BETWEEN : CREATIVE LAND MANAGEMENT AUSTRALIA PTY LTD (IN LIQ) (ACN 078 432 872)

Ballantine (George) & Son Ltd v FER Dixon & Son Ltd [1974] 2 All ER 503

Beecham Group Ltd v Bristol Myers Co [1979] VicRp 27; [1979] VR 273

David Kahn Inc v Conway Stewart & Co Ltd & Ors [1972] FSR 169

Hutchinson v Glover [1875] 1 QBD 138

1 MASTER BREDMEYER: This is an application by the plaintiff for further and better discovery of documents set out in a schedule to its chamber summons.

2 The plaintiff was the distributor of a chemical product, SC 27 ("the product"), which he had got from Natural Science Centre Pty Ltd ("Natural Science"), the manufacturer, which is not a party to this action. In October 1997 the first defendant (Barfam) ordered 40,000 litres of the product at $14.75 per litre. Two consignments, each of 20,000 litres was delivered to Barfam on 24 or 25 February 1998. The plaintiff has received payment of $266,117.50 for this product, which is payment at the agreed rate for approximately 18,000 litres. The plaintiff is suing for payment for the other 22,000 litres and for loss of profits on the sale of the 60,000 litres ordered but for which delivery was not accepted. The plaintiff says payment for the 40,000 litres was due 14 days after delivery in February 1998.

3 Barfam admits in its defence that it took delivery of 40,000 litres in February 1998 and says that it sold 18,000 litres of that consignment for $266,117.50. Barfam says it was only liable to pay for the product received as and when it sold it. In answers to interrogatories, Barfam lists its consignees or customers of the product sold in Victoria, South Australia and Dubbo, New South Wales, and gives the quantity of product sold in each of those three places. The quantities total 21,600 litres, which is inconsistent with its defence of sales of only 18,000 litres. Barfam also says in its answers to interrogatories that the balance of the 40,000 litres not sold was returned to Natural Science in December 1998. The quantity returned was 920 x 20 litre drums = 18,400 litres.

4 It is in issue in this case how many litres were sold between February and December 1998 and how much was received from those sales. The plaintiff would like to know if Barfam received some of the product direct from Natural Science as that would show a motive for not selling all of the 40,000 litres received from the plaintiff. The plaintiff would like to know if Barfam breached its subdistribution agreement with the plaintiff by ordering direct from Natural Science, the manufacturer. The plaintiff is suing Natural Science in a separate action and would like to have the two actions heard together. The plaintiff says it is entitled to this information on the Peruvian-Guano test as set out in Seaman 26.1.4 as it goes directly or indirectly to matters in issue, that is to advance its own case or to damage the case of the defendant and the documents sought are those which may fairly lead to a train of enquiry which may have either of these two consequences. The defendant relies on the statement of law in Mulley v Manifold [1959] HCA 23; (1959) 103 CLR 341 at 345, to the effect that matters in issue must be determined by the pleadings and discovery cannot be granted to assist a party upon a fishing expedition. Only a document which relates in some way to a matter in issue is discoverable, but it is sufficient if it would lead to a train of enquiry which would either advance a party's own case or damage that of its adversity. Discovery is not permitted of documents which go solely to credit.

5 I am not willing to grant the wide discovery sought by the plaintiff. Since the Peruvian-Guano test was established in 1882 and Mulley v Manifold was decided in 1959, this Court has introduced case management and O 1 r 4A and r 4B. Under those rules, interlocutory activities must be essential to the fair and just determination of the issues in contention between the parties and should promote the just determination of litigation at a cost affordable to the parties. The court has also introduced in O 26 r 7(3)(b)(ii) a provision that the court can restrict discovery to documents directly relevant to any specified matter in question. I propose to do that in this case and confine the plaintiff to the matters which I see as directly relevant arising from the pleadings.

6 I consider that the defendant should give discovery of the following documents for the period February to 31 December 1998:

1. Cheque butt stubs and bank statements. (This was conceded).

2. Purchase orders received by the defendant for the product.

4. Sales invoices for the product. (This was conceded).

I will not order discovery of the other documents listed in the schedule as not going to matters in issue.

7 I will order the defendants to give discovery of these documents within 21 days. I will order the defendants to pay the plaintiff's costs of this application on a three-quarter basis in any event.