Burgess, Nirolf Pty Ltd & Freestar Developments Pty Ltd v Thorpe & Ors [1992] QSC 371

...:::> '- '-10l.T37 State Reporting Bureau I --~~·---------------------------------------------------------------------------- TRANSCRIPT OF PROCEEDINGS (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau.) li2~::~~~.·;;,::.·:;~l Lo~ts ~3; 10 1 9 dt j SUPREME COURT OF QUEENSLAND c-- CHAMBERS RYAN J No 51 of 1992 DOUGLAS ARTHUR BURGESS First plaintiff and NIROLF PTY LTD Second plaintiff and FREESTAR DEVELOPMENTS PTY LTD Third plaintiff and HORACE MERVYN THORPE First defendant r "'·- · and RONALD CLEMENT BORLAND Second defendant and BERELA CONSTRUCTIONS PTY LTD Third defendant BRISBANE .. DATE 14/10/92 .. JUDGMENT 1 4th Floor, The Law Courts, George Street, Brisbane, Q. 4000 Telephone: (07) 227 4360. Facsimile: (07) 227 5532 -- 1 of 12 -- 141092 HIS HONOUR: I dismiss the application and order the applicant to pay the respondents costs of and incidental to the action to be taxed. I publish my reasons. 10 () 30 40 ) ; ·' 50 JUDGMENT 60 2 -- 2 of 12 -- c c c IN THE SUPREME COURT OF QUEENSLAND No. 51 of 1992 BETWEEN: DOUGLAS ARTHUR BURGESS First Plaintiff AND: NIROLF PTY. LTD. Second Plaintiff AND: FREESTAR DEVELOPMENTS PTY. LTD. Third Plaintiff HORACE MERVYN THORPE First Defendant AND: RONALD CLEMENT BORLAND Second Defendant AND: BERELA CONSTRUCTIONS PTY. LTD. Third Defendant JUDGMENT- RYAN J. Delivered the Fourteenth day of October, 1992 Counsel: Mr. R. Myers for Applicant Mr. B. O'Donnell for Respondent Solicitors: Watkins Stokes Templeton, Town Agents for Gall Standfield & Tiley, Southport Carter Newel!, Solicitors for Respondent Hearing Date: 28 September 1992. -- 3 of 12 -- c c IN THE SUPREME COURT OF QUEENSLAND BETWEEN: AND: AND: DOUGLAS ARTHUR BURGESS NIROLF PTY. LTD. FREESTAR DEVELOPMENTS PTY. LTD. AND: HORACE MERVYN THORPE AND: RONALD CLEMENT BORLAND AND: BERELA CONSTRUCTIONS PTY. LTD. JUDGMENT - RYAN J. No. 51 of 1992 First Plaintiff Second Plaintiff Third Plaintiff First Defendant Second Defendant Third Defendant Delivered the Fourteenth day of October, 1992 Application has been made by defendants in an action that the first plaintiff, Douglas Arthur Burgess, make file and serve an affidavit stating whether any of the documents listed in a schedule to the summons is or has at any time been in the -- 4 of 12 -- 2 possession or power of the plaintiffs and if they have been but are not now in their possession when they parted with them and what has become of them. The schedule lists: ( 1) All financial records of the company, Berela Northern Special Projects Pty. Ltd. (Berela) (2) All documents relating to the travel and other associated expenses for Douglas Arthur Burgess in attending the Quadrant project site in Canberra and the Radisson Hotel project site in Sydney. (3) All bank records which record payments from Northern Special Projects Pty. Ltd. and/or Berela Northern Special Projects Pty. Ltd. at the direction of Burgess or to him. ( 4) All correspondence and court documents relating to legal proceedings instituted in respect of the Quadrant project in Canberra which are in the possession or power of Berela Northern Special Projects Pty. Ltd. .~ The solicitor for the defendants has deposed that he has on '-_) a number of occasions requested that the plaintiffs provide further and better discovery, but their solicitors have replied that there are no further documents in the power or possession of the plaintiffs which are discoverable. The amended statement of claim alleges that an oral agreement was reached between Burgess, Freestar Developments, Thorpe, Borland and Berela that Burgess would acquire a one-third shareholding in Berela (a company engaged in house construction, of which Thorpe and Borland were directors); the balance of the issued share capital in Berela would be held equally by Thorpe -- 5 of 12 -- c c c c 3 and Borland; Burgess would be appointed a director of Berela, and would be in charge of construction and administration; Burgess would bring to Berela, and administer, new developments for unit and commercial construction; two companies would be incorporated, to be known as Northern Special Projects (N.S.W.) Pty. Ltd. and Berela Northern Special Projects Pty. Ltd., in each of which Burgess would own one-third of the issued share capital and the balance would be held equally between Thorpe and Borland; Burgess would secure for the two new companies commercial projects of the kind previously undertaken by Northern Special Projects Pty. Ltd. but which in the future would be undertaken by these companies (Burgess, it is alleged, was authorised to act on behalf of Northern Special Projects Pty. Ltd.); Freestar would withdraw from the joint venture with Robina Land Corporation Pty. Ltd. and, with the consent of Robina Land Corporation, allow Berela to take its place in the joint venture; and Parkway Constructions Pty. Ltd. would manage, plan and direct the joint venture and Burgess would devote his skill and experience to the business of Parkway, Berela and the two new companies. It is alleged that the effective date for the commencement of these arrangements was to be 1 March 1991. It is further alleged that the agreement was reached between 15 February 1991 and 28 March 1991. From 1 March 1991 to 31 July 1991 Burgess acted in accordance with the agreement and performed work for Berela pursuant to the agreement. Borland, Thorpe and/or Berela repudiated the agreement. Further or alternatively, the failure of Thorpe, Borland and/or Berela to issue a one-third shareholding in Berela was conduct in breach of the agreement. -- 6 of 12 -- 4 On 1 August 1991, Burgess determined the agreement. It is claimed that by reason of the breach and/or repudiation of the agreement the plaintiffs had suffered loss. Further or alternatively, if as the defendants allege no contract was concluded, it is alleged that Burgess and Freestar Developments are entitled to be compensated for the value of the work performed by Burgess for Berela, and the value of the interest in the Robina joint venture made available by Freestar Developments to Berela. The plaintiffs claim: (a) damages representing the value of one-third of the issued share capital of Berela, and one-third of any ·•~ dividend declared by Berela between 1 April and 1 August 1991; (b) further or alternatively, damages for compensation for: (i) the value of the work performed by Burgess for Berela; 0 (ii) the value of Freestar Developments' interest in the joint venture with Robina Land Corporation ~ ~ Pty. Ltd. made available by Freestar Developments to Berela. The defendants admit that between 15 February 1991 and 31 July 1991 they negotiated with the plaintiffs in relation to a proposed merger of their respective business interests, but deny that the negotiations resulted in any concluded agreement. On 31 July 1991, the plaintiffs terminated their negotiations and -- 7 of 12 -- • 5 rejected merger proposals. The plaintiffs repudiated the proposals that had been the subject of negotiations to that time. On 21 May 1992 the defendants' solicitors stated in a letter to the plaintiffs' solicitors that they considered that certain documents would be in existence and discoverable. It referred to documents some of which are in the schedule to the summons. The reply to this asserted that there was no issue on the pleadings that made the documents to which they had referred c relevant. How, it was asked, can it be relevant that your clients assess any profits/losses? The answer made by the defendants' solicitors was, inter alia, that Radisson Hotel and c all subsequent jobs performed by Northern Special Projects Pty. Ltd. were part of the merger arrangements and that all jobs undertaken by Berela Northern Special Projects Pty. Ltd. (which included the Canberra job) were part of the arrangement. All the financial records of these companies on and from 1 March, 1991 c were discoverable so that the defendants may ascertain any profits and losses from those entities. On 10 June 1992, the plaintiffs' solicitors stated in a C letter to the defendants' solicitors that the documents of Northern Special Projects Pty. Ltd. are not documents within the possession or power of the plaintiff, and that their instructions were that there were no further discoverable documents for Northern Special Projects (N.S.W.) Pty. Ltd. and Berela Northern Special Projects Pty. Ltd. On 16 June, they repeated that their instructions were that there were no further discoverable documents in respect of Berela Northern Special Projects Pty. Ltd. They stated that they had requested documents that related -- 8 of 12 -- 6 in any way or in any way evidenced work performed or carried out by Berela Northern Special Projects Pty. Ltd. over the period 1 March 1991 to 31 July 1991, and that they were instructed there was no further documents. Similarly, they were instructed that there were no further discoverable documents in respect of Northern Special Projects (N.S.W.) Pty. Ltd. They confirmed that the documents of Northern Special Projects Pty. Ltd. were in the hands of the liquidator and were not in the power of possession of the first plaintiff. They added that Mr. Burgess had instructed them that he did not have any accounts or other documents evidencing his travel arrangements from 1 March 1991 to 31 July 1991; nor were any such dqcuments in his power or ::) possession as any such documents were now with the liquidator of Northern Special Projects Pty. Ltd. On 14 August 1992, the plaintiffs' solicitors wrote to the defendants' solicitors stating that all documents in relation to the Quadrant project in Canberra had been discovered. The submission for the applicants was directed in terms to showing that the documents of which it sought discovery were relevant to issues which arose on the pleadings. Counsel for the .f) '-..__./ respondents submitted that no such relevance had been shown. It is however sufficient to dispose of this application in the form at which it was presented to say that no case has been made out under the relevant rule of court why I should make an order. The application is in its terms made under 0. 35 r. 18, and it was conceded by counsel for the applicants that it was so made. That rule requires that the application shall be made on an affidavit stating that in the belief of the deponent, the -- 9 of 12 -- - . c c 7 party against whom the application is made has, or has at some time had, in his possession or power the document specified in the application, and that it relates to the matters in question in the case, or to some of them. The affidavit relied on in this case makes no such statement. In White v. Spafford & Co. [1901] 2 KB 241 at p. 245, Collins LJ stated:- "The object of the rule is that a litigant who can point to specific documents, which he is able to name and specify in his affidavit, and who is in a position to swear that in his belief they are or have been in the possession of his opponent, and that they relate to the matters in question in the action, shall have a right to discovery of these particular documents. But the key of the position is this - that there must be an affidavit of his belief as to specific documents capable of being named and specified. The rule applies only where those conditions are fulfilled. It is obviously not intended to give to the party who is seeking discovery, upon a mere general affidavit, based upon a priori reasoning, asserting that he has reason to believe that letters must have passed between his adversary and some third person, or that books or other documents must exist relating to the subject matter of the action, a right to discovery of these documents. The rule was obviously not intended to cover that ground at all." In this case, the application relates not to specific documents but to documents described by reference to categories or classes of documents. Such an application cannot be supported under 0. 35 r. 18. See Permanent Finance Corporation Ltd. v. Euro Pacific (Plant Hire) Pty. Ltd. (1971) Qd.R. 302. Counsel for the applicant invited me to make an order pursuant to 0. 35 r. 11 if I was not satisfied as to the requirements of 0. 35 r. 18. There are however considerable obstacles in his way in seeking to support the application under 0. 35 r. 11. In Jones v. Montevideo Gas Co. (1880) 5 QBD 556, Cotton L.J. stated, at p. 559, that "when an affidavit of discovery was -- 10 of 12 -- 8 sought, it could not be contradicted, and must have been taken to be sufficient, unless from tpe documents referred to, or from an admission in the pleadings of the party from whom discovery was sought, or from the affidavit itself, it could be gathered that some documents were withheld. The object of this practice was to prevent a conflict of affidavits as to whether the affidavit of documents was sufficient." In Mulley v. Manifold (1959) 103 CLR 341, Menzies J. pointed out that it had been established in British Association of Glass Bottle Manufacturers v. Nettlefold [1912] 1 K.B. 369 that the insufficiency might appear not only from the documents but also from any other source that constituted an admission of the existence of a discoverable document. Furthermore, it was not necessary to infer the existence of a particular document, it was sufficient if it appeared that the party had excluded documents under a misconception of the case. Can it be said that the plaintiffs have excluded documents under a misconception of the case? It was contended for the applicant that this was the position. I am however unable to see that the pleadings raise any issue to which the documents said () ~ to be discoverable would be relevant. The claim by the defendants' solicitors that the financial records of Northern Special Projects Pty. Ltd. and Berela were discoverable so that the defendants may ascertain any profits or losses from those entities misconceives the nature of the claim made by the plaintiffs. They are making a claim for breach of conduct , and further or alternatively, if no contract was entered into, a claim for compensation for the value of work performed. No claim ' -- 11 of 12 -- 9 is made for an account of any profits. There is no suggestion in the defence that Burgess breached any terms of the alleged agreement or received any payments in reduction of his loss for which he ought to account. A number of documents referred to in the schedule are deposed to be in the hands of the liquidators of Northern Special Projects Pty. Ltd. (in liquidation). There is nothing before me to indicate that these documents are in the possession or power c=, of any of the plaintiffs. It appears that they are in the actual possession of the liquidators, and there is nothing to show that the company is under the unfettered control of Mr. Burgess. I dismiss the application, and order the applicants to pay the respondents' costs of and incidental to the application to be taxed. -- 12 of 12 --