FAI Home Security Pty Ltd v Price
[1999] VSC 274
•20 August 1999
SUPREME COURT OF VICTORIA
CAUSES JURISDICTION Do not Send for Reporting Not Restricted
No. 4940 of 1999
| FAI HOME SECURITY PTY LIMITED ACN 050 064 214 | Applicant |
| v | |
| JOHN RODERICK EDWARD PRICE AND ORS T/A MAURICE BLACKBURN & CO | Respondents |
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JUDGE: | Byrne J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 3 August 1999 | |
DATE OF JUDGMENT: | 20 August 1999 | |
CASE MAY BE CITED AS: | FAI Home Security Pty Ltd v Price | |
MEDIA NEUTRAL CITATION: | [1999] VSC 274 | |
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Practice and Procedure – preliminary discovery – whether an interlocutory application – whether hearsay evidence admissible.
RSC R. 32.05, R. 32.03, R. 43.03
Practice and Procedure – preliminary discovery – reasonable enquiries – document relating to right of action – document tending to identify wrongdoer.
RSC R. 32.05, R. 32.03
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APPEARANCES: | Counsel | Solicitors |
For the Applicant | Mr J.G. Santamaria QC with Mr C.M. Caleo | Clayton Utz |
| For the Defendant | Mr J.W.K. Burnside QC with Dr. K.P. Hanscombe | Maurice Blackburn Cashman |
HIS HONOUR:
By originating motion filed on 31 March 1999 the applicant, FAI Home Security Pty Ltd (“FAI”), seeks orders for preliminary discovery pursuant to R. 32.05 or R. 32.03. The respondents are the members of the firm of solicitors then known as Maurice Blackburn & Co. The rules are in the following terms:
“32.05 Discovery from prospective defendant
Where –
(a)there is reasonable cause to believe that the applicant has or may have the right to obtain relief in the Court from a person whose description he has ascertained;
(b)after making all reasonable inquiries, the applicant has not sufficient information to enable him to decide whether to commence a proceeding in the Court to obtain that relief; and
(c)there is reasonable cause to believe that that person has or is likely to have or has had or is likely to have had in his possession any document relating to the question whether the applicant has the right to obtain the relief and that inspection of the document by the applicant would assist him to make the decision –
the Court may order that that person shall make discovery to the applicant of any document of the kind described in paragraph (c).”
32.03 Discovery to identify a defendant
(1)Where an applicant, having made reasonable inquiries, is unable to ascertain the description of a person sufficiently for the purpose of commencing a proceeding in the Court against that person (in this Rule called ‘the person concerned’) and it appears that some person has or is likely to have knowledge of facts, or has or is likely to have or has had or is likely to have had in his possession any document or thing, tending to assist in such ascertainment, the Court may make an order under paragraph (2).”
Admissibility of Hearsay
A preliminary point taken by the respondents was that all of the affidavit material filed in support of the application was inadmissible as hearsay. This is a correct characterisation of the form of the evidence offered; the issue was whether the application was interlocutory within the meaning of R. 43.03(2) so that the affidavits may contain statements of fact based on information and belief.
Counsel relied upon both authority and principle. On behalf of FAI my attention was drawn to authority to the effect that applications under R. 32.05 and R. 32.03 are interlocutory in nature. In The Herald and Weekly Times Ltd v The Guide Dog Owners’ and Friends’ Association [1990] VR 451, the Full Court held that, for the purposes of appeal, such an application is interlocutory so that leave is required. In Mercantile Mutual Insurance (Australia) Ltd v Household Financial Services Ltd (unreported, 22 May 1997, BC9702240), the Court of Appeal of this Court observed that in an application under these two Rules, the powers conferred are discretionary in nature and are interlocutory. In Schmidt v Won [1998] 3 VR 435 at 436-7, Ormiston JA, Charles and Batt JJA concurring, accepted as proper a concession by counsel that leave to appeal was required in such a case. To these might be added the recent decision of the Full Federal Court in Malouf v Malouf [1999] FCA 284 which, after an examination of the authorities, reached the same conclusion.
Counsel for the respondents, however, referred to Levis v McDonald (1997) 75 FCR 36 where Lindgren J concluded that, for the purposes of the rule which would admit hearsay evidence in interlocutory applications, an application for preliminary discovery is not interlocutory. To this may be added the unreported decision of David Hunt CJ at CL in Kendell v Moraitis (SC (NSW), 18 December 1991, BC9101330). It was submitted that a distinction between interlocutory applications and other applications for the purposes of the admissibility of a hearsay affidavit under R. 43.03(2) is not the same as that for the purpose of the statutory restraint on appeals under the Supreme Court Act 1986, s. 17A(4). Accordingly, Levis v McDonald and Kendell v Maraitis were the only cases directly in point.
That the expression “interlocutory application” in R. 43.03 may not mean the same as it does in s. 17A of the Supreme Court Act 1989 or its predecessors is mentioned by the Privy Council in Tampion v Anderson (1973) 3 ALR 414 at 416. See, too, Cowie v State Electricity Commission of Victoria [1964] VR 788 at 789 – 90, per Gowans J and Border Auto Wreckers (Wodonga) Pty Ltd v Strathdee [1997] 2 VR 49 at 52 per Brooking JA. In Malouf v Malouf [1999] FCA 284 at [33] Beaumont, Lee and Dowsett JJ observed:
“It is not difficult to find good reason for allowing relaxation of the hearsay rule in a narrower category of cases than that in which the right of appeal is truncated by a requirement for leave. The latter requirement merely places the parties in the hands of the Court. Relaxation of the hearsay rule may substantially affect the outcome of the proceedings or the way in which they are conducted.”
The leading case on the question of the admissibility of hearsay evidence in interlocutory applications is the unusual case of Gilbert v Endean (1878) 9 ChD 259. The parties in that case proceeded before the Vice Chancellor on the basis that the application before the court was for liberty to enforce a decree previously pronounced, an application which was clearly interlocutory in character. In the Court of Appeal it was pointed out that this was not correct. In fact, it was to set aside a subsequent agreement which stood in the way of the enforcement of the decree. Notwithstanding this, the appeal was dealt with on the basis on which it was argued below, namely, that the application was interlocutory so that hearsay was admissible. Cotton LJ, however, seized the opportunity to deplore the practice which he said had done great injury in many ways in the Chancery Division. This was the practice of adducing evidence of information and belief in applications other than interlocutory applications. Of these applications his Lordship at 9 ChD 268-9 said this:
“I am not now adverting to the question as to whether or no the evidence ought to have been given viva voce or by affidavit, but to the question whether the rule that on interlocutory applications the Court may act upon evidence given on the witness’s information and belief applies to the present case. But for the purpose of this rule those applications only are considered interlocutory which do not decide the rights of parties, but are made for the purpose of keeping things in statu quo till the rights can be decided, or for the purpose of obtaining some direction of the Court as to how the cause is to be conducted, as to what is to be done in the progress of the cause for the purpose of enabling the Court ultimately to decide upon the rights of the parties. Now many of the cases which are brought before the Court on motions and on petitions, and which are therefore interlocutory in form, are not interlocutory within the meaning of that rule as regards evidence. They are to decide the rights of the parties, and whatever the form may be in which such questions are brought before the Court, in my opinion the evidence must be regulated by the ordinary rules, and must be such as would be admissible at the hearing of the cause. In my opinion, therefore, on such applications, if an affidavit on information and belief is made, the other side is not called upon to answer it under the peril of its being said to him, ‘You have in fact admitted this by not denying it, and therefore the Court may act upon the admission.’”
Jessell MR at 9 ChD 266-7 was of opinion that the reception of hearsay evidence was a concession made by the court to the practicalities often found in an interlocutory application. Where the court was called upon to determine “the ultimate rights of parties”, direct evidence was required.
Gilbert v Endean was subjected to a detailed consideration by the Court of Appeal in Savings & Investment Bank Ltd v Gasco Investments (Netherlands) B.V. (No.2) [1988] Ch 422, where the question was as to the admissibility of hearsay on an application to commit the respondents for contempt of court. The contempt alleged was that they, as directors of a company, procured, aided or abetted breaches by the company of undertakings given by it to the court. The primary judge said at p.427 [1988] Ch 422 that Gilbert v Endean stood as authority for the proposition that the distinction for evidentiary purpose was one “between, on the one hand, subservient applications designed to regulate in some way the conduct of legal proceedings between the parties and, on the other hand, applications raising independent issues”. See [1988] Ch 422 at 427. He concluded that the committal proceeding was not made for the purpose of facilitating the resolution of the dispute which was the subject matter of the litigation. “It is in every sense, in my view, free standing as a lis, unconnected, save historically, with the action in which the order said to have been broken was made.”: at [1988] Ch 428. Accordingly, it was not an interlocutory application for the purposes of the evidence rule. The Court of Appeal reached the contrary conclusion upon an examination of the true substance of the committal application before the court. The court rejected an approach which would sort applications into one of two categories, interlocutory or final, by reference to the relief sought. Purchas LJ at [1988] Ch 434-5 expressed himself this way:
“In truth such applications may fall into one or other of these categories depending upon the circumstances in which the application is made, the order, if any, which the application is designed to enforce, but not the nature of the penalty which is sought. Thus, frequently in matrimonial proceedings orders are made to enforce the disclosure by the parties of their means or to protect the physical safety of the children by excluding one or other parties from the matrimonial home. These are clearly orders to further the resolution of the main issues or to preserve the status quo pending their final determination. Breaches of such orders may, and frequently do, involve contempts of court punishable in a way that may fairly be described as penal. This does not, as will be discussed in relation to the second judgment, make the proceedings themselves criminal proceedings. Other proceedings, such as in Rossage v. Rossage [1960] 1 W.L.R. 249, which take place after the final determination of the main suit, although sometimes loosely referred to as ‘interlocutory’ are really separate ‘free standing’ causes, the resolution of which are not infrequently ‘final’.”
And, again, at [1988] Ch 436:
“In the present case the undertakings which were offered and accepted to preserve the assets in this country clearly fell within the concept of interlocutory proceedings to protect what would be the fruits of victory in the main suit if not the property which was the subject matter of the action itself. I think that here lies the crucial distinction between interlocutory and final proceedings. The fact that such an order can be enforced by a motion to commit for contempt of court in the breach, if its true purpose is to enable the proper conduct of the trial and the final resolution of the issues between the parties, then it is nonetheless an interlocutory proceedings. Once it is accepted that a motion to commit may be either interlocutory or final depending upon the purpose for which the order or undertaking was given, upon the breach of which the motion is founded, the various authorities fall into place. The danger of admitting hearsay evidence in the case of some interlocutory motions may be avoided by the exercise by the court of its discretion to exclude it; and its admission in others may be very much in the interests of justice.”
Nicholls LJ, too, was of opinion that the application was interlocutory in character. His observations on the distinction between interlocutory and final proceedings are found at [1988] Ch 444:
“Proceedings vary so widely, covering so many different situations, that comprehensive definitions of ‘interlocutory’ and ‘final’ are probably impossible. But the essence of the distinction seems to me to lie in the connotation, implicit in the phrase, that in general ‘interlocutory proceedings’ are proceedings other than the trial of the action or the equivalent hearing in the case of an originating summons or other originating process. The trial of an action or the equivalent stage of other originating processes would, in general, be regarded as ‘final,’ but even here there may be exceptions, depending on the nature of the claims in the proceedings. For example, the trial of a Norwich Pharmacal Co. v. Customs and Excise Commissioners [1974] A.C. 133 type of action may be an exception, and there may well be others. Broadly that is how, as it seems to me, the terms ‘interlocutory’ and ‘final’ in this context would be understood by lawyers.”
I shall return to his Lordship’s passing reference to the Norwich Pharmacal case. Russell LJ at [1988] Ch 447-8, agreed with these judgments adding that he did not consider that the committal application should be seen “as free standing as a lis, unconnected” with the principal hearing.
It appears from the passages from the judgments of the Court of Appeal in Gilbert v Endean (1878) 9 ChD 259 to which I have quoted that, when Cotton LJ spoke of deciding the rights of the parties, he was concerned with the rights of the parties which were in issue in the principal proceeding and which would be finally determined at the trial of that proceeding. These are what Jessell MR, at 9 ChD 267, called “the ultimate rights of parties”. In Savings and Investment Bank Ltd v Gasco Investments (Netherlands) B.V. (No.2) [1988] Ch 422 the primary judge fastened upon this same feature. He drew the distinction between subservient applications on the one hand, and on the other those raising independent issues – free standing actions. The Court of Appeal accepted this distinction but took a different view of its application to the facts. Accordingly, where there is a proceeding on foot, an application will be interlocutory or not depending upon its relationship to the determination of the issues raised in that principal proceeding. Where the rules or court practice requires the application to be made otherwise than within the proceeding, the question is essentially the same: is the application brought in the furtherance of the proceeding or is it free standing? The distinction can be seen as it applies to a committal application. In the Savings and Investment Bank case the application before the court was one to commit for abetting a breach of undertaking. As Purchas LJ analysed it at [1988] Ch 432-3, the undertaking was given in the furtherance of the determination of the rights of the parties in the proceeding – an interlocutory act. Its enforcement by committal is likewise of the same character. Where the committal sought a consumatious interference with the court proceeding by a third party, it would not be an interlocutory proceeding.
Where there is no principal proceeding on foot or where, for some reason, the determination of the application exhausts that proceeding, the distinction may still have a role to play. Nicholls LJ in the passage from the Savings and Investment Bank case quoted above says as much. Of particular interest is the example selected by his Lordship. Norwich Pharmacal Co v Customs and Excise Commissioners [1974] AC 133 was a case where the plaintiff invoked the equitable jurisdiction of the court to order discovery to enable it to identify certain importers who had imported a chemical in circumstances amounting to an infringement of the plaintiff’s patent. The plaintiff did so in order that it might sue those persons. In terms of its role and purpose the proceeding resembled an application under R. 32.03. His Lordship observed that such a proceeding would be understood by lawyers as interlocutory.
In 1970 a similar procedure was introduced in New South Wales by Pt. 3 R. 1 of the Rules of Court. Subsequently, a similar rule was enacted in Victoria in R. 32.03 and R. 32.05, in the ACT by O. 34A R. 3, in the Federal Court by O. 4 R. 17 which later became O. 15A R. 3, in the Northern Territory by R. 32.03, R. 32.05 and in Western Australia by O. 26A R. 3 and in South Australia by R. 60.01. If a proceeding brought by writ for relief of the kind sought in the Norwich Pharmacal case is understood by lawyers as interlocutory, a similar proceeding serving a similar purpose brought under a rule of court is not likely to be viewed differently.
Reported cases in which the distinction between interlocutory and final applications has been of importance for evidentiary purposes are surprisingly rare. Applications brought in aid of as-yet-uncommenced proceedings which have been treated for evidentiary purposes as interlocutory include those to extend the limitation period after its expiry: Scanlon v American Cigarette Company (Overseas) Pty Ltd [1987] VR 261; Ex parte Britt [1987] 1 QdR 221; and those to require a suspected person to provide a blood sample pursuant to the Crimes Act 1958, s. 464U: Loughnan v Magistrates’ Court of Victoria [1993] 1 VR 685. Applications for Mareva orders and Anton Piller orders are treated as interlocutory for this purpose: Gee, Mareva Injunctions and Anton Piller Relief (4th ed 1998) p. 123. On the other hand, an application for leave to commence an action against a municipality requires direct evidence: Cowie v State Electricity Commission [1964] VR 788. The test applied in Scanlon’s case and Cowie’s case was whether the application finally determined the rights of the parties, the same test as is applied to determine whether an order is interlocutory or final for the purposes of appeal: Hall v The Nominal Defendant (1966) 117 CLR 423; Licul v Corney (1976) 180 CLR 213; Carr v Finance Corporation of Australia Ltd (1981) 147 CLR 246. This test, in the context of appeals, has been applied on a number of occasions to preliminary discovery applications, producing in each case the result that these applications are interlocutory so that leave to appeal is required.
In The Herald and Weekly Times Ltd v The Guide Dog Owners’ and Friends’ Association [1990] VR 451 the plaintiffs sued the Herald newspaper and certain journalists, alleging that defamatory statements were contained in an article published by it, which article was based on an undisclosed source. The plaintiffs requested the defendants to disclose this source but they refused. The plaintiffs applied for an order pursuant to R. 32.03 that the journalists attend to be cross-examined in relation to their sources. On the question whether the order made was interlocutory for the purposes of the appeal, O’Bryan J said this at [1990] VR 455:
“In my opinion, the order in the court below did not finally determine the rights of the parties. All the order did was to determine the right of the respondents to preliminary discovery and its practical effect was that the newspaper’s informants might become known to the respondents. The rights of parties in the litigation was not finally determined.”
Marks J at [1990] VR 461-2 agreed that the order was interlocutory, applying the test in Licul v Corney (1976) 180 CLR 213:
“The test is not always easy to apply. However, it is well to remember that a final order must be distinguished from a binding order which has the appearance of being final because it has that practical effect. The High Court held that regard is to be had to the legal not the practical effect. Sometimes, as a result, application of the test might appear to produce a technical result.
In the present case, however, I think the order was clearly interlocutory, not necessarily because there may technically be power to entertain an application to vary or vacate it, but because the rights of the respondents to the discovery sought have not yet been fully exercised. The order merely set in motion an investigation by examination of documents and persons whether certain information exists and if so, what it is. The rights of the respondents given by r.32.03 were not merely to obtain the order but to obtain the information if it existed. The order was merely the first step. It did not preclude further orders limiting or extending the scope of the investigation which the rule permits.”
It was put, however, on behalf of the respondents, that since the application in the Herald and Weekly Times’ case was made in the furtherance of an existing proceeding, it should not be taken to determine a case such as the present where no substantive proceeding was on foot.
The application for preliminary discovery in Mercantile Mutual Insurance (Australia) Ltd v Household Financial Services Ltd (unreported, 22 May 1997) was, indeed, an application made before the proceeding was brought. The President, in a judgment with which Hayne JA and Ashley AJA concurred, characterised the powers conferred under R. 32.03 and R. 32.05 as discretionary in nature and interlocutory (p. 1) and, at p. 6, observed that the primary judge’s “orders were of a discretionary nature made in matters of practice and procedure and in the course of an interlocutory application”. To the same effect is the observation of Powell J in Re Dernacourt Investments Pty Ltd (1990) 20 NSWLR 588 at 608 that “procedural rights to discovery before suit are provided” by the equivalent New South Wales rule, Pt. 3 R. 1.
I come, finally, to Malouf v Malouf [1999] FCA 284, which concerned the question whether a proceeding for pre-trial discovery under Federal Court rule O. 15A, R. 5 was interlocutory so that leave to appeal was required. Having considered the line of authority starting from Hall v The Nominal Defendant and the Victorian appellate decisions to which I have referred, the Full Court determined that leave was necessary – the application for pre-trial discovery was interlocutory in character. The test applied at [36] was that drawn from Hall v The Nominal Defendant, whether the “order in question precludes a further application”, presumably on the basis that the rights asserted in the application had been finally determined by the order made in the application.
I return now to Levis v McDonald (1997) 75 FCR 36 the first of the two cases in point. The application in that case was for an order pursuant to the Federal Court Rules, O. 15A, R. 3 that the respondent attend to be examined about the identity of the person responsible for publishing material said to be defamatory of the applicant. Order 15A, R. 3 is the equivalent of the Victorian R. 32.03 and the New South Wales Pt. 3 R. 1. The question was as to the admissibility of affidavits containing hearsay. Section 75 of the Evidence Act 1995 (Cth) provides:
“In an interlocutory proceeding, the hearsay rule does not apply to evidence if the party who adduces it also adduces evidence of its source.”
Moreover, O. 33 R. 2(1) of the Federal Court Rules permits hearsay to be led in circumstances where the exclusion would cause undue delay or inconvenience. It further states that this indulgence is applicable only to evidence other than evidence on an issue at trial. “Trial” is defined in O. 1 R. 4 to include “any hearing other than an interlocutory hearing”.
Lindgren J first expressed the view, without reference to authority, that the application was not an interlocutory proceeding “since the relief provided for finally determines the rights of the parties in relation to the particular issue tendered for decision, that is to say, the issue whether the person concerned is to be ordered to do the things provided for in the rule”: at 75 FCR 43. His Honour rejected the submission that the order was not the end of the proceeding and that further orders may be necessary to enable the applicant to enjoy its benefit. He said that this was analogous to the position of a party who obtained judgment at trial for the payment of a sum, admittedly a final order. Such a successful party might still have to take further steps by way of execution before enjoying the fruits of the judgment.
His Honour referred to two authorities in support of his conclusion. Stewart v Miller [1979] 2 NSWLR 128 was an application to set aside orders made ex parte pursuant to Pt. 3 R. 1 against three persons requiring them to attend the court and to produce certain documents. The difficulty faced by the court was that of finding power to entertain their application to set aside this order. Section 81 of the New South Wales Supreme Court Act 1970 permitted the court to set aside a step taken “in the course of or in connection with any proceedings”. Sheppard J at [1979] 2 NSWLR 133 observed that the discovery orders in question were final orders made after a hearing and he doubted that s. 81 was apposite. Lindgren J relied upon this dictum and similar statements at [1979] 2 NSWLR 134 that the orders complained of were not interlocutory but were “intended to be final”. It appears from the context, however, that the use of the word “final” was intended by Sheppard J to highlight the fact that the application before the court for Pt. 3 R. 1 relief was exhausted. The order sought had been made after a hearing.
The second was a dictum from John Fairfax & Sons Ltd v Cojuangco (1988) 165 CLR 346. In this case an order had been made upon notice pursuant to Pt. 3 R. 1 requiring the author of an alleged defamatory article published in the Sydney Morning Herald to attend to be examined as to the source of the article and to produce documents. The newspaper and the author appealed, relying upon the immunity conferred on journalists by the newspaper rule. Under this rule a journalist defendant in a defamation proceeding is permitted to refuse to disclose sources of information in interlocutory proceedings. The question arose whether this rule applied to Pt. 3 applications. Mason CJ, Wilson, Deane, Toohey and Gaudron JJ said at 165 CLR 356-7:
“The newspaper rule is not capable of applying directly to proceedings under Pt 3, r. 1. The respondent to an application under Pt 3, r. 1 is not, as such, a defendant in a defamation action. Such an application is not an interlocutory proceeding in such an action. One very powerful reason for denying that the rule has a direct application to the present class of preliminary discovery is that the object of such an application is to ascertain the identity of an informant so that the applicant may sue him. The object of an interlocutory application in a defamation action is to obtain evidence, admissions or better particulars with respect to the issues for trial in the action. If the only object of such an application were to identify the defendant’s source of information with a view to bringing an action against the informant, the purpose of the application would be foreign to the proceedings. Yet that purpose is the very object of an application for preliminary discovery.
On the other hand the policy considerations which underlie the existence of the rule are unquestionably factors to be taken into account in the exercise of the judicial discretion that Pt 3, r. 1 confers. If it were otherwise, the making of orders for preliminary discovery would undermine the status and strength of the rule in its application to defamation actions at the interlocutory stage. However, to say that the policy considerations behind the newspaper rule are relevant in an application for preliminary discovery does not mean that an applicant will fail unless he makes out a case of special circumstances. What an applicant must show is that the order sought is necessary in the interests of justice; in other words, the making of the order is necessary to provide him with an effective remedy in respect of the actionable wrong of which he complains.”
The dictum relied upon in Levis v McDonald is contained in the words which I have emphasised. Again, the context makes it clear that the High Court was not expressing a view that a Pt. 3 R. 1 application was not an interlocutory application generally.
In his judgment in Levis v McDonald (1997) 75 FCR 36, Lindgren J made no mention of cases, such as Hall v The Nominal Defendant and those following it, which discuss the question whether a preliminary discovery application is an interlocutory proceeding in the context of the right to appeal. This omission was relied upon in Seaman, Civil Procedure – Western Australia at [26A.0.3] as an indication that Lindgren J had not been referred to those cases and that he had overlooked them. I think not. It is more likely that his Honour saw the two questions as distinct and unrelated. He, had, after all, participated in the decision of the Full Federal Court on a similar question in Brouwer v Titan Corporation Ltd (1997) 73 FCR 241, which was published only a few weeks before the argument in Levis v McDonald. In Brouwer’s case it was held, in reliance upon Carr v Finance Corporation of Australia Ltd (1981) 147 CLR 246 and Licul v Corney (1976) 180 CLR 213, that a subpoena issued by a party to an existing proceeding directed to a non-party was an interlocutory order so that leave to appeal was required.
In Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (No.3) (1996) 64 FCR 55 the question, again before Lindgren J, was as to the admissibility of hearsay evidence upon a motion for a permanent injunction restraining a party from participating in the taking of an oral deposition in the US District Court in Colorado. His Honour referred to O.33 R. 2 and to the definition of “trial” in O. 1 R. 4, to which I have referred, as well as to s. 75 of the Evidence Act 1995 (Cth). He observed that there is no definition of “interlocutory proceeding” in the Evidence Act. He referred, however, to a passage in the Australian Law Reform Commission report on evidence (ALRC 38) on which the drafting of the Evidence Act (Cth) relied. In paragraph 143, footnote 33 of that report, as his Honour noted at 64 FCR 60, interlocutory proceedings are referred to as:
“…proceedings that are not final, usually dealing with procedural problems that arise in preparing a case for trial, but including proceedings for injunctions pending the trial of an action.”
On that basis, his Honour concluded that the evidence was offered on the trial of an application for a permanent injunction which is in the nature of a final order. Accordingly, hearsay was not receivable.
I am not concerned with that part of his Honour’s reasoning which turns upon the particular statutory or regulatory provisions under which the proceeding before the Federal Court was being conducted. His Honour did, however, make two more general observations which are of particular interest for my present purposes. First, he said at 64 FCR 58, that the nature of the proceedings was to be determined, not by their form, for example, by the fact that they are brought by notice of motion in an existing proceedings, but by reference to the kind of relief sought. This is to be contrasted with the opinion of the Court of Appeal in Savings and Investment Bank Ltd v Gasco Investments (Netherlands) B.V. (No.2) [1988] Ch 422 at 429 where Purchas LJ said “the test whether the proceedings are interlocutory or final must relate to the proceedings themselves and not to the relief sought or the order made in those proceedings”. I shall quote the passage at 64 FCR 58-9 containing his Honour’s second general observation in full:
“The distinction between final and interlocutory proceedings and orders has been much discussed, often in the context of the question whether an appeal lies as of right or only with leave. In Hall v The Nominal Defendant (1966) 117 CLR 423 at 444, Windeyer J, after referring to authorities, said that:
a final order is one which finally disposes (subject only to appeal) of an action or an existing dispute between the parties.
Although the formula by which the distinction is expressed might be agreed, there may be difficulty in applying it. In one sense, even a decision which all would acknowledge to be interlocutory, finally disposes of the particular issue the subject of that decision, subject to any right of appeal. For example, a decision that particular documents must or need not be discovered is an interlocutory order. Yet it finally disposes of the particular dispute between the parties over discovery, subject to any appeal brought with leave.
Sometimes interlocutory orders have been referred to as orders which preserve the status quo pending a final hearing and determination. But again that is only a commonly encountered class of interlocutory order. An order resolving a dispute over discovery or interrogatories, for example, although clearly interlocutory, is not of that kind.
Common to the two kinds of interlocutory order just referred to is the fact that they contemplate that the parties will be before the same court again when a decision will be made which will determine the parties’ jural relations after which they will not be before that court again on the same matter.
In the present case, what is sought is an injunction permanently restraining the exercise of a right to depose a potential witness apparently given to the applicants pursuant to a United States statute. It may be that if the right was given by this Court’s Act or Rules as an incident of the procedures governing the present proceeding it would be proper to regard an order resolving a dispute over the exercise of the right as interlocutory. But the right here in question, although given by United States law for the purpose of assisting foreign or international tribunals and ‘any interested person’ … is not an incidental part or adjunct of these proceedings and is independent and self standing.”
I infer from this passage, first, that his Honour saw the leave to appeal cases, such as Hall v The Nominal Defendant, as setting out the test for him to apply. Second, from the examples given, it is clear that his Honour had in mind the dictum of Cotton LJ in Gilbert v Endean which I have quoted above in [6]. Third, the test which his Honour applied to characterise an application as interlocutory is that it does not determine “the parties’ jural relations”, that is, their rights and obligations in the principal proceeding. They must return to the court for the determination of these ultimate issues. While the application before his Honour might have been interlocutory if brought in the US Court, it was not so in the Federal Court of Australia because the parties sought no further relief in that court.
I should add that I do not understand his Honour to be saying in the quoted passage that the existence or not of a right in a party to the application in question to return to the court for determination of other ultimate issues will always provide an answer to the present question. The recipient of a subpoena or a respondent to an application for non-party discovery is not likely to return. It cannot be doubted that these are interlocutory. On the other hand a party to a proceeding may have some only of the issues ultimately in dispute resolved at a particular trial, reserving the others for a later date. Such a determination would be final. Nor do I understand his Honour to subscribe to the view that the mere fact that the application is brought in a court different from that in which the ultimate issue is or may be litigated is determinative of the question. These are merely features of the two kinds of interlocutory orders which he offers as examples. The essential feature of the proceeding for permanent injunction before his Honour was that, from the point of view of the Australian court, it was “independent and self standing”.
In the course of its judgment in Malouf v Malouf [1999] FCA 284 at [34], the Full Federal Court noted the apparent inconsistency between the Queensland decision in Ex parte Britt (1987) 1 QdR 221 and the two decisions of Lindgren J in Allstate Life Insurance Co v Australian and New Zealand Banking Group Ltd (No.3) (1996) 64 FCR 55 and Levis v McDonald (1997) 75 FCR 36. Nevertheless, it reserved the question whether there was in fact such an inconsistency and, if so, its resolution.
The second decision which might be directly in point is Kendell v Moraitis (SC (NSW), David Hunt CJ at CL, 18 December 1991, BC9101330). This was a defamation case in which Moraitis was the plaintiff and Kendell one of the defendants. Kendell applied on summons in the proceeding for orders pursuant to Pt. 3 R. 1 that Moraitis attend for examination as to sources of information upon which he relied to make defamatory statements of Kendell and which Kendell would use to mount a cross claim in the original defamation action. Hunt CJ noted that the application ought not to have been made in the existing defamation proceeding, but no point was made of this irregularity. The interest of the case for my purpose is that it was, to a large extent, concerned with the admissibility of the evidence adduced in support of the preliminary discovery application. Counsel for the applicant sought to rely on Pt. 36 R. 4 under which hearsay might be admitted in evidence, but not “evidence on an issue at trial”: Pt. 36 R. 4(4). This expression is defined in Pt. 36 R. 1. Unlike the Victorian Rule 43.03, Pt. 36 R. 4(1) provides that the exemption applies only where undue delay or hardship would otherwise be caused. In this respect the Rule resembles O. 33 R. 2(1) of the Federal Court Rules. The applicant’s argument before the Chief Justice at CL as to the applicability of this Rule appears to have foundered on this question as to delay or hardship rather than on one as to whether the matter before the court was an “issue at a trial”.
The preliminary issue before me requires that I take a position on the evidentiary question in preliminary discovery applications. I do so and conclude that for the purposes of the evidentiary rule they are interlocutory applications for a number of reasons.
First and foremost, I see myself as bound to follow the decisions in this Court of Scanlon v American Cigarette Company (Overseas) Pty Ltd [1987] VR 261 and Cowie v State Electricity Commission of Victoria [1965] VR 788, dealing with the reception of hearsay evidence. These decisions lay down, as the relevant test for evidentiary purposes, that an application is interlocutory when it is not finally determinative of the rights of the parties. This test uses the same terminology as is used in the test which is to be applied where the question is whether leave to appeal is required. The statements of the Full Court of this Court and of the Court of Appeal to which I have referred provide clear guidance as to the application of this test, in an appeal context, to an application for preliminary discovery. It is interlocutory. Their observations, which bind me, make my path clear. The application of this test in an evidentiary context must produce the same result.
Second, in any event, the application of the test for admissibility of hearsay which is set out by Cotton LJ in Gilbert v Endean (1878) 9 ChD 259, namely, whether rights are finally determined, produces the same result, that this application is interlocutory. No rights were identified as having been finally determined in this case by the granting or refusing of the application. The applicant before me asserts no rights to the documents it seeks; it seeks an order which would give it a right to inspect them in accordance with court procedures and for a limited purpose. If, as I think to be the case, Cotton LJ was referring to the ultimate rights of the parties, these rights in the present case are those asserted by FAI to protect its confidential information and to vindicate those rights by obtaining an award for damages. They are not determined in this application.
Third, the application is made in anticipation of a contemplated proceeding. It is, to adopt the words of Cotton LJ in O’Shea v O’Shea (1890) 15 PD 59 at 62, “a procedure to get something done in the action”. See Savings and Investment Bank Ltd v Gasco Investments (Netherlands) B.V. (No.2) [1988] Ch 422 at 431, per Purchas LJ. It is not a free standing application with a life and purpose independent of the contemplated proceeding. The documents sought to be discovered are identified by reference to the likely issues in that proceeding. If produced, their use by FAI would be subject to the usual implied undertaking that they be used for no purpose collateral or extraneous to the prosecution of the contemplated proceeding. See Riddick v Thames Board Mills [1997] QB 881; Complete Technology Pty Ltd v Toshiba (Australia) Pty Ltd (1994) 53 FCR 125 at 131-2. The fact that the proceeding is one which is merely contemplated and may never be instituted is beside the point. It is not difficult to think of other applications which may be made in support of contemplated proceedings and which would be seen by lawyers as interlocutory. I offer by way of example, Mareva applications, Anton Piller applications, interim injunction applications, applications for leave to commence a proceeding and applications pursuant to R. 37.02 for inspection from a prospective defendant. The application for preliminary discovery in a case such as the present has no rationale or purpose other than the furtherance of the contemplated proceeding.
Fourth, it was conceded by counsel for the respondents, on the authority of The Herald and Weekly Times Ltd v The Guide Dog Owners’ and Friends’ Association [1990] VR 451, that an application for an order requiring the respondent to attend for examination pursuant to R. 32.05(2)(a) would be interlocutory in nature because further steps would be required to implement it. There would be little logic or sense in requiring the material in support of an application under R. 32.05(2) to take one form if examination was sought and another if a document was to be produced. In the latter case, further steps also are required because an affidavit must be prepared and sworn and filed and the documents produced for inspection if that is ordered.
Fifth, an application under R. 32.03 may be directed to a person who may be able to provide the information sought in order to enable the applicant to decide whom to sue, even if it be some person other than the respondent. From the perspective of such a respondent, the fact that a proceeding is or is not on foot is irrelevant. There is no difference in the determination of any rights to the information or documents in question. It cannot be doubted that an order for non-party discovery under R. 32.07 or R. 32.06 is interlocutory in nature. Consistency inclines me to the conclusion that an application under R. 32.05 or R. 32.03 should be characterised in the same way.
Sixth, I mention for completeness that the learned authors of Bailey and Evans, Discovery and Interrogatories in Australia at [47,010], evidently think an application for preliminary discovery is interlocutory for evidentiary purposes because, in their recommended form of affidavit in support of such an application, they include evidence from information and belief.
Nor have I overlooked the possibility that an applicant for preliminary discovery might seek to shield its witness from cross-examination by leading evidence from information and belief. It may be that in a given case it is suggested that the application is brought for an extraneous purpose or there is an issue whether the applicant’s state of knowledge was such that it was unable to ascertain the description of the defendant or whether it had no sufficient information to enable the making of a decision to sue. In such a case the court might require the applicant pursuant to R. 40.03, R. 40.05 or R. 40.12 to produce more direct evidence, notwithstanding R. 43.03, so that this might be tested.
I conclude that on this application, evidence of fact based on information and belief in accordance with R. 43.03(2) is admissible.
The Application
The circumstances giving rise to the application are these. FAI acquires home security alarm systems (“FAI Products”) and markets them through distributors. It has entered into standard form distribution agreements with authorised distributors and dealers (“Area Distributors”) under which the Area Distributors have agreed to distribute the FAI Products within a stipulated area. It would seem that these agreements are not exclusive distribution agreements because the typical agreement which is in evidence describes the area as Australia and New Zealand. Under the terms of the agreement the Area Distributors are entitled to conduct “the Business” within the area as independent contractor and for this purpose may appoint an agent. The Business is defined in cl. 11.1 or the distribution agreement as follows:
“’Business’: means conduct of the authorised area distributorship using the system of marketing the Products under the ‘FAI Security Group’ name and logo and using the Marks, the Intellectual Property, methods, techniques, information, know how and other relevant Intellectual Property used or owned by FAI Security Group.”
Clause 4.9 imposes an obligation of confidence upon the Area Distributor. The subject matter of this obligation is specified in paragraph (i) of this clause in the following terms:
“… about the Business and FAI Security Group’s methods of business, including details of customers of the Business, the contents of any Manuals issued by FAI Security Group, as well as any trade secrets or any part of Intellectual Property (including business plans, budgets, customer or data bases, terms of trade and details of suppliers to the Business.”
In addition, the directors of an Area Distributor are obliged to enter into an agreement with FAI under which they, too, are bound by the same conditions as those in the distribution agreement.
It seems that the Area Distributor then engages an independent agent to carry out the actual role of marketing to customers. Such an agent is likewise bound to the Area Distributor to maintain strict secrecy about the same matters as are contained in cl. 4.9(i) of the distribution agreement. The form of documentation in evidence suggests that the contract with the customer for the provision of the FAI products is entered into between the customer and the Area Distributor through the agent, not with FAI itself.
When an FAI Home Security System is installed any repairs and maintenance are carried out by technicians who are under contract with FAI. These technicians are likewise required to enter into a secrecy agreement with FAI. The example in evidence shows that this obligation concerns the same matters as are contained in cl. 4.9(i) of the distribution agreement made between the Area Distributor and FAI.
In or about August 1998 the respondents were retained by 22 purchasers of FAI Products to act for them with respect to certain claims or prospective claims against FAI. The names of these clients appear in Exhibit BMM1 to the affidavit of Bernard Michael Murphy sworn on 6 May 1999. They include one Stewart Clissold. The complaints of these clients concern the manner in which the FAI Products were marketed and sold. On 13 January 1999 the respondents wrote to the solicitors for FAI seeking certain information about the contracts made with these customers and some other persons who had become clients subsequently.
By letter dated 4 February 1999 Messrs Clayton Utz, the solicitors for FAI responded with a complaint that an unidentified customer of FAI had received an unsolicited call from the office of the respondents and that this customer had been told that “one of FAI’s ex-employees” had given the respondents a list of customers and that the respondents’ representatives were contacting these customers in an endeavour to have them engage the respondents for the purpose of making a claim against FAI. The solicitors pointed out that the identity of FAI’s customers was highly confidential. They sought undertakings from the respondents with respect to the non-use of and the delivery up of “any confidential information of any of our clients including but not limited to information contained in or derived from the list of customers”.
Over the following month the two firms of solicitors engaged in correspondence which was described, not inappropriately by counsel, as a game of cat and mouse.
It appears from the affidavit of Mr Murphy that, as long ago as August 1998, the respondents had located a person whose description appears to fit that of a former independent agent of one of FAI’s Area Distributors. This person provided Mr Murphy with information and “various documents, including but not limited to copies of a number of sale contracts”. These documents are referred to in the material as “the consultant’s documents” and I shall adopt that terminology. Furthermore, between August 1998 and about January 1999 the respondents were provided, from a number of sources, with the names and details of other purchasers of FAI Products. These sources were identified as financial counsellors, clients of the respondents and non-client purchasers of FAI Products. The purchasers referred to in the sale contracts and those identified by these other sources were then canvassed by the respondents’ staff.
Following receipt of the letter of 4 February 1999, Mr Murphy returned the consultant’s documents to the former independent agent and destroyed all copies. This presumably enabled him to respond to this letter on 7 February 1999 and again on 23 February 1999 by denying that the respondents then had any materials of the kind or description referred to in the letter of 4 February. Mr Murphy goes further in his affidavit. He states positively that the respondents do not have and never have had documents falling within the description of the materials set out in the originating motion. The materials there set out are the following:
“(a)any list of any person or entity that has purchased a home security alarm system branded the ‘FAI Home Security Package’ or ‘SecurityGuard I’ or SecurityGuard II’ that the Respondent has or has had or is likely to have had in its possession;
(b)all documents including, but not limited to, correspondence, notes and records brought into existence by the Respondent, or which were sent to or from the Respondent, which refer to, or which were created or derived from, any list of any person or entity that has purchased a home security alarm system branded the ‘FAI Home Security Package’ or ‘SecurityGuard I’ or ‘SecurityGuard II’ which the Respondent has or has had or is likely to have had in its possession.”
In the course of the hearing before me, FAI obtained leave to amend the originating motion to add as a third class of documents of which discovery was sought, the consultant’s documents which I have defined in paragraph [42] above.
Counsel for FAI submitted that an order should be made under R. 32.05 to enable their client to decide whether to commence a proceeding to obtain damages against the respondents for misuse of confidential information. In the alternative, they sought an order under R. 32.03 to enable FAI to ascertain the description of the former agent against whom they may wish to bring a like proceeding.
In order to obtain an order under R. 32.05 in this case, FAI must show:
1)there is reasonable cause to believe that it has or may have a right to relief in the court from the respondents;
2)it has made reasonable enquiries to obtain sufficient information to enable it to decide whether to commence a proceeding for such relief;
3)it has, nonetheless, not obtained sufficient information of that kind;
4)there is reasonable cause to believe that the respondents have or are likely to have or have had or are likely to have had in their possession a document relating to the question whether FAI has the right to obtain the relief and that inspection of the document by FAI would assist it to make the decision; and
5)the discretion of the court should be exercised in its favour.
The right or possible right to relief asserted by FAI is one based on misuse of confidential information. It was submitted that the list of customers and the consultant’s documents were or might be or contain confidential information and that this information was or might have been imparted to the respondents in circumstances imposing an obligation of confidence including actual notice of its confidential nature. Finally, it was put that the canvassing of the FAI customers on the list or in the consultant’s documents was an unauthorised use of that information. These, it was put, are the ingredients of the cause of action: Coco v A.N. Clark (Engineers) Ltd [1969] RPC 41 at 48.
On the material before me including the evidence of the FAI customers which was in dispute, I am satisfied that the first requirement has been made out. It was said that the circumstances were such that the prospect of such a claim being brought were remote. I am not concerned with that at this stage, although it may bear upon the exercise of discretion.
I doubt, however, whether reasonable enquiries have been shown as required by the second requirement. It would seem that FAI did not consider it inappropriate to approach Mr Clissold in March 1999 and David Deselms, another customer, in February 1999. There is no evidence of it having made other enquiries other than by seeking assurances and undertakings from the respondents.
The third requirement has been satisfied. As Gobbo J observed in Gibson v Australia & New Zealand Banking Group Ltd (unreported, Vic (SC), 30 August 1991) the gist of the rule is to enable a prospective plaintiff to obtain material sufficient to make a decision to commence a proceeding. Counsel for FAI maintained that, for a conservative litigant, the material presently available to it was not sufficient for this purpose. In the circumstances of this case I agree. My perception is that a proceeding which might be brought would be brought to protect the right of confidentiality asserted by FAI. As the evidence stands, the respondents obtained information, some of which was possibly obtained in circumstances which might attract a duty of confidentiality. It was said that these circumstances might include the physical form of the document which came into their hands and which contained the information in question. I can well understand a responsible practitioner hesitating before advising FAI to commence a proceeding on that basis.
The fourth requirement is not shown to be present. The confidential information which is said to be the subject of the alleged misuse is that which may be contained in the consultant’s documents. The evidence shows that the respondents have not had a list of FAI customers as such. It may be that they have compiled a list for themselves from information received, but this is not the subject of the application and, in any event is probably privileged. The consultant’s documents are no longer in their possession so that no inspection of them is possible to assist FAI’s decision-making process. Nor has it been demonstrated to my satisfaction that their mere description in an affidavit of documents would overcome this difficulty.
For these reasons the application under R. 32.05 must fail. Likewise, the application under R. 32.03, if only because there is no evidence that FAI has made reasonable or indeed any enquiries to identify the agent. A further reason fatal to this application is that there is no reason to believe that an affidavit from the respondents specifying that they have had but no longer have in their possession the consultant’s documents will be sufficient to identify this person.
The application brought by originating motion filed on 31 March 1999 will be dismissed with costs.
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