Tribond Developments Pty Ltd v The Hon Kenneth Trevor Griffin, Attorney-General of the State of South Australia

[1997] FCA 486

IN THE FEDERAL COURT OF AUSTRALIA )
  )
SOUTH AUSTRALIA DISTRICT REGISTRY )    No SG 101 of 1996
  )
GENERAL DIVISION                 )

BETWEEN:

TRIBOND DEVELOPMENTS PTY LTD

First Applicant

RODNEY ABEL

Second Applicant

ANNE SELINA ABEL

Third Applicant

- and -

THE HON. KENNETH TREVOR GRIFFIN,
  ATTORNEY-GENERAL OF THE STATE OF
  SOUTH AUSTRALIA

First Respondent
  and First Cross-Respondent

THE STATE OF SOUTH AUSTRALIA

Second Respondent
  and Second Cross-Respondent

ADVERTISER NEWSPAPERS LIMITED

Third Respondent
  and Cross-Claimant

KURT ESSER

Third Cross-Respondent

REASONS FOR DECISION

CORAM:    Mansfield J
PLACE:    Adelaide
DATE:     28 May 1997

In this matter I delivered Reasons for Decision on 8 May 1997 striking out pars7-12 of the cross-claim filed on 25 March 1997.  In those reasons I set out the issues generally in the proceedings and the issues to which the cross-claim specifically was directed.  I will not repeat the material which is referred to in those reasons.  Following that decision I gave to the third respondent leave to file and serve an amended defence and to consider whether it wished to pursue a cross-claim.  It has filed a document entitled Second Amended Defence on 23 May 1997 which is in large measure responsive to some amendments permitted to the statement of claim.

Paragraph 16.6 of that defence, although slightly amended, is in terms similar to a previous defence.  It provides:

"says that in so far as the applicants seek relief against the third respondent in equity they are disentitled by the conduct of their agent Kurt Esser ("Esser") to such relief;

PARTICULARS

(a)at all material times Colin James acted as employee and agent of the third respondent in its dealings with the applicants or any of them;

(b)on 6 November 1996, Esser telephoned the third respondent through its employee Colin James.  At all material times Esser was acting as the agent of the applicants.  Esser asked Colin James how he had got the information about the settlement sum which had appeared in The Advertiser article on 5 November 1996;

(c)the third respondent through its employee Colin James informed Esser that their telephone conversation was "off the record".  Colin James informed Esser that Griffin had told him the amount of the settlement sum, which James would not have told Esser had the conversation not been off the
record.  In the context of the conversation between James and Esser the words "off the record" meant and were understood to mean that:

(i)James's identity as the person who had passed information to Esser was to be confidential;

(ii)the fact that James had passed information to Esser, the agent for the applicants, was to be confidential;

(iii)James was not to be publicly associated with the detail of the conversation between himself and Griffin;

(iv)the third respondent and/or James was not to be involved in any dispute concerning the disclosure of the settlement sum;

(d)the third respondent through its employee Colin James would have terminated the conversation with Esser and would not have passed information to Esser had there not been an understanding between them that the conversation was off the record and thereby confidential;

(e)in breach of the confidence attaching to the telephone conversation between the third respondent through its employee Colin James and Esser on 6 November 1996, the applicants have through the pleading of paragraph 18 of the Further Further Amended Statement of Claim publicly identified James as the person who informed the applicants through their agent Esser, of the source of the disclosure of the settlement sum, namely Griffin, and

(f)in breach of the confidence attaching to the telephone conversation between the third respondent through its employee Colin James and Esser on 6 November 1996, the applicants have joined the third respondent to these proceedings."

The nature of that defence is to assert that, in so far as the applicants seek relief against the third respondent in equity, they are disentitled by the conduct of their agent, Mr Esser, essentially (as the applicants have pleaded and will seek to establish in evidence) relying upon a conversation of Mr Esser with Mr James of the third respondent on 6 November 1996.  In that conversation, it is alleged that Mr James told the applicant's agent, Mr Esser, of the terms of a conversation he had had on 4 November 1994 with the second respondent Mr Griffin, allegedly reporting that Mr Griffin conveyed to the terms of the settlement in a context where it was acknowledged by both Mr James and Mr Griffin that the terms of the settlement were confidential.  That conversation on 6 November 1996 with Mr Esser was said to be "off-the-record" although, as the pleadings indicate, and as I have remarked in my earlier reasons, from the point of view of Mr James, the conversation he had earlier had with Mr Griffin was not a confidential conversation in any sense.  The terms of the conversation with Mr Esser, in particular on what had earlier passed between Mr James and Mr Griffin as to whether the terms of the settlement were confidential, or whether that conversation was itself confidential, are in issue.  The third respondent, on those matters, pleads positively to the contrary.

I am therefore confronted with par16.6 of the defence in the context of there being no dispute that on 4 November 1996 Mr Griffin and Mr James had a conversation in which Mr Griffin told Mr James of the terms of the amount of the settlement offer.  There is or may be, as the pleadings indicate, a dispute as to other terms of that conversation but not of that particular matter.  The third respondent does not assert that that conversation between Mr James and Mr Griffin was confidential.  There is also no dispute that on 5 November an article was published in the Advertiser newspaper recording the terms of the settlement, under the authorship of Mr James, and attributing to Mr Griffin confirmation of the amount of the settlement sum.

It is on the basis of those pleadings, and on the basis of the terms of the settlement deed, that the applicant's claim against the first and second respondents in pars24(a), (b) and (c) of the claim is made, seeking damages against them for breach of a contractual obligation of confidence, for breach of an equitable obligation of confidence, and for breach of a common law duty to treat the settlement as confidential, and then in pars27(a), (b) and (c) corresponding claims are made against The Advertiser for participating in those breaches.  Those claims are asserted by facts which all took place by 5 November 1996.  They reflect causes of action completed before the telephone conversation upon which par16.6 of the defence of the third respondent is based.  Paragraph 16.6, it is acknowledged, is a defence only to that cause of action founded upon par27(b) of the statement of claim.

Counsel for The Advertiser has been unable to refer to any authority which supports the proposition that a conversation "off-the-record", assuming that term to have been used for present purposes, after the completion of the cause of action upon which the principal claim is based, and disclosing the content of a non-confidential communication, can as a matter of law provide a defence even to a claim in equity for breach of an equitable obligation of confidence.  Nor was any authority presented for the proposition that, in those circumstances, the expression 'off-the-record' could give rise to a defence to the principal claim in equity where the principal claim is independent of it, and moreover where the relevant facts alleged in support of the principal claim are not said themselves to involve disclosure of relevant confidential information.

I am mindful that striking out of a pleading under O11 r16 of the Rules of Court should only be done in the clearest of cases.  I have referred to the conventional authorities in my previous reasons.  I am however of the view that par16.6 is, as presently expressed, not arguable.  If there is no confidentiality in the conversation between Mr Griffin and Mr James, and if Mr Griffin did not breach any contractual equitable or common law duty, then there will be no success on the part of the applicants.  If there is such a confidentiality obligation on the part of Mr Griffin, and Mr James knew that, (and it is a matter of proof for the applicants as to how they establish those matters), then I do not see that par16.6 as a matter of law is capable of providing a defence to that claim.  I say nothing as to the prospects of the applicants in fact succeeding in their claim against the third respondent itself.  Accordingly I propose to strike out par16.6 of the defence.

I have before me also an application for indemnity costs in respect of the motion of Mr Esser as cross-respondent on 18 March 1997, upon which I struck out pars7-12 of the cross-claim.  I have considered the submissions put in support of that claim for costs and alternatively a claim for a fixed cost order in respect of that notice of motion.  I anticipate that there will be a similar application in respect of the striking out of par16.6 of the defence.  Before I rule on the issue of costs I will ask counsel for the applicants, whether there is anything further that is sought to be said in respect of the present order striking out par16.6 of the defence.

I have considered the submissions both in writing and orally on that question.  It is always a matter of discretion as to whether costs are ordered, and if they are ordered, whether they are ordered on the ordinary basis or on some other basis.  The principles upon which indemnity costs are ordered have been set out in other cases in this Court and I will not refer to them.  In the particular circumstances, having considered those matters, I have also had to address the question of whether the purpose of the cross-claim was to embarrass Mr Esser.  That has been the subject of specific submission.

I am not satisfied, and I do not find, that that was the purpose of the cross-claim.  I note that, in any event, par18 of the statement of claim refers to the conversation of 4 November 1996 between Mr Griffin and Mr James in terms which the third respondent disputes in significant respects.  It will be a matter for the applicants as to how, in those circumstances, they seek to prove those allegations set out under the heading particulars.  One option of course, on what I now know from the assertions which have been made, is that Mr Esser may need to give evidence at the trial about those matters.  That must have been in the contemplation of the applicants at material times.  So his position as a potential witness has been a live one, once he participated in procuring the information, or at least as it is asserted to have happened, from Mr James.

In those circumstances in my view the appropriate order is simply that Mr Esser have his costs of the notice of motion of 18 March 1997 to be taxed.

In relation to the oral application made yesterday, and determined today, to strike out par16.6 of the statement of the defence of the third respondent, I also order that the third respondent pay to the applicants their costs of that application to be taxed.

I do not think in either event an order for indemnity costs is appropriate.

I certify that this and the preceding       pages are a true copy of the Reasons for Decision of the Honourable Justice Mansfield.

Associate:

Dated:

Counsel for the Applicants       :    Mr D MacLean with
  Mr K Esser

Solicitors for the Applicants        :    Jamison & Associates

Counsel for the First and        :    Mr A Besanko QC
     Second Respondents               with Mr J Daenke

Solicitors for the First and     :    Daenke O'Donovan
     Second Respondents

Counsel for the                  :    Mr A Harris
     Third Respondent                 with Ms C D'Arcy

Solicitors for the               :    Minter Ellison
     Third Respondent

Hearing Dates:                   :    27 and 28 May 1997