Adelaide Ice Services P/L v Midnight Trucking P/L - [2006] SASC 122

Supreme Court of South Australia
(Appeal from a Master: Application)
ADELAIDE ICE SERVICES P/L v MIDNIGHT TRUCKING P/L & ORS
Judgment of The Honourable Justice White (ex tempore)
18 April 2006
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT
Appeal against order of master refusing appellants' application to have their "counterclaim" heard and determined before the hearing of the respondent's application for pre-action discovery - where "counterclaim" seeks to restrain respondent from making use of certain material on the hearing of its application for pre-action discovery.
Held: Court should exercise caution before interfering with a decision relating to practice and procedure - appellants' objections to respondent making use of material can be determined in the course of the hearing of the application for pre-action discovery - appeal dismissed.
Supreme Court Rules 1987 (SA), r 60, referred to.
Adam P Brown Male Fashions Pty Ltd v Phillip Morris (1981) 148 CLR 170, applied.

ADELAIDE ICE SERVICES P/L v MIDNIGHT TRUCKING P/L & ORS
[2006] SASC 122
WHITE J (ex tempore)

This is an appeal from a master which the court has been asked to hear and determine urgently. It came on before me this afternoon on the appellants’ Notice for Specific Directions. The purpose in listing the Notice for Specific Directions this afternoon was to put in place arrangements for the hearing of the appeal at some later time, but on the hearing of that Notice, the parties said that they were in a position to argue the appeal immediately. Accordingly I acceded to a request that the hearing of the appeal take place this afternoon.
There is an urgency about the determination of the appeal because the subject matter of the appeal is an order of the master that a hearing take place on 26 April 2006.
In the underlying proceedings the plaintiff asserts that one group of defendants to the proceedings has made use of confidential information belonging to it.
I will refer to the group of defendants which the plaintiff asserts has made use of confidential information belonging to it as the “Midnight Trucking Group”. There are other defendants in the proceedings who may broadly be categorised as being the firm of accountants who have acted for the Midnight Trucking group of defendants or as principals of that firm.
The appellants are three members of the Midnight Trucking Group.
By the proceedings at first instance the plaintiff seeks an order for pre-action discovery pursuant to r 60. As part of the plaintiff’s investigation of the circumstances which have given rise to its concerns about possible use of its confidential information, it apparently retained the firm of Ferrier Hodgson. By some arrangement which is not wholly clear to me, Ferrier Hodgson obtained from the firm PDK Financial Services Pty Ltd (“PDK”) an electronic copy of certain of PDK’s records. Those records relate to accounting work which PDK has carried out for some of the members of the Midnight Trucking Group.
The material obtained by Ferrier Hodgson has been provided by it to the plaintiff’s solicitors, and as I understand it, at least for a time to the plaintiff itself.
The Midnight Trucking Group assert that the material obtained by Ferrier Hodgson from PDK is confidential to it and was obtained unlawfully. The group has issued a “counterclaim” seeking orders with respect to the confidentiality which it asserts attaches to the Ferrier Hodgson material and declarations and injunctions to protect that confidentiality. The group wishes to have the “counterclaim” heard and determined before the hearing of the application for an order for pre-action discovery. It does so because it contends that the plaintiff should be restrained from making any use at all of the Ferrier Hodgson material on its application for pre-action discovery.
An application that the “counterclaim” should be heard and determined before the pre-action discovery application was apparently made to the master on 10 April 2006. At that time the Midnight Trucking Group had not filed any application for interlocutory relief in respect of the material which is said to be confidential. The master directed that any application for interlocutory relief was to be issued by the Midnight Trucking Group, together with a supporting affidavit, by Thursday, 13 April 2006 and that any responding affidavits by a plaintiff was to be filed and served by Thursday, 20 April 2006. The master listed the plaintiff’s application for an order for pre-action discovery for hearing on Wednesday, 26 April 2006 at 2.15 pm. He also directed that any application that the defendants might file in accordance with his previous order would be heard at that same time.
No member of the Midnight Trucking Group filed an application for interlocutory relief by Thursday, 13 April 2006. No such application has been filed since then. Despite that, the three members of the Midnight Trucking Group have appealed against the whole of the master’s order made on 10 April 2006.
In effect, the appeal complains of the decision of the master not to direct that the “counterclaim” be heard and determined before the hearing of the application for an order for pre-trial discovery. I have already indicated that the appeal is against the whole of the orders made by the master on 10 April 2006, but Mr Ower, who appeared for the appellants today, has indicated that it is really the order that the plaintiff’s application, and any application which the defendants may file, be heard on 26 April, which is the subject of the appeal. Mr Ower accepted that the other orders made by the master were, in effect, consequential, and that the fate of the appeal against those orders turned on the fate of the appeal against the order that the plaintiff’s application be heard on 26 April prior to the hearing and determination of the defendants’ “counterclaim”.
The principles which govern this Court on an appeal of this kind are well understood. Mr Ower acknowledged that an appellate court exercises caution when reviewing decisions on appeal which pertain to practice or procedure. He referred to the decision of the High Court in Adam P Brown Male Fashions Pty Ltd v Phillip Morris.[1]
[1] (1981) 148 CLR 170 at 176-178.
The master gave short reasons only for declining to accede to the defendants’ application that the “counterclaim” be heard and determined before the application for pre-action discovery. He said that in his view the defendants’ concerns could be met on an interlocutory basis by an application for injunctive relief in respect to any particular documents that might be ordered to be produced. Mr Ower has submitted that that reason given by the master reveals an incomplete understanding by the master of the position which the Midnight Trucking Group had put. Their position, in short, was that the question of whether or not the plaintiffs could make any use at all of the Ferrier Hodgson material should be determined before the court embarks upon the hearing of the application for pre-action discovery. It was not, in the defendants’ submission, just a question of protecting any particular documents that might be produced if an order for pre-action discovery was made. It was a question of whether or not the plaintiff was now able to make any use at all of material which it had obtained as a result of the electronic copying by Ferrier Hodgson.
In my opinion the appeal should fail. There are a number of reasons for that conclusion. The first is to repeat a point already made; namely, that this Court is slow to interfere with decisions relating to procedure and practice. In the present case, the timing and sequence in which applications before him would be heard and determined was very much a matter of the master’s discretion.
Secondly, the fact of the matter is that the plaintiff’s application for pre-action discovery was filed on 20 December 2005. It has still not been determined. It is time that the application was determined and the master has put in place arrangements to ensure that occurs in the near future. Acceding to the course which the appellants have proposed would result in yet further delay before the application for pre-action discovery is resolved. I note that the appellants propose a course of action which would involve an exchange of pleadings on the “counterclaim” and an exchange of discovery in relation to the issues arising on the “counterclaim”, which, if adopted, would result in the “counterclaim” not being heard for at least two months, if then. On the appellants’ proposal, the application for pre-action discovery would be put on hold during that time. That is quite an undesirable outcome.
Further, it is not clear why the objections of the defendants with respect to the plaintiff’s use of the Ferrier Hodgson material cannot be dealt with in the context of the application for pre-action discovery. The actual way in which the master proceeds will, of course, be up to him. But if the defendants assert that certain evidential material upon which the plaintiff relies is confidential to them and has been obtained unlawfully, then that is an objection that can be made by them at the time that the plaintiff indicates its intention to rely upon the particular evidence. Such an objection, if made, could then be determined by an evidential ruling. It should be able to be determined without the court having to embark upon the major litigious inquiry which would be necessary if the “counterclaim” was being heard and determined. Issues of this kind commonly have to be dealt with when parties tender evidence to which objection is taken. Any such objection to the tender of evidence can be determined in a context in which the particular evidential material relied upon, and the use to which it is to be put, can be precisely identified.
I did ask Mr Ower to identify the confidential material obtained by Ferrier Hodgson which the defendants apprehended the plaintiff would be relying upon. I was referred to Exhibit “FR 1” to an affidavit of Ms Roach, sworn on 9 March 2006 [FDN 11]. I was told that the defendants asserted that the contents of that exhibit were confidential. However, Mr Robertson who appeared for the respondent, drew my attention to the fact that the document which is Exhibit “FR 1” to Ms Roach’s affidavit is also an exhibit to an affidavit sworn by Ms Conduit on 6 March 2006 filed in this Court in these proceedings (Exhibit “MAC 8”). Ms Conduit is the solicitor of the Midnight Trucking Group. Exhibit “MAC 8” was exhibited to Ms Conduit’s affidavit without it being asserted in the affidavit that the defendants regarded its contents as being confidential. That serves to indicate that issues with respect to the asserted confidentiality which might presently seem hotly contested may well dissipate once the precise material upon which the plaintiff wishes to rely is identified. That material can be examined in the context of all the material to be put before the master.
It does also seem to me to be relevant that what the master is dealing with is an application for pre-action discovery. I do not wish to be understood as in any way stating the approach which the master is to adopt in dealing with that application or as identifying the matters about which he must be satisfied, or as identifying the scope of his powers, assuming that he is satisfied that it is appropriate to make an order for pre-action discovery. That is because I have not had the opportunity to review those matters in the context of this appeal. But it may well be that if the master is satisfied that the concerns of the plaintiff are legitimate, that is, that there is a basis upon which to conclude that the defendants may have documents or information of the plaintiff which is confidential, that he may make the order for pre-action discovery and then deal in an appropriate way with any claims for confidentiality which the defendants raise with respect to such material. The reasons of the master and the orders which he made on 10 April 2006 indicate that that is what the master has in mind.
It is also possible that the master may decide, in the course of hearing the application for pre-action discovery, to make some assumptions in favour of the Midnight Trucking Group. For example, the master may choose to assume that the material about which those defendants are concerned is confidential to them and was obtained unlawfully. When I say “assumed,” I mean assumed for the sake of the hearing of the application for an order for pre-action discovery only, and without deciding the issue. If the master made an assumption of that kind, it might then be open to him to make other orders, if he thinks it necessary, for the very same material to be disclosed in some way to the court and perhaps to the plaintiff, subject, of course, to the defendants’ interest in protecting the confidentiality of that material.
What I wish to make clear by this point is that it would by no means follow from the Court accepting that the material about which the Midnight Trucking Group is concerned is confidential and was obtained unlawfully, that that material could not be received in evidence or that that material would never have to be produced pursuant to a coercive order of this Court in connection with these proceedings. It did seem to me that much of the appellants’ submissions this afternoon proceeded on the assumption that if a declaration of confidentiality was made in respect of the Ferrier Hodgson material, that that would mean that that material could not, in any circumstances, be required to be produced or used in court proceedings. Such an assumption is not valid. These are civil proceedings in which the fact that evidence has been obtained unlawfully does not have the same consequences as it may in criminal proceedings. It would also be open to the plaintiff, in any event, to seek production of the material by a coercive order of the Court. A conclusion that material is confidential does not have the same effect as does a conclusion that the material is the subject of a form of privilege.
For these brief reasons, the appeal of the defendants filed on 13 April 2006, [FDN 21] is dismissed.