Mead Corporation v Carbonless Papers (Australia) Pty Ltd
[2002] WASC 237
MEAD CORPORATION -v- CARBONLESS PAPERS (AUSTRALIA) PTY LTD & ORS [2002] WASC 237
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2002] WASC 237 | |
| Case No: | CIV:1606/1996 | 7 OCTOBER 2002 | |
| Coram: | HASLUCK J | 16/10/02 | |
| 20 | Judgment Part: | 1 of 1 | |
| Result: | Plaintiff's application for leave allowed Defendants' application for an injunction refused | ||
| A | |||
| PDF Version |
| Parties: | MEAD CORPORATION CARBONLESS PAPERS (AUSTRALIA) PTY LTD (ACN 053 402 038) THOMAS LESTER EVERETT ROBIN ASCOTT |
Catchwords: | Practice and procedure Discovery Implied undertaking not to use discovered documents Application for leave to use documents in other proceedings against the opposing party Documents relevant to confidentiality arrangements between the parties Leave granted |
Legislation: | Nil |
Case References: | Ainsworth v Hanrahan (1991) 25 NSWLR 155 All State Life Insurance Co v Australian and New Zealand Banking Group Ltd (1995) 57 FCR 360 Central Queensland Cement Pty Ltd v Hardy [1989] 2 Qd R 509 Crest Homes PLC v Marks [1987] AC 829 CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 Distillers Co (Biochemicals) Ltd v Times Newspapers Ltd [1975] 1 QB 613 Esso Australia Resources Ltd v Plowman (Minister for Energy & Minerals) (1995) 183 CLR 10 Geraldton Building Co Pty Ltd v Christmas Island Resort Pty Ltd (No 3) (1996) 14 WAR 293 Harman v Secretary of State for the Home Department [1983] AC 280 Henry v Henry (1996) 185 CLR 571 Holpitt Pty Ltd v Varimu Pty Ltd (1991) 29 FCR 576 Minister for Education v Bailey (2000) 23 WAR 149 National Mutual Holdings Pty Ltd v Sentry Corporation (1989) 22 FCR 209 Riddick v Thames Board Mills Ltd [1977] 1 QB 881 Springfield Nominees Pty Ltd v Bridgeland Securities Ltd (1992) 38 FCR 217 Sweetman v Australian Thoroughbred Finance Pty Ltd, unreported; Fed C of A; (Lockhart J); 23 July 1992 Uniflex (Australia) Pty Ltd v Hanneybel [2001] WASC 138 Australian Trade Commission v Deputy President McMahon (1997) 73 FCR 211 Duke Group Ltd (In Liq) v Pilmer (1993) 60 SASR 29 Morgan v Mallard [2001] SASC 364 Sony Corporation & Anor v Time Electronics [1981] 3 All ER 376 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
CARBONLESS PAPERS (AUSTRALIA) PTY LTD (ACN 053 402 038)
First Defendant
THOMAS LESTER EVERETT
ROBIN ASCOTT
Second Defendants
Catchwords:
Practice and procedure - Discovery - Implied undertaking not to use discovered documents - Application for leave to use documents in other proceedings against the opposing party - Documents relevant to confidentiality arrangements between the parties - Leave granted
Legislation:
Nil
(Page 2)
Result:
Plaintiff's application for leave allowed
Defendants' application for an injunction refused
Category: A
Representation:
Counsel:
Plaintiff : Mr C S Gough
First Defendant : Mr D M Stone & Ms G S Pitt
Second Defendants : Mr D M Stone & Ms G S Pitt
Solicitors:
Plaintiff : Minter Ellison
First Defendant : Williams & Hughes
Second Defendants : Williams & Hughes
Case(s) referred to in judgment(s):
Ainsworth v Hanrahan (1991) 25 NSWLR 155
All State Life Insurance Co v Australian and New Zealand Banking Group Ltd (1995) 57 FCR 360
Central Queensland Cement Pty Ltd v Hardy [1989] 2 Qd R 509
Crest Homes PLC v Marks [1987] AC 829
CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345
Distillers Co (Biochemicals) Ltd v Times Newspapers Ltd [1975] 1 QB 613
Esso Australia Resources Ltd v Plowman (Minister for Energy & Minerals) (1995) 183 CLR 10
Geraldton Building Co Pty Ltd v Christmas Island Resort Pty Ltd (No 3) (1996) 14 WAR 293
Harman v Secretary of State for the Home Department [1983] AC 280
Henry v Henry (1996) 185 CLR 571
Holpitt Pty Ltd v Varimu Pty Ltd (1991) 29 FCR 576
Minister for Education v Bailey (2000) 23 WAR 149
National Mutual Holdings Pty Ltd v Sentry Corporation (1989) 22 FCR 209
Riddick v Thames Board Mills Ltd [1977] 1 QB 881
(Page 3)
Springfield Nominees Pty Ltd v Bridgeland Securities Ltd (1992) 38 FCR 217
Sweetman v Australian Thoroughbred Finance Pty Ltd, unreported; Fed C of A; (Lockhart J); 23 July 1992
Uniflex (Australia) Pty Ltd v Hanneybel [2001] WASC 138
Case(s) also cited:
Australian Trade Commission v Deputy President McMahon (1997) 73 FCR 211
Duke Group Ltd (In Liq) v Pilmer (1993) 60 SASR 29
Morgan v Mallard [2001] SASC 364
Sony Corporation & Anor v Time Electronics [1981] 3 All ER 376
(Page 4)
1 HASLUCK J: An issue has arisen between the parties to these proceedings as to the use that can be made of certain documents discovered by the defendants.
The Applications
2 The plaintiff has applied for leave to use the documents in question for the purposes of any action that the plaintiff may commence in the United States of America against the defendants or a related company, Rebb Nominees Pty Ltd, claiming damages for the use of confidential information belonging to the plaintiff.
3 Simultaneously, the defendants seek an injunction restraining the plaintiff from using the documents for any purpose save the prosecution or defence of claims in the current proceedings (CIV 1606 of 1996) before the Supreme Court of Western Australia.
4 In support of its application the plaintiff relied upon various affidavits including that of Brian Gray sworn 28 January 2002, that of Scott Allen King sworn 8 February 2002, that of Craig Stewart Gough sworn 11 June 2002, that of Martin John Prestage sworn 7 August 2002, and the affidavits of Francis Lee Breeden sworn 28 February and 6 June 2002.
5 The defendants relied upon the affidavits of Robin Ascott sworn 5 December 2001 and 19 August 2002, and the affidavits of Hermien Bouman sworn 21 November 2001 and 3 October 2002.
6 I note in passing that the present action CIV 1606 of 1996 was entered for trial some time ago with the result that the pleadings defining the dispute between the parties are in close to final form and are therefore an additional point of reference.
7 The action was listed for trial initially in August 2001 but various matters arose which led to an adjournment. The trial is now listed to commence in the near future.
Background
8 The pleadings and evidentiary materials show that for many years the plaintiff has been the exclusive manufacturer and distributor of a range of chemical carbonless coating materials. It also provides technical and other supporting services to facilitate their application and usage.
(Page 5)
9 It seems that over 10 years ago Mr Ascott was party to some negotiations with the plaintiff in the course of which his company, Rebb Nominees, entered into various agreements with the plaintiff. The effect of a confidential disclosure agreement dated 10 September 1990 was that the plaintiff agreed to disclose certain information to Rebb upon the basis that Mr Ascott's company would hold the same in strict confidence. It was not to analyse the compositions provided (or to have them analysed by a third party) without the consent of the plaintiff.
10 The effect of an agreement for provision of information and assistance was that any dispute between the parties should first be considered by an independent arbitrator to be agreed between the parties or, failing that, in accordance with the laws and within the jurisdiction of the Court of the State of Ohio in the United States of America.
11 It seems that in due course the first defendant, Carbonless Papers (Australia) Pty Ltd ("CPA"), was incorporated in Western Australia with a view to furthering the matters under discussion. By an agreement in writing made in October 1991 the plaintiff agreed to sell coating materials to CPA. There was some alteration to the terms and conditions of trade at a later date.
12 It was a facet of the negotiations that Mr Ascott, or a company associated with him, was to acquire a coater for the manufacture of carbonless paper using the plaintiff's system and materials upon the basis of advice received from the plaintiff.
13 It is now a matter of acute controversy between the parties as to whether the coater acquired by CPA was sufficient for the intended purpose and as to whether the plaintiff can be held responsible for certain representations which are said to have caused CPA loss and damage. These are matters to be resolved at the trial of the action. For present purposes, it is not necessary to look at these issues in any detail. It will be sufficient to note, in very general terms, that in the course of using the coater supplied by a third party, and the chemical coating materials supplied by the plaintiff, CPA eventually felt compelled to communicate with other suppliers of chemical coating materials. This was done in an attempt to overcome some of the difficulties CPA claimed to have experienced as a consequence of its dealings with the plaintiff.
(Page 6)
Legal Proceedings
14 It was against this background that the plaintiff commenced legal proceedings in the District Court of Western Australia in 1996. It sought to recover the sum of US$109,998.56 which was said to be due in respect of coating materials delivered to CPA. The matter was moved into the Supreme Court and consolidated with other proceedings when it became apparent that the defendants intended to advance a counterclaim for damages referable to the plaintiff's alleged involvement in the supply of the coater and alleged breaches of warranty and duties of care relating thereto.
15 The defendants' claim for loss includes a plea that had the carbonless paper been of the contractual quality, CPA would have achieved net profits of $3,700,000 over a period to 30 June 1998. It is said further that the defendants sustained losses of between $1,144,000 and $1,505,000 to the date on which CPA ceased trading.
16 It follows from these events that the principal matter in controversy is now reflected in the counterclaim. Hence, a direction has been made for the defendants to have the carriage of the consolidated action, CIV 1606 of 1996.
17 In essence, the defendants allege against the plaintiff breaches of agreements between the parties, breaches of a duty allegedly owed by the plaintiff to CPA when certain representations concerning the quality and performance of the coating machine purchased by the defendants from a third party were allegedly made, breaches of an implied term that the coater would be fit for the purpose and breaches of a contractual obligation and tortious duty concerning the quality and fitness for purpose of certain carbonless coating chemicals supplied by the plaintiff to the defendant company.
Discovery
18 For some years past the parties to the present action have been attending to various interlocutory matters including the process of discovery. Various affidavits of discovery have been filed and served by the solicitors for the defendants. Amendments to the pleadings may have had a bearing upon the provision of discovery but, in any event, for one reason or another, it seems that discovery has been provided by the defendants in a piecemeal way.
(Page 7)
19 It appears from the affidavit of the plaintiff's solicitor in this State, Mr Gough, that in early July 2001 Mr Gough travelled to the United States of America to meet with various persons associated with the plaintiff. During the course of that trip he became aware of correspondence that the plaintiff had obtained reflecting exchanges between Mr Ascott and a Mr Eisele of a company known as Bestforms. This suggested that the defendants may have been involved in providing information and chemicals confidential to the plaintiff to other manufacturers with a view to attempting to replicate the Mead chemicals. On the plaintiff's case before me it was at about this time that the plaintiff was first alerted to the possibility that there had (allegedly) been a breach of the confidentiality arrangements. This raised the question of whether the plaintiff had a basis for seeking relief upon such a ground as a matter additional to the issues in the existing pleadings.
20 Mr Breeden has been the general manager of the plaintiff company since January 2000. He said in his affidavit sworn 28 February 2002 that the most valuable asset owned by the plaintiff is the technology and information that it has concerning the manufacturer of carbonless paper. He said further that, before August 2001, he did not have any knowledge that CPA or Robin Ascott had any other legal claim on foot against any other party relating to alleged deficiencies in carbonless paper coating chemicals. He did not know that they had at any time had Mead carbonless coating chemicals analysed or reproduced, or that they had induced customers of the plaintiff to use other carbonless coating paper coating chemicals. He said in par 15 of his affidavit that prior to August 2001, in his belief, the defendants had not discovered any documents indicating matters of such a kind.
21 His affidavit continues in these terms:
"16. I am informed by Mr Gough, and believe, that in or about the middle of August 2001, during an inspection of discovered documents the defendants made available certain documents relating to the matters referred to in paragraph 15 hereof. I am informed by Mr Gough and believe that these documents had not previously been discovered. Mr Gough has provided me with copies of some of these documents which I have now read in detail. After reading those documents, I believe:
(a) there are currently on foot proceedings in the Supreme Court of Western Australia in which
(Page 8)
- Carbonless Papers (Australia) Pty Ltd is the plaintiff and the defendant is another carbonless paper chemical manufacturer ('BASF'). The claim by the plaintiff is very similar in nature to the counterclaim in this action and covers, at least in part, the same time period for which damages are claimed in this action;
- (b) Williams & Hughes are the solicitors on the record for Carbonless Papers in the action involving BASF;
(c) Robin Ascott has provided Mead carbonless paper chemicals to at least one other entity for the purpose of chemically analysing the chemicals for the purpose of reproducing them;
(d) with the assistance of that chemical analysis, Mr Ascott has caused others to attempt to replicate Mead chemicals;
(e) chemicals manufactured by Taiwan Hopax Chemicals (the company to whom Mr Ascott supplied Mead chemicals for the purposes of analysis), were provided by Robin Ascott to at least one entity in Melbourne for the purposes of trailing the product. I am generally aware of the entities in Melbourne who, at that time, produced carbonless paper and believe that one of these entities is Champion Business Forms. At or about this time, Champion Business Forms ceased to be a customer of Mead;
(f) Robin Ascott had formed a relationship with a manufacturer of equipment so that he was in a position to effectively provide equipment and chemical know-how to prospective customers;
(g) Mr Ascott has provided other chemical manufacturers with information concerning the Mead process and the way in which the Mead chemicals are stored and transported; and
(Page 9)
- (h) after CPA ceased to manufacture carbonless paper in 1996, it continued to earn money from an agency relationship with a Taiwanese chemical manufacturer.
- 17. From reading the documents that have been supplied to me, I believe that Robin Ascott provided Mead chemicals to third parties in the period 1995 - 1997. In or about 1997, other customers of Mead who operated in the Asia-Pacific region ceased to be customers of Mead. If permitted, Mead intends to pursue a line of enquiry to ascertain whether or not these customers subsequently purchased chemicals from Taiwan Hopax Chemicals, the company to which I believe Robin Ascott provided Mead OPAS chemicals.
18. If permitted, it is Mead's intention to commence proceedings against Robin Ascott and/or Carbonless Papers Australia Pty Ltd in Ohio claiming damages (including statutory damages) relating to the use, by Robin Ascott, of confidential information belonging to Mead."
22 Mr Breeden's evidence was backed up by the affidavit of Mr Gough sworn 11 June 2002. Mr Gough says that in August 2001 he pressed for further discovery by the defendants and was provided with a lever arch file containing a number of documents relating to Taiwan Hopax Chemicals and with documents related to legal proceedings between the defendants and BASF Chemicals. In May 2002 he met with a former employee of the defendant company, Martin Prestage, and as a result of that meeting Mr Gough formed a belief that during the course of Mr Prestage's employment with CPA, he was instructed by Mr Ascott to provide Mead chemicals to other chemical manufacturers and this was done for the purpose of having those manufacturers attempt to replicate the Mead chemicals.
23 The plaintiff's case is that chemicals were allegedly provided to other manufacturers in accordance with the instruction of Mr Ascott. CPA provided the contents of a document known as the Mead OPAS Technical Reference Manual to various parties. The meeting with Mr Prestage suggested to Mr Gough also that the defendant company could not get any other chemical to coat or perform as well as the Mead chemical. Further, that after Ferrucio Parri visited the defendants' factory in mid 1993, the
(Page 10)
- defendant company began vesting and experimenting with various other chemicals, and that the paper produced was often sold in the ordinary course of business.
24 Matters of the latter kind were subsequently referred to in an affidavit of Martin John Prestage sworn 7 August 2002. Mr Prestage said that at some point in the first few months of his employment, Mr Ascott indicated that the defendant company had contracts with the plaintiff that prohibited CPA from providing Mead chemicals and Mead confidential information to other parties.
Mr Ascott's Position
25 As I have already indicated, Mr Ascott swore two affidavits in support of the CPA summons for an interlocutory injunction to restrain any collateral use of documents discovered in these proceedings. He confirmed in his first affidavit sworn 5 December 2001 that at the heart of CPA's case is the contention that as a consequence of failures of the coater procured for CPA by Mead Corporation to operate properly for the first 15 months of CPA's operation, and of the inadequacy of (certain of) the chemicals provided by Mead Corporation for use in conjunction with the coater (for the manufacture of carbonless paper), CPA sustained serious business losses and ultimately ceased to trade. He said that CPA did not commence proceedings against Mead Corporation because of the prohibitive cost of judicial proceedings in the United States. However, CPA has counterclaimed for losses in the subject action instituted by Mead Corporation in Western Australia against CPA.
26 Mr Ascott's second affidavit sworn 19 August 2002 was directed principally to the affidavit of Mr Prestage. He joined issue with Mr Prestage as to various matters and denied saying to Mr Prestage that he was attempting to develop a chemical he could both use and sell. He said that from the time the plaintiff stopped supplying CPA with chemicals, he looked for another supplier of suitable chemicals. Mr Prestage was involved in the testing of samples of chemicals sent to CPA by alternative suppliers.
27 Mr Ascott denied that CPA began efforts to source and use chemicals not produced by the plaintiff immediately after Mr Parri's visit in mid 1993. He said that CPA managed to eke out the last of the Mead chemicals until May 1994. CPA had no complaint about the Mead CB chemical. It was the Mead CF chemical which was defective. He
(Page 11)
- acknowledged that CPA obtained chemicals from BASF from 1995 onwards but their version of CF chemicals did not work either.
28 Mr Ascott denied saying that CPA was desperate to maintain stock of Mead chemicals until such time as it could develop a suitable alternative. He acknowledged that he may have said, at some stage, that CPA needed to maintain a stock of Mead chemicals until such time as it could source a suitable alternative. He did not say to Mr Prestage that CPA intended to string Mead along and there was no stringing along. He did not show BASF representatives the Mead chemicals or the Mead technical manuals.
29 The second Ascott affidavit concluded in this manner:
"68. Mead chemicals were not sent to other manufacturers, other than on one occasion in 1997. On that occasion, at the request of Champion Forms, I provided a sample of Mead CB chemicals to Taiwan Hopax. By that stage, CPA had sold the coater to Champion Forms. Champion Forms was looking for a supplier of appropriate chemicals. Taiwan Hopax supply such chemicals, but only in micro-capsule form. Customers of Taiwan Hopax therefore mix the capsules to produce the final form that is applied to the paper. Mr Branagan of Champion Forms told me, and I verily believe, that he did not think his staff had the expertise to mix chemicals and he was looking for a supplier who could provide chemicals in their final form. I thought that Taiwan Hopax might be able to assist, so I agreed to send up a sample of CB chemicals to Taiwan Hopax, to show them that it could be done. I cannot remember where I got the sample from, but I presume it was from Champion Forms. CPA no longer had stock of Mead's chemicals by that time."
Proposed Proceedings
30 It follows from these events that the plaintiff claims to be in possession of certain details that CPA provided Mead confidential information to a variety of parties for the purpose of having them attempt to replicate the carbonless coating chemicals manufactured by the plaintiff. It is said that this information came to the plaintiff long after the plaintiff commenced the present proceedings for recovery of moneys due in respect of goods delivered to the defendant company. The plaintiff
(Page 12)
- therefore cannot be criticised for having failed to include a claim for breach of the alleged confidentiality arrangements in commencing proceedings against the present defendants.
31 The plaintiff now says further that it wishes to commence an action in the State of Ohio, United States of America, seeking damages against certain parties including CPA and Robin Ascott in relation to their involvement in the dissemination of Mead trade secrets.
32 The plaintiff submits that it is entitled to use the information discovered in the subject proceedings for the purpose of the contemplated proceedings. The plaintiff could seek leave of the Court to amend the current claim to include damages for breach of the confidentiality arrangements. However, the plaintiff wishes to avail itself of the use of the legislation of Ohio as it is entitled to do under the relevant agreement.
33 I pause to note that extracts from the Ohio legislation were exhibited to the affidavit of Scott Allen King sworn 8 February 2002. It is apparent that the relevant provisions, inter alia, allow for recovery of compensation upon the basis of unjust enrichment and for punitive damages. Counsel for the plaintiff submitted that the relief available to the plaintiff under the Ohio legislation was broader than forms of relief available to the plaintiff in the State of Western Australia. Counsel for the plaintiff emphasised that the documents disclosing the existence of the alleged breaches of the confidentiality arrangements were only made available to the plaintiff's solicitors either following or just prior to the previously adjourned trial in August 2001.
34 I pause to observe that the plaintiff's chamber summons for leave to use discovered documents sought leave in broad terms, that is to say, that the plaintiff have leave to use any document discovered by the defendants in these proceedings (CIV 1606 of 1996) for the purposes of any action that the plaintiff may commence in the United States of America against the defendants, any of them or Rebb Nominees, claiming damages for the use of confidential information belonging to the plaintiff. However, at the hearing before me, counsel for the plaintiff was prepared to narrow the terms of the proposed order when it became apparent in the course of debate, having regard to the previously decided cases, that the Court might feel compelled to evaluate the origin and status of the documents in question upon a more particular basis.
35 Accordingly, by reference to descriptions provided in the second affidavit of Francis Lee Breeden sworn 6 June 2002 the documents the
(Page 13)
- subject of the plaintiff's application for leave can now be defined as follows:
(a) FLB1A - a copy of various pages of a court transcript dated 7 September 1998 concerning evidence given in the Local Court of Western Australia in action number 15739/97 (being an action between Carbonless Papers (Australia) Pty Ltd (as plaintiff) and Vista Papers P/L (as defendant));
(b) FLB2A - a facsimile from Carbonless Papers (Australia) Pty Ltd to Taiwan Hopax Chemicals dated 4 September 1996;
(c) FLB3A - a facsimile from Carbonless Papers (Australia) Pty Ltd to Taiwan Hopax Chemicals dated 26 October 1996;
(d) FLB4A - a letter from Carbonless Papers (Australia) Pty Ltd to Taiwan Hopax Chemicals dated 25 November 1996;
(e) FLB5A - a letter from Carbonless Papers (Australia) Pty Ltd to Taiwan Hopax Chemicals dated 17 March 1997;
(f) FLB6A - a facsimile from Carbonless Papers (Australia) Pty Ltd to Taiwan Hopax Chemicals dated 26 March 1997;
(g) FLB7A - a facsimile from Carbonless Papers (Australia) Pty Ltd to Taiwan Hopax Chemicals dated 30 May 1997;
(h) FLB8A - a facsimile from Carbonless Papers (Australia) Pty Ltd to Taiwan Hopax Chemicals dated 30 June 1997;
(i) FLB9A - a facsimile from Carbonless Papers (Australia) Pty Ltd to Taiwan Hopax Chemicals dated 27 June 1997;
(j) FLB10A - a facsimile from Carbonless Papers (Australia) Pty Ltd to Follmann & Co dated 22 November 1994 and annexures being copies of pages contained in the Mead OPAS Technical Reference Manual;
(k) FLB11A - copy of the defendant's further and better particulars of defence pursuant to the request that the
(Page 14)
- plaintiff made 12 February 1997 in Supreme Court of Western Australia action number CIV 2072 of 1996;
- (l) FLB12A - letters either to or from Mr Ascott contained in document 51 of the defendant's affidavit of documents dated 12 September 2001."
36 For ease of reference, I will henceforth refer to these documents as "the documents the subject of the plaintiff's application for leave" or, more simply, as the "subject documents".
Legal Principles
37 Before turning to the respective submissions of the parties, it will be useful to look briefly at the legal principles bearing upon an issue of this kind.
38 In Distillers Co (Biochemicals) Ltd v Times Newspapers Ltd [1975] 1 QB 613 Talbot J noted that those who disclosed documents on discovery were entitled to the court's protection against any use of the documents otherwise than in the action in which they were disclosed. Discovery was essentially an invasion of a private right to keep ones documents to one self and, thus, the jurisdiction to restrain publication was based not so much on property or on contract as on the duty to be of good faith. No person is permitted to divulge to the world information which he has received in confidence, unless he has just cause or excuse for doing so. Further, if discovery were to result in documents becoming public, the process of discovery would be in danger.
39 This approach was affirmed in Riddick v Thames Board Mills Ltd [1977] 1 QB 881. The Court of Appeal held that a party who disclosed a document on discovery was entitled to the protection of the Court against any use of it otherwise than in the action in which it was disclosed. A party which obtains discovery impliedly undertakes that it will not use the documents disclosed (or the information contained in them) for a collateral or ulterior purpose not connected with the litigation in which the documents (and information) is disclosed. See also Harman v Secretary of State for the Home Department [1983] AC 280. The same principle has been applied in Australia by the High Court in Esso Australia Resources Ltd v Plowman (Minister for Energy & Minerals) (1995) 183 CLR 10.
(Page 15)
40 The Court has the power to release a party from the implied undertaking: Crest Homes PLC v Marks [1987] AC 829. This principle was applied in Australia in Holpitt Pty Ltd v Varimu Pty Ltd (1991) 29 FCR 576.
41 In Holpitt the Court was considering an application by the applicants (defendants) to use documents that had been made available to them in another action for the purpose of defending civil proceedings brought against them in the Federal Court. Burchett J said that the application for leave had to show that special circumstances existed. He had this to say at 579:
"In my opinion, the court's duty, in an application of this kind, is to consider whether the applicant has shown some circumstance which takes the matter out of the ordinary course, according to which production of documents pursuant to an obligation to make discovery involves the implied undertaking to the court; and, if so, whether an exercise of the court's discretion in favour of the application would be in the interests of justice… I think the interests of justice in the current litigation require that an order should be made in the applicants' favour, and that the order I shall make will not occasion injustice to the bank."
42 An issue of this kind came before the Full Court in this State recently in Minister for Education v Bailey (2000) 23 WAR 149. In that case the respondent was the plaintiff in an action for damages commenced against the Minister for Education. The claim arose out of an alleged breach of the relevant contract of employment. However, the respondent wished to commence a second set of proceedings against the Minister alleging misfeasance by him in his public office. The respondent's solicitors formed the opinion that discovered documents in the first proceedings added weight to the respondent's claim against the Minister in the proposed second proceedings. They therefore brought an application for leave to use the discovered document. The application was opposed by the Minster. The Master granted leave to use the discovered document and this decision was approved by the Full Court.
43 Steytler J undertook a comprehensive review of the relevant authorities. He referred to Crest Homes (supra) and the general principle that the Court will not release or modify the implied undertaking given on discovery save in special circumstances and where the release or modification will not occasion injustice to the person giving discovery.
(Page 16)
44 He referred to the decision in Holpitt(supra) and the appraisal by Burchett J of what is encompassed by the notion of special circumstances. Steytler J referred also to Sweetman v Australian Thoroughbred Finance Pty Ltd, unreported; Fed C of A; (Lockhart J); 23 July 1992 mentioned in Springfield Nominees Pty Ltd v Bridgeland Securities Ltd (1992) 38 FCR 217. In the latter case Wilcox J (at 225) adopted the explanation of the term "special circumstances" given by Burchett J and applied by Lockhart J in Sweetman.
45 It is enough, these previously decided cases suggest, that there is a special feature of the case which affords a reason for modifying or releasing the undertaking and is not usually present. The matter then becomes one of the proper exercise of the court's discretion, many factors being relevant. It is neither possible nor desirable to propound an exhaustive list of those factors. Plainly they include the nature of the document, the circumstances under which it came into existence, the attitude of the author of the document and any prejudice the author may sustain, whether the document pre-existed litigation or was created for that purpose and therefore expected to enter the public domain, the nature of the information in the document (in particular whether it contains personal data or commercially sensitive information), the circumstances in which the document came into the hands of the applicant for leave and, perhaps most important of all, the likely contribution of the document to achieving justice in the second proceeding.
46 It is apparent from the terms in which the implied undertaking or obligation has been formulated, and from the rationale which has been offered for it, that the invasion of privacy and confidentiality inherent in the giving of discovery is seen as being justified for the purpose of doing justice in the proceedings in which discovery is given. It is only for that limited purpose that discovery is required to be given and it is no doubt for that reason that other uses of a discovered document have been described as ulterior or collateral. It is against this background that the courts have concluded that the implied undertaking or obligation will only be waived or relaxed when special circumstances are present.
47 I must also take account of the decision of the High Court in Henry v Henry (1996) 185 CLR 571 where Dawson, Gaudron, McHugh and Gummow JJ had this to say at 591:
"It is prima facie vexatious and oppressive, in the strict sense of those terms, to commence a second or subsequent action in the courts of this country if an action is already pending with
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- respect to the matter in issue. And although there are cases in which it has been held that it is not prima facie vexatious, in the strict sense of that word, to bring proceedings in different countries, the problems which arise if the identical issue or the same controversy is to be litigated in different countries which have jurisdiction with respect to the matter are such, in our view, that, prima facie, the continuation of one or the other should be seen as vexatious or oppressive within the Voth sense of those words."
48 It was reasoning of this latter kind that underpinned various submissions made by counsel for the defendants in the case before me in support of the defendants' application for the grant of an injunction to restrain any collateral use of discovered documents. Counsel submitted that the Court has the power to protect the integrity of its processes once set in motion by stay orders and anti suit injunctions: CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 at 390. The limits of the power are determined by dictates of equity and good conscience.
49 The conduct of foreign proceedings which have a tendency to interfere with the due process of the domestic court may, in the circumstances of a particular case, generate the necessary equity to enjoin those foreign proceedings as vexatious or oppressive: National Mutual Holdings Pty Ltd v Sentry Corporation (1989) 22 FCR 209 at 232. The Court has the power the restrain fresh proceedings which constitute an abuse of its process: Geraldton Building Co Pty Ltd v Christmas Island Resort Pty Ltd (No 3) (1996) 14 WAR 293 at 299.
50 I note in passing that the defendants' application was in its terms not an application to restrain a suit elsewhere, and thus, in strict analysis, the cases relied upon do not apply. However, I accept that vexatious or arguably oppressive conduct may have a bearing on the grant or refusal of leave to use discovered documents for a purpose outside the present proceedings.
The Present Case
51 It emerges from a consideration of these cases that care must be exercised in granting leave to use discovered documents for a purpose lying outside the existing litigation. However, as indicated by Minister for Education v Bailey (supra), in certain circumstances the use of discovered materials in bringing a claim or cross claim against the other party is a situation in which leave may be granted. See also All State Life
(Page 18)
- Insurance Co v Australian and New Zealand Banking Group Ltd (1995) 57 FCR 360. The nature and origin of the documents in question will have a bearing on the question of whether special reasons have been demonstrated sufficient to justify the grant of leave.
52 The defendants submit that notwithstanding a "jurisdiction clause" in the relevant contracts, the plaintiff chose to institute proceedings against a Perth based company in the Supreme Court of Western Australia. During the course of the legal proceedings the plaintiff pressed for discovery of documents relating to CPA's dealings with third parties such as Taiwan Hopax Chemicals Ltd upon the basis that the documents were relevant and discoverable. When the documents were discovered the plaintiff said that it would institute proceedings in Ohio based on material obtained during the discovery process. This was not a proper use of the discovery process and leave to use the documents in the proposed manner should be refused.
53 The decided cases clearly establish that there is an implied undertaking not to make use of discovered documents for a collateral purpose. Leave would be required in order to make use of the subject documents in the contemplated proceedings in Ohio. The defendants submit that the confidentiality issues apparently to be pursued in the proposed proceedings in Ohio should be regarded as related to and essentially as part of the controversy presently being litigated in the subject proceedings in Western Australia. It is therefore prima facie vexatious and oppressive to raise such issues for determination in another court. It follows that leave should be refused upon the basis that there will be an injustice to the defendants. The plaintiff can obtain all the relief it could obtain in the Ohio proceedings by amending its statement of claim in the subject proceedings. It could have made such an amendment at any time after early August 2001 being the moment at which the plaintiff first began to give consideration to proceedings in Ohio. Relaxation of the implied undertaking not to make use of discovered documents for a collateral purpose would simply assist the plaintiff to do that which the High Court in Henry v Henry (supra) castigated as vexatious and oppressive.
54 The defendants say further that if leave to use discovered documents is refused, then absent an appropriate express undertaking, an injunction in the form sought by the defendants must inevitably be granted: Central Queensland Cement Pty Ltd v Hardy [1989] 2 Qd R 509 at 511; Ainsworth v Hanrahan (1991) 25 NSWLR 155 at 169.
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55 The plaintiff says in answer to these contentions that its conduct cannot be characterised as vexatious or oppressive in the circumstances of this case. The plaintiff commenced proceedings in the Supreme Court of Western Australia upon a limited basis only when it sought to recover moneys outstanding in respect of goods delivered to the defendant company. The pleadings in the subject proceedings do not bring into play issues concerning confidentiality and such issues have only arisen recently as a consequence of the discovery process and further enquiries by the plaintiff. The plaintiff has an entitlement under the relevant contractual agreements to have such issues resolved under the law in Ohio and in the absence of any fault on the plaintiff's part it should be at liberty to pursue the proposed course.
56 The plaintiff says further that it is at liberty, in any event, to commence proceedings in Ohio and has a basis for doing so which does not depend upon the discovered documents in that evidence is available to it from Mr Prestage concerning breach of the confidentiality arrangements. In addition, paragraphs 61 to 64 of Mr Ascott's second affidavit and paragraph 68 (quoted earlier) are further evidence that the confidentiality arrangements were breached, for evidence reflected in an affidavit submitted to the Court by a party voluntarily is not subject to the implied undertaking rule: Uniflex (Australia) Pty Ltd v Hanneybel [2001] WASC 138 at par 155.
57 It follows from this, counsel for the plaintiff submits, that there will be no injustice to the defendants in granting leave of the kind sought in that the plaintiff will be at liberty to commence proceedings in Ohio, with or without the proposed order, and obtain discovery of documents from the defendant company and/or other defendants in the Ohio proceedings in due course. Counsel for the plaintiff reminded the Court that although certain of the submissions made on the defendants' side tended to suggest that the Court in this State was being asked to restrain proceedings in a foreign jurisdiction, in fact, the application before the Court was limited to an application by the defendants to restrain the use of discovered documents. The essential issue before the Court was whether grounds had been demonstrated by the plaintiff for a grant of leave to use the subject documents in the proposed proceedings in Ohio.
Conclusion
58 I have given careful consideration to the respective contentions of the parties. I am persuaded by the submissions of the plaintiff that special
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- reasons exist in the circumstances of the present case as to why leave to use the subject documents in the manner proposed should be granted.
59 It is clear from the decided cases that in certain circumstances the implied undertaking will be relaxed where a party wishes to advance a cross claim against the opposing party as a consequence of matters brought to light in the course of the discovery process. The Court must have regard to the interests of justice. A relevant factor in the present case is the presence of contractual arrangements whereby a dispute as to confidentiality is to be referred to Ohio law. In addition, as I have regard to the special reasons sufficient to justify the grant of leave, I consider that there has been no default or inordinate delay upon the part of the plaintiff in raising this issue. Further, it cannot be said that the nature of the documents is such as to preclude their use in the manner proposed, for the documents bear directly upon the commercial relationship between the parties and the confidentiality arrangements were the subject of an express agreement. The implied undertaking should not be allowed to stand in the way of an express agreement between the parties.
60 I give some weight also to the fact that the plaintiff arguably has sufficient evidence, independently of the discovered documents, to commence proceedings in Ohio in any event. In these circumstances it does not appear to be contrary to the interests of justice that leave be granted, for the plaintiff will probably be able to obtain access to the documents via discovery in the proposed proceedings.
61 Accordingly, I am persuaded that the plaintiff should be granted leave to use the subject documents as proposed. It follows inevitably that the application for an injunction of the kind sought by the defendants will be refused. I will hear from the parties as to whether any further orders are required.
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