Morgan v Mallard

MORGAN v MALLARD
[2001] SASC 364
Full Court: Mullighan, Bleby and Wicks JJ

MULLIGHAN J I agree with the orders proposed by Bleby J and with the reasons which he has given.
BLEBY J
Background
The present respondent was at all material times an employee of the WorkCover Corporation. He and his wife brought an action against the present appellant for damages for defamation based on a letter which the appellant had written to the WorkCover Corporation on 1 November 1994. Those proceedings were heard in the Magistrates Court in 1996, and resulted in a judgment for damages in favour of the respondent (but not his wife) in the sum of $10,000. The appellant appealed to this Court against that decision, but the appeal was dismissed.
During the course of those proceedings the respondent’s solicitor filed and served a list of documents in which he gave discovery of a letter dated 3 November 1994 from the respondent to the WorkCover Corporation, which he had written at the request of the Corporation in response to the allegations of the appellant contained in her letter of 1 November 1994.
On 12 October 1999 the appellant, who is unrepresented, commenced proceedings against the respondent in the District Court. The particulars of claim were amended at least twice by filing amended particulars on 17 November 1999 and 6 December 1999.
In those proceedings the appellant claimed damages for defamation against the respondent based on his letter to the WorkCover Corporation dated 3 November 1994. She also claimed damages for perjury against the respondent based on the evidence he gave at the trial in the Magistrates Court in his action against the appellant.
In his defence, the respondent admitted authorship of the letter, admitted a number of imputations pleaded by the plaintiff, denied that the words were misleading, malicious, dishonest and deceitful and pleaded qualified privilege. In relation to the evidence he gave at the trial, he pleaded that, in so far as the evidence was complained of as being defamatory, it was given on an occasion of absolute privilege. In so far as it was the basis of any claim for perjury, he pleaded failure to comply with the conditions set out in s 36 of the Wrongs Act 1936 and that the proceedings were an abuse of process, because they amounted to a collateral attack on the decision of the Magistrates Court in the earlier proceedings.
By application filed on 23 November 1999 the respondent applied for an order striking out those parts of the Statement of Claim which did not relate to the claim for defamation. In the alternative he sought an order that the action be dismissed on the ground that it was an abuse of process. It appears that the written application was directed to the version of the Statement of Claim filed on 17 November 1999.
A Master of the District Court held, correctly in my view, that no action lies at common law for perjury: Cabassi v Vila (1940) 64 CLR 130. Section 36 of the Wrongs Act 1936 does allow such an action, but only subject to compliance with a number of conditions stated in that section. The appellant’s particulars of claim did not allege that any of those conditions had been complied with. Accordingly, he directed that those parts of the Statement of Claim be struck out.
In relation to the claim for damages for defamation, the Master considered that the principles stated in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 applied and that, in the absence of special circumstances, the action in defamation should be stayed upon the footing that the appellant’s claim for damages should have been put by way of counterclaim in the Magistrates Court proceedings brought by the respondent and his wife against the appellant. He adjourned the hearing of the application to enable the appellant to plead special circumstances and for her to lodge a draft proposal for amendments to her Statement of Claim. The appellant lodged a draft amended Statement of Claim on 17 July 2000 and the hearing before the Master resumed on 7 August 2000. He considered that no special circumstances had been shown, and that the appellant was attempting to relitigate the Magistrates Court proceedings. He ordered that the Statement of Claim be struck out and that proceedings be stayed permanently. He ordered that the appellant should pay the costs of and incidental to the application. In making those orders, it is not clear precisely to which version of the Statement of Claim the Master was referring. In the circumstances it did not matter, because whichever version was being referred to, there was, in the Master’s view, justification for striking out the whole. He did not have to direct his attention to which parts of which version related only to the defamation action.
The appellant appealed from that decision to a Judge of the District Court, who dismissed the appeal for reasons which generally agreed with those of the Master.
The appellant appealed to a Judge of this Court against that decision. The appeal was incompetent because no leave had been obtained as required by Rule 96A.02 of the Supreme Court Rules. Nevertheless, his Honour treated the appeal as an application for leave and granted leave to appeal but dismissed the appeal. He did so, however, for reasons which differ from those given in the District Court.
His Honour agreed with the Master and Judge of the District Court that, apart from the pleading in defamation, the Statement of Claim disclosed no cause of action. However, his Honour also concluded that the principles in Port of Melbourne Authority v Anshun Pty Ltd did not apply to a counterclaim of the type which could have been brought by the appellant in respect of her own claim for damages for defamation. Although that claim could have been brought by way of counterclaim in the proceedings in the Magistrates Court, it was in effect a separate action, based on a separate publication. It would have required separate consideration as to whether it was defamatory and as to claims based on qualified privilege and malice. They would not in any way have affected the judgment on the claim brought against the appellant. His Honour elaborated on reasons why the Anshun principle did not apply. It is not necessary to repeat those reasons. In that respect, his Honour held that both the Master and District Court Judge had erred.
Nevertheless, the Judge hearing the appeal raised a further issue, namely the use that could be made of a document discovered in other proceedings. That had not been considered by either the Master or the Judge in the District Court. Having raised the matter, his Honour allowed both parties the opportunity to put further submissions to him on that question. His Honour held that the stay of proceedings should nevertheless continue, and the appeal should be dismissed, because the subject matter of the cause of action was the respondent’s letter of 3 November 1994 to the Chief Executive Officer of the WorkCover Corporation. That had been obtained by the appellant in the course of discovery in the proceedings in the Magistrates Court. When a party obtains discovery from another party in litigation, there is an obligation upon that party not to use the documents discovered for any collateral or ulterior purpose unless the party who gives discovery consents, or the party to whom discovery is given obtains the leave of the Court. As neither of those conditions had been fulfilled, the appellant was not entitled to rely on the letter in the current proceedings because of the fact that it had been produced under compulsion by way of discovery. His Honour concluded:
“It will be for Mr Hiskey SM in the Magistrates Court to determine whether or not the plaintiff should be released from her implied undertaking. In doing so he will have regard to the fact that the plaintiff may have been able to bring these proceedings by way of counterclaim without leave. No doubt Mr Hiskey SM will also have regard to the fact, if it be the fact, that the plaintiff obtained a copy of this document under the Freedom of Information Act. He will also have regard to the fact that considerable time has passed since the proceedings were heard before him.
In the end he will have to determine whether or not leave should be granted in accordance with the principles in Crest Homes PLC v Marks [1987] AC 829.”
Accordingly, his Honour considered that the stay order should remain unless the Magistrates Court gave leave to the appellant to be released from her implied undertaking not to use the document for extraneous purposes.
It is from that decision that the appellant purports to appeal to this Court.
Leave to Appeal
Rule 96A.05 of the Supreme Court Rules provides that, in the circumstances of a case such as the present, there can be no further appeal to the Full Court unless the single judge or the Full Court grants leave pursuant to Rule 94 of the Supreme Court Rules. No such application has been made either to the Judge or to this Court. Rule 94.01 requires that application for leave be made within 14 days of the date of the judgment appealed from. The purported notice of appeal was filed within that time.
As there appears to be no prejudice to the respondent if leave were granted, and as both parties came prepared to argue the merits of the appeal and did so, to the extent necessary I would be prepared to treat the notice of appeal as an application for leave to appeal: see Portellos v Chapley and Chapley [2000] SASC 56; (2000) 207 LSJS 79 at [22].
Grounds of Appeal other than those related to principles of discovery
There are many grounds of appeal contained in the appellant’s Notice of Appeal. It is not entirely clear whether the appellant still challenges the decision of the Master, the District Court Judge and the Supreme Court Judge striking out the Statement of Claim insofar as it pleads causes of action other than defamation. In my opinion, there can be no doubt that the decisions of all three judicial officers on that question were correct. In so far as the appellant seeks to bring an appeal against that part of the decision of the single Judge, I would refuse leave to appeal.
The appellant succeeded in her appeal against the decision of the District Court Judge in so far as it was held that the Master and the Judge of the District Court incorrectly applied the Anshun principles. No notice of contention has been filed by the respondent seeking to rely on those principles or seeking to justify the decisions of the Master and the District Court Judge on that basis. With respect, the Judge of this Court was correct in his application of those principles to this case, and those principles were no bar to the plaintiff maintaining her action for defamation against the respondent. The only remaining issue is whether the Judge of this Court was correct in holding that the proceedings should be stayed because the letter on which they were founded was produced to the appellant as a result of the discovery process in the Magistrates Court.
The use of documents produced as a result of discovery for extraneous purposes.
The letter upon which the appellant’s present action is founded first came to her notice as a result of being discovered by the respondent in the Magistrates Court proceedings. The original letter had been addressed by the respondent to the WorkCover Corporation and to no‑one else. It was a document which was properly discovered in those proceedings. The appellant also asserts that she later received a copy of the document from the WorkCover Corporation following an application she made pursuant to the Freedom of Information Act 1991. There is no evidence before the Court proving that a copy of the letter was produced pursuant to that Act. Nevertheless, I am prepared to assume, in the appellant’s favour, that she did receive such a copy and that it was a letter properly produced to her in accordance with the requirements of that Act.
Discovery of documents is an important weapon in the armoury of procedure in actions in common law jurisdictions. It is a process which, against the will of the party having custody or control of the document, requires that party to disclose its existence and to produce it for inspection if it is still in his or her possession, custody or power. As has long been held, because it is required under compulsion, it is subject to an implied undertaking that the person to whom disclosure of the document is made will not use it for a collateral or ulterior purpose not connected with the litigation in which it is disclosed. The application of the principle is well illustrated by Lord Denning MR in Riddick v Thames Board Mills Ltd [1977] QB 881.
The circumstances were not dissimilar to those of the present case. The plaintiff claimed damages against his former employer for wrongful arrest and imprisonment in connection with his dismissal. In giving discovery in the course of that action, the company disclosed a memorandum which was said to be defamatory of the plaintiff. The action was settled. Later, the plaintiff claimed damages against the company for defamation based on the allegedly defamatory memorandum. He succeeded at first instance, but the verdict was reversed on appeal because the memorandum had only been produced by way of discovery in the earlier action, and it could not be used for a collateral purpose of a subsequent action for defamation.
Lord Denning MR (at 895) pointed out that the reason for the requirement of discovery of documents under compulsion lay in the public interest in discovering the truth, so that justice might be done between the parties. There was another public interest in preserving privacy and protecting confidential information. This was outweighed in the common law system in favour of the public interest of discovering the truth and of making full disclosure. It was the application of that balance that caused Lord Denning to pronounce as follows (at 896):
“I proceed to hold the balance in the present case. On the one hand discovery has been had in the first action. It enabled that action to be disposed of. The public interest there has served its purpose. Should it go further so as to enable the memorandum of April 16, 1969, to be used for this libel action? I think not. The memorandum was obtained by compulsion. Compulsion is an invasion of a private right to keep one’s documents to oneself. The public interest in privacy and confidence demands that this compulsion should not be pressed further than the course of justice requires. The courts should, therefore, not allow the other party - or anyone else - to use the documents for any ulterior or alien purpose. Otherwise the courts themselves would be doing injustice. Very often a party may disclose documents, such as inter‑departmental memoranda, containing criticisms of other people or suggestions of negligence or misconduct. If these were permitted to found actions of libel, you would find that an order for discovery would be counter‑productive. The inter‑departmental memoranda would be lost or destroyed or said never to have existed. In order to encourage openness and fairness, the public interest requires that documents disclosed on discovery are not to be made use of except for the purposes of the action in which they are disclosed. They are not to be made a ground for comments in the newspapers, nor for bringing a libel action, or for any other alien purpose. The principle was stated in a work of the highest authority 93 years ago by Bray J., Bray on Discovery, 1^st ed. (1885), p.238:
‘A party who has obtained access to his adversary’s documents under an order for production has no right to make their contents public or communicate them to any stranger to the suit: ...nor to use them or copies of them for any collateral object ... If necessary an undertaking to that effect will be made a condition of granting an order:...’
Since that time such an undertaking has always been implied, as Jenkins J. said in Alterskye v. Scott [1948] 1 All E.R. 469, 471. A party who seeks discovery of documents gets it on condition that he will make use of them only for the purposes of that action, and no other purpose. The modern authorities are well discussed by Talbot J. in Distillers Co. (Biochemicals) Ltd. v. Times Newspapers Ltd. [1975] Q.B. 613, 621; and I would accept all he says, particularly as to the weighing of the public interests involved: see p.625.”
That decision has been approved by the House of Lords: Harman v Secretary of State for the Home Department [1983] 1 AC 280, and the principle has been applied in Australia: Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10.
The Freedom of Information Act
If that were all, the appellant would be prevented from using the letter as the basis of her claim for defamation in the present proceedings. However, that is not all. As I said, I am prepared to assume in her favour that the document was or could be required to be produced to her by the WorkCover Corporation upon an application made under the Freedom of Information Act 1991. The object of that Act is stated in s 3:
“3. (1) The objects of this Act are to extend, as far as possible, the rights of the public -
(a) to obtain access to information held by the Government; and
(b) to ensure that records held by the Government concerning the personal affairs of members of the public are not incomplete, incorrect, out‑of‑date or misleading.”
In pursuance of those objects, s 12 provides:
“12. A person has a legally enforceable right to be given access to an agency’s documents in accordance with this Act.”
“Agency” is defined in section 4 to include a wide range of government instrumentalities and agencies. It would include the WorkCover Corporation.
The Act then proceeds to specify the procedure by which an application may be made and documents are required to be produced. Section 20 of the Act provides grounds on which access may be refused, but I assume for present purpose that the letter in question does not fall within any of those grounds.
It is to be noted that the reason for the implied undertaking which protects the misuse of documents the subject of discovery is the public interest in privacy and confidence which would, but for the process of discovery, be preserved, and which would not require the person in possession of the document to produce it. In the case of documents held by the Crown or by an agency as defined in the Freedom of Information Act, that privacy and confidence is removed. It would follow that the principle enunciated by Lord Denning MR in Riddick v Thames Board Mills Ltd can have no application to documents which can be required to be disclosed pursuant to the Freedom of Information Act 1991.
However, Parliament has nevertheless protected such documents from use for some particular purposes, including proceedings for defamation. Section 50 of the Act provides:
“50. (1) If access to a document is given pursuant to a determination under this Act, and if the person by whom the determination is made honestly believes, when making the determination, that this Act permits or requires the determination to be made -
(a) no action for defamation or breach of confidence lies against the Crown, an agency or an officer of an agency, by reason of the making of the determination or the giving of access; and
(b) no action for defamation or breach of confidence in respect of any publication involved in, or resulting from, the giving of access lies against the author of the document or any other person by reason of the author or other person having supplied the document to an agency or Minister.
(2) Neither the giving of access to a document pursuant to a determination under this Act nor the making of such a determination constitutes, for the purposes of the law relating to defamation or breach of confidence, an authorisation or approval of the publication of the document or its contents by the person to whom access is given.”

In this case, to the extent that the letter in question has been produced to the appellant under the provisions of the Freedom of Information Act 1991, s 50(1)(b) would prevent her from using it for the purpose of maintaining the present action for defamation. That is because it is the subject of protection under s 50(1)(b) as a document produced by reason of the author having supplied it to WorkCover Corporation. However, because it was also supplied to her in a different capacity, as a litigant in the Magistrates Court, she may be able to use it either with the consent of the respondent or by leave of that Court.
Conclusion
It follows that the order of the single Judge dismissing the appeal to him must be confirmed. That is not to say that the appellant is unable to make an application to the Magistrates Court to seek the leave of that Court to use the document for the purposes of the present action. I have already set out what the Judge said about the approach that might be taken by the Magistrate if such an application were made. The only qualification I would add to that is that although the Magistrate might have regard to the fact that the plaintiff obtained or was able to obtain a copy of the letter under the Freedom of Information Act, he would also have regard to the fact that that in itself would not assist the plaintiff in being able to use it in her present action.
As the single Judge pointed out, there are decisions which suggest that a document which is discovered in proceedings may become the subject of a counterclaim in those proceedings without obtaining the leave of the Court: Allstate Life Insurance Co v ANZ Banking Group Ltd (1995) 57 FCR 360; Eckert v National Australia Bank Ltd (1997) 191 LSJS 221. Like the Judge below, I express no opinion on the correctness of those decisions. They have not been the subject of argument before us. But if they are correct, they would have allowed the appellant to bring her present proceedings for defamation by way of counterclaim in the Magistrates Court proceedings. The Magistrate will no doubt take that into account if an appropriate application is made by the appellant.
The single Judge merely dismissed the appellant’s appeal, but that appears to have been on the assumption that the proceedings should be stayed pending the result of any application to the Magistrates Court, and I agree that that is what should happen. Nevertheless, the effect of the Master’s order and that of the subsequent orders on appeal is that the whole of the Statement of Claim be struck out. If the appellant applies to the Magistrates Court and obtains leave to use the letter for the purpose of the District Court action, it would be appropriate for the stay to be lifted unless justified for some other reason. It would also be inappropriate for the Statement of Claim to be struck out, depending on which Statement of Claim the Master’s order referred to.
The appropriate order is to dismiss the appeal from the single Judge but to order that the appellant be at liberty to apply to the District Court to revoke the stay and to apply for further directions as to the pleading of her action limited to a cause of action in defamation based on the letter of the respondent to WorkCover Corporation dated 3 November 1994. In view of the fact that there have already been many delays in pursuing what is now a very old action, I would limit the time within which the appellant could so apply to the District Court to a period of three months from the date of this judgment. That should give her enough time to make any application she may need to make to the Magistrates Court and, if successful, then to apply to the District Court. In view of the fact that the appellant has failed in her appeal and that only the reasoning has been slightly altered, and in view of the fact that the appellant could have taken up at any time the single Judge’s suggestion that she apply to the Magistrates Court, I would order that she pay the respondent’s costs of this appeal.
The orders I would make are as follows:-
1.That the appellant’s notice of appeal filed on 4 January 2001 be treated as an application for leave to appeal pursuant to Rule 96A.05 of the Supreme Court Rules.
2.That in so far as the appellant seeks leave to appeal against the decision of the Honourable Justice Lander whereby he confirmed that the appellant’s Statement of Claim, to the extent that it pleads causes of action other than defamation based on the respondent’s letter to WorkCover Corporation dated 3 November 1994, be struck out, leave to appeal be refused.
3.That in all other respects leave to appeal be granted.
4.That the appeal be dismissed.
5.That the appellant be at liberty to apply to the District Court within three calendar months of today’s date to revoke the order staying the proceedings in that Court and to apply for directions as to the further pleading of her action, limited to a cause of action in defamation based on the letter of the respondent to WorkCover Corporation dated 3 November 1994.
6.That the appellant pay the respondent’s costs of this appeal.
WICKS J I agree.

[2001] SASC 364

31 October 2001