Warragamba Winery Pty Ltd v State of New South Wales [2010] NSWSC 1314 | Case summary

Warragamba Winery Pty Ltd v State of New South Wales [2010] NSWSC 1314 | Case summary | Zoe

Had the report of Mr Smith and the witness statements referred to above … been provided prior to the mediation they would have materially altered the recommendations made to the plaintiffs as to the settlement of their claims." Costs of mediation and non-compliance with orders to serve evidence 25 In summary, the plaintiffs contended that all of the material that was in fact served by the first defendant by 31 March 2010 could and should have been served prior to the mediation and that the utility of the mediation would have been greater if that had occurred. 26 The plaintiffs originally sought a declaration that the first defendant had not conducted the mediation in good faith. That allegation was ultimately not pressed and a prayer for relief of that sort was abandoned. Given the difficulties arguably associated with such an application it was not surprising that the plaintiffs adopted that course. 27 One of the problems with an assertion that the mediation was less valuable than it might otherwise have been, or that costs incurred in preparation for it and in conducting it have been forever lost or have been wasted, is the achievement of a satisfactory understanding of what turned out to be the actual utility of the mediation in the circumstances. For example, even if the first defendant had complied in all respects with the orders that were made concerning the delivery of evidence and statements beforehand, it is not possible on the material before me to say that the end result would have been different or to quantify the difference if there was one. It is also not possible to give content to the contention that it was in fact a waste of time and money. The plaintiffs do not explain the way or ways in which the outcome may have been different or precisely how the report of Mr Smith and the witness statements "would have materially altered the recommendations made to the plaintiffs as to the settlement of their claims". There may be good reason for this in the wider context of yet to be concluded litigation, but it remains unsatisfactory in terms of the proper adjudication of the present application. 28 This issue was discussed at some length before me on this application. This occurred before the plaintiffs had discarded their claims that the first defendant had not conducted the mediation in good faith. Part of the transcript of that discussion is as follows: "NOCK: …The question that your Honour has to consider is whether all of that material was material that should have been provided before a mediation took place and whether it is significant material which of the type that your Honour referred to that should have been available.

NOCK: That is exactly right. It cuts both ways." 30 In the way that I have described, the nature and extent of the costs said to have been thrown away or occasioned by reason of the unsuccessful mediation scheduled for 4 and 5 November 2009 cannot properly be understood at this time. The plaintiffs do not appear to go as far as to say that the mediation was aborted because of the first defendants' failings and in fact that did not occur. Two matters at least were settled. A proper assessment of the plaintiffs' claim for these costs has to be informed by the difference between what the plaintiffs say happened at the mediation and what they say would otherwise have happened. This is not apparent on the evidence and may never be apparent. The unadorned proposition that the advice given at the mediation would have been materially different does not advance the plaintiffs' argument in a meaningful way. In my opinion, the costs incurred by the plaintiffs and allegedly thrown away or occasioned by reason of the unsuccessful mediation scheduled for 4 and 5 November 2009 should be the costs in the cause. In a consideration and assessment of those costs in due course, the relationship between the final outcome in the proceedings and the significance, if any, that the first defendant's unserved evidence may have achieved in the determination of that outcome, will no doubt be important. These costs should be costs in the proceedings. 31 On the other hand, there does appear to have been a failure on the part of the first defendant to recognise or to appreciate in a timely way that compliance with the orders that were made was going to be difficult and to apprise the plaintiffs of this in advance of the mediation. The correspondence between March and July in particular demonstrates that the plaintiffs were pressing for compliance and were getting less than satisfactory responses from their point of view. The fact that the first defendant actually required until 31 March 2010 to provide the evidence that it had originally been ordered to provide by 10 July 2009 is a fair indication of the extent to which it miscalculated or underestimated the task that confronted it and the time that it would take to complete. This is not an underestimation or miscalculation in which the plaintiffs were in any way complicit or for which their conduct was in any way a cause. 32 As the correspondence suggests, the costs of the appearance before Kirby J on 15 and 16 July 2009 were largely if not entirely caused by reason of the first defendant's failure to serve its evidence by 10 July 2009. In these circumstances I consider that the first defendant should pay the costs reserved by his Honour on 16 July 2009. The costs of the appearances before me on 24 September 2009 and 19 October 2009 appear to fall into a similar category so that the first defendant should also pay those costs. In addition to and separately from those costs, to the extent if at all that the plaintiffs also incurred wasted costs, in the sense that they were occasioned or thrown away by reason of the first defendant's failure to serve its evidence by 10 July 2009 or 18 September 2009 and that are referrable to work, apart from the appearances, that cannot still be utilised in the conduct of the plaintiffs' cases, I consider that those costs should also be paid by the first defendant. Motion for discovery 33 The plaintiffs' motion filed 22 December 2009 sought discovery of the following documents: (a) All situation reports in respect of the 20 fires specified in the letter from GIO to McLachlan Chilton dated 30 March 2009 ("the 20 Fires") for the period from 9.00am on 23 December to 4.00pm on 24 December 2001.

Ultimately, the first defendant considers that the parties ought try to agree on a transcript of those recordings [referred to in par 2 of the motion] the parties propose to tender at the hearing otherwise the Court will be required to listen to all recordings the parties intend to rely upon." 37 In response to that letter the plaintiffs asked the first defendant to modify the second paragraph of the letter so that the final sentence read as follows: "The First Defendant does not intend to rely on any other deficiencies in its equipment or manpower which would have prevented the First Defendant from fighting the Mt Hall fire on the morning of 24 December 2001." 38 Mr Keleher responded to that suggestion by writing another letter on 15 February 2010. It set out a number of proposals that he asked the plaintiffs to consider, and which he indicated the first defendant was prepared to include at any convenient point in correspondence so as, in effect, to formalise them. He said, however, that the first defendant "cannot accept your suggestion which does not accurately reflect our client's case." The letter concluded with the following paragraph: "We would add that as we see it, the evidence now on from our client (which is the bulk of the evidence on this issue) makes the points above clearly and the documents we have discovered cover them to the extent of the documents available." 39 The motion was returned before me for the first time on 16 February 2010. It was given a hearing date on 26 February 2010. Before the hearing took place, Mr Keleher wrote a very long and detailed letter to Mr Torrisi in what Mr Keleher describes at par 27 of his affidavit as "a final attempt to resolve the plaintiffs' motion". The letter is too long to be recorded here. It is sufficient to note that Mr Torrisi replied to the letter on 24 February 2010 in which he said that, subject to the provision of some minor matters "and agreement as to costs, we would regard the [first] Defendant's action as satisfying the Orders that we have sought in the Amended Notice of Motion". Mr Keleher completed the cycle of correspondence on 25 February 2010. His letter of that date included this paragraph: "In relation to costs of the Motion, we respectfully submit that the outcome of the Motion would indicate that the most reasonable order is for costs of the Motion to be costs in the cause." 40 The first defendant maintained that submission at the hearing of this costs application. It submitted that the motion was resolved by consent without a hearing on the merits. In those circumstances it submitted that it is not normally appropriate to make an order for costs except as agreed between the parties. In particular, on any application for costs in such circumstances, the Court should take into account the desirability of encouraging and not penalising a party that responds to an application by negotiating a compromise: see, for example, ASIC v Rich [2003] NSWSC 297 at [78]. 41 The plaintiffs argue in effect that the motion was necessary to provoke the agreement that was ultimately achieved and that they should have their costs in the circumstances. 42 As with so many issues in long running and complicated proceedings such these, it is often not possible to form even a preliminary view about the respective merits of the parties in order to assess whether or not an application for costs on a discrete issue can be made with confidence in its fairness or whether the ultimate outcome in the proceedings ought to be permitted to inform where the burden of the order should fall. In the present case, the parties resolved the discovery issue by consent. The plaintiffs were the moving parties and in that sense achieved a result where none appeared likely before they took action. On the other hand, as the first defendant points out, a resolution of the matter must necessarily indicate that the plaintiffs were prepared to draw back from their original position to achieve an unlitigated outcome. 43 I consider that there is merit in the first defendant's submission that the costs of the discovery motion should abide the outcome in the principal proceedings. I will order that the costs of the motion are to be the costs in the proceedings. Payment forthwith 44 The plaintiffs sought orders that any costs that the first defendant was ordered to pay should be payable forthwith. The ordinary rule is that the costs will not be payable until conclusion of the proceedings. UCPR 42.7 provides as follows: " 42.7 Interlocutory applications and reserved costs

See Fiduciary Ltd v Morning Star Research Pty Ltd [2002] NSWSC 432, 55 NSWLR 1 at [11]-[13] (Barrett J); Hamod v State of NSW [2007] NSWSC 707 at [5] (Simpson J); ASIC v Rich [2003] NSWSC 297 at [86] (Austin J); Jazabas Pty Ltd v Haddad [2006] NSWSC 880 (Simpson J) (successful security for costs application: order that costs be payable to successful defendants forthwith); Perpetual Trustee Co Ltd v McAndrew [2008] NSWSC 790 (Harrison AsJ) (application for summary judgment doomed to failure); Herbert v Tamworth City Council (No 4) [2004] NSWSC 394, 60 NSWLR 476 at [30] (Sperling J)." 47 By reason of the decision I have reached, the only costs that fall to be considered by reference to these categories are the costs of the appearances before Kirby J on 15 and 16 July 2009, the costs of the appearance before me on 24 September 2009, and the costs of the appearance before me on 19 October 2009. The first defendant contended that these costs in the present case did not attract attention as costs falling within any of the three identified categories. 48 In my opinion, the aspect of the proceedings that generated the costs was the failure by the first defendant to comply with orders that it serve its evidence by 10 July 2009. The plaintiffs fairly and persistently sought to hold the first defendant to the timetable by which they had become bound. In the events that occurred, the first defendant did not satisfy the order in any final way until 31 March 2010. Whatever real or apparent significance the evidence might have had upon the looming mediation, the plaintiffs were within their rights to insist upon strict performance of the first defendant's obligation to complete its evidence by the date required. That did not happen. That is a discrete and separately identifiable aspect of the proceedings that will not reappear. 49 I am not satisfied that the first defendant was guilty of unreasonable conduct in the sense contemplated by the second category. Something more than delay would in my opinion be required before it could be said that the first defendant had acted unreasonably. Moreover, there was an explanation for the non-compliance, amounting in effect to a miscalculation by the first defendant concerning what was or what might have been anticipated was necessary to comply with the order. No different costs order should be based on considerations such as those. 50 Finally, there is some prospect that these proceedings have some distance yet to run and that there is a likelihood that there will be a fairly long time before they are disposed of. I have been hopeful, if not necessarily optimistic, that these proceedings could be resolved entirely. I have in that context delayed dealing with the present application against the contingency that any decision I may reach could have a tendency to entrench the current impasse and make settlement of the proceedings in full much less likely. Be that as it may, I do consider that the costs I have ordered the first defendant to pay are costs that will not be paid for a considerable time unless a special order is made. 51 I consider that the costs that I have identified as payable by the first defendant should be paid forthwith. Costs of this application 52 Neither party made submissions before me with respect to the costs of the present application on 7 May 2010. Subject to any submissions that either party may in due course wish to make, it seems to me that the plaintiffs were partly successful and that they should be entitled to an award of costs that reflects that part. Doing the best I can, I consider that the first defendant should pay one half of the plaintiffs' costs of the present application. Orders 53 In these circumstances I make the following orders: 1. Order the first defendant to pay the costs of the appearances before Kirby J on 15 and 16 July 2009, the costs of the appearance before me on 24 September 2009, and the costs of the appearance before me on 19 October 2009.

Warragamba Winery Pty Ltd v State of New South Wales

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Judgment (126 paragraphs)

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Cases Cited (10)