Skytraders Pty Ltd v Ian Wallace Meyer (No 2)

On 30 October 2024 the Court heard an amended notice of motion filed by the plaintiff in these proceedings, Skytraders Pty Ltd on 27 August 2024.

By the time the motion was heard, there were only two prayers of the motion left for determination:

For the reasons which follow, the Court does not accept Skytraders’ submission that all of the disputed documents should be disclosed by Mr Meyer. It was accepted by Skytraders during oral submissions that the only ground of objection to the claim of privilege was that there was insufficient evidence available to establish such a claim. The Court is satisfied that the evidence does demonstrate the documents are privileged and should not be disclosed.

As to who should bear the costs of the error by Mr Meyer’s IT expert, the Court concludes that these costs should be Skytraders’ costs thrown away in the proceedings. No case has been made out for those costs to be other than on the ordinary basis. Skytraders contended for their costs thrown away to be defined by specific categories of costs (see [75] below). The Court declines to adopt such a course for two reasons: first, because costs assessors are experienced in identifying which costs are thrown away in the proceedings without being confined to identifying specific categories of costs thrown away; and, second, the determination of which costs are thrown away should be considered at the end of the proceedings without the Court attempting at this stage to identify any categories of such costs.

Mr A Zahra of Senior Counsel appeared for Skytraders, Mr M Davis of Counsel appeared for Mr Meyer.

These proceedings have had a long and complicated history since their commencement by summons before Robb J sitting as Duty Judge. Since that time the parties have been at loggerheads over the implementation of various interlocutory orders and disputes have been heard by several judges of this Court.

In December 2021, the matter came before Rein J who considered competing motions by both parties as to whether Skytraders’ forensic expert should have access to documents seized as part of a search order to conduct a ‘mapping process’ or whether Mr Meyer should be entitled to provide discovery to Skytraders in the ordinary course (see Skytraders Pty Ltd v Meyer [2021] NSWSC 1670 (Skytraders (No 1)).

In Skytraders (No 1) Rein J provided a helpful overview of the factual background to the proceedings which I gratefully adopt:

At the conclusion of that hearing, Rein J made the following orders:

The Independent Expert provided their mapping reports in January and February 2022. In July 2022 the parties agreed a regime for Mr Meyer to provide verified discovery. As part of those orders, Mr Meyer was required to prepare and serve a list of documents which included identification of any documents which related to specific search terms, including all documents recording or evidencing any sharing of Skytraders’ documents. Mr Meyer was also required to identify any documents which were subject to claims of privilege or confidentiality by himself or third parties. Mr Meyer then had to make available to Skytraders all documents that were not the subject of such claims.

On 9 May 2023, Skytraders filed and served a Notice of Motion seeking orders which authorised the parties’ independent IT experts to search Mr Meyer’s devices, orders requiring the production of certain documents to Skytraders and orders requiring Mr Meyer’s solicitors to identify all privileged materials. Richmond J heard this notice of motion on 23 May 2023. On 4 July 2023 (4 July orders), His Honour made orders requiring, among other things:

On 30 August 2023, the 4 July Orders were varied, relevantly so that a particular subset of documents created prior to Mr Meyer’s resignation on 16 December 2019 could also be withheld by Mr Meyer’s solicitors for consideration of any confidentiality and privilege claims that may arise. These orders also required Mr Meyer’s solicitors to serve an updated list of documents which were the subject of claims of confidentiality or privilege.

On 18 October 2023, further orders were made requiring the list of claims with respect to certain documents created after Mr Meyer’s resignation to identify the “basis for and/or the entity making each claim” for privilege or confidentiality.

The motion and dispute before me arise from controversies which occurred during this extensive and intricate discovery process. There were initially three matters in dispute.

First, a dispute arose between Skytraders and two third parties to the proceedings, namely Air-Affairs (Australia) (the Second Respondent) and Premier Aviation (the Fourth Respondent) concerning access to documents marked as potentially confidential in several lists of documents also prepared by Mr Meyer’s solicitors and to which those third parties press confidentiality claims. These were documents that were identified during the discovery process using search terms agreed by the parties. However, Skytraders’ solicitors were prevented from showing these documents to their clients and were thereby prevented from obtaining instructions about them.

Skytraders resolved all issues concerning confidential documents with Pel-Air Aviation Pty Ltd (the Third Respondent) prior to the hearing. As a result, no appearance was required for Pel-Air before me.

Second, a dispute arose between Skytraders and Mr Meyer as to whether there was a legitimate basis for Mr Meyer to claim privilege over certain documents.

Finally, on 17 April 2024, Mr Meyer’s solicitors wrote to Skytraders’ solicitors that they had discovered that Mr Meyer’s IT Expert had used historical search terms which were different from the search terms required by consent orders made on 21 July 2022 by Registrar Walton to conduct the search required by the 4 July orders. The effect of this error was that there were inaccuracies in the lists that Mr Meyer’s solicitors had prepared over several months concerning claims for confidentiality and privilege. There is now a dispute between Skytraders and Mr Meyer as to who should pay the costs associated with the error made by the third party IT expert.

As a result of the disputes summarised at [15]-[18] above, Skytraders filed a notice of motion on 27 March 2024, which was amended on 27 August 2024. As noted at [2] above, by the time the motion came before me the only issues remaining in dispute were whether Mr Meyer could properly maintain his claims for privilege and who should bear the costs of the error by Mr Meyer’s IT expert.

I should also record that on 5 April 2024 the matter appeared before me in the Applications List (5 April 2024 orders). The parties handed up short minutes which provided for a regime for the parties to access confidential documents to see whether the dispute could be narrowed. Orders (4) and (5) related to the privilege dispute. The orders required an affidavit from Mr Meyer in support of his claim for privilege. They also provided for Mr Meyer’s solicitors to describe the documents to Mr Meyer generally so they could obtain instructions to facilitate the preparation of the affidavit. Orders (4) and (5) are:

At the hearing of the motion on 30 October 2024, Skytraders, Air-Affairs and Premier Aviation resolved their dispute concerning the confidential documentation. Mr B Mostafa of Counsel appeared for Air-Affairs and Mr D Birch of Counsel appeared for Premier Aviation. Both were excused from the hearing after the confidentiality dispute was resolved. The Court made the following orders pursuant to short minutes agreed by the parties to give effect to an agreed access regime:

The affidavits of Mr Meyer’s solicitor, Ms Susanna Ford, dated 16 April 2024 and 26 April 2024, identify that privilege is claimed over three categories of documents.

The first category relates to emails (and attachments) sent between Mr Meyer and Mr Terrence Vickers. Mr Vickers was a director and employee of Skytraders until around October 2019. Mr Vickers is the sole director and shareholder of Premier Aviation which is a 30.8% shareholder of Skytraders. Mr Vickers agreed to fund Mr Meyer’s defence and to keep confidential communications with Mr Meyer in respect of facts, issues and advice received in connection with these proceedings.

The second category of documents comprises emails and attachments sent by Mr Meyer between his own email accounts. These emails and attachments are contended to have been prepared and sent by Mr Meyer for the purpose of collating material to be used for the provision of legal advice in relation to the proceedings.

The third category of documents are standalone documents created by Mr Meyer. The documents are contended to have been created by Mr Meyer at the request of his lawyers and were brought into existence for the purpose of Mr Meyer being provided with legal advice.

Both parties accepted that all of the documents which were the subject of the privilege claim were created after the commencement of the proceedings. They also accepted that documents created after the commencement of proceedings are not normally discoverable (see Uniform Civil Procedure Rules 2005 (NSW) r 21.1(1)(c)). Despite this, it was submitted by Mr Zahra SC that Skytraders would still be entitled to see the documents, subject to any legitimate claim for privilege by Mr Meyer, because they were discovered pursuant to search terms ordered by Richmond J on 4 July 2023 and Mr Meyer’s solicitors had formed the view that they are relevant to the issues in the proceedings.

Section 119 of the Evidence Act 1995 (NSW) provides:

Section 117 of the Evidence Act defines a ‘confidential’ communication’ as follows:

Section 117 also defines a ‘confidential document’ as follows:

Both Mr Zahra SC and Mr Davis relied on the decision of Brereton J (as his Honour then was) in Hancock v Rinehart (Privilege) [2016] NSWSC 12 to outline the principles of how a claim for litigation privilege must be proven. At [35] of the judgment Brereton J provided a summary of the principles applying to applications to maintain legal professional privilege

His Honour’s judgment elaborates on the principles summarised above (emphases added):

The evidence for the claim of privilege was set out in Ms Ford’s affidavit affirmed on 16 April 2024. That affidavit provided a description of all the documents or communications which were said to be privileged and the reason for that claim.

It is important to note that Ms Ford did not specify in the affidavit that the description of the documents was based upon her own personal examination of the documents. However, Mr Zahra SC was prepared to accept Mr Davis’ instructions that the descriptions of the disputed documents and communications were based upon her examination of the documents.

Equally critical to note is that Mr Meyer was never allowed to see the actual documents or communications over which privilege is now claimed. The 5 April 2024 orders agreed by the parties (see [20] above) only enabled Mr Meyer’s lawyers to generally describe the documents to him so they could obtain the necessary instructions to produce the affidavit in support of any privilege claims.

This is significant because [25] of Ms Ford’s 16 April 2024 affidavit states that ‘…in respect of the of the privilege maintained by the Defendant, I am instructed as follows.’ On one view, as Mr Zahra SC contended, this suggests that the assertions of privilege in the affidavit were simply Ms Ford repeating instructions given by her client who was not even able to view the documents. This would not be sufficient evidence to satisfy the evidentiary onus described by Brereton J at [16] of Hancock.

The situation would be juridically very different if it was the case that Ms Ford’s description of the purpose for which the document was created was a product of an inference she had drawn from personally reviewing the documents. It is the Court’s experience, and was accepted by Mr Zahra SC, that many solicitors will draft affidavits on behalf of their clients who claim privilege over documents on the basis that the purpose of the document is clear on its face or is capable of being identified by inference from the terms of the document. Subject to the Court being satisfied such an inference is properly capable of being drawn, this would be sufficient to satisfy the evidentiary onus which rests upon the person claiming the privilege, as described in Hancock at [16].

As a result, it became necessary during the hearing for the Court to be informed of how Ms Ford formed the view that the documents were privileged. That process was described to the Court by Mr Davis based on his instructions from Ms Ford in court on the day of the hearing. While evidence in this form is ordinarily inadmissible, no objection was taken by Skytraders to the Court accepting these instructions as evidence. Mr Davis’ explanation was (Tcpt, 30 October 2024, p. 56(35) – p. 57(42)):

Mr Zahra SC’s essential submission was that the evidence relied upon was insufficient to justify the claim for privilege because the affidavit should have been provided by Mr Meyer himself and not his solicitor. Mr Zahra SC relied on [16] of Hancock to suggest that it was only Mr Meyer who would have knowledge of the relevant purpose for which the documents and communications were created and the absence of his voice in this dispute meant he had not satisfied the evidentiary onus required to maintain a claim for privilege.

The Court rejects Mr Zahra SC’s submission that the general description of the documents provided to Mr Meyer would have been enough for Mr Meyer to have put on his own affidavit and that if the descriptions were insufficient he should have taken further steps to obtain Skytraders’ agreement to vary the order. The orders on 5 April 2024 were consent orders and were formulated to balance the need for Mr Meyer to prepare an affidavit supporting his privilege claim whilst also respecting the confidentiality claim asserted by Skytraders to the documents. It lies ill on the part of Skyraders now to submit that Mr Meyer should have taken further steps to amend an already negotiated position to produce the affidavit.

For the avoidance of doubt, to the extent it was pressed by Skytraders, the Court also rejects any submission that Order 4 of the 5 April 2024 orders which stated that “[the defendant file and serve an affidavit in support of any claim for privilege he seeks to maintain in respect of those documents” required Mr Meyer personally to depose an affidavit. When the orders were handed up to the Court, Skytraders did not specifically suggest that Mr Meyer had to depose the affidavit personally. It is also the Court’s experience that solicitors will often provide affidavits on behalf of their clients to maintain claims for privilege. In any event, the orders only required an affidavit to be made in support of the privilege claim: Mr Meyer was free to choose from whom and the form in which that affidavit was provided.

Finally, as noted at [23] above, some of the documents over which privilege is claimed concern communications between Mr Meyer and Mr Vickers. Ms Ford’s affidavit affirmed 16 April 2024 at [31] outlines the nature of the relationship between these individuals:

It was accepted that Mr Meyer’s firm of solicitors, Arnold Bloch Liebler (ABL) were first retained in this matter on 30 May 2022. Mr Zahra SC contended that there was no evidence to support the confidentiality of the communications for the purposes of sections 117 and 119 of the Evidence Act (See [27]-[29] above). This submission was premised on ABL not being able to provide support for the confidentiality of the communications prior to their involvement in the matter. However, I accept Mr Davis’ submission that the Court can infer a pre-existing obligation for communications between Mr Vickers and Mr Meyer to be kept confidential from the reference in [31] of Ms Ford’s affidavit that ‘Mr Vickers agreed to continue to fund the Defendant’s defence and to keep confidential communications with the Defendant’.

The first category of documents in dispute concerns emails and attachments sent between Mr Meyer and Mr Vickers. It was agreed by the parties that only the documents at [33]-[45] and [46]-[49] of Ms Ford’s affidavit were disputed in relation to this category.

As noted at [23] above, Mr Vickers was a director and employee of Skytraders until October 2019 and is the sole director and shareholder of Premier Aviation. As Ms Ford’s affidavit notes (see [41] above) Mr Vickers had agreed to fund Mr Meyer’s defence and keep all communications in respect of the issues arising and legal advice in connection with the proceedings confidential.

All of the evidence as to why the documents at [33]-[45] and [46]-[49] of Ms Ford’s affidavit were privileged was structured in a similar form in that it provided an overview of the document and then an explanation as to why the document was privileged. For example, [36]-[37] of Ms Ford’s affidavit:

Mr Davis advanced two submissions in support of this category of documents being privileged:

Mr Davis accepted that Ms Ford’s affidavit evidence appears only to assert privilege over the documents. However, Mr Davis submitted that the Court can comfortably draw an inference the documents were created for the dominant purpose of obtaining legal advice for two reasons. First, the fact that Mr Vickers was a litigation funder who was subject to a confidentiality agreement suggests he would be someone who would have an interest in being kept informed as to matters and advice relevant to the proceedings. The existence of a confidentiality agreement was also submitted to strengthen the availability of the inference that the documents being sent were related to the litigation rather than being documents related to a different subject.

Mr Zahra SC submitted that the evidence at [41] of the nature of the relationship between Mr Meyer and Mr Vickers goes no higher than to suggest there is a willingness or some agreement on behalf of Mr Vickers to pay Mr Meyer’s legal fees and then a conclusionary statement that there is an agreement to keep the documents confidential. This was said to be insufficient to establish that the documents were to be kept confidential by either an express or implied agreement as required by s 117 of the Evidence Act. Mr Zahra SC again submitted that the nature of the funding relationship was something that Mr Meyer should have deposed to and could only have been in his knowledge.

The Court is satisfied on the evidence that the contents of the emails and attachments between Mr Meyer and Mr Vickers are privileged because they were created for the dominant purpose of obtaining legal advice for three reasons.

First, the Court rejects Mr Zahra SC’s submission that only Mr Meyer could provide evidence as to the specifics of the arrangement. [31] of Ms Ford’s affidavit indicates that since ABL were retained in May 2022 they have been engaging with or at least aware of Mr Vickers’ involvement in the proceedings. This provides some basis for Ms Ford to be able to provide evidence as to the nature of the agreement. For the reason at [42] above, the Court is satisfied that Mr Meyer and Mr Vickers have had an agreement for Mr Vickers to fund Mr Meyer’s defence and for the pair to keep communications confidential before and after ABL were retained as Mr Meyer’s lawyers.

Second, the Court is satisfied that the documents that were shared with Mr Vickers were related to the case. The privilege review process undertaken by ABL as described by Mr Davis at [37] above demonstrates that Ms Ford and other solicitors personally reviewed the documents in dispute. The example at [45] of Ms Ford’s evidence demonstrates that the emails contained references to facts in issue in the proceedings and comments which would be the subject of or had been the subject of legal advice. This is information which would plainly be privileged.

Third, the Court finds that the communications between Mr Meyer and Mr Vickers were for the dominant purpose of obtaining legal advice. This Court is well familiar with documents being sent by parties to litigation funders. Litigation funders understandably seek to be kept informed of matters related to the progress and outcome of the proceedings. As was noted by Bergin J (as the former Chief Judge in Equity then was) in Rickard Constructions Pty Ltd v Richard Hails Morretti Pty Ltd [2006] NSWSC 234 at [58]-[59], communications which are passed on to litigation funders in relation to the funder’s continued support of the proceedings fall within the description of a ‘dominant purpose’ of the client “being provided” with professional legal services:

The second category of disputed documents is emails and attachments sent by Mr Meyer between his own email accounts. The specific documents in dispute were outlined at paragraphs [52], [53], [60], [61], [62], [71], [73], [74], [90], [91], [94] and [100] of Ms Ford’s 16 April 2024 affidavit.

Paragraph [50] of Ms Ford’s affidavit explains why Mr Meyer had a practice of sending documents to himself:

Ms Ford’s evidence also contained a description as to the nature of the document and then an explanation as to why the documents were privileged. For example, at paragraphs [52], [53] and [60] Ms Ford deposed:

Mr Davis submitted that the documents were privileged because they fell within s 119(b) of the Evidence Act as documents which contained “the contents of a confidential document (whether delivered or not) that was prepared…” for the dominant purpose of obtaining legal advice in relation to the proceedings. The contents of these emails containing notes and comments about evidence as well as about factual and legal issues in the proceedings were contended to be confidential and were prepared so Mr Meyer could obtain legal advice from his lawyers.

Mr Zahra SC submitted the documents were not privileged for two reasons. First, the fact Mr Meyer was sending these documents to himself meant that it could not satisfy the requirement under s 117 that Mr Meyer, as the maker of the document, was under an express or implied obligation not to disclose its contents. In reply, Mr Davis submitted that an individual who has created notes to be used when obtaining legal advice would be under an implied obligation not to disclose this document.

Second, Mr Zahra SC submitted that there was also insufficient evidence to establish that Mr Meyer’s legal representatives, as the persons for whom the documents were said to be prepared for, were under an express or implied obligation to keep the documents confidential for the purposes of s 117. Mr Zahra SC contended the evidence needed to specify that the documents were created in connection with giving that document to a solicitor and there was not enough evidence available for the Court to infer the notes would be provided to Mr Meyer’s lawyers.

The Court concludes that the documents in dispute in this second category were effectively Mr Meyer’s notes to himself about the litigation and issues arising from that litigation. The Court is also satisfied on the available evidence that these notes were confidential communications for the purposes of obtaining legal advice and therefore privileged for two reasons. First, the evidence at [55] above demonstrates that the notes contained remarks concerning legal and factual issues in connection with the dispute. These issues are directly relevant to the proceedings and this connection to the dispute enables the Court to be comfortably satisfied that they were created so Mr Meyer could obtain legal advice.

Furthermore, [50] of Ms Ford’s 16 April 2024 affidavit notes that Mr Meyer was requested by his solicitors to collate documents and information relevant to the proceedings for the purposes of Mr Meyer obtaining legal advice. This provides a further basis for the Court to conclude the notes were created for Mr Meyer to obtain legal advice. I reject Mr Zahra SC’s submission that Ms Ford’s affidavit needed to say explicitly that she told Mr Meyer to create the notes or that Mr Meyer has actually provided the notes to solicitors for the notes to be privileged. If they were created for the purpose of Mr Meyer being provided with professional legal services either at the time of their creation or in the future then this is sufficient for the purposes of s 119 of the Evidence Act for the documents to be privileged.

Second, the Court is satisfied that the documents are a confidential document for the purposes of ss 117 and 119 of the Evidence Act. The question before the Court is not whether Mr Meyer had imposed a duty of confidence upon himself but whether the intended recipient of the notes, Mr Meyer’s lawyers, were under such an express or implied obligation. As noted at [28]-[29] above, s 117 of the Evidence Act makes clear that if the person for whom a document or to whom a communication was made is under an express or implied obligation not to disclose its contents, then the document or communication will be confidential. Because Mr Meyer’s lawyers were undoubtedly under an express or implied obligation to keep such notes confidential on their receipt, this question must be resolved in the affirmative.

The final category of documents comprises a series of standalone documents created by Mr Meyer which are screenshots from his devices relevant to issues in the proceedings. The specific documents in dispute are outlined at [97]-[99] of Ms Ford’s 16 April 2024 affidavit.

Ms Ford’s affidavit at [69] explains the reason why these screenshots were taken:

Ms Ford’s 16 April 2024 affidavit again described the documents the subject of the privilege claim and why they were privileged. For example, [97] of her affidavit states:

Mr Davis submitted that the screenshots relate to and show what Mr Meyer could see or was displayed when he was logged on to search for documents using Skytraders’ document management systems. This relates directly to an issue in the proceedings, namely how Skytraders’ document management system operated. Mr Davis postulated these screenshots might one day be a piece of evidence, a document that may be provided to a forensic expert or a document that may be used by Mr Meyer to help explain factual issues in the dispute to his lawyers. It was submitted on behalf of Mr Meyer that the screenshots were created for the purpose of obtaining advice and legal services and there was no other conceivable explanation for why the screenshots were created.

Mr Zahra SC again repeated his submission that the evidence was insufficient to maintain a claim for privilege because the affidavit from Ms Ford was all based on what Mr Meyer is said to have informed her as to why he created the documents. As such this was only a general attempt to assert that the documents were created for the purposes of obtaining legal advice and was insufficient to satisfy the evidentiary onus described in Hancock.

In reply, Mr Davis submitted, and the Court accepts, that Brereton J at [16] was not requiring that an affidavit must always come from the individual who is claiming the privilege but must prove the facts that establish a claim for privilege. This case was submitted to be distinguishable from Hancock, where the absence of an affidavit from Mrs Rinehart who was claiming the privilege was said to be a reason why her evidentiary onus was not satisfied, on the basis that unlike Mrs Rinehart’s solicitors, Mr Meyer’s solicitors have thoroughly reviewed the documents themselves.

The Court concludes that the documents the subject of this category are privileged. Like the emails sent by Mr Meyer to himself, these screenshots are effectively notes Mr Meyer has created for himself. The Court is satisfied they were created for the dominant purpose of obtaining legal advice. Ms Ford’s 16 April 2024 affidavit shows the screenshots are directly related to subject matter which is in issue in the proceedings. The Court again rejects any submission that only Mr Meyer could depose to why the screenshots were taken. Ms Ford can provide evidence to why documents were created if that purpose is clear on the face of the document. The example at [97] of her affidavit is a document which relates to an issue in the proceedings being how and why Mr Meyer could have retained any of Skytraders’ information. Therefore, this is a document which was created by Mr Meyer to obtain legal advice for the purpose of s 119 of the Evidence Act and the Court is satisfied that was the purpose for which it and the other documents in this category were created.

The Court is also satisfied that the documents are confidential for the purposes of section 117 of the Evidence Act. Like the second category, these are documents the Court is satisfied were created for Mr Meyer’s legal representatives who would be under an express or implied duty of confidence when provided with the documents.

The facts surrounding the dispute concerning who should be responsible for the costs of the error by Mr Meyer’s IT expert are not in dispute. Ms Ford’s affidavit affirmed on 24 May 2024 outlines that ABL engaged the services of KordaMentha to assist with various aspects of Mr Meyer’s discovery process in the proceedings. This included assistance with the application of search terms to create forensic images of Mr Meyer’s devices and to produce a set of documents to ABL for their consideration of whether any documents were privileged or confidential prior to the documents being disclosed to Skytraders’ solicitors.

On 17 April 2024, Ms Ford was informed by KordaMentha that they had inadvertently applied an incorrect set of keyword search terms to the document which was to be considered by ABL under the 4 July 2023 orders (Search Term error)

Ms Ford’s affidavit also cross-references the affidavit of Mr Roman Barbera, an Executive Director in the Forensic Technology team of KordaMentha, whose evidence was that the effect of using the outdated search terms was:

Mr Barbera also deposed that once the updated search terms were applied to the data repository, the following extra documents were responsive and produced to Skytraders’ solicitors:

Ms Ford deposes that after ABL were informed about the Search Term error they instructed KordaMentha to prepare a revised lists of claims, prepare the additional pre-resignation documents for production to Skytraders, prepare the additional excluded pre-resignation documents for production and prepare the additional post-resignation documents for ABL’s consideration, and where relevant, production to Skytraders. Between 17 April 2024 and 26 April 2024 ABL rectified the Search Term error and produced the additional relevant documents to Skytraders’ solicitors. Ms Ford also notes that ABL immediately notified the solicitors for the other parties about the error. ABL also corresponded with the solicitors for the other parties as to the steps taken by ABL to carry out the relevance review required by the 4 July 2023 orders.

The parties provided competing short minutes regarding how the costs of the error by Mr Meyer’s IT expert should be borne. Skytraders proposed:

Mr Davis submitted on behalf of Mr Meyer that the Court should not make any costs orders following the Search Term error because Skytraders had not demonstrated a sufficient level of prejudice or wasted costs to justify such an order. Mr Davis submitted that a large portion of the document lists created after the erroneous searches were also produced once the error was rectified and as such, there were only minimal costs thrown away. However, Mr Davis accepted there were some wasted costs as a result of the Search Term error. Mr Davis further submitted that their client should not have to bear the costs of a mistake which was the fault of a third party.

Mr Zahra SC submitted that Skytraders were entitled to their costs because the error was not caused by them and Skytraders had provided sufficient evidence to demonstrate that they had incurred wasted expenditures. This evidence, which was at a high level of generality, was outlined in the affidavit of Ms Kaushalya Mataraaratchi and was said to be uncontested by Mr Meyer. As a result, Skytraders submitted they were entitled to an order to address any unnecessary costs they have incurred in the proceedings.

Mr Zahra SC also submitted that if a costs order is made in favour of Skytraders, Mr Meyer’s rights to pursue KordaMentha for any costs remain preserved and it should not fall to Skytraders to join a third party to their motion to recover any losses in relation to an interlocutory process that was part of the proceedings.

The Court accepts that Skytraders will have incurred some wasted costs as a result of the error, but makes no finding as to what those costs were. The Court also acknowledges the mistake was not caused by Mr Meyer’s solicitors and appropriate steps were taken in a timely way to resolve the issue. Nevertheless, Skytraders is entitled to recoup costs which were wasted as a result of actions taken on behalf of Mr Meyer in relation to interlocutory orders related to these proceedings.

However, the Court declines to make costs order referrable to specific categories of wasted costs as proposed by Skytraders. Costs assessors are experienced in identifying wasted costs and this should be a process conducted at the end of the case without any attempt by the Court at this interlocutory stage of the proceedings to identify specific categories of such costs. To do so at this stage may only lead to further dispute in a matter which has already been stalled by several interlocutory disputes and is inconsistent with s 56 of the Civil Procedure Act 2005 (NSW) (CPA).

Finally, the motion sought that the costs thrown away be on the indemnity basis, with the ordinary basis as an alternative. No written or oral submission was made in support of the indemnity basis. In my respectful view, that reticence was correct. There is no suggestion that the Search Term error was the fault of Mr Meyer or his solicitors. None of the established categories of conduct which could result in an indemnity costs order are satisfied in this case. Any costs thrown away will be assessed on the ordinary basis.

For these reasons, the Court will not require Mr Meyer’s solicitors to provide Skytraders’ solicitors a Legal Forensic Image of documents to which privilege has successfully been claimed, but will require Mr Meyer to pay Skytraders’ costs thrown away by reason of the Search Term error.

As each party has had a measure of success, the Court proposes that each party’s costs be their costs in the cause. The scope of dispute narrowed significantly after extensive negotiation between the parties. It is also not consistent with s 56 of the CPA for the Court to attempt to parse the measure of success that each party has had on the motion. As the procedural history shows, this litigation has been bedevilled by interlocutory disputes and further costs should not, if possible, be incurred in such an exercise. Nevertheless, the parties will be given an opportunity to be heard in relation to costs if they wish.

The orders of the Court are: