Bassal v Savills (NSW) Pty Ltd (No 3)

HIS HONOUR:

The orders sought in the motion were as follows:

Campbelltown Factory Outlet Pty Limited (CFO) and Pacific Street Properties Pty Limited (PSP) (both in their capacity as a trustee of different unit trusts) formed a joint venture on or about 27 November 2007 for the construction and development of a factory outlet centre in Campbelltown, New South Wales (the Centre). PSP had a 60 per cent interest in the joint venture and CFO had a 40 per cent interest.

The plaintiffs controlled CFO and were responsible for the CFO side of the joint venture until it was placed into receivership.

The development of the Centre was financed by Suncorp-Metway Ltd. The joint venture retained the defendant during 2008 to act as the leasing agent for the Centre. The Centre was built during 2008 and 2009 and opened on 10 December 2009.

On or about 25 November 2010 Suncorp appointed receivers and managers to CFO and PSP.

These proceedings were commenced by the filing of a Statement of Claim on 30 August 2011 with CFO as the plaintiff. In July 2012 receivers and managers appointed to CFO and PSP purportedly assigned the causes of action, the subject of these proceedings, to those plaintiffs. The validity of this assignment is one of the issues in dispute in the proceedings.

On 2 August 2012 orders were made by the Court including an order that CFO be removed as plaintiff in the proceedings and that Messrs Albert and Terry Bassal be substituted as plaintiffs in the proceedings.

The claim against the defendant is in tort and contract and asserts breaches in how it went about obtaining tenants for the Centre.

On 6 August 2012 the plaintiffs filed an Amended Statement of Claim (ASOC). At the time Mr Peter Antoniou of CMC Lawyers was the solicitor on the record for the plaintiffs.

In mid 2012, the parties to the proceedings completed discovery. At the time DLA Piper was acting for the defendant.

In or about mid 2013, Messrs Wotton + Kearney (W+K) were retained by the defendant.

On 30 April 2015, the plaintiffs filed a Notice of Change of Solicitor and appointed Mr Richard Mitry of Mitry Lawyers in place of Mr Antoniou of CMC Lawyers.

On 15 May 2015 W+K received a letter from CMC Lawyers asserting that there were unpaid costs and disbursements owing to them by the plaintiffs. CMC Lawyers confirmed that they had a possessory lien over the documents that they held in the matter.

On 9 September 2015 W+K received an email from Mitry Lawyers requesting copies of documents discovered by the defendant in the proceedings.

On 16 September 2015 W+K responded to Mitry Lawyers' as follows:

On 17 September 2015 CMC Lawyers responded to W+K as follows:

By email dated 18 September 2015 W+K responded to Mitry Lawyers as follows:

On 1 December 2015 W+K wrote to Mitry Lawyers as follows:

On 29 January 2016 CMC wrote to W+K as follows:

Nothing further happened in relation to the discovered documents. In particular, the plaintiffs did not bring a motion as suggested by W+K, nor were there any negotiations between the plaintiffs and CMC Lawyers.

On 7 March 2016 W+K received an email from Mitry Lawyers serving a Notice of Ceasing to Act. On 31 March 2016 W+K were contacted by Mr Badarne of Good Legal Lawyers, who had received instructions to act on behalf of the plaintiffs. By email dated 31 August 2016 Mr Badarne wrote to W+K as follows:

Correspondence between Good Legal Lawyers and W+K on that subject ensued. On 19 October 2016 W+K wrote to Good Legal Lawyers as follows:

On 29 March 2017 the first plaintiff, Terry Bassal, filed a Notice of Change of Solicitor appointing Mr Johnson of Marsdens Law Group (Marsdens) in place of Mr Badarne. Mr Badarne remained as the solicitor on record for the second plaintiff, Mr Albert Bassal. It was not until 19 April 2017 that Mr Badarne filed a notice with the court removing himself as the legal representative of the second plaintiff.

On 30 March 2017 W+K received a letter from Marsdens requesting, inter alia, a complete copy of all discovery provided by the defendant in the proceeding. On 31 March 2017 W+K responded as follows:

On 27 April 2017 W+K responded to Marsdens as follows:

On 1 May 2017 W+K wrote to Marsdens as follows:

On 17 May 2017 W+K wrote to Marsdens as follows:

On 22 May 2017 Marsdens responded to the W+K letter of 17 May as follows:

The subpoenas to which reference was made in the correspondence were issued to the three experts on 10 May 2017. The Notice to Produce was filed on 12 May 2017 and referred to a Notice to Admit Facts, dated 25 August 2014, served by the defendant on the plaintiffs in the course of these proceedings.

The Notice of Motion was filed on 26 May 2017 and the Amended Notice of Motion was filed on 2 June 2017.

On 26 June 2017 Marsdens wrote to W+K advising that Mr Albert Bassal was now represented by a solicitor from Marsdens. They also advised that documents were provided by W+K on 9 and 13 June 2017, being the documents with which the experts were instructed to enable them to prepare their reports and that the plaintiffs regarded those documents as sufficient compliance with the subpoenas. This left as the only outstanding issue, the Notice to Produce.

At the hearing of the matter, a letter from CMC Lawyers dated 3 July 2017 addressed to W+K was placed before the Court (MFI 1). Relevantly, that letter provided:

In the circumstances, I ordered that the documents sought by the plaintiffs in their Notice to Produce be provided by the defendant and that this occur within seven days.

The only issue between the parties was the question of costs. The defendant wished its costs of the motion to be paid on an indemnity basis. The plaintiffs wished their costs to be paid on the ordinary basis.

The plaintiffs submitted that the Notice of Motion was premature and misconceived. By reference to their letter of 22 May 2017, which predated the filing of the motion, they submitted that much of the area in dispute had already been resolved.

The plaintiffs submitted that there was no statutory provision, regulation or authority which precluded two separate legal representatives from representing two separate plaintiffs in proceedings. In any event, that issue did not arise because it was always the case that Marsdens would, in due course, act for the second plaintiff.

The plaintiffs submitted that the issue of the subpoenas to the third party experts was justified given the lack of co-operation on the part of the defendant in relation to its discovery documents and although some of the material may have been privileged, other documents sought in the subpoenas were not and that this was an appropriate application by the plaintiffs.

The plaintiffs submitted that the questions concerning the existence of a possessory lien and the production of discovered documents were quite different and should not be dealt with as though they were related. The plaintiffs submitted that there was a clear obligation under the rules for discovery documents to be produced on request. The plaintiffs submitted that if contrary to their primary position the two issues were related, CMC Lawyers should have been joined as respondents to the motion.

In those circumstances, the plaintiffs submitted the motion was unnecessary and they should have their costs.

The defendant relied upon s 23 of the Supreme Court Act 1970 (NSW) or the Court’s inherent power as providing a basis for the Court ruling on the plaintiffs’ legal representation. It seems to me beyond doubt that the Court can give directions in relation to representation, particularly in circumstances such as these where there were two plaintiffs whose interests were identical.

It is, of course, theoretically possible for two separate solicitors to act for plaintiffs in those circumstances but this could create significant difficulties as was pointed out by Stephenson J in Bettergrow Pty Ltd v NSW Electricity Networks Operations Pty Ltd as trustee for NSW Electricity Networks Operations Trust t/as TransGrid [2017] NSWSC 658 at [16]:

While acknowledging the difference between the situation where one party is simultaneously represented by two solicitors and the present case, I am of the opinion that the correct approach is as described by Adamson J in Buses + 4WD Hire Pty Limited v Oz Snow Adventures Pty Limited [2016] NSWSC 1017 at [28]:

In my opinion, the defendant was entitled to require that the representation of the plaintiffs be clarified sooner rather than later, particularly if as eventuated, Marsdens were going to act for both plaintiffs.

The subpoenas served on the three experts, in effect, sought every document passing between the defendant and each of them and every document created by them in respect of the proceedings. Much of that material was clearly privileged and was not subject to production. The material which was not privileged was that which was instructed to the experts to enable them to express an opinion. The usual method of obtaining such information was to request it from the solicitors who retained the expert. Depending on when those documents came into existence, they may or may not have been affected by the lien relied upon by CMC Lawyers. Given the privileged nature of much of the material sought, however, the defendant was justified in having the subpoenas set aside.

In relation to the possessory lien claimed by CMC, the defendant submitted that its position had been consistent over the years. It acknowledged the right of CMC to claim a possessory lien over the documents and also acknowledged the right of the plaintiffs to request the production of discovery documents. There was an obvious tension between those obligations. Clearly, W+K could not comply with one requirement without running the risk of being in breach of the other.

The resolution was either to approach the Court for a ruling or for CMC and the plaintiffs to sort out their differences so as to enable the litigation to proceed. Having been frustrated in their attempts over the years to explain the difficulty of their position to the plaintiffs, it is not surprising that the defendant decided to have its position clarified by bringing the matter before the Court. In my opinion, that approach given the background as disclosed by the correspondence was a reasonable one on the part of the defendant. The rationale behind the filing of the motion was appropriately explained in the W+K letter of 17 May 2017.

The reason the motion did not proceed on its allocated date was because steps were taken by the plaintiffs to regularise their representation and to accept in answer to the subpoenas that they were only entitled to those documents provided to the experts and on which the experts based their opinion. The question of whether the defendant should provide the discovery documents in spite of the possessory lien was resolved by my order. I was only in a position to make that order because of the motion.

As W+K had repeatedly pointed out in correspondence, the impasse created by the notification of the possessory lien by CMC was, in the absence of a negotiated resolution, only capable of being resolved by an order of the Court. The party in the best position to make that application, again as repeatedly suggested by W+K, was the plaintiffs. Against that background, the issuing of subpoenas to the defendant’s experts and the service of the Notice to Produce by Marsdens invited the filing of the motion for the reasons set out in the W+K letter of 17 May 2017.

In those circumstances, I am of the opinion that the defendant is entitled to its costs of the motion. The only other issue is whether those costs should be on an indemnity basis. On that issue, I have concluded that indemnity costs in favour of the defendant are not justified.

There is nothing in the conduct of the plaintiffs which would justify an order for indemnity costs. It is true that matters would have proceeded more expeditiously had they done what they threatened to do when represented by Mitry Lawyers and brought their own motion for the production of the discovered material. This would have had brought the matter more quickly before the Court. Obviously that course of action was not assisted by the frequent change of solicitors. Since I do not know the reason for these changes, they can play no part in my reasoning other than to provide an explanation for why the plaintiffs did not bring their own motion to clarify the situation.

Accordingly, the orders which I make are as follows: