PROCEDURE - DISCOVERY AND INTERROGATORIES - DISCOVERY AND INSPECTION OF
DOCUMENTS - PRODUCTION AND INSPECTION - GENERALLY - OTHER
CASES –
Where third party contractual arrangements bore on the issue of the alleged
Source
Original judgment source is linked above.
Catchwords
PROCEDURE - DISCOVERY AND INTERROGATORIES - DISCOVERY AND INSPECTION OFDOCUMENTS - PRODUCTION AND INSPECTION - GENERALLY - OTHERCASES –Where third party contractual arrangements bore on the issue of the allegedlack of competency of the plaintiff – Whether draftexpert reports must bedisclosed under sub-rule 212(2) of the Uniform Civil Procedure Rules 1999(Qld) – Disclosure of documents relating to negotiations which led tosettlements – Disclosure of letters to third partiesare relevant to anissue in the pleadings – Disclosure of documents relating to complaints tothird parties which are in issuein the proceeding – Where only therelevant parts of documents must be disclosedPROCEDURE - DISCOVERY AND INTERROGATORIES - DISCOVERY AND INSPECTION OFDOCUMENTS - DISCOVERY OF DOCUMENTS – GENERALLY –Where thedefendant’s solicitor has sworn that the documents do not exist or are notin the possession of or control of the
defendant – Whether an officer of
the defendant should be required to swear an affidavit stating that the
documents do not
exist, or stating the circumstances in which the documents
ceased to exist or passed out of the possession or control of the defendant
– Where the circumstances set out in sub-rule 223(4) of the Uniform
Civil Procedure Rules 1999 (Qld) are not satisfied
PROCEDURE - SUPREME COURT PROCEDURE – QUEENSLAND - PRACTICE UNDER
RULES OF COURT – PLEADING – GENERALLY –
Striking out –
r152 of the Uniform Civil Procedure Rules 1999 (Qld) – Where it is
open to the defendant to lead evidence in support of the pleading or for the
223Interchase Corporation Ltd (in liq) v Grosvenor Hill (Qld) Pty Ltd
(No. 1) [1999] 1 Qd R 141, referred toNatwest Markets Australia Pty
Ltd v Colliers Jardines (Qld) Pty Ltd (No. 3141 of 1996
22 April 1998,
unreported), followedAmos v National Australia Bank Ltd [2001] QSC 31, distinguishedCurlex Manufacturing Pty Ltd v Carlingford Australia
General Insurance Ltd [1987] 2 Qd R 335, referred to
Judgment (38 paragraphs)
[1]
[1] DOUGLAS J: This is an application for disclosure by the plaintiff, Mitchell Contractors Pty Ltd. The dispute being litigated relates to the construction of a water pipeline for the defendant, the Townsville-Thuringowa Water Supply Joint Board. The plaintiff contends that it was to construct the pipeline with material supplied by the defendant and that the defendant supplied gaskets and bolts to use in connecting segments of the pipeline that were not of the type specified for the works. When built initially the pipeline leaked at the joints sealed by the gaskets and bolts. They were replaced with others which conformed with the specification after which the pipeline was retested and did not leak. The plaintiff claims that it was the supplier's inferior gaskets and bolts that caused the leaks while the defendant alleges the pipeline leaked because of poor workmanship on the part of the plaintiff.
[2]
[2] Mr Smith, the defendant's solicitor, has usefully summarised the effect of the pleadings in his affidavit filed 16 June 2004 as follows:-
[3]
"6. Paragraphs 15 to 24 of the Amended Defence and Counterclaim allege a duty on the part of the Plaintiff or the Defendant by Counterclaim to carry out the WUC [Works Under the Contract] in a proper and workmanlike manner and with reasonable care and skill, and further alleges a breach of that duty of care and of Clause 29(1) of the General Conditions of Contract, particulars of which were:
[4]
•
the manner in which it positioned the gasket on the flange surface;
•
the manner in which it tightened the bolts for the flanged joint assembly;
•
the application of Denso Tape coatings prior to hydrostatic testing of the pipeline being carried out;
•
backfilling of the pipeline in the area of the manholes prior to and without hydrostatic testing having been completed;
•
failing to visually inspect the manhole joints contrary to the Contract provisions and good industry practice.
[5]
The Defendant then alleges the Plaintiff or Defendant by Counterclaim carried out rectification work at the direction of the Superintendent, the Manager of Citiwater, on a provisional basis that the rectification work would be paid for by the Defendant subject to repayment in the event that it was discovered that the Plaintiff or Defendant by Counterclaim was responsible for the defects.
[6]
9. In its Reply to Amended Defence, Defence to Counterclaim and Counterclaim, the Defendant by Counterclaim in paragraphs 11 to 18 denies that it was in breach of the duty of care or contractual requirement on the following bases:
[7]
•
That the Contract (Contract NQ001) called for full faced, flat, heavy duty non-asbestos compressed fibre gaskets and that the Defendant supplied half faced rubber gaskets with cotton insert that were not in accordance with the Contract.
•
That the gaskets supplied were structurally inadequate and did not comply with a specified Australian Standard and that the material in the gaskets supplied was unsuitable.
•
That the gaskets supplied failed under test pressure when water was able to pass through the cotton fabric in the gasket.
[8]
The Defendant by Counterclaim then alleges that to the extent that work was defective it was caused by the failure of the Defendant to supply gaskets in accordance with the Contract."
[9]
[3] The disputes about disclosure have been described in the parties' affidavits by reference to numbers. The most substantial legal dispute between the parties related to complaint 3. The documents sought to be disclosed under that heading are draft reports of experts engaged by the defendant for which it claims legal professional privilege. Some other complaints were resolved by agreement between the parties. The arguments that remain relate particularly to the complaints numbered 1, 3, 4, 6, 12 and 13. The defendant has agreed to disclose the documents referred to in complaint 5, the minutes of the defendant's board meetings, to the extent that they are directly relevant. The plaintiff also seeks an order that the defendant file and serve an affidavit of an officer of the defendant in relation to certain classes of documents identified in the complaints numbered 2, 7, 9, 10, 11 and 13 where the response from the defendant has been either that no documents exist or that they have been disclosed or are not directly relevant to the dispute. The affidavits produced for the defendant so far have been sworn by its solicitor rather than by an officer of the defendant.
[10]
[4] The plaintiff also seeks to strike out the word, "partially", from particular 2(b) of the defendant's further and better particulars of paragraph 16(c) of its amended defence and counterclaim. Two further directions are sought that the defendant contends are unnecessary.
[11]
[5] I shall deal with the questions in issue in the numerical order in the complaints and then deal with the further matters I have mentioned.
[12]
[6] The plaintiff's position is that the defendant has not disclosed documents relating to its contractual arrangements for the project including tender documents, letters of award and variations of contractual conditions with the superintendent for the project, Citiwater Townsville, the designer of the project, Gutteridge Haskins and Davey Pty Ltd ("GHD"), and the supplier of materials for the project, Tyco Water Pty Ltd ("Tyco Water"). It asserts the documents are relevant to the proceedings and necessary for the adequate preparation of the plaintiff's case "as they record the principal's contractual arrangements for the designer, the supplier and the superintendent, in a case where the essential dispute is whether the failure of the project was due to the quality of materials supplied and the manner of supervision on one hand and the quality of the installation on the other"; see para 14 of the affidavit of Mr Kent filed 11 June 2004. Mr Kent also says in that affidavit that it appears from one of the defendant's expert reports that he was provided with a copy of the contractual documents between the defendants and Tyco Water.
[13]
[7] The defendant says that the documents relevant to the contractual arrangements with Tyco Water have been disclosed under the heading "NQ Water files - Contract W092" at pp. 10-11 of its list of documents, ex. MS1 to Mr Smith's affidavit. Otherwise it asserts that documents relevant to contractual arrangements with Citiwater Townsville and GHD either do not exist or are not directly relevant to the issue whether materials supplied were defective or failed to comply with design specifications or were used at the direction of the superintendent identified in the pleading.
[14]
[8] Where Tyco Water and not the plaintiff was the supplier of materials for the project and the dispute relates principally to the qualities of those materials, the manner of supervision, the method used for fixing them and the quality of the workmanship, it may not be inevitable that the contractual arrangements between the defendant and the designer and superintendent of the project will be directly relevant to the issues pleaded. The probabilities are, however, that those contracts will be relevant. One can speculate about the possibilities but there is more than speculation here.
[15]
[9] Exhibit 1, the expert report by Mr Manning, at p. 5 para. 12, refers to Tyco Water's contract for the supply and delivery of mild steel pipes and fittings in terms that suggest an inconsistency between the plaintiff's contractual obligations and those of Tyco Water reflecting on the alleged lack of competency of the plaintiff. It is also persuasively submitted for the plaintiff that the contractual obligations of the designer, GHD, and the superintendent, Citiwater Townsville, in respect of these issues are relevant because of their role in the project in either designing the joining methods prescribed or in directing the plaintiff to install the allegedly unsatisfactory gaskets in spite of its queries about their appropriateness; see, for example, the allegations in paras 11(b)(iii), 11(b)(iv), 12(b) and 14(a) of the reply to amended defence, defence to counterclaim and counterclaim and the reply to amended defence and answer to counterclaim. It seems to me that the documents are relevant to the issues pleaded and should be disclosed.
[16]
[10] The defendant has disclosed and produced reports by two experts, Mr Manning and Mr Murray. It refuses to disclose draft reports in its possession or control by those experts on the basis that they were prepared by those men for the purpose of discussions with the defendant's solicitors and counsel retained on behalf of the defendant. Mr Smith goes on to swear at para 17 of his affidavit:
[17]
"This was to ensure that the final report, which would follow from the drafts would be in admissible form and respond to all relevant issues canvassed and raised on the pleadings. The drafts were forwarded to this Firm on a confidential basis. After review of drafts, conferences were held between the Defendant's legal advisers and Messrs Manning and Murray. Thereafter, final reports were prepared and exchanged."
[18]
[11] Rule 212(2) of the Uniform Civil Procedure Rules provides that a document consisting of a statement or report of an expert is not privileged from disclosure. The issue here is whether draft reports should be treated as such a statement or report and so not privileged. The point was discussed but not determined conclusively in this context in the decision of the Court of Appeal in Interchase Corporation Ltd (in liq) v Grosvenor Hill (Qld) Pty Ltd (No. 1)[1999] 1 Qd R 141. There, the drafts of various parts of what became a valuation report prepared by an expert, and described by Pincus JA as "category B" documents, had not been communicated to or prepared for the purpose of communication to a legal adviser; see at 153 ll. 22-33. His Honour did not deal with the issue whether a draft report which was prepared for the purpose of discussion with the defendant's solicitors and counsel was a statement or report of an expert for the purposes of r. 212. Thomas J would not have characterised the drafts of various parts of the report identified as category B documents in Interchase as a statement or a report; see at 159 ll. 43-45. His Honour's main reason for concluding that no valid claim existed for privilege in respect of those documents was, however, that they consisted mainly of working papers or valuations of other properties and lacked the quality of confidentiality. They had not been communicated to anyone else, in particular, the parties' solicitor. Nor was it intended that they should be so communicated; see at 162 ll. 3-25.
[19]
[12] Mr Dunning for the applicant submitted that the expert's opinion itself is not privileged although his communication of it to the solicitor would be privileged in the absence of r. 212. The expert is perfectly capable of saying what his opinion is when asked, whether in court or outside, but his communications with the solicitor for a party who has engaged him are privileged. That is true but does not determine whether a draft report communicated by him to a solicitor is itself privileged.
[20]
[13] In my view the answer to the question may be sought by asking whether a draft statement or report by an expert is nonetheless his statement or report even though it might not be his final view. If an expert has prepared a draft report it is still his report or statement, no doubt normally reflecting his state of mind at the time he wrote it. The fact that, after consultation with lawyers in an action, he may prepare a further report or amend the draft does not prevent the draft from meeting the description in the rules. Such a document seems to me to be different from the working papers and valuations of other properties referred to by Thomas J in Interchase. That was the approach adopted by Derrington J in Natwest Markets Australia Pty Ltd v Colliers Jardines (Qld) Pty Ltd (No. 3141 of 1996; 22 April 1998, unreported).
[21]
[14] On the other hand, Ambrose J in Amosv National Australia Bank Ltd[2001] QSC 31 at [20] appears to have proceeded on the basis that the draft documents and statements referred to before him would only have become expert reports had they been completed. That decision is distinguishable both from the present situation and the decision of Derrington J, which I propose to follow. Ambrose J referred to the documents he was considering as "the various reports, calculations ... made as a consequence of discussions between the Bank and its accountants and other experts upon forged handwriting, but no completed reports had ever been prepared and indeed none was ever made. The notations, drafts, statements etc. had obviously been prepared for the purpose of litigation and the communication of them to the Bank was privileged, albeit that had the reports ever been completed and become expert reports, they would have lost that privilege under the rules". The issue arose there in the context of an argument about costs, not whether the documents should have been disclosed. It is difficult to say on the evidence referred to in his Honour's decision whether the draft statements or reports in that case ever amounted to a statement or report of an expert in the terms of the rule.
[22]
[15] There is little such doubt here because of the description of the draft reports in para 17 of Mr Smith's affidavit as "draft reports ... prepared ... for the purpose of discussions with the defendant's solicitors and counsel retained on behalf of the defendant. This was to ensure that the final report, which would follow from the drafts, would be in admissible form and respond to all relevant issues canvassed and raised on the pleadings." Those documents seem to me to be properly described as documents consisting of a statement or report of an expert and should be disclosed.
[23]
[16] The issue here is whether the defendant should disclose documents relating to negotiations leading up to settlements of associated disputes with Citiwater Townsville and Tyco Water. It has agreed to disclose the terms of settlement with Citiwater Townsville and Tyco Water but says there are no terms of settlement with GHD because there has been no settlement agreed to between the defendant and GHD.
[24]
[17] It does not seem to me to be directly relevant to the quantum of the defendant's claim by counterclaim that documents recording the negotiation of such settlements, rather than the settlements reached, should be disclosed and I refuse to make such an order.
[25]
[18] This complaint concerns a category of documents relating to communication with landholders about "backfilling of the Mt Jack pipeline site". It seems that such documents exist but the defendant contends that they are not directly relevant to the issues being litigated as the issue whether the trench containing the pipeline should have been backfilled should be ascertained by reference to the contractual provisions rather than to correspondence with landowners of property where the pipeline was being laid.
[26]
[19] The issue of relevance from the plaintiff's point of view is whether the plaintiff backfilled the project in the area of the manholes in the pipeline before hydrostatic testing and without the pipeline having been completed properly or at all. The plaintiff's position is that it was appropriate to backfill the trenches before hydrostatic testing had occurred, that the contract required it and it was necessary for safety reasons to do so. It asserts, at para. 44 of Mr Kent's affidavit, that any communication the defendant had with landowners about the timing of backfilling and whether the backfilling occurred with the agreement or concurrence of the defendant or the superintendent is relevant to the proceedings. Mr Kent exhibits a letter to a landowner that has been disclosed. It deals with the issue of how much trench would be open at any one time; see ex. GLK7 at question 11 on p. 3. Prima face it is difficult to see how a communication like that can affect the parties' obligations under the contract but they are likely to be relevant to the allegations that the pipeline was backfilled in the area of the manholes "prior to and without hydrostatic testing having being completed adequately or at all" made in para 16(f) of the amended defence and counterclaim. The dates and terms of such letters seem to me to be relevant to the timing of any backfilling of the pipeline compared to the timing of hydrostatic testing and that is an issue in the action. Accordingly I will order that further disclosure be made in respect of those documents.
[27]
[20] The documents said not to be disclosed here and to be relevant are those relating to complaints by the defendant to other parties in respect of leaking joints in the project, especially complaints made to Tyco Water, GHD and Citiwater Townsville. Mr Kent has exhibited, as ex. GLK6, a number of documents of the type said to be relevant. Those documents do appear to relate directly to the dispute about the quality of the material supplied by Tyco Water and the method of installing them. It seems to me that such documents should be disclosed and I shall so order.
[28]
[21] This dispute relates to the non-disclosure of documents numbered 52, 120, A103, A172, A246 and 21 in the defendant's list of documents. They form part of a category of "incomplete documents" referred to at pp. 4-5 of ex. GLK1 to the affidavit of Mr Kent. The response from Mr Smith, which is ex. GLK3 to Mr Kent's affidavit, is that the missing parts of documents 120, A103 and A246 are parts of larger documents which are not directly relevant, that document A172 falls into the same category and also that the missing part of that document consists of an email which is a privileged communication. Similarly he asserts that the undisclosed parts of documents 21 and 52 are privileged.
[29]
[22] The claims to privilege in respect of documents A172 and 52 have been waived but the privilege is maintained in respect of document 21. Otherwise the incomplete documents have been disclosed and produced to the extent that they are admitted to be relevant. Mr Smith has sworn a separate affidavit claiming privilege in respect of document 21 as a communication from the defendant to the defendant's solicitors, Boulton Cleary & Kern, and Mr Manning, one of the expert witnesses, in relation to a specific enquiry pursued solely for the purposes of anticipated litigation. In my view there is no reason for me to go behind that claim to privilege to order the disclosure of document 21.
[30]
[23] The plaintiff has exhibited documents marked GLK11 to Mr Kent's affidavit to support its submission that the undisclosed portions of those documents must be relevant. Mr Smith says in para 30(a) of his longer affidavit that the part of ex. GLK11 that is part of document A246 is not the document disclosed by the defendant and that a copy of the correct document will be forwarded to the plaintiff's solicitors. The portions of those documents disclosed appear to be relevant but there is nothing in particular to alert me to any reason why the balance of the documents undisclosed should be regarded as relevant. It is, of course, appropriate to disclose only the relevant parts of documents; see Curlex Manufacturing Pty Ltd v Carlingford Australia General Insurance Ltd[1987] 2 Qd R 335, 337-339.
[31]
[24] Accordingly I will not order any further disclosure in respect of this complaint other than those parts of the documents in respect of which the claim for privilege has been waived, namely documents 52 and A172.
[32]
[25] The plaintiff also seeks, pursuant to r. 152 of the Uniform Civil Procedure Rules, an order that particular 2(b) of the defendant's further and better particulars concerning paragraph 16(c) of the amended defence and counterclaim be struck out to the extent of the word "partially".
[33]
[26] Paragraph 16(c) of the amended defence and counterclaim pleads that the plaintiff or the defendant added by counterclaim "failed to employ a proper star pattern bolt tightening procedure in the assembly of the flanged joints" in the pipeline and particularises that, in part, by saying that the procedure is "partially specified in the contract in clause 6.4 of the specification". Mr Kent asserts that the only document disclosed by the defendant that demonstrates a requirement to follow the "proper star pattern bolt tightening procedure" is the copy of the contract for the project. For that reason the plaintiff seeks to have struck out the word "partially" in the particulars to limit the defendant to the contract pleaded in that particular.
[34]
[27] In my view it is not appropriate to delete the word "partially". It should be open to the defendant to lead evidence, if it wishes, that the procedure may stem, for example, from proper work practices used in building such pipelines as well as from the contract. The solution, if any, is for the plaintiff to seek particulars of the respects in which the procedure is specified other than in the contract.
[35]
[28] The plaintiff also asks for an order that the defendant identify by number on its list of documents an attachment to document number 90 and that, as soon as reasonably practicable, it ascertain whether three undisclosed photographs originally attached to document A72 are in existence and, if so, disclose them to the plaintiffs. It seems to me that no such direction is necessary having regard to the fact that the defendant's counsel has informed me that the defendant will pursue the disclosure of those undisclosed photographs.
[36]
[29] An order is also sought that the defendant pursue GHD for the production of documents related to document 87 referred to in para. 30(c) of Mr Smith's longer affidavit. There is no reason to make such an order both because of what is proposed by Mr Smith there and because it is open to the plaintiff to seek non-party disclosure from GHD itself.
[37]
[30] Nor does there seem to me to be any need for a further affidavit to be filed for the defendant from an officer with appropriate authority and knowledge of the nature of the dispute in relation to the classes of documents said not to exist or not to be in the possession or control of the defendant or to have been disclosed already. This order was sought pursuant to r. 223(2). It allows the Court to order a party to a proceeding to file and serve on another party an affidavit stating that a specified document or class of documents does not exist or has never existed or stating the circumstances in which a specified document or class of documents ceased to exist or passed out of the possession or control of third parties. Where, as here, a detailed affidavit has been sworn by the defendant's solicitor, who has taken charge of the relevant documents for the purposes of the action, there is little practical benefit to be gained by requiring a similar affidavit from an officer of the defendant. There does not seem to me to be an objective likelihood that the duty to disclose has not been complied with merely because such an affidavit of an officer of the defendant has not been sworn. Such an order is to be made only if there are special circumstances and the interests of justice require it or it appears there is an objective likelihood that the duty to disclose has not been complied with or a specified document or class of documents exists or existed and has passed out of the possession or control of the party; see r. 223(4). The issues relevant to those aspects of discovery seem to me to be adequately dealt with in Mr Smith's affidavit and by the other orders I shall make. Accordingly I shall not make such an order.
[38]
[31] I will order, therefore, that, except where such disclosure has already been made, the defendant disclose to the plaintiff the classes of documents identified in complaints 1, 3, 5, 6, 8, 12 and 13 (limited to the balance of documents numbered 52 and A172 in respect of which privilege has been waived) in the affidavit of Gary Lance Kent filed 11 June 2004.
Parties
Applicant/Plaintiff:
# Mitchell Contractors Pty Ltd
Respondent/Defendant:
Townsville-Thuringowa Water Supply Joint Board \[2004\] QSC 329