Computershare Ltd v Perpetual Registrars Ltd & ors [2000] VSC 139

Computershare Ltd v Perpetual Registrars Ltd & ors [2000] VSC 139 - VSC 2000 case summary — Zoe

[12]

The announcement stated that the joint venture would commence from 1 May 2000 "subject to completion of due diligence and any necessary regulatory approvals". It also nominated a number of contact points including the third defendant Mr Christopher Hamilton described as "General Manager, Clearing & Settlement Australian Stock Exchange". Immediately upon becoming aware of the announcement Computershare wrote to Perpetual Registrars expressing its concern that the proposed joint venture between Perpetual Trustees and the Exchange might have ramifications for the bureau services agreement between Computershare and Perpetual Registrars. As a consequence, in a letter dated 21 March 2000 Computershare requested urgent written advice as to the structure of the proposed joint venture and confirmation that the confidential information that was the subject of the bureau services agreement had not been disclosed to any person, in particular, the Exchange. Computershare requested, further, confirmation that no employee of Perpetual Registrars who had access to matters relating to the bureau services agreement would be involved in the development of the next generation processing system to be developed as part of the joint venture. Thereafter a course of correspondence ensued between Computershare and Perpetual Registrars. In a letter dated 24 March 2000 Perpetual Registrars informed Computershare that it was aware of its obligations under the bureau services agreement and had no intention of making improper use of the confidential information that was the subject of the agreement. Furthermore, and of some significance to Computershare, Perpetual Registrars advised that it only disclosed information relating to the bureau services agreement to its officers and staff who needed to know such information. The response gave rise to concern on the part of Computershare as to who in particular at Perpetual Registrars had access to the information that was the subject of the bureau services agreement. A correspondence warfare ensued leading to a threat by Computershare of legal proceedings.

[29]

In addition to its summons Computershare served a subpoena for production of documents upon Perpetual Trustees. Perpetual Trustees sought by summons to set aside the subpoena. Ultimately Computershare did not proceed with the subpoena. Both Perpetual Registrars and Perpetual Trustees filed a summons seeking to stay the proceeding generally, alternatively, specific claims in the statement of claim pursuant to order 23.01 of the Rules, alternatively, to strike out the said paragraphs pursuant to order 23.02 of the Rules. The parts of the statement of claim that were the subject of attack were those wherein Computershare alleged that Mr Hamilton was appointed to the board of Perpetual Registrars in order to be able to obtain access to the relevant confidential information for the benefit of the Exchange, that he would communicate that information in breach of the obligations of Perpetual Registrars and Perpetual Trustees under the bureau services agreement, that on dates unknown to Computershare the Perpetual interests had disclosed the confidential information to the exchange or persons acting on its behalf including Mr Hamilton, that the Perpetual interests had used the confidential information for the purposes of its negotiations with the Exchange and for the purpose of the making of the joint venture agreement and that the joint venture agreement constituted a breach by the Perpetual interests of terms of the bureau's services agreement. The statement of claim broadly set out these allegations but without particulars. It was pleaded in the statement of claim that the relevant particulars would be provided following discovery of documents. When the matter first came before me on 7 April 2000 Mr A.C. Archibald QC who appeared with Mr P.H. Clark for the Perpetual interests foreshadowed an application to strike out all or parts of the statement of claim on the basis that it was, among other matters, bereft of particulars and failed to make a claim that could be supported at law. The foreshadowed application came to fruition in the form of the summons issued by Perpetual Registrars and Perpetual Trustees pursuant to order 23 of the Rules.

[36]

"In the Norwich Pharmacal case the Customers and Excise Commissioners, by the exercise of their statutory powers, became 'mixed up' in the importation of infringing chemicals and an order for discovery did not offend against the mere witness rule because it sought discovery of the identity of the importers with a view to bringing proceedings against them. As Lord Reid said, at p.174: 'the foundation of the [mere witness] rule is the assumption that eventually the testimony will be available either in an action already in progress or in an action which will be brought later .... Here if the information in the possession of the respondents cannot be made available by discovery now, no action can ever be begun because the appellants do not know who are the wrongdoers and who have infringed their patent.' Mr. Mann says that the Norwich Pharmacal principle is limited to finding out the identity of a tortfeasor. But his is not the only situation which falls outside the mere witness rule. In Bankers Trust Co. v. Shapira [1980] 1 W.L.R. 1274 discovery was ordered against a bank which had received the proceeds of fraud. The purpose of discovery was to trace what he happened to the money. The bank had innocently become mixed up in the fraud and there was no infringement of the mere witness rule because there would be no point in the plaintiff seeking the information at the trial. By that time the money would be gone. In A v. C (Note) [1981] Q.B. 956, 961, Robert Goff J. made an order for disclosure in aid of a pre-judgment Mareva against a bank which had been joined solely for the purposes of discovery. In the case of discovery against a third party in aid of a post-judgment Mareva, the mere witness rule can have no relevance. The trial, if any, will already have taken place. It follows that all that is necessary to found jurisdiction is that the third party should have become mixed upon in the transaction concerning which discovery is required and, of course, that the court should consider it 'just and convenient' to make an order. The court will naturally exercise with care a jurisdiction which invades the privacy of an innocent party. But this is a matter to be taken into account in the exercise of the discretion. It does not go to the existence of the jurisdiction."

[38]

A debate has ensued in recent times over the extent of a Norwich order. In McLean v Burns Philp Trustee Co Pty Ltd (1985) 2 NSWLR 623 Young J expressed the view (at 645) that the principle in Norwich was limited to identify discovery. A similar view was expressed by Sheppard J in Survival & Industrial Equipment (Newcastle) Pty Ltd v Owner of Vessell "Alley Cat" [1992] FCA 242; (1992) 36 FCR 129 at 139. The broader approach adopted by Hoffmann LJ in Mercantile appears to have been approved by Gummow J in Breen v Williams (1996) 186 CLR 71, 120 and earlier in Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) [1987] FCA 266; (1987) 14 FCR 434 at 445-6. The broader approach appears to have been cited with approval by the Full Court of the Federal Court most recently in Hooper & ors v Kirella Pty Ltd [1999] FCA 1584; (1999) 167 ALR 358, 365. The circumstances of the present proceeding warrant the application of the broader approach of the Norwich order. The plaintiff has provided evidence at an interlocutory stage which stands unchallenged and unrebutted of alleged wrongful use of confidential information. In order to identify the actual information used, the manner of use and, also, the identity of the persons who have had access to such information Computershare is entitled to an order in order to reveal those matters. There is information exclusively within the province of knowledge of the defendants as to the information utilised, the manner of use and the persons who have had access to such use. Furthermore, those persons potentially include third parties who are not at this point parties to the proceedings. An obvious potential such party is the Exchange itself. Similar to the case where a party was entitled to discovery of information in order to trace the disposition of fraudulently obtained moneys so too is Computershare entitled to trace what has happened to its information in the hands of the Perpetual interests especially vis-à-vis the dealings with the Exchange and Mr Hutchinson. If Computershare was compelled to await trial before the information was revealed to it it may well be too late as its dominance in the market place in the provision of its services would be undermined and, further, the value of its next generation software could be totally diminished. Furthermore, on the basis of the final principle stated by Hoffmann LJ in Mercantile I consider that it is in all the circumstances just and convenient to make the order sought by Computershare. I form this view on the basis that the evidence of Computershare stands unchallenged and unrebutted by the Perpetual interests. Secondly, at no stage notwithstanding reasonable opportunity to do so have the Perpetual interests taken the opportunity to depose on affidavit a denial of wrongful use of the information in the course of negotiating or for the purpose of their joint venture with the Exchange. In such circumstances it is appropriate that the plaintiff be granted the relief it seeks with respect to an affidavit of disclosure of the information and the identity of the persons who have been provided with access to such information.

[47]

"This general rule, which applies equally in other jurisdictions and to applications by plaintiffs as well as defendants, appears to me to be based in part upon the notion that it is impossible to determine what documents are material until the issues have been defined by pleadings, and partly upon the desirability of avoiding fishing expeditions (Davies v. Australian Joint Stock Bank (1898), 14 W.N. (N.S.W.) 152; Sunday Times Newspaper Co. Ltd. v. Sun Newspaper Co. Ltd. (1919), 36 W.N. (N.S.W.) 72; Witzig v. Dizick (1928), 46 W.N. (N.S.W.) 14; Gale v. Denman Picture Houses Ltd., [1930] 1 K.B. 588). But all these authorities concede that there are exceptional cases where the court's discretion can and will be exercised in favour of a party, whether plaintiff or defendant, who seeks discovery before pleading and, as is so often the case in comparable fields of practice such as the ordering of particulars and the administration of interrogatories, the modern tendency is to exercise the discretion by granting appropriate relief if justice cannot otherwise be done (Speyside Estate's Case, supra; Saphir v. Green (15 December 1950, unreported); Philliponi v. Leithhead (1959), 76 W.N. (N.S.W.) 150; Hutchings v. Rodriguez (1959), 76 W.N. (N.S.W.) 459; Meth v. Norbett Steinhardt & Son Ltd. (1959), 33 A.L.J.R. 78). It is not sufficient, however, merely to ask if the circumstances are exceptional because other considerations cannot be disregarded: even in exceptional circumstances discovery before pleading may be so oppressive that it should not be granted and, likewise, circumstances which could be characterized as exceptional may not be inconsistent with a desire by a party to pursue a fishing investigation. Therefore one must always bear in mind the extent to which justice requires that the applicant should receive a concession or indulgence not normally granted and, on the other band, the extent to which it is unjust or unfair to require a respondent to assume an obligation not normally cast upon respondents."

[52]

It was urged by Mr Archibald QC that I should read into order 29.07 a requirement that Computershare demonstrate exceptional circumstances. Order 29.07 was a novel rule introduced by Statutory Rule No. 99 of 1986. Prior to its introduction discovery between parties was governed by order 31.12. The latter rule vested in a judge the broad discretion to order discovery at any stage, either generally or limited to certain classes of documents, as the court in its discretion sought fit. Order 29.07 essentially codified the position at common law but in doing so left the matter entirely at the discretion of the court. There was not a prerequisite inserted in the new rule requiring an applicant for early discovery to satisfy the court of exceptional circumstances. In my view the imposition of the requirement of making out exceptional circumstances sets too high an obstacle for an applicant and, furthermore, in particular circumstances may well frustrate the very purpose for which the rule was inserted. In determining whether or not to exercise the discretion under order 29.07 it will be necessary for a court to assess the circumstances in each case. In this matter I am satisfied that the discretion ought be exercised on three grounds. Firstly, Computershare has demonstrated a pre-existing relationship between it and the first and second defendants. Secondly, Computershare has a strong and unrebutted suspicion as to the use of information that it regards as confidential. Thirdly, the statement of claim filed by the plaintiff has already been the subject of attack by the Perpetual interests. A summons was issued returnable before me by the Perpetual interests seeking to strike out the plaintiff's claim or, alternatively, particular paragraphs of the statement of claim. The summons was not pursued before me and Mr Archibald indicated that his client would be satisfied to have the summons dismissed or dealt with at another time. Be that as it may, the plaintiff is reasonably entitled to regard itself in a position where its statement of claim is potentially under attack and it requires information to enable it to further plead and particularise its case in circumstances where the relevant matters are exclusively within the province of knowledge of the defendant. In the circumstances, therefore, I consider it appropriate that the defendants provide discovery pursuant to order 29.07.

[54]

Mr Whelan QC who appeared for the Exchange resisted an order for non-party discovery against his client on three bases. First, the bulk of the documents are said to be with the defendants and not with the Exchange. Second, the Exchange was not asked to produce the documents sought. Third, the pleadings between the parties, that is the plaintiff and the defendants have not closed. Ultimately, each case must be considered on its merits and a court will determine whether or not to exercise a discretion under order 32.07 where it is warranted. In the present circumstances I am satisfied that the plaintiff has demonstrated sufficient dealings between the Exchange and the Perpetual interests. This view is especially borne out by the unrebutted and unchallenged relationship between Mr Hutchinson and both the Perpetual interests and the Exchange. Whilst it might be the case that the bulk of the relevant documents sought are with the defendants it nevertheless is appropriate for the Exchange to discover on a non-party basis to Computershare the documents that it does have in its possession. So far as it is said that the Exchange has not been requested to provide documents such response is nonsensical. If nothing else the service of the summons by Computershare on the Exchange constituted such demand. Whilst it might be said that the pleadings between the parties have not closed and therefore any non-party discovery by the Exchange is premature, in all the surrounding circumstances of this matter I am satisfied it is appropriate to exercise the discretion and order non-party discovery by the Exchange as sort by Computershare. In forming that view I am mindful of the fact that the proposed joint venture between the Perpetual interests and the Exchange is due to be launched a few days hence, on 1 May 2000. Furthermore, I am mindful of the fact that the Exchange has been prepared on the face of the announcement to invest up to M$50 in the proposed joint venture. Furthermore, and of particular significance is the fact that the proposed joint venture will on its face be in direct competition with the plaintiff. Notwithstanding that there are undertakings in place proffered by the defendants such undertakings relate to future conduct and do not encompass past conduct by those parties. It may well be, but is yet to be seen, that the discovery of documents and other information as sought by Computershare will bring to light circumstances that warrant it returning to the court seeking further urgent relief. Ultimately, I am satisfied that in the prevailing circumstances and urgency of this matter it is appropriate that the Exchange provide discovery to Computershare pursuant to order 32.07.

At a glance

Court

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Judgment (54 paragraphs)

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Cases Cited (11)