Inlon Pty Ltd v Farmgard Pty Ltd

[2019] NSWSC 718

Supreme Court

New South Wales

Medium Neutral Citation:	Inlon Pty Ltd v Farmgard Pty Ltd [2019] NSWSC 718
Hearing dates:	16 December 2018
Date of orders:	24 June 2018
Decision date:	24 June 2018
Jurisdiction:	Common Law
Before:	Rothman J
Decision:	The plaintiff to file a minute of the orders consistent with these reasons for judgment, including the grant of leave to file the second version of the Amended Statement of Claim as well as the confidentiality and suppression of the incorrect Exhibit. That minute should include the order in relation to the costs of the Motion relating to the Amended Statement of Claim and, otherwise, the costs will be costs in the cause.
Catchwords:	PRACTICE and PROCEDURE – leave to amend Statement of Claim – Second Attempt – Confidentiality of documents served in error – costs
Legislation Cited:	Civil Procedure Act 2005 (NSW) Court Suppression and Non-publication Orders Act 2010 (NSW)
Category:	Procedural and other rulings
Parties:	Inlon Pty Ltd (Plaintiff/Applicant) Farmgard Pty Ltd (First Defendant/First Respondent) Farmgard Limited (Second Defendant/Second Respondent)
Representation:	Counsel: F Douglas QC (Plaintiff/Applicant) J Wright (Defendants/Respondents)   Solicitors: Aubrey Brown Partners (Plaintiff/Applicant) Colin Biggers & Paisley (Defendants/Respondents)
File Number(s):	2017/268211

Judgment

1. HIS HONOUR: On 31 August 2018 the plaintiff filed a Notice of Motion seeking leave to file and serve an Amended Statement of Claim (hereinafter “ASOC 1”) in the form provided to the defendants’ solicitors on 16 August 2018. Further, application was sought under the Court Suppression and Non-publication Orders Act 2010 (NSW) that certain exhibits, being Confidential Exhibit JJ2 to the Affidavit of Joseph Anthony James Gardim and Confidential Exhibit ABS-3 to the Affidavit of Anthony Bryn Samuel, need not be disclosed to the first defendant, the second defendant or Celli S.p.A.; the in-house counsel or the employees or agents of the entities earlier described; the defendants’ legal representatives or independent experts unless such persons have signed confidentiality undertakings; or any other person who is not provided a signed confidentiality undertaking to the solicitors for the plaintiff. A form of the confidentiality undertaking was provided to the Court.

2. The Notice of Motion filed on 31 August 2018 was consistent with leave granted by the Court, by consent, on 17 August 2018.

The Second Amended Statement of Claim

3. On 14 November 2018, the plaintiff served an Amended Notice of Motion (hereinafter “Amended Motion”) under which it sought leave to file a different Amended Statement of Claim (hereinafter “ASOC 2”) in the form provided to the solicitors for the defendants on 14 November 2018. The defendants do not object to the filing of ASOC 2 on the basis of its form or that it does not disclose a reasonable cause of action.

4. However, the defendants had objected to ASOC 1 on the basis that it did not disclose a reasonable cause of action. On 27 November 2018, the defendants filed and served written submissions in relation to the Amended Motion in which the defendants clarified that they consented to leave being granted for the plaintiff to file and serve ASOC 2 and sought for the plaintiff to be ordered to pay the defendants’ costs thrown away by the amendments and the costs of both the Notice of Motion and the Amended Motion, insofar as they relate to the amendments.

5. It is necessary to deal with a short history of the pleading. The Statement of Claim was filed on 4 September 2017 and the substantive cause of action is relief against the defendants for interfering with the plaintiff’s contractual relations with an overseas manufacturer and supplier of farm machinery, Celli S.p.A. (hereinafter “Celli”).

6. Essentially, the issue relates to what is alleged to be an exclusive distribution agreement which, it is alleged, came to an end in 2017 because of the conduct of the second defendant. It is alleged that, as a consequence of that conduct and the cessation of the exclusive distribution agreement, the plaintiff suffered damage and loss.

7. Further, the plaintiff alleges that the second defendant, a New Zealand company, (hereinafter “Farmgard NZ”) induced the breach of contract. As a consequence of the breach, or as part of the plan associated with it, the first defendant (hereinafter “Farmgard Australia”) was registered for the purpose of taking on the Australian distribution hitherto held under the exclusive distribution agreement by the plaintiff.

8. Leaving aside for present purposes the issues of compliance with the timetable set by the Court, the plaintiff was, after objection by the defendants to the original Statement of Claim, ordered to serve a proposed Amended Statement of Claim. There was a slight delay in its service, but, as already stated, the proposed Amended Statement of Claim, ASOC 1, was served on the defendants on 16 August 2018.

9. The defendants took further objections to ASOC 1 and the plaintiff sought to deal with those objections by filing ASOC 2 and the Amended Motion on 14 November 2018. The Amended Motion and ASOC 2 were not the subject of an additional grant of leave of the Court.

10. On the same date, namely 14 November 2018, the plaintiff served its written submission on the Motion. On 27 November 2018, the defendants served their submissions in response which made clear that they did not object to the terms of ASOC 2, nor to leave being granted to file same.

11. As a consequence of the foregoing, the only issue between the parties on the question of the filing of ASOC 2 is whether the plaintiff should be ordered to pay the costs of the defendants in the terms sought by the defendants. As is obvious from the foregoing, these are interlocutory proceedings. It is neither uncommon nor to be discouraged that parties correspond to ensure that the issues between them are properly defined by the pleadings that are filed in Court and exchanged.

12. Each of the parties, their legal representatives and the Court is under a duty to facilitate the quick, cheap and just resolution of the real issues between the parties. The real issue to which s 56 of the Civil Procedure Act 2005 (NSW) refers are defined by the pleadings. As a consequence, it is the duty of each party and each legal practitioner to ensure, as expeditiously as possible, and with the least amount of cost, that the issues between them are properly defined by the pleadings.

13. The defendants are to be congratulated for raising, and all defendants are to be encouraged to raise, objections to a Statement of Claim in a timely manner. At the same time, a party that is pleading its cause (including a defence) should be encouraged to take account of any objections that may be made to a pleading that had already been filed or of which advance notice has been given. Such a course is commendable, even where the party that has filed the original pleading considers that the original pleading is sufficient.

14. The discretion to award costs, apart from the inherent discretion in a superior court of record of general jurisdiction, is conferred by the provisions of s 98 of the Civil Procedure Act2005 (NSW) and is governed by the Uniform Civil Procedure Rules 2005 (NSW) (hereinafter “UCPR”) at Part 42. Rule 42.6 provides that a party that amends a pleading or summons, without leave of the Court, after the conclusion of proceedings should pay the costs of and occasioned by the amendment.

15. Rule 42.6 does not deal with amendments to pleadings for which leave has been granted. In this case, the Court granted leave for the plaintiff to file and serve a Motion and an Amended Statement of Claim.

16. The Motion was sought to be amended and ASOC 1 was amended by the provision of the Amended Motion and ASOC 2. Nevertheless, the amendments were made pursuant to an order of the Court granting leave to amend the Statement of Claim.

17. Until such time as the terms of ASOC 1 became a pleading in the proceeding, the amendment effected by the filing of ASOC 2 would not be an amendment to “a pleading … without leave”. Only one amendment to the original Statement of Claim is sought to be filed.

18. However, the costs associated with the Notice of Motion and Amended Motion are costs incurred as a result of that which seems to be conceded was an imperfect pleading of the cause of action against the defendants by the plaintiff. On its face, some order ought to be made, allowing costs for the plaintiff to take advantage of the indulgence of filing an Amended Statement of Claim.

19. Part 19 of the UCPR deals with amendments to statements of claim. A plaintiff is entitled, without leave, to amend a statement of claim, as long as that amendment occurs within 28 days of filing the original statement of claim. Otherwise, leave of the Court is required. In this case, leave was granted.

20. No defence had been filed. Rather, in this case, leave of the Court was granted to amend the pleading.

21. Indeed, the Court ordered that the pleading be amended and gave leave to file a motion. The Notice of Motion was filed after the time had expired, but that does not render the pleading sought to be filed at that time (ASOC 1) governed by the executory provisions of UCPR r 19.3.

22. In the exercise of the Court’s discretion, it does not seem that all costs occasioned by the further amendment to the Statement of Claim in ASOC 2 should be recoverable. The Court does consider that the costs of the Motion should be the subject of a costs order, but not one in the terms sought by the defendants. Dealing with the interests of justice and balancing the interests of the parties, the costs of the Motion should be the defendants’ costs in the cause and all other costs occasioned by the Motion should be reserved, so as to be dealt with in accordance with UCPR r 42.7.

Confidentiality and suppression

23. As earlier indicated, the second aspect of the Motion before the Court deals with the confidentiality of certain documentation. There is now no issue associated with documents behind Tab 1 and Tab 2 of Exhibit JJ2.

24. Exhibit JJ2, Tab 3 consists of Annual Reports for Inlon Pty Ltd. Tab 4 of Exhibit JJ2, which is a one-page document, recites the profit contribution of the sale of Celli products to the profit of Inlon Pty Ltd between 2012 and 2016. Confidential Exhibit ABS-3 to the Affidavit of Anthony Samuel is a repeat of or a continuation of Annual Reports for Inlon Pty Ltd.

25. The other five sets of documentation for which a Confidentiality Order is sought relate to an Exhibit that was mistakenly served on 11 October 2018, which mistake was apparently drawn to the attention of the plaintiff’s solicitors. The Exhibit that had been served did not correspond with the description of the documents that were described in the Affidavit.

26. The defendants’ solicitors returned the incorrect Exhibit and, apparently, retained no copies of it. Further, they say that they have disclosed none of the information contained in the incorrect Exhibit to the defendants. As a consequence, the defendants submit that the suppression order in relation to the incorrect Exhibit is superfluous, which I take to mean unnecessary.

27. The defendants submit that, as a consequence of the claim of the plaintiff that it no longer distributes Celli equipment, the plaintiff and the defendants are not competitors, such that the financial information should be suppressed or rendered confidential. The fundamental difficulty with such a submission is that the Affidavit, upon which the plaintiff relies for these orders, asserts that the plaintiff supplies farming machinery and competes on the global market for the purchase of farming machinery. The fact that the machinery may not be Celli equipment does not render the plaintiff incapable of being a competitor in the sense that term is used in the authorities.

28. To the extent that the material might disclose client identities, or financial material that would enable a competitor to calculate or devise pricing in the industry, the documents are plainly confidential and their publication would be problematic and may significantly damage the business of the plaintiff.

29. I turn then to the different categories of documents about which there is issue. First, I deal with the “incorrect Exhibit”. I accept that the defendants’ solicitors acted appropriately in relation to the Exhibit. They have returned it and made no copies. However, it is not suggested that there is no information obtained in the “incorrect Exhibit” that is not summarised, noted or recalled by the solicitors for the defendants.

30. While I accept that there may be very little information that would be able to be recalled by the defendants’ solicitors, I have examined the documentation and most, if not all of it, is confidential as it discloses client names and other detailed costings, which could be used by the industry against the plaintiff. I do not consider an order “superfluous”, but, even though it may have little utility, consider the nature of the documentation is such that an order should be made. I can see no prejudice to the defendants in that regard.

31. I do not consider the Annual Reports of Inlon Pty Ltd that are behind Tab 3 of Exhibit JJ2 and Exhibit ABS-3 to be confidential. I have heard no evidence or submission that suggests that the information contained in those documents would be capable of advantaging a competitor in the industry and those documents would, in many instances (particularly for public companies) be able to be obtained publicly.

32. I turn then to the single page Exhibit being Tab 4 of Confidential Exhibit JJ2. This document neither identifies clients, nor particular items of equipment. It gives an overall financial year report of the sales of Celli machines and parts and indirect costs, being advertising, warranty, labour etc.

33. It would be impossible to calculate pricing of any particular piece of equipment (or all of it) based upon this material. The Court has certainly not heard any evidence to the effect that it was possible.

34. Further, as stated, the material only relates to Celli products, which were not sold after the termination of the exclusive dealing agreement, with which the proceedings are concerned. As a consequence, it would be impossible to determine the cost figures in relation to all other farm equipment and, in relation to the supply of Celli equipment, the plaintiff is not, presently, a competitor in the same area as the defendants.

35. I do not lose sight of the fact that the exclusive dealing agreement will, eventually, need renewing or replacing and the plaintiff may be a competitor with the defendants in seeking to be the exclusive dealer for Australia or Australia and New Zealand. Nevertheless, given the dates of the figures and the period of time that has passed since they were relevant, the Court is not satisfied that the document should be kept confidential.

36. As a consequence of the foregoing, the Court makes orders, the effect of which, in this regard, is to render confidential, or continue as confidential, the incorrect Exhibit that was served and returned on the defendants’ solicitors and otherwise does not consider the documents should be the subject of confidentiality. Further, the Court will make an order under the Courts Suppression and Non-publication Orders Act 2010 (NSW) preventing the publication of the contents of the “incorrect Exhibit”.

Conclusion

37. The plaintiff is to file a minute of the orders consistent with these reasons for judgment, including the grant of leave to file the second version of the Amended Statement of Claim as well as the confidentiality and suppression of the incorrect Exhibit. That minute should include the order in relation to the costs of the Motion relating to the Amended Statement of Claim and, otherwise, the costs will be costs in the cause.

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Decision last updated: 24 June 2019