Capital Property Projects (ACT) Pty Limited and Ors v Planning & Land Authority and Anor [2007] ACTSC 54 (22 June 2007)

Last Updated: 28 July 2008

CAPITAL PROPERTY PROJECTS (ACT) PTY LIMITED and OTHERS v PLANNING & LAND AUTHORITY and ANOR

[2007] ACTSC 54 (22 June 2007)

PRACTICE AND PROCEDURE - Subpoena - failure to comply with orders - proceedings struck out in part.

Supreme Court Rules, r 40(54)

Administrative Decisions (Judicial Review) Act 1989

Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541

Choundary v Capital Airport Group Pty Ltd [2006] FCA 1755

Ex Tempore Judgment

No. SC 796 of 2006

Judge: Connolly J

Supreme Court of the ACT

Date: 22 June 2007

IN THE SUPREME COURT OF THE )

) No. SC 796 of 2006

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: CAPITAL PROPERTY PROJECTS (ACT) PTY LIMITED

ACN 109 406 680

First Plaintiff

AND: CANBERRA INTERNATIONAL AIRPORT PTY LIMITED

ABN 14 080 361 548

Second Plaintiff

AND: CAPITAL PROPERTY FINANCE PTY LIMITED ABN 98 008 608 928

Third Plaintiff

AND: BRAND DEPOT PTY LIMITED

ABN 26 117 285 079

Fourth Plaintiff

AND: PLANNING & LAND AUTHORITY

First Defendant

AND: DIRECT FACTORY OUTLETS CANBERRA PTY LIMITED

ACN 115 065 935

Second Defendant

ORDER

Judge: Connolly J

Date: 22 June 2007

Place: Canberra

THE COURT ORDERS THAT:

1. Pursuant to r 1452 the proceedings brought by the third plaintiff be dismissed for failure to comply with the subpoena issued to the third plaintiff dated 10 May 2007.

2. The subpoenas issued to the first, second and third plaintiffs dated 7 June 2007 be withdrawn.

3. The subpoena issued to the fourth plaintiff dated 7 June 2007 be amended to only refer to "copies of balance sheets, profit and loss statements, trial balance and income tax returns relating to or concerning the financial position produced on or since 1 July 2006".

4. The subpoena issued to the fourth plaintiff dated 7 June 2007 be returnable at the hearing on 30 July 2007 at 10 am.

5. The third plaintiff pay the costs of the first and second defendants thrown away by reason of the proceedings brought by the third plaintiff being dismissed.

6. The third plaintiff pay the first and second defendants' costs of the application in proceedings dated 19 June 2007.

1. This is an application pursuant to r 40(54) of the new Rules to strike out proceedings on the basis of failure to comply with a subpoena issued on 10 May 2007. Although brought under the new Rules, it is in a similar form to procedures that were well established under the old Rules and, indeed, with the inherent power of the Court. Generally, it is true to say that when a party puts on an application to strike out by reason of failure to comply with a subpoena or a direction of the Court, it is really done as a tactical step to bring to the Court's attention the failure by the other party. The plea is formally to strike out, but in most cases the sanction that will be granted falls well short of strike out.

2. It is urged in this case that no sanction short of striking out would be appropriate. The proceedings themselves are somewhat unusual, they are not ordinary common law tort or contract claims. The proceedings are in the nature of various public law claim remedies, variously under the Administrative Decisions (Judicial Review) Act 1989 (Administrative Decisions (Judicial Review) Act) of this Territory and prerogative relief.

3. The underlying dispute relates to a long-standing and much publicised dispute within the Canberra community concerning the development of an empty block of land in Fyshwick in the Australian Capital Territory. In December 2005 an auction was held on that site. There was an application in this Court before me for an injunction to prevent that auction from proceeding, brought by some of the present plaintiffs. The present plaintiffs, Capital Property Projects, Canberra International Airport, Capital Property Finance, and Brand Depot are all inter-related. Brand Depot is a factory outlet enterprise situate on land owned by the second plaintiff, Canberra International Airport, situate, as one would expect, at the airport at Pialligo in the Australian Capital Territory. It offers to the public various retail services in a factory outlet/sale/ discount type basis.

4. The successful bidder for the lease at the auction in December of 2005 was the second defendant. The company name of the second defendant is Direct Factory Outlets Canberra Pty Limited, and it is associated with other companies around Australia which also offer factory outlet style retailing services.

5. In short, these proceedings are brought to seek to challenge two things. Firstly, the decision by the relevant Territory authority, the first defendant, in September 2006 to issue a development approval to enable the second defendant to begin construction of certain premises on the land and, secondly, to seek to challenge the decision of the first defendant to actually grant the Crown lease. The grant of the Crown lease occurred in February 2006, following the successful auction in December 2005.

6. The plaintiffs are well within time and rights to bring the actions in relation to the development application, and his Honour, Gray J, who has had carriage of this matter to date has set down a preliminary point that needs to be determined for hearing on 30 July 2007. The challenge goes to a claimed excess of jurisdiction, or failure to confine itself within its appropriate jurisdiction. His Honour has set down for determination on that date the question whether that is, in effect, a judiciable question of fact, or otherwise. It is a threshold question that needs to be resolved before the substantial challenge to the development application proceeds or otherwise.

7. The second issue that has been set down for 30 July involves, in effect, an application to extend time. The time that is provided to bring challenges under the Administrative Decisions (Judicial Review) Act or for general prerogative relief is significantly shorter than general Limitation Act time limits, and properly so. In ordinary common law actions there has long been a time limit of three years, or six years. In recent years this jurisdiction, as well as others, has brought down the time limit for tort style actions, following concern of old and stale cases. In public law remedies, as opposed to the enforcement of a private cause of action, the limitations have always been somewhat shorter. Under the Administrative Decisions (Judicial Review) Act, the time limit is 28 days. Under the rules in relation to a prerogative writ action, the time limit is 60 days. Those time limits, it seems to me, are, if anything, even more important in public law actions than they are in private law actions. In saying that I am mindful of the well known and often cited remarks that McHugh J made in the Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541 in relation to the importance of bringing actions within statutory time limits.

8. Where what is being sought to be done is to challenge the grant of a Crown lease, it is a very significant act indeed. The authorities have granted a lease, said to be on a commercial basis, at an auction sale, where I am told the successful bid was some $39 million. The successful purchaser has gone out and arranged finance to support that purchase and, I am told, from affidavit material that, as one would expect, the monthly interest cost alone is in the range of a quarter of a million dollars in relation to that matter.

9. I do not know, but one could well expect that that would be the norm in the case of purchase of leases for commercial purposes, as indeed for leases for residential purposes. On from there, there is a whole string of ancillary financing transactions going down the line, following the grant of the lease. It is a very significant step to challenge in a court the grant of a lease, when what is affected is not just the individual purchaser's interest, but their financers, re-financers, and so on down the line.

10. The plaintiffs well knew that this sale was to occur, because they tried to stop it. They well knew that the lease was granted, because they clearly had access to the lease and sought advice as to whether it was properly done and took various other actions through April/May of 2006.

11. In support of the application to extend the time to challenge the lease, which is the second question set down for hearing on 30 July, the reason why the Court's indulgence is sought to extend the time is because of the claimed state of mind of the third plaintiff. As that is the basis for the exercise of discretion, it is not surprising that a subpoena was issued to the third plaintiff to obtain documents and things relevant to that state of mind.

12. There has been, it seems to me, a woefully inadequate response to that subpoena. Clearly, real documents exist that have not been produced in relation to the subpoena. A solicitor in the employ of Mallesons, who has had responsibility for certain file notes for which legal professional privilege was claimed, has sworn an affidavit in relation to that aspect of these proceedings, and was cross-examined in relation to documents that must exist on Mallesons' files. Going to the earlier injunction application, there was a detailed affidavit there, sworn by Mr Byron, that set out in quite fine degree of detail, aspects of the transaction and his then objection to the transaction. Yet nothing was produced in response to the subpoena in relation to material that must have been the basis for that affidavit.

13. A document was produced on 5 June, well after the matter had been re-agitated before his Honour, Gray J, which is a one-page document, described on its face as an update. It appears to be a valuation basis for a sale. It is clearly, on its face, based on general retailing and bulky goods retailing, that is to say a gross floor area of 50,000 square meters broken down into two components, 25,000 square metres for bulky goods retailing and 20,000 for other retailing that sets a projected purchase price of something under $15 million. No satisfactory explanation, it seems to me, has been given as to why this document only came to light well after the return date of the subpoena or why only this document, an update, was provided. It has been said that it was from a consultant and it has been suggested that there could be discovery in relation to that, or interrogatories could be issued in relation to that. I find that quite unsatisfactory and it beggars belief that the response has been so unsatisfactory.

14. In relation to what is probably now the most common form of commercial record keeping, that is to say emails, there has been a constant refrain that there is a difficulty about to be resolved in relation to producing the emails generated within the third plaintiff in relation to the subject matter of the subpoena. The defendants are being told repeatedly, and it would seem the courts have been told, that that matter was on the verge of being resolved. After repeated, "We're working on it. We're interrogating. We're getting documents, but it's going to take a while", the second defendant said, "Well, if this is on a tape, the tape's a matter or thing caught by subpoena", and indeed that is the case, "Can we have that?". The immediate response to that seems to be that the tape has now gone to Melbourne and there has been no other response beyond that.

15. It would appear that at least on 29 May 2007 it was becoming apparent that nothing could be retrieved. The matter was back before Gray J on 31 May and certainly that dire state of inability to recover was not then mentioned.

16. I am troubled by the fact that in the Federal Court in the matter of Choundary v Capital Airport Group Pty Ltd [2006] FCA 1755, similar interests to the present plaintiffs, represented by the same solicitors, were faced with a problem in relation to the inability to comply with subpoenas due to claimed problems in reading tapes containing emails. It would be entirely wrong to draw a sinister conclusion from that but entirely proper to say, as it was put by Mr Erskine, for the second defendant, that if any plaintiffs should be put strongly on notice of the importance of vigorously complying with subpoenaed material, as in relation to electronic materials held on tape, and full and frank and early disclosure and a cooperative attitude in relation to any difficulties that emerge in recovering that electronic data, it is this plaintiff represented by this solicitor.

17. Instead it seems to me there has been a constant saga of, in effect, "the cheque is in the mail. We're getting it, we're getting it, we're getting it". But we are nowhere near getting it.

18. It is an unusual remedy to strike out in relation to a failure to comply with a subpoena but in this case I am going to grant the relief. I stated towards the end of the plaintiffs' submissions in order to put the defendants seeking the relief on notice that, of course, if such relief is granted it is a discretionary relief, and is subject to review. If I am held to be wrong embarking as I am, to some extent, in uncharted waters, as no one has been able to take me to a precise authority where such an order has been granted in these precise circumstances and probably the closest, as Mr Balafoutis, for the plaintiffs, properly took me to, was the tobacco cases in Victoria, the point may be appealed.

19. If I be wrong the consequence will be that that will be pointed out well after the fist stage of the litigation has been dealt with in July and the defendants who are coming here really complaining of delay and saying they want the matter resolved quickly, may find themselves back at the drawing board.

20. But that is a matter for them. I am asked to grant the relief and it seems to me that it is justified. That is because it is an unusual form of relief. It is public law proceedings to challenge the grant of a lease well out of time. Eight and a half months after the decision where the time limit is 28 days or 60 days in relation to prerogative relief writs.

21. I am mindful of the massive commercial uncertainty to all commercial entities in the Australian Capital Territory, developers, persons seeking to build, develop or lease commercial developments, financiers involved at any stage in the financing or the refinancing, insuring or derivative financing of major investment proposals if eight and a half months after a Crown lease is granted it can be put under challenge. I am less troubled than I may be about denying the plaintiffs their day in court on that issue and because, while the claim for relief on that basis is that there was a gross under realisation to the Territory of the proper value of the asset, the plaintiffs themselves bid $38 million against the $39 million bid and the valuation advice they had that was discovered suggested $15 million.

22. I am less concerned than I may be that a highly meritorious case is being lost. But the real issue here is that I cannot be satisfied that the defendants could fairly test the claimed basis for the extension of time because of the gross failure to comply with the terms of the subpoena.

23. It follows that I grant that relief sought in par 1 of the first defendant's application. There are then issues being agitated in relation to certain subpoenaed material. It seems to follow that it is no longer necessary for me to rule on the claim of legal professional privilege in relation to that point.

24. I would indicate that I would have released that material but it seems inappropriate to release it while my order is extant. It would seem that it is unnecessary to order compliance in relation to the other subpoenas going to that question leaving outstanding only that aspect of the subpoena going to the accounting records including but not limited to balance sheets, profit and loss statements, trial balance and income tax returns relating to or concerning the financial position on or since 1 July 2006 for the fourth plaintiff, Brand Depot. That does remain a live issue.

25. Again these are administrative law proceedings where the question of standing is an important issue, a very important and significant issue. The fourth plaintiff pleads that its standing is on the basis that it is a direct commercial competitor and that its financial and economic interest will be substantially and adversely affected by the impact of the proposed development.

26. That may well be a sound basis for standing but if a party pleads that their standing is based on being a competitor whose financial interest will be substantially affected, it seems to me that they open the ground for that material to be made public.

27. It is said that this ought to be done by way of discovery rather then subpoena. It seems to me that in administrative law proceedings, in particular where the question of standing ought to be resolved at an early stage, it is not inappropriate, it would have been appropriate to go down a separate discovery process but it is not at all inappropriate to do it by way of subpoena and I would decline to set aside that aspect of the subpoena.

28. The position now is, in relation to the subpoenas, given my ruling in relation to the third plaintiff, that none of those subpoenas are pressed, save for the subpoena issued against the fourth plaintiff only and only in relation to par 4. That paragraph is very broad and I will need to limit it.

29. The only subpoena now that is pressed is par 4 of the subpoena directed to the fourth plaintiff. I decline to set that aside. However, two things are to be said. One is it is broad and it needs to have a cut off point. The other is of its nature and Mr Erskine acknowledged this and clearly raised that there are well-established principles as to how one can most properly deal with material that may be sensitive, commercial-in-confidence to a competitor on its face. That is the case here. I decline to set the subpoena aside however, I give leave to the parties either before the Registrar, the Master or a judge to seek some further clarification as to how that can be complied with.

30. I will limit the subpoena so it reads "copies of balance sheets, profit and loss statements, trial balance and income tax returns relating to or concerning the financial position produced on or since 1 July 2006" and make it returnable on the first day of the hearing on 30 July 2007.

31. In relation to costs, the appropriate form of costs order is that the first and second defendants are to get their costs of the strike out application and the costs thrown away by reason of the third plaintiff now being out of the proceedings.

I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Connolly.

Associate:

Date: 22 June 2007

Counsel for the plaintiffs: Mr S Balafoutis

Solicitor for the plaintiffs: Mallesons Stephen Jaques

Counsel for the 1^st defendant: Mr P Walker

Solicitor for the 1^st defendant: ACT Government Solicitor

Counsel for the 2^nd defendant: Mr C Erskine

Solicitor for the 2^nd defendant: Meyer Vandenberg

Date of hearing: 22 June 2007

Date of judgment: 22 June 2007