Pacific Equity Partners Pty Ltd v Kerwick - [2017] NSWSC 1302

Supreme Court

New South Wales

Summary available

Medium Neutral Citation: Pacific Equity Partners Pty Ltd v Kerwick [2017] NSWSC 1302
Hearing dates: 31 August; 1 September 2017
Date of orders: 28 September 2017
Decision date: 28 September 2017
Jurisdiction: Equity - Commercial List
Before: Parker J
Decision:
Summons dismissed

Catchwords: Civil Procedure – preliminary discovery – production of documents in connection with marketing of new private equity fund by former employees of plaintiff – strength of potential claim – breach of employment contract – suspected disclosure of confidential information – confidentiality of aspects of “track record” of plaintiff – availability of information in the public domain – no evidence of disclosure of confidential information – discretionary reasons for refusal of application – letter of demand alleging breaches – no fixed decision to sue
Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW), r 5.3(1)
Cases Cited: Hatfield v TCN Channel Nine Pty Ltd (2010) 77 NSWLR 506; [2010] NSWCA 69
McCarthy v Dolpag Pty Ltd [2000] WASCA 106
Viljoen v Hayes [2017] NSWSC 801
Category: Principal judgment
Parties: Pacific Equity Partners Pty Ltd (Plaintiff)
Anthony Kerwick (First Defendant)
Robert Koczkar (Second Defendant)
Adamantem Capital Holdings Pty Ltd (Third Defendant)
Representation:
Counsel:
PD Crutchfield QC/CA Hamilton-Jewell (Plaintiff)
JK Kirk SC/ZCF Heger (Defendants)
Solicitors:
Arnold Bloch Leibler (Plaintiff)
King & Wood Mallesons (Defendants)

File Number(s): 2017/105122
Publication restriction: Nil

Judgment

These are proceedings for preliminary discovery. The plaintiff (“PEP”) is a private equity fund manager which was established in 1998. The third defendant in the proceedings, Adamantem Capital Holdings Pty Ltd (“Adamantem”), is a private equity fund manager which was established by the first defendant, Mr Kerwick, and the second defendant, Mr Koczkar, in 2016. Before they established Adamantem, both Mr Kerwick and Mr Koczkar were senior employees of PEP. They left PEP in 2014.
In October 2016 an article appeared in the Australian Financial Review (“AFR”) concerning the launch of a private equity fund by Adamantem. The article was a friendly one, obviously undertaken with the co-operation of Mr Kerwick and Mr Koczkar as part of their promotion of Adamantem’s new fund. The article referred to their background at PEP and quoted them about a number of investments in which they had been involved at PEP.
Following the publication of the article, PEP became concerned that Mr Kerwick and Mr Koczkar might have been using confidential information from their time at PEP in order to promote Adamantem’s new fund. A request was made for the production of Adamantem’s marketing materials used in connection with its fundraising. The defendants responded by denying that they had misused any confidential information. They did not provide the documents sought. The present proceedings were commenced in April 2017.

Issues for decision

The application for preliminary discovery is made pursuant to Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”), r 5.3(1), which provides:

5.3   Discovery of documents from prospective defendant
(1)   If it appears to the court that:
(a)   the applicant may be entitled to make…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2017] NSWSC 1302
Decision Date: 28 September 2017

CaseChat Overview and Summary

Pacific Equity Partners Pty Ltd, the plaintiff, brought an application for a preliminary discovery order against Kerwick, the defendant. The plaintiff sought the production of documents in connection with the marketing of a new private equity fund by the defendant, who was a former employee of the plaintiff. The plaintiff alleged that the defendant breached his employment contract and suspected that the defendant disclosed confidential information, including aspects of the plaintiff's "track record". The plaintiff also argued that the information sought was confidential and not available in the public domain. The defendant opposed the application on the basis that the plaintiff had not established a strong potential claim and that the information sought was not confidential.

The court considered whether the plaintiff had demonstrated a strong potential claim and whether the information sought was confidential. The court held that the plaintiff had not established a strong potential claim as there was no evidence of the defendant disclosing confidential information. The court also found that the information sought was not confidential as it was available in the public domain. The court further held that the plaintiff had not provided a fixed decision to sue and had only issued a letter of demand alleging breaches of the defendant's employment contract. The court exercised its discretion to refuse the application for a preliminary discovery order.

The court's reasoning was based on the lack of evidence of the defendant disclosing confidential information and the availability of the information sought in the public domain. The court also considered the plaintiff's failure to provide a fixed decision to sue and the issuance of a letter of demand alleging breaches of the defendant's employment contract. The court's decision was a discretionary one, and the court exercised its discretion to refuse the application for a preliminary discovery order. The court did not make any final orders in the case.

Orders