Richard Crookes Constructions Pty Limited v F Hannan (Properties) Pty Limited [2009] NSWSC 142 (6 March 2009)

Last Updated: 18 March 2009

NEW SOUTH WALES SUPREME COURT

CITATION:
Richard Crookes Constructions Pty Limited v F Hannan (Properties) Pty Limited [2009] NSWSC 142


JURISDICTION:
Equity Division
Technology and Construction List

FILE NUMBER(S):
55014/08

HEARING DATE(S):
6/03/09


EX TEMPORE DATE:
6 March 2009

PARTIES:
Richard Crookes Constructions Pty Limited (Plaintiff)
F Hannan (Properties) Pty Limited (Defendant)
M & W Zander Pte Limited (First Cross Defendant Second Cross Claim)
JPR Architects Pty Ltd (First Cross Defendant to Tenth Cross Claim)



JUDGMENT OF:
Einstein J

LOWER COURT JURISDICTION:
Not Applicable

LOWER COURT FILE NUMBER(S):
Not Applicable

LOWER COURT JUDICIAL OFFICER:
Not Applicable



COUNSEL:
Mr S A Kerr (Plaintiff)
Mr M G Rudge SC; Mr D R Sibtain (Defendant)
Mr Goldstein (First Cross Defendant to Second Cross Claim)
Mr S Adair (First Cross Defendant to Tenth Cross Claim)


SOLICITORS:
Colin Biggers & Paisley (Plaintiff)
Gilbert & Tobin (Defendant)
Thomson Playford (First Cross Defendant to Second Cross Claim)
Deacons (First Cross Defendant to Tenth Cross Claim)



CATCHWORDS:
Practice and Procedure
Discovery
Provision of discovery in electronic form-Reference to cost effectiveness in Technology and Construction List Practice Note SC EQ3 is appropriately construed as a reference to the overall cost efficiency of the discovery process, including the benefits to be gained in the later progress of the trial
Consideration of benefits of electronic discovery over hard copy discovery in litigation with voluminous documentation
Consistent with the overriding objective of the just, quick and cheap resolution of disputes, electronic discovery reduces the overall costs to the parties of the discovery and inspection process
An electronic database of discovered documents is likely to be productive of greater flexibility, efficiency and utility in litigation involving voluminous documentation

LEGISLATION CITED:
Civil Procedure Act 2005 (NSW)

CATEGORY:
Procedural and other rulings

CASES CITED:
Harris Scarfe Limited v Ernst & Young (No 3) [2005] SASC 407, BC 200509140

TEXTS CITED:


DECISION:
Order that plaintiff provide discovery to defendant, to first cross defendant to 10th cross claim and to second cross defendant to 10th cross claim in electronic form.



JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
TECHNOLOGY AND CONSTRUCTION LIST


Einstein J

Friday 6 March 2009 ex tempore
Revised 13 March 2009

55014/08 Richard Crookes Constructions Pty Ltd v F Hannan (Properties) Pty Ltd

JUDGMENT


1 There is before the Court a notice of motion filed for the defendant/cross-claimant seeking an order that the plaintiff provide discovery to the defendant, to the first cross-claimant to the tenth cross-claim and to the second cross-defendant to the tenth cross-claim in electronic form. The notice of motion is opposed by the plaintiff. Both of the antagonistic parties have sought to rely upon affidavits and a variety of materials.

2 Clearly enough, the overriding purpose of the Civil Procedure Act 2005, as stated in section 56(1) is "to facilitate the just, quick and cheap resolution of the real issues in the proceedings". The Technology and Construction List practice note SCEQ3 as it existed at the time when these proceedings were commenced read as follows:

"Subject to an order of the court or unless otherwise agreed between the parties, discovery is to be made electronically."

3 On 10 December 2008 the Technology and Construction List practice note SCEQ3 was amended to its current form. Paragraph 28 of the practice note now states:

"Subject to an order of the court or unless otherwise agreed between the parties, discovery of electronically stored documents and information is to be made electronically. Discoverable documents and information that are not stored electronically should only be discovered electronically if it is more cost effective to do so."

4 The current version of practice note of SCGEN7 - Supreme Court - Use of Technology commenced on 1 August 2008. Paragraph 11 of that practice note relevantly states:

"Where the parties have more than 500 documents that are not ESI [electronically stored information], as a general rule the court will expect the parties to consider the use of technology to discover and inspect such documents along with any ESI."

5 It is well established and was affirmed in Harris Scarfe Limited v Ernst & Young [2005] SASC 407, BC 200509140 at 13, that:

· the court is possessed of an inherent jurisdiction to exercise powers which are necessary to enable it to act effectively within its jurisdiction;

· that the purpose of the implied jurisdiction is to allow the court to make such orders as to enable it to uphold, protect and fulfill the judicial function by ensuring that justice is administered according to law and in an effective manner;

· that the inherent jurisdiction of the court includes an untrammelled power of regulating its own proceedings;

· that it is proper to exercise the relevant power, not only where it is strictly necessary to do so but also to secure, promote convenience, expedition and efficiency in the administration of justice;

· that the inherent jurisdiction of the Supreme Court to regulate its own proceedings so as to promote matters relating to convenience, expedition and efficiency in the administration of justice includes directing or ordering the parties to use certain procedures if the benefits derived from the use of such procedures justifies the costs and will ensure that the trial proceeds quickly and efficiently.

6 The materials before the Court make quite plain that the subject proceedings are complex in the extreme and are likely to take a considerable time in terms of the ultimate hearing period of time, whether that hearing takes place before a trial judge of the court or is referred out.

7 The proceedings concern disputes which arose in connection with the construction of two commercial buildings in Alexandria, Sydney. F Hannan Properties Pty Limited is the proprietor and Richard Crookes Constructions Pty Limited is the builder.

8 In essence the claims by the builder concern the payment of unpaid sums and the claims by Hannan concern the cost of rectifying defective and incomplete work, together with consequential losses. The value of the claims between Hannan and Crookes presently exceeds $24 million. Other parties to the proceedings, some of whom are present at the Bar table, include various consultants and contractors.

9 In the case of the respondents to the second to seventh cross-claims, Crookes has sought contribution for any damages which it might be ordered to pay to Hannan. The eighth cross-claim is made by Hannan against the mechanical and electrical engineer in connection with the design and related services provided by that consultant. The ninth cross-claim is a claim by Hannan against the designer of an electrical substation. The tenth cross-claim is a claim by Hannan against the architect and project manager respectively, seeking contribution for any damages which Hannan may be ordered to pay to Crookes.

10 On the pleadings Hannan has put in issue the question of whether it is obliged to pay to Crookes any further sums. Crookes has put in issue, amongst other things, the adequacy of the notices given by Hannan in respect of defective and incomplete work and has contended that Hannan denied Crookes access to the site to enable the latter to rectify defect work and to complete incomplete work. Hannan has put in issue, amongst other things, 865 building defects.

11 There is no controversy between the parties that the number of documents likely to be discovered by the major parties, Crookes, Hannan, the architect - JPRA, the project manager - JPRM, and the engineer - Voss, will be voluminous. See for example the affidavit of Kermond at 24 and 25 and Folkard at 18, 30-34 and 48. In those circumstances Hannan has sought the order for electronic discovery resisted by Crookes.

12 I accept entirely the defendant's contention that it seems clear that in a case of this size and complexity the court encourages the use of electronic discovery. The reference to cost effectiveness in the Technology and Construction List practice note SCEQ3 is appropriately construed as a reference to overall cost efficiency of the discovery process, including the benefits to be gained in the later progress of the trial. I accept that this must be so, as otherwise it would always be cheaper for a party to provide discovery in the traditional manner as opposed to electronic means. In the former instance the costs burden is borne by the other party or parties and in the latter it is borne by the party providing discovery.

13 As the defendant has contended, it is on the basis of the anticipated volume of documents that the parties have analysed the costs of providing electronic or hard copy discovery. The outcome of that analysis is set out in the Folkard affidavit 2 at 7 in a table. Whilst there is some controversy between the parties as to the assumptions to be made as to the average length of documents, there is apparently no controversy as to the figures which have been obtained from two independent providers of electronic discovery services. As the defendant has contended, it may be observed that the cheapest form of discovery is electronic discovery and that the most expensive is hard copy discovery. Naturally, neither is determinative of what will ultimately occur in the proceedings. Naturally also, assumptions must be made about the minor parties and the proportion of documents that each is likely to require. Further, an assumption must be made that each major party is likely to require a copy of substantially all of the documents produced by each other major party.

14 As the defendant has contended, in the case of electronic discovery, with some minor parties receiving a proportion of the discovery in hard copy and no other form, the likely cost is, on the evidence before the Court, in the order of between $259,000 and $308,000. The comparable estimates for hard copy discovery are between $294,000 odd and $438,000 odd. Further professional costs are likely to be incurred by the party giving discovery in connection with the production of lists of documents. In the case of electronic discovery that process is automatic.

15 Whilst it is true that the costs that are incurred in the case of electronic discovery are costs that are incurred by the party giving discovery, whereas in the case of hard copy discovery those costs are incurred by the party seeking copies of the discovery of another, on the assumption that each major party will produce a similar volume of documents and will require copies of all or substantially all of each of the other parties' documents, the comparison between the costs of electronic and hard copy discovery remain true.

16 The defendant has contended that in those circumstances it may be seen that the cost of electronic discovery is likely to be significantly less than or at the very least comparable to the cost of producing hard copy discovery. The contention is that the mere fact that the incurring of costs is accelerated to the time when discovery is given as opposed to the time of inspection would not be an influential, let alone decisive, factor in favour of refusing the order for electronic discovery. That is especially so, it is contended, if the overall costs are likely to be lower. In my view there is substance in each of those contentions.

17 One then turns to consider the benefits of electronic discovery over hard copy discovery in a case with voluminous documents such as the present. In my view the defendant's contention that in those circumstances the desirability of making an order for electronic discovery becomes clear is well made out. As the defendant has contended, consistent with the overriding objective of the just, quick and cheap resolution of disputes, electronic discovery will mean that the overall costs to the parties of the discovery and inspection process will be reduced. Those costs will be recoverable ultimately by the successful party, as will any other costs reasonably incurred in the conduct of the litigation.

18 Next, an electronic data base of discovered documents is likely to be productive of greater flexibility, efficiency and utility in the proceedings. I accept that inevitably tender bundles, issues bundles, court books and the like will need to be produced during the course of preparation for and during the trial. I accept that whereas human efforts must be employed (and further trees must be cut down) in the creation of new bundle in hard copy format, if electronic discovery is adopted that process occurs digitally and with minimum human effort. Further, and as the defendant has contended, it can occur immensely faster than the hard copy equivalent. Further, and as the defendant has also contended, searches for documents which become significant during the course of a trial can occur at a greatly accelerated rate. As such, I accept that the trial is likely to run more quickly and efficiently as new issues arise or old issues are refined or modified, requiring the compilation of documents in new ways or the production of newly significant documents.

19 I further accept that in a case where the number of ring binder folders is likely to be well into the hundreds, the use of electronic discovery minimises the need to have proximity to the documents and the need for the storage of potentially multiple copies of documents. This, I accept, produces or is likely to produce significant work efficiencies in the preparation of the case. For example, and as the defendants have submitted, if a copy of the discovery were not produced for counsel, counsel could have access to the entire discovery remotely, without having to attend upon the solicitors' offices at mutually convenient times.

20 A joint memorandum of discovery was filed on or about 18 February 2009 in the course of which agreements were set out for provision of categories of documents, inspection of discovery in accordance with the categories, other directions and importantly the following appears:

"The defendant and the cross-defendants to the tenth cross-claim propose to give full electronic discovery in accordance with the Ringtail protocol attached hereto and marked A subject to the plaintiff agreeing or being required to give discovery in the same manner."

21 The essence of the plaintiff's contra contentions and opposition to the orders sought in the notice of motion centre on the propositions that if an order is made for electronic discovery in the proceedings it will add significant costs that are not in the circumstances justified

22 Mr Kerr further submitted as follows:

“When Mr Rudge says that in effect his client shouldn't be financing my client's costs of running the litigation, in fact that is what he is asking us to do, because if we engage in the type of discovery that the defendants' witness says they definitely will engage in, then we have to provide discovery in a way that totally assists their method and will in effect be subsidising the method of discovery that they want. That is the real reason why the defendant wants electronic discovery. “

23 At the end of the day, the respective figures on which the parties are close to agreement seem to record that when viewed in terms of the scale of this litigation, the amounts which the plaintiffs have been concerned with, in terms of what they have put as additional unnecessary costs, are but a very small sum.

24 Ultimately, the Court falls back upon its undoubted discretion to order electronic discovery in cases and in circumstances where the giving of electronic discovery will clearly be efficient.

25 In my view the defendant has made good an entitlement to order (1) in the notice of motion and I make order (1) in the defendant's notice of motion filed on 17 February 2009.

26 It is also appropriate to indicate that as far as the other parties at the Bar table were concerned, the position taken by the cross-defendants to the tenth cross-claim was to support the defendants and to support the submissions that Mr Rudge advanced, and next, Mr Goldstein, who appears for the cross-defendant to the second cross-claim advanced no submissions one way or the other.

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LAST UPDATED:
17 March 2009