Peachbulk Pty Ltd and R T Edgar Pty Ltd and Ors (No 3)
[2012] VCC 39
•17 February 2012
| IN THE COUNTY COURT OF VICTORIA | Revised Not Restricted |
AT MELBOURNE
CIVIL DIVISION
COMMERCIAL LIST
Case No. CI-10-01281
| PEACHBULK PTY LTD (ACN 102 656 520) (AS TRUSTEE OF THE CHRIS MOSS STAFF SUPERANNUATION FUND AND AS TRUSTEE OF THE CHRIS MOSS FAMILY TRUST) | Plaintiff |
| v | |
| R T EDGAR PTY LTD (ACN 103 005 965) | Defendants |
| and | |
| OTHERS (as per the attached Schedule) |
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JUDGE: | HIS HONOUR JUDGE GINNANE | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 13 December 2011 | |
DATE OF JUDGMENT: | 17 February 2012 | |
CASE MAY BE CITED AS: | Peachbulk Pty Ltd & R T Edgar Pty Ltd & Ors (No 3) | |
MEDIUM NEUTRAL CITATION: | [2012] VCC 39 | |
RULING
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CATCHWORDS – CIVIL PROCEDURE ACT- claim for compensation for breach of overarching obligations – affidavit supporting application – details of loss of income – confidential exhibit – whether confidentiality undertaking appropriate - Civil Procedure Act 2010, ss. 17, 18, 19, 22, 23 and 29 (1)(c)
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr B Gibson | Norton Gledhill |
| For the Second Defendant For the Sixth Defendant | Mr A Herskope Mr D Clancy (solicitor ) | Gadens Monahan+ Rowell |
HIS HONOUR:
1 I gave judgement in the substantive proceeding on 20 October 2011. I gave judgment as to costs and made final orders on 20 December 2011.
2 By Summons filed on 7 November 2011 Peachbulk Pty Ltd, Christopher John Moss, Andrea John Moss, Chris Moss Pty Ltd and Liberty Belle Medical Skin Rejuvenation Centre Pty Ltd applied for compensation pursuant to s.29(1)(c) of the Civil Procedure Act 2010 (“the Act”). Section 29(1)(c) provides:
“29 Court may make certain orders
(1)If a court is satisfied that, on the balance of probabilities, a person has contravened any overarching obligation, the court may make any order it considers appropriate in the interests of justice including, but not limited to—
…
(c)an order that the person compensate any person for any financial loss or other loss which was materially contributed to by the contravention of the overarching obligation, including—
(i)an order for penalty interest in accordance with the penalty interest rate in respect of any delay in the payment of an amount claimed in the civil proceeding; or
(ii)an order for no interest or reduced interest
(2) An order under this section may be made –
(a)on the application of
(i) any party to the civil proceeding; or
(ii)any other person who, in the opinion of the court has, a sufficient interest in the proceeding.”
3 The application seeks orders against the second and sixth defendants being, Mr Gregory Herman-Moore and R T Edgar (Toorak) Pty Ltd. A reference in these reasons to the defendants is a reference to the second and sixth defendants.
4 The substance of the plaintiff’s application is that Mr Herman and R T Edgar (Toorak) Pty Ltd made false denials during the trial which contravened particular overarching obligations - ss.17, 18, 19, 21, 22 and 23 of the Act. Those provisions require parties to civil proceeding to act honestly, not to make a response to a claim that does not have a proper basis, not to take any step in a proceeding that is not necessary to facilitate the resolution of the determination of the proceeding, not to engage in conduct that is misleading or deceptive, making reasonable endeavours to resolve the dispute and using reasonable endeavours to narrow the issues in dispute in the proceedings.
5 The plaintiff’s particulars of claim rely on the defendants’ denial of the representation which formed a basis of the plaintiff’s case and their reliance on the defence that an offer to purchase the property had been made by Mr S Fleetwood.
6 Dr Chris Moss is the sole director and secretary of Chris Moss Pty Ltd and provides the services by which that company earns its income.
7 The basis of the application for compensation under s 29(1)(c) of the Act is the allegation that by denying the representation and relying on the Fleetwood defence the defendants contravened the overarching obligations referred to previously. The plaintiff and applicants allege that Chris Moss Pty Ltd has suffered loss which was materially contributed to by the contraventions. In essence, the claim is that the case did not settle and took longer because of the contraventions and therefore consumed more of Dr Moss’ time, thereby requiring him to cancel operating lists and not engage in other work thereby causing loss of income to the company.
8 The Civil Procedure Act is significant legislation aimed at reforming and modernising the laws, practice, procedure and processes relating to the resolution of civil disputes which may lead to civil proceedings – s 1(1)(a). It also provides for an overarching purpose in relation to the conduct of civil proceedings to facilitate the just, timely and cost-effective resolution of the real issues in dispute – s 1(1)(c). To achieve those purposes, the Act imposes overarching obligations on the parties to civil proceedings and empowers the courts to impose sanctions, including the power to make orders for compensation under s 29 (1)(c) for contravening those obligations.
9 It is alleged that those alleged breaches materially expanded the scope of the proceeding and in doing so placed further demands on Dr Moss’s time.
10 Dr Moss swore an affidavit in support of the application. In it he states that he spent at least 350 hours assisting with the preparation of the proceeding. He sates that he cancelled a number of theatre operating sessions in order to accommodate the demands of the litigation.
11 An exhibit to Dr Moss’s affidavit, which is described as Confidential Exhibit CJM, contains the average revenue earned by Chris Moss Pty Ltd from each full day operating session, a conservative estimate of the direct loss of revenue to Chris Moss Pty Ltd as a result of cancelled operating days used to assist with the litigation and the total net loss to Chris Moss Pty Ltd as a result of cancelled operating sessions in the relevant period. Dr Moss states that the actual loss to Chris Moss Pty Ltd was considerably more than is set out in the exhibit.
12 I was provided with and considered a copy of the Confidential Exhibit.
13 The plaintiff seeks an order that the Confidential Exhibit should be treated as confidential and only made available to the second and sixth defendants on condition that each person receiving it provide a signed confidentiality undertaking the key part of which states:
“3. Subject to paragraph 4, I will not disclose, either directly or indirectly, the Confidential Information or any part thereof, to any person, including any party to the proceeding or the servants or agents of any party without the prior written consent of Chris Moss Pty Ltd or unless such disclosure is expressly authorised by the Court.
4. I will only disclose the Confidential Information to persons acting as legal representatives of the second to sixth defendants to the proceeding, to the second defendant or to the officers of the sixth defendant provided they have first executed a confidentially undertaking in the form of this undertaking and I have provided a copy of that undertaking to the plaintiff’s solicitors.”
14 I am satisfied that the Court has power to make such an order. It is an essential characteristic of courts that they sit in public. There is to be open justice openly arrived at. However as French CJ stated in Hogan v Hinch[1]:
“It has long been accepted at common law that the application of the open justice principle may be limited in the exercise of a superior court’s inherent jurisdiction or an inferior court’s implied powers.”
[1](2011) 275 ALR 408 at 415 [21]
15 Rule 28.05(2)(a) of the County Court Civil Procedure Rules 2008 expressly provides that no person may inspect or obtain a copy of a document which the Court has ordered remain confidential.
16 Sections 80 and 80AA of the County Court Act 1958 may also provide a source of power for the orders sought
17 The issues to determine therefore are whether the information is confidential and, secondly the Court should require a confidentiality undertaking.
18 The plaintiff argued that the orders that it seeks are limited in scope and derogate little from the principle of open justice. It could not be said that a member of the public could not follow the argument in the proceeding intelligently, or appreciate adequately the fundamental questions involved without detailed knowledge of the information contained in the confidential exhibit.
19 Information concerning the income that a person or a private corporation earns is generally confidential, in that no one else, save as is permitted by law, eg pursuant to taxation legislation, is entitled to know about it. The question is whether such information has that aspect of quality of confidence that a Court will protect by the requirement of a confidentiality undertaking.
20 That question has to be considered against the background of two considerations.
21 The first consideration is the implied undertaking that applies when documents are produced to another party pursuant to a Court order or coercive Court procedure that prevents it being used for any purpose not connected to the litigation: see Harman v Secretary of State for the Home Department[2] .
[2][1983] 1 AC 280
22 The affidavit of Dr Moss and its exhibits would be protected by that undertaking at least until relied on in open Court: see British American Tobacco Australia Services Ltd v Cowell[3]. The affidavit and exhibits were filed in accordance with the Court’s requirements connected with the commencement of proceedings under s 29 of the Civil Procedure Act: see Practice Note, PNCI 3-2011 paragraphs 21-23.
[3][2003] 8 VR 571
23 No person other than the parties should in the ordinary course have access to material that is not in evidence. In P v Australian Crime Commission[4] Emmett J, speaking of the practice in the Federal Court, stated:
“In general, the court is obliged to exercise its jurisdiction in open court. Thus, once material has been admitted into evidence, either as an exhibit, or as an affidavit or viva voce testimony, the principle of open justice requires that the material be open to and available for the public. That is clear from s 17(1) of the Federal Court Act, which gives statutory force to the principle that justice must be administered publicly in open court and gives recognition to the weight of public interest that attaches to that principle.
However, that principle has nothing to do with material that, albeit is on the court’s file and might be available for one of the parties to deploy at a trial or at a hearing, has not in fact been admitted into evidence. No principle of open justice requires that a person other than the parties should, in the ordinary course, have access to material that is not in evidence. The fact that the parties have filed affidavits in anticipation of a hearing does not of itself compel them to rely on the affidavits. It may be that an opposing party could tender an affidavit against the party who filed it. Such an affidavit would then be in the same category as any other evidence. Until that time, in the ordinary course, however, there is no reason why a person other than the parties should have access to the material, simply because it is on the court’s file. In the ordinary course, exhibits to affidavits should not be filed and should therefore not be on the court file. It is only when exhibits are tendered that they become part of the court record.”
[4](2008) 250 ALR 66 at 70 [19]- [20] cf Octagon Inc v Hewitt [2011] VSC 373
24 The second consideration is that it is common place in many civil proceedings for plaintiffs to be required to disclose their earnings to other parties, for instance, in personal injury actions where lost wages is claimed, in contract of employment cases and in disputes between partners.
25 There is no material in Dr Moss’s affidavit to suggest that his company will suffer any harm if its earnings are disclosed.
26 No particular submission was put concerning the fact that the income described in the Confidential Exhibit is the income of a private corporation.
27 The only authority referred to that appears analogous to the present case was the recent decision of South Australian Supreme Court in Minter Ellison (A Firm) v Raneberg[5]. In that case, the plaintiff had obtained a freezing order against a former employee who was alleged to have embezzled funds belonging to it. The plaintiff sought the continuance of orders to maintain confidentiality over financial material of the plaintiff firm’s partners. Gray J held that the order as to confidentiality shoulder continue, stating:
“In my view, there is no legitimate public policy to be served by the release of the personal financial information to the public and the interests of justice are best served by preserving the privacy of the confidential documents by maintaining the existing orders[6].”
[5][2011] SASC 159 at [28] – [36]
[6][2011] SASC 159 at [32]
28 The plaintiff submitted that, as in Minter Ellison, there was no legitimate public policy to be served by the release of the plaintiff’s personal financial information to the public and the interests of justice are best served by preserving the privacy of the plaintiff’s confidential documents. The object of encouraging an applicant to seek relief under s.29 of the Act would be inhibited, if not destroyed, if confidential information put before the Court in confidence was made public.
29 This case is considerably removed from the circumstances of Minter Ellison v Raneberg. It concerns a case where the essence of the claim now made is for compensation for a decrease in revenue said to be caused to Chris Moss Pty Ltd. In that respect the case appears no different from other cases where parties seek damages for loss of income and are required to disclose details of the loss claimed.
30 The Court has to take into account the principles of open justice and the interests of parties in protecting their private information: see per Deane J in Australian Broadcasting Commission v Parish [7] and per Hayne JA in Mobil Oil Australia Ltd v Guina Developments Pty Ltd [8].
[7](1980) 29 ALR 228 at 255- 256
[8][1996] 2 VR 34 at [37]
31 In civil litigation, parties usually have access to documents relied on by the other party. While information relating to a person, or private corporation’s, earnings, may usually be regarded as confidential, when it is relevant to the determination of civil proceedings, it is not normally protected by safeguards additional to the implied undertaking.
32 In Hogan v Australian Crime Commission[9], the High Court considered the circumstances in which the Federal Court could make a non-publication order in respect of documents which included an exhibit to an affidavit, containing file notes and accounting advices concerning the taxation and financial affairs of a public figure. The proceeding had a lengthy interlocutory history, which it is unnecessary to set out.
[9](2010) 240 CLR 651
33 The High Court held that it was insufficient to justify the continuation of a non-publication order to assert that documents were inherently confidential. The principal question to be addressed was whether such an order was necessary to prevent prejudice to the administration of justice. No evidence had been adduced that of any specific prejudice that would or might flow from disclosure of the material. The High Court quoted with approval from a passage in the judgment of Jessup J, who was a member of the Full Court of the Federal Court from which the appeal was brought, which was in the following terms:
“How then does the applicant assert that the contentious documents were, and remain, inherently confidential? It is true that, generally speaking, every person has a right to keep from the view of others, or of the world at large, documents and things, which he or she regards as his or her private concern. But so to propose is no more in my view, than to state a conclusion about the absence of a right in any other person to view such documents and things. There are, of course, all manner of situations in which a claim to keep a particular document confidential will be recognized by a court. For example, equity recognizes that the information contained in certain documents is, of its nature and by reason of the circumstances of its communication, subject to a duty of confidence. So too will the law protect trade secrets in well-recognized situations. And it is commonly the case that the court will protect from the public eye personal or commercial information the value of which as an asset would be seriously compromised by disclosure. In this latter category, the source of the jurisdiction (in this court) to provide such protection is s 50 itself. That is to say, the question will always be: is an order necessary to prevent prejudice to the administration of justice? Absent an affirmative answer to this question it is, in my view, almost meaningless to propose that documents themselves are, or that information in them is, inherently confidential to an extent justifying, or assisting the justification of, the making of an order permanently protecting them from public view[10].”
[10](2010) 240 CLR 651 at 666 [38] per French CJ, Gummow, Hayne, Heydon and Kiefel JJ
34 The defendants emphasised the fact that Dr Moss’ affidavit contained no statement of the prejudice that he, or his company, would suffer from the publication of the material contained in the exhibit[11].
[11]See Autodata Limited v Boyce’s Automotive Data Pty Ltd [2007] FCA 1517
35 As the High Court said in Hogan v Australian Crime Commission:
“The placing of material in evidence, even on the faith of what for the time being would be a restriction imposed by a s 50 order, is a matter of forensic decision. The price of such a decision may be the subsequent disclosure, as is often the case in litigation, of embarrassing disclosure. It is no sufficient answer to brandish the term ‘inherently confidential’, and rely upon the assumptions in favour of Mr Hogan made without an evidentiary basis[12].”
[12]Supra at 667 [43]
36 The plaintiff and applicants have not established that the information in the Exhibit is confidential to the extent justifying the requirement of the confidentiality order sought.
37 I will hear the parties as to the orders and directions that are appropriate to give effect to this ruling and for the further conduct of this litigation.
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