Palmer Tube Mills Ltd v Tubemakers of Australia Ltd
[1991] FCA 866
•10 DECEMBER 1991
Re: PALMER TUBE MILLS LIMITED; PALMER TUBE MILLS PTY LIMITED and AUSTRALIAN
TUBE MILLS PTY LIMITED
And: TUBEMAKERS OF AUSTRALIA LIMITED; THE BROKEN HILL PROPRIETARY COMPANY
LIMITED; JOHN LYSAGHT (AUSTRALIA) LIMITED; AUSTRALIAN WIRE INDUSTRIES
PROPRIETARY LIMITED and AUSTRALIAN IRON AND STEEL PROPRIETARY LIMITED
No. N G58 of 1991
FED No. 866
Practice and Procedure
COURT
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Lockhart J.(1)
CATCHWORDS
Practice and Procedure - Discovery - continuing discovery under Order 15 rule 7A Federal Court Rules - methods for asserting confidentiality - access to confidential documents by solicitors of the applicants, one a director of each applicant, the other a director of a competitor of a respondent.
Federal Court Rules: Order 15 rule 7A.
HEARING
SYDNEY
#DATE 10:12:1991
Counsel for the Applicants: J.D. Heydon QC and I.M. Jackman
Solicitors for the Applicants: Feez Ruthning
Counsel for the First Respondent: T. Bathurst QC and C.P. Comans
Solicitors for the First Respondent: Clayton Utz
Counsel for the Second to
Fifth Respondents: S. Charles QC and R. Wright
Solicitors for the Second to
Fifth Respondents: Blake Dawson Waldron
JUDGE1
Four matters have been raised this morning all relating to the discovery of documents by parties in this litigation.
First, as to the discovery of documents by the first respondent, in my view, the correct approach to discovery there, and it is not in dispute, is that the first respondent should permit inspection of the documents discovered by it, not in one batch at the date suggested of 28 February, but prior to then in two earlier inspections, one by 20 December this year, the other by 24 January 1992 and finally by 28 February 1992, and the orders to be made should accommodate that provision.
Second, the question arises as to whether there should be continuing discovery by the parties within the contemplation of Order 15 rule 7A of the Federal Court Rules. Counsel for the first respondent has argued against that form of discovery but, in my view, it is a sensible course to be followed in this case by all parties. However, if problems arise in practice that confront a particular party, it can always bring the matter back failing agreement between the parties.
The third question concerns the proper orders to be made in relation to discovery and inspection of the documents. The problem centres around claims for confidentiality that will be asserted by the parties. There are two competing views which I shall outline briefly. First, that there should be a classification of documents in respect of which confidentiality may be claimed and once the claim is propounded in a document or documents falling within one or more of those classes then the order should be self operating to ensure that confidentiality is thereafter achieved as between the persons to whom access would be permitted under the proposed form of order. That is the more usual approach. The other approach suggested by counsel for the applicants and substantially agreed in by counsel for the second to fifth respondents, is that when a party has discovered documents that are confidential, then that party must identify them as such, prior to them being inspected by any other party. Once that identification has been made, then the order operates to prevent disclosure of the documents to persons other than counsel and solicitors for the inspecting party and in-house lawyers employed by that party and certain independent experts, with an in-built provision that where the inspecting party wishes that the documents be not subject to the confidentiality provisions, it may give notice to that effect, leaving it then for the parties to either agree upon the future course of action to be taken and failing agreement, by bringing the matter back to the Court.
I prefer the latter approach because, it seems to me, it will in a case of this complexity, centre the attention of the parties upon the particular document or classes of documents or even parts of documents for which confidentiality is claimed, at the time the assertion of confidentiality arises. In that way, I think it will be a more efficient method of handling the problem, but time only will tell. If it results in there being a multitude of applications to the Court, that may be an indication of the failure of that system, in which case it may then be revised. All these orders of course of discovery are ones that maybe revised from time to time as the need arises. Accordingly, the form of short minutes that have been prepared on behalf of the applicants in general is the form which appeals to me, subject to the addition of words suggested by counsel for the second to fifth respondents relating to independent experts. If, as counsel for the applicants has foreshadowed, there may not be in fact, in this case, independent experts in the relevant field, that again is a matter which can be cured in due course by subsequent application.
That leaves the fourth matter which is the real difficulty that has arisen this morning. It concerns the question whether access to confidential documents should be given to two gentlemen: One, Mr H.L. Stack, who is the solicitor on the record for the applicants and who is a partner of the firm of solicitors retained by the applicants. The other gentleman is Mr P.J. Rogers, who is a qualified lawyer and who is a director of certain companies.
Mr Stack, as the partner having the control of this matter for the applicants, has been engaged in the legal work involved in the preparation of the applicants case for the last 12 months or so. That task has consumed almost the whole of his working time. He has chosen to attend to the legal work for the applicants in this case with a small closely knit team, which includes as one of the main members of it, Mr Rogers. Mr Stack has sworn that any order which prevents himself or Mr Rogers from having access to the documents of the respondents would, in his view, gravely prejudice the conduct of the proceedings on behalf of the applicants. That evidence of Mr Stack has not been challenged and I accept it. Mr Stack has been a partner of his firm for some 22 years. The problem that arises, if there be one, is that he is a non-executive director of Australian National Industries Limited and has been a director of that company since 1987. One of its divisions is Steelmark which operates steel service centres in competition with the first respondent and sells the products of the second applicant and of the respondents through those centres.
Although I recognise the possibility that access by Mr Stack to confidential documents in this case could conceivably involve him in a position of conflict or embarrassment, I am not, as at present advised, persuaded that it would. Mr Stack is an experienced and reputable solicitor. He is well aware of the problems that arise in the conduct of litigation where confidential documents are involved. Where documents which are protected by a confidentiality order are exposed to his gaze no doubt he would observe both its letter and its spirit and ensure that none others than those who may have access to the documents or the information which it contains in fact will be allowed to know of it. I would have no doubt that he would respect the duties of a solicitor in these circumstances and ensure that what he reads he reads solely for the purposes of this case. I therefore do not think that access to confidential information and documents in which that information is contained should be denied to Mr Stack.
Mr Rogers is in, I think, a quite different position and what I say is in no sense disrespectful of Mr Rogers. I am sure that if he were to continue in the case to have access to confidential documents he would do his utmost to respect the confidentiality order. But Mr Rogers is a non-executive director of the three applicants in the case; he is a shareholder in the first applicant and he (from the evidence that has been given both by affidavit and orally) has a very good working knowledge of the applicants' business and of the steel tube and pipe industry generally. Mr Rogers is one of the principals of a company, InterFinancial Limited, for whom he works and devotes a large amount of his time. One of the principal clients of that company is one or more of the applicants. The advice which is given by Interfinancial Limited and therefore by Mr Rogers to and in relation to the applicants is on corporate matters which go obviously to the heart of their business and its planning and strategy.
Mr Rogers has sworn a detailed affidavit in which he sets out problems that would arise if confidential documents are not exposed to him in the case and it is obvious to me that he would respect whatever flows from a person having access to confidential documents. But I feel that Mr Rogers' involvement through the directorships of the applicants and through his involvement with Interfinancial Limited and its close link to the applicants is such, in the light of the issues of this case and the parties to this case, that it would not be right that he is included in the category of persons to whom confidential documents may be exposed. Not only do I think that would be not right in itself, but also within the broad but nevertheless still wise maxim that justice must not only be done but appear to be done, it would not give the respondents confidence in the integrity of those who advised the applicants if Mr Rogers were to have access to documents of the kind which I have described. Nor would the community feel any such confidence. That, I think, is an important consideration. I also think that it would not be fair to Mr Rogers himself to allow him to be placed in this position of access to confidential documents. It would put him, I think, in a thoroughly invidious position and I would not like to see him exposed to that and the risks which might flow from it. I emphasise again that I do not suggest for a moment that, if Mr Rogers had access to the documents, he would not do other than respect the orders that would be made for confidentiality. Nor is it suggested that he would not do so.
Accordingly, the orders that should be made relating to confidentiality of documents should, I think, be so framed, unless agreement is reached in the light of what I've said, so as to exclude Mr Rogers from the right to have access to confidential documents or information contained it.
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