Orderly Resolution of Interlocutory Disputes Requires Calm Consideration, not Heated Correspondence

In The Owners-Strata Plan No. 89791 v FKP Constructions Pty Ltd [2024] NSWSC 1432, Stevenson J – sitting in the New South Wales Supreme Court Equity Division, and specifically the Technology and Construction List – wrote helpfully concerning the proper approach by practitioners towards resolving interlocutory disputes, there concerning the further disclosure of documents sought by retained experts.  Following resolution of the dispute, upon the defendants’ application for costs, his Honour wrote:

[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:

The issue for the Court is the proper administration of justice in the Technology and Construction List and ensuring that parties do not take a cavalier approach to the management of matters and, in doing so, wasting the valuable resources of the Court.

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

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

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

Failure to maintain

Our clients’ response to your client’s claims in respect of defective works will canvass the lack of maintenance on the roof which your client was obliged to perform. Given you have escalated this matter on the premise that rectification of the allege[d] defect is now ‘urgent’, we bring forward our request for documents relevant to this issue.

Therefore, we ask that you provide us with the following, as a matter of urgency:

1. Any document recording or evidencing inspection, repairs or maintenance of the roof waterproofing, drainage pipework or ancillary areas described in the Advice as requiring rectification.
2. Any document recording or evidencing the costs incurred in association with the inspection, repairs or maintenance described above.
3. Any documents recording or evidencing any communications addressing the roof with Sure Seal Australia Pty Ltd, the subcontractor responsible for the installation of the waterproofing element on the roof as identified in the operation and maintenance manual for the Property.
4. Any documents recording or evidencing the affixing, installation and/or placement of any additional plant, equipment, anchor point, walkway, apparatus or structure on the roof.
5. Any documents recording or evidencing installation of waterproofing to any additional element or structure referred to in … d.

This document request relates to the entire life of the roof since it has been under the control of the [Owners Corporation], namely from August 2014.

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

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

Notably absent from your latest letter is any response to our reasonable request for documents that describe the maintenance activities which have been performed on the roof during the time your client has been responsible for that maintenance (being a period of 10 years).

We put you on notice that our preliminary investigations reveal to us a wholesale failure on behalf of your client to perform, or even attempt to perform, any maintenance on the roof (and, for that matter, multiple other areas of the building), which any competent owners’ corporation would have performed over the lengthy period since our clients completed their obligations in respect of the building.

Since the two weeks we first made this request, we repeat that it is of some urgency that your client assemble those documents for our clients to review, so that this matter can be considered as part of the evidence that ultimately will be served on your client.

[Other correspondence was then set out].

…

[14]  The letter continued in the same tone.

[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]  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 ….

[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.

…

[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.

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

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

[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.

[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.

[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.

[39]  I propose to make no order as to costs.

(emphasis added)