Shaw v Bennett
[2004] WASC 70
SHAW & ANOR -v- BENNETT & ORS [2004] WASC 70
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2004] WASC 70 | |
| Case No: | CIV:2292/2001 | 6 APRIL 2004 | |
| Coram: | MASTER NEWNES | 20/04/04 | |
| 9 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed | ||
| B | |||
| PDF Version |
| Parties: | DAVID BRIAN SHAW SHOWLINK CORPORATION PTY LTD (ACN 079 124 851) MARTIN LAWRENCE BENNETT MARJURA HOLDINGS PTY LTD (ACN 009 402 993) TOECUTTER PTY LTD (ACN 009 402 993) RICHARD ARTHUR SUTTON ROWICK ANTONY WILLIAM FAIRWEATHER DAVID GRANT SANDERS |
Catchwords: | Practice and procedure Application to limit discovery and to restrict inspection Relevant principles Turns on own facts |
Legislation: | Nil |
Case References: | Church of Scientology v DHSS [1979] 3 All ER 97 Esso Australian Resources Ltd v Plowman (1995) 183 CLR 10 Hamersley Iron Ltd v Lovell (1998) 19 WAR 316 Harman v Secretary of State for the Home Department (1983) 1 App Cas 280 Kimberley Mineral Holdings Ltd (In Liq) v McEwan [1980] 1 NSWLR 210 Nil |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- SHOWLINK CORPORATION PTY LTD (ACN 079 124 851)
Plaintiffs
AND
MARTIN LAWRENCE BENNETT
MARJURA HOLDINGS PTY LTD (ACN 009 402 993)
TOECUTTER PTY LTD (ACN 009 402 993)
RICHARD ARTHUR SUTTON ROWICK
ANTONY WILLIAM FAIRWEATHER
DAVID GRANT SANDERS
Defendants
Catchwords:
Practice and procedure - Application to limit discovery and to restrict inspection - Relevant principles - Turns on own facts
Legislation:
Nil
(Page 2)
Result:
Application dismissed
Category: B
Representation:
Counsel:
Plaintiffs : Mr W S Martin QC
Defendants : Mr M L Bennett
Solicitors:
Plaintiffs : Williams & Co
Defendants : Bennett & Co
Case(s) referred to in judgment(s):
Church of Scientology v DHSS [1979] 3 All ER 97
Esso Australian Resources Ltd v Plowman (1995) 183 CLR 10
Hamersley Iron Ltd v Lovell (1998) 19 WAR 316
Harman v Secretary of State for the Home Department (1983) 1 App Cas 280
Kimberley Mineral Holdings Ltd (In Liq) v McEwan [1980] 1 NSWLR 210
Case(s) also cited:
Nil
(Page 3)
1 MASTER NEWNES: This is an application by the defendants for orders that the plaintiffs' right to inspect documents discovered in the action be limited to nominated counsel or other persons, and that discovery by the defendants of financial records be limited to annual accounts, draft annual accounts and documents relating to partners' drawings.
2 The proceedings, which were instituted by the plaintiffs on 31 August 2001, arise out of a partnership dispute. In the action the plaintiffs claim, among other things, to be entitled to an account of all sums due to them from the partnership for the period 2 March 2001 to 30 June 2001, the alleged remainder of their share of the profits of the partnership for the financial year ended 30 June 2001, and delivery up or access to all financial information and accounts of the partnership in respect of the financial years ended 30 June 1998, 1999, 2000 and 2001.
3 The first-named plaintiff ("Mr Shaw") was a partner of the firm Bennett & Co from 1 July 1996 to 31 March 2001. The second-named plaintiff (a company apparently controlled by Mr Shaw) contends that it was a partner of the firm from 1 July 1997 to 31 March 2001. That is denied by the defendants, who say that the second-named plaintiff was never a partner of the firm. It does not seem to me that anything turns on that in this application.
4 On or about 2 January 2001 Mr Shaw gave to the defendants three months written notice of his (and on the plaintiffs' case, the second-named plaintiff's) retirement from the firm, as he was required to do by the partnership agreement.
5 It is clear that ultimately the parting of the ways was not a happy one. A dispute arose as to the plaintiffs' financial entitlements. Mr Shaw says that, despite constant requests, the first named plaintiff ("Mr Bennett"), who as the sole capital partner of the firm was largely in control of its affairs, refused to discuss those entitlements. According to Mr Shaw, eventually he received from Mr Bennett a statement of what was said to be the plaintiffs' financial entitlements. Mr Shaw did not accept that the statement accurately recorded those entitlements. A subsequent discussion between Mr Shaw and Mr Bennett became heated. Immediately afterwards Mr Shaw instructed solicitors to act on his behalf. The solicitors he instructed were, as Mr Shaw knew, at the time acting for Mrs Rinehart, and interests associated with her, in relation to substantial litigation with Mrs Porteous, then a client of Bennett & Co. (I should say that the solicitors then instructed by Mr Shaw are not the plaintiffs' current solicitors, the plaintiffs having recently changed solicitors.)
(Page 4)
6 Mr Shaw gave a statement of evidence to his solicitors. It included certain statements Mr Shaw said he had heard Mr Bennett make in connection with matters in which Bennett & Co was acting for Mrs Porteous, including in relation to the litigation involving Mrs Rinehart. Those comments were apparently included in the statement on the basis that they were relevant to whether certain funds would become available to the firm in payment of outstanding legal fees and would thereby ultimately affect the amount of distributable profit payable to the partners of the firm.
7 According to Mr Shaw, his solicitor told him that a subpoena could be issued to compel him to give evidence at the coronial enquiry into the death of Mr Lang Hancock, Mrs Rinehart's father. The solicitor suggested that Mr Shaw discuss the matter with a lawyer at the office of the DPP who was involved in the enquiry. According to Mr Shaw, he did so and was told by the lawyer that his evidence was relevant to the enquiry. Mr Shaw then authorised his solicitor to provide a copy of his statement to the solicitor assisting the Coroner.
8 Mr Bennett gave evidence to the coronial enquiry on 29 August 2001. He was cross-examined by senior counsel for Mrs Rinehart on what was apparently the statement of evidence Mr Shaw had given to his solicitors. Mr Bennett says the statement also annexed internal Bennett & Co documents showing the trust account balance of every client of Bennett & Co who had money on trust with the firm, and revealed the names of the firm's clients.
9 The defendants say in support of this application that as a result of those events they have a genuine concern that Mr Shaw will not respect the confidentiality of documents that are discovered by the defendants. I should mention that in his affidavit in support of this application Mr Bennett expressed a similar concern in relation to the plaintiffs' solicitors, but as the plaintiffs have since changed solicitors, that issue was not pursued.
10 The defendants say that, in the circumstances, it is in the interests of justice that the inspection of the defendants' discovered documents be limited so as to exclude Mr Shaw from access to them.
11 On the application to limit discovery to certain categories of documents, counsel for the defendants argued that material extending beyond the documents specified in the application was not relevant to any matter in issue in the action. He submitted that the accounting records
(Page 5)
- sought by the plaintiffs in the statement of claim in respect of the financial years ended 30 June 1998, 1999, 2000 and 2001, are not relevant to the plaintiffs' alleged cause of action. Counsel acknowledged, however, that the defendants have not applied to strike out the pleas in which the claim for those documents is made.
12 Counsel for the plaintiffs submitted that no basis had been established for either of the orders sought. It was fundamental that if a document was relevant to a matter in issue between the parties, then it should be discovered and, subject to established exceptions (none of which applied here), should be produced for inspection by the other party. That obligation should not lightly be interfered with. Counsel argued that there was simply no basis for the conclusion to be drawn that Mr Shaw would not, or may not, observed his legal obligations to maintain the confidentiality of documents produced by the defendants on discovery. Counsel also pointed out that what was in question on this application were the historical accounting and like records of the partnership, documents of an apparently relatively routine and uncontroversial nature.
13 It was submitted on behalf of the plaintiffs that the defendants' application to limit the documents to be discovered was misconceived. If, as the pleadings stood, no other documents were discoverable, then no limitation on discovery was necessary. If further documents were relevant on the pleadings, then they should be discovered. It was not to the point that the defendants contended that the pleas in the statement of claim which made such documents relevant were liable to be struck out. They had not been struck out (and the plaintiffs denied that they were liable to be struck out). The ambit of discovery was to be determined on the basis of the pleadings as they stood, not on how the other side said they should stand. Counsel went on to argue that the plaintiffs would be seriously prejudiced if discovery were limited to final and draft accounts, as proposed by the defendants, and the primary accounting documents from which the accounts were drawn were not discovered. It would make it impossible for the plaintiffs to test the accuracy or completeness of the final accounts.
14 The process of discovery and inspection of documents is a substantial intrusion into the private affairs of a party. It often involves great inconvenience and expense. It requires the disclosure of documents that a party would otherwise be entitled to keep confidential. While it is an important part of the litigation process, it is also important that safeguards be maintained to protect, so far as reasonably practicable, the privacy of the party required to give discovery and to encourage full and
(Page 6)
- frank disclosure of all relevant material. In Harman v Secretary of State for the Home Department (1983) 1 AC 280, Lord Roskill said (at 322 - 323):
"… a party to whom discovery has been made is in relation to his opponent's documents at a great advantage in comparison with the rest of the world. Their owner until the moment of discovery arrives is entitled, subject only to such exceptions as a subpoena ducus tecum, to absolute protection and privacy for them against all who seek them out however meritorious the motives may be of those who seek them out in the search for truth … [T]hat absolute right is qualified once the moment of discovery in litigation has arrived. But it is only qualified as respects the other party to that litigation who thereupon acquires a privilege special to himself of seeing his opponent's documents but on terms that those documents may only be used by him or his advisers in furtherance of the litigation between them. This is a privilege or an advantage upon which our judicial process insists. Other judicial processes do not insist upon the like practice. But our judicial process insists upon this and that process involves invasion of an otherwise absolute right of privacy, albeit on strict terms in order that that privilege or advantage should not be abused. The sole purpose of according that privilege is that once discovery and inspection have taken place the party who has thus acquired this privilege or advantage may use those documents in the litigation against the party who has disclosed and produced them."
16 It is accepted, however, that on occasions a party's undertaking will, or may, not be sufficient to protect the confidentiality of the contents of discovered documents. It is by no means uncommon, for instance, in confidential information and intellectual property cases, for further restrictions to be placed on inspection of specific documents. In such cases, express undertakings of confidentiality may be required from all those who are to have access to the documents in the course of the litigation. The persons who are to have access to the documents may also
(Page 7)
- be restricted, for example, to counsel, solicitors and nominated expert witnesses. It is not unknown in such cases for a party itself to be denied direct access to certain documents. Such cases generally involve trade competitors and concern secret processes or other trade secrets, where, once the contents of the documents concerned are disclosed to the other party, the damage is done, regardless of any undertaking
17 There is no doubt that a court has power to limit inspection where the interests of justice require it to do so, including where there is a real risk that a party will use the right of inspection for some improper purpose: Church of Scientology v DHSS [1979] 3 All ER 97; Kimberley Mineral Holdings Ltd (In Liq) v McEwan [1980] 1 NSWLR 210. But it is a power to be used sparingly and only to the extent that the court is persuaded it is necessary to do so: Church of Scientology v DHSS (supra) at 116. Such limitations are likely seriously to hamper the efficient preparation and conduct of the litigation. They may well cause the party so restricted to incur significant extra expense and to be put to substantial inconvenience.
18 The issue on this application was whether it had been established that the interests of justice required the restrictions sought by the defendants.
19 I accept that the defendants are genuinely concerned that Mr Shaw will not observe his duty of confidentiality. I am not in a position, on the limited material which is before me on this application, to form any firm view as to the appropriateness of Mr Shaw instructing solicitors who were at the time acting in litigation in which Bennett & Co were acting for the other party, or as to the appropriateness of the steps Mr Shaw took in instructing those solicitors in respect of some of the matters contained in his witness statement and in authorising that witness statement to be provided to solicitors assisting the Coroner. I therefore express no view on those matters. But it is perhaps understandable, in view of those events, that the defendants are concerned to ensure that no confidential information about the affairs of the partnership produced on discovery in these proceedings, should be disclosed beyond such disclosure as is reasonably necessary for the conduct of the litigation.
20 I am not, however, satisfied that the defendants have made out a case for the quite draconian remedy they seek. Mr Shaw has stated on oath in his affidavit in opposition to this application that he is conscious of his obligation of confidentiality and that he has no intention of breaching that obligation. He acknowledges that any breach of it would have serious repercussions for him as a legal practitioner. In addition, the plaintiffs
(Page 8)
- have changed solicitors so the concern the defendants had about the position of the plaintiffs' former solicitors no longer arises. Moreover, the documents concerned do not appear to be more than historical accounting records and the like, relating to the financial years ended 30 June 1999, 2000 and 2001 (the claim for the 1998 financial year having been abandoned). I did not understand it to be suggested that they contain information in the nature of trade secrets or are otherwise of a type that, if disclosed, would be likely to cause commercial damage to the defendants. Nor is it evident that disclosure would be likely to cause damage to the firm's clients of the time. In fact, it does not appear that the documents concerned are likely to be of any real interest to a third party.
21 I also accept, as submitted by senior counsel for the plaintiff, that any restrictions which prevented Mr Shaw having access to the documents, or even significantly limited that access, are likely substantially to impede the preparation of the plaintiffs' case and to add to the costs of it.
22 Accordingly, I would refuse the defendants' application to restrict inspection. Of course, if specific issues of confidentiality arise in the future in relation to a particular document or documents, it would always be open to the defendants to apply for such orders as may be necessary to preserve the confidentiality of the documents concerned.
23 I am also not satisfied that a basis has been made out for discovery to be limited to the categories of documents nominated by the defendants. I accept the submission of senior counsel for the plaintiff that it is not to the point (if it is the case) that any additional financial records are only relevant by reason of parts of the statement of claim that are liable to be struck out. The defendants have not moved to strike them out and while they remain in the statement of claim and raise issues to which documents are relevant, those documents are discoverable. There is no evidence that discovery of documents in the ordinary way would be oppressive or unnecessarily onerous on the defendants.
24 It is not inconceivable, however, that discovery by the defendants could become oppressive or unnecessarily onerous if it were to extend to every document connected with the financial affairs of the partnership over the three year period referred to, as counsel for the defendants suggested it might. Such an outcome should be avoidable by consultation and agreement between the parties. But in case that is not possible, I would leave it open to the defendants to come back to Court, on appropriate affidavit evidence, to seek some limits on the scope of their discovery.
(Page 9)
25 I would therefore dismiss the defendants' application to restrict inspection of documents. I am currently inclined to adjourn sine die the application to limit the scope of discovery, with liberty to apply, but I will hear the parties on that.
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