FEDERAL COURT OF AUSTRALIA

Ginger Roger Pty Ltd v Parrella Enterprises Pty Ltd [2009] FCA 1370

GINGER ROGER PTY LTD (ACN 080 582 010) and KHIMJI TRIKAMJI v PARRELLA ENTERPRISES PTY LTD (ACN 080 582 010), STEVEN ROBERT PARRELLA, FAMORE BUSINESS BROKERS PTY LTD (ACN 010 254 930) and SMILEY FREDLYN RADNOR SANSONI

QUD 150 of 2009

COLLIER J

20 NOVEMBER 2009

BRISBANE

THE COURT ORDERS THAT:

The costs be in the cause.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

REASONS FOR JUDGMENT

1                     By notice of motion filed 12 November 2009 the applicants moved for the following orders:

1.                  The Third and Fourth Respondents file and serve a Supplementary List of Documents within seven days of the date of these Orders.

2.                  The Third and Fourth Respondents produce copies of the documents referred to in their Supplementary List of Documents in accordance with Order 15 rule 11 of the Federal Court Rules within fourteen days of the date of these Orders.

3.                  The Third and Fourth Respondents pay the First and Second Applicants costs of this notice to be assessed.

4.                  Such further orders as the Court considers just.

2                     In Court this morning by consent the parties agreed on the following orders:

1.                  The Third and Fourth Respondents file and serve a Supplementary List of Documents by 4.00 pm on 27 November 2009.

2.                  The Third and Fourth Respondents produce copies of the documents referred to in their Supplementary List of Documents in accordance with Order 15 rule 11 of the Federal Court Rules, or by affidavit attest to their efforts to locate the further disclosure sought by the applicants, by 4.00 pm on 27 November 2009.

3                     The parties also agreed on formal extensions to a number of compliance dates in directions made on 15 September 2009.

4                     The only outstanding issue in respect of this notice of motion concerns liability for costs of the notice of motion. The third and fourth respondents submit that the costs of the notice should be costs in the cause.

5                     The discretionary power of the Court to award costs is found in s 43 of the Federal Court of Australia Act 1976 (Cth). Costs follow the event in the absence of circumstances warranting a departure from this general proposition. In this case the third and fourth respondents have, in effect, conceded that the applicants have made their case in respect of the substantive orders sought in the notice of motion, and accordingly as a general proposition the third and fourth respondents should be liable for the costs of the applicants.

6                     However, as is commonly the situation in such cases, the picture is not “black and white”. It is clear from the submissions put to me this morning by Mr Morgan for the applicants and Mr Heath for the third and fourth respondents that:

·                    The applicants’ concerns relate to claimed failure of the third and fourth respondents to comply with O 15 r 7A of the Federal Court Rules, which imposes an obligation on a party, who has been ordered to give discovery, to be under a continuing obligation to discover any document not previously discovered and which would otherwise be necessary to comply with the order.

·                    The applicant’s concerns related further to the failure of the third and fourth respondents to discover documents described by Orders 1 and 2 sought in their notice of motion.

·                    Extensive correspondence was entered by the solicitors on both sides in respect of this issue. In particular I note:

o                   A letter from Lynch Morgan, solicitors for the applicants, to Carter Newell, solicitors for the third and fourth respondents, dated 20 October 2009 in which the concerns of Lynch Morgan in relation to disclosure were ventilated, and further and better disclosure was sought.

o                   A letter from Carter Newell on 11 November 2009 in which Carter Newell said that it would be in a position to furnish further disclosure by supplementary list of documents by 16 November 2009.

o                   A letter from Carter Newell on 18 November 2009 enclosing by way of service a supplementary list of documents. In that letter Carter Newell noted that its clients were continuing to look for telephone records and bank account details. Carter Newell also observed that the existing directions would need to be revised in light of the failure of the applicants to deliver their witness statements by 2 November 2009 in accordance with the orders of 15 September 2009, and that it did not see how the production of telephone records, a trust account statement and a cheque butt prevented the applicants from detailing their claim against the third and fourth respondents.

o                   A letter from Lynch Morgan dated 19 November 2009 observing that their clients had made further and significant disclosure of material, and observing further that it was appropriate to delay delivery of witness statements until discovery had been completed by the respondents.

·                    As of the hearing today, it appears that discovery by the third and fourth respondents had been completed with the exception of telephone records, a trust account statement and a cheque butt. I understand that these materials are, in essence, the materials the subject of the Orders I have already made today.

7                     It appears from the correspondence that the applicants have endeavoured to comply with their continuous disclosure obligations. Indeed, on 11 November 2009 Carter Newell informed the applicants of imminent disclosure, namely before the applicants filed their notice of motion on 12 November 2009. The fact is that, as of today, it appears that a great deal of the material for which the notice of motion contemplated disclosure was actually delivered to the applicants several days ago on 18 November 2009, and that very limited material remains to be discovered. While the obligation of continuous disclosure is a key obligation of a party during the course of litigation, in circumstances:

·                    where it appears that the third and fourth respondents have made, and continue to make, genuine efforts to comply with that obligation;

·                    where prior to the service of the notice of motion the third and fourth respondents had advised the applicants of imminent delivery of material and delivered the material (albeit two days after they advised); and

·                    where the balance of the material to be disclosed appears minimal (and indeed may not even be locatable);

it is difficult to identify particular fault of the third and fourth respondents in the context of complex and ongoing litigation, and not such fault that costs should be awarded against them in these particular factual circumstances. These facts are not illustrative of circumstances where one party is obliged to file a notice of motion to bring to the Court’s attention the failure of the other to comply with disclosure obligations, and to seek the Court’s intervention in aid of orderly progress of the litigation. Indeed, the absence of Carter Newell’s letter of 11 November 2009 from Mr Morgan’s affidavits filed in support of the notice of motion is curious. The solicitors for the applicants were aware of the imminent compliance with disclosure obligations by the third and fourth respondents, such that the filing of the notice of motion by Lynch Morgan appears, in the circumstances, premature.

8                     In my view the appropriate order is that the costs be in the cause.

Associate:

Dated:         23 November 2009