Gemtaf v Tradebanc

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

11419/98 GEMTAF PTY LIMITED & ORS v TRADEBANC INTERNATIONAL LIMITED

JUDGMENT 1 STUDDERT J: There is presently before this Court a further amended notice of motion filed on behalf of the claimants Gemtaf Pty Limited, Margaret Denise Pursell and Terence Edward Fitzgibbon seeking orders that may loosely be described as orders by way of Mareva injunction. Six respondents are joined in the notice of motion, namely Tradebanc International Pty Limited, Business Barter Exchange Limited, Michael Touma, BBX Management Limited, William Frederick Rorke and Tradebanc Exchange Pty Limited. 2 The respondent Michael Touma (earlier mentioned) is the moving party on a notice of motion, the hearing of which took place on 1 April 2003. Mr Conomy appeared for that party and, indeed, he also appears for the second, third, fourth and sixth respondents to the earlier notice of motion in which relief by way of Mareva injunction is sought. The first respondent to that principal notice of motion now has an administrator appointed. Mr Anderson appeared on 1 April for the fifth respondent on the Mareva injunction notice of motion. 3 Having thus identified the various parties, I return to a consideration of the notice of motion in which Mr Touma is the moving party and which occupied the time of this Court on 1 April 2003. In that notice of motion Mr Touma sought the following orders: "1. A direction that in lieu of producing Exhibit MT-1 to the affidavit of Michael Touma sworn 31 March 2003 in response to the subpoena, Michael Touma be permitted to produce Exhibit MT-2 to the affidavit of Michael Touma sworn 31 March 2003 in response to the subpoena. 2. An order that any documents produced by Michael Touma in answer to the subpoena not be open for inspection by any party until further order, such further order not being made until after 3 business day's notice to Michael Touma by his solicitors, Dibbs Barker Gosling. 3. A direction that any documents produced by Michael Touma in answer to the subpoena be not open to inspection by the solicitor for Gemtaf Pty Limited, Margaret Denise Pursell and Terence Edward Fitzgibbon except on the express written undertaking to the Court of the solicitor for Gemtaf Pty Limited, Margaret Denise Pursell and Terence Edward Fitzgibbon, Mr Knaggs, that: (i) he will not, otherwise than for the purpose of prosecuting the Further Amended Notice of Motion filed 3 March 2003, divulge, communicate or refer to any person (including Gemtaf Pty Limited, Margaret Denise Pursell and Terence Edward Fitzgibbon) any information obtained from inspection of any document or thing produced to the court by Michael Touma in response to the subpoena; and (ii) any disclosure by Mr Knaggs of the material to another solicitor or counsel acting for the plaintiff by Mr Knaggs must be made only if the person to whom disclosure is made gives an appropriate undertaking that that person will not disclose the materia. 4. Costs. 5. Such further or other order the court deems fit." 4 The notice of motion had been prompted by the terms of a subpoena which was served upon the deponent Michael Touma. That subpoena sought the production of documents described in a schedule expressed as follows: "All documents and your file relating to the transfer of the business of Tradebanc Exchange to BBX group of companies or any one of those companies, alluded to in your letter to individual members dated 14 February 2003 beginning: Dear Member, it gives me great pleasure to announce the acquisition of Australia's premier trade exchange Tradebanc by BBX Management and including all correspondence, file notes, telephone notes, relating either to the negotiations for such transfer or acquisition of business from Tradebanc, or documents on and from the finalisation of agreement and its progress up to the present stage; and whether or not the acquisition by BBX of an interest in that business consists of purchase of shares, or purchase of business or purchase of companies, or the transfer of members from Tradebanc to BBX." 5 The evidence in support of the notice of motion consisted of the affidavit of Michael Touma sworn 31 March 2003 and a further affidavit sworn on 1 April 2003. The deponent was required for cross examination. I accept the evidence which he gave. 6 It is to be observed from the notice of motion that the moving party has sought that only restricted access should be given to certain documents covered by the subpoena. There were other documents produced in response to the subpoena concerning access to which no objection was raised. I am not now concerned with those documents. 7 As the first of the orders sought in the notice of motion presently under consideration suggests, Michael Touma (and I shall refer to him for present purposes as the applicant) is unwilling to make available to the respondents to this motion the full terms of a document which it is otherwise conceded would be attracted by the subpoena served. That document has been identified as Exhibit MT-1 to the applicant's earlier affidavit. What the applicant is willing to produce, and what the applicant has submitted ought to be produced in response to the subpoena, is Exhibit MT-2, a reproduction of the document MT-1 but with masking out of certain of the clauses in MT-1. Both versions of the document were, of course, presented to the Court and have been considered by me. 8 The relevant document is described as a share sale deed and the parties to it are William Frederick Rorke and Gena Rorke on the one hand and BBX Management Limited on the other hand. Pursuant to that deed, BBX Management Limited purchased all the issued ordinary shares in Tradebanc Exchange Pty Limited from William and Gena Rorke. I observe that William Rorke is one of the respondents to the motion for the Mareva injunction earlier mentioned. Gena Rorke is not. 9 The objection to making available the masked parts of the share sale deed arise from the perceived sensitive nature of the information. Paragraph 7 of the affidavit of 31 March 2003 identifies those clauses to the production of which the applicant objects because of the sensitivity of the content. 10 In his affidavit of 31 March 2003 the applicant stated that he had been in the trade exchange industry for ten years, that that industry is relatively small but very competitive, and that there are abundant interconnections between the participants in that industry, in which, he says, there are only fourteen participants. The acquisition of shares from the Rorkes was one of a sequence of acquisitions by BBX Management Limited and the applicant has deposed that he is currently negotiating on behalf of that company for the purchase of other trade exchanges in South Australia, in Victoria, in Western Australia and New Zealand. He described the applicants on the motion for the Mareva injunction as being "well known in the trade exchange industry" and has expressed the concern in para 15 of the affidavit that should the information in the share sale deed, even in its masked form, become known to the applicants or come into the public domain it would be inevitable that it would soon be made known to the trade exchanges with whom he is presently negotiating. Should this happen the applicant says it would compromise his ability to successfully negotiate a commercial purchase price for those trade exchanges. 11 I observed earlier that I accept the evidence which the applicant gave, and indeed the applicant was not cross examined about the subject matter of his concern or his perception as to the sensitivity of the material in the share sale deed. 12 The perceived need for confidentiality is acknowledged. Mr Knaggs, on behalf of the respondents, does not dispute that the Court has power to either preclude a party from looking at a document or part of a document or allowing a document or part of a document to be inspected only on the granting of an appropriate undertaking. It is not necessary therefore for me to refer to the relevant authorities. There is a convenient citation of them in the judgment of Rolfe J in Reebok v SOCOG [2000] NSWSC 295 at para 26. 13 From my consideration of the content of the share sale deed, I am satisfied as to the commercial sensitivity of the material contained in it, particularly in the masked content. 14 The question ultimately is whether it is necessary for the attainment of justice in this case for the full text of the share sale deed to be made available, and made available not only to Mr Knaggs but to his clients. 15 The deed ought not properly to be used other than for the purposes of the action in which discovery is made, and in my perception this means that the deed can only properly be used for the purposes of the application concerning the Mareva injunction. It is well settled that there is an implied undertaking that documents obtained during the course of proceedings will only be used for the purpose of the proceedings: see as to this the judgment of Einstein J in Idoport Pty Limited & Anor v National Australia Bank Limited & Ors [2001] NSWSC 648 at paras 27-28. 16 Whether an application for confidentiality should be upheld has to be determined in each case on its own particular facts. To my mind, the application for confidentiality should be upheld on the facts of this case. 17 What ought to be done in the interests of justice? 18 I consider that the applicant ought be compelled to produce the masked version of the share sale deed only, subject to this qualification: the content of those clauses referred to in para 7(d) of the share sale deed should be disclosed and hence unmasked. 19 To whom should the disclosure of the masked version of the share sale deed be made? The applicant has submitted, consistently with the expression of order 3, that the disclosure should be only in the terms contemplated in that proposed order. Mr Knaggs has submitted that his clients ought also to be able to see the document so as to permit him the opportunity of informed instructions as to how the matter should proceed having regard to the content of the document. 20 There is obviously a tension in balancing competing interests in a situation such as the present one. If inspection of a document is limited to a legal adviser it may well place him in a difficult position in obtaining necessary instructions. On the other hand, once the content of a document is revealed, confidentiality may be effectively destroyed once and for all. As Hayne JA observed in Mobil Oil Australia Limited & Anor v Guina Development Pty Limited & Anor (1996) 2 VR 34: "Once the documents are inspected by the principals of the trade rival the information which is revealed is known to the trade rival and cannot be forgotten. Confidentiality is destroyed once and for all (at least so far as the particular trade rival is concerned). To say that the trade rival is bound not to use the documents except for the purposes of the action concerned is, in a case such as this, to impose upon that trade rival an obligation that is impossible of performance by him and impossible of enforcement by the party whose secrets have been revealed. How is the trade rival to forget what internal rate of return the competitor seeks to achieve on a new investment of the kind in question? How is the party whose hurdle rate has been revealed to know whether the rival has used the information in framing a tender? Thus, if the trade rival may inspect the documents concerned, the confidentiality of the information in them is at once destroyed. Is that necessary for the attainment of justice in the particular case?" 21 Mr Knaggs here submitted that the respondents on this application are not to be considered to be trade rivals. The evidence of the applicant is, nevertheless, that the respondents are well known to him and well known in the trade exchange industry generally. Indeed, it was through their involvement in that industry that the claim that eventually brought the parties to this court first arose. 22 Notwithstanding Mr Knaggs's submissions, I have concluded that at this stage production of the share sale deed should be in masked form only and should be to Mr Knaggs only upon the appropriate undertaking. I propose therefore to make orders in accordance with paras 1 and 3 of the applicant's notice of motion. I propose to make an order that the document MT-2 may be inspected by Mr Knaggs, having given the necessary undertaking, with the inspection to take place at the office of the applicant's solicitors at a time to be arranged by Mr Knaggs, no earlier than twenty-four hours from this date. 23 In the course of the hearing the applicant produced further material referred to in paras 2 and 3 of his later affidavit. MT-3 comprises only earlier drafts of the document the masked version of which is to be inspected by Mr Knaggs. MT-4 is sufficiently described in para 3 of the affidavit of the applicant sworn on 1 April 2003. I am satisfied as to the confidentiality of that material. I make no order requiring its production at this stage. 24 It is appropriate that directions be given for the further conduct of the proceedings currently on foot, namely the claim concerning the Mareva injunction and the proceedings for contempt. 25 By consent I propose to direct that the moving parties in the proceedings concerning the Mareva injunction and in the contempt proceedings file and serve any further affidavits upon which they propose to rely within a period of twenty-one days. I propose to further direct that the respondents to those applications be allowed forty-two days from today within which to file and serve any further affidavits upon which they intend to rely. 26 The documents contained in the envelopes marked MT-1, MT-2, MT-3 and MT-4 may be returned to the applicant's solicitors. 27 At the conclusion of argument the question of costs arose and I understood that it was conceded between the parties that costs of the motion should be costs in the cause. However, since I reserved my decision, Mr Knaggs has written to my associate requesting that costs be reserved until this judgment has been published, and I propose to accede to that application.

Formal orders 28 1. Order in terms of para 1 of the applicant's notice of motion filed 31 March 2003.

2. An order that the document MT-2, with clauses 4.9(1) and (2) and 7.2(24) unmasked, be made available for inspection at the office of the applicant's solicitors at a time to be appointed by Mr Knaggs no earlier than twenty-four hours from today.

3. Order pursuant to para 3 of the applicant's notice of motion filed 31 March 2003.

4. I grant liberty to apply on forty-eight hours notice.

6. I direct that the proceedings for contempt and that the proceedings for the Mareva injunction be placed in the call-up before the List Judge for 9 May 2003, and in respect of those proceedings I further direct that the moving parties in those proceedings file and serve any further affidavit evidence upon which it is intended to rely within twenty-one days from today. I further direct that the respondents to those applications file and serve any further affidavits upon which it is intended to rely within forty-two days from today. **********

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