Stanley v Layne Christensen Co
[2004] WASCA 50
•24 MARCH 2004
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE FULL COURT (WA)
CITATION: STANLEY & ANOR -v- LAYNE CHRISTENSEN COMPANY & ORS [2004] WASCA 50
CORAM: MILLER J
EM HEENAN J
HEARD: 10 MARCH 2004
DELIVERED : 10 MARCH 2004
PUBLISHED : 24 MARCH 2004
FILE NO/S: FUL 83 of 2003
BETWEEN: ROSS FRANCIS STANLEY
AZILIAN PTY LTD (ACN 008 952 681)
Applicants (First & Second Defendants)AND
LAYNE CHRISTENSEN COMPANY
STANLEY MINING SERVICES PTY LTD (ACN 009 117 533)
First Respondents (Plaintiffs)DAVID HARPER
GEODRILL LTD
Second Respondents (Third & Fourth Defendants)
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram :MASTER SANDERSON
Citation Number : [2003] WASC 103
File Number : CIV 2465 of 1999
Catchwords:
Application for leave to appeal from interlocutory decision - Appeal - Subpoena for production of documents - Order for inspection - Order for production and inspection of copies of affidavits filed in proceedings in Family Court of Western Australia - Confidential material - Extent of inspection permissible - Procedure to be followed on return of subpoena
Legislation:
Nil
Result:
Leave to appeal granted
Appeal allowed in part
Matter remitted for Master to consider extent of inspection, if any, of documents produced which may be permitted
Category: B
Representation:
Counsel:
Applicants
(First & Second Defendants) : Mr A R Beech
First Respondents (Plaintiffs) : Mr J A Thomson
Second Respondents
(Third & Fourth Defendants) : Ms L A Del Fuoco
Solicitors:
Applicants
(First & Second Defendants) : Fairweather & Lemonis
First Respondents (Plaintiffs) : Gadens Lawyers
Second Respondents
(Third & Fourth Defendants) : Williams & Hughes
Case(s) referred to in judgment(s):
Apache Northwest Pty Ltd & Ors v Western Power Corporation (1998) 19 WAR 350
Freid & Ors v National Australia Bank Ltd & Ors (2000) 175 ALR 195
Hillston v Bar‑Mordecai [2002] NSWSC 973
Hilton v Wells (1985) 59 ALR 281
Layne Christensen Company & Anor v Stanley Mining Services Pty Ltd & Ors [2002] WASC 249
National Employers' Mutual General Insurance Association Ltd v Waind [1978] 1 NSWLR 372
State of Western Australia v Bond Corporation Holdings (1991) 5 WAR 40
Wilson v Metaxas [1989] WAR 285
Case(s) also cited:
AG Australia Holdings Ltd v Burton & Anor [2002] NSWSC 170
Bailey v Beagle Management Pty Ltd (2001) 105 FCR 136
Chapman v Luminis Pty Ltd [2001] FCA 1580
Compsyd Pty Ltd v Streamline Travel Service Pty Ltd (1987) 10 NSWLR 648
Khanna v Lovell White Durant [1995] 1 WLR 121
Maronis Holdings Ltd v Nippon Credit Australia Ltd (2000) 18 ACLC 609
JUDGMENT OF THE COURT: This application for leave to appeal from an interlocutory order made by Master Sanderson on 29 May 2003 was heard and determined on 10 March when we granted leave to appeal, allowed the appeal in part and remitted to the Master for further consideration the question of whether and if so to what extent and in accordance with these reasons the first respondents (plaintiffs) may inspect all or any part of the affidavits filed in the Family Court of Western Australia in the proceedings between the firstnamed appellant and another. At the disposition of the appeal we gave brief reasons for that decision indicating that more detailed reasons would follow later. These are our detailed reasons for that decision.
Background
It is not necessary to set out in full the rather complex issues which have arisen in this litigation nor the history of the proceedings in this Court. To a significant extent such a narrative is to be found in an earlier decision of Master Sanderson dealing with disputes over discovery in the action: Layne Christensen Company & Anor v Stanley Mining Services Pty Ltd & Ors [2002] WASC 249 at [2] which the learned Master incorporated in his subsequent reasons for decision on the matter now subject to appeal. It is enough to say that the first respondents (plaintiffs) allege that the firstnamed applicant/appellant, Mr R F Stanley, is bound by a restraint of trade clause contained in a "consulting agreement" to which he and the secondnamed first respondent, Stanley Mining Services Pty Ltd ("SMS") are parties. The restraints in this consulting agreement included alleged obligations by Stanley to avoid any participation or interest in any business which is or becomes a competitor of SMS, not to disclose confidential information belonging to SMS, not to solicit any employees of SMS to leave their employment and other cognate responsibilities. The first respondents, as plaintiffs, in the action allege that Stanley acted in breach of the consultancy agreement in a variety of ways by providing financial resources and other assistance to the second respondents and others to act in competition with SMS. Issue has been joined over whether or not the restraints in the consulting agreement are binding upon Stanley, whether he acted as alleged, whether his alleged conduct constitutes a breach of the consulting agreement, and whether any loss or damage has been suffered by the first respondents for which a remedy can or should be granted. For present purposes it is enough to focus on the allegations made by the first respondents, as plaintiffs, that at a time when it is alleged that Stanley was bound by the terms of the consultancy agreement he provided assistance for the second respondents and participated in a course of transactions which, eventually, led to them obtaining financial support to set up a business in competition with SMS.
On 16 December 2002, pursuant to RSC O 36 r 12(4), the second respondents applied for and obtained leave, ex parte, to issue subpoenas returnable before trial against a number of persons or corporations. The subpoenas were returnable on 5 February 2003 and, before then, the appellants applied to set aside certain of the subpoenas and to vary others. The applications for variation of some of the subpoenas was, in effect, an expedient adopted by the parties without objection which, in effect, asserted that the subpoenas should be set aside as invalid, irregular or embarrassing unless they were in a different form. Nothing turns on the procedure so adopted. This application came on before the learned Master on the basis that there was a challenge to all 17 subpoenas which had issued. After examining all the subpoenas which had issued and accepting certain amendments to the original form of some of them, the learned Master dismissed the appellants' application and allowed the subpoenas in their amended form to stand. In addition, the learned Master made orders allowing the solicitors for the first and second respondents (plaintiffs) and the appellant (first and second defendants) to inspect all the documents which had been produced under those subpoenas to the court in accordance with a timetable which he then set.
The 17 subpoenas which had issued, and which were allowed to stand in amended form, were treated as falling neatly into three categories. This application and proposed appeal concerns only a single subpoena which is the sole subpoena in the third category. In the form in which it eventually issued, after amendments accepted by the first and second respondents, it was a subpoena directed to CS who is the estranged wife of the first appellant (first plaintiff). It directed her to produce to the court:
"Copies of the affidavits filed in Family Court proceedings commenced in or about 1999 between Mr Ross Stanley and [CS], including but not limited to:-
(a)the affidavit of Mr Ross Stanley sworn on 1 June 1999; and
(b)the affidavit of Mr Ross Stanley sworn on 24 June 1999."
At the hearing of the appeal we were informed that there were several affidavits in this category copies of which CS had produced to the court in obedience to the subpoena.
By a proposed amended notice of appeal, amended by leave of the court and by consent on 10 March 2004, the appellants indicated, that if leave to appeal were granted and the appeal allowed, they would seek a variation of the order allowing a subpoena to issue to CS by modifying the terms of the subpoena to restrict its extent to copies of two affidavits of the first appellant Mr Ross Stanley, sworn respectively on 1 and 24 June 1999, and by seeking other orders that:
(a)the documents produced to the court in response to the original subpoena by CS be returned to her;
(b)the solicitors for the parties be entitled to inspect only specified portions of the copies of the affidavits of Mr R Stanley sworn on 1 June and 24 June 1999 as therein identified;
(c)that other documents produced by CS [be returned] or
(d)alternatively that the subpoena addressed to CS be amended to include a provision restricting the obligation to produce the document to such parts of the affidavit relating to any transaction between either or both of the appellants on the one hand and any or all of the third and fourth respondents or the company which the appellant is alleged to have assisted in breach of his obligations under the consulting agreement; or
(e)as a further alternative, that the question of access to and inspection by the parties and their solicitors of any affidavits produced in response to the subpoena as amended be referred to the Master for determination in accordance with the reasons of the Full Court on this appeal.
The proposed ground of appeal upon which the applicants/appellants seek to rely if leave to appeal is granted is:
"The learned Master erred in law and in fact in finding there was:-
1.1a legitimate forensic purpose for the production under subpoena of the affidavits filed in the Family Court proceedings between Ross Francis Stanley and CS, other than the two affidavits referred to above, without any limitation as to their subject matter or relevance to the Supreme Court action;
1.2any sufficient basis to permit inspection of the whole of those two affidavits, alternatively to paragraph 1.1 above, to permit inspection of all of the affidavits."
It is apparent, therefore, that the position of the appellants is that the first and second respondents should not be permitted to issue a subpoena to CS requiring the production of any copies of affidavits from the Family Court proceedings other than the two affidavits of the first appellant sworn 1 and 24 June 1999 and that, inspection of those copies be restricted to those parts of the affidavits, if any, relating to any transaction between the appellants or either of them and any or all of the third and fourth respondents or Cartwheel Advance Ltd or, alternatively, that inspection be restricted to those parts of the affidavits dealing with those issues or, as a further alternative, that there should be no inspection allowed.
In evidence before the learned Master on the application for leave to issue a writ of subpoena, and again on the return of the subpoena in the application to have it set aside, there was an affidavit, filed on behalf of the first and second respondents, of Mr A L Connolly sworn 3 December 2002. Mr Connolly is one of the solicitors engaged for the first and second respondents and he deposed to the grounds of his belief that CS may be in possession of copies of the affidavits filed in the Family Court proceedings and that those documents would be directly relevant to the issues in the current action. Annexed to that affidavit is a letter dated 18 November 1999 written by the solicitors for CS in the Family Court proceedings to the solicitors for her husband and in connection with those proceedings. This letter contains what purport to be quotations from affidavits of the first appellant filed in the Family Court proceedings sworn respectively on 1 June and 24 June 1999 which, on one view, might be regarded as bearing on the question of whether or not the first appellant provided any financial or other assistance to the firstnamed second respondent or to others which might constitute a contravention of the obligations which the first appellant is alleged to have under the consulting agreement.
On the basis of this evidence the learned Master concluded that the first and second respondents had a legitimate forensic purpose for issuing the subpoena to CS to require her to produce copies of all affidavits in her possession filed in the Family Court proceedings. The necessity for there to be a "legitimate forensic purpose" in such circumstances is well established by many authorities including Freid & Ors v National Australia Bank Ltd & Ors (2000) 175 ALR 195 per Weinberg J at [29] and [30] and Apache Northwest Pty Ltd & Ors v Western Power Corporation (1998) 19 WAR 350 at 374. In concluding that a legitimate forensic purpose had been established for the first and second respondents to issue a subpoena requiring the production of copies of the affidavits in the Family Court proceedings the learned Master identified the principles which regulated the decision which he was required to make as follows:
"There are, I think, four points of principle which emerge from the cases. They are:
(1)A legitimate forensic purpose will be established if a document gives rise to a line of enquiry which is relevant to the issues before the trier of fact, including for the purpose of meeting the opposing case by way of cross‑examination: see Apache Northwest Pty Ltd & Ors v Western Power Corporation (1998) 19 WAR 350 at 374; National Employers' Mutual General Insurance Association Ltd v Waind & Anor [1978] 1 NSWLR 372 at 385; Maronis Holdings Ltd & Ors v Nippon Credit Australia Ltd & Ors (2000) 18 ACLC 609 at 613 – 614.
(2)In assessing whether a legitimate forensic purpose exists in relation to documents sought on an early return of subpoena, it must be borne in mind that the necessity for having a document to fairly dispose of the issues at trial might well not become apparent before trial. It may, for example, become apparent when a document is used in cross‑examination to refute unforseen evidence‑in‑chief. Thus, whether a document is 'necessary' to fairly dispose of proceedings is to be understood in the broad sense of embracing any document which has value, in the sense of at least apparent relevance, and fairly disposing of proceedings, even if it might not readily be seen, at the pre‑inspection stage, necessarily to be admissible in evidence: see Apache Northwest (supra) at 376. Cases will be rare in which, prior to production of documents, a subpoena will be set aside as an abuse of process on the ground the documents by description are manifestly irrelevant to the subject proceedings, or are incapable of bearing upon matters of credit pertinent to the proceedings: see Brand v Digi‑Tech [2001] NSWSC 425.
(3)At least one object of the rule permitting early return of subpoenas is to appraise the parties of the strengths and weaknesses of their case at an early stage. Hence, no narrow view as to the legitimate purposes of a subpoena ought to be taken: see Khanna v Lovell White Durrant [1995] 1 WLR 121 at 123.
(4)There is no requirement that to avoid the stigma of fishing, a party must already by in possession of some evidence before issuing a subpoena. Historically the concept of fishing was not concerned with the prior possession of evidence, but rather the prior pleading of issues for which the evidence sought would be relevant: see Bailey & Ors v Beagle Management Pty Ltd & Ors (2001) 105 FCR 136 at 143 – 144; Chapman v Luminis Pty Ltd [2001] FCA 1580 at [48]. In the interests of a fair trial, litigation should be conducted on the footing that all relevant documentary evidence is available: see Bailey (supra) at 143."
We agree, with respect, that the learned Master correctly identified and addressed the principles upon which a determination of whether or not the subpoena issued to CS should be allowed to stand. Further, and again with respect, we consider that the learned Master was correct in his conclusion that in the light of the evidence before him in the affidavit of Mr Connolly there was justification for the issue of this subpoena insofar as it required the production to the court of copies in the possession of CS of affidavits which had been filed in the Family Court proceedings.
However, as already explained, the appellants had objected to unlimited use and inspection of the affidavits produced in response to the subpoena and had submitted that only those parts of the affidavits, if any, which bore on the issues material to the present action, should be produced or be available for inspection by the parties who had issued the subpoena or by their solicitors. In doing so counsel for the appellants, at this hearing and before the learned Master, pointed out that much of the material in the affidavits filed in the Family Court proceedings could be expected to be confidential and that there was every reason for the court to scrutinise carefully and to limit, the access which an adversary sought to documents of a party, or relating to that party, which had been prepared for and used in Family Court proceedings – Hillston v Bar‑Mordecai [2002] NSWSC 973 per Bryson J.
In this case, however, the learned Master concluded that as a legitimate forensic purpose had been demonstrated to allow the subpoena to issue or to allow it to stand, it was also open to the court to order, it seems as a direct further consequence of that conclusion, that inspection of the affidavits should be allowed. In this regard, however, it is necessary to examine more closely the approach taken by Bryson J in Hillston v Bar‑Mordecai (supra) when considering what access should be permitted in proceedings in the Equity Division of the Supreme Court of New South Wales to documents produced in response to a letter of request issued by the Supreme Court Registrar on the application of one of the parties to the Registrar of the Family Court of Australia. Bryson J said:
"[8]Family Court files could readily become a treasure house on issues of credit for cross‑examiners if they have ready access to them, but I do not think they should be treated in that way; the confidentiality of material in them should be given a relatively high value in evaluation of the claim of the plaintiff in this case for inspection. I have looked through the two boxes of documents which were produced by the Registrar of the Family Court. I have not read every document, but I have looked sufficiently closely to understand the nature of each document. They include much material which was highly confidential when recorded and so remains, and much material which persons other than Mr Bar‑Mordecai, not parties to this case would reasonably regard as confidential material which ought to be protected. Mr Bar‑Mordecai himself has expressed concern for the protection of material confidential to himself and to others. There is much confidential material relating to the dissolution of the marriage, custody of and access to infants, maintenance, and the enforcement and variation of orders which I regard as having a strong claim for protection of confidentiality. With the limited exceptions to which I will refer this claim outweighs any discernable legitimate forensic purpose of the plaintiff and his advisors in having inspection of them.
[9]For the most part, the contentious litigation in the Family Court of Australia was heard and disposed of, after many applications and appearances, by or before early August 1983. For the most part the terms and details of the orders were resolved before the time in late August 1983 when Mr Bar‑Mordecai alleges that he entered into a de facto relationship with Mrs Hillston. With the exception of the decree of dissolution itself, my view is that I should not allow any of the material from that period to be examined."
After a further review of the materials Bryson J imposed restrictions on the extent of inspection and use of evidence produced from the Family Court which could be available by the parties to that subsequent litigation in a manner which protected the confidentiality of the Family Court material except in relation to matters which might be regarded as relevant to the then current proceedings. There were also limitations imposed on the persons who could inspect the documents and restrictions upon the communication of the contents of those documents to any other person or their use without the leave of the Judge in the equity proceedings. It is evident, therefore, that the procedure adopted in Hillston v Bar‑Mordecai (supra) was that, while it was open for the court to require the production of materials from the Family Court in response to coercive process, in that case the delivery of a letter of request to the Registrar of the Family Court comparable to the issue of a subpoena, there was a further stage which needed to be undertaken by the court in deciding what use could be made of the material produced and the extent to which it could be inspected, and by whom and on what conditions.
This approach is consistent with the three‑stage procedure described and set out in National Employers' Mutual General Insurance Association Ltd v Waind [1978] 1 NSWLR 372 at 348 per Moffitt P, Hutley and Glass JJA being:
"1.Production of the documents to the court by the witness;
2.the decision of the Judge on whether either or both parties may inspect the documents;
3.admission into evidence of a document produced."
In the present case it is only necessary to dwell on stage two of this process, although the procedure to be adopted at each of the other stages is well described in the authorities.
It will be for the trial Judge, or other judicial officer supervising the process, to decide the extent to which documents produced to the court under subpoena should be available for inspection by one or more of the parties, the timing of any inspection permitted and any special conditions or restrictions which may need to be imposed. Normally, inspection is allowed if it is shown or acknowledged that the documents produced have apparent relevance to the issues in the case. It is not necessary that the documents produced under the subpoena are themselves admissible for inspection to be permitted – see National Employers' Mutual General Insurance Association Ltd v Waind (supra) at 385. Still, the nature and extent of inspection to be permitted is for the court to decide and considerations of confidentiality may affect whether, or the extent to which, inspection may be permitted.
In this regard the confidential nature of the documents produced, or their lack of relevance to any of the issues arising in the pending proceedings will give rise to a need for caution by the court in permitting inspection even of a restricted kind. Where the court is invited to consider permitting confidential disclosure to legal advisers the observations of Wilcox J in Hilton v Wells (1985) 59 ALR 281 at 295 draw attention to the risks involved. In that case Wilcox J upheld a claim of privilege from production of affidavits used to seek the issue of warrants for the interception of telephone communications under Commonwealth legislation and, in doing so, refused to allow inspection of the privileged documents by the counsel or solicitors of the parties. His Honour said:
"Without reflecting in any way upon the integrity of any counsel or solicitor, difficulties are likely to arise where counsel appearing in, and advising their clients in respect of, protracted and complex proceedings acquire information which they are not free to use or to pass on to their clients. During the heat of battle an unwitting disclosure may occur. Frank and full advice becomes impossible. I am aware of cases in which, for reasons such as these, experienced counsel have declined to receive information which they are not free to share with their clients. It seems to me merely common sense to conclude that the fewer people who have access to confidential information the less is the risk of unauthorised disclosure."
It follows from these authorities that a decision that there is a legitimate forensic purpose to allow a subpoena to stand, or to require the production of the documents to the court does not of itself mean that there should be complete or partial inspection of the documents so produced by all the parties to the action. There is a second stage in the process which must be directly addressed, namely whether there should be unrestricted inspection of the documents produced, or whether inspection should be limited or conducted on special terms and conditions. What happened in Hillston v Bar‑Mordecai (supra) is an example of the performance of this second stage. In the present case, however, that does not appear to have been undertaken.
It is quite possible, indeed probable, that the copies of the affidavits produced on this subpoena relating to the proceedings in the Family Court will contain much material which is confidential and which has no bearing on any of the issues arising or likely to arise in the current litigation. There does not seem to be any sufficient reason to justify access by the first and second respondents, or by other parties, to this confidential material. Accordingly, it will be necessary for the court to consider whether all, or parts only, of the copy affidavits or some of them should be made available for inspection. That has not been done so far in the present case and in our view there has been an error in the proceedings before the learned Master arising from this omission.
Consequently, we concluded that this is a case where the criteria for the grant of leave to appeal from an interlocutory decision discussed by this Court in Wilson v Metaxas [1989] WAR 285 and State of Western Australia v Bond Corporation Holdings (1991) 5 WAR 40 have been shown to exist. The firstnamed appellant has a real interest in protecting the confidentiality of the evidence in documents relating to the Family Court proceedings and, if unrestricted inspection of those materials which had no relevance to any of the issues in the present litigation were to occur, that confidentiality may be irretrievably lost.
In the course of submissions on the hearing of this application, counsel for the first and second respondents, submitted that the decision of a Judge or other court officer upon whether either or both parties may inspect documents produced to the court on subpoena, in the course of the second of the three‑stage Waind procedure, could be performed by examining a general category of documents produced without the necessity for the court to examine each or all of the documents. This procedure was followed by Wheeler J at first instance and approved in Apache Northwest v Western Power (supra), and, incidentally, also seems to have been employed in a somewhat different manner by Bryson J in Hillston v Bar‑Mordecai (supra). Counsel submitted that we should rule on whether or not such a procedure would be adequate in this case. We must decline this invitation because none of the parties invited us to examine the documents produced and we have not done so. Nor do we think that any general principle can or should be stated in this regard. What scrutiny of the documents or classes of documents in any particular case sufficient to discharge the responsibility of the court in determining any objections to the grant of leave to inspect, in part or in whole, the documents produced will vary from case to case and may well depend upon the nature of the documents and the issues to which they are claimed to be material in the litigation for which production has been sought.
In the present case we consider that leave to appeal should be granted, that this appeal should be allowed in part, that pars 3 and 4 of the order of Master Sanderson of 29 May 2003 which granted unrestricted rights to the parties to inspect the subpoenaed documents should be varied, to exclude from the operation of the order which allows unrestricted access to documents produced under other subpoenas, so as to exclude any right of inspection of the copies of the affidavits produced under this subpoena deriving from the Family Court proceedings. We consider that the issue of whether or not there should be inspection of all or any parts of those affidavits, and if so the extent of the inspection permitted and the conditions under which it might be undertaken, should be remitted to the learned Master for further consideration in the light of these reasons and after receiving further submissions from the parties should they desire to make any.
It is for these reasons that we granted leave to appeal, allowed the appeal in part and made the other orders at the conclusion of this hearing on 10 March 2004.
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