Hampton v BHP Billiton Minerals Pty Ltd
[2012] WASC 133
•24 APRIL 2012
HAMPTON -v- BHP BILLITON MINERALS PTY LTD [2012] WASC 133
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2012] WASC 133 | |
| Case No: | CIV:2292/2011 | ON THE PAPERS | |
| Coram: | EDELMAN J | 24/04/12 | |
| 13 | Judgment Part: | 1 of 1 | |
| Result: | Discovery ordered in relation to category (4) only | ||
| B | |||
| PDF Version |
| Parties: | NEVILLE CHARLES HAMPTON NANCY EDITH LUMSDEN BHP BILLITON MINERALS PTY LTD MITSUI-ITOCHU IRON PTY LTD ITOCHU MINERALS & ENERGY OF AUSTRALIA PTY LTD |
Catchwords: | Procedure Further and better discovery Formal application by chamber summons not required Proper approach to take where it is alleged that a search for documents has not been conducted No evidence for a conclusion in relation to three categories that there are reasonable grounds for being fairly certain that the documents sought are in existence Three categories of document not relevant, and discovery not proportionate, to pleaded issues and matters which might arise at trial Final category of documents is discoverable Damages Principles of assessment for an award of 'mesne profits' Whether the use to which an alleged owner might have put the property is a sufficiently relevant to require discovery of documents in this category |
Legislation: | Rules of the Supreme Court 1971 (WA), O 26 r 6, r 7 |
Case References: | Attorney-General of New South Wales v World Best Holdings Limited [2005] NSWCA 261; (2005) 63 NSWLR 557 Bunnings Group Ltd v CHEP Australia Ltd [2011] NSWCA 342 Butler v Egg & Egg Pulp Marketing Board [1966] HCA 38; (1966) 114 CLR 185 Delaney v Staples [1992] 1 All ER 944 Equuscorp Pty Ltd v Haxton; Equuscorp Pty Ltd v Bassat; Equuscorp Pty Ltd v Cunningham's Warehouse Sales Pty Ltd [2012] HCA 7 Finesky Holdings Pty Ltd v Minister for Transport (WA) [2002] WASCA 206; (2002) 26 WAR 368 Lamru Pty Ltd v Kation Pty Ltd (1998) 44 NSWLR 432 Perpetual Trustees Company Ltd v Burniston [2012] WASC 26 Portal Software International Pty Ltd v Bodsworth [2005] NSWSC 1179 Siagian v Sanel Pty Ltd (1994) 122 ALR 333 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- First Plaintiff
NANCY EDITH LUMSDEN
Second Plaintiff
AND
BHP BILLITON MINERALS PTY LTD
First Defendant
MITSUI-ITOCHU IRON PTY LTD
Second Defendant
ITOCHU MINERALS & ENERGY OF AUSTRALIA PTY LTD
Third Defendant
Catchwords:
Procedure - Further and better discovery - Formal application by chamber summons not required - Proper approach to take where it is alleged that a search for documents has not been conducted - No evidence for a conclusion in relation to three categories that there are reasonable grounds for being fairly certain that the documents sought are in existence - Three categories of document not
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relevant, and discovery not proportionate, to pleaded issues and matters which might arise at trial - Final category of documents is discoverable
Damages - Principles of assessment for an award of 'mesne profits' - Whether the use to which an alleged owner might have put the property is a sufficiently relevant to require discovery of documents in this category
Legislation:
Rules of the Supreme Court 1971 (WA), O 26 r 6, r 7
Result:
Discovery ordered in relation to category (4) only
Category: B
Representation:
Counsel:
First Plaintiff : No appearance
Second Plaintiff : No appearance
First Defendant : No appearance
Second Defendant : No appearance
Third Defendant : No appearance
Solicitors:
First Plaintiff : Gibson & Gibson
Second Plaintiff : Gibson & Gibson
First Defendant : Ashurst Australia
Second Defendant : Ashurst Australia
Third Defendant : Ashurst Australia
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Case(s) referred to in judgment(s):
Attorney-General of New South Wales v World Best Holdings Limited [2005] NSWCA 261; (2005) 63 NSWLR 557
Bunnings Group Ltd v CHEP Australia Ltd [2011] NSWCA 342
Butler v Egg & Egg Pulp Marketing Board [1966] HCA 38; (1966) 114 CLR 185
Delaney v Staples [1992] 1 All ER 944
Equuscorp Pty Ltd v Haxton; Equuscorp Pty Ltd v Bassat; Equuscorp Pty Ltd v Cunningham's Warehouse Sales Pty Ltd [2012] HCA 7
Finesky Holdings Pty Ltd v Minister for Transport (WA) [2002] WASCA 206; (2002) 26 WAR 368
Lamru Pty Ltd v Kation Pty Ltd (1998) 44 NSWLR 432
Perpetual Trustees Company Ltd v Burniston [2012] WASC 26
Portal Software International Pty Ltd v Bodsworth [2005] NSWSC 1179
Siagian v Sanel Pty Ltd (1994) 122 ALR 333
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- EDELMAN J:
Introduction
1 This is an application by the plaintiffs (Mr Hampton and Ms Lumsden) for further and better discovery. Following a number of concessions by the defendants, the categories in which further and better discovery is sought were reduced to the four which are described below.
2 The principles by which an application for further and better discovery proceeds were not in dispute. Counsel for the defendants relied upon the principles which I set out in Perpetual Trustees Company Ltd v Burniston [2012] WASC 26 [26] - [37]. No submissions were made to the contrary by the plaintiffs.
3 The plaintiffs did not explain the basis upon which the application was brought. There are differences between an application which relies on the court's inherent power, or upon O 26 r 6, or upon O 26 r 7 of the Rules of the Supreme Court 1971 (WA). No real issue was taken in relation to this formal matter, although a submission was made that a chambers summons and memorandum of conferral were prerequisites to any discovery order. That submission should not be accepted.
4 The substance of submissions focussed upon two substantive prerequisites to an order for further and better discovery: (1) that the court has reasonable grounds for being fairly certain that the documents sought (or class of documents sought) are in existence; and (2) that the documents sought are relevant.
5 In relation to three of the categories I do not consider that either requirement has been satisfied. In relation to the final category, both are satisfied and discovery should be given. The final category raises a difficult, and not finally resolved, question of law concerning the meaning and nature of 'mesne profits' (pronounced 'mean' profits). It is not necessary to resolve that issue in this application prior to trial. It is sufficient to explain why, on the state of the law, there is a legal basis for the relevance of the documents sought by the plaintiffs.
Procedural objections
6 This application for discovery was made on notice. It was clear from previous directions hearings that conferral had occurred in relation to this application. Before it was heard on the papers I directed that there be further conferral in relation to some matters raised at the directions hearing. Notice and conferral are vital preliminary steps.
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7 Nevertheless, the defendants raised two procedural objections to any order for discovery: the absence of a chamber summons or a memorandum of conferral. Such formal objections are not usually encountered in the Commercial and Managed Cases List. One answer to the objections are the breadth of the court's prevailing (see O 4A r 4) powers in O 4 r 5(1)(d) of the Rules of the Supreme Court. Another answer is the possibility of waiver of these requirements (see, eg, O 59 r 9(2)). A third answer is the broad power in O 26 r 7(3) for the court to make discovery orders of its own motion.
8 Neither of these procedural objections should be accepted.
The pleaded issues relevant to this application
9 The following description recites aspects of the plaintiffs' case, as pleaded, relevant to this application. Some of the matters below are denied and will require factual determinations at the forthcoming trial in May. The summary of the plaintiffs' case which follows is, in the context of this limited discovery application, in very broad terms, and abbreviated.
10 From 30 August 1989, Mr Hampton was employed by BHP Billiton Iron Ore Ltd (BHPBIO). He and Ms Lumsden (with whom he was in a domestic relationship) rented a property at 25 Gandawarra Crescent Newman (the Property) from BHPBIO, acting with the authority of, and as manager of, the defendants. The defendants are joint venturers of the Mount Whaleback Mine in Newman.
11 On 22 October 1996, Mr Hampton and Ms Lumsden entered a contract for the sale and purchase of the Property (the Sale Contract). One of the terms of the Sale Contract was that Mr Hampton and Ms Lumsden would not be entitled to a transfer of title to the Property until the whole of the purchase price was paid or there was early settlement by transfer on paying the balance of the sum owing by a lump sum.
12 Mr Hampton and Ms Lumsden say that it is an implied term of the Sale Contract that in the event that Mr Hampton's employment with BHPBIO was terminated with immediate effect then they would have a reasonable time to elect to continue with the Sale Contract. Although the term is pleaded as implied in law the particulars appear to raise allegations of both a term implied in fact and a term implied by law, concepts which are often treated separately in the authorities.
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13 On 16 July 2010, BHPBIO told Mr Hampton that it had elected to terminate his employment with BHPBIO on the basis that Mr Hampton should cease work immediately and that he would be paid five weeks pay in lieu of notice. That payment was made on 5 August 2010 'in lieu of notice'. It appears that there is dispute about the meaning of the words used in the termination of Mr Hampton and the words 'in lieu of notice'. It has been said that these words are not terms of art, and the meaning of them may involve questions of fact: Siagian v Sanel Pty Ltd (1994) 122 ALR 333, 352 (Wilcox CJ); Delaney v Staples [1992] 1 All ER 944, 947 - 948 (Lord Browne-Wilkinson); Portal Software International Pty Ltd v Bodsworth [2005] NSWSC 1179 [94] (Brereton J).
14 It is admitted that at 16 July 2010, Mr Hampton and Ms Lumsden had 'paid the sum of $41,381.96 of the Purchase Price of the Property'.
15 On 21 July 2010, Mr Hampton and Ms Lumsden then elected to continue with the Sale Contract by tendering $4,000 to the first defendant, by letter and cheque, and requesting the title deeds to the Property. They re-tendered the cheque on 16 August 2010.
16 The plaintiffs seek a declaration that they were entitled to elect to affirm, or to terminate, the Sale Contract either within the five week period of pay in lieu of notice, or within a reasonable time of the termination of Mr Hampton's employment. The defence and reply pleadings raise issues including construction of the Sale Contract, when the termination of Mr Hampton's employment took effect within the meaning of the Sale Contract, whether the defendants made any election to terminate the Sale Contract (including matters relating to their conduct after the 16 July 2010), whether there is any implied term as pleaded, whether the letter dated 21 July 2010 or the 16 August 2010 tender of payment complied with any election requirements in the Sale Contract, and whether the implied term (if it existed) had been breached.
17 Alternatively, the plaintiffs say that '[t]he [d]efendants in insisting on its [sic] strict legal rights and asserting that the Sale Contract terminated on the termination of [Mr Hampton's] employment on 16 July 2010' engaged in unconscionable conduct under s 51AA or s 51AC of the Trade Practices Act 1974 (Cth).
18 The particulars of unconscionable conduct include references to 'unjust enrichment', loss to the plaintiffs of their home, and loss of the difference between the value of the Property and the Net Termination Refund. The words 'unjust enrichment' appear to be used in a colloquial
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- sense only, as a cross-reference to an earlier pleading of capital improvements which the plaintiffs have made to the Property. They are not a pleading of an independent legal concept of unjust enrichment which describes the 'categories of cases in which the law allows recovery by one person of a benefit retained by another' and which 'must involve a qualifying or vitiating factor such as mistake, duress, illegality or failure of consideration': Equuscorp Pty Ltd v Haxton; Equuscorp Pty Ltd v Bassat; Equuscorp Pty Ltd v Cunningham's Warehouse Sales Pty Ltd [2012] HCA 7 [29] - [30] (French CJ, Crennan & Kiefel JJ).
19 The plaintiffs also have an alternative plea of an implied term of the Sale Contract that the defendants would 'act reasonably in respect to their dealings with the [p]laintiffs'.
20 Numerous different remedies are sought by the plaintiffs but their broad effect is that the plaintiffs seek to have the Sale Contract performed and title to the Property transferred to them; alternatively, they seek damages for breach of an implied term of the Sale Contract.
21 There is also a counterclaim by the defendants for mesne profits for the alleged trespass 'on the Property by [Mr Hampton and Ms Lumsden] during the period 1 September 2010 to 17 June 2011'. It is pleaded that particulars of mesne profits will be provided prior to trial.
The categories of document sought
22 The plaintiffs sought discovery of the following categories of document:
(1) Any direction given internally by BHPBIO or policies adopted in regard to the termination of employees with pay in lieu of notice instead of working out their period of notice.
(2) Any directions given or by the defendants to BHPBIO, policies adopted by the defendants, directions given internally by BHPBIO and/or policies adopted by BHPBIO as to the manner in which the housing contracts were to be dealt with on termination of employment including but not limited to directions to staff in the housing office.
(3) All documents relating to the termination of employment and any contract of sale of other employees who were taking part in the Home Ownership Scheme.
(4) Documents that relate to the defendants' claim for mesne profits including any documents that demonstrate the use to which the defendants would have put the Property after 16 July 2010.
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Whether orders can be made for discovery of each category
23 Each of the categories of document is said to be relevant to the claims for (1) relief against forfeiture; (2) the unconscionable conduct claims; and (3) the claim that the defendants were obliged to act reasonably with respect to the plaintiffs.
Categories (1), (2) and (3)
24 No discovery order can be made in relation to any of these documents. The simple reason why no order can be made is because the plaintiffs have not demonstrated, within the meaning of the existing authorities, that 'there are reasonable grounds for being fairly certain that the documents exist'.
25 The plaintiffs object to the defendants' submission that no discovery orders can be made for this reason. The plaintiffs say that the defendants have never said in writing or in oral conferral that they have searched for the documents in these categories and not found them. This assessment of the conferral process is disputed by the defendants. No affidavit and no conferral correspondence was provided to the court. Whatever the effect of an absence of conferral on this point, it is not possible to make any determination on the point in the absence of evidence.
26 The plaintiffs also say that O 26 r 7 of the Rules of the Supreme Court permits the Court to 'assume, until it is told otherwise, that no search has been made for documents because they were not considered to be relevant'. This submission was unsupported by any authority. I do not accept this submission.
27 In the first place, this submission is not supported by any evidence from which such an inference might be drawn.
28 In the second place, if a plaintiff considers that, within the test as expressed in the authorities, there are reasonable grounds 'to be fairly certain' that relevant documents exist for which a defendant had not conducted a search, then the defendant should be asked whether it has searched for those documents. If the defendant refuses to say whether a search has been made, or refuses to conduct a search because it says that the documents are not relevant, then this response may be a relevant matter for the court to take into account in an application, supported by affidavit, for orders under O 26 r 6.
29 One reason why such a request is important is because a search may have been done and no documents found. Court time, and expense to the
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- parties, can be saved by a request and a short email reply from the party against whom discovery is sought saying that a search revealed no documents of that nature. But there is no evidence concerning whether that procedure was taken in this case, and the submissions for the plaintiffs suggest that it was not taken.
30 It was said by the plaintiffs that the court can infer from the nature of the documents sought in categories (1), (2) and (3), the nature of the defendants (large multinational corporations), and the nature of the relationship of agency between the defendants and BHPBIO that documents of the type sought 'might exist'.
31 I accept that there is a possibility that documents of that type 'might' exist. However, as I explained in Perpetual Trustees Company Ltd v Burniston [26] - [37], the powers of this court to make discovery orders do not extend to speculative allegations, unsupported by any evidence, that there are documents which might exist and which should be discovered if they happen to exist. The legal test, as it currently stands, requires, at least, reasonable grounds for belief that it is 'fairly certain' that the documents exist.
32 In any event, there is a further reason why discovery orders should not be made in relation to the documents in categories (1) to (3). These documents are not relevant, nor would their discovery be sufficiently proportionate, to the issues involved in this case.
33 I have set out above the central matters arising from the plaintiffs' pleadings and the issues broadly in dispute. None of the first three categories concerns the particular relationship between the plaintiffs and the defendants. These three categories concern alleged general policies adopted by the defendants in relation to termination of employees with pay in lieu of notice, contracts of sale with other employees, and the manner of dealing with the housing contacts of employees generally on termination of employment. There is no suggestion that any of these matters was brought to the attention of the plaintiffs at the time of entry into the Contract of Sale, or that the plaintiffs could reasonably have been aware of them. There is no pleading or submission that BHPBIO acted in a manner contrary to any of its internal policies in its dealings with the plaintiffs.
34 Even if there were such a pleading or submission, it is not explained how such inconsistency could be relevant to a claim for 'unconscionable conduct', relief against forfeiture or the alleged implied term requiring the
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- defendants to act reasonably in respect of their dealings with the plaintiffs. For instance, even if it be assumed (which it cannot be) that there were documents in existence which showed that the defendants had a policy concerning the manner of terminating employees without notice, there is nothing in the pleading which could explain how that fact might assist in the plaintiffs' claim for relief against forfeiture of their rights or the claim that the defendants were obliged to act reasonably with respect to the plaintiffs. It is not pleaded that the plaintiffs were aware of any such policy.
35 Nor is it pleaded, or explained in submissions, how any of these matters are relevant to the plaintiffs' claim for unconscionable conduct. In Attorney-General of New South Wales v World Best Holdings Limited [2005] NSWCA 261; (2005) 63 NSWLR 557, 583 [120], Spigelman CJ explained that:
Unconscionability is a well-established but narrow principle in equitable doctrine. It has been applied over the centuries with considerable restraint and in a manner which is consistent with the maintenance of the basic principles of freedom of contract. It is not a principle of what 'fairness' or 'justice' or 'good conscience' requires in the particular circumstances of the case.
- The plaintiffs did not identify any way in which any discovery of any of the first three categories of documents, which concern other people, are relevant to the issue of unconscionable conduct, as that concept is legally understood, between the plaintiffs and the defendants in this case.
Category (4)
36 Category (4) stands in a different position. It concerns the defendants' counterclaim for mesne profits. 'Mesne profits' is a term deriving from a plea in trespass in the era of forms of action: see eg J Chitty A practical treatise on pleading (1809) 388. Today, it might be explained in plain, and modern, English as damages for wrongful use, although the controversy which surrounds its meaning and characterisation has generally led counsel to the perceived safe ground of the terminology of the forms of action.
37 I do not understand the defendants to submit that there are no documents in existence that relate to the use to which the defendants would have put the Property after 16 July 2010. From the pleaded facts and background in this case, there are reasonable grounds to be fairly certain that documents are in existence which are relevant to the question of the use to which the defendants would have put the Property after
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- 16 July 2010 if it were vacant. I did not receive submissions on the nature of such documents but it is arguable that they could include documents relating to the use of similar properties owned by the defendants; they might include any documents concerning the proposals which the defendants had for the use of the Property following the termination of Mr Hampton's employment, or even the use to which the Property was put prior to the lease of it to Mr Hampton and Ms Lumsden.
38 The question, then, is whether documents which relate to the value of the use of the Property to the particular defendants bringing the counterclaim are relevant to the issues in the trial, or whether (as the defendants submit) the question in their counterclaim is one which should be determined only on the basis of evidence about the objective or market value of use.
39 It may be that the very premise upon which the defendants approached this issue is flawed. Their premise was that if the counterclaim falls to be valued on the basis of an objective market value then the particular use to which the defendants might have put the Property is irrelevant. But the use to which the defendants might otherwise have put the Property may, itself, be evidence of a highest and best use of the Property for the purpose of assessment of market value. But no submissions were made on this point and, for the reasons below, I do not accept the defendants' submission so it is not necessary to explore their premise.
40 Some cases have focussed on the measure of mesne profits as the 'value of the property to the trespasser': Lamru Pty Ltd v Kation Pty Ltd (1998) 44 NSWLR 432, 439, 441 (Cohen J) cited with approval by Giles JA in Bunnings Group Ltd v CHEP Australia Ltd [2011] NSWCA 342 [198]. On this approach the measure is not an assessment of subjective, idiosyncratic value to a trespasser. It is a focus upon the reasonable value to a person in the position of the trespasser. The restitutionary analysis of mesne profits cases was expressly left open by the Full Court of this Court in Finesky Holdings Pty Ltd v Minister for Transport (WA) [2002] WASCA 206; (2002) 26 WAR 368, 383 [59] (Steytler J).
41 This restitutionary approach would suggest that the emphasis is upon the use to which Mr Hampton and Ms Lumsden put the Property, and the value to them of that use, rather than the value of the use to which the owners (defendants) would have put it.
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42 An alternative approach to mesne profits is to see the award as concerned with 'compensation' to the party bringing the claim. This is not 'compensation' in the usual sense of reparation for consequential loss. Instead the term 'compensation' is used to mean the objective value of the owner's right to use the asset.
43 Although it is not a case on 'mesne profits', one of the most recent cases on 'user damages', which raises the same issues of quantification, is Bunnings Group v CHEP Australia. In that case Bunnings was held to be liable to CHEP for conversion of wooden pallets owned by CHEP, and which CHEP had the immediate right to possession. Bunnings used some of the pallets for holding stock or stacking goods ready for exchange. The pallets formed part of a pool which was part of Bunnings' business operations [203].
44 One issue on appeal was the measure of damages for the use by Bunnings of the pallets during the period of wrongful detention. Bunnings argued that there was no evidence that CHEP had suffered any loss, including a lack of evidence that CHEP might have hired out the pallets which Bunnings retained. It was submitted that at all times CHEP had more pallets available for hire than it had out on hire.
45 The Court of Appeal held that substantial damages were, nevertheless, payable. Giles JA preferred an explicitly restitutionary approach, focussing upon the value of the use to the wrongdoer, Bunnings. However, Allsop P (Macfarlan JA agreeing) took a different approach.
46 Allsop P accepted that the use by the wrongdoer (Bunnings) was 'essential' to the measure of recovery and that in the absence of evidence that the wrongdoer had used the asset 'it may be difficult to justify conceptually' the award of a hire fee which is, of its nature, a payment for use: [177], [179]; see also [180] - [181]. But the President held that the focus for the award was broader than these restitutionary considerations. His Honour focussed upon the 'interference with the right in question' [177], which required consideration of matters peculiar to CHEP, including whether the pallets were 'profit earning chattels' for CHEP [169], [172]. His Honour also referred, as a relevant consideration, to 'the capacity of the chattel to be hired by the owner' [178]. In discussing the measure of recovery, Allsop P said that:
The focus should be on the appropriate measure of hire. The market or standard rate is to be chosen because it best reflects what the converter or
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- detainer would have to pay and what the owner should obtain for his property wrongfully retained [185]. (emphasis added)
47 Although the starting point was the standard rate of hire, for the period from 8 August 2006 the damages were only measured at the 'Wesfarmers' rate' which was 40% of the standard hire rate. The Wesfarmers' rate was chosen in that case because the conversion occurred in the context of a failure by Bunnings to accept an offer for hire based on the Wesfarmers' rate: to 'give a higher rate after 8 August 2006 would be to risk over-compensation of the kind in [Butler v Egg & Egg Pulp Marketing Board [1966] HCA 38; (1966) 114 CLR 185]' where 'to give damages by reference to the [market] value of the eggs sold by the grower would have given the [plaintiff] a sum greater than it would have received had the [defendant] complied with the law' (see [185] (Allsop P)).
48 The decision of Allsop P can therefore be understood as placing some emphasis in the assessment of damages upon the position of the plaintiff, especially in reaching the conclusion that the plaintiff's position might depart from a general, objective, market value. I reiterate that it is not necessary in this application to determine the nature of a claim for mesne profits or to determine the manner in which they must be assessed in this case. However, this discussion of the decision in Bunnings Group v CHEP Australia suffices to show that considerations of the value of the use of the Property to the defendants are sufficiently relevant to the defendants' counterclaim for mesne profits against the plaintiffs for documents in category (4) to be discoverable.
49 The documents sought in category (4) are discoverable. It may be, however, that the parties will be able to reach agreement upon the use to which the defendants would otherwise have put the Property and the value to the defendants of that use. The commendable co-operation between the parties on other questions concerning valuation gives some cause to be optimistic about this matter.
Costs
50 Although the defendants sought costs if they were entirely successful in this application, I have not heard submissions on any costs orders flowing from this decision. As each party has had a degree of success in this application, and since the final category may raise issues of substance and importance, it may be that the parties will be able to agree costs orders. If not, this issue can be dealt with at the next directions hearing in this matter shortly before the forthcoming trial.
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