Accredited Aged Care Facilities Pty Ltd v Banyan Tree (Aust) Pty Ltd

[2000] VSC 180

SUPREME COURT OF VICTORIA          

PRACTICE COURT

No. 4974 of 2000

ACCREDITED AGED CARE FACILITIES PTY LTD	Plaintiff
v
BANYAN TREE (AUST) PTY LTD	Defendant

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JUDGE:	Gillard J
WHERE HELD:	Melbourne
DATE OF HEARING:	28 April 2000
DATE OF JUDGMENT:	28 April 2000
CASE MAY BE CITED AS:	Accredited Aged Care Facilities Pty Ltd v Banyan Tree (Aust) Pty Ltd
MEDIUM NEUTRAL CITATION:	[2000] VSC 180

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Pre-institution discovery – Rule 32.05 – issue of claim for relief – adjournment to enable further material.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr I.K. Jones	The Law Offices of Zaparas & Dandanis
For the Defendant	Mr J. Kaufman QC	Lou Castellano, Lawyers

HIS HONOUR: 

1. This is an application by the plaintiff for pre-institution of proceeding discovery under Rule 32.05 of the Rules of Court.  The summons sets out the documents that are sought to be discovered and they are in a number of categories, namely, negotiations in relation to proposed purchase from the defendant of the Edgelea Aged Care Facility and, more importantly, documents relating to pre-emptive rights of other parties and the exercise or purported exercise of the said pre-emptive rights.

1. The application came on for hearing before me this day and has been debated over a number of hours.  I discussed the principles that apply to the present case in United Energy Ltd v. Energy Risk Management Pty Ltd, an unreported decision delivered on 13 December 1998.  I did, after considering a number of authorities and the terms of the rules, indicate that the application of the rule should be on a liberal basis, for a very obvious common sense reason.  If an application such as the present is refused, then it is always open to a plaintiff to institute proceedings and seek discovery hoping that discovery may assist to establish a case.  If discovery proves that there is no case then time and expense is wasted.  It is something that should be avoided and, accordingly, the rules should be liberally applied.

1. There are four broad matters that have to be considered and determined by the court.  The first one is whether there is reasonable cause to believe that the applicant has or may have the right to claim relief from an identified person.  It is in relation to that element that the contest has taken place before me this day.

1. The background can be very briefly stated for the reason that it became apparent in the course of submissions that the plaintiff may fail in this application, and as a result application has been made to me to adjourn the matter to enable the plaintiff to file further affidavit material.  Mr Kaufman QC, counsel for the defendant, opposed the application on the basis that the plaintiff should come to court ready to prove its case and, accordingly, the application should be refused.  But I am prepared to grant the application on the basis that the plaintiff pay the defendant's costs of this day.  That has been agreed and accordingly I should not say very much more about this application.

1. Mr Bares who is a director of the plaintiff negotiated with an agent on behalf of the defendant to purchase an aged care business.  On the 31st May 1999 a letter was written which expressed agreement pursuant to certain matters and it is alleged by Mr Bares that agreement was reached subject to the rights of another potential purchaser.  The sale went off because of the exercise of an option but during this year it came to the knowledge of Mr Bares that the defendant still conducts the business.  Mr Bares wants to see documents relevant to the alleged exercise.  The question which is very much in dispute between the parties is whether there is reasonable cause to believe that the applicant may have a right to claim relief from the defendant.

1. Mr Kaufman QC submitted that the contract allegedly relied upon by the plaintiff was never a contract binding in law, and emphasized that there are a number of reasons why that was so.  In particular, that the essential terms had not all been agreed upon and, what is more, the purchaser was not identified.  It is in relation to the latter aspect that in my view there is much substance in what Mr Kaufman QC has submitted.

1. The negotiations between the parties which involved the possible purchase of the Edgelea Aged Care Facility at 83 Chapel Street, St Kilda, by some company associated with Mr Gary Bares, reached a point when on 17 May 1999 Mr Bares sent a letter signed by him over his name advising "that we are prepared to offer to purchase Edgelea Aged Care Facility ... On the following basis", thereafter appeared a number of essential terms to any purchase and against the heading "purchaser:" appears the following:  "a Pty Ltd company associated with Gary Bares." 

1. The letter of the 31st May 1999 purported to accept the offer subject to a pre-emptive condition.  Mr Kaufman QC pointed out a number of other aspects about the alleged agreement which suggests it was subject to a formal contract being agreed and executed by the parties.  He also drew attention to the fact that the letter dated 31 May 1999, which is alleged to be the date when the contract came into being, and which passed to the vendor's agent, which ultimately was passed over to the purchaser on or about the same day, suggests that the contract was all subject to further negotiation.

1. In relation to the matters of formality and in relation to the matters of negotiation, they raise questions of fact which in my opinion would have to be ultimately resolved at trial and would not be a basis for refusing an application under the rule.

1. As I indicated in the course of submissions, a court should be loathe to refuse relief under this rule and, indeed, would only be in circumstances where there is what I could describe as a "knockout blow" to a possible cause of action.  Mr Kaufman QC says he has a knockout blow in that as at 31 May 1999 the purchaser of the business was not identified.

1. In my view, on the evidence that is before the court to date there is much substance in that submission, and Mr Jones of counsel who appears for the plaintiff did not refer me to any authority which suggested that one could enter into a binding contract where there is such a vague description of the contracting party.

1. A deposit was paid pursuant to what was thought to be an agreement, but it was not paid by the plaintiff and it is uncertain on what basis the plaintiff, which is a company associated with Gary Bares, became the contracting party.

1. Mr Jones, who could see the way the wind was blowing during submissions, sought to call further evidence to the effect that Mr Bares or some person on his behalf did actually nominate a company, namely, the plaintiff, on or about 31 May 1999.

1. If that is the position, and that is the evidence, then I would be prepared to make the order, but I am not going to deny the opportunity to the defendant of considering the further evidence and, indeed, calling evidence to suggest or show that it is wrong and making further submissions.

1. What I propose to do is to adjourn the matter until next Thursday.  I will be sitting in the trial division, and I will hear the parties on that occasion, if they desire to be further heard.  In the meantime I am prepared to adjourn but it will be at the cost of the plaintiff.

1. I do have the power to order solicitor/client costs.  As I have said on previous occasions, the courts are more prone to give solicitor/client costs in this day and age and I am prepared to order solicitor/client costs because in my view the matter should have been addressed and prior to coming to court mean it is necessary that the parties come back.  The fault lies with the plaintiff.

1. I order that:

1.The plaintiff's summons filed 7 April 2000 be adjourned to 4 May 2000.

2.The plaintiff pay the defendant's costs of the hearing this day on a solicitor/client basis.

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