Acquista Investments Pty Ltd v Urban Renewal Authority (A Statutory Authority)
[2014] SASC 60
•9 May 2014
SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
ACQUISTA INVESTMENTS PTY LTD & ANOR v URBAN RENEWAL AUTHORITY (A STATUTORY AUTHORITY) & ANOR
[2014] SASC 60
Judgment of Judge Dart a Master of the Supreme Court
9 May 2014
PROCEDURE
Pre-action disclosure - Supreme Court Civil Rules 2006 (SA) r 32 - formulate the claim properly.
Supreme Court Civil Rules 2006 (SA) r 32; Housing and Urban Development (Administrative Arrangements) Act 1995 s 19; Housing and Urban Development (Administrative Arrangements)(Urban Renewal Authority) Regulations 2012; Public Corporations Act 1993 s 11, referred to.
Lifeplan Australia Friendly Society Pty Ltd & Anor v Ancient Order of Foresters in Victoria Friendly Society Ltd 115 SASR 223, applied.
Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223; Hall & Ors v City of Burnside & Ors [2006] SASC 283, considered.
ACQUISTA INVESTMENTS PTY LTD & ANOR v URBAN RENEWAL AUTHORITY (A STATUTORY AUTHORITY) & ANOR
[2014] SASC 60
These reasons deal with an application (FDN2) by Acquista Investments Pty Ltd and Veolia Environmental Services (Aust) Pty Ltd (“the plaintiffs”) for an order under Rule 32 for pre-action disclosure. The first and second defendants, the Urban Renewal Authority (a statutory corporation) and the State of South Australia, are referred to for convenience as “the State”. The third defendant, Adelaide Capital Partners Pty Ltd (“ACP”), is a party who entered into a contract with the State.
The plaintiffs conduct a partnership called Integrated Waste Services (“IWS”) and put a proposal to the State last year in relation to certain land at Gillman. The land is a significant holding of about 407 hectares. The State subsequently entered into a contract with ACP on or about 11 December 2013 in respect of that land.
The Urban Renewal Authority (“the URA”), was established by the Housing and Urban Development (Administrative Arrangements)(Urban Renewal Authority) Regulations 2012. The Gillman land is vested in it. The URA has the power to acquire, hold, deal with and dispose of land.[1] The Board of the URA has a power to delegate functions and powers conferred upon it.[2] Some of the provisions of the Public Corporations Act 1993 apply to the URA.[3]
[1] Regulation 7.
[2] Housing and Urban Development (Administrative Arrangements) Act 1995, section 19.
[3] Regulation 8.
Relevantly, section 11 of the Public Corporations Act provides as follows:
11—General performance principles
(1)A public corporation must perform its commercial operations in accordance with prudent commercial principles and use its best endeavours to achieve a level of profit consistent with its functions.
(2)A public corporation must perform its non-commercial operations (if any) in an efficient and effective manner consistent with the requirements of its charter.
(3)Where a public corporation's charter identifies any operations of the corporation as non-commercial operations, the operations are to be regarded as such for the purposes of this section.
The plaintiffs foreshadow an application for judicial review with respect to the decision to enter into the contract with ACP. They say they need further information to be able to formulate such a claim. As at the date of the argument it was understood that the decision was either made by the relevant Minister or the URA.
Rule 32 provides as follows:
32—Investigation
(1)If the Court is satisfied, on application by a person (the plaintiff) that the plaintiff may have a good cause of action and requires further information—
(a)to determine whether a cause of action exists; or
(b)to formulate the claim properly; or
(c)to determine against whom the claim lies,
the Court may exercise the investigative powers conferred by this rule in anticipation of an action.
(2)The Court may, if satisfied that a person may be in possession of evidentiary material relevant to the possible cause of action, make an order imposing one or more of the following requirements—
(a)to disclose to the Court or to the plaintiff whether the person is or has been in possession of relevant evidentiary material and, if so, to disclose full particulars of relevant evidentiary material that is, or has been, in the person's possession;
(b)if the person is in possession of relevant evidentiary material—to produce it to the Court or to the plaintiff;
(c)to verify the person's response to the order by affidavit.
(3)After considering a person's response (or failure to respond) to an order under subrule (2), the Court may require the person to appear before the Court for cross-examination.
(4)Subject to any direction by the Court to the contrary, a person against whom an order is made under this rule is entitled to reasonable compensation from the plaintiff for the time and expense involved in complying with the order.
(5)The compensation is to be fixed by agreement between the plaintiff and the person entitled to the compensation or, in default of agreement, by the Court.
The State, for the purposes of the application, conceded that the plaintiffs may have a good cause of action, although they quibble with the extent of the cause of action. The plaintiffs argue that they need disclosure for the purposes expressed in Rule 32(1)(b) and (c). The principal argument, however, centred on Rule 32(1)(b), which permits the making of an order for disclosure if a party requires further information to formulate a claim. The identity of the defendants is not seriously in dispute. The principles with respect to the exercise of the discretion are well-known. A clear articulation of the principles is found in Lifeplan Australia Friendly Society Pty Ltd & Anor v Ancient Order of Foresters in Victoria Friendly Society Ltd[4] (“Lifeplan”).
[4] 115 SASR 223.
The position of the State is that the plaintiffs already have sufficient information to formulate a claim. The application is opposed. There is some urgency, as time for issuing judicial review proceedings expires in a few weeks. ACP is also concerned to have the matter resolved expeditiously.
What emerged during the course of the argument is that there were critical facts which the plaintiffs did not have. They related to what occurred between 29 November 2013 and 11 December 2013.
To understand the missing facts it is necessary to have regard to a letter dated 23 April 2014 by which the Crown Solicitor confirmed three facts. The letter was sent after these proceedings commenced. The facts were that:
1On 29 November 2013 the URA Board resolved to approve that advice be provided to the Minister for Housing and Urban Development that the offer made by ACP “represents a good value offer based on independent valuation advice and comparable market evidence”.
2On 13 December 2013 the Minister for State Development, the URA and ACP executed a deed pursuant to which ACP was granted an option to purchase approximately 407 hectares of land at Gillman. The Minister for Housing and Urban Development did not enter into a deed (or contract) for the Gillman land with ACP.
3The deed was entered into without any public marketing or sale process.
It can be seen that on 29 November 2013 the URA, the owner of the Gillman land, made a recommendation to its Minister that an offer made by ACP was a good value offer and that on 11 December 2013 the URA and a different Minister executed a contract with ACP granting to that party an option to purchase the land.
The plaintiffs know the details of the recommendation made by the URA, but there was a gap in their information between the recommendation and the entering into the contract. They need that information to identify the decision-making process, so that they are in a position to properly articulate a challenge to that process. The plaintiffs did not know who the decision-maker was in respect of the decision to enter into the contract. An application for judicial review will seek to impugn the decision-making process. It is necessary to identify the decision-maker, and the process, to formulate such a claim.
In their written submissions the plaintiffs set out the bases of the causes of action they believe may exist.[5] Those bases are:
1A failure by the Minister and/or URA to comply with their respective obligations under the statutory framework set out above, resulting in a decision to award the contract to ACP being ultra vires;
2The decision to award the contract to ACP being unreasonable, in the sense of Wednesbury[6] unreasonableness; and/or
3The lack of procedural fairness in the failure to give due consideration to IWS’ proposal and the awarding of the contract to ACP without any tender process, in circumstances where it was noted that other parties would be interested in tendering.
[5] Paragraph 60 of the Plaintiffs’ submissions, FDN8.
[6] Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223.
The matter was first argued before the Court on 2 May 2014. It was then adjourned for a further hearing on 7 May 2014. Counsel for the State indicated that he would seek to obtain instructions to provide additional detail as to the decision-making process involved in entering into the contract. As the matter stood at the end of the argument on 2 May 2014, I was satisfied that the plaintiffs required further information to properly formulate their claim. At that time they did not have complete details of the decision-making chain and, accordingly, were not in the position to identify the decisions they wished to challenge.
By letter dated 7 May 2014 solicitors acting for the State provided further information to the plaintiffs’ solicitors. The letter included the following additional facts:
1On 2 December 2013 Cabinet approved the ACP offer and approved the URA granting ACP an option to purchase approximately 407 hectares of land at Gillman. In doing so, Cabinet exercised authority delegated to it by the URA to approve the URA entering into the deed.
2On 10 December 2013 the Office of the Minister of Housing and Urban Development advised the URA of the Cabinet decision.
3On 11 December 2013 the Chief Executive of the URA executed a deed on behalf of the URA under a power of attorney granted by the URA Board, pursuant to which ACP was granted an option to purchase approximately 407 hectares of land at Gillman.
4On or about 12 December 2013 the Minister for State Development executed a deed.
The additional facts complete the details of the decision-making chain. It is to be noted that the date on which the contract was executed has changed from the date previously advised.
In the Lifeplan decision, when considering the meaning of “to formulate”, White J said:[7]
This does not mean that a plaintiff who needs further information to articulate or construct a claim perfectly or completely will establish the threshold requirements. A plaintiff who can formulate a claim appropriately, albeit less than perfectly, will not ordinarily be entitled to a r 32 order.
[7] Lifeplan Australia Friendly Society Pty Ltd & Anor v Ancient Order of Foresters in Victoria Friendly Society Ltd 115 SASR 223 at [31].
As a result of the two letters received from the solicitors acting for the State, the plaintiffs now have the facts about the decision-making chain which led to the contract with the third defendant. That information was not available to them at the time the application was commenced.
The question then is whether, in light of the facts now known to the plaintiffs, they have adequate information to formulate a claim at this time. Whether a party has sufficient information to formulate a claim, albeit not perfectly, will always be a grey area. It is a matter of judgment. In my view, although the matter is finely balanced, the plaintiffs do now have adequate information to formulate the claim they wish to prosecute.
In coming to that view, I have had regard to the fact that the plaintiffs did not seek the disclosure of documents under Rule 32(1)(a). As set out above, that allows the making of an order for disclosure where a person requires further information to determine whether a cause of action exists. Implicit in not pursuing disclosure under that subrule is the fact that the plaintiffs had sufficient information prior to the commencement of the application to determine that a good cause of action did exist.
It is also necessary to consider the nature of the proceedings that are foreshadowed. They are judicial review proceedings. There is usually no need to draw a statement of claim in such proceedings. Judicial review proceedings ordinarily start with affidavits that may not be complete in detail, and which are supplemented after disclosure is made in the action. Having opposed this application, the State would not be well-positioned to argue that the proceedings lacked particularity.
If I am wrong in relation to the issue of the plaintiffs having adequate information to properly formulate a claim there are, in any event, discretionary factors which, in my opinion, would prevent the making of an order. If a party satisfies the criteria in Rule 32(1), the Court’s discretion is enlivened so as to permit the making of orders contemplated in subrule (2). In the usual case it might be expected that, if the criteria was satisfied, an order would follow as a matter of course. That, however, is not necessarily the case. In my opinion, there are discretionary factors here which would mitigate against the making of the orders sought by the plaintiffs.
The first relates to the time limits which apply to proceedings for judicial review. The outer limit for commencing such an application is six months from the date when the grounds for review arose. That period, at least in relation to some of the decisions, expires later this month.
Time limits in relation to the issuing of judicial review proceedings are required to be complied with strictly. The reason for that was explained by Doyle CJ in Hall v Ors v City of Burnside & Ors[8] (“Hall”) where his Honour said:
49 The relatively short limitation period reflects the fact that judicial review is concerned with the validity of decision making by individuals and bodies exercising statutory and other powers that must be exercised in the public interest. Such decisions often have direct and consequential effects on persons other than those immediately affected. In a range of circumstances it will often be a matter of significance for other persons and authorities to know whether or not such a decision is valid or has been subject to a legal challenge. There is a substantial public interest in being able to say, after a specified time, that such a decision can be treated as beyond attack. The very fact that the standing rules permit challenges to validity to be made by persons other than those directly involved in the decision making process is a reason why there should be a relatively short period within which any such attack should be mounted.
[8] [2006] SASC 283.
It is now apparent that the decision to proceed to enter into a contract with the third defendant was made by Cabinet acting upon a delegation from the URA. Counsel for the State made clear that if an order for disclosure of documents was made, production of the documents for inspection would be resisted, inter alia, on the basis of public interest immunity. Issues in relation to the production of documents considered by Cabinet will not quickly or easily be resolved. The issue will not be resolved before the expiration of the time for the issuing of judicial review proceedings.
It is not possible at the moment to estimate exactly how long such issues would take to resolve. It may well, however, be many months, during which time ACP would not know if any proceedings were to be issued to review the decision-making process involved. During that period there would be a defacto extension of time within which to issue judicial review proceedings. In my view, for the reasons set out by Doyle CJ in Hall, that is not appropriate. There is nothing in the material to suggest any wrongdoing by the third defendant. It is entitled to know whether or not there is to be a challenge to the validity of the contract it entered into.
A related issue is consideration of the efficient use of the time and resources of the Court. An order for disclosure made under Rule 32 would be narrow in compass. A public interest immunity argument would then proceed in relation to those documents. Once proceedings are issued, it is likely that a general order for disclosure would be made, leading to disclosure of a broader range of documents. It might reasonably be anticipated there would then be a further argument in relation to a claim for public interest immunity in respect of those additional documents. It is in the interests of the parties and the efficient use of the resources of the Court to have one argument on the topic of public interest immunity in relation to the production of documents.
A further consideration to which I have had regard is the fact that there was no submission from the plaintiffs, written or oral, to the effect that the documents sought were required for the purpose of considering whether or not to issue proceedings. Such submissions are common when an application is advanced under Rule 32(1)(a). The argument here did not proceed on that basis, and proceeded primarily in relation to having sufficient material to formulate a claim properly. In my opinion the position of the plaintiffs would have been stronger if the situation was that they required the documents to consider whether to commence proceedings at all, rather than seeking the documents for the purpose of being able to properly formulate their claim.
The plaintiffs also sought disclosure from ACP. In my view, the claim for disclosure from ACP was more speculative. In light of my decision, it is not necessary to consider the claim against ACP in detail. However, I should note that even if I had made orders requiring disclosure from the State, I would not have been satisfied that documents were required from ACP to permit the plaintiffs to formulate a claim. If proceedings are issued, there will be an obligation on ACP to make disclosure in the usual way, but that is a matter for later.
I order that the plaintiffs’ application FDN2 be dismissed and I will hear the parties as to any consequential orders.
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