Zomojo Pty Ltd v Hurd

[2012] FCA 1175

FEDERAL COURT OF AUSTRALIA

Zomojo Pty Ltd v Hurd [2012] FCA 1175

Citation:

Zomojo Pty Ltd v Hurd [2012] FCA 1175

Parties:

ZOMOJO PTY LTD (ACN 114 604 269) v MATTHEW HURD, ZEPTONICS PTY LTD (ACN 141 647 716), CROSSWISE PTY LTD (ACN 140 717 317), MD HAMMER PTY LTD (ACN 149 869 189), ZEPTO MARKETS PTY LTD (ACN 150 529 301), ZEPTO MARKETS PTY LTD (ACN 156 138 000), ZEPTOIP PTY LTD (ACN 156 133 087) and TRADEMACH PTY LTD (ACN 155 683 864); MATTHEW HURD, JOLENE (TAS) PTY LTD and HURD FAMILY SUPERANNUATION FUND; ZOMOJO PTY LTD (ACN 114 604 269)

File number:

VID 1478 of 2011

Judge:

TRACEY J

Date of judgment:

23 October 2012

Publication of reasons:

26 October 2012

Catchwords:

PRACTICE AND PROCEDURE – Notice to produce – whether waiver of legal professional privilege – respondents not required to produce document in question

COSTS  – Applicant induced to pursue claim for access erroneously by respondent – respondent to pay applicant’s costs of and incidental to the hearing

Date of hearing:

23 October 2012

Place:

Melbourne

Division:

GENERAL DIVISION

Category:

Catchwords

Number of paragraphs:

11

Counsel for the Applicant/Cross-Respondent:

Dr M Sharpe

Solicitor for the Applicant/Cross-Respondent:

Corrs Chambers Westgarth

Counsel for the First Respondent/First-Cross-Claimant:

Mr D Parish

Solicitor for the First Respondent/First Cross-Claimant:

Clayton Utz

Counsel for the Second, Third, Fourth, Fifth, Seventh and Eight Respondents/Second Cross-Claimant:

Counsel for the Second, Third, Fourth, Fifth, Seventh and Eight Respondents/Second Cross-Claimant did not appear

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION	VID 1478 of 2011

BETWEEN:

ZOMOJO PTY LTD (ACN 114 604 269)
Applicant

MATTHEW HURD
First Cross-Claimant

JOLENE (TAS) PTY LTD
Second Cross-Claimant

HURD FAMILY SUPERANNUATION FUND
Third Cross-Claimant

AND:

MATTHEW HURD
First Respondent

ZEPTONICS PTY LTD (ACN 141 647 716)
Second Respondent

CROSSWISE PTY LTD (ACN 140 717 317)
Third Respondent

MD HAMMER PTY LTD (ACN 149 869 189)
Fourth Respondent

ZEPTO MARKETS PTY LTD (ACN 150 529 301)
Fifth Respondent

ZEPTO MARKETS PTY LTD (ACN 156 138 000)
Sixth Respondent

ZEPTOIP PTY LTD (ACN 156 133 087)
Seventh Respondent

TRADEMACH PTY LTD (ACN 155 683 864)
Eighth Respondent

ZOMOJO PTY LTD (ACN 114 604 269)
Cross-Respondent

JUDGE:	TRACEY J
DATE OF ORDER:	23 OCTOBER 2012
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1. The respondents not be required to produce the document numbered 2 in the applicant’s notice to produce dated 22 October 2012.

2.The respondents pay the applicant’s costs of and incidental to the hearing of the respondents’ claim of legal professional privilege in relation to the document numbered 2 in the applicant’s notice to produce dated 22 October 2012.

3.Liberty to apply.

Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION	VID 1478 of 2011

BETWEEN:

ZOMOJO PTY LTD (ACN 114 604 269)
Applicant

MATTHEW HURD
First Cross-Claimant

JOLENE (TAS) PTY LTD
Second Cross-Claimant

HURD FAMILY SUPERANNUATION FUND
Third Cross-Claimant

AND:

MATTHEW HURD
First Respondent

ZEPTONICS PTY LTD (ACN 141 647 716)
Second Respondent

CROSSWISE PTY LTD (ACN 140 717 317)
Third Respondent

MD HAMMER PTY LTD (ACN 149 869 189)
Fourth Respondent

ZEPTO MARKETS PTY LTD (ACN 150 529 301)
Fifth Respondent

ZEPTO MARKETS PTY LTD (ACN 156 138 000)
Sixth Respondent

ZEPTOIP PTY LTD (ACN 156 133 087)
Seventh Respondent

TRADEMACH PTY LTD (ACN 155 683 864)
Eighth Respondent

ZOMOJO PTY LTD (ACN 114 604 269)
Cross-Respondent

JUDGE:	TRACEY J
DATE:	23 OCTOBER 2012
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1. The trial of this proceeding is presently taking place in Melbourne.  The applicant is making various claims against the respondents.  Amongst these claims is that the first respondent (“Mr Hurd”) had breached his duties to the applicant.  Those duties were prescribed under a service agreement between them.  It was further alleged that Mr Hurd had breached his duties as a director of the applicant in a number of ways including the setting up of a competitive business and the recruitment of a number of the applicant’s employees to his new business.  In the course of the trial the applicant served a notice to produce requiring the respondents to disclose copies of the following documents:

   “1.Copies of all documents recording, evidencing or comprising legal advice provided to the Respondents (as disclosed in the email from the First Respondent to Mike Gilbert sent on 10 February 2011) in connection with:

   (a)The Service Agreement between the Applicant and the First Respondent;

   (b)       The ‘corporate opportunity doctrine’; and/or
   (c)       The solicitation of employees of the Applicant.

   2.Copy of the letter dated 31 January 2011 from Dibbs Barker referred to in paragraph 15 of the affidavit of Jessica Lane Cowell dated 19 October 2012.”

2. The respondents identified only one document which was covered by the notice.  It was the solicitor’s letter referred to in paragraph 2 of the notice (“Document 2”).

3. The respondents claimed that legal professional privilege attached to the document.

4. The trial judge may have been embarrassed by being required to rule on the privilege claim in the course of the trial.  She referred the privilege claim to me as duty judge.  I heard argument on the afternoon of 23 October 2012 and ordered that the respondents not be required to produce the document.  I advised the parties that I would subsequently publish my reasons.  These are those reasons.

5. The parties were agreed that, if privilege had not been waived, it attached to Document 2.  The applicant did not seek to contend that privilege had been waived through inadvertent disclosure of the document during the discovery process.  The sole basis for the claim was that the substance of the legal advice (or part of it) contained in the document had been disclosed in the aforementioned e-mail of 10 February 2011 from Mr Hurd to a third party.  Relevantly the e-mail read:

   “Zomojo is threatening myself with legal action if I scratch myself, though I haven’t disclosed what I’m doing.  They are taking a broad brush approach and mainly concerned about me trading again but one item of concern is a thing called the “Corporate Opportunity Doctrine” applying to directors which I’m getting some legal advice on.  It normally applies to directors siphoning off opportunities when on the board.  Amongst many tech things, they have mentioned ATS as an opportunity they feel I shouldn’t transgress upon.  Will advise you further once I have further advice.  Mediation by trading off not trading for clear air, or minimising impact to focus attention to Matt Hurd and not any other entity, such as CW, and such, I’m working through.  Will keep you posted.  Good news that the lawyers have ruled the non-solicit in my employment contract, which they are confident of working around anyway, is clearly invalid and unenforceable, so won’t be too much of a problem accepting staff though it will stir the pot naturally.

   Unencumbered from Feb 12, and can start generating IP instead of just working on the business foo.” (sic)

6. The privilege claim was supported by an affidavit, sworn by a lawyer employed by the respondents’ solicitors.  In that affidavit the solicitor deposed that:

   “15.I have reviewed the document referred to by Mr Hurd in the 10 February email.  The document is dated 31 January 2011 and was prepared prior to the commencement of these proceedings.  The document was prepared by Mr Paul Almond, a Special Counsel at Dibbs Barker (the respondents’ lawyers prior to Murdoch Clarke) in Sydney and records a communication between the client and Mr Almond including legal advice to Mr Hurd.  Annexed hereto and marked JFC1 is a profile of Mr Almond obtained from the Dibbs Barker website.

   16.I am instructed by Mr Hurd and verily believe that he did not wish the contents of the documents referred to in the 10 February email to be discovered or in any way disclosed and that he wishes to maintain confidentiality over the documents referred to in that email and the email itself.”

7. Upon reading these paragraphs the applicant’s solicitors came to the view that privilege had been waived because the lawyer had stated that the contents of Document 2 had been referred to by Mr Hurd in his e-mail.

8. The parties were agreed that I should read Document 2.  I did so.  Upon reading it, it became clear that the legal advice contained in it did not deal with any of the matters referred to in Mr Hurd’s e-mail.

9. Counsel for the respondents confirmed that my conclusion in this regard was correct and frankly conceded that any passages in paragraphs 15 and 16 of the lawyer’s affidavit which suggested otherwise were incorrect.

10. In these circumstances I determined that legal professional privilege continued to attach to Document 2.  I ordered that the respondent not be required to produce it.

11. I also ordered that the respondents pay the applicant’s costs relating to the hearing of the legal professional privilege claim.  I made the costs order because, although the applicant was not successful in obtaining access to Document 2, it had pursued its claim for access upon the mistaken premise that the e-mail had disclosed the substance of the advice contained in the document.  That error had been induced by the respondents’ affidavit.

I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tracey.

Associate:

Dated:       26 October 2012