Sigma Chemicals (1986) Pty Ltd as Trustee of the Sigma Chemicals Trust v Brown
[2001] WASC 259
SIGMA CHEMICALS (1986) PTY LTD as Trustee of the Sigma Chemicals Trust -v- BROWN & ORS [2001] WASC 259
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2001] WASC 259 | |
| Case No: | CIV:1715/2000 | 7 AUGUST 2001 | |
| Coram: | WHITE AUJ | 27/09/01 | |
| 10 | Judgment Part: | 1 of 1 | |
| Result: | The material recovered should be examined by an expert under an undertaking to preserve confidentiality | ||
| B | |||
| PDF Version |
| Parties: | SIGMA CHEMICALS (1986) PTY LTD as Trustee of the Sigma Chemicals Trust DAVID BROWN GLENYS DAWN BROWN DAVID BROWN INVESTMENTS PTY LTD JEAN-PIERRE GEORGES HERICHER CICELY MADELEINE HERICHER STEPHEN GLEN BROWN JEFFREY DAVID BROWN MICHAEL CHARLES BROWN CHEMISALES PTY LTD PAUL CONRAD WOJTYSIAK ROBERT STALLARD X-RAY FLUX CORPORATION PTY LTD |
Catchwords: | Procedure Injunction Anton Pillar order Protection of confidentiality Turns on own facts |
Legislation: | Nil |
Case References: | Nil Nil |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
DAVID BROWN
First Defendant
GLENYS DAWN BROWN
Second Defendant
DAVID BROWN INVESTMENTS PTY LTD
Third Defendant
JEAN-PIERRE GEORGES HERICHER
Fourth Defendant
CICELY MADELEINE HERICHER
Fifth Defendant
STEPHEN GLEN BROWN
Sixth Defendant
JEFFREY DAVID BROWN
Seventh Defendant
(Page 2)
MICHAEL CHARLES BROWN
Eighth Defendant
CHEMISALES PTY LTD
Ninth Defendant
PAUL CONRAD WOJTYSIAK
Tenth Defendant
ROBERT STALLARD
Eleventh Defendant
X-RAY FLUX CORPORATION PTY LTD
Twelfth Defendant
Catchwords:
Procedure - Injunction - Anton Pillar order - Protection of confidentiality - Turns on own facts
Legislation:
Nil
Result:
The material recovered should be examined by an expert under an undertaking to preserve confidentiality
Category: B
(Page 3)
Representation:
Counsel:
Plaintiff : Mr S J Archer & Mr S J Penrose
First Defendant : Mr G T Bigmore QC & Mr S K Shepherd
Second Defendant : Mr G T Bigmore QC & Mr S K Shepherd
Third Defendant : Mr G T Bigmore QC & Mr S K Shepherd
Fourth Defendant : Mr G T Bigmore QC & Ms S K Shepherd
Fifth Defendant : Mr G T Bigmore QC & Mr S K Shepherd
Sixth Defendant : Mr G T Bigmore QC & Mr S K Shepherd
Seventh Defendant : Mr G T Bigmore QC & Mr S K Shepherd
Eighth Defendant : Mr G T Bigmore QC & Mr S K Shepherd
Ninth Defendant : Mr G T Bigmore QC & Mr S K Shepherd
Tenth Defendant : Mr G T Bigmore QC & Mr S K Shepherd
Eleventh Defendant : Mr G T Bigmore QC & Mr S K Shepherd
Twelfth Defendant : Mr G T Bigmore QC & Mr S K Shepherd
Solicitors:
Plaintiff : Tottle Christensen
First Defendant : Mallesons Stephen Jaques
Second Defendant : Mallesons Stephen Jaques
Third Defendant : Mallesons Stephen Jaques
Fourth Defendant : Mallesons Stephen Jaques
Fifth Defendant : Mallesons Stephen Jaques
Sixth Defendant : Mallesons Stephen Jaques
Seventh Defendant : Mallesons Stephen Jaques
Eighth Defendant : Mallesons Stephen Jaques
Ninth Defendant : Mallesons Stephen Jaques
Tenth Defendant : Mallesons Stephen Jaques
Eleventh Defendant : Mallesons Stephen Jaques
Twelfth Defendant : Mallesons Stephen Jaques
Case(s) referred to in judgment(s):
Nil
Case(s) also cited:
Nil
(Page 4)
1 WHITE AUJ: In this matter, on 2 August 2001, I granted an ex parte application for Anton Pillar orders against the first and twelfth defendants (to whom I shall refer as "the defendants") authorising the plaintiff, by its proper representatives, to enter certain premises in which it was believed that the defendants had documents and chemicals and equipment relating to the manufacture of x-ray fluxes, which the plaintiff believed to involve actions in contempt of the orders of this Court forbidding the defendants to mix lithium carbonate and boric acid for the production of x-ray fluxes.
2 The action has a long history and this Court has made certain orders from time to time in relation to the disputes between the parties.
3 The plaintiff gave evidence tending to show, prima facie, that the defendants were, in breach of an injunction, mixing lithium carbonate and boric acid in producing x-ray fluxes.
4 The Anton Pillar orders were served and, in the result, there has been brought into court certain documents, a Kodak compact disc and a Sony video 8 cassette and also a Kodak disposable camera containing exposed film. I shall refer to all of these as "the Evidence".
5 The plaintiff would like to inspect the Evidence.
6 On 6 August 2001, the matter came before me again pursuant to a chamber summons taken out by the defendants seeking the discharge of the orders made by me on 2 August 2001 and orders that the documents delivered to the court be returned to the defendants, that all unexposed (sic undeveloped) film delivered to the court be destroyed and that all costs be the defendants' in any event.
7 The chamber summons was supported by the affidavits of Dr Keith Norrish and of David Brown.
8 The defendants contend that the ulterior purpose of the plaintiff in seeking the Anton Pillar orders is to ascertain the method and ingredients now used by the defendants in the manufacture of x-ray fluxes, which matter is confidential to the defendants. The latter are very concerned to ensure that the plaintiff does not acquire this confidential information. As senior counsel for the defendants put it - they have no objection to the plaintiff knowing what they do not do, but every objection to the plaintiff knowing what they do.
9 Mr Brown, in his affidavit, says, in part:
(Page 5)
- "9 Last year, well after these proceedings were commenced against me, in circumstances set out in affidavits before this Honourable Court, I developed a new process and formulae for the manufacture of x-ray flux. Because of the orders made against me in these proceedings, I informed the plaintiff that I had developed the process and formulae and that the twelfth defendant had been formed to manufacture and sell x-ray flux using the new formulae.
10 The new formulae required the mixing of lithium carbonate, boric acid and another chemical to manufacture x-ray flux.
11 By an application dated 13 November 2000, the plaintiff applied to join the twelfth defendant and for injunctions restraining me and the twelfth defendant from using the new process and formulae. The Honourable Justice Steytler heard the application in late January 2001. His Honour gave judgment and published his reasons on 15 February 2001. Formal orders were made on 8 May 2001.
12 In December 2000 and January 2001, prior to the application being heard, and in anticipation of a successful outcome, I arranged the supply of boric acid, lithium carbonate and a third chemical which were intended for use in the manufacture of x-ray flux by the twelfth defendant. I was concerned to ensure that, when His Honour found in my favour, I would be in a position to commence manufacture in a relatively short period thereafter. Chemicals used in the manufacture of x-ray flux can take some months to be delivered.
13 I located a supplier of lithium carbonate from the Peoples Republic of China, Chengdu Chemphys Chemical Industries Co Ltd ('Chengdu'), which suggested it could supply lithium carbonate at a significantly cheaper price than other suppliers. An order was placed with Chengdu on 21 December 2000. The order was placed by Pacific Corporation, a company owned by my son, Michael. It was intended that Pacific Corporation supply chemicals
(Page 6)
- to the twelfth defendant as required in order for the twelfth defendant to manufacture x-ray flux.
- 14 In early February 2001, the lithium carbonate, boric acid and another chemical were delivered to premises at 9 Franklin Lane Joondalup ('the Joondalup premises'). The Joondalup premises are commercial premises occupied by a motorcycle business run by my son Stephen and owned by North City Motorcycles Pty Ltd. It was convenient to have the chemicals delivered to the Joondalup premises as they are secure premises with substantial space available to store the pallets of chemicals. At no time was it intended by me that the twelfth defendant or I would manufacture mixes or x-ray flux held or stored at the Joondalup premises.
15 None of the Lithium carbonate delivered to the Joondalup premises has been used save for one 25kg container which has been opened and approximately 2kg removed in circumstances detailed below.
16 Since the judgment of the Honourable Justice Steytler I have not mixed boric acid and lithium carbonate.
Orders of the Honourable Justice Steytler
17 In the event, the plaintiff was successful in its application. The orders made by the Honourable Justice Steytler on 8 May 2001 included an order preventing XFC by its servants and agents until the hearing and determination of the proceedings or until further order: from mixing together boric acid and lithium carbonate, either alone or with any other substance, for the purpose of manufacturing any x-ray flux substantially similar (in quality and composition) to any x-ray flux produced by the fusion of any of the confidential identified in Schedule D to the orders of Anderson J made on 23 June 2000.
18 I have not breached and have no intention of breaching the orders.
(Page 7)
- Settlement and Shareholders Agreement
19 Negotiation of the Settlement and Shareholders Agreement began in February 2001, shortly after the reasons of His Honour were published.
20 Agreement was reached by me and Justin Evans (who acted for an on behalf of the plaintiff) in or about May. It was intended that the points of agreement be reduced to writing by independent solicitors jointly instructed by Justin and me.
21 The Settlement and Shareholders Agreement envisaged an ongoing joint venture arrangement using a company called 'Sigma X-Ray Flux Pty Ltd'. The Settlement and Shareholders Agreement included an express term settling all litigation between the parties. The settlement expressly included the discharge of all injunctions relating to the production of x-ray flux by any party to the proceedings. Consequently, it was intended Sigma X-Ray Flux Pty Ltd use such formulae and process for the manufacture of Flux as determined by the directors without restriction. The company would have been able to use any chemical in the manufacture of x-ray flux including but not limited to boric acid and lithium carbonate.
Samples provided to the plaintiff
22 During the negotiation of the Settlement and Shareholders Agreement, in a telephone conversation with Justice Evans, I was asked to provide a sample of the granulated flux, equivalent to 12:22, that could be manufactured by the joint venture company.
23 It was my intention that Sigma X-Ray Flux Pty Ltd take advantage of the cheaper source of lithium carbonate as well as my granulation process when producing x-ray flux for commercial sale. I also knew that Sigma X-Ray Flux Pty Ltd would not be bound by the injunction ordered in CIV 1715 of 2000. I agreed to produce a sample for analysis and wanted to use some of the lithium carbonate stored at the Joondalup premises. Because, at that time, the injunctions were yet to be discharged I
(Page 8)
- arranged for Justin Evans to mix appropriate amounts of boric acid and lithium carbonate to allow me to prepare a sample of granulated x-ray flux equivalent in composition to the plaintiff's 12:22.
- 24 On or about 15 May 2001, Justice Evans met me at 443 Scarborough Beach Road. I had weighed out the chemicals (including approximately two kilograms of lithium carbonate from a container I brought from the chemicals stored at the Joondalup premises). I asked Justin Evans to mix the chemicals which he did by placing one chemical in to the bag containing the other. He then returned the mix to me. Justin Evans left the premises and I used the mixture to manufacture a granular flux equivalent to the flux sold by the plaintiff as 12:22.
25 At a meeting shortly thereafter I showed the granular Flux produced by me from the chemicals mixed by Justin Evans to Shann Evans at his office in Cottesloe. Shann Evans said words to the effect that Justin Evans wanted to have the flux analysed to see if it was satisfactory for sale by Sigma X-Ray Flux Pty Ltd pursuant to the Settlement and Shareholders Agreement. I handed him the sample."
10 Dr Norrish says, in par 9 and par 10 of his affidavit:
"9 I have been advised by David Brown of the chemicals and process to be used in his new method for the manufacture of x-ray flux. David Brown's approach appears to me to be chemically sound and feasible. Lithium carbonate is not used in the manufacture of x-ray flux using the new method. The chemical reaction is significantly different to that which occurs when lithium carbonate is used. The difference is substantial and not trivial.
10 David Brown has provided me with samples of x-ray flux produced using his new method. Upon analysis I found it to have lower levels of impurities with respect to calcium, chlorine and chromium when compared to the '12:22' flux manufactured by Sigma."
(Page 9)
11 In the course of his address, Mr Bigmore QC, of counsel for the defendants, submitted that the written submissions which had been furnished to the court by the plaintiff in support of the application heard by me on 2 August 2001, were misleading. He said that the statement by counsel for the plaintiff in the written submission to the effect that the factual background was not controversial was wrong and that, in fact, some of those matters were very much in issue. Counsel pointed to a number of matters which he described as being in issue and certainly not common ground. Mr Archer responded to these allegations, rejecting the imputations of misleading statements.
12 In his affidavit filed in connection with the matter presently before me, Mr Keith Tyler, a sales manager of the plaintiff, deposes to the opinion that, while there are other ways of making flux than using lithium carbonate, they would be far too expensive in comparison. It is the suggestion, therefore, that if the defendant is making flux, it must, by inference, be doing so by mixing lithium carbonate and boric acid - with the consequential inference that the injunction must have been breached.
13 Interestingly enough, the defendant offered to demonstrate to the plaintiff's witness, Professor Watling, the manufacture of the flux without the use of lithium carbonate. That offer has been rejected. In my opinion, it would have been appropriate to have accepted it.
14 I have set out above what is said by Dr Nourish in his recent affidavit, to the effect that, as advised to him by the defendant, lithium carbonate is not used in the flux manufactured by the defendant and the method described appears to him to be chemically sound and feasible.
15 The plaintiff's case against the defendant for breach of the injunction is, of course, circumstantial. The plaintiff points to the purchase by the defendant of a substantial quantity of lithium carbonate as inconsistent with innocence. However, the defendant has offered an explanation which, if true, would negate the inference the plaintiff seeks to draw from that purchase. The plaintiff's evidence was sufficient, in my judgment, to establish a prima facie case and the question now is as to whether that case has been sufficiently rebutted by the defendant to require me to discharge the Anton Pillar orders which I made.
16 Mr Archer submitted that it is not possible to "reverse engineer", as he put it, the flux so as to say what must have been the ingredients used in its manufacture, because of the very high temperatures used in the manufacture of the flux.
(Page 10)
17 I am persuaded that it is undesirable, certainly at this stage, that the plaintiff have access to the materials seized pursuant to the Anton Pillar orders granted by me. In my opinion, the material should be made available to an independent expert, such, for example, as Professor Watling, for him to examine and to make a confidential report to the Court as to his findings. I would also require from him, or from whomsoever else may be appointed to undertake the task, an undertaking in suitable terms not to disclose, whether directly or indirectly, any information derived by him from his examination of the records until further order. I shall hear from counsel as to the appropriate orders to give effect to these Reasons.
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