Hamod v New South Wales [2014] NSWSC 1896 | Case summary

Hamod v New South Wales [2014] NSWSC 1896 | Case summary | Zoe

By interlocutory process filed on 3 October 2014, the Plaintiffs, Messrs Cussen and Strawbridge in their capacities as receivers and managers of Liquor National Pty Ltd and other companies brought an application under s 108 of the Civil Procedure Act 2005 (NSW) or alternatively ss 420, 431 and 1324 of the Corporations Act 2001 (Cth) seeking an order that the respondent, Mr David James, attend and produce documents contained in specified archive boxes to the extent that they were books and records of particular companies, and be orally examined in respect of compliance with orders made by Brereton J on 23 September 2013. Orders were made, on an ex parte basis, on 3 October 2014 requiring the production of documents and that Mr James attend for examination. No documents were produced, when the matter was listed on 16 October 2014, implicitly on the basis that Mr James took the position that books and records to the extent that they might have fallen within the specified archive boxes did not comprise books and records of any of the specified companies.
Mr James was then examined at some length and, following submissions by each of the parties, I delivered an ex tempore judgment and held that documents addressed to or received by the companies or generated by the companies and falling within various other specified categories should be produced to the Court. This morning, two lever arch folders of documents have been produced as falling within those categories.
The question of costs is now listed before me. In his written outline of submissions, Mr Livingston, who appears for Messrs Cussen and Strawbridge in their capacities as receivers and managers of the relevant companies, sets out the background to the application brought by interlocutory process on 3 October and then heard before me on 16 October. It is not necessary to recite the background of that application, which I do not understand to be significantly contested by the parties, although the extent to which Mr James ought to be criticised for any aspect of the relevant matters is in contest, although not, in my view, a matter that is necessary for me to decide for the purposes of this application. Mr Livingstone sets out the evidence given by Mr James in his examination, and I have also referred to that evidence in my ex tempore judgment explaining why I made orders for the production of further documents.
Mr Livingston submits that the plaintiffs should be entitled to their costs of the interlocutory process because the hearing involved elements of contest, and they have succeeded in obtaining the relief sought, and the usual rule is that costs should follow the event under r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"). The receivers submit that Mr James would not have delivered up any books and records of the companies without their filing the interlocutory process and conducting the examinations. It seems to me that that proposition is plainly correct. Its correctness is demonstrated, first, by the fact that Mr James had not produced documents in response to the orders made by Brereton J, albeit that they might have come into his possession after the date on which those orders were made. Its correctness is demonstrated, second, by the fact that no documents were produced when the matter was originally returnable before me on 16 October, a position which could only have been justified on the basis that Mr James took the view that the relevant documents were no longer the companies' documents, notwithstanding that they might once have been the companies' documents. That position is, third, made clear by the fact that Mr James, in examination, led evidence that suggested that he took the view that, the documents having been in boxes held on relevant premises to which the receivers may have had access, and having been, on his account, left in those premises, they had been abandoned by the receivers and were no longer the companies' documents, or alternatively were his copies of the documents, in his capacity as guarantor of obligations of the companies, or otherwise documents to which he asserted a claim as guarantor. The position taken by Mr James in examination makes clear that his position was that the receivers had no entitlement to the documents and they were not in fact been voluntarily produced, or produced to the extent they fell within the Court's previous orders, on any prior occasion and were not produced until the Court made further orders on 16 October, which have led to their production this morning.
Mr Livingston submits that the plaintiffs obtained orders of practical value, which they would not have obtained without prosecuting the interlocutory application, and that Mr James substantively failed in his resistance to the order for production.
Mr Chee, who appeared for Mr James, submits that Mr James did not oppose the orders for production, and that statement is strictly correct, at least so far as his ultimate position emerged at the close of the hearing before me on 16 October. It seems to me that the position needs to be qualified, somewhat, by the fact that that position was made clear late. This was not a case where, for example, at the commencement of the hearing on 16 October, Mr James had indicated that there was in truth no dispute as to the production of the documents and Mr James would voluntarily produce them. Events may well have taken a different course had that position been taken.
Mr Livingston in turn seeks, on behalf of the receivers, an order that costs be payable forthwith, on the basis that the orders granted by the Court on 16 October were the practical equivalent of the grant of final relief in the originating process and, additionally and alternatively, it would be unjust for the plaintiffs to be kept out of their costs of the interlocutory process pending any further applications in the matter. Mr James, in turn, relies on his affidavit dated 28 October 2014, which refers to his visits of several properties at which documents were held, and annexes photographs of those properties, and indicates that he is not aware of what happened to boxes of documents inside at least one of those properties. He indicates that he has also not received any telephone calls or spoken to anyone from the receivers' office or their solicitor's office in which he had been asked to produce any further documents or asked to explain certain documents which were attached to an affidavit led in other proceedings. That evidence is led in respect of the position since the orders made by Brereton J on 23 September 2013 and his examination before White J on 18 October 2013. It seems to me that limited weight should be given to that evidence. Accepting its truth, for the purposes of this application, it remains that orders were made by Brereton J requiring the production of documents of the companies and those documents have not been produced because, on Mr James' account, he considers the documents were not, or were no longer, documents of the companies. There is no suggestion that he would have taken a different view had he received a telephone call asking him to produce the documents, and there is no suggestion that he in fact took a different view, by his counsel, on 16 October when the application was heard, by volunteering production of the documents at the commencement of the hearing. In those circumstances, it seems to me that the absence of such a telephone call is of little significance.
Mr Chee in turn submits that there should be no order as to costs to the extent that each party should bear its own costs of and incidental to the interlocutory process of 3 October, including the hearing before me on 16 October 2014. Mr Chee also refers to the absence of correspondence, prior to the application before the Court. He characterises the application as a sudden application, and one which was made ex parte, and criticises the fact that contact had not been made with Mr James before it occurred. It seems to me that the criticism of suddenness is of limited weight, in circumstances where the application had been brought after the use of documents, apparently originating from the companies, in other proceedings. The receivers' concern that documents might be destroyed, if orders were not made on an ex parte basis, cannot be said to be unreasonable in circumstances where, as the evidence emerged, at least some documents had been destroyed over the relevant period, although Mr James' evidence, which there is no need to form a view about for the purposes of this application, is that they were not documents of significance. To some extent, of course, it would have been somewhat difficult for Mr James to make an assessment, on the receiver' behalf, of what documents might have been significant to them, and he gave them no opportunity to make that assessment for themselves.
Mr Chee also submits that the relevant documents had been abandoned by the receivers, so far as they had been on premises previously occupied by the companies, and the receivers had not taken possession of them. I noted that argument in my substantive judgment and did not consider it necessary to determine it. I still do not consider it necessary to determine it, so far as a question for costs should be determined by reference to the result of the interlocutory application and the hearing before me on 16 October. Even if, to accept Mr James' argument, the receivers had once "abandoned" the documents, and then changed their mind because they were necessary for the receivership, it remains that Mr James did not produce the documents voluntarily, pursuant to the orders previously made by the Court, and that no offer to produce them was made at the commencement of the hearing before me on 16 October.
It seems to me that ultimately this application is a relatively simple one, and much of the history to it is not necessary to determine it. Section 98 of the Civil Procedure Act relevantly provides that costs are in the discretion of the Court and the Court has full power to determine by whom, to whom, and to what extent costs are to be paid. Rule 42.1 of the UCPR in turn provides that where a Court makes an order as to costs, the Court is to order that costs follow the event unless it appears to the Court that some other order should be made as to the whole or any part of the costs. As the case law recognises, although none of the parties considered it necessary to refer to it, presumably because these principles are so well-established that they no longer require authority, costs are to be awarded to compensate the successful party for the expense of being put to the necessity of litigation, and a wholly successful party should ordinarily receive its costs unless good reason is shown to the contrary. To the extent that authority is necessary, that principle is recognised, for example, by the High Court in Milne v Attorney-General (Tasmania) [1956] HCA 48; (1956) 95 CLR 460 at 477 and in Oschlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at 97-98 and 119-113.
In the present case, it seems to me that the receivers were in fact substantially successful, such that the event was determined in their favour. They sought an order for the production of documents, which had not previously been produced by Mr James; no offer for production of those documents was made, after the service of the interlocutory process and orders made when the matter was returnable to me ex parte, or at the commencement of the 16 October hearing, and orders were ultimately made for production of documents in their favour. At that point, they had achieved legal success in the application and, to the extent that at least some documents have been produced today, they have now achieved practical success. As I noted above, it seems to me that the history, and Mr James' evidence in his examination, make it clear that those documents would not have been produced but for the application brought by the receivers. That seems to me to be sufficient to have the result that the receivers have achieved legal and practical success, and costs should follow that event.
As I noted above, the receivers also seek an order that costs be paid forthwith. I do not understand Mr Chee to have addressed that specific issue, as distinct from submitting that costs should not be ordered in favour of the receivers. Again, the parties did not consider it necessary to address the principles applicable to an order in which costs are payable forthwith, although those principles are also well-established. The relevant principles have been summarised by Simpson J in Hamod v New South Wales [2007] NSWSC 707 at [5], and the Court will more readily make such an order where costs are relevant to a discrete, separately identifiable aspect of the proceedings, or there has been unreasonable conduct on the part of the party against whom the costs have been ordered, or the proceedings have some distance and time to run, and it may therefore be some time before costs were payable at the conclusion of the proceedings. Those principles have been applied, for example, in Rafferty v Time 2000 West Pty Ltd (No. 3) [2009] FCA 727; (2009) 257 ALR 503 and in Power Infrastructure Pty Ltd v Downer EDI Engineering Power Pty Ltd (No. 2) [2010] FCA 1437.
In the present case, it seems to me that the issue of greater significance is that this is in truth a discrete application, brought in the course of an originating process which sought the production of documents, and in circumstances where documents had not been produced pursuant to orders made under that originating process. It is entirely possible that there will be no further steps taken in the proceedings and, to the extent that there are, they will have no logical connection with the matter that was raised by the interlocutory application. The position is quite distinct from that which might arise, for example, in an interlocutory stage in the course of preparation of a final hearing. That seems to me to be sufficient to support an order that costs be paid forthwith. It is therefore not necessary for me to reach a finding as to whether Mr James behaved unreasonably in respect of the matter, although I do note that the costs of the lengthy hearing on 16 October might well have been avoided, or reduced, had an offer been made for production of the documents at the commencement of that hearing. Even if that does not support a finding of unreasonableness, as to which I express no view, it is sufficient to indicate that the costs which have been incurred have been increased by reason of the position which Mr James took, in the course of the application, namely that the documents were not such that they ought to have been produced pursuant to the orders previously made by Brereton J or, indeed, the orders made by me when the application was made returnable before me on 3 October.
For all these reasons, I am satisfied that an order should be made that Mr James should pay the costs of the application, and that those costs should be payable forthwith.
Accordingly, I order that the respondent, Mr David James, pay the costs of and incidental to the interlocutory process filed on 3 October 2014, as agreed or assessed, such costs to be paid forthwith.

Hamod v New South Wales

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Cases Cited (9)