Oswal v Carson (No 3)

[2011] VSC 193

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:	9 May 2011
CASE MAY BE CITED AS:	Oswal v Carson and ors (No 3)
MEDIUM NEUTRAL CITATION:	[2011] VSC 193	First revision 30 November 2011

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INJUNCTION – Application to discharge – Changed circumstances – Discovery of documents subject of injunction – Trial of all issues instead of preliminary issue

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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:

Introduction

1. This ruling relates to whether an injunction granted on 9 March 2011 in favour of the plaintiff ought be discharged.  For convenience, I will repeat the introductory paragraphs of an earlier ruling I made relating to discovery,[1] which give the context in which the application for discharge of the injunction is made.

   [1][2011] VSC 192.

1. 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”).[2] 

   [2]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.

1. 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.[3] 

   [3]Ms Oswal also seeks alternative relief effectively to achieve the same ends.

1. 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. 

1. 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. [4] 

   [4]The reasons for his Honour’s ruling are given in Oswal v Carson & Ors [2011] VSC 70.

1. As noted below, there will be no preliminary question and the matter will instead proceed to trial on all issues.  In this regard, Ms Oswal does not make any claim of confidentiality in the emails.  Rather, her claim is one solely of ownership of them.

1. The issues for this ruling are whether the injunction should be discharged on its own terms or whether there has been any change in circumstances since the injunction was granted two months ago that would warrant its discharge.  

1. For the reasons given below, I have formed the view that the injunction should not be discharged.

Should the injunction be discharged on its own terms?

1. The injunction was stated to apply until the trial of a preliminary question or further order of the Court.  As there is now to be a final hearing of the entire action, it was submitted on behalf of the defendants that the injunction order has no ongoing application on its own terms.  In effect it was submitted that Ms Oswal was seeking an extension of the injunction to trial.  I do not accept that submission.  The argument either ignores the words “or further order” or is founded on the basis that the injunction orders are to be interpreted such that any “further order” may only be made prior to the trial of a preliminary question.  In my view, the better construction is that the “further order” would be one made at any time.  On that basis, the interlocutory injunction will remain in place until a further order is made even though there is to be no preliminary question.

Relevant principles

1. An interlocutory injunction granted until trial or further order will be varied or discharged where there has been a material change of circumstances since the injunction was first granted.[5]  The application for variation or discharge is not a vehicle for a rehearing of the original application on the same material nor is it a substitute for an appeal from the original orders granting the injunction.[6]

   [5]Adam P Brown Male Fashions Pty Ltd v Philip Morris Incorporated & Anor (1981) 148 CLR 170; AED Oil Ltd v Puffin FPSO Ltd (No. 5) [2011] VSC 60.

   [6]Paras v Public Service Body Head of the Dept of Infrastructure(No 2) (2006) 152 IR 352.

Are there changed circumstances such that the injunction should be discharged?

1. The defendants submitted that the injunction should be discharged because there were changed circumstances since it was originally granted.  The defendants submitted that:

(a)       the circumstances have changed such that the balance of convenience is no longer ‘finely poised,’ as it was when the injunction was originally granted; [7]

[7]Decision of Almond J, [2011] VSC 70 (8 March 2011), [56]

(b)      there is to be no trial of a preliminary issue and there can no longer be an expeditious trial;

(c)       the emails are discoverable;

(d)      there is a need for the emails to be discovered in other proceedings; and

(e)       the Receivers’ investigations are being unduly prejudiced[8].

As to (d) and (e), those are matters that were raised before Almond J on the original application and they do not constitute a change in circumstances that would warrant the discharge of the injunction.

The proposition in (a) is in effect based on the fact that there is no longer to be a trial of a preliminary issue and that the emails are discoverable.

[8]Counsel for the defendants did not press arguments related to whether there was a serious question to be tried and the fact that the Australian Taxation Office now has a freezing order against Ms Oswal’s Australian assets.

Change of circumstance – no preliminary question; expedited trial

1. The solicitors for Ms Oswal have formulated preliminary questions for determination which relate to the issue of ownership of the emails.  However, they have said that the reality is that apart from the question of relief, there is little (if anything) in the case beyond the preliminary questions they have formulated.  The defendants submitted that there should be no preliminary question and that the matter should proceed to a trial on all issues.  Ms Oswal is willing to have all matters dealt with at once, but not at the cost of losing her injunction. 

1. I informed the parties that I did not intend to order any preliminary question in circumstances where neither party pressed for that course.  It seems to me that as the case is only to be about ownership of the emails and the relief to be granted should Ms Oswal succeed, it is more appropriate and efficient to deal with all matters at trial.

1. The defendants submitted that it can be surmised from the concluding remarks to Almond J’s ruling, that the granting of the injunction was premised upon first, there being a trial of a preliminary issue, and secondly, that trial taking place expeditiously. The defendants pointed to part of the conclusion of the ruling (defendants’ emphasis added):

‘Conclusion

56.In my view, in this finely poised matter, the course which appears to carry the lower risk of injustice is to grant an interlocutory injunction to maintain the status quo for a very limited period to enable the plaintiffs to have an expedited trial on a preliminary question of ownership of the emails... an expedited trial on the question of ownership of the emails can be accommodated in the near future...’

1. Now that there is to be no trial of a preliminary issue, the defendants submit that this is a material change sufficient to warrant the discharge of the injunction.

1. However, it is clear from his Honour’s ruling that he had in contemplation that the issues in dispute may be wider than ownership of the emails.  His Honour specifically mentioned privilege and confidentiality as possible issues.[9] In this context, his Honour suggested a preliminary question as to ownership only.  It is now clear that privilege and confidentiality will not be issues in dispute and that the sole issue will be as to ownership.  It does not seem to me that the fact that the issue of ownership will be determined at trial rather than as a preliminary question is a change sufficient to warrant the discharge of the injunction.

   [9]Oswal v Carson & Ors [2011] VSC 70 at [40].

1. Next I must consider whether the period of time likely to elapse before the issue of ownership will be determined has changed materially such that it would be appropriate to discharge the injunction.  In this regard, the history of the proceeding is relevant.  In summary, Ms Oswal commenced these proceedings on 22 February 2011.  The application for the injunction was heard on 24 February 2011 and Almond J made orders on 9 March 2011.  At about this time, Ms Oswal’s solicitors believed that preliminary question(s) as to ownership of the emails could be ready for hearing in mid-May 2011.  Orders by consent were made on the first directions hearing on 11 March 2011. Those orders included orders for pleadings.  The matter was listed for further directions on 15 April 2011 and orders by consent were made as to particulars of the defence, discovery, expert evidence, filing and service of lay evidence with the last of the orders to be complied with by 8 July 2011.  The parties estimate that the trial will take 3 days.  A trial of that length can be accommodated in mid July. 

1. Although it had originally been anticipated that the preliminary question might be heard in mid May 2011, it does not seem to me that any of the parties has delayed in preparing the matter for trial.  I did ask counsel for each of the parties whether the timetable they had agreed could be compressed so that the trial could be held in early June.  I am satisfied that that could not be done.  Sometimes to prepare a case properly can take a little longer than first anticipated and that is what has occurred here. 

1. I do not think that a trial two months later than originally anticipated is so significant in the circumstances of this case as to warrant the discharge of the injunction.

Change of circumstance – discovery of emails

1. I recently ruled that the defendants ought to make discovery of the emails and that the injunction should be varied to permit the defendants to do this.  I also ruled that no confidentiality regime should apply in regard to the emails, but that they may only be used for the purposes of this proceeding.[10]  The defendants submitted that if the emails were to be discovered, the injunction cannot stand.

   [10]Oswal v Carson & Ors (No. 2) [2011] VSC 192.

1. Before Almond J, counsel for the defendants submitted that there was no utility in granting the injunction as each party needed to have access to the emails to be able to represent their respective interests.  His Honour did not accept this submission and stated:

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.[11]

[11]Oswal v Carson & Ors [2011] VSC 70 at [40].

1. Before me, it was submitted on behalf of Ms Oswal that, given what his Honour had said, the ordering of discovery of the emails is not a change in circumstances that supports the defendants’ application to discharge the injunction as his Honour had been addressed about the effect of discovery if the injunction was granted. 

1. It seems to me that his Honour’s reasoning was based on the defendants not having access to the emails (or at least not to all of them).  However, in light of my ruling as to discovery, the defendants will be able to view and access the emails.  Unless the injunction is discharged, they will only be able to use them for the purposes of this proceeding.

1. Given the limitation on use, I am not satisfied that the making of discovery orders is a sufficient change to warrant the discharge of the injunction.  If, once the emails are viewed by the Receivers and their lawyers, there are matters in them that warrant further relaxation of the injunction, then no doubt they will make application to the Court.  An example might be if they are discoverable in other proceedings.  But until they are reviewed by the Receivers, it cannot be known whether or not the emails do fall within the scope of the discovery to be given in those other proceedings.   Nor can it be known before they are reviewed whether it would be appropriate to relax the injunction so that the emails may be used for other purposes by the Receivers. 

1. Given the claims made by Ms Oswal as to ownership, I can see no reason why the injunction should be discharged at this stage other than in respect of the variation to its terms that I foreshadowed in my ruling relating to discovery of the emails by the Receivers.

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CERTIFICATE

I certify that this and the 6 preceding pages are a true copy of the reasons for Ruling of Ferguson J of the Supreme Court of Victoria delivered on 9 May 2011.

DATED this ninth day of May 2011.

Associate