Certified Building Specialists Pty Ltd v Drenovac

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FEDERAL COURT OF AUSTRALIA

Certified Building Specialists Pty Ltd v Drenovac [2019] FCA 575

File number: NSD 2061 of 2018
Judge: STEWART J
Date of judgment: 24 April 2019
Catchwords: PRACTICE AND PROCEDURE – application for particular discovery under r 20.21 of the Federal Court Rules 2011 (Cth) – whether compliance with order for particular discovery would be oppressive – application allowed
PRACTICE AND PROCEDURE – application to set aside notices to produce – whether absence of anything to produce is grounds to set aside the notice – application dismissed
Legislation: Federal Court Rules 2011 (Cth) r 20.21
Cases cited:

Dennis v Chambers Investment Planners Pty Ltd [2012] FCA 63; 201 FCR 321

Independent Cement & Lime Pty Ltd v Australian Cement Ltd [1988] FCA 749

Seven Network Ltd v News Ltd (No 5) [2005] FCA 510; 216 ALR 147

Date of hearing: 23 April 2019
Registry: New South Wales
Division: General
National Practice Area: Commercial and Corporations
Sub-area: Commercial Contracts, Banking, Finance and Insurance
Category: Catchwords
Number of paragraphs: 42
Counsel for the Applicant: J Burnett
Solicitor for the Applicant: Foteades Freeman Cohen Pty Ltd
Counsel for the Respondents: O Fagir
Solicitor for the Respondents: Herman Legal

ORDERS

NSD 2061 of 2018
BETWEEN:

CERTIFIED BUILDING SPECIALISTS PTY LTD (ACN 151 732 928)

Applicant
AND:

MILAN DRENOVAC

First Respondent

LUKE GLAVAS

Second Respondent

CERTIFIED BUILDING SPECIALISTS PTY LTD (ACN 151 732 928)

Third Respondent

JUDGE:

STEWART J

DATE OF ORDER:

24 APRIL 2019

THE COURT ORDERS THAT:

1.The respondents are to provide particular discovery of documents pursuant to r 20.21 of the Federal Court Rules 2011 in the following categories:

(a)all documents recording or containing any communications between any of the respondents (or any officer, agent or employee of the respondents) and any person listed in the Confidential Schedule (or any officer, agent or employee of any person listed in the Confidential Schedule) in the period from 1 December 2017 to 30 March 2018;

(b)all documents recording any work done by any of the respondents for or on behalf of or at the request of any person listed in the Confidential Schedule in the period from 1 December 2017 to 31 May 2018;

(c)telephone records of any of the respondents that record or identify any telephone calls with, or text messages with, any person listed in the Confidential Schedule (or any officer, agent or employee of any person listed in the Confidential Schedule) in the period from 1 December 2017 to 30 March 2018; and

(d)all pro forma and precedent documents used by any of the respondents in the business of any of the respondents.

2.The discovery ordered in order 1 is to be given by 17 May 2019, save for that in order 1(b) which is to be given by 14 June 2019.

3.Subject to agreement between the parties or further order, the documents produced in category 1(d) shall be provided to and accessed by the applicant's lawyers only and shall not be provided to, accessed by…

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Details
Case
[2019] FCA 575
Decision Date

CaseChat Overview and Summary

The case of Certified Building Specialists Pty Ltd v Drenovac concerns an application for particular discovery and the setting aside of notices to produce. The application was brought by Certified Building Specialists Pty Ltd, the applicant, against three respondents, including two former employees and a company allegedly used to conduct a business in competition with the applicant. The dispute arose from allegations of misuse of confidential information and solicitation of the applicant’s customers post-employment, leading to claims of contractual and equitable breaches, among others.

The central legal issues before the court were whether the compliance with the order for particular discovery would be oppressive and whether the absence of anything to produce justified setting aside the notices to produce. The court had to consider the principles governing discovery in the Federal Court, particularly under Rule 20.21 of the Federal Court Rules 2011 (Cth). It also needed to assess the balance between the applicant’s right to access relevant documents and the respondents' right to avoid oppressive or futile discovery processes.

The court ruled that the particular discovery ordered was necessary to allow the applicant to investigate its claims effectively. It found that the particular discovery ordered would not be oppressive to the respondents, and thus, granted the application in part. Conversely, the court dismissed the application to set aside the notices to produce, finding that the absence of documents did not justify setting aside the notices. The court also dismissed the respondents' interlocutory application without further order. The court reserved the decision on costs.

The orders made by the court required the respondents to provide specific categories of documents by certain deadlines, with particular conditions on the handling of certain documents. Additionally, specific paragraphs of the notices to produce were set aside, and the interlocutory application by the respondents was dismissed.

Orders

Orders of the court

1. The respondents are to provide particular discovery of documents pursuant to r 20.21 of the Federal Court Rules 2011 in the following categories:

(a) all documents recording or containing any communications between any of the respondents (or any officer, agent or employee of the respondents) and any person listed in the Confidential Schedule (or any officer, agent or employee of any person listed in the Confidential Schedule) in the period from 1 December 2017 to 30 March 2018;

(b) all documents recording any work done by any of the respondents for or on behalf of or at the request of any person listed in the Confidential Schedule in the period from 1 December 2017 to 31 May 2018;

(c) telephone records of any of the respondents that record or identify any telephone calls with, or text messages with, any person listed in the Confidential Schedule (or any officer, agent or employee of any person listed in the Confidential Schedule) in the period from 1 December 2017 to 30 March 2018; and

(d) all pro forma and precedent documents used by any of the respondents in the business of any of the respondents.

2. The discovery ordered in order 1 is to be given by 17 May 2019, save for that in order 1(b) which is to be given by 14 June 2019.

3. Subject to agreement between the parties or further order, the documents produced in category 1(d) shall be provided to and accessed by the applicant's lawyers only and shall not be provided to, accessed by or otherwise disclosed to the applicant or its employees or officers.

4. The relief sought in paragraph 1(d) of the applicant's amended interlocutory application dated 17 April 2019 is stood over for later determination.

5. Paragraph 4 of the applicant’s notice to produce dated 5 February 2019 directed to the first respondent and paragraph 3 of the applicant’s notice to produce dated 5 February 2019 directed to the second respondent are set aside.

6. The respondents' interlocutory application dated 14 March 2019 is otherwise dismissed.

7. Costs reserved.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

The notice to produce directed to the second respondent sought, in its first two paragraphs, two USB devices also said to have been inserted into a computer owned by the applicant, but in this instance operated by the second respondent. In its third paragraph, the notice to produce sought the second respondent's telephone records from November 2017 to date.Background The applicant's statement of claim alleges that the first and second respondents had been senior employees of it and were subject to various contractual restraints pursuant to their employment contracts. These restraints included that they would not use certain information of the applicant's during or after the termination of their employment or disclose that information to any third party without the applicant's consent, that upon termination of their employment they would not approach directly or indirectly any customer of the applicant to influence it to cease to carry on business with the applicant or otherwise entice it away from the applicant, solicit, canvas or in any way seek the custom of or act for directly or indirectly, any of the customers or clients of the applicant. The applicant also alleges an implied duty of fidelity and good faith owed by the first and second respondents to it. The applicant alleges that the first and second respondents at some point in time prior to ending their employment with the applicant, which occurred in late December 2017, decided to establish a business to operate in competition with the applicant. Pursuant to that decision, they caused the third respondent to be incorporated. It is alleged that the third respondent was incorporated as the corporate vehicle through which the first and second respondents intended to conduct their new business in competition with the applicant. The applicant alleges that the first and second respondents sent text messages and emails to customers of the applicant soliciting business from them, and that the first and second respondents used the applicant's information, referred to above, for the purpose of the establishment of the new business and of seeking work for the new business. It is alleged that the first and second respondents solicited work from the applicant's clients and customers. It is further alleged by the applicant that the first and second respondents engaged in the aforesaid conduct pursuant to a dishonest and fraudulent design. On the basis of the above, the applicant asserts claims for injunctive relief against the respondents, as well as contractual breaches, equitable claims, statutory claims and trust claims, entitling it to, amongst other things, damages. The parties were ordered to make standard discovery and have done so, the respondents having filed their discovery list on 11 September 2018. The notices to produce and the applicant’s application for particular discovery arise from what the applicant perceives to be inadequate discovery by the respondents.Application to amend the interlocutory application

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

I will hear the parties on costs.Conclusion In the circumstances, I make the following orders:1.The respondents are to provide particular discovery of documents pursuant to r 20.21 of the Federal Court Rules 2011 in the following categories:(a)all documents recording or containing any communications between any of the respondents (or any officer, agent or employee of the respondents) and any person listed in the Confidential Schedule (or any officer, agent or employee of any person listed in the Confidential Schedule) in the period from 1 December 2017 to 30 March 2018;(b)all documents recording any work done by any of the respondents for or on behalf of or at the request of any person listed in the Confidential Schedule in the period from 1 December 2017 to 31 May 2018;(c)telephone records of any of the respondents that record or identify any telephone calls with, or text messages with, any person listed in the Confidential Schedule (or any officer, agent or employee of any person listed in the Confidential Schedule) in the period from 1 December 2017 to 30 March 2018; and(d)all pro forma and precedent documents used by any of the respondents in the business of any of the respondents.2.The discovery ordered in order 1 is to be given by 17 May 2019, save for that in order 1(b) which is to be given by 14 June 2019.3.Subject to agreement between the parties or further order, the documents produced in category 1(d) shall be provided to and accessed by the applicant's lawyers only and shall not be provided to, accessed by or otherwise disclosed to the applicant or its employees or officers. 4.The relief sought in paragraph 1(d) of the applicant's amended interlocutory application dated 17 April 2019 is stood over for later determination.5.Paragraph 4 of the applicant’s notice to produce dated 5 February 2019 directed to the first respondent and paragraph 3 of the applicant’s notice to produce dated 5 February 2019 directed to the second respondent are set aside.6.The respondents' interlocutory application dated 14 March 2019 is otherwise dismissed.7.Costs reserved.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.