Rules of the Supreme Court 1971 (WA), O 26 r 8(2)

First Defendant : Mr J B Blackburn SC & Ms C Galati

Second Defendant : Mr J B Blackburn SC & Ms C Galati

Third Defendant : Mr J B Blackburn SC & Ms C Galati

1 NEWNES J: The plaintiff has applied for an order, pursuant to O 26 r 8(2), that the first defendant produce for inspection the hard drive of a computer owned by the first defendant and referred to in an affidavit of Mr Peter Jeanes, the editorial manager of the first defendant. The plaintiff seeks inspection of the hard drive to ascertain the truth of the matters deposed to by Mr Jeanes in the affidavit.

2 After the matter had been argued, the parties thought that the issue on the application might be resolved without the intervention of the court. On 28 May 2008, however, I was informed that that was not the case. It is therefore necessary to determine the application.

3 In the action the plaintiff pleads that he is the owner of a file of documents which, on or about 1 or 2 December 2006, was removed from one or other of his two residences in Cottesloe or in the course of transit between them. The documents in the file include a seven-page memorandum dated 11 November 2005 from Robert Nelson to the plaintiff (Nelson memorandum), a series of presentations on three companies, another memorandum, and correspondence with the plaintiff's solicitors.

4 The plaintiff pleads that, on 17 December 2005, the first defendant published an article in The West Australian newspaper referring in detail to some of the documents and, in particular, to the Nelson memorandum. The article appeared under the names of the second and third defendants, who are and were at the relevant times journalists employed by the first defendant. The first defendant is the proprietor of The West Australian newspaper.

5 The plaintiff alleges that the defendants have obtained the documents in the file without his consent and despite requests have refused to return them. The plaintiff pleads that by publishing the documents the defendants have dealt with them in a manner inconsistent with his rights and have thereby converted the documents to their own use. The plaintiff says that by reason of the defendants' conversion he has suffered loss and damage.

6 In relation to his claim for damages, the plaintiff alleges that the article published by the defendants was defamatory of him. The plaintiff also alleges that the defendants' conduct in converting the documents to their own use and in publishing the defamatory article demonstrated a contumelious disregard of his ownership of and rights in the documents, entitling him to aggravated and exemplary damages.

7 The plaintiff further pleads that the contents of the documents were obviously private and confidential to him and that the defendants knew that he did not authorise the defendants' receipt or use of them. The plaintiff alleges that the defendants were aware that publication of the documents would destroy the confidentiality in the documents. The plaintiff pleads that the defendants therefore owed a duty of confidence to him in respect of the documents and their contents. In breach of that duty, they published the contents of the documents by way of the newspaper article.

8 In their defence the defendants do not admit that the plaintiff was the owner of the specified documents or that documents of the description alleged were removed from the plaintiff's possession. The defendants deny that they obtained the plaintiff's documents.

9 The defendants deny that the article complained of was defamatory of the plaintiff and in the alternative, in the event that the article is found to be defamatory, plead defences of justification and fair comment.

10 The defendants deny that any material published by them possessed the quality of confidence or that it required any authorisation of the plaintiff before publication. They also deny that any duty of confidence was owed to the plaintiff in respect of any material published by them. The defendants say, in the alternative, that if they have breached any duty of confidence owed to the plaintiff, the publication of the article was in the public interest and therefore equitable relief should be refused.

11 On 20 December 2005, the plaintiff applied for a mandatory injunction requiring the defendants to deliver up the documents to the plaintiff within 24 hours.

12 On 23 December 2005, the defendants gave undertakings to the court that, among other things, they would not dispose of any documents in their possession which met the description of the plaintiff's documents.

13 On 13 March 2008, the first and third defendants applied for orders that they be released, in part, from their undertaking in respect of five documents referred to in the supporting affidavit of Mr Jeanes, sworn 6 March 2008.

14 In that affidavit, Mr Jeanes says that, prior to the undertakings given on 23 December 2005, the first defendant had created an electronic copy of each of five documents which subsequently came within the terms of the undertaking. The electronic copies were stored on the hard drive of a computer owned by and in the possession of the first defendant.

15 Mr Jeanes says that in early October 2006 the third defendant was unable to find on the computer the file containing the electronic copies. The first defendant's IT personnel then took possession of the computer and attempted to retrieve the electronic copies from the hard drive. They were unable to do so. They then removed the hard drive and it has been stored at the premises of the first defendant since that time and has not been put back into service.

16 In November 2007, the first defendant's IT personnel sought external advice about retrieval of the electronic copies and again attempted to retrieve them, but without success. Mr Jeanes says it is the opinion of the first defendant's IT officer that the electronic copies are irretrievable.

17 Mr Jeanes says that the only person with access to the computer before the hard drive was removed was the third defendant and he has informed Mr Jeanes that he has not knowingly deleted the electronic copies from the hard drive and would have no reason to do so. Mr Jeanes says that the hard copy documents from which the electronic copies were made remain preserved and in the custody of the first defendant.

18 Mr Jeanes acknowledges in the affidavit that the first defendant could have attempted to retrieve the electronic copies sooner than it did and that the court could have been informed of these events earlier than it was. Mr Jeanes does not, however, proffer any explanation for the delay.

19 The first and third defendants say that the electronic copies must have been inadvertently deleted from the hard drive and they seek to be relieved of their undertaking to the extent necessary to take account of the loss of those documents.

20 On 20 March 2008, the plaintiff applied for an order that the first and third defendants be punished for contempt of court for breaching the undertakings by destroying the electronic copies.

21 The first and third defendants' application to be relieved of their undertakings in respect of the deleted documents and the plaintiff's application that the first and third defendants be punished for contempt are still to be determined.

22 In the meantime, on 25 March 2008, the plaintiff applied to the court for an order, pursuant to O 26 r 8(2), that the first defendant produce for inspection the hard drive referred to in Mr Jeanes' affidavit. In the application the plaintiff says that he is entitled to inspect the hard drive for the purpose of ascertaining the truth of the matters deposed to by Mr Jeanes in his affidavit in support of the application by the first and third defendants to be relieved of their undertakings.

23 It was not in issue that the hard drive is a 'document' within the meaning of O 26.

24 It was submitted on behalf of the plaintiff that as the hard drive is a document referred to in the affidavit of Mr Jeanes, the plaintiff is entitled to require it to be produced for inspection pursuant to O 26 r 8(2).

25 In the course of argument counsel for the plaintiff put the application on two bases; first, that an inspection of the hard drive was relevant to the application by the first and third defendants to be relieved of their undertakings on the ground that the documents had been inadvertently deleted from the hard drive. Counsel submitted that the inspection of the hard drive is relevant to the manner in which the documents were deleted and what attempts had been made to retrieve them. An order for production is sought to enable the plaintiff to engage an independent information technology expert to examine the hard drive.

26 Secondly, counsel for the plaintiff submitted that an inspection of the hard drive was also relevant to the plaintiff's motion that the first and third defendants be punished for contempt. The information that was relevant to the first and third defendants' application to be relieved of their undertakings was equally relevant to the plaintiff's application that they be punished for contempt for breach of those undertakings.

27 The fact that the hard copy documents from which the electronic copies were made are still in the first defendant's possession is not to the point. The precise date or dates upon which the electronic copies were made will be relevant to whether or not they were made from documents taken from the plaintiff's file.

28 Senior counsel for the first defendant submitted that the plaintiff's application to inspect the hard drive amounted to an abuse of process. The plaintiff, by his counsel, had conceded in the course of argument that the plaintiff seeks production of the hard drive, and proposes to use any information gleaned from an inspection of it, for the purposes of the contempt proceedings. It was submitted that the court should infer that the plaintiff's predominant motive in seeking to compel production of the hard drive is to seek information to be used in the contempt proceedings, which are criminal in nature.

29 That is, the plaintiff seeks an inspection of the hard drive not to prove that the documents are lost (a fact admitted by the defendants), but in the hope that it may contain incriminating evidence about the loss of the documents. It is a fishing expedition seeking information for use in the criminal proceedings for contempt. That is not the purpose for which an application under O 26 r 8(2) is intended and amounts to an abuse of process.

30 Senior counsel for the first defendant further argued that the use by the plaintiff in the contempt proceedings of any material obtained in this way would itself amount to a contempt of court, being in breach of the plaintiff's implied undertaking in respect of documents produced for inspection in the course of the litigation. The contempt proceedings amount in effect to separate litigation, of a criminal nature. In support of the contention that, without leave, the use by the plaintiff of material obtained from the inspection of the hard drive for the purposes of the contempt proceedings would be a contempt of court, senior counsel for the first defendant referred to Bailey v Australian Broadcasting Corporation [1995] 1 Qd R 476 and McCabe v British American Tobacco Australia Services Ltd (No 3) [2002] VSC 150 [15], [16].

31 It was submitted that the court should not accede to an application which would lead to a contempt of court. In that connection, it would not be sufficient for the plaintiff to agree that he will not use any documents obtained from an inspection of the hard drive in the contempt proceedings; it is conceivable the plaintiff would be able to do so in a way that did not appear to be in breach of the implied undertaking.

32 It was submitted that the application should therefore be refused as an abuse of process. Alternatively, if production were ordered, the motion to commit for contempt should be permanently stayed or the order for production deferred until after the hearing of the contempt proceedings. Alternatively, it should be contingent on the plaintiff's motion for contempt being dismissed or withdrawn. In any event, orders for confidentiality should be made to protect other information of the first defendant on the hard drive which is irrelevant to this action.

33 It is apparent from the manner in which this application has been argued for the plaintiff that the plaintiff seeks to inspect the hard drive, pursuant to O 26 r 8(2), both in connection with the first and third defendants' application to be relieved of their undertakings and in connection with the plaintiff's motion for contempt. The question is whether in those circumstances an order for production of the hard drive for inspection should be made and, if made, whether the plaintiff should be precluded from inspecting the hard drive until the contempt application has been disposed of.

Any party to a cause or matter shall be entitled at any time to serve a notice on any other party in whose pleadings or affidavits reference is made to any document requiring him to produce that document for inspection by the party giving the notice.

35 The purpose of O 26 r 8(2) is to enable the other party to put itself in the same position as if the contents of the document concerned had been fully set out in the pleading or affidavit: Quilter v Heatly (1883) 23 Ch D 42; Re Hinchliffe [1895] 1 Ch 117; Rafidain Bank v Agom Universal Sugar Trading Co Ltd [1987] 1 WLR 1606.

36 While production for inspection under O 26 r 8(2) must be for the purposes of the litigation, it is not necessarily limited to inspection for the purpose of the particular application for which the affidavit was filed. Thus, even where the particular application has been determined, the other party will be entitled to inspection unless good cause is shown why inspection should not be permitted, at least if the document concerns matters which are still alive in the action: Dalecoast Pty Ltd v Guardian International Pty Ltd (Unreported, WASCA, Library No 990208C, 23 April 1999), 4 - 5. If the document is no longer relevant to any issue in the action, the fact that the application has been determined may be a reason for declining to order production: Century Drilling Ltd v Gerling Australia Insurance Company Pty Ltd [2004] QSC 120; [2004] 2 Qd R 481 [14].

37 It is, of course, clearly established that a party to whom documents are produced for inspection under the rules of court is bound by an implied undertaking not to use the documents for any collateral or ulterior purpose but only for the purposes of the litigation in which the documents are disclosed: Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10, 32. There is, with respect, helpful discussion of the meaning of a 'collateral or ulterior purpose' in Allstate Life Insurance Co v Australian and New Zealand Banking Group Ltd (1995) 57 FCR 360 and Temwood Holdings Pty Ltd v Oliver [1999] WASC 212. As is apparent from those cases, what amounts to a collateral or ulterior purpose is not settled, although it has been held, for example, that the use of discovered documents to add a cross claim, or to add new causes of action or parties, to the action in which the documents were disclosed is not a collateral or ulterior purpose.

38 The first defendant did not argue that the plaintiff would not be entitled to inspection of the hard drive for the purposes of the first and third defendants' application. Nor did the first defendant suggest that if the hard drive is produced for inspection the plaintiff would not be entitled to have it examined by an expert to ascertain what information was stored on it.

39 As I have said, the first defendant contended that the inspection of the hard drive for the purposes of the plaintiff's motion for contempt was an abuse of the process provided by O 26 r 8(2) and, moreover, the use of any information obtained on the inspection for the purposes of the plaintiff's motion for contempt was not a use for the purposes of the litigation and therefore would be in breach of the implied undertaking.

40 In that context, I should say that I do not accept the first defendant's submission that the plaintiff's predominant purpose in seeking production is in connection with the contempt motion. On what is before me, I do not consider that I can reach that conclusion.

41 In the circumstances, I do not consider that the plaintiff is precluded from obtaining production of the hard drive because he seeks production for the purposes of resisting the first and third defendants' application and, as was acknowledged by his counsel in the course of argument, because he also wishes to inspect it for the purposes of his own motion for contempt. The plaintiff is clearly entitled to seek, and it is clear that he does seek, production of the hard drive to inspect it for the purposes of resisting the first and third defendants' application. The fact that the plaintiff has an additional reason for seeking to inspect it does not, in my view, preclude him from obtaining production for the purposes of resisting the first and third defendants' application. Nor is he necessarily precluded from doing so because, on the first defendant's case, he might subsequently seek to use information obtained on the inspection in a manner which constitutes a contempt of court. Those are, however, matters which are relevant to the exercise of the court's discretion to order inspection.

42 In the present case, I do not consider they provide a sufficient reason to decline an order that the first defendant produce the hard drive for inspection. Such an inspection is clearly relevant to the first and third defendants' application. I am not satisfied that the plaintiff should be denied the opportunity of inspection merely because information obtained from the inspection may be relevant to the plaintiff's contempt motion. If, as the first defendant contends, the plaintiff is not entitled to use any information so obtained for the purposes of the contempt motion, that is a matter to be dealt with on the contempt motion if and when the plaintiff seeks to do so.

43 I do not consider that any significant weight is to be given to the submission on behalf of the first defendant that the use of any relevant information cannot be controlled in that way as once any information relevant to the contempt motion has been obtained by the plaintiff he may use it in ways that cannot be traced back to the inspection of the hard drive. The first defendant did not suggest how the plaintiff might do that. In circumstances where it is by no means apparent that the hard drive contains any information which might support the plaintiff's motion for contempt, and where it is also not clear how any information which it might be found to contain could be used surreptitiously by the plaintiff on the contempt motion, the first defendant's concern seems to me to be entirely speculative.

44 For the same reasons, I am not satisfied that production of the hard drive for inspection should be deferred until the contempt motion has been disposed of.

45 In the circumstances of this application, I do not think it is necessary to determine whether the use by the plaintiff of any information obtained from the inspection for the purpose of the contempt proceedings would amount to a contempt of court. That is a question for another day, if in fact it arises.

46 I would, however, make such orders as may reasonably be necessary to protect the confidentiality of any information of the first defendant on the hard drive which is not relevant to the action. If agreement cannot be reached, I will hear the parties on the form of those orders.

47 I would order that the first defendant produce for inspection the hard drive referred to in the affidavit of Mr Jeanes, sworn 6 March 2008, subject to such orders as may reasonably be necessary to preserve the confidentiality of any information of the first defendant on the hard drive which is not relevant to the action.

48 I will hear the parties on the time within which the inspection of the hard drive is to take place and, if necessary, the form of any confidentiality orders, and on the costs of the application.