Auzcorp Pty Ltd v Bidvest Australia Ltd
[2016] WASC 143
•11 MAY 2016
AUZCORP PTY LTD -v- BIDVEST AUSTRALIA LTD [2016] WASC 143
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2016] WASC 143 | |
| 11/05/2016 | |||
| Case No: | CIV:2736/2013 | 15 APRIL 2016 | |
| Coram: | MASTER SANDERSON | 15/04/16 | |
| 9 | Judgment Part: | 1 of 1 | |
| Result: | Application to vary orders of registrar dismissed Order for inspection made | ||
| A | |||
| PDF Version |
| Parties: | AUZCORP PTY LTD BIDVEST AUSTRALIA LTD BIDVEST (WA) PTY LTD |
Catchwords: | Discovery Application to vary order for inspection by imposition of confidentiality regime Power to vary order for inspection made by case management registrar |
Legislation: | Competition and Consumer Act 2010 (Cth) Rules of the Supreme Court 1971 (WA) The Supreme Court Practice 1991 Trade Practices Act 1974 (Cth) |
Case References: | Biala Pty Ltd v Mallina Holdings Ltd (No 2) (1993) 13 WAR 11 Civic Video Pty Ltd v Paterson [2013] WASCA 107 Greenpark Pty Ltd v Odin Inns Pty Ltd [1989] WAR 322 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
BIDVEST AUSTRALIA LTD
First Defendant
BIDVEST (WA) PTY LTD
Second Defendant
Catchwords:
Discovery - Application to vary order for inspection by imposition of confidentiality regime - Power to vary order for inspection made by case management registrar
Legislation:
Competition and Consumer Act 2010 (Cth)
Rules of the Supreme Court 1971 (WA)
The Supreme Court Practice 1991
Trade Practices Act 1974 (Cth)
Result:
Application to vary orders of registrar dismissed
Order for inspection made
Category: A
Representation:
Counsel:
Plaintiff : Mr M L Bennett & Mr K Malhotra
First Defendant : Mr P Mendelow & Mr D K Zusman
Second Defendant : Mr P Mendelow & Mr D K Zusman
Solicitors:
Plaintiff : Bennett + Co
First Defendant : Bowen Buchbinder Vilensky
Second Defendant : Bowen Buchbinder Vilensky
Case(s) referred to in judgment(s):
Biala Pty Ltd v Mallina Holdings Ltd (No 2) (1993) 13 WAR 11
Civic Video Pty Ltd v Paterson [2013] WASCA 107
Greenpark Pty Ltd v Odin Inns Pty Ltd [1989] WAR 322
1 MASTER SANDERSON: On 11 December 2015 Registrar C Boyle made the following orders:
1. The defendants by 29 January 2016 give formal discovery by list of all documents within the following categories:
(a) any monetary, rebates, other benefit(s) and/or discounts offered to or received by Bidvest between August 2003 and 31 December 2013 from its suppliers in relation to the products purchased by Auzcorp from Bidvest during that period;
(b) any monetary, rebates or other benefit(s) and/or discounts offered or provided to Auzcorp by Bidvest between August 2003 and 31 December 2013;
(c) the client loyalty program (as pleaded in paragraph 9 of the defence dated 7 July 2014) and its application to purchasers made by the plaintiff between August 2003 and 31 December 2013.
2. The defendant make available the documents so discovered for inspection by not later than 10 February 2016.
3. The defendants pay the plaintiff's costs of the application, fixed in the sum of $1500.00.
2 The defendants provided an informal list of discovery on 5 February 2016. However they declined to provide inspection of documents described as BAL.002.001.0001 to BAL.002.001.1847. This prompted the plaintiff on 11 March 2016 to issue a chamber summons seeking inspection of these documents. The defendants then took out their own chamber summons which sought to vary the orders of Registrar C Boyle. Relevantly the chamber summons (in an amended form) sought the following order:
Inspection of the Defendants' discovered documents BAL.002.001.0001 to BAL.002.001.1847 in the Defendants' informal list of discovery dated 5 February 2016 be the subject of a confidentiality regime to be determined by this Honourable Court.
3 The two chamber summonses were heard together with the defendants moving on their chamber summons first. After hearing argument I dismissed the defendants' chamber summons and indicated I would make an order requiring inspection but that order would not be made until these reasons were published. What follows are my reasons for dismissing the defendants' application and granting the plaintiff an order for inspection.
4 Before dealing with the applications some background is necessary. It is convenient to begin with the statement of claim. The plaintiff pleads it carries on the business of providing accommodation services for tourism, mining and other hospitality in the north-west of Western Australia. The defendants are the wholesale suppliers of volume food stuffs who sell to parties such as the plaintiff. The plaintiff says in or about August 2003 based on certain representations made by a Mr Houston, an employee of the defendants, the plaintiff moved its business from its former wholesale supplier to the defendants. Thereafter it continued to trade with the defendants and between August 2003 and the date of issue of the proceedings had spent just under $15 million.
5 The plaintiff says during the course of its discussions with Mr Houston it was told it would get certain discounts and rebates as a consequence of doing business with the defendants. The precise details of these representations are not presently of concern but the plaintiff alleges it acted on these representations in transferring its business to and maintaining the business with the defendants. The plaintiff alleges the representations were false and it did not receive the rebates and bonuses it was told it would receive. As a consequence it alleges it has suffered loss and damage and maintains a claim under the Trade Practices Act 1974 (Cth) and the Competition and Consumer Act 2010 (Cth).
6 It is clear the plaintiff is not in a position to calculate what its claim might be. Paragraph 23 of the statement of claim is in the following terms:
By reason of Bidvest's conduct, Auzcorp lost the benefit of taking immediately its share of bonuses or rebates received by Bidvest
Particulars
Full particulars will be supplied prior to trial and after discovery has been given by Bidvest but in the meantime Auzcorp calculates its loss and damage at not less than 15% of the its total purchases being $2,248,641.
7 It is not difficult to see why the plaintiff is unable to provide a precise calculation of its claim. It is all dependent on its reviewing the information held by Bidvest, applying discounts and bonuses it says it was entitled to receive, and calculating what it has lost. That was the thrust of the plaintiff's submission in relation to discovery. It said it could not even conduct a meaningful mediation unless it had access to information exclusively in the possession of the defendants which would allow it to calculate its alleged loss.
8 At all times the defendants have been represented by its present solicitors. Those solicitors were in attendance when Registrar C Boyle made the case management directions on 11 December 2015. At that time they did not seek a confidentiality regime. It would appear the need for such a regime (at least in the view of the defendants) was realised sometime after the order was made. In support of the defendants' application for the confidentiality regime they relied on an affidavit of Barry Sean Plit sworn 8 April 2016. Mr Plit explains the reason why the confidentiality regime was not sought and the reason why it is now said to be necessary in the following way:
16. While my solicitor, Mr Darren Zusman, has previously made me aware of Bidvest's discovery obligations, at the time of the hearing before the Registrar it was not known to Bidvest that a number of the documents that would be captured by the categories of discovery sought by Auzcorp were commercially sensitive and/or confidential in nature as referred to in paragraphs 34, 35, 42 and 53 to 56 below.
17. I, together with Mr Alan Daniel and Ms Marion Kiss of Bidvest, were tasked with collating any documents relevant to the categories of discovery set out in paragraphs 14(a) to 14(c) that had been retrieved from Bidvest's archives and current databases.
18. It was not until we, being myself, Mr Daniel and Ms Kiss, began reviewing the documents that had been uncovered that Bidvest first became aware that a number of the documents were commercially sensitive and/or confidential in nature as referred to in paragraphs 34, 35, 42 and 53 to 56 below.
19. Within Bidvest itself, there are only 7 employees, of which I am 1 of, that are permitted to access discovered documents BAL.002.001.0001 to BAL.002.001.1847. That is because of the extremely sensitive nature of the information.
20. To put the above statement in context, Bidvest is a national organisation with over two and half [thousand] employees.
21. The restriction on the number of employees able to review BAL.002.001.0001 to BAL.002.001.1847 is because of the risk that employees who leave Bidvest could disclose the information contained in the documents to competitors. That would have a detrimental impact on Bidvest as it would lose its competitive edge and ability to negotiate advantageous terms for rebates with manufacturers.
22 In addition to what I have deposed to in paragraphs 19 to 21 above, Bidvest has an internal policy that it will not employ a former employee of a manufacturer in a procurement capacity. That is because of the risk that the former employee will at some stage in the future go back to the manufacturing side of the industry. That creates a high risk that Bidvest's confidential information is disclosed to a manufacturer, again reducing Bidvest's ability to negotiate advantageous terms for rebates with manufacturers [16] - [22].
9 It is important to note that this is not an appeal against the registrar's decision. If it was an application for an extension of time within which to appeal would have been necessary and the appeal would then have gone to a judge. That is the effect of the present O 60A r 3(2) of the Rules of the Supreme Court 1971 (WA) (the Rules), which has operated since November 2015. The defendants relied on O 26 r 16. That rule is in the following form:
Revocation and variation of orders
Any order which has been made under this Order, including an order made on appeal, may, on sufficient cause being shown, be revoked or varied by a subsequent order or direction of the Court made or given at or before the trial of the cause or matter in relation to which the original order was made.
10 This is an odd rule and it is difficult to know how to give effect to it. On its face it would appear to give any judge or master the right to review any order for discovery (or order for interrogatories - O 27 r 10 is in the same terms) for whatever reason. That would make any rights of appeal otiose and seems to fly in the face of the established appeal procedure. There does not appear to have been any decision which deals squarely with the operation of the rule. Civil Procedure Western Australia [26.16.3] says:
Variation of previous order
Pursuant to the rule one judge or master may vary the order of another judge or master. In the case of an order which affects the position of a third party, it is sufficient ground for variation that the facts were not placed before the court on the earlier application as they should have been: Biala Pty Ltd v Mallina Holdings Ltd (No 2) (1993) 13 WAR 11; 11 ACSR 785; 11 ACLC 1082. An order made by consent is within the rule, and the fact that the consent was given by mistake may be good cause to vary the order: Greenpark Pty Ltd v Odin Inns Pty Ltd [1989] WAR 322 at 324, 325.
11 There is in fact nothing in Biala Pty Ltd v Mallina Holdings Ltd (No 2) (1993) 13 WAR 11 which deals with the rule. While it is possible to take perverse pleasure in finding a rare error (or perhaps the only error) in the Red Book it does not assist in resolving the issue. Greenpark Pty Ltd v Odin Inns Pty Ltd [1989] WAR 322 does lend some support to the view the powers of a judge and master are wide and unfettered. But that decision dealt with a consent order which was consented to by mistake. Further the decision was made long before case management by registrars was introduced.
12 Nor does it help to trace the history of the rule. In its present form it was in the Rules before the current iteration was introduced in 1972. It reflects the English O 24 r 17. TheSupreme Court Practice 1991 has the following commentary:
Effect of the rule - where a defence has been struck out under rule 16 the defendants applied for it to be restored under this rule on the grounds they had subsequently produced a list of documents verified by an affidavit sworn by their solicitors. The plaintiffs gave reasons why they believed that certain further documents must exist and the C.A made it a condition of restoration that the defendants, by a responsible officer and not their solicitor, should make an affidavit as to whether they had or ever had had such documents in their possession and whether they were relevant (Walker (John) & Sons Ltd v Ost (Henry) & Co Ltd [1970] R.P.C 151).
13 It was the plaintiff's position the rule meant what it said and in the circumstances of this case the discovery order should be varied to allow for the confidentiality regime. The plaintiff submitted to follow that course would be to undermine the case management regime and the appeal procedure the rules mandate. Taken to its logical conclusion the rule would permit an amendment to an order for discovery or interrogatories for any reason no matter when the discovery order was made and the circumstances in which it was made.
14 In my view the plaintiff's submission should be accepted. It would appear when O 60A r 3 was amended late last year no consideration was given to O 26 r 10. Be that as it may the extensive powers given to case management registrars and the importance of the procedural orders that they make means in my view if those orders are to be varied it should be done by an appeal process. Otherwise there can be no certainty or finality. In other words I would read down O 26 r 10 to the extent necessary to have it operate much as the so-called slip rule operates. Beyond that it has the potential to undermine the case management regime and that is undesirable.
15 That is sufficient to deal with this application. However, for the sake of completeness I should go on and consider the merits of the defendants' application. In their written submissions the plaintiff refers to the Court of Appeal decision in Civic Video Pty Ltd v Paterson [2013] WASCA 107 as setting out the legal principles which govern the imposition of a confidentiality regime. Counsel reduced these principles to four points which he stated as follows:
12.1 Confidentiality is not ordinarily a sufficient reason to deny inspection by the opposite party. The implied undertaking that the documents be used only for the purpose of the litigation will provide sufficient protection to the party producing them.
12.2 However, other considerations arise where the documents in question are commercially sensitive and the relevant parties are trade rivals.
12.3 Where the relevant parties are trade rivals, and the documents in question contain confidential and commercially sensitive information, the court must strike a fair balance between the competing interests of the parties.
12.4 In relation to the court's duty to strike a fair balance, Hayne JA in Mobil Oil observed that where the Court is required to strike the balance, the Court should take in consideration whether is it necessary to destroy the legitimate claim to confidentiality from trade rivals by permitting the principal of that rival to look at the documents, whether it would be sufficient to permit counsel and solicitors (and nominated experts) to do so instead of the parties and whether the difficulties of such arrangement are necessary. (original emphasis) (footnotes omitted)
16 In my view there is no doubt that the documents in question are commercially sensitive. The last thing the defendants would want is for these documents to be publically available. The question is whether or not the plaintiff and the defendants are trade rivals. It was the plaintiff's submission it was a retailer of food and other goods and the defendants were wholesalers of foods and other goods. They operated in entirely different markets. They were not actually in competition with one another. In my view that submission should be accepted. It may be there is some overlap between the two parties so far as their trading enterprises are concerned but they do appear to operate in separate and distinct markets. Moreover, the plaintiff pointed to the difference in size between the two corporations. The first-named defendant is a global company which employs 141,015 people world wide of which 4,098 are in Australia. Its Australasian turnover was in the region of $2.5 billion in 2015. The plaintiff on the other hand is incorporated in Western Australia and has its sole office in Cottesloe. It operates only in the Pilbara region. To that extent the companies cannot be said to be trade rivals.
17 A further reason for not granting the defendants' application is the delay in seeking to vary the orders. There is no real explanation for the delay in Mr Plit's affidavit. On the one hand he says access to the documents is restricted by a tight regime within the defendant companies. On the other hand he says it was not until he began to collate the documents he realised they were commercially sensitive. It seems to me it has to be one or the other. Further the application for the confidentiality regime was not made until the plaintiff had sought an order for inspection. Given the time for appealing a decision of a registrar is 10 days this application for the imposition of the confidentiality regime seemed to me to be way beyond what was a reasonable timeframe in which to seek an amendment of the discovery orders.
18 For these reasons I determined the defendants' application ought be dismissed. The defendants ought pay the costs of the application including reserved costs. There should be an order for inspection largely in terms of the plaintiff's chamber summons. They should have the costs on that chamber summons although clearly there will be a large overlap between the two applications. I will hear the parties as to any stay of these orders pending a decision by the defendants as to whether an appeal should be lodged.
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