The Owners - Strata Plan No 91086 v Fairview Architectural Pty Ltd

WIGNEY J: 1 The applicant in this matter, The Owners - Strata Plan 91086 commenced this representative proceeding against the respondent, Fairview Architectural Pty Ltd, in June 2019. Owners claims damages on its own behalf and on behalf of group members for losses it contends it suffered by reason of Fairview's supply of allegedly defective or unmerchantable cladding products. The present controversy arises because Fairview is in default of an order made by this Court that it provide standard discovery by serving a list of documents pursuant to rr 20.14 and 20.16 of the Federal Court Rules 2011 (Cth) by 15 March 2021. That order was made as long ago as July 2020 and was varied by an order made on 14 December 2020. 2 While it may be accepted that the default is, in part, explicable by the fact that Fairview was placed into administration very soon after the discovery order was made and subsequently executed a deed of company arrangement, it cannot be accepted that its ongoing non-compliance is justified. Nor has Fairview been able offer any reasonable or acceptable proposal or plan to progress the matter insofar as compliance with the discovery order is concerned. 3 Owners has, in that context, applied for an order pursuant to s 23 of the Federal Court of Australia Act 1976 (Cth) and r 14.01 of the Rules. The effect of the order would be to permit it to enter specified land or premises owned or occupied by Fairview for the purposes of inspecting specified property, mainly documents, to determine whether any of the documents are discoverable. Owners would thereby be able to, itself, satisfy the discovery order in respect of which Fairview is currently in default. 4 The full background and history of the proceeding, including the issue in relation to discovery, is set out in the written submissions of Owners dated 16 June 2021. Fairview did not dispute any of the factual detail in those written submissions. It is accordingly unnecessary to repeat that detail here. Fairview did not consent to the orders sought by Owners. Nor, however, did it oppose the orders or make any submissions in opposition to them. Fairview also notified its insurers of Owner's application. There was no appearance for or on behalf of any of the insurers at the hearing of this application. 5 The Court has power to make an order of the kind sought by Owners pursuant to both s 23 of the Act and pt 14 of the Rules. The power in s 23 of the Act extends to the making of interlocutory orders which are "necessary to ensure the effective exercise of the determination of a matter", orders necessary to prevent the frustration of the Court's processes, and "orders reasonably required or legally ancillary to ensuring that the Court's order is effective": Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157; [2018] HCA 3 at [109]; see also Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 30 at [35]. 6 Rule 14.01 of the Rules specifically provides for the making of an order on the application of a party which both authorises the party to enter land for the purposes of gaining access to and inspecting property. The operation of r 14.01 was recently considered by Stewart J in the context of orders sought for the inspection of material parts of a marine vessel in Orient Overseas Container Line Ltd v ANL Singapore Pte Ltd [2020] FCA 921 at [27]-[34]. It is unnecessary to detail here his Honour's careful analysis of the principles that apply in relation to such an application. It suffices to note that there is no reason to doubt that the power in r 14.01 extends to permit the Court to make such an order for the purposes of ensuring that an order for discovery is satisfied or discharged. 7 The circumstances of this case also justify and warrant the making of the orders sought by Owners. As has already been noted, there is now no reasonable or acceptable justification for Fairview's ongoing default in respect of discovery. It may be accepted that Fairview no longer has the funds to pay solicitors to undertake the entire discovery exercise. That circumstance, however, was largely of Fairview's own making. As a consequence of this proceeding, and with the assistance of insolvency practitioners, Fairview effected a restructure, through the device of a deed of company arrangement, which saw its operating business hived off to another entity. That effectively left Fairview as a shell company, albeit a shared shell company with the benefit (if indeed it turns out to be a benefit) of insurance which may indemnify it for any loss or damage incurred as a result of this proceeding. 8 One of the insurers has already notified Fairview that it does not consider Fairview's claim arising from this proceeding to be covered by the policy it had with Fairview. The position of the other insurers is presently unclear. In any event, it cannot be accepted, particularly in the absence of any, or any acceptable, evidence from Fairview's director, that Fairview could not itself discharge the discovery obligation without having a solicitor perform the entire exercise. 9 There may, of course, be potential legal professional privilege claims. There is, however, no reason to believe that Fairview's director or staff would not be able to readily identify or isolate any documents which might be subject to such a claim. Legal advice could then be sought regarding those claims, if necessary. There is no evidence that Fairview would be unable to retain lawyers for the purpose of providing such advice. 10 As has also already been noted, Fairview has advanced no reasonable or acceptable proposal in respect of compliance with the discovery order, or suggested how the discovery order could otherwise be discharged. The current impasse in relation to discovery is frustrating and delaying the progress of the matter. The roadblock needs to be removed. The orders sought by Fairview are an appropriate way to remove that roadblock. 11 There are other factors which favour the making of the orders. In particular, the intrusion in respect of Fairview's land and property is, in all the circumstances, fairly minimal. The orders also allow time for Fairview or its director to inspect the relevant documents and seek advice if necessary about any legal professional privilege claims before the orders are executed. Indeed, Fairview has already had ample time to conduct that exercise. More significantly, the parties have already agreed on a discovery protocol which deals with inadvertent disclosure of any privileged matter. In all the circumstances, the orders sought by Owners are both within the power of this Court and are appropriate. They can and therefore will be made.

Costs 12 The only remaining issue is the issue in relation to costs. Fairview submitted that it was not appropriate in all the circumstances for it to pay Owners' costs of this application. In my view, however, it is appropriate in all the circumstances for costs to follow the event. It may be the case that the orders were ultimately not actively opposed. Be that as it may, the orders were also not consented to. It was accordingly necessary for the application to be heard and determined by the Court. 13 The application was first raised at a case management hearing on 26 May 2021. At that point in time, however, the interlocutory application had not been filed and Fairview's counsel had not had an opportunity to obtain instructions, let alone make any real submissions in relation to the application. Counsel did note, however, that there may be issues concerning the Court's jurisdiction to make the order sought by Owners. Procedural orders were made for the filing of evidence and submissions in relation to the application and the application was set down for hearing. Owners was entitled, in all the circumstances, to proceed on the basis that the application would, or may, be opposed unless advised otherwise. It accordingly prepared detailed written submissions in support of the application. Fairview only advised Owners that it would not oppose the application two days before the hearing. It was reasonable, in the circumstances, for Owners to retain senior counsel for the hearing of the application.

CONCLUSION AND DISPOSITION 14 The Court has the power to make the orders sought by Owners which permit it to enter Fairview's premises and inspect documents. Those orders are also reasonable and appropriate in all the circumstances. They effectively allow or enable Owners to satisfy or discharge Fairview's discovery obligations in circumstances where Fairview is in default of those obligations and has not suggested any other means by which they could or would be discharged. 15 I am also satisfied that it is, in all the circumstances, fair and reasonable to require Fairview to pay Owners' costs of its successful application. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Wigney.