Liddelow v Gelavis

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: LIDDELOW -v- GELAVIS [2007] WASC 305

CORAM: ACTING MASTER CHAPMAN

HEARD: 29 OCTOBER 2007

DELIVERED : 19 DECEMBER 2007

FILE NO/S: CIV 1676 of 2006

BETWEEN: KANE LIDDELOW
First Plaintiff
UMBERTO CARMELO MONDELLO
Second Plaintiff
AND
GEORGE MICHAEL GELAVIS
First Defendant
CHRISTIAN ANTHONY SINGLETON
Second Defendant
ALLIANCE WA PTY LTD (ACN 101 521 233)
Third Defendant

Catchwords:

Practice and procedure - Third party discovery - Return of documents - Restraint on the use of documents - Release from the implied undertaking in respect of discovered documents

Legislation:

Rules of the Supreme Court 1971 (WA), O 26A r 5

Result:

Third party discovery granted in part
Application of the defendants dismissed

Category: B

Representation:

Counsel:

First Plaintiff                  :     Ms P E Cahill
Second Plaintiff             :     Ms P E Cahill
First Defendant              :     Mr S J Lemonis & Mr R W Richardson
Second Defendant         :     Mr S J Lemonis & Mr R W Richardson
Third Defendant            :     Mr S J Lemonis & Mr R W Richardson

Solicitors:

First Plaintiff                  :     Murcia Pestell Hillard
Second Plaintiff             :     Murcia Pestell Hillard
First Defendant              :     Fairweather & Lemonis
Second Defendant         :     Fairweather & Lemonis
Third Defendant            :     Fairweather & Lemonis

Case(s) referred to in judgment(s):

Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 14 FCR 434
Leighton Contractors Pty Ltd v Public Transport Authority of Western Australia [2007] WASC 65

ACTING MASTER CHAPMAN: As I understand it, I have two applications before me. The first was filed by the plaintiffs on 1 May 2007 seeking discovery from non‑parties. By letter of 24 October 2007, the solicitors for the plaintiffs have advised they are not seeking non‑party discovery at this time against Mr Giuseppe Ianco nor Ms Susan Marnie Verco and seek that the application in relation to those parties be adjourned sine die. The remaining parties, Blueknight Corporation Pty Ltd, Mr David Anthony Paganin and Mr Jamie Hamilton do not oppose the application.
The second application was filed by the defendants on 19 September 2007 and seeks a number of orders. The orders sought now can be summarised as follows:
(1)an order that the documents referred to in the affidavit of the second defendant sworn 30 August 2007 be returned to the third defendant;
(2)an order restraining the plaintiffs from disclosing the contents of the documents to any person or otherwise using the contents of the documents;
(3)the defendants be released from the implied undertaking in respect to the plaintiffs' discovery for a number of purposes.
The application is supported by an affidavit of the second defendant sworn on 30 August 2007. The defendants advise they do not now press for orders in terms of pars 3, 5 and 6 of the application.

The plaintiffs' application for non‑party discovery pursuant to O 26A r 5

The discovery is sought from two groups: (1) Mr Hamilton who is the chief financial officer of the third defendant; and (2) Mr Paganin and Blueknight Corporation Pty Ltd who were effectively equity holders in the third defendant.
As to Mr Hamilton, it is said he is an agent of the third defendant and he has no right consistent with the general principles of discovery to produce any documents for inspection by way of discovery. Further, it is said that the scope of discovery that is sought is well beyond what is normally the case in respect of applications of this type.
Counsel for the defendants referred me to the decision of Le Miere J in Leighton Contractors Pty Ltd v Public Transport Authority of Western Australia [2007] WASC 65 where his Honour said:
Order 26A empowers the court to order a non‑party to give discovery of all documents that relate to any matter in question in the action if there are reasonable grounds for believing that the non‑party had, has, or is likely to have had or to have, possession of documents that relate to any matter in question in the action. The court has a discretion whether to order a non‑party to give discovery and if so to limit the documents in respect of which discovery must be given. A non‑party should not be required to give discovery of specified documents or classes of documents merely on the off chance that something might show up from which some relatively weak inference might be drawn that might advance the case of the requesting party or be prejudicial to another party, or that the documents might lead to some train of enquiry that might advance the case of the requesting party or damage the case of another party.
The category of documents is extremely broad. I am satisfied that the category of documents includes documents that relate to a matter in question in the action in the sense that they may lead to a train of enquiry which would either advance the plaintiff's case or damage that of the defendant. However, the category of documents is drawn so widely that the burden of giving discovery of those documents may outweigh the potential benefit to the plaintiff of obtaining that discovery [34] ‑ [35].
With respect, I agree with his Honour. I accept that the orders should be crafted with a high degree of certainty. The question remains whether or not I should exercise the discretion in favour of the plaintiffs either in terms of the application or in some more confined way.
Counsel for the defendants correctly points out that Mr Hamilton, Mr Paganin and Blueknight Corporation Pty Ltd are not parties to the action and further submits they have not been provided with the pleadings. Rather, they have been provided with a letter from the plaintiffs' solicitors dated 23 April 2007. The relevant letter to Mr Hamilton is exhibit AGR 2 to the affidavit of Mr Adam Graham Rowe sworn on 15 May 2007. This letter lists the issues at pars 1.1 ‑ 1.8. Counsel for the defendants submits that the letter does not articulate all of the allegations in the proceedings.
In any event, counsel for the defendants argued that the extent of the discovery is too wide or not clear in a number of respects. He sought to demonstrate this by referring to the orders sought in relation to Mr Hamilton, the orders sought in relation to Mr Paganin and Blueknight Corporation Pty Ltd being essentially the same. The issues are as follows:
(1)the opening paragraph is too wide as the non‑parties would not know the matters in question in the action;
(2)as to par 1.1, counsel for the defendants submits it is too wide and does not limit the scope in either time or subject‑matter. A similar objection is made in relation to pars 1.2, 1.3 and 1.4(a) and (b);
(3)as to par 1.4(f), (g) and (h), objection is taken to the use of the words 'financial position', 'relationship' and 'involvement'.
I think that many of the objections may overlook the fact that pars 1.1 to 1.4 are subject to the opening paragraph and thus they must 'relate to any matter in question in the action'. I appreciate counsel for the defendants does object to that term on the basis that the non‑parties will not necessarily know what those matters are. I consider if that issue is properly addressed, the other issues substantially fall away.
As counsel for the plaintiffs correctly points out, the three non‑parties do not claim the orders sought are oppressive, nor that they have any problem in understanding the scope of the discovery orders. Counsel for the plaintiffs argues that the non‑parties are not asked to make a decision in a vacuum and without the benefit of pleadings as the matters in issue are defined in the application. Even if one were to accept that was so, it does not define the relevant period. As to the relevant period, counsel for the plaintiffs contends that the period of involvement of Mr Hamilton, Mr Paganin and Blueknight Corporation Pty Ltd was confined to the period of some 18 months from approximately July 2002 to January 2004. That may be so, but any order for discovery should be in clear terms.
Notwithstanding the fact that Mr Hamilton, Mr Paganin and Blueknight Corporation Pty Ltd do not object to orders being made in the terms of the application, I do not consider the orders sought are precise enough. Paragraph 1 seeks discovery and inspection of all documents which relate to any matter in question in the action including but not limited to the paragraphs listed which are pars 1.1 ‑ 1.4. It would appear from the words ('the Matters in Question') that those matters listed in par 1.4 are the matters in question. Given the words 'but not limited to' in the opening paragraph, that leaves the question of what are the other matters in question that are not included in par 1.4.
Further, the letter to Mr Hamilton from the plaintiffs' solicitors referred to above indicates the items referred to in par 1.4 of the application as the relevant issues and it was on the basis of that letter he expressed a view that he would not object to the application. I am of the view the orders sought are not clear.
Counsel for the defendants points out that Mr Paganin was at the relevant time a legal adviser and submits that to the extent that any discovery is ordered from him the defendants seek the ability to inspect the documents first for the purpose of assessing whether or not there is any privilege that arises to the benefit of any of the defendants in respect of that discovery. Assuming that Mr Paganin was at the relevant time a legal adviser, if any privilege resides in him or his clients or former clients, it would be a matter for him to assert that claim and I do not consider the proposal put forward by counsel for the defendants is appropriate.
Exhibit AGR 3 to the affidavit of Mr Rowe sworn 15 May 2007 is a copy of a letter from Blueknight Corporation Pty Ltd which indicates that there had been a dispute between it and the third defendant which resulted in a deed of settlement of release dated 13 July 2005, whereby Blueknight Corporation Pty Ltd undertook to keep the matters in the deed confidential. To the extent that that impacts on the documents sought, the company can make any claim in this regard which is open to it.
As to Mr Hamilton, counsel for the defendants submits that whilst he may be able to produce documents, he holds them as agent and so he will have to object to the production of them. That may or may not be so but that is a matter for Mr Hamilton to assess and in my view it should not prevent an order being made in these circumstances.
Taking all the factors into account I would be prepared to order that Mr Hamilton, Mr Paganin and Blueknight Corporation Pty Ltd discover documents which relate to issues contained in par 1.4 of the application from July 2002 to January 2004. I would not be prepared to make orders in terms of the application as it is currently worded as I consider it is too wide. I would be prepared to consider expanding the orders after having had the benefit of hearing from counsel on the appropriate wording.

Defendants' application

The defendants seek the return of the relevant documents on the basis that the first plaintiff has unlawfully obtained extensive quantities of confidential material in respect of the proceedings. This comes as a result of the first plaintiff filing on 5 July 2007 an affidavit of discovery which included financial records of the third defendant. There is some disagreement between the parties as to how those financial records came to be in the possession, custody or power of the first plaintiff. Counsel for the defendants submits that the documents are the property of the third defendant, are confidential and the first plaintiff does not claim any property in them.
The plaintiffs oppose the application on four grounds: (1) there is no evidence that the first plaintiff obtained the documents unlawfully or retained them unlawfully; (2) if one wishes to make allegations of the kind made by the defendants, they must be supported by cogent evidence; (3) the legal foundation of the application is misconceived in that to the extent the defendants seek the return of the documents, it should be pursued by a claim in detinue not a claim of abuse of process; (4) the documents are relevant to the proceedings and as they were in the possession, custody or power of the first plaintiff, he was obliged to discover them and the plaintiffs have done nothing further with the documents and do not intend to.
The documents fall into two broad categories: (1) documents contained on a laptop which was transferred to the first plaintiff after the employment ceased; (2) documents received after the employment of the first plaintiff ceased. As to the second class of documents, these are said to have been contained on two compact discs.
There is a conflict on the affidavit evidence as to whether or not Ms Verco gave two compact discs to the first plaintiff when they were created and when the first plaintiff says they were given to him.
On the evidence before me I am not persuaded the documents were unlawfully obtained nor unlawfully retained.
To the extent the defendants claim the documents are said to contain confidential material, counsel for the plaintiffs refer to the comments of Gummow J in Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 14 FCR 434, where he said (443):
As I have indicated the case is to be approached in terms of the general law, not as a case of confidence protected by contract, but as one, if anything, of confidence protected in equity. It is now settled that in order to make out a case for protection in equity of allegedly confidential information, a plaintiff must satisfy certain criteria. The plaintiff: (i) must be able to identify with specificity, and not merely in global terms, that which is said to be the information in question; and must also be able to show that (ii) the information has the necessary quality of confidentiality (and is not, for example, common or public knowledge); (iii) the information was received by the defendant in such circumstances as to import an obligation of confidence; and (iv) there is actual or threatened misuse of that information: Saltman Engineering Co Ltd v Campbell Engineering Co (1948) 65 RPC 203 at 215; [1963] 3 All ER 413n, at 415; The Commonwealth v John Fairfax and Sons Ltd (1980) 147 CLR 39 at 50‑51; O'Brien v Komesaroff (1982) 150 CLR 310 at 326‑328.
Counsel for the plaintiffs correctly submits that there is no identification of the information in these documents which is said to be confidential, nor an explanation of why it is said it is confidential. I agree that the fact documents may contain financial records of a private company does not go far enough. Other factors would need to be considered such as the age of the information, the way the owners dealt with the information and how the documents were received.
Further, counsel for the plaintiffs contends that there is no evidence before the court that would demonstrate an actual or threatened misuse of the documents. It is submitted that the exercise of the equitable jurisdiction in relation to a breach of confidence must fail.
As to the release from the implied undertaking, the plaintiffs say: (1) it is not clear why such a release is necessary; (2) the basis upon which the application is predicated is an allegation that the plaintiffs have in some way engaged in unlawful conduct. It is said there is nothing in the evidence before the court that would reasonably allow for any prima facie conclusion that the conduct had been unlawful.
Having considered all of the material, I am not persuaded that:
(1)the documents were unlawfully obtained or unlawfully retained;
(2)the documents have the necessary quality of confidentiality;
(3)there is any actual or threatened misuse of the documents.
Further, I agree with the plaintiffs' submission that the application is misconceived. Accordingly, I would not make any of the orders sought by the defendants.

[2007] WASC 305

19 December 2007