Zouk v Lyons Road Pty Ltd

[2009] NSWADT 203

CITATION:	Zouk v Lyons Road Pty Ltd [2009] NSWADT 203
DIVISION:	Retail Leases Division
PARTIES:	APPLICANTS Emelie ZoukEmelie Zouk Pty Limited RESPONDENT Lyons Road Pty Limited
FILE NUMBER:	055029
HEARING DATES:	6 July 2009
SUBMISSIONS CLOSED:	6 July 2009
DATE OF DECISION:	31 July 2009
BEFORE:	Rickards K - Judicial Member
CATCHWORDS:	Production of documents – relevance
LEGISLATION CITED:	Administrative Decisions Tribunal (General) Regulation 2004
CASES CITED:	AF v Healthquest (2009) NSWADT AP42 Simpson v Monteith (2009) NSWSC 156
REPRESENTATION:	APPLICANTS G Evans, barrister RESPONDENT J Knackstredt, barrister
ORDERS:	1.The Applicant is directed to produce to the Respondent within 21 days all documents within its control or possession as set out below: a.Profit & Loss Statements for the Applicant for the years ending 30 June 2004 to date b.Income Tax Returns for the Applicant for the years ending 30 June 2004 to date c.Notices of Assessment for the Applicant for the years ending 30 June 2004 to date d.Ledger print outs relating to the Birkenhead shops and to the Drummoyne shop for the financial years ending 30 June 2004 to date e.Group Certificates for employees of the Applicant for the financial years ending 30 June 2004 to date f.All leases, licences, agreements, notices and correspondence relating to the occupancy and termination of occupancy by the Applicant of the Birkenhead Shop. 2.The Applicant’s costs of compliance with Order 1 are to be costs in the cause. 3.The costs of this interlocutory hearing are reserved and are to be determined at the conclusion of the proceedings. 4.These proceedings are to be listed for further directions on 13 August 2009.

INTRODUCTION

1 In these proceedings the Respondent Lyons Road Pty Limited (“the landlord”) seeks orders directing the Applicants Emelie Zouk and Emelie Zouk Pty Limited (“the tenant”) to produce documents relating to the tenant’s business.

2 Broadly speaking, the documents are sought in relation to the tenant’s claim for loss of profit claimed to have been caused by the unavailability of the retail shop premises located at Units 13 and 14, 38-50 Lyons Road, Drummoyne (“the Drummoyne shop”) covering the period 20 November 2004 to 8 September 2006.

3 The tenant’s claim for damages has been supported by an expert’s report from an accountant Mr Raymond Draybi dated 26 September 2008 (“the Draybi report”).

4 The landlord’s request for documents has oscillated as to the scope of documents sought as can be seen from the initial letter from its solicitors dated 28 October 2008, and subsequent letters dated 17 December 2008, 3 February 2009, 13 March 2009 and 17 April 2009.

5 The landlord’s expert Mr Ferrier attended at the offices of the tenant’s expert Mr Draybi and inspected documents, but there is a factual dispute as to whether he was permitted to take copies of certain of those documents including ledger records.

6 On 2 July 2009, a few days before the hearing of this interlocutory application, the tenant’s solicitor forwarded a letter to the landlord’s solicitor indicating that certain documents as sought do not exist, other documents would be produced unconditionally and that other documents would be produced upon an undertaking from the landlord’s solicitor or an order from this Tribunal to cover the tenant’s solicitor’s professional costs in personally locating, searching, compiling and copying those particular documents. This letter did not offer to produce any documents relating to the period prior to the 2004 financial year. The tenant submits that these documents are irrelevant to the proceedings and should not have to be produced.

7 The landlord’s expert Mr Ferrier apparently awaits supply of documents before providing a report.

RELEVANT LAW

8 The material sought by the landlord must have “apparent relevance” to the issues to be resolved in these proceedings. The authority for this proposition, as well as a summary of relevant decisions and criteria to be applied, is contained within the decision of the Appeal Panel in AF v HealthQuest (GD) (2009) NSWADT AP42 at paragraphs 50 to 52:

“50 The Appeal Panel has given careful consideration to this question. In addition to the authorities cited by Ms Lucy, it has taken account of other formulations of the criterion of relevance that are usefully cited in Ritchie’s Uniform Civil Procedure NSW at [33.4.30] in the particular context of subpoenas to produce documents. They variously state that documents have sufficient relevance if (a) they ‘could possibly throw light on the issues in the main case’ (Trade Practices Commission v Arnotts Ltd (No 2) (1989) 88 ALR 90 at 103); (b) they are ‘necessary for fairly disposing of the proceedings’ (Arhill Pty Ltd v General Terminal Co Pty Ltd (1990) 23 NSWLR 545 at 556); (c) they have a ‘sufficient apparent connection’ with the issues in the proceedings (White v Tulloch (1995) 19 Fam LR 696 at 708); or (d) it is ‘on the cards’ that they would ‘materially assist’ the resolution of the issues in the proceedings (R v Saleam (1989) 16 NSWLR 14 at 18).

51 As the Tribunal pointed out in New South Wales Bar Association v Archer [2004] NSWADT 38 at [45], these formulations vary in breadth. One of them – the test stated in Arhill Pty Ltd v General Terminal Co Pty Ltd (1990) 23 NSWLR 545 – seems noticeably stricter or (as the Tribunal put it in Archer, ‘more guarded’) than, for instance, the test of ‘apparent relevance’ stated and explained in Trade Practices Commission v Arnotts Ltd (No 2) (1989) 88 ALR 90). As mentioned in Ms Lucy’s submissions, the Tribunal in Archer held the latter test to be applicable.

52 In the Appeal Panel’s opinion, the weight of authority favours a relatively broad criterion such as ‘apparent relevance’. Furthermore, the difference between a criterion of ‘possible’ or ‘potential’ relevance – which in substance was the test put forward by the Tribunal in the present case at [14], [15], [19] and [20] – and this criterion of ‘apparent relevance’ outlined in Trade Practices Commission v Arnotts Ltd (No 2) is insufficient to support the conclusion that the Tribunal erred in its statement of the law. The alternative formulation in the Arnotts case – whether the documents sought ‘could possibly throw light on the issues in the main case’ – is virtually synonymous with a test of ‘possible’ or ‘potential’ relevance.”

9 As pointed out in AF v HealthQuest, the formulations adopted by the authorities to the question of relevance do vary in breadth, but the criterion of “apparent relevance” is the correct general approach to resolution of the subject issue.

10 In the course of submissions, counsel for the landlord has drawn my attention to Regulation 12 of the Administrative Decisions Tribunal (General) Regulations 2004 which regulates certain witness expenses, and to the Supreme Court decision of Simpson v Monteith (2009) NSWSC 156, in support of its argument concerning costs of complying with the request for documents.

DISCUSSION AND REASONS

11 The issue to be determined at this stage of the proceedings is the extent to which the tenant has suffered any loss arising from its inability to trade from the Drummoyne shop between 20 November 2004 and 8 September 2006.

12 The tenant has provided affidavit evidence to the effect that the two shops operated by it at Birkenhead were intended to close and to be replaced by the Drummoyne shop. It is common ground that these Birkenhead shops closed respectively on 13 February 2005 and 30 September 2005, and that the tenant has also continued to maintain a shop at Strathfield throughout the period from 2004 to the present time.

13 Given that the tenant has maintained the two Birkenhead shops beyond their intended closure date and beyond the date when the tenant claims that the Drummoyne shop would have been expected to open, the extent of any profit made or loss suffered by the tenant for the period from 20 November 2004 to 30 September 2005 by reason of its keeping the Birkenhead shops open must, in my view, have “apparent relevance” to determination of the issues in these proceedings.

14 Conversely, neither the trading records of the Birkenhead shops prior to the 2004 financial year nor the trading records of the Strathfield shop in general have, in my view, any apparent relevance to determination of any loss suffered by the tenant by reason of its inability to trade at the Drummoyne shop during the relevant period.

15 The landlord’s solicitor Mr Harris has provided an affidavit sworn 24 June 2009 and in paragraph 22 he asserts that financial records of the Applicant from 2001 through to 2004 are required in order to reasonably assess any loss of profit by the tenant, without any further real explanation provided. Over the objection of the tenant’s counsel, I allowed the landlord to tender a letter from the expert Mr Ferrier to the landlord’s solicitor dated 6 May 2009 (“the Ferrier letter”). This letter addresses the issue of relevance of these documents in the following terms:

“Financial information in relation to each of the stores and the company for the three year period prior to 20 November 2004 is relevant to the formation of a reasonable assessment of the profit which could have been earned by those stores had the Birkenhead Point stores been closed and the Lyons Road store open. Such information will enable the trend in the business to be identified and taken into account in forming a view as to the profits which could have been earned had the Lyons Road store opened in November 2004.

Financial information in relation to the stores and the company for the period after 8 September 2006 is relevant to an assessment of the profits which were actually achieved after the Lyons Road store had opened and, therefore, is relevant to an assessment of the profits which could have been earned by the company if the Lyons Road store had opened on 20 November 2004”.

16 The Ferrier letter goes on to explain that “the time frames of three financial years’ information before the commencement of loss and three financial years after cessation of the loss is intended to provide sufficient information on which to base a reasonable assessment of the profit which could have been achieved by the company had the Lyons Road store opened on 20 November 2004.

It would be possible to prepare a loss calculation on the basis of financial information for a shorter period, but such a calculation would be likely to be less reliable than one based on the requested information.

In my opinion, the minimum reasonable period for which information would be required would be one year before and two years after the loss period (i.e. for the period 1 July 2003 to 30 June 2007)”.

17 The Ferrier letter was not originally intended by Mr Ferrier nor by the landlord’s solicitors to become evidence in these proceedings, but as it was tendered in the landlord’s case upon the issue of relevance of the documents sought, it should be considered within the context of the standard requirements for expert opinion evidence. At the outset, it should be noted that the material agreed to be made available by the tenant will cover the period 1 July 2003 to 30 June 2007. The Ferrier letter understandably does not contain an explanation as to how the identification of the “trend” in the business of each of the stores conducted by the tenant since 2001 will be undertaken, nor why such an analysis will assist determination of any loss suffered by the tenant due to delay in operation of the Drummoyne shop between November 2004 and September 2006. Additionally, whilst the Ferrier letter states that the provision of three financial years’ information before the commencement of loss will provide sufficient information on which to base a “reasonable assessment” of the profit which the tenant could have earned had the Drummoyne store opened on time, there is no explanation as to why this is so. The need for explanation by an expert as to the basis for an opinion is set out in Schedule 7, paragraph 5 of the Uniform Civil Procedure Rules 2005 which have been adopted by this Tribunal under Practice Note No. 14. As stated earlier, I cannot discern the apparent relevance of this particular set of material and the Ferrier letter does no more than baldly assert that such documents are relevant.

18 In relation to the costs sought for production of documents, the landlord’s counsel has pointed to the provisions of Regulation 12 of the Administrative Decisions Tribunal (General) Regulation 2004 and to the decision of Hoeben J in Simpson v Monteith (supra) in support of its contention that the cost of compliance with a request or direction for production of documents must be reasonable and proportionate to the type and extent of work required, and that the costs incurred by a party to the proceedings in providing documents must ultimately be costs in the cause. This latter submission follows the approach of Hoeben J in Simpson v Monteith that a party to the proceedings, such as the tenant, will necessarily have to locate and produce these documents for the purpose of advice or inspection in any event and it is inappropriate that the cost of this process should be borne by another party in the proceedings as a condition of production. The fair approach is to order that the costs of production of these documents should be costs in the cause.

19 It is important that these proceedings now move forward toward finalisation and it is therefore appropriate that a specific time period be set for production of documents by the Applicant and that these proceedings then be listed for further directions as soon as possible.

ORDERS

1. The Applicant is directed to produce to the Respondent within 21 days all documents within its control or possession as set out below:

a. Profit & Loss Statements for the Applicant for the years ending 30 June 2004 to date

b. Income Tax Returns for the Applicant for the years ending 30 June 2004 to date

c. Notices of Assessment for the Applicant for the years ending 30 June 2004 to date

d. Ledger print outs relating to the Birkenhead shops and to the Drummoyne shop for the financial years ending 30 June 2004 to date

e. Group Certificates for employees of the Applicant for the financial years ending 30 June 2004 to date

f. All leases, licences, agreements, notices and correspondence relating to the occupancy and termination of occupancy by the Applicant of the Birkenhead Shop.

2. The Applicant’s costs of compliance with Order 1 are to be costs in the cause.

3. The costs of this interlocutory hearing are reserved and are to be determined at the conclusion of the proceedings.

4. These proceedings are to be listed for further directions on 13 August 2009.