JKB Holdings Pty Limited v Alejandro De La Vega & Anor

Judgment (ex tempore) 1HIS HONOUR: Before the Court today is a notice of motion filed by the plaintiff JKB Holdings Pty Limited on 14 December 2011 which claims orders as follows:

1. Jason Mark Schwede and Karen Elizabeth Schwede have leave to be joined in the proceedings as second plaintiff and third plaintiff respectively.
2. The plaintiffs have leave to file and serve a further amended statement of claim in the form served on the defendant/cross-claimants on 9 December 2011.
3. The plaintiffs shall pay to the defendants the costs thrown away as a consequence of orders 1 and 2 above save for the costs of this motion. The defendants will pay the plaintiff's costs of this motion.
4. The defendants are to produce by 23 December 2011 all telephone bills, account statements and telephone call records, including web-based documents and documents transmitted in electronic form, for any period that includes 8 July 2010, relating to the telephone service used by the first defendant, Alejandro De La Vega, for telephone discussions with Stella Deligiorgis on 8 July 2010, and for telephone discussions with Jason Scwede on 8 July 2010, as alleged in the affidavits of Alejandro De La Vega served in these proceedings.
5. The Defendants are to produce by 23 December 2011 an electronic copy (on a USB drive) and a printed copy of the email from the first defendant's accountant Graham Einfeld to the first defendant with all attachments extracts of which email are said by the first defendant to be quoted in the first defendant's email to Lawyers Qld on 11 April 2010 at 7:22am.
6. The Defendants are to produce by 23 December 2011 an electronic copy (on a USB drive) and printed copy of the email referred to in paragraph 12b. of the first defendant's affidavit affirmed on 10 November 2011 being an email the first defendant says he sent on 25 June 2004 at 9:38 am to the defendants' accountant Graham Einfeld.
7. The Defendants are to produce by 23 December 2011 a copy of the advice referred to in paragraph 5 of the Affidavit of the Defendants sworn 18 March 2011. 2In addition, the plaintiff has put before the Court short minutes of orders in which it proposes further relief in connection with the production of computers for inspection. 3The background to the present application is that on 30 November 2011, by consent, I made orders, relevantly, that the plaintiffs serve any proposed further amended statement of claim by 2 December 2011; that the defendants indicate by 7 December whether they consent to the filing of the further amended statement of claim and the joinder of additional plaintiffs; that in the absence of such consent, the plaintiffs file and serve a motion seeking leave to amend, together with any supporting affidavits by 14 December, such motion to be returnable today; that if consent to the amendment were given, then the further amended statement of claim be served by 12 December and, in that event, the defendant serve a defence thereto by 31 January 2012. 4The plaintiff served the proposed further amended statement of claim on 2 December 2011. On 7 December, the defendants indicated that they consented to the amendments, subject to certain further directions and notations being made. On 9 December, the plaintiffs served a further version of the proposed further amended statement of claim, incorporating further amendments. There is some dispute between the parties as to the significance of those amendments. The defendants had not by 14 December indicated their attitude to the latest version of the proposed further amended statement of claim, so the plaintiffs that day filed their motion returnable today. Subsequently, the defendants have indicated that they consent to the leave to amend sought. The only remaining question is as to the costs of the motion in that respect. But as the motion involves other relief as well as the leave to amend, it is preferable to deal with that question when I have dealt with the other issues today. 5Accordingly, by consent, I will order that Jason Mark Schwede and Karen Elizabeth Schwede be joined as second plaintiff and third plaintiff respectively; and grant leave to the plaintiffs to further amend the statement of claim by filing and serving a further amended statement of claim in the form of annexure KES-1 to the affidavit of Karen Elizabeth Schwede sworn 20 December 2011 by 23 December 2011. I will direct that any request for particulars of the further amended statement of claim be served by 15 January 2012; and that subject to any just objection, the plaintiffs provide full and proper answers to any such request by 31 January 2012. I will extend time for service of a defence to the further amended statement of claim to 14 February 2012. 6The next aspect of the motion seeks orders for production of documents, production of which was called for in a notice to produce served on the defendants on 29 November 2011. The objections taken to this notice, while in some respects strictly correct, are substantially without merit, particularly as the notice effectively afforded to the defendant an opportunity to produce electronic and printed copies of documents stored electronically, rather than to produce or submit to inspection of the relevant computers themselves. 7The objection to paragraph 1 of the notice appears to have been on the misconceived basis that the document called for in it related only to questions of credit, whereas in fact it relates not only to credit but also to a fact in issue in the proceedings. In my view, paragraph 1 of the notice is and was supportable under (NSW) Uniform Civil Procedure Rules (2005), r 21.10(1)(b), which does not require that the document specified in it be referred to in an originating process, pleading, affidavit or statement, but simply that it is a specific document or thing clearly identified in the notice relevant to a fact in issue. 8So far as paragraphs 2 and 3 are concerned, they fall within the same category. While it is correct that, strictly speaking, the defendant cannot be required to bring into existence a document that does not exist, the notice effectively affords a concession in the defendants' favour by permitting hard and electronic copies, rather than the original computer, to be produced for inspection. 9So far as paragraph 4 is concerned, the objection taken is that the advice called for is privileged. I am satisfied on the evidence that that privilege was waived by deployment forensically and for a forensic purpose, not only of the existence, but of the substance of the advice. The defendant has said that, as presently advised, it believes that there is no such document in existence. If so, then an answer to that effect can be given. However, it is to be observed that the defendant's formal response to the notice in accordance with the rules of court was not that the document did not exist but, "in relation to the document sought in paragraph 4 of the notice to produce that document is privileged", which is not the answer one would expect to see if it did not exist. 10I order that at 10 am on Friday, 23 December 2011, the defendant produce to the plaintiffs t the offices of Law in Order at level 3 123 Pitt St Sydney the documents described in paragraphs 1, 2, 3 and 4 of the notice to produce dated 29 November 2011. 11That then leaves the additional orders sought so far as the computer expert's inspection is concerned. On 30 November I made orders as follows: A. The first defendant will on at least 24 hours' notice given to the first defendant's legal representative, Mr Roth, allow a forensic computer scientist or his nominee engaged by the plaintiff to have access to the first defendant's email mailbox for the purpose of examination and copy. B. The first defendant will provide the expert engaged by the plaintiff with access to any email programme, operating system, computer and printer that was used by the first defendant to prepare, send or reproduce any electronic document which forms part of its evidence as requested by such expert." 12Those orders were made essentially on the basis of an affidavit sworn by the plaintiff's computer expert, Dr Bradley Schatz, on 29 November 2011, in which he had deposed that to trace evidence related to the state of Mr De La Vega's email account over the relevant time period and give an opinion on an apparent inconsistency between the user names 'Alejandro de la Vega' and 'Alejandro De la Vega', apparently changing around about 21 July 2010, he would require a complete copy of Mr De La Vega's email mailbox and further information on the means with which Mr De La Vega printed the emails in question, including the email programme used, operating system and actions taken. He also said: I expect that such copy of the email mailbox could be made by a suitably competent digital forensic practitioner with minimal interruption to Mr De La Vega. 13Dr Schatz has, in an affidavit sworn on 20 December 2011, deposed to having attended Mr De La Vega's home and been presented with five computers and "no email servers". However, the order does not specifically refer to an email server, but to a mailbox. So far as the evidence goes, it appears that Dr Schatz examined three of the computers, focusing primarily on a Toshiba P200 - which had Outlook 2007 with an email application open displaying a mailbox of Alejandro De La Vega. He says that the file which appears to be related to storing the local copy of the mailbox on the P200 had a creation time and date associated with it of 6 December 2011, and that other folders within the user's work area had been created at or about that time. 14He says that he found traces of use of a server 'SPS.delavega.local' in an email of 10 November 2011, and in other emails some months earlier than that date. He says that given changes made to the De La Vega email systems in early December, and the limited number of sent items and deleted items observed, he formed the opinion that a copy of the mailbox pre-dating the current claims and orders would provide a more reliable basis for any analysis, and as a result, asked for access to the SPS De La Vega local server. According to Dr Schatz, Mr De La Vega said that it was in storage and that he could not get it for a couple of days. He also said that it may be in Mittagong. In subsequent correspondence, on behalf of Mr De La Vega, it has been indicated that it was disposed of in a dump. Today, it was suggested to the court that in fact it could be on one of the desktop Mac computers in Mr De La Vega's premises. 15Dr Schatz did not, on his own version, examine all of the computers. There was no notification prior to his arrival that access to servers, let alone old servers, would be required. 16On the evidence as it presently stands - and further evidence may well affect this - I am not satisfied that there has been a relevant failure to comply with the order. The order, I will make clear, is a continuing one and permits further access, although I may vary it to extend the requisite notice period. 17Without further evidence I cannot infer from the fact that the file apparently related to the local copy of the mailbox on the P200 has a creation time and date associated with it of 6 December, warrants an inference that there has been some inappropriate manipulation, or threat to, the integrity of the data. Again, it may be that further evidence can change that. 18I am, therefore, save for some minor variation to the existing order, not prepared to make further orders in respect of the computer inspections at the moment, bearing in mind that the existing orders remain in place and further inspection pursuant to them may take place. 19So far as the costs of today and of the motion are concerned, ordinarily the plaintiff seeking leave to amend would have to pay the costs of the motion for leave to amend, unless it was unreasonably opposed. In this case, a regime was put in place to avoid the need for a motion, by making provision for service of a draft and the obtaining of consent. Had consent been unreasonably withheld in accordance with the timetable, that would have been a powerful reason for making a cost order. But the plaintiff ultimately did not comply with the timetable, and served the final version of the proposed amended statement of claim belatedly. In those circumstances, I do not think that, on the application for leave to amend, the plaintiff has made out a case for costs. 20On the notice to produce, as I have indicated, I think the opposition to it was unreasonable in the circumstances, and ought ordinarily be accompanied by a cost order in favour of the plaintiff. 21Against that, an enormous amount of time today has been spent on the computer argument, on which the plaintiff has substantially failed. 22In those circumstances, I propose to make no orders as to the costs of today, to the intent that each party bear its own costs of the motion and of the proceedings today. 23My orders are as follows: A. By consent: (1)I order that Jason Mark Schwede and Karen Elizabeth Schwede be joined as second and third plaintiff respectively. (2)grant leave to the plaintiffs to further amend their statement of claim by filing and serving a further amended statement of claim in the form of exhibit KES-1 to the affidavit of Karen Elizabeth Schwede sworn 23 December 2011. B. Further: (3)Direct that any request for particulars of the further amended statement of claim be served by 15 January 2012. (4)I direct that subject to any just objection the plaintiffs provide full and proper answers to any such request by 31 January 2012. (5)I extend time for service of a defence to the further amended statement of claim to 14 February 2012. (6)Order that at 10:00am on Friday 23 December 2011 the defendant produce to the plaintiff at the offices of Law in Order at level 3 123 Pitt St Sydney the documents described in paras 1,2,3 and 4 of the notice to produce dated 29 November 2011 (7)No order as to the costs of today, to the intent that each party bear its own costs of the motion and of the proceedings today. C. In substitution for the equivalent orders made 30 November 2011: (8) Order that: (1) the first defendant on not less than 14 days notice in writing being given to his legal representative Mr Charles Roth permit a forensic computer scientist or his or her nominee engaged by the plaintiff to have access to the first defendant's email mailbox for the purpose of examination and copying (2) that the first defendant provide to such expert or their nominee access to any email program operating system computer email server or printer in the first defendant's possession custody or power that was used by the first defendant to prepare send or reproduce any electronic document that forms part of his evidence as might reasonably be requested by such expert. D. Further (8)Vacate the appointment for a directions hearing before the Registrar on 9 February 2012 and substitute 23 February 2012 before the Registrar. (9)Order that the plaintiff pay the defendants' costs occasioned and thrown away by the amendment of the statement of claim.