Myer Pty Ltd v Ellery Land Pty Ltd
[2013] VSC 108
•13 March 2013
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
List E
No. S CI 2013 00225
BETWEN
| MYER PTY LTD (ABN 83 004 143 230) | Plaintiff |
| and | |
| ELLERY LAND PTY LTD (ABN 65 124 374 358) | First Defendant |
| and | |
| KIMBERLEY JEAN KAHURANGI ELLERY | Second Defendant |
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JUDGE: | SIFRIS J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 8 March 2013 | |
DATE OF JUDGMENT: | 13 March 2013 | |
CASE MAY BE CITED AS: | Myer Pty Ltd v Ellery Land Pty Ltd & Anor | |
MEDIUM NEUTRAL CITATION: | [2013] VSC 108 | |
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PRACTICE AND PROCEDURE – Notice to produce legal advice – Claim for legal professional privilege – Whether implied waiver of privilege.
PRACTICE AND PROCEDURE – Discovery – Whether documents are relevant to issues in the proceeding.
PRACTICE AND PROCEDURE – Subpoena – Whether documents are relevant to issues in the proceeding.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr P B Murdoch QC | Clayton Utz |
| For the Defendant | Mr C E Shaw | Norton Rose Australia |
HIS HONOUR:
In this proceeding the plaintiff (“Myer”) seeks specific performance of an exclusive supply agreement (“the Agreement”) entered into with the defendants. The defendants (“Ellery”) claim, amongst other things, that the Agreement is in restraint of trade and is prima facie unenforceable and that Myer will not establish that it is reasonable, in the interests of the parties and in the public interest. Ellery claims further that damages are an adequate remedy for any breach of the Agreement.
Ellery has entered into a later exclusive supply agreement with David Jones Limited (“David Jones”).
The matter has been set down for trial and is fixed for hearing on 15 April 2013 before me.
Each side claims documents from the other and Myer has issued a subpoena addressed to David Jones requiring it to produce certain documents.
Discovery from Myer
Ellery seeks discovery from Myer of five categories of documents — described as categories 28, 38, 41, 42 and 44. In my opinion Ellery is not entitled to any of the documents falling within these categories as they are not relevant to the dispute between the parties.
Category 28 seeks:
All documents comprising or evidencing the negotiation of any of the exclusivity contracts between Myer and the seven designers referred to in paragraph 14 of the Coomber affidavit (which refers to eight designers, including Ellery).
Ellery asserts that it is not sufficient to simply disclose the final contracts between Myer and the designers referred to and submits that the course of negotiation between the parties is also relevant. Ellery contends by reference to authority[1] that it is necessary to assess how the final contract was moulded under pressure of negotiations.
[1]Esso Petroleum Co Ltd v Harper’s Garage (Stourport) Ltd [1968] AC 269 at 332-333.
In my opinion the course of negotiation between Myer and other designers is not relevant, although the terms contained in any final agreement may well be. I do not accept that the passage of Lord Wilberforce referred to by Ellery makes good the proposition advanced. Ellery is not entitled to discovery of the documents sought.
Category 38 is in the following terms:
All correspondence sent or received by Jo Lynch (including but not limited to emails copied to Jo Lynch), General Manager Corporate Affairs, regarding Ellery Land and/or Kimberley Ellery including in relation to this proceeding since 25 September 2012.
Ellery contends that this category of documents is relevant in order to assess whether Myer remains ready, willing and able to perform the Agreement. According to Myer, Ms Lynch does not make any decisions in relation to performance of contracts and accordingly discovery is resisted on the grounds that this category of documents is not relevant to any dispute between the parties. According to Ellery, although Ms Lynch is primarily involved in communications with the media, the information she uses is received from internal departments within Myer. Given her involvement with the media and recent press coverage, it is submitted by Ellery that the documents may contain information relevant to the claim for specific performance.
I do not accept the submission made by Ellery. In my opinion there is an insufficient basis or foundation for the submission that documents of Ms Lynch are relevant to the suggested issue.
Category 41 is in the following terms:
All documents recording, evidencing or referring to communications with any high-end Australian designer other than the eight high-end Australian designers referred to in paragraph 14 of the Coomber affidavit since 25 September 2012.
According to Ellery these documents are necessary in order to assess what steps Myer has taken in order to replace Ellery. Further it is contended that the documents are relevant to the claim for specific performance.
Myer has made discovery of 38 agreements entered into with other fashion designers. In my opinion this is sufficient. Other correspondence with high-end designers is not relevant to the issues between the parties. Myer has asserted that it is entitled to specific performance and that damages are not an adequate remedy. It bears the onus of establishing why damages are not an adequate remedy. It goes without saying that Ellery will be entitled to cross-examine any witness called on behalf of Myer in relation to this matter. In my opinion the documents sought are not relevant to this issue.
Category 42 is in the following terms:
All documents recording the total revenue derived by Myer from the “total apparel sales”, referred to in paragraph 13 of the Stapleton affidavit, in the financial year ending 30 June 2012.
Ellery submits that these documents are relevant in order to assess the reasonableness of the restraint and precisely what interest Myer was endeavouring to protect. Myer contends that having admitted that the Ellery account was indeed a small account any other information of the kind sought is simply not relevant.
In my opinion the information requested is not relevant to the dispute between the parties. Myer having admitted that the Ellery account is a small account, it is not necessary to determine precisely how small the account is or obtain relevant financial information in order to determine the extent of the account with any mathematical accuracy. The court and the parties are able to determine whether specific performance is an appropriate remedy without a precise figure in relation to the extent to which Ellery contributes to the total revenue of Myer.
Category 44 is in the following terms:
All documents recording the total profit derived by Myer from the “total apparel sales” referred to in paragraph 13 of the statement and affidavit in the financial year ending 30 June 2012.
In my opinion for similar reasons to those set out above in relation to category 42 the documents are not discoverable.
Discovery from Ellery
By notice to produce dated 28 February 2013, Myer seeks production of the standard supply terms of trade between David Jones and Ellery and legal advice given to Ellery in relation to whether Ellery committed a breach of the Agreement. In addition to the notice to produce Myer seeks further discovery of financial statements of Ellery.
The only matter that requires adjudication is the legal advice sought in the notice to produce dated 28 February 2013. In relation to the standard supply term the parties have agreed that they are relevant and Ellery has undertaken to produce them. In relation to the financial statements the 2009 financial statements have been provided and Ellery has advised that it needs further time in order to produce the 2007 and 2008 statements. I propose to give Ellery a further ten days within which to produce these financial statements. Accordingly, the only matter to determine is that of the legal advice.
In my opinion there has not been an implied waiver of privilege in relation to the legal advice and accordingly there is no obligation on the part of Ellery to produce it to Myer.
On 17 October 2012 Judy Coomber, Group General Manager of Myer, sent an email to Ms Ellery advising that Myer considered that the conduct of Ms Ellery was “in breach of the exclusivity arrangement”. The breach referred to by Ms Coomber was referred to in the following terms:
It has just been brought to my attention that you have recently joined with DJs to produce a diffusion collection. The article also states that you attended one of their events. Imagine my surprise!
Last year you signed an exclusivity deal with Myer. Under the terms of that agreement you agree that you would not sell any of the exclusive goods to any Australian retailer that operates fifteen or more stores or enter into a licence with another Australian department store where customers could purchase the exclusive goods. You further agree that you would obtain Myer’s consent prior to creating a diffusion range with any Australian retailer.
Ms Ellery responded by email on 30 October 2012. Relevantly the email was in the following terms:
In relation to your email dated 17 October 2012, I have sought legal advice in relation to Ellery’s alleged breach of the Myer exclusivity agreement. We have been instructed that no breach has occurred as the brand in question ‘L/America’ falls outside of the agreement. Specifically:
-L/America is not branded Ellery, as such cannot be considered exclusive goods in accordance with the agreement.
–Clause 1.A does no apply as L/America are not exclusive goods nor has Ellery provided design services to an Australian retailer that operates more than fifteen stores nationally.
–Clause 1.B does not apply as L/America are not exclusive goods.
–Clause 1.C does not apply as Elleryland has not created a diffusion range.”
In this context it is submitted by Myer that there has been an implied waiver of the privilege that would otherwise attach to the legal advice obtained. Ellery resists such a claim and contends that in the circumstances there is no inconsistency between disclosure of the gist of the advice on the one hand and the maintenance of confidentiality or privilege on the other. Ellery contends further that there has not been any deployment of the advice for any forensic advantage but simply a legitimate and appropriate response to a serious assertion made by Myer. In all of the circumstances it is contended that it would not be unfair for Ellery to maintain confidentiality and privilege of the legal advice. I agree.
In British American Tobacco Australia Ltd v Secretary, Department of Health and Ageing[2] the Full Court of the Federal Court of Australia provided a very useful summary of the authorities. I adopt with respect that helpful summary. At [44]-[46] the Court (Keane CJ, Downes and Besanko JJ) said as follows:
[2][2011] FCAF 107.
44It is now clear that disclosure of the gist of a privileged communication does not necessarily effect a waiver of legal professional privilege. In Secretary, Department of Justice v Osland at [29]-[51], Maxwell P of the Court of Appeal of Victoria reviewed the authorities. At the conclusion of that review Maxwell P said at [49]-[51]:
[49]Disclosure of the conclusion (or the gist, substance or effect) of legal advice may, or may not, amount to a waiver of privilege in respect of the advice as a whole. Whether it does in a particular case will depend on whether, in the circumstances of the case, the requisite inconsistency exists, between the disclosure on the one hand and the maintenance of confidentiality on the other. In Bennett, the majority of the Full Federal Court judged that there was inconsistency and hence waiver; in British American Tobacco Australia Services Ltd v Cowell (discussed below), this Court judged that there was not. In each case, there was a disclosure of the gist or substance of advice given. That opposite conclusions were arrived at is simply a reflection of the different circumstances of the respective cases.
[50]The content of an advice will often include confidential information about instructions given by the client, or about evidence to be given by a witness, or about forensic investigations being or proposed to be undertaken. These examples are sufficient to demonstrate why it is simply not the case that the disclosure of the conclusions necessarily amounts to, or necessarily entails, the disclosure of the content. There is no necessary inconsistency between disclosure of the one and non-disclosure of the other.
[51]As Carnell demonstrates, the inconsistency test readily accommodates the notion that, in appropriate circumstances, the privilege-holder may disclose the content of legal advice to a third party for a particular purpose without being held to have waived privilege in the advice. Likewise, in my opinion, the test of inconsistency is well capable of accommodating the notion that, in appropriate circumstances, the privilege-holder should be able to disclose publicly that it is acting on advice and what the substance of that advice is, without being at risk of having to disclose the confidential content of the advice.
(Footnotes omitted)
45On appeal to the High Court in Osland v Secretary, Department of Justice, the reasoning of Maxwell P was referred to with express approval in the joint judgment of Gleeson CJ, Gummow, Heydon and Keifel JJ. Their Honours said:
[44]On the issue of waiver of privilege in document 9, an issue resolved adversely to the appellant by both the Tribunal and the Court of Appeal, both parties accepted that the principles to be applied were those stated in the joint reasons of four members of this Court in Mann v Carnell. The difference between the parties concerned their application to the circumstances of the present case.
[45]Waiver of the kind presently in question is sometimes described as implied waiver, and sometimes as waiver ‘imputed by operation of law’. It reflects a judgment that the conduct of the party entitled to the privilege is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. Such a judgment is to be made in the context and circumstances of the case, and in the light of any considerations of fairness arising from that context or those circumstances. In the case of Benecke, referred to in Mann v Carnell, and discussed by Maxwell P in the present case, an appreciation of the unfairness if Mrs Benecke could give her version of her communications with her lawyer and at the same time prevent the lawyer from giving her own version was one aspect of the inconsistency between her conduct in making certain kinds of allegation against her lawyer and holding her lawyer to obligations of confidentiality. In the present case counsel for the appellant acknowledged that, if the press release had not included the sentence earlier identified as critical, privilege probably would not have been waived. This is undoubtedly correct, even though, upon that hypothesis, the press release would have made some disclosure concerning legal advice taken by the Department.
[46]The conduct of the Attorney-General in issuing the press release and including in it certain information about the joint legal advice is to be considered in context, which includes the nature of the matter in respect of which the advice was received, the evident purpose of the Attorney-General in making the disclosure that was made, and the legal and practical consequences of limited rather than complete disclosure.
...
[49]Whether, in a given context, a limited disclosure of the existence, and the effect, of legal advice is inconsistent with maintaining confidentiality in the terms of advice will depend upon the circumstances of the case. As Tamberlin J said in Nine Films and Television Pty Ltd v Ninox Television Ltd, questions of waiver are matters of fact and degree. It should be added that we are here concerned with the common law principle of waiver, not with the application of s 122 of the Evidence Act 1995(Cth) which, as was said in Mann v Carnell, has the effect that privilege may be lost in circumstances which are not identical to the circumstances in which privilege may be lost at common law.
[50]The reasoning of Maxwell P was correct.
(Footnotes omitted).
46In Osland v Secretary, Department of Justice, Gleeson CJ, Gummow, Heydon and Kiefel JJ referred with evident approval to another passage in the judgment of Maxwell P in the Court of Appeal which makes the point that there is no necessary inconsistency in stating the effect of advice and maintaining a claim of privilege. Their Honours said at [35]:
After a discussion of a number of cases argued by the parties to be analogous, Maxwell P expressed his conclusion that the Tribunal's decision on waiver was not only open but was clearly correct. He gave his reasons as follows:
Amongst the circumstances relevant to determining inconsistency, it is clear from Carnell and Bennett that the purpose for which the privilege-holder made the disclosure is highly relevant. The question here was whether the use made by the Minister of the disclosed portion of the privileged communication – more particularly, the purpose for which the conclusion was disclosed – was inconsistent with the maintenance of confidentiality in respect of the content of the advice.
First it is necessary to restate the purpose of the confidentiality which the privilege preserves. In Grant v Downs, Stephen, Mason and Murphy JJ said:
“The rationale of this head of privilege, according to traditional doctrine, is that it promotes the public interest because it assists and enhances the administration of justice by facilitating the representation of clients by legal advisers, the law being a complex and complicated discipline. This it does by keeping secret their communications, thereby inducing the client to retain the solicitor and seek his advice, and encouraging the client to make a full and frank disclosure of the relevant circumstances to the solicitor”.
Later, in Baker v Campbell, Mason J noted that the underlying policy of the privilege covering legal advice “involved the promotion of freedom of consultation generally between lawyer and client”. In the same case, Deane J said that the principle underlying the privilege was that “a person should be entitled to seek and obtain legal advice without the apprehension of being prejudiced by the subsequent disclosure of confidential communications”.
The evident purpose of the Attorney-General’s disclosure was to inform the public that the recommendation he had made to the Governor – that the petition for mercy be denied – was based on independent legal advice, advice which recommended that each ground advanced in the petition should be rejected. The Attorney-General evidently wished it to be known that, in considering whether or not the prerogative of mercy should be exercised, he had taken independent advice and was making a recommendation which accorded with that advice. In the language of Carnell, this was a disclosure “for the purpose of explaining or justifying” the Attorney-General’s actions. The purpose was similar to that of the disclosure in Carnell itself, where the Chief Minister wished to satisfy the relevant member of Parliament that the ACT Government ‘had acted responsibly and in accordance with legal advice’.
In my opinion, there was no inconsistency between disclosing the fact of, and the conclusions of, the independent advice for that purpose, and wishing to maintain the confidentiality of the advice itself. This was not a case of a party to litigation “deploying” a partial disclosure for forensic advantage, while seeking unfairly to deny the other party an opportunity to see the full text of the privileged communication. Nor was it “the laying open of the confidential communication to necessary scrutiny”.
In my opinion, and in the circumstances referred to, it cannot be said that Ellery was seeking to deploy a partial disclosure of the legal advice for a forensic or other advantage. She was simply responding to a serious allegation made by Myer. In the circumstances, reference to the fact of legal advice and the gist of the legal advice does not, without more, involve any implied waiver of privilege. There is no unfairness or inconsistency in the sense used in the authorities.
Subpoena addressed by Myer to David Jones
By subpoena dated 21 February 2013 Myer seeks the production of various categories of documents from David Jones. In my opinion none of the categories are relevant and I propose to set the subpoena aside.
Paragraph 2 of the subpoena seeks production of correspondence in relation to the terms of supply, the business plan submitted by Ellery and correspondence in relation to the supply and cessation of supply to Myer. According to Myer the documents are relevant in relation to when the defendant commenced selling to David Jones and the deliberateness with which Ellery engaged in such conduct.
In my opinion the documents are not relevant to any dispute between the parties. It is clear that Ellery commenced to supply David Jones. This fact is admitted and the relevant agreement has been provided. Further documentation in relation to this matter is not required.
Paragraph 3 of the subpoena seeks production of file notes and records of four named employees of David Jones in relation to the matters referred to in paragraph 2. In my opinion, and for similar reasons, the documents are not relevant.
Paragraph 4 of the subpoena seeks the production of documents in relation to discussions between Ellery and various named employees of David Jones prior to the entering into of the agreement between them. In my opinion these documents are not relevant to any dispute between the parties. The agreement has been admitted and produced.
Conclusion
In the final analysis Ellery is not entitled to any further documents from Myer and Myer is not entitled to any further documents from Ellery or David Jones.
I do not propose to deal with costs. I will set aside the subpoena addressed to David Jones and reserve the question of costs in relation to the subpoena and generally.
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