Green v Wilden Pty Ltd - [2002] WASC 234

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: GREEN & ORS -v- WILDEN PTY LTD & ORS [2002] WASC 234

CORAM: MASTER SANDERSON

HEARD: 10 & 20 SEPTEMBER 2002

DELIVERED : 3 OCTOBER 2002

FILE NO/S: CIV 3049 of 1991
CIV 3050 of 1991
CIV 2965 of 1990
CIV 2966 of 1990
Consolidated by order dated 5 August 1998

BETWEEN: GRAEME WILLIAM GREEN
First Plaintiff
W J GREEN & CO (1984) PTY LTD (ACN 008 851 867)
Second Plaintiff
SHARYN LEE GREEN
GRAEME WILLIAM GREEN
JULIE ANNE GREEN
WILLIAM JOSEPH GREEN
NORMA GLENYCE GREEN
Third Plaintiffs
AND
WILDEN PTY LTD (ACN 009 143 033)
First Defendant
MAGENTA NOMINEES PTY LTD (ACN 009 340 158)
Second Defendant
TACE PTY LTD (ACN 009 204 915)
Third Defendant
SYDNEY JAMES CHESSON
Fourth Defendant
BERT LEONARD DENBOER
Fifth Defendant
CALLAO PTY LTD (ACN 008 867 552)
Sixth Defendant
BENRONE PTY LTD (ACN 008 931 084)
Seventh Defendant
DELTABROOK PTY LTD (ACN 009 462 695)
Eighth Defendant
JOHN MARTIN KELLY
Ninth Defendant

Catchwords:

Practice and procedure - Application for further and better discovery - Turns on own facts

Legislation:

Nil

Result:

Application successful in part

Category: B

Representation:

Counsel:

First Plaintiff                :     Mr M L Bennett
Second Plaintiff            :     Mr M L Bennett
Third Plaintiffs             :     Mr M L Bennett
First Defendant             :     Mr R H B Pringle QC & Mr T Galic
Second Defendant         :     Mr R H B Pringle QC & Mr T Galic
Third Defendant           :     Mr R H B Pringle QC & Mr T Galic
Fourth Defendant          :     In person
Fifth Defendant            :     Mr R H B Pringle QC & Mr T Galic
Sixth Defendant            :     Mr R H B Pringle QC & Mr T Galic
Seventh Defendant        :     Mr R H B Pringle QC & Mr T Galic
Eighth Defendant          :     Mr R H B Pringle QC & Mr T Galic
Ninth Defendant           :     Mr R H B Pringle QC & Mr T Galic

Solicitors:

First Plaintiff                :     Bennett & Co
Second Plaintiff            :     Bennett & Co
Third Plaintiffs             :     Bennett & Co
First Defendant             :     Galic & Co
Second Defendant         :     Galic & Co
Third Defendant           :     Galic & Co
Fourth Defendant          :     In person
Fifth Defendant            :     Galic & Co
Sixth Defendant            :     Galic & Co
Seventh Defendant        :     Galic & Co
Eighth Defendant          :     Galic & Co
Ninth Defendant           :     Galic & Co

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

Green v Magenta Nominees Pty Ltd, unreported; FCt SCt of WA; Library No 950311; 15 June 1995

Case(s) also cited:

Anderson v Wallace (1835) 6 ER 1347
British Association of Glass Bottle Manufacturers Ltd v Nettlefold [1912] AC 709
Caledonian Rail Co v Lockhart [1860] All ER 900
Horwitz Grahame Books Pty Ltd v Mid-City Centre Pty Ltd (1990) NSW ConvR 55-514
Mulley v Manifold (1959) 103 CLR 341

MASTER SANDERSON: By chamber summons filed 30 July 2002 the plaintiffs sought orders against the first, second, third and fourth defendants for further and better discovery. The documents sought against each of the defendants were listed in a schedule attached to the chamber summons. Without reproducing each list in full, it is, I think, a fair summary of what was sought to say that the documents are either financial documents of the named defendant, such as bank statements, deposit books and the like, or documents relating to the internal workings of the defendant - minute books, board papers and the like. Although the application was brought against the first four defendants the documents referred to in the schedule were held by, or were likely to be held, by the first, second and third defendant. Insofar as the fourth defendant had any of these documents it would only be in his capacity as a director of each of the three defendants. To that extent there was no real need to make any order against the fourth defendant. Counsel for the plaintiffs acknowledged as much early on in the proceedings and thereafter it was not proposed to make any order against the fourth defendant. However, he did appear at the hearing and he filed submissions.
The application was due to be heard on 10 September 2002. At the conclusion of the submissions of counsel for the plaintiffs, counsel for the defendants other than the fourth defendant indicated that in light of submissions put on behalf of the plaintiffs, the defendants would amend their defence. Counsel suggested that by doing so issues which were said to give rise to an obligation to provide further discovery on the part of the defendants would fall away, or at the very least, the scope of the application would be reduced. Counsel sought an adjournment to allow the amendments to be made. There being no objection by counsel for the plaintiffs the matter was adjourned and resumed on 20 September 2002. By this time all defendants, including the fourth defendant, had provided a minute detailing amendments to the defences. Unfortunately these amendments did not significantly reduce the scope of the argument. Nonetheless, they did clarify the defendants' position. Subject to one qualification which I will deal with below, counsel for the plaintiffs had no objection to the defences being amended in terms of the minute. In due course I will make orders accordingly.
Turning then to the plaintiffs' application, it is unnecessary for me to go into detail as to the nature of the dispute between the parties. It is a matter of bewildering complexity which has been on foot for 12 years. The dispute is bitter and the proceedings have spawned numerous interlocutory applications. The matter has now reached the stage where, apart from this application, it should be ready for hearing. The papers for the Judge have been filed and they run to 338 pages. Anyone reading these reasons who is interested in a detailed background of the dispute can refer to any one of the numerous first instance and Full Court decisions dealing with the disputes between the parties.
The plaintiffs' application was supported by an affidavit of Jennifer Mary Hill ("Ms Hill"), sworn 29 July 2002. Although this affidavit deals with the applications against the first, second and third defendants separately, at least a number of aspects of the application against each defendant are similar, if not identical. It is convenient to deal generally with the application in relation to the first defendant, the same reasoning applying to the applications against the second and third defendants.
The first aspect of the application is dealt with in pars 6 and 7 of Ms Hill's affidavit. The position can be summarised in this way. Paragraphs 13 through to 17 of the statement of claim plead that in or about September 1985 the first and second plaintiffs applied for and were registered as unit holders in the Balga Unit Trust. The first defendant was the trustee of the Balga Unit Trust. In January 1991 the first and second plaintiffs lodged re‑purchase requests with the first defendant. The Unit Trust Deed of the Balga Unit Trust provided that where there was no agreed value, the price payable on the purchase of a unit would be assessed at the date the repurchase request was received by the first defendant and would be determined by calculating the current value of the trust fund, less the dispersal costs divided by the number of units in the trust. It is pleaded by the plaintiffs that a valuer in providing written determination of the current re‑purchase value of the unit in the Balga Unit Trust did not make an independent discretionary judgment of all assets in the trust fund, or the quantum of liabilities in the trust fund. The first defendant for its part denies that the valuer did not make an independent discretionary judgment of the assets and liabilities of the trust. On the basis of this dispute between the parties on the pleadings, Ms Hill says that certain documents will be relevant to the issues between the parties. These documents (which are set out in par 9 of Ms Hill's affidavit) include financial statements of the first defendant and the Balga Unit Trust from its commencement in 1985 until 30 June 1993, bank statements, bank deposit books and the like for the same period, and documents regarding any loans taken out by the first defendant with its bank for the period. By par 10 of her affidavit, Ms Hill sets out the basis upon which she believes that the documents referred to in par 9 exist. In pars 10.3 and 10.4 Ms Hill refers to an expert report of a Professor Tunnicliffe which has been provided by the first defendant to the plaintiffs. This report which appears as annexure "JMH2" to the affidavit of Ms Hill refers to certain documents supporting auditor's values on non real estate assets and trust liabilities which have not been discovered. The plaintiffs submit that they are entitled to discovery of these source documents.
To determine this issue it is necessary to refer to the terms of the statement of claim and the defence. By par 28 of the statement of claim it is pleaded that if which is denied, the valuer was correctly appointed, he did not make a determination in accordance with the express term of the Balga Trust Deed. (The valuer is identified as a Mr I J V Sanderson. As I advised the parties during the hearing, Mr Sanderson is unknown to me and so far as I am aware, he and I are in no way related.) By par 21.2 of the statement of claim it is pleaded that under the terms of the Balga Trust Deed, if a re‑purchase request was made by a unit holder, then the price payable by the trustee was to be agreed or, if no such value can be agreed, the current re‑purchase value as determined by an independent expert valuer. The statement of claim then goes on to plead as follows:
"29.By reason of the following matters Sanderson did not make an independent discretionary judgment of the Current Value of the Trust Fund as at 3 January 1991:
29.1Sanderson only made an independent discretionary judgment of the value of the Trust Real Estate and did not make an independent discretionary judgment of the remainder of the assets of the Trust Fund; and
29.2Sanderson did not make any independent discretionary judgment of the quantum of liabilities of the Trust Fund.
Particulars
On a proper construction of Sanderson's report, he adopted, without making any independent determination or enquiry or turning his own mind to the question:
(a)the value attributed to the assets of the Trust (other than the Trust Real Estate) in an Auditor's report prepared by NVF Curtis and Associates Pty Ltd (the 'Auditor's report'); and
(b)the amount attributed to liabilities in the Auditor's report.
30.Sanderson did not make any independent discretionary judgment of the quantum of Disposal Costs of the Trust Fund.
Particulars
On a proper construction of Sanderson's determination, he adopted, without making any independent termination or enquiry or turning his own mind to the question, the amount attributed in the Auditor's report to Disposal Costs.
31.Sanderson did not make any independent determination as to the number of Units in the Balga Unit Trust.
Particulars
On a proper construction of Sanderson's determination, he adopted, without making any independent determination or enquiry or turning his own mind to the question, the number of units in the unit trust as at 3 January 1991 stated in the Auditor's report."
By par 20 of its defence, the first defendant denies each of the allegations contained in pars 28 to 31 of the statement of claim. Paragraph 21 of the defence then reads as follows:
"Further as to paragraphs 28, 29, 30 and 31, Wilden says that after Mr Sanderson had valued the shopping centre and Lots 8 and 9 Irwin Chambers, he reviewed the trust deed and the statement of assets and liabilities of the trust (which included his values of the shopping centre and Lots 8 and 9 Irwin Chambers) and concluded that the auditor's figures for the assets (save for a cost error) and liabilities and as at to the number of units in the trust were reliable, that while they were a little high the estimated selling expenses were within acceptable bounds that the non‑current liabilities were those secured by registered mortgages over real estate of which he was aware and that the penalty interest would have been exigible thereunder if the trust's assets had been disposed of in January, 1991 and that with confidence in their accuracy he adopted the auditor's figures and valued the units at $886.82 each at the relevant time."
On behalf of the defendants it was submitted that the issue raised by these paragraphs in the pleading is whether the valuer made an independent discretionary judgment of the value of the trust fund at the date of the relevant re‑purchase request. The plaintiffs say that the relevant question is what were the assets and liabilities of the respective trusts on the date of the re‑purchase requests. Asking that question, the plaintiffs say that they are entitled to the discovery they seek. The defendants submit that is the wrong question and on their formulation of the issue between the parties, no discovery is necessary.
In support of their position the defendants relied on a decision of the Full Court in Green v Magenta Nominees Pty Ltd, unreported; FCt SCt of WA; Library No 950311; 15 June 1995. This was a decision made in proceedings between related parties prior to consolidation of a number of separate proceedings. The appeal concerned a proposed amendment to the statement of claim. The issue raised by the amendment related to the valuation of certain units. The valuer in that case was a Mr Hunt. Their Honours said (at page 9):
"It is common ground that Mr Hunt made an independent discretionary judgment as to the value of the real estate owned by the Trust. Where the parties differ is whether he did so in relation to the other assets of the Trust and to the liabilities of the Trust. The thrust of the applicants' proposed case is that in relation to assets other than the real estate and to the Trust liabilities Mr Hunt did not more than adopt uncritically and without any independent assessment or scrutiny the values put on those items by the auditor. This, it seems to us, raises a question of fact. For example, it is possible that Mr Hunt had received a copy of the auditor's report and based a valuation on it. Whether that involves or qualifies as an independent discretionary judgment depends on what he did with it. He might have done nothing more than transpose its figures into his own valuation. On the other hand he might have subjected it to a process of scrutiny and checking before pronouncing himself satisfied as to its accuracy. It is a question of degree and thus raises issues of fact that can only be determined at trial. If the applicants are able to make out a case that Mr Hunt did nothing more than accept uncritically the auditor's values, it would be open (and we put it no higher than that) for the trial Judge to conclude that the purported valuation did not correspond to that required by the contract."
On balance, I accept the defendants' submissions on this issue. There does not appear to be on the pleadings any dispute as to what Mr Sanderson did in the course of preparing his expert report. The issue is whether, given what he did, he complied with the requirements of the Balga Trust Deed. As the Full Court said, that is a question of fact. There is no suggestion that Mr Sanderson examined in minute detail what lay behind the auditor's reports, nor did he examine other financial documentation of the company. It is then not an issue between the parties as to whether or not the auditor's report was right or whether it was riddled with errors. The question is whether to rely upon it was appropriate, given Mr Sanderson's obligations under the Unit Trust Deed. In my view, to require the defendants to discover the documents requested by the plaintiffs would be to raise a false issue.
That leaves the question of the status of Professor Tunnicliffe's report. During the course of his submissions, counsel for the defendants preferred the view that any opinion expressed by Professor Tunnicliffe as to the adequacy or otherwise of the auditor's report would be irrelevant and inadmissible. With respect, that seems to me to be the case. As I have said, I cannot see that on the pleadings the accuracy or otherwise of the auditor's report is in and of itself an issue between the parties. Accordingly, any views expressed by Professor Tunnicliffe as to its (the auditor's report) accuracy cannot assist. Accordingly, although Professor Tunnicliffe has expressed a view relying upon material which has not been discovered, I am not satisfied that such material should be discovered.
By par 18 of her affidavit Ms Hill refers to certain interest calculations payable on loans. The particulars of loss and damage in the defendants' counterclaim refer to this interest and seek payment. During the course of his submissions, counsel for the defendants conceded that discovery in relation to interest payable should be provided. I will make orders accordingly.
By par 39 of the statement of claim the plaintiffs plead that the first defendant has failed to make any or any adequate disclosure to each of Green and Green & Co of Wilden's conduct of the Balga Unit Trust. Particulars of the alleged breach are given. By particular (vi), it is alleged that since 30 June 1992 the first defendant has failed to provide the first and second plaintiffs with financial statements relating to the Balga Unit Trust. The plaintiffs now say that the first defendant is obliged to give discovery of these documents. As I understand the defence, it is not denied that the first defendant has failed to provide the financial information referred to in the particulars. Rather, it is said, because it satisfied the re‑purchase arrangement for the units, it is not obliged to provide this material. The issue between the parties then is whether or not the material must be provided. That being the case, it does not seem to me there is any basis for ordering discovery of the financial information sought by the plaintiffs. If they are successful in the action then they will be entitled to access to this information. At present there is no issue in the proceedings which would require this material to be discovered.
Paragraphs 26 to 33 of Ms Hill's affidavit deal with certain documents which, it is said, have not been discovered. During the course of his submissions counsel for the defendants indicated that informal discovery of these items had been provided. He indicated the defendants would provide formal discovery as required by the rules. I need say nothing more on this issue.
Paragraphs 38 to 43 of Ms Hill's affidavit relate to par 52 of the defence. This is one of the paragraphs which the defendants sought leave to amend. The paragraph as it presently stands pleads that the first defendant has not paid a certain fee. The defendants propose amending the paragraph to read that the first defendant had paid the fee. The plaintiffs claim they were entitled to particulars of the fee paid and discovery in relation to it. Counsel for the defendants contended that neither particulars nor discovery was necessary but indicated that if called upon to do so, the defendants would provide both. I am satisfied that both particulars and discovery should be provided and I will make orders accordingly.
By par 67 to 70 of Ms Hill's affidavit, an issue was raised about sale of the Kelmscott Newsagency. When the statement of claim was first filed by the plaintiffs in CIV 3050 of 1991, allegations were made against the second defendant, Danyo Nominees Pty Ltd, and the fourth defendant in pars 14 to 17 and 23 to 25, to the effect that the fourth defendant and the other directors of the second defendant falsely represented that the second defendant had an interest in the Kelmscott Newsagency when it did not, that the fourth defendant had an interest in the purchase and sale of the newsagency and the fourth defendant was guilty of a conflict of interest.

By chamber summons dated 19 May 1993 the defendants in CIV 3050 of 1991 applied to strike out those paragraphs of the statement of claim. The application was supported by an affidavit of the fourth defendant, sworn 17 May 1993 and exhibiting documents demonstrating that Danyo Nominees Pty Ltd held the interest in the newsagency on trust for the second defendant and that the transaction was entirely honest. That was conceded by Mr William Green in his affidavit sworn 10 February 1994. Amended statements of claim filed in 1994 and 1995 removed reference to the Kelmscott Newsagency.
On this basis I am not satisfied that there should be any further discovery in relation to the newsagency.
There was a further issue raised by the plaintiffs in pars 88 to 90 of Ms Hill's affidavit. Counsel did not press that issue and I need say nothing further.
I will hear counsel as to the precise form of orders and as to costs.