Cardinia Pty Ltd & Ors v Yu Feng Pty Ltd [1999] QSC 102

IN THE SUPREME COURT OF QUEENSLAND Brisbane BETWEEN: AND: AND: CARDINIA PTY LTD (ACN 050 405 242) ARTHUR WILLIAM IAN KENNEDY and PATRICIA MARGARET KENNEDY YU FENG PTY LTD (ACN 056974844) REASONS FOR JUDGMENT - HELMAN J. Judgment delivered 21 May 1999 No. 10143 of 1998 First Plaintiff Second Plaintiffs Defendant CATCHWORDS: CIVIL LAW - applications for orders for disclosure under O. 35 " of the Supreme Court Rules (Qld). Rules 4, 13. General disclosure and production of a document under r. 13. Counsel: Mr J. Sullivan for the applicant Mr T. D. O. J. North for the respondent Solicitors: Purcell Chadwick and Skelly for the applicant Barry & Nilsson for the respondent Hearing Date: 4 May 1999 -- 1 of 10 -- ( IN THE SUPREME COURT OF QUEENSLAND Brisbane BETWEEN: AND: .. AND: CARDINIA PTY LTD (ACN 050 405 242) ARTHUR WILLIAM IAN KENNEDY and PATRICIA MARGARET KENNEDY YU FENG PTY LTD (ACN 056 974 844) REASONS FOR JUDGMENT - HELMAN J. Judgment delivered 21 May 1999 No. 10143 of 1998 First Plaintiff Second Plaintiffs Defendant I The plaintiffs in action no. 10143 of 1998 apply for orders for disclosure under 0.35 of the Rules ofSupreme Court. The summons, which was filed on 4 March 1999 and came before me on 4 May 1999, seeks relief in two other actions, nos. 10688 and 11486 of 1998. The ( . \,~) former of those other actions, in which the plaintiffs were M A Ryan & Associates Pty Ltd i '-~- and C.M. and M.A. Ryan, has been settled. I heard argument on the application in action no. 10143 of 1998 on the understanding that my decision on that application would apply mutatis mutandis to the application in action no. 11486 of 1998. 2 The first plaintiff in action no. 10143 of 1998 is the tenant of a shop E8, Stafford Sandwich and Carvery, in the food court of the defendant's shopping centre called Stafford City Shopping Centre at 400 Stafford Road, Stafford, Brisbane. The first plaintiff has occupied the shop since about 11 December 1997 under a lease executed in November 1997. The other plaintiffs in the action, Mr and Mrs Kennedy, are directors and shareholders of the -- 2 of 10 -- 2 first plaintiff, and guarantors of the perfonnance of its obligations under the lease. The lease provided for an initial rental of $58,000.00 per annum - $4,833.33 per month. The plaintiffs allege in paragraph 25 of their statement of claim, which was delivered on 10 December 1998,. that $2,679.17 is a fair monthly rental and claim relief under the Trade Practices Act 1974 (eth) for misleading and deceptive conduct and other alleged contraventions of that Act, and other relief. The defendant in paragraph 6 of its defence and counter-claim, which was delivered on 24 December 1998, denies the allegation in paragraph 25 of the statement of claim. It is the issue as to the fair monthly rental that has given rise to this application. 3 In paragraph 1 of the summons the plaintiffs, relying on O. 35 r. 13, seek an order that the defendant produce for inspection reports of rental figures of 183 'eat in food tenancies' referred to in an affidavit filed on behalf of the defendant in connexion with an application for interlocutory relief on 24 November 1998. The affidavit was sworn by Mr Peter Jeffries, a registered valuer and director of Byvan Management (Qld) Pty Ltd, the company that manages the shopping centre. On the subject of shops on premises like that occupied by the first plaintiff, which has an area of forty-four square metres, Mr Jeffries swore that he had access to 'reported rental figures of 183 eat in food tenancies which in area are under 50m2' • He then gave his opinion concerning the rental market for such premises. On behalf of the plaintiffs, Mr J. Sullivan made it clear that the application is now not pursued for reports about all of the tenancies, as a further affidavit ofMs Michelle Bayo, filed by leave on 4 May on behalf of the defendant, revealed that only thirty-five of the 183 tenancies were in shopping centres owned by the defendant. The application is now confined to those thirty-five. The evidence before me shows that production of the reports has been required by written notices dated 27 January 1999 and 23 February 1999 from the plaintiffs' solicitors to the defendant's solicitors but the reports have not been produced. o C) o -- 3 of 10 -- 3 4 Mr T.D.O.J. North, for the defendant, argued that 0.35 r. 13 does not create a new class of documents that must be disclosed. A document must, he submitted, also be one caught by O. 35 r. 4 otherwise the Court will not make an order requiring disclosure. He argued further that the reports in question are not directly relevant to an allegation in issue in the case. 5 Mr North's first point raised the question whether O. 35 r. 13 applies to a restricted category of documents to which 0.35 r. 4 has no direct application: see The Supreme Court ( Practice 1999, vol. 1, para. 24/0/3, p. 442. 6 There was a well-established distinction in the rules before the present 0.35 came into ) force, between general discovery of documents and the production of a document referred to / in a pleading or affidavit: see Quilter v. Heatly (1883) 23 Ch. D. 42 at pp. 49-50 per Lindley L.J. and at pp. 50-51 per Bowen L.J., and Mantaray Pty Ltd v. Brookfield Breeding Co Pty Ltd [1992] 1 Qd. R. 91 at p. 95 per Williams J., with whom Shepherdson and Ambrose JJ. agreed. That distinction is in my view preserved for disclosure in 0.35 in its C_/ present form, so that, as under the previous rules, in the words of Jessel M.R., referring to an application of the kind made in paragraph 1 of the summons, 'the applicant is to have such '\ / an order unless good cause to the contrary is shown.': Quilter v. Heatly at p. 48. The refusing party bears the onus of showing cause why the order sought should not be made: ibid at p. 51 per Bowen L.J. 7 That the distinction I have referred to is preserved in 0.35 in its present form can be seen from comparing the circumstances giving rise to the right to require production of a document in r. 13 and the duty to disclose documents provided for in r. 4. The former may arise, as in this case, before the issues have been defined in the pleadings and the latter only after they have been defined. The object of r. 13 is, as it was for the previous rule to the same -- 4 of 10 -- 4 effect, 'to give the opposite party the same advantage as if the documents referred to had been fully set out in the pleadings': Quilter v. Heatly at p. 50 per Lindley LJ. Under r. 13 mention in a pleading etc., is reason enough that the opposing party should be allowed to see a document: ibid at pp. 48-49 per Jessel M.R. 8 I therefore conclude that provided the plaintiffs establish that they had by written notice required the defendant to produce the sought-after thirty-five reports and that the defendant has refused to produce the documents, the application in paragraph 1 should succeed, unless the defendant can show good cause for refusing the order. It will not be C) necessary to satisfy the requirements ofr. 4(1), which I shall discuss in more detail in relation to paragraph 2 of the summons, although the matters referred to in that provision may be 0 relevant in determining whether the application should succeed. 9 One reason which may be accepted for refusing to make an order for production is that the document is not in the possession or under the control of the party required to produce it, but even in such a case the court may make the order. The question is one of discretion to be exercised on the facts of the particular case: see Rajidain Bank v. Agom Universal Sugar C) Trading Co Ltd [1987] 1 .W.L.R. 1606 and Mantaray Pty Ltd v. Brookfield Breeding Co Pty Ltd. No issue about possession or control arises in relation to the thirty-five reports. 10 . Similarly, it can I think be accepted that irrelevance to any allegation in issue can be considered on an application in reliance on r. 13. The respondent to such an application must generally begin at a disadvantage if such a ground for refusing the order is advanced because the party who refers to documents does so by choice, 'usually because they are either an essential part of his cause of action or defence or of significant probative value to him': see Rajidain Bank v. Agom Universal Sugar Trading Co Ltd at p. 1610 per Nourse L.J. Nevertheless there could be a case in which a mere passing mention of an obviously irrelevant -- 5 of 10 -- 5 document could be regarded as justifYing refusal of an order for production. Here Mr North' s argument rests on the proposition that the pleadings have revealed the reports to be irrelevant to any issue in the action. That is because he says they concern the market rental for the shop and not the real issue in the case, which concerns the fair monthly rental. On this part of the application the onus rests, as I have explained, on the defendant to show that the reports are irrelevant and I am not persuaded that it has done so. The information in the reports will be relevant to assessing the market rental for shop E8, and the market rental is in tum relevant ( to determining what is a fair monthly rental, which, it is reasonable to conclude, could be determined by adjusting the figure for market rental after taking into account other material matters. 11 I also reject Mr North's argument that since the reports may not be admissible the order for their production should be refused. It is by no means clear that they are not admissible, and in any event that is a matter for the trial judge if a party seeks to tender them. It is not appropriate on this application to speculate on that subject, particularly as the documents have not been produced. 12 I therefore conclude that the plaintiffs should have the relief sought in paragraph 1 of the summons, since it appears that there is an objective likelihood that the duty to disclose has not been complied with. 13 In paragraph 2 of the summons the plaintiffs, relying on 0.35 r. 4, seek an order that the defendant make further and better disclosure to them by delivering to their solicitors: (a) all documents containing information regarding or otherwise recording the rental agreed to be paid by each of the proprietors of all of the food outlets within the defendant's shopping centre known as Stafford City Shopping Centre (,Stafford City') including without limitation all offers to lease, agreements for lease and leases. (b) all documents which evidence any agreements and/or arrangements made between the defendant or its agents and any of the tenants of -- 6 of 10 -- (c) (d) 6 food outlets within Stafford City in respect of any landlord's contributions, rebates, discounts or other inducements relating to such tenancy. all documents evidencing the rentals actually paid by all of the tenants of food outlets within Stafford City including documents containing evidence of any rental concessions made by the defendant to such tenants or evidencing arrears of payments of rental by any of these tenants. all documents containing details of - (i) rentals payable; (ii) rentals actually paid by the operators of food outlets; (iii) tenancy areas; (iv) incentives by rebates; (v) discounts; in respect of any tenancy in any other shopping centre owned or managed by the defendant or its Stafford City Centre Manager (Byvan Management (Qld) Pty Ltd) in South East Queensland which the defendant asserts is comparable to the tenancies of the plaintiffs in the subject proceedings. 14 At the hearing of the application Mr Sullivan told me that the plaintiff sought under (d) only those documents relating to tenancies in shopping centres owned by the defendant. It was not contended that the documents the subject of the plaintiffs application, modified as I have related, are not in the possession or under the control of the defendant: see r. 4(1)(a). 15 'Dledefendant has disputed the relevance of the documents referred to in paragraph 2. The duty to disclose a document arises under r. 4 only if the document is directly relevant to C) o o an allegation in issue in the cause: r.4(1)(b). 'Directly relevant' means tending to prove or (j disprove the allegation in issue: Robson v. R.E.B. Engineering Pty. Ltd [1997] 2 Qd. R. 102 at p. 105. On the defendant's behalf it was conceded that there are documents that answer to the description of documents referred to in that paragraph adding that those documents 'both identify tenants and disclose turnover figures of the tenants': see Ms Bayo' s affidavit filed by leave on 4 May 1999. 16 I accept as correct Mr Sullivan's submission that each of the classes of documents sought in (a), (b) and (c) is directly relevant to an allegation in issue as to the fair monthly -- 7 of 10 -- 7 rental. The infonnation in any such documents is relevant to assessing the market rental and the market rental is relevant in the way that I have mentioned in connexion with paragraph 1 of the summons. 17 The defendant has disclosed documents relating to some of the other food shops in the shopping centre but not all of them. Subject to what follows, I can see no proper reason for the defendant's withholding disclosure of the documents relating to some of the other food shops and not others. 18 Ms Bayo's mention of the turnover of other tenants raises the question of the prohibition in s. 26(1) of the Retail Shop Leases Act 1994 which prevents a lessor's disclosing C) to anyone else infonnation obtained by the lessor about the turnover of a lessee's business without the lessee's agreement. It was not suggested before me that that provision did not apply to at least part of the sought-after disclosure by the defendant concerning lessees other than the first plaintiff. Section 26(2)(b)(iv) provides however that a lessor may disclose infonnation specifying the turnover of a lessee's business to a court under a court order. In ( '\1 ,,~j Stone Hipwood Pty Ltd v. DS Queen Street Mall Pty Ltd (No. 9887 of 1997, unreported, 4 November 1998) Ambrose J. made orders for the production of documents, with names blanked out where appropriate, to the Registrar and gave the legal representatives of the applicant liberty to inspect them and take copies of them upon their undertakings and upon the condition that they would not disclose any copies so taken or any infonnation obtained from those documents to any person other than the experts retained for the purposes of the action for use only for such purposes. Ambrose J. further ordered that any person obtaining such copies or infonnation not make any disclosure of them or it to any person not involved in, or for any purpose other than, the conduct of the action. -- 8 of 10 -- 8 19 In this case in my view orders of that kind would provide adequate protection to the other tenants' interests while permitting the disclosure of relevant documents. 20 The documents referred to in paragraph 2(d) of the plaintiff's summons are in my view 21 no less directly relevant than those referred to in (a), (b) and (c). If the defendant had asserted that there was no comparable tenancy then of course no disclosure would have been necessary, but it must be remembered that Ms Bayo' s affidavit to which I have referred suggests that there are relevant documents in that category, since she did not exclude (d) from her reference to paragraph 2. Mr North argued that some of the documents referred to in paragraph 2 of the plaintiff's summons related to transactions too remote in time from the events in question in this action to be directly relevant to the allegation in issue. I am not persuaded that that is so, except in the case of any agreements with the new tenant referred to in paragraph 21 of Mr Skelly's affidavit filed on 19 April 1999 and agreements fixing rents this year on the settlement of two actions, nos. 9250 and 10688 of 1998. Furthermore, any rents agreed upon in settlement of those actions would no doubt have reflected factors arising from the desire of the parties to bring proceedings to an end. Those other factors in my view render it unlikely that the documents arising from the settlements are directly relevant to the 'allegation in issue. 22 In paragraph 19 of Mr Skelly's affidavit filed on 19 April 1999 minutes or notes of leasing meetings between officers of Byvan Management and officers of the defendant are mentioned. I am not persuaded that those documents, if they exist, have been shown to be directly relevant to the allegation in issue. o o c) -- 9 of 10 -- 9 23 Subject to the qualifications I have mentioned, I shall make the order sought in paragraph 2 of the summons since it appears again that there is an objective likelihood that.. the duty to disclose has not been complied with. 24 I shall invite further submissions on the form of the orders and costs. () , / -- 10 of 10 --