Thorlock International Ltd v Sawtell - [2003] WASC 177

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: THORLOCK INTERNATIONAL LTD -v- SAWTELL & ANOR [2003] WASC 177

CORAM: MASTER SANDERSON

HEARD: 2 SEPTEMBER 2003

DELIVERED : 15 SEPTEMBER 2003

FILE NO/S: CIV 1268 of 2002

BETWEEN: THORLOCK INTERNATIONAL LTD (ACN 071 648 309)
Appellant (Plaintiff)
AND
OLGA PEARL SAWTELL
First Respondent (First Defendant)
KEENFERN PTY LTD (ACN 003 863 376)
Second Respondent (Second Defendant)

Catchwords:

Practice and procedure - Application for extension of time within which to appeal decision of Registrar - Limitation on right to inspect documents - Turns on own facts

Legislation:

Nil

Result:

Time within which to appeal extended
Appeal dismissed

Category: B

Representation:

Counsel:

Appellant (Plaintiff)  :        Mr M L Bennett
First Respondent (First Defendant)          :        Mr A Metaxas
Second Respondent (Second Defendant) :        Mr A Metaxas

Solicitors:

Appellant (Plaintiff)  :        Bennett & Co
First Respondent (First Defendant)          :        Metaxas & Vernon
Second Respondent (Second Defendant) :        Metaxas & Vernon

Case(s) referred to in judgment(s):

Sawtell & Anor v Thorlock International Ltd [2003] WASCA 139
The State of Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146

Case(s) also cited:

Nil

MASTER SANDERSON: Occasionally even we battle‑scarred veterans of interlocutory warfare are driven to despair. Why is it that solicitors who invariably aim their darts at the bullseye suddenly focus on the double one? Perhaps the decision is tactical. If that is so in this case, then the tactical advantage to be gained is obscure - or at least I find it obscure. Nonetheless, the application has been brought and heard and a decision must be made. So, with one eye on the inevitable appeal, I wade in.
This is an appeal from a decision of Registrar C Boyle made 7 August 2003. To put that decision in context it is necessary to say something of the history of the matter. By application dated 15 November 2002 the plaintiff sought to restrict the inspection of certain documents it had discovered. The application was heard by Registrar C Boyle on 19 December 2002 and after hearing argument, the learned Registrar dismissed the application. From that decision, the plaintiff appealed.
An application for leave to appeal (an extension of time within which to appeal being necessary) and the appeal were heard together by Acting Master Chapman on 7 February 2003. The learned Acting Master allowed the appeal and indicated he would impose a regime of inspection which limited the right to inspect to the defendants' solicitors. The learned Acting Master gave extempore reasons for his decision and invited the parties to confer to produce a minute of orders. The minute subsequently produced (and dated 11 March 2003) was in the following form:
"1Subject to
1.1the Defendants nominating in writing to the solicitors for the Plaintiff their nominated legal representatives;
1.2such nominated legal representatives undertaking to keep confidential and not to disclose to the Defendants or either of them information obtained by the legal representatives from inspection of the Plaintiff's confidential documents until further order by this Honourable Court;
the Plaintiff give inspection of the Plaintiff's confidential documents to the Defendants' nominated legal representatives; such inspection to be carried out at the premises of the Plaintiff's solicitors by appointment during ordinary business hours.
2Subject to the Defendants' nominated legal representatives undertaking that no additional copies of the confidential documents will be made by the Defendant's (sic) nominated legal representatives and any copy documents will be kept in a secure and confidential manner by the Defendants' legal representatives and in their possession, the right to inspection shall include a right to obtain a copy of the Plaintiff's confidential documents.
3Within 21 days of inspecting the documents, the Defendants shall have liberty to apply to vary the orders for inspection."
From this decision of the learned Acting Master the defendants applied for leave to appeal. Leave was refused: Sawtell & Anor v Thorlock International Ltd [2003] WASCA 139. During the course of his reasons Pullin J said (at par 10):
"… If those legal representatives (of the defendant) consider that it is essential to the conduct of the case that these documents be shown to Ms Sawtell, then the order contemplates an application might be made to vary the order to permit that to happen subject to any arguments that might arise at the time."
No doubt this reference to an application being made to vary the order refers to par 3 of the orders made by the learned Acting Master. In fact, inspection of the documents was undertaken by Karen Ann Vernon ("Ms Vernon") on 4 and 5 March 2003. To avail herself of the liberty to apply found in par 3 of the orders for inspection, the defendants needed to make application on or before 26 March 2003. That was not done. Instead, the application for leave to appeal was pursued.
When that application was dismissed the defendants' solicitors applied to the Case Management Registrar, Registrar C Boyle, for an extension of time to apply to vary the orders for inspection and a variation of those orders. The orders made by the learned Registrar on 8 August 2003 were as follows:
"1.The time for bringing this application be extended to 25 July 2003.
2.Arthur Metaxas and Karen Vernon be released from the undertakings respectfully given by them pursuant to the orders of Registrar Powell dated 7 March 2003.
3.The orders made on 7 March 2003 be varied so that subject to the defendants' written undertaking to keep confidential and not to disclose the existence or content of the plaintiffs (sic) confidential documents until further order, the defendants and their solicitors of record from time to time and any counsel instructed by those solicitors be permitted:
(i)to inspect the documents listed in Part III of the First Schedule to the affidavit of discovery of William Robert Orr sworn 5 December 2002;
(ii)to request the plaintiff to provide, and the plaintiffs are to provide the defendants with copies of any documents so inspected upon request and subject to payment of the plaintiff's reasonable photocopying costs.
4.The right of inspection conferred above is subject to the defendants' giving a written undertaking not to use the documents so inspected (sic) for any purpose other than the purpose of this litigation.
5.The defendants their solicitors and their counsel not disclose the existence of the contents of those documents to any other person until further order.
6.The preceding orders are not to take effect until 22 August 2003, unless otherwise agreed.
7.There be liberty to apply to either party for further orders in relation to these restrictions.
8.All copies of the plaintiff's confidential documents be returned to the plaintiff's solicitors at the determination of this action.
9.The plaintiff pay the defendants' costs of the application, including reserved costs, in any event."
The learned Registrar published reasons for his decision. He dealt first with the application for the extension of time in which to apply to vary the inspection orders. It was put to him by counsel for the plaintiff that in deciding to apply for leave to appeal to the Full Court the defendants had effectively elected to pursue that course of action and they were now precluded from relying on the liberty to apply a provision in the orders of Acting Master Chapman. The learned Registrar rejected that submission. He said (at page 3):
"The defendants were entitled to seek leave to appeal from the decision of the learned Acting Master. For reasons set out in the affidavit of Karen Ann Vernon sworn 25 July, it was a reasonable decision not to pursue independently a restricted and likely pointless inspection at the expense of the defendants whilst simultaneously pursuing an appeal."
The learned Registrar went on to point out that the plaintiff had not suffered any prejudice as a result of the delay. He referred to the need to do justice between the parties and made reference to the decision of the High Court in The State of Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146 at 154.
In my view the learned Registrar was quite right to reach the decision he did in relation to the extension of time. I agree entirely with his approach and his conclusions. Although this is a hearing de novo and I am required to consider matters afresh, I would simply adopt the reasoning of the learned Registrar. Time to bring the application was properly extended.
The learned Registrar then went on to consider the merits of the application. He detailed the nature of the dispute and he identified the documents in question. He then said (at page 4):
"Counsel for the plaintiff at the most recent hearing before me very properly conceded that it is for the plaintiff to justify any restriction on inspection. He also conceded, again - with respect, very properly, that just as the obligation to discover is a continuing one during the course of litigation, so the balance between access and protection is one that must be considered from time to time. Therefore, the decision of the learned Acting Master in February cannot be taken to have decided for all purposes and all times in this litigation how the balance between confidentiality of proprietary information and procedural fairness is to be struck.
I must consider that afresh, and fashion orders that properly reflect the balance to be struck. In doing so, I take into account all the evidence that has been provided on the question."
With respect to the learned Registrar, I am not sure he has correctly stated the position. In the course of his reasons the learned Acting Master said (page 53 of the transcript):
"So there is in my view sufficient in the material before me to cause concern that if some qualification is not placed upon inspection, that confidentiality may be lost. In the circumstances I consider that when one balances the interests of justice between maintaining the confidentiality of the plaintiff on the one hand and on the other the right of the defendants to have access to the documents I consider some qualifications ought be placed in relation to the inspection of documents."
I think it is implicit in what the learned Acting Master said that he accepted that confidentiality attached to the documents and ought, for the present, be maintained. Properly analysed, that, I think, is the ratio of his decision. When the matter came back before the learned Registrar the starting point was to accept the documents were confidential. It was then for the defendants to establish that some variation was needed to the orders for inspection to allow them to properly represent their client.
Before the learned Registrar, the defendants relied on an affidavit of Ms Vernon sworn 25 July 2003. By par 15 and 16 of that affidavit, Ms Vernon says that after inspecting the documents she has formed the view that they are not confidential. Her views on this question seem to have formed the basis, at least in part, of the application to vary the inspection orders. In my view, the opinion of Ms Vernon on this question - that is, the issue of confidentiality - was not relevant to the determination of whether or not the orders ought to have been varied. This was the issue which had been squarely before the learned Acting Master and which had been determined. It was not open to the defendants to make a collateral attack on the learned Acting Master's decision. However, that was not the only basis upon which the defendants sought to have the orders varied. Ms Vernon says in her affidavit (at par 22 and 23):
"22.The plaintiff alleges in paragraphs 11 to 11B of the amended statement of claim that from December 1999 to mid 2001 the defendants breached contractual, fiduciary and statutory duties owed to the plaintiff in relation to the management of the plaintiff's intellectual property and specifically:
22.1implemented a system of omitting to apply for patents over significant parts of the intellectual property;
22.2changed this policy too late to avoid loss and damage.
23.The loss and damage particularised in paragraph 12 of the amended statement of claim refers to processes 'germane' to the operation of the plaintiff's technology which were sought to be patented 'too late'. The confidential documents contain information which relates to both the strategies for protection, what was being targeted and who was making those decisions. I cannot help the defendants to present a defence without needing to discuss with the defendants the contents of these documents which the plaintiff will ultimately rely upon at trial. Only the defendants can instruct me about the accuracy of these documents, their context and where I might find other evidence to assist the defendants. I truly believe the confidential documents are crucial to the defence and I cannot understand them without the defendants reading the documents and explaining their contents to me."
There is no reason to doubt what Ms Vernon says in her affidavit. In fact, it makes perfect sense. In the light of that evidence it was perfectly proper to vary the orders made for inspection. That is what the learned Registrar did. It is true that he followed a course of reasoning which suggested he was considering all matters afresh and, as I have said, I doubt that was a proper course to adopt. But I have no doubt that the end point he reached and the orders he made were entirely proper in the circumstances. I would not vary those orders and I would dismiss the appeal.
As a footnote to this decision, it is worth quoting what Pullin J said in the Full Court in the course of his reasons for dismissing the defendants' application for leave to appeal (par 10):
"This seems to me to be a case where an extraordinary amount of energy and ingenuity of both parties is gone into a fight involving an interlocutory matter."
Nothing more need be said. I would extend the time within which to bring this appeal and dismiss the appeal.