Liberty Funding Pty Ltd v Phoenix Capital Ltd

Introduction 1 On 24 January 2005, after hearing argument, the Court made orders granting the appellants leave to appeal and allowing the appeal from orders made by the primary judge on 15 December 2004. The Court also granted leave to use the affidavit the subject of debate in proceedings on foot in the Supreme Court of Victoria. These are the reasons of the Court for those orders made on 24 January 2005. 2 The matter initially came before the primary judge as an application by the appellants, as applicants in a proceeding commenced in this Court in 2001 (the "First Proceeding"), for leave to use, in current proceedings in the Supreme Court of Victoria, an affidavit sworn by a Mr Jeffery, the Chief Executive Officer of the respondent (the "Jeffery affidavit") which had been served on the appellants as applicants in the First Proceeding. The argument developed before the primary judge as to whether the Jeffery affidavit was in fact the subject of legal professional privilege. The primary judge found that the Jeffery affidavit was privileged and on that basis it could not be used in the Supreme Court proceedings. On this basis, his Honour did not find it necessary to deal with the question of leave to use the affidavit by reference to the principles in cases such as Harman v Secretary of State for the Home Department [1983] 1 AC 280.

Factual background 3 On 22 March 2001, the First Proceeding was commenced in this Court by the appellants against the respondent which traded under the name Bluestone Mortgages (Bluestone). The essence of the claims in the First Proceeding was that Bluestone had disseminated an erroneous and misleading document which misdescribed various financial products supplied to the public by the appellants. We will refer to this document the subject of complaint in the First Proceeding as the Document. In the resolution of the First Proceeding, one issue relevant to liability and damage was the extent of dissemination by Bluestone of the Document. 4 The First Proceeding came into the docket of North J. Early in its procedural life, at a directions hearing, the issue of mediation was raised. Prior to the directions hearing that took place on 30 April 2001, the representatives of the parties had exchanged correspondence about the extent of the dissemination of the Document. This factual question was not resolved before the directions hearing. At the directions hearing, the parties accepted the utility of a Court annexed mediation. From the transcript of the directions hearing it can be seen that North J was keen to see the parties crystallise the issues in dispute between them before the mediation took place. One of those issues was the extent of the dissemination of the Document. The applicants sought an order for specific discovery of documents concerning that issue. Bluestone resisted that course, and embraced, and then urged, a course which was suggested by North J of Bluestone filing and serving an affidavit describing the scope of the dissemination of the Document. By the time of the directions hearing, dissemination of the Document had been halted by the giving of undertakings by Bluestone. The transcript of the directions hearing recorded the following (Mr Maryniak being counsel for Bluestone): His Honour: What do you say about the question of the extent of dissemination? [T3.45] Maryniak: Your Honour, on my instructions, it's very limited and in fact we have attempted to advise the applicants of the extent of the dissemination. [T3.45-T4.02] His Honour: Would it be for instance possible for an officer of the respondent to swear an affidavit of the subject matter instead of discovery as a preliminary to mediation? [T4.05] Maryniak: On my instructions, your Honour we have informed them of what we know. [T4.15] His Honour: Unless there is some good reason, I am inclined, having regard to the state that the case is in, to make an order requiring a responsible officer of the respondent to depose… to the extent of dissemination. [T4.45 et seq] At T5.30-T5.45 Counsel for Liberty pressed for discovery in relation to dissemination. Counsel for Bluestone resisted the application for limited discovery. [T5.45] [At T7.01] His Honour: Yes. The only real difference between you is this question of discovery as against affidavit. What is in truth the difference between the two courses for your side? I mean the obligation of the deponent will be if the affidavit course is adopted to make full inquiries and that would be specified in the form of order. I'm interested to know why you resist discovery if you are prepared to have… [At T7.15] His Honour: It really amounts to the same thing though, doesn't it? I mean in order to be in the position to swear the affidavit, you will have to do exactly the same work as would be necessary to make discovery and it's more a conventional course. I don't really follow why you see a distinction. There wasn't intended really to be one. It just seems that swearing an affidavit in the sense fixes the issue more precisely than discovery. Maryniak: Exactly your Honour, and that's why we embrace it. It's a clearer form of sending the message across about dissemination. … We will investigate it and we will say on affidavit how the document has been disseminated. [At T 7.35] His Honour: I mean indeed my concept is that the affidavit would be more informative than discovery. It would perhaps explain what steps you have taken to investigate, while with discovery all you do is say "here are the documents". Maryniak: Your Honour, it will be an affidavit put forward in good faith to elaborate on and explain the extent of the dissemination. His Honour: I think with that indication, Mr Harrison, you actually ought to be better with an affidavit than with discovery and that's what I intend and if that's not the way it eventuates then the matter should be brought back before the directions day by exercising liberty to apply. 5 North J ordered that an affidavit be filed by Bluestone dealing with dissemination of the Document. 6 A number of relevant things can be said about the above exchanges at the directions hearing. First, the affidavit was to take the place, and fulfil the function, of an affidavit of discovery and of inspection of discovered documents. Secondly, the affidavit was intended to be informative in a way that an affidavit of discovery would not be. In particular, it was a procedure which enabled Bluestone to identify, on oath, the boundaries of the dissemination that had occurred. This was important for Bluestone, because it could then participate in the mediation with the possible loss and damage flowing from dissemination of the Document fixed by reference to what was in the affidavit. Thirdly, the ordering of the affidavit suggested by North J was embraced, and then urged, as a procedural course by Bluestone. That is, it was not in reality a course which Bluestone followed only by reason of legal compulsion. Fourthly, it was intended that the appellants rely on the affidavit's contents, in particular, but not limited to, in approaching and conducting the mediation. Fifthly, whilst the proposed affidavit concerned issues that would be canvassed at any trial, it was not specifically intended to be an affidavit that would form part of the evidence should there be a hearing. The affidavit was intended to be informative about an issue in the proceeding that was central to the proposed mediation. It was intended to be used and relied upon by the appellants for the purposes of the mediation. 7 Thereafter, the affidavit was sworn by Mr Jeffery. Service of the Jeffery affidavit was preceded by the sending of a draft of the affidavit to the appellants' solicitors under cover of a letter from Bluestone's solicitor which stated: We attach the unsworn affidavit of Alistair James Jeffery. Mr Jeffery is interstate at present and is unable to swear the affidavit. We will file and serve the sworn affidavit in the form attached on Mr Jeffery's return to Sydney next Tuesday. No reservation on the use that could be made of the draft was stated in the letter. 8 The Jeffery affidavit was filed and served upon the appellants. 9 The Jeffery affidavit dealt, amongst other things, with the dissemination of the Document, the email system of Bluestone and the back‑up and retention of documents and emails in Bluestone. 10 A mediation was held. The First Proceeding settled in May 2001. 11 In December 2001, a new proceeding was instituted in this Court by the second applicant in the First Proceeding and another against the respondent in the First Proceeding (now called Bluestone Group Pty Limited) and a Mr Trevor Scott. Mr Scott was a former employee of the second applicant in the First Proceeding. In the new proceeding allegations were made, amongst other things, that Mr Scott had wrongfully used the applicants' confidential information and breached copyright and that the respondent (Bluestone) had knowingly taken advantage of these breaches. On 20 December 2001, Weinberg J made Anton Piller orders against Mr Scott. 12 Pleadings were filed in 2002. On 13 November 2003, Weinberg J transferred the proceeding to the Supreme Court of Victoria. 13 The appellants wish to use the Jeffery affidavit and the information contained therein in the conduct of the Supreme Court proceedings. The Jeffery affidavit is said to be relevant in a pending application for better and more specific discovery which is listed for hearing in February 2005 before Harper J. Dealing as the Jeffery affidavit does with the holding of, and dealing with, electronic communications in Bluestone, the relevance of the affidavit to this end can be readily understood. Also, the appellants wish to deploy the information in the Jeffery affidavit in the preparation of the Supreme Court proceedings, including the formulation of the evidence and likely material for cross‑examination.