Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA

Citation : WESTERN AUSTRALIAN RUGBY UNION INC -v- ROUND [2008] WASC 35

Practice and procedure - Application for discovery against non­party - O 26A r 5 - Applicant must identify documents sought - Need for specificity - Applicant must establish that documents relate to matter in question in action - Exercise of discretion

2 NEWNES AJA: The appellants seek leave to appeal against an order of Master Sanderson by which the learned Master ordered that the appellants give discovery of certain documents, pursuant to O 26A r 5 of the Rules of the Supreme Court 1971 (WA).

3 As the appeal is sought to be brought against an interlocutory order, leave to appeal is required: s 60(1)(f) of the Supreme Court Act 1935 (WA). Pursuant to the order of Pullin JA of 1 April 2008, argument on the appeal was heard together with the application for leave.

4 The first appellant (Fairfax) is the publisher of the Sydney Morning Herald newspaper. The second appellant (Mr Ryle) is a journalist employed by Fairfax. The respondent's application for discovery arose in connection with proceedings in this court (the action) by the respondent against a former employee of the respondent, one David Round.

5 The respondent is a non-profit organisation responsible for the regulation and administration of rugby union in Western Australia and the operation of the 'Western Force' rugby union team in the national Super 14 competition.

6 The respondent employed Mr Round as its chief financial officer from 31 January 2005 to 19 January 2007 and again from 1 February 2007 to 21 May 2007 (Mr Round says until 23 May 2007).

7 The respondent alleges that, on 21 January 2007, in breach of the terms of his employment contract, Mr Round sent certain documents from his work email address to his home email address. The respondent says the documents belonged to it and were confidential and commercially sensitive.

8 The respondent alleges that, on dates unknown to it, Mr Round disclosed to persons including Mr Ryle information relating to the respondent's activities which was confidential to the respondent and commercially sensitive, including the information contained in the documents Mr Round sent to his home email address. The nature of the confidential information allegedly disclosed by Mr Round, beyond the documents sent to his home email account on 21 January 2007, is not identified.

9 The respondent says that the disclosure by Mr Round is to be inferred from the fact that he sent the confidential documents to his home email address on 21 January 2007, and from the contents of certain articles published in the Sydney Morning Herald newspaper on 31 May 2007, 9 June 2007, 16 and 22 August 2007. The respondent also relies for the inference on certain postings allegedly made by Mr Round, using a pseudonym, on a website 'The Whole Force' on 17, 18, 22 and 31 August 2007. The website is devoted to the activities of the respondent and its members.

10 The respondent alleges that in providing confidential and commercially sensitive information to third parties, Mr Round was in breach of the terms of his contract of employment. The respondent seeks a permanent injunction restraining him from any further disclosure of confidential information of the respondent, and damages.

11 In his defence, Mr Round, among other things, admits that he sent documents of the nature claimed by the respondent to his home email address. He says that he had been given permission to enter the respondent's premises over the weekend of 20-21 January 2007 to complete outstanding work. But Mr Round denies that he provided the alleged or any other confidential information to Mr Ryle or to any other third party. Mr Round also says that the information contained in the documents attached to his email of 21 January 2007 was already in the public domain.

12 Mr Round admits that he made postings on the website The Whole Force under a pseudonym on 22 August 2007, but otherwise denies making the alleged postings.

13 On 12 December 2007, the respondent applied for orders, pursuant to O 26A r 5, for discovery by Fairfax and Mr Ryle respectively of all documents in their possession, custody or power which relate to:

• any email sent from either of two specified email addresses of Mr Ryle, or otherwise by Mr Ryle, to either of two specified email addresses (alleged to be those of Mr Round) or otherwise to Mr Round;
• any email sent from either of the two specified email addresses alleged to be those of Mr Round, or otherwise by Mr Round, to either of two specified email addresses of Mr Ryle, or otherwise to Mr Ryle;
• any file notes, memoranda or other documents relating to telephone conversations between Mr Ryle and Mr Round.

14 In the course of argument before the learned master, counsel for the respondent amended the application to limit it to such documents in the possession, custody or power of Fairfax or Mr Ryle from 1 January 2007 to 27 September 2007.

15 The application was supported by an affidavit of the respondent's solicitor. In the affidavit, the deponent annexed, among other things, copies of a number of emails passing between the email accounts referred to in the application, and deposed to a belief that the two accounts attributed to Mr Round were in fact used by Mr Round and that the email correspondence between Mr Round and Mr Ryle is relevant to matters in issue in the action. The copy emails had been obtained by the respondent following the execution of search orders, made by this court pursuant to O 52B r 2, at Mr Round's home and current place of employment on 3 October 2007.

16 The application for discovery was opposed by Fairfax and Mr Ryle on the ground, among others, that the ambit of the documents sought was too wide and no attempt had been made to limit the category or categories of documents to be discovered.

17 The learned Master rejected that submission. He said:

It was partly in response to that submission that the plaintiff placed the temporal limitation on the orders sought. In my view, given the temporal limitation, the extent of the discovery sought is not too wide. It can be seen that in each category the email addresses of both the sender and the recipient of the emails are specified. It is not a case where the plaintiff is asking either of the two non-parties to discover all of the email correspondence from whatever source passing to Mr Ryle and details of all emails he may have sent. It is difficult to see how the request could have been further limited.

It may well be, as was submitted by counsel for the non-parties, that discovery of the breadth proposed would turn up some documents and emails which were not related to a matter in issue in these proceedings. That is not to the point. A non-party is always faced with the difficulty of not being entirely sure just what are the issues between the parties to the action. This case is clearer than most, but there still may be aspects of the action of which the non-parties have no knowledge. What is important is that in broad terms, they know the nature of the dispute between the parties and what documents they are required to discover. Against that background, the order made should be no wider than is necessary. In my view, the order proposed in this case is in all respects satisfactory [13] - [14].

18 The learned Master made orders for discovery in terms of the application, limited to the period 1 January 2007 to 27 September 2007.

The learned Master erred in law in granting the non-party discovery orders he made as against the first and second appellants, in circumstances where he had recognised that the breadth of the orders sought 'may well', as he said, ' ... turn up some documents and emails which are not related to a matter in issue in these proceedings' because such an order was beyond the power afforded to him by O 26A r 5 of the Rules of the Supreme Court.

20 On the application for leave, it was submitted on behalf of Fairfax and Mr Ryle that the decision not only created a substantive injustice but also raised an important issue of principle in relation to the limits of non-party discovery orders pursuant to O 26A r 5. Senior counsel for the appellants argued that the decision was attended with sufficient doubt to justify a grant of leave and that substantial injustice would be done if the decision were not corrected.

21 On the appeal, it was submitted that the effect of the order was to capture every email, and every document relating to every email, passing back and forth between the various email addresses of Mr Ryle and Mr Round in the period 1 January 2007 to 27 September 2007, irrespective of the contents of the emails and despite the fact that the learned Master recognised that the effect of the order was that it 'may well ... turn up some documents and emails which were not related to a matter in issue in these proceedings'.

22 It was submitted that in concluding it was 'not to the point' that the order may well have that effect, the learned Master was in error. Order 26A r 5 empowers the court to order discovery of documents 'relevant to a matter in issue'. It was for the respondent to formulate appropriate limited orders carefully tailored to catch only those documents which were relevant to the matters in issue, and to identify those documents in a way which would enable the appellants to locate them. The order went further than was permissible in the circumstances.

23 It was submitted on behalf of the respondent that no error had been made by the learned Master. The learned Master had merely noted that the order may encompass some documents and emails which do not relate to any matter in issue in the proceedings; he did not say that the scope of the order would encompass such documents. Having regard to the breadth of discovery described in Compagnie Financiere et Commerciale D Pacifique v Peruvian Guano Co (1882) 11 QBD 55, 63, the order does not go beyond the limits of O 26A r 5.

24 Counsel argued that it is no bar to the making of an order pursuant to O 26A r 5 that the documents of which discovery is sought are of no more than peripheral interest or of marginal relevance in the action. Order 26A r 5 is broad in its application and provides scope for wide-reaching discovery to be ordered. On the Peruvian Guano test, all the documents that were encompassed by the order clearly relate to matters in issue in the action.

25 In that connection, it was submitted that the tone, tenor and extent of the correspondence passing between Mr Round and Mr Ryle was directly relevant to the respondent's claims in the action. That correspondence will or may show or tend to show that the relationship between them was one of confidence and that sensitive or commercial information passed between them regularly, and/or that the dialogue between them almost exclusively concerned the affairs of the respondent and/or its sponsor. Either of those points, if established, would have probative value and might tend to show that it was more likely than not that Mr Round had breached his contract of employment as alleged.

26 It was submitted that, accordingly, the order did not encompass documents other than those relating to the matters in question in the action. The suggestion by the learned Master that the order may well 'turn up' some documents which do not relate to the matters in question was not an error and, in any event, did not form part of the ratio decidendi of the decision. The learned Master's decision was correct and was not attended by sufficient doubt to justify a grant of leave. In any event no substantial injustice would be caused by allowing the decision to stand.

1. (1) If there are reasonable grounds for believing that a person who is not party to an action ('the non party') had, has, or is likely to have had or to have, possession of documents that relate to any matter in question in the action, a party to the action may apply for an order under this Rule.

(2) The application shall be supported by an affidavit and a copy of both shall be served on the non party and the other parties to the action.

(3) On the application the Court may order the non party to give discovery of all documents that are or have been in the non party's possession and that relate to any matter in question in the action.

28 Whether an order for discovery of documents in the possession of a non-party should be made is a matter of discretion but it is clear that caution must be exercised before making such an order. In McCarthy v Dolpag Pty Ltd [2000] WASCA 106, the Full Court said in relation to an application for discovery from a potential party:

There is no doubt that caution must be exercised before making an order and that such orders should not be made as a matter of course. They should only be made when reasonably necessary to achieve the proper administration of justice: Tipperary Developments Pty Ltd v Western Australia [1999] WASC 62; (1999) 21 WAR 250, per Parker J at 24; O'Sullivan v Herdmans Ltd [1987] 3 All ER 129 at 135 - 6. It must be remembered that discovery 'constitutes a very serious invasion of privacy and confidentiality [and] the process should not be allowed to place upon a litigant any harsher or more oppressive burden than is strictly required': Harman v Secretary of State for the Home Department [1983] 1 AC 280 at 308 per Lord Keith of Kinkel; and this is a fortiori the position where the discovery is sought before action and is for the purpose of determining whether or not there is an issue to litigate. [13].

29 Those considerations apply with at least equal force to an application for discovery against a non-party. The privacy of a person is not to be invaded, and the person put to inconvenience and possibly irrecoverable expense, for the purposes of litigation in which that person is not involved unless, and only to the extent, the applicant establishes that it is reasonably necessary to do so in order to achieve the proper administration of justice.

30 An order under the rule is only available if there are reasonable grounds to believe that the non-party 'had, has, or is likely to have had or to have, possession of documents that relate to any matter in question in the action'. What are the matters in question in the action is to be determined by reference to the pleadings in the action, but it is sufficient if a document would, or would lead to a train of enquiry which would, either advance a party's own case or damage that of the other party: Mulley v Manifold [1959] HCA 23; (1959) 103 CLR 341, 345. A document going exclusively to the credit of a party does not relate to a matter in question: Beecham Group Ltd v Bristol Myers Co [1979] VicRp 27; [1979] VR 273, 278.

31 On an application under O 26A r 5 it is not, however, to be expected that the non-party will be familiar with the matters in issue in the action and the applicant is not entitled to leave it to the non-party to work out what are the issues between the parties in the action in order to be in a position to comply with an order for discovery. The applicant must describe the documents sought with a sufficient degree of specificity (whether individually or by reference to a particular description or class) that the non-party can readily identify the documents from that description.

32 Moreover, before making an order under this rule the court must be satisfied as to what the documents sought contain or might reasonably be expected to contain, and that they relate sufficiently to a matter or matters in question in the action to justify making an order; it is not sufficient that the documents might merely as a matter of speculation provide some evidence for the applicant at trial: Ansett Transport Industries Limited v The Commonwealth (Unreported, VSC, 3 April 1987).

33 It follows that an order for general discovery of a sort that might be made against the parties to an action - that is, an order simply for discovery of all documents relating to any matter in issue in the action, or to similar effect - will not be made against a non-party. Nor will an order be made for discovery of documents which is in the nature of 'fishing'; that is, where the applicant does not know whether a non-party has documents in its possession which relate to a matter in question in the action but wishes to cast a net to see what turns up in it.

34 Once the requirement of relevancy is satisfied, it remains a matter of discretion whether the order sought, or any order, should be made.

35 In the present case, as the learned Master observed at [14], the matters in question between the parties in the action are relatively clear. In essence, the respondent asserts that, between 1 January 2007 and 27 September 2007, in breach of his contract of employment Mr Round conveyed to Mr Ryle confidential and commercially sensitive information belonging to the respondent and relating to its activities.

36 The learned Master also correctly observed that an order made under O 26A r 5 should be no wider than is necessary. But, in my view, the learned Master erred in concluding that it was not to the point that the terms of the order were such that the effect may well be to require the discovery of documents that do not relate to a matter in issue. With respect, I consider that is very much to the point.

37 The power of the court under O 26A r 5 is to require a non-party to give discovery of documents which 'relate to any matter in question in the action'. An order under the rule must be directed to that end, and to that end alone. Where an order is made for discovery of documents, not by reference to their content, but by reference to some other method of classification, such as the date of their creation or communication, it must appear that any document which falls within that classification is relevant to a matter in issue in the action.

38 I do not accept the submission on behalf of the respondent that in this case the whole tenor and nature of the correspondence between Mr Round and Mr Ryle is relevant. What is relevant is defined by the pleadings. In the action what is relevant is whether or not Mr Round disclosed to Mr Ryle information of the respondent which was confidential and commercially sensitive. An order simply that the appellants provide, in effect, discovery of all email correspondence, and all documents relating to telephone conversations, between Mr Ryle and Mr Round over a period of some 10 months, without regard to the subject matter, cannot, on the basis of the pleadings, be said to be an order for discovery of documents that relate to a matter in issue between the parties.

39 There was certainly evidence before him upon which the learned Master was entitled to find there were reasonable grounds to believe that the appellants are likely to have, or to have had, possession of documents that relate to a matter in question in the action. However, in my view the learned Master misapprehended the nature of the power under O 26A r 5 and erred in the exercise of his discretion in making the order in the terms that he did. The order was simply too wide.

40 I am satisfied that the appellants have established that the learned Master's decision was attended by error and, having regard to the importance of the rights and interests affected by an order for non-party discovery, that it is in the interests of justice to grant leave to appeal.

41 I would grant leave to appeal, allow the appeal and set aside the order of the learned Master.

42 In the event that the appeal was allowed and the order of the learned Master set aside, Fairfax and Mr Ryle sought orders in the alternative; namely that the respondent's application for non-party discovery be dismissed or alternatively that the respondent be given an opportunity to formulate orders confined to documents that relate to the matters in issue in the action.

43 I would allow the respondent an opportunity to formulate orders confined to documents that relate to the matters in issue in the action and would hear the parties on such proposed orders.