Practice and procedure - Whether plaintiff should be released from implied undertaking not to use documents discovered in Magistrates Court proceedings - Whether application should have been brought in Magistrates Court - Turns on own facts

Legal Practice Act 2003 (WA), s 215

Holpitt Pty Ltd v Varimu Pty Ltd [1991] FCA 269; (1991) 29 FCR 576

Minister for Education v Bailey [2000] WASCA 377; (2000) 23 WAR 149

1 LE MIERE J: The plaintiff has applied by originating summons for orders as follows:

(1) the plaintiff be released from the implied undertaking in respect of the defendant's discovery in Magistrates Court proceedings matter number 5093 of 2008 between the defendant (as plaintiff in the Magistrates Court proceedings) and Sharad Chandra Nigam for the purposes of disclosing to his Honour Simmonds J and to Eastwood Law, the solicitors for the defendants in Supreme Court matter number CIV 2265 of 2006, Mr Mendelow's account addressed to Bowen Buchbinder Vilensky Lawyers dated 16 November 2007;

(2) the defendant pay the costs of this application, such costs to include the plaintiff's costs of obtaining advice from senior counsel.

2 The document that is referred to in proposed order 1 is annexed to the affidavit of Angela Cecilia Theresa Frigger sworn 4 March 2009 which was read in these proceedings by the defendant. The plaintiff seeks to use the document, that is the account of Mr Mendelow of 16 November 2007, in CIV 2265 of 2006, proceedings in this court between Computer Accounting and Tax Pty Ltd, the defendant to this originating summons, who I will as a matter of convenience refer to as Computer Accounting, as the plaintiff and Professional Services of Australia Pty Ltd and others as the defendants.

3 The plaintiff refers in his affidavit to that action as the Banning proceedings and I will adopt that description as a matter of convenience. In the Banning proceedings a cost order was made in favour of Computer Accounting. In the Banning proceedings Computer Accounting seeks special orders as to costs. That application has been heard by the trial judge, Simmonds J, and his Honour has reserved his decision.

4 The plaintiff was engaged as counsel by the solicitors for the defendants in the Banning proceedings to represent the defendants at the hearing of the application for special costs orders. In the course of that hearing Computer Accounting relied upon affidavits sworn by Ms Frigger in which she made statements about the counsel fees paid to Mr Mendelow who was counsel for Computer Accounting in the Banning action.

5 The plaintiff says in effect that Ms Frigger said that Mr Mendelow charged $7,700 per day as counsel fees for the trial. That was not expressly stated by Computer Accounting. However, in my view, that is the effect of the affidavit of Ms Frigger sworn on 12 October 2008 that was put before Simmonds J. In that affidavit Ms Frigger said:

1. The Plaintiff has applied for special cost orders for costs charged during the period March 2007 until September 2008. During that period the Plaintiff received itemized bills of cost from Bowen Buchbinder Vilensky and Chris Stokes and Associates.
2. I analysed the itemized bills of costs by allocating a scale item number from the Supreme Court Scale of Costs Table applicable from 1/7/06 to each line item on the invoices, based on the proceeding or legal service for which the line item was charged. This is a common analysis that accountants perform in their professional work. I then input the amount of each line item into a MYOB accounting program according to that analysis. I compared the total amount charged for each hearing or service against the applicable scale item allowed on the table, which is shown in the submissions at paragraphs 7.4 - 7.12. Annexed hereto and marked 'ACTF1' is a report produced from MYOB program showing the results of the analysis [5] - [6].

6 That table consists of a number of items which are then subtotalled. For example there are items relating to the statement of claim and then a total given for statement of claim; items relating to reply and a total for reply; items relating to getting up and then a total amount relating to getting up, and so on. So each of these items appear to be, as Ms Frigger explains in her affidavit, items from the Supreme Court scale of costs table which is in the schedule to the Legal Practitioners Supreme Court Contentious Business Report and Determination 2006.

7 It can be seen that in relation to each day of trial there is an amount described as, 'Paid BBV', and then an amount described as, 'Paid to counsel', and then the two items are added together to give an amount which is said to be, 'Total trial', for that day. In accordance with Ms Frigger's description of the task she undertook, that means that she has gone through the bills of costs rendered to her and allocated to the item 'trial' all of those amounts which she attributes to the item 'trial', being item 19 in the Supreme Court scale of costs.

8 There are of course seven sub items in item 19. However, it must be the case that the amount described as, 'Paid to counsel', in relation to all but the first day of the trial, must be an amount which relates to item 19(c) being counsel fee for the second and each successive day of hearing. That is because the items relating to senior counsel are inapplicable. The item being fee on brief for the first day is inapplicable because the first day has been dealt with separately in her schedule.

9 The items solicitor attending trial, clerk attending trial would both be covered by the item, 'Paid BBV', which is a reference to the amount paid to the solicitor and the amount, 'Attending on reserve judgment', is not an amount that applies to that day. Accordingly, the amount paid to counsel, $7,700, would be understood by the reader of the document to be an assertion that the plaintiff in the Banning action, Computer Accounting, paid $7,700 to Mr Mendelow for each of those days of the trial by way of counsel fee.

10 The plaintiff was engaged as counsel for another practitioner, Mr Nigam, in separate proceedings in the Magistrates Court. Computer Accounting is the claimant in those proceedings which, like the plaintiff, I will refer to as the Nigam proceedings. The Nigam proceedings are related to the Banning proceedings insofar as the Nigam proceedings arise out of Mr Nigam representing Computer Accounting in the Banning proceedings.

11 On 20 January 2009 the plaintiff attended the offices of the solicitors for Computer Accounting and inspected the documents discovered by Computer Accounting in the Nigam proceedings. One of the documents inspected by the plaintiff was Mr Mendelow's account of 16 November 2007 which is the subject of this originating summons. The plaintiff says that the account discloses Mr Mendelow charged $3,850 per day for counsel fees in the Banning proceedings. That appears to be correct.

12 As I have said, Computer Accounting has read in these proceedings the affidavit of Ms Frigger of 4 March 2009 to which she annexes a copy of Mr Mendelow's account. It appears from that account that Mr Mendelow charged for each of his attendances at the Supreme Court on each of the days of trial there specified an amount of $3,500 per day plus GST.

13 The plaintiff seeks to be released from his implied undertaking so that he can inform the solicitors for the defendants in the Banning proceedings and to provide to, or enable to be provided to, Simmonds J the contents of Mr Mendelow's account which the plaintiff says show that Mr Mendelow charged $3,850 per day, not $7,700 per day as Ms Frigger sets out in her schedule to which I have referred.

14 The first matter raised by the defendant in these proceedings is that this application ought not to have been brought in this court. In [5] of the defendant's written submissions it is said:

Where permission is sought for use of a document in separate proceedings, the application for permission should generally be by an application notice in the action in which the documents were disclosed and supported by evidence setting out the grounds relied upon.

15 In the course of these proceedings I sought from counsel clarification whether the defendant submitted that this court did not have jurisdiction or power to make the orders sought. Counsel informed me that that was not the submission made by the defendant. The defendant agrees that the court has jurisdiction and power to make the orders sought. The defendant submits that it is a discretionary power and should not be exercised in this case for, amongst other reasons, the reason that the application would be more appropriately brought in the Magistrates Court in the course of the Nigam proceedings.

16 When once it is accepted that this court has jurisdiction and power to make the orders sought and that it is a question of discretion, then the court has to consider whether there are reasons why if the court is otherwise persuaded that it should make the orders, it should in the exercise of its discretion decline to do so because the application should be brought in the Magistrates Court.

17 It is not submitted by the defendant that there is any material before or available to the Magistrates Court which is not available to this court. It is not submitted by the defendant that the Magistrates Court is in any better position than this court to decide the application.

18 If the court were to accede to the submission by the defendant and dismiss the application that would result in the plaintiff then bringing the same or similar application to the Magistrates Court. The result of that is that both parties would incur additional costs, would be put to additional expense and two courts will have had to deal with the same matter. That is not in the interests of either party and not in the public interest. Accordingly in my view it is appropriate that the matter now being before this court, this court should deal with the matter.

19 I take the following statements of legal principle from the plaintiff's outline of submissions, which I accept, omitting references to the authorities cited by the plaintiff in support of the following propositions:

(1) documents obtained by discovery are subject to an implied undertaking which prevents their use for any purpose other than the proper conduct of the action in which the documents were obtained, except with the leave of the court;

(2) the implied undertaking extends to any person who receives documents or information to which the implied undertaking applies;

(3) the implied undertaking has always been subject to the court's discretion to grant leave to use discovered documents for a particular purpose in an appropriate case;

(4) this includes where necessary the power to grant leave for the document to be used by a third party.

20 I adopt the statements of principle stated by Steytler J, in Minister for Education v Bailey [2000] WASCA 377; (2000) 23 WAR 149, and conveniently summarised in the head note to the report of that case as follows:

(1) The policy consideration for the implied undertaking not to use a discovered document for any purpose other than in relation to the litigation in which it is disclosed is that of ensuring that privacy and confidentiality are not invaded more than is absolutely necessary for the purpose of justice.

(2) The implied undertaking will only be waived when special circumstances are present. Whether or not special circumstances exist will depend on the peculiar facts of each case however, ordinarily, it will be no easy matter to secure a waiver of the undertaking.

21 I also refer to the statement of Burchett J in Holpitt Pty Ltd v Varimu Pty Ltd [1991] FCA 269; (1991) 29 FCR 576, 579, referred to with approval by Steytler J. Burchett J said:

In my opinion, the court's duty, in an application of this kind is to consider whether the applicant has shown some circumstance which takes the matter out of the ordinary course, according to which production of documents pursuant to an obligation to make discovery involves the implied undertaking to the court; and, if so, whether an exercise of the court's discretion in favour of the application would be in the interests of justice.

22 I turn then to consider whether the exercise of the court's discretion in this case would be in the interests of justice. I accept and adopted the following matters set out in the plaintiff's outline of submissions, which are established by the evidence before me.

23 First, the defendant is seeking in the Banning proceedings to have the scale limits which would otherwise apply to such costs lifted and/or removed pursuant to s 215 of the Legal Practice Act 2003 (WA). Second, among other things, the application sought to lift or to remove the scale limits applicable to (a) scale item 16, getting up; (b) scale item 19A, counsel's fee on brief being first day in preparation; and (c) scale item 19C, counsel's fee for the second in each successive day of trial. Third, the defendant also sought to have two separate allowances for counsel's fee on brief and first day of trial on account of the adjournment of the trial. Fourth, such application has been made to the trial judge in the Banning proceedings, that is, Simmonds J, and following a hearing on 17 December 2008, the decision with respect to the special costs orders has been reserved. Fifth, during the course of such application, the defendant filed an affidavit, the effect of which is that counsel's fees for trial for the second and each successive day amounted to $7,700 per day. Sixth, a copy of Mr Mendelow's account was not produced to the court in respect of the application for special costs orders heard by Simmonds J. Seventh, a copy of Mr Mendelow's account was in the possession of the defendant and has now been discovered in proceedings brought in the Magistrates Court, inspection of which was given on 20 January 2008.

24 Eighth, without an explanation, notice or copy being provided to the plaintiff's instructing solicitors in the Banning action, an incomplete copy of Mr Mendelow's account appears to have been provided to Simmonds J. That last matter arises from paragraph 9 of the affidavit of Angela Cecilia Theresa Frigger, sworn 4 March 2009. Ms Frigger swears:

I refer to paragraph 26 of the affidavit. I refused to consent to the order requested, although I have no objection to the document being shown. I am advised by my solicitor, and I verily believe, that a copy of the last page of Mr Mendelow's invoice has been forwarded to His Honour Simmonds J as well as the notification of costs I received from Lewis Blyth and Hooper [9].

The plaintiff has sworn in his affidavit of 9 March as follows:

I am not aware of any subsequent provision of documents to Simmonds J. I note that Ms Frigger does not state how or when a copy of the last page of Mr Mendelow's invoice together with the notification of costs were forwarded to his Honour Simmonds J. I have been informed by Mr C Eastwood of Eastwood Law, and I verily believe, that he has not received any copy of any such correspondence from the defendant's solicitors to Simmonds J.

25 I observe in passing it seems that the solicitors for Computer Accounting have seen fit to forward to Simmonds J a copy of one page of Mr Mendelow's account without providing a copy of that page or the accompanying letter to Simmonds J to the defendant's solicitors in the Banning proceedings. It is of course the case that solicitors ought not to make communications to the court in the course of an action without providing a copy of the communication to the opposing solicitors. However, the matter has not been gone into in the course of these proceedings and there may be some explanation of what would otherwise be some improper manner of communicating with the court.

26 I turn to consider the relevance of Mr Mendelow's account to the proceedings before Simmonds J. The amount charged by, and paid to, Mr Mendelow is relevant to the costs application before Simmonds J. An issue in determining an application under s 215 of the Legal Practice Act is whether the amounts provided for in the scale are inadequate.

27 The plaintiff in the Banning action seeks, amongst other things, an order that the scale item or the amount allowable in relation to item 19C - that is, counsel fee for the second and each successive day of hearing - be increased or removed. Accordingly, an issue before Simmonds J is whether or not the amount provided for in the scale in relation to that item is inadequate. In determining whether or not that amount is adequate, it is relevant for Simmonds J to consider what was the amount charged by, and paid to, Mr Mendelow as counsel by the plaintiff in that action.

28 Computer Accounting has put before Simmonds J material that states that, or at least creates the impression that, Mr Mendelow has charged $7,700 per day as counsel fees for the second and each successive day for trial. That, on the face of it, is a misleading impression. As I have said, it appears from the account of Mr Mendelow that he charged $3,850 per day for the second and each successive day of trial.

29 The balance of Mr Mendelow's fees appear to have been for work in relation to particular applications, conferences, getting up and other matters. Whether or not that is so and what the consequences of that are, are matters for the parties to consider and, if an appropriate application is made to Simmonds J, for Simmonds J to deal with. However, for the purposes of the proceedings before me, it is sufficient that I conclude that the account is relevant and the court may be misled if the account is not put before Simmonds J.

30 The defendant has chosen to put part of the account before Simmonds J. That may not cure the problem, and indeed, it may further mislead the court. That is because the earlier pages of the account set out the work in relation to which Mr Mendelow made his charges, and the account should be read in its totality to convey to the reader the complete picture in relation to Mr Mendelow's fees. In all the circumstances, it is in the interests of justice that the plaintiff be released from the implied undertaking unless there are some countervailing considerations that outweigh the interests of justice and the administration of justice in releasing the plaintiff from the implied undertaking.

31 In its written submissions, the defendant put forward a number of matters in [16] of its written submissions which might be considered factors weighing against the exercise of the discretion. The first is that the account came into existence pursuant to the solicitor/client relationship and is privileged. I doubt that the document is privileged, but in any event, any privilege has been waived in the course of the proceedings before Simmonds J by the defendant in these proceedings, Computer Accounting, sending part of the document to Simmonds J.

32 The second matter raised is that the attitude of the author, Mr Mendelow, is unknown. There is no evidence before me that Mr Mendelow considers the document to be in any way sensitive or that any prejudice would be occasioned to Mr Mendelow by the plaintiff being released from his implied undertaking. As I have said, the defendant has seen fit to send part of the account to the court without ascertaining Mr Mendelow's attitude to that.

33 Next, it is said by the defendant that the document has not entered the public domain. I do not think that adds anything to the two previous matters I have referred to and has no weight in circumstances where the defendant has seen fit to send part of the document to the court for the attention of Simmonds J.

34 The final matter raised by the defendant is that the document will not contribute to achieving justice in Supreme Court action CIV 2265 of 2006. For reasons given, I do not accept that point.

35 I conclude that it is the interests of justice and would further the interests of the administration of justice if the plaintiff is released from his implied undertaking.