Bauen Constructions Pty Limited v New South Wales Land and Housing Corporation

Judgment 1By a notice of motion filed in court on 27 May 2014, the plaintiff, Bauen Constructions, seeks disclosure by the defendant, New South Wales Land and Housing Corporation (the Housing Corporation), of certain documents in advance of the parties serving their evidence.

Background 2In early 2010, Bauen Constructions entered into 4 building contracts with the Housing Corporation for the design and construction of seniors living units in various locations in Yagoona. The 4 contracts are referred to by the parties as "the Warringa Contract", "the Colechin Contract", "the Saltash Contract" and "the Dargan Contract". The Superintendent appointed by the Housing Corporation under each contract was McLachlan Lister Pty Limited. 3Work on the 4 projects proceeded concurrently. Practical completion was achieved in relation to the Warringa Contract, the Colechin Contract and the Saltash Contract. The project the subject of the Dargan Contract was damaged by fire and the contract was terminated for convenience by the Housing Corporation before practical completion. 4In these proceedings, Bauen Constructions makes various claims against the Housing Corporation arising out of the 4 contracts. Relevantly, it claims that the Housing Corporation engaged in acts of prevention including: (i) failing to ensure that there was an independent Superintendent engaged at all times as contemplated by Clauses 1 and 20 of Annexure F; (j) failing to ensure that the Superintendent fulfilled all aspects of its role reasonably and in good faith in accordance with Clause 20 of Annexure F; (k) interfering with the Superintendent's powers, duties and obligations with regard to independent assessment and decision making and instructions contemplated by the Construction Contracts, in breach of Clause 20 of Annexure F; 5Bauen Constructions contends that, as a result of those acts of prevention, time under each contract was set at large with the consequence that it is entitled to recover amounts wrongfully retained by the Housing Corporation as liquidated damages. Those liquidated damages are said to amount to $512,174. Bauen Constructions also claims interest of $102,238 on the amount that it is said has been wrongfully retained. 6It is apparent from the amended Technology and Construction List statement filed on 24 December 2013, and from particulars requested by the Housing Corporation and Bauen Constructions' response to that request, that Bauen Constructions does not have any direct evidence that the Housing Corporation interfered with the exercise by the Superintendent of its functions under the construction contracts. At present, Bauen Constructions says that those matters can be inferred from the conduct of the Superintendent about which Bauen Constructions complains. 7On 21 March 2014, the court gave directions by consent that Bauen Constructions file and serve its evidence on or before 16 May 2014. 8On 2 April 2014, Bauen Constructions served a subpoena on McLachlan Lister. The subpoena relevantly sought the production of the following documents: 6. All correspondence exchanged by the Corporation and McLachlan Lister and all documents relating to: a. the certification of practical completion of one or all of the Construction Contracts. b. the determination, approval, rejection and/or certification of Bauen's claims under one or more of the Construction Contracts for: i. extensions of time; ii. delay damages; and/or iii. variations. c. the termination of the Dargan Contract. d. the remedial works required as a result of the fire at the Dargan site on 26.4.2011 ('Dargan fire'); e. the insurer's requirements regarding the remediation of the Dargan site following the Dargan fire; and f. McLachlan Lister's performance of its role as Superintendent under the Construction Contracts. 7. All correspondence exchanged by Bauen and McLachlan Lister and all documents relating to: a. Extension of time claims: i. Number [6, 15, 16, 17, 18, 19] for the Warringa Contract; ii. Number [8, 15, 16] for the Saltash Contract; iii. Number [2, 6, 7, 8, 9, 10, 11, 12] for the Dargan Contract; iv. Number [4, 6, 7, 8, 12] for the Colechin Contract; b. Variation claims: v. Number [15, 16] for the Saltash Contract; vi. Number [15] for the Dargan Contract; vii. Number [15, 16, 17, 18, 19] for the Colechin Contract; ... 9Following correspondence between the solicitors for Bauen Constructions and the solicitors for McLachlan Lister which led to a narrowing of the scope of the subpoena, on 17 April 2014, the solicitors for McLachlan Lister wrote to the solicitors for Bauen Constructions estimating that it would still take between 6 to 8 weeks and cost $36,220 to produce the documents that were still sought by Bauen Constructions. 10Arrangements were then made for the solicitors for Bauen Constructions to inspect some of the documents that McLachlan Lister had in its possession. That inspection occurred but the documents that were made available were not those that were sought by Bauen Constructions. 11There was then further correspondence between the two firms of solicitors. Essentially, the solicitors for Bauen Constructions pressed for production of a number of categories of documents that it had originally sought. The solicitors for McLachlan Lister's position was that their client was willing to produce those documents. However, they maintained that it would take 6 to 8 weeks to produce the documents and the cost of doing so would be in the order of $36,220. They give a breakdown of that figure, in terms of hourly rates and time that the task of complying with the subpoena is expected to take, but they give no indication of what work would be involved in complying with the subpoena. They sought an undertaking that Bauen Constructions pay McLachlan Lister's reasonable costs associated with production of the documents and provide an initial payment on account of the costs of compliance. It was Bauen Constructions' position that the costs estimate was excessive. 12On 15 May 2014, Bauen Constructions' solicitors sent the Housing Corporation's solicitors a detailed letter explaining the history of the subpoena and stating that, in the circumstances, their client would not be in a position to serve its evidence in accordance with the agreed timetable. They proposed that the Housing Corporation give discovery of the documents that had been sought from McLachlan Lister. That application was listed before me on 27 May 2014. In the meantime, it appears that the subpoena has been stood over. 13On 26 May 2014, the Housing Corporation served an affidavit from Mr Gralton, who currently holds the position of "Delivery Director" with the Corporation. Mr Gralton gave evidence that, in order to give discovery in the terms sought, it would be necessary to restore the email accounts of approximately 62 employees of the Housing Corporation who may have corresponded with McLachlan Lister and that the costs of doing so were $1,116 for each email account, making a total of $69,192. In addition, Mr Gralton gave evidence that the Housing Corporation holds 267 lever-arch files in storage and 18 files in its offices which may contain relevant material. Mr Gralton estimates that it will cost approximately $5,000 to retrieve the hard copy files from storage. He gave evidence that it would then be necessary to go through the email accounts and hard copy files to search for documents falling within the categories sought by Bauen Constructions. He did not give an estimate of those costs. However, he gave evidence that the Housing Corporation did not have the resources to undertake that exercise itself and that it would be necessary for it to pay its solicitors to do that work. 14Following service of Mr Gralton's affidavit, on 26 May 2014, Bauen Constructions proposed, in a letter its solicitors sent to the solicitors for the Housing Corporation, a narrower form of disclosure. The notice of motion it filed in court reflects the narrower scope of disclosure sought in the letter. That notice of motion seeks documents between McLachlan Lister and each of 14 named employees of the Housing Corporation concerning: xv. The certification of practical completion of one or all of the construction contracts for 2 - 8 Warringa Street, 22 - 30 Colechin Street, 23 - 29 Saltash Street, and 54 - 62 Dargan Street, Yagoona; xvi. The determination, approval, rejection and/or certification of claims made by Bauen Constructions Pty Limited under one or more of the contracts for 2 - 8 Warringa Street, 22 - 30 Colechin Street, 23 - 29 Saltash Street, and 54 - 62 Dargan Street, Yagoona for: A. Extensions of time; B. Delay damages; and/or C. Variations; xvii. The termination of the contract for 54 - 62 Dargan Street, Yagoona; xviii. McLachlan Lister's performance of its role as Superintendent under the contracts for 2 - 8 Warringa Street, 22 - 30 Colechin Street, 23 - 29 Saltash Street, and 54 - 62 Dargan Street, Yagoona; xix. The insurer's requirements regarding the remediation of the site at 54 - 62 Dargan Street, Yagoona following the fire at 54 - 62 Dargan Street, Yagoona 15In addition, Bauen Constructions seeks discovery of the 18 lever-arch folders of documents that the Housing Corporation continues to hold in its office that possibly contain relevant documents.