Kendrovski v Ardent Leisure Ltd t/as D'Albora Marinas

JUDGMENT

1. By a 3 August 2022 motion Ardent Leisure Ltd sought leave to rely on a 2 August report of a further expert, Captain Frost, as well as an order requiring certain documents the subject of a notice to produce to be produced by 19 August. Both were opposed by the plaintiffs but were consented to or not opposed by the other defendants.
2. At the hearing I refused leave to permit reliance on the report, but I concluded that the documents had to be produced. The parties are conferring on the resulting further directions and orders which need to be made in preparation for the 15 day hearing listed to begin on 21 November 2022.
3. These are the reasons for the conclusions reached.

The notice to produce

1. Mr Kendrovski and Ms Simonovski brought these proceedings in 2018 and 2019 respectively, pursuing damages arising out of an arson fire in the early hours of 3 December 2013, which destroyed the boat Fat Cat, while it was moored at the Cabarita Marina. There were four boats involved in the fire.
2. Ardent operated the marina and the other defendants leased the marina or audited the marina's fire retardation and suppression equipment, before the fire.
3. It is an insurer who brings a subrogated claim in Mr Kendrovski's name. It was also the insurer of another boat involved in a fire in 2012 at the Docklands marina in Melbourne. In 2020 a subpoena was served upon it, seeking access to materials relating to that fire, which has not finally been pressed. Such documents later became the subject of the disputed notice to produce.
4. It appears that in issue at the hearing will be duties owed, breach, causation, damages and the extent of any concurrent wrongdoing. The person criminally charged with the arson, who was acquitted, is not a party to the proceedings but his involvement in the fire will also be an issue at the trial, at which many lay witnesses will be called. Expert evidence has also been served in accordance with Cavanagh J's earlier orders and the experts are due soon to meet to produce a joint report.
5. Ardent's fire expert, Mr Cox, has concluded that even with the firefighting equipment suggested for Mr Kendrovski, the spread of this fire would not have been prevented. In his report Mr Cox explains his analysis of an online video of the spread of the Docklands fire. He also advised on the documents concerning that fire which should be sought and were in issue under the notice to produce.

The regulatory requirements

1. Production of documents is regulated by r 34 of the Uniform Civil Procedure Rules 2005 (NSW), which provides for production in accordance with the notice to produce, without the need for any subpoena, unless the Court orders otherwise: r 34.2.
2. Production was resisted for reasons going to relevance and an absence of legitimate forensic purpose, as well as the consequences of their production.
3. The application had to be considered in the context of the requirements of s 56 of the Civil Procedure Act 2005 (NSW), which specifies the overriding purpose of the Act and Rules to be to facilitate the just, quick and cheap resolution of the real issues in the proceedings. Parties are also under a duty to assist the Court to further that purpose and, to that effect, to participate in the processes of the Court and to comply with its directions and orders: s 56(3).
4. What was in issue also had to be considered in the context of ss 57, 58, 59 and 60 of that Act. The proceedings thus have to be managed having regard to the objects specified in s 57(1): (a) the just determination of the proceedings, (b) the efficient disposal of the business of the court, (c) the efficient use of available judicial and administrative resources, (d) the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties.
5. The Court also has to act in accordance with the dictates of justice. In determining what they are, regard has to be paid to the requirements of s 58(2)(b): (i) the degree of difficulty or complexity to which the issues in the proceedings give rise, (ii) the degree of expedition with which the respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities, (iii) the degree to which any lack of expedition in approaching the proceedings has arisen from circumstances beyond the control of the respective parties, (iv) the degree to which the respective parties have fulfilled their duties under section 56 (3), (v) the use that any party has made, or could have made, of any opportunity that has been available to the party in the course of the proceedings, whether under rules of court, the practice of the court or any direction of a procedural nature given in the proceedings, (vi) the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction, (vii) such other matters as the court considers relevant in the circumstances of the case.
6. On this issue it was common ground that attention had to be paid to what was held in Secretary of the Department of Planning, Industry and Environment v Blacktown City Council [2021] NSWCA 145, there in the context of subpoenas.
7. It was explained by Bell P, as his Honour then was, at [69] that "If the documents are apparently relevant and, provided that the terms of the subpoena are not unduly vague or the ambit of the subpoena is not such that it would be oppressive to comply with it, the subpoena should not be set aside." Further, that provided "that the documents sought are apparently relevant to the issues that have or are likely to arise in the proceedings or have some evidential value (which may extend to value for the purposes of cross-examination, including testing the credit of witnesses including expert witnesses), to the extent it may be necessary to establish a legitimate forensic purpose, such a purpose may be presumed": at [70].
8. Further, that "the absence of any apparent relevance (in the broad sense of that term) of the documents sought to be subpoenaed to the issues in the case, may warrant a conclusion of a lack of legitimate forensic purpose and be a sufficient ground to set aside a subpoena or a part of a subpoena": at [71]. Apparent relevance, however, is a relatively low threshold. The onus falls on the party seeking the production to establish relevance: at [73].
9. Finally, at [80] his Honour observed: "..although a party will generally be able to demonstrate that it had a legitimate forensic purpose in issuing a subpoena where, to quote Simpson J (as her Honour then was, and with whom Spigelman CJ and Studdert J agreed) in Saleam at [11], it can: "(i) identify a legitimate forensic purpose for which access is sought; and (ii) establish that it is 'on the cards' that the documents will materially assist his case", at least in civil matters, an inability to demonstrate that it is "on the cards" that the documents sought will materially assist the subpoenaing party's case will not automatically require either that the subpoena be set aside or that access to the documents produced be refused. It will generally be sufficient and prima facie evidence of a legitimate forensic purpose if the documents sought to be produced on subpoena have an apparent relevance to the issues in the case and or bear upon the cross examination of witnesses expected to be called in the proceedings."
10. Whether the documents pursued had a legitimate forensic purpose or were relevant was in issue. Mr Kendrovski's position being that the parts of Mr Cox's report relied on were not relevant nor admissible and would be objected to at trial. That, too, was in issue.

The expert evidence

1. Mr Apps, Mr Kendrovski's expert, has concluded that "at least part of and all of the damage to Fat Cat could have been avoided had fire safety systems been installed and functioned as per their design."
2. Mr Cox, Ardent's expert, has concluded, amongst other things, that the fire which commenced as a fireball, partially engulfed two other boats, one of them the MV President and that it then spread to Fat Cat, which was destroyed. Further, that the fire was such that this outcome would not have been prevented, had other firefighting equipment been in use at the marina.
3. In arriving at his conclusions Mr Cox considered the progress of the fire and its rate of growth. He determined a "quadratic fire growth equation", with a value of 0.03 for the fire growth factor. He checked the validity of that conclusion against the recording of the Docklands fire, which had involved a vessel similar to the vessel MV President, identifying his assumptions. He also explained his conclusion that the 0.03 growth factor was appropriate for estimating the rate of fire growth at the Cabarita Marina.
4. In his response report, Mr Apps said that his knowledge of the application of data points to fire modelling and formulas was limited, but that he understood that an equation is only as good as the data employed.
5. The experts are scheduled to meet to produce their joint report, identifying what they agree and disagree about, in September and if required, will be called to give concurrent evidence after the lay witnesses have been called at the November hearing.

The parties' cases

1. Mr Kendrovski's insurer has been on notice of the documents sought since the subpoena was served and there is no suggestion of any difficulty or delay in their production. The documents pressed are those identified by Mr Cox, for the purpose disclosed, reviewing the validity of his conclusions about the Docklands fire and the fire growth factor.
2. Ardent's case was that they will provide a basis for Mr Cox either confirming the view he came to in regard to the video, that it confirmed that the 0.03 growth factor he had arrived at was appropriate, or they will provide a basis for him to review his conclusions.
3. The case advanced for Mr Kendrovski was that the documents can have no legitimate forensic purpose because the key issue, the likely sequence of events on the counterfactual, assuming breach in respect of the fire system at the Cabarita marina, turns on factual matters unique to this case. Most particularly, the availability of firefighting equipment, its proximity to the vessels and the availability of people to fight the fire, until professionals arrived.
4. It was argued to be most unlikely that those factual matters would also be present at the unrelated fire at Docklands. The documents thus relate to different circumstances at a different marina, with the result that the development of a fire there can have no bearing on the key issue in this case. Further, their production could only give rise to a side issue unrelated to the real issues in the proceedings and unnecessarily delay them, with additional resulting cost.
5. It was also submitted that what would result from service of any further report by Mr Cox could not be predicted. It might even necessitate another expert being engaged by Mr Kendrovski, for which there was insufficient time. That and the delay in pursuit of the motion until long after the expert evidence had been served, led to the conclusion that the production sought could not justly be required.

The production was required

1. I was satisfied that the case advanced for Mr Kendrovski could not be accepted.
2. There does appear to be a legitimate forensic purpose being pursued. Namely, a better assessment of the Docklands' fire than was possible from the video, against which Mr Cox's conclusion that the Cabarita fire had a 0.03 fire growth factor was tested, using documents in the hands of Mr Kendrovski's insurer.
3. There is no suggestion that the growth factor is not relevant, nor that testing the validity of the conclusions Mr Cox reached against another similar fire is not a valid approach. Ardent questions the similarity of the Docklands' fire, but that is a matter for Mr Cox to explain, given the views he has already reached.
4. I considered that it thus had to be accepted that it was on the cards that the documents were relevant to issues in the case, concerning as they do another fire against which Mr Cox tested his conclusions about the fire growth factor, for reasons already given in his report.
5. True it is that sensibly the documents should have been sought earlier. They were first pursued by subpoena, which was opposed and later by the notice to produce, which was still opposed. But it is relevant that the subpoena was not pressed, it being accepted that the experts' reports should first be obtained. That led to the pursuit of the documents, after Mr Cox's report was received, which were still opposed because leave to lead a further expert's report had not been sought.
6. That a further report may be required was always obvious, if Mr Cox was given access to the documents, given the obligations which fall upon experts. If the documents do not support his conclusion that the fire growth factor was 0.03, then that will no doubt alter Mr Cox's opinions. In either case he will have to provide a further report to explain the basis for the conclusions he has reached about them, which will then have to be considered by the parties and Mr Apps, as well as by the experts at their conclave.
7. But I was not satisfied that this was likely to impede the November hearing, or even the experts' conclave.
8. In the result I concluded that the documents had to be produced.

Further expert evidence

1. I concluded, however, that the leave sought in relation to Captain Frost's report had to be refused, given what was revealed by the affidavits sworn by Mr Hetherington and Ms Barakat, the parties' solicitors.
2. Given all of the circumstances and the consequences of the leave sought, I was not satisfied that justice permitted the order sought to be made; that to do so would have been contrary to the approach discussed in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27; and that it would likely have resulted in the need to adjourn the hearing, the consequences of which not only for the parties, but many others, meant that a costs thrown away order would do little to ameliorate them, even though the proceedings involve litigation between commercial parties.
3. They were commenced in 2018 and 2019 and are to be heard in November 2022 at a 15 day hearing, at which evidence will have to be called from many lay witnesses about events which occurred in 2013. Any further delay can thus only have adverse consequences for them and the quality of their recollections.
4. Case management orders have repeatedly been made, beginning with orders made on 29 November 2019. In June 2021 final orders as to service of the defendants' expert liability and quantum evidence were made, requiring service by 16 July and the plaintiffs' reply evidence by 16 August 2021. Those last reports were served on 21 July 2021. A mediation was also ordered, which took place in December 2021. It was unsuccessful, with the result the hearing being listed, the matter being ready to proceed.
5. That all parties have had a fair opportunity to advance their cases was thus undoubted.
6. When the matter was listed for hearing in December 2021, the parties were required to agree on preparation of joint expert reports. Despite this, that further expert evidence was being pursued by Ardent, was not disclosed until service of the Frost report on 2 August 2022. The explanation given for this was not satisfactory.
7. In his first affidavit Mr Hetherington explained that it was at the conclusion of the mediation that he came to the "conclusion that an expert loss assessor and marine surveyor might be able to add another perspective based on experiences of such fires on vessels". But due to Captain Frost's commitments earlier this year, his own absence from the end of May 2022 until 31 July and counsel's unavailability in recent weeks, the Frost report was not finalised "until now".
8. Neither this affidavit, Mr Hetherington's reply affidavit, nor the submissions advanced explain the failure to adhere to the requirements of the Rules. They envisage not only disclosure to the other parties, but Advent seeking directions from the Court, before Captain Frost was engaged: r 31.19.
9. Rule 31.19 requires parties to "promptly" seek directions from the Court, if it becomes apparent that expert evidence may need to be adduced. That was not complied with, and no explanation was given for that failure.
10. In her affidavit Ms Barakat explained that until service of the 3 August 2022 motion, no notice had been given of the intention to serve further expert liability evidence. She had since made enquiries about whether a suitable marine surveyor could be engaged to respond to Mr Fox's report, in the time available before the November hearing. None of the eight surveyors contacted could guarantee that they could do so.
11. That is understandable, given that apparently Captain Frost was not briefed until February 2022 with approximately 4000 pages of documents, and it took until August for his report to be finalised. Any consideration of, or response to his report will undoubtedly require considerable effort under time pressure, given the November hearing and the need beforehand for the experts to confer and produce a joint report.
12. This difficulty would have been avoided had any notice been given to the other parties of the intention to obtain a report from Captain Frost. The result of the course pursued was that without further order, Ardent is not entitled to rely on Captain Frost's report.
13. That it was only after the report was obtained on 2 August 2022 that the motion seeking leave to rely on it was served, without prior warning or notice to the other parties, did not provide a just basis for the exercise of the Court's discretion to grant the leave sought.
14. It was pertinent that r 31.20 envisages that the Court may direct that expert evidence not be adduced and that it may also limit the number of experts to be called. Here the Court had made directions about the expert evidence which the parties wished to advance, which were complied with in 2021. Those experts are due to meet in September to produce a joint report for the impending hearing.
15. It is apparent that if the leave sought was granted, Captain Frost and a responding expert yet to be identified or instructed, would have to participate in the conclave. All the experts would thus have to be instructed with each other's reports, in order to participate in the production of a joint report and to give concurrent evidence at the hearing.
16. The grant of the belated leave sought would thus not only add considerably to the cost of these proceedings, but realistically, would also require the adjournment of the hearing.
17. I thus could also not accept that the just course would be to grant the leave, see whether another expert could be obtained and if not, then to put Ardent to an election, to rely on the Frost report or to seek to adjourn the hearing.
18. The aim of the Court's Rules and processes, consistently with the requirements of the Civil Procedure Act, and the obligations and considerations which I earlier discussed, is to avoid litigation being conducted by ambush or surprise. A timely application for leave to rely on additional expert evidence would have permitted directions to be given which would have avoided Mr Kendrovski being put to unfair disadvantage, by not having adequate time before the impending expert's conclave and hearing, to put on a response to Captain Frost's report.
19. Nor did I consider that two separate conclaves, which was also submitted to be a viable way forward, would have been just. After all, each of the experts would be giving opinions about the causes and consequences of the fire and the firefighting equipment in issue. Even though they brought different expertise to the matters which arose for consideration, the best and most cost effective way of managing the receipt of their evidence was, in my view, for one joint experts' report to be produced and for them all to give their evidence concurrently.
20. This is a frequently adopted approach and one which I consider would have been ordered, had a timely application for leave to lead evidence from Captain Frost been made, if it was granted.
21. The correspondence between the parties, albeit in the context of the dispute over the production of documents, about the absence of any application for leave to lead further expert evidence, while further expert evidence was being pursued by Ardent, without notice or application to the Court, as the Rules required, supported the conclusion which I reached.
22. Namely, that the absence of any explanation of the failure to adhere to those requirements and the adverse consequences of the grant of the leave for the parties, witnesses and the administration of justice, I was well satisfied would result if the belated leave sought was granted, could not justly permit it being granted, given the further cost and delay which would inevitably result.

Further directions

1. The parties are conferring on the further directions and orders necessary, given my conclusions and were given liberty to approach in the event that they need to be heard further

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