Computer Interchange Pty Ltd v Microsoft Corporation

Federal Court of Australia|1999-03-08|Before: Lindgren J, Madgwick J

REASONS FOR JUDGMENT 1 On 31 August 1998 I refused to order the relief sought in the applicants' Notice of Motion filed on the same day. These are my reasons. 2 The first applicant ("the company") is a retailer of a substantial volume of computer equipment and software and the second applicant is a director of the company. The respondents are, of course, well-known. On 21 August 1998, Lindgren J made, by consent, Anton Pillar orders of an interlocutory nature, following earlier ex parte orders, allowing the respondents to remove from the company's premises, among other things, anything which appeared to Microsoft's legal representatives to infringe the company's trademark. After those orders had been made, counsel for the applicants sought an undertaking from the respondents that they not publish any details of the proceedings until further order of the Court. Lindgren J considered that the proper course would be for the applicants to file a Notice of Motion seeking orders from the Court to that effect. The respondents gave an undertaking to refrain from publishing any such details until the hearing of the Notice of Motion before me on 31 August last.

The applicants' concern 3 The applicants' main concern is the damage likely to be caused to the company's reputation and commercial trading if it becomes known to consumers that products, allegedly infringing the respondents' trademark, had been found at its premises. The applicants contend that the respondents would have a strong interest in publicising the results of the "raid" as a warning to other suppliers and retailers that such action can and will be taken if they are suspected of dealing with or selling infringing products. Therefore, the applicants seek to limit the potential of such adverse publicity. 4 The applicants do not seek to prevent the respondents from discussing the details of the proceedings altogether. It is conceded that such an attempt would be futile given that the proceedings before Lindgren J were heard in open court and that the relevant documents are a matter of public record. Nor do the applicants seek to prevent the respondents, for example, from answering any enquiries from the press in relation to the matter. However, the applicants do wish to prevent the respondents from taking active steps to publicise the action that was taken by way of execution of the Anton Pillar orders and the results that ensued from its execution. The applicants seek the following orders, in the alternative: "(1) Until further order each of the respondents, whether by themselves, their servants or agents, will not seek to have published or encourage the publication in any form of any details of these proceedings to the marketplace or the world at large and will not publish or authorise the publication of any such details in any event including an answer to any inquiry without in such publication specifying that (a) the applicants have given full co-operation to the court and to the respondents at all times since the commencement of these proceedings and (b) the applicants are adamant that they were quite unaware that any products or programs which they had purchased or were selling infringed any rights of the respondents. (2) That each of the respondents until further order whether by themselves their servants or agents will not publish the names of the applicants in connection with these proceedings. (3) That the respondents give the applicants notice of any press release which it might have in mind to issue so as to give the applicants the opportunity of approaching the Court if it was advised to do so." 5 Further, the applicants rely on the continuation of the respondents' undertaking, made in relation to in the Anton Pillar orders, that each of them "undertakes not to use any information, document or thing obtained in the course of the execution of the Orders made today otherwise than for the purposes of these proceedings without the leave of the Court." It is the applicants' submission that this undertaking has not been spent and that, although the respondents may rely on the orders made by the Court, they should not be permitted to reveal information obtained from the material referred to in those orders. The applicants say that, since the respondents sought Anton Pillar orders as their first course of action, they were not given an opportunity to address the matter privately with the respondents before the proceedings commenced and that, had they been given that opportunity, they would have co-operated with the respondents, so that the proceedings would not have been necessary and the potential for damage to their reputation would not have arisen. This is supported, it is contended, by the fact that the applicants consented to the orders being made at the first opportunity. The applicant's case rests on two propositions. First, that the Court has the power to restrict the publication of Court proceedings, and, second, that it is appropriate in the circumstances of this case that the Court issue such orders. The Court's power to restrain publication of its proceedings 6 The applicants rely on s 23 of the Federal Court of Australia Act 1976 (Cth) ("the Act"), which they say gives the Court broad powers to make the orders sought. Section 23 provides that: "The Court has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders, and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate." Order 35, rule 1 of the Federal Court of Australia Rules 1976 (Cth) ("the Rules") provides that: "The Court may, at any stage of the proceedings, on the application of any party, pronounce such judgment or make such order as the nature of the case requires, notwithstanding that the applicant does not make a claim for relief extending to that order in any originating process."

7 Counsel for the respondents argue that the Court's power to make orders prohibiting the publication of information arising from a particular proceeding is limited to the powers granted by s 50, which provides that: "The Court may, at any time during or after the hearing of a proceeding in the Court, make such order forbidding or restricting the publication of particular evidence, or the name of a party or witness, as appears to the Court to be necessary in order to prevent prejudice to the administration of justice or the security of the Commonwealth." The applicants respond that s 50 is not relevant as they are not seeking to establish an exception to the principles which underlie that section. For example, they are not concerned with preventing media reports or the suppression of confidential information. 8 Further, the applicants say that the Court's power to make such an order arises from, or is incidental to, the Court's undoubted jurisdiction to make Anton Pillar orders, pursuant to s 23. It is submitted that, in the context of such orders, which are of an exceptional nature, and where the respondents have gained a substantial forensic advantage, it would be a justifiable part of the exercise of that exceptional jurisdiction to make such orders as would minimise the potential damage to a party's reputation and/or financial position. 9 There may well be something to be said in favour of an expansion of the undertaking usually required by a party seeking Anton Pillar orders and in favour of the Court's power, at an appropriate stage of the proceedings, so as to require that, without the leave of the Court, such a party should not "use or disclose" any information, or the like, obtained in the execution of the orders. However, as I see it, the proceedings have progressed, by the recounting in open court of what occurred in execution of the ex parte orders, beyond a point where such an order could, or should, be made. 10 The power of the Court, as a statutory court, to make an order must be founded in legislation. Section 23 generally authorises the Court to make such orders as it considers appropriate in relation to matters in which the Court has jurisdiction. Whether the Court has jurisdiction in the "matter" is not in issue. However, s 17 provides: "(1) Except where, as authorized by this section or another law of the Commonwealth, the jurisdiction of the Court is exercised by a Judge

sitting in Chambers, the jurisdiction of the Court shall be exercised in open court... (4) The Court may order the exclusion of the public or of persons specified by the Court from a sitting of the Court where the Court is satisfied that the presence of the public or of those persons, as the case may be, would be contrary to the interests of justice." 11 The requirement in s 17(1) that, unless that section or another law of the Commonwealth otherwise provides, the jurisdiction of the Court will be exercised "in open court" carries with it the clear implication that there is to be no restraint upon the publication of proceedings that occur in open court. This accords with the importance of the tradition of open justice to be found in the common law. As McHugh JA stated in John Fairfax & Sons v Police Tribunal (1986) 5 NSWLR 465 at 481: "The rules of statutory construction no longer accord to common law rights the presumption of immunity from statutory interference which they once enjoyed. Nonetheless some common law rights are of such importance that an intention to repeal or amend any of them will only be attributed to the legislature when the language of its statute is unmistakably clear. I think that the right to publish a fair and accurate report of court proceedings is a common law right of sufficient significance to fall within this preferred category. The importance which the common law has attached to a fair and accurate report of court proceedings is illustrated by the rule that its publication is not a contempt of court even though it is likely to prejudice the fair trial of pending proceedings … It is also illustrated by the rule that a fair and accurate report of court proceedings made in good faith is not an actionable defamation. Without the publication of the reports of court proceedings, the public would be ignorant of the workings of the courts whose proceedings would inevitably become the subject of the rumours, misunderstandings, exaggerations and falsehoods which are so often associated with secret decision making. The publication of fair and accurate reports of court proceedings is therefore vital to the proper working of an open and democratic society and to the maintenance of public confidence in the administration of justice. It is a right which can only be taken away by words of plain intendment." 12 The only exceptions to the principle of open justice to be found in the Act are s 17(4) and s 50. No other statute was suggested to be relevant. It seems to me that, having regard to the subject matter of those sections and to the deeply entrenched traditions, to which I have referred, Australian courts should work in public. The general power of the Court to make orders pursuant to s 23 should not be construed so as to thwart limitations imposed by those sections upon derogation from the notion of open justice. I leave for future consideration whether there may be highly unusual and exceptional occasions when, in the interests of justice, some manner of suppression of an aspect of proceedings in the Court other than those contemplated by s 17(4) and s 50 would be plainly called for. There is no occasion for me to consider whether, in all circumstances, the effect of s 17(1) is to prohibit suppression of proceedings in the Court except as authorised by s 17(4) or s 50. 13 It is inherent in open justice that any person, including a party to the proceedings, be free to publish anything which arises from those proceedings, unless the Court is satisfied that it should exercise its discretion under s 50. Even so, the exercise of the Court's discretion is restricted to the protection of the particular values mentioned in s 50 by the particular means referred to in that section. It cannot be exercised in a way that would permit, for example, the making of an order as proposed by the applicants, to forbid a party from seeking to publicise "any details" of the proceedings: see Nationwide News Pty Ltd v District Court of NSW (1996) 40 NSWLR 486 at 498, per Meagher JA. The Court's discretion to restrain publication of its proceedings 14 If, contrary to the above, it is within the power of the Court to issue orders offending the principle of open justice in its general capacity to make orders under s 23 of the Act, it must now be considered whether the Court should exercise its discretion under s 50. 15 Section 50 deals expressly with the prevention of information given in open court from entering the wider public arena. As Bowen CJ remarked in Australian Broadcasting Corporation v Parish (1980) 43 FLR 129 at 133-134, in exercising its discretion under s 50, the Court must weigh the countervailing public interests of open justice against ensuring justice between the parties. The public interest in open justice is a fundamental one: see, for example, Russell v Russell (1976) 134 CLR 495 at 520 per Gibbs J and Harman v Secretary of State for the Home Department [1983] 1 AC 280. 16 The onus on the party seeking to persuade the Court to make an order pursuant to s 50 is a very heavy one. The alleged prejudice to the party seeking orders to prevent publication of evidence or the name of a party or witness that have actually been heard in open court must be sufficiently serious that the absence of such an order would actually "prejudice the administration of justice". As Priestly JA remarked in Raybos Australia Pty Ltd v Jones (1985) 2 NSWLR 47 at 63, "a case where it would be both practical and right to make such orders would be of the utmost rarity". 17 There are undoubtedly few respondents or defendants who would not feel themselves harmed, and often justly so, by the publication of the allegations made against them in litigation. However, such harm alone is not sufficient. Kirby P commented in John Fairfax Group v Local Court of NSW (1991) 26 NSWLR 131 at 142-143: "It has often been acknowledged that an unfortunate incident of the open administration of justice is that embarrassing, damaging and even dangerous facts occasionally come to light. Such considerations have never been regarded as a reason for the closure of courts, or the issue of suppression orders in their various alternative forms… A significant reason for adhering to a stringent principle, despite sympathy for those who suffer embarrassment, invasions of privacy or even damage by publicity of their proceedings is that such interests must be sacrificed to the greater public interest in adhering to an open system of justice. Otherwise, powerful litigants may come to think that they can extract from courts or prosecuting authorities protection greater than that enjoyed by ordinary parties whose problems come before the courts and may be openly reported." 18 If I am wrong about the power of the Court now to make the orders sought as an extension of the Court's jurisdiction to make Anton Pillar orders under s 23, I would nonetheless decline to exercise my discretion to make those orders. While it may be the case that the applicants have been prejudiced to some extent by the proceedings being commenced as they were, the usual undertaking as to damages, which was given, is, in my opinion, an adequate remedy to compensate the applicants for any loss which may arise if it is later shown that they were innocent of any wrongdoing. As counsel for the respondents pointed out, the applicants also have the protection of the law, for example, in an action for defamation, if the applicants' position is falsely or otherwise improperly reported by the respondents, or anyone else. While I understand the applicants' assertion that they are entirely innocent of wrongdoing and their fear that they will suffer harm if the details of this matter become publicly known, I am not satisfied that this is an exceptional case where the potential harm to the applicants' interests outweighs other well-established considerations of the public interest such that an order of the kind sought by the applicants ought be made.

Other matters 19 As to the other orders sought, the Court would have no power to require the respondents to put the applicants on notice of any intention to publish details, or to limit the manner of publication of the proceedings, unless such a requirement was imposed in aid of an order or possible order under s 50. As indicated above, the only issue relevant here is whether the Court is or might be satisfied that the administration of justice requires that the respondents be restrained from publishing the names of the applicants in connection with the proceedings. Whether the administration of justice will be prejudiced requires consideration of, among other things, whether the effect of not making that order will be to discourage other potential adversaries from resisting claims such as those brought by the present respondents in order to avoid any adverse publicity which may follow. The Courts have not been quick to draw such a conclusion. The circumstances here are not so exceptional as to justify the Court in drawing that inference. In any case, that would need to be balanced against the manifest ill-effects of infringing the principle of open justice. Conclusion 20 For these reasons, the Notice of Motion is dismissed and the applicants ordered to pay the respondents' costs. The respondents are relieved forthwith from their undertaking. I certify that the preceding twenty one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Madgwick.

Associate: Dated: 8 March 1999 Counsel for the Applicant: P Gray Solicitor for the Applicant: O'Hara & Company Counsel for the Respondent: W Nicholas QC and R Cobden Solicitor for the Respondent: Mallesons Stephen Jaques Date of Hearing: 31 August 1998 Date of Judgment: 8 March 1999

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