The Owners - Strata Plan No 89791 v FKP Constructions Pty Ltd

1. [1]

   I am dealing with an argument about costs in respect of which it is said by the defendants, who are the applicants for a costs order:

2. [2]

   What the circumstances do show is how unhelpful and productive of unnecessary legal costs it is for the solicitors experienced in the manner in which this List works, and who should understand what expectation the Court has concerning resolution of disputes in this List, to engage in heated correspondence, rather than calmly considering and discussing an orderly resolution of the issue at hand.

3. [3]

   The plaintiff is the Owners Corporation of a residential development in Woolloomooloo. The development was constructed by the second defendant on behalf of the first defendant.

4. [4]

   The Owners Corporation alleges that there are substantial defects in the building.

5. [5]

   On 11 July 2024, Ball J directed that the defendants serve their evidence by 27 September 2024.

6. [6]

   Issues have arisen in respect of the Owners Corporation’s maintenance of the building, and in particular its roof, performance by the third parties of rectification works, the Owners Corporation’s obligation to mitigate its loss and the defendants’ entitlement to be given an opportunity to minimise the damages they must pay by rectifying the defects themselves.

7. [7]

   They led the defendants’ solicitors to write to the plaintiff’s solicitors on 22 August 2024:

8. [8]

   On 30 August 2024, the Owners Corporation’s solicitors responded to that letter without referring to the defendants’ request for documents.

9. [9]

   That led to the defendants’ solicitors writing, on 4 September 2024:

10. [10]

    On 12 September 2024, the defendants’ solicitors referred to expert reports served by the Owners Corporation, being the “Jones Report” and the “Keato Report” and, referring to the work evidently effected at the property by third parties, expanded its request for documents as follows:

11. [11]

    Although the letter stated that the defendants’ responsive expert evidence could not be completed without the documents called for, other than at a high level of generality, no explanation was given as to why that was so.

12. [12]

    That letter prompted the following response from the Owners Corporation’s solicitors on 19 September 2024:

13. [13]

    The defendants’ solicitors responded on 24 September 2024:

14. [14]

    The letter continued in the same tone.

15. [15]

    Again, the defendants’ solicitors did not explain, otherwise than at a high level of generality, what difficulty the defendants’ experts had, absent the documents called for.

16. [16]

    In circumstances where a party’s expert states that he or she requires documents within the other party’s possession in order to complete his or her reports, the appropriate course is for the first party to explain to the other why such documents are needed by the expert and, absent agreement, to file a motion seeking disclosure before evidence and explaining why there are “exceptional circumstances” of the kind to which Practice Note SC Eq 11 speaks. I referred to this circumstance as one often arising in this list in Blacktown City Council v Allen Jack + Cottier Architects Pty Ltd. [8]

17. [17]

    As the Court has explained on a number of occasions now, it is not appropriate in those circumstances for a defendant to serve a Notice to Produce seeking production of those documents. [9]

18. [18]

    However, in this case, on 27 September 2024 the defendants’ solicitors served a Notice to Produce seeking the following documents:

19. [19]

    As can be seen, the scope of the documents sought was extremely broad.

20. [20]

    Mr Le Plastrier, who appeared for the defendants, submitted that:

21. [21]

    That is not obvious to me from the terms of the Notice to Produce.

22. [22]

    On 10 October 2024, the defendants’ solicitors wrote to the Owners Corporation’s solicitors noting that the Owners Corporation had not moved to set aside the Notice to Produce and enquiring as to when production would be given.

23. [23]

    It would have been open to the Owners Corporation to move to set aside the Notice to Produce.

24. [24]

    It did not do so.

25. [25]

    Instead, on 11 October 2024, the Owners Corporation’s solicitors wrote to the defendants’ solicitors contending that the Notice to Produce was “broad and oppressive” and lacked a “legitimate forensic purpose”, and concluding:

26. [26]

    On 17 October 2024, the solicitor for the defendants made an affidavit which set out, in detail, the documents that each of the defendants’ experts contended they needed to be produced by the Owners Corporation in order that they complete their reports and why those documents were needed.

27. [27]

    Thus, in relation to the defendant’s mechanical services expert, Mr Ross Warner, the defendants’ solicitor deposed:

28. [28]

    Similar detail was provided in relation to two further expert witnesses, a waterproofing expert and a fire engineer.

29. [29]

    This was the first time the defendants’ solicitors had communicated this information to the Owners Corporation’s solicitors.

30. [30]

    The matter came before me in the directions list on 25 October 2024.

31. [31]

    Orders were then made, by consent, as follows:

32. [32]

    Further, the time for the defendants to serve their evidence was extended to 15 November 2024.

Costs application

1. [33]

   It is in those circumstances that the defendants seek an order that the Owners Corporation pay the defendants’ costs of the preparation of their solicitor’s letters of 24 September 2024 and 10 October 2024, as well as the costs of the defendants’ solicitor’s affidavit of 17 October 2024.

2. [34]

   This is said to be necessary to afford the defendants “some measure of justice”. [10]

3. [35]

   I see no justification for such an order in this case.

4. [36]

   Faced with instructions from their experts that further documents were needed to finalise their reports, rather than explain in detail to the Owners Corporation what such documents were and why they were needed, the defendant’s solicitor engaged in the combative correspondence I have set out.

5. [37]

   And then, faced with the equally combative correspondence from the Owners Corporation’s solicitors, rather than adopt the appropriate course of seeking pre-evidence disclosure and showing, by evidence, the existence of exceptional circumstances for the purposes of Practice Note SC Eq 11, the defendants’ solicitors served the Notice to Produce, the effect of which was to cause further intemperate correspondence to be exchanged.

6. [38]

   I do not propose to make orders that might be seen to encourage parties to conduct litigation in this List in the manner I have set out in these reasons.

7. [39]

   I propose to make no order as to costs.