Wallace v GWH Build Pty Ltd; GWH Build Pty Ltd & Anor v Wallace & Ors [2016] NSWDC 51 | Case summary

District Court of NSW|2016-04-15|Before: Mr JA, Lewison J

Solicitors: Roberts Legal (Plaintiffs and cross defendants) Lancaster Law & Mediation (Defendants and cross claimants) File Number(s): 2015/270462 Publication restriction: None

Table of Contents Notices of motion [1] - [2] The parties and their representation [3] - [6] Underlying dispute [7] - [11] Dramatis personae [12] - [17] Issues [18] - [19] Evidence and explanatory documents [20] - [27] Factual background to the present notices of motion [28] - [33] Procedural context of these motions [34] - [63] Context of alleged contempt [64] - [73] Commonality of issues : claims and cross-claims [74] - [93] Plaintiff's proposed amended statement of claim : Exhibit "A" [94] - [98] Notice to produce in contention [99] - [100] Subpoena in contention [101] - [103] First notice of motion - orders sought by defendant [104] - [105] Amendment of the first notice of motion on 4 February 2016 [106] - [107] Second notice of motion - orders sought by plaintiffs [108] - [109] Consideration of Issue 1 - Leave to amend statement of claim [110] - [136] Consideration of Issue 2 - Whether an abuse of process arises [137] - [150] Consideration of Issue 3 - Alleged civil contempt [151] - [212] Disposition [213] Costs [214] - [215] Orders [216]

Notices of motion

These two notices of motion stem from complicated inter-party commercial arrangements concerning the plaintiffs' employment contract with the defendant. Those arrangements have given rise to an apparently irreconcilable dispute over the monetary consequences of the termination of that contract. The dispute has broadened so as to involve other parties and non-party entities.
Before identifying the issues raised by the respective notices of motion, it is convenient to identify the parties, their representation, the underlying dispute, and the dramatis personae relevant to that underlying dispute.

The parties and their representation

The plaintiffs, Mr Mark Wallace and Mrs Deborah Lee Wallace, are husband and wife. They had a contract of employment that was ultimately held by the defendant, GWH Build Pty Ltd. That contract provided for them to manage the defendant's motel business at Maitland, NSW.
The plaintiffs originally entered into that contract with Maitland Motel and Conference Centre Pty Ltd (now ACN 125 668 215 Pty Ltd) to manage the Mercure Maitland Motel, formerly known as the Bradford Motel.
The defendant, GWH Build Pty Ltd, and ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd), the latter of which had not been joined to the plaintiffs' proceedings, have both cross-claimed against the plaintiffs, and the plaintiffs' company, Neon Rock Pty Ltd. Those events have led to the plaintiffs seeking leave to join other parties to the proceedings.
At the hearing of the motions, Mr JA Trebeck appeared for the plaintiffs and for the cross-defendants instructed by Roberts Legal, and Mr JL Glissan QC with Mr DH Nagle appeared for the defendant, and for the cross-claimants, instructed by Lancaster Law & Mediation.

Underlying dispute

In 2010, the plaintiffs entered into the original employment contract, which subsisted, with variations, until it was terminated by the defendant, on 15 May 2015. Over that period, the employer's burden in respect of that contract had passed between various entities, ending up with the defendant, GWH Build Pty Ltd. Those variations occurred following dealings, representations and inducements by a number of persons on behalf of the employer, including Mr Jonathan Craig, a director of ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd) and who is also a director of other related companies. The plaintiffs seek to add that company, and that person, and others, as defendants, to these proceedings.
In 2012, the freehold of the land on which the motel business was conducted was sold by another related company with directors in common, Anambah Road Pty Limited, for $6,810,000. The plaintiffs' claim that, in accordance with agreements entered into in the course of their employment, they are entitled to amounts the equivalent of 10 per cent of the annual net operating profit of the business until it was sold, and to the equivalent of 22 per cent of the profit above cost base on the sale of the business, including the sale of the land on which it operated.
Before filing the present proceedings, and afterwards, the plaintiffs have encountered difficulty in identifying the entities to be sued over their grievance to the effect that they have been offered inadequate recompense following the sale of the motel business. One difficulty for the plaintiffs has been the problem of overlapping claims against different entities with common directors: T13.26.
The procedural context of these two notices of motion is that they follow on from a history of correspondence between the parties, from a summons for preliminary discovery in another court, and from cross-claims both against the plaintiffs, and against the company owned by the plaintiffs.
In their notice of motion, the defendant and the cross-claimants seek to have both a subpoena and a notice to produce issued by the plaintiffs set aside, and they also seek that the plaintiffs' solicitors, being the principal of the firm and the employed solicitor, be referred to the Supreme Court for prosecution for an alleged civil contempt. The plaintiffs resist those moves, and in their own notice of motion, they seek leave to amend their statement of claim, and to enforce the production of documents, courses which are opposed by the defendant and by the cross-claimants.

Dramatis personae

MFI "3", which was helpfully prepared on behalf of the plaintiffs, sets out the dramatis personae, which identifies some 11 persons and 15 corporations or organisations, including professional accountancy and legal firms, as being variously mentioned in the pleadings, the evidence and in the correspondence that relates to the proceedings.
Since there is no dispute that MFI "3" succinctly identifies and describes those persons, corporations and entities, for convenience and as background to these notices of motion, a copy of that document is annexed as Appendix I, as if it was incorporated into these reasons.
For the present purpose of determining the contentious issues in these motions, at this point, it is not necessary to refer to all of these described persons, corporations and entities.
The chronological inter-relationship of the persons and corporations listed in Appendix I, and the overlapping claims referred to in the evidence, were not explored in detail in the evidence adduced in the motions. For present purposes, it is therefore sufficient to record that the plaintiffs believe there are relevant and significant inter-relationships between the actions of a number of the corporations and the persons identified in Appendix I, and with the defendant.
The plaintiffs claim that those persons and entitles were, to varying degrees, relevant actors in the events leading to their claims for monetary compensation from the defendant. As a consequence, the plaintiffs seek leave to amend their statement of claim in order to expand the range of defendants in these proceedings to reflect those complicated circumstances, and to refocus their claim for damages.
One of the elements of the claim by the plaintiffs involves a dispute as to how their damages are to be calculated, as one of the actors in the defendant's camp, Mr Jonathan Craig, had required the accounts of the company, ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd), to be rewritten as to certain amounts claimed to be owed to the plaintiffs.

Issues

On an overview of the notices of motion, the essential issues calling for decision may be conveniently identified as follows: Issue 1 - Whether the plaintiffs should be granted leave to amend their statement of claim so as to enlarge the basis of relief and the range of defendants from whom relief is sought in these proceedings; Issue 2 - Whether a notice to produce and a subpoena to produce documents, respectively issued on behalf of the plaintiffs, and which are in contention by the defendant and by the cross-claimants, should each be set aside as being an abuse of process; Issue 3 - Whether, as is asserted by the defendant and by the cross-claimants, the principal solicitor for the plaintiffs, Mr Samuel Heath Roberts, and his employed solicitor, Ms Amanda Lee Crosbie, should both be referred to the Supreme Court for prosecution for a claimed civil contempt arising from an alleged breach of an implied undertaking of confidentiality in respect of documents acquired in the course of court proceedings: Harman v Secretary of State for the Home Department [1983] 1 AC 280.
The allegation made against the plaintiffs' solicitors concerning a claim of civil contempt, is a very serious assertion. At the hearing of these motions, that assertion was adamantly urged upon the court on behalf of the defendant and on behalf of the cross-claimants. That allegation has had a paralysing effect on the continued progress of the plaintiffs' litigation. After careful evaluation, and for the reasons stated in paragraphs [151] - [212] of my judgment, I have concluded that the assertion of civil contempt is without substance, and the application for referral of the solicitors for the plaintiffs to the Supreme Court should be rejected.

Evidence and explanatory documents

The evidence in the first motion, which was filed by the defendant and by the cross-claimants, and which was amended on 4 February 2016, comprised three affidavits respectively sworn on 21 January 2016, 27 January 2016 and 8 March 2016 by Mr Graham Lancaster, solicitor, of Lancaster Law & Mediation, together with a folder of exhibited documents marked as Exhibit GL-1 to Mr Lancaster's affidavit sworn on 21 January 2016.
The evidence in the second motion, which was filed by the plaintiffs, comprised two affidavits by Ms Amanda Lee Crosbie, a solicitor employed by Roberts Legal, respectively sworn on 1 and 2 March 2016.
The plaintiffs have also tendered a proposed amended statement of claim (Exhibit "A"), a letter dated 1 March 2016 from the defendant's solicitor (Exhibit "B") declining to consent to the filing of an amended statement of claim, and a file note dated 9 December 2015, made by the plaintiffs' solicitor, Ms Crosbie, following a discussion with an expert forensic accountant retained on their behalf: Exhibit "C".
The initial consideration of the issues raised in the respective motions was assisted by the presentation of the following additional documents:

MFI "1" - Plaintiffs' chronology prepared by Mr Trebeck;
MFI "2" - Plaintiffs' written submissions prepared by Mr Trebeck;
MFI "3" - Plaintiffs' dramatis personae prepared by Mr Trebeck;
MFI "4" - Defendants and cross-claimants' written submissions prepared by Mr Glissan QC.

Ms Crosbie was the only witness who gave oral evidence, which consisted of cross-examination on her affidavits: T9 - T20. Relevant aspects of that evidence will be referred to in connection with the consideration of Issue 3.
After a hearing in Newcastle on 21 and 22 March 2016, judgment was reserved. In the course of considering the matter, it became apparent that the defendant and the cross-claimants had omitted to tender a copy of the subpoena for production that was referred to in the evidence and arguments, and which they were seeking to have set aside on the ground of a claimed abuse of process.
On 6 April 2016, that omission was drawn to the attention of the parties for the purposes of supplementing the evidence and argument on that point if the parties so required: MFI "7". In response, Mr Lancaster, whose clients carried the onus of persuasion on the claim of abuse of process, provided a copy of the subpoena in question: MFI "8". That subpoena is now marked as Exhibit "D".
Subsequently, the defendant's written submissions relating to Exhibit "D" were received on 7 April 2016: MFI "9". The plaintiffs' submissions in reply were received on 8 April 2016: MFI "10". The consideration of the matters in issue in the notices of motion then continued.

Factual background to the present notices of motion

The plaintiffs initially claimed that following the termination of their employment by the defendant on 15 May 2015, they are owed various amounts which were calculated at the time of filing of the statement of claim, as totalling $179,914.83. The claim is for contractual remuneration, industrial entitlements, interest, and legal costs.
A presently unquantified element of the plaintiffs' claim for damages is the true value of the claims for 10 per cent of the annual business profits and 22 per cent of the ultimate profit derived from the sale of the motel business, where those elements formed part of the plaintiffs' claim for entitlements. For the purposes of determining the issues in the notices of motion it is unnecessary to analyse those matters with any further particularity.
Historically, the plaintiffs' legal representatives have encountered difficulty in precisely formulating the plaintiffs' claim because of the factual complexity of the claimed inter-relationships between some of the persons and entities referred to in the Appendix I. Those difficulties included an added complexity due to sequential changes in ownership of the motel managed by the plaintiffs, and related changes in the identity of the actual employer of the plaintiffs.
In that regard, a further difficulty faced by the plaintiffs was that some of the financial documents and records required for precise identification of parties and the quantification of the plaintiffs' claim were beyond the reach of the plaintiffs and their legal representatives. Another difficulty that emerged for the plaintiffs was reconciling the sale price of the motel business at $6,810,000 as is apparently stated in the transactional documentation, with an amount of $2,000,998 that was disclosed in some financial statements as being the capital gain on the sale transaction. The plaintiffs therefore claim there are accounting issues that need to be resolved in that regard for quantification purposes.
Those circumstances have led the plaintiffs' solicitors to retain expert forensic accountants to assist them with the analysis required for the accurate formulation of their claim. The defendant and the cross-claimants seek to resist the plaintiffs' attempts to gain access to the materials required for those forensic purposes.
In the course of preparatory work on the case, the plaintiffs' advisors have identified some additional parties whom the plaintiffs now wish to also join to these proceedings, if they are given leave to file a proposed amended statement of claim: Exhibit "A".

Procedural context of these motions

Although the employment of the plaintiffs was terminated on 15 May 2015, the ensuing background correspondence prior to 30 July 2015 is not relevant to the present notices of motion.
On 30 July 2015, the solicitors for the plaintiffs sent a detailed letter of demand to the directors of the defendant company GWH Build Pty Ltd. That letter recited the plaintiffs' employment contract, the variations to that contract, the history of sale of the Mercure Maitland Motel, the history of relevant conversations, including the termination of employment of the plaintiffs, and the basis upon which monies were claimed to be owing to the plaintiffs: Annexure "A" to the affidavit of Amanda Lee Crosbie sworn on 2 March 2016.
In a subsequent letter dated 3 August 2015, the solicitors for the plaintiffs identified a detailed claim of debt owing to the plaintiffs. That letter was addressed to certain company directors, namely Mr HR Grugeon, Mr JR Craig, and Mr GA Chevalley, as well as being addressed to Anambah Road Pty Limited, and to ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd).
There is a commonality of those directors with the defendant company. The letter from the solicitor for the plaintiffs dated 3 August 2015 also sought the provision of 17 categories of documents relating to the sale by Anambah Road Pty Limited of a property at Rutherford and the sale by ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd) of the Maitland Mercure Motel business: Annexure "B" to the affidavit of Amanda Lee Crosbie sworn on 2 March 2016 and Annexure "H" to Exhibit G-L1, pp 27 - 31.
On 14 August 2015, Mr Mathew Tranter, of Tranter Legal, responded to the 3 August 2015 letter of claim from the solicitors for the plaintiffs. In that reply he referred to "my clients", but his letter of reply only identified Anambah Road Pty Limited, and ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd) and GWH Build Pty Ltd as his clients: Annexure "I" to Exhibit GL-1, p 33.
Later on 14 August 2015, in a follow-up letter of reply to the letter identified in the preceding paragraph, the plaintiffs' principal solicitor, Mr Roberts, sought an indication as to whether Mr Tranter also represented Mr Grugeon, Mr Craig and Mr Chevalley. In that letter to Mr Tranter, Mr Roberts also extended to Mr Tranter the professional courtesy of refraining from commencing the foreshadowed proceedings on behalf of his clients, until 5.00pm on 21 August 2015, given Mr Tranter's relatively recent engagement in the matter: Annexure "J" to Exhibit GL-1, p 34. It appears that courtesy was in fact extended by a further three weeks.
The evidence does not reveal the full nature or content of the subsequent dealings, if any, between those respective solicitors before the present District Court proceedings were ultimately filed.
On 15 September 2015, the plaintiffs, through their solicitors, Roberts Legal, who have acted for the plaintiffs throughout this dispute, filed the present proceedings in the District Court at Newcastle, against the defendant, GWH Build Pty Ltd. No other defendants were joined to the proceedings at that time, although it appears that this may have been a step that was being contemplated, according to the contemporary correspondence.
It is not known why no other defendants were joined at that time, but absent the documentation being sought by Mr Roberts, it seems likely that the solicitors for the plaintiffs may not have been in a position to provide the necessary certification required in relation to additional defendants, as required by s 357 of the Legal Profession Act 2004, or cl 4 of Sch 2 to the Legal Profession Uniform Law Application Act 2014. However, in the context of these motions, it is not necessary to form a concluded view on that aspect, other than to observe that claims of the nature of those under present review fundamentally require detailed supporting evidence and documentation for such certification to be made at the time of filing court proceedings.
After filing, these proceedings appeared to have languished for some time whilst further correspondence and the process of requesting and supplying particulars then ensued. In that time, the firm Tranter Lawyers continued to act for the defendant, as well as acting for ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd), and Anambah Road Pty Limited, and also for Mr Grugeon, Mr Craig and Mr Chevalley.
In that period, there were some communications between the respective opposing solicitors which involved some friction between the defendant's then solicitor Mr Tranter, and the plaintiffs' principal solicitor, Mr Roberts. This was to the extent that on 29 September 2015, Mr Roberts felt compelled to write a letter to Tranter Legal, which concluded as follows: "Finally, as regards to your threat of criminal proceedings against our clients we respectfully refer you to Rule 34.1.2 of the Legal Profession Uniform Law Australia Solicitors Conduct Rules 2015. Both our firm and our clients take this to be a most serious circumstance. We invite you to immediately and unreservedly withdraw the threat." [Affidavit of Amanda Lee Crosbie sworn on 1 March 2016, Annexures, p 26]
In the context of the present notices of motion, it is not relevant to further analyse those events, or those frictions.
On 13 October 2015, Mr Roberts wrote to Tranter Legal, noting that the various documents that had previously been requested by his letter dated 3 August 2015 had not yet been provided to him. He therefore indicated that if the documents he was seeking were not provided within 7 days, his clients would consider bringing a separate application for preliminary discovery pursuant to UCPR r 5: Annexure "C" to the affidavit of Amanda Lee Crosbie sworn on 2 March 2016 and Annexure "K" to Exhibit GL-1, p 35.
As at 13 October 2015, the eight categories of documents the plaintiffs sought from the company ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd), now a cross-claimant in these proceedings, related to the sale of the Mercure Maitland Motel: Annexure "L" to Exhibit GL-1, p 36.
At that time, the eleven categories of documents the plaintiffs had also sought from Anambah Road Pty Limited, a proposed additional defendant in these proceedings, related to the sale of land at 11 Denton Park Road, Rutherford: Annexure "M" to Exhibit GL-1, p 37.
Those documents were claimed by the plaintiffs to relate to the quantification of the plaintiffs' contractual entitlements according to the terms of the agreement which is the subject of this litigation.
For completeness, the documents that the plaintiffs had also been seeking from the remaining five respondents, who included members of an accounting firm, and which do not now require consideration, were also identified: Annexures "N", "O", "P" and "Q" to Exhibit GL-1, pp 38 - 41.
Time passed, and in that time the solicitors for the plaintiffs still did not receive the documents that had been requested from the defendant, nor were such documents received from the other clients represented by Tranter Legal. The details of those required documents are as set out in the earlier identified letter dated 3 August 2015, and need not be recited here.
By 13 October 2015, because the documents which had been requested some 10 weeks earlier, on 3 August 2015, had still not been supplied, the plaintiffs then pursued a foreshadowed application for preliminary discovery.
On 10 November 2015, pursuant to UCPR, r 5.3 and r 21.3, the principal solicitor for the plaintiffs, Mr Roberts, filed a summons in the General Division of the Local Court in Newcastle, seeking preliminary discovery of the earlier described categories of documents from the eight named respondents to that application.
The first respondent in those preliminary discovery proceedings was ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd), and the second respondent was Anambah Road Pty Limited. Those companies had common directors who are claimed to have had relevant dealings with the plaintiffs over their contract of employment.
Two days later, on 12 November 2015, Tranter Legal, the then solicitors for the defendant, GWH Build Pty Ltd, filed a defence to the plaintiffs' claim in the District Court. At that time, the then solicitors for the defendant also filed a cross-claim on behalf of ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd). At that time, the plaintiffs had been contemplating, but had not yet sued that company. It is not clear as to why it took almost 8 weeks after the filing of the plaintiff's statement of claim for the defence and cross-claim to be filed in the present proceedings.
As at 12 November 2015, some 14 weeks had passed since the solicitors for the plaintiffs had requested documents on 3 August 2015, without compliance with that request.
The plaintiffs' application for preliminary discovery was due to be heard in the Local Court at Newcastle on 14 December 2015. The plaintiffs were subject to an order from that court to file supporting evidence in the Local Court proceedings by 5.00pm on Thursday 10 December 2015.
Concurrently, in the present District Court proceedings, the current solicitors for the defendant and the cross-claimants, Lancaster Law & Mediation, had also become involved in the proceedings. By the time they did so, their clients were in breach of a court order made on 26 November 2015 concerning further and better particulars to be provided in relation to the defence and first cross-claim filed in these proceedings: Affidavit of Amanda Lee Crosbie sworn on 1 March 2016, Annexures, p 75.
In November / December 2015, there was some debate as to whether the plaintiffs' statement of claim in the present District Court proceedings would be amended. Counsel's formal advice on that point was awaited. At that time, some documents the plaintiffs were seeking to have produced from the defendant as required by a notice to produce dated 19 November 2015, continued to remain outstanding: Affidavit of Amanda Lee Crosbie sworn on 1 March 2016, Annexures, pp 75 - 76.
The absence of the required documents, and the unresolved question of whether the proceedings should be amended, created a procedural difficulty for the plaintiffs both in terms of the progress of the present proceedings and in relation to the application in the Local Court for preliminary discovery.
At about 4.53pm on 8 December 2015, at what seems to have been an 11th hour compliance, Tranter Lawyers, the solicitors then acting for ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd), a cross-claimant in the present proceedings, and a respondent to the plaintiffs' application for preliminary discovery, provided the plaintiffs' solicitors with copies of company tax returns for the years 2011, 2012 and 2013, together with financial statements for the years 2012 and 2013: Exhibit GL-1, p 46; Affidavit of Amanda Lee Crosbie sworn on 1 March 2016, Annexures, p 48. This production was in partial compliance with what had been sought by the plaintiffs' solicitors in the notice to produce they had issued on 19 November 2015 in the present District Court proceedings.
When the plaintiffs' solicitors examined those documents, it was noticed that the documents produced were unverified, they appeared inconsistent when different financial years were examined, and it appeared to the plaintiffs' solicitors that the content of the documentation did not reflect the income outlined in the copies of the Tax Returns that had also been made available: Exhibit GL-1, p 46.
At that time, concurrently, the plaintiffs' solicitors were attempting to urgently comply with a direction of the Local Court which required them to serve all evidence in support of the application for preliminary discovery by 5.00pm on Thursday 10 December 2015. To do so, the plaintiffs' solicitors needed the assistance of an expert forensic accountant.

Context of alleged contempt

For the purposes of compliance with the order referred to in the preceding paragraph, and for analysis of the present claim, on 9 December 2015, on behalf of the plaintiffs, Ms Crosbie prepared a briefing letter to a firm of forensic accountants, Dolman Bateman, enclosing the financial material received late on the previous afternoon, from ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd). That letter sought the urgent assistance of Dolman Bateman with a view to obtaining evidence with which to obtain a variation of the then current timetable directions for the service of evidence in the application for preliminary discovery, and to analyse the documents for the purpose of the present proceedings.
Specifically, Dolman Bateman had been asked to comment on whether, from an examination of the documents provided, the profit from the sale of the motel business in question could be properly calculated from the financial information that had been provided, and if not, what further records were required in order to calculate that profit, including documents relating to the sale of the motel business and the sale of the land upon which the motel stood: Exhibit GL-1, pp 45 - 46.
I am satisfied that at the time when Ms Crosbie briefed Dolman Bateman in order to assist the plaintiffs in that exercise, she did so in both matters about which the plaintiffs were concerned, namely, the claim by the plaintiffs against the defendant GWH Build Pty Ltd, and in respect of the plaintiffs' potential claims against ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd) and Anambah Road Pty Limited, if not other entities which had directors in common: T10.20; T11.29. The clarification of those matters was the very purpose of the Local Court application for preliminary discovery.
On 10 December 2015, Mr Arnold Shields of Dolman Bateman wrote a reply to the Roberts Legal letter of 9 December 2015. In that reply, he addressed the questions that had earlier been asked of him. In particular, it was noted that the sale of the business by ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd), was disclosed in that company's financial statements as being an amount of $2,000,998. Mr Shields pointed out that two outstanding categories of documents were required in order to undertake the task of evaluation for which he was briefed: Exhibit GL-1, pp 48 - 49.
Those two categories of documentation identified by Dolman Bateman in order to undertake the required analysis were as follows: 1. For the evaluation of the profit on the sale of the Mercure Maitland business by ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd), he needed the following documents: "(a) Contact (sic) for sale of the Mercure Maitland business; (b) Depreciation Schedule as at 30 June 2012 for ACN 125 668 215 Pty Ltd; (c) Copies of General Ledgers for ACN 125 668 215 Pty Ltd for the year ended 30 June 2013; (d) Copies of General Journals for ACN 125 668 215 Pty Ltd for the year ended 30 June 2012 and 30 June 2013; and (e) Copies of all bank statements for ACN 125 668 215 Pty Ltd for the year ended 30 June 2012 and 30 June 2013." [Exhibit GL-1, p 48] 1. For the evaluation of the profit on the sale of the land on which the Mercure Maitland business stood, he needed the following documents: "(a) Contact (sic) for sale of the property owned by Anambah Road Pty Ltd; (b) Depreciation Schedule as at 30 June 2012 for Anambah Road Pty Ltd; (c) Copies of General Ledgers for Anambah Road Pty Ltd for the year ended 30 June 2013; (d) Copies of General Journals for Anambah Road Pty Ltd for the year ended 30 June 2012 and 30 June 2013; (e) Copies of all bank statements for Anambah Road Pty Ltd for the year ended 30 June 2012 and 30 June 2013; and (f) Financial statements and Company Income Tax Returns for Anambah Road Pty Ltd for year ended 30 June 2011 to 30 June 2013." [Exhibit GL-1, pp 48 - 49]
Later on 10 December 2015, Roberts Legal forwarded a letter of even date to Lancaster Law & Mediation, by email, enclosing a copy of the abovementioned Dolman Bateman letter, also of even date, in advance of the hearing of the plaintiff's application for preliminary discovery scheduled to take place in the Local Court on 14 December 201: Exhibit GL-1, p53.
Significantly, it is noteworthy that the 10 December 2015 letter from Roberts Legal to Lancaster Law & Mediation, did not enclose any of the financial materials that Roberts Legal had received from ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd) on 8 December 2015. The letter simply attached the 9 December 2015 letter from Dolman Bateman, as well as the underlying instructing letter to Mr Shields of that firm. Ms Crosbie's letter of 10 December 2015 then went on to state that at the hearing of the application for preliminary discovery, the plaintiffs would amend the summons to extend the list of sought after documents to include those identified by Mr Shields, and as reproduced at paragraph [68] above.
The important point to be recognised here is that after the production of the financial materials in question, those materials had not been further disseminated to any persons other than by providing them to Dolman Bateman, the retained expert forensic accountants.
The events outlined in paragraphs [64] to [70] above are claimed by the defendant in these proceedings to have constituted a civil contempt on the part of the solicitors for the plaintiffs.
I shall return to an examination of the significance of the correspondence dated 9 and 10 December 2015 in my consideration of Issue 3 concerning the claim by the defendant of a civil contempt on the part of the solicitors for the plaintiffs.

Commonality of issues : claims and cross-claims

At this point in the factual analysis, it is relevant to record that when Roberts Legal had engaged Mr Shields of Dolman Bateman, there were two matters of litigation under consideration, hence Ms Crosbie's handwritten file note to the effect that Dolman Bateman were being briefed in "both matters": Exhibit "C"; T10.20; T11.29.
The first such matter involved the plaintiffs' claim against GWH Building Pty Ltd, in which ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd) had also become a participant as a cross-claimant against the plaintiffs in the present District Court proceedings. The second such matter involved a proposed claim against Anambah Road Pty Limited, and others, evidenced by the list of respondents in the Local Court application for preliminary discovery.
It was plain from the overlapping of directors between the various companies in the defendant's camp, and from the application for preliminary discovery, that at the time Dolman Bateman were briefed, the solicitors for the plaintiffs were contemplating proceedings against Anambah Road Pty Limited and other related parties and relevant actors or directors in common: T14.10.
A further common feature in those two matters, apart from the fact of common directorships, was that by 12 November 2015, when ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd) became a cross-claimant against the plaintiffs and their company Neon Rock Pty Ltd in the present proceedings, the plaintiffs were, by that cross-claim, effectively embroiled in litigation with that company. This was evident from the cross-claim filed by GWH Build Pty Ltd and by ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd) against the plaintiffs' company, Neon Rock Pty Ltd.
On the evidence, it is plain that those common directorships and historical holdings rendered otiose the further amendment and pursuit of the application for preliminary discovery in the Local Court, as Ms Crosbie had in fact flagged in her letter to Lancaster Law & Mediation on 10 December 2015. It was therefore obviously more appropriate to join ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd), and the other contemplated defendants, to the present proceedings: T16.3. This was especially so after the advent of the defendant's cross-claim which had been filed on 12 November 2015: T17.41.
At that point, the obligations of the parties and their legal representatives imposed by s 56 of the Civil Procedure Act 2005 had particular significance and focus.
In my view, the decision by the solicitors for the plaintiffs to discontinue the Local Court proceedings, and to instead focus their efforts on the District Court proceedings, were entirely and properly consistent with adherence to the mandatory requirements and obligations imposed on them by s 56 of the Civil Procedure Act 2005.
In the context of the plaintiffs' claims against all the entities mentioned in the preceding paragraphs, it was plain that there was a need for the retention of expert accountants common to both matters.
On 18 December 2015, the solicitors for the plaintiffs wrote to Lancaster Law & Mediation, the firm which had been representing some of the respondents to the summons in the Local Court, with a request for the respondents to consent to the discontinuance of the preliminary discovery proceedings issued in the Local Court. Those proceedings had apparently been stood over from 14 December 2015 to another date in 2016.
In my assessment, the decision of the plaintiffs to discontinue the preliminary discovery proceedings against the eight named respondents appears to have been due to the advent of cross-claims being filed against the plaintiffs and against their company, in the District Court proceedings on behalf of ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd): Exhibit GL-1, p 62.
It is plain from the contemporary correspondence, that the plaintiffs considered it was more efficient and procedurally appropriate to amend the District Court proceedings to add the proposed additional defendants. Accordingly, a notice of discontinuance for the application of preliminary discovery in the Local Court was then provided to Lancaster Law & Mediation for that purpose: Annexure "D" to the affidavit of Amanda Lee Crosbie sworn on 2 March 2016.
On 14 January 2016, after some deliberation on the part of the respondents to the plaintiffs' application for preliminary discovery, the discontinuance of those Local Court proceedings was then effected by consent: Exhibit GL-1, pp 70 - 71.
As those proceedings have been discontinued, it is not necessary to identify with particularity, the other five respondents to the summons, who are members of a firm of accountants, and who do not separately feature in the plaintiffs' dramatis personae document.
On 18 January 2016, in the present District Court proceedings, Mr Tranter filed a notice of intention to cease to act for both the defendant, GWH Build Pty Ltd, and the cross-claimant ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd).
Also on 18 January 2016, in the District Court proceedings, a notice of change of solicitor was filed by Mr Lancaster of Lancaster Law & Mediation. From that time, Mr Lancaster has then acted for the defendant GWH Build Pty Ltd, and ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd).
It appears that between 18 January 2016 and 10 February 2016, some negotiations had taken place between Roberts Legal and Lancaster Law & Mediation. At that time, Mr Lancaster, whose letterhead identifies him as a specialist in commercial litigation, indicated that it was the intention of his several clients to press on with a costs assessment against the plaintiffs in respect of the discontinued Local Court proceedings, and to also press for a prosecution of a case against the plaintiffs' solicitors for contempt arising from Mr Shields of Dolman Bateman being briefed with the described documents.
Mr Lancaster's letter of 18 January 2016 to the plaintiffs' solicitors concluded with the statement: "In the circumstances, there appears to be no point negotiating with your clients": Annexure "E" to the affidavit of Amanda Lee Crosbie sworn on 2 March 2016. The precise basis for that statement was not apparent from the correspondence that was tendered in support of these motions.
In the midst of those background events, on 12 November 2015, the defendant in the present District Court proceedings, GWH Build Pty Ltd had filed its defence late. In that defence, many of the facts pleaded by the plaintiffs in their original statement of claim were admitted. That defence was verified by one of the defendant's directors, Mr Jonathan Craig. That defence included many admissions as to facts pleaded by the plaintiffs.
The cross-claim filed at the same time as the defence was against Mr and Mrs Wallace as the first and second cross-defendants, and Neon Rock Pty Ltd, the plaintiffs' company which had been created as part of the plaintiffs' financial arrangements with the defendant, as the third cross-defendant. That cross-claim was verified by Mr Jonathan Craig, and that verification was witnessed by Mr Nicholas Chevalley, a Justice of the Peace, who was also a director of the defendant company.
Those signatures by the directors tend to confirm the inter-relationship of the companies in the defendant's camp.

Plaintiffs' proposed amended statement of claim : Exhibit "A"

The effect of the proposed amendments to the plaintiffs' statement of claim, in the terms of Exhibit "A", seeks to expand the claims made by the plaintiffs as follows: 1. As against the existing defendant, GWH Build Pty Ltd, the plaintiffs' claim is based on alleged breaches of the pleaded contract of employment; 2. In addition, further claims are made based on s 82 of the Trade Practices Act 1974 and s 236 of the Australian Consumer Law for damages for alleged breaches of contract as against: 1. The proposed third defendant, Anambah Road Pty Limited, the owner of the land on which the Maitland Mercure Motel was situated; 2. The proposed fourth defendant, Hilton Ross Grugeon, who is a co-director of ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd), Anambah Road Pty Limited, GWH Group Pty Ltd and Newcastle Airport Hotel (NSW) Pty Ltd; 3. The proposed fifth defendant, Jonathan Robert Craig, who is a co-director of ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd), Anambah Road Pty Limited, GWH Group Pty Ltd and Newcastle Airport Hotel (NSW) Pty Ltd .
The proposed amended statement of claim makes reference to a series of other related or associated entities and persons likely to feature in the evidence, without being joined as parties. These are as follows: 1. Hunter Valley Brewery Sports Bar Pty Ltd, the second employer of the plaintiffs; 2. Jonathan Craig Holdings Pty Ltd, which employed Mrs Wallace from 5 December 2013; 3. OBJ Maitland Pty Limited, or Outback Jack Maitland Pty Limited, the role of which was uncertain; 4. Grahame Anthony Chevalley, who is a co-director of ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd), Anambah Road Pty Limited, GWH Group Pty Ltd and Newcastle Airport Hotel (NSW) Pty Ltd; 5. Newcastle Airport Hotel (NSW) Pty Limited, a company incorporated on 27 July 2012, in order to operate the Mercure Airport Hotel.
The pleading within the plaintiffs' proposed amended statement of claim raises a threshold case against each of the five defendants named in Exhibit "A". It is plain from the nature of the proposed case pleaded, and from the factual context pleaded, that the entities and the persons named in paragraphs [94] and [95] above will feature in the evidence.
These proceedings are plainly at an early stage of development. The plaintiffs seek to advance their claim by amending their existing statement of claim to expand the claim and the parties, and seek leave to file an amended document in the form of Exhibit "A". That course is opposed by the defendant and by the cross-claimants, hence the application for leave to amend.
At this point it is relevant to observe that none of the proposed amendments are statute barred. This was conceded by Mr Glissan QC, but he did not have instructions to formally consent to the amendment sought in the form of Exhibit "A": T25.49. Those matters will be the subject of consideration concerning Issue 1.

Notice to produce in contention

On 19 November 2015, in these proceedings, the solicitor for the plaintiffs issued a notice to produce to the second cross-claimant, ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd), seeking production of the following documents: "1. A copy of the annual Profit & Loss Statements for ACN 125 668 215 Pty Limited for the financial years ended 30 June 2010, 30 June 2011, 30 June 2012 and 30 June 2013. 2. A copy of the monthly Profit & Loss Statements for ACN 125 668 215 Pty Limited for the financial years ended 30 June 2010, 30 June 2011, 30 June 2012 and 30 June 2013. 3. A copy of the Income Tax Returns for ACN 125 668 215 Pty Limited for the financial years ended 30 June 2010, 30 June 2011, 30 June 2012 and 30 June 2013. 4. A copy of the Tax Assessment Notices for ACN 125 668 215 Pty Limited for the financial years ended 30 June 2010, 30 June 2011, 30 June 2012 and 30 June 2013. 5. A copy of the full General Ledger in respect of the accounts for ACN 125 668 215 Pty Limited for the period 1 July 2010 to 30 June 2013."
That notice to produce remains in contention in these motions and it will be the subject of consideration concerning Issue 2.

Subpoena in contention

On 11 December 2015, in the present proceedings, the solicitor for the plaintiffs issued a subpoena for production to Resort Brokers (NSW) Pty Ltd, the brokers who acted on the sale of the Mercure Maitland Motel, seeking the production of documents.
That subpoena is now marked as Exhibit "D". The course by which that subpoena came into evidence has been described at paragraphs [25] - [27] above. The subpoena relevantly required the hotel brokers, a non-party, to produce the following documents: "1. All Financial Statements including Profit & Loss Statements for the financial years ended 30 June 2010, 30 June 2011, 30 June 2012 and 30 June 2013 (or part thereof) in respect of the business known as "Mercure Maitland" and/or "The Bradford Hotel" marketed and sold by Resort Brokers (N.S.W) Pty Limited on behalf of ACN 125 668 215 Pty Limited (formerly known as Maitland Motel and Conference Centre Pty Limited) received from ACN 125 668 215 Pty Limited or any party or Accountant on its behalf and/or provided to any prospective purchaser of the business from 1 January 2011 to 30 November 2012. 2. All documents, records and correspondence (including emails) between Ian Crookes and any person on behalf of ACN 125 668 215 Pty Limited (including Jonathan Craig) in connection with the trading figures or operating profit of the business, including the adding back of directors' fees, commissions, bonuses or other unusual items between 15 July 2010 and 30 November 2012."
Before moving on to consider the issues, it is appropriate to identify the orders sought in the respective notices of motion.

First notice of motion - orders sought by the defendants

The first notice of motion, dated 21 January 2016, was filed by the defendant, GWH Build Pty Ltd, in proceedings numbered 2015/270462. In its original form, that first notice of motion sought three orders, namely: "(1) That the Subpoena to Produce filed by the Plaintiffs on 11 December 2015, and addressed to Resort Brokers (NSW) Pty Ltd be set aside in whole, pursuant to Uniform Civil Procedure Rule 33.4, on the basis that it is an abuse of process, or otherwise; (2) That the Plaintiff pay the Defendant's costs of this Motion and the costs of the Subpoena Recipient on an indemnity basis; (3) Such other orders as the Court sees fit."
On 4 February 2016, that first notice of motion was superseded by amendments so as to include a prayer for an additional order, based on a claim of a civil contempt on the part of the solicitors for the plaintiffs.

Amendment of the first notice of motion on 4 February 2016

The relief claimed in the amended notice of motion renumbered the earlier orders sought by GWH Build Pty Ltd. For convenience, those orders are set out in their entirety as follows: "(1) That the Subpoena to Produce filed by the Plaintiffs on 11 December 2015, and addressed to Resort Brokers (NSW) Pty Ltd be set aside in whole, pursuant to Uniform Civil Procedure Rule 33.4, on the basis that it is an abuse of process, or otherwise; (2) That the Notice to produce dated 19 November 2015 from the Plaintiffs addressed to CAN 125 668 215 be set aside as to the balance or the remainder thereof, on the basis that it is an abuse of process, or otherwise; (3) That the Solicitor for the Plaintiffs, Samuel Heatlh (sic) Roberts and his employed Solicitor, Amanda Lee Crosbie, be referred to the Supreme Court of New South Wales for prosecution for contempt, for disclosing documents produced under Notice to produce dated 19 November 2015 in these proceedings, to Arnold Shields of Dolman Bateman in Local Court Proceedings No. 2015/00329794, without the leave of the Court or the consent of the Defendants and Cross-Claimants; (4) That the Plaintiff pay the Defendant's costs of this Motion and the costs of the Subpoena Recipient on an indemnity basis; (5) Such other orders as the Court sees fit."
Proposed order (3) above identifies the additional order sought concerning the claim of an alleged civil contempt. It is significant that both the principal solicitor for the plaintiffs, Mr Roberts, and his employed solicitor, Ms Crosbie were jointly the subject of the claim of alleged civil contempt.

Second notice of motion - orders sought by the plaintiffs

The second notice of motion was filed by the plaintiffs on 1 March 2016. That notice of motion seeks the following orders: "(1) Pursuant to Section 61(1) of the Civil Procedure Act 2005, that within seven (7) days the Second Cross-Claimant to the First Cross-Claim: (a) Produce to the Cross-Defendants' Solicitors for inspection the remaining documents the subject [of] a Notice to Produce for Inspection dated 19 November 2015 served on the Second Cross Claimant to the First Cross-Claim on 19 November 2015, namely, the monthly Profit & Loss Statements for the Second Cross-Claimant for the financial year ended 30 June 2013 including, in particular, (i) The Profit & Loss Statement for the Second Cross-Claimant for the period 1 July 2012 to 31 July 2012, and (ii) The Profit & Loss Statement for the Second Cross-Claimant for the period 1 August 2012 to 31 August 2012, and / or (b) Serve on the Cross-Defendants' Solicitors a Notice in accordance with Rule 21.11(1)(b) of the Uniform Civil Procedure Rules 2005 in respect of the abovementioned documents; (2) Pursuant to s 64(1) of the Civil Procedure Act 2005 that the Plaintiff's be given leave to file and serve an Amended Statement of Claim in the form set out at pages 84-123 in Exhibit ALC-1 to the affidavit of Amanda Lee Crosbie sworn on 1 March 2016 within seven (7) days; (3) The second Cross-Claimant pay the Cross-Defendant's costs of and incidental to this motion with respect to Order 1; (4) The Plaintiffs pay the Defendant's (sic) costs occasioned by the amendment in Order 2; (5) Such other Orders as the Court sees fit."
I now turn to a consideration of the particular issues calling for decision in these notices of motion.

Consideration of Issue 1 - Leave to amend the statement of claim

The proposed amended statement of claim has been identified as Exhibit "A", and its effect has been summarised at paragraph [94] above.
The defendant and the cross-claimants oppose the application by the plaintiffs to amend their statement of claim on the basis that the plaintiffs bear the onus of persuasion that the amendments ought to be permitted. The defendant and the cross-claimants assert that the evidence does not satisfy the required onus.
The defendant and the cross-claimants further argued that the course now sought by the plaintiffs was open to them at the time the original statement of claim was filed, as if that was a disentitling factor for leave to amend to be granted. In my view, that latter submission was over-simplistic, and should not be accepted, as the proper inquiry is the context of the claims and the counter-claims as a whole, and the respective positions of the parties and the issues that arise between them, including the presence or the absence of prejudice.
The defendant and the cross-claimants claim that a grant of leave to rely upon the proposed amendment would work an injustice not only to them, but also to the proposed additional defendants, and to the processes of the court. The defendant and the cross-claimants therefore argue that the proposed amendments should not be permitted.
The power of the court to make orders permitting amendments to an originating process may be exercised at any stage of the proceedings. That power is found in s 64 of the Civil Procedure Act 2005; UCPR r 6.24(1). This is especially so where common questions of law or fact between parties and proposed parties are involved: UCPR r 6.19.
Relevantly, s 64(1) of that Act permits a statement of claim to be amended by leave, and s 64(2) of that Act permits the making of all necessary amendments by leave for the purposes of determining the real questions raised. A significant consideration to the exercise of that discretion is the need to avoid multiplicity of proceedings. That power must be exercised according to the dictates of justice: s 58(2) of the Civil Procedure Act 2005.
The historical context for the proposed amendments to the statement of claim, and the opposition by the defendants and by the cross-claimants to that course, are examined in the paragraphs that follow.
Consequent upon the investigations and related consideration as to the formulation of the proceedings as was undertaken by the solicitor for the plaintiffs, a forensic decision was made by the plaintiffs to seek to add four further defendants to the existing statement of claim. The basis of that decision is not open to be impugned in these motions especially as the relevant limitation period has not yet expired in relation to those additional parties, and the plaintiffs could have readily commenced separate proceedings without hindrance from the proposed defendants. The proposed additional parties are identified as follows: 1. ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd), the original employer of the plaintiffs. That company has already been added to the proceedings as a cross-claimant; 2. Anambah Road Pty Limited ACN 116 348 308, which was the owner of the land upon which the Maitland Mercure Motel stands; 3. Hilton Ross Grugeon, who is a co-director of several relevant companies, namely, ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd), Anambah Road Pty Limited, GWH Group Pty Ltd and Newcastle Airport Hotel Pty Ltd; 4. Jonathan Robert Craig, who is also a co-director of several relevant companies, namely, ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd), Anambah Road Pty Limited, GWH Group Pty Ltd and Newcastle Airport Hotel Pty Ltd.
Plainly, the inter-relationships between the various corporate entities, and the related individual directors, are complex. I accept that there appears to be some overlapping in the evidence concerning the relevant actions of those entities and persons. Those complexities will require some focussed evidence or agreements at a final hearing.
On 23 February 2016, Ms Crosbie, the solicitor for the plaintiffs, wrote to the solicitor for the defendant and for the cross-claimants, seeking consent to the filing of an amended statement of claim. The effect of the proposed amendment, which was based on the advice of counsel, was to add the four further defendants, as identified in paragraph [117] above.
The background to that was that since December 2015, there had been consideration given to an amendment to the statement of claim in the present proceedings due to evolving circumstances, but this had been deferred.
Thereafter, on 18 January 2016, the defendant's representation changed from Tranter Lawyers to Lancaster Law & Mediation: Affidavit of Ms Crosbie sworn 1 March 2016, pp 70 - 71. The earlier suggestion that there be an amendment to the statement of claim became deferred as there were discussions on foot over the cross-claims and the possibility of other proceedings being filed and then consolidating them. The pleadings were obviously in a state of flux: Affidavit of Amanda Lee Crosbie sworn on 2 March 2016, Annexures, p 13. The state of the pleadings was also complicated by the fact that, as at 27 January 2016, the defendant and the cross-claimants, for whom Mr Lancaster now acts, had not provided a response to a request for particulars dated 19 November 2015, which was a breach of court orders made on 26 November 2015, requiring them to do so: Affidavit of Amanda Lee Crosbie sworn on 1 March 2016, Annexures, p 75.
At the hearing of the motions on 21 and 22 March 2016, consent for the amendment of the statement of claim was still not forthcoming.
There is no evidence to suggest that in the meantime, or to date, the defendant or the cross-claimants, had either acted to their detriment or were relevantly prejudiced in the litigation as a result of any representation or change in the position adopted by the plaintiffs. Consequently, absent the expiry of any limitation periods, the unreasoned asserted claim by the defendant and by the cross-claimants of an injustice must be rejected as amounting to no more than a hollow flourish, without substance.
Following Ms Crosbie's letter of 23 February 2016 to the new solicitor for the defendant, Mr Graham Lancaster, later on that same day, Mr Lancaster responded with criticisms that were indignant, and accusatory in their adjectival tone, conveying, without substantive reasons, the refusal of the defendant and the cross-claimants to consent to the course suggested by the solicitor for the plaintiffs: Affidavit of Ms Crosbie sworn on 1 March 2016, pp 80 - 81. A copy of that letter, with the signature redacted, is attached as Appendix II to these reasons.
On 24 February 2016, Ms Crosbie responded to that letter, in polite terms, rationally explaining why the amended statement of claim was being pursued. In that letter of reply, she again requested the consent of the defendant and the cross-claimants to the course proposed by the plaintiffs. Reasonably, Ms Crosbie also invited discussion on the matter, should Mr Lancaster wish to take up that opportunity: Affidavit of Ms Crosbie sworn on 1 March 2016, pp 82 - 83.
That letter from Ms Crosbie also enclosed a copy of the then current draft of the plaintiffs' proposed amended statement of claim: Affidavit of Ms Crosbie sworn 1 March 2016, pp 84 - 123. At the hearing of these notices of motion, that draft has since been replaced by a further revised version: Exhibit "A". For the purposes of the present motion seeking leave to amend, nothing turns on those different versions of the proposed draft amended statement of claim: T6.7.
The defendant and the cross-claimants have continued to withhold consent to the plaintiffs' proposed amended statement of claim. That position was reiterated to the solicitors for the plaintiffs by Mr Lancaster in his letter dated 1 March 2016: Exhibit "B". As was earlier foreshadowed by Ms Crosbie, the plaintiffs' present notice of motion seeking the amendments under present consideration, was then filed.
In final submissions, on behalf of the defendant and the cross-claimants, Mr Glissan QC properly conceded that the matters pleaded in the plaintiffs' proposed amended statement of claim comprising Exhibit "A" were not statute barred, and if the plaintiffs had chosen the course of simply filing that document afresh rather than seeking to amend the existing pleadings, and had then sought a consolidation of the proceedings, such a course would have been available to the plaintiffs: T25.45 - T26.9.
In my view, the pivotal issue to be determined on the question of the proposed amendment to the statement of claim is whether the defendant or the cross-claimants would suffer material or significant prejudice other than as to costs, if the proposed amendments were to be allowed.
In considering that question, I can see no such relevant prejudice to the defendant or to the cross-claimants if the plaintiffs were granted leave to file an amended statement of claim in the terms set out in Exhibit "A". I consider that the stance of the defendant and the cross-claimants to continue to withhold consent to the filing of the proposed amended statement of claim has been without sound reasons, and not within the spirit of s 56 of the Civil Procedure Act 2005: Affidavit of Amanda Lee Crosbie sworn 1 March 2016, p 77.
In exercising the discretion conferred by s 64 of the Civil Procedure Act 2005, regard must be had to the overriding purpose of facilitating a just, quick and cheap resolution of the real issues in dispute in the proceedings: s 56(1) and s 57 of the Civil Procedure Act 2005.
Here, relevantly, one such issue of substance is the question of the proper legal entitlement of the plaintiffs to seek just compensation for alleged breach of contract. Another such issue is the correct identification of the party or parties from whom such compensation should be obtained if the claim has merit. Included in the latter consideration is the undesirability of multiplicity of proceedings between parties.
In determining whether or not leave to amend should be granted, the relevant scheme of reference for the exercise of discretion is to be found in s 58(2)(b) of the Civil Procedure Act 2005. In that regard, the following matters seem to be relevant: 1. The proceedings have already been beset with a considerable degree of difficulty and complexity, which is compounding in its nature and effect. Furthermore, the proceedings will involve detailed aspects of factual and expert accountancy evidence that requires precise pleading: s 58(2)(b)(i) of the Civil Procedure Act 2005; 2. The progress of the proceedings has already been significantly delayed by the belated filing of a defence by the defendant, and because of concomitant delays referrable to the advent of the cross-claims. In those circumstances, I consider that it would be just and expeditious for all of the issues between the parties to be determined at the one time: s 58(2)(b)(ii) of the Civil Procedure Act 2005; 3. The relatively slow progress of the proceedings to date seems to have been due to delays encountered by the plaintiffs in obtaining access to evidentiary documents that have been in the custody or control of the various parties who are now sought to be joined to the proceedings. The procedural delays to this point have been largely beyond the control of the plaintiffs, such as the period of almost 8 weeks taken by the defendant to file its defence, and the earlier suggestion on behalf of the defendant, in December 2015, that the question of amendment be deferred: s 58(2)(b)(iii) of the Civil Procedure Act 2005; 4. The resistance by the defendant and the cross-claimants to the amendments sought by the plaintiffs seems contrary to the overriding purpose which requires the parties to participate in the processes of the court in order to facilitate that overriding purpose: s 58(2)(b)(iv) of the Civil Procedure Act 2005; 5. No injustice to the defendant or to the cross-claimants has been identified, other than the presumptive prejudice that is inherently involved with any adversarial litigation, and for which an order for costs after a trial on the merits would be an adequate safeguard: s 58(2)(b)(vi) of the Civil Procedure Act 2005; 6. Exhibit "B", which comprises the letter from the solicitor for the defendant and the cross-claimants, Lancaster Law & Mediation, dated 1 March 2016, indicated to the solicitor for the plaintiffs that the question of amendment should be left to the court for decision. That letter indicated there were "a number of reasons why we are instructed not to consent". What then followed involved non-exhaustive and non-substantive reasoning, including a matter of "form", which has since been addressed in the revised draft comprising Exhibit "A". Another reason put forward by the defendant and by the cross-claimants for withholding consent to amendment at that time was because the proposed amendments had not been raised earlier. In my view, none of those reasons justified the withholding of consent to the proposed amendments, which seemed inevitable, in order to avoid a multiplicity of proceedings between variously connected or related parties: s 58(2)(b)(vii) of the Civil Procedure Act 2005; 7. In considering the scope and extent of the proposed amendments, I consider that it would be more just, efficient and cost effective for the amendments to be effected in these proceedings instead of consolidating separately issued proceedings. It is also more desirable to do so at this relatively early stage rather than to do so at a later stage, which would have the undesirable effect of tending to increase costs and to also disrupt the other business of the court: Aon Risk Services Australia Limited v Australian National University [2009] HCA 27, at [93]; [113]; 8. This case is very different to the procedural circumstances that arose for consideration in Aon Risk Services Australia Limited, where the proposed amendment was belated, and was sought to be made at a much later stage. Here, in contrast, I consider the plaintiffs have acted reasonably, and have brought their application to amend at an appropriate time to ensure the proceedings are placed on the correct footings.
The terms of Mr Lancaster's most recent letter dated 1 March 2016 declining consent to the amendments left it for the court to decide whether the amendments were justified: Exhibit "B". This was in circumstances where the indications for amending the plaintiffs' statement of claim were compellingly in favour of granting leave for that purpose.
I consider that on the above grounds, the plaintiffs have demonstrated ample and overwhelming justification for the exercise of the discretion in favour of a grant of leave to amend their pleadings. Accordingly, for the reasons I have outlined, I consider that the plaintiffs should be granted leave to file the proposed amended statement of claim in the form of Exhibit "A".
To the extent that the defendant and the cross-claimants have incurred wasted costs that might be assessably referrable to the amendments now sought by the plaintiffs, I consider it to be fair that the plaintiffs should pay those wasted costs. This should only be from 18 January 2016 which is when Lancaster Law & Mediation commenced acting for the defendant and for the cross-claimants. I consider that order to be appropriate, given that earlier, whilst Tranter Lawyers had been acting for the defendant and for the cross-claimants, discussions over the amendment of the pleadings had been complicated in the context of the defendant and the cross-claimants having been in breach of court orders made on 26 November 2015 concerning the provision of particulars of the defence and the cross-claims.

Consideration of Issue 2 - Whether an abuse of process relevantly arises

The defendant and the cross-claimants submit that the notice to produce in the terms cited at paragraph [99] above does not arise from the un-amended pleadings, and does not relate to any issue in the case, and that it therefore lacks a legitimate forensic purpose. The same submission is made in relation to the subpoena the text of which is cited at paragraph [102] above.
In my view those submissions should not be accepted, particularly as the plaintiffs' efforts at seeking to amend their pleadings were delayed by the inducements proffered by the former solicitor for the defendant, as cited at paragraph [120] above. In my view, founded upon the requirements of s 56 and s 58 of the Civil Procedure Act 2005, the Court must look beyond the submission made in the preceding paragraph, and to the true issues in the case, which for present purposes, are the identification and joinder of the correct parties, and the appropriate quantification of the claims made by the plaintiffs for damages.
The Court has power to set aside a subpoena and a notice to produce that is improperly issued so as to amount to an abuse of process: UCPR r 33.4(1); GB v Greater Western Sydney Area Health Service [2010] NSWSC 181, at [62].
A subpoena (and for that matter, a notice to produce) will be characterised as an abuse of process if the material sought has no conceivable relevance to the issues in the proceedings, or if the process amounts to a fishing expedition, or if compliance with requirements for production is oppressive or vexatious in the sense of being seriously and unfairly burdensome on the party to whom it is directed: GB v Greater Western Sydney Area Health Service [2010] NSWSC 181, at [64].
The test for determining the question of relevance is a broad one, and includes the concept of apparent relevance: GB v Greater Western Sydney Area Health Service [2010] NSWSC 181, at [68].
In this context, a document is relevant to proceedings if: 1. The document "is likely to add in the end in some way or other to the relevant evidence in the case": GB v Greater Western Sydney Area Health Service, at [69]; Waind v Hill & Anor (1978) 1 NSWLR 372, at p 382. I take "in some way" to include testing evidence, including by cross-examination; 2. It has a "sufficient apparent connection [to the proceedings] to justify their production or inspection": GB v Greater Western Sydney Area Health Service, at [70], following White v Tulloch (1995) 127 FLR 105; 3. It "could possibly throw light on the issues in the main case": GB v Greater Western Sydney Area Health Service, at [70], following Trade Practices Commissioner v Arnotts Ltd (1989) 21 FCR 306;
In applying the above principles to the relevant facts brought into focus by the motion under present consideration, in my view, neither the notice to produce nor the subpoena the plaintiffs respectively seek to be enforced, can be fairly described as amounting to an abuse of process.
In my assessment, the terms of the plaintiffs' notice to produce demonstrates a threshold of relevance to the issues to be determined in the principal proceedings, and in relation to the cross-claims. As a threshold question, that relevance attaches to the issue of the manner in which the plaintiffs' claim should be quantified, and the means by which the defences and cross-claims can be tested, if not met and answered.
Accordingly, neither the notice to produce nor the subpoena as issued by the plaintiffs can be fairly described as being either: irrelevant; a fishing expedition; an attempt to circumvent discovery (a process that was left incomplete at the time it was discontinued in the Local Court); or an abuse of process.
All of the categories of the documents sought by the plaintiffs are plainly relevant and likely to throw light upon, or add to the case in some way or another, and have sufficient apparent relevance so as to satisfy the criteria cited at paragraphs [140] - [142] above.
As the documents plainly relate to the quantification of the claims by the plaintiffs, I am satisfied that a legitimate forensic purpose has been identified, and that it is "on the cards" that the material sought will be likely to materially assist the case sought to be made by the plaintiffs: Commissioner of Police v Hughes [2009] NSWCA 306, at [74].
In that latter regard, the threshold for determining what is "on the cards" likely to materially assist in throwing light onto the case is a low one, as the litigation is at an early stage, and the time has not yet been reached where the plaintiffs must place all their cards on the table. The plaintiffs are still at the early stage of assembling their "cards" before revealing them in the context of a fully pleaded and particularised claim: Nowlan v Marson Transport Pty Ltd [2001] NSWCA 346; (2001) NSWLR 116, at [26]. [28]; White v Overland [2001] FCA 1333, at [4].
In my view, both the notice to produce, and the subpoena for production, each serve the legitimate forensic purpose of assisting with the quantification of the claim by the plaintiffs and the determination of the issues in the proceedings generally, including to determine the respective liabilities of the parties. I reject the claim that they are an abuse of process, and I also reject the claim that oppression to the defendant or to the cross-claimants arises from the course taken by the plaintiffs.
The various documents sought by the plaintiffs should therefore be produced as claimed by the plaintiffs' notice of motion, and by the subpoena, and I propose to make orders to that effect.

Consideration of Issue 3 - Claim for referral for alleged civil contempt

An assertion of guilt of contempt of court in the course of professional practise, is amongst the most serious of allegations that can be levelled against legal practitioners. It follows that unmeritorious allegations of that kind should be discouraged in the strongest possible terms.
Although the allegation for consideration here is one of a civil and not a criminal contempt, having regard to the gravity of such a charge, it must nevertheless ultimately be proven beyond reasonable doubt: Witham v Holloway [1995] HCA 3; (1995) 183 CLR 526, at [7], [11], [19].
The power of the District Court to deal with instances of contempt of court, whether committed in the face of the Court or otherwise, is to be found in s 203 of the District Court Act 1973, which provides: 203 Power to refer allegation etc of contempt to Supreme Court (1) Without prejudice to the powers of the District Court under section 199, where it is alleged, or appears to the District Court on its own view, that a person is guilty of contempt of court, whether committed in the face or hearing of the District Court or not, the District Court may refer the matter to the Supreme Court for determination. (2) On any matter being referred to the Supreme Court under subsection (1), the Supreme Court shall dispose of the matter in such manner as it considers appropriate.
Section 203 of that Act requires a two-stage consideration of an allegation of contempt because this Court does not have the power to hear and to also determine contempt proceedings.
In considering an allegation of contempt, the task of this Court is limited to first, determining whether or not the allegation has substance, and if that is found to be so, then secondly, to refer to the Supreme Court, the person or persons against whom the contempt is alleged, so that the charge of contempt may be formulated, and so that the matter can then be determined according to law: Registrar, Court of Appeal v Maniam (No 1) (1991) 25 NSWLR 459, at 463, 464-5; Lin & Anor v Borrowdale & Ors [2011] NSWCA 65, at [3].
That process has a number of procedural elements: Pelechowski v Registrar, Court of Appeal [1999] HCA 19, (1999) 198 CLR 435, at [17].
The first procedural element to be addressed is whether the court, here being this Court, is of the view that there has been a contempt as alleged. The second procedural element then involves affording the person or persons whose conduct is sought to be impugned by the charge of contempt, the fair opportunity to show why the matter complained of should not be referred to the Supreme Court. The third procedural element is the exercise of the discretion conferred by s 203(1) of the District Court Act 1973, concerning whether or not the person or persons the subject of the allegation of contempt should in fact be referred to the Supreme Court for the matter in question to be determined by that Court.

Was there a contempt?

In the present case, the defendant and the cross-claimants, claim that both Mr Roberts and Ms Crosbie should be jointly referred to the Supreme Court for contempt: Proposed order (3) of the notice of motion filed on 4 February 2016.
On behalf of the defendant, Mr Glissan QC argued that a civil contempt by the solicitors for the plaintiffs occurred at the time of an alleged breach of the implied undertaking when the financial materials produced by ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd), were used for an ulterior, alien or collateral purpose that was extraneous to the litigation: Hearne v Street [2008] HCA 36, at [107]; Riddick v Thames Board Mills Ltd [1977] QB 881, at 896.
Mr Glissan QC further submitted that for contempt to be established, evidence of the origin of the material the subject of the implied undertaking was sufficient, and it was therefore unnecessary to establish actual knowledge of the implied undertaking which arises from the circumstances in which the material was generated and received: Hearne v Street [2008] HCA 36, at [102], [112].
That said, there is no doubt that Ms Crosbie was aware of the existence of the implied undertaking generally, and that she had that understanding around the time of the events. This is evidenced by her refusal to accede to Mr Lancaster's request to be provided with copies of his own client's documents. Instead, she suggested that he seek those documents from his clients because of the context in which she had received those copies: T13.31.
At this point it becomes relevant to consider the circumstances in which the financial materials in question, which are described at paragraph [61] above, were generated, and then received, and then used by the solicitors for the plaintiffs.
It is beyond dispute that the materials themselves were generated for a non-litigious purpose by the company in question in conformity with the need for that company to comply with taxation and accounting obligations.
There is no doubt that the copies of those materials received by Roberts Legal were generated in the context of this case in order that they be supplied to the solicitors for the plaintiffs, as indeed occurred at 4.53pm on 8 December 2015, as chronicled at paragraph [61] above.
There is no doubt that the materials were received by the solicitors for the plaintiffs in circumstances where it was plain, had they been otherwise withheld in circumstances of a disputed entitlement, it would have been inevitable that the District Court would have ordered that such documents be made available for inspection to the solicitors for the plaintiffs, and if requested, leave would have been granted for copies of those documents to be briefed to forensic accountants engaged on behalf of the plaintiffs.
The copy documents in question had been the subject of an unmet request by the plaintiffs since 3 August 2015. Whilst it might have been arguable that before the advent of the cross-claims filed on 12 November 2015, the documents produced by ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd) were alien to the litigation, that argument does not apply after 12 November 2015. This is because, on that date, that company became a cross-claimant against the plaintiffs. Accordingly, from that date, any claim made by ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd) against the plaintiffs was open to be tested by reference to its own documents, including those copies produced by it to the plaintiffs' solicitors on 8 December 2015.
As at 8 December 2015, the plaintiffs were engaged in litigation brought against them by ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd), and they were contemplating joining that company into their own proceedings as an additional defendant. In those circumstances, it is difficult to see how it can be suggested, reasonably, that, on 9 and 10 December 2015, the plaintiffs' solicitors used those documents produced by ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd) for an alien, collateral or extraneous purpose, as was argued by the defendant and by the cross-claimants.
I consider that at 4.53pm on 9 December 2015, when copies of the documents in question were received by Roberts Legal, this occurred in circumstances which attracted the well understood implied undertaking that applies to lawyers and to their agents in litigation: Harman v Secretary of State for the Home Department [1983] 1 AC 280.
I infer from the circumstances that copies of the documents in question were provided to the solicitor for the plaintiffs in the pragmatic recognition of what this Court would most probably have ordered in any event in that regard if there was a dispute over the entitlement of the solicitors for the plaintiffs to be given inspection and copy access to those documents in the context of the notice to produce as described at paragraph [99] above.
Before leaving the consideration of those circumstances, it is relevant to examine a further aspect that relates to the exercise of the discretion on whether or not to refer, as conferred by s 203(1) of the District Court Act 1973.
The solicitors for the plaintiffs had been requesting the sought after financial materials from Messrs Grugeon, Craig, Chevalley, Anambah Road Pty Limited, and ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd), since 3 August 2015, as chronicled at paragraph [36] above. The notice to produce was issued by the solicitors for the plaintiffs, 8 days after the advent of the cross-claim issued against them by ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd).
In that time, the plaintiffs were also subject to an order of the Local Court that their evidence in support of their application for preliminary discovery, which in this case required expert accountancy evidence, was to be served by 5.00pm on 10 December 2015: Exhibit GL-1, p 46.
The documents were only provided to the solicitor for the plaintiffs with a day to spare, which, due to timing, could only have amounted to partial compliance with that court order.
In those circumstances, it is reasonably clear that Roberts Legal had acted with appropriate adroitness in briefing their retained expert forensic accountant to provide them with material upon which to obtain an extension of the timetable for compliance with the existing court orders.
At that time, the solicitors for the plaintiffs had an indivisibly mixed role in evaluating the documents produced by ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd). One aspect of that role was to examine the documents for their relevance to the quantum of the plaintiffs' claim against the defendant GWH Build Pty Ltd, and another aspect was to evaluate the issues raised by the cross-claim brought against the plaintiffs by ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd). In the midst of those circumstances, the Local Court proceedings seeking preliminary discovery were aimed at clarifying those matters. There were no bright lines separating the forensic issues in the respective claims.
Neither of those interests of the plaintiffs should be seen as being alien or extraneous to the issues raised by present litigation between the plaintiffs and ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd), either in relation to the claims by the plaintiffs, or in relation to the cross-claims brought against them by that company.
In this latter regard, it is not to the point to argue, as the defendant and the cross-claimants have argued, that the issues between the parties were not defined on account of the fact that the plaintiffs had not yet filed a defence to the cross-claims brought against them. It was clear from the correspondence that the parties were relevantly at issue concerning the plaintiffs' entitlements, and that the pleadings and the issues were in need of refinement.
Returning then to the circumstances in which the documents in question were generated, received and used, it is the use of the documents in the particular context that is examined in the paragraphs that follow.
In my view, Ms Crosbie used the documents for particular, confined and legitimately permissible purposes in advancing the interests of her clients in existing and contemplated litigation against an identified defendant, an identified cross-claimant, and against identified proposed defendants.
One such use of the documents was to examine them for the purpose of the application for preliminary discovery, in order to clarify, or to ascertain, albeit incompletely at that time, the identities of the potential parties against whom her clients should pursue redress, and to establish quantification of the plaintiffs' claims in order to assess their merit. There can be no complaint about the use of the documents for those purposes.
Another such use of the documents was to set in train steps to obtain evidence to alleviate the time constraints for compliance with existing court orders for the service of evidence in compliance with UCPR r 5.4(2)(a) regarding the, at that time, unresolved application for preliminary discovery.
Yet another use of the documents was to evaluate the claims and cross-claims involving the plaintiffs and ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd).
Ms Crosbie briefed Mr Shields of Dolman Bateman for that latter purpose to assist the plaintiffs with the required forensic analysis in order to demonstrate, with reasons, that further documentation, preparation and therefore preparation time, was required by the plaintiffs.
In my opinion, the duality of purpose of Ms Crosbie briefing the forensic accountants, as outlined in the preceding paragraphs, is clearly established: Exhibit "C"; T10.20; T13.23; T14.10. I accept that Ms Crosbie briefed the accountants for the dual purposes of obtaining and evaluating evidence in the present litigation, including in relation to the cross-claims and the preliminary discovery proceedings in the Local Court, all of which were related: Affidavit of Amanda Lee Crosbie sworn on 2 March 2016, par 13.
As the preliminary analysis by the accountants was germane to all of those identified purposes, in the available time, it would have been artificial if not futile for Ms Crosbie to prepare separate briefing letters to those forensic accountants. In any event, the time for such an exercise had not yet arisen, because at the stage of briefing, a full evidentiary report from the accountants would not have been obtainable because of the limited and incomplete nature of the documentation provided for analysis.
In those circumstances, I consider that Ms Crosbie's actions were reasonable and appropriately directed to the prevailing circumstances.
The use that Ms Crosbie made of the copies of the documents, in the form of disclosure to Dolman Bateman, was confined to briefing the forensic accountants. That briefing and disclosure to those accountants was not for an alien, ulterior or a collateral purpose that could be seen as being extraneous to, or foreign to the litigation for which she had been engaged to assist the plaintiffs.
Furthermore, as the agents of the instructing solicitors, in receiving those copy documents, the forensic accountants were also bound by an extended form of the implied undertaking which prohibited any unauthorised disclosure or use of the copies of the documents for an ulterior or alien purpose: Hearne v Street [2008] HCA 36, at [109]. There is no evidence to suggest that those accountants had in any way acted improperly, or in breach of the implied undertaking which also extended to them.
In my view, contrary to the submissions made on behalf of the defendant and the cross-claimants, there was no alien, ulterior, improper or extraneous use of the copies of the documents that had been provided to Roberts Legal in this litigation.
By the time Ms Crosbie received the documents, her clients, the plaintiffs, were engaged in the pursuit of litigation that involved: 1. GWH Build Pty Ltd as the defendant in the District Court proceedings; 2. ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd) as a cross-claimant against them in the District Court proceedings; 3. A forensic trail leading to Anambah Road Pty Limited as a potential defendant, and to other individual directors, namely Mr Grugeon and Mr Craig, also as potential defendants.
The alignment of the respective interests of those parties and their directors was that they were in the same tactical camp, as is evident from their common representation by Mr Lancaster's firm.
The technical and detailed nature of the financial statements and materials rendered it inevitable that an evaluation of those materials would need to be undertaken by a forensic accountant retained in the plaintiffs' interests. It ought to have been obvious to those persons producing those materials to the solicitors for the plaintiffs that forensic accountants would be asked to examine them for such purposes.
There is no doubt that when Ms Crosbie copied those financial materials to Dolman Bateman, the implied undertaking which attached to those materials also extended to apply to Mr Shields of that firm: Hearne v Street [2008] HCA 36, at [109]
There is no evidence to suggest that Mr Shields had in any way misused the copies of the documents provided to him by Roberts Legal. He acted entirely within the remit of his instructions. His letter dated 10 December 2015 did not contain any unauthorised disclosures. It simply referred to the documents. He did not attach any copies of the documents to his letter.
That is a matter of some significance, because when Ms Crosbie provided a copy of the Dolman Bateman letter dated 10 December 2015 to Mr Lancaster, also on 10 December 2015, that copy letter did not have any unauthorised copies attached.
Accordingly, in my view, at that point, there was no breach by any person, party, solicitor or agent, concerning the implied undertaking. The communications to that point were entirely appropriate and proper.
At the very highest, all that could be said against Ms Crosbie is that her letter to Mr Lancaster informed him, by reference to the attached letter from Dolman Bateman dated 10 December 2015, that she had provided copies of the financial statements and returns in question, to Mr Shields of that firm.
In my view, the briefing of Mr Shields by Ms Crosbie at that point in time was covered by an extension of the implied undertaking. Therefore, the briefing of Mr Shields did not involve a breach of that undertaking: Hearne v Street [2008] HCA 36, at [109].
In my opinion, Ms Crosbie acted properly, and within the accepted boundaries of legitimate forensic investigation of the financial issues in the interests of her clients who were seeking redress from known categories of opponents. There was no breach of the implied undertaking in relation to the documents in question.
In my view, contrary to the submissions of the defendant and the cross-claimants, the identified combination of the factors at play which led to the plaintiffs' solicitors briefing the forensic accountants with the documents in question, the non-alien or non-ulterior purpose of the plaintiffs' solicitors in doing so, namely to advance the plaintiffs' rights in existing litigation between the parties to the already filed claims and cross-claims, readily and convincingly shows reasonable doubt as to whether a contempt occurred.
This leads me to conclude that no civil contempt has been committed by the solicitors for the plaintiffs.
The contrary arguments alleging the existence of contempt are overwhelming and terminally afflicted by the described circumstances. This interlocutory issue has become a costly distraction from the central issues in the litigation.

Opportunity for comment

As the need for referral of the solicitors for the plaintiffs to the Supreme Court does not arise, there is no requirement that they be afforded the procedurally fair opportunity for comment on the allegation of civil contempt.
In that regard, it should be noted that the claim by the defendant and by the cross-claimants is for both Mr Roberts and Ms Crosbie be referred for prosecution for contempt, which seems to involve something of an imprecise approach, particularly since there is no evidence that Mr Roberts had any actual involvement in preparing the letter dated 9 December 2015 to Dolman Bateman, which is the subject of the complaint by the defendant and by the cross-claimants: T11.22.
Mr Roberts did not give any evidence of the factual circumstances. There was no suggestion that he was required to do so. No adverse comment arises from the fact that he did not do so.
At best, any responsibility on the part of Mr Roberts would have been vicarious in nature. That is an insufficient basis upon which to seek the extreme step of an order for his referral to the Supreme Court for prosecution for an alleged contempt. That aspect of the claim made by the defendant, and by the cross-claimants, was entirely without arguable merit.
The evidence given by Ms Crosbie in the form of cross-examination on her affidavits was in her capacity as a factual witness. In the course of doing so, she rejected the proposition that her actions had constituted a civil contempt along the lines argued by Mr Glissan QC: T13.18. That said, it must be recognised that when Ms Crosbie gave that evidence, it was not evidence in the nature of answering a challenge that she should show cause why she should not be referred to the Supreme Court for contempt. I find that a need for Ms Crosbie to give evidence on a show cause issue along those lines has not relevantly arisen in this case.
Accordingly, in light of these findings, the need to consider the exercise of the discretion conferred by s 203(1) of the District Court Act 1973 does not arise.

Conclusions on alleged contempt

Accordingly, for the above reasons, I reject the application by the defendants and by the cross-claimants, according to the procedure provided by s 203(1) of the District Court Act 1973, that I refer the solicitors for the plaintiffs to the Supreme Court for prosecution for a claimed civil contempt.
A well respected author has written, ex curia, that in legal analysis, the use of metaphor can at times be apt to mislead: Metaphors and Legal Reasoning; the Rt Hon Lord Justice Lewison, Judicial Review, Vol 12, No 4, March 2016; Judicial Commission of NSW, p 375, at p 392. It is also apparent from many and varied decided cases, too numerous to cite here, that at times, the use of metaphor can also conveniently serve to provide clarity in order to illustrate an issue in its proper perspective.
In my view, in this case, metaphor can be appropriately employed in the latter sense, to aptly characterise the assertion by the defendant and by the cross-claimants, of a civil contempt on the part of the solicitors for the plaintiffs, as a vituperative diversion, which has un-meritoriously distracted attention from the matters that are truly in issue.
In my view, that attack is akin to an attempt to stir up a storm in a teacup, with tepid water, and without the addition of any substance, in the form of a tea bag, or tea leaves.

Disposition

The notice of motion by the defendant and by the cross-claimants, seeking to set aside both the plaintiffs' notice to produce and the subpoena, and the claim for referral for prosecution of the plaintiffs' solicitors for civil contempt, has failed. The plaintiffs' notice of motion seeking leave to amend their statement of claim has succeeded.

Costs

It therefore follows that in respect of each notice of motion, the defendant and cross-claimants should pay the costs respectively incurred by the plaintiffs in each instance, except as qualified by my reasons at paragraph [136] above.
In relation to my finding at paragraph [206] above, to the effect that the motion seeking to have Mr Roberts referred to the Supreme Court for contempt, I will hear the parties on the nature of the appropriate cost order in relation to that matter. On one view, part of those costs may be payable on an indemnity basis, and not necessarily by the defendant or by the cross-claimants.

Orders

I make the following orders: 1. The notice of motion filed by the defendant and by the cross-claimants on 21 January 2016, as amended on 4 February 2016, is dismissed, and therefore: 1. I decline to set aside the plaintiffs' subpoena filed on 11 December 2015 addressed to Resort Brokers (NSW) Pty Ltd as it does not involve an abuse of process as claimed by the defendant and the cross-claimants. The documents required by the subpoena must therefore be produced within 14 days of these orders; 2. I decline to set aside the plaintiffs' notice to produce dated 19 November 2015 addressed to ACN 125 668 215 Pty Ltd (formerly known as Maitland Motel and Conference Centre Pty Ltd), as it does not involve an abuse of process. The documents required by the notice to produce must therefore be produced within 14 days of these orders; 3. I decline to refer the solicitors for the plaintiffs to the Supreme Court of NSW for prosecution for a claimed contempt as there was no such contempt as has been claimed by the defendant and by the cross-claimants; 4. The defendant and cross-claimants are to pay the plaintiffs' costs of this notice of motion. 1. In the notice of motion filed by the plaintiffs on 1 March 2016: 1. Pursuant to s 61(1) and s 64(1) of the Civil Procedure Act 2005, the plaintiffs are granted leave to file an amended statement of claim in the form of Exhibit "A", such amended statement of claim is to be filed within 14 days of the date of these orders; 2. The defendant and the cross-claimants are to pay the plaintiffs' costs of this notice of motion; 3. The order for costs in order (2)(b) above is not intended to absolve the plaintiffs from liability for the payment for any wasted costs incurred by the defendant and by the cross-claimants before 18 January 2016, but includes the costs incurred by the plaintiffs thereafter concerning the pursuit of the notice of motion to obtain leave for the amendments sought; 1. In the proceedings generally, I make the following additional case management orders: 1. Pursuant to s 26 of the Civil Procedure Act 2005, following service of the amended statement of claim the subject of order (2)(a), by 31 July 2016, all of the parties are to convene and attend a mediation of all issues in dispute between them, and to use their bona fide best endeavours to try and resolve those disputes. In that regard: 1. Initially, in the interim, pending a final resolution of the proceedings, each party is to pay an equal share of the cost of the mediator, and any out-of-pocket expenses associated with the mediation; 2. If the mediation does not resolve the proceedings, the costs of and incidental to the mediation, and the costs of the mediator, are to be costs in the cause; 3. If, within 28 days of these orders, the parties cannot agree upon the date, time and place for the mediation, or the name of the mediator to be appointed, each party is to submit two names of suggested mediators and the related arrangements to my Associate, following which the Court will then make the appropriate orders on the papers to facilitate a mediation of all disputes between the parties, as contemplated by this order; 1. The plaintiffs may forthwith proceed to an assessment of the costs orders made in respect of these notices of motion, if in the meantime, those costs cannot be agreed upon between the parties without the need for a formal assessment; 2. Liberty to apply on 7 days notice if further or other orders are required; 3. In the event the proceedings remain unresolved after the proposed mediation the subject of these orders, the proceedings are to be listed for a directions hearing at the District Court at Newcastle in the sittings commencing 12 September 2016, at which time the parties will be expected to have agreed upon a timetable for the completion of the remaining procedural steps required to achieve readiness of the proceedings for the allocation of a hearing date; 1. I will hear the parties on the question of whether any of the costs payable to the plaintiffs in respect of the unsuccessful allegation of a contempt should be on an indemnity basis, and whether the solicitor for the defendant and for the cross-claimants should be personally liable for such costs.

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: 15 April 2016

Wallace v GWH Build Pty Ltd; GWH Build Pty Ltd & Anor v Wallace & Ors

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