MORAN -v- ATRUM COAL NL [No 5] [2016] WASC 23 (29 January 2016)

3 On 8 June 2015 I granted an ex parte interim injunction restraining the defendant from disclosing information about the loan agreements until 2.15 pm on 9 June 2015.[6] At an inter partes hearing on 9 June 2015, the interim injunction was extended to 12 June 2015 by consent. At a contested hearing on 12 June 2015, I further extended the interim injunction to 19 June 2015.[7] Following a contested hearing on 19 June 2015, I dismissed the plaintiffs' application for a further extension of the injunction.[8]

4 The principal point in dispute at these contested hearings was whether disclosure of information concerning the plaintiffs' loan agreements was required by s 674 of the Corporations Act 2001 (Cth) and r 3.1 of the ASX Listing Rules. There was no dispute that the statutory requirements of the Corporations Act would qualify any equitable duty of confidence in the circumstances of the present case. At the hearing on 12 June 2015, I was not satisfied that the disclosure then proposed by the defendant was required at that point in time. However, by 19 June 2015 I was satisfied that circumstances had developed so that disclosure of certain information concerning the plaintiffs' loan agreements was required by the Corporations Act and ASX Listing Rules.

5 The plaintiffs plead that, on 22 June 2015, the defendant released an ASX announcement, which was published by the ASX on the same day, containing only some of the information derived from the plaintiffs' loan agreements. The pleading accepts that this disclosure was limited to the extent necessary for the defendant to comply with s 674 of the Corporations Act.[9]

6 Finally, the plaintiffs plead that, despite request, the defendant has failed to undertake to:[10]

hold the balance of the information contained in the loan agreements confidential and thereafter not to disclose the information or otherwise set out on the basis that such information was not confidential.

7 The plaintiffs seek an injunction restraining the defendant from disclosing the information contained in the loan agreements of 11 June 2014 save for the information disclosed on 22 June 2015.

8 Following the injunction hearings, programming orders provided for the filing of pleadings. The Amended Statement of Claim was filed on 13 August 2015. On 2 September 2015, the defendant filed a motion seeking summary judgment or, in the alternative, an order striking out the Amended Statement of Claim in its entirety. There was some delay in dealing with the application due to further conferral which I required between the parties. I made orders programming the application for determination on the papers. There was a further delay caused by difficulties which the plaintiffs had in obtaining material for affidavits for use in these proceedings, caused by orders made in Federal Court proceedings between the parties which restricted the plaintiffs' access to certain documents.

9 The basis of the defendant's application was succinctly stated by senior counsel for the defendant at directions hearings on 9 September 2015 and 4 November 2015. The point is that the pleading does not disclose any ongoing risk of disclosure, and so fails to disclose a cause of action, and there is no evidence of any ongoing risk of disclosure.

10 Although it is sought as alternative relief, it is convenient to begin by considering the defendant's strike out application.

11 To obtain equitable relief for breach of confidence it is not sufficient to show that the information is confidential and was imparted in circumstances importing an obligation of confidence. It is necessary for a plaintiff to demonstrate that there has been, or is threatened, an unauthorised use of the information to the detriment of the plaintiff.[11]

12 The Amended Statement of Claim does not plead that there has been any unauthorised use of the plaintiffs' information. The only pleaded use of the information is the disclosure of 22 June 2015, which the plaintiffs accept was authorised and required by s 674 of the Corporations Act. The only other facts pleaded are the preceding discussion at the board meeting of 7 June 2015 and the failure of the defendant to give an undertaking.

13 In order to demonstrate a cause of action it is necessary for the statement of claim to plead facts which can support the conclusion that unauthorised detrimental use has been made of the information or that such use is threatened. In my view the facts pleaded by the Amended Statement of Claim cannot support such a conclusion. By failing to plead any material fact which could support a conclusion that there has been an unauthorised detrimental disclosure or that there is an ongoing threat of such disclosure, the amended statement of claim fails to disclose a cause of action.

14 The principles which establish the limited circumstances in which it will be appropriate to strike out a pleading under O 20 r 19(1)(a) of the Rules of the Supreme Court 1971 (WA) (Rules) are well established.[12] Further, the exercise of the power to strike out a pleading must be exercised so as to best ensure the attainment of the case management objectives referred to in O 1 r 4B(1) of the Rules. Consistently with that requirement, the courts actively discourage interlocutory pleading disputes because of the substantial, and often disproportionate, amounts of time and expense which they consume.[13] The case management undertaken in the Commercial and Managed Cases List has reduced the opportunity for ambush or surprise at trial and has contributed to a less technical and restrictive approach to pleadings.[14] As Martin CJ noted in Barclay Mowlem Construction Ltd v Dampier Port Authority:

... provided a pleading fulfils its basic functions of identifying the issues, disclosing an arguable cause of action or defence, as the case may be, and apprising the parties of the case that has to be met, the court ought properly be reluctant to allow the time and resources of the parties and the limited resources of the court to be spent extensively debating the application of technical pleadings rules that evolved in and derive from a very different case management environment [7].

15 However, as this passage recognises, a statement of claim must still fulfil the function of identifying the issues and disclosing an arguable cause of action. In my view, by failing to plead facts which support the existence of necessary elements of the cause of action the Amended Statement of Claim fails to meet these requirements. It further seems to me that the efficient determination of the dispute will be advanced if the plaintiffs articulate in their pleading the basis on which the threat of unauthorised detrimental disclosure of the confidential information is alleged.

16 I therefore agree with the defendant that the Amended Statement of Claim in its current form should be struck out as disclosing no reasonable cause of action.

17 The question of whether the plaintiffs should have an opportunity to re-plead their claim to identify the facts on which the allegation of threatened unauthorised detrimental disclosure is based will depend on the outcome of the summary judgment application.

18 Order 16 r 1(1) of the Rules allows a defendant within 21 days after appearance, or at any later time allowed by the court, to apply for summary judgment. The court, if satisfied that the action is frivolous or vexatious or that the action should be disposed of summarily, may enter judgment for the defendant.

19 It is established that the courts will not order summary judgment except in the clearest of cases where there is a high degree of certainty about the ultimate outcome in the proceeding if it were allowed to go to trial in the ordinary way.[15] The legal onus remains on the defendant, as applicant, to show that there is no serious question to be tried on any cause of action raised by the plaintiff.[16]

20 The only evidence on which the defendant relies is an affidavit of Joshua Wyner sworn 2 September 2015, enclosing a letter of the same date from the defendant's solicitors to the plaintiffs' solicitors. In that letter it is said that:

Our client does not propose to disclose any of the allegedly confidential information unless, and then only to the extent that, it is required by law to do so, including pursuant to section 674 of the Corporations Act 2001 (Cth). If that position changes, our client will give your clients seven days notice before making any disclosure of allegedly confidential information.

21 The plaintiffs point out that this statement in a letter between solicitors does not deny the existence of an arguable cause of action for breach of confidence. They note that there is no undertaking in an enforceable form. The defendant reserves to itself the right to disclose the information on seven days' notice. By referring to 'allegedly' confidential information, the letter indicates that the defendant does not accept that the information held is necessarily confidential or subject to an obligation of confidentiality. I accept those submissions.

22 The plaintiffs rely on their own affidavits sworn 7 and 8 December 2015. In those affidavits the plaintiffs describe the ongoing detrimental effect which disclosure of information about their loan agreements of 11 June 2014 would have on their financial affairs, in particular their refinancing and sale of the shares which they hold in the defendant. They contend that the difficulties which further disclosure would create for them provide a motive for certain officers of the defendant to make the disclosure to force the sale of shares in the defendant at a lower price than would be obtained on an organised selldown. They identify evidence of apparent disclosure of information about the loan arrangements to a number of persons, and invite the inference that this disclosure has been made by an officer of the defendant. The plaintiffs invite the court to infer the existence of a threatened disclosure from that evidence.

23 In my view the factual matters raised by the plaintiffs' affidavits are not of a character as to be appropriately resolved on a summary judgment application. Having regard to all of the evidence, I am not satisfied that there is no serious question to be tried as to whether persons for whom the defendant is responsible may have disclosed information about the loan arrangements in the past, or as to whether there is a threat of further unauthorised detrimental disclosure sufficient to warrant the grant of injunctive relief. The case is not one which, in my view, can be resolved summarily.

24 For the above reasons, I would dismiss the defendant's application for summary judgment, strike out the Amended Statement of Claim and give the plaintiffs leave to re-plead their case. I will hear from the parties as to the form of the orders and any consequential or other orders which should be made in the proceedings.

[1] Paragraphs 4 - 7 of the Amended Statement of Claim.

[2] Paragraphs 9 - 10 of the Amended Statement of Claim.

[3] Paragraph 3.2 of the Amended Statement of Claim.

[4] Paragraph 11 of the Amended Statement of Claim.

[5] Paragraph 12 of the Amended Statement of Claim.

[6] Moran v Atrum Coal NL [No 3] [2015] WASC 219.

[7] Moran v Atrum Coal NL [No 2] [2015] WASC 218.

[8] Moran v Atrum Coal NL [No 4] [2015] WASC 241.

[9] Paragraph 13 of the Amended Statement of Claim.

[10] Paragraph 14 of the Amended Statement of Claim.

[11] Smith Kline & French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health (1990) 22 FCR 73, 87; Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] HCA 63; (2001) 208 CLR 199 [30].

[12] See the summary in Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd [No 3] [2014] WASC 162 [44] citing Kimberley Downs Pty Ltd v Western Australia (Unreported, WASC, Library No 6414, 25 August 1986) 6 - 7.

[13] Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2006] WASC 161; (2006) 33 WAR 1 [2].

[14] Thomson v STX Pan Ocean Co Ltd [2012] FCAFC 15 [13]; Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82 [6].

[15] General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125, 129 130; Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 [57]; Batistatos v Roads and Traffic Authority (NSW) [2006] HCA 27; (2006) 226 CLR 256 [46].

[16] Lois Nominees Pty Ltd v QBE Insurance (Australia) Ltd [2011] WASC 208; (2011) 42 WAR 75 [34], citing Anderson v Effexseven (1998) 10 ANZ Insurance Cases 61-424, 74,757.