Testel Australia Pty Ltd v Rickard - [2015] SADC 118

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Appeal Against a Master's Decision)
TESTEL AUSTRALIA PTY LTD v RICKARD AND ORS
[2015] SADC 118
Reasons for Decision of His Honour Judge Slattery
19 August 2015
APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - RIGHT OF APPEAL
Two appeals against decision of a Master declining to make orders for further and better disclosure - whether the Master erred in his decision that the documents are not directly relevant to the proceedings - whether the Master erred in his decision that it is alternatively not in the interests of justice for the documents to be discoverable - whether references to documents in affidavits filed by or on behalf of the defendants entitled the plaintiff to require production of the documents referred to under Rule 61 - whether the Master erred in refusing to order production of documents.
Held:
1. No error identified in the approach or decision of the learned Master with respect to either of the appeals.
2. Appeals dismissed.
Rules 61, 136 and 145 District Court Rules 2006; Rule 59 District Court Rules 1987 , referred to.
McLean v DID Pty Ltd (2010) SASC 33, applied.
Beneficial Finance Corporation Pty Ltd v Price Waterhouse (1996) 68 SASR 19, discussed.
Testel v KRG Electrics [2013] SASC 91; Jewel River Pty Ltd v Captured Pty Ltd [2009] SADC 2; ADX Building Systems Pty v Adelaide Fibrous Plasterboard Linings Pty Ltd (In Liq) [2009] SADC 7; George v Dowling (1992) 57 SASR 579; Mac Audio & Acoustical Consultants Pty Ltd (in liq) v Eddy [1999] SASC 443; Manos v Maros (2007) 249 LSJS 67; FMV Stanke Holdings Pty Ltd v O’Meara (2007) 252 LSJS 87; Oxer v Astec Paints Australia Pty Ltd [2008] SASC 210; Beverage Bottlers (SA) Ltd (In Liq) v Abode Enterprises Pty Ltd [2009] SASC 272; House v The King (1936) 55 CLR 499; Stan Rowe Brewer LLP v Just Costs Ltd [2014] All ER (D) 265; Pettiford v Federal Commissioner of Taxation [2014] AATA 937; State Bank of South Australia v Smoothdale (No. 2) Limited (1993) 174 LSJS 378, considered.

TESTEL AUSTRALIA PTY LTD v RICKARD AND ORS
[2015] SADC 118
JUDGE SLATTERY

In the first of these appeals the appellant plaintiff asks the Court to find that a Master of the Court has made an error in the exercise of his discretion by refusing to order the defendants to make further disclosure.
At first instance the Master made some orders requiring the defendants to make further disclosure. He dismissed other applications and the appellant plaintiff appeals against these orders of the Master.
For the reasons that are set out below, I am not satisfied that the learned Master made any appealable error nor am I satisfied that there has been a failure by the Master to properly exercise the discretion reposed in him.
In the second of the appeals, the appellant plaintiff asks the Court to find that a Master of this Court erred in the exercise of his discretion by refusing to make orders pursuant to Rule 61 of the District Court Rules 2006 that the defendant produce documents referred to in affidavits lodged by them. For the reasons that I set out below, the appellant has not satisfied me that the learned Master has made any appealable error, nor am I satisfied that there has been a failure by the Master to properly exercise the discretion reposed in him.
The first defendant Troy Rickard was the owner of T&T Rickard (T&T). That entity entered into a franchise agreement with the appellant, Testel Australia Pty Ltd (Testel) in August 2008. Under the franchise deed, Testel granted to T&T a franchise in respect of its electrical testing business whilst retaining ownership of the clients serviced by T&T. The second defendant, Rowan Wilson, was an employee of T&T. In March 2011 Mr Wilson ceased to be an employee of T&T. In April of that year, he started a company called Active Safety Services Pty Ltd (Active) of which he is the sole director and shareholder. Active is the third defendant in these proceedings.
One of Testel’s largest work contracts was with the Flinders Medical Centre (FMC). This contract involved electrical testing conducted at FMC by T&T as a franchisee of Testel. In May 2011, FMC terminated its contract with Testel and executed a contract with the third defendant to undertake the same work. At this time, T&T unilaterally abandoned doing the work of the franchisee on the basis that the business was not viable without that contract. By August of 2012, Rickard was undertaking electrical testing work as an employee of Active.
The franchise agreement made between Testel and T&T included a restraint covenant, the terms of which were considered by Blue J in Testel v KRG Electrics.[1] At [59]-[79] of that judgment, Blue J held that the contractual restraint was valid and therefore 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. The restraint period ended in October 2013. The appellant’s primary claim against the first defendant Rickard is for a breach of restraint covenant.
[1] [2013] SASC 91.
In this action, Testel alleges that Mr Rickard is directly or indirectly involved in the business of Active and has been so involved since April 2011. It alleges that this conduct is contrary to clause 12.29 of the franchise deed. Having made that allegation, the appellant now seeks to establish that Mr Rickard is controlling or is administratively involved in the business of Active and alleges that, in effect, Active is the alter ego of Mr Rickard or alternatively Active is a joint enterprise where Mr Rickard’s interests are the same of those of Mr Wilson. All of these allegations made by Testel are denied. The matter has been set for trial on 7 September 2015.
By an interlocutory application dated 25 March 2015, the appellant sought a number of orders for further and better disclosure to be made by each of the defendants; the requests were divided into two annexures. Annexure A concerned claims for further and better disclosure against the first defendant, Mr Rickard. Annexure B contained claims for further and better disclosure against the second and third defendants. The first appeal relates to the refusal by the learned Master to order disclosure of documents sought under Annexures A and B of the interlocutory application. The only issue of contention between the appellant and the first defendant in respect of Annexure A is paragraph A1, 1.2. For the sake of completeness that paragraph relevantly reads as follows:-
A1. [Townsends 19 February 2015 at paragraph 1.2, DBH 13 March 2015] as to payslips produced by the first defendant to the plaintiff under cover of letter dated 13 March 2015 from DBH Commercial:
1.1     …
1.2     Any electronic records from which the hours worked referred to in the payslips was extracted, in a format which enables the date on which the electronic records were produced to be determined.
1.3     …
The issue in contention between the appellant and the second and third defendants in respect of Annexure B are paragraphs B4 and B7. Those two paragraphs relevantly read as follows:-
B4. [Townsends 13 February 2015 at paragraph 8.2; Hunt & Hunt 20 March 2015 at paragraph 8] for the period both before and after August 2012:
4.1     All quotes provided to clients.
4.2     All purchase orders received from clients.
4.3     The covering emails by which such quotes are sent to clients.
4.4     Communications between Active (whether conducted by Mr Rickard or Mr Wilson) in respect of quotes,, the prospective provision of services, services which have been provided and the provision of reports.
4.5     Covering emails by which invoices are sent to clients.
B7. [Townsends 13 February 2015 at paragraph 15.2-15.6; Hunt & Hunt 20 March 2015 at paragraph 15.2-15.6] in connection with the issue of the extent of the involvement of Mr Rickard in the business of Active:
7.1     All emails or other communications sent by Active (whether through Mr Rickard or Mr Wilson) attaching an invoice.
7.2     All emails or other communications sent by Active (whether through Mr Rickard or Mr Wilson) attaching a report as to the results of testing.
7.3     All reports as to the results of testing.
7.4     All purchase orders received from clients.
7.5     All email or other communications received as a covering communication for a purchase order.
In the second appeal under the Notice of Appeal dated 14 July 2015 the appellant appeals against the order of Master Rice in which the learned Master refused to require the production of the documents referred to in paragraphs 8, 21, 22 and 56 of the affidavit of Troy Rickard filed on 30 April 2015 and the documents referred to at paragraph 14.5 of the affidavit of Melanie Bird filed on 27 April 2015.
On this second Notice of Appeal, the appellant primarily alleges that the learned Master erred in finding that at paragraph 14.5 of the affidavit of Melanie Bird, the second and third defendants were referring to documents incidentally to advance an objection to the production of them. The appellant also contends that the learned Master erred in implicitly finding that at paragraphs 8, 21, 22 and 56 of the Rickard affidavit, references are made to documents incidentally to advance an objection to the disclosure of them.
Of the many orders sought by the appellant, a number of them concern electronic records, computers and hard drives of the defendants allegedly containing directly relevant emails, financial records, spreadsheets and text documents concerning the business affairs of Active. The appellant averred through affidavit evidence that the applications were made to determine the first defendant’s involvement with Active based on the documents sought, alleging that the defendants had not properly complied with disclosure. This expression of the appellant’s position almost certainly raises aspects of speculation on the part of the appellant which seeks to make good its allegations by, in part, seeking documents that may support those very allegations. The appellant is relying on the production of these documents to challenge the propriety of any relationship between the defendants and to show that Mr Rickard controls or is a person who controls Active. In the alternative, the appellant contended that it was in the interests of justice that these documents should be disclosed.
The approach to the determination of this appeal
The correct approach in the determination of this appeal is as set out in the decision of her Layton J in McLean v DID Pty Ltd (2010) SASC 33:
[21] This reasoning has not received acceptance in other decisions of the District Court.[2] Indeed, the reasoning appears to be inconsistent with the treatment of Rule 97 of the former Supreme Court Rules 1987 (SA) (the “1987 Rules”) by Mulligan J in George v Dowling.[3] Similarly, it seems to be inconsistent with the approach taken by Wicks J in Mac Audio & Acoustical Consultants Pty Ltd (in liq) v Eddy,[4] when his Honour said of the 1987 Rules (at [6]):
This appeal is by way of re-hearing and not by way of re-hearing de novo: SCR 97.17. An appellate court is required to make an independent assessment of the material that was before the learned Magistrate and may draw any inferences from the facts which may be appropriate: Warren v Coombes (1979) 142 CLR 531. An appellate court, hearing an appeal is not, however, entitled to substitute its own discretion for that of the Magistrate in the court below unless an error in the exercise of discretion can be detected: Mullett v Gabriel (1989) 52 SASR 330 at p333. For this purpose there will be such an error where matters which should have been taken into account were not taken into account or where matters which should not have been taken into account were taken into account.
[22] In addition, several recent decisions of the Full Court of this court have required a court to find error before exercising the discretion afresh.[5] Accordingly, counsel’s submission should not be accepted. Instead it is appropriate to follow the well known rules in House v The King,[6] which case sets out the circumstances in which an appellate court would disturb an exercise of discretion. In that case the High Court[7] said (at 504-5):
“The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.
[23] Accordingly, it is necessary that the appellant identify an error by the Master of the kind described in House v The King before any appeal should be allowed.
[2]    See eg Jewel River Pty Ltd v Captured Pty Ltd [2009] SADC 2, [25]-[32]; ADX Building Systems Pty v Adelaide Fibrous Plasterboard Linings Pty Ltd (In Liq) [2009] SADC 7, [47].
[3] (1992) 57 SASR 579, 582.
[4] [1999] SASC 443.
[5]    Manos v Maros (2007) 249 LSJS 67, 77 [50]; FMV Stanke Holdings Pty Ltd v O’Meara (2007) 252 LSJS 87, 111 [141]; Oxer v Astec Paints Australia Pty Ltd [2008] SASC 210, [33]; Beverage Bottlers (SA) Ltd (In Liq) v Abode Enterprises Pty Ltd [2009] SASC 272, [114].
[6] (1936) 55 CLR 499.
[7]    Dixon, Evatt and McTiernan JJ.
In making my decision in this Appeal, I have also had regard to whether special circumstances exist that would justify me setting aside the decision of the learned Master in allowing this Appeal. If the Master’s decision resulted in blatant unfairness and/or injustice then special circumstances may exist justifying the setting aside of the Master’s decision. Common law authority on this point is now well understood and I need not repeat it here.[8]
[8] See Stan Rowe Brewer LLP v Just Costs Ltd [2014] All ER (D) 265.
The first appeal
I will deal with the matters in the same order as they were developed in argument by the appellant. The appellant dealt with paragraphs B4 and B7 together and alleged that the learned Master erred in failing to find all of the documents sought were directly relevant or alternatively failing to find that these documents should be ordered to be disclosed in the circumstances of the case. The learned Master declined to make an order in respect of these categories of documents on the basis that the appellant had failed to establish a reason for the Master to doubt that disclosure obligations had been properly complied with and that the orders sought were too broad in that they covered essentially every transaction undertaken by Active.
The learned Master was of the view that better disclosure of directly relevant material should not be made in respect of paragraph B4 at the least in part due to the cost and effort involved with implementing such an order having regard to the outcome it would produce. The learned Master alternatively concluded that the disclosure was not required in the interests of justice after discussing the history of the matter including the termination of the contract between the appellant and FMC. The learned Master said as follows:
[43] Mr Dal Cin, for the plaintiff, argued that the picture that he wishes to paint is that of Mr Rickard either controlling the business, or alternatively administering it, in his purported position as an employee, such that it will give rise to the conclusion that it is a sham relationship. In effect, that the third defendant is the alter ego of Mr Rickard, or alternatively, it is at least a joint enterprise where Mr Rickard's interests are the same as Mr Wilson's.
[44] That can be put a variety of ways. It is the conspiracy argument that everyone was plotting against the plaintiff and that the plaintiff seeks to find that there is some support for its conclusions in every piece of paper and every omission.
[45] Further and better disclosure of that type of request requires a great deal of analysis, piecing together bits of information so it might give rise to the conclusion that, with all those bits, it will prove a point in issue.
[46] I was originally attracted to only B4.1 but later B4.4 of the request. However, a review of B4.4 shows the plaintiff really wants all electronic data that sits behind every communication. There is a perception that if all of this material was produced electronically, it would be able to ascertain, from that metadata, that Mr Rickard provided quotes or drafts and sent emails to clients etc, all of which might be of some general interest in ascertaining the degree to which Mr Rickard was involved in the business. It seems a very remote and distant view of how proof on the balance of probabilities will be established.
The solicitor’s letter of 23 July 2015
The appellant submitted that if the Court was able to find that Mr Rickard is directly behind a significantly or sufficiently large proportion of the documents that it seeks, then that circumstance, together with other circumstances would tend to suggest that he was not just an employee of Active but that he was involved as a directing mind of the business. The appellant conceded that on its own, that argument was equivocal because, implicitly, it could not overcome the view of the learned Master. The appellant then purported to rely upon a letter dated 23 July 2015 from Messrs Hunt and Hunt, the then solicitors for the second and third defendants which made further disclosure to establish an inference that such a relationship existed. This material was not before the Master. He therefore did not give consideration to it and on that basis, it is not a matter to be taken into account before me on the authorities that bind me. For the sake of completeness it is necessary for me to consider the content of the further disclosure.
It was submitted that based on the content of that letter, it may be ascertained that the first defendant was intimately involved in the business of the third defendant at least as of the date of the text messages. I am unable to accept that submission on two bases. The first is that as the document was not before the Master, it is not relevant in this appeal. The second is that on a proper review of the material contained within the letter dated 23 July 2015, with some exceptions, much of it is either irrelevant or its connection to any matter relevant to the proceedings is no more than speculation. In his submissions,[9] counsel for the appellant referred to the content of this material disclosed by the second and third defendants and attempted to draw particular conclusions favourable to the appellant from that material.
[9] T10, T11 and T12.

The first entry is a text message sent from Rowan (Wilson) to Mr Rickard which reads as follows:-
“Hey mate, how’s the data entry going? Ready for a full frontal lobotomy yet?”
The second line reads:-
“Dude plugging away at data gay as printers have had a look but no buy yet do you want a fax included - from Troy”.
Counsel for the appellant submitted that on a natural reading, this is a category B5 document because it purports to be a communication between Mr Wilson and Mr Rickard, on behalf of Active, dealing with printers. In order for the appellant to make good that submission, it would be necessary for the Court to give the words “gay as printers” some particular meaning which is not apparent on the face of those words.
There is another exchange. A question is asked whether someone wanted a fax or perhaps a faxed document included and the response is that:-
“May as well unless it costs heaps on top”.
There is a later response of:
“Nup probs under one hunge each …”.
Counsel for the appellant submitted that this means under $100 each. There is no evidence to support how counsel came to that conclusion. To that extent the submission carries at least some degree of speculation. There is then a further exchange where the following message is sent:
“… ill be data all day tomoz so go to the beach or somn constructive like that -from Troy”.
Counsel for the appellant did not make any submission on that text but referred to the next line in the text which said:-
“Check exit light and order up for next round while your in there get ten more lights.”
No suggestion was made that there was any connection between the message about data and the message about the lights. Counsel for the appellant submitted that this can only be interpreted as a communication between Mr Rickard and Mr Wilson about Active’s stock. That said, there seems to be no connection between this text message and those messages concerning the costs of an item. Also, there seems to be no asserted connection between the exchange about a fax or perhaps a faxed document. There is no suggestion that a faxed document will cost $100 and inferentially this refers to a fax machine. Obviously enough, there is a disconnect between these particular topics.
By parity of reasoning, the reference to the words “one hunge”, whatever they mean, are referrable to something else apart from a faxed document, as does the reference to someone “data all day” and someone else going to the beach. This document discloses that there are text messages passing between a person called Troy, who is Mr Rickard and a person called Rowan who is Mr Wilson. Counsel for the appellant suggested that this can only be a communication between Mr Rickard and Mr Wilson about Active’s stock. That assertion may well be correct however that will be a matter of evidence for trial because the documents have been disclosed as directly relevant. Orders have now been made for disclosure in full of these texts messages.
A further text from Mr Wilson to Mr Rickard reads as follows:
“Just checking what the go with sensitive rcd report was. Did you print it and I hand in tomoz with hours and invoice? – from Rowan”.
Counsel for the appellant suggested that an RCD report is a report by Active about testing results of devices with a code RCD. There is a reference to the expression RCD in the pleadings (Statement of Claim, paragraph 35.4(i)). The text goes on:
“Yep and we,ll email bob an excel copy – from Troy”.
Counsel for the appellant submitted that “bob” is a reference to Bob Crossman at Flinders Medical Centre (T12.3)(my emphasis). An objection was raised to that submission. The submission borders on impermissible speculation because there is no evidence to suggest that the text messages had any connection to the Flinders Medical Centre or any person called Bob Crossman. A person called “bob” is referred to and it is a matter for evidence at trial who that particular person may be. It is not a matter for this Court to speculate on those matters.
Therefore in summary, even if the relevant text messages were receivable before me in the appeal as further evidence upon which I might make my decision in this matter, I am satisfied that the communications are either irrelevant or the purported reliance upon them is based, to some degree, upon speculation. These are quite apparently text exchanges that may well be relevant to the appellant’s pleaded case however I am satisfied that these are matters for evidence being documents disclosed by the second and third defendants with the letter of 23 July.
In relation to request B7, the appellant submitted that the error of the Master was to focus upon the breadth of the request and the (presumably) vast amount of material that would answer this request. The appellant criticised the fact that there was no evidence that there would be a vast amount of material and submitted that this assessment by the Master was erroneous. The appellant submitted that the defendants had deceptively created a construct to hide the involvement of Mr Rickard in Active. The appellant’s position is that it has to, as it were, dig through and find the evidence of this construct. The intention of the appellant would be to dismantle this construct. The appellant also criticises the pleadings of the first defendant that he acts under the particular authority of the second and third defendants in the work that he does for the third defendant. The appellant’s response is that the better question is whether or not this shows the first defendant to be the person in charge of the third defendant.
On the materials before the Master, it was open to him to focus upon the breadth of the request made by the defendants. The reasons of the Master correctly identify the relevant rules and do not disclose any misunderstanding of principle. Critically, the decision of the learned Master rested upon the question of the breadth of the request and therefore his decision turned upon his view of the facts. I have not seen any basis to suggest that the learned Master’s approach was in error.
The appellant submits that it was necessary to have access to these documents so that evidence could be ascertained that disclosed the extent of the activities of Mr Rickard in relation to the business of the third defendant. There are a number of matters that are the subject of other orders of the Court by another judicial officer which substantially diminishes the importance, if any, of this submission. I will deal with those matters at the same time as I deal with paragraph A1 and the matters raised about that paragraph in this appeal. The comments that I have made on that paragraph which are set out in paragraphs [39] to [53] hereof are similarly applicable to the arguments put by the appellant in relation to paragraphs B4 and B7.
The appellant then addressed paragraph A1 which was the application for disclosure against Mr Rickard. It is alleged that Mr Rickard caused Mr Wilson to cease to be employed by T&T Rickard when it was a franchisee of the appellant. It is alleged that Mr Rickard caused the third defendant to be incorporated, caused Mr Wilson to pretend to be the guiding hand and mind of that corporation when in fact it was the first defendant and then, by clandestine methods, operate the third defendant as his own. Thus it is contended that the first defendant was the guiding hand and mind of the third defendant rather than the second defendant Mr Wilson.
The documents which have already been disclosed by the defendants reveal a number of transactions. In his submissions about some of these documents, Counsel for the appellant placed particular emphasis upon the payslips disclosing payments made to Mr Wilson by Mr Rickard. There are some anomalies in the dates within the documents which have been disclosed. There are consequently some further anomalies in relation to the amounts paid.
At T22.14 et seq. the appellant made this submission:
So this application for discovery relates to the records and the cash flow accounting system that are said to be original records, contemporaneous records from that time from which it is said about Mr Rickard this payslip was produced. We say that is directly relevant because it goes to whether the last payment to Mr Wilson was a genuine payment of wages or in fact was a transfer of capital to him and therefore a circumstance from which the Court can infer Mr Rickard is actually behind Active from the start. My friend Mr Munt I expect will tell your Honour that your Honour shouldn’t rule on this because my client now has an emailed copy of Mr Rickard’s computer and an Order that we are permitted to search it in respect of this record.
I was then informed that an Order had been made by a Judge of this Court upon an application by the appellant. On 3 June 2015 the appellant made an ex parte interlocutory application for a search Order. The appellant alleged that the first, second and third defendants had not complied with their disclosure requirements. This was contrary to the findings of the learned Master on the applications of the appellant. The foundation put forward by the appellant for this contention was based on the alleged anomalies in the production of documents. The appellant relied upon Mr Rickard’s second affidavit of 30 April 2015 in which he produced a receipt for a car purchased in March 2011. It was alleged that by the production of this receipt Mr Rickard had misled the Court. The vehicle referred to in the affidavit was purchased in 2011, however a receipt produced in evidence and disclosing the date 21 March 2011 was only obtained in April of 2015. That fact was not disclosed by the first defendant to the Court. It would have been appropriate for the Court to be informed of this fact of backdating much earlier, but that is not to say that the transaction referred to in the receipt did not take place. There is no doubt that the transaction in respect of the vehicle occurred in or about March 2011.
Despite that, the appellant argued that this conduct and other related conduct amounted to dishonesty and that Mr Rickard has not complied with his disclosure obligations and would be unlikely to comply with his disclosure obligations. Consequently, Judge Barrett granted a search Order in regards to the first, second and third defendant’s premises on an ex parte basis. The Orders allowed for the seizure of various computers, laptops, mobile phones and documentation by an independent lawyer which would then be assessed by a forensic expert. These Orders were made despite the fact that Orders of the same nature were sought in the application then before Master Rice that was yet to be heard and determined.[10]
[10] INTERLOCUTORY APPLICATION 25 March 2015 (FDN55)
The plaintiff, Testel Australia Pty Ltd applies for the following orders or directions:
1.…
2.…
3.…
4.…
5.That the first defendant produce to the solicitors for the plaintiff, Townsends:
5.1All computers and hard drives containing emails, financial records, spreadsheets, or text documents relating to the claims by the plaintiff against the first defendant.
5.2All computers and hard drives containing emails, financial records, spreadsheets, or text documents relating to the claims by the plaintiff against the second and third defendants.
6.That the second and third defendants produce to the solicitors for the plaintiff, Townsends:
6.1All computers and hard drives containing emails, financial records, spreadsheets, or text documents relating to the claims by the plaintiff against the first defendant.
6.2All computers and hard drives containing emails, financial records, spreadsheets, or text documents relating to the claims by the plaintiff against the second and third defendants.
On 10 June 2015, Judge Barrett made Orders that the copies of independent lawyers’ reports and independent computer reports were to be provided to all parties and that all hardware seized was to be imaged and returned as agreed between the parties. When given the opportunity to respond, Mr Rickard disputed that there was any proper foundation for the Order on the basis that the affidavit provided by the appellant contained inadequate disclosure as to the history of the matter. There was a real issue raised about whether the appellant had come to the Court with clean hands. The second and third defendants also challenged the accuracy of the affidavits put before Judge Barrett in relation to the grant of the search Order. Judge Barrett then further ordered that the images taken of the electronic documents were not to be accessed by anyone until ordered by the Court.
On 19 June 2015 Judge Barrett ordered that the independent computer expert return to complete the execution of the search order conducted at Mr Rickard’s premises. This Order was apparently made so as to determine whether Mr Rickard had interfered with the documents immediately before receiving the search Order. Mr Rickard asked the Judge to direct any questions of access to be heard before the Master on the next occasion. Judge Barrett made orders directing Master Rice to determine access to the materials that were then seized pursuant to the search order.
The Orders made by Judge Barrett are as follows:
THE COURT ORDERS that:-
1.   The issues as to the extent, if any, to which the plaintiff and/or its legal representatives should be permitted to access the documents and materials seized from the premises of the respective defendants pursuant to the Search Order made on 3 June 2015 (“Search Order”), or any images or copies of such documents and materials, is reserved to Master Rice and is to be argued before Master Rice on 23 June 2015, and/or at such other time as may be determined by Master Rice, in connection with the argument of paragraphs 5 to 7 of the plaintiff’s application FDN55 or as may otherwise be necessary.
2.   Part B of Schedule A to the Search Order, in relation to the orders against each of the defendants and the non-party Tracey Rickard, is suspended pending determination by Master Rice of the extent, if any, to which the plaintiff and/or its legal representatives should be permitted to access the documents and materials seized pursuant to the Search Order or any images or copies of such documents and materials.
3.   If Master Rice determines that the plaintiff and/or its legal representatives are permitted to access any of the documents and material seized pursuant to the Search Order, or any images or copies of any such documents and materials, Master Rice may make orders or directions in relation to the procedures to be adopted in that regard, including without limitation:
3.1   In connection with any analysis by the computer expert in relation to Part B of Schedule A to the Search Order, in the context of the orders against each of the defendants and the non-party Tracey Rickard; and
3.2   In connection with the results of that analysis by the computer expert, including but not limited in relation to the access by the plaintiff and/or its legal representatives to the documents or data the subject of those results and in relation to issues of confidentiality and legal professional privilege.
4.   The date and time referred to in paragraph 19 of the Search Order is extended until further order.
5.   Costs of and incidental to the Search Order are reserved.
6.   Liberty to apply.
On 28 July 2015 Master Rice made an order allowing the appellant to carry out an electronic search of the documents that were the subject of the search order. The terms of those Orders are as follows:
THE COURT ORDERS that:-
1.   The plaintiff, by its solicitors Townsends, shall, within 7 days of these orders, nominate in writing to the defendants the tests or investigations that the plaintiff proposes be undertaken upon the subject items.
1.1   The subject items are:
1.1.1The electronic images made of:
(a)Samsung Internal Hard Drive serial number SOURJ1EPB01327 installed in Dell desktop computer serial number BRXLWIS.
(b)Compaq laptop serial number CNF94514JN.
(c)ACER laptop serial number 43400259.
(d)Western Digital external hard drive WXQ1A712154D.
(e)SanDisk Cruzer USB drive.
(f)Galaxy Tablet Serial Number RF2C90603HJ.
(g)Samsung mobile telephone GT-19506, serial number 3532240690040978.
(h)Samsung mobile telephone GT-19506 second occurring referred to at item 4.2.1 of the report by Jean Pierre Du Plessis filed in these proceedings on 11 June 2015.
1.1.2The following email accounts:
(a)…
(b)…
(c)…
(d)…
(e)…
(f)…
2.   Within 7 days of receiving the nomination referred to in 2 above, the defendants shall advise in writing whether they object to any nominated tests or investigations (“the nominated analysis”) and provide a basis for any such objection.
3.   The plaintiff and the defendants have liberty to apply at short notice for directions to resolve any objections.
4.   Jean Pierre du Plessis and/or Elizabeth Drake, in their capacity as independent computer experts under the said search orders (“the independent computer experts”) shall undertake such tests or investigations as they consider appropriate to conduct the nominated analysis, and in the event of an objection, as may be directed by the Court.
5.   The Registrar shall release into the possession of the independent computer experts such of the subject items as are required to comply with order 7.
6.   The independent computer experts shall:
6.1   Prepare a report in writing as to the results of the tests and investigations, and produce an electronic copy of the documents identified in that process;
6.2   Provide the report and documents referred to in 6.1 above to the defendants by their solicitors DBH Commercial;
6.3   Not otherwise distribute the report and documents referred to in 6.1 above unless authorised by this order or by further order of the Court.
7.   Within 7 days of receipt of a report under order 6, the defendants shall notify the plaintiff and the independent computer experts in writing of:
7.1   Any file identification names used in the said report which the defendants seek to have redacted, and the grounds for such redaction (without revealing the context of the file name that sought to be redacted);
7.2   Any documents in respect of which they maintain a claim for legal professional privilege, and the basis of the claim;
7.3   Any documents in respect of which they maintain a claim that the material is irrelevant and do not fall within the categories of documents that have been ordered to be disclosed or are disclosed by consent and/or
7.4   Any documents which they maintain are subject to the confidentiality regime contained in the orders dated 5 May 2015 and 26 May 2015.
8.   The first defendant, by his solicitors DBH Commercial shall take all reasonable steps to ensure that the plaintiff, by its solicitors Townsends, receives, as soon as practicable after the giving of the notification pursuant to order 7:
8.1   The said independent experts report, redacted as to file identification names the subject of a claim under paragraph 7.1 and any redaction so as to be consistent with confidentiality regime referred to in 7.4 above;
8.2   All documents other than those the subject of a claim under paragraphs 7.1 to 7.4.
9.   All documents the subject of a claim 7.4 above that are produced to Townsends pursuant to paragraph 8 above are produced subject to the confidentiality regime referred to in 7.4 above.
10.   Liberty to the plaintiff and the defendants to apply at short notice for determination of any claims made under paragraph 7 above.
11.   Costs as between plaintiff and second and third defendants of paragraphs 5-7 of FDN55 (including the process referred in these orders) reserved.
12.   The first defendant to pay the plaintiff’s costs of paragraphs 5-7 of FDN55 (including the hearing on 8 July 2015) on a party party basis to be agreed or adjudicated.
13.   Liberty to apply at short notice.

The learned Master continues to manage these orders and their sequelae. To date, no further orders have been made by the Master since the order made on 28 July 2015. When asked by me to justify why an ex parte application was sought in light of the fact that the application before the learned Master in paragraphs 5 and 6 sought very similar Orders, the appellant’s Counsel responded as follows:[11]
We did it because if it were inter partes documents it would be rendered unavailable and we were concerned that, because Mr Rickard had deposed in an affidavit, in respect of another transaction, he had produced a receipt which he put before the Court in an affidavit as an original receipt in respect of the acquisition of a car in April 2011, we made enquiries of the car dealer… who deposed in affidavit material to the fact (that Mr Rickard approached him)… and obtained the receipt… he did acquire the car back in 2011 but obtained a receipt backdated the relevant date in 2011… obtained in April 2015.
[11] T23.20.
The appellant acknowledges that the 2011 transaction in relation to the purchase of a motor vehicle took place. Implicitly an evidentiary inference arises that if a receipt was obtained, it was no longer available. The first defendant approached the car dealer and obtained a copy of the receipt and that approach was made in 2015. The receipt was dated 2011. It would have been appropriate for the defendants to have informed the appellant of this fact but this did not happen. An unnecessarily narrow focus on that fact risks losing sight of the relevant fact: the car was purchased in 2011. This is particularly pertinent where, as here, the appellant has challenged every aspect of the conduct of the defendants and alleges conspiratorial conduct on their behalf as justifying its approach in this action.
A number of other issues arise. Notwithstanding there are anomalies on the face of the documents disclosed by the defendants, in my opinion, on a proper commercial approach to such documents, they do not necessarily give rise to any basis upon which the appellant would be entitled to obtain further disclosure. The documents appear to be anomalous because of identifiable errors that have been made within them. It is not uncommon in commercial matters to find errors within documents. Without more, these errors do not necessarily provide a basis to ground an order by the Court for further disclosure. Because of the nature of this proceeding there seems to have been a strong focus on very closely examining every document in an attempt to discern any identifiable error, however small. The intention appears to be to marry together any errors found with other matters in an attempt to bolster the appellant’s case.
Commercial experience discloses that on occasion mistakes are made in reconciling information within records and between disparate sets of records; and that can occur for any number of reasons. Usually, by the application of ordinary commercial common sense, an explanation may be ascertained and an appropriate adjustment made without any consequence. Commercial experience also dictates that on occasion some aspect of a transaction is unintentionally not recorded at the relevant time and a document is later created that ordinarily would have existed at the time of a transaction but was overlooked. The intended transaction occurs and obligations on both sides are fulfilled as the parties intend but for one reason or another the corporate record of that transaction is deficient. It is not uncommon, for example, for parties to later ensure that the corporate record is complete. This is hardly a matter for comment in most commercial circumstances as long as the now complete records disclose the actual transaction as it occurred. That situation is completely different to and may be distinguished from the circumstance where a party has set about to deceive the other about whether a transaction occurred by backdating documents and not disclosing that fact. This type of circumstance often arises in revenue cases: see Pettiford v Federal Commissioner of Taxation [2014] AATA 937 at [9] as an example of a Tribunal dealing with such a circumstance.
Master Rice refused to order disclosure in relation to paragraph A1 as the payslips which were the subject of the subcategory had already been provided, as I have set out above. The Master declined to make an Order in reference to the records of hours worked by Mr Wilson in the period as he concluded that they would neither prove nor disprove any matter even remotely in issue. The first defendant points to the pleadings of the appellant set out in paragraph 35.4. That subparagraph reads as follows:-
35.4 Mr Rickard was directly or indirectly engaged concerned or interested in the electrical testing business conducted by Active Safety Services, which fact is to be inferred from the following circumstances:
(i) On 7 February 2011, by email to the plaintiff, Mr Rickard attempted to cause testing work at Flinders Medical Centre with codes BEL5, BRCD, BEL4, DRCD and BLD4 to be reassigned so as not to be due until six months later than otherwise due.
(ii) In April 2011, T&T Rickard purportedly made Mr Wilson’s employment redundant but did not, and was not required by Mr Wilson, to communicate with Mr Wilson in writing as to his purported redundancy.
(iii) In April 2011, T&T Rickard purportedly made Mr Wilson’s employment redundant but did not, and was not required by Mr Wilson, make a payment to Mr Wilson on account of redundancy.
These subparagraphs disclose that the only issue joined is that T&T were not required to communicate anything about Mr Wilson’s purported redundancy and nor was it required to make any payment to Mr Wilson on account of redundancy. Hence the conclusion formed by the Master that these documents were not remotely in issue. The learned Master thus concluded that the disclosure was not warranted on the basis that it was not directly relevant. The learned Master further stated that the documents need not be produced in the interests of justice as they do not assist in establishing anything of significance in the trial. The appellant has not shown that the learned Master made any error in the exercise of his discretion. The appellant has not disclosed any basis upon which I would interfere with the Master’s decision.
Master Rice directed the second and third defendants to provide disclosure of the quotes provided to clients in Exhibit B4.1 only in respect of the quotes prepared by Mr Rickard for the period before and after August 2012 to October 2014. He also directed that the second and third defendants comply with the request in paragraph B5 only to the extent that it involved Mr Rickard and not in relation to any credit accounts. In my opinion, no error is disclosed on the face of the reasoning of the Master.
The appellant will soon be in a position where it will be able to undertake a search of the electronic records seized which would disclose the documents (if any) the subject of the appellant’s request. The appellant’s submission in that respect was that:
Notwithstanding the benefit of the Orders that it had received following the Search Order made by a Judge of this Court… we shouldn’t have to go searching. The defendant has an obligation. We say the defendant should be ordered to make the disclosure of this data and simply produce it to us so that we don’t have to incur the cost of searching for it and the risk that we don’t find it.[12]
I am not persuaded by the appellant’s submissions.
[12] T25.30-35.
I consider on all of these matters that the learned Master was correct in his considerations. The rulings made by the learned Master were within his discretion. No error has been identified in the Master’s approach either as a matter of principle or as a matter of fact. No basis has been established to cast doubt on the Master’s ruling. Further having regard to other Orders made by a Judge of this Court, there is no other basis to order disclosure of documents in this matter.
I therefore dismiss the Appeal on the first Appeal Notice filed by the appellant.
Second Appeal Notice
On 23 June 2015 Master Rice heard submissions in relation to a further interlocutory application filed by the appellant seeking production of all documents referred to in the affidavits filed by Ms Bird and Mr Rickard pursuant to Rule 61 of the District Court Rules. Further submissions were also made about other non-party disclosure orders made concerning communications between Active and FMC and Morphett Vale Tax Services Pty Ltd.
Under Rule 61, where a party files an affidavit that refers to other material, the other party can seek production of that material upon which the affidavit relies. The affidavits filed refer to various communications between solicitors and clients concerning information that has been provided or derived from computer records. Master Rice was of the view that this was a production based argument which was not relevant to any disclosure obligations.
In his reasons from paragraph [10][13] the learned Master canvassed the content of the affidavit of Ms Bird filed 27 April 2015. He discussed the history of the matter including the affidavit filed by the appellant’s solicitor of 25 March 2015 which sought a variety of disclosure orders and a further affidavit (FDN56) which also sought further and better disclosure. The learned Master identified that one of the questions arising from the application was the doubt of the appellant about the bona fides of the defendants in complying with their disclosure obligations. A number of assertions were made as to documents that are known to exist, what would be expected to be the usual connecting documents that are not disclosed and the absence of other material which might otherwise naturally be expected to exist.
[13] Reasons dated 23 June 2015.
The Master made particular reference to paragraph 29.2 of the fourth Townsend affidavit (FDN56) which asserted that there were five categories of email communications which needed to be considered. The Master identified that in her affidavit the solicitor Ms Bird had responded to the application, set out the history of the instructions that had been taken, made observations about her client’s communication processes and then dealt with the assertions about the emails including setting out a history of Mr Wilson’s Hotmail email account. At paragraph 14.5 of her affidavit (the subparagraph in contention here) Ms Bird deposed to a belief that Mr Wilson had reviewed all of the emails which he was still able to access through the Hotmail account and that all relevant documents had been disclosed.
At paragraph [29] and following, the Master relevantly said as follows:
[29] The plaintiff’s argument for production is surreal…
[30] Essentially the plaintiff says the defendants have gone too far in the affidavit and opened “Pandora’s Box” to all documents. Clearly the defendant did not intend to provide to the plaintiff all of their disclosure in response to the various requests.
The appellant’s argument was that by responding in this way, the defendants were not responding in some incidental way. The learned Master then considered the relevant authorities and in particular the decision of the Full Court of the Supreme Court of South Australia in Beneficial Finance Corporation Pty Ltd v Price Waterhouse (1996) 68 SASR 19 at page 39 and page 48 as well as the decision of State Bank of South Australia v Smoothdale (No. 2) Limited (1993) 174 LSJS 378. In Beneficial Finance (on the generally equivalent Rule 59 of the 1987 Rules) Perry J said at page 39:
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 documents…. So that the affidavit was filed and answered to that application. 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.
The Master stated that Ms Bird was doing no more than was referred to by Perry J in the Beneficial decision. The learned Master also referred to the judgment of Lander J at page 49 where Lander J said:
I cannot agree that the purpose of (the) Rule… is to make available for inspection a document to which a party is obliged to refer for the purposes of resisting an application for discovery and inspection of the documents. If that were the purpose and object of (the) Rule… then it would be unfair and unjust, I would reject any interpretation of the Rule which would or could lead to visiting an injustice on a litigant.
The learned Master concluded that it would be grossly unfair for the documents referred to by Ms Bird in her affidavit to be produced. The rulings made by the learned Master were matters within his discretion and no error has been identified in the learned Master’s approach either as a matter of principle or fact. No basis has been established to cast any doubt upon the learned Master’s ruling. I would dismiss the Appeal on this ground.
The second matter concerning Rule 61 relates to the content of the affidavit of Mr Rickard of 30 April 2015 (FDN62). The learned Master found that in his affidavit, Mr Rickard was responding to each category of the application for further and better disclosure made on 25 March 2015 (FDN55). In the affidavit, Mr Rickard explained how payslips were generated and the learned Master found that Mr Rickard was responding to the request for further and better disclosure. His Honour referred to the decision of Lander J in Beneficial at page 50 and found that Mr Rickard was referring to documents in the process of objecting to an application for disclosure. He was genuinely attempting to comply with Court procedures by putting sufficient information before the Court to enable an argument to be put and a decision to be reached; these were genuine endeavours to defeat the application. Those genuine endeavours could not be used as a reason for granting of an application for further and better disclosure. The learned Master refused the application on that basis.
I have read the materials. The ruling made by the learned Master was within his discretion and no error has been identified in his approach either as a matter of principle or as a matter of fact. No basis has been established to cast doubt on the learned Master’s ruling. I would also dismiss the Appeal on this ground.
Conclusion
For the reasons set out above, I Order that the Appeals of the appellant be dismissed.