Pluim Constructions Pty Ltd v Tuggerah Business Park Pty Ltd
[1996] FCA 959
•8 NOVEMBER 1996
CATCHWORDS
PRACTICE AND PROCEDURE - preliminary discovery - whether reasonable cause to believe the applicant has or may have a right to obtain relief against a person.
Trade Practices Act 1974 (Cth) s52(1), s82
Federal Court Rules O15A r6
PLUIM CONSTRUCTIONS PTY LTD v
TUGGERAH BUSINESS PARK PTY LIMITED & ORS
No. NG 728 of 1996
CORAM: BRANSON J
PLACE: SYDNEY
DATE: 8 NOVEMBER 1996
IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 728 of 1996
GENERAL DIVISION )
BETWEEN: PLUIM CONSTRUCTIONS PTY LTD
ACN 001 029 198
Applicant
AND: TUGGERAH BUSINESS PARK PTY LIMITED
ACN OO3 658 473
First Respondent
TERRACE TOWER GROUP PTY LIMITED
ACN 002 742 967
Second Respondent
TERRACE TOWER PTY LIMITED
ACN 002 832 304
Third Respondent
PATRICK HOULAHAN
Fourth Respondent
PATRICK HOULAHAN AND
ASSOCIATES PTY LIMITED
ACN 050 056 927
Fifth Respondent
J.S. NOMINEES PTY LIMITED
ACN 000 886 448
Sixth Respondent
LANLEX NO. 117 PTY LIMITED
ACN 064 274 139
Seventh Respondent
VINCENT TRAD
Eighth Respondent
CORAM: BRANSON J
PLACE: SYDNEY
DATE: 8 NOVEMBER 1996
MINUTES OF ORDER
THE COURT ORDERS THAT:
The application is dismissed.
The applicant is to pay the costs of the first to seventh respondents to be taxed if not agreed.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 728 of 1996
GENERAL DIVISION )
BETWEEN: PLUIM CONSTRUCTIONS PTY LTD
ACN 001 029 198
Applicant
AND: TUGGERAH BUSINESS PARK PTY LIMITED
ACN OO3 658 473
First Respondent
TERRACE TOWER GROUP PTY LIMITED
ACN 002 742 967
Second Respondent
TERRACE TOWER PTY LIMITED
ACN 002 832 304
Third Respondent
PATRICK HOULAHAN
Fourth Respondent
PATRICK HOULAHAN AND
ASSOCIATES PTY LIMITED
ACN 050 056 927
Fifth Respondent
J.S. NOMINEES PTY LIMITED
ACN 000 886 448
Sixth Respondent
LANLEX NO. 117 PTY LIMITED
ACN 064 274 139
Seventh Respondent
VINCENT TRAD
Eighth Respondent
CORAM: BRANSON J
PLACE: SYDNEY
DATE: 8 NOVEMBER 1996
REASONS FOR JUDGMENT
By an amended application dated 16 October 1996, the applicant seeks orders for preliminary discovery against each of the respondents pursuant to O15A r6 of the Federal Court Rules.
Order 15A r6 of the Federal Court Rules provides as follows:
"6. Where -
(a)there is reasonable cause to believe that the applicant has or may have the right to obtain relief in the Court from a person whose description has been ascertained;
(b)after making all reasonable inquiries, the applicant has not sufficient information to enable a decision to be made whether to commence a proceeding in the Court to obtain that relief; and
(c)there is reasonable cause to believe that that person has or is likely to have or has had or is likely to have had possession of any document relating to the question whether the applicant has the right to obtain the relief and that inspection of the document by the applicant would assist in making the decision -
the Court may order that that person shall make discovery to the applicant of any document of the kind described in paragraph (c)."
The relevant factual background to this application is not easily ascertained from the affidavits upon which the applicant placed reliance. I shall do the best that I can.
By a letter dated 15 May 1995 on a letterhead of the first respondent, addressed to the applicant, and signed by the fourth respondent as "Head Construction Manager", the applicant received the following advice with respect to the "Tuggerah SupaCenta Development":
"We confirm our intent to enter into a contract with your company for construction of the above project, in accordance with your amended tender letter dated 5 May 1995, for the Firm Lump Sum of $14,926,860.00." (emphasis in original)
The solicitor for the applicant, by an affidavit sworn on 4 September 1996, deposes to having been informed by the Managing Director of the applicant that "... the Executed Contract, with respect to the Supa Centa Project, was not exchanged until on or about 2 February 1996". No such contract has been placed in evidence. The solicitor goes on to assert in her affidavit that the contract documents -
"comprise a heterogeneous collation of documents which are mutually contradictory, the terms of which are mutually inconsistent calling alternately for a lump sum fixed price, 'no variations', price bill of quantities, an agreement which provided moreover for liquidated damages of $15,000 per day".
The Managing Director of the applicant has deposed to the fact that the AS 2124-(1992) contract "was to be used for the project". Certainly correspondence between the applicant and the first respondent, dated earlier than 2 February 1996, which assumes that there is a contract between them, has been placed in evidence. I am prepared to assume, in the applicant's favour, that there was a contract in existence between the applicant and the first respondent from approximately mid-1995.
Correspondence which passed between the fourth respondent, apparently acting on behalf of the first respondent, and the applicant between May 1995 and June 1996 has been placed in evidence. In nearly every instance the fourth respondent wrote on one of three differently styled letterheads of the first respondent. On at least one occasion he used the
letterhead of the second respondent. On another occasion he used the letterhead of a company "Crown Gardens Pty Limited".
Disputes arose between the applicant and the first respondent with respect to entitlements of the applicant pursuant to the contract between them. Various pieces of correspondence, all on one or other of the letterheads of the first respondent, addressed to the applicant and signed by the fourth respondent, make criticisms of the applicant's performance in respect of the Tuggerah Supa Centa project.
The Managing Director of the applicant has deposed to the fact that, under an AS 2124-(1992) contract, the role of the "superintendent" under the contract is critical to the resolution of disputes, to certification of progress payments and to other matters.
The heart of the applicant's claim for preliminary discovery is apparently to be deduced from the following sentence in the first affidavit sworn by its solicitor in support of its application:
"3.It is considered by the Applicant and by its solicitors that there is a well founded basis for preliminary discovery so as to allow the Applicant to determine whether or not it wishes to allege with respect to some or all of the following Directors of the Second Respondent, the Third Respondent, the Fifth Respondent, the Sixth Respondent and the Seventh Respondent in unison or as individuals and / or the Fourth and Eighth Respondents as individuals, so acted, or permitted or allowed their corporations to conduct themselves so that they directly or indirectly induced, or alternatively conspired together, or with others to induce a breach by the
First Respondent of its contract with the Applicant, alternatively to interfere with the contractual relationship between the First Respondent and the Applicant, by directly or indirectly, directing, arranging or causing the First Respondents' management and directors to act so that the First Respondent ceased to comply with its lawful obligations under the AS 2124 Contract between the Applicant and the First Respondent in that it failed to properly appoint, or appoint at all, or appoint a proper Superintendent and, to the end that the First Respondent did not pay money due under the contract, refused to approve variations, grant extensions of time, or direct the acceleration of works at the Supa Centa Tuggerah."
Little, if any, evidence has been placed before the Court on this application as to moneys allegedly due under the contract, or as to the circumstances surrounding refusals to approve variations, to grant extensions of time or to direct the acceleration of works at the Tuggerah Supa Centa.
Notwithstanding the reference in the sentence quoted above to the directors of the respondents, I assume that the applicant's case is that it has reasonable cause to believe that it may have a right to obtain relief from the respondents, or some of them, as opposed to the directors of the respondents who are not parties to the proceeding.
A later affidavit, sworn by the same solicitor pursuant to leave to supplement the affidavit evidence initially filed on behalf of the applicant, states that -
"It is considered by the Applicant and its Solicitors that there is a well founded basis for preliminary discovery in relation to five separate causes of action being: misleading and deceptive conduct, quantum meruit (following the First
Respondent's repudiation of the original Contract with the Applicant) and the torts of deceit, inducing breach of Contract and conspiracy."
This affidavit continues that "[i]n the premises, the Applicant seeks information which will allow it to assess whether or not it wishes" to make certain specific allegations against the first, the second and the sixth, the fourth and the fifth "or one of them", and the seventh respondent respectively.
I point out that O15A r6 of the Federal Court Rules is not premised upon whether it is reasonable for an applicant to give consideration to possible allegations, but upon whether there is reasonable cause to believe that the applicant has or may have a right to obtain relief against a person.
I assume from the failure to include the third respondent amongst those with respect to whom the applicant wishes to assess whether or not it wishes to make allegations, that it is not contended on behalf of the applicant that there is reasonable cause to believe that it may have the right to obtain relief against the third respondent. Order 15A r6(c) makes it plain that preliminary discovery under the rule may only be obtained against a person in respect of whom there is reasonable cause to believe that the applicant may have the right to obtain relief. The application must be dismissed so far as it is made against the third respondent.
So far as the first respondent is concerned, it is asserted in the later affidavit sworn by the applicant's solicitor that the applicant -
"seeks information which will allow it to assess whether or not it wishes to allege ...
that it [ie the first respondent] knowingly and deliberately deceived the Applicant as to the existence and identity of the Superintendent under the contract intending that the Applicant should rely on its untruths to its detriment;
Superintendent under the Contract; and the manner, method and payment of variations; and that it would be in a financial position to meet the Progress Claims of the Applicant as they fell due. [I assume that words have been unintentionally omitted from this portion of the affidavit.]
that it conspired with one or more of the other Respondents to delay and if possible avoid, carrying out its contractual obligations towards the Applicant;
that it allowed itself to be induced by one or more of the other Respondents to breach its contract with the Applicant and to otherwise interfere with the business relations of the Applicant;
that it so repudiated the Contract between the parties that the Applicant is able to plead a case in quantum meruit against it the First Respondent; and
that it conspired with one or more of the Respondents to cause damage to the Applicant by unlawful and improper means including the breaching of its contract with the Applicant; the wrongful withholding of monies in order to coerce the Applicant and others into varying the contractual terms between the Applicant and the First Respondent."
As to the existence and identify of the superintendent under the Contract, correspondence placed in evidence on behalf of the applicant shows that on both 5 and 6 December 1995 the applicant wrote to "Tuggerah Business Park" and marked the letter "ATTENTION: THE SUPERINTENDENT". By letter dated 13 December 1995, the fourth respondent, writing on a letterhead of the first respondent and describing himself as "Project Management Consultant", made the following request of the applicant:
"Please address all correspondence to the attention of Superintendent in accordance with the contract to:
SAUNDERS DESIGN
Level 6
98 Arthur Street
NORTH SYDNEY NSW 2060."
On 22 December 1995, one Jon Kennedy, writing on a letterhead of the first respondent and describing himself as "Contracts Manager", advised that "we have been authorized on behalf of the superintendent to respond to your letter of 14th December 1995". The letter advised that "[w]e are unable at this point in time to grant practical completion of the project ...".
By letter dated 22 January 1996 on the letterhead "Saunders" and signed "Paul Saunders, Managing Director", the fourth respondent was advised as follows:
"Further to our conversation and your request for assignment of the Superintendent representative, we wish to respond as follows.
We have major legal implications and professional liability exposure and cannot see an effective resolution for both parties which in any way or form necessitates us agreeing or implying that we actively fulfilled the role of 'Superintendent' on Tuggerah Supa Centa project, as defined by AS 2124/1992 Building Contract, for the following reasons.
First, acknowledging that we acted in the role of 'Superintendent' as, in reality, this function and role was undertaken by yourself from the start by appointing the contractor through to completing the project;
..."
By a letter dated 27 May 1996 on a letterhead of the first respondent, and signed by the fourth respondent over the title "Project Management Consultant", the applicant was advised as follows:
"We confirm the Principal's appointment of Patrick R. Houlahan in the position of Superintendent in conjunction with his role as the Principal's representative for Project Management of the Project."
By a letter dated 7 June 1996 on a letterhead of the first respondent "David I. Dinte, Group Managing Director", the applicant was advised:
"We confirm the appointment of Mr David Warren in the role of Superintendent for the ... project effective from 11 June 1996."
By a letter dated 26 June 1996 on a letterhead of the first respondent and signed by the fourth respondent over the title "Project Management Consultant", the applicant received the following advice:
"On behalf of the Principal, we confirm received advice from Mr David Warren this day withdrawing from the role of Superintendent.
The Principal will confirm an appointment with appropriate urgency."
The above correspondence, read in the light of other evidence placed before the Court, in my view, gives reasonable cause to believe the following:
(a)that although an executed contract between the applicant and the first respondent was apparently not exchanged until 2 February 1996, earlier dealings between them were conducted on the basis that a contract between them did exist, and that such contract required the appointment of a superintendent;
(b)the fourth respondent, with the apparent authority of the first respondent, advised the applicant in mid-December 1995 that Saunders Design was acting as superintendent under the contractual arrangements between the applicant and the first respondent;
(c)a person, apparently an officer or agent of the first respondent (i.e. Jon Kennedy), in late December 1995 held out to the applicant that he, or the first respondent, was "authorized on behalf of the superintendent" to grant or withhold "practical completion" of the project;
(d)Saunders Design did not act as superintendent under any contractual arrangements between the applicant and the first respondent or under the executed contract;
(e)the first and fourth respondents probably knew at all relevant times that Saunders Design was not in fact acting as superintendent under the contractual arrangements between the applicant and the first respondent or under the executed contract; and
(f)a superintendent under the contract arrangements between the applicant and the first respondent may not have been formally appointed at any relevant time.
The first of the allegations listed above which the applicant wishes to give consideration to making against the first respondent is formulated in terms of fraudulent misrepresentation or deceit. Allegations of fraud ought not to be lightly made and they require strict proof. The evidence before the Court is not sufficient, in my view, to give rise to reasonable cause to believe that the first respondent has or may have engaged in fraudulent, as opposed to negligent and misleading, conduct with respect to the appointment of a superintendent under its contractual arrangements with the applicant.
In oral argument Dr Doyle, counsel for the applicant, placed reliance on s52 of the Trade Practices Act 1974 (Cth) ("the TPA"). Section 52(1) of the TPA provides as follows:
"52.(1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive."
Section 82 of the TPA allows a person who has suffered loss or damage by reason of conduct of another person that was done in contravention of s52 of the TPA to recover such loss or damage by action against that other person.
It seems clear that the conduct of the first respondent of which the applicant complains was conduct in trade or commerce. I find that there is reasonable cause to believe that such conduct was likely to mislead or deceive. However, there is little, if any, evidence before me on the issue of whether or not the applicant is a person who has suffered loss or damage by reason of that conduct.
The Managing Director of the applicant has deposed to the fact that at all times during the construction of the Tuggerah Supa Centa, he understood that the fourth respondent was the principal's representative and that -
"[i]n the circumstances, I consider the Fourth Respondent's comments about the Applicant throughout the project's construction, and after, a deliberate tactic designed to deter the Applicant from submitting legitimate claims for materials supplied and work done, by restricting the Applicant's cashflow. As best I can presently calculate, the monies owed to the Applicant by the First Respondent exceed one and a half million dollars (excluding any damages in tort, or for loss of reputation."
He has further deposed to the fact that a substantial part of the Tuggerah Supa Centa project work was placed on hold at the commencement of the work and thereafter cancelled without compensation being paid to the applicant. No allegation of misleading or deceptive conduct in respect of the work ultimately cancelled is apparently made.
I am unable on the evidence before me to form a view as to whether or not the applicant's disputes with the first respondent with respect to the construction project would have been resolved in a manner more favourable to it had the first respondent not engaged in the conduct of which complaint is made. That is, I am unable to be satisfied that the applicant is, or may be, a person who has suffered loss or damage by reason of the conduct of the first respondent concerning the appointment of a superintendent under the contract between the applicant and the first respondent. For this reason, I am unable to be satisfied that there is reasonable cause to believe that the applicant has or may have the right to obtain relief from the first respondent pursuant to ss52 and 82 of the TPA.
I am unable to deduce what was intended as the second allegation which the applicant wishes to give consideration to making against the first respondent.
The third such allegation is one of conspiracy. The evidence before me is insufficient to establish a reasonable cause to believe that the first respondent has or may have engaged in the conspiracy identified.
Similarly, in my view, the evidence before me is insufficient to establish a reasonable cause to believe that the first respondent has or may have engaged in any of the other conduct which the applicant wishes to assess whether to allege against it.
The claim against the first respondent must fail.
As to the applicant's claims with respect to the second respondent, subject to the ASC search referred to below, the totality of the evidence before me concerning the second respondent is contained in the following paragraph from the first affidavit sworn by the applicant's solicitor:
"7.The Second Respondent is said to be the Ultimate Holding Company for the First Respondent and for the Seventh Respondent. However there is no public record of ownership nor of any of the shares [sic] of the Seventh Respondent which wholly owns the First Respondent".
An ASC search confirms that the second respondent is the ultimate holding company of the first and seventh respondents.
The evidence before me concerning the second respondent is insufficient to establish that there is reasonable cause to believe that the applicant has or may have a right to obtain
relief in the Court from the second respondent. The claim against the second respondent must fail.
I have dealt already with the applicant's claim against the third respondent.
As to the fourth and fifth respondents, it is said that the applicant seeks information which will allow it to assess whether it wishes to allege with respect to them, or one of them -
that either the Fourth or the Fifth Respondent, or both, knowingly and deliberately deceived the Applicant as to the existence and identity of the Superintendent under the Contract intending that the Applicant should rely on these untruths to its detriment;
that either the Fourth or the Fifth Respondent, or both of them, misrepresented the nature and extent of the Works in the tender documentation issued to the Applicant, the existence and/or identity of the Superintendent under the Contract and the manner, method and payment of variations;
that either the Fourth or the Fifth Respondent, or both of them, conspired with one or more of the other Respondents to delay and if possible avoid, carrying out its contractual obligations toward the Applicant;
that either the Fourth or the Fifth Respondent, or both of them, allowed itself to be induced by one or more of the other Respondents to breach its contract with the Applicant, and to otherwise interfere with the business relations of the Applicant;
that either the Fourth or the Fifth Respondent, or both of them, acting on behalf of the First Respondent and duly authorized by it, so repudiated the Contract between the parties that the Applicant is justified in pleading a case in quantum meruit against the First Respondent; and
that either the Fourth or the Fifth Respondent, or both of them, conspired with one or more of the Respondents to cause damage to the Applicant by unlawful and improper means including inducing breaches of the Contract of the Applicant with the First Respondent, the wrongful withholding of monies in order to coerce the Applicant and others into varying the contractual terms between the Applicant and the First Respondent."
I turn first to the case against the fourth respondent. The first of the above potential allegations involves, with one exception, the same issues as are discussed above concerning the first potential allegation against the first respondent. The exception to this is that the fourth respondent is not a corporation and thus falls outside the ambit of s52 of the TPA. This aspect of the claim against the fourth respondent must fail.
There is either no, or insufficient, evidence concerning the other potential allegations against the fourth respondent to maintain the claim for preliminary discovery against him. The claim against him must fail.
As to the fifth respondent, the only evidence concerning it is that one of its directors is the fourth respondent. The claim against it must fail.
The totality of the evidence placed before the Court concerning the sixth respondent is as follows:
"The Sixth Respondent's Directors include (in addition to John Saunders, Gary Grunstein and Betty
Ann Saunders-Klimenko who are the sole directors of the First, Second, Third and Seventh Respondents) John Landerer, and Gabriel Andrew Kune. In these circumstances, and for these reasons, the Applicant is of the opinion that the decision making power so far as Supa Centa, Tuggerah is concerned lies with J.S Nominees Pty Limited [sic] because of the strength of its Board."
The material is insufficient to ground a satisfaction that there is reasonable cause to believe that the applicant has or may have the right to obtain relief from the sixth respondent.
The totality of the evidence concerning the seventh respondent, apart from an ASC search showing the second respondent as its ultimate holding company, is as follows:
"The Second Respondent is said to be the Ultimate Holding Company for the ... Seventh Respondent. However there is no public record of ownership nor of any of the shares [sic] of the Seventh Respondent which wholly owns the First Respondent.
The First Respondent is a $2 company. The Applicant has not been able to ascertain if it has any real assets but is aware that it is wholly owned by the Seventh Respondent. Although the directors of the Seventh Respondent are the same as the Directors of the Second Respondent to wit, Gary Grunstein, John Saunders and Betty Ann Saunders-Klimenko, it appears all shares, in both the ordinary and redeemable classes, are held by parties unknown to the Applicant."
This material is insufficient to ground a satisfaction that there is reasonable cause to believe that the applicant has or may have the right to obtain relief from the seventh respondent. The claim against the seventh respondent must fail.
The applicant did not press its claim against the eighth respondent with whom it has reached an agreement.
The application will be dismissed.
I certify that this and the preceding (seventeen) 17 pages are a true copy of the reasons for judgment of the Honourable Justice Branson.
Associate:
Date: 8 November 1996
Counsel for the applicant: Dr D. Doyle
Solicitors for the applicant: Dr David Doyle & Affiliates
Counsel for the first to
seventh respondents: Mr M. Rudge
Solicitors for the first to
seventh respondents: Landerer & Company
Counsel for the eighth
respondent: Mr C. Whitelaw
Solicitors for the eighth
respondent: Deluchi & Co.
Hearing date: 29 October 1996
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