Suncorp Metway v Rider Levett Bucknall

Issues in the litigation 2Of present significance, the bank says that it was relevantly induced to lend the money to FTFS because of a report or reports prepared for it by the defendant, a firm of quantity surveyors. The defendant (RLB) reported as to the estimated cost of carrying out the development proposed by FTFS, the time to carry out that work, and other matters. According to the bank, RLB was negligent, and otherwise liable, because its report was seriously inadequate both as to the cost of construction and as to the time for completion of the development. 3RLB is no doubt in a position to defend those aspects of the case on their merits, although I note in passing that many paragraphs of RLB's list response "do not admit" the allegation to which they purport to reply. That is not consistent with the requirements for a list response set out in paras 10 and 11 of Practice Note SC Eq 3. See, in particular, para 11.2, which requires a defendant's contentions to admit or deny allegations made by the plaintiff. 4For present purposes, no complaint is made about the tactic of "not admitting" various allegations but I would not want it thought that, by passing it over, I am expressing some tacit approval of that practice. I am not. 5Of present significance, para 40 of the list response alleges that if RLB has any liability to the bank, the bank caused or contributed to the loss in respect of which it sues RLB. Detailed particulars are given of that allegation. They allege, among other things, that the bank did not follow its own procedures when it agreed to grant the loan to FTFS and when, from time to time, it agreed to vary it. 6Para 41 of the list response asserts that there are some six concurrent wrongdoers in respect of what is said to be an apportionable claim for the purposes of s 34(1) of the Civil Liability Act 2002 (NSW), and s 87C(B)(1) of the then Trade Practices Act 1974 (Cth). RLB asks the court to limit any judgment against it for no more than is whatever may be found to be its just contribution to the bank's loss and damage. 7Paras 42 and following of the list response then plead and give particulars of the matters that are said to make each of the six individuals or entities concurrent wrongdoers. 8One of the issues raised by RLB is as to the bank's reliance on its report. I am not entirely sure how that could arise, in circumstances where the bank commissioned the report for the purpose of deciding whether or not to grant the loan and, if it did, on what terms. Nonetheless, the allegation of reliance is denied.

Application for disclosure 9On an earlier occasion, when the matter was listed (I think, but it does not matter) for directions, a number of questions were argued including some application by the bank to strike out various parts of the list response and some application by RLB for the production of documents. In relation to the production of documents, Hammerschlag J clearly having in mind the requirements of Practice Note SC Eq 11, enquired (T 6.13) "Why are the circumstances not exceptional anyway?" His Honour observed, in my respectful view correctly, that the question of reliance was "internal" to the bank and that production of the bank's internal documents going to the question of reliance ought be permitted. 10There was further debate which resulted in his Honour noting at T 10.30: "I note that the plaintiff accepts that material internal to it in relation, both as to its deliberations and as to quantum, are in due course properly discoverable and the parties are to engage in discussions about identifying appropriate classes of documents for discovery." 11Although his Honour did not say what he had in mind by "in due course", it is clear that he thought that the documents might be discoverable (or disclosable) prior to RLB putting on its evidence. So much appears from his Honour's earlier references to the circumstances being "exceptional"; and it is confirmed in essence by the orders that his Honour made. 12That exchange led to RLB's solicitors proposing categories for disclosure. Some thirty categories of documents were proposed. I have to say that the terms used in relation to the categories, by the adoption of such well worn phraseology as "all documents...evidencing, recording, referring to" some subject, might be thought to be inappropriate to the requirements of the Practice Note SC Eq 11. Further, the use of the tactic of identifying specific subjects but stating that the request for discovery was one "including but not limited to" those specific topics, might be thought to be inconsistent with the Practice Note. 13Notwithstanding those observations, and notwithstanding the complaints now made by Mr Kidd of counsel (for the bank) as to the width of categories three to thirty, the bank engaged in an exercise of producing informally what it said were non privileged documents held by it in relation to categories three to thirty. However, in relation to categories one and two, the bank produced only a limited class of documents.

Application for further discovery 14RLB's solicitors have undertaken an exhaustive (and no doubt exhausting) process of analysis of what has been produced, and through a lengthy affidavit and detailed schedule have identified what they say are numerous shortcomings, discrepancies and inconsistencies in the production in relation to categories three to thirty. That has led RLB to seek an order that the discovery be verified, that there be further or particular discovery, and that there be an affidavit setting out particulars of the various claims for privilege. In each case, I exclude for the moment categories one and two. 15Notwithstanding that the bank did not take a point as to the width of the expressions used in relation to categories three to thirty, I want to make it perfectly plain that I do not regard it as normally appropriate, in an application under para 4 of the Practice Note, to use the drafting technique adopted in those categories. If there is to be disclosure of documents before evidence, as is contemplated may occur in exceptional circumstances, what is required is a precise identification of the documents, or classes of documents, concerned. I do not regard the shotgun or machine gun technique of drafting as being necessarily apposite to meet that requirement. 16It is sufficient to refer to category three which seeks disclosure of documents "evidencing, recording, referring to or concerning" the application for finance. That request is said to be one "including but not limited to" some nine specified categories of documents. Of those nine categories, one has six sub-categories, and another has four sub-categories. Of those four sub-categories, two have sub-sub-categories. 17It may very well be that if the words "including but not limited to" had not been used, but, rather, the request for disclosure had been made in respect of those nine categories (and their various sub-and sub-sub-categories) then the request could be seen as being consistent with the requirements of the Practice Note. 18Likewise, it may be observed that from time to time, some of categories three to thirty require disclosure of documents that have already been produced by the bank in its evidence. I simply do not understand how it could be necessary for a defendant to have disclosure of a document that has already been made available to it, for the purposes of putting on its evidence. 19In other cases, the well worn phrase "including but not limited to" is used not to indicate particular categories of documents on which, it might be thought, the particular category was truly focused, but, rather, to extend that category. 20The only reason I have gone to all the trouble of dealing with categories in respect of which there was no original protest is because RLB, in respect of those categories, wants the bank to go back and give disclosure on oath, and to deal with the claims for privilege, in the way that I have suggested. 21It is true that the evidence of RLB identifies what are said to be deficiencies in the disclosure given by the bank in respect of categories three to thirty. It is equally true that some of those complaints may not be correct. By way of example only, there are categories of documents said not to have been disclosed that should have been placed in various parts of the bank's files. It is not entirely clear whether the complaint is that the documents have not been disclosed at all, or whether they have not been disclosed by reference to where they should have been (according to RLB) in some particular part of particular files maintained by the bank. 22If it is the latter case, then I fail to understand why the exercise of disclosure at this stage needs to be undertaken by reference to the particular files and particular filing structure adopted. 23If the complaint is the former, it is sufficient to note that in some cases at least, some of the documents said not to have been disclosed have in fact been produced in other ways. 24On either basis, it is clear that the complaints as to non-production need very careful consideration. 25As against this, the bank's evidence is that various files that were thought to be the most likely repositories of relevant documents have been searched, and that documents thought to fall within categories three to thirty that were found on those searches have been produced. 26I refused leave to cross-examine the deponent of that affidavit because in my view the question is one which ought be resolved at the level of principle and not at the level of minute detail. I remain of that view. 27Accepting that there may be deficiencies in the disclosure, nonetheless the evidence is that there has been an attempt to search relevant files and disclose relevant documents within the categories three to thirty. 28What the evidence for RLB does not address is why the volume of documents which it has obtained from the bank (I am told, some seven lever arch folders in all), combined with the many folders of documents that the RLB has obtained from the builder and from receivers appointed by the bank, are not sufficient to enable RLB to commence the process of putting on its evidence, including in relation to the defences of contributory negligence and the defences seeking to raise proportionate liability. 29Even if it be accepted, for the sake of argument, that there are deficiencies in the bank's disclosure, it is by no means apparent how those deficiencies are of such magnitude as to require further revisiting of repositories of documents, and the associated formality of a verified list of documents, to enable RLB to mount its evidentiary case. 30In the same category, and a fortiori, I have no understanding of why it is necessary for RLB to have the claims for privilege properly verified before it can mount its evidentiary case. 31For those reasons, it is my view that the notice of motion, insofar as it relates categories three to thirty, should not receive the court's imprimatur. 32I turn, as I said I would, to the first two categories. 33Before the bank made the construction loan to which I have referred, it lent money to FTFS to enable it to buy the land. That loan was rolled over into, or refinanced by, the construction loan. The bank seeks to recover all its loss on the construction loan facility. Thus, the loss that the bank seeks to recover includes the amount originally lent by it for the purchase of the land. 34RLB wishes, in my view understandably, to investigate what might be called the counter-factual situation: what would have happened if a report that was not deficient in the ways alleged by the bank had been prepared and provided to the bank. It may be - I do not know - that RLB wishes to argue that if that had been done, the bank would not have made the construction loan. In those circumstances, I have been told, RLB may wish to argue that the bank would have suffered a loss in any event on the original loan, and that in some way this aspect of loss should not be sheeted home to it if, otherwise, it is liable in respect of the advice that it gave that preceded, and is said to have induced the making of, the construction loan. 35Acknowledging that for those reasons categories one and two appear to have some relevance, and that because they are matters internal to the bank, RLB needs them before it can put on all its evidence, nonetheless the categories are extremely wide. They cover documents extending over some three years, and again use the hallowed phraseologies "evidencing, recording, referring to" and "including but not limited to". 36It is common ground that some documents have been provided pursuant to category one and category two. There is a dispute as to the extent of that production. Some of that dispute may relate to the fact that documents of the apparent width sought by categories one and two have not been provided. Some may relate to internal inconsistencies - I do not know. In this context, a difficulty that I have in coming to grips with the complaints is that the table prepared by RLB's solicitors, setting out alleged deficiencies in the bank's disclosure, has not I think been prepared with reference to the categories rather than the documents that have been provided and the evidentiary sources for the alleged deficiencies. 37What I propose to do is to indicate that in principle there should be disclosure in relation to categories one and two, but that the categories should not be as widely described as presently they are. To that extent, I would be inclined to make an order for disclosure, although not an order for disclosure involving either the formality of a verified list of documents or a requirement for verification of any claim for privilege. 38It seems to me that the appropriate way to deal with this is to reserve further consideration of the amended notice of motion filed on 14 August 2002, insofar as that amended notice of motion picks up categories one and two of the categories for disclosure that have been proposed, but to indicate that the notice of motion will otherwise be dismissed. 39Since I remain of the view that it is better for the parties to try and agree on a manageable process of disclosure rather than for the court to impose one which may have its own difficulties, I propose to stand the matter over for a period of time convenient to the parties and counsel to enable what I have said to be digested and, I hope, acted on appropriately. 40When the matter comes back I will make appropriate orders and deal if there is no agreement with the question of costs. 41I should make it clear that I am dealing with the matter on the basis that it is an application for disclosure before evidence in terms of Practice Note SC Eq 11. I accept that at some stage there may be legitimate reasons why the bank should be required to give verified discovery in the usual way, so that RLB can make use of whatever discrepancies or non-productions may be demonstrated from that verified disclosure. I simply do not think that this is the appropriate time for that to be done. 42To make it perfectly plain, I am not foreclosing an application for formal discovery at what I regard to be an appropriate time.

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: 23 August 2012