Pages Property Investments Pty Ltd v Boros

Supreme Court of NSW|2019-07-30|Before: Rees J, Lindsay J

Solicitors: WMD Law (Plaintiff) Rigby Cooke Lawyers (Defendants) File Number(s): 2016/357782

Judgment

HER HONOUR: I have been asked to make orders in respect of the costs of two motions relating to production of documents. Both the plaintiff, Pages Property Investments Pty Ltd, and the defendants, Attila Boros and Pages Equipment Holdings Pty Limited, seek their costs of both motions in circumstances where I ultimately dismissed both motions by consent.
To give some background to the substantive proceedings, and drawing upon the judgment of Lindsay J in Pages Property Investments Pty Ltd v Boros [2018] NSWSC 986 and the Court of Appeal in Boros v Pages Property Investments Pty Ltd [2018] NSWCA 269, Pages Property owns land at Punchbowl. Mr Boros is a minority shareholder in the company but was its sole director and secretary when it executed a five-year lease of the land to a lessee owned and controlled by Mr Boros, Pages Equipment. The plaintiff alleges that Mr Boros, in his own interests, caused the lease to be entered into at less than market rent. The Pages Group of companies had borrowed some $7 million from the ANZ Bank and, under Mr Boros' management of the business in 2016, the liability of Pages Property to the bank was increased by about $1.65 million and changed from being one of several sureties to that of principal debtor. Pages Property alleges that Mr Boros, in his own interests, changed the nature and amount of Pages Property's liability to the bank by using money of Pages Property to discharge Pages Equipment's indebtedness to the bank. Pages Property has since contracted to sell the Punchbowl property to a third party in order to meet ANZ Bank's demands and Mr Boros has a competing aspiration to purchase the property.

Subpoena Motion

On 4 April 2018, the Court issued seven subpoenas at the request of Pages Property, seeking the additional documents identified by Ms Bateman as necessary for her to complete her report. Pages Equipment was one of the subpoenaed parties. On 9 April 2018, Pages Property filed a proposed amended statement of claim which included, if leave were granted to amend the document in that form, the joinder of Pages Equipment as second defendant.
The subpoenas were returnable on 17 April 2018. On 16 April 2018, Mr Boros filed a motion seeking to have the subpoenas set aside together with an order for the costs of the motion on an indemnity basis (Subpoena Motion). The basis of the application was that the subpoenas were said to be an abuse of process in circumstances where Lindsay J was part-heard on the summary dismissal and amendment applications. On 17 April 2018, no documents were produced in answer to the subpoena and the Subpoena Motion was referred by the Registrar to Lindsay J for determination.
On 10 May 2018, the matter came back before Lindsay J. His Honour made directions for further submissions and stood over the now three motions to 22 June 2018. On 15 June 2018, Mr Boros served submissions. In respect of the Subpoena Motion, it was submitted by Mr Boros that, not only were the subpoenas an abuse of process, but that they sought documents which were irrelevant, were impermissibly broad, were not sufficiently particular, and were a substitute for discovery. The plaintiff submitted that Mr Boros' complaints included various technical or procedural objections unrelated to the substance of the subpoenas. For example, Mr Boros queried why, if there was not proper compliance with the original subpoenas, the matter was not brought back before the Court; further subpoenas ought not have been issued whilst his motions seeking to have the whole of the proceedings struck out as an abuse of process was part heard; the subpoenas were said to be being improperly used as a substitute for discovery; the proposed amended pleading made allegations against Pages Equipment which, if joined, would become a defendant and as such it would be inappropriate for a subpoena to be issued to that company; Mr Boros suggested, without elaboration, that seeking documents directed at enabling Ms Bateman to express an opinion was somehow improper and that identifying the current financial position of the plaintiff, including loans to and from Pages Property, did not bear upon any question in the proceedings.
On 22 June 2018, the motions were heard and his Honour reserved judgment. On 29 June 2019, Lindsay J gave judgment in Pages Property Investments Pty Ltd v Boros [2018] NSWSC 986, granting the plaintiff leave to amend its pleading, including by joining Pages Equipment as a defendant, dismissing Mr Boros' strike out motion and making orders for a Defence to the amended pleading to be filed. His Honour noted at [8]: A recurrent theme in the plaintiff's conduct of the proceedings remains a complaint that the defendant has failed to produce books and records of the business necessary to permit his conduct of the business to be audited or sufficient to allow the plaintiff's forensic accountant to prepare an expert report. The state of the defendant's record keeping remains a live issue as he endeavours to contain the plaintiff's case at an interlocutory stage. The Subpoena Motion was deferred until 8 August 2018.
On 7 August 2018, Pages Property provided written submissions which inter alia contended that the subpoenas were properly issued and relevant to the facts in issue, including by detailed reference to the pleadings and evidence. On 8 August 2018, the Subpoena Motion came before Lindsay J who, noting the defendants' intention to appeal, stood over the proceedings and the motion to 13 September 2018.
On 15 August 2018, the defendants filed a Summons Seeking Leave to Appeal. On 13 September 2018, as a practical alternative to having to determine the dispute in respect of subpoenas, Lindsay J ordered the parties to give general discovery by filing a verified list of documents by 25 October 2018, with inspection to be completed by 8 November 2018, and stood the Subpoena Motion over until 9 November 2018.
On 11 October 2018, the plaintiff's solicitors wrote to the defendants' solicitors, enquiring: We refer to the order for general discovery. Please confirm whether your clients intend to include the documents set out in the subpoenas filed by our client on 4 April 2018 in their verified list of documents by way of general discovery. Pages Property received no answer. On 2 November 2018, the defendants filed a List of Documents verified by Mr Boros. Adopting the required format, Mr Boros deposed that he had made reasonable inquiries as to the existence and location of documents and believed there were no documents falling within the order that were in his possession or the possession of Pages Equipment other than those referred to in the list.
On 8 November 2018, Leeming JA and Simpson AJA heard the application for leave to appeal. On 9 November 2018, the matter was listed for directions before Lindsay J. The plaintiff indicated to his Honour that it was still inspecting the documents but it appeared that the defendants had not discovered all of the documents sought in the disputed subpoenas. Accordingly, Lindsay J made the following orders: 3. ORDER that the defendants serve upon the plaintiff, no later than 23 November 2018, a table identifying the defendants' discovered documents insofar as they provide information sought by the plaintiff in subpoenas which (by their notice of motion filed 16 April 2018) the defendants have applied to set aside. 4. ORDER that the proceedings be listed before Lindsay J on 30 November 2018 at 9.30am for consideration of whether there is any continuing need for a determination of the defendants' notice of motion filed 16 April 2018. 5. ORDER, subject to further order, that the proceedings be listed before the Real Property List Judge on 1 March 2019…
On 13 November 2018, the application for leave to appeal was dismissed with costs: Boros v Pages Property Investments Pty Ltd [2018] NSWCA 269. It appears that their Honours were concerned with the volume of material sought to be placed before Lindsay J and the Court of Appeal by the parties in the proceedings generally. At [5]-[8]: 5 The hearing in this Court, and before the primary judge, followed an unusual course. Before the primary judge, the plaintiff's application to amend, and Mr Boros' application for summary dismissal or a stay, came on in the Applications List. That, as we understand it, is a list for relatively short matters. The parties read 7 affidavits in a court book comprising 2 lever arch folders. … 7 The matter was not concluded by the afternoon. … The matter was adjourned until 10 May 2018. … The matter was thereafter adjourned again until 22 June 2018. At either the second or third hearings, four solicitors' affidavits were read. Those affidavits occupy some 380 pages. … 8 The parties were no less verbose in their submissions than in their testimonial evidence. Mr Boros supplied 5 sets of written submissions to the primary judge (dated 30 January, 16 March, 20 April, 7 May and 15 June). … The plaintiff also relied on 4 sets of submissions (dated 10 January, 16 March, 30 April and 1 June). … The hearing in this Court occupied slightly more than 2 hours. Whilst their Honours noted that Lindsay J may not have fully dealt with the claimed abuse of process, no grant of leave was warranted as there was no sufficient prospect that a different outcome would be reached if the appeal were heard, noting that the onus on a party alleging an abuse of process is a heavy one, the power to grant a permanent stay is one to be exercised only in the most exceptional circumstances, and where open access to justice is an important civil right to which the courts have long given high regard: at[16]-[17].
On 26 November 2018, the defendants served a table as contemplated by Order 3 made on 9 November 2019. On 30 November 2018, when the matter came before Lindsay J for directions, the plaintiff raised a concern that the defendants' table confirmed there were a large number of documents sought by the subpoenas that had not been discovered, which the plaintiff considered would be expected to exist and be within the defendants' possession or control. Senior Counsel for the defendants advised the Court that his clients had made "further inquiries" and had located "some additional documents". His Honour made the following orders: 1. ORDER that the defendants serve, no later than 17 December 2018, a supplementary, verified list of documents by way of discovery. 2. ORDER that the defendants, no later than 20 December 2018, serve on the plaintiff a written statement which sets out with precision: (a) those categories in the subpoenas served by the plaintiff (issued [sic] on 17 April 2018) for which the defendants or subpoena addressees possess documents, but which have not been produced or discovered to the plaintiff. (b) the basis upon which those documents have not been produced or discovered, including any objection as to the relevance of the documents to any issue to be determined in these proceedings. 3. ORDER that (if the defendants or subpoena addressees contend that, although a document the subject of a demand for disclosure exists within their possession, custody or control, it is not relevant to any issue to be determined in these proceedings) the written statement required by Order 2 is to include: (a) a description of the document sufficient to allow it to be identified; and (b) a statement of the ground, or grounds upon which the defendants (or subpoena addresses) contend that the document is not required to be produced. 4. ORDER that the proceedings (including the defendant's notice of motion filed on 16 April 2018) be listed for directions before Lindsay J on 8 February 2019 at 9.30am.
On 4 December 2018, the plaintiff's solicitors advised that they intended to call on the subpoenas at the hearing on 8 February 2019. On 21 December 2018, the defendants filed a statement in accordance with Lindsay J's orders, objecting to production in answer to the subpoenas including on the basis that the documents sought were irrelevant to the issues in dispute.
On 6 February 2019, the defendants' solicitors wrote again. Whilst objecting to producing documents in answer to the subpoenas until the Subpoena Motion had been determined, the solicitors advised that the defendants would provide a supplementary list of documents the next day discovering a large number of the documents sought by the subpoenas apart from those categories objected to. In light of events that occurred since the subpoenas were issued, the defendants' solicitors suggested that there was little, if any, utility in the subpoenas, with only the remaining categories set out in the defendants' statement to be resolved. In respect of the hearing listed for 8 February 2019, the defendants' solicitor advised: In order to seek to narrow the dispute between the parties regarding the subpoenas, the supplementary list of documents to be served tomorrow will discover a large number of documents answering a number of the categories of documents specified in the subpoenas, though our clients maintain that such documents have little (if any) bearing upon the pleaded issues in the proceeding. In order to deal expeditiously with these outstanding issues, we suggest it would be beneficial for your client to have an opportunity to review the documents to be discovered by our clients in the supplementary list of documents to be served tomorrow and, if further documents are still required, to review and refine its request. … The verified supplementary list of documents was provided on 7 February 2019. The plaintiff submits that, despite Mr Boros' verifying affidavit of November 2018, when pressed about the glaring absence of documents such as tax returns and annual financial reports, Mr Boros at the last minute, just before the matter returned to court for him to be challenged about his non-production, found "further documents" and produced a supplementary list.
On 8 February 2019, the matter returned before Lindsay J. The plaintiff raised its concerns with Lindsay J that the defendants' statement of 21 December 2018 did not comply with Order 3 made on 26 November 2018 in that it did not identify specific documents but instead referred to broad categories such as "emails". The transcript suggests that his Honour was concerned with the amount of time and effort being directed to extracting documents, and a way had to be found to get beyond a fight about discovery. While the defendants continued to press objections on the grounds of relevance, his Honour envisaged a complete exchange of the documents in the defendants' possession. SEGAL: … So we are at a high level question as to whether or not that material is required. The continued - HIS HONOUR: If it is all in a room why don't you just let it in the room? SEGAL Because that defeats the question of the objection. If you - HIS HONOUR: The problem with the objection is that possession is nine tenths of the law. You have got possession of the documents and part of the forensic game that could be being played on behalf of the defendants - I am not being critical about that, this is forensic life - is that the defendants are trying to restrict access to things. SEGAL: That is not the case. … there is no relevance and there is no need for that material and even if one - HIS HONOUR: It might be that this requires a little bit of imagination in the electronic age but aren't the documents physically in a room? SEGAL: They are accessible in the sense of the email but - and there is a question of - HIS HONOUR: Have the emails been collated and put on a CD, for example? SEGAL: No. HIS HONOUR: That is the problem. SEGAL: But that is not the problem because the objection ought to be determined before the task, especially the one which is complaining about oppression and proportionality. If you go to the task and you undertake it all, then you objection has not been - HIS HONOUR: The trouble is the defendants have spent a year or more taking objections. SEGAL: That is not fair, your Honour. HIS HONOUR: It may not be fair but it is not wholly unfair. … I just need to work a way forward.
His Honour's experience, on that occasion, with seeking to obtain the co-operation of the defendants to production of documents would be echoed by my own experience at later hearings. Lindsay J made the following orders, which repeated the themes of earlier orders on this subject: 1. NOTE that the parties inform the Court that the list of documents required by order 1 of the orders made on 30 November 2018 to be served no later than 17 December 2018 was served only yesterday (7 February 2019). 2. ORDER, subject to further order, that the parties co-operate so as to enable the plaintiff to inspect, no later than 27 February 2019, documents the subject of yesterday's discovery. 3. NOTE that, subject to any questions arising from inspection of those discovered documents, the plaintiff reserves a right to apply to the Court for orders to the following effect: a) order that the defendants comply with order 3(a) of the orders made on 30 November 2018 by service on the plaintiff (no later than a specified date) a written statement which, in respect of each of the documents referred to in the document styled "written submissions" and filed by the first defendant on 21 December 2018, identifies that document specifically. b) order that order (a) may be complied with by production of each document, or documents, for inspection by the plaintiff. 4. RESERVE for consideration, if required, the question whether any orders should be made by the Court in the terms, or to the effect, of those described in notation 3. 5. RESERVE to the plaintiff liberty to apply on three days' notice for orders in the terms, or to the effect, of those described in notation 3. 6. ORDER that the plaintiff, no later than 11 February 2019, serve on the defendants a written statement identifying each of the "related parties and associated entities" referred to in subpoenas the subject of objection by the defendants as noted in the document styled "written submissions" and filed by the first defendant on 21 December 2018. 7. ORDER that the proceedings (including the first defendant's notice of motion filed on 16 April 2018) be listed before the Real Property List Judge on 1 March 2019 for directions. 8. ORDER that the defendants' pay the plaintiffs' costs of the directions hearing of today (8 February 2019).
On 28 February 2019, Pages Property's solicitors wrote to the defendants again: We have inspected your clients' supplementary list of discovery. We enclose a list of documents that have still not been produced by your clients (by reference to the Subpoena categories). We understand your clients have made objections to certain subpoena categories in its schedule filed 21 December 2018 (Schedule). For the documents which are not objected to in the Schedule, please let us know: 1. Whether your clients have any objection to producing the documents; 2. Why the documents have not been produced yet; and 3. When the documents will be produced.
On 1 March 2019, the matter came before Darke J in the Real Property List. By consent, his Honour made orders standing over the Subpoena Motion to the Registrar's List on 18 March 2019. His Honour made a further order by consent: The plaintiff is to provide a supplementary list of discoverable documents in respect of the categories described in [the plaintiff's solicitors] letter … dated 28 February 2019 b[y] no later than 4.00pm on Friday 22 March 2019. Any motion to be filed by the plaintiff in exercise of the liberty to apply granted by Lindsay J on 8 February 2019 was also made returnable before the Registrar for directions on the same day.

Plaintiff's Motion

On 13 March 2019, Pages Property filed a Notice of Motion (Plaintiff's Motion), seeking the following relief: 1. The Defendants are to serve on the Plaintiff, by no later than 7 days after the date of this order, a written statement that: (a) identifies with precision each individual document referred to in the document styled 'written submissions' filed by the first defendant on 21 December 2018 pursuant to the orders made by Lindsay J on 30 November 2018; and (b) states the ground or grounds upon which the defendants contend that each respective document is not required to be produced. 2. Order 1 may alternatively be complied with by instead producing, no later than 7 days after the date of this order, the relevant document, or documents, for inspection by the plaintiff. 3. The defendants are to provide, by no later than 14 days after the date of this order, discovery of the categories of documents referred to in the letter from plaintiff's solicitors to the defendants' solicitors dated 28 February 2019 by way of a verified further supplementary list of documents. For any category referred to in that letter for which the defendants contend that no such documents exist, or that no such documents are within the custody, possession or control of the defendants or the subpoena recipients, the first defendant is to provide, by no later than 14 days after the date of this order, an affidavit explaining what searches have been conducted for the relevant documents and the first defendant's best explanation as to why the document does not exist or is not with the custody, possession or control of the defendants or the subpoena recipients. 4. The plaintiff may inspect forthwith documents produced in response to the seven subpoenas … 6. Costs of and incidental to this motion. The plaintiff submitted that it should never have been put in the position of having to file this motion simply to seek compliance by the defendants with Lindsay J's orders made on 30 November 2018. However, the plaintiff submitted that it was left with little alternative given the defendants' intransigence and ongoing refusal to provide the financial records and documents that had been requested.
On 14 March 2019, the Registrar made orders in chambers transferring the matter to the Corporations List. On 22 March, Black J made orders by consent for the filing of evidence and the exchange of submissions on both motions, with a view to hearing on 6 May 2019. On 9 April, the defendants' solicitors sent another letter in respect of discovery: … Notwithstanding that our client maintain their position that the categories of documents sought in your client's subpoenas dated 4 April 2018 are lacking in relevance to the Proceeding, and are so broad as to be oppressive, our clients have made further extensive enquiries regarding availability of the documents sought in order to narrow the issues in dispute… As a result of these further enquiries, our clients have located several further documents which are discoverable. We intend to file a further supplementary list of documents as soon as possible. … The plaintiff submits that it was only after the plaintiff filed its motion that Mr Boros was forced to conduct "further extensive inquiries regarding availability of the documents sought". It was submitted that Mr Boros had an obligation to conduct such inquiries as an ordinary consequence of the discovery order already made.
On 1 May 2019, the defendants' solicitor forwarded a draft unverified supplementary list of documents: … As was foreshadowed in our previous letter, after having conducted extensive searches of the archives of the Pages group of companies (Pages), and consulting IT experts in order to seek to extract further documents, our clients have located further documents they intend to discover. … It is therefore our clients' position that your client's subpoenas …: 1. have, by way of discovery, been substantially addressed; 2. otherwise, require the production of documents that are irrelevant to the issues in dispute; and 3. are oppressive in that they seek categories which are extraordinarily broad and would require our clients to incur enormous time, expense and inconvenience to obtain, review for relevance, and produce. In light of the matters set out in this letter, we invite your client to withdraw the subpoenas and its notice of motion by 4.00pm on Thursday 2 May 2019. … The plaintiff points to this as another example of Mr Boros, at the last moment, finding further documents shortly before the matter returned to Court, while still insisting upon the same technical objections.
On 6 May 2019, the matter came before Black J for directions. His Honour made orders standing over the motions to 17 June 2019 for hearing, and also made orders for the future carriage of the matter towards a final hearing. On 14 June 2019, the plaintiff's solicitors sent a final letter, in the following terms: We refer to our letter dated 11 June 2019 and enclose a further list which sets out the remaining subpoena categories the Plaintiff is pressing. The categories in the list are pressed due to there being no or limited documents produced by the Defendant for those categories to date. The attached list contained some 36 categories for which further production was sought. The plaintiff's solicitor also advised that neither they nor Ms Bateman has been able to access the MYOB files in the format in which the files were produced.
On 17 June 2019, the Subpoena Motion and the Plaintiff's Motion came before me for hearing. The defendants submitted that the subpoenas were liable to be set aside for the reasons originally argued in mid-2018. The plaintiff pressed for further production. By reference to the categories attached to the letter of 14 June 2019, submissions were made and, progressively, orders made: 1. By 4.00 pm on 18 June 2019, the defendants to grant the plaintiff access to the defendants' MYOB.EXO database in the Cloud. 2. The plaintiffs' expert, Fiona Bateman, to provide an undertaking to the defendants to inspect the MYOB.EXO database for the purpose of these proceedings only and to inspect but not amend the MYOB data. 3. In the event that access cannot be provided to the plaintiff via the Cloud in accordance with Order 1 then by 10.00 am on 19 June 2019 the defendants' solicitors have liberty to propose an alternative arrangement for access to the database by communicating with the plaintiff and her Honour's chambers. 4. NOTES that access to the MYOB.EXO database in accordance with Order 1 answers Categories 1, 16, 17, 21, 22, 29, 31, 34 and 35 in the plaintiff's "List of Document Categories not produced as at 14 June 2019 by reference to the Subpoena Categories" (Plaintiff's List), a copy of which is annexed to these orders, from 2015 onwards. 5. DIRECTS the defendants by 4.00 pm on 19 June 2019 to file and serve a verified List of Documents. 6. DIRECTS the defendants by 4.00 pm on Friday 21 June 2019 to produce hard copies documents only in answer to Categories 2, 11 and 28 in the Plaintiff's List. 7. DIRECTS the defendants by 4.00 pm on Friday 21 June 2019 to produce documents in answer to Categories 3 to 7, 9, 10, 12 to 15, 19 to 24, 32 to 33 and 36 in the Plaintiff's List. 8. NOTES that Categories 8, 18, 25 to 27 and 30 in the Plaintiff's List are not pressed at this time. 9. Stand over the defendant's motion filed on 16 April 2018 and the plaintiff's motion filed on 13 March 2019 before Rees J to Monday, 24 June 2019 at 10.00 am for the purpose of reviewing the production of documents to the plaintiff and whether the defendants should provide an affidavit describing the steps taken to locate documents sought by the plaintiff. 10. Costs of the defendant's motion filed on 16 April 2018 and the plaintiff's motion filed on 13 March 2019 are reserved.
Access to the MYOB records was not able to be arranged in the manner contemplated by my orders. The defendants' solicitors proposed that Pages Property's expert attend at their offices for access to be provided on a computer. When the matter returned before me on 24 June 2019, that process was in train but had not yet been concluded. I therefore granted a further adjournment for that access to be provided. On 24 June 2019, a Further Supplementary List of Documents was also filed as contemplated by my orders. Senior Counsel for Pages Property informed me that he was satisfied that orders 5 to 7 had been complied with. On 28 June 2019, I made orders, by consent in Chambers, in the following terms: 1. The Plaintiff's notice of motion dated 13 March 2019 and the First Defendant's notice of motion dated 16 April 2018 be dismissed. 2. The parties are to file and serve short written submission of no more than four pages and any evidence on the costs of the notices of motion on or before 30 July 2019 for determination of costs by the Court on the papers.
Each party provided written submissions, Pages Property relied upon a further affidavit setting out some factual matters which I have incorporated into this judgment, and the defendants' relied on portions of affidavits already filed in the proceedings, also incorporated.

Submissions

Pages Property submits that it has been seeking documents since mid-2017 in order to put on its evidence in the substantive proceedings, and that it has been frustrated by the defendants in attempting to do this. The subpoenas and the Plaintiff's Motion were filed in order to obtain the documents the plaintiff needs from its opponents and related companies. The defendants were ultimately forced to produce virtually all the documents sought in the subpoenas, but the defendants did not do so willingly and had to be forced to provide the documents through multiple orders made over the course of multiple directions hearings. Mr Boros' objections to the subpoenas and his "further documents" produced when challenged on the extent of discovery were said to demonstrate that his real purpose in opposing the subpoenas was an attempt to avoid having to disclose the material ultimately produced in the discovery process and thus presumably accepted by the defendants as relevant to an issue in the proceedings. Mr Boros persisted in an unreasonable and costly approach in refusing to withdraw the Subpoena Motion. Although the Subpoena Motion was not the subject of final determination, Pages Property submitted that it has enjoyed a practical success in opposing the motion as the documents sought by the subpoenas were eventually produced.
As to the Plaintiff's Motion, the plaintiff submitted that it had little alternative to filing its motion of 13 March 2019, which was said to be vindicated by further production by the defendants as a result. No explanation was provided by Mr Boros as to why the material was not discovered six months earlier when he provided his first verified list of documents. It was submitted that the directions hearings on 9 and 30 November 2018, 9 February, 1 March, 17, 24 and 28 June 2019 were unnecessary and were occupied with dealing with the defendants' non-compliance with discovery orders, and it should have its costs in respect of these hearings. Specific costs orders were sought in respect of the directions hearings to ensure that there was no dispute that those hearings were costs of and incidental to the motions.
The defendants submitted that the subpoenas issued on 4 April 2018 were contrary to the principles enunciated in Broadway Plaza Investments Pty Ltd v Broadway Plaza Pty Ltd [2019] NSWSC 410, issued prematurely without allowing the discovery process to run its course and that Pages Property abandoned large parts of the subpoenas late in the day at the hearing on 17 June 2019, such that they should have their costs of the Subpoena Motion. It was submitted that, when the subpoenas were issued, Pages Equipment was not a party to the proceedings. Pages Property persisted in seeking to enforce a subpoena against a party even after Pages Equipment was joined and it was submitted that this was not a legitimate use of the process of a subpoena to rely upon it as a substitute for discovery. It was also submitted that the subpoenas were initially served contrary to, and in an attempt to circumvent, Practice Note SC Eq 11.
In respect of the Plaintiff's Motion, it was said to be unnecessary in circumstances where the defendants were complying with their discovery obligations by providing further documents when they became available. The defendants relied on a summary of the directions hearings before this Court to contend that most did not touch upon the motion filed on 16 April 2018.
The defendants submitted that the adjournment on 24 June 2019 was caused by Pages Property, and could have been avoided where the records had been made available earlier and the adjournment was not sought in advance of the hearing. I do not think this submission fairly reflects events as they unfolded. The matter was adjourned by me to 24 June 2019 to ensure that the defendants did what they had agreed to do on 17 June 2019 and, if any further problems arose, that the Court could deal with those problems immediately so that the protracted process of document production could be finalised and the parties could move on with preparing their evidence for a final hearing. Inspection of the MYOB records by Ms Bateman was one of the matters to happen by that date, whilst the defendants had to also attend to other matters of document production.
In the alternative, the defendants submitted that the costs should be costs in the cause as the majority of hearings at which these motions were dealt with were in the nature of general directions rather than interlocutory hearings where costs consequences might be expected.

Consideration

Rule 42.7(1) of the Uniform Civil Procedure Rules 2005 (NSW) sets out the 'default' position in respect of the costs of interlocutory applications: Unless the court orders otherwise, the costs of any application or other step in any proceedings, including - (a) costs that are reserved, and (b) costs in respect of any such application or step in respect of which no order as to costs is made, are to be paid and otherwise dealt with in the same way as the general costs of the proceedings. …
As explained in Australiawide Airlines Ltd v Aspirion Pty Ltd [2006] NSWCA 365, albeit in the context of a different costs rule in the UCPR, such rules create a starting point as to what the costs order is to be unless that outcome is displaced by a discretionary decision: at [48]. That discretion is to be exercised judicially having regard to established principle: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11. In this case, the starting point is that the costs of the motions are the parties' costs in the cause. As I said in Mundi v Hesse [2018] NSWSC 1548 at [58]: The sense in r 42.7 is perhaps illustrated by this application for a different costs order. To consider the application, the Court has had to canvass a detailed and complicated procedural history in not one, but two hard fought proceedings and the detailed submissions made in support of and against the costs orders. Rule 42.7 appears to be directed to discouraging parties from expending further resources on such costs disputes and to focus on the substantive proceedings. If I might use an imperfect sporting analogy: if litigation is compared to a sporting match, then r 42.7 indicates that the normal result after an interlocutory application is that the parties should "play on" until the final hearing. That observation is apposite to the task I have had to undertake in considering the parties' application for costs orders in this case.
With respect to motions disposed of by consent, it is not normally appropriate to make an order for costs, except as agreed between the parties, since the Court will take into account the desirability of encouraging, and not penalising, a party who negotiates a compromise: Gambro Pty Ltd v Fresenius Medical Care of Australia Pty Ltd [2002] FCA 581 at [26]; Australian Securities and Investments Commission v Rich [2003] NSWSC 297 at [78]. However, where a compromise position represents substantial success by one party, it may nevertheless be appropriate to order costs in their favour: ASIC v Rich at [79]; Boensch v Pascoe [2010] NSWSC 1172; Vanguard Financial Planners Pty Ltd v Ale [2017] NSWSC 196; Rissanen v Nunan [2019] NSWSC 418. That approach is consistent with Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6 in respect of compromised proceedings generally, where McHugh J said, at 624 (footnotes omitted): Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order. However, McHugh J noted that such an order may be made where the Court is able to conclude that one of the parties has acted so unreasonably that the other party should obtain the cost of the action, or a Judge may feel confident that, although both parties acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried: at 624.
With those principles in mind, I turn to the suggested costs orders posed by the parties. Without wishing to be drawn into the substance of the defendants' grounds for seeking to have the subpoena set aside any more than is necessary to determine an appropriate costs order, it appears from the transcript which I have reviewed in various hearings in this matter before Lindsay J and myself that the defendants' contention that the issue of a subpoena to Pages Equipment before it became a party, and continuing to seek those documents from Pages Equipment once it had become a party, has never received a warm welcome by the Court. It seems, with respect, to be a submission which promotes form over substance. Either way, the plaintiff wanted documents from Pages Equipment. With regard to Practice Note SC Eq 11, it appears to me that this was quintessentially an appropriate case to make orders for discovery before evidence, if such orders were indeed necessary in this case. The plaintiff had been ordered to file its expert evidence. The plaintiff's expert witness required, and had specifically identified, documents necessary to complete her report. Those documents were in the possession of the defendants and the subpoenaed parties. These are precisely the circumstances in which the Court will permit its processes for compulsory production of documents to be utilised. There is nothing in Broadway Plaza which would suggest the contrary.
The manner in which the Subpoena Motion was filed and thereafter deployed, together with the long and painful history of the plaintiff's efforts to extract documents from the defendants, was something of a war of attrition reminiscent of the days before the Civil Procedure Act 2005 (NSW) and its mandate to conduct litigation in a manner which is just, quick and cheap. It would appear that Lindsay J formed the same impression when he remarked to the defendants' counsel on 8 February 2019, This is a case which, if it were in America, would spend all its time in a fight about discovery. Right? And we just have to find a way of getting beyond that. Whilst his Honour's remark may not fairly reflect the qualities of the judicial system of the United States of America, his sentiments were plain. Notwithstanding his Honour's entreaties, it took a further five months before the defendants produced sufficient documentary material that the motions became otiose.
In total, efforts to extract documents - being documents identified by an expert witness as necessary to prepare her report - have largely occupied these proceedings for two years. This Court and its officers - registrars and judges alike - work tirelessly to avoid just this scenario.
In respect of the specific directions hearings referred to by the plaintiff, the directions hearing on 9 November 2018 was occupied with the issues the subject of these motions, as were those of 30 November 2018, 8 February 2019 and 1 March 2019. No other directions for case management of any note were made on these occasions beyond standing the matter over for further directions before a Judge or Registrar. That did not progress the matters beyond the documentary production phase.
The hearings before me on 17 June 2019 and 24 June 2019 were occupied with the determination of both motions. The defendants submitted that, at the hearing on 17 June 2019, the plaintiff's Senior Counsel advised, for the first time, that the plaintiff did not press certain categories relating to correspondence with internal or external accountants and accountants' work papers, which had been the subject of opposition from the defendants for a considerable period of time. "By finally abandoning those categories, the scope of the dispute between the parties was significantly reduced". What this submissions fails to acknowledge is that the plaintiff did not press these categories because the plaintiff had decided to simply subpoena the accountants in question rather than persist in seeking to extract the documents from the defendants. This does not suggest that the categories of documents were not relevant to these proceedings, nor that the documents should not have been made available by the defendants either in answer to subpoena or by general discovery, but that the plaintiff had decided it would be quicker and cheaper to obtain the documents from another source.
There was no hearing on 28 June 2019 when orders were made in chambers to dismiss both motions but it may be that the plaintiff incurred costs in relation to negotiating or preparing the short minutes of order made by the Court on that occasion and the plaintiff is entitled to those costs as part of their costs of the motions.
Pages Property's complaint as to the considerable difficulty it has had obtaining production of all relevant documents is well-founded. I accept, contrary to the defendants' submissions, that it was appropriate for Pages Property to file a motion where it was not satisfied with production as ordered, and where two judges of this Court (Lindsay and Darke JJ) had made orders contemplating that course. It does appear that Mr Boros responded to impending hearings by reviewing his production obligations and producing further documents. Where the result of the hearings before me was to provide a technical solution to accessing a MYOB file which had already been provided, and to agree upon remaining production, I do not consider that there was any substantial capitulation by the defendants at that hearing. Rather, the final issues relating to production and access were resolved after a most protracted struggle.
It seems to me in the circumstances canvassed in this judgment that the 'default' costs order in rule 42.7(1) of the UCPR should be displaced in this case notwithstanding that the Subpoena Motion and the Plaintiff's Motion are interlocutory applications ultimately resolved - after some 13 directions hearings or substantive hearings as well as various orders made in chambers - by consent. Whilst it is desirable to encourage parties to negotiate a compromise and thus not make costs orders on occasions such as this, I do not think it can be fairly said that the dismissal of the motions reflected any particular compromise by the defendants but rather an acceptance of defeat in the face of the inevitable. The plaintiff has had substantial success on both the Subpoena Motion and the Plaintiff's Motion and I consider it appropriate in the circumstances set out in this judgment that the defendants pay the plaintiff's costs of both motions including of the nominated directions hearings which, so far as I can see having reviewed the orders made by the Court on each occasion, were concerned entirely with these issues.

ORDERS

For these reasons, I make the following order: 1. Order the defendants to pay the plaintiff's costs of the first defendant's Notice of Motion filed 16 April 2018, the plaintiff's Notice of Motion filed 13 March 2019 and the hearings on 13 September 2018, 9 November 2018, 30 November 2018, 8 February 2019, 1 March 2019, 22 March 2019, 6 May 2019, 17 June 2019 and 24 June 2019.

Amendments 13 December 2019 - Coversheet - inclusion of Solicitors DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 13 December 2019

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