GPI Properties v Tweed Central

SOLICITORS : HW Litigation for plaintiff Hickey Lawyers for defendant

• 1 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

4635/08 - GPI PROPERTIES PTY LIMITED v TWEED CENTRAL PTY LIMITED

1 HIS HONOUR: This is the hearing of a notice of motion filed 10 June 2009 in which the plaintiff seeks a review of a decision of Registrar Musgrave dated 28 April 2009. 2 The Registrar had before him a motion filed 2 April 2009 seeking discovery of various categories of documents. The only contentious categories were those in 1.1, 1.2, 1.5 and 1.6. The defendant had already agreed to give discovery of documents in 1.3 and 1.4. There was also a motion filed 1 April 2009 seeking to set aside the subpoenas to certain third parties. The Proceedings 3 These proceedings commenced in September 2009 now have a statement of claim. The plaintiff, as a purchaser under a contract of sale dated 3 August 2006, brings a claim seeking specific performance of that contract against the defendant vendor. The primary issue in the proceedings is whether the defendant was entitled to rescind the contract in reliance on cl 28. That issue, which required an approval of a plan of subdivision, will turn upon whether the defendant has complied with the obligations imposed on it under cl 28.2 of the contract in order to do everything reasonable to have a plan of subdivision registered within 18 months of the contract date. 4 The plaintiff asserts that the defendant did not comply with cl 28.2 of the contract and therefore is not entitled to rescind. The alleged failure is asserted in para 8 of the statement of claim which contains detailed particulars and is in this form: "8. The defendant breached clause 28.2 by not doing everything reasonable to have the plan registered within 18 months of the contract date.

(a) The defendant took 47 days from on or about 12th October 2007 to lodge the subdivision certificate with Tweed Shire Council with Application for subdivision certificate.

(b) The application for subdivision certificate was lodged at Tweed Shire Council on or about 28th November 2007.

(c) The defendant took 34 days to reply to an information request received from Tweed Shire Council dated 5th December 2007.

(d) Information sought in the information request was received by Tweed Shire Council on or about 8th January 2008.

(e) The defendant failed to act within reasonable time to enable the plan to be registered prior to 3 February 2008.

(f) The plaintiff anticipates providing further particulars following disclosure by the defendant." 5 Particulars of that were sought including particulars of para 8. The more general particular which is set out in paragraph (e) of para 8 of the statement of claim has been particularised by the exchange of correspondence to say that the matters referred to in sub-para (e) are the facts, matters and circumstances contained in para (a) to (d). 6 The application was out of time by 19 days. As this seems to have been caused by filing difficulties in the registry I would be prepared to extend time within which the application should be filed. 7 The Registrar decided the particular areas of discovery were outside the issues in the proceedings. His reason was as follows: "It is the defendant's position that the plaintiff is asserting that the defendant's failure to comply with cl 28.2 of the contract comprises specified delays which are set out in para 8 of the statement of claim and is further particularised in the correspondence above referred to. The period during which those pleaded delays occurred are from 12 October 2007 to 8 January 2008. The plaintiff rejects this view of the proceedings. It submits its pleadings are capable of covering the steps undertaken by the defendant to enable the plan to be registered and that its case as pleaded relates to the failure of the defendant to do everything reasonable to have the plan registered. The categories in dispute are 1.1 which roughly seeks all documents relating to the status of the subdivision application as at 31 July 2007; 1.2 all documents relating to the status of the subdivision application as 12 October 2007; 1.5 all documents relating to a particular caveat; and 1.6 all documents relating to the progress of the subdivision application and registration of the plan for the development between 31 July 2007 and 7 March 2008. In my view the defendant's view of the proceedings is correct. The particulars contained in para 8 when read with the answer to the request for further and better particulars limit the scope of the dispute between the parties. What constitutes a fact in issue may be determined by reference to the pleadings. The provision of particulars is intended to fully inform a defendant of the case it has to meet. Here the pleadings and particulars are specific. Consequently I would not make the order sought by the plaintiff in his notice of motion." 8 For the same reasons he set aside the subpoenas which sought wide categories of documents. The nature of the review before the Registrar 9 In Tomko v Palasty (No 2) [2007] NSWCA 369 the Court of Appeal recently dealt with the nature of review with which I am concerned. Basten JA after an extensive review of the authorities concluded at paragraph 52 in these terms: "52 It follows that the proper approach to an application in relation to a decision of the Registrar is as follows: (1) the application should be treated as a 'review', pursuant to section 121 (3) of the Supreme Court Act and UCPR r 49.19;

(2) a review, unlike an appeal, does not require demonstration of error, nor is it restricted to a reconsideration of the material before the primary decision maker; (3) authorities with respect to the conduct of appeals against the exercise of discretionary powers, such as House v The King , do not in terms apply to a review; (4) nevertheless, similar policy considerations may arise in relation to a review, including:

(a) a Court may be less inclined to intervene in relation to a decision concerned with the management of an ongoing proceeding, as opposed to one which terminates the proceeding or prevents its commencement;

(b) different factors may need to be addressed in relation to breach of time limits in relation to the commencement of proceedings, as compared with breach of time limits for steps to be taken in the course of proceedings properly commenced, and

(c) a Court may be more inclined to intervene on a review based on fresh evidence, changed circumstances; or whether error is demonstrated in the decision under review." 10 The other members of the Court were Hodgson JA and Ipp JA. Ipp JA agreed with what was said by Basten JA subject to the adoption of the additional remarks of Hodgson JA. Those additional remarks appear in paragraphs 6 to 10 of the decision, and are as follows: "6. I agree that a review of a decision of a Registrar is not an appeal, subject to section 75A of the Supreme Court Act; and that in such a review a Court must exercise its own discretion. 7. In my opinion, this discretion extends to a discretion as to whether, and if so how to intervene; and in my opinion, there is an onus on a person seeking to have a Court set aside or vary a Registrars decision to make out a case that the Court, in the interests of justice, should exercise its discretion to do so. 8. In the case of a decision on practice or procedure, this will normally require at least demonstration of an error of law, or a House v The King error, or a material change of circumstances, or evidence satisfying the strict requirements for fresh evidence. Even then, a Court may not think that the interests of Justice require intervention. This could be so, for example, if the error of law is a deficiency of reasons and the result is on its face not an unreasonable one; 9. In the case of a decision which finally determines a party's rights, or which (albeit one of practice or procedure) has a decisive impact on those rights, a Court may be more willing to intervene. It may permit further evidence to be led which does not satisfy the strict requirements for fresh evidence, if it is satisfied that the interest of Justice require this. It may decide to substitute its own discretionary decision for that of the Registrar, even though no House v The King error is shown, again if it is satisfied that the interests of Justice require this. To that extent, the review may be considered a de novo hearing. 10. In my opinion, this approach is consistent with the position that such reviews are not appeals and involves the exercise of discretion by the reviewing body; and with the policy considerations referred to by Jordan CJ in In Re the Will of Gilbert (1946) 46 SR (NSW) 318 at 323. It is also consistent with the general principle concerning interlocutory applications: they do not finally decide matters, and successive applications can be brought for the same orders; but generally, a later application for orders that have previously been refused will be summarily dismissed unless a change of circumstances is shown or there is evidence satisfying the strict requirements for fresh evidence." 11 Hodgson JA recently reaffirmed these views in Dae Boong International Co Pty Ltd v Gray [2009] NSWCA 11. His Honour said at paragraph 16 to 19 the following: "As I have said, the matter comes before me on an application to review the Registrar's decision. 17. As regards the nature of such a review and the grounds on which such decisions can be reviewed, I adhere to what I said in Tomko v Palasty (No 2) [2007] NSWCA 369 at paragraphs [4] to [10]. 18. Thus in my view a review of a decision of a Registrar is not an appeal, and in such a review a Court must exercise its own discretion. This discretion extends to a discretion as to whether and if so how to intervene, and there is an onus on a person seeking to have a Court set aside or vary a Registrars decision to make out a case that the Court in the interest of Justice should exercise its discretion to do so. 19. In a case of a decision on practice or procedure, this will normally require at least a demonstration of error of law or an error of the kind referred to in House v The King [1936] HCA 40; 55CLR 499, or a material change of circumstances or evidence satisfying the requirements of fresh evidence." 12 Plainly, this is a matter which is concerned with practice and procedure and the limitation referred to by Hodgson JA will apply. 13 The reference to House v The King [1936] 55 CLR 499 is a reference to what was said at page 504 of that case in these terms: "But the judgement complained of, namely, sentence to a term of imprisonment, depends upon the exercise of a judicial discretion by the Court imposing it. The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges comprising the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the Court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred."

14 It was suggested the Registrar applied the wrong test and did not take a wide view of relevance. Reference was made to a decision of Lakatoi Universal Pty Limited & Ors v Walker and Ors [1998] NSWSC 470. There Rolfe J said as follows: "In determining the question of relevance the Court must bear in mind that the parties are entitled to build up an evidentiary mosaic. Generally that cannot be done, particularly in complicated commercial litigation, by the tender of one piece of evidence or the assertion that only limited material is relevant to the issues involved. Particularly is that so when one must have regard to the desirability of as full a cross-examination as possible, assisted by the availability of documents which will aid that. Both as to issues and the issue of credit the Court should not be astute to find irrelevance at an early stage of the proceedings, especially when, as Clarke J pointed out, the production of documents pursuant to a subpoena may lead to, inter alia , legitimate amendments to the pleadings. I think it is necessary to distinguish between the utilisation of subpoenaed material to permit amendments to increase the scope of an existing sustainable action, on the one hand, and discovery before suit to determine whether there is a right of action, on the other. In my opinion, it is not correct to characterise the subpoenas here in issue as seeking discovery before suit."

15 That particular quotation was picked up with approval by Einstein J. in Idoport Pty Limited v National Australia Bank [3][1999] NSWSC 1026. In paras 36 to 37 his Honour had the following to say: "36 As Rolfe JA said, albeit in a slightly different context: 'In determining the question of relevance the Court must bear in mind that the parties are entitled to build up an evidentiary mosaic. Generally that cannot be done in complicated commercial litigation by the tender of one piece of evidence or the assertion that only limited material is relevant to the issues involved...the Court should not be astute to find irrelevance at an early stage of the proceedings... [Lakatoi Universal Pty Ltd & Ors v Walker & Ors, Unreported, Supreme Court of New South Wales, 31 July 1998 at 18] 37 I am further satisfied that the proposed expanded discovery categories are such as are 'reasonably likely to add, in the end, in some way or other, to the relevant evidence in the case'. [Cf, (again dealing in a slightly different field of discourse,) the judgment of Waddell J in Spencer Motors Pty Ltd v LMC Industries Ltd [1982] 2 NSWLR 921 at 297, seeking to summarize views expressed by Moffitt P in National Employers Mutual General Association Ltd v Waind and Hill [1978] 1 NSWLR 372 at 383, 384]. I particularly have in mind the wording extracted in paragraph 23(l) of the Judgment which makes it clear that the plaintiffs seek to make a case to the effect that the defendants are seeking to fundamentally shift the Bank's operating model from a traditional branch based regional retail bank to 'the paradigm of a highly customer focussed information driven globally integrated financial services operation [using technology including the internet, personal digital assistants and modern communication devices...and E-commerce generally]. These are broad concepts indeed and involve, as the case sought to be made, an examination of an alleged radical move from one type of operation to another." 16 When one looks at para 8 of the statement of claim as particularised there are only two relevant delays identified. They are of no particular nature. They are in respect of two separate defined periods. Given the periods involved it is clear how the documents in the period referred to in 1.3 are relevant and similarly with respect to 1.4, hence there is no argument on these categories. 17 If one turns to 1.1 31 July 2007 has no relevance to any material allegation in the statement of claim other than it is shortly after the defendant purchased the project and the previous vendor's interest in the land the subject of the contract. 18 1.2 is similar in that the debt has no relevance to any material allegations in the statement of claim other than it is the start of the first period of delay. 19 Presumably there is no time limit back to which documents are called for in respect of 1.1 and 1.2. Similarly in 1.6 there is no connection between the breaches alleged and the earlier part of the time period specified. 20 1.6 has no other specification than progress of the subdivision and its registration. It could, for instance, cover some quite different breach earlier than 12 October 2007. 21 This is, of course, the defendant's complaint. It describes the width of the categories as simply a fishing expedition to see if any other delays can be unearthed. 22 I agree that one has to paint a picture and other documents may be relevant to such an exercise. However, the picture comprises the relevant alleged breaches. For other documents to be called for they should relate to those pleaded breaches rather than being at large in the hope of catching some other delay. 23 Nothing in the submissions or the evidence enlightened me as to how the delay in removing the caveat was related to or had any connection with the two specifically pleaded delays. If it is a separate delay upon which the plaintiff wished to rely then the plaintiff should amend the statement of claim to include that delay as one of the delays referred to in para 8. 24 Having regard to the specific definition of the issues in the pleadings I do not see that the Registrar proceeded upon a mistaken view of the law but was right in his conclusions. The question in relation to subpoenas 25 There were subpoenas issued to a number of third parties in identical terms. They sought the production of: "All files and documents currently in your possession or control which relate to or are connected with...... the development..... for the period 11 July 2005 to 7 March 2008". 26 Those subpoenas call for, as is obvious, the entirety of the file. There have been no attempts to limit the scope by reference to the issues in the proceedings. Plainly I think the Registrar was right to set aside the subpoenas. 27 I dismiss the motion filed 10 June 2009 with costs. I will give directions for the further conduct of the proceedings. 28 I note that the parties expect that the first defendant will be able to give discovery and inspection of the documents agreed to within two weeks and, accordingly, I order that the plaintiff is to serve all affidavits upon which it intends to rely including any expert evidence by 10 November 2009. 29 The proceedings are stood over for further directions before the Registrar at 9:15 a.m. 17 November 2009.

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