Skycity Adelaide Pty Ltd v The State of South Australia
[2009] SASC 34
•18 February 2009
SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
SKYCITY ADELAIDE PTY LTD v THE STATE OF SOUTH AUSTRALIA
[2009] SASC 34
Reasons of Judge Lunn a Master of the Supreme Court
18 February 2009
PROCEDURE
Application by plaintiff for better disclosure under 6R 136(1)(a) - whether documents on background facts to making of contract were directly relevant to issue of meaning of 'Casino duty' in contract - held not directly relevant as some not relate to that issue - held documents on calculation of the duty not directly relevant to any issue pleaded - application dismissed.
SKYCITY ADELAIDE PTY LTD v THE STATE OF SOUTH AUSTRALIA
[2009] SASC 34Reasons on plaintiff’s application for further disclosure of documents.
JUDGE LUNN: Counsel were agreed that the only relevant issue on the pleadings for the purpose of the present application was the meaning of the phrase “Casino duty” in the licensing agreement made between the parties on 27 October 1999. It is not necessary to go into the background facts or the other disputes between the parties.
The plaintiff’s counsel submitted that in order to resolve the issue of the true meaning of “Casino duty” the Court had to look “to the objective framework of facts on which the contract came into existence, and to the parties presumed intention in this setting”: Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 352.
By an application of 3 December 2008 the plaintiff sought the following orders:
1That the defendant, within 14 days, comply with its obligation to disclose documents pursuant to Rule 136, including the following documents:
(a)all documents from the mid 1990s to 2000 relating to the preparation for the sale of the Adelaide Casino (Casino) dealing with the issue of providing potential purchasers with a sufficient level of comfort in relation to the future regulatory and taxation regimes including future taxes, duty and levies which may be imposed by the government on the Casino and the mechanisms to address adverse changes to those initial regulatory and taxation settings, including (but without limitation) any advice received from Deutsche Bank in relation to the sale of the Casino;
(b)all documents and prior reports supporting the 2003/2004 State budget papers, and each subsequent year’s budget papers, insofar as they relate to:
(i)the recovery of the costs of the Office of the Liquor and Gambling Commissioner (OLGC) (however described);
(ii)the Statutes Amendment (Investigation and Regulation of Gambling Licensees) Act 2007;
(iii)SKYCITY Adelaide or the Casino; or
(iv)TAB SA Pty Ltd (TAB);
(c)all documents relating to the voluntary payment by way of contribution to the OLGC’s costs by SKYCITY Adelaide which commenced in 2004 and all discussions within Government and discussions with SKYCITY Adelaide by Ministers of the Crown on that matter, including (but without limitation) any undertakings given to SKYCITY Adelaide by the Minister for Gambling or his staff (including Chief of Staff, Geoff Baynes) or advisers (including David Reynolds and Philip Fedele);
(d)all documents relating to the Variation of TAB Duty Agreement between the Treasurer and TAB dated on or about 29 December 2004 and all discussions within Government and discussions with TAB by Ministers of the Crown on that matter, including (but without limitation) any undertakings given to TAB by the Minister for Gambling or his staff or advisers;
(e)any briefing papers, notes or other documents relating to Premier Rann’s meeting with SKYCITY Adelaide’s Chief Executive Officer, Evan Davies, in November 2006;
(f)documents relating to the assessment of costs of regulation of the Casino and the proposal to recover the sum of $796,093 from SKYCITY Adelaide as referred to in paragraph 18 of the Further Amended Statement of Claim, including (but without limitation):
(i)any documents supporting the OLGC’s assessment of the cost of regulating the Casino as $1,194,139 (as outlined in the OLGC minutes dated 6 December 2007) including as to allocation of such costs between Casino related activities and other non-Casino related activities;
(ii)documents relating to the compliance and enforcement activities the OLGC proposed to undertake in relation to the Casino in the period to which the costing of the proposal referred to in paragraph (i) above relates and in the previous 12 months; and
(iii)documents identifying the OLGC activities that do not relate to the Casino that occurred or were proposed to occur in the same period;
(g)documents relating to the assessment of costs of regulation of the TAB and the proposal to recover the sum of $312,469 from TAB as referred to in paragraph 34 of the Amended Statement of Claim prior to its further amendment), including (but without limitation):
(i)any documents supporting the OLGC’s assessment of the cost of regulating TAB as $468,703 (as outlined in the OLGC minutes dated 6 December 2007) including as to allocation of such costs between TAB related activities and other non-TAB related activities;
(ii)documents relating to the compliance and enforcement activities the OLGC proposed to undertake in relation to TAB in the period to which the costing of the proposal referred to in paragraph (i) above relates and in the previous 12 months; and
(iii)documents identifying the OLGC activities that do not relate to TAB that occurred or were proposed to occur in the same period;
(h)the four opinions received by the defendant from the Crown Solicitor’s Office in 2003 and 2007 as referred to on pages 1068 and 1069 of the record of discussion in the Legislative Council in relation to the Statute Amendment (Investigation and Regulation of Gambling Licensees) Bill dated 23 October 2007 (Exhibit PGT2 to the affidavit of Paul Geoffrey Turner sworn on 3 December 2008).
The application stated that it was brought pursuant to Rules 117 and 145 of the Supreme Court Civil Rules 2006. The preamble to paragraph 1 of the application referred to Rule 136. It was implicit in the application, the supporting affidavit and the submissions of counsel that the application was based on the defendant not having fulfilled its obligation under 6R 136(1)(a) which states:
(1)Each party must disclose the documents that are, or have been, in the party’s possession and –
(a)are directly relevant to any issue raised in the pleadings …..
It was not suggested that the application also extended to subrule (1)(b) which provides:
or
(b)are to be disclosed by order of the Court.
The plaintiff’s counsel submitted that the documents whose disclosure was sought were directly relevant to the issue of the meaning of “Casino duty” because they went to “the objective framework of facts” mentioned above. The defendant’s counsel submitted that the licensing agreement required that the meaning of “Casino duty” should be ascertained from the terms of the Casino Act 1997 because of the cross-reference to that Act in the agreement. This is a matter which will need to be resolved by the trial Judge. I am satisfied that the contention of the plaintiff about the ability to refer to “the objective framework of facts” for the purpose of interpretation is reasonably arguable and therefore the documents which are directly relevant to this issue are required to be disclosed under subr (a): Barbecues Galore Aust Pty Ltd v Jones Lang Lasalle SA Pty Ltd, Besanko J, 3 February 2006, Judgment No [2006] SASC 31.
There is a grey area in what is the boundary between directly and indirectly relevant documents. It should be noted that R 136(1) refers to documents, and not to classes of documents. Here the application is generally framed in terms of classes of documents, and in many instances very broadly defined classes of documents. For a class of documents to be directly relevant for the purposes of subr (1)(a) all of the documents in the designated class, and not merely some of them, need to be directly relevant to an issue raised in the pleadings.
The authorities on the meaning of “directly relevant” are conveniently summarised of the Judgment of Duggan J in Channel 7 Adelaide Pty Ltd v Lane (2004) 234 LSJS 225 at 229-231 with which the other Judges in the Full Court concurred. He said (citations omitted):
19The scope of the parties’ duty of discovery for lists of documents and affidavits of discovery filed after 3 June 2000 is defined in R 58A which provides:
The parties must discover in their lists of documents, but discover only, the documents which are or have been in their possession, custody or power which are directly relevant to any issue arising on the pleadings.
20R 58A significantly narrows the obligation to provide discovery. The earlier rule which was in the same terms as the requirement in the English Rules, required discovery of all documents in a party’s possession or under that party’s control “relating to any matters in question in the action: The well known construction put upon these words by Brett LJ in Compagnie Financier Du Pacifique v Peruvian Guano Co ….. required discovery of documents which may fairly lead to a train of enquiry which, in turn, may enable the party to whom discovery is made to advance that party’s case or damage the case of an adversary in the litigation …..
21The effect of the new rule has been considered in decisions of single Justices of this Court.
22In Southern Equities Corporation v Arthur Anderson (No 5) Bleby J expressed the view that the new test required a greater focus on the pleadings and issues which arose thereon. He said that the test of relevance is the same as that which is applied to admissibility, but that it is not a test which includes only those documents which are strictly admissible in that documents, although relevant, may not be admissible under the common law or various statutory provisions.
23Referring to the use of the word “directly” his Honour said at [10]:
However, there is a further qualification, in that the documents must be ‘directly’ relevant. I doubt whether that qualification effectively narrows, for the purposes of discovery, ordinary concepts of relevance for the purpose of admissibility into evidence. In my opinion, it cannot mean, if the document is not itself proof of a fact in issue but is merely a piece of circumstantial evidence tending, along with other evidence, to prove the fact in issue, that it is not discoverable. Many a case is provable and in fact proved by circumstantial evidence, including documents. I note that a similar view was expressed by Demack J in Robson v REB Engineering Pty Ltd ….. in respect of a similar rule in Queensland. The Rule cannot be allowed to govern in practice the admission of documents into evidence merely because they have not been revealed in the discovery process.
What the qualification does reinforce is the notion of relevant to proof or disproof of a fact in issue, and the unquestionable abolition of the rule which required discovery of a document which might directly or indirectly lead to a train of inquiry or which might, in some other way, otherwise advance the party’s case or damage that of the adversary. For example, it would seem that documents going solely to the credit of a witness, unless that witness’s credit is an issue raised on the pleadings, would not be discoverable. However, it is inappropriate to attempt to define exhaustively what will and what will not be discoverable under this Rule.
24Doyle CJ agreed with these observations in Quenchy Crusta Sales Pty Ltd v Logi-Tech Pty Ltd. ….. He added (11):
It is not wise to attempt to state in comprehensive terms the effect of the requirement that the documents be ‘directly relevant’. The adverb ‘directly’ is probably intended to emphasise the requirement of relevance, and to be used in the sense of requiring that the document be directly in point, excluding as sufficient indirect relevance which might be established through another linking circumstance. That is not to say, as I have already said, that a document is not direction relevant if it is merely a piece of circumstantial evidence. The point is that a document will not be directly relevant if, rather than tending to prove an issue on the pleadings, it merely tends to prove something that may be relevant to an issue.
25In Rehn v Australian Football League & Ors Doyle CJ again considered the rule. He said at [24]:
However, as I commented in Quenchy Crusta, it is not possible to state precisely the effect of the adverb “directly” in R 58A.03. Indirect relevance to an issue is not enough for the purposes of R 58A.03, but distinguishing between direct and indirect relevance is not easy.
It is consistent with the intent of R 58A.03 to apply the requirement of direct relevance firmly, and to give it a relatively narrow meaning. To hold that a document is not directly relevant to an issue arising on the pleadings is not to deprive a party of access to the document. The effect of such a holding is merely that the requirement to discover the document is not imposed by R 58A.03, and that the Court will decide, on application to it, whether the document must be discovered. In other words, R 58.03A draws the line between an obligation to make discovery as a matter of course, and an obligation to make discovery upon application to the Court and after the Court has considered whether the interests of justice requires that discovery should be made.
Another point relevant to R 58A.03 is that the rule assumes that a party is able to decide, from the pleadings, what documents must be discovered. This also suggests a narrow meaning for “directly relevant”. It would be counter-productive if a party was expected to discover documents because they might be relevant, depending on how the other party’s case was put at trial. R 58A.03 assumes that a party can determine that party’s obligation to make discovery by reference to the pleadings.
…..
26I respectfully agree with the observations made in these cases. It is unnecessary to attempt any further analysis of the concept of direct relevance in order to resolve the issues raised in the present case.
(87R 58A.03 is generally the equivalent of 6R 136(1)(a)).
To be “directly relevant” to the issue of the meaning of “Casino duty” the documents sought must, on the Codelfa principle, say something relevant to “the objective framework of facts within which the contract came into existence” which bears on the meaning to be given to “Casino duty” in the licensing agreement. The licensing agreement was a substantial document which dealt with an extensive relationship between the parties of which clause 14.2(a), which deals with “Casino duty”, was but one of many topics dealt with in the agreement. Hence it is almost certain that some, and probably, much, of the “objective framework of facts” would not be relevant to the meaning of “Casino duty”. Thus a significant number of the documents sought may only be relevant, rather than will be relevant, to the issue of the meaning of “Casino duty” which under the authorities means that they are not directly relevant. As the authorities stated require that a relatively narrow meaning is to be given to “directly relevant” a conservative approach is to be taken in determining whether a document is directly relevant. This approach is consistent with the last paragraph quoted above from the judgment in Rehn v Australian Football League in that the scope of the documents now sought would not be apparent from the face of the pleadings.
The plaintiff put forward a further argument to justify the direct relevance of the documents sought which were created after the licensing agreement was made. It contended there was an issue to which these documents were directly relevant that the impost imposed on the plaintiff by the defendant was not a “duty” but a “fee for service”. The plaintiff’s case is that the impost was a “duty”. The further amended defence does not plead a factual issue that the impost imposed should be categorised as a “fee for service” and not a “duty”. Paragraphs 14 and 18 of the further amended statement of claim, which pleads the imposition of the “duty”, have been admitted in the defence. There is no reply filed by the plaintiff. Thus there is no issue raised by the pleadings as to the nature of the impost to which any documents relating to its creation, as sought by the plaintiff in its application, can be directly relevant.
For these reasons, I find that the documents sought are not “directly relevant” and no order is to be made on this application for disclosure. (It is possible that some of the documents within the classes referred to in the application are directly relevant, but it is not for the Court, even if it could do so, to re-draft the orders sought to confine them to “directly relevant” documents: Wildbore v Amatek Ltd (1998) 199 LSJS 49).
I have not determined whether the documents sought can be the subject of an order under R 136(1)(b). If it so wishes, the plaintiff can test this on a further application under that subrule. This may involve further evidence in addition to that which is before me on the present application.
Objection was also taken by the defendant to the disclosure of the documents in paragraph 1(h) of the application on the grounds of legal professional privilege. As these documents have not been shown to be directly relevant, it is not necessary for me to go into that question. However, strictly speaking, “directly relevant” privileged documents are disclosable under R136(1)(a), but privilege should be claimed for them. The issue of privilege or
its waiver is then to be determined on an application to compel their production for inspection.
I have today made the following orders:
1Orders in paragraph 1 of the application, FDN 11, refused.
2Costs of the application to be the defendant’s costs.
3Fit for counsel.
4Further directions hearing to be held on Thursday 26 February 2009 at 9.45 am.
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