Central Equity Ltd v Chua

[1999] FCA 1067

FEDERAL COURT OF AUSTRALIA

Central Equity Ltd v Chua [1999] FCA 1067

PRACTICE AND PROCEDURE – whether Court has power to order that particulars of defamation and particulars of defence of justification to allegation of defamation be kept confidential and not subject to inspection by members of the public – Federal Court Rules O 46 r 6(1) – exercise of discretion – potential for dissemination of particulars of defamation  to cause irreparable pecuniary harm to applicant – effect of prior agreement by respondent’s solicitor not to file particulars of defence of justification.

Trade Practices Act (1974) (Cth) s 52

Television Broadcasts Ltd v Nguyen (1988) 21 FCR 34 referred to
Scott v Scott [1913] AC 417 at 441 referred to
Russell v Russell (1976) 134 CLR 495 at 520 referred to

R v Tait and Bartley (1979) 24 ALR 473 at 487‑8 referred to

CENTRAL EQUITY LTD (ACN 006 708 738) v DAVID CHUA
V 324 of 1999

WEINBERG J

29 JULY 1999
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V324 OF 1999

BETWEEN:	CENTRAL EQUITY LTD (ACN 006 708 738) Applicant
AND:	DAVID CHUA Respondent
JUDGE:	WEINBERG J
DATE OF ORDER:	29 JULY 1999
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1.Paragraph 18 of the orders made on 23 June 1999 be vacated.

2.The applicant file the particulars of defamation and of misleading and deceptive conduct dated 1 July 1999 by 4 pm on 30 July 1999, such particulars to be filed in a sealed envelope to be marked “Confidential - not to be opened without the leave of a judge of the Court”.

3.The respondent file and serve his defence in the form of the defence exhibited to the affidavit of Nathan Kuperholz, sworn 28 July 1999 as Exhibit “NK2” without the particulars subjoined to paragraph 17, by 4 pm on 30 July 1999.

4.The respondent file and serve full and proper particulars of the allegations contained in paragraph 17 of the defence by 4 pm on 4 August 1999, such particulars to be filed in a sealed envelope to be marked “Confidential - not to be opened without the leave of a judge of the Court”.

5.The applicant file and serve any reply by 4 pm on 11 August 1999.

6.The directions hearing be adjourned to 9.30 am on Wednesday 18 August 1999.

7.Liberty to apply.

8.Costs reserved.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V324 OF 1999

BETWEEN:	CENTRAL EQUITY LTD (ACN 006 708 738) Applicant
AND:	DAVID CHUA Respondent

JUDGE:	WEINBERG J
DATE:	29 JULY 1999
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1. On 23 June 1999 the Court made certain orders of an interlocutory nature in this proceeding.  These included orders that the applicant file and serve a statement of claim by 30 June 1999, and that the respondent file and serve a defence within 14 days of service of the applicant's statement of claim.  A further directions hearing was fixed for today.  It was not then anticipated that the difficulties which have since arisen would require urgent resolution at this directions hearing.

2. It is not necessary for the purposes of this judgment to set out in any detail the history of this matter.  The applicant is a major developer of residential properties.  The respondent previously worked for the applicant in a senior sales and marketing role.  The respondent left the applicant's employ on or about 22 May 1998.  The applicant contends that the respondent's employment was terminated because it was discovered that he had been developing his own business in competition with that of the applicant. 

3. On 17 June 1999 the applicant applied to the Court ex parte for an Anton Piller order. The Court has power, pursuant to s 23 of the Federal Court of Australia Act 1976 (Cth) (“the Act”) to make such an order: Television Broadcasts Ltd v Nguyen (1988) 21 FCR 34 per Lee J.

4. The application arose out of the circulation of an anonymous letter to prospective purchasers of one of the applicant’s many residential developments.  The letter contained a series of allegations concerning that particular development, and was highly critical of the applicant’s business practices.  The applicant contends that the statements made in this letter were misleading or deceptive, and that they were highly defamatory.

5. The applicant suspected, on what seemed to be strong grounds, that the respondent may have been the author of this letter, or at least may have been responsible for its dissemination.  It was clear that any further dissemination of the letter had the potential to cause serious damage to the applicant.  There was evidence that the respondent was likely to have had incriminating documents in his possession, and that there was a real possibility that he might destroy such material before any application inter partes could be made.  It was on the basis of that evidence that the Court was persuaded to grant the Anton Piller order permitting the applicant, through its legal advisers, to search various premises associated with the respondent.

6. The matter next came before the Court on 23 June 1999.  On that occasion the respondent was present and represented by a solicitor and by counsel.  The applicant contended that the Anton Piller search had confirmed its suspicions regarding the respondent, and sought interim injunctive relief preventing the respondent from making any false or misleading statements to any purchaser of any of a number of listed residential developments concerning the qualities or attributes of any of the apartments in any of the applicant's developments.  The respondent did not resist the granting of this interim relief.

7. It seems that what happened next was that the applicant filed and served a statement of claim on 1 July 1999.  That statement of claim pleaded various causes of action including breach of confidence, breach of copyright, defamation, and misleading or deceptive conduct contrary to s 52 of the Trade Practices Act (1974) (Cth).  The applicant did not, however, file and serve with that statement of claim any particulars of the allegedly defamatory material or any particulars of the allegedly misleading or deceptive conduct.  Rather, the applicant served upon the respondent what were said to be the particulars of its claim in relation to those causes of action, and indicated that it was adopting that somewhat unusual course in order to avoid placing upon the Court file a pleading which would, pursuant to O 46 r 6(1) of the Federal Court Rules (“the Rules”) be generally accessible to the public and which, if seen and publicised, would have the potential to cause the applicant irreparable harm.

8. The evidence of the applicant's solicitor is that the respondent's solicitor voiced no objection to the particulars of the statement of claim being served but not filed when that matter was drawn specifically to her attention.  Thereafter, on 15 July 1999, the respondent filed and served upon the applicant a defence to the statement of claim.  That defence contained a denial by the respondent of having been responsible for disseminating the letter.  However, the pleading did not rest there.  It went on to assert that a number of the allegations contained in the letter were, in any event, true.  It then set out detailed particulars of the defence of justification.  The matters relied upon responded to the particulars which had been served upon the respondent by the applicant, but not filed with the Court.  They sought to justify the contents of the anonymous letter.

9. The applicant's solicitor, upon receiving the defence in this form, immediately contacted the respondent's solicitor by fax.  He demanded that the defence be uplifted immediately from the file, failing which the applicant would seek urgent injunctive relief.  It is common ground that counsel formerly retained on behalf of the respondent then approached the Court Registry on the afternoon of 15 July 1999 and arranged for the defence, including the detailed particulars of the plea of justification, to be uplifted from the Court file. 

10. The applicant's solicitor has deposed in an affidavit (which has not been controverted by the respondent’s solicitor) that in his discussions with the respondent's solicitor on 16 July 1999, she had apologised for what had occurred the previous day.  Moreover, she agreed that she would file with the Court, and serve upon the applicant, a defence.  The particulars of the defence of justification in respect of the alleged defamation would be contained in a separate document which would be served upon the applicant's solicitor, but not filed with the Court Registry.  I accept entirely the applicant's solicitor’s version of these events, including the agreement which he reached with the respondent's solicitor.

11. The next event of significance occurred on 22 July 1999.  On that date, the respondent's solicitor wrote to the applicant's solicitor. In that letter she complained of the manner in which the applicant's solicitor had acted on 15 July 1999, the threats which had been made, and the conduct of the applicant in seeking to prevent the respondent from filing with the Court a fully particularised defence to the applicant's statement of claim. She stated that she had received advice that the conduct of the applicant's solicitor was:

    “… at the very least improper, certainly an abuse of the process and possibly in contempt of Court.”

12. The respondent’s solicitor foreshadowed that at today's directions hearing she would raise the matters contained in the applicant's solicitor's fax to her of 15 July 1999, and would seek directions in relation to the applicant's failure to file and serve a statement of claim properly particularised in accordance with the Rules.  She would also seek directions in relation to filing and serving a defence which was properly and fully particularised.  She indicated that no defence would be filed prior to today's hearing.

13. Counsel for the applicant, Mr Sifris, submitted that I should order that the respondent file and serve a defence to the applicant's statement of claim which does not include any particulars of the defence of justification which the respondent has foreshadowed as one of the defences to be raised.  He submitted that, at least on an interim basis, I had the power to order that the particulars be filed separately from the defence, and also the power to order that those particulars be sealed.  Mr Sifris drew attention to O 1 r 8 of the Rules which provides as follows:

    “The Court may dispense with compliance with any of the requirements of the Rules, either before or after the occasion for compliance arises.”

14. He also referred to O 10 r 1(1) of the Rules:

    “On a directions hearing the Court shall give such directions with respect to the conduct of the proceeding as it thinks proper.”

15. Mr Sifris’ attention was drawn to s 50 of the Act which provides:

    “The Court may, at any time during or after the hearing of a proceeding in the Court, make such order forbidding or restricting publication of particular evidence, or the name of a party or witness, as appears to the Court to be necessary in order to prevent prejudice to the administration of justice or the security of the Commonwealth.”

16. Mr Sifris submitted that this section did not restrict the breadth of the powers conferred upon the Court by O 1 r 8 and O 10 r 1(1) to make orders of the type sought.  He also relied upon which he described as the “inherent jurisdiction of the Court”.

17. It is clear that the circumstances in which s 50 of the Act may be invoked are narrowly circumscribed. The section does not, in my opinion, authorise orders of the type presently sought by the applicant. Indeed, Mr Masel, counsel for the respondent, submitted that the Court had no jurisdiction to make any such orders. He relied specifically upon the narrow terms in which s 50 is drafted as manifesting an intention to “cover the field” in relation to confidentiality orders made by the Court. He submitted that the Rules should be read down so as not to be seen as being in conflict with the plain intent of the legislature.

18. There is one further provision in the Rules, however, to which attention must be drawn.  Order 46 r 6(1) deals with access to documents in proceedings.  That subrule provides:

    “A person may search in the Registry for, and inspect, a document in a proceeding that is specified in subrule (2), unless the Court, or a Judge, orders that the document is confidential.”

19. Subrule (2) sets out a series of documents to which subrule (1) applies. That series of documents includes “a pleading or particulars of a pleading”: O46 r 6(2)(c). In my opinion O 46 r 6(1) provides clear support for Mr Sifris’ contention that the Court has power to make orders of the type sort by the applicant. I can discern in s 50 of the Act no intent on the part of the legislature to “cover the field” in relation to confidentiality orders. The section applies, in terms, to what occurs “during or after the hearing of a proceeding in the Court”. Subject to one qualification, that section appears to be directed primarily at the trial of the action, and perhaps at matters immediately preceding it, rather than at interlocutory steps such as the filing and service of pleadings taken in the early stages of litigation. The qualification is that s 50 may perhaps be invoked at an early stage of a proceeding to suppress the identity of a party or witness.

20. The Court itself is responsible for determining what access there should be to documents filed with the Registry.  Order 46 r 6(1) confers upon the general public the rights to inspect documents which are on the Court file set out in that subrule.  Order 46 r 6(1) also recognises, however, that the Court may, for good reason, order that a pleading, or particulars of a pleading, remain confidential, though on the Court file.  It matters little whether the source of the power to make the orders sought by the applicant is O 46 r 6(1) taken alone, or whether that source of power is what might be described as the implied power of the Court to regulate its own process.  I am satisfied that the power exists.

21. Mr Masel next submitted that if I determined that the Court had jurisdiction to make the orders sought, I should nonetheless decline to do so in the exercise of my discretion.  He reminded me of the general principle which has been enunciated on many occasions which requires that the proceedings of courts of justice should be conducted "publicly and in open view" (Scott v Scott [1913] AC 417 at 441, Russell v Russell (1976) 134 CLR 495 at 520 and R v Tait and Bartley (1979) 24 ALR 473 at 487‑8).

22. Mr Masel submitted further that the applicant had not demonstrated any reason why it was “necessary in order to prevent prejudice to the administration of justice” (which is in fact the language of s 50 of the Act) to require the particulars to be filed separately, and to be kept confidential.

23. Finally, Mr Masel submitted that even if it were correct that the applicant would suffer irreparable harm if the particulars sought to be relied upon by the respondent were filed openly as part of the defence to the claim for defamation, the requirements of open justice outweighed any claims which the applicant might have to have those particulars temporarily suppressed. 

24. Mr Sifris submitted that I should exercise my discretion in favour of the applicant's contention, albeit on a limited and temporary basis.  He submitted that there was cogent evidence before the Court on behalf of the applicant of the enormous potential for irreparable pecuniary loss to the applicant if the respondent's allegations were widely disseminated, particularly within the next few months.  This was a critical period for the applicant.  He submitted that such dissemination could occur if no restrictions were placed upon access to the particulars of the defence once those particulars were filed with the Court.

25. Mr Sifris submitted further that a relevant factor in the exercise of the Court’s discretion was the agreement reached on 16 July 1999 between the applicant's solicitor and the respondent's solicitor.  It was agreed on that date, as I have found, that the defence would be filed without the particulars of justification.  Those particulars would merely be served.  Mr Sifris submitted that it would be wrong to permit the respondent to resile from that agreement.

26. I accept that in this Court the usual practice is that pleadings and the particulars to those pleadings which are filed, are accessible to the general public.  Those pleadings may be inspected and published or reported upon by the media.  I accept also that the principle of “open justice” is of fundamental importance.  The applicant must overcome a substantial hurdle to justify the Court in making orders which restrict access to the particulars relied upon by the respondent in answer to the applicant’s claim for defamation.  The cases will be rare where access will be so restricted.

27. It seems to me, however, that the applicant has made out a special case for making the orders as to confidentiality which are sought.  Those orders will operate only temporarily.  They will be lifted at some point soon, as and when this matter progresses further towards trial.  I am satisfied that the further publication at this stage of the allegedly defamatory material, whether in the form of particulars to the applicant's statement of claim, or in the form of particulars to the respondent's defence of justification to the claim for defamation, has the potential to do irreparable harm to the applicant's business reputation.  Damages, if awarded, would be likely to be very substantial.  There is nothing to suggest that the respondent would be able to meet such an award of damages, and there are in fact some indications that he would not be able to do so.  The uncontroverted evidence is that, from the applicant’s point of view, the next few months in particular are critical to its business dealings.  The scale on which the applicant operates is such that immense damage might be caused to its reputation, and huge losses sustained, if the particulars were made public at this stage.

28. I also take into account the fact that on 16 July 1999 the respondent's solicitor agreed, in substance, to the course now proposed by the applicant.  The respondent should, in my view, be held to that agreement.  It matters little, in my view, whether, as Mr Masel submitted, the agreement was unsupported by consideration, or could not technically give rise to an estoppel, or was entered into in haste, and under some pressure.

29. I can see no prejudice to the respondent if the particulars which are presently to be filed, and any future particulars of the same type, are subjected temporarily to confidentiality orders.  Those orders will be lifted at the earliest appropriate moment.  They will be kept consistently under review at each directions hearing in this matter.

30. The respondent will be able to file openly a complete denial of having disseminated the relevant letter.  He will also be able to file openly an alternative plea of justification.  The effect of my orders will be that, for a relatively short time, the defence to the claims of defamation, and of misleading or deceptive conduct, will be less than fully informative to the public at large because that defence will be unparticularised.  That is a price which, in my view, it is both proper and necessary, in the interests of the administration of justice, to exact.

31. The orders which I propose would require the applicant to file with the Court the particulars already provided to the respondent, such particulars to be sealed in an envelope and marked “Confidential - not to be opened without the leave of a judge of the Court.”  The same requirement would be imposed upon the respondent in relation to the particulars presently set out under paragraph 17 of the foreshadowed defence.  Any further and better particulars which might hereafter be sought, and provided, and which are of a like character, will be dealt with in the same manner.  These orders shall apply until further order.  They will be revisited at each future directions hearing.

I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Weinberg.

Associate:

Dated:             29 July 1999

Counsel for the Applicant:	Mr ML Sifris
Solicitor for the Applicant:	Mr N Kuperholz
Counsel for the Respondent:	Mr D Masel
Solicitor for the Respondent:	Glass & Co
Date of Hearing:	29 July 1999
Date of Judgment:	29 July 1999