Highfield Property Investments Pty Ltd v Urban Construct (SA) Pty Ltd - [2010] SASC 148

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
HIGHFIELD PROPERTY INVESTMENTS PTY LTD v URBAN CONSTRUCT (SA) PTY LTD & ANOR
[2010] SASC 148
Reasons of Judge Lunn a Master of the Supreme Court
25 May 2010
PROCEDURE - DISCOVERY AND INTERROGATORIES
Application by plaintiff for disclosure by defendant of documents in certain categories under 6RR 136(1)(b), 139(1)(a) and 145(1) - claims for disclosure in the alternative whether the documents were directly or indirectly relevant - held such orders were not complete alternatives and should be sought separately - held no reason to doubt directly relevant documents had not been disclosed - held not shown it was just to order their disclosure as indirectly relevant documents - application dimissed.

HIGHFIELD PROPERTY INVESTMENTS PTY LTD v URBAN CONSTRUCT (SA) PTY LTD & ANOR
[2010] SASC 148
Reasons on plaintiff’s application for disclosure of documents

JUDGE LUNN: The plaintiff owns a property at Glenelg (“the property”). By contract in writing dated 7 May 2008 the plaintiff agreed to sell this property to the defendant for $3,500,000 plus GST. By letter of 28 April 2009 the defendant purported to rescind the contract for misrepresentation. It alleges that on 23 May 2007 a director of the plaintiff had represented to a director of the defendant that there was no asbestos contained within the buildings on the property. The defendant contends that the representation was false. The plaintiff denies making the representation or that, if it was made, it was a material inducement for the defendant to enter into the contract. In this action the plaintiff sues for specific performance of the contract and/or damages and the defendant has counterclaimed for a declaration that the contract has been rescinded and for re‑payment of an option fee.[1]
[1] There is a second defendant to the counterclaim which is not relevant to the present application.
The defendant has filed a List of Documents and in it its solicitors have certified the defendant has now fully discharged its obligations regarding disclosure of documents in the action. By an application of 10 February 2010 the plaintiff seeks the following orders:
1.     That the Defendant disclose documents falling within the following categories:
1.1     Board Minutes of the Defendant recording discussions or resolutions connected with the Defendant’s purchase or proposed purchase of the property at 3 St John’s Row Glenelg (“the Property”);
1.2     Budget Forecasts of the Defendant prepared in connection with
1.2.1the purchase of the Property; and
1.2.2the development of the Property;
1.3     Plans prepared in connection with the Defendant’s development project relating to the Property, including but not limited to
1.3.1         the construction management plan; and
1.3.2         plans submitted to planning and/or development authorities.
1.4     Documents submitted to and/or received from planning and/or development authorities, including but not limited to:
1.4.1         building approvals; and
1.4.2         planning approvals.
1.5     Dilapidation survey.
The plaintiff’s counsel asks that 1.4 be read as limited to “in connection with the defendant’s development project relating to the Property”.
The application stated it was made pursuant to 6R 139(1)(a), which relevantly provides:
(1) The court may, on application by an interested party—
(a) extend the obligation to disclose to classes of documents specified by the Court; or
Example—
The Court might extend the obligation of disclosure to documents that are only indirectly relevant to a particular issue arising in the action.
That sub-rule deals with disclosure of indirectly relevant documents and apparently ties in with 6R 136(1)(b) which provides:
(1)Each party must disclose the documents that are, or have been, in the party’s possession and—
(a)are directly relevant to any issue raised in the pleadings; or
(b)are to be disclosed by order of the Court.
Sub-rule 6R 139(1)(a) does not deal with directly relevant documents whose disclosure is required under 6R 136(1)(a) without the need for any order of the Court. The primary contention of counsel for the plaintiff was that all, or at least most, of the documents whose disclosure were sought in the application were directly relevant. If so, an order for their disclosure could not be made under 6R 139(1)(a). In order to overcome this problem, he orally expanded his application also to seek an order under 6R 145(1) which provides:
(1)If there is reason to doubt whether a party has fully complied with the party’s obligations to disclose and produce documents under this Part, the Court may make orders the Court considers appropriate to ensure that the obligations have been fully complied with and, if necessary, to enforce those obligations.
That sub-rule provides the remedy where a party has not complied with its obligations to disclose directly relevant documents under 6R 136(1)(a).
It is unsatisfactory for a party to seek orders in the alternative under either 6R 145(1) or 6R 139(1)(a), depending on whether the Court finds the documents in question to be directly relevant or only indirectly relevant as if they must be ordered to be disclosable as one or the other. It is preferable if the orders are sought by separate paragraphs of the application and set out in each case precisely the order sought. Whether an order for disclosure is made does not merely depend upon whether the documents are directly or indirectly relevant. Any order under 6R 145(1) for disclosure of directly relevant documents is conditional upon the applicant establishing that there is “reason to doubt” whether the other party has fully complied with its obligation under 6R(1)(a).[2] An order will be made under 6R 136(1)(b) or 139(1)(a) if it is shown that it is just that the order be made.[3] Thus it is possible the party claiming that a document is directly relevant will fail to get an order for its disclosure under 6R 145(1) because it cannot establish the necessary “reason to doubt” under 6R 145(1), but will also not be able to obtain an order for its disclosure under 6R R136(1)(b) or 139(1)(a) because it is has not shown that the document is only indirectly relevant.
[2] Ceneavenue Pty Ltd v Martin White J, 25 November 2008, [2008] SASC 332.
[3] Hewitt v Pacific Magazines Pty LtdNo. 2 (2009) SASC 366; O’Meara v FWY Stanke Holdings Pty Ltd (No. 2) (2009) 250 LSJS 221 at 221-2.
It is possible to resolve this application without determining whether each of the documents in question is either directly relevant or indirectly relevant. For the reasons set out below, I hold that if the documents are directly relevant, no sufficient “reason to doubt” has been shown to justify any order under 6R 145(1). Alternatively, if the documents are only indirectly relevant, I am not prepared to make any order for their disclosure under 6R 136(1)(b) or 139(1)(a), for the reasons given below.
The argument proceeded on the basis that documents in question were relevant only on the issue of the materiality of the alleged misrepresentation about no asbestos and whether that induced the defendant to enter into the contract. The plaintiff by its Reply has merely put in issue both that any such representation, if made, was not material to the defendant’s decision to enter into the contract[4] and that the defendant was induced by the alleged misrepresentation to enter into the contract. It has not pleaded that there was any other unrelated cause for the defendant to purportedly rescind the contract. Thus, the issue for the Court is whether any misrepresentation about no asbestos was made and, if so, was it material and did it induce the defendant to enter into the contract. Hence, any document referring to, or dealing with the existence of, asbestos in the property will be at least relevant, and probably directly relevant, to these pleaded issues. However, any document merely going to what was material for the defendant entering into the contract, and what induced it to enter into the contract, which do not in any way relate to the existence or non-existence of asbestos in the property are not directly relevant. (Nevertheless, if the defendant intends at trial to seek to make out a positive case that other matters than asbestos issues induced it to enter into the contract, it needs to volunteer the disclosure of documents on such matters.)
[4] For this purpose, it is not necessary to differentiate between the prior option and the contract.
The plaintiff did not adduce any affidavit evidence to establish that there was “reason to doubt” under 6R 145(1). It relied on alleged inferences from the pleadings and the correspondence which was exhibited to affidavits.
In relation to 1.1 the defendant’s solicitor has filed an affidavit that she has looked at the relevant minutes and deposes that, apart from those which have been disclosed, no others contain directly relevant evidence. There is a presumption that solicitors have done what is necessary to ascertain what documents are directly relevant and will be disclosed by their client.[5] Insofar as undisclosed minutes are alleged to deal with directly relevant issues, there is no reason to doubt that the plaintiff has fully complied with its obligations to disclose such minutes.
[5] See Ceneavenue Pty Ltd v Martin above; Lane v Channel 7 Adelaide Pty Ltd Prior J, 28 November 2003, [2003] SASC 391.
In relation to 1.2 – 1.5, there is no evidence to raise any reason to doubt that these documents, insofar as they exist, are not directly relevant to any issue. It is not sufficient that they may deal with what induced the defendant to enter into the contract if they do not in some way relate to asbestos in the property. While there is always the possibility such documents deal with asbestos or inducement, there is nothing which advances that possibility to a “reason to doubt”. Thus, no order for their disclosure is to be made under 6R 145(1) on the basis that the documents sought are directly relevant.
To show that it is just an order should be made under 6R R136(1)(b) or 139(1)(a) for the disclosure of the documents in 1.1 – 1.5 as being indirectly relevant the Court must be able to see from the pleadings and the evidence adduced what role such indirectly relevant documents might play in resolving the disputed issues. The Court needs to be satisfied that the documents may be so logically probative of a matter in issue that it justifies an order be made requiring the other party to go to the trouble, and incur the expense, of obtaining and disclosing these documents. The wider the category of documents sought, the greater needs to be the justification for an order for their disclosure. Here what is sought is indirectly relevant documents which appear to be virtually the whole of the defendant’s files on its purchase of the property and its plans for its future use. Insofar as these documents do not refer to asbestos or the absence of it, I do not see how they can be logically probative of a matter in issue. The relevance of the documents sought to anything in issue on the pleadings is tenuous at the best. Rather, the inference is that the plaintiff is conducting a “fishing” exercise to see if there is anything in the defendant’s papers which might assist it on credibility issues or the like. Hence, no order for the disclosure of such indirectly relevant documents is to be made under 6R R136(1)(b) or 139(1)(a).
I have today made the following orders on FDN10:
1Application dismissed.
2Costs of FDN10 to be paid by the defendant to the plaintiff.
3Fit for counsel.
4Adjourned to a directions hearing on 17 June 2010 at 12.10pm.