Self Care Corporation Pty Ltd v Green Forest International Pty Ltd (No 9)
[2021] FCCA 1866
•31 August 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
Self Care Corporation Pty Ltd v Green Forest International Pty Ltd (No 9) [2021] FCCA 1866
File number(s): SYG 2771 of 2019 Judgment of: JUDGE BAIRD Date of judgment: 31 August 2021 Catchwords: PRACTICE AND PROCEDURE – application in a case brought on day 2 of final hearing – further search sought of forensic image of storage devices made in 2019 – delivery up and searching of further electronic storage devices used by sixth respondent – delay – prejudice – no delay found –paragraph 1 allowed as varied - paragraphs 2 to 4 of application dismissed. Cases cited: Brookfield v Yevad Products Pty Ltd [2002] FCA 1376
Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No. 3) [2012] FCA 61
Microsoft Corp v Goodview Electronics Pty Ltd [1999] FCA 754; (1999) 46 IPR 159
Suzlon Energy Limited v Bangad [2011] FCA 1152; (2011) 198 FCR 1
Number of paragraphs: 72 Date of last submission/s: 4 August 2021 Date of hearing: 3, 4 and 5 August 2021 Place: Sydney Counsel for the First and Second Applicants: Mr Hennessy SC and Mr C McMeniman Solicitor for the First and Second Applicants: Gilbert + Tobin Counsel for the Sixth Respondent: Mr B Le Plastrier, Mr R Sud, and Ms C Nguyen Solicitor for the Sixth Respondent: Taylor David Lawyers ORDERS
SYG 2771 of 2019 BETWEEN: SELF CARE CORPORATION PTY LTD ACV 132 213 113
First Applicant
SELF CARE IP HOLDINGS PTY LTD ACN 134 308 151
Second Applicant
AND: GREEN FOREST INTERNATIONAL PTY LTD ACN 607 602 988
First Respondent
YAOAN (ERIC) CHEN
Second Respondent
YILIN TRADING PTY LTD ACN 626 244 479 (and others named in the Schedule)
Third Respondent
ORDER MADE BY:
JUDGE BAIRD
DATE OF ORDER:
31 AUGUST 2021
THE COURT:
1.DISMISSES paragraphs 2, 3, and 4 of the applicants’ application in a case dated 3 August 2021.
2.NOTES the Court will hear the parties as to any argument as to costs on a date to be advised administratively.
REASONS FOR JUDGMENT
Judge Baird
INTRODUCTION
On 3 August 2021, the second day of the final hearing in this matter, conducted electronically by video‑conferencing because of current COVID-19 restrictions on movement in New South Wales, the applicants, Self Care Corporation Pty Ltd and Self Care IP Holdings Pty Ltd, brought an application in a case seeking orders against the sixth respondent, Mr Pascal Skelin, in substance:
(a)first, varying orders made in the proceeding in 2019 to enable further search of the forensic image made in 2019 of Mr Skelin’s electronic storage devices further to orders made 25 October 2019 (as varied) (existing forensic image) applying the search terms set out in Annexure B to the application, and any other terms identifying privileged material to be notified by Mr Skelin’s solicitors (together, Search Terms); and
(b)secondly, seeking delivery up by Mr Skelin to the applicants’ independent engaged computer expert, Mr Rodney McKemmish, of any “External Storage Devices (including any inoperable or dissembled internal and external storage devices)” in Mr Skelin’s possession, power, or control used by him at any time since the commencement of the proceeding on 25 October 2019, and whether or not owned by him (further devices), the taking of a forensic image of the further devices by Mr McKemmish, and the search of the forensic image applying the Search Terms.
The applicants also seek consequential orders for (i) the provision by Mr Skelin of usernames and passwords and the like to enable the search of the forensic image of the further devices to be done, (ii) the progressive provision of the results of the above searches simultaneously to the applicants’ and Mr Skelin’s solicitors, (iii) the identification of terms to be applied to exclude legally privileged or confidential material, and (iv) for a regime enabling the applicants to use the balance of the further results for the purposes of enforcing any rights against any person and otherwise for the purposes of this proceeding.
The application was made returnable instanter, and was brought as a matter of urgency.
After briefly hearing from the applicants’ junior counsel, Mr McMeniman, I stood the application down to later in the day to enable Mr Le Plastrier, counsel for Mr Skelin, to obtain instructions. Mr Skelin opposed the application. I heard the balance of the application on 4 August 2021. Both parties relied on the affidavits I describe below. Neither party objected to the other’s affidavit evidence.
On 5 August 2021, I informed the parties I was persuaded that it is appropriate to allow further search of the existing forensic image in accordance with a modified regime and search terms, which I then outlined, and to dismiss paragraphs 2 to 4 of the application (concerning the further devices). I invited the applicants to draft and circulate proposed orders. After Court on 5 August 2021, by consent, counsel for the applicants and Mr Skelin informed my Chambers that their respective clients agreed to orders which they submitted, which orders I then made. I indicated to the parties I would subsequently deliver reasons for my decision. These are my reasons.
THE APPLICATION
The application is brought by reference to a notice to produce dated 27 July 2021 issued by the applicants to Mr Skelin, and Mr Skelin’s production in answer to the call, and supported by two affidavits made by Mr Daniel Plane to which I refer below.
The notice to produce was first before me at pre-trial directions on 28 July 2021 and stood over to the first day of final hearing. The notice to produce in substance seeks any documents held by Mr Skelin concerning certain counterfeit activities in relation to freezeframe‑branded products, and any documents recording or referring to communications between Mr Skelin and various Chinese entities, and various named individuals, including the non‑participating fifth respondent, Mr Emilio Wang, and in respect of communications with Emilio Wang, concerning certain subject matter, including freezeframe products, Self Care, or Ms Sonia Amoroso, Self Care’s CEO.
The extent of Mr Skelin’s production in answer to the notice to produce was 5 pages comprising screenshots of what appear to be text messages in the period 1 May 2021 and 5 May 2021, some of which make reference to Ms Amoroso, and including copies of text messages from her to a third party (5 Pages).
Applicants’ evidence in support
In support of the application the applicants rely on Mr Skelin’s production of the 5 Pages, the affidavit of Mr Daniel Plane dated 31 July 2021 and supporting exhibits (Plane #3), and a further affidavit of Mr Plane dated 3 August 2021 (Plane #4). The applicants say that Mr Skelin’s production in response to the notice to produce is inadequate, on their face it is apparent the 5 Pages are obviously extracted from a larger chain of communications which involve Mr Skelin and Emilio Wang, that this submission is supported by Mr Plane’s evidence, and that there is an identified basis set out in affidavits on which they rely for the orders sought in the application.
Mr Plane’s evidence
The applicants rely on Plane #3 and Plane #4. Mr Plane is a partner at Simone Intellectual Property Services Asia Limited (SIPS), and is the attorney and IP consultant acting for the applicants in Hong Kong and mainland China. He is located in Hong Kong, and is fluent in Mandarin Chinese. He gives evidence on his own account, and on information and belief, as to investigations undertaken by Chinese authorities, and attendances and observations made by named SIPS employees acting under his direction and located in Shanghai and Hangzhou, mainland China.
In Plane #3, Mr Plane gives evidence of certain investigations by the Chinese authorities in mainland China concerning alleged counterfeit activities relating to freezeframe‑branded products by named Chinese entities and named individuals, and the recent arrest in mainland China of Emilio Wang. Mr Plane gives evidence on information and belief of apparent communications between Emilio Wang and Mr Skelin sighted during raids on Emilio Wang at his residence. In Plane #4, Mr Plane sets out some further evidence of those communications.
Limitations on ability of mainland Chinese SIPS employees to give evidence on oath
In Plane #3, Mr Plane gives evidence why SIPS employees located in mainland China are not in a position to give affidavit evidence themselves in this proceeding. Simply put, his understanding and experience of Chinese law is that residents of mainland China are only permitted to give evidence in overseas proceedings such as the present proceeding after getting express permission from China’s Ministry of Justice. In Mr Plane’s knowledge and experience, China rarely, if ever, grants such permission. He is aware of no recent examples where permission has been granted. In the absence of such permission, the administration of the oath could subject the attorney administering the oath to criminal prosecution.
It is impractical, if not impossible, for members of SIPS Shanghai team to execute affidavits in this proceeding, particularly under the present COVID related travel restrictions that prevent their readily travelling outside of mainland China to where those restrictions do not apply. Thus, the practice of SIPS and other firms of which Mr Plane has knowledge is that evidence sourced in China and given under oath for use in foreign proceedings is to be taken in jurisdictions outside of the People’s Republic of China, such as Hong Kong or Taiwan, and where there are no such restrictions. Accordingly, Mr Plane gives such evidence because he is resident in Hong Kong, and neither he nor the attorney administering his oath when making his affidavit are subject under the restrictions placed within mainland China. I accept Mr Plane’s explanation.
Investigations and raids by Chinese authorities
Suspected counterfeit freezeframe products have been the subject of investigations by Chinese authorities, including the Public Security Bureau (PSB) in the Baoshan district of Shanghai (Shanghai PSB). Mr Plane lists a number of Chinese entities that are also identified in a criminal complaint prepared by SIPS on behalf of the applicants and filed with the Shanghai PSB, and states that a number of those entities have been the subject of investigations by the Shanghai PSB following on from that complaint.
Many of the entities Mr Plane lists have been named in the final hearing in this proceeding. Fuli Ruizi Brand Management (Shanghai) Co., Limited and Yunyin International Trading (Shanghai) Co., Ltd were also named in the criminal complaint, and/or have been the subject of Shanghai PSB’s ongoing investigations in response to that complaint. A number of people have been taken into custody in connection with the investigations, and follow-on criminal raids conducted by Shanghai PSB, including on Emilio Wang at his residence. The arrest warrant dated 9 July 2021 issued by the PSB in relation to Emilio Wang and its English translation is in evidence. A number of other people have also been detained, and arrest warrants dated 9 July 2021 are in evidence before me in respect of Mr Dingqing Yang, and Mr Peike Li who worked for Mr Dingqing Yang.
Mr Plane gives evidence on information and belief that on 4 June 2021 the Shanghai PSB, in the presence of Mr Qing Zhao, a member of the SIPS Shanghai office who reports to Mr Plane, attended the residence of Emilio Wang, in Hangzhou. On the same day, Shanghai PSB, in the presence of another member of the SIPS Shanghai office who reports to Mr Plane, attended the office of the company Fuli Ruizi, and the Shanghai residences of Mr Dingqing Yang, Ms Feng Han and Mr Peike Li. Photographs taken during those attendances are reproduced in the evidence.
The Shanghai PSB issued a request for verification in relation to suspected counterfeit freezeframe products identified during the visit to Fuli Ruizi’s premises, requiring a verification report to be prepared by 24 June 2021. In evidence before me is a copy of the responsive verification report dated 23 June 2021 prepared by SIPS for the Shanghai PSB in relation to suspected counterfeit freezeframe products identified during the visit to Fuli Ruizi’s premises on 4 June 2021.
On 23 June 2021, the Shanghai PSB attended the Shanghai residence of Ms Weiwei Lin, a Canadian national who goes by the English name ‘Sarah’, and is a representative of Yangfeng (Shanghai) Biotechnology Co., Limited. Mr Zhao observed that Ms Lin was taken into the Baoshan Shanghai PSB Station by the PSB for questioning.
Additionally in Plane #3, Mr Plane gives evidence that on 4 June 2021, in the presence of a member of SIPS Shanghai office who reports to him, the Shanghai PSB visited premises of a Hangzhou‑based Taobao seller, whom Mr Plane had identified as being involved in the sale of products purporting to be freezeframe products. Mr Plane gives evidence that the SIPS employee observed certain WeChat messages on the Taobao seller’s phones, and Mr Plane names persons identified within those messages.
Mr Skelin is named on Emilio Wang’s phone
Mr Plane gives evidence that Mr Zhao has informed him, arising out of Mr Zhao’s presence with the Shanghai PSB at Emilio Wang’s residence in Hangzhou on 4 June 2021 (see above, [16]), and subsequent communications and meetings between Mr Zhao and the Shanghai PSB, that:
At Mr Emilio Wang’s residence in Hangzhou, at around 9:34am on 4 June 2021, Mr Zhao observed that Mr Emilio Wang’s locked phone screen indicated that he was receiving a WeChat call from somebody with the contact name “Pascal ( 潘世高)”.
Mr Plane observes that the Chinese characters in the contact name are pronounced PAN SHI GAO.
Two mobile phones, one iPad and two laptop computers in the possession of Mr Emilio Wang were also seized by the Shanghai PSB and removed for further investigation.
In Plane #4, Mr Plane expands on the above evidence. He gives evidence that Mr Zhao has informed him, and he believes:
that he observed from Mr Emilio Wang’s phone [on 4 June 2021] (which phone had been unlocked by a PSB agent at the start of the raid action) that there were records of extensive text and voice communications over WeChat between Mr Wang and Mr Pascal Skelin (“Pascal (潘世高)”) up until 4 June 2021. Due to the Shanghai PSB’s ongoing investigations, further details about those communications cannot currently be disclosed.
Applicants submit no prejudice arises
The applicants say that no prejudice arises in relation to the further searches of the existing forensic image, as the image has already been produced, and Mr Skelin’s previous solicitors were provided with a copy of the existing forensic image, and reviewed the results.
The applicants say in relation to the search of the further devices, the regime proposed would limit production to the applicants’ and Mr Skelin’s solicitors and counsel, provide for a regime for identification and removal of any legally privileged or confidential material. The applicants say that what would be left is material that can be dealt with in the present proceeding, and no prejudice would arise because the material is squarely in Mr Skelin’s camp, and should have been dealt with in his evidence, or earlier in a Norwich Pharmacal affidavit he made in late 2019, or in response to discovery orders made in December 2020.
The production of the further devices, and the searching of the forensic image of those devices would be targeted to documents bought into existence since the existing forensic image was made in late 2019. The applicants propose that the further devices could be collected by Mr McKemmish from Mr Skelin’s residence in Sydney’s eastern suburbs, and be delivered back to him within a number of hours.
Mr Skelin’s evidence
Mr Skelin relies on an affidavit of Mr Gregory Alberto Grunert, sworn on 4 August 2021. Mr Grunert is a solicitor in the employ of Mr Skelin’s instructing solicitors, trading as Taylor David Lawyers. He is located in Brisbane, whilst Mr Skelin is located in Sydney. Mr Grunert makes his affidavit on the basis of records and files maintained by his firm. He gives evidence in relation to the notice to produce and the application, and on instructions from Mr Skelin and from Mrs Anne Skelin. Additionally, Mr Skelin relies on the search terms that have been previously been used to search the existing forensic image, to demonstrate that there is some duplication of terms in the Search Terms.
Mr Grunert gives evidence of:
(a)telephone and email communications and discussions he had with Mr Skelin and Mrs Anne Skelin in the period 27 July to 2 August 2021 regarding his request that they search for and produce documents within the scope of the notice to produce, their searches and production of documents, and his instructions in relation to those searches, and production;
(b)his receipt on 3 August 2021 of an unsealed copy of the application, and forwarding it to Mr Skelin, and his subsequent receipt of a sealed copy;
(c)several telephone conversations with Mr Skelin and Mrs Skelin on 3 August 2021, and instructions from them;
(d)his subsequent receipt of a further bundle of text messages from Mr Skelin via WhatsApp, which are annexed to his affidavit;
(e)an explanation Mr Grunert sought from Mr Skelin of the genesis of the 5 Pages;
(f)Mr Skelin’s instructions about the devices he uses, the number of documents generated since 2019, and the prejudice Mr Skelin is likely to suffer should the application be allowed; and
(g)searches that Mr Grunert has taken of “all outlook items” via Microsoft Outlook of the Taylor David email account which he uses on a day-to-day basis of email addresses he believes Mr Skelin uses and he receives emails from and to which he sends emails, which Mr Grunert attests returned some 2,274 emails, and the review he believes his firm would have to do to discharge its professional obligations to Mr Skelin before it could release any search results.
As to the notice to produce
In relation to the notice to produce, Mr Grunert’s evidence is that he asked Mr and Mrs Skelin to conduct a search and provide copies of any documents within the scope of the notice to produce, he received instructions from Mr Skelin that “he didn’t have any documents other than maybe a couple of text messages from Mr Emilio Wang”, and Mr Grunert was provided by way of emails from Mr Skelin a number of text messages stated by Mr Skelin to be “text messages he had received from Emilio Wang and were responsive to the [notice to produce]”. Mr Grunert then sent an email to both Mr Skelin and Mrs Skelin which attached a bundle of text messages together with the notice to produce, and asked them both to confirm that they had no other documents in their possession, power, custody or control which would be responsive to the categories in the notice to produce. He received those instructions. Mr Grunert then produced the bundle he sent to the Skelins, being the 5 Pages.
As to the application
In response to the application, Mr Grunert’s evidence is that:
(a)in response to his enquiry whether they had any other documents which could be responsive to the categories in the notice to produce, he has obtained confirmatory instructions that Mr Skelin had already provided everything which comes within the categories of the notice to produce;
(b)Mr Skelin’s instructions are that he has only one mobile phone and a laptop, and they are the same devices he produced in late 2019, and he has no other devices;
(c)Mrs Skelin’s instructions were to the effect:
There’s nothing – we don’t have anything.
(d)Mr Grunert asked Mr Skelin to send him the text messages he received from Emilio Wang both before and after those which were provided to him in response to the notice to produce, a further bundle of text messages was received on 3 August 2021, which he annexes. Mr Skelin described them to him as relating “to commodities and nothing else”;
(e)on being pressed by Mr Grunert, Mr Skelin’s instructions to Mr Grunert were to the following effect:
No, I don’t have anything else that comes under the notice to produce;
Emilio and I would talk about commodities trading and mining deals.
Mrs Skelin said: “there’s nothing else”.
Mr Grunert also sets out Mr Skelin’s instructions of the circumstances in which Mr Skelin uses his mobile phone and laptop, and the prejudice he would suffer if he had to deliver them up, being:
(a)Mr Skelin is currently providing consulting services to a company and is in the middle of a capital raising which requires him communicating with investors located in both the United States of America and Europe, he is the lead on communicating with these investors, and he is required to be available for phone calls and emails at all hours of the day and night, given the differing time zones;
(b)if he had to deliver up his devices he was likely to be terminated and have no income;
(c)he needs the devices to communicate with his solicitors;
(d)further, there would be tens of thousands of emails created since November 2019.
Mr Grunert states that Mr Skelin has said to him to the effect that after the fourth respondent, Freezeframe China Co Pty Limited, was placed in liquidation in January 2020, he did not speak to Emilio Wang until around March 2020, when he received a telephone call from him during which they discussed him sourcing protective equipment and testing kits for COVID-19 as a business idea which never eventuated. Thereafter, Mr Skelin did not recall speaking to Emilio Wang until May 2021, when he received a telephone call from him concerning commodities trading. Mr Grunert states Mr Skelin instructed him that Emilio Wang knows Mr Skelin used to work in this area, and Mr Wang wanted to discuss it with him further.
As I have said above, Mr Grunert also sets out the substance of Mr Skelin’s explanation to him of the genesis of the 5 Pages, and Mr Skelin’s understanding as conveyed to him of the text messages.
Mr Grunert also makes submissions to the effect that if Mr Skelin is compelled to deliver up the further devices, it would be necessary for his firm to perform a privilege review of potentially thousands of documents before his firm can discharge its professional obligations to Mr Skelin, and that the search term “RE” would return a significant number of documents with the subject “re”, significantly delaying any review process. Whilst I accept that Mr Grunert genuinely holds these concerns, in my view it should not be beyond the efforts of competent lawyers, acting in good faith, and with the expert involvement of Mr McKemmish, to resolve such concerns.
Mr Skelin’s submissions
Mr Le Plastrier for Mr Skelin vigorously opposed the application.
Mr Skelin submits first, that the application is vexatious and should be dismissed. Its timing – on the second day of final hearing - is such that it has no legitimate purpose. The delay is inexcusable and has not been explained. He emphasises the extreme care that the Court must take before exercising its jurisdiction to grant Anton Piller relief, which he submits the application in substance seeks, and draws attention to Justice Branson’s statements in Microsoft Corp v Goodview Electronics Pty Ltd [1999] FCA 754, especially at [13] and [26], (I note also [25]). In sum, there must be clear evidence that the respondent has in his possession incriminating documents or things, and there must be a real possibility that he may destroy such material before any application can be made. Counsel emphasises that the Court must be careful to avoid the extraordinary jurisdiction of the Court to make an Anton Piller order from being subverted to a mere investigatory tool for applicants or, indeed, from being used for any purpose other than the preservation of vital evidence pending the hearing and determination of proceedings.
It is relevant that I observe here that I consider the application is not framed as seeking relief in the nature of an Anton Piller order, which order seeks ex parte relief based, inter alia, on the strength of a concern that if given notice there is a real possibility the defendants may destroy the material sought. Nonetheless, what her Honour said in Microsoft v Goodview bears repetition:
[13]Although the power of the Court to make an Anton Piller order is now beyond doubt it is a power which will only be exercised in exceptional circumstances. As Lee J observed in Television Broadcasts Ltd v Nguyen at [38]:
‘The grant of an Anton Piller order is a peremptory and severe interference with the ordinary rights of a party when it is done without the support of any binding judgment and care must be taken to see that the order is only granted in appropriate cases and with due safeguards:
“First, there must be an extremely strong prima facie case. Secondly, the damage, potential or actual, must be very serious for the applicant. Thirdly, there must be clear evidence that the defendants have in their possession incriminating documents or things, and that there is a real possibility that they may destroy such material before any application inter partes can be made.” (Anton Piller KG v Manufacturing Processes Ltd [1976] Ch 55 per Ormrod LJ (at 62)).”
…
[25] I was not satisfied that the above material was sufficient to support a finding that there was a high risk that the respondents might hide evidence or remove it from the jurisdiction. In a sense the situation was similar to a case in which a party is shown to have made inadequate discovery. Although regrettable, it is the case that it is not uncommon for litigants to fail to comply fully with orders for discovery. Rarely does this prove to be because they have hidden evidence or removed it from the jurisdiction. Ultimately I was not satisfied that the manner in which the first respondent had deployed the purchase orders and invoices referred to in its defence provided evidence of a high risk that the respondents might hide evidence or remove it from the jurisdiction.
[26]It is probably appropriate that I record my suspicion that the concern of the applicants with respect to the documentation of the respondents is not so much that it may not become available to be placed in evidence in this proceeding, but that they may not be able to inspect it for the purpose of identifying whether or not there are other persons against whom they might institute proceedings. As Bryson J observed in EFG Australia Ltd v Kennedy, the caution with which courts have entertained applications for Anton Piller orders has increased, rather than diminished, as their experience with such orders has increased. The Court must, in my view, be careful to avoid the extraordinary jurisdiction of the Court to make an Anton Piller order from being subverted to a mere investigatory tool for applicants or indeed, from being used for any purpose other than the preservation of vital evidence pending the hearing and determination of a proceeding.
Mr Skelin also relied on Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No. 3) [2012] FCA 61, at [7], where Collier J at [7] observed that:
… service of a notice to produce shortly before trial, imposing a considerable obligation and thus disruption on parties and practitioners already deeply immersed in the preparation for and conduct of the trial, may be unreasonable and vexatious.
Her Honour observed on the facts in that case that the notice to produce was unreasonable, particularly as orders for discovery had been made six weeks before in specific terms.
Mr Le Plastrier submits that given the timing of the notice and the extent of the search upon delivery up, the application is brought only to vex Mr Skelin, and it is outrageous that Mr Skelin is required to engage with it at all. He tells me I should have stopped it in its tracks when it was first raised. He submits this is because there is no evidence explaining delay, and also why a further affidavit (Plane #4) was subsequently put on. He urges me to find that there is a dearth of forensic purpose.
Mr Skelin’s second point is that the application should be regarded, first, as a mere investigatory tool, which is not permitted: (Microsoft v Goodview at [26]), and, secondly, as an attempt to circumvent ordinary Court processes of discovery.
In response to the applicants’ submissions that the evidence sought by delivery up should have been produced by Mr Skelin either in a Norwich Pharmacal affidavit, in compliance with existing discovery orders, or in his evidence, Mr Le Plastrier submits there is no obligation on Mr Skelin first, to give evidence, or secondly, to give any particular type of evidence, and simply because the applicants thought he should have, does not entitle them to the benefit of the application.
Relying on Brookfield v Yevad Products Pty Ltd [2002] FCA 1376 Mansfield J at [21], counsel submits that a verified list of documents is generally conclusive of its contents, and the Court is concerned to prevent a contest between two competing oaths that only a trial could resolve. Thus, Mr Le Plastrier reminds me that Mr Skelin has made affidavits in response to Norwich Pharmacal orders, and two discovery affidavits, one on 19 January 2021 and one on 8 February 2021.
Mr Le Plastrier submits that, if the applicants were concerned about the inadequacy of discovery, there are limited responses that the law allows. First, in narrow circumstances to allow the request for a second affidavit, or cross-examination on the existing affidavit: see Brookfield at [21]. Counsel emphasises that it cannot be shown by a contentious affidavit that the affidavit of documents is insufficient, and submits there was no attempt by the applicants to engage with the limited circumstances in which a further affidavit might be required, as referred to by Mansfield J in Brookfield, nor to engage with the consequence of production under a notice to produce. In this latter regard, in Suzlon Energy Limited v Bangad [2011] FCA 1152, Rares J explains the historical purpose for the issue of a notice to produce:
[13] …that if the party served with it does not produce the document or thing called for, his or her opponent may lead secondary evidence of the contents or nature of the document or thing.
Mr Le Plastrier submits that there is no proposition that an Anton Piller order logically follows from a failure to provide an affidavit of discovery that is complete.
Returning to the circumstances in which an Anton Piller order may be granted, and the application for delivery up of the further devices, Mr Le Plastrier’s next submits that the applicants’ case does not satisfy either the requirement for clear evidence, or the requirement that there be evidence of a real possibility of the destruction of this new material.
Mr Le Plastrier submits that Mr Plane’s evidence is no more than inference. At its highest, the applicants’ case comprises a reference to a phone call that occurred, and screenshots that have been produced (the 5 Pages), and the inference that there are other texts, such that the sample produced is not the complete picture. Mr Le Plastrier submits that Mr Grunert’s evidence in contrast provides further context to the production of the 5 Pages, and further, evidences surrounding text messages, which, on their face relate to commodities and mining and, do not appear to have direct relevance to this proceeding. Thus, the further production addresses any concern that production was inadequate – the surrounding texts are not relevant.
Mr Skelin has disclosed material, and there is no evidence of risk of destruction. Phone calls are admitted, and there is positive evidence they do not relate to the search terms. The fact of the content of a conversation in no way contributes to establishing the clear evidence required that Mr Skelin has in his possession incriminating documents containing the Search Terms.
Turning to discretion, Mr Le Plastrier points to the alleged delay, the significant time and effort that would be taken to have to sift through the results, submits the timing is unfair and deeply prejudicial, given that the matter is in week one of a two-plus week hearing, that the Search Terms include those that have previously been done on the existing forensic device, and the possibility that searches of the further devices will encompass privileged material.
In the orders I outlined I have taken into account Mr Skelin’s further submissions as to the scope of the Search Terms and the potential use to which the results are sought to be made.
Applicants’ submissions in reply
Mr McMeniman drew attention to the investigations and recent arrests, evidenced in Mr Plane’s evidence, and the entities and individuals only recently identified further to those investigations, submitting that they demonstrate that the application is not delayed, nor is it vexatious. This evidence also reveals that previously known names are now shown to be relevant to the subject matter of the proceeding.
The Court does have power to order further discovery. Such an order for further discovery can be made where an applicant can specify a particular document or class of documents in respect of which further discovery is sought, and can establish reasonable grounds for believing the documents were or had been in the opponent’s possession, and more broadly, relevant to the pleadings, where there is an evidential basis to believe that documents that ought to have been disclosed have not been. The application does not seek Anton Piller relief, but compliance with discovery obligations.
Mr McMeniman points to the lack of evidence of what searches Mr Skelin undertook. He explains the rationale behind certain of the Search Terms, and proposes certain modifications to the terms, noting that “RE” refers to Revitaleyes, one of the freezeframe products.
CONSIDERATION
As I indicated on 5 August 2021, I do not accept the submission that there has been delay, nor that the application is vexatious or an abuse of process. I accept that the application is based on the culmination of recent investigations in China and their results set out in Mr Plane’s evidence, including recent arrest of Emilio Wang following the issue of an arrest warrant on 9 July 2021, and the counterfeit analysis that was undertaken shortly before that date. On the basis of Mr Plane’s evidence I am satisfied that the application could not reasonably have been brought earlier.
Further, I am cognisant that the applicants and various respondents, principally but not only Mr Skelin, recently have been much engaged in significant interlocutory disputes in this proceeding, and that Mr Skelin and the applicants are also engaged in two proceedings brought by Mr Skelin in the Federal Court on appeal from two interlocutory judgments that I have delivered (on 12 May 2021, and 23 July 2021). I am also cognisant that in the context of the first of those two appeals, and then expanded to encompass the second appeal, Mr Skelin brought and maintained an application in the Federal Court to stay this proceeding which was heard on 28 July 2021, and determined on 29 July 2021, the Thursday before the commencement of the final hearing of this proceeding. In these circumstances, I consider that the application was brought in a timely manner, and that it was reasonable to bring it early in the first week of the final hearing.
I consider that Mr Plane’s evidence and the 5 Pages, evidencing as they do that Mr Skelin and Emilio Wang have been in recent contact, provide a reasonable basis for the applicants to bring the application against Mr Skelin. The ambit of the application, and the Search Terms are reasonably founded on matters in Mr Plane’s evidence. I reject that the application is vexatious, or without legitimate forensic purpose.
I am also satisfied that it was appropriate that the applicants sought first to issue the notice to produce before bringing the application. There has been no attack on the notice to produce. To the contrary, there has been production. It does not follow, however, that because the production is limited to the 5 Pages, and on their face the screenshots form part of more extensive communications, Mr Skelin has further relevant documents to produce so that it is appropriate to order delivery up and examination of the further devices forthwith during the first week of final hearing. Mr Skelin’s further production in answer to the application, and his explanation, although evidenced on information and belief, are matters I take into account.
In relation to those paragraphs of the application seeking delivery up, forensic imaging, search and review of the further devices (that is, paragraphs 2 to 4), as I have observed above, in my view it is not appropriate to characterise the application as seeking Anton Pillar orders, not the least of which because it is not ex parte, and I accept that the Court does have power to order further discovery, and for that purpose production and limited search of the further devices. I consider that in the present circumstances, however, the applicants have to establish on clear and persuasive evidence a sound basis for the orders sought, and that any prejudice likely to be suffered, weighed against that evidence, warrants the relief being granted. I am not persuaded, however, and in contradistinction to Anton Pillar relief, that it is necessary that the applicants establish on the evidence that there is an imminent risk of destruction of documents.
Taking a forensic image of electronic storage devices such as a computer, and conducting electronic search of the image applying specific terms identified on evidence as relevant to the proceeding, may be a practical and efficient way to minimise time and expense for a party under a continuing obligation to give discovery. It seems to me that if able to be done efficiently, at less expense, and in such a way to minimise production of results that are privileged or irrelevant, this is a means that warrants further consideration at an appropriate occasion. For the reasons that follow, I do not consider that this is that occasion.
In relation to those paragraphs of the application seeking orders to permit Mr McKemmish to apply the Search Terms to the existing forensic image, and consequent review, release and use, it is also inaccurate to characterise the application as seeking Anton Piller relief, including for the reasons I have already stated. Rather, I apprehend the application is brought to vary the extant orders first made in 2019 at the commencement of the proceeding having regard to the results of recent investigations in China of which Mr Plane gives evidence. The orders are sought to permit Mr McKemmish to undertake further search, and thus vary the limitations on search of the existing forensic device that the Court placed on Mr McKemmish. He is not able to undertake such search without first obtaining the Court’s order. It is appropriate that the applicants apply to the Court to seek that variation of extant orders.
The application relating to the further devices
In respect of the orders sought requiring urgent delivery up of the further devices, forensic imaging, search and review, all to take place in the first days of final hearing conducted electronically, I would need more cogent and substantial evidence from the applicants than was presented in Plane #3 and in Plane #4 in order to be satisfied that I should grant the relief sought.
I am not persuaded that it reasonably follows from Mr Zhao on 4 June 2021 seeing on a phone used by Emilio Wang a contact name that is likely to be Mr Skelin, or Mr Zhao observing on that phone instances of communications between Emilio Wang and Mr Skelin, that any such communications relate to the subject matter encompassed by the notice to produce, or to the Search Terms. In the circumstances pertaining on 3 and 4 August 2021, I considered that more was required to be persuaded it was appropriate to order delivery up of the further devices, forensic imaging and search. That is, I am not persuaded that there is clear evidence before me of Mr Skelin communicating or having communicated with Emilio Wang on matters that could be said to be relevant to this proceeding. I have had regard to Mr Plane’s evidence, the 5 Pages, and Mr Skelin’s further production, and instructions as evidenced in Mr Grunert’s affidavit, and annexed to it, in coming to this conclusion.
Mr Grunert’s evidence, on instructions, of Mr Skelin’s present use of the further devices, and his concerns if he was deprived of them, even for a few hours, as at 3 August 2021, are matters to which I have had regard and take into account in weighing the competing concerns of the parties.
Given I am not persuaded to allow the relief sought in respect of the further devices, it is not necessary that I form a concluded view as to the balance of the discretionary matters raised by Mr Le Plastrier particularly as to the extent of search and distraction of resources. I do not consider, however, that it necessarily follows that the application of the Search Terms (or any modified terms) to a forensic image of the further devices would result in an unmanageable number of results, notwithstanding Mr Grunert’s concerns about the number of emails passing between his firm and Mr Skelin, or the thousands of emails that Mr Skelin informs Mr Grunert he has on his devices.
As to the extent of searches that Mr Grunert considers his firm would then have to undertake to meet their obligations to Mr Skelin, before releasing the results, as I have said above, I observe that it should not be beyond the ingenuity of both parties’ legal representatives acting in good faith, complying with their obligations to this Court under the Rules, approaching the matter practically, and with the assistance of Mr McKemmish, readily to be able to exclude likely privileged material.
As to the submission that as Mr Skelin had produced documents, it followed that any risk of destruction was unlikely, I express no view.
Further search of the existing forensic image
Turning now to paragraph 1 of the application which seeks a further search of the already captured existing forensic image applying the Search Terms, in the light of the further evidence that is now before me – which relates to recent investigations and events, self-evidently not known in October 2019 – I am persuaded it is appropriate to allow further discovery by a further search of the image. It seems to me that an efficient and practical course is to vary the extant orders to allow Mr McKemmish undertake a further search of the existing forensic image applying the Search Terms, but excluding some of those terms that have previously been searched (and thus I apprehend would return some results already generated), or would be likely to be unproductive, such as “RE”.
I am persuaded that the evidence that Mr Plane gives of the named Chinese entities and individuals, the investigations of the Shanghai PSB, the June 2021 raids and July 2021 issue of arrest warrants, the recent arrest of Emilio Wang, and the verification reports of counterfeit freezeframe products provide a clearly sufficient basis on which to vary the extant orders to permit Mr McKemmish to undertake the further search.
Given that Mr McKemmish has a master copy of the existing forensic image, the further search could be undertaken readily. It does not require Mr Skelin to produce any devices.
I note that the unfiltered previous search results were reviewed by the former solicitors for Mr Skelin, and privileged, confidential and irrelevant material was identified and excluded (I apprehend including by the use of exclusionary terms provided by them to Mr McKemmish), and that a master copy of the search results was provided to Mr Skelin by provision to his former solicitors.
I am informed by Mr Le Plastrier, however, that Mr Skelin’s current solicitors do not have a copy of that master. I have not been provided with any explanation why that is so, however, given that Mr McKemmish was ordered to retain a master copy, in order to progress the matter without further disputation, I will require Mr McKemmish to provide a further copy of the master existing forensic image to Mr Skelin’s current legal representatives.
DISPOSITION
Having regard to the above matters, orders in terms of paragraph 1 of the application in a modified form should be made, and paragraphs 2 to 4 of the application should be dismissed. Mr McKemmish should provide a report to the Court regarding the further searches undertaken, further to which I will make further orders to progress in an orderly manner the production of certain results that may be released to the applicants.
Accordingly, I made the orders dated 5 August 2021, and will now dismiss paragraph 2 to 4 of the application.
I will hear the parties on costs.
I certify that the preceding seventy-two (72) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Baird. Associate:
Dated: 31 August 2021
SCHEDULE OF PARTIES
SYG 2771 of 2019 Respondents
Fourth Respondent:
FREEZEFRAME CHINA CO PTY LTD ACN 621 016 975
Fifth Respondent:
KEFEI (EMILIO) WANG
Sixth Respondent:
PASCAL SKELIN
Seventh Respondent:
EPAQ INTERNATIONAL PTY LTD ACN 608 870 588
Eighth Respondent:
QUANJIAN PTY LTD
Ninth Respondent:
YIPING YANG
Tenth Respondent:
TAOYU PAN
Eleventh Respondent:
KEFEI (IVAN) WANG
Twelfth Respondent:
ZUREN INTERNATIONAL PTY LTD
Thirteenth Respondent:
SIQI HUO
Fourteenth Respondent:
YULIN WANG
Fifteenth Respondent:
E-GO CHANNEL PTY LTD
Sixteenth Respondent:
AUSTRALIAN VITAMIN PLUS PTY LTD
Seventeenth Respondent:
YAN (CYNTHIA) LI
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