| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : FRIGGER -v- CLAVEY LEGAL PTY LTD [2011] WADC 174 CORAM : STAUDE DCJ HEARD : 10 OCTOBER 2011 DELIVERED : 26 OCTOBER 2011 FILE NO/S : CIV 1221 of 2011 BETWEEN : ANGELA FRIGGER First Plaintiff
HARTMUT FRIGGER
Second Plaintiff
AND
CLAVEY LEGAL PTY LTD
Defendant
Catchwords: Procedure - Discovery of documents - Obligation not to use documents for another purpose - Waiver of obligation - Whether party should be released from obligation - Whether public interest in enforcement of obligation outweighed by the importance of the documents in other proceedings Legislation: Nil
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Result: Application allowed in part Representation: Counsel:
First Plaintiff : In person
Second Plaintiff : In person
Defendant : Mr A T MacKnay
Solicitors:
First Plaintiff : Not applicable
Second Plaintiff : Not applicable
Defendant : MDS Legal
Case(s) referred to in judgment(s):
Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 4] [2011] WASC 284
Dagi v Broken Hill Proprietary Co Ltd [1996] 2 VR 567
Esso Australia Resources Ltd v Plowman (Minister for Energy & Minerals) (1995) 183 CLR 10
Hamersley Iron Pty Ltd v Lovell (1998) 19 WAR 316
Hearne v Street [2008] HCA 36; (2008) 235 CLR 125
Riddick v Thames Board Mills Ltd [1977] QB 881
Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217; (1992) 110 ALR 685
Wellness Pty Ltd v Hamilton-Bond [2002] NSWSC 1259
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1 STAUDE DCJ: The plaintiffs' claim is against the defendant, a legal practice, for repayment of fees and damages. The amended statement of claim alleges that the plaintiffs retained the defendant to act for them in their capacities as directors of Computer Accounting and Tax Pty Ltd (in liquidation) (CAT) to intervene in a winding up application in respect of that company. The plaintiffs allege that in breach of legal duties arising from the retainer, the defendant, inter alia, withdrew its services in circumstances which disadvantaged the plaintiffs resulting in personal costs orders being made against them in the winding up application. The factual and legal issues are somewhat more complex, but that is the gist of it.
2 Discovery of documents has been given by each side. The defendant's discovery includes four documents which are the subject of the application before me by chamber summons dated 30 August 2011 for an order that the plaintiffs be released from their implied undertaking in relation to those documents. 3 The documents are said by the plaintiffs to be relevant to their grievance with another legal practitioner, Mr David Lenhoff, who is the legal representative of Professional Services of Australia Pty Ltd and the Estate of M P Banning, the applicants for the winding up of CAT. Mr Lenhoff’s interest in this matter has been acknowledged by the making of orders by the Principal Registrar on 7 September 2011 that this application and other relevant papers be served on him. Mr Lenhoff has not sought to be heard. 4 The term 'implied undertaking' in this context refers to the legal obligation on a party in an action not to use any documents discovered by another party for any purpose but the litigation itself: Hearne v Street [2008] HCA 36; (2008) 235 CLR 125, [96] (Hayne, Heydon and Crennan JJ). The court's power to release a party from the obligation is not freely exercised, but may be in special circumstances: Hearne v Street [107]; Esso Australia Resources Ltd v Plowman (Minister for Energy & Minerals) (1995) 183 CLR 10, 37; Hamersley Iron Pty Ltd v Lovell (1998) 19 WAR 316. 5 Determining whether special circumstances are made out is a balancing exercise which takes into account the nature of the material produced, the policy underlying the implied undertaking and any other relevant factors, and asks whether the needs of justice are better served by relieving from or maintaining the undertaking: Wellness Pty Ltd v Hamilton-Bond [2002] NSWSC 1259 [15]. In relation to the release of a (Page 4)
party from the obligation ordered to disclose evidence to a regulatory body, it was held in Wellness Pty Ltd v Hamilton-Bond in relation to subpoenaed documents that the use of a document as one means of supporting a complaint to a regulator which was otherwise supportable, did not justify the release of the obligation. 6 In Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217, 225; (1992) 110 ALR 685, 693 Wilcox J identified the relevant considerations to be the nature of the document, the circumstances of its creation, the attitude of the author and the prejudice to him or her, whether the document was created before litigation or for its purposes and therefore expected to enter the public domain, the nature of the information, whether it is personal or commercially sensitive, the circumstances in which it came into the possession of the applicant, and the likely contribution to achieving justice if leave is given. 7 The documents in question are as follows: 1. Note to file of 'Sarah' dated 24 February 2010 (discovered document 88). 2. Note to file of 'Terry' dated 4 March 2010 (discovered document 127). 3. Email chain between Mr Clavey and Mr Lenhoff dated 31 March 2010 to 6 April 2010 (discovered document 186). 4. Letter by Mr Lenhoff to Mr Clavey dated 25 May 2010 and enclosed copy of affidavit of Mrs Frigger sworn 18 May 2010 in Supreme Court action CIV 2265 of 2006 (discovered document 197). 8 The documents were recently put before Simmonds J in an application by the plaintiffs to adduce additional evidence with respect to a costs decision in Supreme Court action CIV 2265 of 2006 which his Honour had reserved. On 28 September 2011 his Honour dismissed the application: Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 4] [2011] WASC 284. His Honour traversed the documents in question. His fundamental reason for disallowing the application was that the Friggers had not been released from their obligation. His Honour accepted that the obligation ceased to apply when the documents were received in evidence but did not accept that this had occurred, as the Friggers argued, when they were referred to in a case management hearing in this matter before the Principal Registrar (Page 5)
on 7 September 2011. His Honour went on to find, moreover, that he would not, in any event, admit the documents because they were not material, i.e. the evidence was not likely to affect the result, stating expressly at [37] that he would not admit the evidence even if the Friggers were released from their obligation. 9 Documents 1 and 2 record telephone conversations by the authors with Mr Lenhoff who was acting for Professional Services of Australia Pty Ltd and the Estate of M P Banning in CIV 2265 of 2006, an action related to the winding up of CAT in which the plaintiffs intervened. The notes record that the purpose of each conversation was to inform Mr Lenhoff of the recent appointment of Clavey Legal as solicitor for the plaintiffs and to put him on notice of a proposed application to adjourn a chamber summons hearing to a special appointment. 10 These two documents are conceded by the defendant's counsel to be documents created pursuant to the plaintiffs' retainer of the defendant and therefore documents of which they are entitled to have possession. They are 'client documents' within the meaning of the Legal Profession Conduct Rules 2010. 11 Although the obligation not to use discovered documents for a collateral purpose is owed to the Court as well as the opponent, where there has been clear and informed consent to collateral use the Court will treat the obligation as waived and not enforce it: Dagi v Broken Hill Proprietary Co Ltd [1996] 2 VR 567, 572; Hamersley Iron Pty Ltd v Lovell (1998) 19 WAR 316, 338 (Anderson J). Counsel’s concession amounts to a waiver, so the plaintiffs should be released from their obligation in respect of those documents. 12 Documents 3 and 4 are in a different category. They post-date the termination of the retainer by the defendant. Document 3 is an email chain. Mr Lenhoff sent an email to Mr Clavey and others attaching an affidavit by way of service. Mr Clavey responded by saying that his practice had ceased to act. A personal conversation comprising four short messages followed. 13 Document 4 is a short letter from Mr Lenhoff to Mr Clavey enclosing a copy of Mrs Frigger’s affidavit sworn 18 May 2010 in opposition to the extension of freezing orders which were made in the Supreme Court action. The affidavit, under the heading 'Sabotage of Proceedings' deposes to what Mr Clavey told Mrs Frigger of statements made to him by Mr Lenhoff about her (par 36) and also to what the (Page 6)
plaintiffs' subsequent solicitor Mr Dutton told Mrs Frigger of what Mr Lenhoff had said to him about her (par 39). 14 The documents in question are submitted by the plaintiffs to have great significance. They argue that they afford corroborative proof of their allegations that Mr Lenhoff wrongly interfered in their contractual relationship with the defendant. They say that by making certain remarks about them to Mr Clavey, Mr Lenhoff caused the termination of the retainer. This occurred at a time when the hearing of an application for winding up of CAT was imminent such that they had insufficient time to properly instruct other legal counsel to represent their interests in the winding up proceedings. 15 Mrs Frigger deposes to the relevance of the documents to four matters, namely, the Supreme Court action (CIV 2265/2006), an appeal before the Court of Appeal (CACV 51/2010), a future claim against Mr Lenhoff for damages for tortious interference and a foreshadowed complaint to the Legal Practitioners' Complaints Committee. Clearly, on the basis of Simmonds J's decision they do not have relevance to the first matter. 16 The basis of the plaintiffs' grievance with Mr Lenhoff is set out in the affidavit of Mrs Frigger sworn 18 May 2010 to which I have referred. Neither the affidavit nor Mrs and Mr Friggers' submissions satisfy me that it is in the interests of justice to release them from their obligation. The documents are private communications between two legal practitioners. On their face, they do not evidence any impropriety. They would not serve any of the purposes to which the plaintiffs wish to put them. 17 Even if the documents were open to a different interpretation, that in itself would not justify dispensation. There are legitimate means by which such documents relevant to any other proceedings in which the plaintiffs are engaged or intend to engage may be obtained. It is put to me that but for their discovery in these proceedings the plaintiffs would not have known of them. That circumstance does not assist the plaintiffs in my view. As Lord Denning MR held in Riddick v Thames Board Mills Ltd [1977] QB 881, 896, 'The public interest in privacy and confidence demands that this compulsion [to disclose on discovery] should not be pressed further than the course of justice allows'. That public interest is strong because while discovery promotes the ascertainment of truth in litigation, it is desirable that interference with individual rights brought about by discovery be limited as far as reasonably possible: Hamersley (Page 7)
Iron Pty Ltd v Lovell, 321 (Ipp J). The obligation is necessary to maintain the integrity of the administration of justice: Hamersley Iron, 321. If the documents are relevant to other proceedings then they would be liable to be disclosed in those proceedings by discovery or upon subpoena. 18 The onus is on the plaintiffs to show special circumstances which warrant dispensation. Having considered the evidence and the submissions I am not persuaded that the public interest in upholding the obligation is outweighed by the perceived importance of documents 3 and 4 in the resolution of the other proceedings in which the plaintiffs are or may become involved. 19 The orders will be: |