Ainsworth & Anor v Stapleton Johnson & Partners

1. [1]

   By summons filed on 6 December 2019 the plaintiffs sought orders for preliminary discovery under r 5.2 Uniform Civil Procedure Rules 2005 (NSW) (UCPR) in aid of a contemplated claim for damages for defamation. In the course of correspondence between the solicitors, which was extensive both before and after the commencement of the proceedings, the defendant’s solicitors, on 3 February 2020, in riposte to a preceding forensic lunge from the plaintiffs’ solicitors, volunteered what the former would regard as a mere amplification of information previously provided.

2. [2]

   Whatever the correct categorisation of the information provided on 3 February 2020, the plaintiffs solicitors accepted it in full satisfaction of the summons save as to costs. In the event it was the competing claims for costs that occupied the time at the hearing. The plaintiffs no longer pressing the prayers contained in the summons are content for it to be dismissed with an order that the defendant pay their costs. For its part, the defendant argues that the plaintiffs are not entitled to costs and in the circumstances seeks a costs order in its favour.

3. [3]

   I should say that on the evidence before me the various attempts by the parties through their solicitors to resolve their procedural differences, and indeed the whole of the dispute, were unsuccessful. The “disclosure” of information to the plaintiffs’ satisfaction on 3 February 2020 was not the product of any agreement between the parties. It was merely something which fell out in the tortuous course of ongoing correspondence characterised, for present purposes, by the plaintiffs insisting that information necessary for it to commence proceedings was being withheld and the defendant’s equally insistent maintenance of the positon that the information the plaintiffs were seeking was in fact obvious on the face of documents within their possession or which the defendant had supplemented from the public record.

4. [4]

   It remains that the costs dispute falls to be resolved in the context of an application for preliminary discovery, which has been resolved without resort to a hearing and judicial decision. These matters are central to the exercise of the Court’s discretionary power as to costs conferred by s 98 Civil Procedure Act 2005 (NSW) (“The Act”).

Background facts

1. [5]

   The plaintiffs reside at a waterfront property in a prestigious suburb in Sydney’s inner west. The defendant is a corporation carrying on practice in heritage planning and architecture. The defendant acts for the plaintiffs’ neighbours on their eastern boundary. The neighbour’s property is heritage listed on the State Heritage Register and on the local environmental plan for the district.

2. [6]

   The defendant acted for the neighbours on an application for an exemption under s 57(2) Heritage Act 1977 (NSW) in respect of a proposal involving (affidavit of Neil Martin Wallman affirmed 6 December 2019, annexure A, p.8):

3. [7]

   There was no evidence before me about the construction or appearance, other than its components were of stainless steel, of the barrier involved but in written submissions, Mr A.T.S. Dawson SC who appeared for the plaintiffs with Mr T.B. Senior, without demurrer from Ms S. Chrysanthou of counsel, who appeared for the defendant, described the neighbour’s proposal as “a development application to install extreme barriers”.

4. [8]

   The architect’s retainer extended to the preparation of required drawings and the provision of a Heritage Impact Statement (HIS) dated 19 July 2019 in support of the application for exemption. The HIS is the source of the plaintiff’s grievance. In summarising the neighbour’s proposal, the author of the HIS wrote (affidavit of Neil Martin Wallman affirmed 6 December 2019, annexure A,p.8):

The nature of the present dispute

1. [9]

   The plaintiffs claim in defamation is outlined in their solicitors letter to the defendant of 26 August 2019 (affidavit Jennifer Moran sworn 12 March 2020, JM 3), styled a Concerns Notice under the Defamation Act 2005 (NSW). It is said that the italicised statements in the HIS refer to the first plaintiff as he is the owner of the property and impute that he:

2. [10]

   The defendant submits that neither the proposed claim for damages for defamation nor the application for preliminary discovery have any merit. The defendant says that neither plaintiff is named in the HIS and there is no evidence that any person identified either of them as being the subject of the HIS, notwithstanding the first plaintiff’s assertion made in the Concerns Notice that he would be identifiable from the HIS by officers of the New South Wales Government Office of Environment and Heritage. The defendant says that it is self-evident on the face of the HIS that it was prepared for the neighbour and that the Exemption Notification Form (JM 2) was signed by the neighbour as landowner as was pointed out by the defendant’s solicitors as long ago as 12 September 2019 (JM 8). It was also pointed out that when responding to that letter on 17 October 2019, the plaintiffs solicitors stated that the impugned statements “are clearly based on allegations made to your client” by the neighbour. Although on 1 November the plaintiffs solicitors wrote to the defendant’s solicitor (JM 10):

3. [11]

   Again on 5 December 2019 after the plaintiffs had threatened to file a summons seeking preliminary discovery, and on the day before it was actually filed, the defendant’s solicitor wrote (JM 12):

4. [12]

   After a further exchange of heated correspondence on this topic, the plaintiffs’ solicitors asserted by letter dated 17 January 2020 (JM 17) that the defendant’s solicitors had failed “to confirm whether the [impugned statements] … were published as a result of instructions provided by [the neighbour] and/or others”.

5. [13]

   On 3 February 2020, the defendant’s solicitors wrote to the plaintiffs’ solicitors in the following terms:

6. [14]

   As I have said the defendant’s solicitors maintained that these things were obvious and at most an amplification of what had been drawn to the plaintiffs’ solicitors’ attention from the start. The plaintiffs’ solicitors, on the other hand, regarded them as a capitulation rendering their application for preliminary discovery otiose.

7. [15]

   The issue was presented to me for determination by the plaintiffs on the basis that the defendant had capitulated and by the defendant on the basis that the plaintiffs had abandoned their claim.

Legal principles

1. [16]

   The power of the Court to award costs may be sourced to s 98 of the Act. The primary operative provision is found in s 98(1)(a)-(c):

2. [17]

   Section 98 is expressed to be subject to the rules of court, the Act “or any other Act”. The basic rule is to be found in UCPR 42.1 in the following terms:

3. [18]

   Where, as here, the proceedings are to be disposed of without a hearing and without a judicial decision quelling a dispute, there is no “event” which costs may “follow”. In such cases, the general costs discretion is usually exercised by reference to the judgment of McHugh J in Re the Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6 at 624-5. His Honour said (at page 624):

4. [19]

   However, Ms Chrysanthou drew my attention to UCPR 42.20(1) which is in the following terms:

5. [20]

   Ms Chrysanthou characterised the plaintiff’s positon is an application for the court to “order otherwise”. In Fordyce v Fordham (2006) 67 NSWLR 497, McColl JA (with whom Beazley JA (as her Honour then was) agreed) held (at [84]) that the default order in UCPR 42.20 did not “create a presumption that [the plaintiffs] ought to pay the costs of the … proceedings”. Her Honour said that the default order provided by, inter alia, UCPR 42.20 was “a relevant, but not determinative” consideration. In her Honour’s judgment, the other considerations were those “usefully gathered” by McHugh J in Lai Qin.

6. [21]

   There is a body of authority relating to applications for preliminary discovery to the effect that as such applications “are not ordinary adversarial proceedings, where the general rule is the unsuccessful party pays the costs of the successful party”. Rather, and generally, the applicant for preliminary discovery should be ordered to pay the costs of the party required to make the disclosure by the Court’s order: Totalise PLC v The Motley Fool Limited & Interactive Investor Limited, Court of Appeal for England and Wales, unreported 19 December 2001. The Court of Appeal recognised there were exceptions to that general approach. Simpson J (as her Honour then was) considered this matter in Airways Corporation of New Zealand & Anor v The Present Partners of Price Waterhouse Coopers Legal & Anor [2002] NSWSC 521. Her Honour held that where the party required to make the disclosure had adopted an adversarial posture in the litigation, “the consequences of their making a judgment which turned out to be wrong are the same as such consequences for any other unsuccessful litigant”: at [11]. The costs, however, would not extend to the costs and expenses associated with the location and production of the information sought by the plaintiffs. Her Honour observed “plainly, those costs should not be [borne by] the defendants” (at [12]). The principles were also discussed by Ball J in Equiti Capital Limited v Hewson [2015] NSWSC 1388 at [14]–[16]: His Honour referred to the judgment Besanko J in Procter v Kalivis (No 3) [2010] FCA 1194 at [17]. Besanko J observed that the jurisdiction to make an order for preliminary discovery is extraordinary. His Honour, with respect, took a very similar view to Simpson J. Only where the responding party takes “an adversarial approach … it may be appropriate to order that it pay the costs caused by that adversarial approach”. Even then, those costs “would not necessarily include the costs of complying with an order for preliminary discover”.

7. [22]

   Ball J (at [16]) expressed the view that “where the defendant does take an adversarial approach … it will normally be appropriate for the court to order that costs follow the event unless it appears that some other order should be made; and “the event” in this case is obviously success or failure in relation to the application” for preliminary discovery. His Honour continued, that “where … the proceedings are settled, it is generally not appropriate for the court to order that one party pay the other’s costs”. His Honour referred to McHugh J’s judgment in Lai Qin.

8. [23]

   The matter was also considered by Ward CJ in Eq in Renton v Kelly [2018] NSWSC 1377. That too was a matter involving an application for preliminary discovery resolved without the need for a contested hearing. Her Honour expressed the governing principle in the following terms (at [56]):

9. [24]

   I appreciate that when one is obtaining guidance from previous authorities, one is not engaged in a process akin to the interpretation or construction of a statute. However like Ward CJ in Eq, with respect, I understand McHugh J in Lai Qin, by adopting the phrase “so unreasonably”, as meaning to connote a certain level of unreasonableness as necessary before the discretion to “otherwise order” was engaged; bearing in mind that it is not for the Court to embark upon a hypothetical hearing on the merits, which the parties by their conduct have sought to avoid. As Basten JA in said Nichols v NFS Agri Business Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84 (not a preliminary discovery case) at 683 [8]:

10. [25]

    The meaning of his Honour’s expression (see [7]), “acted manifestly unreasonably” is synonymous with McHugh J’s expression “acted so unreasonably” (my emphasis).

Consideration

1. [26]

   Where, as here, unlike in Airways Corporation of New Zealand or Equiti Capital, the application for preliminary discovery has not proceeded to a determination on the merits, there is no real occasion to enquire into whether the defendant has adopted an adversarial posture, or conducted the litigation in an adversarial manner. Rather, it seems to me, the costs question is to be resolved by reference to the principles stated by McHugh J in Lai Qin. And, in approaching the matter that way, “the court cannot try a hypothetical action between the parties”. The question therefore becomes, given I am required to resolve competing applications for costs, whether one of the parties has acted so unreasonably as to displace the general principle identified by McHugh J so as to attract the exercise of a discretion in favour of that party’s opponent.

2. [27]

   I would regard the expression “so unreasonably” as requiring the demonstration of conduct that was unreasonable enough as to be “manifest by reference to known circumstances, not in dispute between the parties”, as Basten JA put it in Nichols (at [8]). I am not satisfied that either party has discharged that onus and in my view the proper order is that each party bear his, her or its own costs of the proceedings for preliminary discovery.

3. [28]

   Doubtless there was a degree of robustness in the exchange of correspondence, the salient features of which I have summarised above. The solicitors doubtless were from time to time at cross-purposes. That matter does not constitute the type of manifest unreasonableness with which I am concerned.

4. [29]

   I am satisfied that the additional information volunteered on 3 February 2020, as I have said by way of amplification, went beyond what had previously been stated. But I would not regard it as a “capitulation” by the defendant in the face of an unanswerable case.

5. [30]

   Nor would I regard the plaintiffs as having “abandoned” their application for preliminary discovery. I accept that it is not obvious that the additional information provided by way of amplification would have been necessarily obtainable under UCPR 5.2. As Simpson J observed in Airways Corporation (at [4]),there may have been a question to the extent to which that information went to the identity of the person concerned as opposed to “evidence which might be used against that person”.

6. [31]

   On the other hand, the power conferred by UCPR 5.2 may go beyond the mere provision of a name and address. The definition provided of the expression “identity or whereabouts” in UCPR 5.1 is inclusive. It needs to be borne in mind that the making of an order for preliminary discovery is “for the purpose of commencing proceedings against” the person concerned. Information which “identifies” the person as a tortfeasor, or at least involved in the tort (in the present context), may be covered by the rule even if that expression does not go as far as empowering the court to order the provision of “sufficient information to decide whether or not to commence proceedings against” the person concerned: cf UCPR 5.3. However, it is unnecessary to make a final decision about that matter. As I have said it is not appropriate for me to embark upon the determination of disputed questions of fact going to the merits of the original application.

7. [32]

   My orders are:

   1. (1)

      The summons filed on 6 December 2019 is dismissed;

   2. (2)

      Each party is to bear his, her or its own costs of the proceedings.