Reebok International Ltd v Sydney Organising Committee for the Olympic Games
[2000] NSWSC 295
•12 April 2000
CITATION: Reebok v SOCOG [2000] NSWSC 295 CURRENT JURISDICTION: Equity Division
Commercial ListFILE NUMBER(S): SC 50149/99 HEARING DATE(S): 05/04/99 and 06/04/00 JUDGMENT DATE: 12 April 2000 PARTIES :
Reebok International Limited - Plaintiff
Sydney Organising Committee For The Olympic Games - DefendantJUDGMENT OF: Rolfe J
COUNSEL : Mr F.M. Douglas QC/Mr S. Habib - Plaintiff
Mr S.J. Gageler - DefendantSOLICITORS: Freehill Hollingdale & Page - Plaintiff
Blake Dawson Waldron - DefendantCATCHWORDS: Discovery of Documents. Application that documents not be disclosed to in-house counsel of the Plaintiff even subject to a confidentiality undertaking. Documents clearly relevant for the proper conduct of the proceedings. - Necessity for external lawyers to obtain instructions. - Need for procedural fairness. - In balancing the competing considerations access to in-house counsel granted to most of the documents subject to the giving of a confidentiality undertaking. CASES CITED: Harman v Secretary of State for the Home Department [1983] AC 280
Magellan Petroleum Australia Limited v Sagasco Pty Limited [1994] 2 QdR 37
Mobil Oil Australia Limited & Anor v Guina Developments Pty Limited & Anor [1996] VR 34
Mackay Sugar Co-operative Association Limited & Ors v CSR Limited & Anor (1996) 63 FCR 408
Hadid v Lenfest Communications Inc & Ors (1996) 70 FLR 403
Idoport Pty Limited & Anor v National Australia Bank Limited & Ors (1999) NSWSC 686
Idoport Pty Limited & Anor v National Australia Bank Limited & Ors (2000) NSWSC 63.DECISION: Short Minutes of Order to be brought in.
I N D E X
PageIntroduction 1
(a) The Parties 1
(b) The Olympic Supporter Agreement 2
(c) The Proceedings 4The Issue 6
The Pleading In Relation To The Pacific Dunlop Agreement 8
The Issue As Finally Argued 11
The Evidence 14
A Consideration Of The Relevant Principles 22
Conclusions 25
Costs 251 On 11 November 1997 the plaintiff, Reebok International Limited, (“Reebok”), for which Mr F.M. Douglas of Queen’s Counsel and Mr S. Habib of Counsel appeared, entered into an Olympic Supporter Agreement, (“the Agreement”), with Sydney Organising Committee for the Olympic Games, (“SOCOG”), for which Mr S.J. Gageler of Counsel appeared. In the Agreement Reebok is referred to as “Supporter” and it is recited that pursuant to the Olympic Charter, the International Olympic Committee, (the “IOC”), governs the Olympic Movement and owns all rights in respect of the Olympic Games and the Olympic Symbol; that IOC will, over the quadrenium 1997 to 2000, implement its international marketing programme of Olympic sponsorship to the Olympic Games to be held in Sydney in 2000; that SOCOG in its own right and on behalf of the Australian Olympic Committee Incorporated, (the “AOC”), has the authority to grant SOCOG Supporters certain rights and opportunities relating to the Games in Sydney; and that Reebok wished to enter into an agreement with SOCOG to avail itself of certain rights and opportunities in respect of Products in circumstances where it was important that the rights opportunities granted to it pursuant to the Agreement be used in a manner, which maintained and enhanced the stature of the Olympic Movement and furthers the achievement of its aims.
THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LISTROLFE J
WEDNESDAY, 12 APRIL 2000
50149/1999 - REEBOK INTERNATIONAL LIMITED v SYDNEY ORGANISING COMMITTEE FOR THE OLYMPIC GAMES
JUDGMENT
HIS HONOUR:
Introduction
(a) The Parties
2 The Agreement has an extensive definition clause, and defines as “Competitor” of Reebok:-
(b) The Olympic Supporter Agreement
“Any person who carries on, directly or indirectly through a related body corporate, a business of marketing athletic or athletically-inspired footwear or apparel, except where that business is incidental to such person’s principal business.”
The primary business of Reebok is the manufacture and sale of athletic footwear and apparel.
3 A number of companies are defined as “Named Competitor”, and “Products” were defined as meaning “the products and/or services of Supporter described in Appendix G”. Appendix G specifies the Products as athletic/sports competition footwear; apparel; suits; training apparel and footwear; and bags “all of the nature and type referred to in or contemplated by Appendix H”. The consideration for the grant by SOCOG is defined in that Appendix as “Value in Kind” and, in Appendix I, by a reference to the payment of a sum in specified instalments.
4 Clause 3 grants the rights to Reebok set forth in Appendices A1, A2 and C to be exercised from the date of signing of the Agreement to 31 December 2000, and the nature of those rights.
5 Clause 5.1(b) states that SOCOG represented and warranted that:-
“(b) Except as otherwise provided in this Agreement, and in particular as limited by clause 3.8, the grant of the rights to Supporter under this Agreement is exclusive with respect to Products and that neither SOCOG nor the AOC have:
(i) granted or will grant to any person other than Supporter, directly or indirectly, with respect to the Products and during the period from 1 January 1997 to 31 December 2000, any advertising, promotional or marketing rights in connection with SOCOG, the Games, the AOC or the 1998 or 2000 Australian Olympic teams, or the Complimentary Properties anywhere in the world, including any right to use the SOCOG Marks or the AOC Marks in connection with Products; and
(ii) granted or will grant such rights to or enter into any sponsorship agreement with a Competitor of Supporter in connection with SOCOG, the Games, the Olympic Marks, the AOC, 1998 or 2000 Australian Olympic teams or the Complimentary Properties anywhere in the world.”
6 Clause 7 provides that in consideration of the rights and opportunities granted under the Agreement, Reebok will pay SOCOG the amount specified in Appendix I and provide to it and the AOC the goods and services identified in Appendix H.
7 Clause 10 provides for termination, clause 10.3, which is relevant for present purposes, stating:-
“Unless otherwise provided, either party may terminate this Agreement in the event of the other party’s failure to observe or perform any of its material obligations under this Agreement and if, after receiving written notice from the other party, such failure is not remedied (if capable of remedy) as soon as possible but in any event not later than thirty (30) days after receipt of written notice of the failure from the other party.”
(c) The Proceedings
The words “material obligations” are not defined, but an important issue in these proceedings is whether there were breaches by SOCOG of “material obligations”, an issue which will substantially be resolved by a consideration of the nature of the obligations under the Agreement and the terms and conditions of certain other agreements into which SOCOG has entered.
8 By a Summons issued on 8 December 1999, Reebok sought declarations that SOCOG had breached the Agreement by entering into two other sponsorship agreements described as the Canterbury Agreement and the Bonds Agreement; by publishing a Merchandise insert; by approving the publication of a Souvenir Liftout; and that as a result of any or all of those breaches it was entitled to terminate the Agreement. It also sought a declaration that as a result of the issue of the Notice of Termination dated 8 December 1999 it had validly terminated the agreement; damages for breach of contract; and ancillary relief.
9 By its Contentions, Reebok pleaded the relationship between the various parties, the entry into the Agreement and certain of its terms. The only matter which was contentious in paragraphs 1 to 10 inclusive was that in response to paragraphs 9(c) and (d), which pleaded the warranties set forth in clauses 5.1(b)(i) and (ii) respectively, SOCOG pleaded that the warranties were subject to the Agreement and, in particular, were expressly limited by clause 3.8, which provides:-10 The Summons then dealt with an agreement into which SOCOG had entered with Canterbury International (Australia) Pty Limited, (“the Canterbury Agreement”), on 28 August 1999. It is unnecessary for me to consider that further in these reasons, as the parties have reached an agreement in relation to the present dispute, which involves the confidentiality of that agreement, and of an agreement referred to in paragraph 14 of the Summons, which was referred to in the pleading as the Bond Agreement, but is an agreement entered into between Pacific Dunlop Limited and SOCOG.
“Supporter acknowledges and agrees that SOCOG may enter into sponsorship agreements with, and grant advertising, marketing and promotional rights to suppliers of sports apparel, sports footwear or sports equipment which is not provided by Supporter to SOCOG or AOC pursuant to this Agreement provided that such supplier’s advertising, marketing and promotional rights will be limited to the right to use a product - specific SOCOG or AOC designation in non-electronic media …”
The Issue
11 Before dealing further with the Pacific Dunlop Agreement, it is desirable to state the issue with which I am concerned. On 3 March 2000, SOCOG applied by Notice of Motion for orders that access pursuant to Part 23 rule 2 to the documents referred to in paragraphs 5 and 8(b) of its Defence, being respectively the Canterbury Agreement, and an agreement into which it entered with Pacific Dunlop Limited on or about 25 November 1997, (“the Pacific Dunlop Agreement”), be restricted to such of Reebok’s legal advisers as executed and provided to SOCOG a written confidentiality undertaking; and that SOCOG not be required to produce those agreements for inspection by Reebok, except to such of Reebok’s legal advisers as executed and provided such undertakings.
12 On 5 April 2000, SOCOG sought orders in respect of those agreements, but restricted to an obligation to furnish them in the redacted form in which they had been furnished to the solicitors for Reebok and subject to the confidentiality undertakings. The editing or redaction had, of course, been carried out by SOCOG.
13 When the Notice of Motion came on for hearing on Wednesday, 5 April 2000, Mr Douglas objected to his having to argue the question of confidentiality in circumstances where neither he nor Reebok’s external solicitors, who were instructing him, had been granted access to the unedited agreements. After some argument on that day as to the entitlement of Mr Douglas, Mr Habib and their instructing solicitors, being Reebok’s external solicitors, to copies of the unedited agreements for the purposes of arguing the question of confidentiality, Mr Gageler stated that he was instructed not to maintain that position and, in those circumstances, unedited copies of both agreements were provided by SOCOG to the solicitors for Reebok subject, as I understand it, to express confidentiality. There was no issue that the implied confidentiality undertaking did not apply. The matter came before me on 6 April 2000 when I was informed of an agreement between the parties in relation to the Canterbury Agreement and it proceeded on the question as to whether two employees of Reebok, namely Mr David Pace and Mrs Stephanie Cucurullo, both of whom are in-house lawyers of Reebok, should have access to an unedited version of the Pacific Dunlop Agreement subject to their furnishing confidentiality undertakings.
14 I shall now refer to the pleading in relation to the Pacific Dunlop Agreement. It is accepted that Reebok’s Summons is inaccurate in referring to it as an agreement entered into with Bonds.15 In paragraph 14 of the Contentions it is pleaded that the Pacific Dunlop Agreement was entered into in circumstances pursuant to which rights were granted to supply baseball-type caps to SOCOG officials and volunteers. In answer to paragraph 14 SOCOG denied that it entered into an agreement with Bonds, but admitted that on or about 25 November 1997 it entered into one with Pacific Dunlop Limited by which it granted to it the rights and opportunities set out in Appendices A1, A2 and C with respect to Products (as defined):-
The Pleading In Relation To The Pacific Dunlop Agreement
“.. which definition included casual uniforms, partly comprising baseball caps, and that for the purposes of that agreement Bonds was one of Pacific Dunlop’s Affiliates as defined.”
16 In paragraph 15 Reebok pleaded that the caps will feature Bonds’ brand or brands on the back of them, to which SOCOG replied by saying that a single Bonds brand of not more than 6 cms square would be on the back of the caps.
17 In paragraph 16 Reebok pleaded that SOCOG did not offer it first right of refusal to supply these caps to the SOCOG officials and volunteers. SOCOG responded by denying that Reebok had an entitlement to any first right of refusal to supply baseball-type caps to SOCOG officials and volunteers under the Agreement; by not admitting that it did not offer Reebok a first right of refusal to so supply; and by saying that by letter dated 25 March 1997 it had invited Reebok to provide that supply, but Reebok had declined to do so.
18 The Contentions continued to deal with advertising and promotion and, relevantly for present purposes, alleged in paragraph 26 that Bonds is, and was at all material times, a Competitor of Reebok as that term is defined in the Olympic Supporter Agreement. SOCOG denied that allegation.
19 The Contentions continued with allegations of breaches and, in paragraph 29, alleged that by entering into the Bonds Agreement SOCOG breached the Agreement and, in particular, clauses 3.1, 3.6, 5.1(b)(i), 5.1(b)(ii), 3.7 of Appendix B, and 1.8 of Appendix H. SOCOG denied these allegations.
20 Commencing at paragraph 32 of the Contentions Reebok alleged that SOCOG had breached the Agreement, such breaches being “of material obligations of the defendant within the meaning of clause 10.3 of that agreement”. Paragraph 33 alleged that the breaches by SOCOG are incapable of remedy and, in paragraph 34, it is alleged that in the alternative, SOCOG failed to remedy the breaches within thirty days of receiving notice from Reebok. In paragraph 35 it is pleaded that the conduct of SOCOG, in breaching the Agreement in the manner pleaded, evinced an intention by SOCOG not to be bound by the terms of the Agreement and that that conduct constituted a repudiation.
21 In paragraph 36 it is pleaded that by notice dated 8 December 1999 and served on the same day Reebok exercised its rights pursuant to clause 10.3 and gave notice of immediate termination of the Agreement as a result of the breaches referred to in the Contentions, and that it accepted SOCOG’s repudiation and brought the Agreement to an end. The Defence denied, relevantly for present purposes, paragraphs 29, 32, 33, 34 and 36 where secondly appearing. In response to paragraph 36 where first appearing, in which the allegations of giving of the notice are pleaded, SOCOG admitted it was served with the notice, but denied that Reebok was entitled to exercise any rights pursuant to clause 10.3 or otherwise or to terminate the Agreement.
22 By its Cross-Claim SOCOG seeks to recover $500,000, being an instalment payable on 1 July 1999 pursuant to the Agreement. In the course of pleading that case it is asserted in paragraph 9 that Reebok was not entitled to terminate the Agreement. Particulars are that SOCOG was not in breach or, in the alternative, any breaches were not of “material obligations within the meaning of clause 10.3”. The pleading continued that Reebok’s purported termination amounted to a wrongful repudiation of its obligations under the Agreement and, on 13 December 1999, SOCOG accepted Reebok’s repudiatory breach of contract and terminated the Agreement, thereby entitling it to payment of outstanding instalments.
The Issue As Finally Argued
23 SOCOG’s essential submission was that the issue propounded by the Summons, in relation to the Pacific Dunlop Agreement, was a very narrow one, namely one relating to the provision of baseball-type caps and that that confined issue either made it unnecessary for employees of Reebok to see any part of the Pacific Dunlop Agreement or, alternatively, to see anything other than the version edited by SOCOG. In so far as any part of the agreement was to be seen by Mr Pace and/or Mrs Cucurullo, which SOCOG opposed, it should be on the basis of the giving of a confidentiality undertaking, which was not in issue and to which it is unnecessary to refer further.
24 The essential submission on behalf of Reebok was that its solicitors could not obtain proper instructions in relation to the Pacific Dunlop Agreement without disclosing its contents to employees of Reebok; that upon a consideration of that agreement instructions may be given to amend the Summons to allege further breaches of the Agreement, but that such instructions could not be sought without disclosing the terms of the former agreement to employees of Reebok; and that, in any event, there was a very real issue as to whether there had been breaches of “material obligations” entitling termination, which required instructions to be taken by reference to the whole of the Pacific Dunlop Agreement. It was submitted, and so much as a legal proposition was not in issue, that if at the time Reebok terminated or purported to terminate the Agreement, there were other breaches which would have entitled it to do so then, notwithstanding that it was unaware of them, it could none-the-less rely on them.
25 In reply, Mr Gageler submitted that it was not proper to use the discovery of documents for the purpose of amending the pleadings and, in any event, it had not been shown that in all the circumstances it was necessary to disclose the terms of the Pacific Dunlop Agreement to employees of Reebok. He placed heavy reliance on the submission that once its terms were disclosed the employees to whom disclosure was made could not remove from their minds what they had learned.
26 I have stated the issues shortly because really they do not require, as issues, much more elaboration. This is but another case in which documents, which are obviously confidential as between the parties, and would not, in the normal course, be disclosed, are sought to be seen in litigious circumstances for the legitimate purpose of conducting the litigation. The principles applicable in such cases are not really in doubt and in addition to the implied obligation of confidentiality: Harman v Secretary of State for the Home Department [1983] AC 280, there is also power in the Court to either preclude a party from looking at a document or part of the document or to allow the document or part of the document to be inspected upon the granting of an appropriate undertaking: Magellan Petroleum Australia Limited v Sagasco Pty Limited [1994] 2 QdR 37; Mobil Oil Australia Limited & Anor v Guina Developments Pty Limited & Anor [1996] VR 34; Mackay Sugar Co-operative Association Limited & Ors v CSR Limited & Anor (1996) 63 FCR 408; Hadid v Lenfest Communications Inc & Ors (1996) 70 FLR 403; Idoport Pty Limited & Anor v National Australia Bank Limited & Ors (1999) NSWSC 686 and Idoport Pty Limited & Anor v National Australia Bank Limited & Ors (2000) NSWSC 63.
27 The Court will usually be asked to exercise the power of non-disclosure in circumstances where the parties to the litigation are trade rivals, which is not the case here as Reebok and SOCOG are not in that position, or, less usually, where a party to the litigation, here SOCOG is being asked to disclose information of a third party to a trade rival of that third party.
The Evidence
28 SOCOG relied, first, upon the affidavit of Mr John Lawrence Moore sworn 20 March 2000. Mr Moore was not available for cross-examination and the parties agreed that no point should be taken about the failure to cross-examine him in. Nor was any objection taken to the reading of his affidavit on that basis. Mr Moore set forth, in general terms, the nature of a sponsorship arrangement and referred to the consideration paid by a sponsor for the right to promote the association of its brand with another company or event often containing both a cash and a value in kind component. He deposed that sponsorship agreements generally contained information regarding the sponsor’s marketing rights and supply obligations, which could enable the identification of a sponsor’s marketing and manufacturing plans, new concept development and market share information. He said that if such information was disclosed to a competitor “it would vastly increase the competitor’s ability to neutralise the sponsor’s strategic investment”. Accordingly, he said, it was standard practice in the marketing industry for the terms of sponsorship agreements to be reached in confidence between the parties and, in his experience, those terms were closely guarded and highly protected by the parties.
29 He referred to other extremely commercially sensitive information that sponsorship agreements contained, which would give a competitor an insight into the design, manufacturing, distribution and pricing aspects of a sponsor’s business.
30 He deposed, in paragraph 15, to the fact that disclosure of the terms of a sponsorship agreement to a competitor would enable the competitor to identify the level of protection and exclusivity of rights, which the sponsor had against third parties, which would allow the competitor to target areas of the sponsorship which were not protected.
31 Mr Moore dealt with SOCOG sponsorships, saying that there was a myriad of permutations to the final package of marketing rights that may be offered to a sponsor.
32 He dealt with the Pacific Dunlop Sponsorship Agreement which he said was negotiated under his supervision and contained “significant commercially sensitive information”. He noted it also contained a confidentiality provision, and he continued that the disclosure of the terms of that agreement to Reebok would enable it to compare the terms of the standard SOCOG Sponsorship Agreement with that of the Pacific Dunlop Agreement, and that that would enable Reebok to gain an insight into how forms of the standard Olympic Committee sponsorship could be negotiated and the type of packages “to this sponsorship product category”. From this he opined that Reebok would have a headstart and competitive edge over Pacific Dunlop or other potential sponsors tendering for and negotiating sponsorships in relation to future Olympic Games. He said the identification of the areas which Pacific Dunlop had negotiated with SOCOG would give Reebok an insight into how Pacific Dunlop did business, and that the disclosure of certain generic provisions to Reebok would give it an insight into how far SOCOG was prepared to negotiate the generic provisions and enable it to identify which generic provisions were important to Pacific Dunlop. This involved an amalgam of the position of the Olympic organising committee and Pacific Dunlop. He considered that this may also highlight areas of weakness in Pacific Dunlop’s business, and said that the disclosure of Pacific Dunlop’s sponsorship rights to Reebok would enable Reebok to identify the scope of the sponsorship rights, opportunities available and the extent the rights were being exploited with the consequence that Reebok would be in a position to formulate its own marketing strategy by reference to that of Pacific Dunlop. He identified certain provisions which, in his opinion, would enable Reebok to analyse Pacific Dunlop’s marketing strategies and opportunities, and referred to the potential consequences of the disclosure of the terms of the Pacific Dunlop Agreement in relation to the operation of the Sydney Olympic Games.
33 There can be no real doubt that the terms of a commercial agreement are, generally speaking, confidential between the parties. A disclosure of them may well have the consequences of providing a competitor with information, which it would not otherwise have and which it may well be able to use to its advantage. However, those matters have to be balanced against the fact that there is litigation between the competitor and one of the contracting parties based on the entry by that contracting party into a sponsorship contract with the third party. An important matter for decision in this case is whether the entry into the Pacific Dunlop Agreement entitled Reebok to terminate its agreement with SOCOG and, for this to be reached, it would seem, at least prima facie, that Reebok should be able to consider that agreement.
34 The other affidavit upon which SOCOG relied was that of Ms Catherine Jane McGill sworn 23 March 2000. She is Legal Counsel and Programme Manager, Brand Protection of SOCOG and responsible for the operation and management of its brand protection programme of intellectual property enforcement. Her role includes managing SOCOG’s anti-ambush campaign and includes monitoring all forms of media to check for ambush marketing activities. She described ambush marketing as including conduct by a non-sponsor, which seeks to undermine the official sponsor’s exposure and/or boosts the ambusher’s own brand awareness in the lead-up to or during the Olympic Games. She said that such conduct may not be actionable under the Sydney 2000 Games (Indicia and Images) Protection Act 1996 or the Trade Practices Act.
35 She gave evidence about ambush marketing, the effect of which she said was to diminish the value of the exclusive rights granted to sponsors and to destabilise the Olympic sponsorship programmes. She also said that such marketing threatened the revenue, which could be earned by SOCOG under its sponsorship agreements, and the potential consequences of this.
36 In paragraph 7 she set out a number of examples of ambush marketing activities but, in cross-examination, she conceded that reading the Pacific Dunlop Agreement would not assist Reebok in carrying on any of those activities. None-the-less, in paragraph 9, she concluded that if Reebok was able to read the Pacific Dunlop Agreement, which she said she had, it would be able to identify gaps in the marketing rights granted as well as seeing the precise nature of the marketing rights granted to Pacific Dunlop. This, in turn, would enable Reebok to implement a marketing campaign exploiting the areas under the Pacific Dunlop Agreement for which Pacific Dunlop had no marketing rights, as well as targeting selected areas in which Pacific Dunlop had been granted marketing rights.
37 The cross-examination of Ms McGill on the topic of ambush marketing eroded, to a not insubstantial extent, the fears she had expressed about that. I have referred to her concession in relation to the matters raised in paragraph 7 of her affidavit and, in the end, it seemed to me that the term “ambush marketing”, which has a pejorative ring, was intended to identify nothing more than marketing by competitors of sponsors in opposition to the sponsors, which is an everyday occurrence in commercial life.
38 On behalf of Reebok reliance was placed upon the affidavits of Ms Kathryn Cecilia Everett, a partner in Freehill, Hollingdale & Page, the external solicitors for Reebok, with the carriage of this matter, of 3, 5 and 6 April 2000. Ms Everett stated in her first affidavit that throughout the proceedings she had received instructions from Mr Pace and Mrs Cucurullo, the former being Vice-President and General Counsel of Reebok, and the latter being a counsel of Reebok reporting to Mr Pace. She stated that each had informed her that he and she was prepared to execute appropriate undertakings of confidentiality. Her evidence was that in the absence of being able to confer with Mr Pace and Mrs Cucurullo she would be unable to obtain full instructions and, further, that she had been informed by Mr Pace that he did not foresee a need to disclose the agreements to Mr Paul Fireman, the Chief Executor Officer and Chairman of Reebok, or to its executive committee or members of the Board for the purposes of instructing her in relation to the proceedings or for the purpose of reporting to those people. In her affidavit of 6 April 2000 she said that having reviewed the agreements it remained her view that Reebok’s external legal representatives could not properly prepare evidence in opposition to SOCOG’s Notice of Motion, present arguments in opposition to it, and properly conduct these proceedings if no officer or employee of Reebok is provided with copies of the Pacific Dunlop Agreement. She continued:-39 She referred to the fact that the preliminary review had led her to the conclusion that she may wish to advise Reebok of further breaches disclosed by the agreements and seek its instructions as to whether it wished to amend the pleadings to particularise them and to further particularise breaches already alleged. She further deposed to the fact that following the preliminary review she remained of the view that she would be inhibited in her communications with those who instruct her if no officer or employee of Reebok is permitted to see the agreements and that the agreements are clearly essential to many of the issues in the proceedings. She continued:-
“As a result of the Preliminary Review it is also my view that the Plaintiff’s external legal representatives cannot properly prepare evidence in relation to issues such as, without limitation, breach, the materiality of the alleged breaches; the extent to which the alleged breaches are capable of ready and the damages to the plaintiff as a result of those breaches unless relevant witnesses are provided with copies of the agreements.”
40 In Mobil Oil Hayne JA, with whom Winneke P and Phillips JA agreed, noted that information said to be “commercially sensitive” was information:-
“Discussion of these Agreements has been and will continue to be of considerable importance to the conduct of these proceedings. If I have information concerning these Agreements which is not available to my clients it is likely to result in my being unable to discuss the Agreements with them at all. As a result of the breadth of the Confidentiality Undertaking I have been required to execute I would be concerned that even discussion of matters which were known by my client prior to the disclosure of the Agreements to external legal counsel may risk my being in breach of my undertaking.”
A Consideration Of The Relevant Principles
41 His Honour referred to the fact that a statement that the documents are confidential, whilst accepted as accurate, will not ordinarily be a sufficient reason to deny inspection by the opposite party. He then recognised the difference where the party obtaining discovery is a trade rival of the person whose secrets would be revealed, and pointed out that once documents are inspected by the principals of the trade rival, the information which is revealed is known to them and cannot be forgotten. He continued:-
“.. that a rival in the market place who obtains access to it may turn the material to the advantage of that rival and to the disadvantage of the party who seeks to keep it secret”: p.38.
His Honour continued that there was no absolute right to inspection of documents discovered, there being well recognised limits and:-
“Secondly, because the law recognises that the assertion of compulsive power requiring production must be balanced against the needs of justice, the party inspecting the documents of the opposite party may not use them except for the purposes of the action in which discovery is made.”
“Confidentiality is destroyed once and for all (at least so 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 a case such 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. How is the trade rival to forget what internal rate of return the competitor seeks to achieve on a new investment of the kind in question? How is the party whose hurdle rate has been revealed to know whether the rival has used the information in framing a tender? Thus, if the trade rival may inspect the documents concerned, the confidentiality of the information in them is at once destroyed. Is that necessary for the attainment of justice in the particular case?”
42 His Honour considered it necessary for the Court to inspect the documents for which confidentiality was sought to determine whether the application for confidentiality should be upheld, and stated, p.40, that no specific rule can be laid down, each case having to be determined on its own facts.
43 In Idoport I referred to a number of the cases and, for present purposes, I do not propose to repeat all of what I there said. I noted, in particular, the statement of White J in Magellan Petroleum about the high undesirability that litigation solicitors and counsel should be left without the benefit of instructions from the client. I also highlighted the statement of Hill J in Hadid that:-44 It seems to me that the proper approach is to consider the Pacific Dunlop Agreement and to determine what parts, if any, should not be disclosed to Mr Pace and Mrs Cucurullo. In my opinion, after a careful reading of the agreement, only the following portions should not be disclosed:-
“It is a far from satisfactory answer to the abrogation of this prima facie right, that the legal adviser to the party may be permitted to inspect the document for that adviser is, if the client is restricted from inspecting the material, placed in the difficult and indeed sometimes impossible position where he or she cannot obtain instructions.”
The prima facie right to which his Honour was referring was that of the right of the party personally to inspect discovered documents and the difficulty to which his Honour was referring is one taken up by Ms Everett.
45 In my opinion it is proper to grant access to all these provisions in order to ensure procedural fairness in the conduct of this litigation having regard to the issues raised, and balancing the essential rights of the parties to the litigation. If further information is sought the parties may apply.
(a) The amount in clause 8.1(a).(b) The amount payable in clause 9(c).
(c) The amount stated in clause 11.4(b) .
(d) The percentage of the purchase price to be paid as a royalty stated in clause 2.1 of Appendix C.
(e) The amount in clause 3.8(b).
(f) The amounts referred to in clauses 1.3, 2.2, 2.3, 3.1 and 4.3 of Appendix J.
46 I advised the parties that I would publish my reasons to enable them to consider them and to bring in Short Minutes of Order to give effect to them.
Conclusions
47 It seems to me that as Reebok has been essentially successful in defeating the claim made by SOCOG, SOCOG must pay Reebok’s costs of the Notice of Motion. I shall, however, hear any submissions on this point.
Costs
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