Gebauer Nominees Pty Ltd v Hotrox Charcoal Co [2006] WASC 155

Gebauer Nominees Pty Ltd v Hotrox Charcoal Co [2006] WASC 155 - WASC 2006 case summary — Zoe

[36]

'A desirable outcome in this case is to refuse an order permitting Dr Franklin to inspect the premises and to see the answers to interrogatories, and requiring Hotrox [sic the applicant] to substitute for him another expert. But, as the evidence stands at the moment, one would be reluctant to take such a course because, it may be, after all, that Hotrox [sic the applicant] is right and that the number of experts in this area in this country is very limited. ...

In the end, what has to be done as best one can, is justice, in all the circumstances, as between these parties. If the desirable outcome of the obtaining of a new and different expert from Dr Franklin cannot be achieved, justice may demand that he be allowed to make the inspection on Hotrox's [sic the applicant's] behalf. But that, I think, is a course which should be avoided if possible. The only way to find out whether or not it is possible to avoid it is to have more detailed evidence called on the qualifications and experience of others who may be able to do what Hotrox [sic the applicant] requires sufficiently well to ensure that there is no injustice in Dr Franklin not being able to inspect the premises. At the moment, the evidence does not permit one to say with any confidence whether there are other, and independent, experts who would be able to perform the task. All that there really is in the evidence are assertions, the respondent asserting that there are such experts and Hotrox asserting that there are not. Regrettably, I think there has to be a further hearing of the matter so that this area can be explored properly. It was not explored to any extent at the hearing before the Master. That is not due to any neglect or omission on the part of the Master; it is due to the failure of the parties sufficiently to lead evidence and to cross-examine witnesses in order to aid the process that was being undertaken. The way the case was conducted was not in the Master's hands, but in those of the parties. They chose to slide over this issue and therein lies the problem.'"

[49]

...

The initial question to be determined is whether the Master's discretion miscarried and, if so, whether the matter being one dealing with practice and procedure, leave to appeal should be granted. A critical sentence in one of the Master's decisive paragraphs is that in which he says that there is a 'slight risk' of the information not being kept confidential. That was his assessment as to the extent of the risk and, because of his judgment in that regard, he was led to the conclusion that he should make the orders for inspection and the answers to interrogatories which he did.

In the light of the whole facts and circumstances of the case, I am of the opinion that the risk ought to have been assessed as significantly more substantial than slight. I think the evaluation of it as a slight risk did not give enough weight to the very real concerns of Hotrox. After all, Dr Franklin himself had, some 10 years ago, been one of the applicants for a patent in relation to an invention, in the very area of the process which Hotrox claims to undertake. I realise that 10 years is a lengthy period and that Dr Franklin's interests and activities may have changed. But he is, from a professional point of view, interested in the process - I do not mean financially - and he claims to be one of only two people in Australia who have sufficient expertise in the field to give evidence of the kind that is required of him in this case. Although the project upon which he embarked when the application for the provisional patent was lodged came to nothing, he would be less than human if he did not wish to take advantage of an opportunity to inspect a process which might show him a way of doing something which he was unable to do.

Of course, it may be that what will be demonstrated by any inspection which he has, is that Hotrox's process was no more successful than his own. That, indeed, is the reason why his evidence is required by the respondent. But, in an area such as this, it is difficult to escape the compelling statement made in the dictum of Hayne JA in the Mobil case earlier cited. Because of his professional interest, Dr Franklin would be most unlikely ever to forget, or put aside, what he learns on the inspection. It will stay forever as part of his professional know-how.

I recognise that Dr Franklin is not a trade rival of Hotrox. That distinguishes this case from the Mobil case. But each case must be dealt with on its own facts and circumstances. The fact that Dr Franklin was at one time an applicant for a patent in this very area is something which has to be given very substantial weight. That is what gives Mr Cole the very genuine concern which the evidence establishes that he has. A further factor is that the correspondence annexed to Mr Huston's affidavit establishes that, at one stage, it was proposed by the respondent that, not only Dr Franklin, but also Mr Pekin, should be allowed to inspect the Hotrox factory. Mr Pekin was the other applicant for the patent which has been referred to. The suggestion that Mr Pekin, as well as Dr Franklin, be allowed to inspect the premises would not have been likely to have increased Mr Cole's or Hotrox's confidence in the value of Dr Franklin's assurances that matters would be kept confidential. The fact that the suggestion that Mr Pekin inspect the premises along with Dr Franklin was eventually withdrawn, does not overcome the problem.

Nothing that I have said is intended to attribute any dishonest motive or intention to Dr Franklin. What has been said simply states the reality of the matter. I accept that Dr Franklin is now mainly engaged as a consultant and that he is not presently intending to embark upon any enterprise which would involve him in manufacturing charcoal by this or any other method. He is a professional adviser in this field and he appears to be retained by a number of large undertakings in the industry. But one can well imagine a situation in the future - and this was postulated in argument - in which Dr Franklin is asked about the possibility of doing something along the lines which Hotrox claims to do and, having gained the information he would gain on the inspection which he desires to carry out, would be in quandary as to whether, directly or indirectly, to make use of that information in advising his client. And there would be the danger that he may subconsciously disclose something which was covered by his agreement to keep matters learnt on the inspection confidential. It would seem to me that unless he declined to advise any client interested in pursuing a process similar to that of the respondent, there would always be the danger that he would, however unwittingly, make a disclosure which would imperil the confidentiality which he has agreed to preserve."

[79]

"... to mould orders that will distinguish between the plaintiff, its officers, its legal advisers and experts. Again it may be accepted that generally a party is entitled to inspect the documents of an opposite party by itself its servants or its agents. But in the present kind of case, is it necessary to destroy the legitimate claim to confidentiality from trade rivals by permitting the principal of that rival to look at the documents? Is it sufficient to permit counsel and solicitors (and nominated experts) to do so? It is now commonplace in the courts for material to be made available only to the legal advisers of the parties and nominated experts. Of course such arrangements bring with them their own difficulties and are arrangements that should be adopted only where there is a need to do so; of course they are arrangements that may need to be reviewed as the matter progresses towards trial or as the trial itself proceeds. But they are arrangements that are made and should be made when doing so would strike a fair balance between the competing interests of the party seeking inspection and the party claiming confidentiality. No more specific rule can be laid down - each case will fall for determination according to its own facts. In particular the nature and the content of the disputed documents is a matter that will usually, if not invariably, be of great importance in forming a conclusion and, if that is so, it will be appropriate for the judge to inspect the documents concerned. In the present matter, where the plaintiff did not challenge the evidence given below that the information supplied by Mobil and McDonald's to the corporation in document 38 [the financial proposal] was confidential and commercially sensitive, there would appear to be powerful reasons for limiting access to that information (at least in the first instance) to counsel, solicitors and nominated experts. It is by no means self-evident to me that disclosure to the principals of the plaintiff is necessary for the attainment of justice. In particular it is not self-evident that the plaintiff can properly consider the course which it will follow in relation to the litigation only if its principal has access to the material that is confidential."

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (239 paragraphs)

Gebauer Nominees Pty Ltd v Hotrox Charcoal Co [2006] WASC 155 (4 August 2006)

Parties

Legislation Cited (1)

Cases Cited (4)