Liberty Financial Pty Ltd v Scott
[2004] VSC 414
•19 October 2004
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
INTELLECTUAL PROPERTY LIST
No. 9140 of 2003
| LIBERTY FINANCIAL PTY LTD (ACN 077 248 983) and SHERMAN CHING MA | First Plaintiff Second Plaintiff |
| v | |
| TREVOR WILLIAM SCOTT | First Defendant Second Defendant |
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JUDGE: | HARPER J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 15, 18 and 19 October 2004 | |
DATE OF RULING: | 19 October 2004 | |
CASE MAY BE CITED AS: | Liberty Financial Pty Ltd and Anor v Scott and Anor | |
MEDIUM NEUTRAL CITATION: | [2004] VSC 414 | |
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RULING – Claim brought against former employee and present business rival - Alleged unlawful transmission of confidential information - Discovery – Access by plaintiffs to masked portions of business rival’s confidential documents – Whether inspection regime agreed between the parties should be varied – Whether plaintiffs should have access to entire list of documents seized on Anton Piller raid – Whether fishing.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr B.R. Kendall QC With Mr C. Salpic | Abbott Stillman & Wilson |
| For the Firstnamed Defendant | Mr P. Jopling QC | Allens Arthur Robinson |
| For the Secondnamed Defendant | Mr S. Anderson | Freehills |
HIS HONOUR:
I have before me a summons dated 29 September 2004. By that summons as originally issued, the plaintiffs sought in paragraph 1 an order that two employees and/or officers of the first plaintiff and the second plaintiff itself have access to certain documents.
The first category of documents to which access was sought is those documents identified by the second defendant, Bluestone, in its list of documents as commercially sensitive. That, I take it, is a reference to the 27 documents which Bluestone has discovered but which it declines to allow the plaintiffs themselves or their servants or agents to inspect in an unmasked form.
Part of each of the documents in this category have been "masked" by the second defendant. The effect of that masking is that the portions of the documents thus hidden from view are not, if the second defendant's position is maintained, to be seen by the plaintiffs or any officers of the plaintiffs.
The second defendant has no objection to unmasked copies of all of its discovered documents being seen (given appropriate undertakings as to confidentiality) by the plaintiff's instructors and by nominated persons from the firm of Ernst & Young who are to be engaged by the plaintiffs as the plaintiffs' experts for the purposes of this litigation.
The argument over the right of the second defendant to prevent the plaintiffs from seeing unmasked the documents in question has been heavily contested in the hearing before me. The plaintiffs submit that the information contained in these documents is highly relevant to their case. When pressed upon the basis of this claim of relevance, the plaintiffs turned not in the first instance to the pleadings, but to the proposition that it was part of their case that the first defendant had wrongfully transmitted to the second defendant information about what might broadly be termed the first plaintiff's "modus operandi."
It was not submitted that the plaintiffs can identify any document, whether stored electronically or otherwise, in which this information can be identified. Rather, the plaintiffs submitted that at trial they will, if discovery is properly made, demonstrate that by comparison with the first plaintiff's modus operandi in 1999 against the second defendant's modus operandi when it first commenced business and in the two years thereafter, one will be able to see such similarities as to infer that confidential information was passed by the first defendant to the second defendant.
If I have accurately described the submissions of the plaintiffs on this point, then their position is that they have no evidence at present to substantiate what they anticipate will be the proper inference to draw from a comparison of the several modus operandi of respectively the first plaintiff and the second defendant. They suspect that discovery, if properly made, will disclose that the comparison they seek to make can be made and, when made, will lead to the inference to which I have referred.
If that, again, is an accurate summary of the plaintiffs' argument on this point, then it seems to me that the plaintiffs are essentially engaged in a fishing expedition. The rules concerning discovery do not permit discovery for the purposes of creating a case. There are of course special rules concerning discovery before action is commenced, where the plaintiff or putative plaintiff can demonstrate a real likelihood that a suspected case will be substantiated by inspection of documents not available without resort to that rule. That is not this case. Again, with the caveat that I have accurately summarised the plaintiffs' submissions, it seems to me that this application is one that can be properly described as fishing in the pure sense.
If one turns to the pleadings, rather than to the oral submissions, one sees particularly in paragraph 19 but not exclusively in that paragraph, the way the plaintiffs presently plead their case in relation to the identification of the confidential information which it is alleged the first defendant wrongly passed to the second defendant. There is nothing in that paragraph as I read it, and there is nothing in the pleadings more generally, which suggests that it is the plaintiffs' case that the court should engage in a comparison of the kind to which I have referred. Rather, it is the plaintiffs' case, as I understand the pleadings, that certain documents - set out in Appendices 1 and 2 to the statement of claim - contain within them information which has the impugned character, that is information which falls within those categories of information set out in subparagraphs (a) to (d) at paragraph 19.
In relation to subparagraphs (a) to (c) the second defendant has submitted, and I accept, that the documents already discovered cover each of those categories of information. Category (d) is broadly expressed. It is in these terms: "Information and data in respect of the first applicants - that is the first plaintiff's - products and services maintained and developed by the first plaintiff as was necessary to enable it effectively to carry on its business." That pleading is in broad terms; it could be read to cover the category of or genus of information an example of which is given in Exhibit 3 to the affidavit of Benjamin Lee Souter Fitzmaurice, sworn on 18 October 2004.
It may be, although I am in no position to know, that it was for that reason that the exhibit to which I have just referred was included by the Registrar of the Federal Court, Registrar Efthim, when he made orders in relation to categories of documents that were to be discovered.
If it were relevant for the plaintiffs to deal effectively with Exhibit 3 of Mr Fitzmaurice's affidavit, then they would be under severe constraints in providing adequate instructions to their legal advisers in relation to such document in its currently masked form. It may well be that there are other documents, which would give rise to and which have given rise to, similar difficulties. It is on this basis that the plaintiffs have strenuously argued for a relaxation of the current inspection regime; a regime which requires the plaintiffs' instructors to restrict access to unmasked documents to themselves and confer with their clients in circumstances where their clients have access only to masked copies.
Given that the plaintiffs do face real practical difficulties in obtaining instructions in relation to documents of this kind marked in this way, the question becomes whether a different regime would overcome the problem or alternatively, whether the problem is one which is unreal in the sense that the documents themselves are not relevant to the issues that the pleadings have raised.
It is apparent from what I have said that I have real doubt about the relevance of the documents in question. I accept that all 27 of them fall within the categories delineated by the Registrar. I also accept that the defendants have consistently maintained that the documents are not relevant and have produced them, in effect, under protest. This is not a case where the defendants have at one stage taken one position and now seek to renege on that position. The defendants, in particular the second defendant, as I understand the position, have consistently maintained the irrelevance of these documents but consistently with the Registrar's orders and with what I am instructed and accept is a desire to ensure the smooth progress of this matter to trial, have been prepared to make them available to the plaintiffs in the limited form I have described.
The plaintiffs seek by paragraph 2 of their summons unrestricted access by Colin Wright, David Smith and Hilda Cheong of Ernst and Young to the commercially sensitive documents. In my opinion in taking this position the defendants have gone as far as they need go in assisting the plaintiffs to deal with the documents in question. Were the defendants not prepared to allow access to the relevant accountants, my position almost certainly would have been that the masked documents should not be further inspected at all by the plaintiffs save to the extent that the current regime would permit such inspection. Even then I would have some doubt as to whether that course was appropriate given that if taken it would on the past history of this litigation result in further claims by the plaintiffs that they were so hampered in their dealing with these documents that they could not within the time allowed complete the preparation of the affidavit material which in due course will form the evidence-in-chief to be called by the plaintiffs.
In order to remove the likelihood of further delays grounded upon the difficulties to which I have referred, I would as presently advised have been minded to rule that the documents were irrelevant and therefore not open to inspection at all. I need not come to a final decision about that, however, given that the defendants have no objection to inspection by the accountants in the way that I have mentioned. Should the accountants find that they are unable to properly advise the plaintiffs' practitioners and should those practitioners find that they are, even with the assistance of the accountants, unable to obtain proper instructions from their clients, then it may be that this issue will have to be revisited. If so, then I will be open to persuasion; but my present position, as I say, is that the documents are not relevant and that the plaintiffs by having access to these documents at all are gaining an advantage to which, if I am right, they are not entitled.
That takes me back to paragraph 1 of the summons. The plaintiffs seek access by Messrs Pillai and Hodges and by the second plaintiff, to the documents identified by the first defendant's list of documents. I am informed by counsel for the first defendant that subject to the confidentiality claims of the second defendant they have no objection to the application. Accordingly, I will grant that access. It will be subject to the confidentiality presently claimed by the second defendant.
The plaintiffs also seek access to the supervising solicitor's list. This application is in my opinion one that ought not be granted. That list contains, I am told, 60,000 documents. Some of those documents one can assume will be totally irrelevant to this litigation. That assumption is supported by evidence that the list includes documents held on a computer operated in the main, as I understand it, by the partner of the first defendant; and on another computer generally used by a child of the first defendant. Whether or not what I have just said is in fact accurate is, however, it seems to me, of no great relevance. There has been no evidence to suggest that all 60,000 documents are relevant to the issues between the parties. On the contrary, the evidence is that the list has been examined by the solicitors for the defendants and in each case those solicitors have determined that certain documents are relevant and in each case those documents have been discovered.
I see no reason why the normal rule should not be applied. The normal rule is that the affidavit of a party making discovery is conclusive unless there is evidence suggesting that certain relevant documents have not been included in it. Given that the sworn evidence before me is that the defendants have discovered all relevant documents and given that there is no evidence to the contrary, I see no reason why the ordinary rule should not apply.
The plaintiffs seek leave to amend the summons of 29 September by adding, amongst other paragraphs, paragraph 1A. By that paragraph the plaintiffs seek permission for their solicitors and counsel to inspect all of the documents in the supervising solicitor's list. They also seek permission to photocopy where appropriate. For the reasons that I have just expressed, it seems to me that that permission, which has previously been sought and refused, should be refused once more.
The summons next seeks an order that the first defendant permit forthwith an independent forensic computer expert nominated by the plaintiffs to examine the computers belonging to the first defendant with a view, in effect, to reconstructing those documents which have presently been identified as being corrupted. The first defendant, against whom this order is directed, has no objection to the 191 documents which it has relevantly identified being so reconstructed.
I will therefore require that the first defendant permit the computer expert to make examination of the relevant computers with a view to ascertaining whether or not it is possible to remove the corruption presently attending the documents in question. I will grant that permission on the basis that the plaintiffs not rely on it in any claim for delay in their preparation for trial.
I now come to subparagraph (b) of paragraph 2 of the summons. As I understand it the first defendant does not oppose access by the three named representatives of Ernst & Young to the documents identified in his list of documents, subject of course to the people signing the usual undertakings for confidentiality.
Paragraph 3 of the summons seeks an extension of time by which the plaintiffs’ affidavit material be filed and served. I am prepared to allow the plaintiffs until Friday 12 November by which to file and serve that affidavit material. Paragraph 4 of the summons has been deleted. The next paragraph therefore is paragraph 5. I am prepared to extend to Tuesday 21 December the time by which the defendants must file and serve their affidavit material. In each case 4 p.m. will be the relevant deadline.
I will fix Wednesday 22 December as the date on which the parties must return to the Court so that the Court can ascertain whether or not progress has been made in accordance with these orders and with the parties general obligations pursuant to the rules. The Court’s settled purpose is that the trial commence on 1 February next year.
Paragraph 5A of the summons seeks an order that the date for the trial be vacated. As I understand the plaintiffs’ position they no longer seek that order. In any event I will not grant it. The trial will commence on 1 February.
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