Oswal v Carson (No 2)
[2011] VSC 192
•6 May 2011
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
S CI 2011 785
| RADHIKA PANJAK OSWAL | Plaintiff |
| v | |
| IAN MENZIES CARSON, DAVID LAURENCE MCEVOY, SIMON GUY THEOBALD AND BURRUP FERTILISERS PTY LTD (ACN 095 441 151) | Defendants |
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JUDGE: | FERGUSON J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 29 April 2011 | |
DATE OF RULING: | 6 May 2011 | |
CASE MAY BE CITED AS: | Oswal v Carson and ors (No 2) | |
MEDIUM NEUTRAL CITATION: | [2011] VSC 192 | |
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PRACTICE AND PROCEDURE – Discovery – Dispute as to ownership of emails – No claim for confidentiality in emails – Whether discovery of emails should be made – Whether confidentiality regime should apply to discovered emails.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr P Durack SC with Ms K Williams | Jones Day |
| For the Defendants | Mr JWS Peters SC with Mr DR Luxton | Freehills |
HER HONOUR:
The first three defendants, Ian Menzies Carson, David Laurence McEvoy and Simon Guy Theobald, have been appointed receivers and managers under a charge registered over the assets of the fourth defendant, Burrup Fertilisers Pty Ltd (“BFPL”).[1]
[1]The validity of the appointment of the first three defendants as receivers and managers of the charged property is disputed by Ms Oswal and is the subject of separate proceedings in this Court.
The plaintiff, Radhika Oswal, is the wife of the former managing director of BFPL. Ms Oswal sent and received emails using an email server operated by BFPL. She claims that those emails are her property and that the defendants are not entitled to access or otherwise deal with them. She seeks a declaration that the emails are her property and that the defendants be required to deliver them up to her.[2]
[2]Ms Oswal also seeks alternative relief effectively to achieve the same ends.
The defendants say that the versions of the emails that are stored on the server operated by BFPL form part of the property charged by BFPL over which the Receivers have been appointed. They say that they are entitled to access the emails.
On 9 March 2011, Almond J made orders restraining the defendants until the trial of a preliminary question in the proceeding or further order, from accessing, viewing, copying, forwarding or in any other way dealing with the emails except with the prior written consent of Ms Oswal’s solicitors. In the other matters section of the orders, it was recorded that the orders do not affect the discretion of the judge managing the case to trial to make any order for discovery or inspection.[3]
[3]The reasons for his Honour’s ruling are given in Oswal v Carson & Ors [2011] VSC 70.
The parties are of the view that there should be no preliminary question and the matter will instead proceed to trial on all issues.
The defendants seek orders for discovery and inspection of the emails which are the subject of the dispute and for orders discharging the injunction. This ruling deals with the first matter relating to discovery.
Ms Oswal disputes that discovery of the emails or all of them is necessary. She relied on a passage from the ruling of Almond J where his Honour said:
As to the first of these matters, I disagree that there is no utility in the application. If the issues of ownership, confidentiality and privilege were to be tried concurrently it would be necessary for the parties to have access to the documents to be able to represent their respective interests. But if there was a separate trial of the question of ownership the parties would not need to have access or at least the same level of access to the documents to ensure a fair trial. [4]
[4]Ibid at [40].
In her amended statement of claim of 16 March 2011, Ms Oswal pleads that, except for a period of about one month, she was not an officer, employee, agent or contractor of Burrup and that the emails:
(a)relate to her private personal or business affairs;
(b)were not sent or received on behalf of BFPL;
(c)were not sent or received in the course of the business of BFPL;
(d)were sent or received in circumstances where Ms Oswal was entitled to and did expect that they would not be disclosed to or accessed by anyone without her authority;
(e)are documents which belong to Ms Oswal; and
(f)were either in Ms Oswal’s possession or she had an immediate right to possession.
These allegations are not admitted by the defendants on the basis that without reference to the emails they cannot be either admitted or denied.
Ms Oswal does not make any claim of confidentiality in the emails. Rather, her claim is one of ownership of the emails.
As part of their defence, the defendants allege that the emails were sent or received in circumstances where Ms Oswal knew or ought to have known that BFPL retained all relevant proprietary interest in the emails and should be considered company information of BFPL and that BFPL retained rights to monitor, access and disclose such emails.
The emails are relevant to the issues in the proceedings. One or other of the parties may wish to rely on them and they may be supportive of a party’s case or adversely affect a party’s case. In those circumstances, in the absence of a court order to the contrary, the emails will be discoverable.[5]
[5]See r 29.01.1 Supreme Court (General Civil Procedure) Rules 2005.
In my opinion, if the defendants are to be given a fair trial, they must have the right to see the emails. While all of them are discoverable, the parties may only choose to put certain of them in evidence in relation to the disputed issues. Nevertheless, they are entitled to review all of them to determine which will most advance their position.
Who should give discovery of the emails?
As the emails are discoverable, does it matter which party gives discovery of them?
The Receivers are in possession of the emails. At this stage, it is unclear whether Ms Oswal has copies of them.
Ordinarily, when there is a dispute as to discovery, it is the party who is not in possession of the documents who seeks orders against their opponent for discovery of them. However, that is not the case here. Ms Oswal does not require the defendants to discover the emails and the injunction granted by Almond J restrains the defendants from accessing them. However, the Receivers wish to access and review the emails and then give discovery of them.
By way of compromise, Ms Oswal has proposed that certain classes of the emails be discovered by her subject to a confidentiality regime. Essentially, she proposes that the defendants be permitted to make a copy of the emails, and any attachments to them, with the copy to be made under the supervision of a person nominated by her solicitors. The copy of the emails would be provided to Ms Oswal’s solicitors with any duplicate or backup of the copy to be destroyed, without review, by the defendants or their solicitors. Ms Oswal then proposes that she would give discovery of:
(a)emails sent or received by her in her capacity as an officer, employee, agent or contractor of BFPL;
(b)emails otherwise sent or received by her on behalf of BFPL;
(c)emails relating to the business of BFPL and sent or received by her in the course of the business of BFPL.
Ms Oswal then proposes that disclosure of the documents she discovers and inspection of them be limited to the solicitors and counsel for the defendants who have signed a confidentiality undertaking. The proposed confidentiality undertaking provides that the emails will only be used for the purpose of the conduct of the proceedings and will not be disclosed to any other person without the prior written consent of Ms Oswal or her solicitors. There is a carve out so that the documents may be provided to independent expert witnesses who also sign a confidentiality undertaking. If the defendants’ lawyers wish to disclose the emails to any of the defendants, then they must first give five days’ notice of their intention to Ms Oswal’s solicitors and she may then make application to the Court within that time for the Court to make orders with respect to confidentiality.
As counsel for the defendants pointed out, the categories of documents proposed by Ms Oswal to be discovered would exclude those emails in respect of which she claims to have property. However, those are the very emails that are the subject of the dispute in the proceeding. For the reasons given above, in my view, they are discoverable. They are in the possession of the Receivers. A copy of them could be given to Ms Oswal and she could then make discovery of them. However, that course may lead to delay, further expense and dispute. The emails fall into two categories – those to which she makes no claim (which, if they form part of the charged property, the Receivers will be entitled to access without reference to Ms Oswal) and those over which Ms Oswal claims ownership and which the Receivers are entitled to inspect as part of the discovery process. In those circumstances, subject to what I say below as to legal professional privilege, there is no reason to depart from the usual rule that the defendants provide discovery of the emails and Ms Oswal be permitted to inspect them.
The relevant category of documents should be “all emails defined as “Plaintiff’s Emails” in the amended statement of claim save for any such documents in respect of which a claim of legal professional privilege is made.” In respect of claims of privilege by Ms Oswal, I understand that the parties have had discussions in relation to possible mechanisms for dealing with emails to which privilege attaches so that the Receivers do not inspect them. In those circumstances, I do not propose to make orders as to the process to be implemented unless the parties cannot reach final agreement about it.
Should any confidentiality regime apply?
There is still a question as to whether there should be any confidentiality regime imposed on the defendants in respect of making discovery of the emails.
In Harman v Secretary of State for the Home Department,[6] Lord Keith of Kinkel stated:
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. In so far as that must necessarily involve a certain degree of publicity being given to private documents, the result has to be accepted as part of the price of achieving justice. [7]
[6][1983] AC 280.
[7]At p. 308.
In Mobil Oil Australia Limited v Guina Developments Pty Ltd,[8] Hayne JA (as his Honour then was) stated:
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 litigation concerned will be sufficient protection to the party producing them. But where, as here, the party obtaining discovery is the trade rival of the person whose secrets it is proposed should be revealed by discovery and inspection, other considerations arise.
Once the documents are inspected by the principals of the trade rival the information which is revealed is known to the trade rival and cannot be forgotten. Confidentiality is destroyed once and for all (at least as far as the particular trade rival is concerned). To say that the trade rival is bound not to use the documents except for the purposes of the action concerned is, in such a case as this, to impose upon that trade rival an obligation that is impossible of performance by him and impossible of enforcement by the party whose secrets have been revealed.
[8][1996] 2 VR 34.
If the Receivers are to make discovery of the emails, it was submitted on behalf of Ms Oswal that a confidentiality regime akin to that which she had proposed ought still to apply. The process would be for only named persons within the defendants to be entitled to review the emails for the purposes of discovery. It was submitted on Ms Oswal’s behalf that a confidentiality regime was not sought based upon a cause of action alleging breach of confidentiality. Rather, it was submitted, the regime is intended to minimise the impact on what Ms Oswal says is an intrusion of her proprietary rights which would occur as a result of discovery being given. Counsel, on behalf of Ms Oswal, submitted that if the emails are the property of Ms Oswal, then the emails should never have been inspected by the Receivers and once there has been some inspection by them, it is a very difficult matter for them keeping what they have read out of their minds for all purposes, other than for the purposes of these proceedings.
Essentially, Ms Oswal wants to protect the information contained in the emails, but she makes no claim based on confidentiality. Her claim is an ownership claim only. This is to be contrasted with the situation where a trade rival seeks to have a confidentiality regime imposed to protect confidential trade secrets.
It will often be the case that documents containing private information are discoverable. A common example is a person’s private appointment diary. That may contain information which the owner does not want disclosed, but it must be disclosed as part of the price of prosecuting or defending a claim.
In the absence of a claim to confidentiality by Ms Oswal, there is no proper basis upon which to impose a confidentiality regime on the defendants.
Even had there been a reason to protect the private information of Ms Oswal, I would not have been minded to restrict access to the emails to the defendants’ lawyers only. Orders restricting inspection of discovered documents to the lawyers for a party can create significant difficulties. These difficulties were outlined in Hawksford v Hawksford[9] where White J stated:
It is a strong thing to deny a party personal access to materials produced by the other side for the conduct of the proceedings. The solicitors may well be hampered in taking instructions, in giving advice and in giving instructions to expert witnesses if they cannot disclose the contents of discovered documents to their client. Solicitors and counsel can be placed in an impossible position in providing advice as to the settlement of proceedings and the client can be in an impossible position in understanding and weighing the advice, if the lawyers are unable to refer to the contents of material documents which influence such advice. Likewise, in preparing for the litigation, the client may have a greater appreciation than do the lawyers or accountants retained on the client’s behalf as to the significance of information in relevant documents. It can thus be unfair to withhold relevant documents from the client for fear of misuse of confidential information by them.
However, by the same token the misuse of discovered documents can be difficult to detect. In the case of a trade rival, it may be impossible for an opposite party to put out of is or her mind the information which can give him or her a competitive advantage.[10]
[9](2007) NSWSC 661.
[10]At [25] – [26]. For a similar observation see NAK Australia Pty Ltd v Starkey Consulting Pty Ltd (2008) NSWSC 1136 at [4]..
In this regard, it was submitted by the defendants that only someone with detailed knowledge of the financial arrangements of BFPL would be able to properly contextualise the contents of the emails. Evidence was given of this difficulty.
In those circumstances, even if I had been minded to impose a confidentiality regime, I would have allowed the defendants, as well as their lawyers, to access and review the emails for the purposes of discovery.
Variation of injunction
As it is the Receivers who will be giving discovery, the injunction granted by Almond J will need to be varied. It will only be varied at this stage to the extent necessary to enable the Receivers to make discovery of the emails and the orders will make clear that the emails may only be used for the purposes of this proceeding.
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