Walmsley & Walmsley v Coorong Dairies Limited No. Scciv-02-1312

[2004] SASC 140

WALSMLEY AND WALMSLEY
v
COORONG DAIRIES LIMITED
[2004] SASC 140

Appeal from a Master

1. DOYLE CJ:          The plaintiffs have sued the defendant for breach of a sharefarming agreement. The defendant was to provide land pasture and infrastructure, which I assume included plant and equipment and stock.

2. On this land, and with this equipment and stock, the plaintiffs were to conduct a dairy farm, using the plaintiffs’ skills as a farm manager. The plaintiffs operated the dairy farm from July 2000 until, the plaintiffs allege, the defendant wrongfully terminated the agreement in September 2001. The plaintiffs sue for loss, as a result of termination, and for loss of profits that were anticipated from the sharefarming agreement.

3. The plaintiffs allege that the defendant failed to provide suitable pasture and infrastructure, with the result that the plaintiffs could not conduct the dairy farm appropriately. That allegation is made in para.7 of the Statement of Claim.

4. By Counterclaim, the defendant alleges that the plaintiffs breached their agreement in numerous respects, including matters such as pasture rotation, feed management, livestock handling and water management and so on.

5. It appears that after the sharefarming agreement was terminated, the defendant conducted the dairy farm on the relevant property. I gather the defendant will allege that it conducted it pursuant to an arrangement that differed from the manner in which the plaintiffs conducted the dairy farm.

6. The plaintiffs have sought an order for discovery by the defendant of a wide range of records relating to the period when the defendant was running the dairy farm on the property after the plaintiffs had left the property. The records appear to relate to topics or matters in relation to which the defendant alleges the plaintiffs breached the sharefarming agreement and also, to a lesser extent, to matters in respect of which the plaintiffs allege the defendant was in breach.

7. I agree with the Master, that these documents are not directly relevant to any issue arising on the pleadings.  In the interests of economy, first of all, I indicate my general agreement with the Master’s reasoning.

8. I add these brief remarks. In view of the allegations in the Statement of Claim, and in the Defence and Counterclaim, the matter directly in issue is whether the plaintiffs competently managed the dairy farm. The manner in which the defendant subsequently managed the same farm is not directly relevant to this issue. The defendant might be more or less skilled than the plaintiffs. The conditions under which the defendant operated, might have been more or less favourable than the conditions under which the plaintiffs operated. The manner in which the defendant operated the farm is, at best, indirectly relevant to the issue of whether the plaintiffs operated the farm in compliance with the requirements of the agreement. The manner in which the defendant operated the farm might throw some light on the adequacy of the plaintiffs’ management, but that is all that can be said.

9. In my opinion, the defendant’s management of the farm is not of direct relevance. In short, the competence of, or ability of the defendant in dairy farm managing, or even in managing the same dairy farm, is not directly relevant to the issue of the plaintiffs’ competence, and in the end, the production of these records would go to the competence or ability of the defendant.

10. For much the same reason, documents recording the defendant’s expenditure on the farm are not directly relevant to proof of the plaintiffs’ loss, particularly if it was the plaintiffs’ obligation to maintain and repair equipment as it seems to have been by and large, although I acknowledge as to some equipment at least, the defendant had the obligation of maintenance. I recognise that documents relating to expenditure by the defendant on a particular item of equipment might be relevant if the plaintiffs allege that that particular item was not in proper working order at the outset. But the request for discovery is a good deal more general than that.

11. Likewise, records relating to the skills of staff employed by the defendant, the hours worked and wages paid, are not directly relevant. The same applies to documents relevant to the profits made by the defendant while operating the dairy farm.

12. For those brief reasons I indicate that I agree with the reasoning of the Master, that the defendants were not in breach of their obligation in failing to discover these documents.

13. In light of the matters canvassed in submissions, nor am I satisfied that the interests of justice call for an order for discovery under rule 58A.04(1) in relation to the same categories of documents. As I explained, the standard of management later achieved by the defendant is only indirectly relevant to the issue raised by the allegation that the plaintiffs did not manage the property properly.

14. The defendant’s performance and the matters that would be covered by these documents, might prove to be quite irrelevant for various reasons, or the relevance may be quite limited.

15. An order for discovery, as wide-ranging as that sought, will raise, potentially, a whole range of issues that might well go nowhere.  I accept the submission that the undertaking required of the defendant to comply with the request for discovery, is not so minor that one could say ‘This is not a factor to be put into the scales’.

16. I also take into account, as being of some relevance, although of limited relevance, that the plaintiff has voluntarily made discovery of certain categories, or certain items sought, namely items 10 to 17 and 19 on the list. I do not give this great weight, but I do accept the submission that to the extent that this material enables the defendant to inquire as it was put, at the higher level of generality, into some of the matters which it wishes to pursue, that is relevant to the interests of justice.  It appears likely that these documents will enable it to do so.  To some extent, the remaining documents can be described as source documents. However, I make it plain, while I regard this as a factor, it is not something to which I give great weight.

17. I add that I can conceive the possibility that a more limited and specific request for discovery, focused on particular matters, for example, a particular item of equipment of crucial importance, might be such that although still not directly relevant, it would be in the interests of justice to order discovery.

18. I emphasise that my decision relates to the application for discovery as it stands.   Taking for example, item 18, which calls for original invoices for capital expenditure and repairs and maintenance, presumably for every item of equipment for a number of years, I can conceive there might be a particular item of equipment, the role of which on the farm would be of such significance that it would be in the interests of the justice to require the defendant to make discovery in relation to repairs and maintenance of that item. But I do not consider it in the interests of the justice to require the defendant to make discovery in the broad terms sought over the whole range of items sought.

19. For those reasons, I agree with the Master and accordingly, would dismiss the appeal against his decision.

20. I order that the plaintiff pay the defendant’s costs of the appeal.