J.C. Hutton Pty Ltd v Darling Downs Co-Operative Bacon Association Ltd. & Ors [1988] FCA 421

1. upon inspection on behalf of the cross-claimant of documents discovered by the third cross-respondent, only the solicitors for the cross-claimant attend on its behalf and that they keep confidential to themselves and counsel (until further order) copies of all documents supplied to the extent that they contain information in any or all of the categories (a) to (£) set out in the notice of motion, and

that until further order they keep confidential to themselves and counsel all such information;

the costs of the notice of motion incurred by the third cross - respondent be the third cross-respondent's costs in the proceedings brought by the cross-claimant.

Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA ) QUEENSLAND DISTRICT REGISTRY ) QLD G192 of 1987 GENERAL DIVISION )

AND: DARLING DOWNS CO-OPERATIVE BACON ASSOCIATION LIMITED

AND: DARLING DOWNS CO-OPERATIVE BACON ASSOCIATION LIMITED

CrossClaimant AND: J.C. HUTTON PTY LTD First CrossRespondent

This is a notice of motion by the third cross-respondent for orders restricting inspection of discovered documents. The notice of motion seeks to restrict inspection by the cross-claimant, by the second cross-respondent, and by the third

As to the last, the notice of motion makes no sense, since the application relates only to documents supplied by the

It appears from exhibit 2 that an arrangement has been made between the third cross-respondent and the second cross-respondent, which is, for the time being at least,

The live issue, then, is whether the cross-claimant

should be restricted in inspection of discovered documents.

The cross-claim against the third cross-respondent, as pleaded, sets up that it engaged in misleading or deceptive conduct over a substantial period of time in holding itself out as having purchased a particular business from the second cross - respondent, whereas in fact 1t 1s (in substance) carrying on that very business for the second cross-respondent. It is not clear to me what damages against the third cross - respondent, could be based on that alleged deception, but no point is made about that. It appears to be accepted by the third cross-respondent that documents in considerable quantity are discoverable as relevant to the claim against it - for example many documents evidencing sales made by it; the list of documents filed on its behalf is long. The basis on which such documents have been discovered apparently is that the cross-claimant might be able to compare the third cross - respondent's mode of carrying on business with that of the second cross-respondent and seek to have the

Court infer that the second cross-respondent must have some hand

The third cross-respondent''s defence says that about February 1986 the second cross-respondent ceased to carry on a certain business in a factory at Oxley, and that shortly after that the third cross-respondent commenced to carry on such a business and, for a short time, it used a name "Tancred Processed

Meats", that being suggestive of a connection with the second

The general manager of the third cross-respondent, Mr Desmond Nolan, has made an affidavit saying that it and the cross-~claimant "have by far the largest market share in selling" certain products and are competitors. Mr Nolan claims in his affidavit that information as to prices, costs of production, recipes and formulations, and even (somewhat surprisingly) the identity of customers might be very useful to the cross-claimant in its business. He says in effect that it is impracticable, in

view of the bulk of the documents, to attempt to seal up such

Apart from that, it seems to me that most of it could

Mr Sofronoff, for the third cross-respondent, says that some relief should be granted because if (for example) it turns out that there is nothing in this cross-claim, the third cross~-respondent will nevertheless have suffered a significant

disadvantage by the very fact of having made discovery and

disclosing information. He argues that officers of the cross-claimant may, and indeed probably will, be unable to avoid misuse of the information, if by "misuse" is meant use, conscious

or otherwise, for some purpose other than the litigation.

Mr Sofronoff's argument is essentially that the revelation of the whole of the documents to officers of the cross-claimant is necessary (so far as liability is concerned) only for quite a limited purpose, namely to compare the modes of operation of two businesses, but would inevitably have the

unsought for but important effect of laying bare to a competitor

Mr Griffin Q.C., with whom Mr Kings-Scott appeared on behalf of the cross-claimant, argued that there is no recognised exception to the obligation of permitting inspection of documents which would cover such a case as this. Mr Griffin said that the case is one in which ordinary commercial documents are sought to

The notice of motion seeks an order that upon inspection the solicitors only will attend "and shall keep confidential to themselves and counsel ... copies of all documents supplied ... by the third cross-respondent and all information contained therein relating to ..." a number of specific subjects. Mr Sofronoff implicitly concedes the possibility that if this is done the process of inspection will be insufficient for the

cross- - claimant's purposes and argues that if so, the matter may be

In dealing with authorities on applications of this sort, it has to be kept in mind that not all rules of ail courts are identical. So far as the rules of this Court are concerned, it is clear, in my view, that the Court has a discretion to make or not to make orders for production of documents for inspection: 0.15 r.11(1) which contains the words "the Court may, subject to any question of privilege which may arise order ..." (emphasis added). Further, the Court has power to inspect any document for the purposes of deciding "an objection to production ... made on any other ground" under 0.15 r.14 - i.e. any ground other than

In the work by Simpson et al "Discovery and Interrogatories" at p.55, the author, under the heading "Actions

"In such actions the court has been conscious of the fact that discovery can be used oppressively by a business rival to extract from his opponent information concerning his customers, his trade and his mode of doing business .... Courts have been careful to ensure that trade secrets are given adequate protection so that the process of discovery is not abused".

While (I think) conceding this principle, Mr Griffin contends in effect that it is confined to trade secrets properly so called, such as secret processes of manufacture. In my opinion

that is not so, as appears from Church of Scientology of

California v. Department of Health and Social Security [1979] 3

As to the last reference, Brandon L.J. (as he then was),

after referring to cases on "secret trade processes or analogous

"In my view, however, the principle on which the power has been exercised in such cases is of general application and applies in particular toa case like the present one where the collateral purpose potentially involved is the harassment of third parties."

I note that there the Court made no finding that harassment was likely. Here, on the uncontradicted evidence, it seems to me that some commercial advantage to the cross-claimant, whatever the result of the case, is likely if there is full inspection of documents. What Mr Sofronoff proposes is that the matter be approached in stages. Although that is unusual, I think it is a sensible order and a fair one. It may be that when the solicitors have inspected the documents, the cross-claimant will still desire to insist if it can on inspection by an officer or officers and not merely the solicitors. If so, then examples of

the difficulties created by restricted inspection can be

Two other points arise. One is that the order proposed un the notice of motion seems to me ambiguous; it is unclear whether, if made, it would force the solicitors to keep from their clients all documents supplied, or only all documents in a certain category, namely being those relating to one of the designated

subject matters. I propose to order, subject to any submission

counsel may have to make, that upon inspection on behalf of the eross - claimant of documents discovered by the third cross-respondent, only the solicitors for the cross-claimant attend on its behalf and that they keep confidential to themselves and counsel (until further order) copies of all documents supplied to the extent that they contain information in any or all of the categories (a) to (f) set out in the notice of motion, and that until further order they keep confidential to themselves and

The second point is that Mr Griffin suggested that if such an order were made, it would be fair that it be reciprocal. That may well be so, but Mr Sofronoff suggested, in effect, that the cross-claimant's discovery in favour of the third cross-respondent is in quite a different category. It appears to me that I need more information on that subject and a definite

application from the cross-claimant before making any similar

I should add, in case there may be misunderstanding later, that the order is intended to be of a provisional character, not finally disposing of the question of the right of inspection. When the documents are seen by the cross-claimant's solicitors, it may be that they form the opinion that fuller inspection is essential and no doubt they will then consider

raising the matter again. { certify that this and the G_ preceding

pages are a true copy of the reasons for judgment herein of His Honour