Sullivan v Sclanders
[2000] SASC 273
•18 August 2000
SULLIVAN & SULLIVAN & GKR KARATE AUSTRALIA PTY LTD
v
SCLANDERS & GOLDWELL INTERNATIONAL PTY LTD
ACN 068 036 813
[2000] SASC 273Full Court: Prior, Williams and Gray JJ
1................ PRIOR J:....................... I agree with the orders proposed by Gray J for the reasons he has given.
2................ WILLIAMS J. In my view the statement of principle by Gummow J in Corrs Pavey Whiting & Byrne v Collector of Customs (1987) 74 ALR 428 at 450 expresses Australian law with respect to the defences which are available in a civil suit for breach of confidence.
3 Mr Sullivan’s personal notes which were stored in his briefcase were obviously of a nature for which he would be able to claim confidentiality in the ordinary course. In cross-examination Sclanders recognised that fact. There is no material before the Court which could justify the access to the documents by the plaintiffs upon any of the grounds identified by Gummow J. I agree with the conclusion reached by Gray J and with orders which he proposes. I will comment upon paragraph 7 of those orders.
4 In taking instructions for a fresh statement of claim it may be prudent for anyone who is aware of the contents of the confidential documents or who has been associated with the drafting of the original statement of claim to consider the possibility of embarrassment. Whether a change of solicitors is necessary may depend upon the precise scope of any intended further instructions - which must then be given and taken without any reliance upon the confidential material. The plaintiffs themselves and their advisers must understand the very considerable difficulties which they may face by reason of the knowledge which they have acquired. If constructed, Chinese walls may not have firm foundations.
5 As now relevant the order obtained at first instance was for the protection of the legal advisers of the plaintiff. That fact was acknowledged by counsel during argument upon the appeal. The plaintiffs have apparently taken advantage of that order to enable their advisers to proceed with their instructions whilst the defendants still retained a right of appeal. It is that fact (together with Sclanders earlier inspection of the purloined documents) which has created the problem to which I have referred.
6................ GRAY J............ The Issues on Appeal Robert Brian Sullivan (Sullivan) and Donna Avelyn Sullivan are the sole shareholders of GKR Karate Australia Pty Ltd (GKR). The Sullivans and GKR are the defendants and appellants. Adrian Francis Sclanders (Sclanders) and his wife are the sole shareholders of Goldwell International Pty Ltd (Goldwell). The Sclanders and Goldwell are the plaintiffs and respondents.
7 Confidential documents of Sullivan came into the possession of the plaintiffs. They sought an order that they be permitted to use the documents. The defendants countered by seeking orders that the documents be delivered up and restraining their use. The learned judge at first instance granted the defendants partial relief, but allowed the plaintiffs to make use of certain confidential documents for the purposes of these proceedings.
8 The defendants have appealed. In so far as necessary, leave to appeal has been granted.
9 Two broad issues arise. Should equity provide relief against the use of copies of confidential documents in the hands of a third party when they have been improperly obtained. Should equity restrain the use of information gleaned from the confidential documents.
Background Facts
10 Sullivan, through GKR, operated a karate business throughout Australia. Sclanders became involved in the business in May 1987. The business expanded overseas, where it was conducted through associated entities. Sullivan and Sclanders were both involved. Goldwell held a 30 percent share of the overseas business.
11 In December 1995, a business development agreement was entered into between the Sullivans, GKR Sclanders and Goldwell.
12 Rod Martin was employed by one of the associated entities in the United Kingdom. He and his wife resided in London. Mrs Martin was associated with the UK overseas entity, through a trust.
13 In or about October 1999, difficulties arose between Sullivan and Sclanders. Sclanders was removed as managing director of GKR. Shortly thereafter, he retired as a director of GKR and the other associated entities. He alleges there was a breach of the business development agreement and that he was accordingly, entitled to a lump sum payment.
Improper Conduct
14 In the latter months of 1999, Sclanders was in regular contact with Martin. He travelled to the United Kingdom to elicit the support of Martin and others, for the development of a rival karate business.
15 In February 2000, Sullivan was a guest at the Martins' London home. He left an unlocked suitcase containing a number of original documents in his room. During the morning of 21 February 2000 Sullivan and Martin left the house. This was not by chance. In their absence, Mrs Martin went through Sullivan's suitcase, removed the documents and copied them. She then returned the original documents in such a way as to ensure that Sullivan would not notice what she had done.
16 Mrs Martin then telephoned Sclanders. She told him that she had documents of Sullivan which would be of interest to him. She explained how she came by them. She said that she had copied them and would send them to him by facsimile. She did so immediately.
17 By affidavit Sclanders deposed:
"I have come into possession of a large bundle of documents which reveal a pattern of behaviour on the part of Mr Sullivan which seems to have commenced as early as about November 1998 to deprive me and/or Goldwell of my entitlements under the B.D.A. They were sent to me by an acquaintance of mine and Mr Sullivan in London without the knowledge or consent of Mr and Mrs Sullivan. The documents had been left by Mr Sullivan at this person's house and the person read them, or some of them (and) faxed them to me. I received them on 23 and 24 February 2000. Now produced and shown to me and marked with the letter "C" is a sealed envelope which contains the documents."
18 Sclanders was cross-examined before the learned judge at first instance. The following exchange occurred:
"Q.... Do you see [referring to his affidavit] you say there that they were sent to you by someone we now know to be Mrs Martin without the knowledge or consent of Mr and Mrs Sullivan.
A.Yes.
Q...... How do you know that.
A.I assumed she didn't know. She told me she had some documents.
Q...... You assumed it was without the knowledge or consent of Mr Sullivan.
A.I think I could say fairly confidently.
Q...... Why did you assume that.
A.It would just seem reasonable that that would be the case."
...
"Q.Did she tell you the circumstances as to how she obtained them.
A...... Yes.
Q.What were those circumstances.
A...... She said she went to his room to do something in the course of her duties, make the bed or something, I don't recall exactly why, but she went to his room, she saw the documents, she read them, or part of them, realised that the information I would be interested in and so called me, said she had them and faxed them to me.
Q.Did she tell you that she had replaced them so that Mr Sullivan would not be aware that they had been interfered with.
A...... No.
Q.Did you assume that is what had occurred.
A...... Yes, I assumed that."
...
"Q.... You understood the documents to be his documents.
A.Yes.
Q...... That they were his private, confidential documents.
A.As far as I knew, yes."
19 The learned judge found that although Sclanders did not expressly request that Mrs Martin forward the documents, he did not attempt to discourage her from doing so.
20 Mrs Martin abused the trust and confidence placed in her by Sullivan, her house-guest. Martin had arranged a training session with Sullivan so that Mrs Martin could search through his personal belongings without being disturbed.
21 In an affidavit tendered in the proceedings in the High Court in England Sullivan deposed as follows:
"Subsequently, in a conversation with Mr Martin, he admitted to me that he and his wife had planned to obtain copies of documents in my bags and photocopy and fax them to Mr Sclanders while I was out at a training session with Mr Martin."
22 Sclanders was on notice that Mrs Martin had engaged in underhand conduct and that he had knowingly received the proceeds of that conduct.
The Taking of Further Copies
23 On receipt of the faxed documents from Mrs Martin, Sclanders discussed their contents with his brother, an employee in the business. He was possibly provided with copies. Later, a copy of the documents arrived for Sclanders from London. Later still, Sclanders travelled to London and was shown a further copy of the documents by Mrs Martin. He copied them, returned Mrs Martin's copy, and brought the additional set to Australia. No explanation has been offered as to why Sclanders received the further copy by post or why he made a further copy whilst in the United Kingdom and then brought them to Australia.
24 At the present time, a copy of the documents is in court. A copy has been retained by Sclanders' solicitor, a copy has been retained by Sclanders and at least one copy remains with Mrs Martin. It is not known whether Mrs Martin has further disseminated the documents. It is possible that Sclanders' brother has a copy of at least some of the documents.
The Documents
25 A number of the confidential documents are also the subject of a claim for legal professional privilege. This appeal relates only to those documents over which no such claim is made.
26 It is accepted by the plaintiffs that all documents were confidential and the property of Sullivan. The plaintiffs further accept that the conduct of Mrs Martin was in breach of contractual confidentiality. The learned judge considered that although Mrs Martin was not a party to the relevant contract, a Region Management Agreement, she was bound by it, and in particular, its terms as to confidentiality.
27 Sclanders sought advice from his solicitors. Alternative solicitors were then engaged for the purposes of these proceedings. This was apparently to quarantine his former solicitors from knowledge of the contents of the documents.
The Proceedings
28 These events led to the issue of proceedings. As earlier observed, the plaintiffs sought an order that they be permitted to show the confidential documents to their solicitors and take advice from them. The defendants sought delivery up of the confidential documents including copies and extracts and a restraining order to prevent use being made of the documents or their contents.
29 The learned Judge heard both applications as a matter of urgency, and delivered reasons on 2 May 2000. His Honour ordered that all copies of the documents be delivered to the court. He restrained the plaintiffs from making any use of the privileged documents. He allowed the plaintiffs access to the non-privileged documents for the limited purpose of taking advice from their solicitors and for use in these proceedings. His Honour restrained the plaintiffs from soliciting any further copies and in the event that they should acquire any, they were to be delivered into court. He granted the plaintiffs liberty to apply to the trial judge to use the documents in court.
The Approach at First Instance
30 The plaintiffs submitted to the learned judge that a perusal of the documents disclosed iniquity on the part of the defendants such that equitable relief should not be granted. The plaintiffs also contended that the defendants should be denied relief, as the defence of unclean hands had been made out. The learned Judge found it unnecessary to consider or rule on these issues. He concluded that no relief should be granted for other reasons. He said:
"The defendants seek to invoke an equitable remedy which involves the exercise of a discretion. Various factors must be weighed in considering the exercise of that discretion, including the right of the defendants to maintain confidentiality in their private documents. The circumstances in which the documents were obtained are relevant. As mentioned, there also exists the public interest that the truth should be ascertained. In that context, I have had the advantage of reading the documents. In my opinion the documents are highly relevant to the plaintiffs' possible causes of action. For the limited purposes of the applications I am now considering, it is unnecessary for me to draw any conclusion as to suggestions of fraud or other misconduct having occurred or having been planned by the defendants. That is an issue which I will address later in connection with the claims for legal professional privilege.
I am satisfied that the interests of justice favour permitting the plaintiffs and their legal advisers to have access to the documents for the purpose of the plaintiffs obtaining advice concerning their rights and for subsequent use in connection with any proceedings between the parties in connection with the karate business operated by GKR. As presently advised, I would allow the documents to be used in evidence, but issues as to the exclusion of the documents from use at trial and the admissibility of the documents should be determined finally by the trial judge. In other words, the defendants are at liberty in due course to apply for an injunction from the trial judge preventing the use of the documents in the trial. My view about the matter, formed on the basis of the material before me, should have little impact upon the view to be formed by the trial judge who will be in possession of all pleadings, discovered documents and any other material that the parties have chosen to put before the trial judge. I am put in a position of having to make a decision based on affidavit material, allegations and counter-allegations and the contents of the documents themselves. My position is far removed from the position in which the trial judge will ultimately be placed."
31 I disagree with this process of reasoning. A person who has confidential information belonging to another may be restrained from using it without the owner's consent, by injunction. Equity acts in regard to the unconscionable circumstances in which the confidential documents were obtained and disseminated. Equity may grant relief from the consequences of reprehensible conduct. To be effective, this relief may bind third parties who may have come into possession of the information and can protect the defendants from oral or written dissemination or other use.
32 The granting of equitable relief as sought in this matter does not preclude the truth from being ascertained. Discovery and production, either pre-action or during an action, will ensure that the relevant documentary material is available, according to the ordinary rules of procedure. If the documents are relevant, then they will be discovered and produced, subject to claims of privilege.
33 The learned judge considered that the public interest in ascertaining the truth outweighed the private right to confidentiality. He did not grant equitable relief to the defendants.
34 A public interest defence has been recognised in England. In Lion Laboratories Ltd v Evans[1] Griffiths LJ said:
"The first question to be determined is whether there exists a defence of public interest to actions for breach of confidentiality and copyright, and if so, whether it is limited to situations in which there has been serious wrongdoing by the plaintiffs - the so-called 'iniquity' rule.
I am quite satisfied that the defence of public interest is now well established in actions for breach of confidence and, although there is less authority on the point, that it also extends to breach of copyright: see by way of example Fraser v Evans [1969] 1 QB 349; Hubbard v Vosper [1972] 2 QB 84; Woodward v Hutchins [1977] 1 WLR 760 and British Steel Corporation v Granada Television Ltd [1981] AC 1096.
I can see no sensible reason why this defence should be limited to cases in which there has been wrongdoing on the part of the plaintiffs. I believe that the so-called iniquity rule evolved because in most cases where the facts justified a publication in breach of confidence, it was because the plaintiff had behaved so disgracefully or criminally that it was judged in the public interest that his behaviour should be exposed. No doubt it is in such circumstances that the defence will usually arise, but it is not difficult to think of instances where, although there has been no wrongdoing on the part of the plaintiff, it may be vital in the public interest to publish a part of his confidential information. Stephenson LJ has given such an example in the course of his judgment."
[1] [1985] QB 526 at 550
35 This defence as recognised by English law relates to the truth being disclosed where disgraceful or criminal conduct is involved or disclosure is vital in the public interest. In the absence of such matters, confidentiality will be protected.
36 The defence of public interest at general law has been rejected in Australia by Gummow J in Corrs Pavey Whiting & Byrne v Collector of Customs (Vic)[2]. This case analysed the origins and development of the iniquity rule.
[2] (1987) 74 ALR 428; see also Smith Kline & French Laboratories (Aust) Ltd v Department of Community Service and Health (1988-90) 22 FCR 73 per Gummow J at 110.
37 The iniquity rule derives from Gartside v Outram. Wood V-C spoke of the exception to the general obligation of confidence in these terms:
"that there is no confidence as to the disclosure of iniquity. You cannot make me the confidant of a crime or a fraud, and be entitled to close up my lips upon any secret which you have the audacity to disclose to me relating to any fraudulent intention on your part: such a confidence cannot exist."[3]
[3] (1857) 26 LJ Ch 113 at 114.
38 His Honour recognised that the public interest still has a part to play in determining whether the information in question had the necessary quality of confidentiality and in considering the defence of unclean hands. Gummow J said at (450):
"That principle, [the iniquity rule] in my view, is no wider than one that information will lack the necessary attribute of confidence if the subject matter is the existence or real likelihood of the existence of an iniquity in the sense of a crime, civil wrong or serious misdeed of public importance, and the confidence is relied upon to prevent disclosure to a third party with a real and direct interest in redressing such crime wrong or misdeed.
...
It is no great step to say that information as to crimes, wrongs and misdeeds, in the sense I have described, lacks what Lord Greene MR called 'the necessary quality of confidence' .
...
There is authority which indicates that this defence [unclean hands] is not so confined and it extends to cases where the plaintiff's misconduct has operated to the prejudice of third parties, especially where some general public interest is involved."
39 In The Commonwealth of Australia v John Fairfax & Sons Ltd[4] Mason J considered that the iniquity rule:
"... makes legitimate the publication of confidential information or material in which copyright subsists so as to protect the community from destruction, damage or harm."
[4] (1980-1981) 147 CLR 39 at 57
40 Later English decisions have developed an approach of balancing the public interests. This has led to the broader proposition that disclosure should not be restrained where the public interest in publication outweighs the public interest in confidentiality. The decision in Lion Laboratories is treated as the leading case and subsequent English authority has confirmed the principles there formulated.[5]
[5] X v Y (1988) 2 All ER 648; W v Edgell (1990) 1 All ER 835
41 In Australia, the preferred approach has been the subject of differing judicial views. Gummow J in Corrs Pavey preferred the iniquity rule. However Attorney-General (UK) v Heinemann Publishers Australia Pty Ltd[6] Kirby P adopted the balancing approach. His Honour found that the iniquity rule, as with the doctrine of unclean hands, was unnecessarily restrictive as there were matters which, whilst not iniquities, justified disclosure. He said:
"The respondents also suggested that a defence was available to them on the basis that there is 'no equity in inequity'. I am unimpressed. First, I agree with what Wood VC said long ago in Gartside v Outram, supra. Like him, I do not look upon the word 'inequity' as expressing a principle. It is simply an instance of the wider category of the public interest in disclosure which may sometimes, even if rarely, outweigh the public interest in confidentiality and secrecy: cf Gibbs CJ in A v Hayden (1984) 156 CLR 532 at 545 et seq. The special consideration to be taken into account where suppression is sought by a governmental plaintiff and where the matters relate to issues of general public concern was stressed in Fairfax. In any case, as Powell J observed, the suggested iniquities, crimes and other wrongdoings of Wright himself upon which he can scarcely rely. Accordingly, I prefer to deal with this publication by reference to a general principle of 'public interest' rather than by reliance upon a narrower defence, developed for special cases, to justify the publication of particular iniquities."
[6] (1987) 75 ALR 353 at 434
42 It is to be observed that in the present matter, the same issues of public interest are said to arise whether the iniquity rule is applied or whether the relevant public interests are balanced.
43 An important distinction needs to be drawn between matters that ought to be disclosed in the public interest, and those which are merely of public interest in the sense that many people would like to know them. English and Australian authority express a clear preference for the former. I refer in particular to Castrol Australia Pty Ltd v Emtech Associates Pty Ltd[7] and Bacich v Australian Broadcasting Corporation[8]. I also refer to A v Hayden[9], a case dealing with contractual confidentiality, and in particular to the remarks of Gibbs CJ at (545-6), Mason J at (559); Wilson and Dawson JJ at (572-573), Brennan J at (586) and Deane J at (595-596).
[7] (1980-81) 33 ALR 31
[8] (1992-1993) 29 NSW LR 1 at 16
[9] (1984-1985) 156 CLR 532
44 I later conclude upon review of the relevant material, that I can discern no case of iniquity. As a result, whether the iniquity rule or the balancing of public interest approach is applied the result is the same.
45 However, as a matter of strict legal principle I consider the application of the iniquity rule to be the correct approach. Equitable principles are best developed by reference to what conscionable behaviour demands of the defendant rather than by balancing those demands with matters of public interest. This approach avoids the ad hoc judicial idiosyncrasy associated with deciding whether, on the facts overall, it is better to respect or override the obligation of confidence.[10]
[10] Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 74 ALR 428
46 In my view, the learned judge erred in failing to consider the issues of iniquity and unclean hands. In the absence of findings against the defendants on these matters, they were entitled to relief. Public interest has a part to play in this process. However His Honour did not address these issues. Even if the balancing of public interests is the correct approach, it was necessary for the learned judge to have considered whether any disgraceful or criminal behaviour was disclosed or whether some matter vital to the public interest required that the material be published. The learned judge did not consider any of these issues.
47 Having reached this conclusion, it is necessary to consider the matter afresh.
The Role of Equity
48 It is well accepted that an action in breach of confidence can protect commercially valuable information. This cause of action has also been utilised to protect the unauthorised publication of personal confidences.[11]
[11] His Royal Highness Prince Albert v Strange 41 ER Ch 1171
49 Where the exclusive jurisdiction of equity is invoked, an injunction may be awarded to a party with a sufficient equity even if it may not be classified as proprietary. Deane J in Moorgate Tobacco Co Ltd v Philip Morris Ltd[12] said:
"Moorgate relied in two distinct ways on the alleged confidentiality of certain of the information which Loew's communicated to Philip Morris. First, it was said that that allegedly confidential information had been obtained by Philip Morris as a result of its having undertaken the fiduciary duty of acting for Loew's in relation to the proposed introduction of the new cigarette in the Australian market. If Philip Morris had acquired confidential information by use or by reason of such a fiduciary position or of opportunity or knowledge resulting therefrom, it would, on well established principles, be precluded from using the information to its own advantage or to the detriment of Loew's. As has been said however, Moorgate has failed to establish that Philip Morris undertook any such fiduciary duty. Alternatively, it was submitted that the effect of the combination of the confidential nature of the relevant information and the circumstances in which it was communicated was that Philip Morris was under a duty, enforceable in personam by equitable remedies, not to disclose or make use of the confidential information other than for the purposes for which it was communicated to it: see, eg Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1947) 65 RPC 203 at p 215; Interfirm Comparison (Australia) Pty Ltd v Law Society of New South Wales [1975] 2 NSWLR 104, at p 117ff; Talbot v General Television Corporation Pty Ltd [1980] VR 224 at p 230."
[12] (1984-1985) 156 CLR 414
50 Many decisions have addressed the deliberate abuse of confidential information. It has been observed that in such cases, the application of the equitable principles is straightforward and the courts have not hesitated to grant generous restitutory relief, including injunctive relief[13]. Where confidential information has been obtained by reprehensible means, the case for equitable intervention is at least as compelling.[14]
[13] Attorney-General (UK) v Heinemann Publishers Australia Pty Ltd (1987) 75 ALR 353 per McHugh JA at 453-4; G Jones - 86 Law Quarterly Rev 463 at 474 ff
[14] G Jones - 86 Law Quarterly Rev 463 at 482
51 Equity will protect confidential information obtained in reprehensible circumstances.[15] In ITC Film Distributorsv Video Exchange Ltd[16], Warner J considered a situation in which a defendant obtained files belonging to the plaintiffs' solicitors by trick. The following proposition was accepted:
"Where A has improperly obtained possession of a document belonging to B, the court will, at the suit of B, order A to return the document to B and to deliver up any copies of it that A has made, and will restrain A from making any use of any such copies or of the information contained in the document."
[15] TheCommonwealth of Australia v John Fairfax & Sons Ltd (1980-1981) 147 CLR 39
[16] (1982) 2 All ER 241
52 To be protected by equity, information must have the necessary quality of confidentiality. There can be no confidentiality in iniquity. Equity is also subject to the defence of unclean hands.
53 Different issues arise when considering confidentiality under the rubric of privilege. When determining a claim of legal professional privilege the court embarks on the task of balancing competing public interests. However, confidentiality as a basis for privilege against disclosure sought in proceedings brought to vindicate some other right is to be distinguished from confidential information as a source of the plaintiff's rights which are the subject of a suit.[17]
[17] Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 74 ALR 428 per Gummow J at 449
Third Parties subject to Equitable Relief
54 An injunction can be granted to restrain the publication of confidential information, not only by the person who is a party to the confidence, or who has obtained it by reprehensible means, but by other persons into whose possession that information has been received improperly.
55 In Lord Áshburton v Pape[18] Swinfen Eady LJ said at (475)
"The principle upon which the court of Chancery has acted for many years has been to restrain the publication of confidential information improperly or surreptitiously obtained or of information imparted in confidence which ought not to be divulged. Injunctions have been granted to give effectual relief, that is not only to restrain the disclosure of confidential information, but to prevent copies being made of any record of that information, and, if copies have already been made, to restrain them from being further copied, and to restrain persons into whose possession that confidential information has come from themselves in turn divulging or propagating it."
[18] [1913] 2 Ch 469
56 In TheCommonwealth of Australia v John Fairfax & Sons Ltd[19] Mason J said at (50):
"The plaintiff says that this case falls neatly within a fundamental principle of Equity. The principle is that the court will 'restrain the publication of confidential information improperly or surreptitiously obtained or of information imparted in confidence which ought not to be divulged' (Lord Ashburton v Pape, per Swinfen Eady LJ). In conformity with this principle, employees who had access to confidential information in the possession of their employers have been restrained from divulging information to third parties in breach of duty and, if they have already divulged the information, the third parties themselves have been restrained from making disclosure or making use of the information (Tipping v Clarke; Lamb v Evans)."
[19] (1980-1981) 147 CLR 39
57 Equity responds to unconscionable conduct. The fundamental notion is that a relationship of trust and confidence has been breached or that the information has been obtained by reprehensible means. The dictum cited from Lord Ashburton v Pape also emphasises that information which is not obtained consensually, cannot be freely used. Equity will intervene by reason of the circumstances in which the defendant obtained the information, rather than by any intrinsic value or importance in the information itself or by any apprehended damage which might result from its misuse.
58 In this matter, the original documents taken and copied were returned to the suitcase. Copies and then further copies were taken. Equitable relief can be given in regard to the further copies as the dissemination of each copy involves a breach of confidence. Additionally, insofar as copies have been read and their contents orally disseminated, equity can restrain the use of that information and its dissemination.
Contractual Confidence
59 Where necessary equity can act to protect contractual confidences.
60 In the area of confidences protected by contract, the Australian approach has been to consider matters of public interest. The courts have indicated that the public interest in disclosure must be compelling. As Mason J said in A v Hayden[20] at (559):
"The refusal of the courts to enforce contracts on grounds of public policy is a striking illustration of the subordination of private right to public interest. The problem is one of formulating with any degree of precision the criteria or the circumstances which will justify a court in refusing to enforce a contract on the ground that there is a countervailing public interest amounting to public policy. The difficulties in ascertaining the existence and strength of an identifiable public interest to which the courts should give effect by refusing to enforce a contract are so formidable as to require that they 'should use extreme reserve in holding such a contract to be void as against public policy, and only do so when the contract is incontestably and on any view inimical to the public interest', to use the words of Asquith L J in Monkland v Jack Barclay Ltd [1951] 2 KB 252, at p 265. Here, however, the head of public policy invoked is well recognized and it relates to the enforcement of the criminal law - a field in which the courts have a special interest and experience."
[20] (1984 -1985) 156 CLR 532
61 When the public interest requires disclosure, relief is granted either by declaring the contract void or certain terms unenforceable. This approach has some similarities to the enquiry equity makes into whether the material is sufficiently confidential.
62 Quite apart from the documents being Sullivan's private property and subject to confidence, it was also accepted that Mrs Martin had an obligation in contract to respect the confidence of the material. It was common ground that the contract protecting confidence had been deliberately breached.
63 Sclanders acknowledged that he was aware that Sullivan's private and confidential documents had been taken in surreptitious circumstances. He was more than an innocent bystander. Although he was not involved in the taking of the documents, he was aware at the time they were being faxed to him, that they had been taken in reprehensible circumstances. Sclanders stands in no better position than Mrs Martin.
Final Relief
64 It was agreed that the matter was before the court for final relief. Both counsel submitted that this court should review the documents, (excluding those that were the subject of the privilege claim) to determine whether they disclose any case of iniquity.
65 As has been observed, the plaintiffs conceded that the documents were of a private and confidential nature and that their confidentiality was protected by contract. It was accepted that Mrs Martin had obtained the documents in reprehensible circumstances and that she intended to make unauthorised use of the documents to the detriment of the defendants. However, it was submitted that iniquity defeated confidentiality. It was said iniquity was such that there was no confidence to be respected either in contract or in equity. The plaintiffs submitted further, relying on the same iniquity, that equitable relief was precluded by the doctrine of unclean hands.
66 In my view, a general defence of public interest to a claim of breach of confidence does not form part of Australian law. Iniquity is relevant however, in considering whether equity will treat the documents as having the necessary quality of confidence and whether the equitable defence of unclean hands is made out.
67 I have reviewed the documents made available to this court and closely studied the particular passages identified by counsel for the plaintiffs. I conclude that no case of iniquity has been made out. In arriving at my decision I have considered the allegations of fraud, abuse of process and breach of trust. My reasons are necessarily circumscribed so that confidentiality of the material is maintained.
68 That is not to say that the material, or much of it, may not be discoverable in due course in regard to the causes of action identified by the plaintiffs. That is a different issue. The truth will be ascertained by the process of discovery and production. The admissibility of relevant material will be addressed at trial.
69 If a general defence of public interest does exist, it is my view that the public interest does not call for disclosure in these circumstances. My review of the material does not indicate any matter of iniquity. I do not discern any evidence of disgraceful or criminal behaviour. There is no matter vital to the public interest. The public interest defence does not limit the public interest to the defendants being guilty of iniquitous conduct. It will be sufficient if the information related to disgraceful or criminal conduct by a third party. My review of the documents does not disclose such matters.
70 For these reasons, the admitted contractual confidentiality should be protected and equity should act to assist in that regard.
71 It has been suggested that, as the documents are likely to be discoverable in any event, nothing is achieved by granting relief. I do not agree. The plaintiffs should not be advantaged by what has occurred. The plaintiffs offered, in lieu of a stay, to amend the statement of claim if the appeal were to succeed. However this would lead to considerable debate as to what part of the statement of claim reflected the documents or their contents. A more effective approach to minimise any unfair advantage is to strike out the entire Statement of Claim. The plaintiffs should be at liberty to deliver a fresh Statement of Claim without either directly or indirectly making use of the confidential documents or their contents. In my view, if these steps are not taken equity will not be done.
72 I propose the following orders:
(1) Appeal allowed.
(2)... The plaintiffs file an affidavit deposing
(a) to the number of copies taken,
(b) who has custody of each copy
(c) where each copy is held
(d) whether any further copies have been made by any persons.
(3)... The disclosure in order (2) is to include any secondary or other copy of the documents.
(4)... All copies of the confidential documents held by the plaintiffs, their servants or agents be brought into court, sealed, preserved and not opened without an order of a judge of this court.
(5)That the Statement of Claim be struck out, sealed, preserved and not opened without an order of a judge of this court.
(6)... That the plaintiff be at liberty to file a fresh Statement of Claim making no use either directly or indirectly of the confidential documents or their contents.
(7)... That the plaintiffs be restrained from disseminating or making use of the contents of the confidential documents.
(8)... The plaintiffs pay the defendants costs of the appeal and of the proceedings at first instance.
(9) Liberty to speak to the Minutes of Order.
LIST OF CITATIONS AS THEY APPEAR
LISTED IN THE JUDGMENT1 [1985] QB 526 at 550
2(1987) 74 ALR 428; see also Smith Kline & French Laboratories (Aust) Ltd v Department of Community Service and Health (1988-90) 22 FCR 73 per Gummow J at 110.
3 (1857) 26 LJ Ch 113 at 114.
4 (1980-1981) 147 CLR 39 at 57
5 X v Y (1988) 2 All ER 648; W v Edgell (1990) 1 All ER 835
6 (1980-81) 33 ALR 31
7 (1992-1993) 29 NSW LR 1 at 16
8 (1984-1985) 156 CLR 532
9 (1987) 75 ALR 353 at 434
10Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 74 ALR 428
11 His Royal Highness Prince Albert v Strange 41 ER Ch 1171
12 (1984-1985) 156 CLR 414
13Attorney-General (UK) v Heinemann Publishers Australia Pty Ltd (1987) 75 ALR 353 per McHugh JA at 453-4; G Jones - 86 Law Quarterly Rev 463 at 474 ff
14 G Jones - 86 Law Quarterly Rev 463 at 482
15TheCommonwealth of Australia v John Fairfax & Sons Ltd (1980-1981) 147 CLR 39
16 (1982) 2 All ER 241
17Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 74 ALR 428 per Gummow J at 449
18 (1984 -1985) 156 CLR 532
19 [1913] 2 Ch 469
20 (1980-1981) 147 CLR 39
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