PARTIES: WEEDING PARTY HIRE PTY LTD (ACN 009 494 295)

Procedure - Discovery and interrogatories - Production and inspection of documents - Grounds for resisting production - Irrelevance - Whether r 395 applies where a party objects to inspection of documents inadvertently discovered in list of documents.

Supreme Court Rules 2000 (Tas), rr 394 and 395

Judgment Number: [2024] TASSC 75

1. The plaintiff applies for an order under r 388 of the Supreme Court Rules 2000 (Tas) that the defendants discover three categories of documents, additional to those apparently contained in the defendants' list of documents filed on 28 March 2024. The defendants object to any such order. At the hearing of the application the defendants did not admit the existence of any additional documents. However an email from the defendants' solicitor and a category of privileged documents contained in the defendants' list of documents impliedly (if not expressly) admit their existence. I therefore ordered on 28 November 2024 that the documents be produced to the Court for inspection under r 395 to decide whether the defendants' claims or objections are valid.
2. The context of this application is that aspect of the plaintiff's case[1] that alleges an agreement in writing extending the time for completion of the business sale agreement dated 19 July 2023 (BSA) from 1 September 2023 to on or before 8 September 2023.
3. The three categories of documents sought are as follows.
4. Category A relates to documents evidencing instructions given by the second defendant to his solicitor between 31 August 2023 and 4 September 2023. The plaintiff submits that documents containing instructions from Mr Nation to his solicitors are directly relevant to the issue of whether the parties agreed to extend the completion date beyond 1 September 2023. The plaintiff's amended statement of claim pleads that the agreement to extend the completion date is constituted by the documents referred to at pars [6]-[9] of the amended statement of claim.[2]
5. Category B relates to documents evidencing instructions given by the second defendant to his solicitor, referred to in par [10] of his affidavit sworn 15 October 2024. The plaintiff submits that the fact that Mr Nation instructed his solicitor on 4 September 2023 to terminate the BSA is relevant to the issue of whether the defendants had agreed to extend the completion date.
6. Category C relates to documents evidencing the second defendant's state of mind as asserted in par [11] of his affidavit. The plaintiff submits that these documents evidence Mr Nation's reasons for instructing his lawyers to terminate the agreement as explained in par [11] of his affidavit. In summary, in par 11 Mr Nation says he thought the continuing vendor finance arrangement under the BSA was unsustainable "[a]s a result of the plaintiff's conduct up until that date, culminating in the completion payment deadline being missed".

1. This application is to be decided by reference to the issues raised by the pleadings; r 382(1)(a). Having regard to how the plaintiff has presented the application,[3] the issue raised by the pleadings is whether there was agreement in writing between the parties to extend the time for completion until 8 September 2023: see amended statement of claim par [10]. Ultimately, the issue is whether the defendants' purported termination of the BSA by email dated 4 September 2023 was valid, or whether it was in breach of the BSA.
2. In light of the fact that the plaintiff pleads that the agreement to extend the date for completion was in writing, the parol evidence rule applies. Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 347 Mason J (as he then was), with whom Stephen and Wilson JJ agreed, said that in general, the parol evidence rule excludes extrinsic evidence (except as to surrounding circumstances) which would subtract from, add to, vary or contradict the language of a written instrument. Codelfa establishes that evidence extrinsic to the written agreement cannot be admitted when the written words are clear, unambiguous and not susceptible to more than one meaning. In this case, the plaintiff obviously does not suggest that the terms of the documents comprising the agreement to extend time are unclear, ambiguous or susceptible to more than one meaning.
3. I refer briefly to the cases relied upon by the plaintiff, to the effect that evidence of subjective intentions is made relevant by what Mr Nation has said in his affidavit. Branir Pty Ltd & Ors v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833 related to an agreement alleged to be partly oral and partly in writing and which also depended upon representations by the defendant which were alleged to have induced the plaintiff to act consistently with the alleged agreement in respect of which the defendant ought be estopped from denying. Downer EDI Ltd v Gillies [2012] NSWCA 333 at [18] also involved an agreement that was partly oral (see par [37] as an example) and partly written, unlike this case, which is pleaded to be wholly in writing. The passages from each of these cases cited by the plaintiff must be understood in that light. There is a stark contrast between those cases and this one. On the materials before me, there is no appreciable prospect that Mr Nation's evidence would be admitted as evidence which could "subtract from, add to, vary or contradict" the written agreement as pleaded, because there is no issue on the pleadings that the documents comprising the agreement to extend time are unclear, ambiguous or susceptible to more than one meaning

Rules 394 and 395

1. Where a party claims privilege from the production of a document for inspection, or objects to its production on any other ground, the Court may inspect the document to decide whether the claim or objection is valid: r 395. Rule 395 does not expressly state that it relates specifically to r 394, but the overwhelming inference is that r 395 is intended to: see the commentary on r 395 to that effect by the learned author of Civil Procedure Tasmania (LexisNexis, online). It appears to be a drafting error that r 395 is not expressed to relate specifically to r 394.
2. Rule 395 expressly refers to an objection to production "on any other ground". That expression is wide enough to include an objection to the inspection of documents inadvertently discovered. Even though the documents, the subject of this application, have been discovered because of the way item 34 of the defendants' list of documents is drafted, r 395 provides a mechanism by which the defendant may object to their inspection by the plaintiff. In essence, the defendants objection is that if the disputed documents are within the scope of item 34, they were inadvertently or mistakenly discovered. The defendants submit that the they are entitled to object to the plaintiff inspecting these documents because they are not directly relevant to the issues raised by the pleadings for the purposes of r 382(1)(a). I accept that r 395 operates this way.
3. As stated above, I made an order that the defendants produce the disputed documents to the Court. I have inspected them and considered the defendants' objections on the grounds of relevance and privilege.

1. During oral argument, counsel for the plaintiff replied to the defendants' submission that the parol evidence rule would exclude the documents being sought, and submitted that categories B and C are relevant to the issue of termination of the agreement as alleged in pars [11]-[13] of the amended statement of claim. That was not a matter that had been canvassed in the plaintiff's written submissions. At its highest, the submission must be that Mr Nation's instructions to terminate the BSA are relevant to whether the defendants agreed to extend. I reject that submission. Assuming I have followed the difficult logic of that submission, such an approach would still be contrary to the parol evidence rule as it is expressed in Codelfa.
2. I now turn to consider the documents provided by the defendants under r 395. My analysis proceeds on the basis that the documents comprising the alleged agreement to extend time for completion are clear, unambiguous and not susceptible to more than one meaning. Because the whole of the agreement is in writing, the parol evidence rule applies to issues of its construction. The question of the intention of the parties at the time they entered the written agreement is to be answered by reference to the words used. It is an objective enquiry. The question is: what would a reasonable person in the position of each of the parties to the contract, have regarded as the other party's intention from the words used? See Reardon Smith Line v Hansen-Tangen (1976) 1 WLR 989 at 996; Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41 at 62. The question is not what the parties inwardly intended, but what intention they indicated by their words.
3. There are no relevant documents in categories A and B. I accept there are no documents in category C. No questions of advice privilege or litigation privilege therefore arise.
4. The plaintiff's application is dismissed.

[1] See amended statement of claim par [10].

[2] Specifically, par [6] (4 emails), par [7] (1 email), par [7A] (several SMS messages), pars [8], [8A] and [9] (1 email referred to in each).

[3] See the nature of the dispute summarised at pars 7-10 of the plaintiff's submissions dated 27 November 2024.