PPK Willoughby Pty Ltd v Roads and Maritime Services & Minister Administering the Environmental Planning and Assessment Act 1979

Categories for discovery by the Plaintiff

1. The defendants seek discovery by the plaintiff of the following categories of documents which are in dispute: "1. All documents relating to the invitation to tender (tender invitation) referred to in paragraph 15 of the FASOC including and/or any response (or proposed response) to the Tender Invitation by PPK: documents recording or evidencing any consideration of the Tender Invitation by or on behalf of PPK; documents recording or evidencing any consideration of whether to submit a response to the Tender Invitation (including in relation to the terms of any such response) by or on behalf of PPK; … 4. All documents recording any consideration by HWL Ebsworth in respect of: the tender invitation; any response (or possible response) to the Tender Invitation by PPK; the documents contained in the Data Room; the Requisition; the s. 149(2) certificates or any certificate to be issued under s. 149(2) of the EPAA Act in respect of each parcel of land comprising of Properties; the purchase (or possible purchase) of the Properties by PPK; or the flood development controls. … 6. All documents from 1 October 2009 relating to the requisition including documents relating to any consideration of the Requisition Response by or on behalf of the Plaintiff and/or HWL Ebsworth. 7. All documents from 1 October 2009, including the Report, relating to any consideration by or on behalf of the plaintiff and/or HWL Ebsworth of the documents contained in the Data Room. 8. All documents between 9 October 2009 and 20 January 2010 relating to: … consideration by or on behalf of the plaintiff and/or HWL Ebsworth of, and any correspondence or all documents recording or evidencing or communications in respect of, the s. 149(2) certificates (as defined in the FASOC), or any certificate to be issued under s. 149(2) of the EPAA Act in respect of each parcel land comprising the Properties. 9. All documents recording or evidencing any consideration by or on behalf of the plaintiff and/or HWL Ebsworth of restrictions on use of the Properties in the period 1 November 2009 to 20 January 2010. … 11. All documents from 1 October 2009 relating to the Flood Development Controls, including: b) documents recording or relating to any work done on the assumption that the properties were not subject to any restriction on their use and development. … f) all documents relating to any consideration of the Flood Development Controls by PPK (or any person or entity engaged by or on behalf of PPK); … 13. All documents between 9 October 2009 and 20 January 2010 recording or evidencing any consideration by or on behalf of PPK, or the matters relied upon by PPK, in relation to: whether to purchase the Properties; whether to submit the Expression of Interest (and, if so, on what terms) including any correspondence between HWL Ebsworth and PPK regarding same; PPK's negotiating position in purchasing the Properties; the value of the Properties; the formulation of the Expression of Interest; whether to enter into the Contract (and, if so, on what terms); proceeding with Settlement.
2. The issue in relation to these categories arises from the use of the word "consideration" in each case.
3. The defendants also seek discovery of: "11. All documents from 1 October 2009 relating to the Flood Development Controls, including: … documents recording or relating to any work done on the assumption that the Properties were not subject to any restriction on the use and development.

Submissions of the plaintiff

1. Counsel for the plaintiff submitted that a critical issue in the proceedings was whether or not the defendants carried on the business of managing a portfolio of properties. He further submitted that an issue between the parties was whether or not the defendants regularly marketed surplus land for sale for the purposes of funding their respective activities. Against that background, counsel made the following submissions in relation to the disputed categories of documents for discovery by the defendants.
2. As to category 2A, counsel submitted that it was common ground that one or other of the defendants engaged in the practice of leasing land prior to it being sold. He submitted that a document recommending that a lease agreement be entered into would generally identify the basis on which a determination was made as to the amount of rent, and the term of the agreement. It was submitted that such documents would identify a business purpose, namely leasing activity, in circumstances where the plaintiff was required to demonstrate that the activities of the defendants concerning the management of land constituted a business or commercial activity. He submitted that to not discover documents which recommended a lease would operate to deny the plaintiff relevant and important evidence. In support of this proposition, counsel relied upon the decision in Village Building Company Limited v Canberra International Airport Pty Limited (2004) 139 FCR 330.
3. In terms of category 5, counsel for the plaintiff accepted that the defendant had indicated that it would discover the annual financial reports. However, he submitted that financial reports provided between the publication of annual reports would, in the ordinary course, set out the basis of transactions which were being undertaken, and that this was critical to the plaintiff establishing that the defendants were engaged in a business. He also pointed out that the period for which these reports were sought was a limited one.
4. In relation to categories 9 to 12, counsel for the plaintiff acknowledged that documents such as the Information Memorandum, the Tender Invitation and the Contract were already in possession of the plaintiff. However, he submitted that the documents sought to be discovered in this category would disclose the purpose of the creation of the documents which were in the plaintiff's possession.
5. In terms of the defendants' motion, counsel for the plaintiff turned firstly to categories 1, 4, 6, 7, 8(b), 9, 11(f) and 13. He submitted that a category of documents which adopted the phrase "any consideration of" was too broad: Construction, Forestry, Mining and Energy Union v Rio Tinto Coal Australia Pty Limited [2014] FCA 462 ("CFMEU") at [122].
6. Counsel conceded that category 11(b) reflected the pleadings. However he submitted that as drafted, this category required the plaintiff to determine what documents related to a relevant assumption. He submitted that the category should be restricted to documents which recorded or evidenced matters taken into account by the plaintiff in relation to the restrictions placed upon the use of the properties in question.

Submissions of the defendants

1. Counsel for the defendants submitted that the extent of any permitted discovery was to be determined firstly by reference to the pleaded issues, and secondly by reference to the provisions of s 56 of the Civil Procedure Act 2005 ("the Act").
2. Counsel submitted that the defendants had already agreed to provide significant discovery of documents going to the issue of whether the defendants were carrying on a business. He pointed out, in particular, that the defendants had agreed to discover: 1. documents comprising marketing material for the sale of land and buildings by the defendants over a 3 year period; 2. all final contracts for the sale of land by the defendants over a similar 3 years period; 3. all annual financial reports recording all evidencing relevant activities; and 4. submissions for recommendation of sale and/or approval of sale of land by the defendants in a similar 3 year period.
3. In terms of category 2A, counsel for the defendants pointed to the pleadings in paragraph 5 of the further amended statement of claim, and the defence responding to those pleadings. He pointed out that the pleadings in paragraphs 5(a) to (h) were all admitted, such that the only matters which were in issue were those pleaded in paragraphs 5(i) and (j), neither of which raised any issue of leasing of properties. He pointed out that the only allegation in paragraph 5 which went to that question was paragraph 5(h), which was admitted. Counsel submitted that in these circumstances, and also having regard to paragraph 6A of the further amended statement of claim, there was no pleaded fact in issue in respect of leasing by the RMS.
4. Counsel also drew attention to paragraph 10A of the further amended statement of claim and submitted that no issue of leasing was raised against the Minister. He also submitted that the relevant transaction in the present proceedings was a property sale, not a lease. He further submitted that an additional vice of category 2A was that it sought the creation of a document and not the discovery of a document. For all of these reasons, he submitted that the defendants should not be required to discover the documents in category 2A.
5. In terms of category 5, counsel for the defendants submitted that the annual financial reports disclosed revenue from property sales and that in view of what was otherwise proposed to be discovered by the defendants in respect of the issue of carrying on of a business, this was sufficient. Counsel submitted that deletion of the word "annual" from the request would necessitate a review of all financial reports over a 3 year period in order to determine whether or not they recorded or evidenced something relating to the sale of property. He submitted that it would be a highly onerous undertaking, and one which was generally contrary to the provisions of s 56 of the Act.
6. As to categories 9 to 12, counsel submitted that each referred to a document that was provided to interested persons before any tender was submitted. He submitted that there was no pleaded issue as to the content or drafting of such documents and that in these circumstances, discovery of the documents in those categories should not be ordered.
7. In respect of the defendants' motion, counsel submitted that category 11(b) mirrored the allegation in paragraph 38(b) of the further amended statement of claim. He submitted that the statement of claim had been verified and that the person verifying it must have had knowledge of the subject matter and could identify the documents which related to that category.
8. In respect of categories 1, 4, 6, 7, 8(b), 9, 11(f) and 13, all of which concerned the issue of the use of the word "consideration", counsel submitted that this was an ordinary English word, which carried its ordinary English meaning. He submitted that the mere use of that word did not automatically lead to the conclusion that the categories of documents were too wide, and that the issue was required to be determined in the context of the dispute between the parties. He submitted that in such a context, and given the correspondence which had passed between the parties (in the course of which the solicitors for the defendants had provided a definition of the word "consideration") there could be no real issue as to what was meant by it.

Submissions of the plaintiff in reply

1. In terms of category 2A, counsel for the plaintiff revised his position and abandoned the application in so far as it entailed the provision of a list of the kind contemplated.
2. As to categories 9 to 12, counsel for the plaintiff pointed out that the documents sought related to one property and that in these circumstances there had been no "general trawling".

THE RELEVANT PROVISIONS OF THE RULES

1. Rule 21.2 of the Uniform Civil Procedure Rules 2005 ("the Rules") is in the following terms: 21.2 Order for discovery (1) The court may order that party B must give discovery to party A of: (a) documents within a class or classes specified in the order, or (b) one or more samples (selected in such manner as the court may specify) of documents within such a class. (2) A class of documents must not be specified in more general terms than the court considers to be justified in the circumstances. (3) Subject to subrule (2), a class of documents may be specified: (a) by relevance to one or more facts in issue, or (b) by description of the nature of the documents and the period within which they were brought into existence, or (c) in such other manner as the court considers appropriate in the circumstances. (4) An order for discovery may not be made in respect of a document unless the document is relevant to a fact in issue.
2. Rule 21.1(2) contains the following relevant definition: 21.1 Definitions … (2) For the purposes of this Division, a document or matter is to be taken to be "relevant to a fact in issue" if it could, or contains material that could, rationally affect the assessment of the probability of the existence of that fact (otherwise than by relating solely to the credibility of a witness), regardless of whether the document or matter would be admissible in evidence.

General Principles

1. It is important to bear in mind that in determining the permissible scope of discovery, documents that may be relevant to a fact in issue should not be unduly restricted: Lakatoi Universal Pty Limited v Walker [1998] NSWSC 470; Idoport Pty Limited v National Australia Bank Limited [1999] NSWSC 1026. At the same time, the Court retains a general discretion to limit discovery, consistent with the provisions of s. 56 of the Act: Palavi v Radio 2UE Sydney Pty Limited [2011] NSWCA 264 at [101].

The plaintiff's motion

1. In terms of category 2A, the change in position by counsel for the plaintiff as to the requirement for a list overcomes what would otherwise have been, in my view, an almost insurmountable objection raised by the defendants. As counsel for the defendants pointed out, category 2A, as drafted, sought (at least in part) the creation of a document, as opposed to discovery.
2. In any event, the pleadings raise no issue about the defendants' leasing of properties. To the extent that any allegation is made by the plaintiff in that respect it has been admitted. In these circumstances, I am not satisfied that the defendants should be required to give discovery of the documents in category 2A, even on the revised basis sought by counsel for the plaintiff. The judgment of the Full Federal Court in Village Building Company (supra) at [54], upon which the plaintiff relied, simply makes the point that particular activities may have more than one character. In light of the pleadings in this case, that decision does not, in my view, provide any real support for the plaintiff's position.
3. As to category 5, and even giving full weight to the fact that there is an issue in the proceedings as to the defendants carrying on a business, I am satisfied that the category should be limited to the discovery of annual reports by the defendants. Those reports will disclose relevant information regarding revenue derived from property sales. In reaching that conclusion I have had regard to the extent of the material already discovered by the defendants in relation to the general issue of the carrying on of a business.
4. As to categories 9 to 12 no issue is raised on the pleadings as to the content of any of the material already in the plaintiff's possession. In these circumstances, discovery of "all documents which refer to or evidence" that material is, in my view, unnecessarily wide and should not be permitted.

The Defendants' motion

1. As to categories 1, 4, 6, 7, 8(b), 9, 11(f) and 13 there should, in my view, by no real issue in terms of the ordinary meaning of the word "consideration". Generally speaking, the documents in those categories go to the issue of the reliance, by or on behalf of the plaintiff, of representations made by the defendants. In my view, discovery of that material is entirely appropriate.
2. I have had regard to the decision of Flick J in CFMEU (supra) upon which counsel for the plaintiff relied. At [122] his Honour noted that one category of documents sought in that case included the words "consideration of". He concluded that such a category invited inquiry into matters which may or may not have had relevance to a decision making process.
3. In my view, his Honour's observations are not to be construed as authority for the proposition that a party will be automatically disentitled to an order for discovery whenever the identified category of documents uses the word "consideration". Whether the use of such a word will result in the scope of discovery being impermissibly extended is an issue which falls to be determined on the facts of, and issues in, the particular case. In the context of the present case, and in light of the correspondence which has passed between the parties, there can hardly be any real dispute about the meaning of the word "consideration".
4. Finally as to category 11(b), and in circumstances where that category mirrors the pleading contained in para. 38(b) of the further amended statement of claim, there should be no issue about identification of the documents in question. Discovery of that material is therefore appropriate.

COSTS

1. In respect of the categories of documents which remained in issue, the plaintiff has been entirely unsuccessful on its motion. The defendants have been entirely successful on their motion. In these circumstances, there is no reason why the plaintiffs should not pay the defendants' costs of each motion, as agreed or assessed.

ORDERS

1. I make the following orders: 1. The plaintiff's notice of motion is dismissed. 2. The plaintiff is to give verified discovery of the documents identified in this judgment as categories 1, 4, 6, 7, 8(b), 9, 11(b),11(f) and 13 within 14 days 3. The plaintiff is to pay the defendants' costs of both notices of motion as agreed or assessed.

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. Decision last updated: 13 October 2015