Spruson & Ferguson Pty Ltd v Gennochio

Federal Court of Australia|2024-10-22|Before: Cheeseman J

THE COURT ORDERS THAT:

The amended interlocutory application filed by the Prospective Applicant on 28 May 2024 be dismissed.
The Prospective Applicant pay the Prospective Respondents' costs of the amended interlocutory application as agreed or assessed.
The orders made by the Registrar on 21 May 2024 (in relation to the Prospective Respondents' costs of and incidental to providing discovery and inspection by way of preliminary discovery) be set aside and in lieu thereof the Prospective Applicant pay the Prospective Respondents' reasonable costs of providing preliminary discovery and production of documents.
The Prospective Applicant pay the Prospective Respondents' costs of the interlocutory application filed by the Prospective Respondents on 11 June 2024 as agreed or assessed.
The amendment to order 3 of these orders is to take effect nunc pro tunc. THE COURT NOTES THAT:
Consistently with the reasons for judgment published on 22 October 2024 these orders were amended pursuant to rule 39.05(e) of the Federal Court Rules 2011 (Cth) by changing the reference to "order" to "orders" in order 3 and adding to the end of order 3 the words "and in lieu thereof the Prospective Applicant pay the Prospective Respondents' reasonable costs of providing preliminary discovery and production of documents" and to add order 5. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT CHEESEMAN J:

PROCEDURAL BACKGROUND

The procedural history is somewhat convoluted. I will address it only to the extent necessary on this application.
On 20 September 2023, the Registrar published lengthy reasons in which he decided to grant the application for preliminary discovery (with minor amendment to the categories that had been sought) and made orders for the parties to confer and attempt to agree the appropriate orders.
The parties did not agree the orders. They provided further submissions in relation to the form of the preliminary discovery orders and also in relation to costs.
On 23 October 2023, the Registrar made orders for preliminary discovery; awarding costs on the preliminary discovery application; and reserving to a future case management hearing, the issue of costs of providing discovery.
Relevantly, the order in respect of the costs of the preliminary discovery application required the GLMR Respondents to pay Spruson & Ferguson's costs as agreed or taxed. Upon being asked to provide reasons for that order by the GLMR Respondents, the Registrar informed the parties that the order made was not the order he intended to make. The Registrar informed the parties that he intended to correct the order pursuant to rule 39.05(g) and/or rule 39.05(h) of the Rules. The Registrar recorded that the parties did not oppose him taking that course.
The Registrar proceeded to issue what he described as a corrected order on 16 November 2023. The corrected order took the form of re-issuing the orders made on 23 October 2023 as "Amended Orders" with a notation that "This order was amended pursuant to r 39.05(g) and r 39.05(h) of the [Rules] on 16 November 2023". In this version of the orders of 23 October 2023, the order in respect of the costs of the preliminary discovery application was changed so that it read "Each party to bear their own costs of the application for preliminary discovery". This version of the orders was stamped on 16 November 2013. Spruson & Ferguson then sought reasons for the making of this version of the order. The Registrar provided written reasons for the making the costs order in the amended form on 6 December 2023.
Notwithstanding the unusual way in which the cost order evolved, the parties have not sought to challenge the Registrar's action in correcting the order in the way that he did. Accordingly, I express no opinion on this aspect of the procedural history. I will proceed on the same basis as the parties have in treating the order made in respect of the costs of the preliminary discovery application as being the order made on 16 November 2023, that each party pay their own costs of the application for preliminary discovery.
On 16 November 2023, the Registrar ordered that the GLMR Respondents' entitlement to recover their "costs and reasonable expenses of giving discovery and production of documents" to Spruson & Ferguson be reserved for determination at a further case management on 12 December 2023. The issue of Production Costs was not determined on 12 December 2023.
The provision of discovery proved to be somewhat protracted. The GLMR Respondents filed their lists of documents on 17 April 2024, by which time no order had been made in relation to the GLMR Respondents' Production Costs. A substantial number of documents were discovered, essentially in two tranches, comprising in excess of 200,000 documents.
The Registrar ultimately determined the outstanding issue of Production Costs on the papers on 21 May 2024, making the conditional costs order described at paragraph [3(2)] above. At which time, the Registrar provided written reasons.

Review of a Registrar's decision

In the present applications the Registrar was exercising delegated judicial power pursuant to s 35A(1) of the Act following a direction that the preliminary discovery application be determined by the Registrar. A party may apply to the Court under s 35A(5) for review of any exercise of power by a Registrar under s 35A(1): r 3.11. The right to review arises because the Registrar has exercised the judicial power of the Commonwealth and, as such, is subject to the supervision of the Court.
The applicable principles for a review under s 35A of the Act are well-established. It is convenient to extract a recent summary of the applicable principles in Lee v Dentons Australia Limited [2024] FCA 622 at [2]: An application for a review of a Registrar's exercise of power under s 35A(1) of the Act is brought as of right under s 35A(6) pursuant to an application under s 35A(5). The review is by way of hearing de novo: Harris v Caladine [1991] HCA 9; 172 CLR 84; Bechara v Bates [2021] FCAFC 34; 286 FCR 166 at [17]. De novo review is not directed to a consideration of the correctness of the Registrar's decision or redressing error by the Registrar. On de novo review, the task of the Court is to determine afresh the application unaffected by what has gone before. The review proceeds as if the power had not been delegated. In consequence, on review, the Court can entertain new arguments, receive new evidence or adjourn the proceeding but only to the extent, and in the circumstances where, it would do so in a matter that had already been set down for determination. Further, the applicant on review is the applicant on the application irrespective of whether the applicant was successful before the Registrar. The same onus arises as if the application was being heard for the first time: Robson as former trustee of the estate of Samsakopoulos v Body Corporate for Sanderling at Kings Beach CTS 2942 [2021] FCAFC 143; 286 FCR 494 at [63] (Colvin J, with whom Allsop CJ, Markovic, Derrington and Anastassiou JJ agreed on this point).
The Court determines the rehearing without being fettered by the decision of the Registrar: Southern Motors Pty Ltd v Australian Guarantee Corporation Ltd [1980] VR 187 at 190.

Generally

The Court has a general discretion to order costs pursuant to s 43 of the Act. The discretion to award costs is unconfined but must be exercised judicially, that is according to relevant considerations and taking into account the contextual features and facts of the litigation: El‑Debel v Micheletto (Trustee) (No 2) [2021] FCAFC 146 at [2] (Markovic, Derrington and Colvin JJ).

Preliminary Discovery

The principles relating to the award of costs in applications for preliminary discovery were canvassed by Burley J in Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd (No 2) [2019] FCA 657 at [25]-[27]: 25 Unsurprisingly, many single judge decisions consider the award of costs in applications for preliminary discovery. Without overcomplicating the analysis, which ultimately involves the exercise of the discretion conferred by s 43(2) of the FCA Act, the following propositions may be observed in relation to the making of such an award: (1) The jurisdiction to order preliminary discovery is an extraordinary one since an order for preliminary discovery involves an invasion of the prospective respondent's private affairs in order to determine whether or not a case can properly be brought against the prospective respondent; J & A Vaughan Super Pty Ltd v Becton Property Group Limited [2013] FCA 340 at [17] (Kenny J); C7 Pty Ltd v Foxtel Management Pty Ltd [2001] FCA 1864 at [50] (Gyles J). (2) In considering where the balance lies in ordering costs, the exceptional nature of the jurisdiction is a matter to be taken into consideration and is a matter that may mean that a wholly successful prospective applicant is not entitled to an order for costs; ObjectiVision Pty Ltd v Visionsearch Pty Ltd (No 3) [2015] FCA 304 at [23] (Perry J); Cobankara v Australia and New Zealand Banking Group Ltd [2017] FCA 419 at [20] (Mortimer J). (3) In Cappuccio v Australia & New Zealand Banking Group Ltd [1999] FCA 1188, a case where an application for preliminary discovery was resolved by consent, Burchett J at [3] considered that the appropriateness of the costs order: …depends very much on the consequences of the discovery obtained. If the applicant for preliminary discovery uncovers enough to enable that applicant to bring proceedings which are successful, there may be much to be said for the proposition that the costs of the preliminary discovery should form part of the costs of the action. On the other hand, if the applicant proceeds, brings an action, fails, and is ordered to pay the costs of that action, there seems every reason why, generally speaking, the costs of the preliminary discovery should be included in the costs payable to the respondent. (4) Following this approach, in a number of cases where a prospective applicant has been successful in procuring orders for preliminary discovery, courts have found it appropriate to order that the payment of costs be deferred to see whether the outcome of the production of documents yields the commencement of substantive proceedings (usually within a specified period of time following the preliminary discovery proceedings). When that has occurred, then the award of costs has been left to the decision-maker in the substantive proceedings; Cappuccio at [3] - [5]; SmithKline Beecham plc v Alphapharm Pty Ltd [2001] FCA 271 at [32] (Finkelstein J); E D Oates Pty Ltd v Edgar Edmondson Imports [2012] FCA 356 at [59] (Kenny J); Gearhart United Pty Ltd v Omni Oil Technologies (Asia) SDN BHD (No 2) [2010] FCA 558 at [24] (Besanko J); Procter v Kalivis (No 3) [2010] FCA 1194; Aristocrat Technologies Australia Pty Limited v Ainsworth Game Technology Limited (No 2) [2019] FCA 511 at [10] - [11] (Yates J). (5) In other cases, the view has been expressed that the costs outcome should be determined at the time the outcome of the preliminary discovery application has been determined. It is a discrete issue and should not be deferred to an uncertain time; C7 Pty Ltd at [50]; Steffen v ANZ Banking Group [2009] NSWSC 883 at [31] (McDougall J); ObjectiVision at [17] - [21]. (6) Where an order for costs has not been deferred, some authorities indicate that the costs balance should favour the payment of costs by the prospective applicant. This is because there is no obligation on a prospective respondent to respond to requests for information, and a prospective respondent is entitled to remain passive and consequently put a prospective applicant to proof in preliminary discovery hearings: Glencore International AG v Selwyn Mines Limited [2005] FCA 801; 223 ALR 238 [15] (Lindgren J); C7 Pty Ltd at [50]; Vaughan Super at [18]; Procter at [17]. (7) However, where the prospective respondent takes an adversarial approach to the application, it exposes itself to an order for costs; Steffen at [32] - [33]; ObjectiVision at [23] - [24]; Dallas Buyers Club LLC v iiNet Limited (No 3) [2015] FCA 422; 327 ALR 695 at [3] (Perram J). In these cases, the courts have preferred not to defer the making of costs orders. 26 It is true to say, as has been observed in some of the authorities to date, that there has been no uniform approach to the award of costs in relation to preliminary discovery applications. However, an emerging thread is that where a prospective respondent takes an adversarial approach to the application, it may be required to bear some or all of the costs in the event that the prospective applicant is successful. The rationale behind that approach may be explained by the extraordinary nature of the preliminary discovery jurisdiction, which is intended to facilitate the making of sensible decisions concerning the commencement of proceedings, before proceedings have been formulated. Accordingly, whilst an adversarial approach is not prohibited, it is to be discouraged. Preliminary discovery is not a process by which potential parties are to open up new fronts for litigation warfare, but a procedure by which the efficient conduct of litigation is promoted; Appeal Judgment [2], [4] (Allsop CJ), [119] (Perram J). 27 Where a prospective respondent elects to enter the fray and vigorously contest the application, it becomes exposed to the risk that it should bear a costs consequence similar to the position it would be in were it a party to proceedings proper. Where the contest on an application is limited to the prospective applicant being put to proof of the elements of r 7.23, then even a successful prospective applicant may be liable to pay the costs. Conversely, where each point is hard fought, the prospective respondent is exposed to the risk that it will be visited with some or all of the costs in the event they are unsuccessful. In such circumstances, it may be inappropriate to defer a costs order to the outcome of any prospective litigation.
Applying the principles I have outlined, I now turn to consider each of the costs applications in turn. In doing so, I bear in mind that each application ultimately involves the exercise of the discretion conferred by s 43(2) of the Act in the particular setting of preliminary discovery which involves an invasion of the prospective respondent's private affairs in order to determine whether or not a case can properly be brought against the prospective respondent. Accordingly, the usual rule that costs follow the event does not play the role that it otherwise would.
Although the present reviews are hearings de novo, the parties relied in their respective submissions on observations made by the Registrar in his reasons for ordering preliminary discovery. As mentioned, the order for preliminary discovery was not the subject of the review applications.

The evidence

The parties did not seek to adduce any additional evidence on this application.

The parties' submissions

The parties' submissions centred on the following two themes.

Reasonableness of the application

Spruson & Ferguson seeks to displace the order made by the Registrar that each party pay their own costs, with an order that the GLMR Respondents pay its costs of and incidental to the preliminary discovery application, or alternatively, that the costs of and incidental to the preliminary discovery application be costs in the cause in any future proceeding, provided such proceeding is commenced within nine months.
Spruson & Ferguson submits that it enjoyed substantial success on the application and that as a consequence, the usual principle that costs follow the event is engaged. Spruson & Ferguson submits that the preliminary discovery order it obtained was substantially the same as what it sought, save for minor drafting amendments. Spruson & Ferguson relies on the Registrar's finding that it was justified in making the preliminary discovery application. Spruson & Ferguson submits that the Registrar rejected the GLMR Respondents' primary contentions that Spruson & Ferguson had failed to demonstrate that it had made reasonable inquiries with a view to obtaining sufficient information to decide whether to start proceedings and in any event preliminary discovery was not required because Spruson & Ferguson already believed it had a case against the GLMR Respondents.
In support of its alternative submission, that costs be reserved for determination in any future proceeding that it may commence within nine months, Spruson & Ferguson submits that costs are more fairly judged once the documents have been discovered and an assessment of their materiality, probative value and bearing on the merits of any claims are known.
The GLMR Respondents submit that as Spruson & Ferguson was only partially successful in its preliminary discovery application, the appropriate order is that each party bear their own costs. Accordingly, the review application should be dismissed with costs. The GLMR Respondents submit that relevantly they did not unreasonably refuse to provide documents. Rather, they made a conditional offer to provide some documents provided that a confidentiality regime was agreed. The GLMR Respondents submit that Spruson & Ferguson did not avail itself of the conditional offer made by the GLMR Respondents before commencing the application for preliminary discovery.
In response, Spruson & Ferguson sought to explain its refusal to agree a confidentiality regime by asserting that the Harman undertaking provided sufficient protection. Spruson & Ferguson further submits that the GLMR Respondents' offer of inspection was limited to a "selective limited number of categories of documents" which Spruson & Ferguson regarded as insufficient to enable it to decide whether to commence proceedings.

Adversarial approach

Spruson & Ferguson submits that the GLMR Respondents took an adversarial approach to the preliminary discovery dispute by actively contesting each aspect of the application in relation to both law and facts. Spruson & Ferguson points to the following features of the GLMR Respondents' conduct:
requiring a witness to be made available until the start of the hearing who was not required for cross-examination;
agreeing to informal discovery of only a selection of the documents ultimately the subject of the preliminary discovery orders and opposing production of categories of documents without providing any substantive explanation;
maintaining objections on the basis of what Spruson & Ferguson submits the Registrar found to be a misapplication of the correct legal test for commencing a proceeding;
belatedly imposing unreasonable conditions for access to documents produced, including an onerous confidentiality regime, requiring the withdrawal of the preliminary discovery application and payment of the GLMR Respondents' costs;
refusing to engage and correspond constructively with Spruson & Ferguson, both before and after the application was filed;
filing submissions opposing the application; and
briefing counsel and making detailed oral submissions at the hearing.
Spruson & Ferguson submits that but for these acts of the GLMR Respondents, it would not have incurred costs. Further, Spruson & Ferguson submits that if the GLMR Respondents had taken a more constructive rather than confrontational approach to the application, the scope of the dispute could have been narrowed significantly, potentially to nil, and unnecessary expenditure of time and costs could have been avoided.
The GLMR Respondents submit that rather than adopting an adversarial approach, they demonstrated a willingness to provide some of the documents sought subject to a confidentiality regime being agreed but that Spruson & Ferguson did not inspect the documents. Further, the GLMR Respondents submit that it is not adversarial to put a prospective applicant to proof in respect of the elements of r 7.23 of the Rules.
The GLMR Respondents seek to distinguish Pfizer on the basis that in the present case, they did not put on any evidence in response to the application and advanced only limited arguments. The GLMR Respondents submit that even in Pfizer, the Court ordered that the prospective respondents pay half of the prospective applicant's costs.
In response to the matters outlined in paragraph [29] above, the GLMR Respondents submit that:
there is no evidence that any additional costs were incurred by Spruson & Ferguson in making a witness available for cross-examination who had already provided an affidavit in support of the application;
at all times, the onus remained with Spruson & Ferguson to prove that the categories of documents were necessary for it to determine whether to commence a proceeding, and that it was not for the GLMR Respondents to demonstrate why certain documents were not needed;
the Registrar did not hold that they had misapplied the correct legal test - rather the Registrar merely stated the correct test when reciting the GLMR Respondents submission directed to establishing that in fact correspondence from Spruson & Ferguson indicated that it had already determined whether to commence proceedings;
the conditions in respect of production of documents were reasonable;
Spruson & Ferguson commenced the proceeding prematurely when the parties were still in discussions about a confidentiality regime; and
it was not unreasonable to put Spruson & Ferguson to proof in circumstances where it had not availed itself of the opportunity to inspect documents prior to commencing proceedings.

Consideration

I will first address Spruson & Ferguson's contention that it should have its costs on the application.
It may be accepted that Spruson & Ferguson enjoyed substantial success on the preliminary discovery application but that does not, in the present circumstances, engage the usual rule that costs follow the event. Subject to whether the GLMR Respondents have exposed themselves on the issue of costs by reason of taking an unjustified adversarial approach, the starting position is to afford proper weight to the exceptional nature of the jurisdiction to order preliminary discovery and accordingly it may be the case that even a wholly successful applicant may not be entitled to costs.
The Registrar found that Spruson & Ferguson was entitled to bring the application (and, as mentioned, the parties do not seek review of the order made by the Registrar for preliminary discovery). That is also a relevant matter to take into account in exercising the discretion to award costs, but it is not determinative. The fact that the Registrar found that Spruson & Ferguson was entitled to bring the application does not render irrelevant the fact that Spruson & Ferguson did not avail itself of the opportunity to agree confidentiality orders and inspect such documents as the GLMR Respondents were prepared to provide. The possibility is that if Spruson & Ferguson had taken that step then the application may not have been necessary because, for example, Spruson & Ferguson obtained sufficient information via that avenue for the purpose of deciding that it would commence proceedings in respect of, at least, some of its claims. Once Spruson & Ferguson decided to commence a proceeding, if that had been the case, then it may have been that the documents sought via preliminary discovery may have been properly the subject of disclosure orders in the proceeding once on foot. It is not possible to be definitive, but it is at least possible. Alternatively, the scope of the preliminary discovery required by Spruson & Ferguson may have been reduced. These are matters which also must be weighed in considering the appropriate costs order. As it was, there was some agreement as to the categories of preliminary discovery that were ordered. That is also relevant to the exercise of the costs discretion.
Spruson & Ferguson's contention that the adversarial way in which the GLMR Respondents conducted their opposition to the application should sound in a costs order against them must be assessed having regard to the fact that the GLMR Respondents were under no obligation to respond to requests for information. The GLMR Respondents were entitled to remain passive and put Spruson & Ferguson to proof. Here, the GLMR Respondents did not remain passive (as was their right). They engaged in a process whereby a conditional offer was made on terms that were not unreasonable. That factor weighs against characterising the GLMR Respondents' conduct as adversarial in the requisite sense. Spruson & Ferguson's submission that the GLMR Respondents' stance was based on a misapplication of the correct legal test fails to recognise the nature of the submission put by the GLMR Respondents before the Registrar. It does not demonstrate that the GLMR Respondents were adversarial in the requisite sense in this context.
I am conscious that the rationale that informs the line of authority that seeks to discourage an adversarial approach being taken by a prospective respondent is informed by the raison d'etre of the preliminary discovery process, which is to facilitate the making of sensible decisions concerning the commencement of proceedings, before proceedings have been formulated, and to promote the efficient conduct of litigation thereafter. The issues that Spruson & Ferguson rely on to characterise the GLMR Respondents' conduct as disentitling do not, in my view, support that conclusion, save, perhaps, for one issue. The exception is that the GLMR Respondents required a witness to be made available until the start of the hearing who was not then required for cross-examination. Viewed in isolation I do not regard this unfortunate circumstance as justifying a costs order in favour of Spruson & Ferguson. In saying that I do not accept the GLMR Respondents' submission that because the witness had sworn an affidavit he was required to be at Court in any event. The reason I do not accept this circumstance as crossing the line in terms of being adversarial is that there are often legitimate forensic reasons in the running of a case that result in a decision to cross-examine being reversed. Parties should not be dissuaded from making such decisions, which often promote the overarching purpose embodied in s 37M of the Act. The situation may be different if Spruson & Ferguson established that the GLMR Respondents never had any intention of cross-examining but required the witness for tactical reasons or in terrorem. That would be tantamount to an abuse of process - it is not a conclusion that I would reach in the absence of evidence.
Taking all of these matters into account, I am not persuaded that in the present circumstances the Court should exercise its discretion to order the GLMR Respondents to pay Spruson & Ferguson's costs.
I now turn to Spruson & Ferguson's alternative argument - that the issue of the costs of the application be deferred to a future time on the basis that the appropriate costs order will be more fairly determined once the documents have been discovered and an assessment of their materiality, probative value and bearing on the merits of any claims are known. In the circumstances of the present application, I do not regard the costs of the application itself as being appropriate to be deferred to an uncertain time in the future if any substantive proceeding is commenced. It is a discrete issue. The imposition of the obligation to provide preliminary discovery was onerous and intrusive. I am not persuaded that the Court should exercise its discretion to defer this issue.
The GLMR Respondents do not seek to disturb the order that each party pay their own costs of the preliminary discovery application but rather seek an order that the review be dismissed with costs. In those circumstances, it is not necessary to revisit the costs order that was made.

Determination

The review application instituted by Spruson & Ferguson will be dismissed with costs.

The evidence

Two additional affidavits were read on this review application. The GLMR Respondents read an affidavit of their solicitor, Mr Christopher Finn, of 4 July 2024. Mr Finn summarises the costs incurred by the GLMR Respondents which directly relate to compliance with the preliminary discovery orders as totalling approximately $357,000. Spruson & Ferguson read an affidavit of its solicitor, Ms Rachel Jane Bernasconi, of 9 July 2024. Ms Bernasconi responds to the affidavit of Mr Finn in relation to the scope of compliance with the preliminary discovery orders.

The parties' submissions

The GLMR Respondents seek to displace the Registrar's conditional costs order made in respect of Production Costs.
The GLMR Respondents submit that the costs associated with providing discovery, inspection and production of the relevant documents were caused by the extraordinary and intrusive nature of Spruson & Ferguson's application rather than the approach taken by them - adversarial or otherwise. The GLMR Respondents submit that it was necessary to undertake a review, including review for potential claims for privilege, of approximately 200GB of documents to ensure compliance with the preliminary discovery order. Given the volume of data that had to be reviewed, the GLMR Respondents submit that it is self-evident that the costs associated with compliance would be significant. In these circumstances, the GLMR Respondents' submit that it was not necessary for them to lead precise evidence about the likely costs of compliance.
The GLMR Respondents rely on ObjectiVision Pty Ltd v Visionsearch Pty Ltd (No 3) [2015] FCA 304, in which Perry J drew a distinction between the costs incurred on an application for preliminary discovery and the costs of complying with such an order. In ObjectiVision at [39], Perry J concluded that it was not fair to make prospective respondents await the possible outcome of a proceeding, if any, instituted by an applicant for the costs incurred in complying with the order for preliminary discovery, "given the extraordinary and intrusive nature of these orders and given that the costs of compliance may be significant". The GLMR Respondents submit that the same consideration applies presently.
Spruson & Ferguson submits that while there is no conventional rule for preliminary discovery costs orders, authorities support costs being ordered as costs in the cause so long as proceedings are commenced within a reasonable prescribed time period, or costs not being awarded where the prospective respondents have taken an adversarial approach to the application for discovery, the making of discovery, the production of documents and compliance with orders. It is not necessary to enumerate the authorities relied on by Spruson & Ferguson in this regard. As a matter of general principle, the submission is correct. It remains necessary to consider whether as a matter of discretion in the particular circumstances of the present case, such an order would be appropriate.
Spruson & Ferguson characterises the Prospective Respondents' conduct as 'dilatory, obstructive and contrary to what the orders contemplated'. Spruson & Ferguson submits that the GLMR Respondents' adversarial approach extended to compliance with the preliminary discovery orders once made, relying on the following matters in support of that submission:
the GLMR Respondents were late in providing their lists of documents (which were required to be produced by 29 November 2023, and then 16 February 2023 and then 29 March 2024 but not produced until 4 April 2024) and did not describe the categories of documents of a similar character which can be easily identified and comprehensible, but, in breach of r 20.17(2)(a) of the Rules, describing the documents by reference to the generic format or type of document (eg generic pdf or email): Cantor v Audi Australia Pty Limited (No 3) [2017] FCA 1079 at [45] and [48];
the GLMR Respondents were late in providing updated lists of documents and inspection of documents in accordance with orders 1 and 2 of the Registrar orders dated 1 May 2024 and 23 May 2024, where the GLMR Respondents were required to provide discovery and produce updated lists by 22 May 2024 and then 7 June 2024, in circumstances where the GLMR Respondents requested an extension to the deadline in relation to the orders of 1 May 2024. The GLMR Respondents failed to comply with both orders;
the GLMR Respondents refused to provide inspection of any documents in accordance with the orders made on 23 October 2023, 12 December 2023 and 1 February 2024 on the basis of an unjustified global claim of confidentiality and the Harman undertaking when the directions were made which contemplated a list of documents being provided identifying specific documents said to be confidential and why they are said to be confidential and non-confidential documents otherwise being provided for inspection; and
the GLMR Respondents provided informal production of some documents for inspection by Spruson & Ferguson on 22 May 2024 and then an additional set of documents on 17 June 2024, both which did not provide any of the associated meta-data required as part of discovery. Spruson & Ferguson requested that this additional information and/or data be provided by the GLMR Respondents in its correspondence dated 5 June 2024 and 13 June 2024, and did not receive the required meta-data in relation to the documents until 19 June 2024.
Spruson & Ferguson submits that the GLMR Respondents failed to comply with the Registrar's orders to provide updated lists of documents and inspection of documents and Spruson & Ferguson's requests for the additional information and metadata relating to documents following informal production.
Spruson & Ferguson further submits that the GLMR Respondents cannot now raise at this late stage that the scope of compliance is relevant to the Court's discretion in relation to costs of compliance or assessment of the nature of costs to be awarded. The Registrar gave the parties an opportunity to comment on the scope of the documents to be produced following delivery of his reasons on 20 September 2023. The GLMR Respondents did not raise any concerns at this time and agreed to produce documents in accordance with the order.
In reply, the GLMR Respondents maintain that while this Court has made orders that the costs of complying with the orders for preliminary discovery are to be costs in the cause, the authorities referred to by Spruson & Ferguson do not deal with the proposition that the costs of compliance are distinct to the costs incurred by reason of the application and that it cannot be said that the costs of compliance were incurred by reason of any alleged adversarial approach. The GLMR Respondents refer to Mortimer J (as her Honour was then) in Cobankara v Australia and New Zealand Banking Group Ltd [2017] FCA 419 at [28]-[29] in support of the distinction drawn in ObjectiVision.

Consideration

In accordance with the approach taken in ObjectiVision and Cobankara I accept that there is a distinction between Production Costs and the costs of the original application. I do not accept that the matters relied on by Spruson & Ferguson demonstrate that the GLMR Respondents have been unreasonably dilatory or adversarial in their approach to providing discovery and production in the present context, having regard to the scale of the review required and the nature of the review which necessarily involved issues of commercial sensitivity in relation to intellectual property as well as legal professional privilege. Many of the complaints raised by Spruson & Ferguson go to whether particular aspects of the GLMR Respondents' costs are costs that were reasonably incurred and for this reason are relevant to the assessment of costs, if not agreed, rather than to whether the GLMR Respondents are entitled to Production Costs.
In these circumstances, I do not regard it an appropriate exercise of the discretion to require the GLMR Respondents to await the possible outcome of future proceedings (if any) instituted by Spruson & Ferguson to be compensated for such costs as they may have reasonably incurred in providing preliminary discovery and inspection at this stage. In my view, deferring the award of costs to a future time may well be counter-productive in that it may incentivise the commencement of future proceedings. The GLMR Respondents are entitled to an order against Spruson & Ferguson, limited to the recovery of their reasonable costs of and incidental to complying with the orders for preliminary discovery. If agreement on the quantum of costs cannot be reached then the costs will be assessed. The complaints that Spruson & Ferguson have made about the manner in which the GLMR Respondents have provided preliminary discovery can be addressed in any assessment as to whether the costs claimed are reasonable. In the event that a future proceeding is commenced, and if Spruson & Ferguson succeeds in that proceeding and obtains an award of costs, it may argue that the liability it has incurred in relation to the payment of the GLMR Respondents' reasonable Production Costs forms part of its claim against the GLMR Respondents. For present purposes, I am satisfied that Spruson & Ferguson should pay the GLMR Respondents their reasonable Production Costs.

Determination

For these reasons, the order made in relation to Production Costs by the Registrar on 24 May 2024 will be set aside. In lieu thereof, Spruson & Ferguson will be ordered to pay the prospective Respondents' reasonable Production Costs. In terms of the costs of the review application, the GLMR Respondents have succeeded and taking into account the whole of the circumstances, it is appropriate that they should have an order for their costs.

CONCLUSION

For these reasons, I will make orders as I have indicated in relation to each of the review applications. I certify that the preceding fifty-five (55) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Cheeseman.

Associate: Dated: 22 October 2024 SCHEDULE OF PARTIES NSD 6 of 2023 Respondents Fourth Prospective Respondent: SIMON REYNOLDS Fifth Prospective Respondent: GLMR PTY LTD

At a glance

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