Civic Video Pty Ltd v Paterson [No 2]
[2014] WASC 14
•22 JANUARY 2014
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: CIVIC VIDEO PTY LTD -v- PATERSON [No 2] [2014] WASC 14
CORAM: ACTING MASTER GETHING
HEARD: 15 JANUARY 2014
DELIVERED : 22 JANUARY 2014
FILE NO/S: CIV 2144 of 2008
BETWEEN: CIVIC VIDEO PTY LTD (ACN 003 851 152)
Plaintiff
AND
ROBERT HENRY PATERSON
First DefendantMALCOLM THOMPSON
Second DefendantBARBARA THOMPSON
Third Defendant
Catchwords:
Practice and procedure - Further and better discovery
Legislation:
Rules of the Supreme Court 1971 (WA), O 26
Result:
Limited further discovery ordered
Category: B
Representation:
Counsel:
Plaintiff: Mr D R Chandler
First Defendant : Mr L Hager
Second Defendant : No appearance
Third Defendant : No appearance
Solicitors:
Plaintiff: Marque Lawyers
First Defendant : Metaxas & Hager
Second Defendant : Clifton Tham
Third Defendant : Clifton Tham
Case(s) referred to in judgment(s):
Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Australian Railroad Group Pty Ltd v Rowan [2004] WASC 165
Beecham Group Ltd v Bristol Myers Co [1979] VR 273
British Association of Glass Bottle Manufacturers Ltd v Nettlefold [1912] AC 709
Chandler v Water Corporation [2004] WASC 95
Civic Video Pty Ltd v Paterson [2013] WASCA 107
Civic Video Pty Ltd v Paterson [2013] WASCA 107 (S)
Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Company (1882) 11 QBD 55
Daraja Ltd v Hogan & Partners Stockbrokers Pty Ltd [2012] WASC 256
Dowd v McCloskey [2005] WADC 99
Hardie Finance Corporation Pty Ltd v Ahern [No 3] [2010] WASC 403
Livingstone v Rawyards Coal Company (1880) 5 App Cas 25
Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1
Mulley v Manifold [1959] HCA 23; (1959) 103 CLR 341
North Kalgurli Mines Pty Ltd v GRD Minproc Ltd [2002] WASC 275
Perpetual Trustees Company Ltd v Burniston [2012] WASC 26
Roe v The State of Western Australia [2013] WASC 130
Singh v Friedman [2013] WASC 78
Smith v Leveraged Equities Ltd [2011] WASC 282
Technomin Australia Pty Ltd v Xstrata Nickel Australasia Operations Pty Ltd [2010] WASC 218
Tremeer v City of Stirling [2002] WASCA 281
Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2005] WASC 60
ACTING MASTER GETHING:
Background
Civic Video and Video Ezy are competitors in the business of operating stores which rent and sell movies in DVD and Blu‑ray format, and computer games, along with peripheral retail goods such as confectionary, drinks, mobile phone cards and promotional items. Civic Video Pty Ltd (Civic), the plaintiff in the action, is the franchisor of the Civic Video stores. Robert Paterson, the first defendant, and his family, own multiple Video Ezy franchises in Western Australia.
In September 2006 Mr Paterson purchased the assets of two Civic Video franchises operating in Geraldton, one at Durlacher Street and the other on North West Coastal Highway (which I will refer to as the Durlacher store and the Highway store respectively). The vendors were Malcolm and Barbara Thompson, who are the second and third defendants. One store was closed and the other became a Video Ezy store.
In September 2008, Civic commenced an action against Mr Paterson and the Thompsons. It alleges that the Thompsons wrongfully repudiated the franchise agreements they entered into with Civic for the two Geraldton stores. Civic further alleges that Mr Paterson wrongfully interfered in the contractual relations between Civic and the Thompsons by inducing the Thompsons to wrongfully repudiate the franchise agreements.
Discovery and inspection in the action has proven problematic due to the fact that Civic and Mr Paterson operate competing businesses and that some of the documents discovered were commercially sensitive. These issues were considered by the Court of Appeal in reasons published as Civic Video Pty Ltd v Paterson[2013] WASCA 107 and Civic Video Pty Ltd v Paterson [2013] WASCA 107 (S). The outcome was that Mr Paterson was given an unrestricted right to inspect documents 112 and 113 from Civic's list of discoverable documents, respectively being copies of:
(a)spreadsheets showing total advertising fees received and spent in respect of WA franchisees from January 2006 to June 2011; and
(b)Civic's profit and loss statements for the period June 2006 to June 2011.
Mr Paterson was not permitted to personally inspect document 114, being a copy of a summary of total annual revenue figures of all Civic stores in Western Australia, including stores that are now closed, from 2006 ‑ 2011. He was given liberty to apply on this point, which he has not to date exercised.
Another discovery issue has arisen requiring determination. By application dated 11 December 2013, Mr Paterson sought orders requiring Civic, by its director Rod Laycock, to give further discovery on oath in relation to the following classes of documents:
Item
Description
1
Financial statements of the plaintiff for each year for the periods ending 30 June 2001 to 30 June 2011.
General ledger of the plaintiff for each financial year commencing 30 June 2001 and ending 30 June 2011.
2
The invoices rendered by the plaintiff to the Thompsons for the Durlacher Store and Highway Store.
3
The documents identified as numbered 2 and 9 to 33 of appendix B of the plaintiff's expert report dated 7 December 2011.
4
The KPI/BART Reports for all Civic Video stores in Western Australia for the period 2003 ‑ 2006.
Mr Paterson seeks a springing order for judgment in the event of non‑compliance.
At the commencement of the hearing before me I was informed that within the preceding 24 hours, Civic had informally discovered:
(a)the documents in item 2;
(b)the documents in item 3 (including the KPI/BART reports for the Civic Video stores in Albany, Carnarvon and Esperance for the period January 2006 to August 2011); and
(c)the KPI/BART reports for the Civic Video stores in Malaga, Kalgoorlie (three stores), Greenwood, Applecross, Forrestfield and Armadale for the 2005 ‑ 2010 financial years.
I foreshadowed at the hearing that it would at least be appropriate for the court to make orders that Civic formally discover these documents.
In submissions filed after the hearing, counsel for Mr Paterson advised that his client did not press item 1 in relation to documents from 2007 onwards.
The outstanding classes of documents are:
(a)the financial statements and general ledger of the plaintiff for each year for the periods ending 30 June 2001 to 30 June 2007;
(b)the KPI/BART reports for the Civic Video stores in Albany, Carnarvon, Esperance, Malaga, Kalgoorlie (three stores), Greenwood, Applecross, Forrestfield and Armadale for the 2003 ‑ 2005 financial years; and
(c)the KPI/BART reports for the remaining Civic Video stores for the 2003 ‑ 2006 financial years.
Issuing arising for determination
In the present case, Civic has given discovery on oath. A list of discoverable documents verified by affidavit is generally treated as conclusive as to its contents: Chandler v Water Corporation [2004] WASC 95 [10] (Hasluck J). There are three specific sources of power in the court to go behind discovery on oath and make orders where there has been a deficiency in discovery. In each case, the onus is upon the party seeking orders for further discovery to satisfy the court that the orders should be made: Perpetual Trustees Company Ltd v Burniston [2012] WASC 26 [26] (Edelman J).
The first is Rules of the Supreme Court 1971 (WA) (RSC), O 26 r 15, which empowers the court to make 'such order as it thinks just' when there has been a failure to comply with 'any of the Rules of this Order or … any order made thereunder, to give discovery'. The scope of the discovery that must be provided by a party is set out in RSC O 26 r 1(1), being 'all documents which are or have been in his possession, custody or power relating to any matter in question therein'. This sub‑rule 'gives the court the widest powers, having regard to the principles of positive case flow management, to determine the stage at which and the extent to which discovery shall be ordered': North Kalgurli Mines Pty Ltd v GRD Minproc Ltd [2002] WASC 275 [26] (Hasluck J); Perpetual Trustees [23].
The second source of power to make orders where there has been a deficiency in discovery is the inherent jurisdiction of the Supreme Court: Technomin Australia Pty Ltd v Xstrata Nickel Australasia Operations Pty Ltd [2010] WASC 218 [3] ‑ [5] (Murphy JA); Chandler [16]. The court's inherent jurisdiction is not modified by the power in RSC O 26 r 6: Technomin [5]; Chandler [16]. A limitation on this power is that the deficiency cannot be demonstrated by a contentious affidavit from the party seeking to challenge the discovery: Technomin [4]; Chandler [17].
The third source of power to make orders where there has been a deficiency in discovery is RSC O 26 r 6. This was introduced to modify the rules which apply in the inherent jurisdiction, in particular to allow a challenge to discovery based on a contentious affidavit seeking discovery of particular documents, or a particular class of documents: Technomin [4]; Mulley v Manifold [1959] HCA 23; (1959) 103 CLR 341, 343 (Menzies J). The power in RCS O 26 r 6(1) is that:
[T]he Court may at any time, on the application of any party to a cause or matter, make an order requiring any other party to make an affidavit stating whether any document specified or described in the application or any class of document specified or described is, or has at any time been, in his possession custody or power, and if not then in his possession custody or power when he parted with it and what has become of it.
Whichever of the three sources of power is relied upon, there are three primary requirements which the applicant must satisfy, namely that:
(a)the court has reasonable grounds for being fairly certain that the documents sought (or class of documents sought) are in existence;
(b)those documents sought are relevant; and
(c)those documents ought to have been disclosed.
Perpetual Trustees [29]; Technomin [6]; Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2005] WASC 60 [3] (Newnes M); Beecham Group Ltd v Bristol Myers Co [1979] VR 273, 276, 279 (Menhennitt J); British Association of Glass Bottle Manufacturers Ltd v Nettlefold [1912] AC 709, 714 (Viscount Haldane LC).
In the present application, it is not in issue that there are documents in existence falling within the remaining classes of document identified above [11]. The issues for determination focus on relevance and discretion. Five issues thus arise for determination:
1.Are Civic's financial statements and general ledger for each year for the periods ending 30 June 2001 to 30 June 2007 relevant documents (item 1)?
2.Are the KPI/BART reports for the Civic Video stores in Albany, Carnarvon, Esperance, Malaga, Kalgoorlie (three stores), Greenwood, Applecross, Forrestfield and Armadale for the 2003 ‑ 2005 financial years relevant documents?
3.Are the KPI/BART reports for the remaining Civic Video stores for the 2003 ‑ 2006 financial years relevant documents?
4.Ought any relevant documents be discovered in the exercise of the court's discretion?
5.What final orders are appropriate?
Are Civic's financial statements and general ledger for each year for the periods ending 30 June 2001 to 30 June 2007 relevant documents (item 1)?
For the purposes of discovery, a document will be relevant if it relates to any matter in question: RSC O 26 r 1(1). A document will 'relate to' a matter in question if it directly or indirectly enables a party to advance its own case or damage an adversary's case: Mulley (345); Perpetual Trustees [30]; Technomin [37]; Chandler [14]; Youlden [4]; Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Company (1882) 11 QBD 55, 63 (Brett LJ). The document may also 'relate to' a matter in issue if it indicates a useful line of investigation, or contains information which could affect the manner in which a party may decide to conduct proceedings: Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1 [19] (Gleeson CJ, Gaudron, Gummow & Callinan JJ); Technomin [37]. This wide review of relevance is subject to case management considerations which may in effect lead to a much narrower range of documents actually being discovered than on a traditional application of the principles in cases like Compagnie Financiere: Roe v The State of Western Australia [2013] WASC 130 [12] (Martin CJ).
The pleadings are the principal source of defining the matters in question in the proceedings: Mulley (345); Smith v Leveraged Equities Ltd [2011] WASC 282 [9] (Allanson J); Australian Railroad Group Pty Ltd v Rowan [2004] WASC 165 [22] (Le Miere J). Regard must also be had to the conduct and admissions of the parties and the nature of the action: Singh v Friedman [2013] WASC 78 [4] (Allanson J); Perpetual Trustees [31]; Youlden [5].
The documents sought are said to be relevant to Civic's claim for damages. In its further amended statement of claim dated 14 October 2009, Civic sets out the following particulars of its loss and damage [21], [40]:
(a)loss of franchise fees and royalties payable pursuant to the franchise agreement for each store;
(b)loss of opportunity to procure a purchaser for each store or to acquire the assets of each store from the Thompsons; and
(c)loss of reputation and goodwill in the Geraldton area.
In his amended defence dated 17 March 2010, Mr Paterson denies Civic's claim for damages. Among other things, he asserts that the business operating at each store was operating at a loss [12], [15], [27], [29].
Civic has already discovered a summary of its profit and loss statements for the financial years 2006 ‑ 2011. For each of the years ending 30 June 2006 to 30 June 2011, this table sets out the total income derived by Civic and the deductions and adjustments required to derive the net profit before tax. This is document 113 of Civic's list of discoverable documents, being one of the documents dealt with by the Court of Appeal. Although the document is described in the discovery list as 'profit and loss statements for the period June 2006 to June 2011', it is in fact only a summary.
In an affidavit sworn 11 December 2013, Luke Hager, a solicitor employed by Mr Paterson's lawyers, deposes that the documents sought as item 1 are relevant to allow:
(a)Mr Paterson to check the accuracy of the summary document discovered; and
(b)Mr Paterson's expert to know what costs Civic incurred as franchisor of the two Geraldton stores, as these costs 'need to be deducted from the plaintiff's claimed damages' [16.3].
In relation to the first reason, it is not immediately apparent to me that the information in the summary of profit and loss (document 113) will be of any utility in ascertaining, or testing, the loss suffered by Civic by reason of the closure of the two Geraldton stores. The financial information in the summary document is aggregated to a level which means that the information relating to the two Geraldton stores is not identifiable. I am therefore not satisfied that the documents on which the summary document is based are themselves relevant.
In relation to the second reason, Mr Hager goes on to depose that:
(a)Mr Paterson is preparing his expert evidence which will respond to the expert evidence served by the other parties; and
(b)Mr Paterson's expert evidence 'can be completed within approximately 4 weeks after he is provided with the additional documents' from Civic, as well as certain documents from the Thompsons (which are not the subject of the present application).
However, as things presently stand, there is no order granting leave to Mr Paterson to adduce expert evidence at the trial of the action.
Civic and the Thompsons have leave, which they have exercised. Civic served its expert evidence on Mr Paterson in December 2011, being a report by John Temple‑Cole, an accountant. Mr Temple‑Cole sought to quantify the loss suffered by Civic as a result of Mr Paterson's alleged conduct in respect of the Geraldton stores. Mr Temple‑Cole assessed Civic's damages to be in the order of $250,000. His report quantified Civic's loss based on the estimated franchise and advertising fees that would have been payable to Civic if the alleged breaches had not occurred. The report detailed Civic's methodology for calculating the franchise and advertising fees. He examined revenue for three Civic stores which, he was instructed, were stores which were 'comparable to' the two Geraldton stores. He disregarded costs specific to the two Geraldton stores when calculating damages on the basis that, 'it is reasonable to assume that the expenses incurred in relation to the operations of the two individual stores do not form a significant proportion of the overall expenses of Civic Video' [3.4.2(b)].
The Thompsons served their expert evidence in October 2013.
On 20 June 2013, the court made an order, with the consent of the parties, that Mr Paterson serve any expert evidence on which he intended to rely by 15 August 2013. This was not complied with. At the next status conference on 22 August 2013, no order was made giving Mr Paterson an extension of the time within which to serve his expert evidence. At a subsequent status conference on 3 October 2013, Mr Paterson was granted until 6 November 2013 to serve his expert evidence. Mr Paterson did not comply with this direction. At the next status conference on 7 November 2013, no order was made granting Mr Paterson a yet further extension of the time within which to serve his expert evidence.
As Mr Paterson has not complied with the directions given to serve his expert evidence by 6 November 2013, he does not currently have leave to adduce expert evidence at the trial of the action: RSC O 36A r 3(2).
Mr Paterson has not sought orders from the court in the present application granting him that leave. The action is thus presently proceeding to trial on the basis that Mr Paterson will not be adducing expert evidence. It follows that the issues of relevance and discretion in the present application need to be determined on the basis that Mr Paterson will not be adducing expert evidence.
Civic opposes Mr Paterson's request for its financial statements for each year for the periods ending 30 June 2001 to 30 June 2011 on the basis that the documents sought do not include or contain any information that will enable Mr Paterson to ascertain the amount of expenses that Civic has saved by reason of the closure of the two Geraldton stores. They are therefore not relevant for this purpose or for any other purpose in these proceedings.
Civic further submits that it is unclear why such documents from the period 2001 ‑ 2006 are now required in circumstances where the stated relevant basis for the discovery of such documents, namely, to assess Civic's cost base, has not changed since Mr Paterson's initial request in January 2012 for the profit and loss statements for the financial years 2006 ‑ 2011.
For similar reasons, Civic also opposes Mr Paterson's request for its general ledger for each financial year commencing 30 June 2001 to 30 June 2011. It says that by its very nature, Civic's general ledger will contain every single posting from the general journal for each of Civic's accounts. For example, it would contain every posting relating to stationary purchased by Civic's head office. As such, the production of Civic's general journal in this period or at all will contain a significant amount of data which is not at all relevant to these proceedings. Moreover, it has adduced evidence that the general ledger does not contain information which will enable Mr Paterson to ascertain the amount of expenses that Civic Video has saved by reason of the closure of the stores. Civic thus submits that the general ledger is not relevant for this purpose or for any other purpose in these proceedings.
I am satisfied that the amount of expenses saved by Civic by reason of the closure of the two Geraldton stores is a matter in question in the action going to the quantum of loss suffered by Civic. If its claim in tort succeeds, Civic will be entitled to that amount of damages necessary to place it in the position it would have been had the tort not been committed: Livingstone v Rawyards Coal Company (1880) 5 App Cas 25, 35 (Lord Hatherley); Hardie Finance Corporation Pty Ltd v Ahern [No 3] [2010] WASC 403 [806] (Pritchard J). This must be assessed by reference to profit, not revenue. It will be a question of fact whether there are any identifiable costs which should be deducted. Mr Temple‑Cole thinks not. Mr Paterson is entitled to test this position and adduce contrary evidence.
However, I am not satisfied that the Civic's financial statements or its general ledger will contain this information. Put slightly differently to address Mr Paterson's submissions, nor am I satisfied that the financial statements or its general ledger will contain information about the costs incurred by Civic to administer the two Geraldton stores prior to 2006. I am therefore not satisfied that the documents sought in item 1 are relevant.
In the course of submissions, counsel for Mr Paterson submitted that there was case law to the effect that it was permissible for the court to deduct a percentage figure for costs off the expected revenue from the lost franchise agreement based on an analysis of the costs of the remainder of the business as a whole. I allowed counsel the opportunity to file written submissions on this point so that I might consider this authority. Written submissions were filed, but the case law was not drawn to my attention. It seems to be that before a trial judge would be justified in deducting costs from a revenue stream, there would need to be specific evidence that there were in fact relevant costs of a particular kind that were saved. This inevitably directs the inquiry to the actual costs which were incurred in relation to the additional revenue stream.
It also seems to me that Mr Paterson has not correctly defined the relevant class of documents. The relevant class is 'all documents recording or evidencing the costs incurred in managing the franchise of the Durlacher store and the Highway store in the period from 1 July 2003 to 30 June 2007'. Costs incurred prior to 30 June 2003 are going to be too dated to be relevant to the costs which Civic would have otherwise incurred had the franchises continued.
Are the KPI/BART reports for the Civic Video stores in Albany, Carnarvon, Esperance, Malaga, Kalgoorlie (three stores), Greenwood, Applecross, Forrestfield and Armadale for the 2003 ‑ 2005 financial years relevant documents?
'KPI' refers to 'Key Performance Indicators'. The reference to 'BART' is to an online database known as the Business Analyst Report Tool which records the turnover information of Civic's franchisees. There is an example of a KPI/BART report annexed to Mr Hager's affidavit.
In his expert report, Mr Temple‑Cole examined the revenue for three Civic stores which he was instructed were comparable stores, being Albany, Carnarvon and Esperance. He was provided with the KPI/BART reports for these stores for the period from January 2006 to August 2011 (which as I have already noted were recently discovered as part of item 3). Civic's Western Australian manager, Michael O'Connell, also identifies the Malaga store as being comparable (see his affidavit sworn 27 November 2013). Civic has informally discovered the KPI/BART reports for 2005 ‑ 2010 for the Malaga store.
In his affidavit, Mr Hager deposed that:
28.The documents are relevant as follows:
28.1the KPI Reports/Bart Reports are relevant to the issue of whether the Civic Video stores in Albany, Esperance and Malaga were comparable to the Durlacher Store and Highway Store as claimed by the plaintiff; and
28.2I am informed by the first defendant, who has been in the video industry for 30 years, and I verily believe that the Bart Reports for the following Civic Video stores:
(a)3 Kalgoorlie stores;
(b)Greenwood;
(c)Applecross;
(d)Forrestfield; and
(e)Armadale,
may disprove the plaintiff's assertion that the Civic Video stores in Albany, Esperance and Malaga were comparable.
Civic informally discovered the KPI/BART reports for these stores for 2005 ‑ 2010 financial years. (I will refer to the Albany, Esperance, Carnarvon, Malaga, Kalgoorlie, Greenwood, Applecross, Forrestfield and Armadale stores as being the 'comparable stores').
Mr Hager submitted that the KPI/BART reports for the comparable stores for the 2003 ‑ 2005 financial years were relevant to two issues:
(a)whether the Durlacher store and the Highway store operated by the Thompsons were operating at a loss; and
(b)whether stores relied on by Mr Temple‑Cole (Albany, Esperance and Carnarvon) were comparable to the two Geraldton stores.
In relation to the first, the question of whether the Durlacher store and the Highway store were operating at a loss will turn on the financial evidence for these two stores. It is not apparent to me how the information from comparable stores (eg turnover) could be relevant to the financial position of the two Geraldton stores.
In relation to the second, the damages claimed by Civic relate to the period from the termination of the two franchise agreements (2006) until the end of the two franchise agreements (2014 for the Durlacher store and 2016 for the Highway store). Mr Hager submitted that the earlier information was important for discerning trends in revenue. This is not apparent to me. It seems to me that the relevant issue is revenue from 2006 onwards, including trends evidenced in the revenue of the comparable stores.
Mr Paterson has not discharged the onus on him to demonstrate that the KPI/BART reports for the comparable stores for the 2003 ‑ 2005 financial years relate to any matter in issue.
Are the KPI/BART reports for the remaining Civic Video stores for the 2003 ‑ 2006 financial years relevant documents?
Counsel for Mr Paterson submitted that it was necessary for Mr Paterson to have access to the remaining KPI/MBART reports for the 2003 ‑ 2006 financial years to test whether the three stores relied on by Mr Temple‑Cole (Albany, Esperance and Carnarvon) were the three most appropriate comparable stores. He submitted that as a matter of fairness Mr Paterson ought to have access to the same information as Civic in identifying the most appropriate comparable stores.
Civic's position was that the documents were not relevant. Counsel for Civic referred to a number of passages from the decision of the Court of Appeal which he considered were apposite to the current application. One of the documents considered by the Court of Appeal was Civic's discoverable document 114, being a copy of a summary of total annual revenue figures of all Civic stores in Western Australia, including stores that are now closed, from 2006 to 2011. In relation to document 114, the court observed (Pullin & Murphy JJA):
Mr Paterson did not give any direct evidence as to why he would need to see document 114 in order properly to conduct his defence of the damages claim in general or to instruct an accounting expert in particular. Indeed, Mr Paterson's counsel said, in effect, that he could not give any, or any meaningful, evidence as to whether the stores which were chosen by Civic as comparable were, in fact, comparable without actually seeing the document himself (ts 36). In our view, that submission ought not be accepted.
Mr Paterson knew, from the description of document 114, what it contained and he also knew from the Accountant's Report the reasons why the chosen stores were deemed to be comparable to the Geraldton stores. Civic's accounting expert said in par 4.4.2 that he had been instructed that the reasons that the Albany, Carnarvon and Esperance stores were deemed comparable to the Geraldton stores were:
(a)each of the comparable stores are regional stores operated by a single unit franchisee (owner, operator stores);
(b)the turnovers of the comparable stores are similar to that of the Geraldton stores;
(c)while the population of these markets varies when compared to Geraldton, they are similar regional Western Australian towns; and
(d)each of the towns in which each of the comparable stores operates has other video store competitors operating.
There is no reason, in our view, as to why, in these circumstances, Mr Paterson could not have deposed to the basis upon which he would need to see the information in document 114 in order to address the question of whether the chosen stores were, in fact, comparable stores.
Moreover, it is difficult to see any basis upon which Mr Paterson would need to see the figures in document 114 in order to address and respond to the reasons given for the selection of the comparable stores referred to in par (a), (c) and (d) of paragraph [60] above. It would be expected that Mr Paterson could draw on his industry experience to address those matters without seeing Civic's turnover figures for every store in this State [59] ‑ [62].
I agree that these comments are apposite. Neither Mr Hager nor Mr Paterson give evidence as to the basis on which the latter needs to see comparable revenue information in order to address the question of whether the chosen stores were in fact comparable.
However, in my view the argument against discovery on the present application is even stronger. This is because Mr Paterson's lawyers and expert have been able to access document 114 pursuant to the orders made by the Court of Appeal. It was open for Mr Paterson's expert to have reviewed document 114 in order to either:
(a)satisfy himself that the three stores chosen by Mr Temple‑Cole were in fact the most appropriate comparable stores; or
(b)identify (in conjunction with the publicly available and industry information known by Mr Paterson) three more appropriate comparable stores.
Mr Paterson has not satisfied me that discovery of the KPI/BART reports for the remaining Civic Video stores for the 2003 ‑ 2006 financial years will enable him to directly or indirectly advance his own case or damage that of Civic. Nor has he satisfied me that discovery of the documents will indicate a useful line of investigation, or contain information which could affect the manner in which he may decide to conduct proceedings. Accordingly, I am not satisfied that the documents are relevant.
In relation to the fairness issue raised by Mr Hager, I accept that the purpose of rules requiring disclosure of expert evidence, is 'that of ensuring that no‑one is taken by surprise at trial and that each party [has] an adequate opportunity to consider, investigate and, if necessary, answer expert evidence to be led by an opposing party': Tremeer v City of Stirling [2002] WASCA 281 [33] (Wallwork, Steytler & McLure JJ). For this reason, disclosure of the documents on which each expert relies is usually ordered on the ground of fairness to ensure that the experts of the opposing party are able to opine on the same factual matrix: see generally Dowd v McCloskey [2005] WADC 99 (Gething PR). However, the fact that Mr Paterson's expert can have access to document 114 sufficiently addresses the fairness issue. If access to document 114 was not sufficient, then it was incumbent on Mr Paterson to provide evidence on this application specifically identifying why access to document 114 was not sufficient to enable his expert to identify the appropriate comparable stores.
Ought any relevant documents be discovered in the exercise of the court's discretion?
Given my conclusion on relevance, none of the three sources of power to order further discovery has been enlivened in relation to the classes of documents set out above [11]. However, even if the remaining documents sought were relevant, I would not have been prepared to order further discovery in the exercise of the court's discretion.
Any order for further and better discovery, under any of the three heads of power set out above [13] ‑ [15], is discretionary: Perpetual Trustees [34]. The discretion is exercised with regard to the overriding objectives of case management and the just resolution and determination of litigation: RSC O 1 r 4A, r 4B; Singh [6]; Perpetual Trustees [34]; Daraja Ltd v Hogan & Partners Stockbrokers Pty Ltd [2012] WASC 256 [10] (Kenneth Martin J); Smith [35]; Youlden [6].
In Roe, the Chief Justice made the following observations about the contemporary principles governing the provision of discovery:
[I]t is now established that general discovery is no longer regarded as a right. Rather, the extent of the obligation to give discovery and the entitlement to discovery will be fashioned having regard to the general principles that are articulated in the Rules of the Supreme Court 1971 (WA) and in particular the principles enunciated in O 1 r 4A and r 4B. Those principles include and expressly embody the notion of proportionality, which requires a court, before ordering any interlocutory process, to assess whether the forensic benefit to be derived by that process is proportional to the cost and delay which will flow from the undertaking of the process, having regard to the value, importance and complexity of the subject matter in dispute and the financial position of the parties.
In the context of discovery, this means that when issues arise with respect to the breadth of the discovery to be ordered, the ambit of discovery will be determined taking into account the cost and delay associated with the provision of discovery over a broader ambit, as compared to the forensic benefit likely to be derived from the provision of discovery over that broader ambit. Unless the cost and delay involved in the provision of that discovery is proportionate to the forensic benefit likely to be derived from a broader ambit of discovery, and to the value and importance or complexity of the subject matter of the proceedings, a narrower ambit of discovery will be ordered.
The only proposition I would add to the principles enunciated in the defendant's written submissions is the proposition that at least in cases such as this, when general discovery has not been sought or ordered, adjectival or indirect relevance of itself will no longer determine whether or not a document will be ordered to be discovered, and in particular the approach to general discovery enunciated in cases like Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55 will no longer guide the court in relation to issues with respect to informal discovery.
Rather, those issues will be determined by the balancing of the likely forensic benefit to be obtained against the risk of cost and delay in the manner that I have described, viewed in the context of the value, importance and complexity of the subject matter of the proceedings. In that context, the forensic significance of the issue in respect of which discovery is sought and the relevance of the documents sought to that issue, in a qualitative sense, will be pertinent to the proper disposition of any application for discovery.
It follows from these observations that it is necessary to put the present contest between the parties in its proper forensic context in order to undertake the balancing process which the principles enunciated in O 1 r 4A and r 4B require [10] ‑ [14].
In the present application, the principles of case management weigh heavily against the making of an order for further discovery in relation to the remaining classes of documents sought. Mr Paterson has been in possession of Mr Temple‑Cole's report since December 2011. He made a request for further discovery in January 2012 which, as I have mentioned, resulted in an appeal to the Court of Appeal before being resolved. It was open to Mr Paterson to have requested the documents initially the subject of the present application at the same time as the other documents requested in January 2012. There is no evidence before me as to why this did not occur. The documents the subject of the present application were not in fact requested until November 2013.
The present case was commenced over five years ago. Mr Paterson has failed to comply with multiple deadlines to serve his expert evidence, and now faces the prospect of trial without expert evidence.
The issue of proportionality also looms large in this action. According to Mr Temple‑Cole, Civic's damages are in the order of $250,000. From my review of the file to prepare these reasons, I am of the view that there is a serious risk that the costs which each party has spent on the litigation to date, and which they will need to spend to complete the trial, will be well in excess of the damages sought by Civic.
Finally, with one exception, Mr Paterson has not demonstrated that the remaining classes of documents sought have any real forensic benefit. The exception is the class of documents which I described above in relation to item 1, being 'all documents recording or evidencing the costs incurred in managing the franchise of the Durlacher store and the Highway store in the period from 1 July 2003 to 30 June 2007'. There is a clear forensic benefit in having these documents as they will allow the parties (and ultimately the trial Judge) to assess what, if any, deduction ought to be made from the gross revenue stream expected by Civic from the two franchise agreements so as to place Civic in the position it would have been in had Mr Paterson not engaged in the alleged tortious conduct.
I am therefore of the view that, in the circumstances of the present case, it would not achieve the objectives set out in RSC O 1 r 4A and r 4B to allow Mr Paterson multiple opportunities to seek additional discovery. I am satisfied that Mr Paterson has had ample opportunity prior to the present application to request the further documents sought. That he has had this opportunity is sufficient to ensure the just determination of the action: Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 [98], [102] (Gummow, Hayne, Crennan, Kiefel & Bell JJ).
What final orders are appropriate?
In my view, the power in RSC O 26 r 15 has been enlivened in relation to:
(a)the documents informally discovered by Civic; and
(b)the documents recording or evidencing the costs incurred in managing the franchise of the Durlacher store and the Highway store in the period from 1 July 2003 to 30 June 2007.
Added to this power, is the power in RSC O 4A r 5(1), which provides that when hearing an application in a case, a master has the power to 'make any case management direction the Court considers just'. A case management direction is 'any procedural direction that in the Court's opinion it is just to make in a case to facilitate the attainment of the objects referred to in Order 1 rule 4B(1)': RSC O 4A r 2(1). This at least extends to requiring Civic to formalise its recent informal discovery.
My preliminary view is that an order in the following terms will give effect to these reasons:
1.By 31 January 2014, the plaintiff must:
(a)make a list of the documents which are or have been in that party's possession, custody or power relating to any matter in question in the action, and which to date have not been discovered, in the form of Form 17 to the RSC;
(b)swear an affidavit verifying the list in par (a) in the form of RSC Form 18;
(c)serve a copy of the documents in pars (a) and (b) on each other party;
(d)file a copy of the documents in pars (a) and (b) with the court; and
(e)serve on each other party a legible photocopy (or PDF image) of each document referred to in pt 1A of the list in par 1(a), which is not the subject of an objection as set out pt 1B of the list, the cost of provision of which is to be in the cause.
2.The documents in par 1(a) are to include:
(a)the invoices rendered by the plaintiff to the second and third defendants for the Durlacher Store and the Highway Store (as defined in the further amended statement of claim);
(b)the documents identified as numbered 2 and 9 to 33 of appendix B of the plaintiff's expert report dated 7 December 2011
(c)the KPI/BART reports for the Civic Video stores in Malaga, Kalgoorlie (three stores), Greenwood, Applecross, Forrestfield and Armadale for the 2005 ‑ 2010 financial years; and
(d)all documents recording or evidencing, either directly or in summary form, the costs incurred by the plaintiff in managing the franchise of the Durlacher Store and the Highway Store (as defined in the further amended statement of claim).
3.By 31 January 2014, the plaintiff's solicitor must file a certificate in accordance with RSC O 26 r 16A.
I will hear from counsel on the final form of the orders and costs.
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