Trans Petroleum (Australia) Pty Ltd v United Petroleum (WA) Pty Ltd
[2019] WASC 154
•13 MAY 2019
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: TRANS PETROLEUM (AUSTRALIA) PTY LTD -v- UNITED PETROLEUM (WA) PTY LTD [2019] WASC 154
CORAM: SMITH J
HEARD: 8 MARCH 2019
DELIVERED : 13 MAY 2019
FILE NO/S: CIV 2608 of 2016
BETWEEN: TRANS PETROLEUM (AUSTRALIA) PTY LTD
Plaintiff
AND
UNITED PETROLEUM (WA) PTY LTD
Defendant
Catchwords:
Application for the production and inspection of documents - Order 26 r 8(2) and r 10 of the Rules of the Supreme Court 1971 (WA) - Where documents sought to be produced are pleaded - Agreements to purchase commercial premises and property - Opposed on grounds of confidentiality, relevance and commercial sensitivity - Whether good cause shown why the documents should not be produced
Third party settlement agreement irrelevant to parties' pleaded cases
Application to set aside subpoena - Subpoena issued to third party - Alleged abuse of process - Alleged attempt to circumvent the application for production and inspection of documents - Whether subpoena is oppressive on third party and an abuse of process
Legislation:
Rules of the Supreme Court 1971 (WA), O 1 r 4A and r 4B, O 26 r 8(2) and r 10, O 36B r 8A(2)(a)
Result:
Application for production and inspection of documents allowed in respect of three agreements but refused in respect of one agreement
Application to set aside subpoena allowed in part
Category: B
Representation:
Counsel:
| Plaintiff | : | Dr J Schoombee |
| Defendant | : | Mr J Maclaurin |
Solicitors:
| Plaintiff | : | Robertson Hayles Lawyers |
| Defendant | : | Johnson Winter & Slattery |
Case(s) referred to in decision(s):
Bond v West Australian Newspapers Ltd [2008] WASC 121
Burchard v Macfarlane [1891] 2 QB 241
Civic Video Pty Ltd v Paterson [2013] WASCA 107
Commissioner for Railways v Small (1938) 38 SR (NSW) 564
Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55
Dubai Bank Ltd v Galadari (No 2) (1990) 1 WLR 731
Hancock Prospecting Pty Ltd v Hancock [2013] WASC 290
Jensen v Nationwide News Pty Ltd [No 6] [2018] WASC 415
Kizon v Palmer (1997) 75 FCR 261
Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd [No 2] [2010] WASC 217
Murray v Schreuder [2009] WASC 51
National Employers' Mutual General Association Ltd v Waind [1978] 1 NSWLR 372
Quilter v Heatly (1883) 23 Ch D 42
Riddick v Thames Board Mills Ltd [1977] QB 881
Robinson v Adshead (No 1) (1994) 12 WAR 574
Schreuder v Murray [No 2] [2009] WASCA 145
Seiffert v Prisoners Review Board [2010] WASC 239
Southern Waste Resources Pty Ltd v Adelaide Hills Region Waste Management Authority [2014] SASC 140
SMITH J:
Introduction - application for production and inspection of documents and application to set aside subpoena
The court has before it:
(a)a chamber summons filed by the plaintiff seeking orders pursuant to O 26 r 8(2) and O 26 r 10 that the defendant produce to the plaintiff the following documents for inspection:[1]
1.1Heads of Agreement ‑ Sale of Business between Quickstop Pty Ltd and the defendant dated 18 October 2006 (at paragraph 39A.3(i) of the Amended Defence);
1.2Interdependency Agreement between Quickstop Pty Ltd and the defendant (amongst others) dated 13 December 2006 (at paragraph 39A.3(ii) of the Amended Defence);
1.3Sale of Business Agreement between Quickstop Pty Ltd and the defendant dated 13 December 2006 (at paragraph 39A.3(iii)(sic) of the Amended Defence); and
1.4Settlement Agreement between Quickstop Pty Ltd and the defendant in or about November 2017 (subject of correspondence between the solicitors for the parties;
(b)a chamber summons filed by the defendant for an order setting aside a subpoena (issued at the request of the plaintiff on 24 August 2018) to Quickstop Pty Ltd (Quickstop).[2]
[1] Plaintiff's chamber summons for an order for production and inspection of documents, filed 2 July 2018 [1.1] ‑ [1.4].
[2] Defendant's chamber summons for an order setting aside a subpoena, filed 6 September 2018.
The plaintiff's pleaded case
The plaintiff at all material times carried on business as a service station operator and a commercial lessor of service stations.
The defendant also carries on the business of the operation of service stations.
The plaintiff was the owner and lessor of the land situated at 2 The Gateway, Edgewater from June 1997.[3] The plaintiff claims that from June 1997 it had plant, equipment, and chattels installed in or on the land and all services to the land.
[3] Plaintiff's amended statement of claim, filed 7 July 2017 [13].
The plaintiff pleads:
(a)prior to the time the plaintiff became the owner of the land the original lessor of the land (also the owner of the land) had constructed, and placed, on the land buildings to be used for the purposes of a service station, which included:[4]
[4] Plaintiff's amended statement of claim, filed 7 July 2017 [11.1] ‑ [11.3].
(i)4 x Gilbarco MPP 6 hoses fuel bowsers (bowsers);
(ii)pump counter communication system and computers (including the surge protectors and main electrics to the pump box) (pump systems); and
(iii)the car wash including all relevant components (car wash);
(b)on or about 11 July 1996, the original lessees assigned the right, title and interest in the lease (of the land and original lessors' fixtures, plant, equipment, and chattels installed in or on the land) to Mobil Oil Australia Pty Ltd (Mobil);[5]
(c)on or about 1 December 2004, Mobil, with the consent of the plaintiff, assigned the lease of the land to Quickstop;[6]
(d)from on or about 1 December 2004 to about 31 October 2006, Quickstop was the lessee of the land;
(e)on or about 31 October 2006, Quickstop, with the consent of the plaintiff, assigned the lease of the land to the defendant;[7]
(f)the defendant vacated the premises on or about 24 June 2016;[8]
(g)prior to the expiration of the lease of the land (and the vacation of the premises) by the defendant, as and from 3 June 2016 the defendant;
(i)without the consent of the plaintiff, removed from the land the bowsers and the pump system;[9] and
(ii)without notifying the plaintiff or rectifying the damage, caused significant damage to the car wash and other plant and equipment on the land.[10]
[5] Plaintiff's amended statement of claim, filed 7 July 2017 [12].
[6] Plaintiff's amended statement of claim, filed 7 July 2017 [14].
[7] Plaintiff's amended statement of claim, filed 7 July 2017 [16].
[8] Plaintiff's amended statement of claim, filed 7 July 2017 [20].
[9] Plaintiff's amended statement of claim, filed 7 July 2017 [45].
[10] Plaintiff's amended statement of claim, filed 7 July 2017 [52] ‑ [56].
The plaintiff seeks, against the defendant, orders for:[11]
(a)damages for conversion, alternatively detinue, with respect to the bowsers and the pump systems, alternatively damages for breach of lease;
(b)damages for breach of the lease with respect to the car wash; or
(c)further and alternatively a declaration that:
(i)the bowsers, pump systems and car wash (the disputed property) are fixtures upon the land; and
(ii)the defendant is estopped from asserting ownership to the disputed property and an order for equitable damages or compensation.
[11] Plaintiff's amended statement of claim, filed 7 July 2017 [69] ‑ [72].
The defendant's pleaded case
The defendant denies the plaintiff acquired the disputed property from the original lessors. In [39A] of the defendant's amended defence filed 21 August 2017, the defendant claims:[12]
[12] Defendant's amended defence, filed 21 August 2017 [39A.1] ‑ [39A.3].
(a)on or about 13 December 2006, the defendant agreed to purchase from Quickstop, and Quickstop agreed to sell to the defendant, amongst other things, the assets owned by Quickstop and used to conduct its business from the premises (including the disputed property);
(b)the defendant paid consideration to Quickstop for the purchase of the assets; and
(c)in selling the assets to the defendant, Quickstop warranted that it was the legal and beneficial owner of, and had good and valid title to, the assets and that the assets would, on completion, be free of all encumbrances the particulars of which are:
(i)the assets purchased by the defendant and sold by Quickstop are those assets referred to in the list at annexure A to the amended defence;
(ii)the agreement to purchase the assets and Quickstop's ownership of the assets is contained in:
(A)a Heads of Agreement ‑ Sale of Business between Quickstop and the defendant dated 18 October 2006;
(B)an Interdependency Agreement between Quickstop and the defendant (amongst others); and
(C)a Sale of Business Agreement between Quickstop and the defendant (amongst others) dated 13 December 2006;
each of which are confidential commercial agreements in the possession of the defendant's solicitor (the Quickstop agreements).
The defendant admits that it removed the bowsers and pump systems from the land, and says that it was entitled to do so as they formed part of the assets purchased by the defendant.[13]
[13] Defendant's amended defence, filed 21 August 2017 [45].
The defendant claims it owned the car wash and admits it removed components from the car wash when it vacated the premises.[14]
[14] Defendant's amended defence, filed 21 August 2017 [53].
Relevant background facts - Quickstop
On 15 September 2016, the plaintiff issued proceedings against the defendant.[15]
[15] Writ of summons, filed 15 September 2016.
On 20 February 2017, the defendant brought third party proceedings (against Quickstop) seeking contribution, indemnity, or alternatively damages, in the event that the plaintiff was successful in its claim against the defendant.[16]
[16] Notice to third party, filed 20 February 2017.
In or about November 2017, the defendant and Quickstop entered into a settlement or compromise of the third party proceedings by way of a settlement agreement (Quickstop settlement agreement). The material terms of the Quickstop agreements are not known to the plaintiff, nor was the plaintiff a party to the settlement agreement.
On 13 November 2017, the third party proceedings were dismissed by a consent order.
Plaintiff's application for production and inspection of the Quickstop agreements and the Quickstop settlement agreement
The Quickstop agreements are a suite of three agreements for the sale of the businesses and assets of a number of service stations comprising good will, intellectual property, materials, land (of some sites), equipment, and the benefit and burden of the businesses of each leased site.
One of the service stations that is the subject of the Quickstop agreements was the Edgewater service station. The two other service stations were a service station located at Padbury and another at Mindarie.[17]
[17] ts 9, 8 March 2019.
The defendant has given discovery of redacted copies of the Quickstop agreements pursuant to an agreed confidentiality regime entered into between the defendant and the plaintiff through the plaintiff's former solicitors.
In accordance with this regime, the defendant provided the plaintiff's solicitors with unredacted versions of the Quickstop agreements. The plaintiff's solicitors (but not the plaintiff) may view and access the documents.[18]
[18] ts 3 - 4, 8 March 2019.
Additionally, the defendant has provided to the plaintiff partially redacted versions of the Quickstop agreements outside of the confidentiality regime, which may be viewed by the plaintiff itself.[19]
[19] Affidavit of Madeleine Giselle Bright, affirmed 21 February 2019.
The redacted copies of the Quickstop agreements, essentially, only redact the schedule of lists of assets and prices paid for assets of the sites.
The plaintiff sought to extend the confidentiality regime to Mr Jimmy Wong, the plaintiff's sole director, to enable Mr Wong to review the documents and provide the plaintiff's solicitors with proper instructions.
As part of the agreement with Quickstop, the defendant, in purchasing the Edgewater assets, paid Quickstop a specified sum for the equipment particularised in annexure A to the amended defence (which included the disputed equipment).
The plaintiff seeks to obtain inspection of the unredacted Quickstop agreements to compare the amount paid by the defendant for the assets it purchased as the Edgewater assets and compare that amount to the amounts paid for the same type of equipment purchased by the defendant from Quickstop for the assets located at the Padbury and Mindarie service stations.
The defendant concedes that the Quickstop agreements are referred to in [39A] of its amended defence, in support of a plea that it and Quickstop agreed to sell and purchase, respectively, certain assets which include the disputed property and that Quickstop provided certain warranties in respect of those assets.[20] However, it claims that whilst it is pleaded (only) that consideration was paid for purchase of the assets, the amount of the consideration is not material (relevant) to the plea.[21]
[20] Defendant's outline of submissions in opposition to the plaintiff's O 26 application, filed 27 February 2019 [12].
[21] ts 39, 8 March 2019; defendant's outline of submissions in opposition to the plaintiff's O 26 application, filed 27 February 2019 [13].
It says its plea in [39A] of the amended defence is expressly directed to the legal effect of the other terms and provisions of the Quickstop agreements and is run as a matter of construction of the contracts.[22]
[22] Defendant's outline of submissions in opposition to the plaintiff's O 26 application, filed 27 February 2019 [13].
The defendant points out that the plaintiff, in its reply to the amended defence dated 13 October 2017, does not plead to [39A] of the amended defence.[23]
[23] Defendant's outline of submissions in opposition to the plaintiff's O 26 application, filed 27 February 2019 [14].
The plaintiff, however, submits that it wishes to file an amended reply to plead to [39A] but is unable to do so unless the plaintiff's director is able to inspect unredacted copies of the Quickstop agreements, as it cannot obtain proper instructions from the plaintiff's director.[24]
[24] ts 37, 8 March 2019.
The defendant also claims that the redacted information is confidential, commercially sensitive, and contains irrelevant information regarding other sites, including the location and details of other property and the monetary values (including the purchase prices) of the property purchased by the defendant as part of the same transaction by which it acquired the Edgewater site.[25]
[25] Affidavit of Ashley Maree Swenser, sworn 13 August 2018 [18] ‑ [19]; defendant's outline of submissions in opposition to the plaintiff's O 26 application, filed 27 February 2019 [21].
Thus, they claim the details of the transaction with Quickstop, insofar as they relate to sites and assets other than those at the Edgewater site, are commercially sensitive in nature and are irrelevant to the proceedings.
The defendant says that it and the plaintiff are trade rivals, as both entities own and operate petrol stations around Western Australia. The defendant says it should not be required to share commercially sensitive information with a trade rival. It says that although the Quickstop agreements date back some years, both the plaintiff and defendant are still active within the Western Australian petrol station industry and that knowledge of past transaction details, entered into by the defendant, may affect any potential future transactions between the parties, and may confer upon the plaintiff the benefit of knowledge that it would not otherwise have had.[26]
[26] Defendant's outline of submissions in opposition to the plaintiff's O 26 application, filed 27 February 2019 [26(d)].
When regard is had to all of these matters, the defendant says that the plaintiff has failed to demonstrate any persuasive reason why it is necessary to show unredacted copies of the Quickstop agreements to the plaintiff's directors.
The plaintiff's counsel prepared a confidential schedule of the argument to be advanced at trial if regard is able to be had to the information contained in the unredacted Quickstop agreements. The defendant objects to the confidential schedule being inspected by the court at this time.
I do not find it necessary to determine this objection, as I do not find it necessary to have regard to the schedule in disposing with the plaintiff's application for inspection of the Quickstop agreements.
The defendant produced unredacted copies of the Quickstop agreements for the court to inspect if the court formed the view that it was necessary to inspect the documents to determine the plaintiff's application for production of these documents. I have not, however, inspected these documents. For the reasons that follow, I did not find it necessary to do so in order to determine the plaintiff's application.
Legal principles ‑ O 26 r 8(2) of the Rules of the Supreme Court
The plaintiff seeks production and inspection of the three Quickstop agreements pursuant to O 26 r 8(2). The Quickstop agreements are pleaded as particulars of how the defendant became the legal and beneficial owner of the disputed assets, free of all encumbrances.[27]
[27] Defendant's amended defence, filed 21 August 2017 [39A.3].
Order 26 r 8(2) of the rules of the Supreme Court entitles a party, at any time, to serve a notice on any party in whose pleadings (or affidavits) reference is made to any document requiring the other party to produce that document for inspection by the party giving the notice.
In Murray v Schreuder, Newnes J found that the right to inspect under O 26 r 8(2) is a right conferred as an alternative, or in addition to, discovery.[28] His Honour also went on to consider the effect of O 26 r 8(2) and in doing so, had regard to a line of English cases which considered the equivalent of O 26 r 8(2). His Honour said:[29]
The purpose of O 26 r 8(2) is to put the party seeking production of the document for inspection in the same position as they would have been in if the document referred to had been set out in full in the affidavit: Rafidain Bank v Agom Universal Sugar Trading Co Ltd [1987] 3 All ER 859, 862. The document must be produced unless good cause is shown why it should not be: Quilter v Heatly (1883) 23 Ch D 42, 51; Rafidain Bank.
[28] Murray v Schreuder [2009] WASC 51 [67] ‑ [68]; referred to by the Court of Appeal without disapproval in Schreuder v Murray [No 2] [2009] WASCA 145; (2009) 41 WAR 169 [55] (Buss JA; McLure JA agreed); approved by Martin CJ in Seiffert v Prisoners Review Board [2010] WASC 239 [12].
[29] Murray v Schreuder [2009] WASC 51 [63].
The principle established in Quilter v Heatly[30] was applied by Newnes J in Bond v West Australian Newspapers Ltd,[31] and by Master Adams in Robinson v Adshead (No 1). In Robinson v Adshead (No 1), Master Adams observed that:[32]
It is clear from Quilter v Heatly that the defendants have a right to an order for inspection unless good cause to the contrary is shown and in my view, it is not essential that a document referred to in the pleadings has significant probative value to a party or is an essential part of his cause of action for production to be ordered. If the document is referred to in a statement of claim, then it must be taken to be material for the reason that only material facts should be pleaded. There is, therefore, a prima facie entitlement to production of the document referred to.
[30] Quilter v Heatly (1883) 23 Ch D 42.
[31] Bond v West Australian Newspapers Ltd [2008] WASC 121 [35].
[32] Robinson v Adshead(No 1) (1994) 12 WAR 574, 576.
In Quilter v Heatly, Jessel MR, Lindley and Bowen LJ found that where there is a 'reference' to a document in a pleading, inspection of the document is to be given, unless the party against whom production is sought can show good cause for refusing production.[33] Thus, the onus is on the party resisting production to show good cause.
[33] Quilter v Heatly (1883) 23 Ch D 42, 48 (Jessel MR), 50 (Lindley LJ), 51 (Bowen LJ).
A distinction has been drawn in the English cases between a right to production of a document to which 'reference' is directly made in a pleading or an affidavit, as opposed to which a mere inference to a document is raised (in respect of which no right of production arises).[34]
[34] Dubai Bank Ltd v Galadari (No 2) (1990) 1 WLR 731.
Similar factual and legal issues to those raised in this matter were raised in Southern Waste Resourceco Pty Ltd v Adelaide Hills Region Waste Management Authority.[35] Master Dart of the Supreme Court of South Australia had before him an application for the provision and inspection of an unredacted copy of a document referred to in a pleading. The document was a report by the defendant's executive officer that contained financial models used by the defendant. The defendant objected to an unredacted copy of the report being provided on the basis that it contained confidential and sensitive commercial information. The report was also said to contain some matters which were the subject of a claim of legal professional privilege. However, the plaintiff did not seek to inspect the part of the report that contained the material that was claimed to be subject to the claim of legal professional privilege. The report was said to contain price comparisons between the operation of the plaintiff and the defendant's operation, although no issue arose in respect of trade rivals.
[35] Southern Waste Resources Pty Ltd v Adelaide Hills Region Waste Management Authority [2014] SASC 140.
In Southern Waste Resourceco, the plaintiff contended that the defendant was not entitled, having pleaded the document, to refuse production or inspection on the grounds it contained confidential information.[36] The defendant agreed that the rule of court requiring inspection was mandatory. Nonetheless, it argued that the court retained a discretion to permit the defendant to mask parts of the documents where a document contained material that was irrelevant and/or confidential.
[36] Southern Waste Resourceco Pty Ltd v Adelaide Hills Region Waste Management Authority [2014] SASC 140 [9].
Master Dart accepted that the report contained matters that were irrelevant and commercially sensitive. Master Dart applied the principle in Quilter v Heatly and then observed:[37]
[37] Southern Waste Resourceco Pty Ltd v Adelaide Hills Region Waste Management Authority [2014] SASC 140 [19] - [25].
There is a significant difference between the obligation placed on a party with respect to disclosure and the obligation to produce a document for inspection which has been pleaded. There is no doubt there has long been a practice of masking documents or passages of documents that are said to be irrelevant in respect of documents which have been disclosed. However, I do not think that the practice assists the defendant in respect of Rule 61.
The masking of irrelevant parts of documents or, for that matter, commercially sensitive parts of documents, is understandable when considered in the context of a party's obligation to make disclosure.
Disclosure is an obligation imposed on the parties by the Rules of Court. It is an intrusion into the right of a party to keep its documents confidential. However, only documents which are relevant, now directly relevant, are required to be disclosed. When regard is had to the intrusive nature of the obligation to make disclosure, and the limitation on the scope of documents to be disclosed, it is understandable that documents can be masked to exclude irrelevant or commercially sensitive parts of a document.
The obligation under Rule 61 is totally different, in my opinion. Relevance has no part to play. It is an obligation on a party who pleads a document to produce a copy of that document to the other party so that that party is able to properly understand the case put against it. No issue of disclosure or relevance arises. A document which did not fall within the relevant criterion to be disclosed would still need to be produced if referred to in a pleading.
The defendant's argument that, notwithstanding the wording of Rule 61, the Court retains a discretion in respect of the production of documents must be accepted at least to some extent. The effect of Rule 117 is that the Court always has a discretion to override the Rules of Court when it is in the interests of justice to do so. The Court could decline to require the production of a document that had been referred to in a pleading. However, it would be a very rare case in which the Court would do so. This is not such a case.
The defendant's pleading is that at its meeting on 21 November 2013 it received the subject report and considered the information contained in it. It then resolved to act in a certain way based on that information. The position of the defendant is that, notwithstanding pleading that it acted on information contained in the report, the information should not be made available to the plaintiff.
To accede to the defendant's proposition would be to create significant difficulties for the conduct of the trial. The report must be an important issue for the defendant's case. It would not have been pleaded otherwise. How, for example, is counsel for the plaintiff to cross-examine, at trial, a member of the Authority about its decision to act in a certain way when counsel is not entitled to see the information he or she relied upon. In my opinion, Rule 61 does not anticipate such an approach and, once a document has been pleaded, except in the rarest of cases, the obligation is to produce an unredacted copy to the other party upon request.
The principles to be applied where a principal of a trade rival seeks an unrestricted right to inspect confidential and commercial sensitive documents
In Civic Video Pty Ltd v Paterson, the Court of Appeal summarised the principles to be applied when considering whether a court should allow or refuse an application for inspection of confidential commercially sensitive documents sought by a trade rival as follows:[38]
Confidentiality is not ordinarily a sufficient reason to deny inspection by the opposite party as the implied undertaking that the documents be used only for the purpose of the litigation will provide sufficient protection to the party producing them. However, other considerations arise where the documents in question are commercially sensitive and the relevant parties are trade rivals: Cazaly Iron Pty Ltd v Minister for Resources [2007] WASCA 60 [7] - [10]. Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd [No 2] [2010] WASC 217 [55] - [59].
In this context, when it is said that the information is 'commercially sensitive', what is meant is that 'a rival in the market place who obtains access to it may turn the material to the advantage of that rival and to the disadvantage of the party who seeks to keep it secret': Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] 2 VR 34, 38.
Where the relevant parties are trade rivals, and the documents in question contain confidential and commercially sensitive information, the court must strike a fair balance between the legitimate concerns of the party discovering the documents and the needs of the other party to the litigation: Mobil Oil, 39-40; Cadbury Pty Ltd v Amcor Limited (No 2) [2009] FCA 663 [6].
In relation to the court's duty to strike a fair balance, Hayne JA in Mobil Oil observed:
'Where, as here, the problem is one of balancing the needs of a party to the litigation and the legitimate concern of a trade rival to retain secrecy of commercially sensitive information, it may well be necessary to mould orders that will distinguish between the plaintiff, its officers, its legal advisers and experts. Again it may be accepted that generally a party is entitled to inspect the documents of an opposite party by itself its servants or its agents. But in the present kind of case, is it necessary to destroy the legitimate claim to confidentiality from trade rivals by permitting the principal of that rival to look at the documents? Is it sufficient to permit counsel and solicitors (and nominated experts) to do so? It is now commonplace in the courts for material to be made available only to the legal advisers of the parties and nominated experts. Of course such arrangements bring with them their own difficulties and are arrangements that should be adopted only where there is a need to do so; of course they are arrangements that may need to be reviewed as the matter progresses towards trial or as the trial itself proceeds. But they are arrangements that are made and should be made when doing so would strike a fair balance between the competing interests of the party seeking inspection and the party claiming confidentiality. No more specific rule can be laid down - each case will fall for determination according to its own facts. In particular the nature and the content of the disputed documents is a matter that will usually, if not invariably, be of great importance in forming a conclusion and, if that is so, it will be appropriate for the judge to inspect the documents concerned (39 - 40).'
Some of the relevant matters in assessing whether a document should attract additional protection beyond the protection of the implied undertaking include the age of the information, the identity of the persons who will inspect the documents, and the reason or reasons why the inspection of particular documents is necessary: Cadbury Pty Ltd v Amcor Limited (No 2) [7]. More generally, a relevant factor is the degree of commercial sensitivity involved and the extent of any prejudice to the party giving discovery: Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd [No 2] [58].
[38] Civic Video Pty Ltd v Paterson [2013] WASCA 107 [26] ‑ [30] (Pullin & Murphy JJA).
In making these observations, the Court of Appeal made it clear that in assessing whether a document should attract additional protection, beyond the protection of the implied undertaking,[39] it is relevant to consider, among other matters, the age of the information and the degree of commercial sensitivity involved. As to the latter, Murphy JA in Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd [No 2] relevantly observed:[40]
The prima facie right in a party to inspect its opponent's discovered documents is important both for the proper conduct of the trial, as well as for informed prospective settlement negotiations: Hadid v Lenfest Communications Inc (1996) 70 FCR 403, 410. Also, 'it is in the interests of justice that the parties, and ultimately the Court, do not proceed in very difficult litigation in a half-light without adequate instructions': Australian Competition and Consumer Commission v Universal Music Australia Pty Ltd [2000] FCA 1086 [17].
The party claiming to displace the prima facie right must prove the existence and degree of confidentiality involved in relation to the particular documents which are sought to be withheld from inspection: Hadid (410).
Has the defendant shown good cause why the Quickstop documents should not be disclosed to the plaintiff's principal
[39] The implied undertaking is that a document will be used solely for the purpose of the litigation in which they are produced, and not for any collateral or improper purpose: Riddick v Thames Board Mills Ltd [1977] QB 881, 896.
[40] Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd [No 2] [2010] WASC 217 [56] - [57].
In this matter, the redacted information relates solely to lists of equipment and amounts paid for particular assets sold by Quickstop to the defendant in 2006. This information is over 12 years old.
In support of the defendant's claim that the Quickstop documents are commercially sensitive, the defendant relies upon the following opinion stated in an affidavit, sworn on 13 August 2018, by Ms Ashley Maree Swenser (who is employed by the defendant as a solicitor and legal counsel) that:[41]
The information that has been redacted from this version of the Quickstop Sale Agreements is:
(a)all references to monetary values, including the purchase price paid by the Defendant for the Premises and the other properties involved in the transaction; and
(b)clauses and schedules disclosing the details of the properties, other than the Premises, involved in the transaction.
I verily believe that the information that was redacted from this version of the Quickstop Sale Agreements is commercially sensitive and irrelevant to this proceeding.
[41] Affidavit of Ashley Maree Swenser, sworn 13 August 2018 [18] - [19].
Even if it is accepted that the plaintiff and the defendant are trade rivals, the defendant's 'evidence' that the redacted information is commercially sensitive and confidential is insufficient to prove that it is so. Ms Swenser's assertion that this information is commercially sensitive cannot be regarded as anything other than a mere assertion.
Ms Swenser does not illuminate, in any way at all, any reason why information relating to the sale price of the assets forming part of a business of operating service stations in Perth's northern suburbs that is over 12 years old would be commercially sensitive in 2018. Nor does Ms Swenser illuminate to what degree the information should be regarded as commercially sensitive or what prejudice the defendant would suffer if the plaintiff's principal is allowed to inspect the unredacted information.
In these circumstances, the court cannot be satisfied that the redacted information in the lists of assets and sale prices of the three service stations is to be properly regarded as commercially sensitive.
Ms Swenser's opinion that the Quickstop agreements are irrelevant must also be rejected. The Quickstop agreements in their entirety are pleaded as material particulars. The price paid by the defendant for the disputed equipment is squarely a material particular of fact raised by [39A] of the amended defence. Plainly, the documents in their entirety must be relevant, as they are pleaded as such.
Whether the price paid for the disputed equipment is consistent with the price paid for similar equipment in acquiring the Padbury and Mindarie service station sites is a line of inquiry the plaintiff is entitled to pursue. In pursuing this line of inquiry the plaintiff is properly entitled to obtain instructions from the plaintiff's director about those matters by regard to the redacted information.
The plaintiff's application for production and inspection of the Quickstop settlement agreement
The Quickstop settlement agreement is in a different category to the Quickstop agreements. It is not a document referred to in the defendant's amended defence.
The plaintiff seeks production of the Quickstop settlement agreement on grounds that it is necessary to dispose fairly of the cause and pursuant to the case management principles in O 1 r 4A and r 4B.
The settlement agreement was entered into between Quickstop and the defendant in or about November 2017. A heavily redacted and partially signed version of the Quickstop settlement agreement was discovered to the plaintiff and the plaintiff's solicitors. The redacted copy in effect only discloses one operative clause that states: 'The parties have agreed to settle the dispute, on a without costs or admissions basis in accordance with the agreement'.
The plaintiff claims that the Quickstop settlement agreement should be discovered without redaction as it is relevant to the providence of the ownership of the disputed equipment. The plaintiff seeks to make a Peruvian Guano 'line of inquiry'[42] to either directly or indirectly enable the plaintiff to advance its own case or damage the case of the defendant. In particular, the plaintiff wishes to ascertain whether a payment was made in settlement of the third party proceedings.
[42] Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55.
The defendant claims that the settlement agreement is commercially sensitive and confidential. It argues that the document is not relevant to the nature of the case between the plaintiff and the defendant or the facts in issue. The defendant points out that the Quickstop settlement agreement was, by its express terms, a commercial settlement, and was entered into without any admissions or concessions. The defendant concedes that a global sum was paid as part of the terms of the settlement, but says that that amount was a commercial settlement made without any admission of liability and that the global sum does not attribute any dollar amounts to any particular matter or item of assets and was inclusive of costs.
During the course of the hearing of the application, the defendant agreed that it was appropriate that the court inspect an unredacted copy of the Quickstop settlement agreement.
Having inspected an unredacted copy of the Quickstop settlement agreement I agree, for the reasons advanced by the defendant, that the terms of the Quickstop settlement agreement are neither directly or indirectly relevant to the issues in dispute between the plaintiff and the defendant.
Conclusion - plaintiff's application for inspection of documents
For these reasons, I propose to order:
(a)that the defendant is to provide unredacted copies of the Quickstop agreements for inspection to the plaintiff; and
(b)that the plaintiff's application for inspection of the Quickstop settlement agreement be refused.
The defendant's application to set aside the subpoena to Quickstop
The defendant claims the Quickstop subpoena is an abuse of process, it is not issued for a proper purpose or otherwise ought to be set aside pursuant to O 36B r 8A(2)(a) or, alternatively, pursuant to the inherent jurisdiction of the court.
The defendant seeks orders to set aside items 3.1 and 4 to 7 of a subpoena issued to Quickstop (at the request of the plaintiff) on 24 August 2018 and returnable on 21 September 2018.[43]
[43] Defendant's outline of submissions in support of application to set aside subpoena, filed 8 February 2019 [2] ‑ [3].
Items 4 to 7 are the Quickstop agreements and the Quickstop settlement agreement, and are identical to the documents sought to be produced to the plaintiff by the defendant in the plaintiff's application for production.
In item 3.1 all communication, notes, memoranda or documents containing financial and non‑financial information relating to the following matters are sought:
the sale by Quickstop Pty Ltd and the purchase by United Petroleum (WA) Pty Ltd, on or about 13 December 2006, of the business, and any assets (including the Disputed Property) in respect of the service station on the property situated at 2 The Gateway, Edgewater, Western Australia;
Items 1, 2 and 3.2 of the subpoena are not the subject of objection by the defendant. These items seek the production of documents going to rental payments by Quickstop to the plaintiff; the sale and purchase of specified equipment situated at the Edgewater service station; and the legal and beneficial ownership of any assets situated at the Edgewater service station prior to the sale of assets by Quickstop to the defendant.
The defendant objects to the production by Quickstop of documents in items 3.1 and 4 to 7 on grounds that:
(a)the documents sought in each of these items are confidential;
(b)it is an abuse of process to seek to use a subpoena to circumvent the proper processes of discovery; and
(c)the plaintiff did not give notice of its intention to issue the Quickstop subpoena or serve the defendant with a copy of the subpoena as soon as practicable after its service upon Quickstop.
The defendant's solicitor, Ms Madeleine Giselle Bright, became aware that the plaintiff had filed the Quickstop subpoena on Monday, 27 August 2018, when she logged onto the court's ePortal to check whether the plaintiff had filed any response to evidence in relation to the plaintiff's discovery application by 24 August 2018, as required by the courts order made on 30 July 2018.[44]
[44] Affidavit of Madeleine Giselle Bright, affirmed 6 September 2018 [16].
On 29 August 2018, Ms Bright sent an email to the plaintiff's solicitors requesting them to undertake not to serve the subpoena on Quickstop.[45]
[45] Affidavit of Madeleine Giselle Bright, affirmed 6 September 2018 [20].
Mr WeeChong Tay, a solicitor for the defendant, deposes in an affidavit, sworn on 21 December 2018, that:[46]
(a)he caused the subpoena to be served on solicitors for Quickstop on Monday, 27 August 2018;
(b)on Wednesday, 29 August 2018, he received correspondence from the defendant's solicitors complaining about non‑service of the Quickstop subpoena on it;
(c)he was aware that O 35B r 4(2) of the Rules of the Supreme Court requires service of a copy of a subpoena on each party as soon as practicable after the subpoena is served on the addressee; and
(d)he intended to cause the defendant's solicitors to be served with a copy of the subpoena on or about 29 August 2018 but by that date as the defendant's solicitors had notice of the Quickstop subpoena he did not do so.
[46] Supplementary Affidavit of WeeChong Tay, sworn 21 December 2018 [6] ‑ [13].
The defendant claims the Quickstop subpoena is, in effect, an attempt to circumvent:[47]
(a)the court's discovery and inspection processes;
(b)the claims of confidentiality made by the defendant over the Quickstop documents; and
(c)the proper determination of the defendant's rights in that regard.
[47] Defendant's outline of submissions in support of application to set aside subpoena, filed 8 February 2019 [3(a)] ‑ [3(b)].
The defendant points out that the plaintiff knew the grounds upon which the discovery application was being opposed, prior to the service of the Quickstop subpoena, as the plaintiff's discovery application had been the subject of ongoing conferral.
Whilst I agree that the defendant is right to complain that the plaintiff's solicitors had not complied with O 35B r 4(2), it appears clear that the defendant was not prejudiced by the failure of the plaintiff's solicitors to do so. This is because the plaintiff's solicitors by their own efforts became aware of the subpoena and its terms on the day on which the subpoena was served on Quickstop solicitors.
The plaintiff's solicitors should have diligently taken steps to comply with the court's rules as to service of the subpoena as the plaintiff's solicitors knew that its chamber summons seeking an order for production of the documents (the subject of items 4 to 7 of the subpoena) was opposed by the defendant.
However, in the absence of prejudice to the defendant, by the failure of the plaintiff to comply with the rules of the court, I am not persuaded that the subpoena should be set aside on this ground.
As to the defendant's argument that the subpoena constitutes an abuse of process, the fact that the document sought pursuant to a subpoena might also be sought in discovery does not, of itself, mean that the subpoena is an abuse of process.[48]
[48] Hancock Prospecting Pty Ltd v Hancock [2013] WASC 290 [49] (Pritchard J).
The authorities establish that it is an abuse of process to compel the production of documents from a third party if the subpoena is used for the purpose of discovery whereby the person to whom the subpoena is addressed will have to make a judgment as to which documents relate to the issues between the parties.[49]
[49] National Employers' Mutual General Association Ltd v Waind [1978] 1 NSWLR 372, 382 (Glass JA, Moffitt P and Hutley JA agreed) applying Burchard v Macfarlane [1891] 2 QB 241 and Commissioner for Railways v Small (1938) 38 SR (NSW) 564.
A subpoena may also be oppressive if the terms of the subpoena are so wide that it imposes on a stranger an obligation to collect and produce documents many of which can have no relevance to the litigation.[50]
[50] National Employers' Mutual General Association Ltd v Waind [1978] 1 NSWLR 372, 382 (Glass JA, Moffitt P and Hutley JA agreed).
However, these principles have no application in this matter as the categories of documents sought to be discovered in items 3.1 and 4 to 7 are described in particular terms and do not require Quickstop to make a judgment as to the relevance of the documents sought to be produced to the issues in dispute. Nor is there any issue as to the number and volume of documents sought to be produced.
An abuse of process will, however, arise if a court has decided that discovery of particular documents is prohibited or otherwise has been refused by an order of a court and production of those documents is sought by the issue of a subpoena to a third party.[51]
[51] Jensen v Nationwide News Pty Ltd [No 6] [2018] WASC 415 [13], [69] and [73] (Quinlan CJ); Kizon v Palmer (1997) 75 FCR 261, 271 (Beaumont J).
Consequently, any argument in respect of an abuse of process must also necessarily fall away in respect of items 4 to 6.
Given my findings in respect of the plaintiff's discovery application, I do not intend to set aside the subpoena in respect of the obligation to produce items 4 to 6.
Further, given my findings rejecting the defendant's claim of commercial sensitivity in respect of items 4 to 6, the defendant's claim of confidentiality to resist inspection of documents in item 3.1 must also necessarily fall away.
However, item 7 is in a different category. The document described directly or indirectly in item 7 (being the Quickstop settlement agreement) is not relevant to the issues pleaded in the action. I intend to make an order setting aside the subpoena, in part, to release Quickstop from the obligation to produce this document. To not make such an order would constitute an abuse of process and circumvent the orders that I intend to make in respect of the plaintiff's application for the production and inspection of this document.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
EH
Research Associate/Orderly to the Honourable Justice Smith13 MAY 2019
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