Payce Properties Pty Limited v BBC Hardware Limited S265/2000 [2001] HCATrans 451 (20 September 2001)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S265 of 2000

B e t w e e n -

PAYCE PROPERTIES PTY LIMITED

Applicant

and

BBC HARDWARE LIMITED

Respondent

Summons

GLEESON CJ

(In Chambers)

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON THURSDAY, 20 SEPTEMBER 2001, AT 10.23 AM

Copyright in the High Court of Australia

MR M.H. TOBIAS, QC: Your Honour, I appear for the applicant in the special leave application, the respondent to the summons. (instructed by Morgan Lewis Alter)

MR T.G.R. PARKER: May it please the Court, I appear for the respondent and the applicant on the chamber summons. (instructed by Allens Arthur Robinson)

MR TOBIAS: Your Honour, I can just say this in relation to the chamber summons - and I assume your Honour has read the papers.

HIS HONOUR: I have read the papers, Mr Tobias, but let me just get clear that I understand the area of dispute. There is an application for an order either that you not be permitted to pursue certain affidavit evidence that has been filed in support of the special leave application or, alternatively, that there be made orders for the production and inspection of documents.

MR TOBIAS: Yes.

HIS HONOUR: The orders for production and inspection of documents I find - - -

MR TOBIAS: Very wide.

HIS HONOUR: Well, ridiculous, if I may say so. You need not bother addressing an argument in terms of paragraph 2, I assume.

MR TOBIAS: We would agree with paragraph 1 subject to a couple of matters I will mention in a moment.

HIS HONOUR: Well, that seems to remove the area of dispute. Just let me - - -

MR TOBIAS: But, your Honour, can I just say this. In relation to Mr Kable's affidavit, we will not be seeking to include that as a consequence of the correspondence that has taken place. We propose, however, as a consequence of what has happened, to substitute an affidavit of Mark Edward James Morgan. Can I hand up a copy? It is in draft form only.

HIS HONOUR: All right.

MR TOBIAS: I have provided my learned friend with a copy, albeit only this morning, as I only got it myself. It seeks to do in admissible form what Mr Kable did in inadmissible form. In other words, your Honour, it seeks to take the leases that Blakes, who are acting for the SRA, have themselves inspected and to extract out of the 87 - in fact, there are 90 extracts from those leases the form of the rent review provision that seeks to relate the rent determination to a percentage of land value.

HIS HONOUR: Mr Tobias, I have not had the pleasure of reading the judgments in the court below in this matter. Could you just state in a summary form the relevance of this material to the special leave application.

MR TOBIAS: Yes. The issue both before the trial judge and before the Court of Appeal was a rent review provision in a long-term lease that provided that the rent was to be a percentage of the value of the land, the freehold value of the land. In the relevant provision were the magic words "for the purposes" - and I just pick it up precisely - it says that it shall determine the rent by taking:

an amount equal to ten per centum . . . of the amount (if any) by which the valuation of the demised premises for rental purposes as determined by the Valuer-General at any time during such immediately preceding year exceeds the immediately preceding valuation for rental purposes.

The issue that arose was this: as a consequence of the land being rezoned from, I think, industrial to residential, if the land was valued at its highest and best use, it would have value X. On the other hand, if it was not so valued but valued in accordance with the purpose for which the land could be used under the lease, which in this case was a timber yard, then it would have value Y, which was much less than value X.

The trial judge and the minority judge, Justice Giles, held that the land should be valued by the Valuer-General in accordance with normal valuation principles, including its highest and best use at the time. The majority determined that the consequence of the words "valuation of the demised premises for rental purposes" was that they had to be valued in accordance and confined to the use to which the land could be put under the use clause of the lease. That was the issue. It would be our contention that the effect of the majority judgment was to basically rewrite the lease, rewrite this provision - - -

HIS HONOUR: But the purpose of these affidavits - - -

MR TOBIAS: - - - and the purpose of this is to show that it - - -

HIS HONOUR: - - - the general importance.

MR TOBIAS: - - - that it has an impact outside the immediate parties to this lease , because in the case of the Waterways there are five long-term leases that have a rent review provision identical the BBC one and in relation to the SRA, although not identical, it has the same concept of a percentage of land value and for the purpose of determining rental that valuation can be sought from the Valuer-General.

HIS HONOUR: What is the relationship between your client and the parties to those leases?

MR TOBIAS: None.

HIS HONOUR: It is just that you happen to know that there are these other - - -

MR TOBIAS: Yes. I should just say this: the BBC lease is originally a Maritime Services Board lease. Your Honour may know there were hundreds of them. We bought the land from the Maritime Services Board and therefore we had their lease. The Waterways leases - Waterways is now the successor of the old Maritime Services Board and they still own the land. So there is that relationship in relation to those five leases. There is no relationship in relation obviously to the SRA leases.

HIS HONOUR: All right. Thank you for that. Now, Mr Parker, you are the applicant, you are the moving party in these proceedings.

MR PARKER: Yes, your Honour.

MR TOBIAS: Can I just add a couple of things to clarify the matter, your Honour? We can understand the desire of the respondent to the special leave application wanting to ensure that the leases say what we extract and I have suggested to my learned friend that the SRA be required to produce, for joint inspection by both solicitors so there cannot be any dispute about it, the 187 leases referred to in Blakes Dawson Waldron's letter, which is the second-last annexure to Mr Morgan's draft affidavit.

The SRA have 257 long-term leases and 187 have been made available to Blakes. Of those, 87 were reviewed and contained what they referred to as a land value rent review clause and they then sent us a couple days later, on 14 September, copies of the relevant parts of those 87 leases - in fact it turned out to be 90. I think in fairness to all parties it would be appropriate that there be a notice to produce to the SRA, or Blakes for that matter, to produce those 90 leases and they should be inspected co-operatively by both parties and any parts of those leases that the parties want to rely on could then be flagged and copied in the usual way.

What is more, your Honour, what Mr Morgan has sought to do in paragraph 5 of his draft is to summarise them, although he has not had - as your Honour will see from paragraphs 6, 7 and 8, there are a number of leases that he does not have sufficient pages to be able to express a firm view and that would be got over by a notice to produce along the lines that I have foreshadowed. There seems no reason, so as not to burden the application book by annexing 90 or more pages of leases, for paragraph 5 in its summary of the relevant provisions to be agreed between the two solicitors, as I am sure with a modicum of goodwill it could be. That seems to us to be the most efficient way of dealing with it, rather than putting on an affidavit and then the other side looking at them and putting on a counter-affidavit and that sort of waste of time and money.

HIS HONOUR: We will see what Mr Parker has to say. Mr Parker, first of all, this chamber summons of yours has a number of schedules annexed to it.

MR PARKER: Yes, your Honour.

HIS HONOUR: Can I just take you to Schedule A?

MR PARKER: Yes, your Honour. May I indicate, your Honour, that I would not be pressing Schedule D in any event.

HIS HONOUR: I will just make a note of that.

MR PARKER: And in the light of what my friend has said about Mr Kable's affidavit, clearly something would have to be done about Schedule B.

HIS HONOUR: I will put a question mark over that. Just look at Schedule A for the moment. This requires the production of:

All documents . . . concerning:

(a) the Valuation Reports prepared by the Valuer-General which are the subject of these proceedings.

That would include an instruction to a taxi driver to deliver a valuation report from one part of Sydney to another part of Sydney. It would include a telephone message left by an officer of the Valuer-General's Department explaining why he was delayed in getting to a particular place to do some valuation work. It would include all the reasoning in relation to valuation reports, including reasoning having nothing even remotely to do with the litigation in this case. The next subparagraph, "All documents . . . concerning":

(b) Supreme Court Proceedings No 50033 of 1999.

Now, that would include internal memoranda concerning what counsel should be briefed to appear in those proceedings; documents relating to the length of time that the litigation was expected to take. "All documents . . . concerning":

(c) Court of Appeal Proceedings No 40813 of 1999 -

would include, similarly, documents relating to what counsel were to be briefed in the matter; documents estimating the costs. They would include all costs sheets of solicitors attending the matter; all memoranda of telephone calls between the solicitors on one side to the solicitors on the other side in relation to those proceedings.

MR PARKER: Your Honour, it is not our intention to do that and - - -

HIS HONOUR: But that is what you have done, I am afraid, and it produces a result that is simply fantastic.

MR PARKER: Your Honour, Schedule A was to be addressed to the applicant in the proceedings and all of the subparagraphs are qualified by the initial words:

recording or embodying communication between the Applicant and the -

named authorities.

HIS HONOUR: No:

All documents including, but not limited to - - -

MR PARKER: I am sorry. The intention was that the phrase "including, but not limited to" would qualify file notes and correspondence. So we were only ever seeking - and I am sorry if we have drafted it in a infelicitous way - communications between the applicant and the other named authorities and certainly there was no intention of obtaining the material that your Honour has referred to.

HIS HONOUR: But even if the problem is a misplaced comma of the kind that you have referred to, "All documents . . . recording or embodying" communications in relation to that subject would go far beyond anything that could be of possible relevance to these proceedings. This is just an example of an over-enthusiastic subpoena and orders like this are meant to be taken seriously. If this Court makes an order, somebody is seriously going to have to comply with it.

MR PARKER: Yes, your Honour, and the purpose, as I have sought to indicate, was just to get the communications, and the purpose of that in turn was to explore the background of these affidavits that have been put forward by the applicant.

HIS HONOUR: Is there a serious contest about the facts alleged in the affidavits or is it just that you do not know and you have a desire to check?

MR PARKER: It is just that we do not know.

HIS HONOUR: Right. Now, in those circumstances, is not the most convenient course to pursue to work out a way by which you can reasonably satisfy your proper desire to - I do not use this expression mischievously or offensively - keep your opponents honest. That is a reasonable thing for parties to litigation to want to do. But there being no genuine dispute, at least at this stage, about the facts, it should not go beyond that, should it?

MR PARKER: I accept that, your Honour.

HIS HONOUR: Well, let us see if we can work out a way of achieving that.

MR PARKER: Yes, your Honour.

HIS HONOUR: I would have thought, for my part, that the evidentiary material that your opponents want to file is plainly relevant to the special leave application. I am not suggesting it is decisive by any means. What weight it will have will be for the members of the Court who deal with the special leave application. But let us see if we can work out a way for you to check up on the information they want to put before the Court without getting into a royal commission on something that will probably end up being of marginal significance.

MR PARKER: Yes, your Honour.

HIS HONOUR: Now, Mr Tobias suggests that a way to deal with it would be, by reference to the proposed affidavit of Mr Morgan, to issue a notice to produce in respect of particular leases so that you and he, or those instructing you and those instructing him, can have a look at them.

MR PARKER: Well, with the SRA leases, in view of the affidavit which I have now seen, I would accept that, your Honour.

HIS HONOUR: What about the others?

MR PARKER: As far as the Waterways affidavit, it goes a bit further than that because we will be contending that the issue is not just, "Are there other leases which contain the same terms?", but we will be saying the issue is, "Are there other leases which contain the same terms and give rise to the same sort of dispute?".

HIS HONOUR: But that will all be able to be checked by just looking at the leases, will it not?

MR PARKER: We think not because the dispute in this case arose out of a particular valuation that was done and arose out of the particular circumstances, as Mr Tobias has described, of this particular land being in the Olympic zone and being revalued. Now, the other land which is the subject of these other leases may not be in that situation and there may not be a dispute.

HIS HONOUR: Well, once again, in order to prevent there being a royal commission on a matter that is likely to occupy no more than two or three minutes of the Court's attention when the special leave application comes on, could I suggest that a way to deal with that is, once again, for those instructing you to check these leases to see what the leases say and then for somebody on your side to file an affidavit pointing out that it does not necessarily follow from the fact that those provisions are in the leases that the same dispute arises because of certain circumstances that you have in mind.

In other words, all we are doing here is looking at the question which is not an issue in the litigation: whether or not it appears that there is a substantially wider public interest in the outcome of this litigation than might at first appear? That is all we are concerned with.

MR PARKER: Yes, your Honour.

HIS HONOUR: That is a subject that ought to be dealt with fairly superficially, like many other subjects that arise in litigation, if I may say so.

MR PARKER: Yes.

HIS HONOUR: There are aspects of justice that ought to be a good deal rougher than they are.

MR PARKER: Well, as your Honour has indicated, it is a question of simply keeping honest those who have - - -

HIS HONOUR: Exactly.

MR PARKER: - - - keeping honesty in relation to the material that has been presented against us.

HIS HONOUR: Yes, on a fairly marginal issue.

MR PARKER: And may I only just say - and this is not said critically but just to - I indicate to your Honour that there has been a great deal of background to this in the form of correspondence between the parties in which access to documents was sought and refused and we are here not just because of our desire to immediately rush off to court and have a royal commission into everything. We did write and ask for documents and that was not provided to us.

HIS HONOUR: Do you think that if I were to adjourn until 11 o'clock, in the meantime it would be possible for you and Mr Tobias to work out by agreement between yourselves an order that I could make or an agreement that I could note that could resolve this in a practical way?

MR PARKER: Yes, your Honour.

HIS HONOUR: Do you think that, Mr Tobias?

MR TOBIAS: If the Court pleases, but I just should say this, your Honour - and I said this to my learned friend earlier this morning - the highest I am going to be able to put my case on this issue is that there are a number of leases in identical terms, or sufficiently similar terms, that may give rise to a potential problem in terms of this judgment. For instance - and these are all long-term leases - it may well be that up to the present time the relevant land the subject of any one or more of these leases has not changed its zoning, but in the next 25 years it may and, therefore, the issue may not have arisen now but it may arise in the future. In other words, that the judgment has the potential - and that is the highest I am going to be able to put it - to have wider ramifications and to have relevance to the determination of rent in the future under leases that it may not have at the present time.

Now, my learned friend will be able to say apropos of what your Honour has said about him putting on an affidavit: I am not going to be able to put on evidence that this is actually occurring now or that there has been actual changes of zoning whereby the actual facts of this case will apply to the facts of another case. I am not going to be able to put it higher than there is this potential if these changes have taken place, they may or may not to date and they may or may not in the future, one does not know. So I am not too sure that putting on an affidavit along the lines your Honour has suggested is really necessary. It is obviously a matter that can be asserted from the Bar table.

HIS HONOUR: Yes, but he can please himself what affidavit he puts on.

MR TOBIAS: Well, he can.

HIS HONOUR: He does not need your agreement for that.

MR TOBIAS: No. But I just wanted to make it clear at the level at which I am pitching this material and I am not trying to take it and push it further than it can legitimately can be taken.

HIS HONOUR: Yes. I think it is important also that both sides should understand that when this Court deals with a special leave application it often hears submissions, sometimes supported by evidence, sometimes not supported by evidence, that a particular decision has a wider operation or wider field of application than might at first appear.

MR TOBIAS: Or may have.

HIS HONOUR: Yes. That is sometimes a matter that is regarded as weighty. It is sometimes a matter that is not regarded as very important at all. It depends on the circumstances of the case but - - -

MR TOBIAS: It also depends on what view the Court has taken as to whether or not there is reasonable room for regarding the majority judgment to being in error.

HIS HONOUR: Exactly, but in a system that operates on the basis that both sides only get 20 minutes each to put their case, there is a strictly limited room for factual dispute and investigation and the one thing that cannot be permitted to happen is that applications for special leave turn into fully contested factual disputes.

MR TOBIAS: I fully understand that, your Honour. That is why I am only seeking to put in evidence the number of leases that could be affected by this decision, including the particular provision, or summarising the particular provision, just to give some background in that sense.

HIS HONOUR: Yes. Well, I will adjourn for 20 minutes in the hope that you can work out a procedure between yourselves that will solve the problem and if you want any further time just send in a message. I will adjourn until 5 past 11.

AT 10.45 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.26 AM:

HIS HONOUR: I will just have a look at these short minutes. Are both sides happy with that?

MR PARKER: Yes, your Honour.

MR TOBIAS: Yes, your Honour.

HIS HONOUR: Especially the last part I am sure. I will make an order in terms of the short minutes initialled by me and placed with the papers.

MR PARKER: If the Court please.

HIS HONOUR: Very well. I will adjourn.

AT 11.27 AM THE MATTER WAS CONCLUDED