The Owners Strata Plan 69567 v Baseline Constructions Pty Ltd [2012] NSWSC 502 | Case summary

What happened

This was a procedural, interlocutory dispute before Stevenson J in the New South Wales Supreme Court (Technology and Construction List). The Owners - Strata Plan No 69567 (the owners corporation) had sued, among others, Baseline Constructions (builder) and Baron Corporation (Baron), in respect of construction of common property at Rosebery. The owners corporation served a Notice to Produce dated 4 April 2012 on Baron seeking broad categories of documents including profit and loss statements, balance sheets, tax returns for a sequence of years, and all communications and security documents between Baron (and related companies) and financiers in relation to the development project ([1]–[3]).

Baron sought to set that Notice aside. At the time, no witness statements had been exchanged; Practice Note SC Eq 11, which generally prevents orders for disclosure until evidence has been served, was drawn into the discussion because the Notice sought production before exchange of evidence ([18]–[20]). Baron also had filed a separate interlocutory Notice of Motion seeking dismissal (a strike-out/dismissal application) of the claims against it ([33]–[34]). The parties agreed the Court should consider whether the Notice complied with the UCPR and whether there were 'exceptional circumstances' under Practice Note SC Eq 11 to warrant early production ([10], [18]–[19], [29]).

Stevenson J found the 4 April 2012 Notice invalid under UCPR r 21.10 because it did not identify specific documents but instead sought classes of documents, and therefore set it aside ([4]–[7], [43(a)]). Nonetheless, assessing the Practice Note, the Court concluded that the Practice Note could not be sidestepped by serving Notices to Produce and that the Court could 'otherwise order' under r 21.11 or r 34.10 if exceptional circumstances were demonstrated ([21]–[29]). Because Baron had an outstanding dismissal application and the documents sought were likely adjectivally relevant to that application (potentially revealing a tripartite contractual relationship or securities that could affect whether a builder did work 'on behalf of' Baron), Stevenson J found that exceptional circumstances existed and granted leave for the plaintiff to serve a properly specified Notice under UCPR r 34.1, returnable before the Registrar. The original r 21.10 Notice was set aside; further directions on the return date and costs were reserved ([41]–[43]).

Why the court decided this way

Two discrete legal propositions drove the decision.

First, compliance with the formal requirements of UCPR r 21.10. Stevenson J emphasised that a Notice under r 21.10 must call for a "specific document or thing that is clearly identified" ([4]). Relying on earlier authority (Patonga Beach Holdings v Lyons; Norris v Kandiah), the Court accepted that a notice that merely seeks a class of documents, however tightly described, does not satisfy the rule ([5]–[6]). The 4 April notice sought broad classes (profit and loss statements over several years, all correspondence with financiers, etc.) and thus failed the specificity requirement. While the plaintiff later identified two particular documents in correspondence (the Development Agreement and a Facility Agreement referred to in ASIC filings), that post-service identification did not cure the deficiency of the original r 21.10 notice ([3], [7]). Hence the notice had to be set aside ([43(a)]).

Second, the interplay with Practice Note SC Eq 11. Practice Note SC Eq 11 (effective 26 March 2012) directs that the Court will not order disclosure until parties have served their evidence, except in exceptional circumstances ([18]–[20]). Stevenson J rejected any contention that Notices to Produce could be used to evade the Practice Note, observing that allowing such a procedural artifice would subvert the Practice Note's purpose and could amount to abuse of process ([21]–[25]). The UCPR expressly allows the Court to order otherwise (r 21.11 and r 34.10), and the Court will exercise that power sparingly where 'exceptional' circumstances exist ([22]–[25]).

The Court then considered whether exceptional circumstances existed in this case. Drawing on the ordinary meaning of 'exceptional' (adopted from Leighton at [20] and applied in this judgment), Stevenson J found that the existence of Baron's pending dismissal application and the potential for the documents sought to be directly relevant to that application constituted circumstances out of the ordinary. The documents sought might materially assist the plaintiff in resisting the strike-out application by revealing contractual or financing arrangements bearing upon whether Baseline did the work 'on behalf of' Baron ([32]–[42]). On that basis, the Court exercised its power to 'otherwise order' and allowed the plaintiff to re-serve a notice under UCPR r 34.1 that specifies the particular documents identified in the plaintiff's later letter ([42]–[43(b)]).

Before and after state of the law

Before this decision:

The authorities relied upon (Patonga; Norris) already required specificity for notices under r 21.10: they must identify particular documents rather than classes ([5]–[6]).
Practice Note SC Eq 11 was a recent court administrative step aimed at curbing early disclosure and discovery costs; earlier decisions (Armstrong, Leighton) had discussed its operation ([20]).

After this decision:

The ruling reaffirmed the strictness of the specificity requirement for r 21.10 notices; parties cannot validly use r 21.10 to obtain broad classes of documents ([4]–[7]).
It clarified that the Practice Note SC Eq 11 is not avoided by serving Notices to Produce; the Court will use its express powers under the UCPR to prevent such circumvention and will require 'exceptional circumstances' to be demonstrated before disclosure is allowed prior to exchange of evidence ([21]–[29]).
It confirmed that where exceptional circumstances do exist, the Court can grant leave to serve a UCPR r 34.1 Notice (which may call for 'any specified document') even if exchange of evidence has not yet taken place ([8]–[9], [42]–[43]).

In short, this judgment both enforces specificity for r 21.10 notices and balances that enforcement against the Court's power to permit early production where the circumstances justify it, particularly to meet an impending interlocutory challenge.

Key passages with plain-English translation

Paragraph 6: "As those authorities, and indeed the words of the rule, make clear, a Notice to Produce served pursuant to UCPR r 21.10 must identify specific documents (not merely classes of documents, no matter how specifically those classes are described)."
- Translation: You cannot serve a notice that says "all documents of type X" and expect compliance. The notice must point to particular documents, not just types or categories.
Paragraph 23: "It would subvert the intended operation of the Practice Note if parties could avoid its operation by adopting the expedient of serving a Notice to Produce, rather than seeking an order for disclosure."
- Translation: You cannot game the system by using Notices to Produce as a way of getting early disclosure when the Practice Note prevents it. The court will not allow that workaround.
Paragraph 30 (citing Leighton) and paragraph 31: On 'exceptional' meaning "out of the ordinary, or unusual", not necessarily unique.
- Translation: 'Exceptional' means more than ordinary; it need not be one-off, but it must be something that justifies making an exception to the general rule.
Paragraph 42: "As the plaintiff is facing what amounts to a strike out application, and as the documents sought may well provide it with ammunition with which to resist that application, the circumstances are sufficiently unusual or out of the ordinary..."
- Translation: Because there is a pending attempt to end the plaintiff's claim without a hearing, and these documents might help the plaintiff stop that, this is a legitimate reason to allow early disclosure.

What fact patterns trigger this precedent

From the judgment, the kinds of fact patterns likely to trigger similar relief (leave to produce before evidence is exchanged) are:

There is a pending interlocutory application that could dispose of the proceeding (strike-out, summary dismissal) and the outcome of that application could be materially affected by documents in the opposing party's possession ([33]–[35], [41]–[42]).
The documents sought are more than merely of background interest; they are adjectivally relevant, they may provide direct factual or legal support needed to resist the interlocutory application (here, documents showing contractual relationships or financing arrangements relevant to whether work was done 'on behalf of' Baron) ([39]–[41]).
The applicant cannot obtain those documents from another source in time and the absence of those documents would render the pending interlocutory application premature or unjust ([34], implicit in [41]–[42]).

Conversely, a party seeking disclosure before evidence exchange where only routine discovery is sought, or where the documents are not directly relevant to an immediate interlocutory determination, will likely fail to demonstrate exceptional circumstances ([18]–[29]).

How later courts have treated it

This judgment itself cites and relies upon earlier decisions addressing Practice Note SC Eq 11 and the meaning of 'exceptional' (Armstrong; Leighton), and earlier authority concerning the specificity requirement for notices (Patonga; Norris) ([5], [20], [30]). The present decision is an application of those authorities to particular facts: it upholds the specificity rule and gives practical guidance on how and when the Practice Note may be displaced.

The judgment does not provide material about later appellate consideration or subsequent cases applying its specific combination of holdings. The immediate post-judgment actions contemplated were procedural: the plaintiff was granted leave to serve a properly specified r 34.1 Notice and the return date and costs were to be the subject of further submissions ([43]–[44]).

Practitioners should therefore treat this decision as a working trial-level application of the Practice Note and UCPR rules: it confirms the strictness of r 21.10, confirms the Court's readiness to prevent subversion of the Practice Note, and demonstrates that 'exceptional circumstances' can include the existence of a strike-out application where the documents sought are adjectivally relevant.

Still-open questions

A number of practical and doctrinal points remain for future clarification:

The precise threshold of 'adjectival relevance' required to constitute an 'exceptional circumstance' is fact-sensitive; courts will need to articulate how direct and material the connection between the documents and the interlocutory application must be before allowing early production (this judgment found such a connection on these facts at [41]–[42], but did not lay down a bright-line test).
The decision leaves open the question of how narrowly a r 34.1 notice permitted under these exceptional circumstances must be framed, is a request for a narrow set of specified documents mandatory, and what standard will the Court apply to determine sufficiency of specification for a r 34.1 notice in the pre-evidence context (contrast r 21.10 specificity requirement and r 34.1's 'specified document') ([4], [8]–[9], [43]).
Allocation of costs and the practical management of the return date for any r 34.1 notice remain to be determined on remittal; the Court reserved those matters for further submissions ([44]).
Broader policy questions about how Practice Note SC Eq 11 will operate in complex construction litigation where financing and corporate arrangements often bear heavily on liability remain practical challenges: this judgment suggests the court will balance cost-control goals against fairness in interlocutory contests, but the contours of that balancing exercise will be developed incrementally in subsequent cases ([21]–[29], [26]).

Practitioners should therefore be careful in drafting notices to produce: r 21.10 notices must specify particular documents; if seeking production before witness statements are served, they should be prepared to demonstrate exceptional circumstances and to frame any r 34.1 request in narrow, document-specific terms tied to an immediate interlocutory need.

Judgment (5 paragraphs)

[1]

Solicitors: Bannermans Lawyers (plaintiff/respondent) Stanford Lawyers (second defendant/applicant) File Number(s): SC 2011/63243

[2]

Judgment 1By Notice of Motion filed in court on 11 May 2012, the second defendant, Baron Corporation Pty Ltd ("Baron") seeks to set aside a Notice to Produce dated 4 April 2012 served on it by the plaintiff. 2Relevantly, the Notice to Produce sought production of the following documents: - "(1) All profit and loss statements, balance sheets, cash flow statements and tax returns of Baron Corporation Pty. Ltd. (ACN 001 406 873) for the periods ending 30 June 2001, 30 June 2002, 30 June 2003, 30 June 2004, 30 June 2005 and 30 June 2006. ... (4) Copies of all documents, letters and facsimiles generated by, or correspondence and file notes of oral conversations with, any financier/bank providing finance for the Development Project to any or all of Baron Corporation Pty Limited (ACN 001 406 873), Metro Village Development Pty Limited (ACN 050 037 566) (Deregistered) and/or Oldtex Pty Limited (ACN 003 163 924 including, without limitation: (a) all mortgages (registered and unregistered), charges (fixed and/or fixed and floating), debentures or any interests by way of security over any assets of the company; (b) all directors' guarantees and/or indemnities; and (c) all agreements to create, confer or give any of the rights of interests in 4(a)." 3By letter dated 9 May 2012, the plaintiff's solicitors refined and expanded the documents sought in paragraph 4 of the Notice to Produce as follows: - "3. Calls upon the documents specified in paragraph 4 of the Notice to Produce to the extent the documents relate to the Development Project (as defined in the Notice to produce) and any security (including without limitation any charges and mortgages). 4. Further in relation to paragraph 4 of the Notice to Produce, my client specifically calls upon: a. The document referred to as 'A Development Agreement in respect of the Property made between [Metro] and Baron Corporation Pty Limited' in the document annexed to the Notification of details of charge form 309 submitted to the ASIC by Phillip Bart on 20 December 2001. b. The 'Facility Agreement made between [Metro], [Macquarie Bank Limited] and Others and other Transaction Documents' referred to on page 1 of form 309 submitted to the ASIC by Phillip Bart on 26 June 2004 to the extent that they relate to Baron Corporation Pty Ltd." (emphasis in original) 4The Notice to Produce was served pursuant to Uniform Civil Procedure Rules (2005) ("UCPR") r 21.10 which provides that the notice must call for production of, relevantly, a "specific document or thing that is clearly identified in the notice". 5It is plain that the Notice to Produce, as served, did not seek production of specific documents clearly identified: see Patonga Beach Holdings Pty Ltd v Lyons [2009] NSWSC 869 per Barrett J, in which he cited with approval the observations made by Brereton J in Norris v Kandiah [2007] NSWSC 1296. 6As those authorities, and indeed the words of the rule, make clear, a Notice to Produce served pursuant to UCPR r 21.10 must identify specific documents (not merely classes of documents, no matter how specifically those classes are described). 7Although two specific documents are referred to in the plaintiff's solicitor's letter of 9 May 2012, the Notice to Produce of 4 April 2012 does not refer to "specific documents". It must be set aside. 8However, it is common ground that the plaintiff could overcome this problem by serving a Notice to Produce pursuant to UCPR r 34.1. That rule enables service of a notice requiring production of, relevantly, "any specified document". 9A document is "specified" where it is described or identified. A notice under UCPR r 34.1 plays in relation to a party the same role as is played under UCPR r 33 by subpoena in relation to a non-party: see Barrett J in Patonga Beach Holdings at [12]. 10In those circumstances, the plaintiff and Baron have invited me to express a view about the relevance of the documents sought, and the impact of Practice Note SC Eq 11, on the assumption that the plaintiff serves a UCPR r 34.1 Notice to Produce in the same terms (as refined in the letter of 9 May 2012) as the one presently under consideration.

[3]

Relevance of documents sought to issues in the proceedings 11The plaintiff is an Owners Corporation and is the registered proprietor of the common property of an apartment complex at Rosebery. 12The first defendant, Baseline Constructions Pty Ltd ("Baseline") is a builder that constructed the Rosebery property ("the Project"). The plaintiff alleges Baseline carried out "residential building works" ("the Work") within the meaning of the Home Building Act (1989) ("the Act") in relation to the construction of the common property. Baseline has not participated in the debate before me concerning the plaintiff's Notice to Produce. 13Baron was the owner of part of the property on which the Work was carried out. 14The plaintiff alleges, and Baron denies, that Baseline did the Work under contract with Baron. 15Baron points to (at least) three contracts that Baseline entered into with Metro Village Development Pty Limited ("Metro") to do the Work on the Project. These are particularised in the plaintiff's List Statement as being in writing and dated 28 November 2001, 26 March 2003 and 12 May 2004. 16Baron denies the existence of any other contract between it and the plaintiff in respect of the Work. 17The plaintiff alleges, alternatively, that Baseline did the Work "on behalf of" Baron for the purposes of s 3A of the Act and is thus a "developer" for the purposes of the Act. Baron denies it was the developer and asserts that Metro was the developer.

[4]

Practice Note SC Eq 11 18The parties have not yet exchanged witness statements. Accordingly, the requirements of Practice Note SC Eq 11 arise for consideration. 19This Practice Note took effect on 26 March 2012 and provides, relevantly to this matter, that the Court will not make an order for disclosure of documents until the parties to the proceedings have served their evidence, unless there are exceptional circumstances necessitating disclosure. 20The Practice Note was discussed by Bergin CJ in Eq in Armstrong Strategic Management & Marketing Pty Ltd v Expense Reduction Analysts Group Pty Ltd [2012] NSWSC 393 (particularly at [65] and [66] and by McDougall J in Leighton International v Hodges [2012] NSWSC 458). 21The Practice Note does not apply, in terms, to a Notice to Produce as a party serving a Notice to Produce does not seek "an order for disclosure of documents". 22Whether a Notice to Produce is served under UCPR r 21.10 or r 34.1, the effect of the rules is that the documents referred to in the notice must be produced unless "the Court orders otherwise" - UCPR r 21.11 and r 34.10. 23It would subvert the intended operation of the Practice Note if parties could avoid its operation by adopting the expedient of serving a Notice to Produce, rather than seeking an order for disclosure. 24Indeed, if a Notice to Produce was served with the object of avoiding the operation of the Practice Note, such service might well constitute an abuse of the Court's process. 25In any event, in the case of a Notice to Produce served before service of witness statements, the Court would readily "otherwise order" under r 21.11 or r 34.10 and relieve the recipient of the Notice to Produce of the obligation to produce unless, conformably, with the requirements of the Practice Note were "exceptional circumstances" established. 26As McDougall J pointed out in Leighton, the Practice Notice is the latest step taken by the Court in its efforts to deal with the burgeoning costs of litigation, particularly so far as concerns the cost of discovery in the digital age (see Leighton at [4] - [7]). 27Practitioners should assume that the Court will not permit the clear object of the Practice Note to be thwarted by the service of Notices to Produce rather than the making of an application for disclosure in accordance with the Practice Note. 28The Court will be ready to "otherwise order", or impose cost sanctions, or make such other orders as are appropriate to discourage any such practice from arising. 29In this case the problem did not arise as Mr Young, who appeared for the plaintiff, while not formally accepting that I should proceed as if the Practice Note applied, in effect, proceeded upon the assumption that he did need to point to exceptional circumstances to justify a Notice to Produce in the terms of that served under UCPR r 21.10 or to be served under UCPR r 34.1. Exceptional circumstances? 30In Leighton McDougall J said at [20]: - "As a matter of language, something is exceptional if it is out of the ordinary, or unusual. To my mind, the exceptional circumstances referred to in paragraph 4 of the practice note must be circumstances that are not normal, or usual; they must be something out of the ordinary; they need not be unique; but however one characterises them they are not 'exceptional' at large, but 'exceptional' because they necessitate disclosure". 31I agree. 32In this case I think there are "exceptional", that is to say, not normal or usual, circumstances. 33By Notice of Motion dated 20 April 2012, Baron seeks an order pursuant to UCPR r 13.1 (presumably intended to be UCPR r 13.4) that the proceedings against it be dismissed. That Notice of Motion has not yet been allocated a hearing date. 34I am told that it was that Notice of Motion which prompted service by the plaintiff of the Notice to Produce with which I am dealing. 35Mr Pesman, who appears for Baron, has informed me that the basis of Baron's application to strike out the plaintiff's claim against it is the proposition that a builder can only do work "on behalf of" another party for the purpose of s 3A of the Act if the builder is undertaking work for that other party pursuant to a contract between them. 36In this regard Baron proposes to rely on obiter dicta of Sackville AJA, with whom Tobias and McColl JJA agreed, in Ace Woollahra Pty Ltd v Owners - Strata Plan 61424 (2010) NSWLR 631 at [52], where his Honour said: - "It seems to me that there are good reasons for confining the expression 'on whose behalf' to the case where residential building work is undertaken by one party on a contractual basis for another party...." (emphasis in original) 37Mr Pesman accepts that, in order to succeed in having the plaintiff's claim against it dismissed, Baron must show that it is not legally possible for a builder to do work "on behalf of" another absent a contractual relationship between them, and that no such contractual relationship exists between it and Baseline. 38Mr Young submits that the documents sought by the Notice to Produce may reveal what he described as a tripartite contractual relationship between Metro, Baseline and Baron such as would provide an answer to Baron's pending application for summary disposal of the plaintiff's claim. 39Mr Young points to the "Development Agreement" in respect of the "Property" between Metro and Baron to which reference is made in the letter of 9 May 2012 and submits that the terms of that agreement may very well be relevant to the existence of a contractual relationship between Baron and Baseline. 40He also submits that Baron's financial records and records of any communications with its financiers in respect of the Work or the Project may cast light on the contractual relationships at play concerning the Project. 41It seems to me that the documents sought may well have, at least, adjectival relevance to the issues raised by Baron's dismissal motion. 42As the plaintiff is facing what amounts to a strike out application, and as the documents sought may well provide it with ammunition with which to resist that application, the circumstances are sufficiently unusual or out of the ordinary to justify granting the plaintiff leave to serve a Notice to Produce under UCPR r 34.1 seeking the documents to which I have referred. 43I make the following orders: (a) the plaintiff's Notice to Produce of 4 April 2012 is set aside; (b) I grant leave to the plaintiff to serve a Notice to Produce pursuant to UCPR r 34.1, returnable before the Registrar, seeking production of the documents described in [2] and [3]. 44I will hear submissions from the parties as to the return date of that Notice to Produce, and as to costs.

[5]

Amendments 21 July 2021 - Case title amended 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: 21 July 2021

The Owners Strata Plan 69567 v Baseline Constructions Pty Ltd

At a glance

Result

Key principles

Issues before the court

Plain English Summary

Cited legislation

Deep Dive

What happened

Why the court decided this way

Before and after state of the law

Key passages with plain-English translation

What fact patterns trigger this precedent

How later courts have treated it

Still-open questions

Catchwords

Judgment (5 paragraphs)

Parties

Cases Cited (4)

Cited By (25)

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