Testel Australia Pty Ltd v Rickard - [2015] SASC 174

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
TESTEL AUSTRALIA PTY LTD v RICKARD & ORS
[2015] SASC 174
Judgment of The Honourable Justice Sulan
30 October 2015
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - HEARING OF APPEAL - OTHER MATTERS
PROCEDURE - DISCOVERY AND INTERROGATORIES - DISCOVERY AND INSPECTION OF DOCUMENTS - DISCOVERY OF DOCUMENTS - ORDERS FOR FURTHER AND BETTER DISCOVERY
This is an appeal against a decision of a District Court Judge on appeal from a Master of the District Court. The District Court Judge upheld a decision of the Master not to order further and better disclosure, and to refuse to order disclosure of documents referred to in other documents filed with the court pursuant to r 61 of the Supreme Court Civil Rules 2006 (SA).
The appellant requires permission to appeal pursuant to r 288(1)(a)(ii). The substantive appeal and permission were heard together.
Held, refusing permission to appeal:
1. There is no issue of principle that has not previously been decided in relation to the further disclosure application, nor is it in the interests of justice to grant the application.
2. It is not in the interests of justice to grant permission on the r 61 application. Rule 61 was not intended to apply in the circumstances of this case.
Supreme Court Civil Rules 2006 (SA) r 288(1)(a)(ii); Supreme Court Civil Rules 1987 (SA) r 59.02; District Court Civil Rules 2006 (SA) r 61, referred to.
Advanced Resources Pty Ltd v Charlton [2007] SASC 434; Landmark Operations Limited v J Tiver Nominees Pty Ltd [2009] SASC 185; Mitropoulos v Hancock Corporation Pty Ltd [2007] SASC 43; Testel Australia Pty Ltd v Richard & Ors [2015] SADC 118; G K Sanford Pty Ltd v Jansen (1992) 36 FCR 83; Star Petroleum v Pertsinidis (Unreported, Supreme Court of South Australia, Perry J, 30 September 1993); Zadow v Tolmer Fuels Pty Ltd (Unreported, Supreme Court of South Australia, Lander J, 1 February 1995); BHP Petroleum Pty Ltd v Oil Basins Ltd [1985] VR 756; Brealey v Drogemuller [1983] 108 LSJS 48; Beneficial Finance Corporation Ltd v Price Waterhouse (1996) 68 SASR 19; Testel v KRG Electrics [2013] SASC 91; Alliance Craton Explorer Pty Ltd v Quasar Resources Pty Ltd & Anor [2011] SASC 64, considered.

TESTEL AUSTRALIA PTY LTD v RICKARD & ORS
[2015] SASC 174
Civil: Application

SULAN J: This is an application for permission to appeal from a decision of a Judge of the District Court on appeal from a Master of the District Court in respect of interlocutory matters concerning disclosure. The application involves two substantive issues; an application for further and better disclosure, and an application for production of documents referred to in two affidavits filed with the District Court pursuant to r 61 of the District Court Civil Rules 2006 (SA) (“DCR”). The applicant seeks permission to appeal pursuant to r 288(1)(a)(ii) of the Supreme Court Civil Rules 2006 (SA) (“SCR”), requiring permission to be given in respect of an appeal from an interlocutory judgment of the District Court. Counsel made submissions which were relevant to both the question of permission, and the substantive appeal.
Background
The plaintiff in the District Court proceedings is the applicant in this application. Since early 2014 there have been numerous interlocutory applications and rulings. The matter has been set down for trial twice and, in each case, the trial has been vacated. The plaintiff’s primary claim is that Mr Rickard (the first defendant) breached a restraint covenant[1] by being directly or indirectly involved in the business of Active Safety Services Pty Ltd (the third defendant) (“Active”), a company of which the sole director and shareholder is Mr Wilson (the second defendant), a former employee of the first defendant’s company. This company, T&T Rickard, had entered into a franchise agreement with the plaintiff in 2008 with respect to its electrical testing business. One of the plaintiff’s largest work contracts was with the Flinders Medical Centre, which involved electrical testing by T&T as a franchisee. In May 2011, the Flinders Medical Centre terminated its contract with the plaintiff and instead contracted with the third defendant, at which point T&T unilaterally abandoned doing the work of the franchisee on the basis that the business was not viable without that contract. By August 2012, Mr Rickard was undertaking electrical testing work as an employee of Active.
The plaintiff claims that Mr Rickard is controlling or is administratively involved in the business of Active and alleges Active is Mr Rickard’s alter ego or, alternatively, there is a joint enterprise between the respondents in which Mr Rickard’s interests are the same as Mr Wilson’s. These allegations are denied.[2] The plaintiff is seeking further and better disclosure and disclosure under DCR r 61 in order to obtain evidence in support of these allegations.
[1] The terms of the restraint covenant were considered by Blue J in Testel v KRG Electrics [2013] SASC 91, where his Honour held that the restraint was valid and prevented franchisees from being engaged, concerned in or interested in a business substantially the same as or in competition with the franchised business to the extent that it operated within South Australia for up to one year after the expiration of the franchise period.
[2] Testel Australia Pty Ltd v Rickard & Ors [2015] SADC 118 at [5]–[8].
Legal principles for permission to appeal
In exercising the discretion to grant permission, regard must be had to whether an appeal raises issues of principle or of general importance,[3] especially if it is a matter on which there is no decided authority.[4] It is also relevant to determine if the circumstances are such that there is a substantial and serious matter which affects the rights of the parties,[5] or whether there is sufficient doubt surrounding the decision on appeal coupled with substantial injustice if that decision is allowed to stand.[6] The principles applicable to an application for permission to appeal were considered by the Full Court in Landmark Operations Limited v J Tiver Nominees Pty Ltd & Ors.[7] Bleby J, with whom Vanstone and White JJ agreed, said:[8]
... In South Australia Government Financing Authority v Bank of New Zealand the Full Court of this Court cited with approval the practice adopted in the Supreme Court of Victoria in BHP Petroleum Pty Ltd v Oil Basins Ltd. In that case Fullagar J said:
As this is an application for leave to appeal from interlocutory orders, the authorities show that this Court should address itself to two questions, as follows: (1) whether the correctness of the orders [appealed against] is attended with sufficient doubt to warrant their being reconsidered on appeal; and (2) whether substantial injustice will be caused to the applicant ... if the orders [appealed against] stand: see, for example Niemann v. Electronic Industries Ltd. [1978] V.R. 431, at p. 433, per McInerney J., and at p. 441-2, per Murphy J. At p 441, Murphy J said, inter alia: “If the order was correct then it follows that substantial injustice could not follow. If the order is seen to be clearly wrong, this is not alone sufficient. It must be shown, in addition, to effect a substantial injustice by its operation.”
This is consistent with an earlier decision of this Court in Glenauchen Pty Ltd v Circuit Finance Pty Ltd to similar effect.
[Citations omitted.]
[3]    Mitropoulos v Hancock Corporation Pty Ltd [2007] SASC 43 at [11].
[4]    G K Sanford Pty Ltd v Jansen (1992) 36 FCR 83, 94.
[5]    Star Petroleum v Pertsinidis (Unreported, Supreme Court of South Australia, Perry J, 30 September 1993); Zadow v Tolmer Fuels Pty Ltd (Unreported, Supreme Court of South Australia, Lander J, 1 February 1995).
[6]    BHP Petroleum Pty Ltd v Oil Basins Ltd [1985] VR 756; Brealey v Drogemuller [1983] 108 LSJS 48.
[7] [2009] SASC 185.
[8] [2009] SASC 185 at [21]-[22].
Further and better disclosure
The plaintiff submits that Mr Rickard was in truth an owner of Active, and that the documents sought under the further disclosure would cover three broad types of activities undertaken in the course of Active’s business establishing this: quotes and reports as to electrical testing outcomes produced by Active, communications between Active and its clients relating to the testing services, and documents relating to Mr Rickard’s participation in the acquisition of goods or services by Active. The plaintiff claims that the documents sought are directly relevant in light of their allegations regarding Mr Rickard’s involvement with Active, justifying the order for further disclosure.
Counsel for the plaintiff contends that the decision not to order further disclosure is either wrong, or affected with sufficient doubt as to warrant its reconsideration. Further, counsel contends that substantial injustice would be caused to the plaintiff if the orders are allowed to stand.[9]
[9] Landmark Operations Ltd v J Tiver Nominees Pty Ltd [2009] SASC 185 at [21].
This is not an issue on which there is no decided authority. On the issue of general importance, counsel for the defendants submitted that parties bringing an interlocutory application will almost invariably view that application as important, otherwise it would not be made. This alone does not constitute “general importance” for the purpose of granting permission to appeal.
Counsel for the defendants submit that the plaintiff has had two previous opportunities to advance its case on the application for further disclosure. Limited further disclosure has previously been ordered by Master Rice in respect of the categories of documents sought. The order took account of the extensive scope of the documents sought, and the time, effort and cost that would result from further disclosure. It was contended by the defendants that the balance of that time, effort and cost against the limited utility of the documents sought reveals the Master’s decision was correct.
I accept the defendants’ submissions. There is not a sufficient doubt as to the correctness of the decision being appealed, nor is there any evident injustice that would result from a refusal to order further disclosure in this instance. I would refuse permission to appeal.
District Court Rule 61
DCR r 61 provides that where a document is referred to in another document filed with the court, and the party filing that document is in possession of an original or copy of the document referred to, it must be disclosed if requested:
61—Copies of documents to be provided
(1) If—
(a) a party files in the Court a document that refers to some other document; and
(b) the party is in possession of the original or a copy of the document referred to,
the party must, at the request of another party, provide the other party with a copy of the document.
(2)A party who files a secondary originating process introducing a new party to the action must, at the request of the new party, provide the new party with a copy of all documents filed in the action before that party was served with the originating process.
(3)A party who files a document in the Court must, at the request of another party and payment of the appropriate fee, provide the other party with a number of photocopies of the document (not exceeding 10) requested by the other party.
In an interlocutory application dated 5 June 2015, the plaintiff made a number of requests for documents referred to in affidavits of Mr Rickard and Melanie Bird, the solicitor for the second and third defendants. The relevant paragraphs of Mr Rickard’s affidavit are 21 and 22:
21.In February 2014 I engaged an IT company to perform a data recovery on the hard disk drive of the affected computer, specifically for the purposes of this Court action. I instructed the company to attempt to recover as much data as possible. This process successfully recovered some of the data on the computer, which I subsequently reviewed and disclosed in this legal action to the extent that it was relevant. Some of the data was unable to be recovered.
22.Upon the Plaintiff requesting further documents in relation to the payment of $1050.00 to D R & S M Hughes I have again reviewed the data that was recovered from the computer. My review of the data has not revealed any documents in connection with this payment.
The relevant sub‑paragraph of Ms Bird’s affidavit is 14.5:
14.I am informed by Mr Wilson and believe:
...
14.5. Mr Wilson has reviewed all emails he is still able to access through the Hotmail account (including sent and deleted items) for disclosure purposes and all emails through the Hotmail account that the Second and Third Defendants claim are relevant have been disclosed.
The relevant extracts of the affidavits concern documents that were assessed and found to be outside disclosure obligations.
Counsel for the plaintiff submits that the references went beyond incidental references required to deal with the initial applications for disclosure, and as a result those documents referenced should now be disclosed pursuant to r 61. The thrust of the argument is that reference was made for a forensic purpose; that purpose being to put evidence before the court that the documents referenced had been reviewed in order to assess what was and was not relevant. The documents referenced were deemed not to be relevant, and therefore were not disclosed. Counsel for the plaintiff submits that Mr Wilson, referred to in paragraph 14.5 of Ms Bird’s affidavit, could have stated disclosure obligations had been complied with without reference to the category of documents reviewed. The fact that the category of documents was referenced raises disclosure obligations under r 61. This forensic choice drives the plaintiff’s submissions. The bona fides of the compliance with disclosure obligations are also questioned.
Counsel for the defendants submit that the affidavits in question were clearly sworn to support the defendants’ opposition to the orders for further disclosure that were the subject of the further disclosure application and must be considered in that context. It is submitted as apparent from the relevant passages of the affidavits that the defendants were “genuinely attempting to comply with the procedures of the Court by putting sufficient information before the Court to enable … [them] to argue in opposition to the application”.[10]
[10] Beneficial Finance Corporation v Price Waterhouse (1996) 68 SASR 19 at 51
In Beneficial Finance Corporation v Price Waterhouse,[11] the Full Court considered rule 59.02 of the Rules as they then applied.
[11] (1996) 68 SASR 19.
Rule 59.02 provided:[12]
Where a party has filed a pleading or an affidavit referring to a document he shall within seven days of receipt of any request from another party in accordance with the request either make such document available for inspection by that other party, or furnish that other party with a copy of the document at that party’s cost.
[12] Supreme Court Rules 1987 (SA).
In considering the breadth of the rule, Perry J observed:[13]
In my opinion, the learned judge at first instance erred in relying on the rule in that way. To do so was to adopt a literal interpretation at the expense of the requirements of justice and fairness.
The rule should not be construed so as to oblige a party to produce a document which it has referred to in the context of an affidavit sworn to support an objection to the production of the document.
...
... In my opinion, to refer incidentally to a document which is the subject of an application for discovery in order to advance an objection to the production of it cannot sensibly expose the party to a liability to produce it. The rules of court should be interpreted and applied consistently with the requirements of justice, not so as to defeat those requirements.
If the learned primary judge was correct in his view as to the application of the rule, it would mean that a party opposing production of a document could never refer to it, at least in a pleading or in an affidavit in the course of advancing that opposition. I would not be prepared to give r 59.02 a construction which would lead to such a strange result. ...
[13] Beneficial Finance Corporation v Price Waterhouse (1996) 68 SASR 19 at 39-40.
The Full Court held that, as a matter of fairness and justice, the rule did not oblige a party to produce a document it has referred to in the context of an affidavit sworn to support an objection to the production of the document. In my opinion the reasoning of Perry J is apposite in considering the application of r 61. Rule 61 was not, and could not have been, intended to cover documents which were not required to be disclosed. The purpose of the affidavits was to satisfy requirements of disclosure, and to outline that certain documents were reviewed and found to be outside those requirements. Finding that references to documents as being reviewed as outside disclosure requirements actually rendered them as subject to disclosure involves circular reasoning, and would lead to a strange result. It cannot be the case that it was intended that a party which opposes production of a document or documents is then required to produce them as a result of having referred to them in an affidavit in support of its claim.
A further matter. Counsel for the plaintiff brought to my attention that the action has been listed for trial in the District Court, to commence on 9 November 2015. It had previously been listed for trial on two occasions and the trial date has been vacated. Counsel informed me that the plaintiff will be seeking a further adjournment of the trial. He advised that the application is for reasons unrelated to this application. Nevertheless, the District Court will be informed that this application has been made.
In the circumstances, I advised the parties that I would decide the application before the date of trial. Counsel for the defendants indicated that the adjournment application will be opposed. He submitted that any further adjournment will have catastrophic consequences to the defendants.
In considering whether it is in the interests of justice to grant permission to appeal, I have had regard to the desirability for this action to be heard and determined without further delay and additional cost to the parties. The parties have an obligation to make continuous discovery. If during the trial it becomes evident that one or other party is required to make further discovery and disclosure, that party is obliged to do so. It is not unusual that documents are discovered during the progress of the trial. If that occurs, questions of adjournments to inspect or time to investigate matters further can be dealt with by the trial judge. It is generally undesirable to disrupt the preparation for trial.[14]
[14] See Alliance Craton Explorer Pty Ltd v Quasar Resources Pty Ltd & Anor [2011] SASCFC 64 at [15].
Conclusion
In relation to the further disclosure application there is no issue of principle that has not been previously determined, nor is it in the interests of justice to grant the application.
The issues raised on the application relating to r 61 are not such that, in the interests of justice, permission to appeal should be granted.
Permission to appeal is refused as to both applications.