Kautto v La Trobe Capital and Mortgage Corporation Ltd

[2011] WASC 157

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   KAUTTO -v- LA TROBE CAPITAL & MORTGAGE CORPORATION LTD [2011] WASC 157

CORAM:   MASTER SANDERSON

HEARD:   2 MAY 2011

DELIVERED          :   22 JUNE 2011

FILE NO/S:   CIV 2720 of 2008

BETWEEN:   ASKO JUKKA KAUTTO

MARICE MARTTA ANNIKKI SARIOLA
Plaintiffs

AND

LA TROBE CAPITAL & MORTGAGE CORPORATION LTD
Defendant

Catchwords:

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

Legislation:

Nil

Result:

Application dismissed

Category:    B

Representation:

Counsel:

Plaintiffs:     Mr I A Morison

Defendant:     Mr R R Cywicki

Solicitors:

Plaintiffs:     John Mazza

Defendant:     GV Lawyers

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

Beecham Group Ltd v Bristol‑Myers Co [1979] VR 273

Mulley v Manifold (1959) 103 CLR 341

1. MASTER SANDERSON:  This is the plaintiffs' application for further and better discovery.  The application to the case management registrar was made on 18 December 2009.  Since that time, the parties have been in discussion and from time to time, the defendant has discovered more documents.  At the hearing, counsel for the plaintiffs referred to a minute of orders sought filed 11 February 2011 (the Minute).  The Minute referred to documents still in dispute.  It was by reference to the Minute rather than the application that the matter proceeded. 

2. It is convenient to begin by summarising the plaintiffs' claim.  As at March 2001, the plaintiffs were the registered proprietors of certain property in the Yallingup region of Western Australia.  They granted a mortgage over this property to the defendant.  The plaintiffs defaulted under the terms of the mortgage and in January 2003, the defendant took possession of the property.  After initially attempting to sell the property by public auction, it was eventually sold by private treaty.  The plaintiffs allege the defendant was under a duty not to sacrifice the property when it was sold.  The plaintiffs alleged that is exactly what the defendant did - sold the property for an amount which was substantially below its true worth and what the property would have realised if it had been properly marketed.

3. Much of the statement of claim deals with what the plaintiffs allege was the defendant's failure to properly market the property.  It is unnecessary for present purposes to go into detail.  What is important is the agents appointed by the defendant to sell the property were Elders Real Estate Busselton.  The defendant also appointed Property Realisations Pty Ltd as a conjunctional agent.  During the course of the sale process, the defendant also instructed Valuation Partners (WA) Pty Ltd and Hegney Partners.  At the time the property was sold, the plaintiffs' solicitors were CBA Legal.

4. There was no dispute between the parties as to the legal principles applicable when further and better discovery is sought.  The power to order further and better discovery is discretionary and should not be exercised in such a manner as to be oppressive:  see Beecham Group Ltd v Bristol‑Myers Co [1979] VR 273. Further, it cannot be shown by a contentious affidavit that the discovery made is insufficient. The insufficiency must appear from the pleadings, the affidavit of documents itself, or the documents referred to therein, or from any other source constituting an admission of the existence of a discoverable document: see Mulley v Manifold (1959) 103 CLR 341, 343 (Menzies J). In support of the application, the plaintiffs relied upon two affidavits sworn by John Gerard Mazza, the plaintiffs' solicitor, the first sworn 18 December 2009, the second sworn 11 February 2011. For its part, the defendant relied upon three affidavits of Rowan Janek Donoghue, the first sworn 19 November 2009, the second sworn 12 March 2010 and the third sworn 18 March 2011. It also relied on an affidavit of Luke James Durack Baker sworn 28 April 2011.

5. Against that background, the various categories of documents sought by the plaintiffs can be considered.  (These categories are taken from the defendant's submissions.  They reflect the way the matter was argued.)

Item 1(a):  Property Realisations Pty Ltd ('Property Realisation') filenotes of its conversations with the defendant.

1. The application is supported by pars 3 and 4 of the affidavit of Mr Mazza sworn 18 December 2009.  Essentially, what Mr Mazza says is that as Property Realisations was the defendant's agent and there were discussions between the defendant and Property Realisations, file notes of those discussions must have been kept.  The way in which Mr Mazza approaches this issue can be well illustrated by quoting par 4 of his affidavit.  It is in the following terms:

   4.The basis of my belief that it is fairly certain the documents referred to in paragraph 2(a) of this my affidavit, namely Property Realisations filenotes of its conversations with the defendant, exist or existed and are relevant to issues in dispute between the parties is as follows:

   (a)\Property Realisations is a licensed estate agent. Attached hereto and marked 'A' is copy facsimile of Property Realisations to the defendant dated 27 March 2003 (D46). The letterhead of this facsimile says 'Property Realisations Pty Ltd... Licensed Estate Agent';

   (b)The defendant engaged Property Realisations to act as its real estate agent for the purpose of selling the security property the subject of this Action. This belief is based on:

   (i)The defendant described Property Realisations as its 'agents' in answer 13(a) of the defendant's answers to plaintiffs request for further and better particulars of defence and counterclaim;

   (ii)Correspondence passing between the defendant and Property Realisations, for example its correspondence to the defendant dated 27 March 2003 (attachment 'A'), reflect that Property Realisations as the agent of the defendant provided advice and reports as requested by the defendant;

   (c)There were conversations between Property Realisations Pty Ltd and the defendant. F or example there are references to conversations between the defendant and Property Realisations in Property Realisations correspondence to the defendant dated 23 January 2003 (D26), 28 January 2003 (D27), copies of which are attached hereto and marked 'B' and 'C', and 27 March 2003 (attachment 'A');

   (d)Communications between Property Realisations Pty Ltd and the defendant are relevant to issues in this Action. For example:

   (i)The correspondence of Property Realisations Pty Ltd to the defendant dated 23 January 2003 (attachment 'B') is relevant to whether the property was sold at a gross undervalue and the defendant failed to obtain any proper valuation prior to sale. This is pleaded by the plaintiff at paragraph 11(1) and (3) of the statement of claim filed herein on 27 February 2009 and denied by the defendant at paragraph 11 of the defence and counterclaim filed herein on 24 March 2009;

   (ii)The correspondence of Property Realisations Pty Ltd to the defendant dated 28 January 2009 (attachment 'C') is relevant to whether the defendant once in possession of the property as mortgagee failed to keep up the property prevent it deteriorating and prevent it losing value. This is pleaded at paragraph 11(7) of the statement of claim and denied at paragraph 11 of the defence and counterclaim;

   (iii)The correspondence of Property Realisations Pty Ltd to the defendant dated 27 March 2003 (attachment 'A') is relevant to the issues of whether the property was sold at a gross undervalue, the defendant failed to obtain any or any proper valuation prior to sale, the defendant failed to properly or sufficiently advertise the property, the defendant failed prior to sale to subdivide the property pursuant to a subdivision approval and the defendant failed to keep up the property and prevent it deteriorating and losing value and the defendant failed to fix any or any reasonable or proper reserve for an auction of the property held on 22 March 2003. This is pleaded in paragraph 11(i) and (iii) to (vii). This is denied at paragraph 6 of the defence and counterclaim;

   (e)As a purchaser and vendor of a number of real properties and a practising solicitor for more than 20 years during which time I have acted for and against real estate agents and purchasers and vendor of real property, it is my experience that it is not uncommon for individuals involved in the sale of real estate to take notes of conversations relating to the property to be sold.

2. This paragraph can be described as contentious.  Mr Mazza is not saying by reference to the pleadings or to some already discovered document it is clear these file notes exist.  He is speculating.  That is precisely what Menzies J in Mulley v Manifold says was impermissible. 

3. For its part, the defendant relies on pars 6 and 7 of Mr Donohue's affidavit sworn 19 November 2009 and par 6 of the affidavit of Mr Donohue sworn 12 March 2010.  The defendant, through its in‑house legal counsel, deposes to the fact that Property Realisations is a deregistered company, that the defendant has obtained a copy of Property Realisations' file which it has discovered to the plaintiffs and to the best of the defendant's knowledge there are no other relevant documents to be discovered. 

4. In my view, the plaintiffs fail in two ways.  First, they have attempted by a contentious affidavit to postulate the existence of certain documents in a way which is impermissible.  Second, the defendant has provided a complete answer and produced evidence to show that all necessary inquiries have been made and no further discovery is required.

Item 1(b):  Property Realisations filenotes of its conversations with Elders Real Estate (WA) Pty Ltd ('Elders Real Estate')

1. The basis of this application is very similar to the argument advanced with respect to item 1(a).  In par 5 of his affidavit of 18 December 2009, Mr Mazza essentially says such documents must exist because, based upon his experience, such documents would be brought into existence.  Again, the affidavit material is contentious.  Furthermore, by pars 3, 8 and 27 of Mr Donohue's affidavit of 19 December 2009, pars 7 and 8 of his affidavit of 12 March 2010 and par 4 of his affidavit of 18 March 2011, the defendant has established all documents in existence have been discovered. 

2. There is no basis for making an order under this item. 

Item 1(c):  Elders' filenotes of its conversations with Property Realisations

1. The same comments can be made in relation to this item.  Once again, reliance is placed on par 5 of the affidavit of Mr Mazza.  It is speculative.  A complete answer is provided by the affidavits of Mr Donohue and there is no basis to make any order under this item.

Item 1(d):  The entire file(s) of Elders pertinent to the property

1. The application is supported by par 6 of Mr Mazza's affidavit.  Mr Mazza says Elders Real Estate was commissioned to sell the property and, by virtue of Mr Mazza's experience, he has observed that real estate agents keep files pertaining to the sale of property.  Once again, the basis of the application is speculative.  Furthermore, a complete answer is provided by pars 3, 8 and 27 of Mr Donohue's affidavit of 19 November 2009 and par 2 of his 12 March 2010 and par 5 of his 18 March 2011 affidavits.  There is no basis for making an order under this item.

Item 1(e):  The entire fil(e) of Property Realisations pertinent to the property

1. Again, the application is supported by par 6 of the affidavit of Mr Mazza of 18 December 2009.  Mr Mazza relies on his experience and speculates such a file must exist.  Again, Mr Donohue provides the complete answer.  There is no justification for an order under this item.

Item 1(f):  The defendant's correspondence to Hegney Property Valuations ('Hegney')

1. The application is supported by par 7 of Mr Mazza's affidavit of 18 December 2009.  The application relies on a reference to 'Instructions received from the defendant by Hegney'.  Mr Mazza speculates that such instructions must have been in writing.  But it is speculation.  Further, Mr Donohue, by par 4 of his affidavit of 12 March 2010, and par 6 of his affidavit of 18 March 2011, says a copy of the Hegney file has been obtained and discovered.  That is a complete answer to the plaintiffs' claim under this item. 

Item 1(g):  The defendant's filenotes of its conversations with Hegney

1. By par 7 of his affidavit of 18 December 2009, Mr Mazza speculates instructions were issued by the defendant to Hegney in writing.  Again, this is speculation.  Again, Mr Donohue, in par 4 of his affidavit of 12 March 2010, says the entire Hegney file has been discovered and nothing else is available.  There is no justification for making an order under this item.

Item 1(h):  The facsimile of Valuation Partners (WA) Pty Ltd  to the defendant dated 1 July 2002 and its annexures

1. The application is supported by par 3 of Mr Mazza's affidavit of 11 February 2011.  The defendant has discovered a facsimile transmission face sheet dated 1 July 2002 from Valuation Partners to the defendant.  The plaintiffs assert the face sheet must have contained writing and must have had attachments.

2. By par 8 of his affidavit of 18 March 2011, Mr Donohue deposes the defendant has undertaken a search and does not have in its possession, custody or control the document sought.  Further, Mr Donohue says the defendant is not aware as to when the defendant parted with the documents if they ever existed.

3. While the facsimile cover sheet does suggest annexures, the defendant has explained why those annexures were not produced.  A party cannot discover documents it does not have.  There is no reason to disbelieve Mr Donohue on his affidavit.  It may be, given the time that has passed in this matter, the documents have gone missing.  There may never have been any documents.  Either way, the plaintiffs can take this issue no further and there is no warrant for making an order under this item.

Item 1(i):  Valuation Partner's filenotes of its conversations with the defendant save for any filenotes contained in item 222 of the defendant's supplementary list of documents affirmed by Rowan Janek Donohue on 19 November 2009

1. The application is supported by par 4 of the affidavit of Mr Mazza sworn 11 February 2011.  Underpinning the plaintiffs' submissions is an assumption because Valuation Partners made file notes on some occasions, Valuation Partners make file notes on all occasions.  This is based on supposition.  The defendant says, through Mr Donohue, that it does not have the documents sought by the plaintiffs and does not know whether they ever existed.  There is no warrant for making an order under this item.

Item 1(j):  Written communications of Valuation Partners to the defendant to the effect that Elders was not appropriate agent to sell the property

1. Again, this application is supported by par 5 of Mr Mazza's affidavit of 11 February 2011.  It is based on supposition.  Again, the defendant says it does not have any documents and there is no warrant for making an order under this item.

Item 1(k), (l), (m), (n), (o):  Correspondence between Elders and Property Realisations on various dates

1. It is asserted by the plaintiffs in par 6 of Mr Mazza's affidavit of 11 February 2011 the discovered documents are not originals and the originals should be discovered.  Mr Donohue says in his affidavit of 18 March 2011 the defendant does not have the originals of these documents and has no idea where the originals might be.  What has been discovered has all been obtained from the files of Property Realisations and Elders and that is the best the defendant can do. 

2. I am satisfied there is no warrant for making an order under this item.  The plaintiffs have been provided with copies of the relevant documents.  A sworn affidavit to the effect the originals do not exist means the originals are not available to be put into evidence and the copies can be used.  That would be sufficient for the plaintiffs' purposes.

Item 1(p):  The two pages of attachments to the facsimile of Elders to Property Realisations dated 29 August 2002

1. This part of the application is supported by par 7 of Mr Mazza's affidavit sworn 11 February 2011.  He points to a facsimile cover sheet dated 29 August 2002 which refers to two additional pages.  This is one instance where the documents themselves disclose the existence of further documents.  Prima facie, the plaintiffs are entitled to discovery of these two additional pages.

2. The defendant relies on par 2 of Mr Donohue's affidavit sworn 12 March 2010 and par 5 of his affidavit of 18 March 2011.  Mr Donohue says the defendant does not have in its possession, custody or control the two pages referred to.  Further, the defendant is not aware when it parted with such documents or, indeed, whether they ever existed.  I am satisfied proper inquiries have been made by the defendant and noting more need be done.  While the absence of these two pages may be unfortunate, in light of the evidence led by the defendant, there is no warrant for ordering discovery of a document which, in all probability, does not exist.

Item 1(q):  The 3 pages of attachments described as 'information following' in the facsimile of Elders to Property Realisations dated 22 November 2002. 

1. The application is supported by par 8 of Mr Mazza's affidavit of 11 February 2011.  It is asserted that the documents discovered by the defendant are not originals and the defendant should discover the originals.

2. The defendant relies on par 2 of the affidavit of Mr Donohue of 12 March 2010 and par 5 of his affidavit of 18 March 2011.  The defendant does not have the originals of these three pages.  I am satisfied proper inquiries have been made and the originals simply cannot be produced.  The evidence on this point is adequate and no further order need be made.

Item 1(r):  'Property Realisation' written communications after 22 March 2003 and Elders written communications after 22 March 2003

1. The application is supported by pars 9 to 12 of the affidavit of Mr Mazza sworn 11 February 2011.  It is asserted correspondence from Property Realisations dated 21 March 2003 requested information from Elders Real Estate which in the usual course of business would have been supplied in writing.  Mr Mazza's affidavit is speculative.  There is nothing in the discovery to suggest the information was actually supplied in writing. 

2. Furthermore, by par 5 of his affidavit of 18 March 2011, Mr Donohue says all relevant documents have been discovered.  There is nothing to suggest that any further documents exist.  There is no warrant for making an order under this item.

3. Paragraph 2 of the Minute seeks an order the defendant do produce to the plaintiffs' solicitors the following documents:

   (a)the complete correspondence of CBA Legal to the defendant dated 18 November 2002 (item D 162 of the discovery); and

   (b)the complete undated handwritten note (item D330 of the discovery).

4. It is not entirely clear what is contemplated by category (a).  In any event, the evidence of Mr Donohue is to the effect inquiries have been made with CBA Legal and the only documents which are available have been discovered.  In my view, the evidence produced by the defendant is, in all respects, satisfactory and no further order needs to be made.

5. The allegation in relation to category (b) appears to be the document discovered is an incomplete record and the plaintiffs want the complete record.  The defendant says the document discovered is the only one available and nothing else can be produced.  I am satisfied the defendant has taken all necessary steps to give adequate discovery in this respect and no further order will be made.

6. For these reasons, I am not satisfied any order for further and better discovery ought be made.  I am also not satisfied there needs to be a consolidated affidavit of discovery.  The defendant has, from time to time, updated its discovery, a process anticipated by the rules.  It has gone to considerable lengths to explain why documents the plaintiffs believe should exist and should be discovered have not been discovered.  That really is the end of the matter.

1. For these reasons, I would dismiss the application.  I will give the parties the chance to be heard as to costs.