Christer Nominees Pty Ltd trading as Willis Property Group v Calabria Community Club Ltd

Before the Court is a notice of motion filed on 23 November 2021. The applicant on the motion seeks the following orders:

The applicant on the motion is the defendant on a statement of claim brought by the respondent. A cross-claim has also been brought by the defendant. Defences to the statement of claim and the cross-claim have been filed. While I am determining the applicant’s motion, it is convenient to refer to the parties by reference to their positions in the substantive proceedings.

The background to the dispute can be described in relatively short terms. The plaintiff conducts a business as a licensed real estate agent. The defendant was at all material times the registered proprietor of a parcel of land in Prairiewood, New South Wales. The dispute arises out of a property development undertaken by the defendant. A significant number of apartments were built on the land and the plaintiff engaged as a real estate agent to sell those apartments. A dispute has now arisen in relation to the payment of commissions to the plaintiff, leading to this litigation.

The proceedings were commenced by the filing of the statement of claim on 8 December 2020.

A request for further and better particulars was made by the defendant on 14 January 2021.

Further and better particulars were provided by the plaintiff on 2 February 2021.

A defence and statement of cross-claim were filed on 8 April 2021.

On 15 April 2021 the Court made timetable orders that included an order that the plaintiff serve its evidence in chief in the substantive proceeding by 13 May 2021. That order has not been complied with.

A defence to the cross-claim was filed on 12 May 2021.

A notice of motion seeking security for costs was filed by the defendant on 7 April 2021.

The Court ordered that the plaintiff pay security for costs on 26 July 2021.

The subpoenas to which this notice of motion relates were issued by the Court at the request of the plaintiff on 6 October 2021.

The notice of motion was filed on 23 November 2021 and came before me as Duty Judge on 22 February 2022.

The defendant observed that the Division in which the matter is to be heard will impact on the practice notes which are applicable to the proceedings. This has, at least, the potential to impact on the orders that should be made with respect to the subpoenas. It was the defendant’s contention that, in the event proceedings are transferred to the Equity Division, the subpoenas would be set aside, based on Practice Note SC Eq 11, at [4]-[6]. While I do not necessarily accept this contention, it is convenient, given at least the potential impact on the other orders sought, to consider the application for the transfer of the proceedings first.

Section 53 of the Supreme Court Act 1970 (NSW) is the starting point that governs the Division to which proceedings are assisted. As Rogers CJ Comm D said in Challenge Bank Ltd v Raine & Horne Commercial Pty Ltd (1989) 17 NSWLR 297 at 308:

The proceedings were properly commenced by statement of claim in the Common Law Division. Section 54 of the Supreme Court Act provides that the Court in a Division may, on application by a party or on its own motion transfer the whole or any part of the proceedings in that Division to another Division. The relevant principles with respect to the transfer of proceedings are not in dispute. The determination is discretionary: Coastline Constructions (Aust) Pty Ltd v Kakavas [2008] NSWSC 388 per Hislop J at [16].

In Giorgi v European Asian Bank Aktiengesellschaft (Supreme Court (NSW), McLelland J, 3 March 1986, unrep), quoted with approval by Rogers CJ Comm D in Challenge Bank Ltd at 308, McLelland J observed (at 5):

Here, the defendant has the burden of establishing that the proceedings should be transferred to the Equity Division. The defendant submits the subject matter of the proceedings are more appropriately dealt with in that Division, and particular in the Commercial List of that Division.

As discussed above, there is a dispute between the parties as to the effect of the contracts between them. It is unnecessary to detail the precise areas of difference. What is clear is that the plaintiff asserts that, in accordance with the agreements executed between the parties, invoices have been sent with respect to commissions owed and those invoices have not been paid. The defendant relies on the “full terms and conditions” of the agreement in disputing its obligation to pay the amounts claimed in the invoices. The defendant’s contentions in this regard are expanded upon in the cross-claim, discussed below. The defendant also says the agreements failed to comply with the Property and Stock Agent Act 2002 (NSW) and the Property and Stock Agent Regulation 2014 (NSW), and that as a result the plaintiff has no entitlement to the claimed commissions.

The defendant in its cross-claim asserts that the plaintiff was in breach of express and implied terms of the agreement. In particular the defendant asserts the plaintiff failed to use its best endeavours to effect sales of the apartments at the highest achievable price in breach of an express term requiring it to do so. Additionally, it is asserted the plaintiff was in breach of an implied term that the plaintiff would exercise due care, skill and diligence in providing the services under and in accordance with the agreement. This term is said to be implied by operation of the Property and Stock Agents Act and the Regulations made under that Act. The factual foundation for these claims fall into two categories, the first styled as “apartments to relatives”, and the second styled as “car park affected units”.

In relation to the “apartments to relatives”, the defendant asserts that part of the plaintiff’s claim for commission is based on reported sales of four apartments to Mr Willis (the plaintiff’s director and signatory on the agreements), in relation to which the defendant claims contracts were never exchanged and no commission is therefore payable. In relation to a further four apartments the defendant claims the apartments were sold to persons related to Mr Willis at a price lower than could have been achieved, in breach of the express and implied terms referred to above.

As to the “car park affected units”, the defendant claims that, in relation to a number of units, the plaintiff made representations to the purchasers to the effect that no car parking spot was included as part of the title to the property when that was not the case. Inherent in this is a failure to properly promote the property and consequently achieve the best possible price. On this basis, the defendant asserts a breach of the express and implied terms referred to above. The defendant also asserts that representations made to purchasers of the car park affected units were false, misleading or deceptive or likely to mislead or deceive and thus, constituted contraventions of s 18 of the Australian Consumer Law, entitling the defendant to recover, pursuant to s 236 of the Australian Consumer Law, the loss and damage it suffered because of the conduct. The defendant also claims the plaintiff was negligent in the sale of the car park affected units.

The defendant, by its cross-claim, seeks damages based on the loss and damage suffered as a result of the sale of the apartments to relatives and the car park affected units. While it can be accepted that the claim relates to a commercial transaction with respect to a property development, there is, to this point, nothing in the claim that is particularly unusual, or complex, that would warrant diverting it from this Division at this stage of the proceedings.

The cross-claim goes further and alleges that the plaintiff owed a fiduciary duty to the defendant to avoid situations where its personal interests conflicted with the interests of the defendant and its duties to the defendant; and further not to take advantage of its position to the detriment of the defendant. The cross-claim asserts that the plaintiff breached its fiduciary duty as a result of the sale of the apartments to relatives and the defendant as a result suffered loss.

The defendant submits that if the plaintiff is found to have breached its fiduciary duty there are a range of equitable remedies that the Court might consider. It is submitted that, based on the commercial nature of the transaction giving rise to the dispute and the potential availability of equitable remedies, the matter is more appropriately dealt with in the Commercial List in the Equity Division. I do not accept this submission.

As noted above, while the facts involve a significant property development, there is nothing particularly complex about the dispute that arises between the parties. Further, insofar as a breach of a fiduciary duty might give rise to particular equitable remedies, no such remedies have been sought in the cross-claim. What is specifically claimed are damages together with interest and costs. While the relief claimed includes “such further or other order as the Court deems fit”, this is not a solid foundation for an argument that some equitable remedy will later be seen to be appropriate. Having regard to the dispute, it is entirely understandable that the drafter of the cross-claim did not specifically envisage anything beyond damages for the claimed loss, irrespective of the basis of liability established. In any event, if matters should transpire beyond what was envisaged by the drafter of the cross-claim, and some equitable remedy is regarded as appropriate, there is no issue that such an order could be made by a judge in this Division.

Having regard to the above, I am not satisfied that a sufficient case for transfer to the Equity Division has been made out. As a result, the orderly conduct of the business of the Court requires that the proceedings properly commenced in the Common Law Division of this Court remain in this Division.

I would dismiss Prayer 3 of the defendant’s motion.

On 6 October 2021, at the request of the plaintiff, subpoenas were issued to the following:

As noted above, the defendant seeks orders setting aside those subpoenas. In the alternative an order is sought directing that any documents produced in answer to the subpoenas not be open to inspection by the plaintiff until further order.

Two of the recipients of the subpoenas, GJW and All Round, have already produced material in answer to the subpoenas (the former after correspondence narrowing the terms of what was sought). The other two recipients have engaged in correspondence with the plaintiff to narrow the terms of the respective subpoenas.

Insofar as GJW and All Round have responded to the subpoenas issued to them, the defendant submitted that no regard should be had to this fact in determining its application. This is because, the defendant argued, in making their response to the subpoenas, GJW (and, incidentally, Pagano Architects) had been misled by emails sent by the plaintiff’s solicitor narrowing the terms of the subpoenas, and indicating that this narrowing was the result of agreement with the defendant. On the evidence of the defendant, there had been no such agreement. The plaintiff in submissions accepted that there had been no explicit agreement reached between the parties to narrow the scope of their subpoenas. The plaintiff noted, however, correspondence from its solicitor explicitly responded to complaints raised by the defendant’s solicitor, by indicating that the plaintiff “consent[s] to amend the subpoenas” to substitute apparently offending words and said “we trust that will assuage your concerns”. There was, apparently no response from the defendant. Ultimately, it is neither necessary nor appropriate for me to enquire into the conduct of the plaintiff’s solicitor in this regard. There is a more straight-forward point in the defendant’s favour with respect to the significance of the recipients having responded to the subpoenas. This is discussed below. However, insofar as the defendant relied on the conduct of the plaintiff’s solicitor, the short response is there is no evidence the recipients responded to the subpoenas as a result of a misunderstanding of its terms. It should also be noted that it is, and has been at all times, open to the recipients of the subpoenas to seek to have them set aside irrespective of the attitude of defendant in the proceedings. This brings me to the circumstance that this application is brought by a party to the proceedings rather than the recipient of a subpoena.

As noted above, two of the subpoena recipients have produced material in answer to their subpoenas, and the two others have entered into communication with the plaintiff with a view to narrowing the terms of their respective subpoenas. It is notable then, that the defendant brings this application to set aside a process in which it is not (at least directly) involved.

There is no issue that the defendant in this matter has standing to make this application. That is made explicit by r 33.4(1) of the Uniform Civil Procedure Rules 2005 (NSW) which provides as follows:

At common law, however, there is an issue as to whether a party to a proceeding has standing to seek to set aside an order directed to a non-party. There are judgments that suggest such a party does not have standing: Re ACI International Ltd (1986) 11 ACLR 240, per Beach J at 241-2; Wran v Australian Broadcasting Commission [1984] 3 NSWLR 241 per Hunt J at 264. The conflicting approaches were discussed by Wienberg J in Fried v National Australia Bank [2000] FCA 911; (2000) 175 ALR 194.

The significance of the debate at common law to the present matter is the argument in favour of acceptance that a party has standing to seek to set aside a subpoena issued to a non-party. Weinberg J in Fried (at [16]) referred to the reasons of Hill J in Trade Practices Commission v Kimberley Homes Pty Ltd (1989) 217 ALR 110 at 113 where his Honour said:

Ultimately, it was unnecessary for Weinberg J to resolve the conflict in the authorities. His Honour, however, noted that he found the reasoning of Hill J, above, persuasive (see at [19]). In this case, that reasoning operates to elucidate the operation of r 33.4. In short, the force of the reasoning of Hill J is that, if the subpoenas, or any one of them, constitute an abuse of process, it matters not that the recipient has answered it, or is willing to do so.

It is necessary to turn then to the application to set aside.

In Secretary of the Department of Planning, Industry and Environment v Blacktown City Council [2021] NSWCA 145, Bell P (as the Chief Justice then was) said (at [60]-[61]):

His Honour later said (at [65]):

His Honour, at [68]-[69] said:

See also Brereton JA at [88]-[89], McCallum JA (as the Chief Justice of the ACT then was) at [98].

The observations of Bell P set out above are, of course, as his Honour noted (at [70]), subject to the power to set aside, as an abuse, a subpoena issued for an “improper, illegitimate or ulterior purpose foreign to the litigation” even where the documents have apparent relevance.

Thus, while it is common in this area to seek to set subpoenas aside on the basis of complaints that the party is using a net rather than a line or is seeking discovery from third party, these are but attempts, not always helpful, to describe a more fundamental concept. A complaint the subpoena is being used as an attempt to obtain discovery from a third party, commonly arises (and indeed is referred to in the list compiled by Powell J, as his Honour then was, in Botany Bay Instrumentation and Control Pty Limited v Stewart, referred to by Bell P in Secretary of the Department of Planning, Industry and Environment v Blacktown City Council at [45] and at [60]). This complaint was a substantial part of the defendant’s argument in the present matter. The problem, however, as I understand it, is not with the use of a subpoena to obtain discovery, per se. The complaint is, in reality, a complaint with respect to the requirement of reasonable particularity: see Commissioner for Railways v Small (1938) SR (NSW) 564 at 573-4; National Employers’ Mutual General Association Ltd v Waind and Hill [1978] 1 NSWLR 372 at 382; Southern Pacific Hotel Services Inc v Southern Pacific Hotel Corporation Ltd [1984] 1 NSWLR 710. The observations of Hodgson JA in Bengalla Mining Co Pty Ltd v Barclay Mowlem Construction Ltd [2001] NSWSC 93, at [16] are instructive. His Honour said:

As noted above, there has been an agreement between the plaintiff and the subpoena recipients to narrow the terms of the subpoenas (other than the subpoena issued to All Round). The subpoenas issued by the Court, of course, remain in the same terms despite what has occurred between the plaintiff and the recipients. The parties, however, agreed that, in the event the subpoenas are not set aside, they should be amended by the Court of its own motion to reflect the agreed narrowing. This appears to me to be a sensible approach (although, ultimately the view I have reached below is that subpoenas should be set aside and new subpoenas issued). The choice therefore, is not between whether the subpoenas as issued to GJW, Pagano Architects and Holding Redlich should remain standing or be set aside, but rather whether the narrowed form of each subpoena should be found to be an abuse. While the defendant’s submissions were made in relation to the subpoenas as issued, there is no difficulty in applying those submissions to the narrowed form of the subpoenas.

The amended schedule to the subpoena to GJW seeks:

Paragraph 1 of this subpoena seeks all correspondence between GJW and the plaintiff which refers to the development. I was informed, and it is apparent from some of the correspondence tendered on the motion, that GJW was engaged as the defendant’s consultant on the development. While the drafting is broad, given the roles of the respective entities (particularly the plaintiff as the real estate agent engaged to sell the units), the correspondence can be assumed to relate to, or be very likely to relate to, the sale of units in the development.

It might be noted, in seeking correspondence with the plaintiff, the subpoena seeks documents the plaintiff might be thought to itself possess. However, no specific complaint was raised on this basis. The defendant complained that this paragraph is being used as a substitute for discovery. However, having regard to the observations of Hodgson JA in Bengalla Mining discussed above, I do not accept this is sufficient to establish an abuse. Further, the terms of the paragraph are explicit in identifying documents that expressly refer to the development and require no judgment on the part of the recipient in this regard. In fairness to the defendant there may have been some substance to this complaint with respect to the original form of the subpoena given its use of “in connection with”, rather than “expressly refers to”, arguably requiring judgment on the part of the recipient as to whether a document was “in connection with” the development or otherwise.

A further complaint made by the defendant was that the request was in the nature of a “fishing expedition”. As discussed above, what is required is “apparent relevance”. That relevance is, of course, relevance to the issues between the parties. Given that the meaning of the agreements between the plaintiff and the defendant are an issue, as is the defendant’s knowledge of Mr Willis’ relationship with a number of purchasers, I accept that communication between GJW, implicitly on the defendant’s behalf, and the plaintiff is of “apparent relevance” to understanding the relationship between the two parties. Further, while the period over which the documents are sought is lengthy, so was the time over which the units were sold. According to the statement of claim the plaintiff introduced purchasers over the period between November 2015 to March 2020.

Additionally, while broad, I do not think the request is oppressive. Given the business relationship, it can be presumed that the correspondence can be located by a relatively straightforward search of the recipient’s electronic records. I would uphold paragraph 1.

Paragraph 2 of the amended subpoena, in requiring all documentation recording meetings with the defendant, is apt to catch records dealing with any aspect of the development. As noted above, GJW was the defendant’s consultant on the project. There was no suggestion that this role was limited to the sale process or in any way confined to matters relevant as between the plaintiff and the defendant. The request therefore goes well beyond documents that relate to the defendant’s relationship with the plaintiff, the relationship between various units in the development and car parking spaces or the defendant’s knowledge of Mr Willis’ relationship with purchasers. While the requirement for “apparent relevance” admits that some documents may be caught which are ultimately not relevant, what is sought here includes what may be a large number of documents which can have no relevance. This paragraph is, in my view, impermissibly broad. Paragraph 2 lacks a legitimate forensic purpose and therefore constitutes an abuse.

In relation to paragraph 3, I would accept that correspondence and records dealing with car space allocations have “apparent relevance”. The understanding of the defendant’s consultant is likely to have a bearing on the instructions given by the defendant to the plaintiff with respect to the allocation of car spaces.

Paragraph 4 seeks copies of all versions of an excel spreadsheet called the “Prairiewood Topline Summary”. The Prairiewood Topline Summary is, according to the affidavit of the defendant’s solicitor, a document prepared by the plaintiff. It is not entirely clear why the plaintiff is (again) seeking its own documents. Be that as it may, the affidavit of the defendant’s solicitor explains that it is a spreadsheet containing a working record of sales including the number of properties for sale, sales that have settled, purchasers’ details and lots acquired by Mr Willis. Examination of a copy of one iteration of the document tendered in evidence shows that it also includes the sale price and the number of car parking spaces attached to the unit. Iterations of this document, in my view, have “apparent relevance” given the issues in dispute. The documents will indicate the understanding of the author as to, at least, the allocation of parking spaces at particular times.

Paragraph 5 seeks documentation as to the proposed pricing of the units. The defendant’s consultant’s records as to pricing have apparent relevance to the issues which arise with respect to the price at which various units were actually sold, particularly in relation to the apartments sold to relatives and the car park affected units.

Paragraph 6 seeks documents recording proposed or actual allocation of car parking spaces. Paragraph 7 seeks strata plans in both draft and final form. These documents are of apparent relevance to the defendant’s consultant’s understanding of the allocation of car parking spaces and, in turn, the instructions given by the defendant to the plaintiff in this regard.

It follows from the above that with the exception of paragraph 2, the narrowed subpoena is not an abuse of process. The subpoena issued to GJW should be set aside and a new subpoena issued in the terms of paragraphs 1 and 3-7 of the narrowed subpoena.

I note that the agreement between GJW and the defendant includes a confidentiality clause. The defendant should be granted first access to the documents produced to allow the defendant to make any application restricting access to all or some of the documents on this basis or otherwise (see orders below).

The amended Pagano subpoena seeks:

Paragraph 1 of the subpoena seeks correspondence with the plaintiff which refers to the development. This is in essentially the same terms as paragraph 1 of the GJW subpoena. For the same reasons given above, I am of the view that this paragraph, given that the communication is with the sales agent, is framed so as to catch documents with “apparent relevance”.

Paragraph 2 of the subpoena is again in similar terms to the corresponding paragraph in the GJW subpoena. In this instance the subpoena is directed to the architects on the project. Their role can presumably be understood as going well beyond matters to do with pricing, car park allocation, and the plaintiff’s relationship with potential purchasers. For essentially the same reasons given above with respect to the GJW subpoena, the terms of this paragraph are apt to capture documents with no apparent relevance and constitutes an abuse.

Paragraphs 3, 4, 6, 7 and 8, correspond with 5, 3, 4, 6, and 7 of the GJW subpoena. The drafter’s purpose in reordering the paragraphs is not readily apparent. Despite the slight inconvenience thereby created, for essentially the same reasons given above with respect to those paragraphs of the GJW subpoena, I accept that the documents sought in these paragraphs have apparent relevance.

Paragraph 5 has no analogue in the GJW subpoena. It seeks all correspondence with All Round (the conveyancer engaged by the defendant for the sale of some of the units) recording car space allocations for particular units. This material has apparent relevance to the instructions given by the defendant to the plaintiff in relation to the allocation of parking spaces.

It follows from the above that the subpoena issued to Pagano Architects should be set aside. I would order that a subpoena be issued in the terms of paragraphs 1 and 3-8 of the narrowed subpoena to Pagano Architects.

It is not apparent that the defendant has any basis on which to seek to restrict the plaintiff’s access to the Pagano documents. However, erring on the side of caution an order should be made giving the defendant first access.

All Round is a conveyancing company which was engaged over a period in relation to the sale of units in the development. There has been no narrowing of the scope of the subpoena issued to All Round. The subpoena seeks:

With respect to paragraph 1, the plaintiff maintains that it is required to prove its introduction of purchasers for each contract. Further, it maintains that the conveyancer’s record of the sales advice issued by the plaintiff is reflective of the receipt of that advice by the defendant. I accept that the documents have apparent relevance on this basis.

Paragraphs 2 and 3 seek copies of all written correspondence with the plaintiff and Mr Willis respectively, “in connection with” the development regardless of the subject matter. While, given the relationship between the parties, it can be assumed that such correspondence will relate to the sale of individual units, the breadth of these paragraphs is apt to catch documents with no relevance to the issues between the parties. Unlike the paragraph 1 in the subpoenas to GJW and Pagano which are superficially similar, these documents (being between the plaintiff and the defendant’s conveyancer) do not strike me as relevant to the relationship between the plaintiff and the defendant. These paragraphs are not within the proper scope of a subpoena.

Documents caught by paragraph 4 are relevant to the defendant’s knowledge of the sale of particular units, and its response, including with respect to the allocation of car parking. I would uphold this paragraph.

Paragraphs 5 and 6 deal with the sale of apartments to relatives, both by reference to the particular individuals and the particular apartments. There is, however, no basis to think that the conveyancer would hold information dealing with the relationship between those persons and the plaintiff, or the defendant’s knowledge of it. I therefore see no apparent relevance in these documents.

Paragraphs 7 and 8 seek correspondence in relation to particular numbered units. According to correspondence between the parties, these are simply alternative identifiers for the same units referred to in paragraph 6. These paragraphs therefore fail on the same basis.

I have dealt with the apparent relevance of the Prairiewood Topline Summary sought in paragraph 9 in dealing with the GJW subpoena above. Paragraph 10 seeks documents recording proposed pricing. Such documents have apparent relevance given the defendant’s claim that properties were sold at less than their true value. Paragraph 11 relates to the allocation of car spaces. Such documents have apparent relevance for reasons discussed above in relation to the GJW subpoena. Paragraph 12 relates to copies of strata plans, the apparent relevance of which has also been dealt with above. Paragraph 13 seeks copies of executed contracts of sale. Such documents will provide a record of sale price, car parking allocation and the named agent with respect to the sale. These documents have apparent relevance. Paragraphs 14 and 15 relate to the timing of sales and have relevance with respect to the time at which commissions are claimed, and on that basis have apparent relevance.

It follows from the above the subpoena to All Round should be set aside and that a subpoena be issued in the terms of paragraphs 1, 4, and 9-15 of the original subpoena to All Round.

It is not apparent that the defendant has any basis on which to seek to restrict the plaintiff’s access to the All Round documents. However, erring on the side of caution an order should be made giving the defendant first access.

Holding Redlich solicitors took over the conveyancing role from All Round. A copy of the narrowed form of the subpoena to Holding Redlich seeks:

In its original form, the schedule was in identical terms to that issued to All Round other than with respect to the periods over which documents were sought. In its narrowed form, each paragraph still corresponds with a paragraph of the original. The reasoning above in relation to the All Round subpoena is therefore relevant to this subpoena.

Paragraphs 1(a), (d), (e), (g), (h), (i) and (j) survive for the reasons given in relation to the corresponding paragraphs of the All Round subpoena.

Paragraphs 1 (b), (c) and (f), fail for the reasons given in relation to paragraphs 2, 3 and 5-8 of the All Round subpoena.

The Holding Redlich subpoena should be set aside and a new subpoena issued in the terms of paragraphs 1(a), (d), (e), (g), (h), (i) and (j) of the narrowed subpoena to Holding Redlich.

There is a potential claim in relation to client legal privilege by the defendant. The defendant should have first access to the documents, as outlined in the orders below.

Costs

Each party has had a measure of success on the motion. Each should pay its own costs.

I make the following orders: