Exclude Holdings Pty Ltd v Warwick

[2014] WADC 22

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CIVIL

LOCATION:   PERTH

CITATION:   EXCLUDE HOLDINGS PTY LTD -v- WARWICK [2014] WADC 22

CORAM:   DEPUTY REGISTRAR HEWITT

HEARD:   12 FEBRUARY 2014

DELIVERED          :   27 FEBRUARY 2014

FILE NO/S:   CIVO 212 of 2013

BETWEEN:   EXCLUDE HOLDINGS PTY LTD

Applicant

AND

DENNIS WARWICK
First Respondent

TYREPOWER MARKETING (WA) LTD
Second Respondent

Catchwords:

Practice and procedure - Application for pre-action discovery

Legislation:

Rules of the Supreme Court O 26A r 4

Result:

Application dismissed

Representation:

Counsel:

Applicant:     Mr S J Blyth

First Respondent           :     Mr Chandler

Second Respondent       :     No appearance

Solicitors:

Applicant:     Lewis Blyth & Hooper

First Respondent           :     Templar Legal

Second Respondent       :     Not applicable

Case(s) referred to in judgment(s):

Nil

1. DEPUTY REGISTRAR HEWITT: In this matter, the plaintiff applies by originating summons against the first respondent (and another) seeking orders pursuant to O 26A of the Rules of the Supreme Court.  The documents which are sought to be provided are described as all the documents that are or have been in the first respondent's possession, custody or power relevant to the preparation of partnership returns of the partnership of the applicant and the first respondent under the business name and style A K Tyre Service, for the financial years ending 30 June 2009, 30 June 2010 and 30 June 2011, and to 31 December 2011 and including but not limited to all documents and other written material indicating or otherwise evidencing the partnership claiming or otherwise seeking a credit note rebate on tyres purchase by the partnership from the second respondent, or supplied by the second respondent to the applicant, for the financial years ending 30 June 2009, 30 June 2010 and 30 June 2011 and to 31 December 2011, and any rebate payments made by the second respondent to the partnership or the applicant on behalf of the first respondent for the financial years or periods aforesaid.

2. As will be apparent from the nature of discovery sought, the applicant and the first respondent were in partnership in the business known as A K Tyre Service. The application is brought pursuant to O 26A of the Rules of the Supreme Court and in my view the relevant order is O 26A r 4 which is in the following terms:

   4.Discovery from potential party

   (1)This rule applies if a person who may have a cause of action against a person whose description has been ascertained (the potential party) wants –

   (a)to commence proceedings against the potential party; or Rules of the Supreme Court 1971 Order 26A Discovery etc. from non‑parties and potential parties r5

   (b)to take proceedings against the potential party in the course of an action to which the person is a party, but the person, after reasonable enquiries, has not been able to obtain sufficient information to enable a decision to be made as to whether to commence or take the proceedings.

   (2)If there are reasonable grounds for believing that the potential party had, has, or is likely to have had or to have, possession of documents that may assist in making the decision, the person may apply for an order under this rule.

   (3)The application shall be supported by an affidavit and a copy of both shall be served on the potential party.

   (4)On the application the Court may order the potential party to give discovery of all documents that are or have been in the potential party's possession and that may assist the applicant in making the decision.

3. In my view the first relevant enquiry is what is the nature of the action which the applicant is considering pursuing against the respondent.  In the present case as I have already indicated, the parties were in partnership together.  That partnership was ended under the terms of a deed entitled 'Dispute Settlement Deed' dated 28 December 2012.  A copy of that deed appears at JYS5 of the affidavit of Mr J Y Stevenson, sworn 7 November 2013.  To the extent that there may be a cause of action able to be pursued by the applicant it would appear to be contained in cl 1 of the deed which in effect provides that the partnership was to terminate on 31 December 2011 and upon that date an account would be taken.  The monies found to be due on the taking of that account would be either added to or offset against payments referred to in par 3 of the deed, which effectively was the price to be fixed on certain assets transferred under the terms of the deed.  It is clear that a partnership tax return was prepared and submitted by the ongoing partners, and that the applicant is not satisfied that that accounting process properly reflected the entitlements of the parties under the terms of the deed.  To that end, the applicant seeks access to the books and records of the partnership, which are in the possession of the first respondent, to conduct an examination to ascertain whether or not its impression as to the accuracy of the account is in fact correct.  In the event that the accounts prove to be incorrect and the respondent has received more than its fair entitlement, a cause of action would lie.

4. This dispute has had an unfortunate course and it is clear that the applicant has made similar requests over a period of time.  To some extent the requests have been complied with, however certain matters have led to differences between the parties.  However what I regard as the critical matter in this case is the fact that by way of an email from the respondent to Mr Stevenson of behalf of the applicant, Mr Stevenson was invited to attend the premises of the respondent and inspect the documents during business hours.  The respondent however declined to allow the materials to be removed from the premises, citing the fact that he needed to retain those documents for taxation purposes.  It appears that offer was never taken up and the applicant made no effort to come to the premises and inspect the documents.  Instead, lawyers became involved and a great deal of sabre rattling began to take place.  I gain the impression that because the volume of paperwork was extremely large, the applicant required the respondent to itemise, categorise and list all the relevant documents which no doubt would have been convenient for the applicant but would have represented an extremely onerous task for the respondent and one which in my opinion it was entirely justified in declining.  More recently that offer has been renewed, but at an earlier stage some months after it was made and prior to the commencement of these proceedings it was revoked.

5. How then should I categorise an application by an applicant who has been invited to come and inspect the relevant documents and has not troubled to do so?  The relevant rule permits proceedings of the kind which are before me to be entered into where, after reasonable enquiries, the applicant has not been able to obtain sufficient information to enable a decision to be made as to whether to commence or take proceedings.  There was for a number of months an offer on the table which would have permitted the applicant, at its leisure, to attend the premises of the respondent and inspect the documents which are now the subject of the present originating summons.

6. In my view the failure to take up the opportunity when it was offered, and to bring this application which if successful would require the respondent to list and catalogue all the documents which are in its possession which answer the description in the summons, should be fatal to the application.  The purpose of the rule is to enable a party who needs them to be able to have access to documents which are necessary to evaluate its legal position and potential for action.  It is not there to force other parties to do work the applicant could have done for itself if it had chosen to do so.

7. Although argument before me canvassed a number of matters I think this point it is sufficient to dispose of the application.  If the applicant could not be bothered to look at the documents and carry out its own analysis, I see little reason to force the respondent to do so.  Accordingly, in my view this application is without merit and I dismiss it.