Mantel v Waterproofing WA Pty Ltd [No 2]
[2012] WASC 117
•5 APRIL 2012
MANTEL -v- WATERPROOFING WA PTY LTD [No 2] [2012] WASC 117
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2012] WASC 117 | |
| Case No: | CIV:1815/2008 | 29 SEPTEMBER 2011 | |
| Coram: | ALLANSON J | 5/04/12 | |
| 11 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed | ||
| B | |||
| PDF Version |
| Parties: | BARRY JAMES MANTEL MICHELLE LEANNE MANTEL WATERPROOFING WA PTY LTD DOMINIC WILLIAM WHALEN LERIC PTY LTD MICHAEL RICHARD GOSS MARY-LENA GOSS |
Catchwords: | Practice and procedure Discovery of documents Factors to consider in exercise of discretion |
Legislation: | Nil |
Case References: | Beecham Group Pty Ltd v Bristol Myers Co [1979] VR 273 Erlistoun Gold Pty Ltd (formerly Erlistoun Gold NL) v Worth Investments Pty Ltd [1999] WASCA 3 Gollin Holdings Pty Ltd v Adcock [1981] 1 NSWLR 691 Mantel v Waterproofing WA Pty Ltd [2011] WASC 77 Re McGorm; Ex parte The Co-operative Building Society of South Australia (1989) 20 FCR 387 Science Research Council v Nasse [1980] AC 1028 Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2005] WASC 60 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- MICHELLE LEANNE MANTEL
Plaintiffs
AND
WATERPROOFING WA PTY LTD
First Defendant
DOMINIC WILLIAM WHALEN
Second Defendant
LERIC PTY LTD
Third Defendant
MICHAEL RICHARD GOSS
MARY-LENA GOSS
Fourth Defendants
Catchwords:
Practice and procedure - Discovery of documents - Factors to consider in exercise of discretion
(Page 2)
Legislation:
Nil
Result:
Application dismissed
Category: B
Representation:
Counsel:
Plaintiffs : Mr A Metaxas
First Defendant : No appearance
Second Defendant : Ms N M E Breach
Third Defendant : Mr B W Ashdown
Fourth Defendants : Mr B W Ashdown
Solicitors:
Plaintiffs : Metaxas & Hager
First Defendant : No appearance
Second Defendant : Earnshaw & Associates
Third Defendant : D'Angelo Legal
Fourth Defendants : D'Angelo Legal
Case(s) referred to in judgment(s):
Beecham Group Pty Ltd v Bristol Myers Co [1979] VR 273
Erlistoun Gold Pty Ltd (formerly Erlistoun Gold NL) v Worth Investments Pty Ltd [1999] WASCA 3
Gollin Holdings Pty Ltd v Adcock [1981] 1 NSWLR 691
Mantel v Waterproofing WA Pty Ltd [2011] WASC 77
Re McGorm; Ex parte The Co-operative Building Society of South Australia (1989) 20 FCR 387
Science Research Council v Nasse [1980] AC 1028
Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2005] WASC 60
(Page 3)
1 ALLANSON J: The plaintiffs seek orders for discovery by each of the second, third and fourth defendants. In order to understand the application it is necessary to give some detail of the history of this matter.
The parties and the claim
2 The first defendant (Waterproofing WA) is trustee of the Waterproofing Trust and, at material times, carried on business in the supply of goods and services for building developments. The Waterproofing Trust was constituted by deed as a unit trust. The plaintiffs (Mr Barry Mantel and Mrs Michelle Mantel), the second defendant (Mr Dominic Whalen), and Ms Kelly Tivey hold all of the units in the Waterproofing Trust.
3 Mr Mantel and Mr Whalen were directors of Waterproofing WA, and they and Ms Tivey owned the four issued shares in Waterproofing WA.
4 Ms Mary-Lena Goss, one of the fourth defendants, is Mr Whalen's mother. She and her husband (together, the fourth defendants) are the directors and shareholders of the third defendant, Leric Pty Ltd.
5 On 4 July 2008, the plaintiffs filed a writ of summons. The action was then against Waterproofing WA and Mr Whalen only. The writ bore an indorsement of claim claiming breach of trust by Waterproofing WA. It sought relief by way of an account by Waterproofing WA, and equitable compensation against Mr Whalen for 'having aided and abetted the first defendant's breaches of trust'. A statement of claim was filed the same day.
6 On 18 August 2008, the court ordered that the parties give discovery on affidavit by 20 October 2008. The plaintiffs gave discovery on 13 August 2008. Mr Whalen did not comply with the order.
7 On 16 December 2008, Mr Whalen filed a defence, in which he did not admit any of the facts and denied that he had aided or abetted, counselled or procured a breach of trust. Because Mr Whalen remained in default of the order for discovery, the plaintiffs applied for judgment. On 23 January 2009, a springing order was made requiring Mr Whalen to give discovery by 27 January 2009. Mr Whalen filed an affidavit of discovery on 23 January 2009.
8 On 6 March 2009, the plaintiffs applied for further and better discovery against Mr Whalen. At the same time they applied for leave to
(Page 4)
- issue subpoenas to two companies with whom the first defendant had traded: Mirvac Fini (WA) Pty Ltd and Mirvac Fini Holdings (WA) Pty Ltd (the Mirvac Fini companies). The subpoenas to the Mirvac Fini companies required each of them to produce:
1. All invoices received by the Mirvac Fini companies from the first defendant, Silicone Applications WA, Silicone Aqua and/or WA Waterproofing after 1 November 2006.
2. Records of all payments by Mirvac Fini to the first defendant, Silicone Applications WA, Silicone Aqua and/or WA Project Waterproofing after 1 December 2006.
9 The plaintiffs also issued a subpoena to produce documents to Ms Goss (then known as Mary Whalen), who was not then a party to the action. The plaintiffs sought:
1. All contracts for the provision of waterproofing services made by WA Project Waterproofing after 1 January 2006.
2. All purchase orders issued for the provision of waterproofing services to WA Project Waterproofing after 1 January 2006.
3. All invoices issued for the provision of waterproofing services by WA Project Waterproofing issued after 1 November 2006.
4. Bank statements for WA Project Waterproofing after 1 January 2006.
5. BAS returns for WA Project Waterproofing after 1 January 2006.
10 The subpoena to Ms Goss was issued and served on 30 March 2009. The subpoenas to the Mirvac Fini companies appear to have been issued, or perhaps re-issued, in August 2009.
11 On 24 March 2009, orders were made by Master Sanderson in chambers, including an order that:
Within 28 days the second defendant file and serve an affidavit stating whether the documents or classes of documents in schedule A are now or have been but are not now in his possession, custody, control or power and if not now in his possession, custody, control or power when they were last in his possession, custody, control or power and what has become of them.
(Page 5)
12 Schedule A contained four classes of documents:
1. contracts, purchase orders and invoices for the provision of waterproofing services and BAS returns for the first defendant;
2. contracts, purchase orders, and invoices for the provision of waterproofing services, and bank statements and BAS returns for Silicon Applications WA;
3. contracts, purchase orders, and invoices for the provision of waterproofing services, and bank statements and BAS returns for Silicon Aqua;
4. contracts, purchase orders, and invoices for the provision of waterproofing services, and bank statements and BAS statements for WA Project Waterproofing.
13 In each case the plaintiffs requested contracts, purchase orders, bank statements and BAS returns after 1 January 2006; invoices (except from the first defendant) were requested after 1 November 2006.
14 Again, there was an application for judgment against Mr Whalen for failure to comply. On 2 July 2009, Mr Whalen filed a further affidavit in which he discovered invoices and BAS statements for Silicone Applications WA. Otherwise he deposed, in effect, that he was unable to locate contracts, purchase orders, invoices and BAS returns for the first defendant and contracts and purchase orders for Silicone Applications WA. He denied that he was involved in or concerned with Silicone Aqua or WA Project Waterproofing, and denied that he had any right of access to or control of any document of those entities.
15 On 21 August 2009, Mr Whalen filed a further affidavit in which he said that the directors of Waterproofing WA were himself, Ms Tivey and the two plaintiffs. Ms Tivey was also company secretary, and had attended to the paperwork and maintained the company records. Contracts for Waterproofing WA were written by Mr Mantel and Mr Whalen, but then handed to Ms Tivey. Ms Tivey and Mr Mantel were the joint signatories of the company's bank accounts, were responsible for raising invoices and maintaining records. Ms Tivey was responsible for maintaining the purchase orders and attending to the taxation matters of the company.
(Page 6)
16 In relation to the business Silicone Applications WA, Mr Whalen said the documents of that business similarly were the responsibility of Ms Tivey and were in her possession.
17 On 2 September 2009, Mr Whalen filed another affidavit in which he provided further information. He said that he and Ms Tivey had been in a de facto relationship which had ended in separation in February 2007. The business documents for Waterproofing WA and Silicone Applications WA had been kept in the family home, and on that basis had been in his possession, power or control up to the separation in February 2007.
18 On 15 February 2010, the plaintiffs were given leave to file an amended writ and statement of claim in which they joined the third and fourth defendants. The writ claimed equitable compensation against those defendants by reason that they also had aided and abetted the first defendant's breach of trust. A statement of claim was filed seeking relief on that basis. This led to applications by the newly added defendants to strike out the statement of claim in whole or in part. The second defendant also applied to strike out, although he was long out of time to do so.
19 On 18 October 2010, the application to strike out came before the court. The plaintiffs accepted, at least as regards the third and fourth defendants, that pars 13, 14 and 15 of the amended statement of claim should be struck out. The plaintiffs were given leave to re-plead.
20 On 26 November 2010, the plaintiffs filed a re-amended statement of claim. This also met with objection from all defendants. An application to strike out was determined on the papers and, on 25 March 2011, I ordered that pars 14, 15, 22 and 24 of the re-amended statement of claim be struck out. In effect, the specific allegations against the third and fourth defendants that they were complicit in a breach of trust were struck out. The statement of claim still pleads that Leric rendered an invoice for waterproofing work done on a project (Burswood Tower 3) for which the plaintiff had been engaged to provide waterproofing services.
21 Following that decision, the plaintiffs applied to extend the time in which they could file and serve any amended statement of claim and requested orders for discovery by each of Mr Whalen, Ms Goss and Leric. Mr Whalen has already given discovery on oath, in the series of affidavits that I have described above. There has not to date been discovery ordered against any of the other defendants.
(Page 7)
Further discovery by the second defendant
22 The power to order discovery is discretionary. Before making an order for further discovery the court must have reasonable grounds for being fairly certain that there are relevant documents that should have been but were not discovered: Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2005] WASC 60; Beecham Group Pty Ltd v Bristol Myers Co [1979] VR 273. Relevance is not the only factor the court must consider in the exercise of the discretion to order discovery. The ultimate test is whether the discovery is necessary for fairly disposing of the proceedings: Science Research Council v Nasse [1980] AC 1028, 1065. In deciding whether to order discovery, the court must consider how best to attain the objects set out in O 1 r 4B of the Rules of the Supreme Court1971 (WA).
23 In par 2 of the minute of proposed orders the plaintiffs ask for an order in these terms:
2. Within 14 days from the date of this order the second defendant do make file and serve a list of following documents verified by affidavit:
2.1 written communications between the first defendant and Mirvac or Mirvac-Fini in relation to the provision of waterproofing services after 1 January 2006;
2.2 written communications between the second defendant and Mirvac or Mirvac-Fini in relation to the provision of waterproofing services after 1 January 2006;
2.3 written communications between the first defendant and the third or fourth defendants in relation to the provision of waterproofing services to Mirvac or Mirvac-Fini after 1 January 2006;
2.4 written communications between the second defendant and the third or fourth defendants in relation to the provision of waterproofing services to Mirvac or Mirvac-Fini after 1 January 2006.
(Page 8)
- Australia (1989) 20 FCR 387, 389 - 390. But to the extent Mr Whalen has a right to the documents of Waterproofing WA by reason of his office as director, it is no greater than the right of Mr Mantel. Further, Mr Whalen has already said on oath that Ms Tivey and Mr Mantel were responsible within the first defendant for raising invoices and maintaining records. The plaintiffs have put forward no sound reason why I should not accept that evidence, or why I should require Mr Whalen to make further inquiry, when the documents of the first defendant are equally in their power.
25 Paragraph 2.2 relates to Mr Whalen's own written communications with the Mirvac Fini companies. If Mr Whalen has or had documents coming within this category that are relevant to the claim, they should have been discovered in 2009. There is no evidence before me that he has such documents.
26 The orders sought in paragraph 2.4 concern Mr Whalen's written communication with Leric and the fourth defendants. The category of documents sought is very widely described. When Mr Whalen gave discovery in 2009, the third and fourth defendants were not parties. But the pleaded case, even then, was that Waterproofing WA (aided and abetted by Mr Whalen) had breached its obligations as trustee by authorising or permitting income that should have been paid to Waterproofing WA to be paid to other persons or entities (which would include Leric and the fourth defendants). Any documents that were in Mr Whalen's possession or control and that were relevant to that breach of trust should have been discovered then.
27 Is there any evidence that there are documents that come within the scope of this order but which have not been discovered? The plaintiffs say that Leric carried on business from 14 November 2005 and from 12 June 2007 carried on that business under the name WA Commercial Waterproofing. Documents produced by Mirvac on subpoena include invoices issued for work done on the Burswood Towers 1 and 3, and record that Mirvac made payments to WA Commercial Waterproofing from 20 June 2007 to the end of July 2007. The plaintiffs say this supports the inference that a contract between Waterproofing WA and Mirvac had been transferred to WA Commercial Waterproofing (Leric) and it is more likely than not there were written communications between Mr Whalen, Leric and its directors, and Mirvac.
28 The reasoning leading to the conclusion that it is likely there are relevant documents is, in my opinion, speculative rather than inferential.
(Page 9)
- Following the earlier discovery process, in which no documents of this nature were discovered, I am not satisfied that Mr Whalen has or has had in his possession or control any documents or communications coming within this description.
Discovery by the third and fourth defendants
29 The plaintiffs also seek discovery from the other defendants. Orders 3 and 4 of the proposed orders are in these terms:
3. Within 14 days from the date of this order the second named fourth defendant do make file and serve a list of the following documents verified by affidavit, namely, the documents in the subpoena served on 30 March 2009.
4. Within 14 days from the date of this order the third defendant do make file and serve a list of following documents verified by affidavit:
4.1 written communications between the third defendant and Mirvac or Mirvac-Fini in relation to the provision of waterproofing services after 1 January 2006;
4.2 written communications between the fourth defendants and Mirvac or Mirvac-Fini in relation to the provision of waterproofing services after 1 January 2006;
4.3 written communications between the third defendant and the second defendant in relation to the provision of waterproofing services to Mirvac or Mirvac-Fini after 1 January 2006;
4.4 written communications between the fourth defendants and the second defendant in relation to the provision of waterproofing services to Mirvac or Mirvac-Fini after 1 January 2006;
4.5 invoices from the third defendant and any other firm or entity controlled by the fourth defendants for the provision of waterproofing services to Mirvac or Mirvac-Fini after 1 January 2006.
31 In response to that subpoena, Ms Goss wrote to the solicitors for the plaintiffs in a letter which is annexed by Mr Metaxas to his affidavit of 7 July 2011. That letter makes it clear that WA Project Waterproofing has, or in 2009 had, documents coming within the terms of the subpoena.
(Page 10)
- The subpoena is not, of course, limited to waterproofing services provided to the Mirvac Fini companies or on projects where Waterproofing WA had been engaged.
32 What is most significant with regard to this application for discovery is the failure to date by the plaintiffs to plead a sustainable case against either Leric or the fourth defendants. To determine whether a class of documents may be relevant, the court should consider the pleadings, together with the conduct and admissions of the parties and the nature of the action: Youlden Enterprises [5]. But the court has a discretion to order discovery before pleading in an appropriate case: Erlistoun Gold Pty Ltd (formerly Erlistoun Gold NL) v Worth Investments Pty Ltd [1999] WASCA 3. In Erlistoun Gold, at first instance, the master dealt with the application for pre-defence discovery on the basis that a statement of claim, although defective, existed and the plaintiff would be endeavouring to plead precisely the same causes of action which were already inadequately pleaded. In exercising his discretion whether to order discovery, the master had regard to the fact that most of the facts were within the knowledge of the defendant and not the plaintiff, and the parties were in a fiduciary relationship. The Full Court dismissed an appeal from that decision. White J said:
It must, I think, be rare indeed for an order for discovery to be made against a defendant before the plaintiff has properly formulated his statement of claim, albeit without detailed particulars of all complaints. Usually, such an order will not be made until at least the nature of the plaintiff's case has been identified. The present case is, however, as I have already mentioned, not one in which the nature of the plaintiff's case is in fact unidentified. The plaintiff's claims are for breach of the Heads of Agreement and the plaintiff has, in the statement of claim (albeit defectively) indicated the complaints he makes. The avowed intention of the plaintiff is to replead the statement of claim in proper form - not, as I understand it, to plead entirely new and hitherto undisclosed claims against the defendant - and the Order of the learned Master was made on that understanding [23].
33 In Gollin Holdings Pty Ltd v Adcock [1981] 1 NSWLR 691, to which White J referred in Erlistoun Gold, the plaintiff had pleaded. Discovery was sought to enable the plaintiff to complete a narrative statement of facts which was, in effect, a particularised statement of the very many transactions which were to be considered by the court. That narrative was to be limited to the allegations already made in the statement of claim. The documents sought in discovery were to delineate, with accuracy, a claim already made.
(Page 11)
34 The present case is quite different. The plaintiffs have attempted to plead against the third and fourth defendants. The defect in their plea was not confined to a lack of particularity. In striking out the relevant paragraphs of the statement of claim, I held that the statement of claim did not state the facts on which the conclusion of a breach of trust by the first defendant, and participation by the other defendants in a dishonest and fraudulent design by the first defendant, could be found: Mantel v Waterproofing WA Pty Ltd [2011] WASC 77 [24], [34]. Despite the fact that the plaintiffs are seeking defined categories of documents, and not more general discovery, it is in relation to a case where they have not set out the facts on which they base their claim. It is difficult to avoid the conclusion that they are looking for whether they have a case, and if so what it is, rather than documents to enable them to state their case with the required particularity.
35 In this application, as in any case management application, I must have regard to how best to attain the objects set out in O 1 r 4B(4), including the just determination of the litigation. I am not satisfied that ordering discovery, even in the limited terms sought, in advance of a plea is the best way to attain those objects.
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