Arysta Lifescience Australia Pty Ltd v Patton - [2018] SASC 83

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
ARYSTA LIFESCIENCE AUSTRALIA PTY LTD v PATTON & ORS
[2018] SASC 83
Judgment of Judge Dart a Master of the Supreme Court
18 June 2018
PROCEDURE - DISCOVERY AND INTERROGATORIES - DISCOVERY AND INSPECTION OF DOCUMENTS - PRODUCTION AND INSPECTION - GROUNDS FOR RESISTING PRODUCTION - LEGAL PROFESSIONAL PRIVILEGE - WAIVER OF PRIVILEGE
Order for preservation of evidence made pursuant to Rule 149 - whether discretion to permit inspection of the documents should be exercised - defendants say documents privileged from inspection - consideration of litigation privilege and advice privilege - Court inspection of the disputed documents.
Held:
1. Claim for privilege made out in part.
2. Plaintiff entitled to inspect documents not subject to privilege.
Supreme Court Civil Rules 2006 (SA) r 149, referred to.
Evans Deakin Pty Ltd v Orekinetics Pty Ltd & Ors [2002] QSC 42, applied.
Australian Competition and Consumer Commission v Yazaki Corporation [2014] FCA 1316; Brookfield Multiplex Ltd v International Litigation Funding Partners PTE Ltd (No 2) [2009] FCA 449; Esso Australia Resources v Commissioner of Taxation (1999) 201 CLR 49; Grant v Downs (1976) 135 CLR 674; Metso Minerals (Australia) Ltd v Kalra (No 3) [2008] FCA 1201; Mitsubishi Electric Australia Pty Ltd v Victorian WorkCover Authority [2002] VSCA 59; Network Ten Ltd v Capital Television Holdings (1995) 36 NSWLR 275; Perazzoli v BankSA (A Division of Westpac Banking Corporation Ltd) [2017] FCAFC 204; Rich v Harrington [2007] 245 ALR 106, considered.

ARYSTA LIFESCIENCE AUSTRALIA PTY LTD v PATTON & ORS
[2018] SASC 83
JUDGE DART:

On 19 March 2017 the Court made an order pursuant to Rule 149 for the purpose of preserving evidentiary material. The evidentiary material is primarily comprised of business records stored electronically. An issue has arisen in respect of the entitlement of the plaintiff to inspect the evidence that has been collected.
Background
The plaintiff is a company owned by a global entity listed on the New York Stock Exchange. Its primary business is the franchising of the Hannaford system of mobile grain cleaning and grading. Franchisees take the mobile machines to various farming properties for the purpose of seed grading, cleaning and to treat seed and grain after harvest. The treatment often involves the application of chemicals.
The first and second defendants are husband and wife. Teldata Pty Ltd (“Teldata”) is the third defendant. The first defendant is the director of that company and each of the first and second defendants are shareholders. The Grain Team Pty Ltd (“the Grain Team”) is the fourth defendant. The first defendant is the sole director of that company, which was registered on 6 November 2015.
The Hannaford system franchising arrangement has 30 franchisees operating across Western Australia, South Australia, Victoria and New South Wales. The plaintiff holds various registered trademarks. The mobile machines used in the conduct of franchises have a capital value of between $250,000 and $750,000, depending on the size of the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2018] SASC 83
Decision Date: 18 June 2018

CaseChat Overview and Summary

In the Federal Court of Australia, Arysta Lifescience Australia Pty Ltd initiated proceedings against the defendants, primarily concerning disputes related to the franchising of mobile grain cleaning and grading equipment. The plaintiff sought to inspect business records preserved under an order made on 19 March 2017. The defendants opposed this inspection, asserting that the documents were protected by legal professional privilege. The central legal issue before the Court was whether the defendants' claim of privilege was valid and, if so, which category of privilege applied.

The Court examined the nature of the privilege asserted by the defendants. The defendants argued that the documents were covered by both litigation privilege and advice privilege. Litigation privilege applies to documents created in anticipation of litigation, while advice privilege covers confidential communications between a client and their legal advisor for the purpose of obtaining legal advice. The Court conducted an inspection of the disputed documents to determine the validity of the privilege claims. The Court concluded that some of the documents were indeed privileged, but others were not. The Court found that certain documents related to the strategic business decisions and negotiations, which were not covered by privilege. Conversely, documents that involved legal advice on the operator agreements and restraint provisions were protected by advice privilege.

Based on its findings, the Court ruled that the defendants' claim of privilege was partially upheld. The Court determined that while some documents were privileged and should not be inspected, others were not privileged and could be inspected by the plaintiff. This decision balanced the need for the plaintiff to access relevant evidence with the protection of privileged communications.

The Court ordered that certain documents should be preserved and not inspected, while others should be made available for inspection by the plaintiff. This decision ensures that the plaintiff can access relevant evidence while respecting the defendants' legal professional privilege.

Orders

Orders of the court

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Background

Background to the litigation

On 19 March 2017 the Court made an order pursuant to Rule 149 for the purpose of preserving evidentiary material. The evidentiary material is primarily comprised of business records stored electronically. An issue has arisen in respect of the entitlement of the plaintiff to inspect the evidence that has been collected.Background The plaintiff is a company owned by a global entity listed on the New York Stock Exchange. Its primary business is the franchising of the Hannaford system of mobile grain cleaning and grading. Franchisees take the mobile machines to various farming properties for the purpose of seed grading, cleaning and to treat seed and grain after harvest. The treatment often involves the application of chemicals. The first and second defendants are husband and wife. Teldata Pty Ltd (“Teldata”) is the third defendant. The first defendant is the director of that company and each of the first and second defendants are shareholders. The Grain Team Pty Ltd (“the Grain Team”) is the fourth defendant. The first defendant is the sole director of that company, which was registered on 6 November 2015. The Hannaford system franchising arrangement has 30 franchisees operating across Western Australia, South Australia, Victoria and New South Wales. The plaintiff holds various registered trademarks. The mobile machines used in the conduct of franchises have a capital value of between $250,000 and $750,000, depending on the size of the machine. The plaintiff provides the majority of the required chemicals to its franchisees. The business is seasonal. The busiest period of the year for franchisees is from approximately October to April. That involves both the harvest and planting periods. Client lists are developed for each franchise territory and are compiled and maintained by the plaintiff. Relevantly, there were a series of franchises conducted on Eyre Peninsula known collectively as the Kellidie Bay Franchise Agreements. There were three separate franchises. The first and second defendants became involved with the Kellidie Bay Franchises in 2013 as employees. Each signed an operator’s agreement in 2013. The operator agreement contained a number of obligations, including an obligation to keep confidential information in respect of the Hannaford system. The obligation of confidence was expressed to extend beyond the termination of the franchise agreements. The operator agreement also contained a restraint provision. The restraint provision sought to prevent the first and second defendants competing with or being engaged in a competitive business or from soliciting the clients of the plaintiff’s franchises. In September 2014 a Mr Paul Hutchinson started negotiations with the plaintiff with a view to taking over the conduct of the three Kellidie Bay franchises. In the result, he incorporated a company called Hannaford (Eyre Peninsula) Pty Ltd (“HEP”). The company changed its name to M106 Pty Ltd in 2016 and is now in liquidation. In November 2014 HEP commenced operating the three Kellidie Bay franchises and an additional three franchises. Each of the six franchises had a separate territory on the Eyre Peninsula. The first defendant became the authorised representative of HEP.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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