Octagon Inc v Hewitt & Anor (No 2)
[2011] VSC 373
•10 August 2011
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
PRACTICE COURT
No 04813 of 2008
| OCTAGON INC | Plaintiff |
| V | |
| LLEYTON GLYNN HEWITT & ANOTHER | Defendants |
---
JUDGE: | DIXON J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 8 June 2011 | |
DATE OF JUDGMENT: | 10 August 2011 | |
CASE MAY BE CITED AS: | Octagon Inc. v Hewitt & Anor (No. 2) | |
MEDIUM NEUTRAL CITATION: | [2011] VSC 373 | |
---
Practice & Procedure – inspection of documents – redaction – whether justified – relevance and confidentiality asserted – whether further inspection by court warranted – whether discovering party has justified redaction – Civil Procedure Act 2010 (Vic) ss 54, 55, 56 – Supreme Court (General Civil Procedure) Rules 2005 r 29.11.
Practice & Procedure – appeal from associate justice – nature of rehearing de novo – special leave to rely on further affidavit – whether unreasonable advantage being taken of rehearing de novo – whether judge bound by prior conduct of application – Civil Procedure Act 2010 (Vic) ss 7, 8, 9, 26, 27 – Supreme Court (General Civil Procedure) Rules 2005 r 77.06.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr T North SC with Mr P Nugent | Mills Oakley |
| For the Defendant | Mr TJ Walker | Logie-Smith Lanyon |
HIS HONOUR:
The Octagon parties resisted, by making redactions, complete production of certain discovered documents for inspection by the Hewitt parties. The redacted parts are said to be irrelevant or confidential, or both. Before an associate justice, the Hewitt parties challenged the adequacy of inspection made available to them. A procedure was agreed which, in effect, resulted in the associate justice ruling against the application of the Hewitt parties for inspection, following her review of 12 lever arch folders, comprising the documents in both un-redacted and redacted form. The application comes before me as an appeal against the order refusing further inspection.
This proceeding has involved an intensive and prolonged dispute over discovery of documents on other battlefronts.[1] The issues which arise on this appeal are as much procedural matters as matters of substance. They are:
·What procedure ought this court adopt on the application by the Hewitt parties to inspect redacted parts of discovered documents? Having regard to the provisions of the Civil Procedure Act 2010 (Vic) on the one hand and the provisions of r 77.06 of the Supreme Court (General Civil Procedure) Rules 2005, by which a person affected by any order made by an associate justice may appeal to a judge of the court—which appeal shall be by rehearing de novo —to what extent is the court entitled to have regard to the prior review of the documents by a judicial officer? Is the applicant entitled to a second review by another judicial officer?
·Does the proper exercise of the court’s discretion require that the Octagon parties be ordered to produce the whole of the documents, that is, in unredacted form, for inspection?
[1]Octagon Inc v Hewitt and Anor [2011] VSC 138.
Background circumstances
In another application in this proceeding, the court summarised the allegations in the pleadings.[2] I was not taken through the pleadings, which are extensive. It is convenient, for context, to repeat the substance of the earlier summary of the pleadings.
[2]Ibid [1]–[16]. In my description of the claims made in the pleadings I acknowledge that I have drawn upon his Honour’s reasons for judgment.
Lleyton Hewitt and Lleyton Hewitt Marketing Pty Ltd (“LHM”) have been sued by Octagon Inc, an American company that promotes, markets and manages the affairs of athletes. LHM, a trading corporate trustee, promotes Lleyton Hewitt’s name, likeness, image and reputation. Its claims are, in essence, for fees or commissions payable under agreements by which Octagon represented Hewitt as his agent. Such agreements involve managing commercial transactions such as merchandising and promotional activities, product endorsements, tournament guarantee payments (appearance money), licensing agreements, exhibition matches, and television appearances.
A related company, Octagon Financial Services Inc (“Octagon Financial”) was in the business of providing cash management and advisory services to athletes for investment of their earnings. Neither Octagon nor Octagon Financial is a financial institution. As pleaded, Octagon Financial was involved in the management of Hewitt’s affairs because Octagon was allegedly bound to procure Octagon Financial to provide financial services to Hewitt. Such services included maintaining an interest bearing account, collecting his earnings, converting foreign currency, transferring money, paying his bills, managing his insurance needs, preparing United States federal income tax returns and like matters. The case directly against Octagon Financial is that the company not only held funds but also served Hewitt as his investment advisor and strategist, and likewise served LHM.
The alleged causes of action against the Octagon parties are first, in negligence based on an implied term of the agreement that Octagon Financial would exercise reasonable skill and care in managing Hewitt’s financial affairs by a prudent investment of funds that were a surplus to Hewitt’s current financial requirements. The Hewitt parties allege that over six years Octagon Financial held funds on behalf of Hewitt and LHM which were surplus to living or business expenses. In that regard, the agreement stated that Octagon Financial would have the sole discretion with respect to the direction of the investment and re-investments, and that investments could be made in securities including mutual funds, bonds, securities of investment companies, municipal securities, US Government securities and certificates of deposit. A duty was allegedly owed to Hewitt by Octagon Financial to plan investments for Hewitt’s particular circumstances and financial objectives, and to manage his financial affairs by prudent investment of funds. This is pleaded in the context of Hewitt having significant current earnings but having an uncertain future earning capacity, such that the investment plan was to secure his financial future by investing his current earnings in a conservative manner. It is alleged that an appropriate investment plan would have emphasised the production of stable income through low-risk investments, a small component of higher-risk investments, and would not place his surplus funds primarily in the money market alone. The same was said of LHM’s financial objectives and circumstances.
It is alleged that, as agent, Octagon Financial was Hewitt’s fiduciary. The counterclaim states that Hewitt and LHM received from the Octagon parties an account of their moneys in the account transaction summaries and account transaction details. While a fiduciary relationship may be a basis for a beneficiary to request a court to compel a fiduciary agent to deliver up documentation or information concerning its performance, enforcing the duty of an agent to give full disclosure or to account and to explain dealings with the principal’s property does not require an agent to breach like duties owed to others, and it has not been alleged against the Octagon parties that it has done so.
The case is also put in contract. It is alleged that an agreement was breached in that Octagon Financial did not develop plans and strategies to reach Hewitt’s goals and did not supervise, review or advise him on the investment of his discretionary account. It is alleged Octagon Financial failed to manage Hewitt’s financial affairs, having neglected to prudently invest funds in a mix of investments consistent with Hewitt’s particular financial objectives and circumstances. The gist of the allegation is that Octagon Financial obtained for Hewitt a return equivalent to investments in the money market rate only.
The principal accusation of wrongdoing is that had Octagon Financial performed its obligations under the agreement or under its concurrent duty in tort, then “Octagon Financial would have made investments on behalf of Hewitt which would have yielded a greater return than the investments which were made”.
The redacted documents form part of the discovery about financial dealings. Their relevance, if any, was asserted by the Hewitt parties to be on quantum issues.
It is convenient to explain how this particular dispute has developed by working backwards chronologically. By their notice of appeal the Hewitt parties appealed against the dismissal, on 17 May 2011, of their application to inspect confidential documents. The application under appeal was made by the Hewitt parties by summons dated 19 July 2010. That summons sought, inter alia, inspection of the discovered documents with all redactions removed other than those made on the grounds of legal professional privilege. Redaction on the grounds of legal professional privilege was also separately challenged. It is conceded by the Octagon parties, that the challenged documents produced for inspection included documents which had been redacted on two bases: legal professional privilege, and a combined ground of relevance and confidentiality.
The summons first came on before an associate justice on 29 July 2010. The court ordered that the Octagon parties each file and serve a further affidavit of documents setting out, in summary form, the basis upon which those parts of the documents redacted on relevance and confidentiality grounds were justifiably excluded from inspection. The order directed that the Hewitt parties then notify the Octagon parties to deliver to the court:
·the documents the Hewitt parties pressed for inspection, in both redacted and un-redacted form;
·any document said to be subject to legal professional privilege where such a claim is challenged; and
·any affidavits or submissions upon which the Octagon parties intend to rely.
An opportunity was provided for the Hewitt parties to file and serve submissions in support of orders for inspection of the documents, and the further hearing of paragraphs 5 and 6 of the summons was adjourned to a date to be fixed.
This procedure was accepted by the parties. There was no appeal from this order. No complaint is now made about it.
However, the Octagon parties defaulted. The documents which contained privileged redactions were provided to the court but the documents which contained relevance redactions were not. The Octagon parties did not prepare and file any further affidavit or submissions. The Hewitt parties subsequently filed and served submissions regarding the redactions of Octagon’s documents, including the relevance redactions. Presumably prompted by receipt of these submissions, the solicitors for the Octagon parties realised that the order had not been complied with and wrote to the court advising of the error. However, the Octagon parties objected to the court receiving documents because the time specified in the court’s order had passed. I pause to observe that, with the Civil Procedure Act2010 (Vic) now in force, the failure by one party to a civil proceeding to cooperate with the other in the conduct of an interlocutory application might be no less a sin than the failure of the other party to comply with court directions.
The application returned to court on 9 December 2010 when the associate justice delivered her decision about privilege issues. All but three of the redactions made on privilege grounds of privilege were held to be appropriate, and the three non-privileged communications were discussions of a purely commercial nature, possibly of no relevance to the issues in dispute.
Special leave for further affidavits
Before me what occurred in court on 9 December 2010, was the subject of debate. The Hewitt parties sought special leave, pursuant to r 77.06(7)(b) of the Supreme Court (General Civil Procedure) Rules 2005, to rely on the appeal upon the affidavit of David Jenkin sworn 6 June 2011. Mr Walker of counsel, who appeared for the Hewitt parties, submitted that the purpose of the affidavit is to complete the chronology of relevant events that occurred between 29 July 2010 and the final orders dismissing the application on 17 May 2011. Mr Walker relied on Express Gas Operations Pty Ltd v Axton Jones Pty Ltd,[3] contending that the affidavit did not advance any new evidence of matters which ought to have been before the associate justice and did not offend the underlying objective in requiring special leave.
[3][2009] VSC 321, [10].
Mr North SC, who appeared with Mr Nugent for the Octagon parties, opposed the application for special leave. His principal concerns were:
·The deponent of the affidavit was not in court on 9 December 2010. Although the court may receive information on an interlocutory application on information and belief, to do so will in this instance lead to an evidentiary dispute as to what occurred before the court that day.
·Statements in the affidavit were contested.
·The orders and directions made by the court on 9 December 2010 are not challenged. Thus, the court record of that day, the order made, is the principal evidentiary source for what happened.
Further affidavits may not be read without special leave first being obtained from the judge. The discretion to grant special leave is commonly exercised by reference to whether an unreasonable advantage would be taken of the fact that under r 77.06(7) an appeal is by rehearing de novo. The underlying reason for that requirement was elegantly expressed by Hansen J (as his Honour then was) in Brownport Management Ltd v Aqua-Tec 21 Pty Ltd:[4]
It is important to bear in mind the reason why the requirement of special leave was introduced. It was introduced to stop the mischief of a party using the hearing before the Master as a dry run and, depending on the result, appealing and, on the appeal, filing additional affidavits to bolster its case in light of the arguments presented to the Master and the Master’s reasons for decision. This became all too common an occurrence. It could cause vexation to another party in terms of time and costs, and it could take up an unreasonable amount of a Judge’s time when there might not have been an appeal if the case had been properly presented to the Master. In short, in many cases it constituted an unreasonable taking advantage of the fact that under r 77.05(7) an appeal is by re-hearing de novo.
These sentiments are now reinforced by the terms of the Civil Procedure Act.
[4][2002] VSC 396, [39].
I do not accept Mr Walker’s submission. I do not consider that the affidavit simply brings the court up to date on relevant matters. Hansen J is emphasising the importance of ensuring an unreasonable advantage is not taken of the procedure: appeal by rehearing de novo. His Honour was not suggesting that to “up-date the court on clearly relevant matters” falling short of a dry run in the offending sense will commonly attract special leave. The dry run example is no more than an illustration based on the facts of that case of the attempt to take unreasonable advantage. In large part, the content of the affidavit in setting out the relevant chronology of communications between the parties and the court, effectively put submissions on behalf of the Hewitt parties. Before me, Mr Walker had every opportunity to, and did, put to me all that could be said on behalf of his clients. While I do not think the Hewitt parties were undertaking a dry run before the associate justice, there is no point in allowing endless reams of paper to flow unnecessarily on a procedural application.
Special leave to rely upon the affidavit of David Jenkins sworn 6 June 2011 is refused.
Inspection by the primary court
The order of the court on 9 December 2010 extended time for the Octagon parties to comply with the earlier orders to which I have referred, and they duly did so. The procedure developed between the parties for the associate justice to inspect the documents for herself and rule on the redactions continued. There was no appeal then, or complaint now, about the process being adopted.
Thereafter, the solicitors for the Octagon parties delivered to the court not three but 12 lever arch folders of documents. These lever arch folders consisted of copies of the redacted documents and the unredacted versions of the same documents, as pressed for inspection by the Hewitt parties. The documents have not been seen by, or on behalf of, the Hewitt parties, although they were examined by the associate justice. The further opportunity granted on 9 December 2010, for the Octagon parties to set out in summary form a statement of the basis for redaction, was not taken.
Following her consideration of the 12 lever arch folders of documents provided to the court on 17 May 2011, the learned associate justice dismissed the application by the Hewitt parties to inspect the documents in unredacted form.
Submissions
In context, it seems that the Hewitt parties, when claiming to be persons affected by an order of an associate justice, challenge not just the result, but also the process, thereby bringing in issue not just the order appealed against but the earlier orders made on the application. Their submissions bear this out.
Mr Walker submitted that the Octagon parties failed to comply with the process established by the court for the orderly determination of the Hewitt parties’ application. The affidavits relied on by the Octagon parties did not set out any proper basis for redactions for relevance or for confidentiality. The Hewitt parties suffered some apparent procedural unfairness as the Octagon parties only delivered documents redacted on these grounds to the court after the Hewitt parties had filed their submissions.
In response to the orders of 29 July 2010, affidavits sworn by the managing director of Octagon Financial Services, Janet Plewes, use a column system in schedules that simply identifies which documents have been redacted. A notation appears in the R1 column if the redaction is for relevance and in the R2 column if the redaction is for confidentiality. Ms Plewes states, “For the avoidance of doubt, R2 and the term ‘Confidentiality’ relates to Octagon’s obligations to maintain the confidence of the details of its clients, other than Mr Hewitt”. That is the extent of the evidence about the reasons for redaction.
On a rehearing de novo, the Octagon parties carried the onus of justifying the redactions. Mr Walker submitted there was no evidence on which the court could find that the redactions were justified. The process of inspection need not be undertaken again as the Octagon parties cannot now point to any evidence justifying the redactions. The court is not obliged to inspect the documents in the absence of such evidence, in order to discover why such redaction is justified. That there is no evidence or method, other than by inspection, for justifying redactions is a consequence of this default.
It is apparent that, by 16 December 2010, the extended date for directions, questions had arisen on the basis of the lack of explanation for the redactions, about the process to determine the application. It is significant that the Hewitt parties did not exercise liberty to apply, which had been specifically reserved. Had those parties wished, the opportunity had by then arisen to advance to the associate justice submissions that there was no basis in principle for the Octagon parties to withhold inspection of the unredacted documents, and that without evidence of the basis for redaction, the court’s inspection of the documents would be compromised unless a basis was apparent merely on examination.
Mr North submitted that the failure of the Hewitt parties to exercise liberty to apply or to appeal the earlier orders by which the process for determining the inspection dispute had been set, constituted acquiescence in that process or waiver of the right to complain about the result.
For the Hewitt parties, Mr Walker contended that the deliberations of the associate justice cannot be evaluated, were it appropriate to do so, as there are no written reasons. He contended it was unclear whether the court had regard to the submissions of the Hewitt parties on 18 October 2010 in deciding to dismiss the application. Neither the relevant principles or their application to the subject application has been expressly revealed.
I do not accept that the associate justice did not have regard to the submissions of the Hewitt parties, even though they are prolix. It is probable that she did. There was no opposing submission. It seems that the associate justice had the views of the Hewitt parties as to how the task should be approached. Their complaint in this respect is obscure. However, as the relevant rule makes clear, an appeal against an order of an associate justice is by rehearing de novo of the subject application. The reasoning of the associate justice is not relevant. The consequence, Mr Walker contended, is that I am bound to determine the application for myself, either on the basis that the Octagon parties, on the material before the court, have not discharged the onus of justifying the redactions, or on the court’s inspection.
Redactions - principles
The principles applicable to the redaction of documents produced for inspection were recently surveyed by Kaye J in Gunns Ltd and Ors v Alexander Marr and Ors.[5] These principles were not in issue before me. In summary, the discovering party is prima facie required to produce for inspection the whole of the document being discovered by it, even where parts of the document are irrelevant. The practice of sealing up or masking irrelevant parts of the document is long established, particularly where the discovering party has a legitimate claim to confidentiality in the irrelevant part of the document. Ultimately, the onus to establish an appropriate basis for redaction rests with the party resisting production of the whole of the document. Where redactions are in dispute it is for the court to determine, on the material before it, whether that party has a right to do so. In making that determination, the court will focus on ensuring the attainment of justice between the parties. That the rules of court are designed to serve and enhance the ends of justice, and to facilitate the resolution and determination of disputes between parties, has recently been emphasised by the provisions of the Civil Procedure Act 2010 (Vic).
[5][2008] VSC 464, [28]-[36].
Various considerations can arise. For example, redaction of irrelevant parts of a document ought not create gaps affecting the intelligibility or meaning of the unredacted portions of the document. The court will not permit the coercive nature of the discovery process to infringe genuine interests of privacy and confidentiality for no legitimate purpose. However, as the decision of the Court of Appeal in Mobil Oil Australia Pty Ltd and Anor v Guina Developments Pty Ltd and Anor[6] demonstrates, denying inspection may not be the appropriate method of attaining justice between the parties.
[6][1996] 2 VR 34.
Inspection by court
An objection to produce for inspection discovered documents in unredacted form can enliven the court’s powers under r 29.11 of the Supreme Court (General Civil Procedure) Rules 2005. Neither the claiming party’s oath nor inferences from the circumstances in which the document came to exist are considered conclusive. The court has the power, under r 29.13 to examine the document for itself. It is well established that the court may order that documents be produced to it for inspection for the purpose of determining the question arising. In respect of privilege claims, that power now finds statutory expression in s 133 of the Evidence Act2008.[7] The power is used to mitigate the absolute character of the common law rule that an affidavit of documents is conclusive.
[7]See for example Priceline Pty Ltd v JHY Nominees Pty Ltd and Ors [2010] VSC 61.
Compulsory discovery and confidentiality
Relevantly in the context of this application, in Guina Developments, Hayne JA (as his Honour then was) reminds us of the oft quoted observations of Lord Keith of Kinkel,[8] “Discovery constitutes a very serious invasion of the privacy and confidentiality of a litigant’s affairs. It forms part of English legal procedure because the public interest in securing that justice is done between parties is considered to outweigh the private and public interest in the maintenance of confidentiality. But the process should not be allowed to place upon the litigant any harsher or more oppressive burden than is strictly required for the purpose of securing that justice is done”. Hayne JA then observed:
While it may readily be accepted that a party is ordinarily entitled to discovery and inspection of all discoverable documents in the possession or control of the opposite party (save those for which a valid claim for privilege from production is claimed) it is important to bear steadily in mind that discovery is but a tool to be used in the pursuit of justice and that the right to discovery and inspection is not without its limits. The first and most obvious limit is that a party does not have a right to inspect documents that are discovered if there is a valid claim to privilege from production (as e.g. on the grounds of legal professional privilege). Secondly, because the law recognises that the assertion of compulsive power requiring production must be balanced against the needs of justice, a party inspecting the documents of the opposite party may not use them except for the purposes of the action in which discovery is made. Where it is said that the documents are confidential, it may be accepted that the fact that the documents are confidential will not ordinarily be a sufficient reason to deny inspection by the opposite party. In most cases, the fact that the documents may not be used except for the purposes of the litigation concerned will be sufficient protection to the party producing them.[9]
[8]Home Office v Harman [1983] 1 AC 280, 308.
[9]Mobil Oil Australia Pty Ltd and Anor v Guina Developments Pty Ltd and Anor [1996] 2 VR 34, 38.
That case concerned claims to confidentiality to protect a trade secret from a trade rival. The focus suggested by the Court of Appeal is on the question: what is necessary for the attainment of justice in the particular case? The outcome of the application in GuinaDevelopments turned on the adequacy of the primary judge’s consideration of the factual basis for the claim of confidentiality and on the court’s failure to inspect the documents in issue before resolving the application. As Hayne JA noted:
It is only upon consideration of exactly what is in the documents that a decision can be made about what orders should be made for inspection by or on behalf of the plaintiff.[10]
[10]Ibid 39.
Focussing on the problem of balancing the needs of a party in litigation and the legitimate concern of a discovering party to retain secrecy of commercially sensitive information, Hayne JA moulded orders that distinguished between the plaintiff, its officers, its legal advisers and its experts. Material was made available only to the legal advisers of the parties and nominated experts. Of course, such arrangements may bring with them their own difficulties and may need to be reviewed as the matter progresses towards trial or as the trial itself proceeds. His Honour considered that no more specific rule could be laid down, as each case falls for determination according to its own facts. In particular, his Honour observed, “… the nature and the content of the disputed documents is a matter that will usually, if not invariably, be of great importance in forming a conclusion and, if that is so, it will be appropriate for the judge to inspect the documents concerned”.[11] This observation needs to be read in the context of the evidence on that application of the legitimate concern to retain secrecy of commercially sensitive information. Otherwise, the judge will have no basis for understanding the relevant aspect of the documents being inspected.
[11]Ibid 40.
Civil Procedure Act
The Civil Procedure Act 2010 (Vic) is now in force. The Act had not commenced operation when the inspection application was before the associate justice; it commenced on 1 January 2011. Although the Act provides, by s 54, that discovery is to be in accordance with the rules of court, ss 55 and 56 express relevant discretions in the management of the discovery process.
55 Court orders for discovery
(1)A court may make any order or give any directions in relation to discovery that it considers necessary or appropriate.
(2)Without limiting subsection (1), a court may make any order or give any directions—
…
(k)modifying or regulating discovery of documents in any other way the court thinks fit.
The overarching obligations under the Act now include two relevant matters for this application. First, there is the ongoing obligation for the duration of the civil proceeding, under s 26, to disclose the existence of all documents that are, or have been, in that person’s possession, custody or control of which the person is aware, and which the person considers, or ought reasonably consider, are critical to the resolution of the dispute.
Second, there is recognition in s 27 of the Act of the principle in Home Office v Harman. The section provides that a person, who receives any information or documents provided by another person involved in the civil proceeding as a result of disclosure in compliance with the overarching obligation in s 26, is subject to an obligation not to use or permit the use of the information or documents for a purpose other than in connection with the civil proceeding. Such an obligation is an obligation to the court, contravention of which constitutes contempt of court.
I referred earlier to the recognition by s 7 of the Act of the purpose of rules of civil procedure being directed to the just resolution of civil disputes, what is now described as the overarching purpose: to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute. I bear in mind that the court must, by s 8 of the Act, seek to give effect to the overarching purpose of the Act in exercising or interpreting any of its powers, whether those powers are part of the court’s inherent jurisdiction, implied jurisdiction or statutory jurisdiction. Section 9(1) requires that in making any order or giving any direction in a civil proceeding, a court shall further the overarching purpose by having regard to objects including, relevantly:
(c) the efficient conduct of the business of the court;
(d) the efficient use of judicial and administrative resources;
(e)minimising any delay between the commencement of a civil proceeding and its listing for trial beyond that reasonably required for any interlocutory steps that are necessary for—
(i)the fair and just determination of the real issues in dispute; and
(ii)the preparation of the case for trial;
(f) the timely determination of the civil proceeding;
(g) dealing with a civil proceeding in a manner proportionate to—
(i)the complexity or importance of the issues in dispute; and
(ii)the amount in dispute.
Section 9(2) provides that the court may have regard to certain matters and a number of those matters are relevant on this application:
(e)the degree to which each person to whom the overarching obligations apply has complied with the overarching obligations in relation to the proceeding;
(f)any prejudice that may be suffered by a party as a consequence of any order proposed to be made or direction proposed to be given by the court;
(g)The extent to which the parties have had the benefit of legal advice and representation.
It is tempting on this application, in furthering the overarching purpose of the Act, to have regard to the objects specified in s 9(1) when considering the nature of an appeal under r 77.06. It might be said that exercising a right to require me to look again at the discovery which has been examined by the associate justice is not efficient conduct of business of the court, is not an efficient use of judicial and administrative resources and has not minimised delay. Mr North contended that as specific error had not been shown to be present in the decision of the associate justice, it does not follow that a second review is reasonably required to achieve justice between the parties. Nor is it clear that a further review by a judge of some 12 volumes of material is proportionate to the complexity or importance of the issue or the subject matter of the dispute. In one sense, the process adopted by the parties and implemented by the associate justice resembled an expert determination and, if it was such a process, the decision would be regarded as final. But it is not such a process.
Nature of appeal
The appeal is by rehearing de novo of the application to the associate justice. The nature of the appeal was explained by a majority of the Appeal Division in Humphries v Poljak:[12]
However, we are bound to say, … [concerning] … a rehearing “de novo”. Such a rehearing involves a complete rehearing of the matter by the appellate court. The initiator of the proceedings below would be required on appeal to commence the rehearing proceedings regardless of whether or not he was the appellant or respondent. It would be open to the parties on the rehearing to call evidence different from that adduced before the primary tribunal. Examples of a rehearing of such a nature, properly to be described as a hearing de novo are appeals in criminal matters to the County Court from the Magistrates’ Court and appeals to a judge of this court from a master.
To the extent that the Appeal Division has made a passing reference to appeals from a Master, the reference is to the r 77.06 procedure. The observation, while deserving of great respect, is obiter. That appeal concerned the procedure under s 74 of the County Court Act 1958 and is not directed to the circumstances I am considering. It is not, of course, open to the parties to adduce different evidence from that considered by the associate justice, unless special leave to do so is granted and that requirement is intended to fetter the pure concept of a rehearing de novo. This jurisdiction, for a judge in the Practice Court predominately involving procedural matters of no more than two hours in duration, has evolved over time.
[12][1992] 2 VR 129, 139.
The exercise of the jurisdiction is now governed by the provisions of the Act, another development since the decision in Humphries v Poljak. The practices of the primary court have also changed, particularly, but not solely, since the appointment of associate justices. While the rules of court continue to allow for a rehearing de novo, any party is entitled to appeal to a judge. The applicant, as the initiator of the application below, must commence the process. The process is not, however, a pure rehearing of the matter by the judge. It is decided on the evidence before the primary court. The judge retains a discretion to ensure an unreasonable advantage is not taken of the fact that an appeal is by rehearing de novo. In this way, aspects of the primary hearing remain relevant. However, the decision of the associate justice on the application is not such a matter.
I do not accept Mr North’s contention that I should have regard to the result of the inspection process. He contended that an absence of justification for the redactions by the affidavit of discovery or by submissions to the associate justice, did not require a conclusion that the redactions have not been justified by the Octagon parties. It is clear that it was the Hewitt parties who requested that the court inspect and rule upon the redactions. True it is that that process of court inspection was not challenged then or now by the Hewitt parties, but the material on which the rehearing proceeds does not include a detailed explanation of the basis on which redactions were made. It is also clear that the task was, in terms of its scope, misdescribed. The parties have allowed the substantial task of examining 12 folders of documents, in circumstances which do not readily admit explanation by written reasoning, to be the essential process to resolve the issue.
I cannot rely upon the obvious inferences, to be drawn from the inspection undertaken by the primary court, about utility of, on relevance considerations, or entitlements to, on confidentiality considerations, disclosure of the redacted parts of the documents in resolving the real issues in dispute between the parties. I reject the submission for the Octagon parties that I do so. The right to a rehearing de novo is not removed or redefined by the provisions of the Act, despite that course appearing to be in the interests of the efficient conduct of the business of the court, the efficient use of judicial and administrative resources, likely to minimise delay, or to deal with the proceeding in a manner proportionate to the complexity or importance of the issues in dispute.
The court’s processes are regulated in its inherent jurisdiction, for the most part articulated in the rules of court and now subject to the overarching purpose expressed in the Act. I doubt that the Act effects any material change in how the court exercises its jurisdiction and determines its procedures to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute. The court has long recognised the importance of ensuring an unreasonable advantage is not taken of the fact that under r 77.05(7) an appeal is by rehearing de novo.
Resolution of the appeal
The essential feature of this application is that the task expected of the court lacks appropriate definition. On the one hand, the Octagon parties, having declined or failed to put on any evidence about the basis for the redactions: the justification of their claims of lack of relevance and confidentiality, rely on the process of review by the associate justice and the failure by the Hewitt parties to challenge that process on this appeal. The Octagon parties submit that to undertake the exercise again is a waste of time and resources. Implicitly, the Octagon parties contend that the Hewitt parties are taking an unreasonable advantage of the right to a rehearing de novo, claiming the inspection by the associate justice was just a dry run.
On the other hand, the Hewitt parties, while implicitly contending that the decision of the associate justice must be in error, do not specifically demonstrate error. Rather, they submit the objection to inspection fails for want of proof or alternatively, the court should re-inspect the documents and rule again. There was limited reference to redacted documents to demonstrate that in context, the redaction could not possibly be justifiable; Mr Walker referred to approximately a dozen documents. Having obtained the folders from the associate justice, which I have not examined, I did look at the examples to which Mr Walker referred.
I am not bound by the process agreed by the parties, whether or not they choose to appeal the earlier directions made by the associate justice. In determining how to approach the resolution of the application on a rehearing de novo, I am able to give full consideration to the interests of the efficient conduct of the business of the court, the efficient use of judicial and administrative resources, to minimise delay or to deal with the proceeding in a manner proportionate to the complexity or importance of the issues in dispute. I bear in mind that the outcome of the application in GuinaDevelopments turned on the adequacy of the primary judge’s consideration of the factual basis for the claim of confidentiality being made, and the court’s failure to inspect the documents in issue before resolving the application. However, each application must be considered on its merits and I do not consider it necessary to allocate further judicial resources to examine the 12 volumes of documents in order to progress this proceeding fairly for all parties. Distinction between this litigation and GuinaDevelopments is evident in the volume of material involved and in the explained basis for the claims of confidentiality. I consider there are good reasons why allocating the time of a judge to a second review of these documents is inappropriate. The application can, and will, be resolved on the basis of the material before the court on the appeal.
It is unclear whether the redactions were regarded on analysis, either by the Octagon parties or the associate justice, to be predominately justified by reference to relevance or confidentiality or both. Sampling the dozen or so documents nominated by Mr Walker reinforces the following observations made by reference to principle.
Redactions for relevance alone can offend the discovering party’s prima facie obligation to produce for inspection the whole of the document being discovered by it. The fact that parts of the document are irrelevant does not ordinarily prejudice the discovering party in ways regarded as unjust. They have the protection of s 27 of the Act or, to the extent that the Act does not apply, the protection of the principle in Home Office v Harman. There is no suggestion in the evidence before me of prejudice to the Octagon parties due to discovery of irrelevant material, or that s 27 of the Act does not provide adequate protection in the circumstances.
The basis for the confidentiality claim is inadequate. It does not permit the proper exercise of discretion. The court cannot assess the content of the expression “confidence of the details of its clients”. Possibly the documents, unredacted, may identify other athletes. Why the identification of redacted names possibly of clients is information which needs special confidentiality protection is not explained. The “details” of those other clients is, equally, a meaningless expression. What “details” might be revealed by the unredacted materials is not identified. Such particulars have not been related to the claims of confidentiality or to claims that prejudice may be suffered through loss of confidentiality of such particulars. For example, were it the case, the affidavits of discovery might have stated that the unredacted material would reveal personal financial transactions of other athletes and that Octagon would thereby be in breach of some identified contractual or legal obligation. It is not apparent whether, and if so, what prejudice would be suffered by the Octagon parties from disclosure, subject as it is to the limitations upon use of compulsorily revealed documents. There is no suggestion that the Hewitt parties might use or permit information or documents to be used for a purpose other than in connection with the proceeding.
Assuming a judge undertook a review of the redacted material, can an informed determination be made whether any particular redaction is a proper claim to confidentiality. Without a proper foundation, the assessment is not an exercise of discretion and will likely be speculative. A judge cannot be expected to take judicial notice of the identities of tennis players on the international circuit or simply trust that if a name is redacted it is the name of an Octagon client. Is a particular sum paid to another athlete, perhaps in the USA for endorsing a product, confidential? Is it public knowledge? Had these matters been addressed by appropriate evidence, and there seems no reason why that has not occurred, the court might have been in a position on an inspection to evaluate matters relevant to the exercise of its discretion. I agree with the Octagon parties, but for different reasons, that further inspection would be a waste of time and resources.
The Octagon parties have, in substance, chosen to rely on the “expert” determination of the associate justice, who was prepared to undertake the necessary review. Perhaps, as Mr North contended, the advantage to the associate justice of her familiarity with the pleadings overcame these hurdles. On appeal, the Octagon parties are exposed by the lack of evidence, which I have noted. That exposure is a consequence of either choice or default in compliance with earlier directions. The Octagon parties did not seek leave to place any further evidence before the court. I was not taken to the pleadings. Mr North contended that at trial, if cross-examination exposed the occasional entry to be relevant, the trial judge would be in the best position to consider permitting inspection. While that is obvious, leaving incidental matters to the judge at trial does not encourage the efficient conduct of the business of the court. If the material is indeed irrelevant, the expense and delay of the redaction process is a consequence of a decision taken by the Octagon parties, as the balance of the document is plainly available for inspection. Irrelevant parts will likely be ignored. If there are genuine concerns about confidentiality, the material placed before the court is wholly inadequate to identify what those concerns are or to permit a discretionary balancing of the interests of the parties.
Balancing all of the considerations to which I have referred, including those identified in s 9 of the Civil Procedure Act 2010 (Vic), I have determined that disclosure should be made.
The orders the court will make are as follows:
1. The appeal is allowed and the order of the associate justice made 17 May 2011, that the application by the defendants/plaintiffs by counterclaim to inspect confidential documents is dismissed, is set aside.
2. By 24 August 2011, the plaintiffs/defendants by counterclaim produce to the defendants/plaintiffs by counterclaim for inspection in original, unredacted form each of the documents identified as redacted in the affidavits of discovery filed on behalf of the plaintiffs/defendants by counterclaim, by an entry in the R1 or R2 column in Schedule 1 Part 1 thereto.
No basis is apparent for confidence that the redacted material is either relevant or confidential. The tone of the correspondence between the solicitors for the parties does not give confidence that regard will, in future, be had to the obligations on litigants and their advisers under ss 19 or 23 of the Civil Procedure Act 2010 (Vic). I will hear the parties on the question of costs.
---
11
3
0