Letch Holdings Pty Ltd & Anor v The Promenade Geelong Pty Ltd & Ors
[2007] VSC 310
•29 August 2007
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
No. 462 of 2003
| LETCH HOLDINGS PTY LTD (ACN 075 996 182) and X & T PAPAILIADIS NOMINEES PTY LTD (ACN 005 190 876) | Plaintiffs |
| v | |
| THE PROMENADE GEELONG PTY LTD (FORMERLY KNOWN AS NORTHERN RIVERS DEVELOPMENT CORPORATION NO. 2 PTY LTD) (ACN 082 073 489) AND OTHERS (ACCORDING TO THE SCHEDULE ANNEXED HERETO) | Defendants |
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JUDGE: | OSBORN J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 22 AUGUST 2007 | |
DATE OF JUDGMENT: | 29 AUGUST 2007 | |
CASE MAY BE CITED AS: | LETCH HOLDINGS PTY LTD & ANOR v THE PROMENADE GEELONG PTY LTD & ORS | |
MEDIUM NEUTRAL CITATION: | [2007] VSC 310 | |
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Application for non-party discovery pursuant to Supreme Court (General Civil Procedure) Rules 32.07 – Plaintiffs appeal against order of Master pursuant to Supreme Court (General Civil Procedure) Rules 77.05(7) - Plaintiffs seek discovery of two general categories of documents in addition to specific documents provided – Plaintiffs must establish that each document sought relates to a question in the proceeding – issues to which the documentation sought was said to relate identified during hearing – non-party discovery given in respect of documents forwarded by the first defendant and its lawyers to the non-party’s receivers and managers relating to specified circumstances alleged in the statement of claim
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr N Hastie | Mr N Hastie |
| For the Defendants | Mr J Evans | Madgwicks |
| For the Non-Party | Mr N Debney | Hunt & Hunt |
HIS HONOUR:
This proceeding arises out of a tender process undertaken by the State of Victoria in 1999, for the purpose of sale of a parcel of land known as Harding Park, Geelong.
The plaintiffs were unsuccessful tenderers and complain of the circumstances in which the first defendant successfully tendered for and purchased the land.
This complaint is centred in the first instance upon the alleged giving of confidential information to the first defendant by officers of the City of Geelong, which the plaintiffs contend rendered the tender process inequitable and unlawful, and/or constituted conduct actionable as misfeasance in public office.
In the alternative it is alleged that in conjunction with the tender process misrepresentations were made by or on behalf of the first defendant to the State with respect to the financial probity, capacity and intentions of the first defendant.
In particular it is alleged that one Bourke, between June and October 1999, negotiated a loan from a company (“MDC”)incorporated on behalf of the Tainui according to the laws of New Zealand. It is alleged that such loan was obtained for the express purpose of purchase of the property and was dealt with in a manner giving rise to inferences that the first defendant misrepresented its position to the State at the time of tender. It is alleged the first defendant engaged in misleading and deceptive conduct with respect to its financial probity, capacity and intentions in respect of the position it put forward to the State. Further or alternatively, by reason of such conduct it interfered unlawfully with the contractual relations between the State and the plaintiffs said to be consequential upon the plaintiffs’ submission of a tender. In the further alternative, by reason of such conduct it is alleged there was an unlawful interference with the plaintiffs’ business and/or trade.
I shall return to more detailed allegations contained in the statement of claim insofar as they were the subject of particular submission before me and it is necessary to do so.
In August 2005 the defendants made discovery in the proceeding.
Thereafter application was made by summons for non-party discovery with respect to specified classes of documents. Such discovery was sought from K2F Pty Ltd (“K2F”) to which receivers and managers were appointed on 15 June 2004. K2F had originally been incorporated by the defendants to act as the corporate vehicle for the development of the land.
Discovery from K2F elicited copy documents providing the basis for an application for further discovery of particular documents by the first defendant, which was ordered by Master Kings on 21 March 2007.
This further discovery was given by way of affidavit of Bourke sworn 11 April 2007.
That affidavit describes a series of specific documents as having been in the possession, custody or power of the first defendant, but as having passed out of such possession, custody or power “when the first defendant caused all of the documents in its possession, power and custody relating to K2F Pty Ltd to be forwarded to its receivers and managers …”
The affidavit further describes two documents as having been in the possession, custody or power of the first defendant until the date when “Madgwicks Lawyers, acting on the first defendant’s instructions caused its files relating to K2F Pty Ltd to be forwarded to its [sic] receivers and managers of K2F Pty Ltd.”
By summons dated 18 June 2007 the plaintiffs sought discovery pursuant to r.32.07 of the specific documents identified in Bourke’s affidavit (documents “a” to “o”) said to have been forwarded to K2F. The plaintiffs further sought discovery of the following two categories of documents:
n.The first defendant’s documents relating to K2F which were forwarded to the receivers and managers of K2F on or about 15 June 2004.
o.The first defendant’s files which were forwarded by Madgwicks Lawyers to the receivers and managers of K2F.
The defendants did not oppose an order for specific discovery, but successfully opposed the application for discovery of the two general categories of documents described above.
The plaintiffs now appeal the Master’s decision with respect to these two categories of documents. Such an appeal is by way of rehearing de novo pursuant to r.77.05(7).
Rule 32.07 governs the application:
32.07 Discovery from non-party
On the application of any party to a proceeding the Court may order that a person who is not a party and in respect of whom it appears that that person has or is likely to have or has had or is likely to have had in that person’s possession any document which relates to any question in the proceeding shall make discovery to the applicant of any such document.
In the first instance it was submitted before me on behalf of the plaintiffs that the relevance of the categories of documents could be inferred:
(a)because of the concession made with respect to the specific documents in categories “a” to “m”, that they were forwarded to K2F as part of “all of the documents” in the first defendant’s “power, possession and custody relating to K2F”;
(b)coupled with the history of inadequate discovery by the first defendant.
The defendants, who were ably represented by Mr Evans of counsel, submitted that “it is for the plaintiffs, as the party seeking the non-party discovery, to establish that each document sought relates to a ‘question’ in the proceeding.”[1]
[1]Attention was drawn to the definition of “question” in r.1.13 as:
Question means any question, issue or matter for determination by the Court, whether of fact or law or of fact and law, raised by the pleadings or otherwise at any stage of a proceeding by the Court, by any party or by any person not a party who has sufficient interest.
It was submitted the plaintiffs had not established that the general categories of documents in issue did relate to any question in the proceeding. Alternatively, those documents which could be shown to so relate had already been identified and were the subject of orders agreed to for further discovery.
It was submitted that before the Master the solicitor for the plaintiffs had failed to identify any part of the pleadings which identified a question to which the remaining documents in issue related. It was submitted that the plaintiffs’ submissions were again defective in this respect before me.
In so submitting, however, Mr Evans conceded at one point, that it may be K2F has in its possession documents “germane” to the issues in the proceeding, which have not been discovered.
Despite this concession I accept his submission that the general propositions initially advanced on behalf of the plaintiffs, are not sufficient to establish a case for further non-party discovery by K2F.
When pressed, however, Mr Hastie, solicitor for the plaintiffs, identified the issues to which the documentation was said to relate by reference to the current version of the plaintiffs’ statement of claim. He pointed to the allegations made at [56] following concerning the manner it is alleged that between June and October 1999, Mr Bourke on behalf of the first defendant negotiated a loan from MDC for the purpose of being able to finance the purchase of the property. He pointed specifically to the allegations made in [57] and [59] that representations were made that K2F would repay the entirety of the funds advanced by MDC and that such representations were knowingly false.
By [59](d) it is alleged that it was not intended that K2F would repay the entirety of the funds advanced by MDC plus interest. This allegation is particularised as an intention to be inferred from a series of acts, facts and circumstances, commencing on or about 29 October 1999 and continuing through to September 2004.
These include specific allegations that:
vi.The fact that on or about 2 August 2000, while Mr Bourke was a director of both Northern Rivers No. 2 and K2F, and without the prior consent of the Tainui;
·Northern Rivers No. 2 used its title to raise a fresh mortgage in the sum of $1.04 million from Suncorp-Metway Bank; and
·In order to raise the fresh mortgage from Suncorp-Metway, Mr Bourke, without the prior consent of the Tainui, executed a variation in priority of mortgages to rank the fresh mortgage from Suncorp-Metway higher in priority to the existing mortgage held by K2F. …
xii.The fact that on or about 20 February 2003, and while Mr Bourke was a director of both Northern Rivers No. 2 and K2F, Mr Bourke discharged the mortgage held by K2F over the Property;
xiii.The facts, as stated in a 30 April 2004 letter from Tainui Group Holdings Limited, that on or about 29 October 1999, a company within the Tainui group provided a facility of $AUD 3 million to K2F and that despite demand for repayment of the amounts owed by K2F under the facility, those amounts remained unpaid. …
xvi.The fact that in the statement of affairs lodged by Mr Bourke with the ASIC, Mr Bourke stated that while he was a director of both K2F and Northern Rivers No. 2, Mr Bourke executed a “profit share agreement” between K2F and Northern Rivers No. 2.
xvii.The fact that the “profit share agreement” executed by Mr Bourke on behalf of K2F was executed without the prior consent nor knowledge of the Tainui.
It can be seen that these particulars include allegations concerning a remortgage of the property in August 2000, a discharge of K2F’s mortgage in February 2003, a loan by a company associated with the Tainui in October 1999, and a “profit share agreement” between K2F and the first defendant.
It was further submitted on behalf of the plaintiff that the categories of documents in respect of which non-party discovery is sought are inherently likely to contain documents relevant to the above allegations, and that the history of inadequate discovery by the first defendant should encourage the exercise of the Court’s discretion to require discovery of this material. Reliance was placed on the concession by Mr Evans that K2F may have “germane” documents in its possession. Thus, it was submitted the plaintiffs should have discovery of the whole of the categories of documents in issue, or alternatively such of them as relate to the matters the subject of the particulars in the pleading to which I have referred.
When the case was put this way Mr Evans did not resist an order for discovery with respect to the profit sharing agreement (if such an agreement exists). He continued however to resist further discovery with respect to the other matters referred to in the particulars on the basis that they were already evidenced by discovered documents. He further resisted more general discovery on the basis that the potential relevance of the documents in issue had only been established in respect of the specific allegations contained in [59](d) to which I have referred.
In my view non-party discovery should be given in respect of the categories of documents in issue (i.e. those forwarded respectively by the first defendant and Madgwicks Lawyers to K2F’s receivers and managers).
(a)As to the circumstances in which the first defendant on or about 2 August 2000 raised a fresh mortgage in the sum of $1.04 million from Suncorp-Metway Bank;
(b)As to the circumstances in which on or about 20 February 2003 the mortgage held by K2F over the property was discharged;
(c)As to the loan from a company associated with the Tainui made on or about 29 October 1999 of $AUD 3 million to K2F; and
(d)As to any profit share agreement between K2F and the first defendant.
I will hear the parties and non-party further as to the precise terms of such order in accordance with the request made at the hearing on behalf of the non-party and having regard to the effective amendment of the plaintiffs’ application to embrace a lesser alternative.
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SCHEDULE OF PARTIES
| No. 462 of 2003 | |
| BETWEEN: | |
| LETCH HOLDINGS PTY LTD (ACN 075 996 182) | First Plaintiff |
| X & T PAPAILIADIS NOMINEES PTY LTD (ACN 005 190 876) | Second Plaintiff |
| - and - | |
| NORTHERN RIVERS DEVELOPMENT CORPORATION NO.2 PTY LTD (ACN 082 073 489) | First Defendant |
| GREGORY ROY GILES | Second Defendant |
| PETER KENNETH MANN | Third Defendant |
| DAVID LINDSAY EDWARD BROWNE | Fourth Defendant |
| DAMIAN JOSEPH BOURKE | Fifth Defendant |
| K2F PTY LTD | Non-Party |
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