Kingdom v Lavan Legal - [2012] WASC 387

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: KINGDOM -v- LAVAN LEGAL [2012] WASC 387

CORAM: MASTER SANDERSON

HEARD: 2 OCTOBER 2012

DELIVERED : 19 OCTOBER 2012

FILE NO/S: CIV 2135 of 2012

BETWEEN: LEX KINGDOM
Plaintiff
AND
LAVAN LEGAL
Defendant

Catchwords:

Practice and procedure - Application for preaction discovery - Whether plaintiff has sufficient knowledge to allow decision to be taken - Turns on own facts

Legislation:

Nil

Result:

Application dismissed

Category: B

Representation:

Counsel:

Plaintiff: Mr M A Atkinson
Defendant: Mr I R Freeman

Solicitors:

Plaintiff: Atkinson Legal
Defendant: Lavan Legal

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

Davis v Sagar Pty Ltd (Unreported, WASC, Library No 980443, 10 August 1998)
McCarthy v Dolpag Pty Ltd [2000] WASCA 106
Waller v Waller [2009] WASCA 61

MASTER SANDERSON: This is the plaintiff's application for pre‑action discovery. To understand the basis upon which the application is opposed it is necessary to deal in some detail with the factual background.
In or about 2004 the plaintiff decided to develop a property in South Perth of which he was the sole proprietor. The development of the property was to involve the design and construction of a three lot strata apartment building (Kingdom Apartments). It was the plaintiff's intention to sell two of the proposed three lots (Lots 1 and 2) prior to the commencement of the development - that is to say 'off the plan'. To assist in arranging finance for the development in early 2005 the plaintiff engaged a Mr Vic Grundy of Barry Barr & Associates, finance brokers.
In the first part of 2005 Mr Grundy arranged for the plaintiff to meet with a Mr Geoff Stevens, a partner of the respondent. The plaintiff says the meeting took place at his home. He says the purpose of the meeting with Mr Stevens was to discuss the sales contract for the sale of Lots 1 and 2. The plaintiff says he wanted a 'waterproof' contract of sale for the two lots. He says he instructed Mr Stevens to prepare a contract of sale.
The plaintiff says two or three weeks after the meeting he received in the post what he understood to be a draft or 'proforma' contract for sale. He says the proforma contract was not in a form which could be immediately executed by him or any purchaser. It needed to go back to the respondent to be put into a final form. He is not quite sure why he thinks that was the case and he does not now have a copy of the proforma contract. Nor is the plaintiff sure whether there was a covering letter with the proforma contract.
In or about November 2005 the plaintiff engaged Aria Projects Pty Ltd (Aria) to act as the project manager for the development. His contact point was a Mr Tony Metcalf. He also engaged a Mr Bob Campbell, a real estate agent, to assist with the marketing of the units. Mr Campbell told the plaintiff a contract of sale for the purposes of marketing Lots 1 and 2 was required. The plaintiff says he told Mr Metcalf of his discussions with Mr Campbell and handed to Mr Metcalf the proforma contract. That was the last he saw of it. He says his discussions with Mr Campbell and Mr Metcalf took place prior to April 2006.
The plaintiff says he is aware in April 2006 Aria, via Mr Metcalf, instructed the respondent to prepare the contracts for the sale of Lots 1 and 2. That was done. The plaintiff refers to the file maintained by the defendant as the 'Contract File'. The plaintiff says Aria billed him for work undertaken by the defendant on his behalf.
In or about June 2006 the plaintiff entered into a contract with a Mr Noel Hall to sell the proposed Lot 1 to Mr Hall 'off the plan'. The plaintiff refers to this as 'Hall's Contract'. The plaintiff says to the best of his knowledge the respondent prepared Hall's Contract. It is the case that Hall's Contract is endorsed with the respondent's name and has a file reference which is the same as the Contract File. The plaintiff says Hall's Contract matched the proforma contract.
Hall's Contract included a disclosure statement in the form prescribed in accordance with s 69(3) of the Strata Titles Act 1985 (WA) (the Act). The units were duly constructed and the strata titles issued. Under the terms of Hall's Contract settlement was due on 7 October 2008. Mr Hall did not settle. On 10 October 2008 Mr Hall caused a notice of avoidance of Hall's Contract to be served on the plaintiff. The plaintiff disputed Mr Hall's right to terminate the contract. He instructed the respondent to act on his behalf. Eventually the dispute was resolved. In broad terms the parties agreed the deposit paid by Mr Hall would be forfeited to the plaintiff, the contract for the purchase of Lot 1 would be rescinded and there would be mutual releases between the parties.
The plaintiff makes two points about this settlement. First, he was advised by the defendant to enter into the settlement as it was the best possible outcome of the dispute. Second, at no stage did the defendant advise that there might be a conflict of interest on the defendant's part because they drew Hall's Contract and, at least on the plaintiff's view, it was flaws in that contract that allowed for the possibility of termination.
The plaintiff says as a consequence of the failure to settle Hall's Contract he has suffered loss and damage. He did not, and he did not need to, detail precisely what loss he had suffered. However, the alleged loss is in the region of $560,000.
All of the above material is taken from an affidavit of the plaintiff sworn 2 July 2012 and filed in support of the application. By pars 31 ‑ 39 the plaintiff gives quite a detailed explanation as to why it is he alleges the defendant was at fault in drawing Hall's Contract. Essentially what the plaintiff says is the disclosure statement included with Hall's Contract showed a unit entitlement of 27. When the strata plan was registered the unit entitlement was 31. The plaintiff alleges the unit entitlement included in Hall's Contract was calculated contrary to the Act. This the plaintiff alleges was the fault of the defendant. Although it is not said in as many words the plaintiff is seeking access to the Contract File to see how the unit entitlement was calculated with a view to establishing whether or not the defendant was negligent.
There has been correspondence between the plaintiff, the plaintiff's solicitors and the defendant about provision of files held by the defendant. Some material has been provided. However it has been acknowledged there is further material that has not been provided. Because of the way this matter was argued I need say nothing more about just what documents the defendant has which have not yet been provided by the defendant to the plaintiff. In his affidavit the plaintiff does analyse in some detail the material that he has been provided with to date. The affidavit makes clear the plaintiff has a fairly clear idea of who did what in relation to his affairs: see pars 66 ‑ 73 of the plaintiff's affidavit.
Order 26A r 4 of the Rules of the Supreme Court 1971 (WA) (the Rules) is in the following terms:
4.Discovery from potential party
(1)This rule applies if a person who may have a cause of action against a person whose description has been ascertained (the potential party) wants -
(a)to commence proceedings against the potential party; or
(b)to take proceedings against the potential party in the course of an action to which the person is a party,
but the person, after reasonable enquiries, has not been able to obtain sufficient information to enable a decision to be made as to whether to commence or take the proceedings.
(2)If there are reasonable grounds for believing that the potential party had, has, or is likely to have had or to have, possession of documents that may assist in making the decision, the person may apply for an order under this rule.
(3)The application shall be supported by an affidavit and a copy of both shall be served on the potential party.
(4)On the application the Court may order the potential party to give discovery of all documents that are or have been in the potential party's possession and that may assist the applicant in making the decision.
There is only one issue in this case. The defendant says the plaintiff has been 'able to obtain sufficient information to enable a decision to be made as to whether to commence or take the proceedings'. In other words the defendant says the plaintiff does not need further discovery - he has everything he needs to make a decision. To make good that submission counsel for the defendant referred to the detailed analysis by the plaintiff in his affidavit of material already available to him.
In considering this question the purpose of O 26A needs to be borne in mind. If an application is bona fide and the circumstances required by the Rules is shown to exist the court has a discretionary power to order discovery. The Rules are of a beneficial kind which should be given the fullest scope their language will reasonably allow: see Waller v Waller [2009] WASCA 61. As I pointed out in Davis v Sagar Pty Ltd (Unreported, WASC, Library No 980443, 10 August 1998) the aim is to ensure that all relevant documents are available to the parties so that no relevant fact remains hidden and a decision as to whether or not to commence proceedings can reasonably be made.
That is not to say the order does not have its limits. For instance there is nothing in O 26 about limiting the scope of discovery once the conditions for the making of an order have been established. But the decisions dealing with the question have routinely limited the scope of documents to be discovered: see McCarthy v Dolpag Pty Ltd [2000] WASCA 106. That case of course concerned a different question but the point remains valid. The circumstances in which discovery will be ordered and the scope of that discovery will depend upon the circumstances of each case.
In this case I am satisfied the defendant has made out its position. The way in which the plaintiff in his affidavit material has analysed what is presently available to him suggests strongly his is in a position to make a decision as to whether or not to proceed. He clearly understands what was wrong with the Hall's Contract. He acknowledges the error in the contract forced him to settle. There is nothing in the material to suggest it would not have been possible to get the contract right. It was simply a matter of complying with the statute. The mechanism of how the defendant got it wrong and the question of whether or not there may be other parties who share the blame is not really the plaintiff's problem. It is difficult to know what might be achieved by further discovery.
I am satisfied then this is not a case where I should make an order for pre‑action discovery. The plaintiff's application ought be dismissed with costs.
Before leaving this matter I should deal with one issue which divided the parties. In his affidavit the plaintiff says:
I want to commence proceedings against the Respondent in respect of loss and damage I contend I have suffered as a consequence of what I contend is negligence on the part of the Respondent, further or alternatively, a breach of contract, further or alternatively, breach of fiduciary duty, as outlined in this affidavit, but as at the date of this affidavit I have not been able to obtain sufficient information to decide whether or not to commence such proceedings (par 74).
It was the plaintiff's position that this statement was sufficient to overcome any suggestion the plaintiff had sufficient material to make a decision as to whether or not to commence proceedings. With respect that seems to me not to be so. The question must be examined objectively. It is necessary to look at what is available to the plaintiff and to determine whether armed, with that material, the plaintiff is in a position to make a decision. In my view in this case he is. It is true if a decision had already been made discovery would not be ordered. It may therefore be appropriate in the affidavit material for a plaintiff to make a statement to the effect no decision had been made. But that does not deal conclusively as to whether there is sufficient material available upon which to make a decision.