Leighton International v Hodges; Thiess v Reinforced Earth

Judgment 1HIS HONOUR: In each matter there is an application pursuant to practice note SC Eq 11 (the practice note) for disclosure before the service of evidence. The two matters were heard together, with a third. The intention was that the operation of the practice note could be explored in differing factual circumstances, so that I could give one judgment dealing with both matters of general application and with the facts of each case. 2As it turned out, one of the three matters proved not to be ideal as a vehicle for the production of a consolidated set of reasons. It turned on circumstances which were completely distinguishable, and which in the result did nothing in reality to enable the elucidation of the practice note. It added nothing to what will follow in these reasons. 3Accordingly, these reasons now deal with two matters. I hope to illustrate the different ways in which the practice note may be applied, as well as at least some of the circumstances in which it may not apply.

The Practice Note 4The practice note represents an evolution of the court's attempts to deal with the burgeoning cost of litigation. I do not propose to deal in any detail with the way that the courts have sought to do so. It is enough to note that, as is notorious, the cost of discovery has become increasingly substantial, and a very significant contributor towards the overall cost of litigation. One of the reasons for that is, of course, the proliferation of records, particularly in the era of digital information. 5The process of discovery has been subject to attention on more than one occasion. The current position, under the Uniform Civil Procedure Rules, is that discovery is discretionary: UCPR r 21.2. If ever there was a "right" to discovery (and it will be necessary to look at this in considering submissions in one of the two cases), the structure of the rule makes it clear that there is no longer any such absolute right. 6Rule 21.2 operates by making the general approach to discovery one of discovery by categories. An order for general discovery was to be the exception rather than the rule. Nonetheless, partly because of the difficulties in agreeing on categories, and partly because, even if categories could be agreed, the expense of searching documentary databases to see what might fall within any particular category remained, in some cases, immense. Further revision of the court's approach to discovery was taken. 7The practice note represents the latest step in that process. Practice notes are made pursuant to s 15 of the Civil Procedure Act 2005 (NSW). They are, and for many years have been, a well recognised way of regulating, at least in the ordinary case, specific aspects of the court's procedures. It is clear, and uncontroversial, that one of the principal functions of practice notes is to assist in the achievement of the overriding objective of the Civil Procedure Act and of the Uniform Civil Procedure Rules, as set out in s 56 of the Act: to facilitate the just, quick and cheap resolution of the real issues in dispute in any proceedings before the court. 8Practice note 11 is brief. It applies to all new and existing proceedings in the Equity Division, with the exception of proceedings in the Commercial Arbitration List (paragraph 2). Paragraph 3 confirms that the practice note is intended to assist in achieving compliance with the overriding purpose. Paragraphs 4, 5 and 6 set out a general regime for what is now called disclosure of documents. Paragraph 7 enables the court, in an appropriate case, to limit recoverable costs incurred in respect of disclosure. I am not concerned today with, and say nothing about, paragraph 7. 9One of the matters of concern in the application of the practice note is meshing its operation with pre-trial preparation in cases that were under way when the practice note commenced, on 26 March 2012. Although paragraph 2 makes it clear that the practice note applies to such proceedings, neither it nor any other paragraph says how it is to be applied in such cases. Clearly enough, I think, that is a matter for elucidation on a case by case basis. I will say something about it later in these reasons. 10In very broad terms, the practice note applies in two separate situations. First, and as a general rule, orders for disclosure will not be made before the parties serve their evidence. There must be exceptional circumstances shown for this position not to apply (paragraph 4). Secondly, there will not in any event be an order for disclosure unless it is necessary for the resolution of the real issues in dispute (paragraph 5). In both cases, any application for an order for disclosure is to be made (presumably, on motion) supported by an affidavit (paragraph 6). 11I should state at this stage that nothing in the practice note, or for that matter in the rules, prevents parties to proceedings from agreeing and implementing, by consent and without any order of the court, a regime for or equivalent to disclosure. The practice note only applies where an order of the court is sought; but, where an order is sought, the practice note applies whether the order is sought by consent or not. That, to my mind, emphasises the role of the court in satisfying itself, at the appropriate stage, that disclosure is necessary. 12Since it does not arise in either of the cases with which I am now concerned, I leave for another day the question of whether the court might, in particular circumstances, lend its aid to the enforcement of purely consensual regimes put in place without any order of the court. 13The use of the word "disclosure", rather than the traditional term "discovery", seems to me to suggest that the practice note wished to make it very clear that, whatever may have been the traditional approach to production of documents in litigation, as between parties, there is a totally new regime in place. True it is that the practice note cannot override (in this case) r 21.2. But, as I have said, r 21.2 is discretionary in any event. The practice note is intended to set out the general approach that the court will take to the exercise of its discretion under the rule. Of course, it cannot be suggested that the practice note sets out in any exhaustive or definitive way the discretionary considerations that may be appropriate in a particular case. 14The general position is that disclosure is not to be ordered until after he parties have served their evidence. The reason for that is of course that the service of evidence will help to identify specific issues of fact which arise on the pleadings. The philosophy is that the issues, as they arise on the pleadings (and I use this expression even though it is strictly inappropriate to proceedings in the Commercial and Technology and Constructions Lists) will be elucidated and refined through the parties' evidence. It is expected that parties will know the case that they wish to bring, as plaintiffs or cross-claimants, and the cases that they wish to make out in defence, as defendants or cross-defendants. It is expected, too, that they will know the documents in their possession that are relevant to their claim, or defence, as the case may be. Thus, the expectation is, the exchange of evidence will narrow the real issues in dispute, enable identification of the factual issues, enable identification of at least some of the documents relevant to those factual issues, and enable the process of disclosure (if it is to be undertaken) to be very closely and carefully focussed. 15In this context, I repeat what Bergin CJ in Eq said in Armstrong Strategic Management and Marketing Pty Limited & Ors v Expense Reduction Analysts Group Pty Limited & Ors [2012] NSWSC 393, in particular at [65] and [66]. 16At [65], her Honour noted that the question of necessity for disclosure was to be assessed in the ordinary case once the evidence, including relevant documents in the parties' possession, was complete. At [66], her Honour noted that the ambit of disclosure is to be confined to the real issues as defined by both the pleadings and the evidence. Thus, her Honour concluded at [66]: "However it is envisaged that the process will engender a far more disciplined analysis of the need for disclosure by reference to those real issues, compared to the carte blanche gathering in of every document the respective clients have generated in their lengthy relationship for "review" by teams of lawyers and students in the absence of any knowledge of the proposed evidence." 17The application of the practice note is to be considered bearing in mind the objectives that it is intended to serve. However, where there are existing orders for discovery in place (whether general or by category), I do not think that the practice note should be treated as operating to discharge, abrogate or vary those orders. I shall return to this later. 18There are at lest two key concepts in the practice note. One is the concept of "exceptional circumstances" found in paragraph 4. The other is the concept of "necessity" found in paragraphs 4, 5 and 6. 19The concept of "exceptional circumstances" is not unique. It appears, for example, in UCPR r 31.28 (4)(a), dealing with reliance on experts' reports that have not been disclosed as required by earlier paragraphs of that rule. The cases on that rule and its equivalents and predecessors make it clear that there can be no all-encompassing definition of "exceptional circumstances". What is required is an assessment of the particular provision that specifies the need for such circumstances, and the rationale for that provision; and a consideration of the application of the provision in the particular case. However, there are a number of cases which suggest that exceptional circumstances must be something more than circumstances regularly, routinely or normally encountered; but at the same time, they need not be unique, or very rare. (See R v Kelly [2000] 1 QB 198 at 208.) 20As a matter of language, something is exceptional if it is out of the ordinary, or unusual. To my mind, the exceptional circumstances referred to in paragraph 4 of the practice note must be circumstances that are not normal, or usual; they must be something out of the ordinary; they need not be unique; but however one characterises them they are not "exceptional" at large, but "exceptional" because they necessitate disclosure. 21The related concept of "necessity" was considered by Ward J in the matter of Gerard Cassegrain & Co Pty Ltd [2011] NSWSC 241 at [20] and following. That case was concerned with the administration of interrogatories; something closely connected, at least historically, with discovery (both were obtained, before the Judicature Act system came into place, through bills in Chancery). At [22], her Honour noted that the concept of necessity should not be pitched so high as meaning "essential", but should be considered as referring to what was reasonably required to the achievement of a fair trial. At [23], her Honour said that "the accepted test of necessity is what is reasonably necessary for the disposing fairly of the matter or necessary in the interests of a fair trial." 22In the context of the practice note, the disclosure (either pre-evidence or at all) must be shown to be reasonably necessary for disposing of the matter fairly or in the interests of a fair trial. 23As I have indicated, the concept of necessity is focussed on resolution of the need for disclosure. It is not something to be answered by reference to wider concepts. Having said that, however, once the power to order disclosure is enlivened (because the test of necessity is satisfied), it may well be that there are wider considerations that are capable of bearing on the order to be made, in a particular case. Again, it is unnecessary to express any concluded view on this. 24I said that I would return to the application of the practice note. In so far as it applies to existing proceedings, there are at least three different categories that seem relevant. The first is proceedings where there is a regime in place for discovery, and where that regime is working out. As I have said, I do not understand that the practice note was intended to abrogate or discharge any such regime put in place pursuant to earlier orders of the court. Further, in this context, if the regime is working its way through but for some reason or other the parties have run into problems, I think that the court retains its power to assist the parties by putting the regime back on track, without going to the following paragraphs of the practice note. For example, where discovery has been given in existing proceedings, it seems to me that the court may still make orders, in an appropriate case, for further or particular discovery without having to conside, under paragraphs 4 to 6, the tests posed by those paragraphs. 25The second category is a case where a regime for discovery has been put in place by orders of the court, but which has been in effect overtaken by events or abandoned. In other words, the regime that was put in place has, one way or another, in substance lapsed. In such a case, it seems to me, it may be appropriate to try to get the regime working again; or it may be appropriate to abandon it and to move into the territory covered by the practice note. Again, that judgment will depend on the particular facts. 26A third category of case is where there was no discovery regime put in place before 26 March 2012. In those circumstances, it seems to me, there can be no real argument as to the application of the practice note. 27I turn now to the two cases, in respect of which that exceedingly lengthy introduction has been given.