Graham Evans Pty Limited v Stencraft Pty Limited

[1997] FCA 60

IN THE FEDERAL COURT OF AUSTRALIA                 No NG 62 of 1995
QUEENSLAND DISTRICT REGISTRY  
GENERAL DIVISION  

BETWEEN:GRAHAM EVANS PTY LIMITED

(ACN 009 774 378)

Applicant

AND:STENCRAFT PTY LIMITED

(ACN 010 734 997)

Respondent

MINUTES OF ORDERS

CORAM:  Drummond J
DATE OF ORDER:  6 February 1997
WHERE MADE:  Brisbane

THE COURT ORDERS THAT:

1.  The notice of motion is dismissed.

2.  The respondent in the action, as applicant on the notice of motion, pay Watpac Australia Pty Ltd’s costs of and incidental to the notice of motion.

NOTE:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA                 No NG 62 of 1995
QUEENSLAND DISTRICT REGISTRY  
GENERAL DIVISION  

BETWEEN:GRAHAM EVANS PTY LIMITED

(ACN 009 774 378)

Applicant

AND:STENCRAFT PTY LIMITED

(ACN 010 734 997)

Respondent

CORAM:Drummond J

DATE:6 February 1997

PLACE:Brisbane

REASONS FOR JUDGMENT

This is an application for third party discovery by the respondent in the action. 

The applicant in the action, a construction company, claims damages from the respondent, the developer of the Dockside project, for breach of contract and in respect of conduct said to infringe s 52 the Trade Practices Act 1974 (Cth).  The applicant alleges that the respondent wrongly repudiated the Dockside contract at the outset.  The applicant also alleges that it lost the opportunity to make a profit from another developer's project, Admiralty Towers.  The applicant was interested in submitting a tender at the time it says it concluded the Dockside contract with the
respondent for Admiralty Towers, but it alleges it could not devote to Dockside the resources that the respondent wanted, if it had both jobs.  The applicant alleges that it lost the opportunity to make a profit from the Admiralty Towers project by relying on misleading representations by the respondent, that the respondent would confer certain benefits on the applicant with respect to the Dockside project if it did not actively seek the Admiralty Towers contract.  The applicant claims damages on two alternative bases, viz, the profits it would have earned from Dockside if permitted to complete that project;  or the worth of the lost opportunity to win the Admiralty Towers project which it quantifies by reference to the profits it would have made if it had won it.

The applicant quantifies its expected profits from the Dockside project and the Admiralty Towers project by using a simple formula.  It calculates its loss in respect of Admiralty Towers by applying to what is called the Admiralty Towers contract sum (which I take to be the sum at which the Admiralty Towers contract was awarded to the successful tenderer) of about $37.5M, a factor of 19.2% said to represent its chance of winning the contract, and another factor, viz, “a percentage in the range 3.5% to 8.14% as determined by the Court”.

The applicant's evidence shows that this range is derived from the profits earned by the applicant on each of five projects completed by it at various places in Queensland.  These projects are a Community Care Centre at Ipswich, a residential tower in Brisbane, Colleges of Technical and Further Education at Mackay and Caboolture, and the State Archives building.  This quantification of the applicant's claim has the benefit of simplicity, whatever may be said about its cogency, as proof of a multi-million dollar claim.   Even its simplicity may well be illusory if the applicant does not accept that these five jobs are similar in relevant respects to the Admiralty Towers project and does not accept that these are the only projects completed by the applicant which are of relevance to the applicant's claim as presently formulated.

Be all that as it may, the respondent's answer to this is a general denial, ie, the respondent does not seek to make a positive case that, even if the applicant won the Admiralty Towers project, it would not have made the profit it claims or any profit.

Watpac Australia Pty Ltd, the respondent to the respondent's notice of motion seeking third party discovery, is the builder who won the Admiralty Towers project.  It is said by the respondent that Watpac made a loss on that job.

By its notice of motion, the respondent seeks an order that Watpac make discovery to the respondent in the action of those materials which reveal its job costs in relation to the construction of the Admiralty Towers building comprising those documents which summarise:  (1) the actual costs incurred in relation to each subcontractor and supplier which performed work or supplied materials for the project;  (2) all on-site and off-site costs incurred by Watpac in relation to the project;  and (3) any other non-primary source documents which reveal the cost to Watpac and the revenue received by Watpac in respect of the project.

The respondent indicated, through its counsel, that it would be content with evidence from Watpac that gave it, in effect, two figures:  Watpac's total costs of and total revenue from the Admiralty Towers project.  The material sought in the notice of motion is more detailed, but would, I think, yield little more information than the overall loss figure, if Watpac in fact made a loss.

Watpac is most concerned at revealing information as to how it priced the Admiralty Towers project, including the margins it allowed for in its pricing of that job and information as to any special arrangements it had with its subcontractors and suppliers.  The respondent is associated with a large Brisbane construction company, and it and the applicant in the action are both in active competition with Watpac's building work.  The applicant in the action was represented on the notice of motion and sought the same access to Watpac's documents as the court may allow the respondent to have.  The respondent, in answer to the objections based on these concerns, points out that it does not seek the sort of sensitive information that Watpac here refers to.

However, Watpac also objects to an order being made in the terms sought in the notice of motion on the grounds that the material sought is irrelevant to any issue in the case as pleaded.  It also objects on the grounds that if the material sought is relevant, its relevance is so marginal that the special jurisdiction conferred on the court to order discovery by a stranger to an action should not be exercised in favour of the respondent.  Watpac refers to Richardson Pacific Ltd v Fielding (1990) 26 FCR 188. The head note sufficiently summarises the effect of the decision:

“The purpose of O 15A of the Federal Court Rules, being to enable discovery to be obtained where anything less than the broad obligations imposed by the Order would not meet the case, is directed to exceptional rather than to ordinary circumstances.  Nevertheless, the Order is not to be read down, or fettered by considerations not contemplated by its language, so as to render it inapplicable to cases where the evidence suggests that it would provide an appropriate and reasonable solution.”

Finally, Watpac objects to the making of the order sought on the ground that the material sought is so vaguely described as to make an order of this kind oppressive.

It is difficult to see the relevance to the case as pleaded by the applicant and respondent in the action of the material sought in the notice of motion.  It is apparent from the applicant's formulation of its claim that its contention is that if it had won the Admiralty Towers job it would have made a profit in the range $1.31M to $2.89M.  To know only the quantum of the loss that Watpac may have made seems to me of little relevance to the case.  It is not suggested that Watpac made a loss of such magnitude that any builder of average competence would necessarily have lost on the Admiralty Towers project, although it was said in argument by counsel for the respondent that it was well known, in effect, that a loss had been made.  If Watpac made a modest loss, it would be very difficult, in my opinion, to infer from that fact alone that the applicant could not have made the fairly moderate sort of profits it is claiming in the action.  For example, the applicant in the action may well have had, for all I am told, different approaches to pricing, to running, and to administering the job, and estimators, construction crews, and supervisory staff of a range of qualities different from Watpac's that could all have enabled it to have made a profit, even though Watpac may have made a loss.

The more detailed but still limited information sought in the notice of motion does not, in my opinion, add to the very limited value, as a source of inference adverse to the applicant's likely ability to earn the profits from the Admiralty Towers project that it is claiming, which the evidence of Watpac's overall loss may have.

The respondent does not intend to use such information as a basis for a comparison between the applicant's notional costs and recoveries in respect of the matters covered by the range of documents sought from Watpac, and Watpac's actual experience in those regards on the Admiralty Towers project.  I was told that what the respondent was really interested in was Watpac's overall loss figure and that the additional information was only sought in order to be fair, as it was put, to the applicant by enabling it to have a little more information about the matter.

If the applicant had quantified its Admiralty Towers lost profit opportunity claim by taking that job as built and by comparing the costs it would be likely to have incurred in building that project with the returns it would have got under the sort of tender that would be likely to have won the job for the applicant, then the corresponding experiences of Watpac as the actual builder would perhaps have more relevance to the respondent's answer to a claim so formulated than does the information it now seeks to the applicant's radically different claim formulation.  As I have said, neither the applicant nor the respondent has set up such a case and the respondent does not seek that sort of documentation from Watpac.  Given the, at most, very marginal relevance of the information sought by the respondent from Watpac, I am not prepared to exercise the jurisdiction I have under O 15A the Federal Court Rules in favour of the respondent.

The notice of motion is dismissed.

I certify that this and the preceding six
pages are a true copy of the reasons
for judgment herein of the Honourable
Justice Drummond.

Associate:

Date:  6 February 1997