Idameneo (No 123) Pty Limited v Candetti Constructions Pty Limited & Anor - [2010] SASC 213

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
IDAMENEO (NO 123) PTY LIMITED v CANDETTI CONSTRUCTIONS PTY LIMITED & ANOR
[2010] SASC 213
Reasons of Judge Lunn a Master of the Supreme Court
14 July 2010
PROCEDURE
Application for disclosure of documents by plaintiff after issue of Summons and before Statement of Claim filed – held power to make the order under 6R 136(1)(b) – order not needed for plaintiff to file its Statement of Claim – held not in the interests of justice in the circumstances of the case to order disclosure by defendant at this stage – application dismissed.

IDAMENEO (NO 123) PTY LIMITED v CANDETTI CONSTRUCTIONS PTY LIMITED & ANOR
[2010] SASC 213
JUDGE LUNN:
Reasons on plaintiff’s application for disclosure of documents before pleadings
Definitions
In these reasons:
“the Plaintiff” means Idameneo (No 123) Pty Limited;
“Candetti” means the first defendant, Candetti Constructions Pty Limited;
“the Council” means the second defendant, the Corporation of the City of Marion, and
“the Street” means Milham Avenue, Oaklands Park.
Background

The Plaintiff owns a medical clinic which is adjacent to the Street. The Street is under the control of the Council. Prior to November 2009 the Street was a two-way street. In November 2009 this was changed to make it a one-way street which made it difficult for some vehicles to access the Plaintiff’s medical centre. The physical work in changing the Street into a one-way street was done by Candetti. The Plaintiff alleges these changes to the nature of the Street have adversely affected its business.
This Action
On 19 February 2010 the Plaintiff instituted this action against Candetti and the Council. In its Summons it claims an injunction to restore the Street as a two-way street and damages for the tort of public nuisance. Before the Plaintiff’s application for an interlocutory mandatory injunction could be heard the Council, in about late February 2010, restored the Street to be a two-way street.
The Plaintiff seeks to pursue the action on its claim for damages for public nuisance. Up to this point only affidavits have been filed and not pleadings. At a directions hearing on 24 March 2010 it was agreed by all parties that the action should proceed on pleadings. However, I did not then make an order to that effect.
As a result of an ambiguous statement in the Plaintiff’s outline of argument, there has been some confusion about whether the Plaintiff was seeking to use its affidavit as a substitute for pleadings under 6R 96. This was not its intention. Its claim for damages is to proceed on formal pleadings.
The Application
On 22 April 2010 the Plaintiff took out an application (FDN10) seeking the following orders:
1.The Defendants disclose the documents that are, have been [sic], within their respective possession and are directly relevant to the issue of:
1.1    the identity of the entity or entities that performed certain works on Milham Avenue, Oaklands Park, in October or November 2009, which resulted in the changes in parking and traffic flow arrangements on the street… (hereafter “the Works”);
1.2    the nature and manner of the performance of the Works, including but not limited to any reports made by the entity or entities in respect of the performance of the Works;
1.3     any agreement between the Defendants as to the performance of the Works;
1.4    the grant of lawful authority to that entity or entities that performed the Works to do so, whether by way of consent, approval, licence, permit or howsoever; and
1.5    the publication of any notice, whether by way of advertisement, correspondence or otherwise, in respect of the performance of the Works.
Although it does not say so, it is an application for disclosure of documents before the filing of any statement of claim.
On 20 March 2010 the Council consented to an order that it disclose some documents, although it was not in the terms of the application. Candetti opposed any order being made against it. On 30 June 2010 the Council filed a list of documents in compliance with the order against it, although this was not known at the time of the argument before me.
The application stated it was brought under RR 139 and/or 32. Shortly before the hearing the Plaintiff abandoned its reliance on R 32 which deals with pre-action disclosure of documents.
The Plaintiff had written to Candetti and its solicitors on a number of occasions seeking information about what is its defence to the claim for damages. Candetti has merely replied that it has a good defence based on statutory authority to carry out the Works on the Street, but it has declined to give any details about the source and nature of such authority.[1]
[1] Candetti is entitled to take this position although it may subsequently be relevant if it was to seek an order for costs after conducting a successful defence.
In a letter of 18 June 2010 the solicitors for Candetti wrote to the Plaintiff’s solicitors stating, inter alia:
Should your client fail to agree to discontinue the proceedings… we have been instructed to bring an Application seeking that the proceedings be dismissed against Candetti[2]…
[2] It is unclear to me how Candetti could apply to have the proceedings dismissed presumably for not disclosing a reasonable cause of action against it prior to a statement of claim being filed, but it may be it was contemplating an application for summary judgment under 6R 232.
If such an application was to be brought, Candetti would have to support it by material which would disclose much, if not all, of the documents and information which the Plaintiff now seeks by FDN10. However, at the hearing on 1 July 2010 counsel for Candetti indicated that its solicitors had no current instructions to bring such an application. Accordingly, it is irrelevant to the determination of FDN10.[3]
[3] If Candetti was subsequently to bring such an application for summary judgment successfully, it would be relevant on the question of costs as to why it was not pursued concurrently with FDN10.
The Plaintiff based its application on the power of the Court under 6R 139(1)(f), which provides:
(1)The Court may, on application by an interested party –
(f) modify or regulates disclosure of documents in some other way
It argued that implicitly this must encompass a power to order disclosure of documents before they would otherwise be disclosable under 6R 136(4) which is not until after any settlement conference. There is no authority of which I am aware for R 139(1)(f) being used to make such an order. Unlike 87R 58.04(i) there is no express Rule in the 2006 Rules dealing with ordering disclosure of documents between the issue of the Summons and when discovery is to be automatically made after the close of the settlement conference. However I need not pursue the point as I consider there is another more appropriate head of power under which such orders can be made under the 2006 Rules.[4]
[4] The use 6R 136(1)(b) was not canvassed in the course of submissions but as the application is to be dismissed this is of no prejudice to Candetti. If I had dealt with the application under 6R 139(1)(f), the result would have been the same.
Power under 6R 136(1)(b)
This Rule provides:
(1)Each party must disclose the documents that are, or have been, in the party’s possession and –
…
(b) are to be disclosed by order of the Court.
Sub-Rule (b) is couched in extremely wide terms. On its face it can extend to any document in the possession of a party without any express restriction by reason of relevance. Likewise it is not restricted in any express way as to the point of time in the action at which it can be exercised.[5] The precise scope of Sub-Rule (b) still awaits determination.
[5] Presumably it can only be after the institution of the action as there cannot be a party, which is required by the preamble, until the action has been commenced.
Sub-Rule (1)(b) is to be interpreted in conformity with 6R 117(1) which provides:
(1) The Court may make any order it considers necessary for the proper conduct of a proceeding or otherwise in the interests of justice.[6]
[6] Reference should also be made to 6R 116 giving the Court power to manage litigation fairly, expeditiously, economically and consistently with the proper administration of justice.
Clearly there are some actions where orders for disclosure of documents may be needed in the interests of justice before the close of pleadings and, as is sought here, after the issue of the summons and before the filing of a statement of claim. It would be contrary to the objects of the Rules as set out in 6R 3 for the Court not to have such a power. I consider a liberal interpretation should be given to sub-rule 136(1)(b) for it to confer power on the Court to order disclosure of documents before the close of the settlement conference.
In another context it has been held that whether disclosure should be ordered under Sub-Rule (1)(b) depends on the justice of the case.[7] Similarly, in its operation for an order for disclosure between the issue of the summons and the close of the settlement conference sub-rule (1)(b) should be applied on a criterion of the justice of the case.
[7] O’Meara v FWV Stanke Holdings Pty Ltd (No 2) (2007) 250 LSJS 221. Appeal dismissed. FWV Stanke Holdings Pty Ltd v O’Meara [2007] SASC 413 without express reference to this point.
Counsel cited a number of authorities dealing with discovery of documents before the close of pleadings, but all of these were in the context of rules which differed from 6R 136(1)(b) and each of which may in part have turned on the particular rules under which they were decided.[8] In my view the criteria for the application of sub-rule (1)(b) should be merely what is in the interests of justice and should not be circumscribed or elaborated upon by any additional formulae. There is no basis to import into it a restriction of it being used only in special circumstances.[9]
[8] Mason & Cox Pty Ltd v KPMG Peat Marwick (1999) 74 SASR 171 particularly at 177 – 87R 58.04(a); Computershare Ltd v Perpetual Registrars Ltd (2000) 1 VR 626 – O26.07 which gave an express power to order discovery before the close of pleadings.
[9] Mason & Cox Pty Ltd v KPMG above disapproved of any restriction on 87R 58.04(a) of special circumstances, but it did not cite the authority for that restriction of Latec Finance Ltd v Jury [1960] NSWR 321.
Course of the action if no disclosure is ordered
In determining what is in the interests of justice in this particular case it is helpful to compare what would be the course of the action if the disclosure requested is not granted as against its course if it is granted.
If the disclosure is not granted, the Plaintiff will file a statement of claim. It does not need the benefit of the disclosure sought in order to plead a statement of claim. To plead of a cause of action in public nuisance is relatively simple. There was some suggestion that it needed the disclosure to determine the respective roles of Candetti and the Council in the creation of the nuisance. It must have had some proper belief that both were involved in some way in the creation of the alleged nuisance for it to have joined each as a defendant to the action. Where it has any uncertainty about which was involved it is entitled to plead against them in the alternative. Insofar as it cannot plead proper particularity it is entitled to say that the particulars will be given after disclosure of documents.[10] It is not the case here that the plaintiff cannot plead a proper statement of claim without the benefit of some disclosure of the defendants’ documents.
[10] ETSA v Union Insurance Co, Perry J, 9 July 1997, Jud No 56241.
In response to the statement of claim each Defendant will have to plead its defences. Under 6R 100 such defences will need to disclose the material facts and the statutory provisions relied upon for any statutory authority by way of defence and any other defences which are raised. These defences should give the Plaintiff proper notice of the cases which it has to meet.[11]
[11] Insofar as the defences plead documents the Plaintiff is entitled to obtain copies of them immediately, and without an order of the Court, under 6R 61.
The Plaintiff will then need to file a reply if it challenges the statutory authorities pleaded by the Defendant. A defendant who creates a nuisance but has statutory powers will still be liable if it exercises those powers negligently.[12] Counsel for the Plaintiff said he needed the disclosure of documents to be able to plead any such negligence. The issue is premature. No question of negligent performance can be articulated until the nature of the statutory authority which is relied upon is known. In this matter this will not occur until the defences are filed. It would be open for the Plaintiff to seek disclosure of the Defendants’ documents if justice required such disclosure to enable it to plead its reply properly. However, that may well be countered by a submission that the exercise is merely one of “fishing” by seeking to trawl through Candetti’s documents to see if there might be any evidence of relevant negligence. Such fishing expeditions would not usually be allowed under 6R 136(1)(b). Nevertheless, the question need only be addressed, if and when, the Plaintiff makes such an application. If it is to avoid a “fishing” objection the Plaintiff will need to put forward some case about relevant negligence without the prior benefit of disclosure of the Defendants’ documents.
[12] Clerk and Lindsell on Torts (19^th ed., 2006), paragraph [20-75].
Once the pleadings are closed, the next step in the action would be the convening of a settlement conference, if appropriate, under 6R 124. The Plaintiff’s counsel submitted that in any event the Plaintiff would need the documents in question before it could engage in a worthwhile settlement conference. That sounds reasonable. However, the practice of the Court under 6R 124 is to defer the holding of a settlement conference if the completion of other interlocutory steps are desirable to assist in a successful outcome for the conference. Hence frequently limited or full disclosure of documents is ordered before any settlement conference is convened. If the Plaintiff says that it needs the documents before the conference, it is likely that 6R 136(4) would be varied to require disclosure of relevant documents at that stage of the action.
On the other hand, if the application FDN10 is granted before a statement of claim is filed the Plaintiff will have the opportunity to assess better what is its likely prospects of success in its claim for damages before it incurs the expense of filing a statement of claim. Although it was not explicitly stated, there is a strong inference that if the documents, when disclosed by the defendants, show that they have a good a case of statutory authority, the Plaintiff would not pursue the action further. It could then minimise its liability for costs to the defendants by negotiating a settlement or by discontinuing the action before the defendants have incurred the expense of filing their defences. However, in instituting the action the Plaintiff took the risk that the defendants might have good defences and therefore the action might fail and it would be liable potentially for costs to the defendants.[13] It is not in the interests of justice that at this stage of the action the Plaintiff should be able to test the strength of a defendant’s case before completing the pleadings. There are many plaintiffs and defendants who would like the opportunity to advance the disclosure of documents in the course of an action so that they can earlier determine their chances of success. However, it would not be in the interests of the overall administration of justice for the Court to have to rule on applications for special and limited disclosure of documents before the time for that disclosure under the Rules has arrived, merely so that parties can minimise their risk in costs if they have underestimated the case of their opponents as disclosed by their documents. The Rules lay down the steps for the progress of an action and they should not be varied unless there is some good reason to do so. If FDN10, or some part of it, is granted, and the action proceeds, it will mean there will be a two stage process of disclosure of documents by Candetti as other relevant documents will need to be subsequently disclosed as required by R 136(1)(a) and (4). That adds to the costs and creates delays. Here no sufficient good reason has been shown why it is in the interests of justice to vary the disclosure requirements of the Rules and not to leave disclosure until it is required by the operation of the Rules.
[13] The reinstatement of the Street is in the Plaintiff’s favour on the issue of costs at least as against the Council, but there are likely to be separate costs issues about the damages claim for nuisance.
I do not need to deal with paragraph 1.1 of the application as the affidavit filed by Candetti in answer to the application concedes that it performed the Works in question. Whether such disclosure would have been ordered had it not been conceded in the affidavit need only be dealt with if it becomes relevant on the question of the costs of the application.
The Plaintiff contended that it could have obtained the documents in question if it had brought proceedings for disclosure before action under R 32. However it said that it was precluded from doing so because the urgency of obtaining an interlocutory injunction to reinstate the dual carriageway meant that it did not have time to proceed under R 32. This was a tactical decision made by the Plaintiff and with knowledge of its likely consequences. Rule 32 contains special powers which are not replicated by R 136 or 139. It is by no means certain that the plaintiff would have succeeded against Candetti in an application under R 32. I do not accept its submission that all of the documents sought are in the exclusive possession of Candetti. Some were in the possession of the Council and others may have been obtainable from other sources. If an order had been made under R 32, under sub-rule (4) the Plaintiff would have been required to pay the costs of making the disclosure. I do not consider that RR 136(1)(b), or 139(1)(f), should be construed so as to make them the mere equivalents of R 32 such that the same order for disclosure after the commencement of action could be made under them as under R 32 before action. If that was the intent of the Rules, there would be no need for the special procedure under R 32 as a potential Plaintiff could merely institute an action against the proposed defendant and as a first step, seek the disclosure orders. On the Rules as framed once the R 32 procedures have been completed the Plaintiff has to commence a fresh action for any substantive relief which is sought.
The documents sought in paragraph 1.2 – 1.5 go to the nature and basis of any statutory authority to be relied upon by Candetti and to any possible negligence which might be an answer to a plea of statutory authority. For the reasons given I am not prepared to order such disclosure at this stage of the action.
I have today made the following orders:
1Application FDN10 is dismissed as against Candetti.
2Costs of FDN10 are to be paid by the Plaintiff to Candetti.
3Fit for Counsel.
4The action is to proceed on pleadings.
5The Plaintiff is to file its statement of claim within 21 days.
6Adjourned to a directions hearing on Thursday 9 September 2010 at 10.10am.