CTI Joint Venture Company Pty Ltd v Cardno Hard and Forester Pty Limited; CRI Chatswood Pty Ltd (In Liquidation) (Receivers and Managers appointed) v Cardno Hard and Forester Pty Ltd

[2017] NSWSC 775

Supreme Court

New South Wales

Medium Neutral Citation:	CTI Joint Venture Company Pty Ltd v Cardno Hard & Forester Pty Limited; CRI Chatswood Pty Ltd (In Liquidation) (Receivers and Managers appointed) v Cardno Hard & Forester Pty Ltd [2017] NSWSC 775
Hearing dates:	09/06/2017
Date of orders:	09 June 2017
Decision date:	09 June 2017
Before:	McDougall J
Decision:	Plaintiffs to give limited discovery.
Catchwords:	PRACTICE AND PROCEDURE – discovery – where justifications for discovery are based on an erroneous conception of the case sought to be made out – discovery to be given in terms of the further amended proposed category – no question of principle
Category:	Procedural and other rulings
Parties:	CTI Joint Venture Company Pty Ltd (First Plaintiff) (2015/94457) Galileo CTI Pty Ltd (Second Plaintiff) ISPT DOF 2 (Chatswood) Pty Ltd (Third Plaintiff) Cardno Hard & Forester Pty Limited (First Defendant) Pierre Hartzenberg (Second Defendant) CRI Chatswood Pty Ltd (In Liquidation) (Receivers and Managers Appointed) (Plaintiff) (2014/376670) Cardno Hard & Forester Pty Ltd (First Defendant) Pierre Harzenberg (Second Defendant)
Representation:	Counsel: C H Withers / J S Burnett (Plaintiffs) J Shepard (Defendants)   Solicitors: Herbert Smith Freehills (Plaintiffs) Gilchrist Connell (Defendants)
File Number(s):	2015/94457; 2014/376670

Judgment   (ex tempore – revised 9 JUNE 2017)

1. HIS HONOUR: The plaintiffs sue the defendant for alleged negligence in connection with the defendant's survey of a very large commercial development site at Chatswood and for misleading or deceptive conduct in connection with that survey. In essence, the plaintiffs’ complaint is that the defendant's survey mislocated a boundary of the development site, so that one of the proposed buildings could not be built. That is said to have caused a very substantial loss.

2. The matter has been fixed for hearing to commence on 14 August 2018, with an estimate of two weeks.

3. I am concerned today with the defendant's notice of motion filed on 26 May 2017, seeking discovery of documents. The only category still in issue has been amended. In essence, what is sought are documents evidencing or recording advice and the terms of that advice given to any of the plaintiffs during a due diligence process described in the plaintiffs’ affidavit evidence. The due diligence was conducted, it seems, because the company that ultimately carried out the development was not the company that had obtained the development consent. There were no relevant vendor warranties, and thus, the plaintiff's evidence is, the group of companies of which the plaintiff is a part conducted a substantial due diligence process. That process is said to have involved at least one meeting with each of the consultants who had previously been involved in the project. Those consultants included the defendant.

4. The plaintiff's evidence identifies specifically meetings with some six consultants. It is not immediately apparent that they were the only consultants involved, and having regard to the scope of the development, it would be perhaps a little surprising if there were not more.

5. The defendant seeks to justify the request for discovery on four bases. The first two may be considered together. They are that the documents sought go to reliance and causation generally, and that they go specifically to the pleading of reliance at para 59 of the amended commercial list statement. As far as I understand it, the argument sought to be made is that the documents could show that the plaintiff relied to a substantial extent on advice given by other consultants. Insofar as the requirement is said to be justified by reference to para 59, that paragraph alleges that the representations said to have been made by the defendant were individually and together a substantial cause of the plaintiff’s decision to buy the land on which the project was to be constructed, and to spend money on and enter contracts in relation to that project.

6. Those two suggested justifications seem to me to involve an erroneous conception of both the case sought to be made out on causation and, more generally, the principles relating to causation. The plaintiffs do not suggest that they did not rely on other consultants. What they plead is that they relied specifically on representations made by a particular consultant: the defendant. It is of course trite to say that the topic of causation, as it is recognised by the common law and as it is relevant to the various statutes that proscribe misleading or deceptive conduct, does not require that the conduct complained of must have been the sole cause of the plaintiff’s loss. Applied to the particular pleading, it is not necessary that the representations said to have been made by the defendant were the sole cause of the plaintiff’s decisions as particularised. It is sufficient, in each case, if the conduct complained of was a cause, and perhaps something other than an insignificant or inconsiderable cause, of the making of those decisions.

7. The assessment of the significance of causation requires the conduct of which complaint is made to be looked at in the context of the decisions that it is said to have influenced. It simply does not follow, because the plaintiffs (so they say) obtained and relied upon assurances from other consultants, that they did not also rely upon any assurances that were given by the defendant. As I have said, these bases for the suggested need for the documents do not seem to me to reflect the relevant legal test.

8. The same, although it arises in a different context, may be said of the next way in which the request was put. It is framed by reference to the pleading of vulnerability at paras 70 and 78 of the amended commercial list statement. The plaintiffs say at 70 that they were unable to protect themselves from and were vulnerable to the consequences of the defendant’s suggested negligence. Paragraph 78 essentially reflects that, in respect of the representations said to have been made by the defendants about the work that was said to have been done negligently.

9. Again, the defendants submit, the extent of the plaintiff’s ability (if any) to protect themselves from the consequences of the alleged negligence ought to be assessed by looking at how they might have protected themselves vis-a-vis the other consultants.

10. I accept that ability to protect oneself from the consequences of negligence is essential to the concept of vulnerability, in connection with a duty of care to avoid pure economic loss. I do not accept that it is something which is necessarily to be assessed by reference to the dealings between the plaintiffs and other consultants at large. The plaintiff’s pleading focusses, properly, on the negligence alleged against the defendants at each relevant stage (when they did the work, and when they made representations about it, if they did). It pleads inability to protect at those times and in respect of those matters. I do not think that the defendants’ ability to defend this aspect of the case is likely to be assisted in any way by learning about advice given by other consultants at the due diligence stage.

11. The final matter relied upon is the suggested need for the defendants to explore the topic of proportionate liability. There is an express pleading that a particular identified party – a certifier – and its director are concurrent wrongdoers. That is said to arise out of negligent certification of the plan of subdivision. There is no pleading that any of the other consultants, details of whose advices are now sought, were concurrent wrongdoers. Insofar as the request is sought to be justified by the prospect that they might be, it seems to be nothing more than a fishing expedition.

12. In relation to the certifier, it is not clear whether the company in question or its director were among those to whom the plaintiff spoke in the due diligence process. In the circumstances, I propose to order that discovery be given, in terms of the amended category, but in respect of that company and its director only.

13. There was a deal of evidence and submissions as to the time at which the disclosure sought was agitated and the suggested cost. It is not necessary to refer to that evidence or those submissions, because I think that, except to the very limited extent I have indicated, the application must fail.

14. I order that the plaintiffs give discovery in terms of the amended proposed category of discovery further amended by me and initialled and dated today's date. I order that the defendant’s notice of motion filed on 26 May 2017 otherwise be dismissed. In light of the defendant’s very limited success and very substantial failure, I order the defendants to pay the plaintiff’s cost of that notice of motion. I direct the plaintiffs to give the discovery ordered as quickly as it may be done.

**********

Decision last updated: 15 June 2017