Richard Crookes Constructions v Hannan [2009] NSWSC 142

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

Preliminary

Justice Einstein is a leading light for electronic litigation in the Equity Division of the Supreme Court of New South Wales. His Honour's paper, "Technology in the Court Room – Friend or Foe?" first published in 2001, and revised in 2004, is recommended reading for a judicial insight into electronic discovery and trials.

His Honour's recent decision in a complex commercial building construction dispute re-emphasises the need to 'think ahead' when faced with proposed orders for discovery. The decision is also notable for considering, and applying, the Court's discretion to order compliance with recently revised e-discovery provisions of the General (SC Gen 7) and Equity Division, Technology and Construction List (SC Eq 3) Practice Notes.

Pleadings

The pleadings arguably served their purpose by refining the scope of the dispute. However, given that the value of claims between the parties is approximately A$24 million, unresolved issues remain significant in both volume and complexity. Justice Einstein noted at [11-12]:

[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.

Discovery

In accordance with paragraph 30.5 of SC Eq 3, the parties prepared and filed a Joint Memorandum of Discovery. At [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."

The plaintiff resisted proposed orders for electronic discovery on the basis of cost (approximately $280,000).

The plaintiff further argued that complying with the proposed orders and associated Document Management Protocol (DMP) would make the discovery process much easier for the defendants. It is assumed that this argument is a reflection on the defendant's law firm proposing a 'Ringtail-specific' DMP and that the law firm is publicly referenced as a licensed user of the FTI Ringtail Legal document review platform. At [21-22]:

[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."

His Honour rejected the plaintiff's submissions and noted at [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.

Further, at [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.