Graham Evans Pty Ltd v Stencraft Pty Ltd

[1997] FCA 958

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	NG 62 OF 1995

BETWEEN:	GRAHAM EVANS PTY LTD APPLICANT
AND:	STENCRAFT PTY LTD RESPONDENT
JUDGE:		SPENDER J
DATE OF ORDER:		10 SEPTEMBER 1997
WHERE MADE:		BRISBANE

THE COURT ORDERS THAT:

1. The notice of motion be dismissed, except that the subpoena, the subject of the notice of motion, be amended by deleting the documents referred to in those items in the Schedule numbered 3 and 4.

1. On or before 24 September 1997, Watpac Australia Pty Ltd produce to the Registry those documents which it has in its possession, power or custody, and which are the subject of items 1 and 2 in the Schedule of the subpoena, addressed to Watpac and issued on 1 September 1997.

1. Further, in so far as Watpac is not able to produce such documents, Watpac file and serve on or before 24 September 1997 an affidavit by an appropriate officer of Watpac explaining what has become of those documents and when.

1. The respondent pay Watpac's reasonable costs in complying with the subpoena, and with these orders, and that the respondent pay Watpac's costs of the motion, to be taxed if not agreed, and that those costs be the respondent's costs in the principal proceedings.

1. Leave to apply is granted.

THE COURT DIRECTS THAT:

1. The applicant and respondent in the principal proceedings have liberty to inspect and take copies of the documents so produced to the Court by Watpac.

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

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	NG 62 OF 1995

BETWEEN:	GRAHAM EVANS PTY LTD APPLICANT
AND:	STENCRAFT PTY LTD RESPONDENT

JUDGE:	SPENDER J
DATE:	10 SEPTEMBER 1997
PLACE:	BRISBANE

REASONS FOR JUDGMENT

This is a notice of motion filed 4 September 1997 on behalf of Watpac Australia Pty Ltd (‘Watpac’) pursuant to O 27 r 9 of the Federal Court Rules (‘the Rules’).  The motion seeks to set aside a subpoena directed to Watpac, issued by the respondent in the principal proceedings, Stencraft Pty Ltd (‘Stencraft’).  The subpoena seeks the production of certain of Watpac's documents which relate to Watpac's internal costings of its construction of the Admiralty Towers Stage 1 project, (‘the Project’).

In the principal proceedings, the applicant, Graham Evans Pty Ltd (‘Evans’), claims to have suffered loss for, inter alia, foregone profit from the Project, or the lost opportunity to earn that profit, calculated on the basis of its expected gross profit margin, based on its performance on other projects.

By a notice of motion filed in January 1997, Stencraft had sought an order that Watpac make discovery of materials which reveal its job costs in relation to construction of the Project.

Watpac opposed the making of such discovery and on 6 February 1997, Drummond J dismissed the motion.  The basis of the dismissal was that his Honour said:

It is difficult to the 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 plain from his Honour's reasons for judgment that the essence of what was sought by Stencraft were Watpac's total costs and its total revenue from the Project.  With respect, it is difficult to see the relevance of the profit Watpac may or may not have made on the Project to what might have been the profit made by Evans, had it succeeded in obtaining the Project.

It seems to me that the position now advanced by Mr Freeburn, counsel for Stencraft, is quite different from what appears to have been the position in the proceedings before Drummond J.  I accept that Stencraft would like to advance the possible issue that, had Evans got the Project, it would have not made a profit.  Essentially Mr Freeburn submits that if an expert for Stencraft, Mr Wrenn, had the opportunity to explore the historical performance of Watpac on the Project (including details of the calculations showing how the figures in the tender price were arrived at, and the internal Project cost ledger, which would show the costs actually incurred by Watpac, the revenue received, as well as the difference between the actual expenditure and the budget estimations for components of the Project), he would then be able to answer the question of whether Evans would have been able to make a profit on the Project.

It is accepted, as I understand it, that there is a large measure of speculation in this inquiry and it is not the case that Stencraft has evidence, at the moment, in support of the allegation that had Evans got the Project, it would not have made a profit.  What is sought, essentially, is access to Watpac's internal documents with the possibility that, on analysis, they might permit Mr Wrenn to conclude that Evans would not have made a profit on the Project, had it been the successful tenderer.

I accept that the question of whether Evans would have made a profit had it been the successful tenderer for the Project is a legitimate inquiry to be pursued by Stencraft.  But it seems to me that the historical performance of Watpac, and the figures that compose it, are not relevant to that inquiry.

The designation of the job and the description of it seems to me to be a legitimate subject for a subpoena.  For that purpose, I will not set aside the subpoena directed to Watpac, in so far as it relates to a complete copy of the contract including all bills of quantity, specifications and drawings, and in relation to final, as constructed drawings.

If there are documents answering those descriptions, which are no longer within the custody or control of Watpac, their whereabouts will be the subject of an affidavit by Watpac.

The further documents sought by the subpoena are, it seems to me, not relevant to the issues in the pleadings, nor do they, on my present understanding of the material, fall into a category of documents that are other than fishing.  It would be unfair and oppressive for Watpac to be compelled to disclose its private information, having regard to the issue to which, on my present understanding, the production of those documents is sought.

So far as the notice of motion is concerned, I order that it be dismissed, except that the subpoena, the subject of the notice of motion, be amended by deleting the documents referred to in those items in the Schedule numbered 3 and 4.

I further order that on or before 24 September 1997, Watpac Australia Pty Ltd produce to the Registry those documents which it has in its possession, power or custody, and which are the subject of items 1 and 2 in the Schedule of the subpoena, addressed to Watpac and issued on 1 September 1997.

Further, in so far as Watpac is not able to produce such documents, I direct that Watpac file and serve on or before 24 September 1997 an affidavit by an appropriate officer of Watpac explaining what has become of those documents and when.

I direct that the applicant and respondent in the principal proceedings have liberty to inspect and take copies of the documents so produced to the Court by Watpac.

I order that the respondent pay Watpac's reasonable costs in complying with the subpoena, and with these orders, and that the respondent pay Watpac's costs of the motion, to be taxed if not agreed, and that those costs be the respondent's costs in the principal proceedings.  I grant liberty to apply.

I certify that this and the preceding three (3) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender.

Associate:

Dated:            10 September 1997