Hodgson v Amcor Ltd

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. 9420 of 2004

JAMES GEORGE HODGSON	Plaintiff
v
AMCOR LTD (ACN 000 017 372)	Defendant

No. 8181 of 2004

AMCOR LTD AND ORS (ACN 000 017 372)	Plaintiffs
v
TREVOR MARK BARNES AND ORS	Defendants

JUDGE:	VICKERY J
WHERE HELD:	MELBOURNE
DATES OF HEARING:	21-22 FEBRUARY 2011
DATE OF JUDGMENT:	4 MARCH 2011
CASE MAY BE CITED AS:	HODGSON v AMCOR LTD; AMCOR LTD v BARNES
MEDIUM NEUTRAL CITATION:	[2011] VSC 63

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PRACTICE AND PROCEDURE – Application to strike out pleadings for contumelious disregard of Court orders – Inherent jurisdiction - Delay in bringing the case to trial - Explanation for delay – Prejudice – Non-party discovery – Supreme Court (General Civil Procedure) Rules 2005 r.1.14; r.24.02; r.24.05; r.29.12.1; r.34.01; r.34.02; r.35.07 – Civil Procedure Act 2010 ss.7; 16-27; 47; 51.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff (9420 of 2004)	Mr C Gunst QC and Mr P Booth of counsel	A.J. Macken & Co
For the Defendant (9420 of 2004)	Mr N O’Bryan SC and Ms C Button of counsel	Corrs Chambers Westgarth
For the Plaintiffs (8181 of 2007)	Mr N O’Bryan SC and Ms C Button of counsel	Corrs Chambers Westgarth
The First Defendant (8181 of 2007)	Mr T Barnes appeared in person
The Second–Fourth Defendants (8181 of 2007)	Mr SJ Maiden of counsel	Mills Oakley
The Fifth Defendant (8181 of 2007)	Mr Sangster appeared in person
The Sixth–Seventh Defendants (8181 of 2007)	Mr M Champion of counsel	Mr David Shaw
AJ Macken and Co (a non-party to the proceeding (8181 of 2007)	Ms R Doyle SC and Dr O Bigos of counsel	A.J. Macken and Co.

TABLE OF CONTENTS

INTRODUCTION.............................................................................................................................. 1

The Applications........................................................................................................................... 1
Justice Delayed is Justice Denied............................................................................................... 2
The Course of the Proceedings................................................................................................. 10

Mr Hodgson’s Application to Strike Out Amcor’s Defence and Counterclaim................... 23

Legal Principles........................................................................................................................... 23
Directions and Orders of the Court.......................................................................................... 24
Inherent Power............................................................................................................................ 25
The Directions Power................................................................................................................. 29
Directions as to Witness Statements......................................................................................... 31
Approach to the Exercise of the Discretion to Strike Out for a Contravention of Orders or Directions........................................................................................................................................................ 33
The Orders of the Court (Emerton J)........................................................................................ 39
Mr Hodgson’s Case..................................................................................................................... 40
Amcor’s Excuse........................................................................................................................... 43

Conclusion as to the Strike Out Application.............................................................................. 47

Amcor’s Application for Non-Party Discovery Against Mackens........................................... 49

Legal Principles as to Non-Party Discovery........................................................................... 49
Basis of Amcor’s Application for Non-Party Discovery....................................................... 51
Mackens’ Case in Opposition to Non-Party Discovery........................................................ 52

Mackens Not likely to have Relevant Documents in its Possession.......................................... 52
Amcor Should First Pursue Other Parties for Discovery......................................................... 53
Client Legal Privilege............................................................................................................... 53
Amcor’s Summons is Oppressive............................................................................................. 54

Conclusion as to Non-Party Discovery.................................................................................... 56

Amcor’s Interrogatories................................................................................................................... 56

Directions........................................................................................................................................... 56

Costs.................................................................................................................................................... 56

HIS HONOUR:

INTRODUCTION
The Applications

There are two groups of applications before the Court.

The plaintiff (“Mr Hodgson”) in proceeding 9420 of 2004 (the “Hodgson proceeding”) seeks, by his summons filed 14 January 2011, orders which are essentially to the following effect:

(a)the defence and counterclaim (alternatively only the defence) of Amcor Ltd (“Amcor”) be struck out for its repeated and contumelious failure to comply with orders of the Court that Amcor deliver its witness statements made on 19 May 2010, 11 August 2010 and 1 October 2010, and his claim be fixed for trial as an assessment of damages only, alternatively;
(b)this proceeding be heard and determined separately from proceeding No.8181 of 2007 (the “Barnes proceeding”); and
(c)further directions, including directions pursuant to s.47 and s.49 of the Civil Procedure Act2010, to bring the proceeding on for trial expeditiously.

Amcor contends that Mr Hodgson’s summons should be dismissed, save for the further case management directions sought.

The second application is made in proceeding 8181 of 2007 (the “Barnes proceeding”). The Hodgson proceeding is to be heard with the Barnes proceeding.

In the Barnes proceeding the firm of solicitors A J Macken & Co was served with a summons dated 9 December 2010, and the affidavit of Janet Whiting dated 9 December 2010 filed by the plaintiffs in that proceeding (the “Amcor parties”) seeking non-party discovery of seven categories of documents.

Mackens resists the application and submits that the summons of the Amcor parties directed to it for non-party discovery ought to be dismissed.

Justice Delayed is Justice Denied

Central to Mr Hodgson’s application is the prejudice he claims has arisen from the delay in commencing his trial caused by Amcor’s failure to deliver its witness statements in accordance with the orders of the Court.

French CJ in Aon Risk Services Australia Limited v Australian National University[1] said:

The impetus for civil procedure reform in the 19th century was provided by critics of the system in place at the beginning of that century, which was described by Jeremy Bentham as one of “exquisitely contrived chicanery which maximises delay and denial of justice”.[2]

[1][2009] HCA 27 at [10].

[2]Quoted in "Civil Procedure Since 1800" in Jacob, The Reform of Civil Procedural Law and Other Essays in Civil Procedure, (1982) 193 at 207.

Civil procedure has developed markedly since the dark days described by Bentham.[3] In most cases the rules of the superior courts in Australia state in various ways that the overriding purpose behind the administration of court processes is to facilitate the just resolution of the real issues in civil proceedings with minimum delay and expense.[4] In Victoria this objective has received statutory momentum by the recent introduction of the Civil Procedure Act 2010, which commenced operation on 1 January 2011.
[3]Aon at [10–27] per French CJ.
[4]See: Supreme Court (General Civil Procedure) Rules 2005 (Vic), r 1.14; Court Procedures Rules 2006 (ACT), r 21; Civil ProcedureAct 2005 (NSW), ss 56-58; Uniform Civil Procedure Rules 1999 (Q), r 5; Supreme Court Civil Rules 2006 (SA), r 3; Supreme Court Rules (NT), r 1.10; Rules of the Supreme Court 1971 (WA), O 1, rr 4A, 4B.

Nevertheless, and in spite of these reforms, the present applications before the Court starkly illustrate that our legal system continues to be challenged by the ancient maladies which have always confronted it - delay and cost.

Delay is a natural enemy of justice. The maxim attributed to William Gladstone[5] “justice delayed is justice denied” is uncontroversial. The concept is of ancient origin. The Magna Carta pronounced in definitive terms:[6] “To no one will we deny or delay right or justice”, and earlier, Ulpian, a Roman jurist who wrote between AD 211 and 222, expressed the idea in similar terms: “Justitiae dilatio est quaedam negatio”. It is also well recognised in civil law jurisdictions and internationally. French jurists say “Justice rétive, justice fautive, and the European Convention on Human Rights provides by Article 6 provides that “everyone is entitled to a fair and public hearing within a reasonable time” in the determination of a person’s civil rights and obligations.
[5]A British Liberal statesman (1809-1898). He served as Prime Minister four times (1868–1874, 1880–1885, February–July 1886 and 1892–1894).
[6]Magna Carta, Ch 40.

Lord Denning MR, in Allen v Sir Alfred McAlpine and Sons Ltd[7] lamented of the need to put this wrong right with potent allusions to Shakespeare’s Hamlet and Dickens’ Bleak House:

All through the years men have protested at the law's delay and counted it as a grievous wrong, hard to bear. Shakespeare ranks it among the whips and scorns of time.[8] Dickens tells how it exhausts finances, patience, courage, hope.[9]

[7][1968] 2 QB 229 at 245.

[8] Hamlet, Act III, sc 1.

[9] Bleak House, ch 1.

Delay may have a direct impact on the quality of the justice able to be administered. Indeed, it has been said that the longer the delay in commencing proceedings, the more likely it is that the case will be decided on less evidence than was available to the parties at the time that the cause of action arose.[10] As McHugh said in Brisbane South Regional Health Authority v Taylor:

The enactment of time limitations has been driven by the general perception that "[w]here there is delay the whole quality of justice deteriorates." Sometimes the deterioration in quality is palpable, as in the case where a crucial witness is dead or an important document has been destroyed. But sometimes, perhaps more often than we realise, the deterioration in quality is not recognisable even by the parties. Prejudice may exist without the parties or anybody else realising that it exists. As the United States Supreme Court pointed out in Barker v Wingo, "what has been forgotten can rarely be shown". So, it must often happen that important, perhaps decisive, evidence has disappeared without anybody now "knowing" that it ever existed. Similarly, it must often happen that time will diminish the significance of a known fact or circumstance because its relationship to the cause of action is no longer as apparent as it was when the cause of action arose. A verdict may appear well based on the evidence given in the proceedings, but, if the tribunal of fact had all the evidence concerning the matter, an opposite result may have ensued. [11]

[10] Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 per McHugh J (with whom Dawson J agreed).

[11] Supra at 551.

Delay in litigation gives rise to increased costs for the parties. In recognition of the problem of costs in civil litigation, in November 2008 Jackson LJ was appointed to lead a fundamental review of the rules and principles governing the costs of civil litigation in the United Kingdom and to make recommendations in order to promote access to justice at proportionate cost. The final report, known as the Jackson Report, was published to the then Master of the Rolls, Lord Neuberger, on 14 January 2010. It sets out a coherent package of reforms which are designed to reduce costs in civil litigation and by this means to promote access to justice.

Of no less import are the insidious social and indirect commercial costs which arise from delay in litigation. The Hon. Michael Black AC,[12] at the 18^th Pacific Judicial Conference, Papeete, Polynésie Français (Tahiti),[13] said the following in his paper “The role of the judge in attacking endemic delays”:

Delay does more than deny justice. It has multiple cost implications, some more apparent than others. In commercial enterprise, for example, the unnecessary resulting from delay has both direct and incidental costs. Some of these will be measurable, and some not. In either case they may have a substantial impact upon an enterprise and the lives of those involved in it. In the private lives of people engaged in litigation the uncertainty associated with delay also has a social cost. Moreover, in all litigation – although most obvious in commercial litigation – there is the cost attributable to the time of those involved in the litigation as parties and witnesses.
There is a broader point about the role of courts with a commercial jurisdiction as part of what may be seen as the commercial infrastructure of a county. If courts are to perform that role – as well as their fundamental constitutional roles – commercial dispute resolution should function on a commercial timescale. Corporations see many courts as operating on a timescale foreign to commercial thinking. The timelines for a commercial enterprise are quarterly, six-monthly and yearly – so that matters that take more than a year to resolve are outside normal operational timelines for commercial decision-making. As well, in some cases the principal remedy sought becomes redundant when a case is drawn out too long, such as where a party seeks corrective advertising as the most effective remedy for a misleading statement.
I should also note that while delay is difficult enough for large scale corporations, for smaller corporations it may be life imperilling and can impose great personal cost on the owners of the enterprise. Large corporations can, and do, take advantage of this imbalance by using delay as a tactic to force resolution in litigation against smaller players. If competitive markets are to be maintained we should not allow this imbalance.
In short, the need to reduce delay in litigation, and the uncertainties and costs associated with delay, is incontrovertible.

[12]Former Chief Justice of the Federal Court of Australia 1 January 1991 – 21 March 2010.

[13]18 June 2009.

Since the delivery of Black’s paper, two things have occurred which are of significance to the present case.

The first was the handing down of the decision of the High Court in Aon Risk Services Australia v Australian National University[14] on 5 August 2009. This decision affirmed the importance, not only to the parties, but to the Court and other litigants, of a “just but timely and cost-effective resolution of a dispute between the parties to a proceeding”.[15] French CJ noted there is “an irreparable element of unfair prejudice in unnecessarily delaying proceedings”.[16] In particular, the Chief Justice drew attention to “the waste of public resources”, the “strain and uncertainty imposed on litigants” and “the potential for loss of public confidence in the legal system” arising from adjournment of trials without adequate justification.[17] Similarly, in Aon, Gummow, Hayne, Crennan, Kiefel and Bell JJ referred to the “ill-effects of delay” upon employees and officers of corporations, as well as upon defendant corporations whose ability to plan financially may be affected by a contingent liability.[18]
[14]83 ALRJ 951; 258 ALR 14; [2009] HCA 27.
[15]Supra at [93] per Gummow, Hayne, Crennan, Kiefel and Bell JJ.
[16]Ibid at [5].
[17]Ibid at [30].
[18]Ibid at [101].

In Aon, the High Court accepted the principles of case management by the courts, saying:

Such management is now an accepted aspect of the system of civil justice administered by courts in Australia. It was recognised some time ago, by courts here and elsewhere in the common law world, that a different approach was required to tackle the problems of delay and cost in the litigation process. [19]

[19] Aon at [92] per , Gummow, Hayne, Crennan, Kiefel and Bell JJ.

Further, the High Court in Aon said that the rules concerning civil litigation are no longer to be considered as directed only to the resolution of the dispute between the parties to a proceeding. The achievement of a just but timely and cost-effective resolution of a dispute has an effect upon the court and upon other litigants. As explained by Gummow, Hayne, Crennan, Kiefel and Bell JJ:

In Sali v SPC Ltd[20] Toohey and Gaudron JJ explained that case management reflected:
"[t]he view that the conduct of litigation is not merely a matter for the parties but is also one for the court and the need to avoid disruptions in the court's lists with consequent inconvenience to the court and prejudice to the interests of other litigants waiting to be heard ..." [21]

In this vein, their Honours also concluded:
In the past it has been left largely to the parties to prepare for trial and to seek the court's assistance as required. Those times are long gone. The allocation of power, between litigants and the courts arises from tradition and from principle and policy. It is recognised by the courts that the resolution of disputes serves the public as a whole, not merely the parties to the proceedings. [22]

[20] Sali v SPC Ltd[1993] HCA 47; (1993) 67 ALJR 841 at 849.

[21] Aon at [93].

[22]Aon at [113].

The Court of Appeal (Vic.) in Trevor Roller Shutter Service Pty Ltd v Crowe[23] reinforced the reasoning in Aon when it observed:[24]

As we construe Aon, it was about the impropriety of granting a party leave to make a late amendment to a pleading, in circumstances where that party had failed to act expeditiously, and where to allow the amendment was likely to be productive of wasted costs and resources. More generally, Aon may be thought to have re-invigorated the procedural paradigm, to some extent and for some time diminished by JL Holdings, that time, costs and limited judicial resources are relevant considerations in the determination of whether to allow late applications for amendment and invoke other interlocutory processes.

[23] [2011] VSCA 16, per Warren CJ, Ashley and Nettle JJA.

[24]Ibid at [42]

The second thing of significance to occur, as has earlier been mentioned, was the passing of the Civil Procedure Act 2010 (the “Act”) into law. The Act commenced operation on 1 January 2011. A central object of the legislation is to curb the vice of delay in civil litigation.

This central object is reflected in the overarching purpose of the Act.[25] The overarching purpose of the Act, as defined by s.7(1), is as follows:

The overarching purpose of this Act and the rules of court in relation to civil proceedings is to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute.

[25]Section 7(1).

A court must give effect to the overarching purpose in the exercise of any of its powers or in the interpretation of those powers.[26] In making any order or giving any direction in a proceeding, a court shall further the overarching purpose by having regard to a range of objects including:
[26]See Section 8(1).

· the just determination of the proceeding;

· the efficient conduct of the business of the Court;

· minimising any delay between the commencement of the proceeding and its listing for trial beyond that reasonably required for any interlocutory steps but are necessary for the fair and just determination of the real issues in dispute and the preparation of the case for trial;

· the timely determination of the proceeding.[27]

[27]See section 9(1)(a), (c),(e) and (f).

When considering the overarching purpose of the Act, the Court may have regard to a range of matters including:

·the degree of promptness with which the parties have conducted the proceeding, including the degree to which each party has been timely in undertaking interlocutory steps in relation to the proceeding;
·the degree to which each person to whom the overarching obligations apply has complied with the overarching obligations in relation to the proceeding;
·any prejudice that may be suffered by a party as a consequence of any order proposed to be made or direction proposed to be given by the Court.[28]

[28]See section 9(2)(c), (e) and (f).

It is also expressly provided for in the overarching obligation of legal practitioners and other participants in the legal process.[29] The overarching obligations are set out in Part 2.3 of the Act. The obligations are:
[29]See: s. 10.

· as a paramount duty to the court, to further the administration of justice (s.16);

· act honestly at all times (s.17);

· only pursue claims and defences that have a proper basis, on the factual and legal material available at the time (s.18);

· only take steps reasonably believed to be necessary to resolve or determine the dispute (s.19);

· co-operate with other parties (s.20);

· not to mislead or deceive (s.21);

· use reasonable endeavours to resolve a dispute by agreement (s.22) or narrow issues (s.23);

· use reasonable endeavours to ensure costs are reasonable and proportionate to the complexity or importance of the issues, and the amount in dispute (s.24);

· minimise delay (s.25); and

· disclose “critical documents” at the earliest reasonable time, and on a continuous basis after becoming aware of their existence (s.26).[30]

[30]The Explanatory Memorandum describes “critical documents” as those that a party would reasonably be expected to have relied on as forming the basis of the party’s claim when commencing the proceedings, as well as those the party knows will adversely affect their case.

Recent authority emphasises that the Act requires the Court to be proactive and innovative in its approach to achieve its objects.[31]
[31]Thomas v Powercor Australia Ltd [2010] VSC 489 at [41] per Forrest J; Crowe v Trevor Roller Shutter Services Pty Ltd [2010] VSC 536 [19-20] per Beach J and on appeal Trevor Roller Shutter Service Pty Ltd v Crowe [2011] VSCA 16 (Warren CJ, Nettle and Ashley JJA).

The overarching purpose and obligations now apply to all civil proceedings commenced after 1 January 2011. If proceedings have commenced before that date, pursuant to s.72(2), the overarching purpose applies to that proceeding on and from the Commencement Date. In relation to the overarching obligations, if a civil proceeding has commenced before the Commencement Date, if the Court has not begun to hear and determine the proceeding, the overarching obligation applies to that proceeding from the date of operation of the Act, pursuant to s.73(2).

Accordingly, given that the Hodgson proceeding commenced before the Commencement Date of the Act, on and from 1 January 2011, the overarching purpose of the Act applies in relation to the proceeding. Further, given that the Court has not begun to hear and determine the proceeding at a trial, the overarching obligations apply in relation to the proceeding on and from 1 January 2011.

Pursuant to ss.61 and 62 of the Act, the Court has the power to summarily dismiss a claim or give summary judgment for a plaintiff where the claim or defence has “no real prospects of success”. This is intended to liberalise the summary judgment procedure and so dispose of unmeritorious claims or defences. It should be noted that the powers of a court under this Part, pursuant to s.65 of the Act, are in addition to, and do not derogate from, any powers a court has under Rules of Court in relation to summary disposal of any civil proceeding.

In this regard, reference may be made to r.1.14 of the Supreme Court (General Civil Procedure) Rules 2005 (the “Rules”) which provides:

1.14. Exercise of power
(1) In exercising any power under these Rules the Court-
(a)shall endeavour to ensure that all questions in the proceeding are effectively, completely, promptly and economically determined;
(b)may give any direction or impose any term or condition it thinks fit.

(2)The Court may exercise any power under these Rules of its own motion or on the application of a party or of any person who has a sufficient interest.

It is against this background that the present applications before the Court are to be considered.

The Course of the Proceedings

The Hodgson proceeding was commenced more than six years ago, by writ and statement of claim dated 3 December 2004. The statement of claim has not changed since then. Mr Hodgson seeks monies (including long service leave, holiday pay and other entitlements) totalling some $1.9 million due upon the termination of his employment with Amcor Ltd in October 2004.[32]
[32]Statement of Claim paragraph 11.

However, the cases of the Amcor parties in both the Hodgson proceeding and the Barnes proceeding are considerably more complex. In essence misconduct is alleged against Mr Hodgson and the natural person defendants in the Barnes proceeding arising from their conduct as former employees of companies in the Amcor group and their role in the sale of businesses owned by companies in the Amcor group in 2002 and 2003.

The Amcor parties allege in their pleadings in the Hodgson proceeding and in the Barnes proceeding that in February 2002, a packaging materials business conducted by Service Containers (“Service Containers business”) was sold to interests associated with Mr Hodgson, the plaintiff in the Hodgson proceeding, and some of the defendants in the Barnes proceeding, namely Messrs Barnes, Sangster and/or Bayley. The Amcor parties also allege that in June 2003, a corrugated packaging business previously conducted by ACB (“ACB business”) was sold to interests associated with Mr Hodgson and some of the defendants to the Barnes proceeding, namely Messrs Holihan, Barnes, Sangster, Bayley and/or Mihelic.

The Amcor parties claim that the terms of both the sale of the Service Containers business in 2002 (“the first sale agreement”) and the sale of the ACB business in 2003 (“the second sale agreement”), and supply agreements forming part of those sale agreements, were uncommercial and detrimental to the interests of Amcor and the relevant vendor. Moreover, they say the defendants deliberately and dishonestly concealed from Amcor and the vendor their interests in the ACB and Service Containers businesses.

The Amcor parties also allege that Amcor Ltd is the holder of all the issued share capital in APA and that APA holds all the issued share capital in ACB and Service Containers. Accordingly, Amcor Ltd is not a shareholder in either ACB or Service Containers.

By on order made by Osborn J on 11 December 2007 the Hodgson proceeding was ordered to be heard together with the Barnes proceeding. A stated purpose behind making this order was expressed by his Honour to “… bring both proceedings to trial relatively expeditiously”.[33]
[33] Amcor v Barnes [2007] VSC 515 at para 49 per Osborn J.

Numerous directions hearings were subsequently conducted.

In December 2009, in Hodgson v Amcor Ltd; Amcor Ltd v Barnes (the “December 2009 Applications”),[34] Emerton J determined applications made by the Amcor parties to add parties to the existing proceedings and to amend pleadings. In summary, leave was sought:
[34][2010] VSC 204.

(a) to add APA as a plaintiff by counterclaim in the Hodgson proceeding and as a plaintiff in the Barnes proceeding;

(b) to add Service Containers as a plaintiff in the Barnes proceeding;

(c) to make various amendments necessitated by the operation of what was called a “Deed of Accession” and the addition of parties in both proceedings;

(d) to make extensive amendments to the amended defence and counterclaim in the Hodgson proceeding, which are said to be necessary to ensure that the allegations in the Hodgson proceeding are aligned with those in the Barnes proceeding.

It is convenient to set out below the central allegations of the Amcor parties in the pleadings which were before her Honour in the December 2009 Applications, as recited in the judgment of Emerton J in Hodgson v Amcor Ltd; Amcor Ltd v Barnes:[35]
[35]Supra at [6].

In the Barnes proceeding -
(a)The first defendant, Trevor Barnes, was employed by Amcor as its Regional General Manager of the Amcor Fibre Packaging (Australasia) Division in New South Wales from January 2000 to the end of 2002 and from 1 January 2003 to 28 October 2004 as its general manager, operations, of the NSW division. He was an ‘officer’ of Amcor, ACB and Service Containers for the purposes of s 9 of the Corporations Act 2001 (Cth). Barnes supervised Messrs Holihan and Hottes, who were respectively responsible for running the ACB business and the Service Containers business. Barnes reported to Mr Hodgson.
(b)The second defendant, Craig Holihan, ran the ACB business from December 1998 until the end of July 2003. He was an ‘officer’ of ACB for the purposes of s 9 of the Corporations Act. He was a director of the entity (the third defendant) that purchased the ACB business (‘the ACB Purchaser’) and a director of the fourth defendant, Achilla Pty Ltd (‘Achilla’). From 30 July 2003, the ACB purchaser was the legal owner of the ACB business and operated the ACB business with Achilla.
(c)The fifth, sixth and seventh defendants – Ian Sangster, Christopher Bayley and Albert Mihelic – were employed by Amcor in senior positions from approximately 1990 to 28 October 2004. They were ‘officers’ of Amcor for the purposes of s 9 of the Corporations Act.
(d)Barnes, as an officer and employee of Amcor, ACB and Service Containers, had obligations pursuant to ss 180(1), 181(1), 182(1) and (2) of the Corporations Act to Amcor, ACB and Service Containers, and owed fiduciary duties and a duty of fidelity and good faith to Amcor, ACB and Service Containers.
(e)Holihan, as an officer of ACB, had obligations pursuant to ss 180(1), 181(1), 182(1) and (2) of the Corporations Act to ACB, as well as owing fiduciary duties and a duty of fidelity and good faith to ACB and Amcor.
(f)Each of Sangster, Bayley and Mihelic, as officers of Amcor, and as employees of Amcor, had obligations pursuant to ss 180(1), 181(1), 182(1) and (2) of the Corporations Act to Amcor and owed fiduciary duties and a duty of fidelity and good faith to Amcor.

In the Hodgson proceeding -
(g)Mr Hodgson was employed by Amcor in a senior management position until 13 December 2004. He was an officer for the purposes of s 9 of the Corporations Act of Amcor, APA and ACB, as well as being a director of a number of subsidiaries of Amcor, including Service Containers (until 9 November 2004). He was also a director, shareholder and effective controller of Bankson Pty Ltd (the second defendant by counterclaim).
(h)Mr Hodgson had obligations under s 181, 182 and 183 of the Corporations Act to Amcor, APA, ACB and, relevantly, Service Containers, as well as fiduciary duties and a duty of fidelity and good faith to Amcor, ACB and Service Containers.

Emerton J then proceeded to briefly describe the “bare bones” of the allegations against Mr Hodgson and the Barnes defendants in relation to the sale agreements, which she did in the following terms:[36]
[36]Ibid at [7-21].

The first sale agreement
(a)Amcor alleges that Mr Hodgson was involved in the sale by Service Containers of its business on terms uncommercial to Amcor and Service Containers; that he was involved in the conduct of Barnes, Sangster and/or Bayley to effect such a sale; and that he acquired, or intended to acquire, an interest in the Service Containers business for himself and/or entities associated with him, concealing such interest from Amcor and Service Containers.
(b)Correspondingly, it is alleged that Mr Hodgson was involved in the acquisition of interests in the Service Containers business by Barnes, Bayley, Sangster and/or entities associated with them, and that he also concealed such interests from Amcor and Service Containers.
(c)Amongst other things, it is proposed to add that the concealment by Mr Hodgson was deliberate and dishonest and that Mr Hodgson entered into agreements, arrangements or understandings with Barnes, Bayley, and/or Sangster for an illegal or improper purpose, namely to take the benefit of the Service Packaging business from Amcor and Service Containers and to secret obtain the benefit of the business for himself and/or the others.
(d)In the Barnes proceeding, Amcor alleges that Barnes, along with Mr Hodgson and/or Hottes, negotiated the first sale agreement which was uncommercial and detrimental to the interests of Amcor and Service Containers; that Bayley and Sangster stood by while this happened; that Barnes, Bayley and Sangster had interests in entities that were to obtain a financial benefit from the Service Containers business (or, alternatively, that each of them intended to acquire a beneficial interest in the service Containers business and later acquired such an interest); and that they failed to warn or inform Amcor of this fact. Allegations of deliberate and dishonest concealment, entering into arrangements for an illegal and improper purpose and the receipt of secret benefits are also made against Barnes, Bayley and Sangster.
(e)Although the current form of the counterclaim in the Mr Hodgson proceeding makes no reference to it, it is alleged in the Barnes proceeding that the first sale agreement included a 5 year supply agreement between Service Containers and the Service Containers purchaser which was uncommercial and detrimental to Service Containers. It is proposed to amend the Hodgson proceeding to allege that Mr Hodgson was knowingly involved in the supply agreement and that that agreement was made on terms uncommercial and substantially for the benefit of Mr Hodgson, the Service Containers purchaser, Hottes, Barnes, Bayley and/or Sangster.

The second sale agreement
(f)In the Hodgson proceeding, it is alleged that Mr Hodgson was involved in the sale of the ACB business; that he was involved in the conduct of Barnes, Mihelic, Sangster and/or Bayley to effect a sale of the ACB business; that he acquired an interest in the ACB business for himself and/or entities associated with him; and that he concealed such interests from Amcor and ACB.
(g)Amongst other things, it is proposed to add that Mr Hodgson deliberately and dishonestly concealed his interest and the interests of the ACB purchaser, Achilla, Holihan, Barnes Sangster, Bayley and/or Mihelic from to Amcor and/or ACB. It is also proposed to add that Mr Hodgson entered into secret agreements, arrangements or understandings with Barnes, Bayley, Sangster and/or Mihelic for an illegal or improper purpose, namely to take the benefit of the ACB business from Amcor or ACB.
(h)Although the current form of the pleading in the Hodgson proceeding makes no reference to it, it is alleged in the Barnes proceeding that the second sale agreement included a 5 year supply agreement between ACB and the ACB purchaser and Achilla which was uncommercial and detrimental to ACB. It is proposed to amend the Hodgson proceeding to make reference to the supply agreement and Mr Hodgson’s involvement in it.
(i)In the Barnes proceeding, it is alleged that Barnes, in consultation with Mr Hodgson, negotiated the sale of the ACB business with Holihan on behalf of the ACB purchaser and Achilla on terms uncommercial and detrimental to the interests of Amcor and ACB and substantially for the benefit of Barnes, the ACB purchaser, Achilla, Holihan, Mr Hodgson, Bayley, Sangster and/or Mihelic and that he failed to warn Amcor about interests of those persons in the business and, in fact, deliberately and dishonestly concealed those matters form Amcor and ACB. Similar allegations are made against Holihan.
(j)As a result of that conduct, Barnes and Holihan are alleged to have improperly used their positions to gain advantage for themselves and persons other than Amcor and ACB, made secret profits and obtained secret benefits when dealing with the property of Amcor and ACB.
(k)To similar effect, it is alleged against Sangster, Bayley and Mihelic in relation to the second sale agreement that each of them was involved in the conduct of Mr Hodgson and/or Barnes; that they failed to exercise powers or discharge duties by allowing or causing the negotiation of the second sale agreement in the relevant circumstances, failing to warn Amcor and ACB and placing himself in a position of conflict of interest; and that, at the time of the negotiations for the second sale agreement, each of Sangster, Bayley and Mihelic held the financial interests in a corporation that was to obtain a financial benefit from the ACB business once it had been sold to the ACB purchaser (or, alternatively, intended to acquire a beneficial interest in the ACB business and later acquire such an interest). The allegations of failure to warn and deliberate and dishonest concealment are made against those defendants, along with those of acting for an illegal or improper of purpose and obtaining secret benefits.

The establishment of AMCG
(l)Furthermore, in the Hodgson proceeding, the Amcor parties allege that from at least August 2004, Mr Hodgson was involved in the establishment of Australasian Manufacturing Consulting Group (‘AMCG’) by enticing Barnes, Bayley, Sangster and Mihelic to work in AMCG’s business, approaching Amcor’s competitor, Carter Holt Harvey Ltd with a view to providing consultancy services and, during August and September 2004, copying, removing and secretly storing for use in AMCG’s business, over 30,000 documents belonging to Amcor, including customer lists, product specifications, financial analyses, strategic financial plans, reports, product research and development laboratory reports, diagrams for plant layout and so on. It is also alleged that Mr Hodgson canvassed Amcor’s customers for AMCG’s business, otherwise made preparations for the conduct of that business and provided consultancy services to Carter Holt Harvey in connection with strategies to compete with Amcor.

Relief claimed
(m)In the Barnes proceeding, Amcor and ACB seek declarations that Barnes, Sangster and Bayley breached ss 180(1), 181(1), 182(1) and (2) of the Corporations Act with respect to the conduct alleged in connection with both sale agreements, and that Mihelic breached ss 180(1), 181(1), 182(1) and (2) and Holihan breached ss 181(1), 182(1) and (2) in respect of the second sale agreement. They also seek orders to set aside the second sale agreement and claim damages, equitable compensation, the taking of accounts, an account of profits and the declaration of a constructive trust and consequential orders in favour of Amcor or ACB over any rights or interests that Barnes, Holihan, Sangster, Bayley and Mihelic hold in the ACB business and/or the companies that now own the business, as well as any shares that Holihan holds in those companies and any shares that the ACB Purchaser holds in Achilla.

(n)In the Hodgson proceeding, the Amcor parties seek by way of counterclaim damages, equitable compensation, an account of profits, the declaration of a constructive trust and consequential orders in favour of the Amcor parties over moneys and assets derived from the sale and carrying on of both businesses. It is proposed to add a declaration that the defendants by counterclaim breached ss 180, 181, 182 and 183 of the Corporations Act.
(o)If APA is added as a party in both proceedings, it will be alleged that it has suffered loss and damage by reason of the conduct of Mr Hodgson, Holihan, Barnes, Sangster, Bayley and Mihelic, and that it is a beneficiary of constructive trusts arising from the circumstances of the sale and subsequent conduct of the ACB business and is due, amongst other things, an account of profits.
(p)If Service Containers is added as a plaintiff in the Barnes proceeding, it will be alleged that it has suffered loss and damage by reason of the conduct of Barnes, Sangster and Bayley, and that it is a beneficiary of constructive trusts arising from the circumstances of the sale and subsequent conduct of the Service Containers business and is due, among other things, an account of profits.

In the course of her Honour’s reasoning in Hodgson v Amcor Ltd; Amcor Ltd v Barnes, the history of the steps taken in the proceedings were considered and detailed in the following passages:[37]
[37]Ibid at [38–53].
History of steps taken in the proceedings
(a)The Hodgson proceeding was commenced on 3 December 2004. Mr Hodgson made claims for debt and damages for breach of contract for amounts which he contends accrued to him as a result of Amcor’s termination of his employment on 1 October 2004. Amcor filed its defence on 27 January 2005 and Mr Hodgson filed a reply to defence on 22 April 2005. The defence contained an allegation in relation to Mr Hodgson’s involvement in the establishment of AMCG.
(b)By the time the Hodgson proceeding was issued, there was on foot in the Federal Court of Australia a proceeding between Amcor and some of the defendants to the Barnes proceeding –
·     On 10 November 2004, Amcor commenced proceedings in the Federal Court against Messrs Mihelic, Sangster, Bailey, Barnes and AMCG (‘the Federal Court proceeding’).
·     On that same day, Amcor obtained an Anton Piller order from the Federal Court (‘the Anton Piller order’), which was executed on 11 November 2004.
·     On 15 November 2004, Mr Hodgson was joined as a party to the Federal Court proceeding.
·     On 17 December 2004, the Federal Court proceeding was settled.
·     In July and December 2005, the Federal Court imposed a confidentiality regime in respect of documents obtained by Amcor pursuant to the Anton Piller order, which permitted Amcor to use certain of the documents obtained pursuant to the Anton Piller order in the Hodgson proceeding.
(c)On 21 April 2006, Harper J granted leave to Amcor to file and serve an amended defence and counterclaim in the Hodgson proceeding. This order was made by consent. The amended defence and counterclaim filed on 27 April 2006 included the allegations against Mr Hodgson in relation to the sale of the Service Containers business and the ACB business, as well as in relation to the establishment of AMCG. Many of these allegations were contained in confidential annexures as a result of orders made in the Federal Court proceeding.
(d)Interlocutory steps in the Hodgson proceeding, including the filing of defences and replies, and requests for and giving of particulars, took place between June 2006 and March 2007.
(e)On 14 June 2007, the Amcor parties applied in the Hodgson proceeding for orders permitting them to disclose and use documents obtained pursuant to the Anton Piller order for the purposes of a proposed proceeding in New South Wales in which the Amcor parties intended to make allegations that were substantially in the same terms as those now made by Amcor and ACB in the Barnes proceeding. By order dated 5 July 2007, Williams J declined to grant the Amcor parties leave to disclose documents in the proposed proceeding.[38]
[38][2007] VSC 237.
(f)On 3 September 2007, Amcor and ACB commenced the Barnes proceeding. In her first affidavit, Janet Whiting deposes to the Barnes proceeding having been commenced without access to the documents that were obtained as a result of the Anton Piller order.
(g)On 3 September 2007, the Amcor parties applied to have the Barnes proceeding and the Hodgson proceeding heard together. Mr Hodgson resisted the consolidation of the proceedings on the grounds that consolidation would possibly delay the time by which the Hodgson proceeding would be ready for trial until late 2010.
(h)On 14 December 2007, Osborn J ordered that the proceedings be heard together.[39]
(i)From approximately April 2008 until early December 2008, discovery, including from non-parties, was sought and provided in the Barnes proceeding. In her first affidavit, Janet Whiting deposes to the various steps in discovery that were taken under the heading “Failure of the defendants and non-parties to the Barnes proceeding to provide timely and adequate discovery”. She alleges that the discovery by the first to the fourth defendants in the Barnes proceeding and the plaintiff in the Hodgson proceeding has been inadequate and that those parties have failed to discover documents to which they were a party or that were sent or received by them. Consequently, she says that she caused to be undertaken significant forensic work and made numerous applications for non-party discovery.[40] These steps were difficult and time-consuming.
(j)On 11 December 2008, Amcor and ACB filed an amended statement of claim in the Barnes proceeding.
(k)On 5 March 2009, Ms Whiting wrote to AJ Macken & Co, the solicitors for Mr Hodgson, proposing that discovery in the Hodgson proceeding be deemed discovery in the Barnes proceeding and vice versa. Holding Redlich, the solicitors representing the fifth to seventh defendants in the Barnes proceeding, advised they would not consent to such orders.
(l)On about 9 April 2009, the Amcor parties served a proposed further amended defence and counterclaim on AJ Macken & Co, solicitors for Mr Hodgson. The covering letter foreshadowed that the Amcor parties would seek the leave of the Court to file and serve the proposed pleading when the matter was next before the Court for directions.
(m)Mr Hodgson gave no response to the proposed further amended defence and counterclaim prior to a directions hearing on 15 September 2009. In his affidavit, Mr Macken, on behalf of Mr Hodgson, explains that no response was given when the proposed further amended defence and counterclaim was served, as no comment or response was invited. He says that notwithstanding the service of the proposed further amended defence and counterclaim on 9 April 2009, the Amcor parties took no further steps to seek the leave of the Court to file and serve that document until 3 September 2009.
(n)On 15 September 2009, Byrne J made an order by consent that discovery in the Barnes proceeding was deemed discovery in the Hodgson proceeding and vice versa.
(o)On 17 September 2009, Goldberg J in the Federal Court of Australia gave Amcor leave to disclose to the defendants in the Barnes proceeding, and for the parties in that proceeding to use, certain documents obtained pursuant to the Anton Piller order.
(p)On 29 September 2009, Amcor produced the proposed further amended defence and counterclaim that is the subject of the present application in the Hodgson proceeding. According to Ms Whiting, only a small number of amendments have been made to the version served on AJ Macken & Co on 9 April 2009. These further amendments relate to particulars of documents obtained from non-parties in the Barnes proceeding and the Deed of Accession.

[39]Amcor Ltd v Barnes [2007] VSC 515.

[40] According to Ms Whiting, some discovery made by a particular non-party was subject to claims for legal professional privilege by the first and second defendants in the Barnes proceeding. Orders were ultimately obtained in December 2008 permitting inspection of those documents. In late December 2008, pursuant to orders of Byrne J made on 10 December 2008, computer specialists on behalf of the Amcor parties captured forensic images of data from computers at the office of the non-party. The solicitors for the Amcor parties obtained copies of the forensic images on 13 February 2009.

Having considered the December 2009 Applications, Emerton J determined that the amendments sought by the Amcor parties should be allowed in each proceeding. However, in the course of arriving at this conclusion, her Honour made the following pertinent observations as to the prejudice suffered by Mr Hodgson:

In this case, I am especially cognisant of the position of Mr Hodgson, who commenced relatively uncomplicated proceedings against Amcor in December 2004 to recover (in the scheme of things, relatively small) amounts said to be due to him under his employment contract. He is still waiting for his day in court, some 3½ years after the previous application to amend and almost 6 years after he commenced his action.[41]
I accept that the prejudice to Mr Hodgson in allowing the proposed extensive amendments to the amended defence and counterclaim is significant for several reasons. Mr Hodgson is physically frail; he is approaching old age and has a serious heart condition. He underwent a quadruple bypass in 1995, and it is anticipated that he will require further surgery in the future. I take into account the additional strain that the that new allegations may impose on him, as well as the strain inevitably arising from litigation that takes much more time that it should to reach a resolution. I also take into account the fact that Mr Hodgson is retired and has not been paid, or has been under-paid, termination entitlements that he says have been owing to him for five years. [42]

[41]Ibid at [104].

[42]Ibid at [109].

On the other hand, her Honour considered the position of the Amcor parties and in particular the difficulties they faced in the preparation of their cases in relation to obtaining documents. In this regard, her Honour observed:

On the other hand, I am satisfied that the Amcor parties have been handicapped in making their case against the former Amcor employees who allegedly acted secretly and in concert by the complex web of confidentiality requirements in which it has been ensnared since the execution of the Anton Piller order in November 2004. This has caused Amcor’s solicitors to tread warily in relation to the use of information and has necessitated extensive independent investigative work on their part, including numerous applications for discovery against non-parties. Until the order made on 15 September 2009 that discovery in the Barnes proceeding was deemed to be discovery in the Hodgson proceeding and vice versa, the Amcor parties faced difficulties aligning the two proceedings, notwithstanding that the claims made against Mr Hodgson are intimately related to the claims made against the defendants in the Barnes proceeding.[43]

[43]Ibid at [106].

As to the late reliance on the Deed of Accession by the Amcor parties, which provided a foundation for advancing the amendments sought in the December 2009 Applications, her Honour concluded:

The problems experienced in identifying the Deed of Accession and recognising its significance for the litigation are more difficult to understand, given that it is plainly a document that was prepared by, or at the behest of, Amcor companies and must be assumed to have been in the possession of one or more of those companies at all relevant times. It ought to have been identified as relevant to the proceedings and discovered by the Amcor parties. Nonetheless, I accept that the persons responsible on behalf of Amcor for identifying the relevant documents and formulating the claims on the basis of those documents did not know about or appreciate the significance of the Deed of Accession until June 2009.[44]

[44]Ibid at [107].

Her Honour reasoned in Hodgson v Amcor Ltd; Amcor Ltd v Barnes[45] that she did not consider that to allow the amendments would be to fall into the trap of treating them with “uncomplaining supine liberality”.[46] Nor did she consider that any forbearance and liberality inherent in allowing the amendments at that stage in the proceedings should be regarded as being extended to a “delinquent”, and as imposing a relative disadvantage on “those who proceed methodically and in due time”.[47] Her Honour concluded that:[48]

The circumstances of these proceedings are unfortunate, but quite unusual. An explanation for Amcor’s failure to recognise the potential importance of the Deed of Accession has been given and Amcor has acted with reasonable expedition to seek leave to make the amendments required.

[45]Ibid at [108].

[46]Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at [133] referring to a comment of Bryson J in Maronis Holdings Ltd v Nippon Credit Australia Pty Ltd[2000] NSWSC 753 at [15].

[47]Ibid.

[48] Hodgson v Amcor Ltd; Amcor Ltd v Barnes at [108].

Nevertheless, leave was not granted to the Amcor parties to amend their pleadings without two elements being introduced which were designed to ameliorate the prejudice caused to Mr Hodgson: the first was an expedited hearing, following an order made that the Amcor parties put on their evidence without delay; and the second was an order for the costs of the 2009 December Applications being paid by the Amcor parties on a solicitor and own client basis. As to the observations made in relation to an expedited hearing and the putting on of Amcor’s evidence without delay, her Honour said:[49]

The prejudice to Mr Hodgson arising from further delay can be ameliorated to some extent by ensuring that Amcor puts on its evidence without further delay, and the proceedings are given an expedited hearing date.

[49]Ibid at [111].

Judgment in the Hodgson v Amcor Ltd; Amcor Ltd v Barnes matter arising from the December 2009 applications was handed down on 19 May 2010. On that occasion, directions were given to ensure that an early trial date could be provided, including the delivery of witness statements, commencing with an order that the witness statements of the Amcor parties be delivered first in the sequence of witness statement exchanges. In this respect, the following orders, inter alia, were made:

6.The plaintiffs [the Amcor parties] file and serve any lay witness statements and any expert witness statements upon which they intend to rely in the proceeding by 5:00 pm on 13 August 2010.
10.The proceeding be referred to the Associate Justice in charge of listing to be listed for hearing on the first available date after 8 October 2010.

The Amcor parties failed to file and serve any lay witness statements and any expert witness statements as directed by the order of the Court of 19 May 2010.

During 2010 the proceeding was the subject of further directions hearings. The Amcor parties failed to file and serve an amended statement of claim which complied with the grant of leave ordered by Emerton J on 19 May 2010. On 11 August 2010, Emerton J made orders which included an order that the Orders numbered 6 to 10 made by her Honour on 19 May 2010 be vacated. Directions were given to the Amcor parties as follows:

2.The Plaintiffs [the Amcor parties] file and serve a second further amended statement of claim by 4:00 pm on 12 August 2010 which complies with the grant of leave ordered by the Honourable Justice Emerton on 19 May 2010.
4.The Plaintiffs [the Amcor parties] file and serve any expert witnesses statements upon which they intend to rely at the hearing of the proceeding by 5:00 pm on 22 September 2010.

On 11 August 2010 no orders were made by the Court in relation to the filing and service of lay witness statements by the Amcor parties.

On 18 August 2010, the Amcor parties sought and obtained leave to file and serve a third further amended statement of claim. Consequential orders were made in favour of the other parties for the delivery of further pleadings.

On 20 August 2010 further orders were made in relation to discovery.

The Amcor parties failed to file and serve any expert witness statements as directed by the order of the Court of 11 August 2010.

At a directions hearing conducted on 1 October 2010, Emerton J made orders which included an order vacating Order number 4 made by her Honour on 11 August 2010 and which directed the Amcor parties in the following terms in relation to the filing and service of witness statements:

3.The Plaintiffs [the Amcor parties] file and serve any expert witness statements upon which they intend to rely at the hearing of the proceeding by 5.00 pm on 5 November 2010.
15.The Plaintiffs [the Amcor parties] file and serve any lay witness statements upon which they intend to rely at the hearing of the proceeding by 5.00 pm on 10 December 2010.

The proceeding was fixed for a directions hearing on 16 December 2010, before me. The Amcor parties by that date had not filed or served any of their expert or lay witness statements, as directed by the Court on 1 October 2010. On that occasion, Mr Hodgson, by his counsel, made oral application for the defence and counterclaim (alternatively only the defence) of the Amcor parties be struck out for failure to comply with orders of the Court made on 19 May 2010, 11 August 2010 and 1 October 2010, and his claim be fixed for trial as an assessment of damages only; alternatively, that his proceeding be heard and determined separately from the Barnes proceeding. Given the gravity of the application, I was not prepared to hear and determine it without proper notice having first been given to the Amcor parties by summons. I fixed the matter for further directions on 21 February 2011.

On 16 December 2010, the summons of the Amcor parties dated 9 December 2010 seeking non-party discovery from Mackens was also before the Court. This was adjourned to the directions hearing to be conducted on 21 February 2011.

At the directions hearing conducted on 16 December 2010, I made no direction extending the time for the Amcor parties to deliver expert or lay witness statements, and no application was made to the Court seeking such an order.

The return date for the resumed directions hearing was Monday 21 February 2011. On the evening of the Friday before, 18 February 2011, the Amcor parties filed an expert report of Mr Owain Stone, a forensic accountant of the firm Korda Mentha. The report was dated 14 February 2011. At the same time the Amcor parties filed with the Court 13 lay witness statements. Amcor’s expert report and the lay witness statements were progressively served on the other parties to the litigation between 17 and 18 February 2011.

The expert report prepared by Mr Stone is an extensive work. It comprises an 83 page document containing numerous appendices. Mr Stone catalogues 1031 documents which he says he relied upon in preparing his report.

The lay witness statements and attachments span 5 large lever arch folders.

Mr Hodgson’s Application to Strike Out Amcor’s Defence and Counterclaim
Legal Principles

In General Steel Industries Inc. v Commissioner for Railways (NSW),[50] Barwick CJ said that the power of the Court to dismiss a proceeding summarily without a trial on the ground that the cause or causes of action cannot possibly succeed should be exercised sparingly and should not be used except in a clear case. The Chief Justice observed in a seminal passage:

It is sufficient for me to say that these cases uniformly adhere to the view that the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action - if that be the ground on which the court is invited, as in this case, to exercise its powers of summary dismissal - is clearly demonstrated. The test to be applied has been variously expressed; "so obviously untenable that it cannot possibly succeed"; "manifestly groundless"; "so manifestly faulty that it does not admit of argument"; "discloses a case which the Court is satisfied cannot succeed"; "under no possibility can there be a good cause of action"; "be manifest that to allow them" (the pleadings) "to stand would involve useless expense". (at p129)
At times the test has been put as high as saying that the case must be so plain and obvious that the court can say at once that the statement of claim, even if proved, cannot succeed; or "so manifest on the view of the pleadings, merely reading through them, that it is a case that does not admit of reasonable argument"; "so to speak apparent at a glance". (at p129)
As I have said, some of these expressions occur in cases in which the inherent jurisdiction was invoked and others in cases founded on statutory rules of court but although the material available to the court in either type of case may be different the need for exceptional caution in exercising the power whether it be inherent or under statutory rules is the same.

[50] [1964] 112 CLR 125 at 129

In arriving at this formulation in General Steel Industries, Barwick CJ placed some reliance upon the observations of Dixon J in Dey v Victorian Railways Commissioners[51] where his Honour said:

A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury. The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process.

[51](1949) 78 CLR at 91.

However, although General Steel Industries may assist to inform the approach of the Court to the dismissal of a party’s claims on other grounds examined below, Mr Hodgson’s application in this case does not involve any relief to dismiss a proceeding summarily without a trial on the ground that Amcor’s causes of action cannot possibly succeed. In his summons, he does not invoke Order 23 of the Supreme Court (General Civil Procedure) Rules 2005.

Rather, he founds his strike out application on a failure to comply with the Orders of the Court made during 2010 directing that the Amcor parties file and serve their witness statements by specified dates. It remains to consider the sources of the power for the Court to make such orders.

Directions and Orders of the Court

One of the Rules of Court does provide specifically for the sanction of the striking out of a proceeding or defence, where there has been a failure to comply with an order to give particulars of any pleading or with an order for the discovery or inspection of documents or for answers to interrogatories. Rule 24.02 provides:

24.02. Failure to obey order
(1)Where a party fails to comply with an order to give particulars of any pleading or with an order for the discovery or inspection of documents or for answers to interrogatories, the Court may order-
(a)if the party is the plaintiff, that the proceeding be dismissed;
(b)if the party is a defendant, that the defendant's defence, if any, be struck out.

(2)A defendant whose defence is struck out in accordance with paragraph (1)(b) shall, for the purpose of Rule 21.02(1), be taken to be a defendant who, being required to serve a defence, does not do so within the time limited for that purpose.

In addition to r.24.02, and without limiting its force and effect, r.29.12 provides for a default notice to be issued by a party in the event of another party failing to make discovery of documents, as a precursor to the Court making an order to dismiss a proceeding or striking out a defence in the event of continued default after 7 days. Rule 29.12 provides:

29.12.1 Default notice
(1)This Rule shall not limit the power of the Court under Rule 24.02.
(2)If a party required to make discovery of documents fails to make discovery within the time limited by these Rules or fixed by any order of the Court, the party entitled to the discovery may serve on that party a notice in Form 29D.
(3)If, within seven days after service of a notice under paragraph (2), the party on whom the notice is served does not make discovery, the Court may order-
(a)if the party required to make discovery is the plaintiff, that the proceeding be dismissed;
(b)if the party required to make discovery is a defendant, that the defendant's defence, if any, be struck out.

Inherent Power

Further, the Court has inherent power to control and supervise its process to prevent injustice. This is reflected in r.24.05 of the Rules, which provides:

24.05. Inherent jurisdiction
Nothing in this Order shall affect the inherent power of the Court to dismiss any proceeding for want of prosecution or to order that upon the failure of a party to do any act or take any step which under these Rules the party is required to do or take or to comply with an order that the party do any such act or take any such step the proceeding shall be dismissed or the defence struck out and that judgment may be entered or that there be judgment accordingly.

The possible varieties of abuse of process which may justify invoking the inherent jurisdiction of the Court are not restricted to defined and closed categories. As was observed by Deane and Gaudron JJ in Hamilton v Oades:[52]

The inherent power of a court to control and supervise proceedings includes the power to take appropriate action to prevent injustice. See Cocker v Tempest[1841] EngR 242; (1841) 7 M & W 502, at pp 503-504 [1841] EngR 242; (151 ER 864, at p 865).
The power of a court to control and supervise its process to prevent injustice is not restricted to defined and closed categories: Jackson v Sterling Industries Ltd, at p 639; Tringali v Stewardson Stubbs & Collett Ltd(1966) 66 SR (NSW) 335, at pp 340 and 344. In this context injustice is not simply a question of the purpose or motive for which the relevant proceedings were instituted but includes a consideration of the consequences of the proceedings for the person invoking the power. The terms "oppressive" and "vexatious" are often used to signify those considerations which justify the exercise of the power to control proceedings to prevent injustice, those terms respectively conveying, in appropriate context, the meaning that the proceedings are "seriously and unfairly burdensome, prejudicial or damaging" and "productive of serious and unjustified trouble and harassment": Oceanic Sun Line Special Shipping Co Inc v Fay[1988] HCA 32; (1988) 62 ALJR 389, per Deane J. at p 411; [1988] HCA 32; 79 ALR 9, at p 45.

[52](1989) 166 CLR 486 at 502.

It is conceivable that in some cases the inherent power of the Court to take appropriate action to prevent injustice in the management of a proceeding before it, may call for the staying of the proceeding or part of a the proceeding, or even the striking out of a pleading or part of a pleading. However, sanctions involving the striking out of a party’s case are generally reserved for only the most serious cases, where no alternative and less severe remedy is available.

The American case of Capellupo v FMC Corporation[53] was cited by the Court of Appeal in British American Tobacco Ltd v Cowell,[54] where it was noted that District Judge Rosenbaum said of striking out:

The most severe sanction available to the Court is default and dismissal. This is an extreme measure, reserved only for the most egregious offenses against an opposing party or a court. The Court must consider default and dismissal as a last resort if no alternative remedy by way of a lesser, but equally efficient, sanction is available. See Perkinson, 821 F 2d at 691; Adolph Coors Co v Movement Against Racism and the Klan, 777 F 2d 1538, 1542-1543 (11th Cir.1985); Alexander, 687 F2d at 1205-1206; Fox, 516 F2d at 993; EEOC, 690 F Supp at 998; Carlucci, 102 F.RD at 486.

[53]126 FRD 545 (1989).

[54](2002) 7 VR 524 at 585.

Cases involving conduct which has rendered it impossible to hold a fair trial or would make any judgment in favour of the offending party unsafe, may warrant a striking out order.

Logicrose Ltd v Southend United Football Company Ltd,[55] which was also cited by the Court of Appeal in British American Tobacco Ltd v Cowell,[56] is on point. There it was alleged that one Harris, the principal director and shareholder of the plaintiff (and its principal witness) had not merely failed to disclose the existence of a crucial document in his possession or power, but, having obtained it during the course of the trial (and indeed during the course of his cross-examination) had deliberately suppressed it, and for a time had successfully concealed its existence from the court. Millett J (as he then was) in reasoning to the conclusion that “The court must always guard itself against the temptation of allowing its indignation to lead to a miscarriage of justice”, also approached the sanction of striking out a party’s case with a marked disinclination, even in the most serious circumstances of contumelious disobedience to the Court’s processes which would justify a finding of contempt. His Honour drew a contrast between punishing an offender for the crime of contempt and responding when a party disregards his or her obligations even in the absence of contempt, saying:
[55]Chancery Division, 5 February 1988, unreported save in the Times newspaper of 5 March 1988.
[56]Ibid at 576-152.

Deliberate disobedience of a peremptory order for discovery is no doubt a contempt and, if proved in accordance with the criminal standard of proof, may, in theory at least, be visited with a fine or imprisonment. But to debar the offender from all further part in the proceedings and to give judgment against him accordingly is not an appropriate response by the Court to contempt.
It may, however, be an appropriate response to a failure to comply with the rules relating to discovery, even in the absence of a specific order of the Court, and so in the absence of any contempt, not because that conduct is deserving of punishment but because the failure has rendered it impossible to conduct a fair trial or would make any judgment in favour of the offender unsafe.
In my view a litigant is not to be deprived of his right to a proper trial as a penalty for his contempt or his defiance of the Court, but only if his conduct had amounted to an abuse of the process of the Court which would render any further proceedings unsatisfactory and prevent the Court from doing justice. Before the Court takes that serious step, it needs to be satisfied that there is a real risk of this happening.

Millett J continued:
I do not think that it would be right to drive a litigant from the judgment seat without a determination of the issues as a punishment for his conduct, however deplorable, unless there was a real risk that that conduct would render the further conduct of proceedings unsatisfactory. The court must always guard itself against the temptation of allowing its indignation to lead to a miscarriage of justice. [Emphasis added]

Landauer Ltd v Comins & Co[57] was also cited by the Court of Appeal in British American Tobacco Ltd v Cowell.[58] This was a case in which, after the commencement of the proceeding, a party had deliberately indulged in fraudulent conduct designed to mislead the Court by the production of documents in the course of discovery which he knew to be forged and, secondly, he persisted in the fraudulent conduct during the proceeding. Reliance was placed upon O.24 r.16(1) (the equivalent of r.29.12.1 of the Rules of this Court), which, upon default in compliance with the requirements of discovery, authorised the Court to make an order including that the action be dismissed or the defence struck out. In spite of the scope and effect of the Rule, Lloyd LJ[59] adopted the view of Millett J in Logicrose “that it was not part of the function of the court in exercising its discretion under O.24 r.16 to punish the party in default”. He reserved, for further consideration, however, cases of contumacious conduct “such as the deliberate suppression of a document” which, his Lordship said, might justify the striking out “even if a fair trial was still possible”. However, he added that such cases “must necessarily be extremely rare”. In the same case Chadwick LJ adopted, as a general principle, the observations of Millett J in Logicrose:[60]

... that the object of the rules as to discovery is to secure the fair trial of the action in accordance with the due process of the Court; and that, accordingly, a party is not to be deprived of his right to a proper trial as a penalty for disobedience of those rules - even if such disobedience amounts to contempt for or defiance of the court - if that object if ultimately secured, by (for example) the late production of a document which has been withheld.

His Lordship continued:-
But where a litigant's conduct puts the fairness of the trial in jeopardy, where it is such that any judgment in favour of the litigant would have to be regarded as unsafe, or where it amounts to such an abuse of the process of the court as to render further proceedings unsatisfactory and to prevent the court from doing justice, the court is entitled - indeed I would hold bound - to refuse to allow that litigant to take further part in the proceedings and (where appropriate) to determine the proceedings against him. The reason, as it seems to me, is that it is no part of the court's function to proceed to trial if to do so would give rise to a substantial risk of injustice. The function of the court is to do justice between the parties; not to allow its process to be used as a means of achieving injustice. A litigant who has demonstrated that he is determined to pursue proceedings with the object of preventing a fair trial has forfeited his right to take part in a trial. His object is inimical to the process which he purports to invoke.
[57]Court of Appeal, England, 14 May 1991, unreported save in the Times newspaper of 7 August 1991.
[58]Ibid at 577-579.
[59]British American Tobacco Ltd v Cowell, supra at 578–579.
[60] British American Tobacco Ltd v Cowell, supra at 579-580.

The Directions Power

The general power to give directions is provided for in the Rules of Court by rr.34.01 and 34.02:

Powers of Court
34.01. Powers of Court
(1)At any stage of a proceeding the Court may give any direction for the conduct of the proceeding which it thinks conducive to its effective, complete, prompt and economical determination.
(2)A party may apply for directions on the hearing either of a summons filed for the purpose or of a summons for other relief.

34.02. Nature of directions
Without limiting Rule 34.01(1), the Court may give directions relating to-
(a) amendment of a document, under Rule 36.01;
(b) evidence under Order 40.

These powers are now supplemented by Part 4.2 of the Civil Procedure Act 2010 which makes specific provision for case management and underlines its importance. Section 47(1) of the Act provides:

47.Judicial powers of case management-overarching purpose and active case management
(1)Without limiting any other power of a court, for the purposes of ensuring that a civil proceeding is managed and conducted in accordance with the overarching purpose, the court may give any direction or make any order it considers appropriate, including any directions given or orders made-
(a) in the interests of the administration of justice; or
(b) in the public interest.

Section 51 of the Act then provides for specific sanctions which may be applied to any party who contravenes a case management direction or order made under s.47. These sanctions include the power to:

(a)       dismiss the civil proceeding, whether-
(i)        generally; or
(ii)       in relation to a particular cause of action; or
(iii)      in relation to the whole or part of a particular claim;

(b) strike out or limit any claim made by a plaintiff;
(c)strike out or limit any defence or part of a defence filed by a defendant, and give judgment accordingly;
(d) strike out or amend any document filed by the person, either in whole or in part;
(e)disallow or reject any evidence that the person has adduced or seeks to adduce;
(f)direct the person to pay the whole or part of the costs of another party or person;
(g)make any other order or give any other direction that the court considers appropriate.

Directions as to Witness Statements

As to witness statements, under the Rules of Court, evidence at the trial of a proceeding must be given orally or by affidavit: r.40.02. A medical report, a copy of which was served under O.33, may be used in evidence by either party pursuant to r.33.11), and a party upon whom the report of an expert witness is served pursuant to O.44 may put the statement in evidence (r.44.04). Otherwise the Rules do not provide for the statement in writing of a witness to be used as evidence.

However, outside the Rules, and under the authority of practice notes, the Court may order that witness statements be filed and exchanged between the parties.[61] The order is usually made at the time the proceeding is fixed for trial.
[61]See for example: Practice Note (No 2 of 2009) Technology, Engineering and Construction (TEC) List [1571F] paragraph 3(g); Practice Note (No 1 of 2010) Commercial Court [1567H] paragraphs 13.11 to 13.21; and Practice Note (No 4 of 1995) Major Torts List [1565N] reproduced behind the guide card “Supreme Court Practice Notes” in vol 2.

In a commercial matter in the Commercial Court of the Supreme Court, the evidence-in-chief of a non-expert witness will ordinarily be given by verified witness statement unless and to the extent that it concerns a contested issue of fact involving the evidence of that witness or where the List Judge otherwise orders. A witness statement is a written form of the evidence that a witness would otherwise give orally and, subject to any contrary order, will when adopted stand as the evidence-in-chief of the witness. It should therefore be in a form which satisfies the evidentiary requirements for the oral evidence of the witness.

Where witness statements are not ordered in respect of one or more witnesses, or where a witness will not provide a witness statement, the party proposing to call the witness will be required to file and serve a summary of the evidence to be given by the witness. A summary of evidence shall clearly identify the topics in respect of which evidence will be given and the substance of the evidence.

Typically, where an order for witness statements is made, a party may not without leave adduce from the witness evidence-in-chief other than evidence included in the witness statement of that witness or, where the witness will not provide a witness statement, the evidence referred to in a summary of the evidence to be given by the witness.

This course would also have the advantage of facilitating a Protean Holdings[86] split in the proceedings, so that Mr Hodgson is not compelled to meet in advance the serious allegations made against him in the counterclaim of the Amcor parties. In this case, it would be quite unfair to Mr Hodgson to require him in effect to exhaust what evidence he is able to muster to meet the Amcor case in anticipation of the full body of evidence which is to be marshalled against him and the inferences which the Amcor parties will ask the court to draw from it.
[86]Protean (Holdings) Ltd v American Home Assurance Co. (1985) VR 187 at 191 per Marks J.

Amcor’s Application for Non-Party Discovery Against Mackens

It may be recalled that in the Barnes proceeding the firm of solicitors A J Macken & Co (“Mackens”) was served with a summons dated 9 December 2010, and the affidavit of Janet Whiting dated 9 December 2010 filed by the Amcor Parties seeking non-party discovery of seven categories of documents.

Mackens is not a party to the Barnes proceeding and does not act for any party to this proceeding. Mackens, however, does act for Mr Hodgson (who is the plaintiff and defendant to counterclaim) and Bankson (which is a defendant to counterclaim) in the Hodgson proceeding.

Mackens opposes the application of the Amcor Parties for non-party discovery.

Legal Principles as to Non-Party Discovery

The application of the Amcor parties for non-party discovery is made pursuant to r.32.07 of the Rules. The rule provides that, on the application of any party to the proceeding, the Court may order that a person, who is not a party to the proceeding, make discovery of any document, which that person has, or is likely to have, in that person’s possession, and which “relates to any question” in the proceeding. Rule 32.07 is in the following form:

On the application of any party to a proceeding the Court may order that a person who is not a party and in respect of whom it appears that that person has or is likely to have or has had or is likely to have had in that person's possession any document which relates to any question in the proceeding shall make discovery to the applicant of any such document.

As Kaye J observed in Buckley v The Herald & Weekly Times Pty Ltd & Anor (No 5):[87]

That test is similar to the test for discovery between parties under rule 29.02. In particular, it is, in my view, appropriate to apply the “Peruvian Guano” test[88] to determine whether, under rule 32.07, a party might possess a document which “relates to any question in the proceeding”. The case before His Honour proceeded on that basis.

[87][2010] VSC 413 at [5].

[88]Derived from Compagnie Financier Du Pacifique Guano Co (1882) 1 QBD 55, 62-63 per Brett LJ.

Murphy J in Russell Kumar & Sons Pty Ltd v Bienstein[89] expressed the breadth and reach of r.32.07 in similar terms, when his Honour said:[90]

Anything which would throw light upon the case is relevant and, in my opinion, material. There is no present day justification, in my view, for construing relevance in any other way. See Hutchinson v Glover (1875) 1 QBD 138 at 141 per Blackburn J; Donaldson v Harris & Anor (1973) 4 SASR per Wells J at 304-305; and Compagnie Financiere v The Peruvian Guano Co (1882) 11 QBD 55 per Brett, LJ at p63.
Marks J has in Ansett Industries v The Commonwealth No 268 of 1987, a judgment apparently delivered on 3 April 1987, stated that the advancement of the “fair determination of the issues in the case,” which he inferred to be one of the principle purposes of the Rule, “ … would not be met should the Rule be used for collateral purposes, such as disadvantaging a business competitor. Also the Court must be careful not to allow the power to be used oppressively, for example, for mere fishing expeditions.
I can only say that what one person may categorise as a “mere fishing exhibition” another may claim to be a legitimate use of the Rule. I have myself no hesitation in making the order which has been sought against the liquidator in the present case.
I have in the past explained that the person called upon to make an affidavit of documents pursuant to R32.07 may take objections to produce any such document on the ground of privilege (see r32.02).
The Court’s order in the case of non-party discovery does not go automatically but involves the exercise of a discretion in each case. The Court may refuse in any particular case, if thought appropriate, to exercise its discretion. However, I would interpret the scope of the Rule concerning non-party discovery to favour the allowance of the same rather than its restriction simply because of an element of fishing (whatever that means) is seen to be involved.
The value of discovery as a tool leading to the disposal of actions cannot, in my opinion, be overestimated. Furthermore, the saving of costs is a consideration of such importance today in the overall administration of justice that it ought to be advanced whenever the opportunity arises. I think that the opportunity arises here and I would seek to exercise it.

[89]Practice Court (unreported), Murphy J (2 August 1991) BC9102878.

[90]At 6-7.

The observations of Murphy J in Russell Kumar were later adopted and cited with approval by Batt J in Ensee Holdings Pty Ltd v BWN Holdings Pty Ltd.[91] In that case, Batt J also relied upon the following passage from Mulley v Manifold[92] where Menzies J said:

I turn now to the pleadings to determine what are the matters at issue between the parties, because discovery is a procedure directed towards obtaining proper examination and determination of these issues - not towards assisting a party upon a fishing expedition. Only a document which relates in some way to a matter in issue is discoverable but it is sufficient if it would or would lead to a train of inquiry which would either advance a party's own case or damage that of his adversary.

[91]Practice Court (unreported), Batt J (23 June 1994) BC9401179.

[92](1959) 103 CLR 341 at 345.

In Lurgi (Australia) Pty Ltd and Anor v Gratz and Anor[93] Hansen J (as he then was) took a similarly broad approach to the application of r.32.07. His Honour observed:[94]

In considering whether to exercise the discretion, I note the fact that the plaintiffs have not yet sought ordinary discovery from the defendants as a factor which may be taken into account.
In my opinion it is wrong to approach the application of r 32.07 as though it was fettered by some rules or guidelines found in statements of judges in other cases. While guidance may be found in past cases it is important to note that the rule confers a discretion in relation to certain specific requirements. Once those requirements are satisfied the discretion exists. See Irving v Carbines (1982) VR 861, 865. The discretion is to be exercised in light of all relevant circumstances in the particular case, and is not to be circumscribed by observations of judges made in other cases in relation to their own facts.

[93](Unreported), Hansen J (14 October 1995) BC9506631.

[94]Supra at 38 .

His Honour in Lurgi also approved and followed the approach of Murphy J in Russell Kumar & Sons, noting that “r.32.07 should be interpreted to favour the allowance of discovery from a non-party rather than its restriction simply because an element of fishing is seen to be involved”.[95]
[95]Ibid at 41.

Basis of Amcor’s Application for Non-Party Discovery

In the course of making its application, senior counsel for the Amcor parties outlined its cases in the Hodgson proceeding and the Barnes proceeding. In particular, the following facts were relied upon in support of the application, derived from the affidavit material before the Court:

(a)On 3 May 2005, a Mr Walmsley wrote to Mr Dominic Macken at Mackens referring to “our conversation with you this afternoon”. The subject of the letter was “Hottes – Sangster – Amcor”. The letter attached correspondence together with an opinion of counsel, Mr Kunc.
(b)It appears that Mr Walmsley faxed the Asset Sale Agreement to Mr Macken on 13 May 2005. A full copy of the copy of the Asset Sale Agreement was apparently faxed which had the name of Mr Sangster (the Fifth Defendant in the Barnes proceeding) and his mobile phone number on the front page.
(c)None of the defendants or Mr Hodgson have discovered the 3 May 2005 letter from Mr Walmsley to Mr Macken. While describing some detail his firm’s retainers to act for various of the defendants and Mr Hodgson from time to time, it appears that Mr Macken has not provided to the Amcor parties either the identity of his client or the nature of the retainer he held in connection with the 3 May 2005 letter from Walmsley.

Accordingly, it was submitted that there is a reasonable basis to conclude that Mackens holds documents that would go to the identity of the beneficial owners of the G5 Investments (and hence the Service Packaging business).

Mackens’ Case in Opposition to Non-Party Discovery
Mackens Not likely to have Relevant Documents in its Possession

Mackens was first retained by any person connected in any way with either the Hodgson proceeding or the Barnes proceeding in October 2004. Mackens was not retained by any relevant person or entity at the time when the fraudulent conduct alleged by the Amcor parties first occurred. Accordingly, it was submitted on behalf of Mackens that it was not retained at any time when documents may have been created in furtherance of the alleged fraud.

However, in my opinion, non-party discovery is appropriate in this case, given the facts advanced by the Amcor parties, and the likelihood that Mackens may well have in its possession or power documents which would throw light upon a crucial question in the case, and which are relevant and material to the issues for determination. At the very least, such documents may well lead to a train of inquiry which would either advance the case of a party or damage that of an adversary.

I take the view of Hansen J in Lurgi, that r.35.07 should be interpreted to favour the allowance of discovery from a non-party rather than its restriction simply because an element of fishing may be involved. The administration of justice is better advanced in this case by the making of the order, than not.

Amcor Should First Pursue Other Parties for Discovery

It was submitted on behalf of Mackens that the clients who have retained Mackens from time to time have already discovered documents falling within a number of the overlapping categories contained in the summons of the Amcor parties.

It was further submitted that there is no reasonable basis for the implied assertion which underpins the Amcor summons that the discovery by any of Mackens’ clients has been deficient. To the extent that there exist any relevant categories of documents in respect of which the Amcor parties have not exhausted their search for discoverable documents, then that may be pursued by them in an ordinary inter partes discovery application on a proper basis, namely by adducing sufficient evidence to ground a finding by the Court that discoverable documents in the party’s possession have not been discovered.

However, although the Amcor parties have already sought and obtained discovery from the other parties to the litigation, even if they are in a position to seek further discovery from them on proper material (and there is no evidence that they are in such a position), in my opinion this would not preclude the order for non-party discovery sought in this case.

Client Legal Privilege

Mackens further submitted that what Amcor in fact seeks is the production of documents to which, prima facie, the legal professional privilege (now described as client legal privilege) applies. Any documents in the possession of Mackens are privileged if they contain confidential communications between that firm and its client or prepared by that firm or by the client, for the dominant purpose of the firm providing legal advice to the client, or if they were created for the purpose of the client being provided with legal services relating to an existing or anticipated proceeding: ss.118, 119 of the Evidence Act 2008 (Vic). Once this is accepted, it was submitted, it then becomes necessary to consider the way in which the exception to that principle might operate.

The Mackens submission then proceeded with a very thorough and well considered analysis of the operation of the crime or fraud exception to a privilege claim with a view to satisfying the Court that in this case it had no application, with the likely result that claims for privilege over the documents sought by the Amcor parties would be maintained. It followed, so it was put, that the non-party discovery sought from Mackens would be a futile exercise, and for this reason the Court should exercise its discretion against the making of the order.

However, in my opinion, consideration as to whether any document which may be discovered by Mackens (a) is privileged; or (b) if it is, it is exempted from the protection by the operation of the crime or fraud exception, is at this point premature. These interesting arguments may be preserved for another day, if production of any relevant documents is the subject of a claim of privilege. In this event, consideration of the any such claim can be undertaken by reference to the actual document in dispute, which can be given the Judge for his or her consideration, without disclosing the controversial document to a party.

However, I do not approach this application on the basis that every document of relevance which may be in Mackens’ possession is necessarily privileged, and if it is, does not fall within the crime or fraud exception.

Amcor’s Summons is Oppressive

It was submitted that the summons of the Amcor parties was oppressively wide and that the volume of material to be examined by Mr Macken is considerable if an order was to be made against his firm.

The Amcor summons, by paragraph 1, seeks the following documents from Mackens:

1)Within 14 days of the date of these orders, AJ Macken & Co make non-party discovery to the Plaintiffs on the following documents, or copies of such documents, in its possession, custody or power:
(a)All documents relation to the ownership of the Service Packaging Business (as that term is defined in the Third Further Amended Statement of Claim) from 1 February 2002 to 30 March 2007, including but not limited to ownership of interests in G5 Investments Pty Ltd and in Service Packaging Pty Ltd;
(b)All documents relating to any proposed sale of the Service Packaging Business by Mr Ian Hottes, Mrs Marlene Hottes and/or the beneficial shareholders of the 4 shares in G5 Investments Pty Ltd held legally by Mr Ian Hottes and subsequently by Mrs Marlene Hottes;
(c)All documents relating to any proposed transfer of the Service Packaging Business by Mr Ian Hottes, Mrs Marlene Hottes and/or the beneficial shareholders of the 4 shares in G5 Investments Pty Ltd held leally by Mr Ian Hottes and subsequently by Mrs Marlene Hottes;
(d)All documents evidencing any communications with the beneficial owners G5 Investments Pty Ltd or their advisers;
(e)All documents which relate to or record the identity of the beneficial shareholders in G5 Investments Pty Ltd (excluding Mr Ian Hottes and Mrs Marlene Hottes) since 1 February 2001 to date.
(f)All documents that constitute, refer or relate to the sale and/or transfer of the assets of the Service Packaging Business pursuant to the First Sale Agreement (As that term is defined in the Third Further Amended Statement of Claim), whether before or after such a sale.

The documents sought in the Amcor summons as described in sub-paragraphs (b) to (f) are in essence sub-sets of the documents described in sub-paragraph (a). The summons on its face, in my opinion, is not oppressively wide. The descriptions of the documents sought are sufficiently precise to enable the discovery to be provided.

Further, given that the documents to be reviewed by Mackens in the course of providing the discovery may well be extensive, and may well involve trawling through and examining many documents which do not fall within the description of documents sought, thereby occasioning considerable time and expense, it would be appropriate in this case for the costs of the firm in undertaking the exercise, at least in the first instance, to be born by the Amcor parties, and on a solicitor/client basis.

Conclusion as to Non-Party Discovery

Non-party discovery by the provision of an affidavit of discovery should be ordered against Mackens in the terms of paragraph [1] of the Amcor summons dated 9 December 2011, and that the costs of the firm in providing the affidavit of discovery in the first instance should be paid by the Amcor parties, and on a solicitor client basis, subject to any further order subsequently being made by the Court as to such costs.

Amcor’s Interrogatories

In my opinion, this is a case where, prima facie, the Amcor parties are justified in delivering interrogatories for the examination of Mr Hodgson and the defendant parties in the Barnes proceeding.

However, issues may well arise under s.128 Evidence Act 2008. It would not be appropriate to make an order directing that any party served with interrogatories prepared by the Amcor Parties to answer those interrogatories without first giving the party an opportunity to seek legal advice and the opportunity to object to the provision of answers on the grounds set out in s.128. For the assistance of the self-represented parties, attached as Appendix 1 is a sample form of objection, and as Appendix 2 is a copy of s.128 Evidence Act 2008.

Orders and Directions

I propose to make further case management directions to facilitate the just, efficient, timely and cost-effective resolution of the issues in dispute, as far as it is possible to achieve this end at this stage in the proceedings.

Attached to these reasons as Annexure ‘A’ are a set of draft orders and directions which I propose to make, subject to hearing further from the parties.

Costs

I will hear the parties on the question of costs arising from the applications.

Annexure ‘A’
Draft Orders

OTHER MATTERS:

Dictionary. In these Orders:

“Mr Hodgson” means the Plaintiff in proceeding No.9420 of 2004;
“Amcor Ltd” means the Defendant in proceeding No.9420 of 2004;
“The Amcor Parties” mean the First, Second and Third Plaintiffs in proceeding No.8181 of 2007;
“The Defendants” mean the First to Seventh Defendants (inclusive) in proceeding No.8181 of 2007;
“The Hodgson Proceeding” means proceeding No.9420 of 2004;
“The Barnes Proceeding” means proceeding No.8181 of 2007.

THE COURT ORDERS THAT:

Mr Hodgson’s Summons

The relief sought by Mr Hodgson in paragraphs 1 and 2 of his summons dated 14 January 2011 be dismissed.

Pursuant to paragraphs 4 and 6 of Mr Hodgson’s summons dated 14 January 2011, the following orders and directions are made:

(a)The quantum of Mr Hodgson’s claim against Amcor Ltd referred to in the particulars subjoined to paragraph 11 of his Statement of Claim in the Hodgson Proceeding, together with any interest thereon, is to be the subject of a separate trial (the “Hodgson Quantum Trial”);

(b)The Hodgson Quantum Trial is set down for trial on an estimate of 2 days commencing on 30 March 2011;

Court Book for the Hodgson Quantum Trial

(c)Mr Hodgson, in consultation with Amcor Ltd. prepare a court book containing the following documents for use in the Hodgson Quantum Trial:
(i) the current pleadings including requests for and particulars;
(ii)all documents, in date order, which any party expects to tender in evidence‑in‑chief or to be referred to in cross‑examination.

(d)Mr Hodgson by 4.00 pm 18 March 2011 serve on each other party and file for the use of the Judge a copy of the court book. Mr Hodgson have available at the hearing a further copy of the court book for the exclusive use of witnesses during their examination.

for the Hodgson Quantum TrialWitness statements

(e)Evidence in the Hodgson Quantum Trial be by witness statement. The Trial Judge may require the witness to give oral evidence as to any part of the content of the witness statement notwithstanding that no party has required this. The witness statement when adopted by a witness will stand as the evidence‑in-chief of the witness subject to these orders. The party calling a witness may not, without leave, adduce further evidence‑in‑chief from that witness.
(f)Mr Hodgson file and serve his witness statements by 4:00 pm on 22 March 2011.

(g) Amcor Ltd file and serve its witness statements by 4:00 pm on 25 March 2011.
(h)Each party have available for use by the Trial Judge a copy of all its witness statements in paper form and in electronic form.

(i)       Each witness statement satisfy the following formal requirements:
(i)       it should be set out in numbered paragraphs;
(ii)      as far as possible, it should be expressed in the witness' own words;
(iii)it should contain evidence only in admissible form. For example, hearsay should be avoided;
(iv)where the witness statement contains conversations these should, if the witness' recollection permits, be expressed in direct speech. If this is not possible, this fact should be stated and the witness' best recollection or the substance of the conversation may be set out;

(v) it should contain at the end of the statement the following verification:
“I verify that I have read the contents of this my witness statement and the documents referred to in it and that I am satisfied that this is the evidence‑in‑chief which I wish to give at the trial of the proceeding”.

(vi)Where the statement of the witness, if admitted in evidence, proves a document, a copy of the document may be annexed to the witness statement or the document may be identified and tendered separately whether in the court book or otherwise.
(vii)The content of a witness statement served pursuant to an order of the Court is subject to the same implied undertaking as to confidentiality as applies to a document produced upon discovery.
(viii)Where any witness is not willing to provide a witness statement, the party calling the witness shall, by the date fixed for the delivery of the witness statement of that witness, file and serve a statement of the substance of the evidence which the party expects that witness to give and shall be entitled to lead oral evidence‑in‑chief from that witness.

for the Hodgson Quantum TrialWritten Outlines

(j)The parties file and exchange written outlines of opening submissions, limited to 10 A4 pages, 1.5 spaced text in font size 12, by 4:00 pm on 29 March 2011.

Interrogatories

Any party in either the Hodgson Proceeding or the Barnes Proceeding served with interrogatories by any of the Amcor Parties, may give notice of any objection taken to answering the whole or any part of any such interrogatories, identifying in each case which part is objected to, pursuant to s.128 Evidence Act 2008, and stating in each case the grounds of any such objection.

The Notice of objection shall be filed and served by 4.00 pm 18 March 2011.

The Notice of Objection shall be generally in the form annexed hereto as Appendix 1.

The time for any party in either the Hodgson Proceeding or the Barnes Proceeding served with interrogatories by any of the Amcor Parties to answer any such interrogatories, is extended to a date to be fixed by further order of the Court.

The Amcor Summons for Non-Party Discovery

Within 21 days of the date of these orders, AJ Macken & Co (a firm) which is a non-party to the Barnes Proceeding, provide an affidavit of discovery to the Plaintiffs of the following documents, or copies of such documents, in its possession, custody or power:
(a)All documents relation to the ownership of the Service Packaging Business (as that term is defined in the Third Further Amended Statement of Claim) from 1 February 2002 to 30 March 2007, including but not limited to ownership of interests in G5 Investments Pty Ltd and in Service Packaging Pty Ltd;
(b)All documents relating to any proposed sale of the Service Packaging Business by Mr Ian Hottes, Mrs Marlene Hottes and/or the beneficial shareholders of the 4 shares in G5 Investments Pty Ltd held legally by Mr Ian Hottes and subsequently by Mrs Marlene Hottes;
(c) All documents relating to any proposed transfer of the Service Packaging Business by Mr Ian Hottes, Mrs Marlene Hottes and/or the beneficial shareholders of the 4 shares in G5 Investments Pty Ltd held leally by Mr Ian Hottes and subsequently by Mrs Marlene Hottes;
(d)All documents evidencing any communications with the beneficial owners G5 Investments Pty Ltd or their advisers;
(e)All documents which relate to or record the identity of the beneficial shareholders in G5 Investments Pty Ltd (excluding Mr Ian Hottes and Mrs Marlene Hottes) since 1 February 2001 to date.
(f)All documents that constitute, refer or relate to the sale and/or transfer of the assets of the Service Packaging Business pursuant to the First Sale Agreement (As that term is defined in the Third Further Amended Statement of Claim), whether before or after such a sale.
The costs of AJ Macken & Co (a firm) in providing discovery in the first instance should be paid by the Amcor parties, and on a solicitor client basis, subject to any further order subsequently being made by the Court as to such costs.

Further Trial of the Hodgson Proceedings and the Joint Trial

The issues raised in the counterclaim of Amcor Ltd in the Hodgson Proceedings be heard and determined at the same time as the Barnes Proceeding (the “Joint Trial”).

The Amcor Parties will call their evidence first in the Joint Trial.

Directions in Relation to the Joint Trial

In relation to the Joint Trial it is further directed that:

Court Book for the Joint Trial

(a)The Amcor Parties, in consultation with Mr Hodgson and the Defendants prepare a court book containing the following documents for use in the Joint Trial:
(i) the current pleadings including requests for and particulars;
(ii)all documents, in date order, which any party expects to tender in evidence‑in‑chief or to be referred to in cross‑examination.

(b)The Amcor Parties by 4 pm 13 May 2011 serve on each other party and file for the use of the Judge a copy of the court book. The Amcor Parties have available at the hearing a further copy of the court book for the exclusive use of witnesses during their examination.

Witness Statements for the Joint Trial

(c)Evidence in the Joint Trial be by witness statement. The Trial Judge may require the witness to give oral evidence as to any part of the content of the witness statement notwithstanding that no party has required this. The witness statement when adopted by a witness will stand as the evidence‑in-chief of the witness subject to these orders. The party calling a witness may not, without leave, adduce further evidence‑in‑chief from that witness.

(d)The times by which the Amcor Parties are to file and serve their expert witness statements and their lay witness statements as ordered by Orders number 3 and 15 made by the Honourable Justice Emerton on 1 October 2010 are extended to 18 February 2011.

(e)The times by which Mr Hodgson and the Defendants are to file and serve their expert witness statements and their lay witness statements as ordered by Orders number 5 and 16 made by the Honourable Justice Emerton on 1 October 2010 are vacated.

(f)Mr Hodgson and the Defendants are to file and serve their witness statements, including any expert witness statements by 4:00pm on 21 April 2011.
(g)The Amcor Parties file and serve any witness statements in reply by 4:00pm on 5 May 2011.
(h)Each party have available for use by the Trial Judge a copy of all its witness statements in paper form and in electronic form.

(i)       Each witness statement satisfy the following formal requirements:
(i)       it should be set out in numbered paragraphs;
(ii)      as far as possible, it should be expressed in the            witness's own words;
(iii)it should contain evidence only in admissible form. For example, hearsay should be avoided;
(iv)where the witness statement contains conversations these should, if the witness's recollection permits, be expressed in direct speech. If this is not possible, this fact should be stated and the witness's best recollection or the substance of the conversation may be set out;

(v) it should contain at the end of the statement the following verification:
“I verify that I have read the contents of this my witness statement and the documents referred to in it and that I am satisfied that this is the evidence‑in‑chief which I wish to give at the trial of the proceeding.”

(vi)Where the statement of the witness, if admitted in evidence, proves a document, a copy of the document may be annexed to the witness statement or the document may be identified and tendered separately whether in the court book or otherwise.
(vii)The content of a witness statement served pursuant to an order of the Court is subject to the same implied undertaking as to confidentiality as applies to a document produced upon discovery.
(viii)Where any witness is not willing to provide a witness statement, the party calling the witness shall, by the date fixed for the delivery of the witness statement of that witness, file and serve a statement of the substance of the evidence which the party expects that witness to give and shall be entitled to lead oral evidence‑in‑chief from that witness.

Written Outlines for the Joint Trial

(j)The parties file and exchange written outlines of opening submissions, limited to 20 A4 pages, 1.5 spaced text in font size 12, by 4:00pm on 13 May 2011.

Trial of the Joint Trial

The trial of the Joint Trial shall commence on 16 May 2011.

The trial will be programmed as follows:

(a)The openings and the calling of evidence shall be concluded by Friday 10 June 2011.

(b) Final Addresses shall be concluded by 16 June 2011.

Further Directions

A further directions hearing to deal with all outstanding matters prior to the trial will be conducted on 6 May 2011.

There be liberty to apply.

Appendix 1

NOTICE OF OBJECTION PURSUANT TO S. 128 EVIDENCE ACT 2008
[heading as in originating process]

To the Amcor Parties

I, [insert full name],object to answering the following interrogatories contained in the interrogatories served on me by the Amcor Parties dated [insert date of interrogatories].

[identify each interrogatory objected to]

[etc.]

The grounds of my objection pursuant to s. 128 Evidence Act 2008 (a copy of which is attached as Appendix 2) are:

(a)

(b)

Signed: [usual signature]

Appendix 2

Copy of s.128 Evidence Act 2008

Privilege in respect of self-incrimination in other proceedings

Privilege in respect of self-incrimination in other proceedings

(1) This section applies if a witness objects to giving particular evidence, or evidence in a particular matter, on the ground that the evidence may tend to prove that the witness-

(a) has committed an offence against or arising under an Australian law or a law of a foreign country; or

(b) is liable to a civil penalty.

(2) The court must determine whether or not there are reasonable grounds for the objection.

(3) If the court determines that there are reasonable grounds for the objection, the court is to inform the witness-

(a) that the witness need not give the evidence unless required by the court to do so under subsection (4); and

(b) that the court will give a certificate under this section if-

i. the witness willingly gives the evidence without being required to do so under subsection (4); or
ii. the witness gives the evidence after being required to do so under subsection (4); and

(c) of the effect of such a certificate.

(4) The court may require the witness to give the evidence if the court is satisfied that-

(a) the evidence does not tend to prove that the witness has committed an offence against or arising under, or is liable to a civil penalty under, a law of a foreign country; and

(b) the interests of justice require that the witness give the evidence.

(5) If the witness either willingly gives the evidence without being required to do so under subsection (4), or gives it after being required to do so under that subsection, the court must cause the witness to be given a certificate under this section in respect of the evidence.
(6) The court is also to cause a witness to be given a certificate under this section if:

(a) the objection has been overruled; and

(b) after the evidence has been given, the court finds that there were reasonable grounds for the objection.

(7) In any proceeding in a Victorian Court before any person or body authorised by a law of this State, or by consent of parties, to hear, receive and examine evidence-

(a) evidence given by a person in respect of which a certificate under this section has been given; and

(b) any information, document or thing obtained as a direct or indirect consequence of the person having given evidence-

cannot be used against the person. However, this does not apply to a criminal proceeding in respect of the falsity of the evidence. Note This subsection differs from section 128(7) of the Commonwealth Act. The Commonwealth provision refers to an "Australian Court" instead of a "Victorian court".

(8) Subsection (7) has effect despite any challenge, review, quashing or calling into question on any ground of the decision to give, or the validity of, the certificate concerned.

(9) If an accused in a criminal proceeding for an offence is given a certificate under this section, subsection (7) does not apply in a proceeding that is a retrial of the accused for the same offence or a trial of the accused for an offence arising out of the same facts that gave rise to that offence.

(10) In a criminal proceeding, this section does not apply in relation to the giving of evidence by an accused, being evidence that the accused-

(a) did an act the doing of which is a fact in issue; or

(b) had a state of mind the existence of which is a fact in issue.

(11) A reference in this section to doing an act includes a reference to failing to act.

Notes

Bodies corporate cannot claim this privilege. See section 187.
Clause 3 of Part 2 of the Dictionary sets out what is a civil penalty.
The Commonwealth Act includes additional subsections. The subsections give effect to certificates in relation to self-incriminating evidence under the Victorian Act in proceedings in federal and Australian Capital Territory courts and in prosecutions for Commonwealth and Australian Capital Territory offences.
Subsections (8) and (9) were inserted as a response to the decision of the High Court of Australia in Cornwell v The Queen [2007] HCA 12 (22 March 2007).

[2011] VSC 63

4 MARCH 2011