British American Tobacco Australia Limited v Gordon & Ors

1 The history of this unhappy proceeding appears in my earlier judgment.[1] It is sufficient by way of background to record that, in each case, the plaintiff in proceeding No 5617 of 2007, British American Tobacco Australia Limited ("BATAL") and the plaintiff in proceeding No 5618 of 2007, British American Tobacco Australia Services Limited ("BATAS"), seeks orders restraining the defendants from using confidential information contained in certain Clayton Utz documents which were taken from that firm by its former member, Christopher Antony Dale, and passed to the firm of solicitors, Slater & Gordon Ltd (formerly Slater & Gordon Pty Ltd) ("Slater & Gordon"), which had previously acted for the late Mrs McCabe in her claim for damages against BATAS in proceeding No 8121 of 2001 ("the McCabe proceeding").

2 In the McCabe proceeding, the trial judge on 22 March 2002 entered interlocutory judgment against BATAS.[2] This was done following his Honour's decision to strike out its defence on the ground that BATAS had subverted the discovery process by its destruction of relevant documents. Damages were assessed at $687,560 and, on 11 April 2002, judgment was given for Mrs McCabe in that sum and costs. The judgment was the subject of appeal and on 6 December 2002 the Court of Appeal allowed the appeal with costs; orders were made setting aside the judgment and directing a new trial.[3]

3 Meantime, following the judgment at trial, Clayton Utz, who had been retained in 2001 by BATAS for the McCabe proceeding,[4] and generally, to provide legal services to companies in the British American Tobacco Australasia Group including BATAS,[5] undertook in 2002 an internal review of the events the subject of the trial judge's criticisms.[6] In the course of this review a number of documents were brought into existence and were laid before the board of Clayton Utz. It is said that these documents include information which Clayton Utz had received in circumstances of confidence from its client BATAS. Another client of Clayton Utz was BATAL, a company associated with BATAS. It is said that the documents also include information received by Clayton Utz in circumstances of confidence from this client, BATAL.

4 After the review Mr Dale, on or around 22 September 2006, disclosed the existence and nature of the documents and the information to Peter Gordon of Slater & Gordon, a solicitor who had acted for Mrs McCabe at the trial and for her representative, Mrs Cowell, on the appeal. It is said that the documents and the information were also disclosed to other persons, including journalists.

5 BATAS, in February 2007, brought a proceeding in the Supreme Court of New South Wales[7] against Slater & Gordon, seeking orders restraining the publication and use of the information contained in the documents and for certain other orders. A similar proceeding was brought by BATAL in the Supreme Court of New South Wales[8] against Mr Gordon and Slater & Gordon on the basis that it, too, had rights of confidentiality in parts of the information in the documents. Although there is a degree of overlap, the information the subject of each proceeding is not identical. The two NSW proceedings were transferred to this Court in March 2007[9] and, for the past two years I have managed them with a view to trying them in due course. Ms Cowell was joined as defendant to the BATAL proceeding on 22 March 2007 and, on 27 February 2007 she and Mr Dale were joined as defendants to the BATAS proceeding. The subsequent history of these proceedings[10] in this Court is of no particular relevance for present purposes except to note that Mr Dale has submitted to judgment and is no longer a party to the BATAS proceeding.

6 The McCabe proceeding appears to have been permitted to lie dormant. On 20 April 2007 Slater & Gordon ceased to be solicitors on the record for the plaintiff; Arnold Bloch Leibler became its solicitor and this position continues. Meantime, on 11 March 2003, Mrs McCabe had been replaced as plaintiff in that proceeding by Jamie Ryan McCabe, the co-executor of the will of Mrs McCabe. Mr McCabe remained as sole plaintiff until 14 December 2007 when Mrs Cowell became plaintiff, again in her capacity of executrix of her mother's will. I have been told that Mrs Cowell's intention is to seek to set aside the Court of Appeal orders on the ground that they were made in reliance upon incorrect and incomplete material which mislead the judges, and that the information the subject of these proceedings bears upon this.

7 Against this background, which I believe to be uncontroversial, I turn to the present applications. In each case Mrs Cowell seeks to file an amended defence to the statement of claim of the plaintiff. Her principal defence, at least for present purposes, is that the rights to confidentiality in the information in question are lost because the maintenance of this confidentiality would serve to conceal serious misconduct, referred to in the pleading as "iniquities".

8 These proceedings have been and are likely to be very expensive and time-consuming for the parties, their legal representatives and the Court. In the circumstances I see it as my responsibility to take particular care to contain as far as possible the issues in these proceedings to those which are properly maintainable as a matter of law or logic and which are directed to the relief sought. I am, of course, mindful of the fact that much of the factual basis of Mrs Cowell's positive allegations in her proposed defences might not be within the knowledge of her or her lawyers, so that the allegations may have to be based upon inference from facts within this knowledge. Nevertheless this cannot be used as a justification for insufficiently detailed allegations or those which are simply unsubstantiated by the facts alleged, particularly where these deficiencies have been pointed out in the previous applications. Furthermore, these are cases where I foresee that the parties will engage with energy in disputes about particulars and discovery, disputes which will depend upon issues as to relevance. This means that I cannot derive comfort from statements from counsel for Mrs Cowell to the effect that BATAS and BATAL know very well what are the cases against them. These cases against them must be made to appear. I approach my task, therefore, with a strong disposition to reject broad-based allegations as well as those contentions which are not predicated upon tenable legal principle. In this way the parties will be spared the burden of undertaking discovery unnecessarily and of having to meet at trial allegations which are not set out with sufficient precision to enable them or the trial judge to conduct the trial with due efficiency and expedition.

9 One further preliminary matter should be noted. Counsel for Mrs Cowell has taken the position that the defences based upon iniquities would be made out, not if she was able to establish only that there was real likelihood or that she had a genuine belief on reasonable grounds that the iniquities occurred; but rather if she established that they did in fact occur.[11] This has the consequence that the trial of these proceedings will require a detailed and careful examination of the iniquities alleged. This also causes me to look at the allegations with particular care lest the trial should become unmanageable.

10 A further aspect of these applications which has caused difficulty is due to the fact that the drafters of the defences have readied themselves for a number of hearings of the application to amend between August and November 2008. Consideration of the written submissions from BATAS and BATAL have led them to modify their draft defences, often in very substantial ways.[12] This has had the consequence that these pleadings have, to a large extent, lost their coherence; they resemble more a patchwork. A further consequence has been that, in a laudable attempt to shorten the hearing, counsel for Mrs Cowell has adopted all or part of these prior outlines of argument, much of which are no longer relevant. This has meant that I have had to pick over these carcases in the hope that there may be some meat remaining.

11 I should identify at the outset what document is under consideration. The document is entitled "(Proposed) Further Amended Defence of the Third Defendant (Roxanne Joy Cowell) as at 21 October 2008". There is in fact more than one document so described. That which is the subject of the present application is that which was filed with the Court by email on 8 December 2008. This version of the document incorporates the corrections set out in schedule 1 to an outline of argument dated 4 December 2008 entitled the Third Defendant's Response to the Submission of BATAS and BATAL, and some further typographical corrections. I was told, too, that a further schedule 3 to the pleading is to follow. I have not seen this new schedule. This document and a similar one in the BATAL proceeding, I refer to as the proposed defence.

12 As I have mentioned, the BATAS proceeding is brought against Mrs Cowell and Slater & Gordon. Slater & Gordon is not concerned with this application. Mrs Cowell's position is that she has no intention of using or disclosing to any person the documents or the information for any purpose other than for the purpose of defending this litigation and for bringing the application to set aside the Court of Appeal orders.[13]

13 The BATAS case against Mrs Cowell is put as follows. When Slater & Gordon requested and received the documents from Mr Dale in 2006 and disseminated copies of the documents and disclosed the confidential information to journalists and others, they acted as lawyers and agents for "the McCabe family including Mrs Cowell".[14] This is surprising since it is earlier alleged that Slater & Gordon was retained as lawyer only for Mrs Cowell and "the plaintiff in... the McCabe proceeding, which plaintiff by order of the Court made 11 March 2003 is Jamie Ryan McCabe (as executor of the will of Rolah Ann McCabe deceased)".[15] No relief is sought against any member of the McCabe family other than Mrs Cowell. In any event, it is said that, since the conduct of Slater & Gordon was conduct of her solicitor, its conduct is attributed to Mrs Cowell and its knowledge is her knowledge.[16] In paragraph 35 it is alleged:

(a) requesting the Documents from Dale as alleged in paragraph 22 hereof;

(b) receiving the Documents from Dale as alleged in paragraph 23 hereof; and

(c) receiving the Documents from Dale for the purpose of disseminating the Documents to Birnbauer and others as alleged in paragraph 25 hereof -

Mrs Cowell -

(i) procured and knowingly intended to procure Dale to breach the terms of the retainer alleged in paragraphs 11 and 12 hereof;

(ii) procured and knowingly intended to procure Dale to breach his professional obligations referred to in paragraph 13A(i) and (ii) hereof; and

(iii) knowingly participated in Dale's breach of his equitable obligations to BATAS.

Orders are then sought restraining her from using, publishing or disseminating the confidential information contained in the documents.[18] BATAS also seeks orders restraining Mrs Cowell, as well as Slater & Gordon from disseminating the confidential information in the exercise of its supervisory jurisdiction over legal practitioners.[19]

14 The information in question is that which is said to be contained in documents brought into existence for the purpose of the Clayton Utz review and "documents otherwise created by legal practitioners acting for BATAS".[20] In the schedule to the BATAS statement of claim they comprise eight documents described as board memos, draft board memos or partial memos dated variously between May and August 2002, nine documents described as chronologies and five miscellaneous documents, all except two dated 2002. Counsel for Mrs Cowell have assessed that 152 separate of pieces of information are the subject of the present claim.[21]

15 The plea against Mrs Cowell in paragraph 35 of the BATAS statement of claim has the regrettable consequence that the BATAS case against her requires a consideration of allegations made in the pleading against Mr Dale, who is no longer concerned with them, and those against Mr Gordon and, perhaps, Slater & Gordon who have little interest in resisting the claim. The challenge offered by this is one which the drafters of Mrs Cowell's defence appear to have taken up with some enthusiasm over a number of unsuccessful drafts.

16 I pause at this stage to recall three matters. First, as counsel for BATAS has reminded me on many occasions, the subject-matter of this proceeding is the confidential information, not the documents containing this information which were received from Mr Dale. Second, whatever they may have done or intended to do in the past, the defendants, including Mrs Cowell, now protest that they wish to make no use of the confidential information other than for the purpose of seeking to set aside the Court of Appeal decision and obtaining the reinstatement of the trial judgment in favour of the late Mrs McCabe.[22] Third, relief is not sought against Mrs Cowell in her capacity as representative of the estate in the McCabe litigation, but in her personal capacity. This is a little surprising. If her protestations as to her intentions as to the use of the information are accepted, then this proceeding by BATAS against her personally has little, if any, purpose.

17 The breaches alleged against Mr Dale[23] and Mr Gordon, and Mrs Cowell's vicarious complicity in or responsibility for the latter.[24]

18 The obligations of Mr Dale are alleged to arise from Clayton Utz's obligations of confidence arising out of its contractual[25] or professional relationship with its client, BATAS, and under the provisions of the Legal Practice Act and the practice rules made under it.[26] Mrs Cowell in paragraphs 11, 12 and 13 of her proposed defence does not admit Mr Dale's obligation but she does admit that he owed duties of confidence under the Act and the rules.[27]

19 There was a general attack on the proposed defence in the BATAS proceeding for its lack of legal and logical rigour and for its lack of particularity. For example, the adoption of the expression "iniquity" to cover a large number of matters having very different characteristics is likely to lead to confusion, and this is borne out when the expression is called upon in different parts of the pleading to perform different roles.[28] As will be seen, this criticism is, in many respects, made out. Notwithstanding its length[29] and its complexity, the intent of the pleading is often obscure. Nor was a I comforted by assurances by counsel for Mrs Cowell to the effect that BATAS and its lawyers well knew what is meant by the proposed defence or by his confidence that the Court itself will be able to sort it all out in the end.

20 A more specific attack upon the pleading before me was directed to the positive allegations of Mrs Cowell that the usual contractual duty of confidence is unenforceable when it would prevent "disclosing or using information ... which discloses that there has been a crime, civil wrong or serious misdeed of public importance (an iniquity)".[30] The information which loses its confidentiality in this way is referred to in the pleading as "iniquity information". The pleaders exempt from iniquity information, that part of the confidential information which is the subject of legal profession privilege.[31] This concession, if concession it be, has the unfortunate consequence that it will be necessary to examine the confidential information in question and to sort it into two piles: that which is iniquity information in respect of which any contractual obligation of confidence is unenforceable or would not be enforced; and that which is protected from disclosure by legal profession privilege, for which the iniquity defence does not apply.[32] For pleading purposes, it is not clear what part of the information which is the subject of the BATAS claim is iniquity information and what part is not. Nevertheless, having drawn this distinction, the pleaders appear to ignore it in paragraph 18(a), (b) and (d) and in those paragraphs which depend upon these. Paragraph 18(b)(i) refers to all of the information for which confidence is asserted in paragraph 17 of the statement of claim. This is an inconsistency which the pleaders should address in the next draft.

21 A number of criticisms were addressed to the plea of iniquity in para 12A(a). First, the expression "a crime, civil wrong or serious misdeed of public importance" is taken from the judgment of Gummow J in Corrs Pavey Whiting & Byrne v Collector of Customs (Vic).[33] It was pointed out that his Honour expressly states in that case that the principle has no application to a claim for contract-based confidentiality, as is in part the case here. In such a case, his Honour says, the law of contract supplemented by equitable defences will sufficiently deal with the situation. No equitable defences are, in terms, raised. It follows from this that the plea in paragraph 12A(a) with respect to iniquity information, which is directed to the BATAS contract claims asserted in paragraphs 11 and 12 of the statement of claim, cannot stand unless some equitable defence to the contract claim is raised.[34]

22 Moreover, no principle is asserted in paragraph 12A which would provide a basis for resisting the claims of BATAS in paragraph 13A of the statement of claim to an equitable obligation of confidence, as is asserted in paragraph 18(d)(i) of the proposed defence. Nor is any principle asserted with respect to a claim for confidence based on legal profession privilege.[35] Apart from the iniquity based principle asserted in paragraph 12A(a) of the proposed defence, the pleaders assert in paragraph 12A(b) only that the contractual right of confidence does not prevent disclosure of information which is in the public domain. It may be that the pleaders had in mind the formulation of Gummow J later in the same case with respect to a claim for confidentiality based on an equitable right of confidence:

[I]nformation will lack the necessary attribute of confidence if the subject-matter is the existence or real likelihood of the existence of an iniquity in the sense of a crime, civil wrong or serious misdeed of public importance, and the confidence is relied upon to prevent disclosure to a third party with a real and direct interest in redressing such crime, wrong or misdeed.[36]

The difficulty is that they nowhere articulate this or any basis for applying an iniquity rule to the BATAS claims for confidentiality based otherwise than on contract.[37]

23 The principal attack on paragraph 12A(a), however, depended upon its adoption of the comprehensive expression "iniquity" for the composite "crime, civil wrong or serious misdeed of public importance". Iniquity, which carries a pejorative overlay, appears to call up the use of that word in the leading case of Gartside v Outram[38] where the Vice-Chancellor said this as to a claim for confidence made by an employer against a former employee:

The true doctrine is, that there is no confidence as to the disclosure of iniquity. You cannot make me the confidant of a crime or fraud, and be entitled to close up my lips upon any secret which you have the audacity to disclose to me relating to any fraudulent intention on your part: such a confidence cannot exist.

24 Gartside v Outram has been much expounded in the ensuing 150 years, but its application in a case such as the present, however, is not free of difficulty. First, it may be that not every crime is covered by his Lordship's statement of principle. It may have to be a serious crime.[39] Second, it appears that the doctrine from the quoted passage was there concerned with information which discloses the iniquity of the employer rather than that of a third party. It may be that iniquities of a third party may be relied upon, but the rule might work differently in this context.[40] These are matters which were not explored in argument before me and I do not express any concluded view upon them. In the context of the receipt of confidential information by a lawyer from a client charged with a criminal offence, it cannot be asserted that the iniquity rule would permit the lawyer to disclose, for example, information which would show that the client had in fact committed the crime.[41] In such a case, there is a public interest that an accused person should be able to instruct a lawyer on the basis that the confidentiality of these instructions will be respected. Accordingly, the Court of Appeal in this State has said that

[34] But since the jurisdiction to enjoin publication or use of privileged information[42] is limited to such equity as may inhere in the confidentiality of the communication,[43] ordinary principles dictate that injunction ought not go at the suit of an applicant who comes to equity with unclean hands or where the subject-matter of the communication 'is the existence or real likelihood of the existence of an iniquity in the sense of a crime, civil wrong or serious misdeed of public importance, and the confidence is relied upon to prevent disclosure to a third party with a real and direct interest in redressing such crime, wrong or misdeed'. [44]

[35] So to say does not mean that the defences of 'unclean hands' and 'iniquity' should apply in exactly the same way to a legal professional privileged communication as to other kinds of confidential communications. Generally speaking, the rationale of both defences in this context is that there is a public interest in disclosure of iniquity which makes it unconscionable for the applicant to insist upon the maintenance of a confidence which would keep the iniquity secret.[45] But, as has been seen, with legal professional privileged communications the public interest favours maintenance of the confidence of the communication[46] unless the communication comes within one of the established exceptions to legal professional privilege. Logically, therefore, the remedy of injunction should not be withheld for want of clean hands or because of iniquity, unless it amounts to the furtherance of crime or fraud or abuse of power or the concealment of the whereabouts of a ward of court or the frustration of the execution of an order of the court cannot exist.[47]

25 Nevertheless, there remains uncertainty as to the precise ambit of the iniquity defence, whether it be raised in response to a claim in contract or put on some other basis.[48] Furthermore, the law of confidence has developed much since 1856 and it may be that the modern position is not to be circumscribed by the terminology of the Vice-Chancellor.

26 Upon a pleading summons where the facts have not been established, I am, therefore, reluctant to reject as untenable the formulation adopted by the pleaders in this defence. I would not, therefore, reject paragraph 12A(a) of the proposed defence on this basis. I would, however, require the pleaders, if they be so instructed, to consider whether, and in what terms, they wish to raise this defence to the claims based on the non-contractual duties of confidence.

27 Having defined "iniquity" in these wide terms, the pleaders then allege in paragraph 18(a) that the conduct alleged in each of 24 identified paragraphs of the pleading constitutes an iniquity, or it may be that some or all of them constitutes the iniquity.[49] They fall naturally into two groups: those which represent conduct at the McCabe trial or on appeal; and those which do not. The impugned conduct at the trial and on appeal may be further sub-divided into those acts of BATAS and those acts of others. The acts of others comprise nine where a solicitor acting for BATAS gave misleading evidence at the trial[50] knowing it to be misleading, and one where Brian Thomas Wilson, a solicitor with Clayton Utz which had acted for BATAS, gave evidence and made submissions as an intervening party at the appeal. The suggested iniquity of Mr Wilson, who was the subject of criticism by the trial judge, is that he knowingly gave misleading evidence and, through his counsel, made misleading submissions.[51] The conduct at trial and on appeal which was attributable to BATAS are nine occasions when BATAS at the trial knowingly called a witness to give misleading evidence[52] or to provide false information to a deponent who, in turn, gave evidence on information and belief,[53] and one where it is alleged that BATAS took no steps to prevent Mr Wilson from giving his misleading evidence and submissions to the Court of Appeal.[54]

28 The acts of BATAS which were not directly concerned with the McCabe litigation are three instances where BATAS itself engaged in document destruction[55] or conspired with others to do so.[56]

29 A miscellaneous count of iniquity is that where it is said that Mr Wilson gave to his client BATAS improper and/or unethical advice.[57] It is not clear whether and, if so, how this is an iniquity to be laid at the feet of BATAS.

30 Some attention was directed by counsel for BATAS to the allegation that witnesses knowingly gave evidence which was misleading. Is this merely a coy formulation of an allegation of perjury, or an allegation of some other crime? An examination of the facts and matters which precede the allegation and its provenance suggest that it is intended to be some other crime. What, then, is the crime? I could imagine a number of candidates but, it was said, this should not be left to speculation. It was submitted that, even so, any one of these acts might or might not fall into one or more or none of the three categories of crime, civil wrong or serious misdeed of public importance. I remind myself that Mrs Cowell in her proposed defence understates to prove that the crimes were in fact commited. Moreover, these are serious allegations involving non-parties who are professional people. Accordingly, fairness to them requires greater precision. Finally, as I have mentioned, a significant number of the 24 counts of iniquity alleged in paragraph 18(a) are not alleged to be iniquities committed by BATAS.[58] Is it contended that the confidence of BATAS falls away where the document for which confidence is asserted conceals the iniquity of a third party?[59]

31 It was put on behalf of BATAS that it was necessary for Mrs Cowell to plead in respect of each piece of information what crime, what civil wrong and what other misdeed it discloses. Further, in each case she should plead and prove each of the legal elements of the crime or civil wrong. Again, counsel for Mrs Cowell sought to brush this aside, arguing that each of the alleged iniquities is identified and that this is sufficient. The difficulty with this essentially broad brush approach is that it is not the way the courts have traditionally approached the task. Whether it be a loss of contractual or other confidentiality where legal profession privilege is present, the authorities show that the Court will act cautiously before interfering with these legal rights.[60]

32 An important concern, however, is whether the pleas are embarrassing to the plaintiff and whether they will create difficulties in the interlocutory or trial process. It will be necessary for Mrs Cowell to identify the crime, civil wrong or misdeed in each case where she alleges it. It is regrettable that the pleaders were not prepared to specify these matters in this draft, having regard to the criticisms addressed to its numerous predecessors. It should not be for the plaintiff or the Court to speculate which, if any, of the 24 counts of iniquity referred to in para 18(a) amounts to a crime, civil wrong or serious misdeed of public importance or one or more of these and, if so, what crime or civil wrong. The distinction will be important, because the right and extent of the permitted disclosure may well differ depending upon the nature of the iniquity which warrants its removal.[61] The new pleading which I require should address this matters.

33 It was said, in this regard, that the proposed pleading was deficient inasmuch as it failed to address the question to whom the disclosure might be made where confidentiality is lost by reason of the iniquity defence. The cases appear to suggest that, in such an event, the right of disclosure is not unqualified, contrary to the position apparently taken in the proposed defence. This proposition was not challenged on behalf of Mrs Cowell but the objection was brushed aside in these terms:

It can scarcely be contended that the Court of Appeal or the High Court are not persons with a proper interest in redressing the iniquities alleged.[62]

This may be correct, but on a contested pleading application, such a contention must be formulated with some precision. Not all of the alleged iniquities are relevant to the basis upon which, I apprehend, Mrs Cowell proposes to apply to set aside the Court of Appeal decision in the McCabe litigation.

34 The next criticism is directed to the nexus asserted between the information for which confidence is asserted and the iniquity. In paragraph 18(b)(i), it is said that the information discloses the existence of the iniquities and, so too do the documents. The criticism here is that the documents are not the subject of the litigation; it is the confidential information which is sought to be protected from use. What appears to be Mrs Cowell's intention is that the information in the documents, read in context, makes the disclosure. The contention put on behalf of BATAS would have the Court assess the information alone and would require the Court to determine whether this information disclosed all of the iniquity rather than merely aspects of it. This is quite unrealistic. I would not reject the pleading on this basis.

35 Paragraph 18(c) is concerned to invoke the principle in R v Cox & Railton[63] that legal profession privilege cannot exist in respect of a communication made in the furtherance of crime or fraud. I observe in passing that this is not a case where disclosure is sought under court process so that the privilege may not arise in this case[64] otherwise than as an aspect of the equity which adheres or does not adhere to the confidentiality and which a court of equity will protect.[65] There is no allegation in paragraph 12A of the proposed defence raising the crime or fraud defence to the privilege. What is there put is that the unprivileged information is subject to the iniquities defence and that the contractual protection afforded to all of the confidential information disappears when it is in the public domain.[66] Nevertheless, there is in para 18(c) the following remarkable allegation:

(c) insofar as the Information and the Documents contain communications that are alleged by the Plaintiff to be the subject of legal professional privilege, those communications were made in furtherance of the Iniquities.

The orthodox formulation of this principle is, relevantly, that the privilege is lost where there is material raising an arguable case that the relevant communications were made for the purpose of furthering or assisting in crime or fraud. Fraud, for this purpose, has been said to embrace legal wrongs that have "deception, deliberate abuse or misuse of legal powers or deliberate breach of legal duty at their heart".[67] While the definition of iniquities includes crime, it also includes civil wrong or serious misdeed of public importance. Counsel for Mrs Cowell brushed aside the disconformity between principle and pleading by saying that the "categories of misconduct which can lead to the displacement of privilege are not closed", and ultimately, the Court will decide whether the iniquities will bring into play this exception.[68] If a legal principle is to be relied upon in the defence it must be stated in accurate terms and the facts asserted must be related to it. It should not be for the plaintiff or the Court to speculate how it might be that a document brought into existence for the Clayton Utz review in 2002 is said to contain communications made in the furtherance of an iniquity which was committed some time previously. I was told that this would be addressed in the forthcoming 3rd schedule to the pleading. I am content to await this schedule if it be included in the new draft.

36 I was referred to a decision of the NSW Dust Diseases Tribunal in support of the proposition that the creation and implementation of the BATAS document retention policy might amount to fraud within the meaning of the exception to the privilege.[69] I am not at all prepared to conclude that such a conclusion is so hopeless that it should not go to trial. Furthermore, there is authority for the proposition that a litigant who calls a witness to give evidence which the litigant knows to be false for the purpose of defeating the claim of another party is guilty of fraud upon that party.[70] I would not reject as unarguable an allegation in these terms or even where the allegation is that the evidence was known to be simply misleading rather than false. It was said that "misleading" in this context was insufficiently precise. I do not agree. I would accept this allegation as asserting that the thrust of the evidence as summarised in the pleading was inconsistent with the facts which are pleaded as being the true facts. The further question, whether the information in the documents for which privilege is claimed is a communication made in the furtherance of such a policy or such conduct, is one which was not the subject of argument. I have not inspected the documents[71] and do not know enough about the information to form a view as to this.

37 I turn now to paragraph 18(d) of the proposed defence, which contains the core of the iniquities defence. The plea depends upon paragraphs 12A and 18(a), (b) and (c) which I have already referred to. It refers to the documents, for which no claim to confidence is asserted by BATAS, and to all of the information for which confidence is asserted, not merely to the iniquity information.[72] Paragraph 18(d) sets out the conclusions which Mrs Cowell invites the Court to reach. It asserts in paragraph 18(d)(i) that the documents and the information do not attract equitable obligations of confidence, but it does not set out the legal basis for this. It asserts in paragraph 18(d)(ii) that the documents and the information are not protected from disclosure or use by reason of legal profession privilege, presumably by the application of the allegation in paragraph 18(c), to which I have referred.[73] It asserts in paragraph 18(d)(iii), that the documents and information may be disclosed by Clayton Utz, apparently without limitation, without the disclosure being a breach of contract, presumably on the basis that a term as to confidence with respect to the iniquity information is not enforceable as alleged in paragraph 12A(a) or on the basis that the information is in the public domain, having regard to the principle asserted in paragraph 12A(b), "or is otherwise not confidential in nature"[74], an expression which is unsupported in the pleading and, in any event, unclear.

38 Counsel for BATAS then subjected the separate allegations of knowingly giving misleading evidence in the iniquity counts to a detailed critical analysis directed to demonstrating that the conclusions were not supported by the alleged facts which were said to support them, and to other deficiencies. Given my conclusion that the pleading cannot be accepted in its present form it is not necessary that I burden this judgment with a detailed assessment of these allegations. It is, I hope, sufficient that I record my conclusions as to the principal criticisms.

39 A general complaint is made that the pleading does not particularise the knowledge of BATAS as is required by R13.10. I am not persuaded that, in the circumstances of this case, this is a deficiency which should cause me to reject the allegation. It is apparent from the pleadings generally, that the case of Mrs Cowell is that BATAS has been involved in a very close way in the various matters in which it has been a party. It is not necessary that she identify the particular person in BATAS who had in fact the knowledge which she alleges was the knowledge of BATAS.

40 Paras 18B to 18 DB. The conclusionary allegations in paras 18D, 18DA and 18DB do not follow from the allegations upon which they are said to depend. They cannot stand.

41 Paras 18E to 18GA. The conclusionary allegations in paras 18G, 18GA and 18GB sufficiently follow from the allegations upon which they are said to depend. I will accept them.

42 Paras 18M to 18MC. The conclusionary allegations in paras 18MA, 18MB and 18MC sufficiently follow from the allegations upon which they are said to depend. I will accept them.

43 Paras 18N to 18NE. The conclusionary allegations in paras 18NC, 18ND and 18NE[75] sufficiently follow from the allegations upon which they are said to depend. I will accept them.

44 Paras 18O to 18OD. The conclusionary allegations in paras 18OB, 18OC and 18OD sufficiently follow from the allegations upon which they are said to depend. I will accept them.

45 Paras 18P to 18PD. The conclusionary allegations in paras 18PB and 18PC sufficiently follow from the allegations upon which they are said to depend. I will accept them.

46 Paras 18Q to 18QD. The conclusionary allegations in paras 18QB, 18QC and 18QD sufficiently follow from the allegations upon which they are said to depend. I will accept them.

47 Paras 18R to 18RD. The conclusionary allegations in paras 18RB, 18RC and 18RD sufficiently follow from the allegations upon which they are said to depend. I will accept them.

48 Paras 18U to 18VD. These are remarkable allegations indeed. Mr Wilson was found at the McCabe trial to have devised a strategy which became the document retention policy.[76] It seems, too, that the conduct of Mr Wilson was much criticised by the trial judge and he was therefore given leave to make submissions on the appeal.[77] In the appeal he was separately represented. The plea is that he was not called by BATAS at the trial to give evidence in relation to these matters[78] and that he gave evidence on the appeal and there made submissions that he "had not been involved in the representation of BATAS" at the trial, that he was not aware of the allegations against him,[79] that he did not have the opportunity to give evidence[80] and that the findings of the trial judge against him were unsupported and untrue.[81] This evidence and these submissions are all said to have been misleading and that Mr Wilson knew this.[82] As to the first misleading statement, the facts upon which it is said to depend do not support it. As to the second, the decision to call or not to call him as witness at the trial was not his decision. The facts alleged, however, do sufficiently support the contention that his assertion that he was not aware of the allegations against him was misleading, if not false. The third allegedly misleading evidence submission is not supported by the facts alleged. Against BATAS it is alleged in this context that it took no step to prevent Mr Wilson misleading the Court in this way.[83] It is not said what steps it could or should have taken to this end. I will not accept these allegations.

49 Paras 18A, 18H to 18L. Paragraph 18A contains allegations that in 1998 BATAS destroyed documents discovered in the litigation brought against it by Phyllis Lynette Cremona or which were potentially relevant to that proceeding. The destruction occurred in March to May 1998 after the Cremona litigation was concluded.[84] At this time, however, BATAS was party to a proceeding referred to as the Hodson proceeding[85] which is described as a proceeding in the New South Wales Consumer Claims Tribunal and proceedings related to that in the New South Wales Supreme Court and the New South Wales Court of Appeal.[86] This sufficiently provides part of the basis for the allegation in paragraph 18GA to which I have referred.[87]

50 Paragraphs 18H to 18L allege that, between 1985 and 1999, BATAS devised and implemented a document retention policy under which documents which might be prejudicial to its defence to a personal injury claim by a smoker were destroyed and copies maintained in the hands of persons not amenable to the discovery process. It is said that the purpose of this was to wrongfully hinder or impede plaintiffs from successfully proving their case against BATAS. The policy also required the destruction of documents recording the destruction of the prejudicial documents. The matters alleged in these paragraphs would appear to include those alleged in paragraph 18A. No complaint in this application was directed to these paragraphs 18H to 18L.

51 Paras 18AA to 18FF. These paragraphs contain what has been described as the conspiracy allegation. Broadly speaking, what is here alleged is that since 1987 BATAS and BATAL and five of the persons mentioned in the earlier paragraphs, and other persons unknown to Mrs Cowell (referred to as the "Conspiracy Parties"), agreed to destroy documents and to conceal this conduct with the sole or predominant intention of injuring prospective plaintiffs by hindering or preventing them from being able to successfully prove their cause of action against BATAS and BATAL for damages for personal injury caused by their smoking products.[88] The pleas, much amended, extending over 10 pages[89] of the proposed defence, have been taken by counsel for BATAS to allege a criminal conspiracy. They present a large number of arguments as to their deficiency for this purpose. In response, counsel for Mrs Cowell seeks to avoid the criticism, saying that "the elements of the tort of conspiracy would also be satisfied by a criminal conspiracy which harmed" their client.[90] This further demonstrates the validity of the fundamental complaint of insufficient particularity made generally by BATAS.[91] Is this a plea of a crime or a civil wrong? Is it a plea that the conspiracy parties engaged in lawful activities but for an unlawful purpose? Given that the conspiracy is one of the iniquities alleged in para 18(a) of the proposed defence, it is relied upon to defeat the allegation of Mr Dale's breaches of duty.[92] It must therefore provide the foundation for one or more of the conclusionary allegations in para 18(d). For this purpose the distinction between a crime and a civil wrong might be important. The pleaders must therefore make their allegation specific.

52 It is convenient at this point to deal with a submission put by counsel for BATAL with respect to the Conspiracy Parties. The plea in paragraph 15DD in the proposed defence in the BATAL proceeding is identical to paragraph 18DD presently under consideration so that the submission is apposite here. In paragraph 18FF it is alleged that "the Conspiracy Parties, or one or more of them, on numerous occasions between 1987 and 2002 (inclusive) engaged in" a number of overt acts. To this is addressed the criticism that the plaintiff and the Court will be required to consider the acts of a great number of permutations of the Conspiracy Parties, including persons unspecified, over a period of 15 years. This is oppressive without a great deal of specificity. I agree.

53 Furthermore, the particulars of the agreement and combination contained in para 18DD are oppressive and of such generality that it is difficult to see how the discovery process or the trial could be contained within manageable proportions. I am mindful of the fact that the allegation is made in the context of a claim by Mrs Cowell that she should be at liberty to use the information for a very limited purpose, to mount an application to set aside the decision of the Court of Appeal in the McCabe litigation. The proposed defence already contains allegations in paras 18H to 18L that BATAS devised and implemented a policy of document destruction. If this allegation is made out, it is difficult to see what legitimate purpose the conspiracy pleas serve; if the policy is not made out it is difficult to see how the conspiracy allegations might succeed. Insofar as it is a criminal conspiracy, a criminal trial judge would discourage the inclusion of such a conspiracy count. In the circumstances I will not accept a conspiracy plea which will have such drastic consequences upon this proceeding unless it is properly pleaded so that I am obliged to accept it.

54 It will be apparent from what I have written that this pleading is unacceptable in a number of fundamental respects. I will not accede to the suggestion put on behalf of Mrs Cowell that I should grant leave to deliver a defence in terms of those paragraphs which are not considered defective so that the matter might go to trial. If those advising her are unable to formulate a satisfactory pleading a trial may not be required.

55 It will be necessary for those advising Mrs Cowell to revisit the proposed defence. If I may be permitted to do so, I suggest that the matters raised by counsel for BATAS generally be considered as well. I have in this judgment focussed upon those matters which seemed to me to be particularly important to the parties. In particular, I invite the drafters to consider reverting to a more conventional format. The use of an elaborate lexicon in the pleading tends more to confuse than simplify. I have not undertaken the task of counting the defined terms but they are very and unnecessarily numerous. Since it will be a new pleading, it may be convenient, too, to re-number the paragraphs.

56 The defendants to this proceeding are Mr Gordon, Slater & Gordon and Mrs Cowell. as executrix of the estate of the late Mrs McCabe.[93] BATAL was not a party to the McCabe proceeding and is not therefore to be a party to any application to set aside the Court of Appeal orders made in that proceeding.

57 Much of what I have written with respect to Mrs Cowell's proposed defence in the BATAS proceeding is applicable to her proposed defence in this proceeding, since it is clear that they were prepared from the same template. There are, however, a number of significant differences between the two proceedings. The information the subject of the claim for confidence in the two cases is not the same; the causes of action alleged by BATAL are not the same as those alleged by BATAS; and the proposed defence seeks to visit BATAL with iniquities most of which are not of its making and in most of which it is not said to have been involved. Furthermore, given her protestations as to the only use which she seeks to make of the information, Mrs Cowell's threatened use of the information for which BATAL claims confidentiality does not adversely affect its interests. This may bear upon the identity of the person who may have an interest to receive the disclosed information.

58 BATAL's claims are pleaded as follows. It retained Clayton Utz on or before March 1996 to act for it in a proceeding in this Court commenced by Ms Cremona[94] and Clayton Utz provided legal services to it between 1996 and 1998 or thereabouts.[95] Clayton Utz also acted for BATAL in connection with a proceeding brought against it by Michael Christopher Nixon in the Federal Court[96] and it provided legal services pursuant to this retainer between 1999 and 2000.[97] Furthermore, at various times between the 1980s and 2002 BATAL retained Clayton Utz to provide and it did provide unspecified legal services for reward.[98]

59 BATAL asserts that it was an implied term of each of these retainers that Clayton Utz would not, without the client's consent, disclose certain information or make use of it for an extraneous purpose. The information in question is defined as "information confidential to [BATAL] which Clayton Utz held, obtained or prepared for the purposes or by reason of the retainer".[99] BATAL also asserts an equitable obligation to the same effect arising out of the fiduciary position of Clayton Utz as solicitors for BATAL.[100]

60 The proceeding concerns 26 pieces of information[101] which comprise the information To which rights of confidentiality are said to adhere. This information is said to be contained in eleven documents which are organised in the schedule to the statement of claim a little differently from those in the schedule to the BATAS statement of claim, but there is substantial overlap. The notable exception is document 11 which is described as an "advice of John T. Rush dated 25 October 2006". This is surprising as Mr Rush QC is said to have been counsel retained, not by BATAS or BATAL, but by Mrs McCabe and, later, by those representing her estate. Furthermore, the date of 25 October 2006 is a month after the date of the alleged disclosure of the confidential information which is said to have been contained in the documents including this advice.

61 What is then alleged is that these documents which were prepared for the Clayton Utz review in 2002 were prepared otherwise than for the purposes of the retainer and without the consent of BATAL.[102] The unstated allegation then is that the preparation by Clayton Utz of these review documents, insofar as they contain information obtained or prepared for the purposes of the retainers, amounted to a breach of its contractual and fiduciary duties owed to BATAL.

62 Then, it is said that Mr Dale, in 2006, as a former partner of Clayton Utz and a former employee of that firm, also owed to BATAL obligations to the effect of the implied terms and equitable duty.[103]

63 When Mr Gordon and Slater & Gordon received the documents from Mr Dale in September 2006 they knew that the information contained in them was confidential and privileged[104] and was delivered to them in breach of the contractual and fiduciary duties of confidence to which I have referred[105] so that they, too, were bound by duties not to disclose or to make use of the information.[106] It is then said that Mr Gordon and Slater & Gordon breached these duties by receiving the documents, by making copies of them, by providing copies of them to, and by disclosing the information in them to various persons including journalists and by refusing to undertake to BATAL not to publish or disseminate the contents of the documents.[107]

64 The case against Mrs Cowell is that, between September and December 2006, Mr Gordon and Slater & Gordon disclosed all or part of their confidential information to her "and to other members of the [McCabe] family"[108] and provided advice to her which included the information.[109] This and the breaches by Mr Gordon and Slater & Gordon are said to be conduct attributed to Mrs Cowell since the conduct was pursuant to the McCabe retainer.[110] As in the BATAS statement of claim, it is said that the solicitors' acts were her acts and their knowledge was her knowledge.[111]

65 Accordingly, it is said that Mrs Cowell held the documents and the information subject to an equitable duty not to disclose it or to make use of it without the consent of BATAL.[112]

66 The relief sought against her is that she not use or disclose the information, that she efface the information from her documents, that she endeavour to retrieve the documents delivered to others and that she efface the information from these retrieved documents.

67 As I have mentioned, the proposed defence of Mrs Cowell pays scant attention to the differences between the BATAL claims and those of BATAS. She relies upon an iniquity defence pleaded in essentially the same terms as in the BATAS proceeding. She says that any contractual obligation of Clayton Utz in respect of the information is unenforceable or would not be enforced by a court of equity insofar as the information discloses that there has been a crime, civil wrong or serious misdeed of public importance.[113] Her plea to the allegation that Clayton Utz is bound by an equitable duty of confidence is put rather differently. She does not admit the allegation and says, further, that the iniquity information and the information which is in the public domain is not protected by equitable obligations of confidence.[114]

68 The iniquity defence raised in paragraphs 10, 11 and 15-15FF is, as best I can see, almost identical to that raised in paragraphs 12A, 13 and 18-18FF of her proposed defence to the BATAS statement of claim. These paragraphs suffer from the same deficiencies. They suffer from the further deficiency that they fail to address the essential differences between this claim and the BATAS claim.

69 In the circumstances, I will not accept the proposed pleading in response to the BATAL statement of claim.

70 Accordingly, I propose that each of the applications brought by the thirdnamed defendant to deliver an amended defence in terms of the proposed drafts should be dismissed.

71 Before I leave this matter, and in response to the plea of counsel for Mrs Cowell at this hearing and to the request of counsel for BATAS at earlier hearings, for a speedy trial of these matters, I offer for the consideration of the parties the following tentative observations. In so doing, I emphasis their tentative nature, made as they are, without having seen any but one of the documents containing the information in question and in the light only of my familiarity with the proceedings as they have been disclosed in the pleadings and arguments to date -

1. Is it not likely that the information was received by Clayton Utz in circumstances which would attract an equitable, if not a contractual, obligation of confidence?
2. Is it not likely that Mr Gordon and Slater & Gordon received the information from Mr Dale in circumstances where he or it knew that the information was subject to an obligation of confidence, so that he and it were also subject to that obligation.[115]
3. Is there an issue as to the information being in the public domain?
4. In these circumstances the issues for determination in these proceedings are likely to be the following:

(a) Is Mrs Cowell subject to the same obligation of confidence as Mr Gordon and Slater & Gordon?

(b) Have the iniquities or some of them been established?

(d) Does the information in question disclose the iniquities or any of them; alternatively does the imposition of the obligation of confidence conceal the iniquities or any of them?

(e) In these circumstances, does this obligation of confidence extend to or should it be enforced so as to prevent her using all or part of the information for the purpose of mounting the challenge to the Court of Appeal decision of 6 December 2002

1. If these be the real issues in these proceedings, the pleadings should be drafted so as to expose these issues.
2. Following discovery the issues may be set down for trial later in the year.

[1] [2007] VSC 216.

[2] BATAS statement of claim para 16(a).

[3] Cowell v BATAS [2007] VSCA 301 at [1].

[9] The BATAS proceeding became Victorian proceeding No 5618 of 2007 and the BATAL proceeding became Victorian proceeding No 5617 of 2007.

[10] Set out in my judgment [2007] VSC 216.

[11] See A-G v Guardian Newspaper Ltd (No 2) [1990] 1 AC 109 at 189, per Lord Donaldson MR, at 223, per Bingham LJ and at 283, per Lord Griffiths.

[12] I was told that the current draft pleadings represent the eighth draft.

[15] BATAS statement of claim para 3(b). The representative of the estate of Mrs McCabe since changed. See paragraph [6] above.

[19] BATAS statement of claim para 40F.

[20] BATAS statement of claim paras 16, 17.

[25] BATAS statement of claim paras 11 and 12.

[26] BATAS statement of claim paras 13 and 13A.

[27] Professional Conduct and Practice Rules 2005.

[28] See Proposed defence para 18(b) and (c).

[29] 44 pages plus 29 pages of schedules.

[33] [1987] FCA 266; (1987) 14 FCR 434 at 456. It may have its origins in Initial Services Ltd v Putterill [1968] 1 QB 396 at 405, per Lord Denning MR.

[34] See Cowell v BATAS [2007] VSCA 301 at [34] - [35].

[35] It may be that this is not a case where this privilege is properly raised. See para [35] below.

[36] [1987] FCA 266; (1987) 14 FCR 434 at 456

[38] (1856) 26 LJ Ch 113 at 114.

[39] See A v Haydon [1984] HCA 67; (1984) 156 CLR 532 at 545, per Gibbs CJ.

[40] See Lion Laboratories v Evans [1985] QB 526 at 550 per Griffiths LJ; AFL v The Age [2006] VSC 308.

[41] Tuckiar v R [1934] HCA 49; (1934) 52 CLR 335 at 347.

[42] Apart from injunction in aid of contractual, statutory and proprietary rights.

[43] Corrs Pavey Whiting & Byrne [1987] FCA 266; (1987) 14 FCR 434, 454 (Gummow J, in diss. but not in point of principle).

[44] Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) [1987] FCA 266; (1987) 14 FCR 434, 456; Australian Football League v The Age Co Ltd [2006] VSC 308; (2006) 15 VR 419, 433 [57]-[68] (Kellam J); cf. ISTIL Group Inc v Zahoor [2003] EWHC 165; [2003] 2 All ER 252, 273 [94].

[45] Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) [1987] FCA 266; (1987) 14 FCR 434, 457.

[46] Even if it might disclose the commission of a crime: Carter supra.

[47] Cowell v BATAS [2007] VSCA 301 at [34]- [35].

[48] See Minister for Immigration and Citizenship v Kumar [2009] HCA 10 at [27], and the cases referred to in Toulson & Phipps, Confidentiality, 2nd ed., 2006 at pp158ff.

[49] See Third Defendant's response to submissions of BATAS and BATAL dated 4th December 2008, para 16.

[50] Proposed defence paras 18DA, 18GA, 18MB, 18ND, 18OC, 18PC, 18QC and 18RC.

[52] It was submitted on behalf of BATAS that most of the evidence to which reference is made in this context is evidence that was elicited in cross-examination. But in an application of this kind I am not concerned with factual issues.

[53] Proposed defence paras 18DA and 18DB.

[55] Proposed defence paras 18E, 18H and 18L.

[56] Proposed defence paras 18DD and 18FF.

[58] See Proposed defence paras 18DA, 18GA, 18MB, 18ND, 18OC, 18PC, 18QC, 18RC, 18T and 18VC.

[59] See as to this para [24] above.

[60] See, for example, Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) [1987] FCA 266; (1987) 14 FCR 434 at 456.

[61] See AFL v The Age [2006] VSC 308; (2006) 15 VR 419 at 436 [67-8], per Kellam J.

[62] Third Defendant's response to submissions of BATAS and BATAL dated 4th December 2008, para 11.

[63] (1884) 14 QBD 153.

[64] It is not pleaded in the statement of claim, perhaps for this reason. See Crowley v Murphy [1981] FCA 31; (1981) 52 FLR 123 at 145-6, per Lockhart J

[65] See Cowell v BATAS [2007] VSCA 301 at [34]- [35].

[67] Southern Equities Corporation Ltd (in liq) v Arthur Andersen [1997] SASC 6712; (1997) 70 SASR 166 at 174, per Doyle CJ.

[68] Third Defendant's response to submissions of BATAS and BATAL dated 4th December 2008, para 12 & 14.

[69] Brambles Australia Ltd v BATAS; Re Mowbray (No 8) [2006] NSWDDT 15.

[70] McHarg v Woods Radio Pty Ltd [1948] VicLawRp 86; [1948] VLR 496 at 499, per Herring CJ.

[71] Other than the opinion of counsel for BATAS dated 18 February 2002, being item 7 to the schedule to the BATAS statement of claim.

[72] This expression is defined at 12A(a). See para [23] above.

[73] See para [35] above.

[75] The references in this paragraph are to para 18O(d) and (g), and para 18Q(a)(i), (ii) and (iv) appear to be erroneous.

[76] [2002] VSC 73 at [289].

[77] See [2002] VSCA 197; (2002) 7 VR 524 at 531 [11].

[82] Proposed defence para 18VB and 18VC.

[87] See para [41] above.

[89] And many more since, in para 18FF, overt act (f) picks up many if not all of the more specific iniquities previously alleged.

[90] Submission 8 October 2008 para 84.

[94] Proceeding No 4423 of 1996. See BATAL statement of claim para 5.

[97] BATAL statement of claim paras 7 and 8.

[100] BATAL statement of claim para 11.

[101] Cowell Submission 8 Oct 2008 par 66

[102] BATAL statement of claim para 16.

[103] BATAL statement of claim para 19(f).

[104] The basis for this privilege is not asserted.

[105] BATAL statement of claim para 21. In fact, this may not be correct: the duties in paras 10. 11 and 12 of the statement of claim are said to be owed to BATAL; those referred to in para 21 are said to be owed to BATAS.

[106] BATAL statement of claim para 22.

[107] BATAL statement of claim paras 23(a), 23(b), 25, 26, 31 and 32.

[108] BATAL statement of claim para 24(a).

[109] BATAL statement of claim para 24(b).

[110] BATAL statement of claim para 33.

[111] BATAL statement of claim para 34.

[115] See A-G v Guardian Newspaper Ltd (No 2) [1990] 1 AC 109 at 268, per Lord Griffiths.