New South Wales Supreme Court CITATION : Cleary Bros (Bombo) Pty Limited v Waste Recycling & Processing Corporation [2007] NSWSC 538 HEARING DATE(S) : 25/05/07 JUDGMENT DATE : 29 May 2007 JURISDICTION : Equity Division Technology and Construction List JUDGMENT OF : Einstein J DECISION : Reasons given for disallowing certain discovery categories and permitting others CATCHWORDS : Practice and procedure - Discovery categories - Conventional estoppel - Need for communications 'across the line' Idoport Pty Ltd v National Australia Bank Ltd [1999] NSWSC 1026 CASES CITED : Lakatoi Universal Pty Ltd v Walker [1998] NSWSC 470 Moratic Pty Ltd v Gordon [2007] NSWSC 5 National Australia Bank Ltd v Idoport Pty Ltd [2000] NSWCA 8 PARTIES : Cleary Bros (Bombo) Pty Limited (Plaintiff) Waste Recycling & Processing Corporation (Defendant) FILE NUMBER(S) : SC 55079/06 COUNSEL : Mr M Orlov (Plaintiff) Mr R Scruby (Defendant) SOLICITORS : Sparke Helmore (Plaintiff) Clayton Utz (Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION TECHNOLOGY AND CONSTRUCTION LIST Einstein J Tuesday 29 May 2007 55079/06 Cleary Bros (Bombo) Pty Ltd v Waste Recycling & Processing Corporation JUDGMENT The application for discovery 1 Waste Recycling and Processing Corporation ("WSN") by motion filed 23 May 2007 seeks an order for discovery from the plaintiff ("Cleary Bros") of documents in categories identified in annexure "J" of the affidavit of Deborah Kate Tomkinson, affirmed 23 May 2007. Six out of the 23 categories remain in dispute: categories 7, 8A, 11, 13, 15 and 23. 2 WSN is the owner of the Lucas Heights waste management centre. Cleary Bros is contracted to manage and operate that centre. The present proceedings concern 4 disputes between the parties arising out of that contractual relationship. For present purposes, it is only necessary to deal with 2 of those disputes: i. A dispute about the basis on which Cleary Bros is entitled to be paid under clause MP-2 of the contract, in relation to material taken over the weighbridge ("the Weighbridge dispute"). ii. A dispute about Cleary Bros' obligations to achieve certain rates of compaction and airspace volumes on the site ("the Compaction dispute"). 3 WSN seeks discovery pursuant to Part 21 r 3(b) of the UCP rules, which permits the court to order discovery of classes of documents specified "by description of the nature of the documents and the period within which they were brought into existence". 4 Part 21 r 2(4), introduced in April of this year, has the effect that documents in relation to which discovery is ordered must be relevant to a fact in issue in the sense that they could contain material that could rationally affect the probability of the existence of a fact in issue. In the context of considering an application to set aside certain subpoenas in Lakatoi Universal Pty Ltd v Walker [1998] NSWSC 470, Rolfe J said, as to "relevance" (at p 11): "In determining the question of relevance, the court must bear in mind that the parties are entitled to build up an evidentiary mosaic. Generally, that cannot be done, particularly in complicated commercial litigation by the tender of one piece of evidence or the assertion that only limited material is relevant to the issues involved … the court should not be astute to find irrelevance at any early stage of the proceedings. This approach was approved by Einstein J in Idoport Pty Ltd v National Australia Bank Ltd [1999] NSWSC 1026 at [36] [Affirmed on appeal: National Australia Bank Ltd v Idoport Pty Ltd [2000] NSWCA 8] on a discovery application." The Weighbridge Dispute 5 The nature of the issues which presently separate the parties on this parameter may be gleaned by simply reciting the defendants overview submission: i. The waste management centre comprises three separate areas, referred to in the contract as LHWMC, LH-1 and LH-2. In general terms, the centre operates in the following way. Persons wishing to dispose of waste at the centre drive their vehicles over a weighbridge at LHWMC, they then proceed to dispose of their waste, then drive their vehicles back out over the weighbridge, and are charged according to the weight of the waste disposed of. ii. Part of Cleary Bros' obligations under the contract involves the excavation from LHWMC of material referred to as VENM (an acronym for virgin excavated neutral material – essentially, sandstone). The purpose of that excavation is, broadly, two-fold. First, to create airspace at LHWMC to be filled with waste disposed of at that site. Secondly, the VENM so excavated is transported by Cleary Bros to LH1 and used as a filler for the purposes of constructing sporting fields at the latter site. iii. Clause MP-2 of the Contract provides that Cleary Bros is entitled to payment in relation to the operation and management of LHWMC, with the applicable weekly costs to be determined by the formula set out in that clause, which involves the weight of material put over the weighbridge during any given week. iv. The Weighbridge Dispute is centrally concerned with whether Cleary Bros is entitled to take the weight of VENM excavated at LHWMC and transported to LH1 into account under MP-2. Since April 2004 Cleary Bros has claimed payment under MP-2 on this basis. Paragraphs 21 – 24 of the Further Amended Summons claim over $4 Million dollars in this regard. v. WSN has two answers to Cleary Bros' claim. First, that on a proper construction of MP-2 Cleary Bros is not entitled to payment on the above basis. vi. Secondly, it is WSN's contention that in the period from the commencement of the contract in June 1999 to April 2004 Cleary Bros did not take VENM excavated and transported in the manner described above over the weighbridge at LHWMC and that, accordingly, during that period, the weight of that VENM was not taken into account in calculating Cleary Bros' entitlement to payment under clause MP-2. WSN relies on the above course of conduct, together with correspondence particularized in its List Response to set up an estoppel by convention or alternatively an estoppel by representation. vii. For the purposes of its estoppel claims, WSN seeks discovery of documents in the disputed categories 7, 8A, and 11. Category 13 relates to the quantum of Cleary Bros' Weighbridge Claim. 6 Whilst the plaintiff has a number of disparate objections to producing documents within the disputed category it is convenient to firstly deal with its question of principle. 7 The short proposition put forward by the plaintiff is that in terms of the pleaded case and in terms of general principle, conduct which was internal or private to the plaintiff [described in submission as conduct which did not 'cross the line between the parties'] for example, involving the preparation of documents of the kind described in category 7 (if they exist), is simply irrelevant to the estoppel claim. However, the plaintiff concedes that documents within category 7 limited to the period 1998 to 17 May 1999 (being the date on which the defendant accepted the plaintiffs tender for the contract pleaded in paragraph C2 of the further amended summons] could conceivably be relevant to the construction of clause MP- 2. 8 The plaintiff's proposition is as follows: i. Estoppel by convention depends on proving the existence of mutually manifest conduct by the parties with the intention of affecting their legal relationships. [Handley ' Estoppel by Conduct and Election ' Sweet & Maxwell 2006 [8-001] at p115] "There cannot be any estoppel unless the alleged representor has said or done something, or failed to do something, with the result that – across the line between the parties – his action or inaction has produced some belief or expectation in the mind of the alleged representee". [ The August Leonard [1985] 2 Lloyds Rep 28 CA per Kerr LJ at 34-5 cit in Handley ' Estoppel by Conduct and Election ' [8-011] at p 124]; ii. Similarly, in the case of estoppel by representation there must be "some manifest representation which crosses the line between representor and representee either by statement or conduct". [ The August Leonard [1985] 2 Lloyds Rep 28 CA per Kerr LJ at 34 cit in Handley ' Estoppel by Conduct and Election ' [3-002] at p 46]; iii. The defendant's pleaded estoppel case relies exclusively on conduct which is "across the line between the parties". a) The allegations in paragraph C26 concern the contents of estimates which the plaintiff provided to the defendant between March and May 1999, prior to the plaintiff's tender being accepted. b) The allegations in paragraph C27 concern the contents of claims for payment under clause MP-2 which the plaintiff made and the defendant paid between 11 June 1999 and 28 April 2004. c) This conduct is alleged in paragraph C28 to give rise to an estoppel by representation or an estoppel by convention. iv. Hence the plaintiff does not accept that the documents sought in category seven go to any issue. Decision on the question 9 Clearly as a matter of principle the plaintiff's proposition is well grounded. An estoppel by convention will fail for a lack of a communication "across the line". 10 I am unable to discern that Brereton J in Moratic Pty Ltd v Gordon [2007] NSWSC 5, in particular at [37-40], is seen to have held that in a case of conventional estoppel, evidence of the private and non-communicated reasoning and assumptions made by the respective parties could be allowed as admissible. 11 Even giving full credence to the requirement that the Court bear in mind in determining questions of relevance, that the parties are entitled to build up an evidentiary mosaic, the defendant has not shown any entitlement to discovery of documents passing between the parties which did not 'cross the line'. Hence [except for the production of documents the subject of the above described concession by the plaintiff], categories 7, 8A, 11, 13 and 15 are disallowed. The Compaction Rate Claim 12 WSN in its cross-claim claims damages for what it alleges to be Cleary Bros' failure to achieve compaction rates at the waste management centre. In essence, the contract obliges Cleary Bros to deposit waste dumped at the centre into landfill on the site, and to compact that waste to certain standards. The contract also contemplates, as a related matter, Cleary Bros achieving certain levels of airspace usage in landfill areas. 13 WSN's claim is that clauses 3.0(i) and GC-22.6 of the contract require Cleary Bros to achieve compaction rates of 0.94m3 per tonne of waste, and that Cleary Bros has not achieved this rate. Cleary Bros in its cross-claim list response says that in the events that happened clauses 3.0(i) and GC-22.6 became too uncertain to be enforceable, and that it has in any event achieved compaction rates of less than 0.94m3 per tonne. Category 15 14 Category 15 seeks discovery of the following documents: "All Documents recording or referring to any action by or on behalf of the plaintiff to increase or decrease compaction rates at the LHWMC". 15 For the reasons given by the defendant which are presently adopted as of substance, category 15 is allowed. Those reasons were as follows: i. Cleary Bros rejects this category on the basis that the documents are irrelevant. ii. Cleary Bros' proposition appears to be that whilst the compaction rates actually achieved by WSN are relevant, any action taken by Cleary Bros to increase or decrease compaction rates is not relevant. iii. This proposition is wrong because any action taken by Cleary Bros to increase or decrease compaction rates may rationally affect the probability that Cleary Bros actually achieved a particular rate. iv. It is likely, indeed, that a direction given or received by an employee of Cleary Bros to increase compaction rates to the level required in the contract would be admissible on a final hearing as an admission. 16 Likewise for the reasons given by the defendant category 23 is allowed. Those reasons which are presently adopted as follows: Category 23 i. Paragraph 7 of Cleary Bros' list response refers to surveys carried out by GA Goodman since 2004. ii. Until they were provided in the context of these proceedings, WSN did not have those surveys. iii. On the basis that GA Goodman has been performing work in relation to airspace usage/compaction rates for Cleary Bros (and on the basis that Cleary Bros relies on this work in its pleadings) WSN seeks in category 23 discovery of: "All Documents recording or relating to communications between the plaintiff and GA Goodman Surveys Pty Ltd (now Goodmans Consulting NSW Pty Ltd) in relation to: (i) the determination of air space volume under clause T0-9.2 of the Contract; and (ii) compaction rates and/or air space usage rates, at the LHWMC". iv. The reference in sub-paragraph (ii) picks up the compaction rate and air space usage requirements in clauses 3.0(ii) and GC 22.6, referred to above. v. In its most recent correspondence, Cleary Bros rejects sub-paragraph (ii), but otherwise accepts the category. vi. The reasons for Cleary Bros' objection and reformulation are not clear to WSN. vii. Indeed, WSN's proposed category is based on the following category, proposed by Cleary Bros in its letter dated 30 April 2007: "All Documents recording or relating to communications between Cleary Bros and GA Goodman Surveys Pty Ltd (now Goodmans Consulting NSW Pty Ltd) in relation to the determination of air space volume under clause T0-9.2 of the Contract and/or compaction/air space rates at LHMWC in respect of those volumes". viii. The reason Cleary Bros' most recent proposal is too narrow is that the claim in relation to compaction rates concerns more than just clause T0-9.2 of the Contract. ix. It is apparent from paragraphs 5 and 6 of the Cross-Claim List Statement that WSN relies on clauses 3.0(i) and GC-22.6 of the Contract. x. Those clauses refer to Cleary Bros' obligations in relation to "air space usage" and "compaction rates". Cleary Bros in paragraphs 6(c)(vi) and 7 of its Cross-Claim List Response relies, inter alia, on clause T0-9.2. 17 The parties are to bring in short minutes of order, at which time costs may be argued. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.