William Inglis and Son Limited v Australian Turf Club Limited

[2021] NSWSC 1348

Supreme Court

New South Wales

Medium Neutral Citation:

William Inglis and Son Limited v Australian Turf Club Limited [2021] NSWSC 1348

Hearing dates:

On the papers

Decision date:

21 October 2021

Jurisdiction:

Equity - Commercial List

Before:

Ball J

Decision:

(1)   Orders in terms of paragraph 1 and 2 of the plaintiff’s notice of motion filed on 8 September 2021;

(2)   In relation to the first defendant’s notice of motion filed on 3 September 2021, an order that, in addition to the agreed categories, the plaintiff provide discovery of documents falling within category 13 by 3 December 2021;

(3)   In relation to the third defendant’s notice of motion filed on 3 September 2021, an order that, in addition to the agreed categories, the plaintiff provide discovery of documents falling within categories 20 and 22 by 3 December 2021;

(4)   The first and third defendants’ notices of motion otherwise be dismissed; and

(5)   The costs of the three motions be costs in the cause.

Catchwords:

CIVIL PROCEDURE — Discovery — No issue of principle

Legislation Cited:

Australian Consumer Law

Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW)

Category:

Procedural rulings

Parties:

William Inglis and Son Limited (Plaintiff)
Australian Turf Club Limited (First Defendant)
SMEC Testing Services Pty Ltd (Second Defendant)
Liberty Mutual Insurance Company Pty Ltd (Third Defendant)

Representation:

Solicitors:
Norton Rose Fulbright Australia (Plaintiff)
Corrs Chambers Westgarth (First Defendant)
Colin Biggers & Paisley (Third Defendant)

File Number(s):

2019/165012

Judgment

1. On 5 December 2012 the plaintiff, William Inglis and Son Limited (Inglis), and the first defendant, Australian Turf Club Limited (ATC), entered into a contract by which ATC (or, more accurately, a company with which it merged) agreed to sell Inglis a parcel of land in Warwick Farm for $8,568,000. Parts of the land were contaminated. Inglis claims damages it says it has suffered as a consequence of the contamination from ATC on the basis that ATC breached a contractual obligation to remediate the land. Inglis pleads alternative claims in negligence and for misleading or deceptive conduct in contravention of s 18 of the Australian Consumer Law. Inglis also sues the second defendant, SMEC Testing Services Pty Ltd (In Liq) (SMEC), a consultant engaged to assess contamination on the land, for negligence and misleading and deceptive conduct. Lastly, Inglis makes a claim against the third defendant, Liberty Mutual Insurance Company Pty Ltd (Liberty), SMEC’s professional indemnity insurer, relying on s 4 of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW).

2. Before the Court are a number of notices of motion in relation to discovery.

3. To a large extent, the parties have been able to agree on categories of documents for discovery. By each party’s respective motion, that party seeks one or more additional categories of documents that are not agreed. The parties have helpfully prepared a schedule setting out the categories that are not agreed and short submissions summarising the parties’ respective positions. It is necessary to deal with each category in turn. In dealing with each category, I have retained the number assigned to it by the parties.

Plaintiff’s Motion filed 8 September 2021

4. The plaintiff seeks the following category of documents:

All documents recording the advice received by ATC in relation to its obligations under the “contracts” referred to in the email from Mark Flanagan to Mark Webster dated 31 May 2016 at page 1377 of Exhibit MW-1 of the Affidavit of Mark Webster dated 6 November 2019.

5. Mr Webster is the managing director of Inglis. In his affidavit, he deposes to correspondence that he exchanged with Mr Mark Flanagan, a representative of ATC. He also refers to an email dated 31 May 2016 he received from Mr Flanagan. In that email, Mr Flanagan says:

The ATC has sought advice in regards to its obligations under the contract and has been advised that its obligations under the contract concerning contamination have been met. The ATC is unaware of how the contamination made its way onto the site and accepts no responsibility for it or its removal.

6. ATC objects to producing documents falling within the category in dispute on the ground that opinions of a third party about the content of existing contractual obligations can do nothing to assist the Court in construing those obligations.

7. The advice is plainly relevant to a fact in issue in the case. The advice may record instructions given to the person giving the advice. Those instructions may be both relevant and admissible. Accordingly, in my opinion, the category should be permitted.

ATC’s Motion filed 3 September 2021

8. ATC seeks three disputed categories of documents.

Category 8

9. This category is in the following terms:

8   All documents recording any advice provided by Robert McCuaig of Colliers (or Colliers’ agents or employees) regarding the value or development potential of the Property created between 1 June 2009 to 28 February 2014.

10. ATC submits that this category is relevant to the value of the property at the time that it was acquired and consequently may be relevant to Inglis’s claim for damages.

11. Inglis does not claim as damages the difference between the price that it paid for the property and the property’s true value. Instead, it gives the following particulars of the loss it claims in respect of each cause of action it pleads:

(a)   Costs incurred by Inglis in the course of modifying its original development plans to avoid the majority of the Tip Contamination;

(b)   Additional costs incurred in developing Lot 1 by reason of the presence of the Undisclosed Contamination;

(c)    Investigation and expert consultants' costs and expenses relating to the discovery of the Undisclosed Contamination;

(d)   The further cost to be incurred in remediating the Undisclosed Contamination, which is expected to exceed $22 million;

(e)   Past and future losses arising from the inability to build all of the income producing stables originally proposed for Lot 1 by Inglis by reason of the Undisclosed Contamination;

(f)    The diminution in the value of Lot 1 caused by the Undisclosed Contamination and the associated restrictions on the development of Lot 1;

(g)   Further particulars will be provided in due course.

Category (f) is no longer pressed.

12. There is a question of how Inglis’s damages should be calculated if it can otherwise make out its case. However, notwithstanding the way that it has particularised its loss, it is at least arguable that its damages for negligence and misleading and deceptive conduct should be calculated as the difference between the price that Inglis paid for the property and its true value at the time that it was acquired in accordance with the principles stated in Potts v Miller (1940) 64 CLR 282. That is what ATC contends; and it is one of the issues in the case.

13. In my opinion, there is not a sufficient connection between documents falling within category 8 and the true value of the property at the time it was acquired to justify ordering discovery of that category. Documents “regarding the value or development potential of the Property” created over a period of time would provide no assistance to the Court in determining the true value of the property at the time it was acquired. It is not suggested that an expert valuer needs material of that type in order to express an opinion on the question of the property’s true value having regard to the contamination that Inglis says was present on it. Indeed, it is to be expected that any expert valuer would form his or her own opinion on the value or development potential of the property. It is unclear whether Inglis has served evidence on the true value of the land. It seems unlikely that it has, given the way it puts its claim for damages. In any event, it is not suggested that the material may be relevant to cross-examination of a witness on that question. Accordingly, I am not prepared to order discovery of documents falling within category 8.

Category 13

14. Category 13 is in these terms:

13   All documents constituting or recording the advice received by Inglis concerning the environmental condition of the Property referred to in:

a.   the email from Mark Webster to Jonathan Seward dated 25 November 2009 (at page 143 of Exhibit JS-1 to the Seward Affidavit); and

b.   the email from Jennifer Degotardi (formerly of Henry Davis York) to Mark Webster, coping Elizabeth Wild (formerly of Henry Davis York) dated 3 December 2009, which was forward by Mark Webster to Jonathan Seward (ATC) on 3 December 2009

15. The plaintiff no longer objects to this category. However, it maintains that any documents produced in response to this category will be privileged and it has indicated that it intends to maintain that claim for privilege.

16. In my opinion, the documents are discoverable. It is a matter for Inglis whether it maintains its claim for privilege or not.

Category 22

17. Category 22 is in the following terms:

22   All documents recording any valuation of the Property (or any part of it or the improvements located on it).

18. This category raises similar issues to those raised by category 8. For the same reasons, I would not permit this category.

Liberty’s Motion filed on 3 September 2021

19. Liberty seeks documents falling within the scope of a number of disputed categories.

Category 3

20. Category 3 is in the following terms:

3   Documents obtained by Inglis regarding the value of the site from 2009 until 2019 including any valuations carried out, market research reports, real estate sales reports, advice on the Site value, and summaries prepared or issued by the NSW Valuer General.

21. Again, this category raises similar issues to those raised by ATC’s category 8. For the same reasons, I would not permit this category.

Category 17

22. Category 17 is in the following terms:

17   Documents regarding Inglis' use of the car park, including, but not limited to:

a)   The agreement for the use of the car park;

b)   The sharing of costs for the construction of the car park;

c)   Any plans or surveys carried out in relation to the car park;

d)   Invoices issued between Inglis, ATC, or any agent of either, for costs of the construction of the car park;

e)   Any correspondence between Inglis and ATC regarding the use of the car park;

f)   Proof of any ongoing payments between Inglis and ATC regarding the sharing of use of the car park, such as rates notices, rent or the like, statements issued by the NSW Valuer General.

23. In relation to this category, Liberty’s expert valuer expresses the opinion that the benefit afforded to Inglis by a carpark easement is substantial, which is said to significantly enhance the utility and marketability of the property. Presumably, the valuer has taken those matters into account. It is difficult to see how any of the documents sought would assist the Court in determining the true value of the property. There is no evidence that they would assist an expert.

24. In my opinion, this category raises the same issues as the other categories concerned with the valuation of the property. For the reasons already given, it should not be permitted.

Category 20

25. Category 20 is in the following terms:

20   A ledger or financial summary showing the total costs spent by Inglis on the Site to build the hotel and stables currently sitting on the site, including all costs spent to third party consultants, demolition costs, clearing costs, geotechnical costs, and construction costs.

26. Again, these documents are said to be relevant to the question of loss. Inglis claims what are said to be the additional costs of developing the property because of the contamination. In my opinion, a breakdown of the costs actually incurred by Inglis may assist in determining whether and which costs can properly be said to have been additional because of the contamination. Accordingly, I would allow this category.

Category 22

27. This category is in the following terms:

22   Profit/Loss statements regarding Inglis operations at the Site only for 2017 - 2020.

28. Liberty contends that this category is relevant because it says that in calculating its loss, Inglis should give credit for profits it has earned from purchasing the property. Whether that is correct as a matter of law is open to question. However, that question should not be determined on a dispute in relation to discovery. If Liberty is correct, the documents are plainly relevant. Accordingly, I would allow this category.

Costs and orders

29. Speaking generally, the parties have enjoyed mixed success on the motions. The motions concern issues relating to case management — that is, the scope of discovery that should be given in the proceedings. In those circumstances, in my opinion the appropriate order in relation to costs is that the costs of each motion should be costs in the cause.

30. Accordingly, the Court makes the following orders:

1. Orders in terms of paragraph 1 and 2 of the plaintiff’s notice of motion filed on 8 September 2021;

2. In relation to the first defendant’s notice of motion filed on 3 September 2021, an order that, in addition to the agreed categories, the plaintiff provide discovery of documents falling within category 13 by 3 December 2021;

3. In relation to the third defendant’s notice of motion filed on 3 September 2021, an order that, in addition to the agreed categories, the plaintiff provide discovery of documents falling within categories 20 and 22 by 3 December 2021;

4. The first and third defendants’ notices of motion otherwise be dismissed;

5. The costs of the three motions be costs in the cause.

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Decision last updated: 21 October 2021