Temwood Holdings Pty Ltd v Oliver
[1999] WASC 212
TEMWOOD HOLDINGS PTY LTD -v- OLIVER & ORS [1999] WASC 212
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [1999] WASC 212 | |
| Case No: | CIV:2008/1997 | 6 OCTOBER 1999 | |
| Coram: | STEYTLER J | 3/11/99 | |
| 22 | Judgment Part: | 1 of 1 | |
| Result: | Application failed | ||
| PDF Version |
| Parties: | TEMWOOD HOLDINGS PTY LTD OSCAR NEIL BLACKBURNE OLIVER ASEAN AUSTRALIAN ASSETS PTY LTD SLY AND WEIGALL (A FIRM) |
Catchwords: | Practice and procedure Contempt Whether discovered documents misused for a collateral or ulterior purpose Whether Court should exercise its discretion to punish contempt Alleged contempt not sufficiently serious to warrant Court's intervention |
Legislation: | Rules of the Supreme Court, O 26A r 4, O 26 r 6 |
Case References: | Allstate Life Insurance Co Ltd v ANZ Banking Group Ltd (1995) 57 FCR 360 Alterskye v Scott [1948] 1 All ER 469 Ampolex Ltd v Perpetual Trustee Company (Canberra) Ltd (1995) 18 ACSR 218 Crest Homes Plc v Marks [1987] 1 AC 829 Davis v Baillie [1946] VLR 486 Distillers Co (Biochemicals) Ltd v Times Newspapers Ltd [1975] 1 QB 613 Duke Group Limited (In Liq) v Pilmer (1993) 60 SASR 29 Eckert v National Australia Bank Ltd, unreported; SCt of SA (Doyle CJ); 17 April 1997 Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10 Halcon International Inc v Shell Transport & Trading Co [1979] RPC 97 Hamersley Iron Pty Ltd v Lovell (1998) 19 WAR 316 Harman v Home Office [1983] 1 AC 280 Holpitt Pty Ltd v Varimu Pty Ltd (1991) 29 FCR 576 John Fairfax & Sons Pty Ltd v McRae (1955) 93 CLR 351 Mann v Medical Defence Union Ltd, unreported; Federal Court (Olney J); 18 July 1996 Mann v Medical Defence Union Ltd, unreported; Federal Court (Ryan J); 7 February 1997 Miller v Scorey [1996] 1 WLR 1122 Prudential Assurance Co Ltd v Fountain Page Ltd [1991] 1 WLR 756 R v MacDonald [1994] 1 VR 414 Re Perkins; Mesto v Galpin [1998] VICSC 41 Riddick v Thames Board Mills Ltd [1977] QB 881 Sentry Corporation v Peat Marwick Mitchell & Co (1990) 95 ALR 11 Servcorp (Australia) Pty Ltd v Abgarus Pty Ltd (1995) 38 NSWLR 281 Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217 Sweetman v Australian Thoroughbred Finance Pty Ltd, unreported; Federal Court; 23 July 1992 Sybron Corporation v Barclays Bank Plc [1985] Ch 299 Tate Access Floors Inc v Boswell [1991] Ch 512 Viner v Australian Building Construction Employees and Builders Labourers Federation (No 1) (1981) 56 FLR 5 Wigan v Edwards (1973) 1 ALR 497 Wilden Pump & Engineering Co v Fusfeld [1985] FSR 581 Bailey v Australian Broadcasting Corporation [1995] 1 Qd R 476 Cameron v Cole (1944) 68 CLR 571 Emanuele v Australian Securities Commission (1997) 188 CLR 114 Grocon Ltd v Alucraft Pty Ltd (In Liq) (1992) 10 ACLC 1127 Hamilton v Oades (1989) 166 CLR 486 Posner v Collector for Interstate Destitute Persons (Vic) (1946) 74 CLR 461 Spedley Securities Ltd (In Liq) v Bank of New Zealand (1991) 26 NSWLR 711 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
Consolidated with CIV 2173 of 1997 and CIV 2244 of 1997 BETWEEN : TEMWOOD HOLDINGS PTY LTD
- Plaintiff
AND
OSCAR NEIL BLACKBURNE OLIVER
First Defendant
ASEAN AUSTRALIAN ASSETS PTY LTD
Second Defendant
SLY AND WEIGALL (A FIRM)
Third Defendant
(BY ORIGINAL ACTION)
ASEAN AUSTRALIAN ASSETS PTY LTD
Plaintiff
AND
TEMWOOD HOLDINGS PTY LTD
Defendant
(BY COUNTERCLAIM)
(Page 2)
Catchwords:
Practice and procedure - Contempt - Whether discovered documents misused for a collateral or ulterior purpose - Whether Court should exercise its discretion to punish contempt - Alleged contempt not sufficiently serious to warrant Court's intervention
Legislation:
Rules of the Supreme Court, O 26A r 4, O 26 r 6
Result:
Application failed
Representation:
Original Action
Counsel:
Plaintiff : Mr J C Giles
First Defendant : Mr N W McKerracher QC & Mr C E Chenu
Second Defendant : Mr N W McKerracher QC & Mr C E Chenu
Third Defendant : No appearance
Solicitors:
Plaintiff : Solomon Brothers
First Defendant : Durack & Zilko
Second Defendant : Durack & Zilko
Third Defendant : No appearance
(Page 3)
Counterclaim
Counsel:
Plaintiff : Mr N W McKerracher QC & Mr C E Chenu
Defendant : Mr J C Giles
Solicitors:
Plaintiff : Durack & Zilko
Defendant : Solomon Brothers
Case(s) referred to in judgment(s):
Allstate Life Insurance Co Ltd v ANZ Banking Group Ltd (1995) 57 FCR 360
Alterskye v Scott [1948] 1 All ER 469
Ampolex Ltd v Perpetual Trustee Company (Canberra) Ltd (1995) 18 ACSR 218
Crest Homes Plc v Marks [1987] 1 AC 829
Davis v Baillie [1946] VLR 486
Distillers Co (Biochemicals) Ltd v Times Newspapers Ltd [1975] 1 QB 613
Duke Group Limited (In Liq) v Pilmer (1993) 60 SASR 29
Eckert v National Australia Bank Ltd, unreported; SCt of SA (Doyle CJ); 17 April 1997
Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10
Halcon International Inc v Shell Transport & Trading Co [1979] RPC 97
Hamersley Iron Pty Ltd v Lovell (1998) 19 WAR 316
Harman v Home Office [1983] 1 AC 280
Holpitt Pty Ltd v Varimu Pty Ltd (1991) 29 FCR 576
John Fairfax & Sons Pty Ltd v McRae (1955) 93 CLR 351
Mann v Medical Defence Union Ltd, unreported; Federal Court (Olney J); 18 July 1996
Mann v Medical Defence Union Ltd, unreported; Federal Court (Ryan J); 7 February 1997
Miller v Scorey [1996] 1 WLR 1122
Prudential Assurance Co Ltd v Fountain Page Ltd [1991] 1 WLR 756
R v MacDonald [1994] 1 VR 414
Re Perkins; Mesto v Galpin [1998] VICSC 41
Riddick v Thames Board Mills Ltd [1977] QB 881
Sentry Corporation v Peat Marwick Mitchell & Co (1990) 95 ALR 11
Servcorp (Australia) Pty Ltd v Abgarus Pty Ltd (1995) 38 NSWLR 281
(Page 4)
Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217
Sweetman v Australian Thoroughbred Finance Pty Ltd, unreported; Federal Court; 23 July 1992
Sybron Corporation v Barclays Bank Plc [1985] Ch 299
Tate Access Floors Inc v Boswell [1991] Ch 512
Viner v Australian Building Construction Employees and Builders Labourers Federation (No 1) (1981) 56 FLR 5
Wigan v Edwards (1973) 1 ALR 497
Wilden Pump & Engineering Co v Fusfeld [1985] FSR 581
Case(s) also cited:
Bailey v Australian Broadcasting Corporation [1995] 1 Qd R 476
Cameron v Cole (1944) 68 CLR 571
Emanuele v Australian Securities Commission (1997) 188 CLR 114
Grocon Ltd v Alucraft Pty Ltd (In Liq) (1992) 10 ACLC 1127
Hamilton v Oades (1989) 166 CLR 486
Posner v Collector for Interstate Destitute Persons (Vic) (1946) 74 CLR 461
Spedley Securities Ltd (In Liq) v Bank of New Zealand (1991) 26 NSWLR 711
(Page 5)
1 STEYTLER J: This is an application, brought by the plaintiff, for orders that each of the first and second defendants be fined for contempt of this Court.
2 The parties are involved in bitterly contested litigation. Three separate sets of proceedings have been instituted in this Court and these have been consolidated into one action. That action encompasses a number of claims brought by the plaintiff against the first and second defendants as well as other claims, not presently relevant, against the third defendant. It also involves a counterclaim by the second defendant against the plaintiff which arises as a consequence of the consolidation, together with the other actions to which I have referred, of a District Court action which has been instituted by the second defendant against the plaintiff.
3 Many of the claims brought by the plaintiff against the first and second defendants in the consolidated proceedings arise out of the making of an agreement, on 18 September 1991, whereby the plaintiff appointed the second defendant as its consultant with respect to the development of land at Singleton Beach in Western Australia. The making of that agreement, which was said to have been disadvantageous to the plaintiff, is alleged to have been procured by the first defendant to his own advantage (he was a shareholder of the second defendant) in breach of fiduciary obligations owed by him to the plaintiff as one of its directors. The plaintiff seeks a range of declarations and monetary relief arising out of events surrounding this and other transactions. It also claims damages from the second defendant arising out of what it says were a number of breaches of the agreement and of a later management agreement entered into between it and the second defendant.
4 The claim by the second defendant against the plaintiff which, as I have said, has become a counterclaim in the consolidated proceedings, is one for payment of a reasonable fee which, it contends, was payable to it by the plaintiff for consultancy services provided by it in respect of the Singleton Beach development. While the statement of claim in that proceeding refers to the two agreements which are relied upon by the plaintiff in its claim against the first and second defendants the claim for payment is made under what are described as "further agreements" made between the plaintiff and the first defendant for the provision of other consultancy services in respect of the Singleton Beach development ("the development"). There is also a claim for repayment of various disbursements incurred by the second defendant in the course of providing those services.
(Page 6)
5 The consolidated proceedings have been marked by preliminary skirmish after preliminary skirmish. A date for trial is nowhere in sight. However the proceedings have arrived at the point at which discovery has been given. After inspecting the discovered documents the first and second defendants took out, on 3 September 1999, a chamber summons for an order for discovery pursuant to O 26A r 4 and O 26 r 6 of the Rules of the Supreme Court. Order 26A r 4 is that which enables a person who may have a cause of action against another and who wants to commence proceedings against that other, or wants to take proceedings against that other in the course of an action to which the first person is a party, to obtain discovery against that other in order to assist that person in deciding whether or not to commence or take those proceedings. Order 26 r 6 is that which enables a party to existing proceedings to obtain an order for discovery of particular documents. The summons was supported by an affidavit sworn by the first defendant. It is essentially the contents of that affidavit which have caused the plaintiff to bring this application.
6 The first defendant, in his affidavit, has referred to a clause (cl 5.1(3)) of one of the consultancy agreements relied upon by the plaintiff in its proceedings against the defendants which provides that fees payable by the plaintiff to the second defendant under that agreement are to be calculated, in some instances at least, at 3.5 per cent of the contract sum for each contract let to advance the development. He says that he has attempted, unsuccessfully, to obtain information which would enable him to find out what sums, if any, might have become due and payable to the second defendant under cl 5.1(3) since it last rendered an invoice to the plaintiff pursuant to that clause on 24 October 1997. He might have stopped there and sought an order for discovery of the category or categories of documents from which the second defendant could get the information it needed. However he did not do that. Instead he went on to say that, when he inspected documents discovered by the plaintiff in the consolidated proceedings, he saw that further contracts had been let by the plaintiff to advance the development and that, as a consequence, there were further payments due to the second defendant. He went on to say:
"Had I not inspected the invoices from the contractors concerned in … [the plaintiff's] discovery, I would not have been aware that these sums had become due and payable by … [the plaintiff] to advance the Development and … [the second defendant] would not have been in a position to render an invoice. … [The second defendant] has now rendered an invoice for its fee with respect to the above sums due to the contractors."
(Page 7)
7 The invoice so rendered is one dated 16 August 1999 claiming a total amount of $502.86, being 3.5 per cent of what is said to be the value of a number of contracts there identified.
8 There followed some correspondence between the parties in the course of which the amount payable was disputed. The plaintiff has paid to the second defendant only $81.06, denying that any further amount is payable.
9 The first defendant, in his affidavit, has also said that in the course of his inspection of the plaintiff's documents he found none relating to the further works being undertaken on the development and that, based on his observations at the site of the development and on his experience, other documents of a kind categorised by him must be in the plaintiff's possession. These comprise documents or classes of documents, such as contracts between the plaintiff and others performing work on the development and documents identifying amounts payable thereunder, which could only relate to a claim which has yet to be brought by the second defendant against the plaintiff.
10 The plaintiff contends that the use of the documents discovered in the consolidated proceedings for the purposes of rendering the invoice is a contempt by each of the first and second defendants. It also contends that reference to documents discovered in the consolidated proceedings in support of the application brought under O 26A r 4 and O 26 r 6 is a misuse of the discovered documents in the consolidated proceedings by each of the first and second defendants and therefore a further contempt. In each case, its counsel submitted, there was a misuse of discovered documents for a collateral or ulterior purpose within the meaning ascribed to that phrase in such cases as Harman v Home Office [1983] 1 AC 280.
11 The first defendant has sworn an affidavit on behalf of himself and the second defendant in opposition to the contempt proceedings. In it he refers to a number of matters which, he says, support his understanding that all issues "arising from or in relation to the two Consultancy Agreements between the second defendant and the plaintiff, and indeed all claims and counterclaims between the parties, [have for some time been proposed to] be dealt with in … [the consolidated] proceedings". One of these issues, he says, is the second defendant's entitlement to be paid fees under cl 5.1(3) of the consultancy agreement referred to above. While that issue has not been raised in the existing counterclaim I was told by counsel for the first and second defendants that this is because that counterclaim only came into being as a consequence of the consolidation
(Page 8)
- and, indeed, before the cause of action arose in respect of the fees to which I have referred. The second defendant proposes, if consent to this is forthcoming (and such consent is needed because the cause of action proposed now to be relied upon arose after the date upon which the original counterclaim was filed, as to which see O 18 r 2 of the Rules of the Supreme Court, Wigan v Edwards (1973) 1 ALR 497 at 508, 515 and Servcorp (Australia) Pty Ltd v Abgarus Pty Ltd (1995) 38 NSWLR 281 at 283), to amend its existing counterclaim accordingly once the amended statement of claim has been finalised (there are still outstanding interlocutory proceedings in respect of it) and the time for the filing of an amended defence and counterclaim arrives. Counsel for the first and second defendants said that if such consent is not forthcoming then separate proceedings will have to be instituted and consolidated with the existing proceedings. However he said that the first and second defendants' legal advisers had not, at least until now, envisaged that there would be any difficulty in obtaining consent. I notice, in this last respect, that the chamber summons for discovery asks that the costs of that application be "costs in the cause of the first and second defendants' counterclaim against the plaintiff" in the consolidated proceedings.
12 Counsel for the first and second defendants submitted that in all of these circumstances there was no contempt. The issue of the invoice was, he said, seen to be a necessary preparatory step to bringing the counterclaim for payment of the fees the subject thereof and the application for discovery was necessary in order to obtain information required in order to know what other fees might be made the subject of the proposed counterclaim. He submitted that there was consequently no misuse of any discovered documents for a collateral or ulterior purpose.
13 It is well established that a litigant in court proceedings to whom documents have been produced under the discovery process impliedly undertakes not to use those documents for a collateral or ulterior purpose and that such improper use amounts to a contempt (see, for example, Harman, above; Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10 at 32 - 33; and Hamersley Iron Pty Ltd v Lovell (1998) 19 WAR 316 at 320 and 334 - 335).
14 There have, in the cases, been a number of different formulations of what is a collateral or ulterior purpose.
15 The phrase appears to have originated in "Seton's Judgments and Orders" (7th ed, 1912) vol 1 at 76 which, according to Borrie and Lowe, "The Law of Contempt", 3rd ed at 593, referred to "vexatious or improper
(Page 9)
- use" for a "collateral object". That, in turn, appears to have led to the use of the expression "collateral or improper purpose" in the judgment of Jenkins J in Alterskye v Scott [1948] 1 All ER 469 (although Jenkins J himself remarked at 470 that there was room for considerable argument as to what a collateral or ulterior purpose is).
16 In Distillers Co (Biochemicals) Ltd v Times Newspapers Ltd [1975] 1 QB 613 Talbot J said at 621 that those who disclose documents on discovery "are entitled to the protection of the court against any use of the documents otherwise than in the action in which they are disclosed".
17 In Riddick v Thames Board Mills Ltd [1977] QB 881 Lord Denning MR said at 896 (and he has many times since been quoted in this respect) that in order to encourage openness and fairness the public interest "requires that documents disclosed on discovery are not to be made use of except for the purposes of the action in which they are disclosed". He also said (ibid) that a party who seeks discovery of documents "gets it on condition that he will make use of them only for the purposes of that action, and no other purpose".
18 Stephenson LJ, in the same case, (at 902 - 903) dealt with the rule only in general terms but added that there might be cases (which he did not identify) in which a plaintiff would be justified in bringing an action on a document disclosed in an earlier action although, he said, this would "generally speaking" amount to an abuse of the process of the court.
19 Waller LJ, in that case, referred with apparent approval (at 911) to what had been said by Talbot J in Distillers and remarked that the early authorities (decided in the course of the 19th century before the existence of an implied undertaking had come to be generally accepted) show that discovery may be refused in an action unless the opposite party gives an undertaking that the document will not be used for any purpose other than the action then proceeding.
20 In Harman, above at 302, Lord Diplock said that the implied undertaking was to the effect that the documents could not be used for " … some purpose different from that which was the only reason why, under a procedure designed to achieve justice in civil actions, … [the person giving the undertaking] was accorded the advantage, which she would not otherwise have had, of having in her possession copies of other peoples' documents".
21 Lord Diplock also there said that a person could not use discovered documents for some " … collateral or ulterior purpose of his own not
(Page 10)
- reasonably necessary for the proper conduct of the action on his client's behalf".
22 Lord Keith of Kinkel, in that case, said (at 307) that the implied obligation was one "not to make use of the documents for any purpose other than the proper conduct of the litigation in the course of which the order was made".
23 Lord Scarman, with whom Lord Simon of Glaisdale was in agreement, regarded the undertaking (at 312) as being one not to use the documents discovered "for any purpose other than that of the action".
24 Lord Roskill said (at 323) that discovered documents may only be used "in furtherance of the litigation" between the parties.
25 In Sybron Corporation v Barclays Bank Plc [1985] Ch 299 Scott J, at 319 - 320, favoured a contention as to the scope of the undertaking that the disclosed documents "can be used in the action in which they are disclosed" but not without the leave of the court in any other action, even if the same cause of action is thereby being prosecuted and even if the same parties are involved. The rival contention which was rejected by Scott J in that case was one to the effect that the documents could only be used for the purpose of prosecuting that particular cause of action to assist the prosecution of which the discovery was given.
26 In Wilden Pump & Engineering Co v Fusfeld [1985] FSR 581 Falconer J, at 605, took the implied undertaking to be "that the disclosed documents will only be used for the purpose of the proper conduct of the litigation in furtherance of … [the] client's case" and that the solicitor will not "use or allow his client or anyone else to use the disclosed documents for any collateral or ulterior purpose not reasonably necessary for the proper conduct of the litigation on his client's behalf".
27 In Tate Access Floors Inc v Boswell [1991] Ch 512 at 526 Sir Nicolas Browne-Wilkinson VC said that the implied undertaking is usually expressed "as being not to use the information disclosed for a collateral or improper purpose" and said that authority clearly established "that the use of information for the purpose of separate proceedings is improper". The Vice Chancellor gave as an example of that proposition the case of Sybron Corporation, above.
28 In Sentry Corporation v Peat Marwick Mitchell & Co (1990) 95 ALR 11 it was accepted by the parties that Northrop J, in the court below, had correctly stated the law with respect to the use of documents and
(Page 11)
- information contained in documents obtained on discovery when he said (in an extract quoted at page 491 of the report of the appeal) that:
"It is clear that according to Australian law a person who acquires a document pursuant to the purposes of the Court is under a duty not to disclose or make use of that document for purposes other than the Court proceedings without the leave of the Court or the person from whom the document has been obtained."
30 In Miller v Scorey [1996] 1 WLR 1122 Rimer J said, at 1128, that " … the nature of the implied undertaking … is that … [the documents] will not be used otherwise than for the purposes of the action in which they have been disclosed".
31 In Esso Australia Resources Ltd v Plowman, supra, at 32 Mason CJ, with whom Dawson and McHugh JJ agreed, said:
"In relation to documents produced by one party to another in the course of discovery in proceedings in a court, there is an implied undertaking, springing from the nature of discovery, by each party not to use any document disclosed for any purpose otherwise than in relation to the litigation in which it is disclosed."
32 While this formulation of the undertaking is in somewhat wider terms than that in the other cases to which I have referred Mason CJ relied, in support of his formulation, upon the cases of Alterskye, Distillers, Riddick and Harman each of which, as can be seen from what I have said above, stands for a somewhat narrower proposition. That being so, it is by no means clear that his Honour was, by his use of the words "in relation to the litigation", intending to widen the scope of the permissible use of discovered documents.
33 It might not unreasonably be said, at this point, that the cases to which I have referred are not as clear as they might be as regards the question what is a collateral or ulterior purpose. Because the restriction upon the use of discovered documents is imposed for policy reasons designed primarily to encourage the making of full disclosure as required
(Page 12)
- by the discovery process and to minimise the temptation to destroy or conceal the existence of relevant documents (as to which see Riddick at 895 - 896 and Harman at 321) there is much to be said in favour of preventing, without leave, any use different from that for which the discovery had been given, namely use in the proceedings as then defined by the pleadings. This notion is supported by what was said by Lord Diplock in the first of the extracts which I have quoted from his judgment in Harman, above, at 302. However it is open to read the other formulations of the rule to which I have referred in such cases as Distillers, Riddick, Sentry Corporation, Esso, Wilden Pump, Ampolex, Miller and the judgments of Lords Keith, Scarman, Simon and Roskill in Harman, in a less restrictive manner and, indeed, so restrictive a formulation was expressly rejected in Sybron Corporation. Moreover, in Allstate Life Insurance Co Ltd v ANZ Banking Group Ltd (1995) 57 FCR 360 Hill J said at 378 - 379 that the cases make it clear that it will not be a collateral or ulterior purpose to use documents disclosed on discovery to add new causes of action or parties to the action in which the documents have been disclosed. His Honour referred, in support of that proposition, to Sybron Corporation and Wilden Pump, above. He also referred to P Matthews and H M Malek, "Discovery" (1992) at 257 in which the authors rely (at 257) upon what was said by Scott J in Sybron Corporation at 328 in support of the proposition that it is not a "collateral or ulterior use" to use documents disclosed on discovery for the purpose of adding new causes of action or parties to the action in which the documents have been disclosed.
34 Hill J went on to say, at 379, (and his Honour's reasoning was found, in this respect, to be "persuasive" by Doyle CJ in Eckert v National Australia Bank Ltd, unreported; SCt of SA; 17 April 1997) that:
"The ambit of discovery is defined by the pleadings which will ordinarily have been settled by the time discovery is given. Thus it would be possible to argue that any use beyond the case as pleaded would be in contravention of the implied undertaking. The cases which indicate both that new parties can be added on the basis of discovery and that new claims can be added indicate that this is not the case. The reason for these exceptions can be found in the basic philosophy of all Judicature Act systems as expressed, for example, in s 22 of the Federal Court of Australia Act 1976 (Cth), namely, that, so far as may be possible, all matters in controversy between the parties are to be completely and finally determined in the one set of proceedings and multiplicity of proceedings concerning
(Page 13)
- the matter before the court is to be avoided. To this end the rules of this Court permit the adjoinder in one proceeding of multiple claims in respect of more than one cause of action … and the joinder of parties, particularly where common questions of law or fact arise or the relief claimed arises out of the same transaction or series of transactions … ."
35 Importantly for present purposes, his Honour also (at 379 - 380) considered the position of a cross-claimant. He said:
"Similarly, the rules permit the bringing of cross-claims consistently with the provisions of s 22 of the Federal Court of Australia Act: O 5, r 1. Although a cross-claim must comprehend a claim which could have been brought in a separate proceeding if against the original applicant and which is related to or connected with the subject matter of the main proceeding if brought against some other party, once the cross-claim is brought, with or without leave as the case may be, that claim falls to be decided as part of the proceedings as a totality … and indeed the application for leave under O 5, r 8 is itself an interlocutory application in the main proceedings.
It seems to me to follow that, in principle, there should be no difference between the use of discovered materials by an applicant in adding new causes of action against a respondent, on the one hand, or indeed new respondents, and an application by a respondent to the main proceedings for leave to cross-claim against a party not a party to the main proceedings or for the bringing of a cross-claim against an applicant by a respondent, on the other. In my view the principle in Harman has no application to any of these cases. In all of them use of discovered material is a use for the purpose of the legal proceedings and involves no contempt."
36 In Mann v Medical Defence Union Ltd, unreported; Federal Court; 7 February 1997 Ryan J, after reviewing a number of the authorities, including Riddick, Sybron Corporation, Wilden Pump and Allstate Life Insurance, accepted (at 11) that " … whether the proposed use of a discovered document is for the purposes of the action in which it has been discovered is not to be determined by concentrating on the causes of action so far pleaded or the parties to that action as constituted at the time when discovery was given". However, his Honour went on to say (at 11 - 12):
(Page 14)
- "Nevertheless, the authorities to which I have been referred make it clear that the proposed use must bear a reasonable relation to the prosecution of the case sought to be made or the mounting of a defence to that case. So it is that the use of a discovered document to frame a case of fraud in addition to one of breach of contract is permissible if the fraud is said to have infected the same transaction even if additional parties are alleged to have been implicated or the allegations of fraud are sought to be raised by way of cross-claim. Allstate v ANZ Banking Group Ltd (supra) I regard as a case of this kind."
37 The cases next establish that, where there is the commission of a contempt of this kind, a court is not obliged to exercise its summary jurisdiction to deal with it.
38 In John Fairfax & Sons Pty Ltd v McRae (1955) 93 CLR 351 at 370 Dixon CJ, Fullagar, Kitto and Taylor JJ said, albeit in a somewhat different context, that:
"Sometimes the court may think that, technically speaking, a contempt has been committed, but that, because the tendency to embarrass is slight, or because of special circumstances, it ought to refuse to exercise its summary jurisdiction."
- That there is a discretion to decline to exercise this jurisdiction is supported by the following extract from the judgment of Fullagar J in Davis v Baillie [1946] VLR 486 at 493 - 494 which has since been quoted with approval by Northrop J (also in a somewhat different context) in Viner v Australian Building Construction Employees and Builders Labourers Federation (No 1) (1981) 56 FLR 5 at 17 - 19:
"The truth is, I think, that the jurisdiction [to punish for contempt] is essentially discretionary, and that, because it is discretionary, there is often felt to be no real necessity for considering as separate and distinct questions the question of guilt and the question of punishment. The proceeding is criminal in character: In Re Thompson … [[1893] 19 VLR 286]; R v Fletcher; ex parte Kisch … [[1935] 52 CLR 248]; but the logical distinction between 'conviction' and 'sentence' has not the significance which it has in an ordinary criminal proceeding. I was much impressed by … [the] proposition that I had to deal with two questions: (1) was there a contempt? and (2) was there a punishable contempt? Of course, if there is a clear contempt, the court must consider whether it should
(Page 15)
- punish, and, if it should punish, how it should punish. But often, I think, the court does not ask itself two separate questions, but simply and quite properly, asks itself whether it ought to exercise its jurisdiction. And, as in all cases of discretion, the matters which should be taken into consideration cannot be exhaustively enumerated and defined à priori."
39 That same extract has since been referred to in another case to which I have been referred, being one in the Court of Appeal of the Supreme Court of Victoria in Re Perkins; Mesto v Galpin [1998] VICSC 41. Brooking J with whom Phillips and Bolt JJA were in agreement, there said (and the judgment has not, so far as I am aware, been reported), at 10 that:
"It is well accepted that although the court is satisfied that a contempt has been committed it may decline to make any order, in which case it will often describe itself as declining to exercise the jurisdiction to deal with contempts summarily. It can probably be said that most commonly the question whether this should be done has arisen in relation to the publication of statements said to have the tendency to prejudice the fair trial of proceedings. In this connection the expression 'technical contempts' has been coined: John Fairfax & Sons Pty Ltd v McRae (1955) 93 CLR 351 at 370; Attorney General v Times Newspapers Ltd [1974] AC 273 at 312 per Lord Diplock; Attorney General v John Fairfax & Sons Ltd [1980] 1 NSWLR 362 at 367."
40 After referring with approval to what had been said by Fullagar J in Davis v Baillie, above, Brooking JA went on to say that while Fullagar J was there dealing with a report said to be prejudicial to legal proceedings, what his Honour had said about the discretionary character of the jurisdiction and the lesser significance of the distinction between conviction and sentence "is apposite whatever kind of contempt is being considered".
41 In R v MacDonald [1994] 1 VR 414 Hampel J found that the conduct there under consideration amounted to a contempt which was the result of lack of judgment and restraint rather than any intentional interference with the process of justice and consequently found it unnecessary "to move to conviction and penalty" thereby declining, in effect, to make a formal adjudication that a contempt had been committed, that being, to use the words of Brooking JA in Re Perkins, "the
(Page 16)
- appropriate and usual way of convicting a defendant or respondent of contempt".
42 Similarly, in Mann v Medical Defence Union Ltd, unreported; Federal Court; 18 July 1996, Olney J found it to be quite clear that a document discovered in court proceedings had been used for a purpose collateral to those proceedings but, because he was satisfied that the plaintiff had acted in good faith and without any intention to interfere with the ordinary processes of justice, that he had apologised for his conduct and that no harm had been done in that or any other proceeding, chose, like Hampel J in R v MacDonald, "not to move to conviction nor to impose any penalty for contempt … ".
43 That brings me to the question whether I should exercise my jurisdiction as regards each of the alleged contempts in this case.
44 I will deal first with the application for further or pre-action discovery. Insofar as the summons was brought under O 26 r 6 there could, I think, be no complaint. The additional documents sought by way of discovery were either relevant and producible in the existing proceedings or they were not. If they were then there could be no complaint as regards any reference, in the affidavit filed in support of the summons, to documents already discovered. If they were not then the most that could be said is that the application had been misconceived, but even then any documents relied upon could not be said to have been used for any collateral or ulterior purpose.
45 Insofar as the summons was brought under O 26A r 4 I have mentioned that the first defendant said, in the affidavit in support, that he had become aware, from discovered documents, that further contracts had been let by the plaintiff to advance the development and that there were consequently fees payable to the second defendant under cl 5.1(3). However he also said that he had attempted to obtain information as to progress payments submitted by contractors for work undertaken by them on the development but had not been able to do so. He added that he had himself observed that in the past two months work had been undertaken in pursuance of the development, that he did not find in the discovered documents any documents relating to those further works and that, based on his experience in managing the development and in project management generally, he believed that there must be contractual documents, correspondence and invoices relating to those works. It seems to me to follow that any reference in the affidavit to the documents used for the purposes of rendering the invoice was unnecessary to the
(Page 17)
- application except for the purpose of illustrating that the plaintiff had documents which, in the first defendant's submission, evidenced the second defendant's entitlement to further fees but which had not been disclosed to the first defendant. However the existence of documents already discovered in the consolidated proceedings was not what motivated the application under O 26A r 4. Rather, it was the absence of documents of the kind described which motivated it.
46 It seems to me to follow from all of this that, if there was any contempt, then it was one of a comparatively insignificant character which, for the reasons I have given, added little or nothing to the strength of the application brought by the second defendant. It was also one which took place in circumstances in which those advising the first and second defendants considered it to be at least very likely that the existing counterclaim would be amended with the consent of the plaintiff, with the consequence that what was done would take place in what was believed to be the overall context of one dispute between the parties. In those circumstances I am not persuaded that if there was any contempt (and it will be apparent, from the review of the authorities which I have undertaken above, that the law in this respect remains somewhat unsettled) it was such as should warrant my intervention.
47 I have reached a similar conclusion in respect of the use of the discovered documents for the purposes of rendering the invoice dated 16 August 1999.
48 There is no doubt, in my opinion, that the use of documents discovered in the consolidated proceedings for the purpose of rendering that invoice was not reasonably necessary for the conduct of the first or second defendants' defence in those proceedings or for the conduct of the existing counterclaim. However, I was told by senior counsel for the first and second defendants that the rendering of the invoice was seen as a necessary prerequisite to the bringing of an amended counterclaim. It seems plain, from what has been said by the first defendant in the affidavit to which I have referred that it was always contemplated that a claim would be made against the plaintiff for unpaid fees of the kind the subject of the invoice. It was for that purpose that the application for discovery under O 26A r 4 was made. While that application did refer, in part, to documents already discovered it was, as I have earlier remarked, motivated by what the first and second defendants claim was the plaintiff's failure to provide information to the second defendant rather than by the existence of any documents inspected in the course of discovery in the consolidated proceedings. It seems inevitable that, once discovery under
(Page 18)
- O 26A r 4 had been given, a claim for unpaid fees would have been made, whether by way of the issue of an invoice or otherwise, which encompassed the fees the subject of the invoice. That being so, there was no real prejudice to the plaintiff in the events which have occurred.
49 In all of these circumstances it seems to me that if there was any contempt (and I should reiterate that the law in this respect is somewhat unsettled) it is not one which, in my opinion, warrants the exercise, by this Court, of its discretion.
50 Consequently, in the case of each of the alleged contempts, it seems to me that I should decline to make any formal adjudication that a contempt has been committed.
51 Before leaving the matter I should mention that I was asked by counsel for the first and second defendants, if I should find that there might have been any contempt by way of misuse of the discovered documents, to absolve it by giving to the first and second defendants retrospective leave to make use of the documents in the manner in which they have made use of them.
52 Although there has been some discussion in the cases as to the existence of a power to grant retrospective permission for the use of discovered documents in a manner which would otherwise be impermissible (see, for example, Miller v Scorey, above, at 1133 and Eckert, above) I am not at all persuaded that this is a course which should be followed when the purpose for which permission is sought is solely that of absolving a contempt or possible contempt. Either a contempt has been committed which should attract the exercise by a court of its jurisdiction in that regard or it has not. If it has, the court should exercise its jurisdiction. If it has not, there is no need for the grant of retrospective leave, at least for this limited purpose.
53 Indeed, I am not persuaded that a sufficient basis for leave of any kind has been made out in this case.
54 The cases establish that leave is not easily granted in cases of this kind. It has even been suggested that furtherance of a private interest would not justify the grant of leave to use discovered documents for the purpose of other proceedings and that some overriding public interest would normally be required. (See Halcon International Inc v Shell Transport & Trading Co [1979] RPC 97 at 109 - 110 and Sybron Corporation, above, at 327 - 328.) However this may be too narrow an exposition of the discretion to grant leave. Thus Scott J, in Sybron
(Page 19)
- Corporation (at 328), while finding what had been said by Whitford J in Halcon International to be "a valuable general guide", was prepared to grant such leave in a case in which there was nothing more than the furtherance of a private interest in what he said were the "unusual circumstances of the present case" (see also the comments of Matthews and Malek, above, par 12.29).
55 In Prudential Assurance Co Ltd v Fountain Page Ltd [1991] 1 WLR 756 at 775 Hobhouse J, while acknowledging that the court has the power wholly or partially to release the recipient of discovered documents from the duty, or undertaking, and to permit use to be made of the documents, said that circumstances under which the relaxation would be allowed without the consent of the serving party were "hard to visualise, particularly where there was any risk that the statement might be used directly or indirectly to the prejudice of the serving party", subject to any overriding principle of public policy.
56 In Crest Homes Plc v Marks [1987] 1 AC 829 Lord Oliver said, at 854, that the implied undertaking could, in appropriate circumstances, be relieved or modified by the court but only in special circumstances and not where it would occasion injustice to the person giving discovery.
57 The notion of "special circumstances" was considered by Burchett J in Holpitt Pty Ltd v Varimu Pty Ltd (1991) 29 FCR 576 at 578. His Honour there said:
"As far as the expression 'special circumstances' is concerned, it is an expression which is liable to be misunderstood unless care is taken to ask and answer the question, special in relation to what? 'Special' is one of those words which derive almost all their meaning from the context … If all that is required is that, among the great number of cases in the court in which documents have been discovered, this one must evince some special feature which affords a reason for releasing or modifying the undertaking, there will be no difficulty. Circumstances in which there is a legitimate reason why documents discovered in one proceeding should be made available in another will, viewed in this way, be rare. In the ordinary course, the ordinary rule should apply, there being no special circumstance to suggest otherwise."
58 His Honour went on to say (at 579):
(Page 20)
- "In my opinion, the court's duty, in an … [application] of this kind, is to consider whether the applicant has shown some circumstance which takes the matter out of the ordinary course, according to which production of documents pursuant to an obligation to make discovery involves the implied undertaking to the court; and, if so, whether an exercise of the court's discretion in favour of the application would be in the interests of justice."
59 What was said by Burchett J in this case was quoted with apparent approval by Wilcox J in Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217 at 223 - 224. Wilcox J there also referred to an unreported decision of Lockhart J in Sweetman v Australian Thoroughbred Finance Pty Ltd, unreported; Federal Court; 23 July 1992 in which a similar approach was followed. That case had involved two motions, one in each of two separate proceedings involving some common respondents, though entirely different applicants. There was some commonality of fact between the two actions and the same solicitors acted for each set of applicants. In each case they wished to use the documents discovered in the other proceeding. Wilcox J remarked that Lockhart J granted the applications, holding that the extent of commonality constituted special circumstances and that the respondents would not be prejudiced by leave. He also mentioned that, in coming to that conclusion, Lockhart J took into account that the documents had been compulsorily discovered but also the fact that they were not documents which would ordinarily attract a confidentiality order. His Honour went on to say (at 225):
"Especially having regard to the adoption by Burchett and Lockhart JJ of the 'special circumstances' formula stipulated in Crest, I am not prepared to reject that test in favour of counsel's alternative reference to abuse of process. In saying that, of course, I adopt the explanation of that term given by Burchett J and applied by Lockhart J. For 'special circumstances' to exist it is enough that there is a special feature of the case which affords a reason for modifying or releasing the undertaking and is not usually present. The matter then becomes one of the proper exercise of the court's discretion, many factors being relevant. It is neither possible nor desirable to propound an exhaustive list of those factors. But plainly they include the nature of the document, the circumstances under which it came into existence, the attitude of the author of the document and any prejudice the author may sustain, whether the document
(Page 21)
- pre-existed litigation or was created for that purpose and therefore expected to enter the public domain, the nature of the information in the document (in particular whether it contains personal data or commercially sensitive information), the circumstances in which the document came into the hands of the applicant for leave and, perhaps most important of all, the likely contribution of the document to achieving justice in the second proceeding."
60 What was said by Burchett J in Holpitt was approved, also, by Mullighan J in Duke Group Limited (In Liq) v Pilmer (1993) 60 SASR 29 at 36.
61 In Allstate Life Insurance, above, at 380 - 381 Hill J considered that, if leave was necessary in that case, it could be granted in view of the fact that there were present the "special circumstances of which Wilcox J spoke in Springfield Nominees" (at 381). In arriving at the decision to which he came his Honour took into account the fact that it was in the interests of all the parties and the administration of justice that the matters in controversy between the parties be finally determined in one set of proceedings (at 380).
62 In Ampolex Ltd, above, Giles CJ considered that a party might be released from the undertaking "in special circumstances and where the release will not occasion injustice to the person giving discovery … " (at 221).
63 I am not persuaded that there are any special circumstances which should warrant the grant of leave to use the discovered documents for the purpose of rendering an invoice or for that of obtaining the discovery which has been sought upon any basis, let alone a retrospective basis.
64 I have already mentioned that it was unnecessary for the second defendant to rely upon any of the documents discovered in the consolidated proceedings in support of its application for discovery under O 26A r 4. It is, as the first defendant's affidavit makes plain, able to rely, in that respect, upon the first defendant's own observations at the site of the development and on his experience with respect to developments of that kind if, indeed, it is necessary for the second defendant even to rely upon evidence of that kind. I would have thought that it was enough, in order to obtain pre-action discovery of the kind sought, merely to identify the purpose for which the discovery is sought, namely to assist in the decision whether or not to commence litigation for unpaid fees payable
(Page 22)
- under the agreement relied upon, and then to ask for discovery of the documents necessary to enable it to make that decision, categories of which documents are readily identifiable without resort to documents discovered in the consolidated proceedings. I have also mentioned that, once that discovery was given, proceedings could, if necessary, have been commenced in respect of any unpaid fees and, if the rendering of an invoice was thought to be necessary before commencing those proceedings, that could have been done in reliance upon the documents so discovered without resort, again, to documents discovered without resort, again, to documents discovered in the consolidated proceedings.
65 In these circumstance I am not prepared to grant the leave which has been sought.
66 The upshot of all of the aforegoing is, of course, that the plaintiff's application fails. However I will hear further from the parties in relation to the issue of costs.
13
22
0