ELJAY BUILDERS AND DEVELOPERS PTY LTD (ACN 122 660 771) (ABN 65 122 660 771) v SOTIRIS ROUMELIOTIS [2024] SADC 21

Applicant: ELJAY BUILDERS AND DEVELOPERS PTY LTD (ACN 122 660 771) (ABN 65 122 660 771) Counsel: MR C MUNT - Solicitor: LYNCH MEYER Respondent: SOTIRIS ROUMELIOTIS Counsel: MR M HOILE - Solicitor: COSTI & CO COMMERCIAL LAWYERS Hearing Date/s: 17/11/2023 File No/s: CIV-20-003026 B DISTRICT COURT OF SOUTH AUSTRALIA (Civil: Interlocutory 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. ELJAY BUILDERS & DEVELOPERS PTY LTD v ROUMELIOTIS [2024] SADC 21 Judgment of her Honour Judge Thomas 1 March 2024 PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - DISCOVERY AND INTERROGATORIES - DISCOVERY AND INSPECTION OF DOCUMENTS The Applicant builder contracted with the former Respondent owner of residential land to build two houses on the land. The central dispute concerns whether the written building contract for a house to be built on one lot was varied from a fixed price to a cost plus arrangement. A subsidiary dispute concerns the terms of an alleged profit sharing agreement for the house built on the other lot. These disputes involve questions of formation and construction of contract. The Applicant also relies on causes of action for equitable estoppel based on alleged representations made by the Respondent to the Applicant’s director. As to the central dispute, the Respondent later sold one lot to third parties with whom he then contracted to build a house on it, promising to procure the Applicant to build it pursuant to the contract the Respondent had made with the Applicant “with such variations as may be necessary to construct” it. The third party purchasers of the lot and are not parties to the alleged contractual arrangements between the Applicant and the Respondent. In this context, the Applicant seeks further discovery and production of communications between the Respondent and the third party purchasers relating to any of the building contracts. The application is opposed. Held, dismissing the application: 1. The contractual issues arising on the pleadings require an objective assessment of the Respondent’s words and conduct in making his agreement with the Applicant. Anything communicated to the third parties by the Respondent but not communicated to the Applicant is not determinative or relevant (directly or indirectly) to either the claims in contract or for equitable estoppel. -- 1 of 11 -- 2. It is unnecessary to consider the question of compliance and whether in the circumstances the requisite reason for doubt exists because the documents sought are not discoverable documents within the meaning of the UCR r 73.7(5). No sufficient basis has been shown for their relevance in supporting or adversely affecting either party’s case. 3. No good reason has been shown as to why it is in the interests of justice for an order to be made under UCR r 73.16 for production of documents that are not discoverable or relevant or of any probative value in resolving the issues for determination at trial in this proceeding. Supreme and District Court Civil Rules 2006 (SA) r 136(1), r 142; Uniform Civil Rules 2020 (SA) r 73.7, r 73.15, r 73.16, referred to. Allen v Carbone (1975) 132 CLR 528; Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540; Ceneavenue Pty Ltd & Ors v Martin & Ors [2008] SASC 332; Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95; Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 9251; Kuehn & Kuehn v Masterton Homes (NSW) Pty Ltd [2020] NSWSC 1049; Sagacious Procurement Pty Ltd v Symbion Health Ltd (formerly Mayne Group Ltd) [2008] NSWCA 149; Scott v Johnson [2010] SASC 277; Sion v NSW Trustee & Guardian [2013] NSWCA 337; Southern Equities Corporation Ltd (in liq) v Arthur Andersen & Co [2001] SASC 335; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, considered. -- 2 of 11 -- ELJAY BUILDERS & DEVELOPERS PTY LTD v ROUMELIOTIS [2024] SADC 21 Civil Introduction 1 By application dated 4 August 2023,1 the Applicant sought further discovery and production of certain categories of documents, relying on rr 73.7, 73.15 and 73.16 of the Uniform Civil Rules 2020 (UCR). The parties have resolved their dispute over all but the following category: 3c. All communications, including without limitation emails and text messages, and notes of communications between the first and/or second respondent,2 or Costi & Co, and Mr or Mrs Ware (or their legal or other advisors) relating to the Second Roumeliotis Contract3 or the Ware Building Contract4 up to and including 31 January 2018. 2 The parties relied on written submissions5 and limited affidavit material exhibiting the key written documents referred to in the pleadings and a letter demanding further discovery be made. Oral argument proceeded on 17 November 2023. Parties’ Contentions 3 The Applicant presses discovery of this remaining category of documents, contending they are directly relevant to the issues in dispute on the pleadings or, alternatively, whether or not they are discoverable, should be produced in the interests of justice. 4 The Respondent opposes the application, submitting it should be refused because there is no sufficient reason to doubt the Respondent has complied with his discovery obligations. He submits this follows because he has taken the significant procedural step of filing a list of documents6 with the requisite notations and certification and is therefore presumed to have made discovery of all directly relevant documents.7 Further, compliance aside, the Applicant has failed to discharge its onus and show that the category of documents sought is directly relevant to any allegation in issue on the pleadings. 1 FDN 60. 2 The “second respondent” is Mrs Renata Magdalena Roumeliotis (the wife of the First Respondent, Mr Sotiris Roumeliotis) who is no longer a party to the proceeding. 3 As defined in the pleadings. 4 Ibid. 5 FDN 72 and FDN 73. 6 FDN 52. 7 Ceneavenue Pty Ltd & Ors v Martin & Ors [2008] SASC 332 per White J at [11]. -- 3 of 11 -- [2024] SADC 21 2 5 The Applicant accepts that it must point to matters that ground a reason to doubt that the Respondent has complied with his discovery obligations, before orders can be made to ensure full compliance with discovery obligations under r 73.15.8 6 As to the alternative basis for the application, the Respondent submits reliance on r 73.16 is inapposite. Consideration Conclusion 7 The contractual issues arising on the pleadings require an objective assessment of the Respondent’s words and conduct in making his agreement with the Applicant. Anything communicated to the third parties by the Respondent but not communicated to the Applicant by its director is not determinative or relevant (directly or indirectly) to either the claims in contract or for equitable estoppel. 8 It is unnecessary to consider the question of compliance and whether in the circumstances the requisite reason for doubt exists because the documents sought are not discoverable documents within the meaning of the UCR. No sufficient basis has been shown for their relevance in supporting or adversely affecting either party’s case. 9 No good reason has been shown as to why it is in the interests of justice for an order for production to be made of documents that are not discoverable or relevant or of any probative value in resolving the issues for determination at trial in this proceeding. 10 Subject to hearing from the parties as to any matter relevant to the Court’s discretion on costs, the application should be dismissed with an order for costs made in favour of the Respondent on a standard costs basis, certified fit for junior counsel, as agreed or taxed and payable in any event. The Legal Principles 11 In the context of general discovery, a “discoverable document” is defined in UCR r 73.7(5) as follows: A document is a discoverable document for the purposes of this rule if it is directly relevant to an issue raised in the proceeding and, if pleadings have been filed, the issues for this purpose are defined by the pleadings. The legal principles concerning discovery under the UCR are well established and uncontentious. The basal concept of ‘direct relevance’ is well understood as 8 Applicant’s Written Submission [11]. -- 4 of 11 -- [2024] SADC 21 3 meaning ‘tending to prove or disprove a matter in issue on the pleadings’ as was explained by White J in Scott v Johnson:9 The issue of direct relevance is to be determined by reference to the pleadings. A document will be directly relevant if it tends to prove or disprove a matter which is in issue. It will not be directly relevant if it merely tends to prove or disprove something that may be relevant to a matter in issue, or if there is merely a chance that the document will prove or disprove a matter in issue. 12 Further, in the context of general discovery, r 73.7(6) expands the concept of discovery beyond direct relevance as follows: Without limiting the generality of the definition of discoverable document in subrule (5), a document is directly relevant in the context of discovery made by a party to the proceeding if it is intended to be relied on at trial by that party or it supports or adversely affects a party’s case. 13 UCR r 73.16 provides: Order for production or non-production (1) The Court may order that a person produce a document, whether or not it has been discovered or is required to be discovered, for inspection by the Court or inspection or copying by a party. (2) If a person objects to producing a particular document to a party, the Court may order its production to the Court so that the Court can determine the objection. (3) The Court has a discretion, on objection to the production of a document, to relieve the objector from the obligation to produce the document if satisfied that the document neither supports nor adversely affects the case of any party to the proceeding. 14 Rule 73.16 confers the Court with a wide discretion to order production. Its application in this case is, as the Respondent contends, inapposite. 15 The Applicant submits that r 73.16 effectively takes the place of r 136(1)(b) of the Supreme and District Court Rules 2006 (O6R) that provided for disclosure by order of the Court as an alternative to directly relevant documents. I do not agree and consider that there is a closer correlation between UCR r 73.16 and O6R r 142(1). Rule 142(1) provided for an order for the production of documents in addition to a party’s obligation to produce discoverable documents for inspection. Rule 136(1)(b) facilitated alternatives to general discovery as provided by r 136(1)(a). 16 Nonetheless, in argument it was uncontentious that the prevailing consideration for an order under r 73.16 is what is in the interests of justice in any case. As would be expected, this would ordinarily depend on the potential utility of the documents sought. Determining their utility would involve an assessment 9 [2010] SASC 277 at [6]. -- 5 of 11 -- [2024] SADC 21 4 of questions as to the role the subject documents would play in resolving the issues in dispute in the proceeding, how intimately connected they are to the disputed issues, whether they are logically probative of any relevant issue (whether directly or indirectly) and the delay, inconvenience and cost involved in ordering production. 17 It follows the Court must be satisfied that an order is necessary because the documents sought are of some relevance and use in resolving the issues for determination at trial in this proceeding. The Issues in Dispute 18 The starting place is to identify the issues in dispute as defined by the pleadings. 19 The relevant pleadings are the Statement of Claim – Revision 4 (the Claim),10 the Defence – Revision 3 (the Defence)11 and the Reply to Defence – Revision 2 (the Reply).12 The Applicant relies on specific paragraphs in its Claim that found its causes of action in contract and equitable estoppel.13 Its claim in restitution for a quantum meruit was not relied on and is not relevant to this application. 20 By way of overview, the proceeding concerns a dispute over the somewhat unusual contractual arrangements made between the parties for the construction by the Applicant builder of two houses on subdivided land formerly owned by the Respondent and his wife (the Roumeliotis’). Essentially, the Applicant claims payment of monies due for building work carried out on one house on a cost plus basis and, for the other house, there is a dispute over monies due under an alleged profit sharing agreement. The Profit Sharing Agreement for the Coote Allotment 21 Dealing with the second allotment first, this is a subsidiary dispute concerning the construction of a house on the allotment (the Coote Allotment) known as 20 Wilkinson Avenue, Somerton Park which was sold by the Roumeliotis’ to Mr Coote in about November 2017. The dispute concerns the terms of an alleged verbal profit sharing agreement made between the Applicant and the Roumeliotis’14 and the quantum of the credit of the profit share allegedly due to the Roumeliotis’ against the price to be paid for the house to be constructed on the other allotment.15 10 FDN 65 filed on 10 August 2023. 11 FDN 66 filed on 11 September 2023. 12 FDN 68 filed on 13 September 2023. 13 Applicant’s Written Submissions [17]. 14 Claim and Defence [1G.5]. 15 Claim and Defence [8]. -- 6 of 11 -- [2024] SADC 21 5 The Ware Allotment, the Second Roumeliotis Contact and the Ware Building Contract 22 The central dispute in the proceeding concerns the other allotment (the Ware Allotment) known as 20A Wilkinson Avenue, Somerton Park, an allotment sold by the Roumeliotis’ to Mr and Mrs Ware (the Wares) in about January 2018. 23 The Applicant claims monies due under an alleged agreement ultimately made with the Roumeliotis’ for the construction of a house on the Ware Allotment to the specification of the Wares (referred to in the Claim as the “Ware Plan”) 16 (the Ware House), in circumstances where the Wares were not parties to any iteration of the alleged contractual arrangements between the Applicant and the Roumeliotis’. 24 The essential issue arising on the pleadings as between the Applicant and the Respondent is whether the written fixed-price contract executed by the parties on 11 May 2017 (and backdated to 15 March 2017) (the Second Roumeliotis Contract)17 was varied and became in effect on its terms a cost plus arrangement. 25 This issue concerns questions of formation and construction of contract. 26 To this end, the Applicant relies on a series of representations allegedly made by the Roumeliotis’ between February 2017 and February 2018 to the Applicant’s director (Mr Zagotsis) and an alleged agreement made on the terms of a document signed by all of them on 7 November 2017. In the alternative, the Applicant alleges a collateral contract was formed on the terms of the document signed in November 2017. 27 It is not necessary to elaborate on the detail of the alleged representations for present purposes. It is sufficient to appreciate that the Respondent denies the alleged representations or the alleged November 2017 agreement were made and have effect as variations to the Second Roumeliotis Contract or as a collateral contract as alleged. 28 In his defence, the Respondent says the Second Roumeliotis Contract is a fixed price contract and he has paid its fixed price and variations to the scope of works as agreed with the Applicant. 29 It is important that this dispute about the parties’ contractual arrangements arises in the context of the Roumeliotis’ entry into a series of separate contracts with the Wares to which the Applicant is not a party. That is, there are two sets of contractual arrangements concerning the building of the Ware House. 30 These separate contracts between the Roumeliotis’ and the Wares concern the sale and purchase of the Ware Allotment and the building of the Ware House on it. Part of their agreement is recorded in a deed (referred to in the Claim as the 16 Claim [4A.1.4]. 17 As defined in the Claim [2C]. -- 7 of 11 -- [2024] SADC 21 6 “Ware Deed”)18 that annexes the proposed building contract (including specifications for the scope of works) to be entered into upon sale and purchase of the Ware Allotment.19 Of relevance is the (uncontentious) written building contract dated 29 January 2018 (the Ware Building Contract) executed by the Roumeliotis’ and the Wares for construction of the Ware House.20 31 The parties’ contractual arrangements for construction of the Ware House are connected by the Roumeliotis’ separate contractual promise to Mr Ware to procure the construction of the Ware House pursuant to the Second Roumeliotis Contract21 “with such variations as may be necessary to construct” it in accordance with the proposed building contract for the Ware House.22 It is apparent from the evidence that the proposed building contract is the Ware Building Contract.23 32 It is important common ground that the Applicant was not privy to any communications between the Roumeliotis’ (and their agents) on the one hand or the Wares (and their agents) on the other. Indeed, the Applicant relies on this as a significant factor favouring its application.24 33 There is a further dispute about differences between the scope of works required under the Second Roumeliotis Contract (referred to as the “Roumeliotis Plan” in the Claim)25 as allegedly varied (or the subject of an alleged collateral contract) and the specifications for the Ware House (referred to in the Claim as the “Ware Plan”)26 that affect price. Contract Questions 34 Questions as to whether binding agreements to vary the terms of the Second Roumeliotis Contract have been entered into and the rights and liabilities of the parties to any such agreements found are to be assessed objectively. 27 The objective intention of the parties is fact-based, found in all the circumstances, including by drawing inferences from their words and conduct in making their agreement. 35 The parties’ uncommunicated subjective intention is not determinative28 and not relevant to whether a binding agreement has been entered into. 18 Exhibit JA14 to the Second Affidavit of Julian Amato made on 4 August 2023 (FDN 63) (the Second Amato Affidavit). 19 Claim [4A]. 20 Claim and Defence [4A]. 21 Referred to in the “Ware Deed” as the “Existing Building Contract”. 22 Recital E2 of the “Ware Deed”, page 51 of Exhibit JA14 to the Second Amato Affidavit. 23 Second Amato Affidavit [10] and Exhibit JA14. 24 Applicant’s Written Submissions [22]. 25 Claim [2C.1.4]. 26 Claim [4A.1.4]. 27 Kuehn & Kuehn v Masterton Homes (NSW) Pty Ltd [2020] NSWSC 1049 per Hammerschlag J as he then was at [29]. 28 Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 548-549; Sion v NSW Trustee & Guardian [2013] NSWCA 337 at [38] (per Emmett JA, Basten and -- 8 of 11 -- [2024] SADC 21 7 36 This basic principle was explained by McLelland J in Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd 29 as follows: Questions of the relevance and probative value of evidence cannot properly be considered independently of what the relevant issue is. It is thus necessary to identify with some degree of precision what the relevant issue is, in the present case. This involves a consideration of what it is in point of fact that constitutes the making of an informal contract, in circumstances such as the present. In my opinion, in such circumstances, a contract is made by the mutual communication between the parties of their respective assents to being bound by identifiable terms otherwise capable of having contractual force, the mutual communication typically taking the form of offer and acceptance. “It is not the subjective thing known as meeting of the minds, but the objective thing, manifestation of mutual assent which is essential to the making of a contract” (Williston on Contracts, 3rd ed, vol 1 para 21.) Frequently one finds the relevant issue formulated in terms of the “intention of the parties”. It is necessary to understand the sense in which the expression “intention” is thus used. In my opinion the following words of Lord Diplock in Gissing v Gissing [1971] AC 886 at 906, albeit in another context, are apt here: “…the relevant intention of each party is the intention which was reasonably understood by the other party to be manifested by that party’s words or conduct, notwithstanding that he did not consciously formulate that intention in his own mind or even acted with some different intention which he did not communicate to the other party.” 37 In considering the requisite intention to create contractual relations, Gaudron, McHugh, Hayne and Callinan JJ said in Ermogenous v Greek Orthodox Community of SA Inc:30 Because the search for the “intention to create contractual relations” requires an objective assessment of the state of affairs between the parties (as distinct from the identification of any uncommunicated subjective reservation or intention that either may harbour) the circumstances which might properly be taken into account in deciding whether there was the relevant intention are so varied as to preclude the formation of any prescriptive rules. Although the word “intention” is used in this context, it is used in the same sense as it is used in other contractual contexts. It describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened. It is not a search for the uncommunicated subjective motives or intentions of the parties. [footnotes omitted] 38 Plainly, the disputes between the parties over their contractual arrangements will be determined by an assessment on the evidence of what was objectively conveyed to the other by what each party said and did, having regard to the circumstances in which those statements and actions happened. Barrett JJA agreeing); Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40] (per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ). 29 (1979) 1 BPR 9251 at page 9254. 30 (2002) 209 CLR 95 at [25]; emphasis supplied. -- 9 of 11 -- [2024] SADC 21 8 39 Applying these principles, the Applicant contends that the category of documents sought is directly relevant to the issues in dispute on the pleadings:31 …regarding the nature and terms of the arrangements applying between Mr Roumeliotis and Eljay in relation to the construction of the house for the Wares and the interaction of those arrangements with the Ware Building Contract and the Ware Plan, relative to (the) Second Roumeliotis Contract and the Roumeliotis Plan. 40 In this case, it should be accepted that the “Ware Deed”, the “Ware Plan” and the Ware Building Contract are directly relevant to an objective assessment of the state of affairs between the parties and the commercial purpose or objects of the contractual arrangements between the parties the subject of dispute. It should be assumed these documents have been discovered. They are in evidence. 41 The same cannot be said, however, of what Mr or Mrs Roumeliotis (or their agents) said to Mr or Mrs Ware (or their agents) or did between themselves that was not communicated to the Applicant. Such communications have no bearing on an objective assessment of the parties’ contractual intentions concerning alleged variations to the Second Roumeliotis Contract or the alleged collateral contract. 42 To the extent documents evidencing such communications manifest the actual intentions and expectations of the Roumeliotis’ as regards their contractual arrangements with the Applicant, they are not discoverable because they are not relevant at all. Estoppel Claim 43 The Applicant pleads a case for an estoppel by representation in the further alternative to its claim in contract.32 It relies on the various representations allegedly made by the Respondent to the Applicant’s director between February 2017 and February 2018. The Respondent formally denies the allegations comprising the Applicant’s estoppel claim were made.33 44 The issues thereby arising on the pleadings are whether the representations were made, their content and whether it was reasonable for the Applicant to act in the way it is alleged it did to its detriment if it is found they were made as alleged. 45 None of these issues on the pleadings concern what the Respondent may have said to the Wares or did with their knowledge that was not communicated to the Applicant. What matters is what the Roumeliotis’ represented to the Applicant by their words and conduct, not what they said they had done to someone else. 31 Applicant’s Written Submissions [19]. 32 Claim [12]. 33 Defence [12]. -- 10 of 11 -- [2024] SADC 21 9 46 To the extent such dealings may evince the Respondent’s subjective intentions with regard to any matter relevant to the issues in dispute in the proceedings, they are not relevant or probative of any element of the Applicant’s claim for an estoppel by representation. Interests of Justice 47 In the course of oral argument, counsel for the Applicant submitted that having regard to the significant issues of credit arising on the pleadings, it is in the interests of justice for an order for production of the subject documents under UCR r 73.16.34 The submission was not developed beyond the point that there were opposing positions taken by the parties as to what was allegedly said from time to time. 48 Documents which go only to credit are not usually directly relevant.35 There is no allegation of misrepresentation or other allegation made putting in issue the Roumeliotis’ subjective intentions. 49 Direct relevance aside, in circumstances where documents evidencing the contractual arrangements between the Roumeliotis’ and the Wares are in evidence before the Court, communications between them (and/or their agents) relating to the contractual relationships between the Roumeliotis’ and the Applicant on the one hand and the Roumeliotis’ and the Wares on the other are not relevant nor probative of any issue arising on the pleadings. The Applicant has not shown why it would be in the interests of justice for an order for production to be made of the category of documents sought. 50 Furthermore, there is no basis for presuming the documents are not likely to be voluminous as the Applicant submits.36 The category is broadly expressed and would catch all communications between the Roumeliotis’ and the Wares and/or their agents. The amendments proposed during the course of argument do not change my view that the Applicant is ‘fishing’ and seeking to use the Court’s processes on the chance there may be a document of assistance to its case. The application should be dismissed. 51 Given the Respondent’s success in opposing that part of the application that was argued, he should have costs of and incidental to the hearing on 17 November 2023 on a standard costs basis as agreed or taxed, payable in any event, subject to any matter that may be relevant to the Court’s discretion on costs. 34 T52.32-53.2. 35 Southern Equities Corporation Ltd (in liq) v Arthur Andersen & Co (No 5) [2001] SASC 335 per Bleby J at [10]-[11]. 36 Applicant’s Written Submissions [23]. -- 11 of 11 --