BELLARA AGED CARE VILLAGE PTY LTD [2024] SASC 101

Applicant: BELLARA AGED CARE VILLAGE PTY LTD Counsel: MR M SPENCER - Solicitor: O’LOUGHLINS LAWYERS Respondent 19: LINDA KNOCK Counsel: MR B JAMES - Solicitor: JONES HARLEY TOOLE Interested Party: MINISTER FOR HEALTH AND WELLBEING Counsel: MR S RANIERI - Solicitor: CROWN SOLICITOR (SA) Hearing Date/s: 02/07/2024, 12/07/2024 File No/s: CIV-22-000951 C SUPREME COURT OF SOUTH AUSTRALIA (Civil: Application) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment. The onus remains on any person using material in the judgment 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 in which it was generated. BELLARA AGED CARE VILLAGE PTY LTD v SERAFINI & ORS [2024] SASC 101 Decision of the Honourable Justice McIntyre 16 August 2024 REAL PROPERTY – RETIREMENT VILLAGES PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – DISCOVERY AND INTERROGATORIES – DISCOVERY AND INSPECTION OF DOCUMENTS – DISCOVERY OF DOCUMENTS – APPLICATION AND ORDER FOR FURTHER AND BETTER DISCOVERY PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – DISCOVERY AND INTERROGATORIES – DISCOVERY AND INSPECTION OF DOCUMENTS – DISCOVERY OF DOCUMENTS – DISCRETION OF COURT AND POWER TO ORDER This is an interlocutory application filed by the 19th respondent seeking further and better discovery. The applicant seeks an order for a termination of a retirement village scheme to be made pursuant to s 58 of the Retirement Villages Act 2016 (SA) (the Act) and has filed various affidavits in support of this application. The nineteenth respondent seeks further and better discovery of documents relating to issues raised in the applicant’s originating application and affidavits, particularly in regard to the applicant’s financial viability and the proposed commercial development in connection with the s 58 order. The 19th respondent submits that it is directly relevant for them to be informed of the issues raised in the affidavits. The applicant contends that the broad scope of the issues outlined in the affidavits was necessary as the nature and extent of the Court’s discretion was unknown at the time of filing. The applicant submits that direct relevance is defined by s 58 and requires a nexus between the rights of residents and the factors relating to the discretion. -- 1 of 9 -- Held: 1. Direct relevance must be assessed by reference to the originating application. 2. The Act requires the Court to balance the rights and responsibilities of an operator of a retirement village scheme and those of the residents. The documents sought by the 19th respondent are, in general terms, directly relevant to that balancing exercise and ought to be discovered. 3. Application granted. Retirement Villages Act 2016 (SA) s 58; Uniform Civil Rules 2020 (SA) rr 73, 86.6, referred to. Keyton Holdings Pty Ltd [2024] SASC 66; Ryan & Anor v Light Regional Council & Anor [2020] SAERDC 45; Channel 7 Adelaide Pty Ltd v Lane and Hurley (2004) 234 LSJS 225; Southern Equities Corporation Ltd (in liq) v Arthur Anderson & Co (No 5) [2001] SASC 335; Rehn v Australian Football League & Ors [2003] SASC 159; Harris Scarfe Ltd v Ernst & Young No (4) [2005] SASC 443, considered. -- 2 of 9 -- BELLARA AGED CARE VILLAGE PTY LTD v SERAFINI & ORS [2024] SASC 101 Civil 1 McIntyre J: The applicant, Bellara Aged Care Village Pty Ltd (‘Bellara’) operates a retirement village scheme (‘the Scheme’). Bellara wishes to excise a portion of land from the Scheme to enable a new development to be built on the northern part of the village. Bellara seeks orders under s 58 of the Retirement Villages Act 2016 (SA) (‘the Act’). 2 At the time Bellara made its application, it was unclear whether the Court had the power to approve a partial termination of the Scheme under s 58. A recent decision in Keyton Holdings Pty Ltd1 (“Keyton”) determines that the Court does have power to approve a partial termination and sets out the factors relevant to the exercise of the discretion to do so. 3 A number of residents object to the application. One, the 19th respondent, is actively participating in these proceedings. The Minister for Health and Wellbeing (‘the Minister’) is an interested party to these proceedings under s 58(2) of the Act. Bellara has filed a list of documents in accordance with consent orders made in this matter.2 The 19th respondent has filed an interlocutory application3 together with a supporting affidavit from her solicitor4 seeking further and better discovery of documents relating to specific issues outlined in the application and the supporting affidavit. 4 The application is permitted under UCR r 86.6. The general principles of discovery are set out in UCR r 73. There is no issue between the parties as to the Court’s power to order discovery, rather the argument relates to the extent of discovery to be made. How is relevance assessed? 5 As this matter has arisen by originating application there are no pleadings against which to assess relevance. This issue was considered in the Environment Resources and Development Court (‘the ERD Court’) by Judge Burnett in the matter of Ryan & Anor v Light Regional Council & Anor.5 His Honour found that the direct relevance of any documents sought must be assessed by reference to the originating application.6 I agree with that conclusion. His Honour also helpfully considered the question of whether the documents are directly relevant by reference to recent decisions. His Honour’s summary is as follows: 1 [2024] SASC 66 (“Keyton”). 2 FDN 106. 3 FDN 107. 4 FDN 108. 5 [2020] SAERDC 45. 6 Ibid at [27]. -- 3 of 9 -- [2024] SASC 101 McIntyre J 2 The question of whether documents are directly relevant has been considered by the Full Court of the Supreme Court in Channel 7 Adelaide Pty Ltd v Lane and Hurley7 in which the court summarised the relevant principles (referring to earlier cases such as Southern Equities Corporation Ltd (in liq) v Arthur Anderson & Co (No 5)8 and Rehn v Australian Football League & Ors9 and Harris Scarfe Ltd v Ernst & Young No (4)10 as follows: a. The test of direct relevance significantly narrows the obligation to provide disclosure from the previous requirements to provide discovery ‘relating to any matters in question in this action’; b. The requirement of direct relevance must be applied firmly and given the relatively narrow meaning; c. The issue of direct relevance is to be determined by reference to the pleadings and the issues which arise thereon and assumes that a party can determine that party’s obligation to make discovery by reference to the pleadings; d. A document will be directly relevant if it tends to prove or disprove a matter which is in issue; e. The rule does not mean that, if the document is not itself proof of a fact in issue but is merely a piece of circumstantial evidence tending, along with other evidence, to prove the fact in issue, it is not discoverable; A document will not be directly relevant if it merely tends to prove or disprove something that may be relevant to a matter in issue or there is merely a chance that the document will prove or disprove a matter in issue. The parties accept that these principles are applicable in this matter. With respect, I agree. What documents are directly relevant? 6 Bellara’s case is set out in its originating application as subsequently amended11 and three affidavits of Crawford David Giles, a director of Bellara authorised to make these affidavits on its behalf. These affidavits were sworn on 1 February 2022,12 9 November 202313 and 12 April 2024.14 These affidavits are extensive and annex considerable documentation. These affidavits form part of the application. In addition, there is an affidavit of Cosimo Dichiera, a property development and project manager consulted by Bellara, made on 16 April 2024.15 This affidavit does not, in my view, form part of the originating application rather it comprises evidence that may be adduced by Bellara. 7 (2004) 234 LSJS 225 at 230-31; [2004] SASC 177 at [22]-[25]. 8 [2001] SASC 335. 9 (2003) 225 LSJS 378 at 381; [2003] SASC 159 at [25]. 10 (2005) 93 SASR 300 at 303-304; [2005] SASC 443 at [13]-[15]. 11 FDN 82. 12 FDN 10. 13 FDN 71. 14 FDN 94. 15 FDN 91. -- 4 of 9 -- [2024] SASC 101 McIntyre Jr 3 7 The materials sought by the 19th respondent relate to issues raised in Mr Giles’ affidavits. The 19th respondent says that, to the extent that these issues have been raised, documents relevant to the various assertions should be discovered. In particular, the 19th respondent says that Bellara has put into issue Bellara’s financial viability as the primary reason for which the development approval is sought. It is said that the basis for the application appears to be a commercial development for the financial benefit of Bellara. It is contended that it is directly relevant for the 19th respondent to be informed of: • the financial benefits received by Bellara in respect of the proposed subdivision and development; • the extent to which Bellara will be able to meet any terms and conditions imposed by the Court; • the extent to which Bellara will receive funds and/or a financial benefit which could or should be made available to the residents; and • the funds proposed to be expended by Bellara for the benefit of the residents in comparison to the funds/financial benefit received and or likely to be received by Bellara by the granting of the original application. 8 Bellara says that the information that was attested to in the affidavits of Mr Giles was, of necessity, very broad because Bellara was to a certain extent “flying blind” given that there was no authority as to the nature and extent of the Court’s power in relation to a partial termination. It is contended that what is in the affidavits is not the sole test of relevance. It is said that the more appropriate test of relevance can be discerned by reference to the originating application, the affidavits and the factors identified in Keyton as relevant to the exercise of the discretion. Bellara says that the scope of relevance is defined by s 58 of the Act, not by what is set out in the affidavits, and that there must be a nexus between the rights of residents and factors going to the discretion. It is said that there is no obligation on operators to explain why they want to terminate a Scheme. The Court is not concerned with the why, but rather the what of the application. Further it is said that the relevance is to the current situation not to the past history and Bellara contends that much of what is sought relates to historical matters. 9 The Minister supports the submissions made by the 19th respondent as to the scope of direct relevance. The Minister says that in addition to the application, supporting material, and the decision in Keyton, it is also relevant to consider the nature of the statutory scheme and its proper construction. The Minister contends that Bellara’s interpretation of Keyton is too narrow. The Minister says that Keyton outlines the scope of the discretion and the fact that this is a balancing act between the interests of an operator and the rights of residents. It is said that the operator’s financial viability may well be a factor that plays into the s 58 discretion. The Minister contends that any suggestion that financial viability is not relevant ought -- 5 of 9 -- [2024] SASC 101 McIntyre J 4 to be rejected, particularly in an application where it is said that viability is the rationale for the application. 10 I do not accept Bellara’s submissions. The decision in Keyton indicated that the factors identified were not exhaustive and may vary from case to case.16 The discretion in s 58 of the Act must be exercised in the context of the Act as a whole including the striking of a balance between the rights and responsibilities of an operator and those of the residents. 11 Bellara contends that:17 “The work of the court is limited to what is proposed by way of a termination and does not extend to why a termination is proposed”. (emphasis added) Bellara says that, in theory, an operator could have a nonsensical or irrational reason for wishing to terminate or partially terminate a Scheme. I do not agree. The Court is not constrained in exercising its discretion to a consideration of what is proposed. Depending on the circumstances, the Court may also be concerned with the “when”, the “why” as well as the “what”. In many cases, the rationale for termination or partial termination will be of considerable relevance to the balancing of rights and responsibilities contemplated by the Act. Bellara contends that the decision in Keyton was not concerned with the reasons for that application. This is not correct. Keyton’s reasons for wishing to build a residential aged care facility adjacent to the village were considered both in general terms18 and in relation to the discretionary factors identified, including the attitude of the operator and residents,19 the benefits and detriments to residents20 and the impact on capital value of independent living units.21 12 Bellara has raised a number of matters in its originating application concerning its reasons for the application that are directly relevant to the balancing exercise required under the terms of the Act. These are expenditure on the village,22 inability to sell units,23 the profitability and sustainability of the village24 and, the fact that it is not financially or commercially viable to continue.25 It is plain from Mr Giles’s affidavit that these matters were the catalyst for development discussions.26 All are directly relevant to the balancing exercise of the rights and responsibilities of the operator and of the residents. In particular it is relevant to 16 Keyton at [61]-[62]. 17 Written Submissions of Applicant provided during the hearing on 12 July 2024 at [15]. 18 Keyton at [10]. 19 Ibid at [65]-[66]. 20 Ibid at [77]. 21 Ibid at [86]. 22 FDN 10 at [35]. 23 Ibid at [36]. 24 Ibid at [42]. 25 Ibid at [49]. 26 Ibid at [96]. -- 6 of 9 -- [2024] SASC 101 McIntyre Jr 5 an assessment of the operator’s rights to operate a profitable business, the rights of the residents to continue living in the village, the funds available to be spent on the village if the application is granted as opposed to refused, and the extent to which the operator will be able to meet any terms and conditions that the Court might impose in relation to a partial termination. 13 Accordingly, discovery of documents related to those issues is required under r 73 of the UCRs. The application Paragraph 1.1 14 In paragraph 1.1 of the application27 the 19th respondent seeks documents relating to the proposed commercial development of the excised portion of the land from 2018 to 2024 in the possession of Bellara or any of its agents, including internal communications, external communication with any proposed purchaser of the adjoining land in connection with the commercial enterprise sought to be developed by Bellara. The scope of the documents sought has been narrowed as in the subsequent paragraphs 1.1.1 – 1.1.9. Paragraph 1.1.1 15 This paragraph seeks documents of and incidental to Bellara’s annual profit and loss statements from the end of the financial year 2018 to 2024, except for the 2023 financial year which has already been discovered. It is my view that the profit and loss statements are directly relevant to the matters in issue and ought be discovered. Paragraph 1.1.2 16 This application seeks documents attesting to the operator’s belief that Bellara was a viable and sustainable business at the time of purchase in 2018. The applicant submits that the financial position of Bellara as at 2018 is not directly relevant as they relate to the “why”. I have rejected the proposition that the “why” is not relevant, having said that I accept Bellara’s submission that documents which inform any general “belief” about the financial state of the business is too general. The request, as presently framed, is oppressive. Paragraphs 1.1.3, 1.1.4, 1.1.5, 1.1.6 and 1.1.7 17 Paragraph 1.1.3 seeks documents relating to and in connection with Bellara’s “significant sums” invested in the renovation and maintenance of the village for the purpose of improving the quality of the retirement village for its residents. 18 Paragraph 1.1.4 seeks documents relating to the ongoing cost of advertising and marketing of the village. 27 FDN 107. -- 7 of 9 -- [2024] SASC 101 McIntyre J 6 19 Paragraphs 1.1.5, 1.1.6 and 1.1.7 seek documents of and incidental to Bellara’s financial liability and difficulties as an operation and how it might be affected by the proposed development. 20 Bellara’s submission in relation to these documents relies upon Bellara’s unduly restrictive view of the effect of the decision in Keyton. It is my view that these documents are directly relevant to the issues in this matter and ought to be discovered. Paragraph 1.1.8 21 This paragraph seeks documents relating to the consideration of the “best and highest” use and likely commercial viability of proposed allotment 11 arising out of discussions between Mr Giles and Mr Dichiera. Mr Dichiera’s affidavit deals with his rationale for that consideration. Bellara contends that there are no documents. If there were such documents, they are relevant and discoverable. Paragraph 1.1.9 22 Paragraph 1.1.9 seeks documents of or incidental to Marcamp Pty Ltd’s site plan for proposed allotment 11. They comprise an alternative proposal for a KFC restaurant and a Hungry Jacks restaurant on proposed allotment 11. Bellara concedes that such documents are directly relevant but says that it does not yet have any documents as a site plan has not been prepared. Bellara says that if that situation changes it will comply with its ongoing obligations for discovery. Paragraph 1.2 23 Paragraph 1.2 seeks contracts, deeds, other instruments, or communications under which Bellara and/or NRD engaged with named parties for the purpose of reaching in principle or executed agreements and leasing arrangements for the proposed allotment 11. Bellara says that documents concerning negotiations are irrelevant. Bellara further contends that whilst contracts may be relevant to explain what the development is, the financial arrangements between the parties are irrelevant. Both arguments rely upon Bellara’s overly restrictive view of the decision in Keyton. It is my view that the documents are directly relevant to the issues in this matter and ought to be discovered. Conclusion 24 The 19th respondent’s application for further and better discovery ought to be granted for the reasons set out above. I will hear the parties as to the form of the orders. To the extent that Bellara raised issues of commercial confidentiality during the course of argument, I note that the Court may make orders to protect the confidentiality of discovered documents.28 Failing agreement, it will be necessary for Bellara to make application to the Court for confidentiality orders 28 UCR r 73.17. -- 8 of 9 -- [2024] SASC 101 McIntyre Jr 7 however, commercial confidentiality is not a basis for declining to discover documents that are directly relevant. -- 9 of 9 --