Douglas Corporation v Currico Nominees

DECISION : (1) The decision of Assistant Registrar Howe dated 14 September 2006 is affirmed; (2) The notice of motion filed 18 October is dismissed; (3) The plaintiff is to pay the defendant's costs as agreed or assessed; (4) The parties are referred to mediation; (5) A Status Conference is to be allocated as soon as possible. The Registrar is to notify the parties of the date.

CATCHWORDS : Review Registrar's decision - set aside notice to produce

Sale of Goods Act 1923 (NSW) LEGISLATION CITED : Trade Practices Act 1974 (Cth) - s 82 Uniform Civil Procedure Rules 2005 (NSW) - rr 14.14, 15.1, 21.10, 49.19

Azzi & Ors v Volvo [2006] NSWSC 183 CASES CITED : Hadley v Baxendale (1854) 9 Ex 341; 156 ER 145 Kursell v Timber Operators & Contractors Ltd [1927] 1 KB 298 Penrith Rugby League Club Ltd v Brown [2004] NSWSC 1182

PARTIES : Douglas Corporation Pty Limited t/as Printing Creations Marketing Services - Plaintiff Currico Nominees Pty Limited t/as Currie & Co - Defendant

COUNSEL : Mr G Sirtes - Plaintiff Ms M Painter - Defendant

SOLICITORS : Bob Rosic & Kinchington - Plaintiff Macquarie Legal Prractice - Defendant

LOWER COURT JUDICIAL OFFICER : Assistant Registrar Howe

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

20340/2005 - DOUGLAS CORPORATION PTY LIMITED t/as PRINTING CREATIONS MARKETING SERVICES v CURRICO NOMINEES PTY LIMITED t/as CURRIE & CO

JUDGMENT (Review Registrar's decision - set aside notice to produce) 1 HER HONOUR: By notice of motion filed 18 October 2006 Douglas Corporation Pty Ltd (Douglas) seeks to appeal the whole of the decision of Assistant Registrar Howe dated 14 September 2006. In lieu thereof Douglas seeks an order firstly, that the defendant's notice of motion filed 10 August 2006, seeking to set aside the plaintiff's notice to produce dated 20 July 2006, be set aside; and secondly, an order that the defendant pay the plaintiff's costs of this review and the costs of the motion determined on 14 September 2006 by Assistant Registrar Howe. Douglas relied on the affidavit of Michael Leon Kinchington dated 17 October 2006.

Grounds of review 2 Douglas "appeals" the whole of the decision of Assistant Registrar Howe dated 14 September 2006 on the grounds that firstly, the Assistant Registrar erred in law by holding that a plaintiff seeking common law damages for a breach of terms implied by the Sale of Goods Act 1923 (NSW) (SGA) must specifically plead a claim for damages under that Act in circumstances where such Act does not give rise to entitlement to claim statutory damages; secondly, the Assistant Registrar erred in finding at [22] that the plaintiff had, in claiming damages for a breach of terms implied by the SGA, mounted a verbal demand for a new claim for damages; and thirdly, the Assistant Registrar, in consequence of his findings in [19]-[22], incorrectly held that the plaintiff's notice of motion did not seek documentation that is relevant to a fact in issue between the parties.

Review 3 Rule 49.19 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) provides: "49.19 Review of registrar's directions, orders and acts

If a registrar gives a direction or makes an order or does any other act in any proceedings, the court may, on application by any party, review the direction, order or act and make such order, by way of confirmation, variation, discharge or otherwise, as the court thinks fit." 4 The approach I have taken is that I should inform myself of all the material before the Registrar at the time when he made the decision and the Registrar's decision itself. While fresh affidavit evidence may be tendered, I should make my own decision based on the material before me after having the benefit of counsel's submissions. No new evidence was tendered. 5 By statement of claim filed 5 October 2005 Douglas seeks damages at common law; or as an alternative, damages, compensation or orders for either the repair of a printing press or a variation of a contract under the Trade Practices Act 1974 (Cth) (TPA). 6 Douglas, in its original statement of claim filed 5 October 2006 sets out the relief claimed as follows: "The plaintiff claims: 1. Damages at common law. 2. In the alternative, statutory damages under s 82 of the Trade Practices Act 1974 (Cth). 3. In the alternative, an order for compensation pursuant to s 87(1A)(c) of the Trade Practices Act 1974 (Cth). 4. In the alternative, an order pursuant to s 87(2)(e) of the Trade Practices Act 1974 (Cth) that the Defendant repair the Printing Press so that it operates to its maximum speed of 17,000 SPH without defective sheets. 5. In the alternative, an order pursuant to s.87(2)(e) of the Trade Practices Act 1974 (Cth) that the Court vary the contract as and from its commencement by the reduction of the purchase price to reflect the cost of a Printing Press with the capability of the Printing Press purchased by the Plaintiff." 7 Paragraph 6 of the statement of claim pleads: "6. In the premises, the Plaintiff has suffered and continues to suffer loss and damage.

d) Lost profit. The Plaintiff will provide evidence of its damages in due course." 8 Douglas has conceded liability but does not concede the quantum of damages (letter 04/07/2006 and Notice of Withdrawal 04/07/2006).

Notice to produce 9 The notice to produce seeks the production of: "1. All documents between the defendant's management and/or administrative personnel and/or technical and engineering personnel and/or Shinohara Machinery Company Limited personnel concerning any service e attendances relating to deficits, malfunctions, deficiencies and/or methods of rectification of the plaintiff's Shinohara 66 IVP four colour high pile printing press. 2. All documents between the defendant's management or administrative personnel and/or technical and engineering personnel and/or Shinohara Machinery Company Limited personnel in relation to the following: (i) any technical, engineering or other problems with the functioning of the plaintiff's Shinohara 66 IVP four colour high pile printing press, (ii) productivity or profitability, (iii) performance or operational capability, (iv) specifications, (v) speed, (vii) draft guards, (viii) paper grades and stocks, (ix) perfecting mode, (x) print quality, including double imaging and mis-registration, (xi) transfer and registration on the plaintiff's Shinohara 66 IVP four colour high pile printing press. (xii) any document generated or received by the Defendant in relation to the plaintiff's Shinohara 66 IVP four colour high pile printing press." 10 Assistant Registrar Howe at paragraphs [19]-[22] of his reasons stated: "19. There is nothing in either the pleading or the particulars concerning damages to be claimed under the Sale of Goods Act. If any such claim is to be made, then it should be pleaded so that the defendant is not taken by surprise. If the plaintiff wishes to make such a claim, then the statement of claim will need to be amended to include this claim and particularise the damages sought. … 22. The plaintiff cannot mount a verbal demand for a new claim for damages at an interlocutory hearing and expect that its notice to produce will be upheld following that demand. Since there has been no amended statement of claim either tendered or proposed, then it is clear that the documents listed in the notice to produce have not been referred to in any pleading, nor are they relevant to any fact in issue between the parties. Therefore, the notice to produce will be set aside." 11 Douglas submitted that the Assistant Registrar erred in law by holding that a plaintiff seeking common law damages for a breach of terms implied by the SGA must specifically plead a claim for damages under that Act. 12 Douglas seeks common law damages for breach of contract, or alternatively damages pursuant to s 82 of the TPA. The Assistant Registrar noted [at paragraph 19] that no claim for damages under the SGA had been pleaded. That so far as it goes, is correct. As I read the Assistant Registrar's decision, the notice to produce was set aside on two bases, namely the documents had not been referred to in any pleading (UCPR, Rule 21.10(1)(a)); and secondly, they were not relevant to any fact in issue between the parties (Rule 21.10(1)(b)). 13 It is trite law that the purposes of a pleading is to inform the other party of the case it has to meet. That party should not be taken by surprise. The statements made by the Assistant Registrar in paragraphs 19 and 22 merely echo what he said earlier in paragraph 17, referring in part to Rule 15.1 of the UCPR: "The purpose of a pleading is to make clear to the other party the nature of the case alleged and give such particulars of any claim as are necessary to enable the opposite party to identify the case they have to meet. Justice demands that the other party is not taken by surprise". 14 The Assistant Registrar was correct when he stated that the plaintiff seeks damages only for its contractual breach and under the TPA. 15 Douglas submitted that the Assistant Registrar erred in finding at [22] that the plaintiff had, in claiming damages for a breach of terms implied by the SGA, mounted a verbal demand for a new claim for damages 16 Secondly, Douglas in its submissions before this Court stated that it is entitled to consequential loss, and to special damages. There is no mention of either of these types of damage in the plaintiff's pleading. The plaintiff has submitted that there need not be a specific pleading as consequential loss and special damages are assumed from claiming "damages at common law". 17 Rule 15.1(1) of the UCPR 2005 states: "(1) Subject to this Part, a pleading must give such particulars of any claim, defence or other matter pleaded by the party as are necessary to enable the opposite party to identify the case that the pleading requires him or her to meet." 18 Rule 14.14 of the UCPR states: "(1) In a statement of claim, the plaintiff must plead specifically any matter that, if not pleaded specifically, may take the defendant by surprise." 19 Special damages are compensation awarded under the second limb of the rule in Hadley v Baxendale (1854) 9 Ex 341; 156 ER 145. Special damages are awarded for losses reasonably supposed to have been in contemplation of both parties, at the time they made the contract, as the probable result of the breach. As a result, a defendant's submissions as to what would reasonably have been within their contemplation, is a significant factor in determining whether special damages should be awarded.

20 It is important that the defendant is specifically informed of the heads of damage under which relief is claimed, in order to allow the defendant to prepare a defence. The Assistant Registrar commented that the plaintiff cannot mount a verbal demand for a new claim for damages at an interlocutory hearing and expect that its notice to produce will be upheld following that demand. I agree with the Assistant Registrar. 21 Lastly, Douglas submitted that the Assistant Registrar adopted an incorrect approach in applying Rule 21.10 of the UCPR. 22 Rule 21.10 provides: "Notice to produce for inspection by parties

(1) Party A may, by notice served on party B, require party B to produce for inspection by party A: (a) any document or thing that is referred to in any originating process, pleading, affidavit or witness statement filed or served by party B, and

(b) any other specific document or thing that is clearly identified in the notice and is relevant to a fact in issue. (2) A notice to produce may specify a time for production of all or any of the documents or things required to be produced." 23 The documents specified within the notice to produce are not documents falling within Rule 21.10(1)(a). The dispute centres around the meaning of the phrase "clearly identified" in Rule 21.10(1)(b); secondly, the threshold required for specificity and thirdly, whether the document is taken to be relevant to a fact in issue. 24 The meaning of the words "clearly identified" and "specific" were considered in a decision of this Court in Penrith Rugby League Club Ltd v Brown [2004] NSWSC 1182. In that case, Young CJ in Eq dismissed a notice to produce that was issued under Part 23 r 2 of the Supreme Court Rules (SCR). Rule 21.10(1)(b) of the UCPR and the former Part 23 r 2(1)(b) of the SCR are similar. 25 Young CJ in Eq in Penrith Ruby Club stated that the words "clearly identified" similar to the words "clearly indicate" in s 88 of the Conveyancing Act should be taken to mean that there: "…must be something more than a matter which can be ascertained by the ordinary processes of construction and employing extrinsic evidence; there must be a pointing out in a manner that is distinct and free from confusion…" at [8]. 26 In relation to the word "specific", Young CJ in Eq referred to Sargant LJ in Kursell v Timber Operators & Contractors Ltd [1927] 1 KB 298, 313-314, where it was said that the word "specific" conjures up the idea of something which is identified and not merely identifiable. 27 The plaintiff in Penrith Rugby Club similarly submitted that a person seeking to take advantage of the rule only needed to give a sufficient description to enable the person served to perform the obligation to produce the document, but this submission was not accepted. 28 In the case of Azzi & Ors v Volvo [2006] NSWSC 183, Brereton J recently considered a motion to set aside a notice to produce. The notice to produce in that case, even in its amended form, was drafted using very broad terms. Brereton J notes the introduction of the UCPR was in part to reduce the burdens of unlimited general discovery, by confining its scope through requiring that classes of documents of which discovery would be required. Brereton J stated, at [11]: "The fundamental purpose of the amendments to the rules which limit discovery to classes was to avoid parties having excessively burdensome discovery obligations imposed on them, by excluding from discovery those documents which were outside the classes which were agreed or determined to be appropriate for discovery. If it remained open to a party to subpoena classes of documents which had been excluded from discovery, that would completely defeat the purpose of the rules in limiting discovery to specified classes. It would amount to using a subpoena to obtain discovery". 29 References to documents require strict specificity in order to identify the individual document sought under the notice to produce. To require anything less would place a great burden on the defendant, and would make the notice to produce similar in nature to a broad discovery motion, which the UCPR operates to prevent. 30 More importantly, in my view, the documents requested are not relevant to a fact in issue in these proceedings. The facts in issue are limited to assessment of damages. The particulars in the statement of claim in paragraph 6 states that loss and damage is claimed for (a) Loss of productivity, (b) Increased production costs, (c) Loss of opportunity for new work and (d) Lost profit. The categories of documents listed in the notice to produce [see paragraph 7 of this judgment] do not relate to a fact in issue. The quantification of loss and damage are matters which are within the plaintiff's knowledge. 31 I have come to the conclusion that the decision of Assistant Registrar Howe is correct. The decision of Assistant Registrar Howe dated 14 September 2006 is affirmed. The notice of motion filed 18 October 2006 is dismissed. 32 Costs are discretionary. Costs normally follow the event. The plaintiff is to pay the defendant's costs as agreed or assessed.

Mediation 33 It is my view that this matter may be resolved more expeditiously by mediation. The parties have agreed to have the matter referred to mediation and this should take place once the plaintiff has calculated its damages and losses.

(1) The decision of Assistant Registrar Howe dated 14 September 2006 is affirmed.

(2) The notice of motion filed 18 October 2006 is dismissed.

(3) The plaintiff is to pay the defendant's costs as agreed or assessed.

(5) A Status Conference is to be allocated as soon as possible. The Registry is to notify the parties of the date. **********

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.