Tiger Nutrition Pty Ltd v Rainier De Silva

[2019] NSWSC 1269

Supreme Court

New South Wales

Medium Neutral Citation:	Tiger Nutrition Pty Ltd v Rainier De Silva [2019] NSWSC 1269
Hearing dates:	18 September 2019
Date of orders:	23 September 2019
Decision date:	23 September 2019
Jurisdiction:	Equity
Before:	Robb J
Decision:	See pars [56]-[57]
Legislation Cited:	Corporations Act 2001 (Cth)
Cases Cited:	Harman v Home Department State Secretary [1983] 1 AC 280 John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 Savcor Pty Ltd v Cathodic Protection International APS [2005] VSCA 213 Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217
Category:	Procedural and other rulings
Parties:	Tiger Nutrition Pty Ltd (plaintiff) Rainier De Silva (defendant)
Representation:	Counsel: B Ilkovski (plaintiff) M Pesman SC (defendant)   Solicitors: Tom Howard Legal (plaintiff) ERA Legal (defendant)
File Number(s):	2019/101158

Judgment

1. By notice of motion filed on 4 September 2019, the plaintiff, Tiger Nutrition Pty Ltd (Tiger Nutrition), seeks the following relief against the defendant, Mr Rainier De Silva:

1.   Order that the Applicant and its legal representatives be released from any implied undertaking not to use the documents identified in paragraph 32 of the Affidavit of Thomas Howard sworn 2 September 2019, to the limited extent that those documents may be adduced or referred to in proceedings in this Court with matter number 2019/176758.

2. The implied undertaking referred to in the notice of motion is the implied restriction, established by Harman v Home Department State Secretary [1983] 1 AC 280, on a party to proceedings who obtains documents or information as a result of the Court’s processes in those proceedings using that information for extraneous purposes without the leave of the Court.

3. Tiger Nutrition also sought leave to file an amended statement of claim, but that issue has been dealt with by consent.

4. Paragraph 32 of Mr Howard’s affidavit describes the documents the subject of the application by reference to Ex TH-1 to the affidavit, which became Exhibit P1 on the application. In five sub-paragraphs, Mr Howard described separate categories by reference to identified pages in the exhibit, concerning documents that had been produced in these proceedings in response to a notice to produce served on Mr De Silva, and subpoenas served on Mr Anthony and Mr Christodoulides, and finally an item of correspondence between Mr Howard’s firm and Mr De Silva’s legal representatives.

5. Tiger Nutrition therefore seeks to be released from the implied undertaking in relation to documents produced to the Court by three parties, only one of which, Mr De Silva, is a respondent to the notice of motion. Strictly, each of the producing parties had a proper interest in responding to Tiger Nutrition’s application: cf John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19. As I do not propose to give Tiger Nutrition the release it seeks, at least at this time, it probably does not matter that Tiger Nutrition has not joined all of the necessary respondents to its notice of motion.

6. Mr Pesman, of senior counsel, appeared for Mr De Silva on the hearing of Tiger Nutrition’s notice of motion. Mr Pesman is also briefed to appear for the defendant in the proceedings in which Tiger Nutrition wished to use the documents if it were released from the implied undertaking. That defendant is Mr Christodoulides. It will be seen below that, as a practical matter, Mr Pesman acted for Mr Christodoulides for certain purposes connected with the hearing of the notice of motion. That was an efficient course for Mr Pesman to take and assisted the Court in its determination of the motion.

7. The notice to produce and subpoenas were apparently served in accordance with an order of the Court made on 24 June 2019.

8. It will be convenient to record, at the outset, that the Court was informed by Mr Pesman that his client consented to the order sought by Tiger Nutrition in respect of the document referred to in sub-par 32(e) of Mr Howard’s affidavit, which is apparently the document at page 225 of Exhibit P2. The subparagraph referred to is somewhat confusing, as page 225 is apparently a WhatsApp exchange between Mr De Silva and Mr Christodoulides and not correspondence between solicitors. I interpret the consent advised to the Court by Mr Pesman as being consent given by both Mr De Silva and Mr Christodoulides, to the extent that the consent of either is necessary.

9. Subsequently, in response to order 3 made by the Court on 12 September 2019, Tiger Nutrition refined its list of the documents in respect of which it sought to be released from the implied undertaking, by producing a schedule that was marked for identification as MFI-2. I will refer more fully to this schedule below.

10. It is necessary to provide some information about the nature of the claim made by Tiger Nutrition in these proceedings and their history to date.

11. The proceedings were commenced in the duty list, on 1 April 2019, by Tiger Nutrition being given leave to file a summons by which it sought relief against Mr De Silva by way of declarations and injunctions to prevent him, as a former employee of Tiger Nutrition, from misusing confidential information and acting in breach of restraints in his contract of employment. Tiger Nutrition also sought declarations concerning alleged breaches by Mr De Silva of ss 182 and 183 of the Corporations Act 2001 (Cth).

12. Further, Tiger Nutrition sought a substantive interlocutory order requiring Mr De Silva to immediately deliver to Tiger Nutrition documents containing confidential information, as defined in the summons.

13. The proceedings came before Kunc J on 10 April 2019, and his Honour made an order that Mr De Silva not use or publish certain specified information until further order of the Court; that he deliver physical copies of such of the information as he had to Tiger Nutrition; and that he delete any electronic copies. An order was also made that, by 4 PM on 17 April 2019, Mr De Silva file and serve an affidavit giving proof of compliance with the order. By agreement between the parties, his Honour made no order as to costs.

14. On 15 April 2019, Kunc J made orders nunc pro tunc varying the earlier orders, by making similar orders by reference to information set out on a specified page of a Confidential Exhibit. Mr De Silva was required to file and serve the affidavit giving proof of compliance by 17 April 2019. This order was apparently made at the request of the parties, who had discovered a possible ambiguity in the earlier orders that they had agreed between themselves.

15. Various procedural orders have been made in these proceedings, after the orders were made by Kunc J, including the order giving leave to serve subpoenas and a notice to produce referred to above, and orders requiring Tiger Nutrition to serve all further evidence.

16. Tiger Nutrition served its statement of claim on 20 May 2019, and Mr De Silva filed his defence on 17 June 2019.

17. Meanwhile, Tiger Nutrition, on 6 June 2019, commenced entirely new proceedings by leave of Rein J, sitting as duty judge, by filing a summons. His Honour has ordered that those proceedings be known as TNPL v AC. For the purposes of these reasons for judgment, it is necessary to record that AC is a reference to Mr Christodoulides. Otherwise, these reasons would not be meaningful.

18. Among other relief, Tiger Nutrition sought against Mr Christodoulides ex parte a search order that required him to permit a search party to enter his premises.

19. Rein J made a search order as sought in terms of the Penal Notice that was an attachment to Tiger Nutrition’s summons. His Honour did not give reasons, but apparently accepted the arguments made by Tiger Nutrition in a written outline of submissions that was handed up in court. Those submissions included, at pars 25 to 30, a submission that there was sufficient evidence in relation to Mr Christodoulides that there was a real possibility that he might destroy the material or cause it to be unavailable for use in evidence.

20. The Penal Notice was in the standard terms, and required Mr Christodoulides to permit the search party, which included a named independent solicitor, Tiger Nutrition’s solicitors, and a number of independent computer experts, to enter Mr Christodoulides’ property, and to search and remove a list of things set out in Schedule A, including computers and mobile devices used by Mr Christodoulides, and electronic information within various categories.

21. The search order was executed on 13 June 2019 and, on 26 June 2019, I, sitting as duty judge, granted leave to the independent solicitor to file his own report and the report of the independent computer expert, each dated 25 June 2019, in court.

22. Also on 26 June 2019, I granted leave to Mr Christodoulides to file in court a notice of motion, which sought an order that the orders made by Rein J on 6 June 2019 be discharged, and that the other proceedings be dismissed.

23. Mr Christodoulides was also given leave to file affidavits affirmed or sworn by himself and Mr Blake Joel O’Neill on 24 June 2019.

24. The orders giving leave for the service of subpoenas and notices to produce made on 24 June 2019 in these proceedings required those documents to be served by 1 July 2019, and were made returnable on 22 July 2019.

25. On 16 July 2019, Ward CJ in Eq made an order that Tiger Nutrition file and serve any evidence on which it intended to rely by 16 July 2019, and listed Mr Christodoulides’ notice of motion filed on 26 June 2019 for hearing before Pembroke J on 27 September 2019, with an estimate of 2 to 3 hours.

26. The transcript of the hearing before the Chief Judge records that she was told on behalf of Mr Christodoulides that his evidence was complete, and the solicitor for Tiger Nutrition informed her Honour that there would be one short affidavit put on for Tiger Nutrition before the close of business that day.

27. It was in this context that Tiger Nutrition filed its notice of motion on 4 September 2019, which is now before the Court for determination. That was some six weeks or so after Tiger Nutrition advised the Chief Judge that its evidence would be completed that day. It seems clear that the Chief Judge fixed the matter for hearing, with an estimate of 2 to 3 hours, on the faith of the representations made by the parties that their evidence was complete, or nearly complete.

28. Tiger Nutrition now wants the order releasing it from the implied undertaking so that it can use parts of the material produced by Mr Anthony, Mr Christodoulides and Mr De Silva in answer to subpoenas and a notice to produce in these proceedings in the other proceedings, in order to assist it to resist Mr Christodoulides’ application to have the search order made by Rein J discharged.

29. A number of observations are appropriate concerning the somewhat novel circumstances in which Tiger Nutrition applies to be released from the implied undertaking in this case.

30. First, Tiger Nutrition has created the problem by reason of its decision to commence new proceedings to obtain an ex parte search order against Mr Christodoulides, rather than to make an appropriate order in these proceedings. It did that in order to obtain documentary evidence for the purposes of these proceedings, in circumstances where Tiger Nutrition intended to obtain leave under Practice Note SC Eq 11 to issue subpoenas and a notice to produce, and it has been given that leave.

31. Not only was the search order effectively executed against Mr Christodoulides, but, contrary to the suggested fear that Mr Christodoulides would act to destroy or suppress evidence, Mr Christodoulides has answered the subpoena served upon him, as did Mr Anthony, and Mr De Silva answered the notice to produce, in a manner that has not led to complaint by Tiger Nutrition.

32. Apparently, all of the documents that were available to be produced by Mr Christodoulides have either been swept up by the execution of the search order, or have been produced to the Court by him in answer to the subpoena.

33. If Mr Christodoulides succeeds in his application to have the search order discharged, the documents and other information gathered will then be available to be returned to Mr Christodoulides. That material would then be available to be produced to the Court, if it came within the terms of the subpoena served on Mr Christodoulides.

34. In this respect, Mr Pesman informed the Court that he had specifically been instructed on behalf of Mr Christodoulides that he would undertake to the Court that, if any of the documents or other material seized in execution of the search order was returned to him as a result of that order being vacated, he would not destroy it or otherwise make it unavailable to be produced to the Court.

35. Secondly, it might seem, on a shallow analysis, that these proceedings are so closely related to the other proceedings, in which the application is being made to discharge the search order made by Rein J, that there should be no substantial reason why leave should not be given to Tiger Nutrition to use documents compulsorily produced in these proceedings to resist the vacation application in the other proceeding.

36. However, counsel for Tiger Nutrition accepted that his client had made the decision to commence the new proceedings; and it had gained the benefits sought from taking that course, so that it could not ask the Court in these proceedings to treat its application to be relieved from the implied undertaking other than by strictly applying the relevant principles.

37. Thirdly, it is necessary to address the issue of the utility of making the order sought by Tiger Nutrition in these proceedings. The hearing of Mr Christodoulides’ notice of motion in the other proceedings has been set down before Pembroke J, with a particular time estimate, on the basis that the evidence was complete. Tiger Nutrition has not made any application in the other proceedings for leave to rely upon additional evidence. Mr Pesman informed the Court that, if Tiger Nutrition was released from the implied undertaking, and sought to rely in the other proceedings on the evidence in respect of which the release was given, Mr Christodoulides would need the opportunity to serve additional evidence in reply, and that would prevent the matter being dealt with on 27 September 2019 by Pembroke J. I accept the assertion made by senior counsel, which in my view was reasonable.

38. In sum, Tiger Nutrition has sought a release from the implied undertaking, with the intent that it will rely upon additional evidence in the other proceedings, which it has not been given leave in those proceedings to do, and the probable result will be an adjournment of the hearing before Pembroke J. But Tiger Nutrition has not squarely faced the issue by applying for an adjournment of that hearing, and has not accepted the likely consequence of a contrary cost order.

39. That has led Mr Christodoulides to submit to the Court, on this application, that the Court would be justified in simply dismissing Tiger Nutrition’s application to be relieved of the implied undertaking, on the ground that it would be contrary to proper case management practices for the Court to give that leave in the circumstances explained above.

40. I consider that this submission has considerable force, and it leads me to examine more closely Tiger Nutrition’s purpose in seeking to be relieved from the implied undertaking.

41. On 12 September 2019, in order to refine the ambit of the dispute between the parties, I directed that a general statement should be prepared of the grounds upon which it would be argued that the search order granted by Rein J should be discharged. Although specific attention was not given to the issue, in practical terms that direction was given to Mr Christodoulides, who is the only party seeking a discharge of the search order in the other proceedings. Mr Pesman helpfully accepted that direction on behalf of Mr Christodoulides. In order to avoid this peremptory order being oppressive, I noted that the document that was provided was not to have effect as if it were a pleading, and Mr Christodoulides was to remain able to put any proper argument at the hearing on 27 September 2019.

42. The document provided by Mr Christodoulides specified the grounds upon which he would submit to Pembroke J that the search order should be discharged, and became MFI-3 in these proceedings. Relevantly, it said:

1.   The plaintiff relied on the fact that it obtained relief from Kunc J; it did not disclose that its application was substantially unsuccessful.

2.   The plaintiff misstated the nature of the injunction obtained and failed to disclose (or provide a copy of) Mr De Silva’s affidavit as to compliance with that injunction dated 19 April 2019.

3.   The plaintiff failed to disclose that Justice Kunc had expressed doubt as to whether the information the subject of the (limited) injunction granted was in fact confidential and that when counsel then appearing was asked as to the value of that order the answer was “potentially nothing”.

4.   The plaintiff failed to disclose that there had been substantial delay in seeking relief, both from the date at which the alleged conduct was discovered and from the date of the hearing before Kunc J, in circumstances where Kunc J specifically observed that the plaintiff had not “chosen to seek anything in the nature of an Anton Piller order” and there was no dissent from that proposition.

5.   The written submissions contain detailed summaries of the plaintiff’s evidence in support of the proposition that a strong prima facie case existed but no such summary of the affidavits of Mr De Silva and Mr Christodoulides contesting much [sic] that evidence (beyond references to the fact that some of it was denied).

6.   The plaintiff failed to disclose that Kunc J held that the plaintiff’s delay in seeking relief would of itself have been a discretionary factor which his Honour would have taken into account in declining relief on the restraint of trade had relief not been refused on other grounds.

43. An analysis of these grounds shows that they all involve a submission, in different ways, based on alleged failures to disclose, or inadequate disclosure, by Tiger Nutrition on its ex parte application before Rein J.

44. Mr Christodoulides has not foreshadowed that he will make a submission to Pembroke J that the search order ought to be discharged on the ground that, either at the time Rein J made the search order, or the time of the hearing before Pembroke J, there was not or will not be sufficient evidence for the Court to find that there was a strong prima facie case to satisfy that condition to the granting of the search order.

45. Only ground 5 mentions the issue of the need for proof of a sufficiently strong prima facie case, but, upon proper analysis, it does so only from the perspective of submitting that the submissions made on behalf of Tiger Nutrition were not sufficiently balanced, in that detailed summaries were given of Tiger Nutrition’s evidence, but equally detailed summaries of the affidavits of Mr De Silva and Mr Christodoulides were not provided. Ground 5 does not suggest that there was inadequate evidence to find a sufficiently strong prima facie case, but rather that Tiger Nutrition effectively misled Rein J because its summary was unbalanced.

46. It is then necessary to give some detailed attention to Tiger Nutrition’s schedule, which was marked for identification as MFI-2, and which has been referred to above. The schedule specifically identified and repeated ground 5 in Mr Christodoulides’ statement, and then said:

2.   It appears from this statement that Christodoulides seeks to put into issue the existence of a strong prima facie case for the search order. Further, to the extent the Court is required to embark on a rehearing of the search order application, it will be necessary in any event for the Court to consider anew, inter-alia: (a) the existence of a strong prima facie case; and (b) whether the search order should be made in the exercise of the Court’s discretion.

3.   Exhibit TH-1 to the Affidavit of Thomas Howard includes texts of WhatsApp conversations that tend toward two important matters; first, reinforcing the prima facie case demonstrated before Rein J on the application for the search order; and secondly, casting doubt on some of the accounts given of certain facts by both De Silva and Christodoulides in their affidavit evidence opposing the interim relief that was sought in the main proceedings before Kunc J.

47. Then, in pars 4 and 5, Tiger Nutrition sets out in tabular form the revised list of documents contained in what is now Exhibit P1 that is the subject of Tiger Nutrition’s application to be released from the implied undertaking.

48. Mr Pesman, in his capacity as senior counsel for Mr Christodoulides, challenged the assertion contained in par 2 that his client “seeks to put into issue the existence of a strong prima facie case”. For the reasons given above, based upon the analysis of Mr Christodoulides’ statement, I accept this submission. The course that Mr Christodoulides proposes to take does not open up the need on Tiger Nutrition’s part for additional evidence on the prima facie case issue.

49. As to Tiger Nutrition’s argument that it might still be necessary for it to tender additional evidence to establish the prima facie case, because, if Pembroke J is persuaded to discharge the search order made by Rein J, Tiger Nutrition will be entitled to ask Pembroke J to re-exercise the Court’s jurisdiction to grant the search order, Mr Pesman on behalf of Mr Christodoulides accepted that, as a matter of principle, a court that sets aside an ex parte order has power to reconsider whether the order should be renewed on the evidence before it: see for example Savcor Pty Ltd v Cathodic Protection International APS [2005] VSCA 213 at [25]-[33].

50. Mr Christodoulides’ argument was not that the Court could not reconsider whether an order made ex parte should be renewed, even if there were grounds to discharge it. Rather, he argued that, in the particular circumstances of this case, there would be no need for the Court to remake the search order because, by reason of the fact that the documents that have been seized have been preserved, and Mr Christodoulides has offered to give the undertaking to the Court referred to above, there could no longer be any need for a search order. If Tiger Nutrition is entitled to the production of any of the documents under the subpoena issued to Mr Christodoulides, they will be produced.

51. Although it is well-established in principle that, when the Court discharges an order made ex parte because of some flaw in the manner in which it was obtained by the plaintiff, the Court may in appropriate circumstances re-make the order, the need for the Court to take that course is likely to depend on the type of the interlocutory order that has been made. If, for example, it is an interlocutory injunction to preserve the status quo, there may be a need to renew the order even if the original order must be discharged for nondisclosure, or equivalent reason. However, in the present case, the ex parte order was a search order, the documents have been preserved by the execution of the order, Mr Christodoulides has responded to the subpoena served on him in a proper way, he has offered the undertaking referred to above, and, if the documents and other information are returned to him, then they can be the subject of the Court’s processes in the ordinary way. In simple terms, there is no need or cause for the renewal of the search order, although this is not a matter to be decided by this judgment.

52. Furthermore, it is something of a nonsense to contemplate that the Court would make a new search order, in circumstances where the documents and other information have already been preserved.

53. There was no dispute between the parties that the observations made by Wilcox J in Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217 at 225, concerning the factors relevant to whether the Court should modify or release the implied undertaking, are relevant to the present case. His Honour said: “It is neither possible nor desirable to propound an exhaustive list of those factors.” Wilcox J then set out a non-exhaustive list of relevant considerations. The final factor referred to by his Honour was: “…and, perhaps most important of all, the likely contribution of the document to achieving justice in the second proceeding.”

54. In the circumstances of the present case, and for the reasons expressed above, I have reached the conclusion that, at this stage of the other proceedings, it is neither necessary nor desirable to release Tiger Nutrition from the implied undertaking in the manner, and for the purposes, sought, as an order to that effect is not likely to achieve justice in the other proceeding.

55. This ruling will not prevent Tiger Nutrition making a further application to be released from the implied undertaking, if the assumptions upon which I have determined that the release should not be given at this time prove in any material way to be unfounded. In any future application, Tiger Nutrition should ensure that all parties are joined who have produced documents in respect of which Tiger Nutrition seeks the release.

56. Accordingly, I dismiss Tiger Nutrition’s application in prayer 1 of its notice of motion filed on 4 September 2019.

57. I will hear the parties on the issue of the costs of this application.

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Decision last updated: 24 September 2019