Melbourne City Investments Pty Ltd v Leighton Holdings Limited
[2014] VSC 7
•31 January 2014
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
SCI 2013 5159
| MELBOURNE CITY INVESTMENTS PTY LTD (ACN 161 046 304) | Plaintiff |
| v | |
| LEIGHTON HOLDINGS LIMITED (ACN 004 482 982) | Defendant |
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JUDGE: | Judd J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 18 December 2013 | |
DATE OF JUDGMENT: | 31 January 2014 | |
CASE MAY BE CITED AS: | Melbourne City Investments Pty Ltd v Leighton Holdings Limited | |
MEDIUM NEUTRAL CITATION: | [2014] VSC 7 | |
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PRACTICE AND PROCEDURE – Group proceeding – Definition of Group – Supreme Court Act 1986 (Vic) Part 4A.
CONFIDENTIAL INFORMATION – Copy of legal advice to defendant obtained by plaintiff – Unexplained receipt – Advice partially disclosed in newspapers – Advice pleaded in Statement of Claim – Injunction sought to prevent use by plaintiff in proceeding.
DISCOVERY – Prior to close of pleadings – Rule 29.07 Supreme Court (General Civil Procedure) Rules 2005 (Vic).
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr N J O’Bryan SC with Mr M W L Symons | Mark Elliott |
| For the Defendant | Mr D J Collins SC with Mr S H Parmenter | Allens |
HIS HONOUR:
The plaintiff, Melbourne City Investments Pty Ltd, commenced a group proceeding against the defendant, Leighton Holdings Limited, under pt 4A of the Supreme Court Act 1986 (Vic). The proceeding was issued in the Commercial and Equity Division of this court. It was called into the Commercial Court for management.
The proceeding was commenced by Generally Endorsed Writ filed on 4 October 2013. On the previous day, there had been media reports concerning the conduct of certain of the defendant’s officers, and a sharp fall in the defendant’s share price. A statement of claim was filed on 4 November 2013. On 26 November 2013 the plaintiff filed an amended statement of claim under r 36.04 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic).
By summons filed on 9 December 2013, the defendant applied to strike out the whole of the amended statement of claim, alternatively, part of paragraph 2, paragraph 12, paragraph 13 insofar as it referred to paragraph 12, and paragraphs 29, 31 and 33 insofar as they referred to ‘Group Members’. It also sought the delivery up by the plaintiff, or the destruction of all copies of a letter of advice prepared by Malcolm Davis of Herbert Geer, dated 20 December 2010, and an injunction restraining the plaintiff from making use of the information contained in the letter. The letter and contents had been pleaded as a material fact in paragraph 12.
By summons issued on 17 December 2013, the day before the hearing of the defendant’s summons, the plaintiff sought discovery in advance of the close of pleadings under r 29.07 of the Rules of Court.
Definition of Group
There were three elements to the defendant’s complaint concerning the statement of claim. Two elements substantially overlapped. The overlapping elements concerned the definition of the group required under pt 4A. The third element, concerns the Herbert Geer advice, and will be dealt with separately.
The defendant contended that the plaintiff failed to sufficiently plead an individual case, because it did not allege essential facts relating to its acquisition or disposal of shares in the defendant. It contended that such facts should be expressly pleaded so as to define the basis upon which the plaintiff claimed to have suffered loss. The defendant contended that there were at least five potential subgroups of shareholders on 3 October 2013 who might, on the plaintiff’s case, have suffered loss. It contended that the statement of claim did not sufficiently define the subgroup or groups of shareholders to which the plaintiff belonged, leaving the basis for its claimed loss and damage unexplained and embarrassing.
Broadly stated, the second and related complaint made by the defendant concerned the plaintiff’s failure to comply with the requirements of s 33C(1)(a) of the Supreme Court Act. The defendant contended that on the plaintiff’s case as pleaded, some members of the group could not maintain a cause of action. It contended that the various subgroups, apparent from the pleading, ought to be pleaded so as to identify the basis upon which each subgroup might have suffered compensable loss. The defendant contended that the statement of claim masked the real issues in the proceeding.
The subgroups identified by the defendant were based on the timing of events or circumstances pleaded in paragraphs 6 to 8, 9, 11 to 14 and 15, and defined as ‘matters’. The plaintiff alleged that these events or circumstances were known to the defendant and price sensitive. It alleged that the defendant was required to, but did not, disclose the information to the market. The plaintiff alleged that the market was not fully informed until 3 October 2013.
The time at which the defendant was alleged to have known of each ‘matter’ was a crucial element of the plaintiff’s case. The content of each event or circumstance, the legal obligation of disclosure and the time for disclosure were essential to the causes of action. The events or circumstances may be summarised as follows:
(a)the defendant’s knowledge of the Unaoil bribery allegation on or about 23 November 2010;
(b)the defendant’s conduct when informing the Australian Federal Police of those allegations on or about 7 November 2010;
(c)the defendant’s knowledge on about 9 December 2010 of misconduct by an officer in Asia. That matter was the subject of the advice from Herbert Geer pleaded in paragraph 12.
(d)the defendant’s conduct on 28 April 2011 when it commenced proceedings in the Supreme Court of New South Wales against Gavin Hodge.
There had been some earlier disclosure of related information by the defendant. The plaintiff alleged that such disclosure as did take place was inadequate or misleading. The time of such earlier disclosures were also made critical by the plaintiff. The events of disclosure were a statement made on 11 April 2011 in connection with a rights issue to shareholders, and a release to the ASX on 13 February 2012.
The plaintiff’s allegations, concerning the effect on the market of the non‑disclosed events or circumstances are unclear. On one view, the plaintiff might be taken as relying on a collective impact of the non‑disclosures, resulting in a more significant fall in the market on and after 3 October 2013,[1] than might have occurred had the disclosures taken place in a timely manner. In other words, had the disclosures occurred as and when the plaintiff alleged should have happened, the effect on the market would not have been as great. Such a hypothesis seems consistent with the general allegation that prior to 3 October 2013 the price was substantially greater than the true value of the shares during the prior undefined period. If the plaintiff intends to advance a case that the inflated prices prior to 3 October 2013, and the extent of the fall after that date, depend in some way on the cumulative effect of the non‑disclosures, the allegation ought to be explicit.
[1]See paragraphs 29(d) and 30.
Such a hypothesis is unlikely, however, because of the astonishing complexity it would introduce into the events analysis at trial. It would also tend to diminish the forensic significance of each individual non-disclosure. It also seems inconsistent with particulars of loss and damage. From the particulars under paragraph 31, it seems tolerably clear that the plaintiff intends to rely upon each event of non‑disclosure as causing or contributing particular loss suffered by one or more shareholder.
The claim for loss and damage is formulated by the plaintiff as follows:
29.The plaintiff and Group Members held their interests in LEI ED securities in a market:
a.regulated by, inter alia, the Listing Rules and the Act;
b.where the price or value of LEI ED securities would reasonably be expected to be informed or affected by information disclosed in accordance with the Listing Rules and the Act;
c.in which there had been the disclosure failures, constituting failures by the defendant to disclose information about the matters that a reasonable person would expect to have a material effect on the price or value of LEI ED securities; and
d.in which the significant falls in the price of LEI ED securities on and after 3 October 2013 were caused by and were a result of the disclosure failures.
30.The disclosure failures caused the market price for LEI ED securities prior to 3 October 2013 to be substantially greater than:
a.their true value; and
b.the market price for LEI ED securities that would have prevailed but for the disclosure failures.
31.The plaintiff and the Group Members have suffered loss and damage by and resulting from the disclosure failures and are entitled to compensation pursuant to each of sections 1041I, 1317HA and 1325 of the Act.
Particulars
The losses will be the subject of expert evidence in due course. They are comprised of at least one or more of the following elements:
a.the difference between the prices at which the LEI ED securities were acquired by the plaintiff and the Group Members at any time after the defendant ought first to have disclosed the matters and the price that would have prevailed had the matters been disclosed by the defendant at that time;
b.interest (including interest by way of damages) on the amount calculated in accordance with (a) above; and
c.in respect of the plaintiff and those Group Members who would not have acquired any LEI ED securities at all had information about the matters been disclosed by the defendant in accordance with the law, the loss of the opportunity to earn a return from an alternative investment of the monies which they used to purchase their LEI ED securities.
32.The defendant made the entitlement offer in circumstances in which:
a.the entitlement offer was regulated, inter alia, by ss 708AA and 1041H of the Act;
b.the defendant was obliged to include in the cleansing statement all information which was required to be disclosed by s 708AA(2)(f) of the Act, including:
i.whether the defendant had complied with s 674 of the Act; and
ii.any other undisclosed information that investors and their professional advisers would reasonably require for the purpose of making an informed assessment of the assets and liabilities, financial position and performance, profits and losses and prospects of the defendant;
c.any failure to inform the plaintiff and Group Members in the cleansing statement of information required to be disclosed by s 708AA(2)(f) of which the defendant became aware with a 12 month period (ending on 11 April 2012) was required to be disclosed to ASX; and
d.the falls in the price of LEI ED securities after 3 October 2013 were a result of the belated disclosure of information about the matters which the defendant should have disclosed either in the cleansing statement or at some other time before 11 April 2012.
33.The plaintiff and the Group Members have suffered loss and damage by and resulting from the misleading or deceptive conduct alleged in paragraph 28 above are thereby entitled to recover the amount of their loss or damage pursuant to s 1041I of the Corporations Act 2001 (Cth).
Particulars
The particulars given under paragraph 31 above are repeated. [2]
[2]Emphasis added.
On the assumption that the likely impact on the price in the market for the defendant’s shares, resulting from each event of non‑disclosure, is a critical element to the case, the defendant contended that the plaintiff should be required to identify the following subgroups, whose claims must involve materially different causation narratives:
(a)Those who acquired their shares before the defendant is alleged to have become aware of the first matter — 23 November 2010. The defendant contended that shareholders within this sub‑group could not maintain a viable claim for loss and damage.
(b)Those who acquired their shares after 23 November 2010 and before:
(i)the defendant became aware of the second matter — 9 or 20 December 2010. The defendant contended that this sub‑group could invoke only the first non‑disclosure event.
(ii)the defendant commenced the proceeding in the Supreme Court of New South Wales against Gavin Hodge — 28 April 2011. The defendant contended that this sub‑group could invoke only the first and third non‑disclosure events.
(iii)the defendant referred the first matter to the Australian Federal Police — 7 November 2011. The defendant contended that this sub‑group could invoke the first, second and third non‑disclosure events.
(c)those who acquired their shares after 7 November 2011, who might invoke all four non‑disclosure events.
To the four categories listed above might be added the shareholders affected by the statement issued in connection with the rights issue on 11 April 2011, and perhaps those affected by the alleged inadequate or misleading statement to the ASX on 13 February 2012.
The plaintiff contended that while individual cases may, and often do, require particular assessment, the group is sufficiently defined by reference to all shareholders who held shares prior to the opening of the market on 3 October 2013. That is because they all held shares in a market that was not relevantly informed as required by the ASX Listing Rules and the Corporations Act prior to that date. The plaintiff submitted that it was
unnecessary to divide the group members into sub‑categories in the manner suggested by the defendant. Assuming that any disclosure failure is made out, all group members have a claim.
The plaintiff contended that it was only in the calculation of individual loss that differences might emerge. Thus, such differences need not be expressed in allegations of material fact, but may be left to particulars under the general claim for loss and damage. The plaintiff conceded that a further category, or categories, of loss might be added to the particulars following discovery, but argued that it was not yet in a position to say ‘when (if ever) the market … was properly informed’. The plaintiff pressed for immediate discovery.
The overarching contention of the plaintiff, when responding to the defendant’s complaints concerning the amended statement of claim, was that the pleading was sufficient to satisfy the requirements of s 33C of the Supreme Court Act, because all those who held shares as at the opening of the ASX on 3 October 2013 had suffered loss of one kind or another. It was not necessary, the plaintiff said, to differentiate between groups of shareholders whose loss might be differently assessed or calculated, at least at this stage of the proceeding.
In relation to its own case, the plaintiff maintained that it had complied with pt 4A of the Supreme Court Act. It claimed to have acquired shares before the market was adequately informed, and that it paid too high a price. But it did not plead when it acquired the shares, the price, whether they had been sold, or under which causal narrative it suffered a loss. It submitted that this was not a case in which the court should require the plaintiff to comply with paragraph 2.2 of Practice Note 9 of 2010, Conduct of Group Proceedings, which states:
The statement of claim should be drawn so that the Plaintiff’s personal claim can be used as the vehicle for determining the common questions in the action. Ordinarily the trial of the action will resolve all common questions together with any non‑common questions raised by the Plaintiff’s personal claim (e.g. the Plaintiff’s individual claim for damages).
It was common ground that the existence of individual differences in a Group Proceeding, such as reliance and the calculation of loss, was not an impediment to a plaintiff maintaining the proceeding.[3] That presupposes, however, a properly pleaded case on behalf of the plaintiff, and compliance with s 33C. The defendant had argued that the Group extended beyond those who might have suffered loss, and that the proceeding did not comply with s 33C, unless confined by the identification of the subgroups that would have the effect of eliminating those without any cause of action.
[3]Woodcroft‑Brown v Timbercorp Securities Ltd & Ors [2010] VSC 68; 77 ACSR 361, [16].
A case constructed on the footing that every shareholder, as at the opening of the exchange on 3 October 2013, had suffered some kind of loss, by reason of time‑sensitive non‑disclosures over the previous few years, is arresting. For present purposes however, I will accept that some form of loss narrative may be capable of formulation to include those who acquired shares prior to the first non‑disclosure event. For example, it is possible that the ‘cumulative effect’ notion mentioned above might provide a basis for a narrative under which the negative impact of disclosure on 3 October 2013 exceeded the likely impact of an earlier disclosure that the plaintiff alleged ought to have been made, and explain how loss might be suffered by a shareholder who might have elected to sell, had the earlier disclosure been made.
The real difficulty with this part of the pleading is that it requires a great deal of imagination, and invites speculation, about the way in which the plaintiff and other shareholders might have suffered loss, with little assistance given in particulars. The role of each event of non‑disclosure, or incomplete disclosure, is uncertain. The amended statement of claim teases the reader with apparently time‑sensitive non‑disclosure events, without elaborating their particular significance to the loss suffered by the plaintiff or any particular category or group of shareholders.
The case as pleaded has masked crucial differences between the subgroups of shareholders as at 3 October 2013. The existence of the subgroups emerges from the statement of claim, in which the plaintiff relied on time‑sensitive events of non‑disclosure or incomplete disclosure. The absence of clarity in the pleading will not be cured by further particulars. Surprisingly, the plaintiff’s own claim is vague and embarrassing. It failed to identify the circumstances in which it became a shareholder, to link that fact with a particular disclosure obligation, or to explain how it suffered a loss.
It is not to the point to contend that the amended statement of claim complied with pt 4A, because the group is comprised of seven or more persons, including the plaintiff, with claims against the defendant arising out of one or more alleged non‑disclosure events. Something more than technical compliance is necessary. In Harrison v Lidoform Pty Ltd[4], Hely J said:
A representative party may be able to enforce the rights of others in a proceeding brought under Part IVA, but the statement of claim needs to identify what the rights of those represented are claimed to be, and how they are said to arise. In my view this is necessary in order to give definition to the proceedings, and to expose the issues for determination in the proceedings. It is also necessary that class members know with some precision the nature of the case which the applicant seeks to bring on their behalf so that they can decide, in terms of s 33J, whether to opt out of a claim formulated in that way. A judgment given in a representative proceeding binds all group members other than persons who have opted out. Section 33ZB Federal Court of Australia Act 1976. Whilst the amended statement of claim remains in its present form, one simply does not know to what it is that group members are bound.
[4]Federal Court of Australia 24 November 1998, at p 14, emphasis added.
A statement of claim must plead a cause of action against the defendant with sufficient clarity to enable the defendant and the court to assess the viability of each cause of action, and the defendant to plead a responsive case that will expose the real issues for trial. The potential scope of the ‘limited’ early discovery sought by the plaintiff is testimony to the magnitude of the task that lies ahead for the defendant, if discovery is not aggressively managed by the Court. Responsible limits must be placed upon the discovery obligation. That will not be possible in the absence of a much more precise definition of issues. The amended statement of claim does not satisfy those minimum requirements. The plaintiff is not relieved of those requirements, because the proceeding has been commenced under pt 4A.
This proceeding will inevitably raise important issues concerning the point at which, if at all, a corporation is obliged to disclose to the market information constituted by allegations of wrongdoing, or the results of an internal investigation, or the fact of a referral of perceived wrongdoing to the police or to a regulatory body, or that a criminal charge has been or may be brought against an employee. There may be competing public policy considerations to be taken into account, that may have the effect of adjusting obligations so as to protect the integrity of investigations and avoid unfair prejudice to those who are being investigated or who might be charged with offences.
The mere fact of media interest, and a consequential fall in share price, may not necessarily convert an allegation, enquiry or reference into an event that must be disclosed to the ASX. But those are all matters for trial. I should not be taken to express any particular view, other than to anticipate that a number of complex issues will arise, including the formulation of loss narratives. That being so, the detail and particularity required of this statement of claim is, and no doubt will continue to be, a matter of great importance to the court. It will be essential to proper case management, and for the efficient and timely determination of the proceeding.
The defendant’s application was to strike out the whole of the amended statement of claim, alternatively certain paragraphs and parts of paragraphs, so as to eliminate reference to Group Members. To focus on a few paragraphs will not, in my view, achieve a practical outcome. If the plaintiff proposed to pursue this litigation as a group proceeding under pt 4A of the Supreme Court Act, the claim must be re-pleaded so as to carefully and completely articulate its individual claim. The defendant and the court are entitled to know the basis upon which the plaintiff claims to have suffered a compensable loss. It is not sufficient to rely on the inclusion of the plaintiff as one among shareholders at the opening of the exchange on 3 October 2013.
The variety of fact circumstances that might be alleged to support compensable claims by other members of the group should also be carefully and completely articulated. The defendant has identified at least five possible subgroups. There may be more. Unless subgroups of shareholders are properly defined, the scope of the group will be imprecise, and the defendant and the Court will be left to guess at the various fact circumstances that might ultimately be alleged to give rise to compensable loss. Accordingly, the better course is to strike out the amended statement of claim and give leave to the plaintiff to re-plead, if so advised.
Herbert Geer advice
In paragraph 12 of its amended statement of claim, the plaintiff alleged:
On 20 December 2010, Malcolm David of Herbert Geer, solicitors, also reported credible findings of misconduct, fraud, breach of contract and breach of fiduciary duties by Gavin Hodge in respect of the building of the Leighton Eclipse to David Stewart.
Particulars
The findings are reported in a letter from Malcolm David to David Stewart of 20 December 2010.
The defendant based its claim for the return or destruction of copies of the letter, and for an injunction restraining the plaintiff’s use of the letter, on established principles for the protection of confidential information. It was accepted that parts of the letter had been published in newspapers, and that they had come into the possession of the plaintiff and its solicitor. The defendant did not press its claim as one for the protection of legal professional privilege. In Australian Securities and Investments Commission v Lindberg[5], Mandie JA said, delivering the judgment of the Court of Appeal:
… once such documents come into the possession of another party, the privilege is lost or cannot be asserted except in the context of a claim in equity to protect confidentiality.
This is not a case in which the plaintiff and its solicitor had been provided with a copy of the document by or on behalf of the defendant without any intention of waiving confidentiality or in error.[6]
[5][2009] VSCA 234 at [51]; 261 ALR 207.
[6]See Mann v Carnell (1999) 201 CLR 1 and Spotless Group Ltd v Premier Building & Consulting Pty Ltd [2006] VSCA 201.
It was common ground that the criteria for equitable relief are set out by Gummow J in the Full Court of the Federal Court in Corrs Pavey Whiting & Byrne v Collector of Customs (Vic)[7], in the following terms:
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.
[7](1987) 14 FCR 434, 443.
The defendant contended that each requirement had been satisfied and that it was entitled to the protection of equity to prevent the plaintiff from using the content of the letter as part of its case.
The plaintiff advanced a threshold objection. It contended that there was no evidence to support the assertion that the letter dated 20 December 2010 was confidential, or that it is or ever was the subject of any obligation of confidence owed by anybody to someone else. It contended that the absence of such evidence was fatal to this part of the defendant’s application. That contention, however, seemed to overlook the evidentiary value of the letter itself, a copy of which was provided to the court, ultimately without objection. The plaintiff did not object to the court treating the document as authentic, and as evidence of what it purported to be. It would have been difficult for the plaintiff to have adopted any other position, having made express reference to the letter, its nature and content, in its pleading. In the end, the plaintiff’s threshold objection was to any weight given to the description of the document by the defendant’s counsel from the bar table, as privileged and confidential. I have disregarded any such asserted description as evidence of the status of the document.
The letter is headed ‘Subject to legal professional privilege’. It purports to have been prepared by Malcolm Davis, a partner of Herbert Geer Lawyers, and is addressed to David Stewart, Chief Operating Officer, Leighton Holdings Limited. It plainly, and self‑evidently, contains legal advice. Implicit in the endorsement claiming legal professional privilege is an intention, at least on the part of the author, that the communication was confidential. In my opinion, the nature and content of the letter supports that implication. The letter contains highly sensitive legal advice. In the absence of evidence to the contrary, it would be fanciful to conclude that the defendant, to whom the confidential advice was directed, did not also intend that the communication was, and should remain, confidential.
The plaintiff contended that any privilege had been lost through the publication of the advice in at least two newspapers articles on 5 October 2013. It submitted that the defendant had never suggested that those publications occurred in breach of some obligation of confidence owed to it by somebody else, and it was too late to do so now. Implicit in that submission is the contention that the defendant had by its conduct waived or in some way abandoned the confidentiality, presumably through its failure to take prompt action against the newspapers. I reject that contention. The issue before the court is whether the defendant can prevent use of the document and its contents by the plaintiff in this case.
The publication in the media took place on 5 October 2013. The plaintiff had issued its generally endorsed writ on the previous day. It was not until the statement of claim had been served, dated 4 November 2013, that the plaintiff disclosed its intention to rely on the letter of advice. There was no evidence that the defendant had prior knowledge of the proposed use of the material by the plaintiff.
On 11 November 2013 the defendant called for production of documents referred to in the statement of claim, including the letter of advice. Having received a copy of the letter, the defendant sought delivery up or destruction of all copies on the basis that it was self‑evidently privileged, and called upon the plaintiff to state in writing the basis for any contention that privilege had been lost. On 28 November 2013 the plaintiff’s solicitor asserted in correspondence that the advice was no longer privileged, because it had been widely circulated for three years, and that the substance of it had been published in newspapers. The plaintiff submitted that it did not obtain the letter from a source which was bound by any obligation of confidentiality. No evidence was advanced by the plaintiff, to whom all relevant facts were presumably known, explaining how the letter came into its possession, and the basis of its assertion that the advice had been widely circulated to third parties for three years.
The plaintiff contended that the criteria for equitable relief[8] were not satisfied. I disagree. The endorsement on the letter, its nature and content, is evidence that the advice was confidential to the defendant. There is no evidence that the defendant waived or abandoned its right to confidentiality.
[8]Gummow J in Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 14 FCR 434, 443, 32.
The plaintiff contended that the information was not received subject to any obligation of confidence. It submitted that the information was not received from the defendant, had been exposed in newspaper articles read by the plaintiff, and so could not be regarded as confidential. But it advanced no evidence at all as to how it came into possession of a copy of the letter. The plaintiff overlooked a material difference between that which was published in newspapers, and the plaintiff’s intended use of the letter of advice that came into its possession.
The plaintiff and its solicitor, who is also the director of the plaintiff, must have appreciated the nature of the document when first obtained. A reasonable and experienced solicitor would have understood that, if pleaded in the statement of claim, there was a very real risk that the defendant would assert a claim for confidentiality, and seek to prevent the use of the document in this proceeding. An enquiry of the defendant, to ascertain the status of the document, would have been courteous and prudent. There is no evidence of any such enquiry.
In the absence of any evidence from the plaintiff as to how it came into possession of the document, of any enquiry made of the defendant, and of facts indicating waiver or abandonment of the confidentiality, I infer that the plaintiff and its solicitor knew, or at least suspected, that any enquiry made of the defendant would prompt an application for an injunction to prevent its use of the letter. Were it otherwise, an experienced solicitor would have sought to ascertain the status of the document before making reference to it in a pleading.
The plaintiff has already deployed the document in its amended statement of claim. That was a misuse of information by a plaintiff who believed, or at least suspected, that the letter would continue to be regarded by the defendant as confidential. The plaintiff threatens to use the information in this proceeding. I am satisfied that each of the criteria necessary to support injunctive relief is present and that the facts justify an order restraining further use of that material. Accordingly, the defendant is entitled to the relief in paragraphs 4 and 5 of its summons filed 9 December 2013, and to an order that paragraph 12 of the amended statement of claim be struck out, and any reference to that paragraph. Having regard to the order that will be made striking out the amended statement of claim, a separate order directed to paragraph 12 is unnecessary.
Discovery
By letter dated 6 November 2013 the plaintiff sought production of specific items ‘in order to fully particularise its claim and otherwise prepare its case for trial’. It did not seek general discovery at that time. Whatever became of that request, it was overtaken by the summons filed on 17 December 2013 in which the plaintiff sought discovery of the following categories of documents namely, those which disclose:
(a)the defendant’s knowledge of bribery allegations in connection with the contract between Leighton Offshore Pte Ltd and Unaoil Ltd in 2010;
(b)the defendant’s knowledge of corruption and fraud allegations in connection with the Leighton Eclipse project in 2010;
(c)the defendant’s knowledge of corruption and other allegations of improper behaviour in the defendant’s Asian operations, as reported by Concorde Corporation in 2010.
The basis for the application for discovery was not mentioned in the written submissions filed on behalf of the plaintiff, also dated 17 December 2013, but was elaborated in oral submissions.
The categories of documents identified by the plaintiff in its summons do not correspond precisely with allegations in the amended statement of claim. The defendant made that complaint. On the other hand, the defendant did not contend that it had no knowledge of the topics to which the summons was directed, but argued, in effect, that the proposed order, if made, had the potential to require a very expensive, protracted and disruptive search by the defendant in advance of general discovery obligations. The defendant did not advance any evidence as to what that might involve. That is not surprising, as the plaintiff’s summons had been issued the previous day.
The plaintiff sought to justify its application for discovery by reference to cases in which discovery was ordered under the rule in advance of a fully pleaded case. Egan Pulp Marketing Board v KH Corp Tocumal Trading Co Pty Ltd & Anor[9] concerned an application by a plaintiff for discovery in advance of particulars. In that case some particulars had already been given, and the transaction to which the request related identified. In Trade Practices Commission v CC (NSW) Pty Ltd & Ors[10], Lindgren J rejected the submission that the plaintiff sought to embark upon a ‘fishing expedition’, where discovery was sought in order to give particulars. His Honour was satisfied that the discovery was sought in aid of proof of a case that was pleaded and particularised in reasonable detail. In Computershare Ltd v Perpetual Registrars Ltd & Ors[11], Warren J (as her Honour then was) rejected a submission made on behalf of the respondent to an application for discovery under r 29.07, that exceptional circumstances must be demonstrated before such an order will be made. The defendant was ordered to provide discovery even though pleadings had not closed. Her Honour acknowledged that in the exercise of the discretion it will be necessary for a court to assess the circumstances in each case. Her Honour adopted what was said by Lindgren J in the Trade Practices Commission case mentioned above. It was not suggested on behalf of the defendant in Computershare that discovery was being sought by the plaintiff to formulate a cause of action.
[9](1963) VR 378.
[10](1995) 58 FCR 426.
[11][2000] VSC 139; (2001) VR 626.
In my opinion these cases do not assist the plaintiff. The plaintiff’s purpose in seeking discovery at this time was frankly articulated by its counsel in the following terms:
We need to know on what date Leighton knew about credible allegations of bribery, corruption, kickbacks et cetera.
The plaintiff submitted that the date of relevant knowledge, alleged in the amended statement of claim, was:
the latest date on which we are able to say Leighton knew. Leighton may have known, your Honour, two years prior.
In other words, the plaintiff sought the discovery to enable it to consider whether there was a further earlier breach of a non‑disclosure obligation. Discovery for that purpose, at this stage of the proceeding, is fishing for a cause of action and impermissible.
I would, in any event, decline to order discovery at this time because the statement of claim is to be struck out. But even in the absence of such an order, I would have refused discovery on discretionary grounds. The plaintiff’s case lacked sufficient clarity to properly define the limits of discovery. That defect was compounded by the uncertain scope of the discovery sought in the summons, and the obvious magnitude of the task. The application for discovery is refused.
The following orders will be made. (1) The amended statement of claim is struck out with leave to the plaintiff to file and serve a substituted statement of claim. (2) The application for discovery is refused. (3) The plaintiff to pay the defendant’s costs of each summons, including the costs of the hearing on 18 December 2013.
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