Drawline Publishing Pty Limited v Insurance Australia Limited
[2004] ACTSC 86
•17 September 2004
DRAWLINE PUBLISHING PTY LIMITED v INSURANCE AUSTRALIA LIMITED
[2004] ACTSC 86 (17 September 2004)
PROCEDURE – production of documents – notice for non-party production – objection by opposing party – pleadings not yet closed – documents sought likely to be produced by defendant on discovery – notice set aside as premature
Freedom of Information Act 1989 (NSW)
Supreme Court Rules, Order 34A, 34B
Lebon v Lake Placid Resort Pty Limited (1995) 1 Qd R 24
Uthmann v Ipswich City Council (1998) 1 Qd R 435
Colbeam Palmer Limited v Stock Affiliates Pty Limited (1970) 122 CLR 25
Dart Industries Inc v The Decor Corporation Pty Limited (1993) 179 CLR 101
LED Builders Pty Ltd v Eagle Homes Pty Ltd (1999) 44 IPR 24
Rossi Pty Ltd v Ballymore Tower Pty Ltd (1984) 2 Qd R 167
Wm. Collin & Sons Pty Ltd v T & T Mining Corporation Pty Ltd (1971) Qd R 427
No. SC 432 of 2004
Judge: Master Harper
Supreme Court of the ACT
Date: 17 September 2004
IN THE SUPREME COURT OF THE )
) No. SC 432 of 2004
AUSTRALIAN CAPITAL TERRITORY )
BETWEEN:DRAWLINE PUBLISHING PTY LIMITED
Plaintiff
AND:INSURANCE AUSTRALIA LIMITED
Defendant
ORDER
Judge: Master Harper
Date: 17 September 2004
Place: Canberra
THE COURT ORDERS THAT:
The notice for non-party production addressed to the Environmental Protection Authority NSW, Department of Environment and Conservation, dated 13 July 2004 be set aside.
The defendant’s costs of this application be the defendant’s costs in any event.
The solicitors for the plaintiff notify the respondent to the notice of the making of this order.
This is an application by the defendant to set aside or vary a notice for non-party production issued on behalf of the plaintiff and addressed to the Environmental Protection Authority, a part of the Department of Environment and Conservation of the State of New South Wales.
The action, commenced in July 2004, is for breach of copyright contained in a trade manual entitled The Plastics Fix, asserted to be an original literary work including a photograph said to be an original artistic work. The plaintiff seeks declaratory and injunctive relief, and damages including aggravated and exemplary damages. The defendant has appeared, and directions have been made by consent setting a timetable for particulars and the delivery of a defence.
On 13 July, within a week of the institution of proceedings and prior to the entry of an appearance, the solicitors for the plaintiff lodged the notice for production under challenge, seeking production of the following documents:
All contracts, instruments, paper writings and any other correspondence whatsoever between Insurance Manufacturers of Australia Pty Ltd and the Environmental Protection Authority of NSW relating to the proposal grant titled “Profiting from Cleaner Production – Industry Partnerships Programme” or proposal titled “Waste Management and Parts Reuse in the Smash Repair Industry Project” including but not limited to:
(a) Application form dated 1 April 2003 completed by Insurance Manufacturers of Australia Pty Ltd;
(b) The deed of agreement between Insurance Manufacturers of Australia Pty Ltd and the Environmental Protection Authority of NSW;
(c) Evaluation plan prepared by Insurance Manufacturers of Australia Pty Ltd;
(d) Email with attached “environmental benefits of car parts re-use report” dated 6 November 2003;
(e) Email with attached report “Developing a Waste Management Programme for NRMA Preferred Smash Repairers: Phase 1” dated 6 November 2003
(f) Email with attached report “Developing a Waste Management Programme for NRMA Preferred Smash Repairers: Phase 2” dated 6 November 2003.
The notice was sealed by the Court and returned to the solicitors for the plaintiff for service. Service was effected on 30 July 2004.
The present application was filed on 11 August 2004. The documents have not yet been produced. The respondent to the notice wrote to the Registrar of the Court on 26 August, stating that it did not intend to appear at the hearing of the application and would abide by any order made by the Court.
The application is supported by affidavits affirmed by Mr Paul Elliot, a project manager employed by a company which is part of the defendant’s corporate group. Mr Elliot deposes that each of the documents sought in the notice relates to a project funded by the respondent known as the Waste Management and Parts Reuse in the Smash Repair Industry Project. He says that the respondent’s possession of the documents arises entirely from his company’s participation in the project, and that he is thus aware of the content of the documents. He asserts that the documents do not contain any information about the subject matter of the plaintiff’s publication, or any works contained in it, or about any access the defendant may have had to the plaintiff’s publication, or about the compilation, publication or distribution of the publication by the defendant which is said to infringe the plaintiff’s copyright; or about any income or other benefits derived by the defendant from distribution of its publication.
Mr Elliot goes on to say that the documents sought contain confidential information concerning the business, professional, commercial and financial affairs of companies in the defendant’s group, and confidential results of private research conducted by those companies and solutions and implementation plans arising from the research for effective waste management. He says that the confidential information includes trade secrets and commercially sensitive material. He asserts that publication of the information to the plaintiff or the public could provide the plaintiff and competitors of the defendant with a business advantage. He asserts that the information was disclosed by the defendant’s group to the respondent in confidence and solely for the purposes of the project. He says that the deed of agreement, one of the documents sought, includes an acknowledgement by the respondent that the project involves issues and information that are commercially sensitive to the Insurance Australia Group.
He also deposes that an application was made to the respondent in about December 2003 under the Freedom of Information Act 1989 of the State of New South Wales for access to documents including those sought in the notice. He says that a submission was made by the Insurance Australia Group to the respondent that the documents were exempt documents under that Act. He says that the submission was accepted by the respondent and that the documents were not produced.
The plaintiff relies on an affidavit sworn by Mr G F McDonagh, director and chief executive officer of the plaintiff company. Mr McDonagh says that he is the author of the plaintiff’s publication, The Plastics Fix, published in May 2000, and that the copyright in the publication is owned by the plaintiff. He earlier wrote a work which he describes as the predecessor of The Plastics Fix, entitled Automotive Industry School of Plastic Welding and Repair, in which the plaintiff also has copyright.
He says that in about August 2003, he became aware that the defendant had made an application to the Environmental Protection Authority of NSW, in relation to the Waste Management and Parts Reuse in the Smash Repair Industry Program. He says that he knows from extensive experience in the smash repair industry that approximately half of all car parts which require repair or replacement following a collision are plastic. His publications deal with repairs to plastic components such as bumpers, headlight surrounds and mudguards. He applied in December 2003 to the respondent under the Freedom of Information Act 1989 for documents relating to the defendant’s application. He was provided with a schedule of documents held by the respondent. Copies of some were provided to him. His application was refused in respect of other documents as exempt under the legislation, and these are the documents to which he now seeks access.
He deposes to his knowledge from experience in the automotive repair industry that applications to the respondent commonly include projections of the quantum of units involved. He believes that in the present case the documentation may include projections as to how many plastic parts could be repaired and recycled instead of replaced. He says that this is likely to be relevant to quantification of damages by way of an account of profits. He also suspects that the copyright material may have been duplicated and incorporated into the defendant’s submission to the respondent, and that it is relevant to the litigation to ascertain the extent, if any, to which this has occurred.
Mr McDonagh has given an undertaking to the defendant and to the Court to keep any documents produced confidential and not to use them for any purpose other than the litigation. Whilst such an undertaking may provide some reassurance to the defendant, it seems to me superfluous in that there is an implied undertaking to that effect in relation to documents produced by a third party pursuant to a notice for production, just as there is in respect of documents produced on subpoena and on discovery. I need not quote authority for the proposition that use of such documents for other purposes may amount to contempt.
The notice for production was issued pursuant to Order 34B of the Rules of this Court. The relevant Rules are:
Notice for Non-Party Production
2. On application by a party to an action, the Registrar shall, unless the Court otherwise orders, issue a notice requiring a person who is not a party to the action to produce for inspection a document in the person’s possession or control relating to a matter in question in the action that the person could be required to produce at the trial of the action.
. . .
Application to Set Aside or Vary
6(1)The respondent to a notice for non-party production or any other party to the action may, within 14 days after the day the notice is served on the respondent, apply to the Court to have the notice set aside or varied.
(2) On an application under subrule 1, the Court may make such orders as the Court thinks fit.
Order 34B was inserted in the Rules in 1997, replacing a procedure established in 1983 by the former Order 39 Rule 6A, which provided for the issue of a notice for non-party production by leave. The Order 39 procedure required an application to the Court on notice to the other party or parties to the action. Prior to its introduction, the only procedure available for bringing documents of a non-party before the Court was by subpoena for production. The practice at that time was for subpoenas to require production of documents at or shortly before the commencement of the hearing of the action. The Order 34B and Order 39 procedures differ in a number of ways from the subpoena system. They require production of documents to the party issuing the notice rather than to the Court, and are intended to be used well in advance of the hearing. The change has been extremely beneficial. It has led to earlier consideration of settlement and to more through preparation of cases before trial, and it has reduced wastage of court time.
The new system was first introduced in Australia in the Supreme Court of Queensland in 1965. The general principles applicable to the system were outlined by Lee J in Lebon v Lake Placid Resort Pty Limited (1995) 1 Qd R 24 and expanded upon by his Honour in Uthmann v Ipswich City Council (1998) 1 Qd R 435.
Lee J expressed the opinion in Lebon that the party seeking production bears the onus in the first instance of establishing that the documents fall within the scope of the rule (at 32). This requires the party seeking production to establish that the documents relate to a matter in question in the cause. The rule does not permit a party to engage in a fishing expedition in the hope that it may advance his case or damage that of the opponent. In other words, non-party production is not equivalent to discovery. The requirement that a specified document must relate to a matter in question in the cause is ordinarily capable of determination only be examination of the pleadings and particulars.
If any support is needed for the proposition that material which would assist in an account of profits is relevant in an action for breach of copyright, it can be found in Colbeam Palmer Limited v Stock Affiliates Pty Limited (1970) 122 CLR 25 at 43 per Windeyer J. The entitlement to an account of profits is also supported by the High Court in Dart Industries Inc v The Decor Corporation Pty Limited (1993) 179 CLR 101, a patent infringement case. The applicable principles are conveniently set out in LED Builders Pty Ltd v Eagle Homes Pty Ltd (1999) 44 IPR 24, a decision of Lindgren J in the Federal Court of Australia, at 47-49.
The primary submission of the defendant is that the notice for production is premature. Until the pleadings are closed, the Court is unable to determine whether or not any specified document relates to a matter in question in the action. The defendant also makes the point that, subject to identification of the issues through the pleading process, the plaintiff will be entitled to discovery and all of the documents sought from the respondent are documents the originals of which are in the possession or control of the defendant, so that they will be produced for inspection through that procedure.
The defendant relies upon a much earlier decision of Master Lee QC prior to his appointment as a judge of the Supreme Court of Queensland: Rossi Pty Ltd v Ballymore Tower Pty Ltd (1984) 2 Qd R 167. The learned Master said that there was often merit in the view that a party should ordinarily have exhausted his rights to discovery and interrogatories as against the other parties to the action before having recourse to outsiders who are not parties. The Master referred to a passage from the reasons of W B Campbell J in Wm. Collin & Sons Pty Ltd v T & T Mining Corporation Pty Ltd (1971) Qd R 427, an early decision of the Full Court in relation to the new non-party production procedure. His Honour said at 442:
. . . I fail to see how the learned judge of first instance could have been satisfied that it was necessary for the respondent to inspect such documents in the possession of the appellant at this stage of the action, i.e. prior to discovery being had of documents in the possession of the defendant and prior to interrogation of the latter party. If . . . such inspection is necessary to enable the respondent to establish the allegations in the statement of claim, the application is seen to be one of a fishing nature and O.35 r28 should not be used to enable the plaintiff to make out a case against a defendant which the plaintiff could not otherwise establish. In my opinion the application has been prematurely made.
In Rossi, Master Lee was dealing with three applications in each of two actions. It appears that such applications were made without notice to the other party or parties to the action. Notwithstanding that the respondent to the notices did not oppose the orders sought, the Master took the view that the plaintiff applicant had not complied with the rule, and refused the application.
In the course of argument I drew the attention of counsel to Order 34A, introduced into the Rules of this Court in 1992, which provides for preliminary discovery. Order 34A Rule 5 provides as follows:
Discovery to Identify Right to Obtain Relief
If –
(a) it is reasonable to believe that the applicant has, or may have, the right to obtain relief from a person whose description has been ascertained; and
(b) having made reasonable inquires, the applicant has not gained sufficient information to enable a decision to be made whether to institute a proceeding to obtain the relief; and
(c) it is reasonable to believe that the person –
(i)has, or is likely to have; or
(ii)has had, or is likely to have had;
possession of a document relating to the question of whether the applicant has the right to obtain the relief; and
(d) inspection of the document by the applicant would assist in making the decision;
the Court may order the person to produce the document to the applicant.
An application under Rule 5 must be served personally on the respondent in the absence of an order to the contrary, as must a supporting affidavit supporting the facts relied on and specifying the documents or classes of documents sought. There is, however, no requirement that the potential defendant be given notice of the application. A shortcoming of the procedure is that the potential defendant is deprived of any opportunity to claim privilege in documents produced by the respondent. There is some safeguard against this in the discretion conferred on the Court by Rule 5.
By contrast, Order 34B Rule 2 obliges the Registrar to issue a notice for production on application. In theory it would be open to the Registrar to decline to issue the notice if it appeared not to relate to a matter in question in the action. As a matter of practicality however, having regard to the time and legal skill which would be required to arrive at such an opinion, and the volume of applications for issue of notices for non-party production, notices which appear to be in order are issued as a matter of course, leaving issues as to compliance to be raised by the respondent to the notice or the other party or parties to the action.
I suggested to counsel that it might have been open to the plaintiff to have sought preliminary discovery under Order 34A from the respondent before commencing action without notice to the defendant. If this were so, I asked whether there was not some artificiality in denying the plaintiff access to the documents because of technical compliance difficulties with Order 34B. The answer to my suggestion is, I think, that the plaintiff would not have been entitled to make use of Order 34A because, clearly enough from the fact that proceedings have been instituted, the applicant was in possession of sufficient information to enable a decision to be made whether to institute the action.
I am persuaded that the wording of Order 34B Rule 2 requires that the matters in question in the action must be capable of identification before a notice for non-party production can be issued, and that the matters in question in the action between any two parties cannot be identified until issue has been joined between those parties on the pleadings. In some actions there will be substantial issues as to liability but no argument about quantum of damages. In others, much of what is asserted in the statement of claim as to liability may be conceded, and the real issue may be about quantum, or some other aspect of the relief sought. What will be in issue cannot be identified until issue is joined. In the present case it may already be reasonably clear what the issues are likely to be, but until the pleadings are closed there remains an element of speculation.
A further factor in the present case is that all of the documents sought to be produced are documents which were provided by the defendant to the respondent, so that the defendant can reasonably be assumed to have originals or copies of the documents in its own possession or control. The documents will therefore be required to be identified and produced for inspection upon discovery, subject to questions including though not necessarily limited to relevance and privilege. There is force in the argument that non-parties should not be subjected to the coercive powers of the Court in relation to production of documents until the usual interlocutory steps between the parties have been carried out.
It follows that the plaintiff sought the issue of the notice for non-party production prematurely. If the timetable set by the Registrar with the consent of the parties on 30 August is adhered to, it may still be some three months before a defence is delivered. The defence may raise issues requiring the plaintiff to deliver a reply. It is therefore likely to be some time before the pleadings between the plaintiff and the defendant are closed and the matters which will be in question in the action are identified. Discovery would be expected to follow. Only after discovery will it be known whether there remain any documents in the possession of the respondent which should be required to be produced.
The notice for non-party production will be set aside. The defendant should have its costs of this application regardless of the ultimate outcome of the action.
I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Master.
Associate:
Date: 17 September 2004
Counsel for the plaintiff: Mr B Levet
Solicitor for the plaintiff: Peter R Glover by his agent Capital Lawyers
Counsel for the defendant: Mr P J Ward
Solicitor for the defendant: Blake Dawson Waldron
Date of hearing: 27 August 2004
Date of judgment: 17 September 2004
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