MURRAY RIVERSIDE PTY LTD -v- TOSCANA (WA) RAVENSWOOD ESTATE PTY LTD [2020] WASC 357 (8 October 2020)

1. the position of the Second Defendant as the sole director of the First Defendant and as the sales representative in respect of the Properties on behalf of the First Defendant pursuant to the Selling Agency Agreement;
2. the fiduciary duties owed by the First and Second Defendants to the Plaintiff arising pursuant to the Selling Agency Agreement, namely:

3.1 to act honestly and in good faith; and

3.2 to not to use their positions to gain a profit or advantage for themselves;

1. the duties of confidence owed by First and Second Defendants to the Plaintiff, arising in respect of information received by the First and Second Defendants in circumstances importing an obligation of confidence (Confidential Information).
2. the disclosure of the Confidential Information by the First and Second Defendants to the Third, Fourth, Fifth, and Sixth defendants in breach of their fiduciary duties and the duty of confidence owed to the Plaintiff causing the Plaintiff to suffer loss and damage in that the realisable value of the Properties was diminished;
3. the receipt and use of the Confidential Information by the Third, Fourth, Fifth, and Sixth defendants to negotiate and thereafter purchase the Properties causing the Plaintiff to suffer loss and damage in that the realisable value of the Properties was diminished.
4. The relief claimed against the individual defendants varies somewhat. Essentially the plaintiff seeks compensation in equity which necessarily involves the taking of accounts. For the purposes of this application it is pars 5 and 6 of the indorsement which are relevant.
5. On 24 September 2019 the plaintiff issued a chamber summons seeking the following relief:
   1. upon the undertaking of Murray Riverside Pty Ltd (or such other undertaking as the Court requires), leave be granted to the director of the Plaintiff, Mr Kasi Palaniappan, nunc pro tunc to be released from the obligation not to use the documents set out in Schedule 'A' hereto for a purpose other than in connection with Supreme Court of Western Australia action CIV 1307 of 2014 between Westpac Banking Corporation (the Plaintiff/Defendant by Counterclaim) and Kasi Palaniappan (the Defendant/Plaintiff by Counterclaim) (Westpac Proceedings), for the limited purpose of providing the documents to the Plaintiff in this action, for use by the Plaintiff in this action.
6. Schedule 'A' was in three parts. The documents referred to in the first part were described as follows:

The following documents produced by the Plaintiff/Defendant by Counterclaim in the Westpac Proceedings as set out in Attachment 'A' to the affidavit of discovery of Terry Neil Lovelock sworn 2 July 2014.

1. There is then produced a schedule of nine documents. It is not necessary for the purposes of this decision to detail each and every document to which reference is made. As an example, document 2 is described as: 'Letter from Paul Bradstreet (of Savills) to Vincent Smith (of Ernst & Young) re Murray Riverside Estate Lots 9006, 9010.'
2. The date of the document is then given, as is the discovery number.
3. Categories 2 and 3 relate to documents which were produced pursuant to a subpoena issued in what is described as the 'Westpac Proceedings'. There are 12 documents in category 2 and one document in category 3. Below I will detail the relevant facts. But from the form of the summons it is readily apparent what has happened. In preparing the indorsement of claim the plaintiff's solicitors have relied upon the documents which were produced in the Westpac Proceedings and were the subject of the usual implied undertakings. Having realised their mistake, the plaintiff sought to regularise the position. The third, fourth and fifth defendants responded with a summons of their own. They sought to dismiss the action as an abuse of process. These reasons deal with both chamber summons.
4. The plaintiff's application is supported by four affidavits of Nathan Christopher Ebbs and an affidavit of Kasi Palaniappan. In his affidavit Mr Palaniappan explains in some detail the background to the Westpac Proceedings. Essentially Westpac took action against Mr Palaniappan in his capacity as guarantor of various facilities owing by Murray Riverside Pty Ltd to Westpac. Mr Palaniappan notes those proceedings have concluded. He makes the point that had those proceedings not concluded he would have made this application in those proceedings. It was an issue between the parties as to whether or not it was competent to make an application for release of the undertaking given in the Westpac Proceedings in these proceedings. I will discuss this issue further below. For the present it is enough to note the Westpac Proceedings have concluded.
5. In his first affidavit sworn 18 November 2019, Mr Ebbs says he is the solicitor who had conduct of this action. He says he is the 'managing principal' of Bennett + Co, the plaintiff's solicitors. From about December 2015, Bennett + Co acted for Mr Palaniappan in the Westpac Proceedings. In or about June 2017 Mr Ebbs came to the view the plaintiff might have a cause of action against the present named defendants. He briefed Mr Steven Penglis SC to provide advice. A brief for counsel was prepared. Paragraph 11 of Mr Ebbs affidavit is in the following terms:

Mr Penglis SC was provided with a large number of documents in the course of providing his advice, most of which were provided in files or bound bundles containing many individual documents. Some of the files of documents were compiled by Bennett + Co and we maintain records of the indexes of documents contained therein however other files were provided by the clients themselves. For this reason we do not hold a precise record of each individual document given to Mr Penglis and therefore there is no record of what Mr Penglis relied upon in providing this advice.

1. It is to be noted that Mr Ebbs' affidavit does not give any indication as to why leave is sought only in relation to the documents described in Schedule 'A' to the chamber summons. If anything, the paragraph quoted above suggests there could well be more documents than those referred to in Schedule 'A' which were provided to Mr Penglis SC and used in breach of the undertaking.
2. Mr Ebbs swore a further affidavit on 8 January 2020. Paragraph 5 of that affidavit is in the following terms:

Further to the matters set out at paragraph 11 of my First Affidavit, without waiving legal professional privilege, I am informed by Counsel for the Plaintiff, Mr Steven Penglis SC, and verily believe that despite being provided with a large number of documents in the course of seeking his advice as to the merits of a cause of action against the Defendants, the only documents actually relied upon by Mr Penglis SC to advise on the same are those documents referred to at 2.6 - 2.9 of Schedule 'A' of the Plaintiff's Chamber Summons dated 24 September 2019.

1. Although the affidavit is not entirely clear, what Mr Ebbs appears to be saying is that only four documents in pt 2 of Schedule 'A' to the plaintiff's chamber summons were the subject of the application. The affidavit does not explain how it came about that leave was sought with respect to the other documents.
2. The position is clarified to an extent by a further affidavit of Mr Ebbs sworn 15 January 2020. That affidavit reads in part:
   1. Prior to commencement of the cause of action, my firm had information from a number of sources including information obtained from the Supreme Court Proceedings (which included the draft letter of 19 December 2012 and the final version dated 20 December 2012), information conveyed to me personally by Mr Zohar during our meeting on 8 June 2017 and information conveyed to me by Mr Palaniappan.
   2. At the time the within proceedings were commenced, my staff and I inadvertently overlooked the fact that certain of the information used for the purpose of making the decision to commence these proceedings came from information obtained from the Supreme Court proceedings and that, accordingly, leave to use that information should first be obtained by application to the Supreme Court. As it was a matter that was overlooked, it was not something that was raised with Mr Palaniappan or Murray Riverside Pty Ltd.
   3. As soon as we realised that an application should have been made with respect to certain of the information, the within application was made.
3. Both summonses were heard at a special appointment on 15 January 2020. Mr Penglis SC appeared for the plaintiff. Mr D Solomon appeared for the third to fifth defendants and the sixth defendant represented himself. Westpac Banking Corporation was also represented by counsel on the basis they were interested in the outcome of proceedings. It became apparent during the course of the hearing that none of those appearing for the defendants (and the sixth defendant) had actually seen the documents referred to in Schedule 'A' to the plaintiff's chamber summons. After hearing argument I adjourned the matter and relevantly made the following orders:
   1. The Plaintiff have leave to provide the documents referred to in its Amended Chamber Summons to the Third to Sixth Defendants and also to Westpac Banking Corporation (Westpac) (as an interested party to the proceedings).
   2. By 22 January 2020 the Plaintiff file (and serve on the Third to Sixth Defendants and on Westpac, via its solicitors, Lavan) an affidavit attaching:

(i) any documents referred to in order 1 above;

(ii) any documents considered by solicitors or counsel in determining whether to commence proceedings; and

(iii) an unredacted copy of the plaintiff's draft Statement of Claim.

1. The Plaintiff's application by Chamber Summons dated 24 September 2019 (as subsequently amended) and the application of the Third to Fifth Defendants by Chamber Summons dated 4 October 2019 be adjourned sine die.

1. In compliance with those orders, the plaintiff filed a further affidavit of Mr Ebbs sworn 4 February 2020. In the affidavit Mr Ebbs again refers to the brief to Mr Penglis SC and repeats his earlier evidence to the effect that Mr Penglis SC only considered the four documents referred to earlier. Mr Ebbs goes on to say that a draft statement of claim had been prepared. Relevantly his affidavit reads as follows:
   1. I am aware that the majority of the preparation of the draft Statement of Claim was undertaken by Ms Tanya Lavan of my office and Counsel, Mr Wayne Zappia.
   2. I am aware that the Statement of Claim found at 'NCE-26' has not yet been submitted to Senior Counsel for the purpose of him settling it.
   3. This is because 1 am informed by Ms Lavan and verily believe that:

13.1 in or about August 2019, during the course of the drafting of the Statement of Claim, it occurred to Ms Lavan that a review needed to be carried out to determine the providence of each of the documents that were to be pleaded so as to ensure that the documents could be pleaded without having to obtain the leave of the Court to do so.; and

13.2 in mid-August 2019, Ms Lavan instructed another solicitor to review the provenance of the documents following which it became apparent to her (and then me) that leave was required to rely on the same as these documents had been produced on subpoena in the Westpac Proceedings.

1. Despite the fact Mr Ebbs has sworn four affidavits, the position in relation to the documents remains unclear. Taking the evidence as a whole, I think the position can be fairly summarised as follows:

(1) Mr Ebbs formed the view the plaintiff may have a claim against the defendants. Advice was sought from Senior Counsel, Mr Penglis SC. Mr Penglis SC was provided with a brief containing a large number of documents. Included in those documents were the documents set out in Schedule 'A' to the plaintiff's chamber summons.

(2) Mr Penglis SC, in preparing his advice, considered only four documents which are listed in pt 2 of Schedule 'A'.

(3) The breach of the implied undertaking was occasioned by inadvertence on the part of the plaintiff's solicitor ‑ in particular by Mr Ebbs in his capacity as the solicitor or having conduct of the action.

(4) Mr Palaniappan was unaware of the breach of the undertaking.

(5) A draft statement of claim has been prepared and in the preparation of that draft, reference has been made to documents the subject of the implied undertaking.

1. There were six different grounds upon which the defendants said leave ought not be granted. However, the parties did agree on a number of statements of general principle. First, all parties accepted that documents produced in legal proceedings are subject to the substantive obligation such that they cannot be used for any collateral or ulterior purpose without leave: See Hearne v Street [2008] HCA 36; (2008) 235 CLR 125. The primary person bound by the substantive obligation is the litigant who receives the information or documents but it extends to any other party to whom information or documents are given. Only the court can release a party from the obligation in appropriate circumstances, irrespective of whether the producing party has consented. The court's power to release or modify the obligation is not freely exercised nor is it an easy matter to secure the court's indulgence. There is no 'hard and fast test' but ultimately good reason must be shown which involves a fact specific evaluation. 'Special circumstances' must exist and the modification or release must not occasion injustice.
2. In Springfield Nominees Pty Ltd v Bridgelands Securities Ltd [1992] FCA 472; (1998) 38 FCR 217, 693 Wilcox J said:

For 'special circumstances' to exist it is enough that there is a special feature of the case which affords a reason for modifying and releasing the undertaking and is not usually present. The matter then becomes one of the proper exercise of the court's discretion, many factors being relevant. It is neither possible nor desirable to propound an exhaustive list of those factors.

1. Wilcox J thereafter expressed the view that the relevant factors for consideration include the following:

(a) the nature of the document;

(b) the circumstances under which it came into existence;

(c) the attitude of the author of the document;

(d) any prejudice the author of the document may sustain;

(e) whether the document pre-existed litigation or was created for that purpose and therefore expected to enter the public domain;

(f) the nature of the information in the document (in particular, whether it contains personal data or commercially sensitive information);

(g) the circumstances in which the document came into the hands of the applicant for leave; and

(h) the likely contribution of the document to achieving justice in the second proceeding (which factor was described by his Honour as 'perhaps most important of all').

1. In written submissions filed 18 November 2019 the plaintiff relied on the following matters:

28.1 the first and second defendants (Garland) were the selling agent of Murray Riverside. Garland owed Murray Riverside a duty of candour, which required them to disclose to Murray Riverside the content of any communications (be that in writing or oral) they had with prospective purchasers. As a corollary, Murray Riverside was (and remains entitled) to all information in Garland's possession in relation to the sale of the Properties;

28.2 as agent of Murray Riverside, Garland disclosed information they ought not to have disclosed to prospective purchasers to the detriment of their principal, Murray Riverside. The substantive obligation cannot be used as a 'shield' to hide such wrongdoing;

28.3 the scope of the intended use of the Documents is limited and they seek to do justice between the parties;

28.4 the Documents would have been produced in any event;

28.5 the within proceedings are a direct consequence of the Documents produced in the Westpac Proceedings;

28.6 the Documents do not contain personal data or commercially sensitive information belonging to the defendants or interested third parties;

28.7 the subject matter of the within proceedings, whilst involving different parties, contains related (and overlapping) facts and issues to those ventilated in the Westpac Proceedings; and

28.8 the Documents are relevant to the within proceedings and reference to their contents will influence the outcome of Murray Riverside's claim.

1. All parties appeared to accept that if this action was struck out as an abuse of process, the plaintiff could issue fresh proceedings. No express or implied concession to that effect was made by counsel for the third to fifth defendants. No submission to the contrary was made by counsel ‑ no doubt because it was not a relevant consideration in this application. However, if fresh proceedings were issued the defendants may have a limitation defence. Whether or not that is the case was not the subject of argument on this application. But it is proper to proceed on the basis that if fresh proceedings are issued the defendants may be able to avail themselves of a limitation defence in a way that is not open in these proceedings. In fairness to the plaintiff it should be said that at no time did counsel for the plaintiff concede a limitation defence would be available to the defendants if fresh proceedings were issued. For the purposes of these applications what is important is that both parties accepted it was a relevant consideration that if this action was struck out as an abuse of process a limitation defence may be available to the defendants in fresh proceedings.
2. The six issues between the parties, as summarised by counsel for the plaintiff (pages 76, 77 of the transcript), were as follows:

(1) Had the plaintiff complied with O 59 r 9 of the Rules of the Supreme Court 1971 (WA);

(2) is there a relevant or close connection between the matters the subject of these proceedings and the Westpac proceedings;

(3) are there special circumstances warranting the grant of leave to use the documents non pro tunc;

(4) is the importance of the documents to the plaintiff such that the justice of the matter requires leave to be given for their use;

(5) if leave is given non pro tunc, will that deprive the defendants of a limitation defence they might otherwise have; and

(6) could a party accessing the court record effectively have access to the documents by reading the pleading.

1. Three of these issues can really be put to one side. The question of whether there are special circumstances requiring the grant of leave non pro tunc and the limitation issues are closely aligned. I have already made comment on the issues above. As to the sixth and final issue, if leave were to be otherwise granted orders could be made which would restrict public access to the pleadings. This would protect the defendant's position. Counsel for the plaintiff intimated at the commencement of his submissions that he would have no difficulty with such an order.
2. Turning then to the issue of conferral, it was conceded by counsel for the plaintiff at the outset of his submissions that there had been no oral conferral as is required by O 59 r 9. It is worth noting that the chamber summons in this matter did not seek a waiver of conferral; nor was any such application made orally. Essentially, counsel's submissions were to the effect first, there was no prospect of conferral disposing of the matter or narrowing any issues and second, although conferral had not initially taken place, there had subsequently been detailed discussions between the parties which, in effect, amounted to conferral.
3. So much has been said about the requirements of O 59 r 9 there is really no point in my explaining the principles again. The position is simple. Oral conferral must take place before an application is brought. If there is no conferral and in the absence of an order waiving the requirement, an application will fail. It does not matter that there is no prospect conferral would have resolved the issue. The rule does not say conferral is only necessary when there is a real prospect of complete or partial resolution of the dispute.
4. There was no conferral on this application and there is no basis upon which the failure to confer can be waived. On that basis alone, this application must fail. It is, however, appropriate to consider all issues raised at the hearing.
5. As to the second issue, counsel for the third to fifth defendant submitted the correct starting point was to consider the scope and rationale for the implied undertaking. He relied heavily on a decision of Ryan J in Arnold Mann v Medical Defence Union Ltd [1997] FCA 45. In particular, counsel referred to the following passage at 6:

Usually, if not invariably, the use of documents disclosed in one action for the purposes of another action will be a collateral or ulterior purpose, even where the parties to both actions are identical and where causes of action are identical. If a party begins an action based on documents disclosed in other proceedings, the action is liable to be struck out as an abuse of the process of the court.

An exceptional case may be where documents disclosed in one action are used in separate proceedings, the sole purpose of the separate proceedings being the furtherance of the party's case in the original action.

1. In the course of his judgment, Ryan J (at 9) said he was satisfied the authorities 'make it clear that the proposed use [of the documents] must bear a reasonable relation to the prosecution of the case sought to be made or the mounting of a defence to that case'. His Honour gave, as an example, the use of a discovered documents to frame a case of fraud in addition to one of breach of contract if the fraud is said to have infected the same transaction, even if additional parties are alleged to have been implicated or the allegations of fraud are sought to be raised by way of cross‑claim.
2. It was the defendants' position the claim in this action did not bear a reasonable relationship to the Westpac Proceedings. Counsel submitted the Westpac Proceedings were to recover under a guarantee whereas this action was for breaches of fiduciary duty in confidence by the creditors' appointed receiver, for which other parties are allegedly accessorily liable. Counsel for the plaintiff framed the claim differently. He accepted the Westpac Proceedings were for the enforcement of a guarantee. However, the present plaintiff had sought to raise, by way of equitable setoff, claims made in these proceedings against the defendants. It was prevented from doing so because the terms of the guarantee prevented the present plaintiff from raising matters of equitable set‑off until payment had been made under the guarantee. Counsel maintain, nonetheless, that the relevant facts, which would have founded the alleged equitable set‑off, were matters raised in these proceedings and therefore bear a reasonable relation to the earlier proceedings.
3. On balance, I am not satisfied this action does bear a reasonable relation to the Westpac Proceedings. Just what Ryan J meant by 'a reasonable relationship' can be illustrated by contrasting the facts in the Mann case with the example his Honour gave where there was a pleaded cause of action to which a cause of action in fraud is added. In the latter case, there is no change in the nature of the transaction which is being impugned. A claim in fraud is a claim that someone involved in that transaction acted dishonestly. Evidence would need to be led above and beyond the evidence which would be led simply to establish a claim for breach of contract. But the nature of the transaction, its essential elements, remain the same.
4. In the Mann case, Dr Mann had sued the defendant for breach of contract and under the Trade Practices Act 1975 (Cth). During the course of that action, certain internal memos from the defendant came to light. Dr Mann then sought to amend his claim to include an action for defamation. On the one hand, there was a connection between the two actions - the memo which was allegedly defamatory would not have been produced had Dr Mann not taken the action based in contract and breach of statute. Ryan J was of the view the disconnect between the two actions was such that release from the undertaking was not warranted.
5. In my view, that is the position here. It should be remembered that in the Mann case, Dr Mann wanted a release from the undertaking so that he could bring a separate action against the same defendant. Here, the present defendants were not parties to the Westpac Proceedings. In due course, if the plaintiff had been able to raise the equitable set‑off they may have been joined to the proceedings. But that is not to the point. There is simply too much distance between the cause of action in this case and the cause of action in the Westpac Proceedings.
6. Turning to the third and fourth issues, given the way the evidence stands in this case it is somewhat difficult to evaluate how important the use of these documents is to the plaintiff. Perhaps what can be said is that a limited number were of such importance they were used in preparing the indorsement of claim and in drafting a statement of claim. This is one of those instances where the importance of the documents is perhaps best evaluated by noting the plaintiff thought it necessary to use them in the course of preparing his case. Moreover, this application was pursued once it became clear the documents had been used without court approval. On that basis and without examining this point in any detail - both as to the facts and as to the law - I think it is possible to say it is a matter which falls in the plaintiff's favour.
7. Finally, there is the question of whether it was appropriate for the plaintiff to make an application in these proceedings. This really is a matter of procedure which ought not stand in the way of resolving the issues between the parties. Given the Westpac Proceedings have terminated, I can see no basis upon which an application could have been made in those proceedings. Of course if those proceedings had still of been on foot then the position would be different - an application in those proceedings would be appropriate. After all, Westpac has an interest in the outcome of the application. Here there is, as I see it, no alternative but an application in these proceedings. Westpac were given notice of the application and if necessary could have made submissions at the final hearing. Their interests were protected. The plaintiff followed the appropriate procedure given the circumstances.
8. The plaintiff's application will be dismissed. I will make the orders sought by the third to fifth defendants. Parties ought confer as to the form of orders as to costs. If agreement cannot be reached, parties ought file competing minutes of proposed orders within seven (7) days.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.