The Mark Bar Pty Ltd & Anor v. PT Ltd
[2007] QSC 176
•20 July 2007
SUPREME COURT OF QUEENSLAND
CITATION:
The Mark Bar Pty Ltd & Anor v PT Ltd [2007] QSC 176
PARTIES:
THE MARK BAR PTY LTD (ACN 103 506 172)
(first plaintiff/applicant)
MURRAY MALCOLM WILLIAMS
(second plaintiff/applicant)
vPT LIMITED (ACN 004 454 666)
(defendant/respondent)FILE NO:
BS 11173/04
DIVISION:
Trial Division
PROCEEDING:
Application
DELIVERED ON:
20 July 2007
DELIVERED AT:
Brisbane
HEARING DATE:
19 June 2007
JUDGE:
Mackenzie J
ORDER:
That further disclosure be made in terms of paragraph 1(a) to (d) of Schedule 1 to the application, and in terms of paragraph 1(e) thereof, limited to any such documents that are directly relevant to the time at which negotiation of the sale of the Toombul Shopping Centre to Centro first commenced.1.
That the application insofar as it relates to paragraph 1(f) be dismissed.2.
That, subject to an affidavit being served and filed on the respondent’s behalf concerning the extent of attempts to retrieve e-mails sent by Veronica Piercy, and, in particular, from the hard drive, the application in paragraph 2 be dismissed.3.
That the application in paragraph 3 be dismissed.4.
That costs be reserved.5.
CATCHWORDS:
PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER RULES OF COURT – OTHER MATTERS BEFORE TRIAL – where applicant alleges breach of s 52 Trade Practices Act 1974 (Cth) – where respondent proposed development of outdoor dining precinct at shopping centre – where applicant was to redevelop leased premises – where respondent failed to disclose the sale of the shopping centre – where applicant seeks disclosure of documents relating to the time the shopping centre was identified as being for sale – whether there is an objective likelihood that the duty to disclose has not been complied with
Trade Practices Act 1974 (Cth) s 52
Uniform Civil Procedure Rules 1999 (Qld) r 223
COUNSEL:
S Couper QC for the plaintiff/applicant
R Traves SC for the defendant/respondent
SOLICITORS:
Hopgood Ganim Lawyers for the plaintiff/applicant
Clayton Utz for the defendant/respondent
MACKENZIE J: This is an application for further disclosure pursuant to r 223 Uniform Civil Procedure Rules 1999 (Qld). Relevantly to this case, it is necessary to show that there is an objective likelihood that the duty of disclosure has not been complied with.
To provide a context for considering the matter, it is convenient to record the following. The defendant is a company in the Westfield Group and was at relevant times the owner of the Toombul Shopping Centre. The crux of the action is that it is alleged that there was a breach of the s 52 of the Trade Practices Act 1974 (Cth), in that the respondent induced the applicant to enter into a lease and expend moneys in fitting out a bar at the shopping centre.
The representations relevantly were to the effect that the respondent proposed to create an upmarket outdoor dining precinct, that there would be extensive marketing of the precinct and publicity associated with the opening of it. It was also alleged that representations were made that proposed new tenancies had been let.
The timing of events is said to be a critical issue because of the timeframe for commencing redevelopment of the premises leased by the applicant. The applicant’s case is that the respondent misled it by failing to disclose that the respondent was considering selling the shopping centre and then that it had sold it. This aspect of the case raised the issue of committing the applicant to a risk that the new purchaser would not continue with the proposed upmarket redevelopment, thereby putting the intended substantial expenditure by the applicant at risk. It was also an aspect of the case that the applicant may have been able to minimise the risk had it known of the proposed sale and the sale in a timely way; the sale contract was executed within days after the proposal date for the handing over of the premises to the applicant for fit-out.
Three categories of documents were sought in the application. The third category was not the subject of any submissions following a concession by Mr Couper on behalf of the applicant that he could not sustain an argument that there was an objective basis for saying that there were individual documents of the kind referred to in light of an affidavit filed on behalf of the respondent.
With respect to the second category, the only contentious issue remaining was whether certain emails sent by a named individual were irretrievable from the computer system. That was resolved on the basis that the further affidavit would be provided by the respondent by way of clarification of their status. A further submission, which went beyond the scope of the application, concerning identification of the recipients of such emails to facilitate non-party disclosure, was taken under consideration by the respondents’ legal advisors.
The remaining category which remained contentious sought the following:
“1.All notes, memoranda, correspondence, reports, Board papers, Board Minutes, documents circulated at Board Meetings or any documents of any sort of the Defendant and the Westfield Group ----- relating to:
(a)The time at which the Defendant identified the Toombul Shopping Centre as a Westfield shopping centre that could be sold or form part of any potential exit strategy that Westfield may have proposed in the future;
(b)The time at which the Defendant identified the Toombul Shopping Centre as a shopping centre that could be sold as part of the AMP Shopping Centre Trust transaction;
(c)The time at which the Defendant decided to sell the Toombul Shopping Centre as part of the AMP Shopping Centre Trust transaction;
(d)The time at which the Defendant decided to sell the Toombul Shopping Centre to CPT Manager Limited ACN 054 494 307 (“Centro”) as part of the AMP Shopping Centre Trust transaction;
(e)The negotiation and sale of the Toombul Shopping Centre to Centro from the date that the negotiations first commenced until the completion of the sale and all conditions subsequent; and
(f)The communication of any of the above matters to any of the Westfield Group officers or employees.
Categories (a) and (b) are respectively concerned with the time of identification of Toombul as a shopping centre that could be sold (without reference to any particular transaction), and the time of its identification as a shopping centre that could be sold as part of the AMP Shopping Centre Trust transaction. Categories (c) and (d) are respectively concerned with the time at which the defendant decided to sell Toombul as part of the AMP Shopping Centre Trust transaction, and the time at which the defendant decided to sell it to Centro. In connection with category (a), Mr Couper referred to minutes of the board meeting of Westfield Management Limited on 26 May 2003, with particular focus on a reference to a proposed conditional sale of properties, including Toombul, currently owned by Westfield Trust and a statement that the board noted that Toombul had been identified for sale prior to the proposed transaction. By way of background, according to the statement of claim, the respondent was custodian of Westfield Trust. It was also alleged that the respondent was registered proprietor of Toombul. Those allegations were admitted in the defence.
Mr Couper also relied on a statement in a media release dated 28 May 2003 where the following was said:
“WFT intends to sell … its Toombul Centre in Brisbane …
…
The sale of properties in Perth and Adelaide was anticipated in WFT’s bid announcement while the sale of Toombul rebalances the Trust’s portfolio of Brisbane centres in line with its longer-term asset strategy.”
It was submitted that the passages quoted reflected that Toombul had been earmarked for sale prior to the particular transaction identified in paragraph (b). It was also submitted that the direct relevance of this to the issues in the pleadings was that the applicant should have been told of this because of the risk that an incoming purchaser might not proceed with the redevelopment. The respondent should have been told of the possibility that the centre might be sold to allow it to reconsider its position and its commitment of expenditure.
It was submitted that there was a strong objective likelihood that the fact that Toombul had previously been identified for sale would have been reduced to documentary form in an organisation of the size and complexity of Westfield. The possibility that any such decision had not been reduced to documentary form was objectively much less likely.
The application, by its terms, is concerned with the time at which the respondent itself identified Toombul Shopping Centre as one that could be disposed of. There may be complexities, which cannot be resolved on the material in this application, as to whether the existence of a document somewhere else in Westfield’s corporate organisational structure, or, for that matter, elsewhere, inevitably relates to a time at which the respondent itself made the postulated identification. There may, for example, be issues as to what the position was if any such document was quarantined, in a particular area, from the knowledge of those involved in any transactions with the applicant, and the effect if there was any commonality of directors between entities in the Group. But, subject to those kinds of issues, if such a document did exist and it fitted the description in the application there would be an obligation to disclose. The question is whether there is an objective likelihood that the duty to disclose has not been complied with.
By way of further background, there is a board paper with an attachment for the 26 May 2003 meeting of Westfield Trust of which the following is a summary. At the previous board meeting on 16 May 2003, it was anticipated that properties named Booragoon, Macquarie and Colonnades would be sold. By the time the papers were prepared, the proposal had become one to sell Macquarie and Colonnades, Galleria Centre in Perth and Toombul, together with the acquisition of an additional 50% of Karrinyup. Of those to be sold, Toombul, Galleria and Colonnades were to be sold to Centro. There was also a media release dated 20 May 2003 concerning a takeover offer in respect of ART in which it was said “Westfield Trust intends to sell its interest in up to three properties from the combined portfolio representing approximately $500 million in line with its long time asset strategy and to meet any regulatory requirements.” There is no evidence that those three included Toombul, and, given the disparity between the $500 million and the price received for the three which included Toombul, there is room to doubt that Toombul was part of that proposal.
Mr Traves for the respondent submitted that the combination of circumstances indicated that the decision to sell Toombul was made only in the period between 20 May 2003 and 26 May 2003. With respect to the passage that Toombul had been identified for sale prior to the proposed transaction, the solicitor with conduct of the action deposed to a search made by a corporate solicitor for Westfield in the board minutes back to 1997, without finding any reference to a proposed sale of Toombul. He also deposed to making inquiries of the person who had been Asset Manager for Toombul from October 2000 until settlement of the sale on 1 July 2003 who had responsibility for the overarching supervision and coordination of development and policy for Toombul, which included responsibility for overseeing dealings with Westfield centre management, marketing, leasing, design and construction. The solicitor was told that the Asset Manager believed that he would have, in the ordinary course of business, expected to have been involved in any sale of the asset from a due diligence point of view, as well as facilitating the transaction. Save for the Centro transaction, he had no knowledge of any sale or prospective sale of the centre or dealings with persons seeking to acquire it. The solicitor deposed that on the basis of those inquiries, he believed that there were no documents other than those already disclosed within the possession and control of the relevant Westfield entities which fitted the description of those sought.
He also deposed that he was informed by another Westfield corporate solicitor that the decision to sell Toombul was made on 26 May 2006 at the board meeting. The contract of sale was prepared and signed over a three day period. Mr Traves indicated that, on instructions, the letter of instructions, which he thought was dated 23 May 2003, could be disclosed to provide verification of the date upon which the instructions were given.
It is tolerably clear that at some time before the transaction involving Centro was conceived, Toombul had been “identified for sale prior to” that transaction. The minutes of 26 May 2003 show that. Since it was not to be sold under the proposal considered on 16 May 2003, the context suggests that the statement, which is not free from ambiguity, relates to something stretching further back into history. As against that, it appears that there are no board minutes about it, nor any knowledge of it on the part of the person employed by the respondent who might be expected to know of it if it was a proposal to do so rather than a generalised strategic intention without any particular focus.
What is meant by “identified for sale prior to (the Centro) transaction” is ambiguous. The absence of any reference in the minutes to a decision to do so suggests that some more informal sort of identification had been made. On balance, I think that the investigations referred to in the previous paragraph are not necessarily exclusive of that possibility. Paragraph 36A of the third amended statement of claim raises the issue of the respondent considering selling the shopping centre which, in my view, makes any documentation concerning identification of Toombul for sale directly relevant to those allegations. Identification of it for sale is not necessarily coexistent with forming an intention to sell it or determining to sell it. Any documents relating to the time at which the respondent identified Toombul Shopping Centre as a Westfield Shopping Centre that could be sold or form part of any potential exit strategy that Westfield may have proposed in the future should be disclosed.
The other aspects of the application involve working backwards from disclosed facts. It can be inferred from exhibit AJP01 page 179 that there had been drafting prior to 25 May 2003. That is not inconsistent with the oral information that the instructions were given on 23 May 2002. However, in connection with paragraph 36A of the third amended statement of claim, the point was made that it would be expected that there would be documents relating to the sale to Centro that preceded the giving of drafting instructions and that such documents had not been disclosed. Such documents would appear to be directly relevant to the allegation in issue in paragraph 36A to the extent that they shed light on the earliest identification of Toombul as part of the AMP Shopping Centre Trust transaction or the Centro transaction. Any documents of that character relating to paragraphs 1(b),(c) and (d) of the schedule to the application should be disclosed.
Attention was also drawn to an issue concerning the ACCC giving consideration to the Centro proposal. The main focus of this was a letter from the respondent’s solicitors to the applicants’ solicitors, which is exhibit AJD001. Section 2 of that letter relates to the genesis of the sale and refers to the ACCC investigating the matter and coming to what was said to be a conclusion that the proposed sales would largely balance out any concerns that there may be about management control. I note that in the minutes of the Westfield Management Limited board meeting of 26 May 2003, immediately after the passage noting that Toombul had been identified for sale prior to the proposed transaction, there is a passage which says:
“The sale of Galleria in Perth would address ACCC concerns on acquisition of the ART portfolio (for Perth only) and would facilitate retention of ART interests in Booragoon and Karrinyup. The sale of Colonnades would address the ACCC’s concerns in Adelaide.”
The emphasis in that paragraph seems not to be a concern about Toombul but about other properties.
Whether there is any inconsistency between what is in the letter and what is in the minutes is not clear. The point made by Mr Couper was that it was apparent that the ACCC had been involved prior to the date of the board meeting on 26 May 2003 and it was submitted that, insofar as any communication with the ACCC may reveal something about the timing of consideration being given by the respondent to the sale of Toombul or reveal that a decision to sell it subject to ACCC giving its imprimatur, the documents would be directly relevant to the issue in paragraph 36A previously mentioned. Any documents relating to the issues in paragraphs (a) to (d) in Schedule 1 to the application should be disclosed. Each of those paragraphs is, of course predicated on the respondent itself making certain identifications or decisions. What has been said is, of course, to be viewed in that context.
The same limitation also applies to paragraph (e), as does the focus, as the focus in argument was on the timing of critical events. In that context, it appears to overlap substantially with the preceding paragraphs, and, as a matter of construction, probably would not extend back in time beyond the time referred to in paragraph (b), at the earliest. Disclosure of documents in that category, limited to the issue of timing, would appear to be directly relevant. The same principles apply to this category as the others.
With respect to costs, it is proposed to reserve them, since the preponderance of success in real terms remains uncertain at this point.
Orders
It is ordered:
1. That further disclosure be made in terms of paragraph 1(a) to (d) of Schedule 1 to the application, and in terms of paragraph 1(e) thereof, limited to any such documents that are directly relevant to the time at which negotiation of the sale of the Toombul Shopping Centre to Centro first commenced.
2. That the application insofar as it relates to paragraph 1(f) be dismissed.
3. That, subject to an affidavit being served and filed on the respondent’s behalf concerning the extent of attempts to retrieve e-mails sent by Veronica Piercy, and, in particular, from the hard drive, the application in paragraph 2 be dismissed.
4. That the application in paragraph 3 be dismissed.
5. That costs be reserved.
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