Findex Group Ltd v McKay

[2019] NSWCA 93

Court of Appeal

Supreme Court

New South Wales

• Summary available

Medium Neutral Citation:	Findex Group Ltd v McKay [2019] NSWCA 93
Hearing dates:	2 April 2019
Date of orders:	03 May 2019
Decision date:	03 May 2019
Before:	Basten JA at [1]; Sackville AJA at [41]; Emmett AJA at [42]
Decision:	(1)   Refuse leave to appeal from orders 1, 3(ii) and 5 made by Ward CJ in Eq on 19 October 2018.  (2)   Order that the applicants pay the costs of the respondent, David Keith McKay, in this Court.
Catchwords:	CIVIL PROCEDURE – interlocutory orders – application for leave to appeal – importance of maintaining tight rein on procedural appeals – respect for overriding principle – whether proposed appeal more than merely arguable   CIVIL PROCEDURE – search orders – potential evidence seized and preserved – solicitors and officer of corporate applicant granted access – application by applicants for unrestricted access to material seized – proceedings not initiated – whether proposed access for purpose of discovery
Legislation Cited:	Civil Procedure Act 2005 (NSW), ss 56, 63 Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law, s 18 Evidence Act 1995 (NSW), s 136 Supreme Court Act 1970 (NSW), s 101 Uniform Civil Procedure Rules 2005 (NSW), rr25.19, 25.20
Cases Cited:	Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164 Harman v Secretary of State for Home Department [1983] 1 AC 280 Hearne v Street (2008) 235 CLR 125; [2008] HCA 36 In Re the Will of F B Gilbert (deceased) (1946) 46 SR (NSW) 318 Metso Minerals (Australia) Ltd v Kalra (No 3) [2008] FCA 1201
Category:	Principal judgment
Parties:	Findex Group Ltd (First Applicant) Spiro Paule (Second Applicant) Danielle Ludbey (Third Applicant) Phillip Hart (Fourth Applicant)   David Keith McKay (Respondent)
Representation:	Counsel: Mr I M Neil SC / Mr M A Friedgut (Applicants) Ms E A Cheeseman SC / Mr M A Karam (Respondent)   Solicitors: Harmers Workplace Lawyers (Applicants) Justice Dispute Resolution (Respondent)
File Number(s):	2018/358342
Decision under appeal	Court or tribunal: Supreme Court Jurisdiction: Equity Division Citation: [2018] NSWSC 1567 Date of Decision: 19 October 2018 Before: Ward CJ in Eq File Number(s): 2016/271090

Judgment

1. BASTEN JA: In September 2016 the applicants sought orders by way of preliminary discovery for the purpose of identifying the publisher of certain statements allegedly defamatory of them. The orders allowed them to identify the first respondent, David McKay, as the publisher of the impugned material.

2. On 16 September 2016 the applicants obtained, ex parte, a search order against Mr McKay for the purpose of securing or preserving evidence. [1] The search order was executed on 20 September 2016. Over the following two years, further interlocutory steps were taken with respect to documents seized in the course of the search.

   1. Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”), r 25.19.

3. An affidavit in support of the application for the search order identified, in accordance with UCPR r 25.20, “a strong prima facie case on an accrued cause of action”, namely (i) misleading or deceptive conduct, contrary to the Australian Consumer Law, s 18, [2] and (ii) a claim in defamation on behalf of the non-corporate applicants.

   2. Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law.

4. By mid-2018 the documents could be classified in the following manner: (i) documents subject to claims for privilege or public interest immunity; (ii) documents to which a specified officer of the corporate applicant, Mr Michael Doucas, and the applicants’ solicitors, had access; (iii) documents which had been disclosed unconditionally to the applicants and (iv) documents which were not relevant to the anticipated causes of action.

5. By an amended notice of motion filed in the Equity Division on 4 July 2018, the applicants sought unrestricted access to the documents in category (ii) (inspected only by Mr Doucas and the solicitors) and, leave to use documents to which the applicants had had unrestricted access for the purpose of “anticipated proceedings”, and for the purpose of “responding to or correcting any allegations made to any third party.”

6. On 19 October 2018 orders were made by Ward CJ in Eq in substance refusing the applicants unrestricted access to the seized documents; directing that the applicants notify Mr McKay whether they wished to pursue the orders sought for use of the documents in other (or anticipated) proceedings, and otherwise requiring that some documents be returned to Mr McKay. Further interlocutory proceedings were envisaged.

7. The applicants seek leave to appeal from two of the interlocutory orders made by Ward CJ in Eq (together with an order reserving the question of costs). Leave is required because the orders were interlocutory: Supreme Court Act 1970 (NSW), s 101(2)(e). Although the matter was listed for the concurrent hearing of the leave application and the proposed appeal, for reasons explained below, a grant of leave would be unwarranted in the circumstances and leave should therefore be refused.

8. It is convenient to note a preliminary matter, namely that the proceedings in this Court, mirroring the proceedings in the Equity Division, identified Mr McKay as the first respondent [3] and three other parties as additional respondents. The other three had been joined in the proceedings for preliminary discovery, which had been provided by consent in 2016. As counsel for the applicants conceded, there was no basis to continue the proceedings against them. Accordingly the Court made the following order at the commencement of the hearing:

“Order that the second, third and fourth respondents be removed from these proceedings, without prejudice to any application they may have as to costs.”

3.    He was the fourth respondent in the Equity proceedings.

Nature of leave application

9. The unhappy procedural history of these proceedings is fully explained in the judgment of the primary judge of 19 October 2018. [4] It need not be repeated. It should, however, be noted that at the time of that judgment no substantive proceedings had been commenced in the Supreme Court.

   4. Findex Group Ltd v iiNet Ltd [2018] NSWSC 1567.

10. It is convenient to start with the orders sought by the applicants in the amended notice of motion of 4 July 2018. The relevant substantive relief was as follows:

“2A   In relation to each of the documents obtained pursuant to the orders dated 16 September 2016 … (Identified Documents), any one of the following sets of orders be made:

[being orders referred to in Schedule A, B, C or D to the amended notice of motion].

2B   Leave be granted to the plaintiffs to use those documents obtained pursuant to the orders dated 16 September 2016 over which no objection is taken and which are identified by the plaintiffs (Identified Undisputed Documents) in:

a.   Federal Court of Australia proceedings VID 1026/2016; or, alternatively,

b.   anticipated proceedings in the Supreme Court of New South Wales or Federal Court of Australia against David McKay and Vandaman Pty Ltd. [5]

2C   Leave be granted to the plaintiffs to use the Identified Undisputed Documents for the purpose of responding to or correcting any allegations made to any third party.”

5.    Vandaman Pty Ltd was apparently a company associated with Mr McKay; it was not a party to the proceedings in the Supreme Court.

11. Each of the schedules referred to in proposed order 2A sought the lifting of restrictions on access and disclosure, and variation of a confidentiality undertaking given by Mr Doucas, so that the identified documents could be disclosed to the applicants, their lawyers and any officer, employee or agent of the corporate applicant. In addition, each schedule sought orders to the same effect as orders 2B and 2C (which related to a different set of documents). In broad terms it was said that order 2A, relating to the documents which had been inspected only by the lawyers and Mr Doucas, comprised some 75% of the seized documents (other than privileged documents), while the identified undisputed documents referred to in proposed orders 2B and 2C (being documents to which the applicants had access) comprised some 25% of the total.

12. Finally, the amended notice of motion filed by the applicants sought to have a notice of motion filed by Mr McKay on 31 October 2016 dismissed. That motion sought that production or inspection of documents identified in annexures A, B and C of a supporting affidavit by Mr McKay, affirmed 31 October 2016, be refused.

13. The search conducted in September 2016 had been supervised by an independent solicitor appointed for that purpose. The vast bulk of the material seized comprised electronic documents held on Mr McKay’s computer. Annexure A to his 31 October 2016 affidavit was a printout of documents said to be “confidential and privileged” which extended to 121 pages containing between 30 and 40 documents on each page.

14. Mr McKay’s affidavit classified the documents as (i) documents falling within the search order “to which no privilege or other right to withhold disclosure applies”; (ii) documents in respect of which a claim for privilege or other right to withhold disclosure applies; (iii) documents which were not sent to any person and therefore did not fall within the terms of the search order; and (iv) documents which did not refer to any of the applicants or related entities and therefore were not within the terms of the search order.

15. It is also convenient to refer at this stage to the affidavit of Mr Doucas of 7 September 2016, in support of the application for the search order. Mr Doucas stated that he was employed as “Head of Risk Management of Crowe Horwath (Aust) Pty Ltd, which is a wholly owned subsidiary of [Findex Group Ltd].” He explained his knowledge of various emails, damaging to the business of Findex, including the completion of the acquisition by Findex of another business, which was then on foot. Mr Doucas stated:

“34.   As of the date of this affidavit, each of the plaintiffs intend to commence proceedings against the publisher of the above communications on receipt of the documents from the defendants, in order to remedy the harm and damage suffered by the plaintiffs. Whilst we hold a suspicion as to the identity of the person involved, we do not know with sufficient certainty to commence proceedings.”

Mr Doucas also stated an apprehension, in support of ex parte orders, that if the publisher became aware of the application, steps might be taken to delete or destroy important information necessary for the anticipated proceedings (par 38).

16. The orders made by the primary judge on 19 October 2018 were as follows:

1.   Save as to the relief sought at 2B and 2C of the plaintiffs’ amended notice of motion filed 4 July 2018, dismiss that amended notice of motion.

2.   Direct the plaintiffs to notify the fourth defendant within 14 days whether they wish to pursue the application for the relief sought at 2B and/or 2C of their amended notice of motion filed 4 July 2018.

3.   Direct that all electronic and hard copies of the following documents held by the plaintiffs, any of their legal advisers, the independent solicitor and/or the independent computer expert obtained pursuant to the search order made on 16 September 2016 by Rein J be returned to the fourth defendant within 7 days in accordance with a mechanism to be agreed between the parties (or, failing agreement, to be determined by the Court following brief submissions by the parties in relation thereto):

(i)   all documents which the plaintiffs admitted in the course of the hearing of the respective notices of motion were of no relevance;

(ii)   all documents identified by the fourth defendant in the annexures to his affidavit of 31 October 2016 as being documents not ‘sent or forwarded or otherwise provided’ by him to any other person and therefore not authorised by the said search order.

4.   Stand over for final orders, pending the election by the plaintiffs as to whether they wish to press for the relief sought at 2B and/or 2C of their amended notice of motion filed 4 July 2018, the fourth defendant’s amended notice of motion filed 19 February 2018.

5.   Reserve the question of costs of the respective notices of motion.

6.   Stand the matter over for directions at 9.30am on 12 November 2018 before Ward CJ in Eq.”

17. The amended draft notice of appeal contained three grounds, each of which contained a number of “particulars”. In reduced form, they read as follows:

“1.   The primary judge erred in holding … that, in the absence of consent from the party whose documents have been seized, to allow a party to inspect seized documents as the applicants sought to do was improper.

…

2.   The primary judge erred in holding that the purpose of the search order has been fulfilled and accordingly that the operation of the search order should not be continued. …

3.   The primary judge erred in making order 3(ii) by accepting globally the position taken by the first respondent on the question of whether each document [was covered by the search order] in the absence of any evidence, argument or finding of fact on that question with respect to each such document. …”

Principles governing leave to appeal

18. The relevant principles governing leave to appeal in the circumstances of this proceeding were not in dispute. However, given the nature of the argument sought to be raised on the application, it is convenient to restate them succinctly.

19. First, because an appeal is directed to the orders made by the Court below, any proposed challenge to the reasoning of the primary judge must directly relate to the orders made. No issue of principle will be raised by identifying error in the reasoning of the primary judge unless the error is shown to have resulted in an adverse outcome.

20. Secondly, where, as in this case, the application relates to a matter of practice and procedure the Court will keep “a tight rein” on interference with interlocutory orders. Failure to do so, as explained by Jordan CJ in In Re the Will of F B Gilbert (deceased) [6] may result in interminable delay and excessive expenditure of costs, by a litigant “with a long purse or a litigious disposition”. The obligation to avoid such a threat to the timely administration of justice is now reinforced by the overriding purpose of the Civil Procedure Act 2005 (NSW) and the rules of court, being to “facilitate the just, quick and cheap resolution of the real issues in the proceedings”: s 56(1). Some interlocutory procedural judgments will raise issues of general principle; some will amount to a practical disposition of substantive proceedings; some will affect the conduct of the proceedings in such a way that, if erroneous, there will be a waste of time and resources which could be averted by early intervention. In such cases there may be a realistic possibility of a grant of leave.

    6. (1946) 46 SR (NSW) 318 at 323.

21. Thirdly, even where there may be circumstances which militate in favour of obtaining a correct decision at an interlocutory stage, leave will not lightly be granted unless the application has real prospects of success, going beyond that which is merely arguable. [7]

    7. Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164 at [33].

22. Accepting in substance these principles, the applicants conceded that the third proposed ground of appeal, relating to order 3(ii), would not, by itself, warrant a grant of leave.

Bases on which leave to appeal sought

23. The applicants sought to base their case for leave on two propositions. First, it was said that the purpose of a search order was to preserve documents from destruction so that they might be available to be adduced in evidence in existing or anticipated proceedings. Secondly, a relevant cause of action, which the party seizing the documents is otherwise unable to maintain, may become apparent upon inspection of the documents. Inspection for such a purpose is a legitimate exercise in giving effect to the purpose of the search order.

Findings of trial judge

24. After noting the history of the proceedings, the restrictions imposed upon the disclosure of the documents seized, and the fact that the applicants’ lawyers had inspected all documents seized, other than those over which privilege or public interest immunity was claimed, the primary judge continued:

“[109]   It is relevant to note that, following the plaintiffs’ solicitors’ inspection of the seized documents, no proceedings have been commenced in this Court in relation to the causes of action in respect of which the documents were originally preserved by reason of the search order and no such proceedings are now contemplated.

[110]   That is, while the search order was granted in circumstances where Rein J was satisfied that there was a good arguable case of defamation or misleading or deceptive conduct, no such causes of action against Mr McKay have subsequently been brought in this Court. (The claim for misleading or deceptive conduct that is on foot in the Federal Court relates to other conduct and any new claim for misleading or deceptive conduct does not relate to the claim that was identified before Rein J).

[111]   In these circumstances, the fourth defendant submits that the plaintiffs, in now making any application themselves to be permitted to inspect the seized documents, is seeking improperly to use the search order as an investigatory tool. The plaintiffs, on the other hand, say that they are still pursuing ‘proceedings and claims of the same nature’ as were anticipated or contemplated at the time when the search order was sought and obtained …. The plaintiffs emphasised that when the search order was obtained, it was expressly put to Rein J that what was then known (in terms of defamatory statements and/or misleading or deceptive conduct) was ‘just the tip of the iceberg and that there might be more’ …. However, the fact that this possibility was put to Rein J does not alter the nature and purpose of a search order as provided for by statute, which turns on the securing and preservation of evidence (not on preliminary discovery or investigation of potential causes of action).”

25. On its face, this reasoning discloses no error of fact or law. As it turned out, the challenge was factual. The applicants relied upon a solicitor’s affidavit of 4 July 2018 in which the solicitor having the daily conduct of the matter on behalf of the applicants, Ms Amy Zhang, stated that, although she and other solicitors had reviewed the documents, it was not possible to advise whether they gave rise to a sustainable cause of action without first obtaining instructions from the applicants. [8] Ms Zhang further asserted that although Mr Doucas “has a broad understanding of the products and services provided and offered by the first plaintiff and its related entities” he did not have the specialised knowledge necessary for the purpose of giving instructions “as to the veracity of the assertions contained in the documents.” [9] Accepting those propositions, the fact remains that Mr Doucas had been nominated by the applicants as their representative to have access to the documents so that, as counsel further accepted, if he were unable to give instructions, it was “a self-inflicted wound”. [10]

    8.    Confidential affidavit of Amy Siyi Zhang, 4 July 2018, par 14.

    9.    Zhang affidavit, par 24(a).

    10.    CA tcpt, 02/04/19, p 4(25); see also p 5(15).

26. There was an additional problem with this aspect of the application: as the primary judge correctly accepted, the purpose of a search order pursuant to r 25.19 is to secure or preserve evidence, not to provide discovery, whether at a preliminary stage or in the course of proceedings. Counsel for the applicants was at pains to avoid reference for this purpose to the terms of r 25.19. It provided, he submitted, no guidance as to what was to be done with the documents once seized in terms of access and inspection. That is only true to the extent that one finds no assistance from the express identification of the purpose of a search order. Having regard to that purpose provides an implied constraint on the use which is to be made of the seized documents. The present application appeared to be an opportunistic form of fishing expedition, seen to be available because the documents to be reviewed were available. The primary judge stated:

“[123]   The plaintiffs maintain … that the purpose of the search order was that of ‘obtaining documents for use in anticipated proceedings including, but not limited to, the proceedings of the kind that were identified at the time’ and that this purpose will not be fulfilled ‘until the plaintiffs have looked at the documents’. That, to my mind, conflates the purpose of preserving evidence (for use in anticipated proceedings) and the function of inspection of that material (as to which it is clear there is no absolute right). It is not a purpose or object of search order provisions to facilitate discovery processes otherwise authorised by rules or to facilitate the provision of further particulars. In Metso Minerals at [34],[11] Flick J warned that construing search order provisions as extending to such a purpose would erode the importance attached by the common law to protecting the privacy of individuals and the constraints otherwise imposed by the rules governing discovery process.

[124]   Put another way, it is not a purpose or object of search order provisions to permit a plaintiff who believes that there has been an vindictive campaign made against it, him or her, the luxury of trawling through a mass of documentation that would not otherwise have been available to it, him or her at this stage, whether that be to see what else was said about it, him or her that might be defamatory or might otherwise support some other potential cause of action.

[125]   The plaintiffs in the present case argue that, while the purpose of a search order is a relevant consideration as to whether the Court should exercise its discretion to permit further inspection, it is not determinative. Similar to the arguments (unsuccessfully) put forward by the applicant in Metso Minerals, they submit that it is in the interests of the administration of justice that leave should be granted to permit further inspection of the documents, even if the purpose of that further inspection (that being, to determine whether or not to pursue any causes of action) is different to the purpose for which the search order was originally granted.

…

[131] In light of the above principles, it is clear that if I were to accede to the plaintiffs’ application for access to the seized documents for the purpose of facilitating discovery or of ascertaining what other potential causes of action they or any of them may have against the fourth defendant (relevantly, a purpose which is different to the purpose which the search order was originally granted to assist and different from the accepted purpose of search orders) it would be endorsing an approach that courts have consistently rejected. That is, it would be allowing the “extraordinary” nature of relief granted pursuant to UCPR r 25.19 to be subverted to an investigatory tool.

[132]   In those circumstances I consider that the plaintiffs’ application for the relief sought at prayer 2A of their amended notice of motion should be dismissed. The search order made by Rein J has now been spent, save only to the extent that there is any need to ensure that any of the documents seized under that order (other than the admittedly irrelevant documents or documents falling outside the terms of the search order and therefore not authorised by the search order) should be preserved pending an application to use those documents in other proceedings. As to that qualification, the difficulty is that the way in which the parties agreed that the hearing on 6 September 2018 was to proceed has had the result that the application for leave to use the Identified Documents (prayers 2B and 2C of the plaintiffs’ amended notice of motion) has not yet been heard and it cannot be said, in my opinion, that there may not be a need for the seized documents to be preserved for that purpose. The plaintiffs should now elect whether to proceed with their motion for orders in terms of prayers 2B and 2C, failing which the appropriate order in my opinion would be for the return of all the documents seized pursuant to the search order made by Rein J in September 2016.”

11. Metso Minerals (Australia) Ltd v Kalra (No 3) [2008] FCA 1201.

27. The Court was told that notice of intention to proceed with prayers 2B and 2C has since been given within the period of 14 days permitted by the primary judge.

No issue warranting leave to appeal

28. Prior to the hearing of the proceedings in this Court, the applicants gave notice of an intention to call further evidence, namely to tender a document commencing proceedings in the Equity Division. No such document was ultimately tendered, although there was passing reference to it in the course of the hearing. Counsel conceded that proceedings had been instituted following the judgment of 19 October 2018 and, it may be inferred, in response to that judgment. [12] Had the statement of claim been tendered, and relied upon as material to the outcome of the appeal, the obvious response would have been that the applicants should reopen their application before the primary judge on the basis of a change in circumstances. The orders, being interlocutory, could be revisited in such circumstances, although the outcome would be uncertain.

    12.    Tcpt, p 7.

29. So far as the first two grounds of appeal were concerned, their only effect was to deny the applicants broader access than they already had, through their solicitors and agent, to the seized documents, for the purposes of considering whether to institute proceedings other than those anticipated at the time the search order was obtained, and in circumstances where more than two years had passed since the search order was obtained, without any proceedings being instituted against Mr McKay. Those orders did not interfere with the maintenance of the status quo with respect to the preservation of the seized documents.

30. The applicants sought to justify their inaction in relation to the commencement of proceedings on the basis that had they commenced proceedings at any earlier time, the causes of action relied upon would have been incomplete and they would therefore not have complied with their obligations under ss 56 and 63 of the Civil Procedure Act. [13] However, that position appears to be inconsistent with the step now taken of commencing proceedings and, in any event, can only be maintained by assuming in the applicants’ favour that they were entitled to inspect the documents before commencing proceedings, contrary to the reasoning of the primary judge.

    13. Counsel referred to “the Supreme Court Act” (tcpt, p 8(25)), but that appears to have been an error with respect to s 56, although possibly not with respect to s 63.

31. That reasoning must be assessed on the basis of the material before the primary judge: she was entitled to assume that the application for inspection was a fishing expedition and an abuse of the purpose for which the search order had been granted, given the failure to commence proceedings.

32. Furthermore, as was suggested to counsel in the course of the hearing, there is a sense in which the application for inspection was misconceived. The applicants had in fact inspected all the documents, other than those the subject of privilege or exempt by way of immunity, through the agency of their solicitors and Mr Doucas. It may be that the purpose of that inspection was limited to ensuring compliance with a search order, with the intention that any documents recovered which should not have been recovered should be returned.

33. If in fact the proceedings foreshadowed at the time the search order was obtained had been commenced, there may have been a further legitimate purpose underlying the inspection, namely to identify which documents were required to be preserved for the purposes that litigation. No such issue arose before the primary judge because no proceedings had been commenced.

34. The present issue is whether those who inspected the documents can and should be released from the implied undertaking not to use documents or information obtained through a court process for a purpose unrelated to the conduct of the proceedings in which the documents or information had been obtained. That such an implied undertaking exists in this case was confirmed by the joint reasons of Hayne, Heydon and Crennan JJ in Hearne v Street,[14] referring to “documents seized pursuant to an Anton Piller order”. UCPR r 25.19 provides a statutory basis for an Anton Piller order; the nature of the implied undertaking is often identified by reference to the decision of the House of Lords in Harman v Secretary of State for Home Department. [15] Thus, what the applicants required in the present case was release from that implied undertaking and, in the case of Mr Doucas, release from an express written undertaking. However, that was precisely the relief which had not been addressed before the primary judge and was the subject of the reservation with respect to prayers 2B and 2C in her orders. In short, the applicants have so far declined to agitate the very relief which they seek on the proposed appeal.

    14. (2008) 235 CLR 125; [2008] HCA 36 at [96].

    15. [1983] 1 AC 280.

The third ground

35. The applicants, advisedly, did not seek to rely upon the third ground as a basis for seeking leave to appeal. That was because the ground raised an issue having no element of importance beyond a ruling of practice and procedure in the specific circumstances of the case. It need be referred to further only because the ground also failed to satisfy the usual requirement that it raise something more than a merely arguable question.

36. The ground was directed to the requirement to release documents identified in order 3(ii), set out at [16] above. The proposed ground relied upon the proposition that the judge had formulated the order by reference to Mr McKay’s affidavit of 31 October 2016, which, it was submitted, was not in evidence before her except as evidence of what Mr McKay asserted, rather than the truth of the assertions.

37. While it is correct to say that counsel for the applicants objected at the hearing on 24 April 2018 to various aspects of the affidavit on that basis, [16] the affidavit was read without any order under s 136 of the Evidence Act 1995 (NSW). [17] It was not anticipated that Mr McKay’s motion would be determined on that day, and counsel for the applicants indicated that he sought an opportunity to cross-examine Mr McKay and for the filing of written submissions. [18]

    16.    Tcpt, 24/04/18, p 13(16)-(20).

    17.    Tcpt, p 15(15).

    18.    Tcpt, p 44(23) and (37).

38. That was not the last step in the proceeding prior to judgment: the matter came back before the primary judge on 6 September 2018. On the previous day, counsel for the applicants had filed a written submission identifying six issues which were “presented for decision”. [19] The third issue was whether the documents sought by Mr McKay to be returned to him should be returned. The judge identified the issues and provided answers. [20] The applicants did not contend in this Court that they had made any submission to the primary judge on 6 September 2018 to the effect that, having identified the issue as one for determination, there was no admissible evidence to support Mr McKay’s claim.

    19.    Applicants’ written submissions, 5 September 2018, par 10.

    20. Primary judgment at [51].

39. In these circumstances, even had leave been granted to address the first two grounds, it would not have extended to ground 3.

Conclusions

40. In these circumstances, the Court should make the following orders:

1. Refuse leave to appeal from orders 1, 3(ii) and 5 made by Ward CJ in Eq on 19 October 2018.

2. Order that the applicants pay the costs of the respondent, David Keith McKay, in this Court.

41. SACKVILLE AJA: I agree with Basten JA.

42. EMMETT AJA: Findex Group Ltd (Findex) and three officers of Findex (together the Leave Applicants) seek leave to appeal from orders made by the Chief Judge in Equity (the primary judge) concerning documents produced in response to an order (the Search Order) made on 16 September 2016 by Rein J under r 25.19 of the Uniform Civil Procedure Rules 2005 (UCPR). Under r 25.19, the Court may make an order for the purpose of securing or preserving evidence and requiring a respondent to permit a person to enter premises for the purpose of securing the preservation of evidence.

43. Under the Search Order, members of the search party appointed by it were authorised to search for and inspect, among other things, all documents about, concerning or relating to any one or more of the Leave Applicants, which were sent or forwarded or otherwise provided by the respondent, Mr David McKay, to any person whatsoever during the period from March 2014 to date. Included in the search party was an independent solicitor who undertook to serve Mr McKay with the Search Order and the other documents referred to in the Search Order. The independent solicitor also undertook to retain custody of all things removed from Mr McKay’s premises pursuant to the Search Order until delivery to the Court or further order of the Court.

44. The Search Order was executed and, as a consequence, many documents were obtained by the independent solicitor. On 23 September 2016, Rein J ordered that the independent solicitor provide to the solicitors for the Leave Applicants a copy of all documents obtained over which no claim of privilege or self-incrimination was made by Mr McKay.

45. On 31 October 2016, Mr McKay filed a notice of motion seeking an order that production or inspection of certain documents identified by him be refused to any other party.

46. On 16 December 2016, McDougall J ordered the independent solicitor to provide to the solicitors for the Leave Applicants an electronic copy of all documents that had not already been provided to those solicitors, other than the documents in respect of which Mr McKay claimed litigation privilege or over which ASIC claimed public interest immunity. The documents were to be provided to the solicitors on a confidential basis for the purpose of assisting the parties to ascertain “the real areas of dispute”. The documents were not to be provided or shown to Findex or any of its officers or employees other than Mr Michael Doucas, the Head of Risk Management of Findex, for the purposes of obtaining instructions.

47. On 24 January 2018, the Leave Applicants filed a notice of motion seeking orders that the independent solicitor provide to the solicitors for the Leave Applicants a copy of documents that had not already been provided and that leave be granted to the Leave Applicants to use the documents in other proceedings. That notice of motion was amended by an amended notice of motion filed on 4 July 2016 (the 4 July Motion). The amendments spelt out in more detail the access sought by the Leave Applicants and the use to which the documents might be put by the Leave Applicants and its legal advisers.

48. By prayer 2A of the 4 July Motion, the Leave Applicants sought various alternative orders, the essential effect of which was that the confidentiality regime ordered by McDougall J, on 16 December 2016, as varied on 1 February 2017 and 11 August 2017, be set aside and discharged in relation to identified documents obtained pursuant to the Search Order (the Identified Documents). Prayer 2A also sought the grant of leave to use the Identified Documents in proceedings in the Victoria Registry of the Federal Court and anticipated proceedings in the Supreme Court or the Federal Court against Mr McKay and Vandaman Pty Ltd (the Other Proceedings).

49. By prayer 2B of the 4 July 2018 motion, the Leave Applicants sought leave to use, in the Other Proceedings, those of the Identified Documents in respect of which no objection was taken by Mr McKay (the Undisputed Documents). By prayer 2C, the Leave Applicants sought leave to use the Undisputed Documents for the purpose of responding to or correcting any allegations made to a third party.

50. On 19 October 2018, for reasons published on that day, the primary judge ordered that prayer 2A of the 4 July Motion be dismissed and directed the Leave Applicants to notify Mr McKay whether they wished to pursue prayers 2B and 2C of the 4 July Motion. Her Honour directed that all copies of the following documents obtained pursuant to the Search Order be returned to Mr McKay:

1. all documents that the Leave Applicants admitted were of no relevance; and

2. all documents identified by Mr McKay as being documents not sent or forwarded or otherwise provided by him to any other person and therefore not authorised by the Search Order.

51. In addition, the primary judge stood over, pending the election as to whether the Leave Applicants wished to pursue prayers 2B and 2C of the 4 July Motion, Mr McKay’s amended notice of motion filed on 19 February 2018. By that notice of motion, Mr McKay sought relief as follows:

• failing the filing of the Statement of Claim, the proceedings and all outstanding applications be dismissed;

• the Search Order be discharged;

• all copies of documents obtained pursuant to the Search Order that are held by the Leave Applicants and any of their legal advisors, the independent solicitor or the independent computer expert be returned to Mr McKay; and

• Mr McKay have leave to file and serve an application with respect of costs of the proceedings and damages pursuant to undertakings as to damages given on behalf of the Leave Applicants.

Her Honour reserved questions of costs of the respective notices of motion and listed the matter for directions on a later day. Subsequently, the above orders, other than the order directing the Leave Applicants to make an election, were stayed pending the outcome of the present application for leave to appeal.

52. In their amended draft notice of appeal filed in support of the summons seeking leave to appeal, the Leave Applicants make essentially two complaints. They contend that, once the documents had been obtained pursuant to the Search Order, and the identified documents had been inspected by their solicitors, those solicitors should have been granted leave to show the documents to them with a view to obtaining instructions for the commencement or prosecution of proceedings claiming relief over and above the relief foreshadowed to Rein J when the search order was made. The Leave Applicants also complain that the identification of documents by Mr McKay of documents not sent or forwarded or otherwise provided by him to any other person, as referred to in order 3(ii) made by the primary judge, involved a denial of procedural fairness by her Honour in so far as the Leave Applicants were not afforded the opportunity of testing the claims made by Mr McKay. The essence of the complaint made by the Leave Applicants is that the effect of order 3(ii), that the documents identified by Mr McKay be returned to him, is that those documents will no longer be preserved as evidence.

53. A possible course would have been for the solicitors for the Leave Applicants to seek leave to use the identified documents for the purpose of considering and formulating advice to be given to them as to whether they should prosecute either or both of the Other Proceedings. Having formulated that advice, it would then be necessary to seek leave of the Court and the variation of the confidentiality regime to the extent necessary to obtain instructions concerning the prosecution of such proceedings.

54. I have had the advantage of reading in draft form the proposed reasons of Basten JA for dismissing the application for leave to appeal. I agree with the orders proposed by his Honour for the reasons proposed by him.

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Endnotes

Decision last updated: 03 May 2019