David E Lee Medical Pty Ltd v APW Properties (Symphony) Pty Ltd [2011] QSC 400

SUPREME COURT OF QUEENSLAND CITATION: David E Lee Medical Pty Ltd v APW Properties (Symphony) Pty Ltd [2011] QSC 400 PARTIES: DAVID E LEE MEDICAL PTY LTD ACN 010 266 476 as trustee for the David E Lee Superannuation Fund (Plaintiff) v APW PROPERTIES (SYMPHONY) PTY LTD ACN 124 650 273 (First Defendant) and ADEM BECIREVIC (Second Defendant) and PAUL RAYMOND CLARKE-WELLSMORE (Third Defendant) and WAYNE HALLIAM KOOREY (Fourth Defendant) and LESLEY MARIE LEE AS EXECUTOR OF THE ESTATE OF DAVID ERIC LEE (DECEASED) (Fifth Defendant) FILE NO/S: BS 8626 of 2009 DIVISION: Trial Division PROCEEDING: Application ORIGINATING COURT: Supreme Court DELIVERED ON: 21 December 2011 DELIVERED AT: Brisbane HEARING DATE: 1 December 2011 JUDGE: Boddice J ORDER: CATCHWORDS: PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND –PROCEDURE UNDER UNIFORM CIVIL PROCEDURE RULES AND PREDECESSORS – -- 1 of 5 -- 2 OTHER MATTERS – Where the applicants make application for further disclosure pursuant to r 223 of the Uniform Civil Procedure Rules 1999 (Qld) – Whether the undisclosed documents in the possession or power of the respondents are directly relevant to issues in dispute Uniform Civil Procedure Rules 1999 (Qld) COUNSEL: Brennan, V for the plaintiff/respondents Coulsen, C for the defendant/applicants SOLICITORS: PM Lee & Co for the plaintiff/respondents QBM Lawyers for the defendant/applicants [1] The first, second, third and fourth defendants (“the applicants”) make application for further disclosure pursuant to r 223 of the Uniform Civil Procedure Rules 1999 (Qld) from the plaintiff and the fifth defendant (by counterclaim) (“the respondents”). The application is opposed on the grounds that the further disclosure sought is irrelevant to the matters in issue, is otherwise too wide, vague or embarrassing and, in respect of one category of documents, relates to documents subject to legal professional privilege. Background [2] The plaintiff’s claim seeks the recovery of moneys loaned to the first defendant by the plaintiff in its capacity as trustee of a superannuation fund. The second, third and fourth defendants are guarantors of that loan. The loan was made, and the liability guaranteed, by a written agreement entered into on 26 June 2007. [3] The plaintiff also seeks an order for rectification of the 26 June 2007 agreement, being the substitution of the identity of the lender from David Lee as trustee for the David E Lee Superannuation Fund to David E Lee Medical Pty Ltd ACN 010 266 476 as trustee for the David E Lee Superannuation Fund. [4] The applicants resist repayment of the loan on the basis that David Lee (“Lee”), who died on 26 January 2009, purported to sign the agreement as trustee of a superannuation fund, not the plaintiff. The applicants also counterclaim against the respondents alleging representations were made to the effect that the superannuation fund, or Lee personally, would lend to the defendants $250,000 on or before 26 June 2007. [5] The pleaded representations are alleged to have been “partly written, partly oral and partly implied”. Insofar as it was said to be partly implied, it is alleged this implication was by Lee and/or the plaintiff “instructing and retaining their solicitors, P M Lee & Co, to act on their behalf and to provide advice with respect to the agreement and by their conduct in signing the agreement”. The respondents deny the alleged representations. The basis for the denial is that P M Lee & Co was not instructed or retained to prepare the agreement which was prepared by another firm retained by one or a number of the defendants and that no such implication arises from retaining solicitors or signing the agreement. The counterclaim further asserts that neither the plaintiff nor Lee were in a position to lend to the defendants the sum of $250,000 on or before 26 June 2007. -- 2 of 5 -- 3 The application [6] The documents sought by way of further disclosure are set out in a letter from the applicants’ solicitors dated 28 September 2011.1 They are: “The documents and records which would be expected to have been in existence and disclosed include, but would not be limited to:- • accounting books and records, including journals; • Profit and loss statements; • Balance sheet and statements of cash flow; • Reconciliation statements and working papers; • Tax returns; • Bank records including correspondence with the banks, account applications, bank statements; • Share statements; • Correspondence, file notes and accounts from P M Lee & Co and drafts of the loan agreements.” The documents sought fall into two categories, a solicitor’s file, and financial documents. Submissions [7] The applicants submit the solicitor’s file is relevant to the order for rectification. The agreement dated 26 June 2007 names the lender as “David Lee as trustee of the David E Lee Superannuation Fund”. The plaintiff has produced an unsigned agreement which names David Lee as the lender with no mention of a superannuation fund. [8] Whilst no document has been produced supporting the allegation that it was the common intention of the parties that the lender be David E Lee Medical Pty Ltd ACN 010 266 476 as trustee for the David E Lee Superannuation Fund, Graham Frederick Knight deposes that PM Lee & Co gave advice to Lee as to the unsigned agreement (although Mr Knight deposes the file does not contain a signed or unsigned copy of the agreement “nor any correspondence to, or communication with David Lee, or anyone else as to the agreement”). It is submitted that in those circumstances the existence of the file is established, and it is relevant to an issue in dispute. Further, reliance upon it by the plaintiff means any legal professional privilege in respect of the file’s contents has been waived. [9] The applicants submit the financial documents are relevant to the ability of Lee and the fifth defendant to lend the plaintiff $250,000 as at 26 June 2007. Whilst the respondents have produced some financial records, they related to the funds available as at 27 June 2007, not 26 June 2007, the relevant date as to whether there was the ability to advance $250,000. [10] The respondents resist disclosure of the solicitor’s file on the basis it contains advices which attract legal professional privilege, which has not been waived, and 1 Affidavit of Box, exhibit “PRB-4”. -- 3 of 5 -- 4 the category of documents sought is too wide, not being limited to documents relevant only to the transaction the subject of the proceedings. [11] The respondents resist disclosure of the financial records on the basis they are not relevant. The respondents contend the financial capacity of Lee and the fund are not put in issue by the respondents. Only the making of the representation is put in issue. Further, disclosure has been made to date of the bank records of the fund for June 2007, and its financial records for the year ending 30 June 2007. They reveal the financial position of the fund. There is no need for any further disclosure. Finally, the respondents submit the balance of the documents sought are too wide, there being no temporal limitation in respect of those documents. Discussion [12] The obligation in respect of disclosure applies to documents “directly relevant to an allegation in issue in the pleadings”.2 Disclosure is not at large. Where disclosure has been made by a party, another party seeking further disclosure must establish there are documents in the possession or power of the first party which are directly relevant to issues in dispute which have not been disclosed by that first party. [13] There is no doubt PM Lee & Co hold a file which is relevant to the transaction the subject of this dispute. The admission contained within Mr Knight’s affidavit that P M Lee & Co gave advice to Lee, albeit about the original agreement, provides a sufficient basis for that conclusion. That file has not been disclosed to date, although part of its contents, an unsigned draft agreement, has been disclosed by the plaintiff. That conclusion renders it open for the Court to find that the disclosure made to date by the respondent is deficient. [14] However, there is substance in the respondents’ contention that the category of documents sought in respect of this file is too wide. The applicants are only entitled to disclosure of documents directly relevant to the transaction, the subject of the rectification claim. [15] The applicants submit that the respondents have, by reason of the matters relied upon to date, impliedly waived any claim to legal professional privilege in respect of those documents. A finding of waiver of a claim to legal professional privilege is not to be lightly made, particularly in circumstances where, as here, there was a claim for disclosure of the file as a whole, not limited to documents relevant to the transaction in dispute in the proceeding. [16] The respondents should provide further disclosure of documents on the file relevant to the transaction, subject to any claim of legal professional privilege. Should such a claim be made, it can, if disputed, be the subject of further determination based on proper material. [17] The claim for further disclosure in respect of financial records is said to be directly relevant to the allegation of a representation that $250,000 would be advanced to the applicants. The respondents have disclosed the bank records of the fund for June 2007 and the financial records for the year ending 30 June 2007. [18] The applicants submit that the documents disclosed to date are not relevant to the allegation as they identify the position as at 27 June 2007, not 26 June 2007. However, nothing in the material establishes that there exists other documents 2 UCPR, r 211(b). -- 4 of 5 -- 5 which may be relevant to this allegation, particularly as the documents disclosed to date include the fund’s audited financial statements for the year ended 30 June 2007 and the fund’s bank records for June 2007. [19] Without identification of documents directly relevant to this allegation which have not been disclosed, the request for further disclosure is properly to be characterised as fishing. It does not satisfy the requirements for going behind the disclosure made by the parties to date. This is particularly so when the claim for further disclosure is framed so broadly, not being limited to any particular financial year. Conclusions [20] The applicants have established that there exist documents directly relevant to the rectification claim which have not yet been disclosed by the respondents. Those documents are documents on the file of PM Lee & Co in relation to the transaction the subject of the rectification claim, but not otherwise, subject to any lawful claim of legal professional privilege. [21] The applicants have not established that there exists financial documents not already disclosed which are directly relevant to the allegation in dispute in relation to the alleged representation. [22] I shall hear the parties as to the form of orders, and costs. -- 5 of 5 --