Letch Holdings Pty Ltd & Anor v The Promenade Geelong Pty Ltd & Ors

[2007] VSC 173

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. 462 of 2003

LETCH HOLDINGS PTY LTD and ANOR	Plaintiffs
V
THE PROMENADE GEELONG PTY LTD (formerly known as NORTHERN RIVERS DEVELOPMENT CORPORATION NO.2 PTY LTD) and ORS	Defendants

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JUDGE:	Mandie J
WHERE HELD:	Melbourne
DATE OF HEARING:	22 and 28 May 2007
DATE OF JUDGMENT:	28 May 2007
CASE MAY BE CITED AS:	Letch Holdings Pty Ltd v The Promenade Geelong Pty Ltd
MEDIUM NEUTRAL CITATION:	[2007] VSC 173

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PRACTICE AND PROCEDURE – application for non-party discovery – whether documents of which discovery was sought related to any question in the proceeding.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr N Hastie	Nigel Hastie
For the Defendants	Mr J L Evans	Madgwicks
For the Non-Party, K2F Pty Ltd	Mr L Blake	Hunt & Hunt

HIS HONOUR:

1. This is an appeal from an order of Master Kings made 21 March 2007 in relation to a summons by the plaintiffs dated 7 March 2007 seeking non-party discovery pursuant to O 32.07 from K2F Pty Ltd.

1. None of the parties complained about the express orders made by the Master but the plaintiffs contend that additional orders should have been made on their summons.

1. It is common ground that the Prothonotary, when authenticating the order on 3 April 2007, omitted from the authenticated order one order that was the subject of consent before the Master as follows:

“By consent order that by 11 April 2007 K2F Pty Ltd ACN 089 875 892 (receivers and managers appointed) (“K2F”) make discovery to the plaintiffs of:

(a)all bank statements evidencing the payment of the sum of $1M by K2F to Dieslo Pty Ltd ACN 007 180 770 (“Dieslo”) in exchange for Dieslo providing K2F introductions to various projects throughout Victoria;

(b)all bank statements evidencing the payment of the sum of $1M by K2F to Dieslo.”

1. The parties agree that the appeal should therefore be allowed to this extent, namely, to vary the Master’s order by adding the consent order above set out.

1. The matter in dispute relates to paragraph 1(c) and (d) of the plaintiffs’ summons in which discovery is sought from K2F of:

“(c)all bank statements evidencing the payment of the sum of $90,000 by K2F to Ian Rankin for consulting services in relation to financial and equity matters;

(d)all bank statements evidencing the payment of the sum of $90,000 by K2F to Ian Rankin.”

1. There is some evidence before the Court, provided by the plaintiffs, that K2F did in fact make a payment of $90,000 to Ian Rankin and that Ian Rankin was at the time of the payment a bank manager or other employee of a financier that lent money to the first defendant to purchase a property in Geelong under a tender that had been accepted by the State of Victoria.  This payment to Mr Rankin (who is now deceased) could be described as “suspicious” and the defendants described the payment as “obviously unusual” but the matter to be decided on this application is, do any documents relating to this payment “relate to any question in the proceeding” within the meaning of O 32.07?  “Question” is relevantly defined in O 1.13 to mean “any question, issue or matter or determination by the Court, whether of fact or law or of fact and law, raised by the pleadings …”

1. Mr Evans, for the defendants, pointed out that the pleadings made no mention of this payment and he submitted that it was irrelevant to any issue in the proceeding.

1. Mr Hastie, for the plaintiffs, submitted that the making of the payment was relevant to allegations that the defendants were guilty of misleading and deceptive conduct in the course of the tender process which is the subject of this proceeding.  The fourth amended statement of claim (“the amended statement of claim”) dated 15 June 2005 is, if one ignores the deletions that have been retained in the document, some 37 pages in length but Mr Hastie pointed to only a few of these paragraphs as having any bearing on this application. 

1. Paragraph 56 of the amended statement of claim alleges that the first defendant negotiated a loan from an entity “MDC” for the purpose of purchasing the Geelong property.  Paragraph 57 of the amended statement of claim alleges that during the course of these negotiations one Bourke on behalf of the first defendant made a number of representations, one being that K2F would be incorporated to purchase the property and another being that K2F would use the entirety of the funds to be advanced by MDC to purchase and develop the property.  Paragraph 59 of the amended statement of claim alleges that those representations (among others) were knowingly false in that it was not intended that K2F purchase the property, but rather that the first defendant would purchase the property and also knowingly false  in that it was not intended that K2F would use the entirety of the sum of $3M[1] to purchase and develop the property.

   [1]Paragraph 58 alleges that MDC advanced $3M to K2F in reliance upon the various representations.

1. Mr Hastie submitted that, as the payment of $90,000 to Mr Rankin was made from the moneys borrowed by K2F from MDC, evidence of the payment would assist in establishing that K2F had not intended to use the entirety of the said sum to purchase and develop the said property.

1. Mr Evans pointed out that the defendants admit that it was not intended that K2F was to purchase the property and that the first defendant was itself to purchase the property.[2]  Mr Evans said that the defendants also admitted that it was never intended that K2F would use the entirety of the sum of $3M advanced by MDC for the purpose of purchasing and developing the property.  However when one examined the defence it was apparent that the making of the relevant representation about using the entirety of the borrowed sum was denied (in paragraph 57(1) of the defence) and the allegation that the said representation was false because it was not intended to use the entirety of the sum to develop and purchase the property, was also denied (contrary to what Mr Evans contended).  The denial was covered by the words in para 59(5) “otherwise, they deny the allegations in paragraph 59”.

   [2]See para 59(1) of their defence dated 29 June 2005. 

1. Accordingly there was a live issue on the pleadings to which the documents relating to the payment to Mr Rankin were relevant.  However leave has now been granted to the defendants on Mr Evan’s application therefor to amend the defence to the fourth amended statement of claim so as to admit that it was not intended that K2F would use the entirety of the sum of $3M advanced by MDC to purchase and develop the property.

1. As a result, the non-party discovery sought is now irrelevant to any issue raised by the pleadings.  There is no basis in the Court’s discretion, either, for making the further orders sought by the plaintiffs.

1. I would propose to make the following orders:

1.        Appeal allowed.

2.Vary the order of Master Kings made 21 March 2007 by adding the following:

“7.By consent order that by 11 April 2007 K2F Pty Ltd ACN 089 875 892 (receivers and managers appointed) (“K2F”) make discovery to the plaintiffs of:

(a)all bank statements evidencing the payment of the sum of $1M by K2F to Dieslo Pty Ltd ACN 007 180 770 (“Dieslo”) in exchange for Dieslo providing K2F introductions to various projects throughout Victoria;

(b)all bank statements evidencing the payment of the sum of $1M by K2F to Dieslo.”

3.Otherwise no further order made on plaintiff’s summons dated 7 March 2007.

4.The Master’s orders as to costs are confirmed and do extend to the above consent order.

5.The plaintiffs’ costs of this appeal (including reserved costs) to be paid by the defendants.

6.The non-party’s costs of this appeal (including reserved costs) to be paid by the defendants.