Newport Quays Pty Ltd v The Urban Renewal Authority - [2012] SASC 84

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
NEWPORT QUAYS PTY LTD & ORS v THE URBAN RENEWAL AUTHORITY & ORS
[2012] SASC 84
Reasons of Judge Lunn a Master of the Supreme Court
25 May 2012
PROCEDURE
Application for pre-action disclosure under 6R 32 - the threshold test - need for any disclosure to be for an anticipated action in this Court and not for any arbitration between the parties - threshold test only relates to a proposed cause of action and not any possible ground of defence - onus of proof under s 54 of the Fair Trading Act for showing reasonable grounds for a representation - cause of action under s 56 Fair Trading Act for a misrepresentation by silence - duty to disclose - some orders made for pre-action disclosure.

NEWPORT QUAYS PTY LTD & ORS v THE URBAN RENEWAL AUTHORITY & ORS
[2012] SASC 84
JUDGE LUNN:
Reasons on plaintiffs’ application for pre-action disclosure of documents
Abbreviations

In these reasons:
“The Consortium” is the three plaintiffs and their parent companies collectively;
“LMC” is the Land Management Corporation, a corporation under the Public Corporations Act 1993. It was originally the first defendant in this action, but the Urban Renewal Authority, which is its successor, has been substituted in its place;
“the Government” is the State Government of South Australia at the relevant time;
“the PDA” is the Port Adelaide Waterfront Redevelopment Project Development Agreement made between LMC and the Consortium;
“the EPA” is the Environment Protection Authority;
“the DAC” is the Development Assessment Commission;
“SafeWork” is SafeWork SA, a State Government division of the Department of the Premier and Cabinet;
“AB Cement” is the cement making plant of Adelaide Brighton Ltd at Birkenhead;
“Pivot” is the Incitec Pivot fertiliser manufacturing plant at Port Adelaide;
“Shell” is the Shell Petroleum fuel depot at Birkenhead.
Background
Although the affidavit evidence was far broader, this summary is confined to those matters which are relevant to the decisions to be made under 6R 32. There was a large area of waterfront land at Port Adelaide which was owned by the State of South Australia and which the LMC was given the responsibility to develop. It was divided into nine precincts which were to be developed progressively. In 2002 LMC called for expressions of interest from developers who would undertake the development of the whole of the project. The Consortium was the successful tenderer.
The EPA had raised misgivings about the suitability of residential development within a radius of AB Cement because of problems with airborne dust from it which could affect the development of Precinct 3. Before October 2004 the second defendant gave a written undertaking (“the undertaking”) to the Consortium as follows:
LMC has offered to procure an undertaking from the South Australian Government (“Government”), that the Government will use all reasonable endeavours to ensure an appropriate resolution of the emission control precondition in the Approved PAR for the undertaking of residential or other “sensitive” development in Precinct 3. In this regard I am aware that the Consortium has advised LMC that such a Government undertaking is a precondition to the Consortium entering into the Development Agreement.
In response to LMC’s offer to the Consortium to procure such an assurance from the Government, and in my capacity as Minister for Infrastructure, I provide the following undertakings:
·Subject to the provisions of the Development Agreement, the Government will use all reasonable endeavours to ensure that appropriate measures are implemented to control future emissions from stockpile areas south of the Adelaide Brighton Cement main operating plant, to the extent of the requirements of the Environment Protection Act, by the time period specified in the Precinct Development Master Program for the Developer/Consortium to commence residential/“sensitive” development of Precinct 3. It should be noted that the EPA is an independent body and not subject to Ministerial direction in relation to licensing requirements.
·Should the Government be unable to procure the implementation of the appropriate measures referred to above by the specified time period, and as a result, the Developer/Consortium is prevented from undertaking residential/“sensitive” development of Precinct 3 by the time period specified in the Precinct Development Master Program, the Consortium’s only rights will be as specified in clause 16.7.6(d) of the Development Agreement.
·The undertakings contained in the preceding two bullet point paragraphs will cease to apply if:
(i)The Development Agreement is terminated for any reason whatsoever prior to commencement of development of Precinct 3;
(ii)The time period for development of Precinct 3 as specified in the Precinct Development Master Program is brought forward for any reason.
On 25 October 2004 LMC and the Consortium executed the PDA. In broad terms, it provided for the Consortium to build just under 2000 residences of various types on the subject land within a specified timeframe, but subject to extensions being granted.
By the end of 2007 the development of Precinct 1 had been successfully completed. There were then problems about obtaining planning approval for the development of Precinct 2B. Ultimately the DAC refused to approve it.
In 2009 and 2010 the Consortium sought to bring forward the developments of Precincts 5, 8A and 8B before proceeding with other Precincts. Problems were encountered with the DAC and local community opposition. The DAC and SafeWork were concerned about the impact on these Precincts of any explosion of combustible material at Pivot and Shell. The Consortium claims that it had no prior knowledge of these potential problems. There were communications between the parties about whether Pivot could be relocated, but nothing eventuated. In May 2011 the Consortium deferred the development of Precinct 5 and returned deposits to purchasers of properties in that development.
In April 2011 the time for compliance with the undertaking for Precinct 3 had expired, but the problem about dust from AB Cement had not been resolved. On 24 October 2011 LMC notified the Consortium that an extension of time for works under the PDA had been approved.
On 31 October 2011, with minimal prior notice to the Consortium, the Premier publically announced the termination of the PDA and notices of termination were served on the Consortium pursuant to clause 32.1 of the PDA.[1] The Consortium has accepted this termination, but claims it was effected capriciously or in bad faith.
[1] This clause is set out below.
This action
On 9 December 2011 the Consortium commenced this action under 6R 32.[2] It seeks disclosure of documents before instituting any substantive action in respect of four potential claims by it against various of the defendants as are set out below. The defendants oppose any order for disclosure.
[2] This Rule is set out below.
On 22 March 2012, with the consent of the parties, I directed that the plaintiffs’ exhibits THB5, THB8 and THB12 be placed in a sealed envelope which was not to be opened other than by direction of a Judge or Master, and with liberty to any interested person to apply to inspect those documents. These exhibits were stated to be commercially confidential.
The basis of the claims of the Consortium for pre-action disclosure of documents has changed somewhat during the course of the proceedings as a result of various objections raised by the defendants in correspondence and in their Outline of Argument. In these reasons I deal with the issues as they were formulated by counsel in the oral argument. As it is only a claim for pre-action disclosure, I do not pursue any of the issues except insofar as they are necessary to make, or refuse, any order under 6R 32.
It was agreed that, at this stage, I would only decide whether the defendant should make pre-action disclosure by filing and serving a list of documents. It would then be open to the defendants to claim privilege or public interest immunity for any documents in that list. Any contest about whether they were entitled to claim such privilege or immunity would be left until after the list had been filed.
The law
6R 32 relevantly provides:
32—Investigation
(1)If the Court is satisfied, on application by a person (the plaintiff) that the plaintiff may have a good cause of action and requires further information—
(a)to determine whether a cause of action exists; or
(b)to formulate the claim properly; or
(c)to determine against whom the claim lies,
the Court may exercise the investigative powers conferred by this rule in anticipation of an action.
(2)The Court may, if satisfied that a person may be in possession of evidentiary material relevant to the possible cause of action, make an order imposing one or more of the following requirements—
(a)to disclose to the Court or to the plaintiff whether the person is or has been in possession of relevant evidentiary material and, if so, to disclose full particulars of relevant evidentiary material that is, or has been, in the person's possession;
Rule 5.3 of the New South Wales Uniform Civil Procedure Rules provides:
5.3 Discovery of documents from prospective defendant
(1) If it appears to the court that;
(a) the applicant may be entitled to make a claim for relief from the court against a person (the prospective defendant) but, having made reasonable inquiries, is unable to obtain sufficient information to decide whether or not to commence proceedings against the prospective defendant, and
(b) the prospective defendant may have or have had possession of a document or thing that can assist in determining whether or not the applicant is entitled to make such a claim for relief, and
(c) inspection of such a document would assist the applicant to make the decision concerned,
the court may order that the prospective defendant must give discovery to the applicant of all documents that are or have been in the person’s possession and that relate to the question of whether or not the applicant is entitled to make a claim for relief. …
In some respects this New South Wales Rule is similar to 6R 32. 6R 32 requires as a threshold for considering making an order that “The plaintiff may have a good cause of action”, which is very similar to the New South Wales “The applicant may be entitled to make a claim”.[3] In respect of the threshold issue for pre-action disclosure the New South Wales Court of Appeal has stated in Hatfield v TCN Channel Nine Pty Ltd[4] that the relevant principles are as follows:
46    It is convenient to set out the key principles relevant to an application for preliminary discovery. …
47    First, “[i]n order for it to ‘appear’ to the Court that the applicant ‘may be entitled’ to make a claim for relief, it is not necessary for the applicant to show a prima facie or pleadable case”.
48    Secondly, while “the mere assertion of a case is insufficient…[i]t will be sufficient if there is reasonable cause to believe that the applicant may have a right of action against the respondent resting on some recognised legal ground”.
49    Thirdly, “belief requires more than mere assertion and more than suspicion or conjecture. [It] is an inclination of the mind towards assenting to, rather than rejecting a proposition. Thus it is not sufficient to point to a mere possibility. The evidence must incline the mind towards the matter or fact in question. If there is no reasonable cause to believe that one of the necessary elements of a potential cause of action exists, that would dispose of the application insofar as it is based on that cause of action”. … The use of the word “may” indicates the court does not have to reach “a firm view that there is a right to relief”.
…
52    Sixthly, … “the rule is to be beneficially construed, given the fullest scope that its language will reasonably allow, with the proper brake on any excesses lying in the discretion of the Court, exercised in the particular circumstances of each case”.
[Citation of authorities omitted. In the main, they are authorities on the Federal Court O15A r6.]
I consider this statement of the principles should be applied under 6R 32 as the threshold test (“the threshold test”). I do not consider there is any material difference between “if the Court is satisfied”[5] at the commencement of 6R 32(1) and “if it appears to the Court” as is stated in the NSW UCPR 5.3(1). If the threshold test is satisfied, the Court then has to exercise a further judicial discretion as to whether the order should be made.
[3]    A similar form of Federal Court Order 15A r 6 turns on establishing there “is reasonable cause to believe”, which is not as close to 6R 32(1) as the New South Wales Rule.
[4]    (2010) 77 NSW LR 506 at [46]-[52].
[5]    This means on the balance of probabilities: Belcar Pty Ltd v Premier Automotive Group Australia Pty Ltd (2007) 249 LSJS 403.
Jurisdiction objection
Clause 36 of PDA is an arbitration provision requiring disputes between the parties to be referred to arbitration.[6] The defendants submitted that the purpose of the proceedings was to obtain their documents for use in such an arbitration and not in any future action in this Court. The submission was put both as to the jurisdiction of the Court under 6R 32 and as to the exercise of the general discretion to make an order.
[6] I need not deal with the Consortium’s submission that its operation does not survive the termination of the PDA.
6R 32(1) only allows this Court to exercise its powers under that Rule “in anticipation of an action”. 6RR 4(1) and 28(1) define an “action” as a proceeding in the Supreme Court. Although I am not aware of any authority on the point, I consider this means that the power under 6R 32(1) can only be exercised if the plaintiff has an anticipation of commencing an action for substantive relief in this Court.[7] In my view, it is not open to the plaintiff under 6R 32 to seek pre-action disclosure for the purpose of using the documents disclosed in a subsequent arbitration between the parties.
[7] The point has been previously argued, but not decided, on whether a plaintiff under 6R 32 could subsequently elect to pursue its substantive claim in the Federal Court, but when the point has been raised, that plaintiff has always then undertaken to bring any further action in this Court.
The Consortium has sworn in its supporting affidavit that it seeks orders under 6R 32 for the purpose of instituting a further action against the defendants. Although the plaintiffs’ counsel submitted it had been deposed that it was to be an action in this Court, that is not expressly stated in the plaintiffs’ affidavits. However, by a letter of 15 May 2012 the plaintiffs’ solicitors have given an undertaking that any such action will be in this Court. That is inconsistent with it arbitrating its claims under Clause 36 of the PDA.
Section 8 of the Commercial Arbitration Act 2011 provides:
8—Arbitration agreement and substantive claim before court
(1)A court before which an action is brought in a matter which is the subject of an arbitration agreement must, if a party so requests not later than when submitting the party's first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.
The operation of s 8 is dependent upon the defendants requesting at the appropriate time that the disputes be referred to arbitration. There is no evidence from the defendants that if the plaintiffs did institute an action in this Court for substantive relief, they would then seek to have it referred to arbitration under s 8. If they do not make the request under s 8, the substantive action would continue regardless of the arbitration provision.[8] Accordingly, I find that the Consortium, if it pursues any claim against the defendants to which the documents sought are relevant, will pursue that claim in this Court, and therefore this Court has jurisdiction to entertain this action.
[8] Russell on Arbitration, 21^st Edition, 325.
The Evidence
The Consortium filed extensive affidavits about the development and its dealings with the defendants. The defendants only filed one short affidavit from their solicitor merely exhibiting some correspondence. They did not seek to contradict the facts deposed to in the Consortium’s affidavits.
The defendants took numerous objections to the admissibility of various parts of the affidavits filed by the Consortium. I received those affidavits de bene esse.
Insofar as the objections were that the passages objected to were assertions, submissions or speculative opinions, I have not acted on them. However, insofar as I have acted on inferences, I have drawn those inferences from facts which have been properly deposed to. I have not needed to resort to many of the passages objected to in reaching my conclusions. It would be tedious and pointless seriatim to go through each of the many objections and specifically rule on each of them.
Claim for uncapped damages for capricious or bad faith termination
Clause 32.1 of the PDA provided:
32.1 LMC Entitlement to Exercise
32.1.1During the undertaking of the Redevelopment Project pursuant to this Agreement, LMC has the right (in its absolute discretion but subject to clause 32.1.3 of this Agreement) to elect to terminate this Agreement.
32.1.2LMC is entitled to exercise its discretionary termination right under clause 32.1.1 of this Agreement:
(a)at any time during the undertaking of the Redevelopment Project pursuant to this Agreement;
(b)even though no Consortium Default Event may exist at that time;
(c)without having to give either or both of the Developer or the Consortium any reason for LMC exercising such discretionary termination right.
32.1.3LMC must not exercise its discretionary termination right under clause 32.1.1 of this Agreement in a capricious or bad faith manner, which the Parties acknowledge will be deemed to occur if LMC attempts to exercise such discretionary termination right in either or both of the following two (2) circumstances:
(a)pursuant to LMC’s statutory discretions, in a manner not authorised by the statute under which LMC is entitled to exercise such statutory discretions; or
(b)for the predominant purpose of LMC then dealing with a third party in respect of LMC’s interest in the whole or a portion of the balance of the Development Area which has not been transferred to (or is otherwise not the subject of Sale Conditions with the Developer/Consortium (or a nominated Relevant Land SPV) as at the time of LMC exercising such discretionary termination right), to achieve a financial return which is higher than the financial return which LMC would have obtained if that balance of the Development Area had been Developed in accordance with the provisions of this Agreement.
The Consortium seeks further documents on a potential cause of action for damages based on the termination being capricious or in bad faith contrary to sub-clause 32.1.3. In order to satisfy the threshold test for this claim it is not necessary for me to go into much of the argument and, in particular, to its relation to other clauses in the PDA or to parol evidence about the formation of the PDA. Doubtless those arguments will be pursued in any trial.

I do not accept the defendants’ submission that the Consortium’s right to pursue a claim for a termination which was capricious or in bad faith is confined only to the circumstances in 32.1(a) and (b). The contrary is clearly arguable. A capricious or bad faith manner is to be deemed to have occurred in the circumstance of (a). Subparagraph (a) is primarily directly to LMC having acted in excess of its powers. That could only be capricious or in bad faith if LMC knowingly so acted in excess of its powers. However, (a) also encompasses unknowingly acting in excess of its powers which, on the proper meanings of capricious and bad faith, would not be either of them. It only becomes capricious or in bad faith because 32.1.3 artificially deems it to be so, even though it could not otherwise be regarded as capricious or in bad faith. This is consistent with (a) being merely an instance of conduct being capricious or in bad faith and not an exhaustive statement of it.
“Capricious” as defined in the Macquarie Dictionary (3^rd Edition, p 292) means “Subject to, led by, or indicative of caprice or whim”. “Caprice” is defined as “A sudden change of mind without apparent or adequate motive; whim – a tendency to change one’s mind without apparent or adequate motive”.[9] Hence, whether the termination was capricious (or in bad faith) focuses on the motives of LMC in terminating the PDA. It requires a quantitative evaluation of the objective adequacy of the motives. As with most findings about states of mind, it can generally only be ascertained by inference.
[9] See also Secured Income Real Estate Australia Ltd v St Martin’s Investments Pty Ltd (1979) 144 CLR 596.
The Consortium received only a few minutes warning from the LMC that the Premier was about to make a press announcement that the LMC was terminating the PDA. Later that afternoon the Premier and the second defendant issued a press release indicating that the Government had made certain decisions which resulted in the LMC terminating the PDA. Shortly before this, the then Member of Parliament for Port Adelaide, the Honourable Kevin Foley, had announced his intention to retire from Parliament and a by-election was expected in his seat which included the development site. There had been groundswell of constituents in that electorate who were not happy with the development. There is a reasonable possibility that the termination was linked to the forthcoming by‑election and that, if so, it would have been capricious on the part of LMC. (There is no explanation about why the termination was first publicly announced by the Premier and the second defendant rather than by LMC.)
On 23 April 2010 an executive of LMC had said he wished LMC had adopted a procedure of “super-lotting” for the development, which was impliedly contrary to the Development Plan contained in the PDA. This may possibly bring the Consortium within a claim under clause 32.1.3(b) of the PDA.
As will be related later, the Government had not complied with the undertaking of 4 October 2004. The termination of the PDA may well have relieved the defendants from some of the consequences of not complying with it. This may have been a possible capricious or bad faith motive for the termination.
The matters related in the last three paragraphs are sufficient to satisfy the threshold test for a claim for a termination in a capricious or bad faith manner.
On this topic the Consortium sought to make something of the failure of the defendants to disclose any reasons for terminating the PDA. Under clause 32.1.2(c) of the PDA they were not obliged to give reasons. On this topic I do not draw any inference against them for not having done so. However, I draw inferences from the evidence of the Consortium which the defendants have not sought to contradict.
Claim against second and third defendants for wrongful interference with the contractual relationship between the Consortium and LMC
It may well be that any documents relating to this claim will already be disclosable in respect of the claim for termination in a capricious or a bad faith manner.[10]
[10] Under 6R 32 the second and third defendants can be ordered to make disclosure of documents relating to the claim by the Consortium against the first defendant only, even though they themselves would not be defendants to that claim.
There was considerable debate about what control the second defendant had over LMC. It is a convoluted question and it is not necessary for me to go into it. The ultimate issue in any substantive action will be whether the second and third defendants did wrongfully interfere in the contractual relationship between the Consortium and LMC. This is a question of fact, and not a question of law of the right of such defendants to do so.
The press releases of the Premier and the second defendant, as mentioned above, are sufficient to satisfy the threshold test under 6R 32 for the documents relating to this claim. I reject the defendants’ submission that it is no more than speculation.
The undertaking of 4 October 2004 as misleading or deceptive conduct
The Consortium contends that the undertaking[11] can give rise to a claim by it under s 56 of the Fair Trading Act 1987 (“the FTA”) for misleading or deceptive conduct.[12] It contends it would not have entered into the PDA but for that undertaking.
[11] It is quoted above.
[12] Originally the claim was to be under s 52 of the Commonwealth Trade Practices Act 1974, but the Consortium now acknowledges that that Act does not apply to the second defendant and it now seeks to pursue that claim here under s 56 of the Fair Trading Act (although the relevant parts of it have since been repealed).
The defendants’ answer to this claim was that the undertaking related to future conduct and there could only be a claim for it under the Fair Trading Act if the second defendant at the time of making the representation did not have reasonable grounds for making it. This raises a number of issues which were not addressed in submissions.
Section 54 of the FTA provides:
54—Representations
(1) For the purposes of this Part, where a person makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act) and the person does not have reasonable grounds for making the representation, the representation will be taken to be misleading.
(2) For the purposes of the application of subsection (1) in relation to a proceeding concerning a representation made by a person with respect to any future matter, the person will, unless the person adduces evidence to the contrary, be taken not to have had reasonable grounds for making the representation.
Section 54(2) is a presumption that the representation was made without reasonable grounds. Thus, in any substantive action the onus would be on the second defendant to show that he had reasonable grounds. The issue of reasonable grounds for the undertaking is not addressed at all in the evidence before me. If a substantive claim was to be decided on that evidence which is before me, the Consortium would succeed because the presumption in s 54(2) would not have been displaced.
In any event, R 32 only requires the Court to be satisfied that the plaintiff may have a good cause of action. 6R 30(3) provides:
(3)A claim is based on a cause of action (that is, some basis in law and fact on which the plaintiff asks the court for a remedy).
The plaintiff would make out a cause of action for the purposes of 6R 32 if it showed a sufficient case satisfying the threshold test for each of the elements of that cause of action. An inquiry as to whether there is a cause of action does not need to address whether the defendant may have a good ground of defence to such a cause of action. The point is neatly illustrated by a major difference between the NSW UCPR 5.3, as quoted above, and 6R 32. The NSW Rule is in wider terms of “entitled to make a claim for relief” which requires an inquiry into what defences the defendant may have to a claim based on such a cause of action. As was stated by the Court of Appeal in New South Wales in Hatfield v TCN Channel Nine Pty Ltd, above, at [51]:
… “the question posed by [UCPR 5.31(1)] … is not whether the applicant has sufficient information to decide if a cause of action is available against the prospective respondent [but] … whether the applicant has sufficient information to make a decision whether to commence proceedings in the Court. Accordingly, an applicant for preliminary discovery may be entitled to discovery in order to determine what defences are available to the respondent and the possible strength of those defences”. … Thus application of the rule will not be precluded by the fact that the applicant already has available evidence establishing a prima facie case for the granting of relief, as there might be matters of defence which could defeat a prima facie case.
[Citations of authorities omitted.]
Hence, on the threshold test under 6R 32 the Court is not concerned with whether the second defendant can make out any defence displacing the presumption in s 54(2) and showing that he had reasonable grounds to make the representation. Accordingly, I find the threshold test satisfied for this part of the application.
Claim for failure to disclosure risks from Pivot
The Consortium seeks disclosure in relation to a potential claim for misleading or deceptive conduct against the first or the second defendant for failing to disclose to the Consortium that Precinct 5[13] could be affected by any explosion from Pivot. The second application (FDN14) sought disclosure of communications between LMC and a number of entities from 1 January 2003 to 25 October 2004 concerning a perceived risk of explosions at Pivot. This is confined to communications before the PDA was made. However, in the course of argument counsel for the Consortium also sought documents on this topic for the subsequent period in which the parties had dealings concerning the development plans for Precinct 5.
[13] Otherwise known as “Dock 1”.
It is a potential claim under s 56 of the FTA for representations by silence. This means that the Consortium must show there was some duty on the first or the second defendant to make disclosure to it on this topic.
Clause 16.1.4 of the PDA provides:
Despite anything expressed or implied to the contrary in this Agreement … the Consortium acknowledge that:
(a)LMC gives no warranty as to the accuracy or completeness of any of the information which LMC provides to … the Consortium concerning the Precinct …
…
(ii) provided by LMC to the … Consortium … at any time and from time to time after the date of this agreement relating to any of the matters identified in clause 16.1.1 of this Agreement
including the accuracy of any reports obtained by LMC from any consultant or third party concerning that Precinct.
(b)The … consortium will make their own investigation and assessment of any such information or report supplied by LMC …
[Underlining added.]
This clause is a powerful bar to there being any duty of disclosure on this topic.
The Consortium submitted that there was some evidence that the EPA had knowledge in 2003 about this potential problem. However, the passage in the letter of 15 July 2010 from the EPA to the DAC, which was relied upon by the Consortium, appears to relate to investigations in 2003 about noxious gasses and not about potential explosions. There is no evidence that anyone was aware of the implications of any explosion at Pivot for Precinct 5 prior to the PDA being made. Even if the EPA, or any other Government agency was aware of it, there is no evidence that LMC or the second defendant was, or should have been, aware of it. Nothing was said about why the Consortium could not have made its own inquiries from the EPA on the topic.
There is some evidence that during the planning stages of Precinct 5 in 2008 the EPA and the local Council were aware of the problem. However, there is no evidence that LMC or the second defendant became aware of it during the planning stages of Precinct 5. Even if LMC did then become aware of it, clause 16.1.4 of the PDA, as quoted above, is against there being any duty of disclosure of it to the Consortium. Even if the second defendant was aware of it in this period, nothing has been put forward about his legal duty to disclose it to the Consortium. There was no reason why the Consortium could not have made its own inquiries of the EPA.
Accordingly, the threshold test for disclosure on this topic has not been satisfied and no order will be made on it.
General discretion to order disclosure
The defendant submitted that disclosure should be refused in the discretion of the Court because of the likelihood that the documents would be used for an arbitration and not for an action in this Court. I have already dealt with this point as an objection to jurisdiction. For the reasons given above, on the evidence there is no likelihood that the plaintiffs’ claims, if pursued, would be pursued by way of arbitration and not by an action in the Court. Hence, there is no reason on this ground to exercise the general discretion against the Consortium.
In respect of the disclosure related to any claim for capricious termination, LMC argued it would circumvent clause 32.1(c) of the PDA, which is quoted above, which exempts the LMC from having to give reasons for exercising its termination right. It argued that as a matter of discretion the Court should not allow this to be circumvented by an order for disclosure. I do not accept this. Clause 32.1.3 envisages that there could be a claim for a wrongful termination which was capricious or in bad faith. Such a claim of necessity would involve examining the motives of LMC in effecting the termination. On the trial of any such claim the documents evidencing the intention of LMC in terminating the PDA will be of considerable importance. The purpose of sub-clause 32.1.2(c) is likely to have been to protect LMC as a Government agency from any judicial review of its decision, but that is not the action which is now being contemplated by the Consortium. Sub-clause 32.1.2(c) does not provide any discretionary consideration against ordering disclosure.
On the three potential claims on which I have found that the threshold test is satisfied I accept that the Consortium requires further information to determine whether it does have a good cause of action and, if so, to formulate its claim properly. While it is theoretically possible for the Consortium now to institute a substantive action against the defendants on these proposed causes of action, and to obtain the documents which they seek by the ordinary processes of disclosure under 6R 136 in that action, it is not in the interests of justice that it should be required to take that course. That course will almost certainly lead initially to inadequate pleadings in the new action and significant amendments to the pleadings after disclosure, and possibly to the discontinuance of some or all of the causes of action. That action will proceed far more expeditiously and economically, if it is pursued by the Consortium, if first it has the benefit of the disclosure which is now to be ordered. This is a strong discretionary factor in favour of making the orders.[14]
[14] Gerard Industries Pty Ltd v Wee (1986) 40 SASR 329; Kinross v SA Health Commission (1995) 182 LSJS 167; Szumylo v IXIA Pty Ltd, Wicks J, [2001] SASC 262.
Hence, the discretion of the Court should be exercised to make the orders for the pre-action disclosure insofar as they are appropriate.
Orders to be made
The orders sought by the Consortium are contained in its second application (FDN14). The defendants complain that many of them are too wide and not sufficiently related to 6R 32(1)(a) and (b). The Consortium has been too detailed and specific in many of the orders which it has sought. In my experience, the preferable course is to make an initial order in general terms, but with liberty to apply for supplementary disclosure if the documents produced properly give rise to any basis for disclosure of other documents under 6R 32. Accordingly, I propose to make an order in the following terms:
1That the first defendant make pre-action disclosure to the plaintiffs of the evidentiary material in its possession relating to, or evidencing, its deliberations and communications with representatives of the Government of South Australia, the second defendant, the Department for Transport and Infrastructure (“the Department”) and the Office of the Premier of South Australia in respect of, and the reasons for, the termination by the first defendant on 31 October 2011 of the PDA.
2That the second defendant make pre-action disclosure to the plaintiffs of the following evidentiary material in his possession and that of the Department:
(1) relating to, or evidencing, their deliberations upon and communications with LMC and the Department in respect of, and the reasons for, the purported termination of the PDA by the LMC; and
(2) evidencing the steps taken by them, or on their behalf, to comply with the undertaking.
3That the third defendant make pre-action disclosure to the plaintiffs of the Cabinet briefings papers, agendas and minutes between 28 April 2011 and 31 October 2011 insofar as those documents deal with, or are related to, the termination of the PDA.
4The defendants are to file their list of documents within 28 days or such further time as the Court may allow.
5Liberty to the plaintiffs to apply for supplementary disclosure under 6R 32.
6Costs reserved.
7Fit for counsel.
8Other than is stated above, the applications for pre-action discovery in FDN14 are dismissed.
I will give counsel the opportunity to speak to these minutes before any order is made. However, if any party seeks any significant change to them, written notice of the proposed changes should be given to my Clerk and the other party at least two business days before the adjourned hearing.
ADDENDUM:
The proposed orders in [51] above were not the final orders made at the hearing on 25 May.