Supreme Court New South Wales Medium Neutral Citation: PPK Willoughby Pty Ltd v Baird [2019] NSWSC 769 Hearing dates: 21 June 2019 Date of orders: 21 June 2019 Decision date: 21 June 2019 Jurisdiction: Common Law Before: Harrison J Decision: Plaintiff not permitted to withdraw its admission that documents are authentic Catchwords: CIVIL PROCEDURE – Admissions – Admission of authenticity of documents – whether plaintiff should be permitted to withdraw its admission that documents are authentic Legislation Cited: Uniform Civil Procedure Rules, r 17.5 Category: Procedural and other rulings Parties: PPK Willoughby Pty Ltd (Plaintiff) David Baird and others (2nd to 106th Defendants) Representation: Counsel: M Green SC with A D Crossland and M Cobb-Clark (Plaintiff) T Faulkner SC with J Williams (2nd to 106th Defendants) Solicitors: Coleman Greig Lawyers (Plaintiff) Gilchrist Connell (2nd to 106th Defendants) File Number(s): 2012/163736 Publication restriction: Nil Judgment 1. HIS HONOUR: The plaintiff retained the defendants in 2009 to act as its solicitor with respect to the proposed acquisition of a large tract of land at Willoughby situated to the north of the Shore school playing fields. The plaintiff intended to develop the site by constructing 76 homes for sale at a profit. In due course, the plaintiff was successful in tendering for the property at a price of $25.5M. However, the plaintiff maintains that it was never advised or informed that the land was subject to significant flood control restrictions that both diminished the value of the land and increased the cost of development as the result of the need to commission a flood study and by reason of variously caused but associated delays. The plaintiff alleges in these proceedings that the defendants were negligent inasmuch as they did not properly conduct a due diligence of the property as they were instructed to do or as they should have done. 2. In that context, the following paragraphs of the further amended statement of claim should be noted: "91. At all material times, it was reasonably foreseeable that there would be a risk that PPK would suffer economic loss, and such loss would not be insignificant, if the HWL Ebsworth did not take reasonable precautions: a. to ensure that the effect of the s 149(2) certificates was accurately summarised in the Report, namely, that the Properties may be subject to flood development controls; and b. to ensure that PPK was properly advised of the legal consequences of the information within the s 149(2) certificates which stated that the Properties may be subject to flood development controls; c. to obtain further s 149(2) certificates from the Council before Settlement to ensure that the certificates were accurate and up-to-date. 92. At all material times, the risk of economic loss pleaded in paragraph 91 … would have been reasonably foreseeable because HWL Ebsworth knew, or ought to have known that, it would be likely that: a. PPK intended to use and develop the properties for the purpose of constructing large scale residential dwellings or commercial buildings; b. in the event that the properties could not be developed for the purpose of constructing large scale residential dwellings or commercial buildings, their commercial value would be significantly diminished; c. the Flood Development Controls would: i. prevent PPK from developing the properties until the Flood Development Controls could be removed or modified so that the Development could proceed; ii. require PPK to waste time and incur costs to attempt to remove or modify the Flood Development Controls; iii. require PPK to redesign and make other material alterations to the development including the design of the dwellings to facilitate the removal or modification of the Flood Development Controls; and iv. stall the development until the Flood Development Controls had been removed or the issue had been resolved to enable the Development to proceed; and v. delay the development being completed. Particulars Such actual or constructive knowledge would have been apparent from: i. the nature, size, location of the properties; ii. the likely market price of the properties; and iii. the identity of the potential purchasers who would have been recognised to be involved in the business of building and construction." 1. The defendants have responded to the plaintiff's allegations of breach of duty and misleading and deceptive conduct, both of which they have admitted, by maintaining that they were given separate and specific instructions not to carry out the searches that would have revealed the flood affectation concerning the land. The defendants maintain that the due diligence that they were instructed to perform was specifically limited for various reasons, including the fact that the plaintiff had the benefit of a due diligence process undertaken on behalf of Pamada Pty Ltd, a company that had previously contracted to buy the site but was unable to complete when its bank withdrew funding for the purchase. 2. Paragraphs 43 and 46 of the defence to the further amended statement of claim should be noted in this respect: "43. In answer to paragraph 88 of the FASOC, the defendants: (a) admit that they did not undertake further checks with the Council to ensure that the s 149(2) certificates provided with the proposed contract were accurate and up to date; (b) say they were entitled to rely on the contents of the s 149(2) certificates as being accurate and up to date; (c) say further that they did not undertake any further checks with the Council as to the s 149(2) certificates and did not obtain any further s 149(2) certificates following receipt of the s 149(2) certificates given that they: (i) had no obligation to the plaintiff to have done so; and (ii) were instructed to not do so by the plaintiff. Particulars Telephone conversation between Deane Ogilvie of HWLE and Jury Wowk, director of the plaintiff, on 4 January 2010. 46. In answer to paragraph 88 of the FASOC, the defendants: (a) say that: (i) the effect of the s 149(2) certificates was accurately summarised in the Report; and (ii) the plaintiff was properly advised of the legal consequences of the information within the s 149(2) certificates; (b) say further that they were not obliged to obtain further s 149(2) certificates from the Council before settlement on the basis of, inter alia, express instructions to not to so provided to them by the plaintiff; and Particulars Telephone conversation between Deane Ogilvie of HWLE and Jury Wowk, director of the plaintiff, on 4 January 2010. (c) otherwise do not admit the paragraph." 1. UCPR 17.5 provides as follows: "17.5 Admission of documents discovered (1) In this rule: 'admitting party' means the party on whom a list of documents is served under rule 21.3. 'requesting party' means the party by whom a list of documents is served under rule 21.3. (2) If a requesting party allows inspection of any documents referred to in a list of documents under rule 21.5, the admitting party is taken to have made the following admissions in favour of the requesting party, unless the court orders otherwise: (a) in respect of each document described in the list as an original document, that the document is an original document and was printed, written, signed or executed as it purports to have been, (b) in respect of each document described in the list as a copy of an original document, that the document is a true copy. (3) Subrule (2) does not apply to a document referred to in the list of documents if the admitting party: (a) has, by his or her pleading, denied the authenticity of the document, or (b) has served on the requesting party, within 14 days after the time limited under rule 21.5 for inspection of a document, a notice to the effect that the admitting party disputes the authenticity of the document. (4) The admitting party and the requesting party are taken to be in the same position as they would have been in had the admitting party, on the date of service of the list of documents, served on the requesting party a notice requiring production at the trial of such of the documents specified in the list as are in the possession of the requesting party." 1. In the course of these proceedings, the defendants discovered two file notes dated 1 December 2009 created by Ms Deane Ogilvie, a senior associate employed by them to assist with the conveyance at the time of the events giving rise to these proceedings. The first file note, in Ms Ogilvie's handwriting, is in the following terms: * costing * check out the Environmental Reports to see if all contamination cleared up * no planning advice. 1. The second file note, also in Ms Ogilvie's handwriting, is in the following terms: * provide costing * check out contamination cleared up in Environmental Reports * no planning advice - SN dealing with that. 1. The plaintiff neither denied the authenticity of the documents in accordance with UCPR 17.5(3)(a) nor served a notice to the effect that it disputes their authenticity in accordance with UCPR 17.5(3)(b). The plaintiff is therefore taken to have admitted the authenticity of both file notes. When senior counsel for the plaintiff sought to cross-examine Ms Ogilvie about the timing and circumstances of the creation of these file notes, the defendants objected upon the basis that the plaintiff is taken to have admitted that each was "written, signed or executed as it purports to have been", and that the Court has not otherwise ordered. 2. In these circumstances, the plaintiff applied to withdraw the admission. That application is opposed. 3. In the way of things, the defendants' contention pleaded in response to the plaintiff's claims, asserting that their instructions were specific and limited, has necessarily attracted a significant amount of evidentiary attention. The question of whether or not the plaintiff has, or should be taken to have, admitted the authenticity of the file notes arises in that context. 4. Ms Ogilvie's affidavit affirmed by her on 14 June 2017 concerning this topic was relevantly in these terms: "24. I recall that, on or about 1 December 2009, Jury [Wowk] asked me what needed to be done in relation to PPK's proposed purchase of the property. 25. Later on 1 December 2009, I had a conversation with Jury in words to the following effect: Jury: Would you please provide PPK with a costing for your work. Me: As part of our due diligence, do you want us to carry out specific planning advice? If so, we will need to provide the planning documents to the firm's planning practice. Jury: No, don't undertake specific planning advice. Simon [Napoli] is dealing with all of that because of his involvement in the due diligence when Pamada was the purchaser. Can you check, though, that the environmental report disclosed in the data room confirms that the contamination has been cleared up? My file note of my discussion with Jury dated 1 December 2009 is at [32]. There is also a file note of my discussion with Jury dated 1 December 2009 at [33]. I do not now recall why I prepared two file notes of what appears to be the same discussion. 26. Later on 1 December 2009, I had a conversation with Elias [Stephen] in which I said words to the following effect 'Jury instructed me not to undertake any specific planning advice as Simon Napoli is dealing with that'. I understand that after that discussion, Elias then worked out costing in terms of what our fee proposal would be for carrying out the agreed work on the transaction." 1. The defendants objected to any challenge being mounted to Ms Ogilvie's evidence about either the file notes in general or her recollection of the manner and timing of their creation in particular, if any such challenge was in truth an attempt by the plaintiff to dispute their admitted authenticity. That objection generated the present application. 2. Senior counsel for the plaintiff submitted that it should not be bound by its admission for a number of reasons. First, he contended that it would be unreasonable in the circumstances of this case, which has generated literally thousands of pages of documents, to hold the plaintiff to the consequence of what was little more than an oversight at the time that the discovered documents were inspected. He submitted that what has now emerged as a significant issue concerning the file notes, and whether they were, or at least one of them possibly was, created after the event, was not always as readily apparent as it now appears potentially to be. 3. Secondly, the plaintiff has changed solicitors since the discovery and inspection of documents took place. To that extent there appears to have been a failure to appreciate the potential importance of all of the information that may have been acquired by the plaintiff's original solicitors following the handover of the files. 4. Thirdly, the prejudice created by holding the plaintiff to the admission would deprive it of a distinct forensic advantage, in not being able to cross-examine the author of the file notes, and would therefore cause an unfair prejudice to the plaintiff in its response to the defendants' pleading that they were released from the obligation to carry out any due diligence that would have revealed the true flood control status of the land. 5. However, while I can accept that the plaintiff may feel that it is prejudiced in these circumstances, the prejudice is neither unfair nor the result of anything done or omitted by the defendants. The pleadings in this matter closed many years ago. The defendants' position with respect to their responsibility for the way in which they performed their retainer on behalf of the plaintiff has been clear for just as long. If the plaintiff had been concerned to question the authenticity of Ms Ogilvie's file notes, it should have done so much earlier than this. 6. Moreover, it should not be overlooked that the plaintiff's application to withdraw its admission is based upon a desire to allege, or at least to explore the possibility, that Ms Ogilvie and others on behalf of the defendants may have acted improperly in order to shore up the evidence that supported this aspect of their defence. If a very serious allegation of that type were ever to be made, it should have been properly pleaded and particularised and well before Ms Ogilvie entered the witness box without any notice that it might be asserted. Whether or not it is correct to characterise this approach as prejudicial to the defendants, it is undoubtedly unfair. 7. The plaintiff should not in the circumstances be permitted to resile from or to withdraw the admission that Ms Ogilvie's file notes are authentic. ************* 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. Decision last updated: 25 February 2020