Keydata Pty Ltd v Brown, S.R.

[1991] FCA 238

JUDGMENT No. 2 3% .?l ......

IN THE FEDERAL COURT OF AUSTRALIA	)
VICTORIA DISTRICT REGISTRY	No. VG 81 of 1991
GENERAL DIVISION	1

KEYDATA PTY LIMITED h ORS

Applicant

13 MAY 1991 - and-

FEDERAL COURT OF

AUSTRALIA	STEVEN ROBERT BROWN
PRINCIPAL
REQISlUY	Respondent

JUDGE :	Heerey J.
PLACE :	Melbourne

DATE : 2 May 1991

EX TEMPORE REASONS FOR JUDGMENT

This application for an interlocutory injunction arises against a background of contentious commercial dealings involving the fourthnamed applicant, Titan Hills Australia Limited, and companies connected with the second and third applicants, Godfrey David Cullen and Maxwell Roger Latimer.

In essence, the Cullen interests which control the fifth applicant, Precision Data Holdings Limited and its subsidiary, Keydata Pty Limited, the first applicant, wish to procure the acquisition by Titan Hills of Precision Data. This matter has had a long and well publicised history of conflict, including litigation which took place in the Supreme Court last year.

Latimer. It is particularly noteworthy for a memorable and	attack on the commercial credibility of Messrs Cullen and
wounding allegation relating to M r Latimer, viz that he had been expelled from the Eastern Golf Club for cheating.
Mr Latimer has sworn an affidavit to the effect that not only
is that untrue but that he has never been a member of that golf club and has never been expelled from any golf club, whether for cheating or for any other reason. The fact that he has gone on oath to depose to a readily verifiable matter leads me to the conclusion that the charge made was totally groundless and likely to and designed to introduce a totally unjustified personal attack into this commercial setting.
I should refer to a number of general matters at the outset. First, the respondent's answer to this claim is that he had nothing whatever to do with the preparation or circulation of the letter. It follows that no defence has been raised as to the contents of the letter. It is plainly defamatory and on the evidence, which is uncontested in this respect, it is misleading and deceptive and also involves a breach of copyright, in that the logo of Keydata Pty Limited appears on the letter without permission.
Secondly, it would seem that if the applicants show that there is a serious question to be determined (see Mur~hv v Lush
is all the one way. It is not suggested that the harm to the (1986) 60 ALJR 523 at p.524), then the balance of convenience
respondent, if there is an interlocutory injunction but he succeeds at trial, would outweigh the corresponding harm to the applicants if no injunction is granted but they succeed at trial.
The third point I would make is that I should be careful not to take the superficially attractive course of saying that if the respondent has not in fact had anything to do with publishing the letter and has no intention of repeating publication, then there is no harm to him in granting an injunction. I agree with Mr Wilson, who appeared for the respondent, that it is no light matter to make an order of the court restraining any individual and the onus remains on the applicants to make out a case for the proper exercise of the court's discretion in the grant of the interlocutory relief sought against the respondent.
As a fourth point, I wish to stress something which of course will go without saying to members of the legal profession involved but is worth repeating because this case may be of interest to a wider audience. I am not concerned to make any findings as to the ultimate truth or otherwise of the applicants' allegations. There has been no cross-examination of the various deponents who have sworn affidavits filed on either side. There is quite an amount of conflict in those affidavits and that conflict has not been explored in cross- examination. My function at this stage is limited to the question whether there is a serious question to be determined and because I reach any particular conclusion, that is not to be taken as any final determination of the truth or otherwise of the relevant allegations.
Now, turning to look at the evidence and arguments that were put to the court in relation to the one issue that I have referred to, that is, whether or not the respondent was
conveniently considered under three headings. responsible for the publication of the letter, they can be
First, there is a history of some - to use Mr Cullen's expression - considerable enmity between the respondent and himself. This is said to arise out of a commercial falling out which occurred about seven or eight years ago and subsequent business rivalry. The respondent, in his affidavit, would not put the matter as high as that, but it seems common ground at least that there is no love lost between these two gentlemen.
The second category of evidence concerns a meeting which was held on 9 August 1990, that being a general meeting of Titan Hills, following which there was an informal meeting of a handful of men, at which the respondent was present. Some evidence was given as to what was said at that meeting by Mr Graeme James Rankin Baldwin, who swore an affidavit on behalf of the applicants, and also a Mr Korn.
The respondent gave a version of what occurred and he was supported by an affidavit sworn by a Mr Quinlan and a
Mr Green. There is considerable divergence between the
accounts of what occurred at this meeting which took place, as
I have said, after the general meeting of Titan Hills, at the
office of Mr Quinlan. This is not surprising, given that the meeting occurred some eight months ago and was of an informal and impromptu nature, there being no suggestion that any minutes or other notes were taken.
Indeed, the conflict even extends to whether Baldwin was present or not and on one view of the evidence he was present but gave a false name and acted as an agent provocateur. Probably the most that can be gleaned out of the episode on the present state of the evidence is that there might be sufficient at trial to found an inference that it was a
meeting of men not well disposed towards Mr Cullen, that they discussed his commercial record and the undesirability of him
achieving control of Titan Hills and that the concept of circularising shareholders of Titan Hills was discussed. On Mr Baldwin's account there was some mention of an anonymous letter which it was said had already been sent, but this was denied by the other persons at the meeting, including Mr Korn.
The third category of evidence arises from the response to a letter of demand which the applicants' solicitors, Messrs Ebsworth and Ebsworth, sent to the respondent on
4 April 1991, shortly after the circulation of the letter
complained of. Solicitors' letters of demand usually put their client's case at its highest but, even taking account of that usual tendency of the genre, this letter form Ebsworth and Ebsworth was in extremely strong terms.
It enclosed a copy of the letter complained of, together with another circular, of which no complaint is made of in this proceeding. It was said:

There are meetings of Titan Hills shortly scheduled to consider this proposal. Within the last few weeks there has been an anonymous letter circulated to a significant number of the shareholders of Titan Hills. The letter makes a bitter

"....that the author of these letters and those involved in their publication are and have been intent on trying to cause as much injury to our clients' personal and business reputations as possible in an effort to poison the attitude of the shareholders of THAL (Titan Hills Australia Limited) towards the widely publicized intentions of PDHL (Precision Data Holdings Limited) as regards THAL."

The letter continued that:

"The publication of anonymous letters is cowardly. If that was their only vice, our clients might have been prepared to take no action concerning their publication. However, the content of the letters is clearly defamatory of our clients; the second of the two letters contains vile, misleading and inaccurate defamatory statements and may amount to a criminal defamation."

The letter then made complaints about misuse of the logo in

breach of copyright. It continued: "As a result of that action and separate investigations	conducted on behalf of our clients, evidence has been
obtained that you are the author of the earlier of the two anonymous letters and suspected of being the author of the second anonymous letter and involved in their publication."

I interpolate that the second letter referred to is the letter

which is the subject of these proceedings. Ebsworth and
Ebsworth's letter continues:

"Our clients have instructed us to issue proceedings for defamation against you in which both general and exemplary damages will be sought. These proceedings will be served upon you in due course."

There was then a request for an undertaking and the letter concluded:

"Our clients are incensed by the events outlined in this letter and by the unjustified, inaccurate and poisonous attacks made upon them which can only be characterised as vicious slurs upon their corporate and personal characters. Our clients are determined to have their reputations vindicated and will pursue all proceedings issued against you to finality."

That letter, as I say, was dated 4 April 1991, which was a Thursday, and may be presumed to have been delivered the following day. There was a response to that letter from Messrs Holding Redlich on behalf of the respondent and that letter was dated Monday, 8 April 1991. It consisted of a denial of any involvement in the letter complained of.

In that setting some investigations were made by a private investigator on behalf of the applicants. At about 1O:OOpm on Wednesday, 10 April, he went to the premises of the respondent's company and took possession of some garbage bags. He later searched the contents of those bags and from them he pieced together three documents, which on their face appear to be credit references relating to Mr Cullen and his companies.

It is clear that the three documents in question had been torn up into quite a number of small pieces. The possibility of a connection on their face between the credit references and the letter complained of may be explained by this passage from the latter:

"Vote no to any 'merger' proposal. The data entry business is not the best place for our money, any interest bearing deposit would give a far better return (for a start it will be profit). Why risk dealing with people you would not even lend your pen to1 Do a credit check (Cullen VIC LIC #l514238 DOB 02/01/44) on them and you will see what we are talking about."

The credit references contain the same licence number and date of birth in relation to Mr Cullen.

The respondent swore an affidavit in which he dealt with this matter as follows. He says that after receiving the applicants' solicitor's letter of demand:

"I immediately contacted my solicitors Messrs Holding Redlich and was advised by Mr Nicholas Pullen of that firm to put all my files in order that related to Cullen or his companies. As a result I went through all my papers with a view to ordering them in a way which would be both tidy and relevant for the solicitors. I threw out an enormous amount of material which was either repetitive or old into which latter category fell the relevant credit searches. In all cases I destroyed the documents by simply tearing them up and throwing them into the rubbish. I would respectfully point out that the latest date appearing on any of the copies of the credit searches which I destroyed was 3 November 1988."

That being the state of the evidence, it will be apparent, as Mr Wilson pointed out, that there is before the court no direct evidence of his client's involvement in the publication of the letter.

make out at trial a circumstantial case which, on the balance

However, the applicants, of course, will succeed if they can

of probabilities, establishes that fact.

I am going to make some comments now and at the risk of boring listeners I repeat that this is not expressing any final view and I make factual comments at this interlocutory stage only because the applicants' case is of necessity one which depends on inference. Therefore, to ascertain whether there is a serious question to be determined, one has to look at the possible inferences which might arise and which might persuade a trial judge to conclude this issue in favour of the applicants.

The possession of the credit references in themselves I see as not terribly sinister and readily explicable, given the commercial hostility which existed between these two gentlemen and the respondent's firm desire to prevent the acquisition of Precision Data taking place.

However, what is of significance to my mind is what is done with the credit references in the face of the solicitors' letter of demand. One would expect the ordinary advice of any solicitor to a client faced with imminent action would be that the client should carefully collect all documents which may be possibly relevant to the case and certainly not destroy any such documents.

There is no direct evidence here one way or the other as to whether that advice was given, but I think it is fair to infer that a well known and reputable firm like the one which acts for the respondent would certainly not have given any advice which gave the slightest suggestion that he should do what he in fact did.

His explanation that in order to put his files "in order" he tore up and threw out material which on its face seems to bear

a connection with the critical letter, be regarded as evidence of a consciousness of guilt in that it was prompted by a desire to get rid of anything which might connect him with the letter which, on the assumption that he was the anonymous author, he would not have expected to be traced to him.

I think it is sufficiently apparent from this perhaps already excessively long review of the evidence that I have come to the conclusion that there is a serious question to be determined on the factual issue as to whether the respondent was in some way responsible for the publication of the letter.

Two other matters were advanced by Mr Wilson to which I should briefly refer. First, Mr Wilson said that in any event there was no basis for fearing a repetition of the publication of the letter, given that the relevant meetings were only a few days away and that if the respondent had, in fact, had anything to do with the earlier circulation, the very onset of these proceedings would be likely to ensure that he would not cause any further publication.

I think the answer to this argument is partly to be found in s .80 (4) of the Trade Practices Act which expressly directs that the power to grant injunctions may be exercised whether or not it appears to the court that the person intends to engage again or to continue to engage in conduct of the relevant kind.

There is also merit in what M r Archibald QC advances namely, that, as he put it, the "high risk zone" of the few days before the meeting is one in which the applicants are particularly vulnerable to an attack of this nature.

was the author of this letter, it was in truth a particularly And I think it also relevant to note that if the respondent cowardly and devious tactic to adopt and somebody who would conduct themselves in that way would have little compunction in repeating the exercise if he thought he could gain some advantage by it, and in a way which could escape detection.

The second matter that Mr Wilson mentioned related to another proceeding in this court, number VG 69 of 1981, where proceedings in relation to this letter have been taken against a company called Data Connection Pty Limited, a company with which the present respondent has no connection.

Some of the court documents in that case were produced as an exhibit before me, but it was said that the affidavits indicating the factual basis of the case would not be disclosed by the registry staff.

I think for present purposes the bare fact that the applicants have taken proceedings against somebody else, admittedly, on this hypothesis, unconnected with the respondent, does not in itself weigh against the grant of an injunction. There is nothing before me to show that the case put in the other proceeding is inconsistent with the present one. The nature of the activity complained of, that is, the publication of a letter which it would seem has gone to about 500 or 600 shareholders, is on its face something in which more than one person can co-operate in different ways.

I am therefore prepared to grant an interlocutory injunction on the usual undertaking as to damages. I agree that it is highly desirable that the substance of this matter should be resolved as quickly as possible. It is not a charge which should be left hanging over the head of the respondent for any longer than is necessary. So I will hear what counsel have to say about any directions which might be sought. I might indicate I would be prepared to make directions which would

hearing. I would think discovery would be necessary, but encompass all the necessary directions leading up to a interrogation seems unnecessary in the light of the disclosure
of substantial affidavit material on either side.

All right. Upon the usual undertaking as to damages, I order that pending the hearing and determination of this application or further order, the respondent by himself, his servants or agents or howsoever otherwise be restrained from:

(a)	publishing, reproducing or distributing the Keydata logo annexed to the statement of claim filed herein; or
(b)	publishing, reproducing or distributing the document being the document annexure "B" to the statement of claim filed herein or any document to similar effect.

I direct that the respondent file and serve his defence and cross claim, if any, by 9 May 1991.

I direct that the applicants file and serve their reply and defence to cross claim, if any, by 16 May 1991.

I direct there be mutual discovery on or before 30 May 1991.

I order that there be inspection of documents on or before

6 June 1991 and I order that this application be treated as a

directions hearing and that the hearing be adjourned to 7 June

1991. I reserve the costs of today.

I certify that this and the preceding ten (10) pages are a true copy of the Reasons for Judgment of the Honourable Mr Justice Heerey

Counsel for the Applicant:	Mr A C Archibald QC and Mr C D Golvan
Solicitors for the Applicant:	Messrs Ebsworth & Ebsworth
Counsel for the Respondent:	Mr S K Wilson
Solicitors for the Respondent:	Messrs Holding Redlich