Plaintiff v Defendant

Supreme Court of Victoria|2008-03-19|Before: HABERSBERGER J

PRACTICE AND PROCEDURE - Expert witness - Legal professional privilege - Confidentiality of instructions - Contractual obligation to keep information confidential - Whether expert witness in possession of privileged or confidential information - Whether privilege or confidentiality waived by serving of expert witness statement pursuant to court order - Whether expert witness able to speak to lawyers for opposing party about his reports and reports of other experts - Whether there was real and sensible possibility of the misuse of privileged or confidential information - Opposing party free to call expert witness at trial.

1 This is an application by Protec Pacific Pty Ltd ("Protec") for an order that the defendant, Brian Cherry, be restrained, pending the hearing and determination of this proceeding or further order, from making any further contact with Steuler Industriewerke GmbH, its servants or agents, including its solicitors Anderson Rice and counsel retained on its behalf, in connection with the Supreme Court proceedings No. 5797 of 2000 and No. 7268 of 2007. Alternatively, that he be restrained from using, copying or dealing with any information confidential to Protec in connection with the said proceedings in his possession, custody or control or from communicating the said information directly or indirectly to Steuler or its said servants or agents.

2 Thus, the order sought was interlocutory in form. Counsel for the defendant submitted, however, that I should "exercise great caution" before accepting the submissions of the plaintiff because any order made would likely be final in effect, as the two proceedings are fixed for trial at the same time in a hearing commencing before me on 31 March 2008. I agree that, given this circumstance, the plaintiff has to establish that there is a degree of likelihood that it would be successful at trial in obtaining a permanent injunction against the defendant.[1]

3 In order to understand why Protec had considered it necessary to commence this proceeding against its expert witness, Professor Cherry, it is necessary to set out the factual background in some detail.

4 In proceeding No. 5797 of 2000 ("the principal proceeding"), which was commenced by Protec against WMC (Olympic Dam Corporation) Pty Ltd, now known as BHP Billiton Olympic Dam Corporation Pty Ltd ("WMC"), WMC counterclaimed against Protec and a German company, Steuler Industriewerke GmbH ("Steuler"). The dispute concerned work carried out by Protec in connection with the supply and installation of high density polyethylene ("HDPE") lining material to process tanks at WMC's Olympic Dam mine in 1998 and 1999. The HDPE lining material known as "Bekaplast" was manufactured and supplied by Steuler. WMC alleged that the Bekaplast was not a suitable lining material and that it had failed prematurely with the result that it had been replaced with a fibreglass lining at considerable cost to WMC.

5 In 2002, Professor Cherry was an Honorary Professorial Fellow in the Centre for Advanced Materials Technology, Department of Materials Engineering at Monash University. He had recently retired from the position of Professor and Associate Dean (Research and Development) in the Faculty of Engineering at Monash University. By an agreement dated 17 October 2002 and made between Protec and Professor Cherry ("the Consultancy Agreement"), Protec engaged Professor Cherry to provide "advice concerning the suitability of High Density Polyethylene as a Tank Lining Material". The written agreement had been proffered by Professor Cherry following discussions with Protec's then solicitors, which now practise under the name Pilley McKellar Pty Ltd. Clause 5 of the Consultancy Agreement provided that:

5.1 The Consultant shall keep confidential all information, particulars and results of all the Work carried out under this Agreement.

5.2 Each party acknowledges that all documents (other than any report issued in the course of this consultation) and information disclosed by or received from the other party remain the property of the party which disclosed or produced them.

6 A draft "brief to expert" was provided to Professor Cherry by Protec's solicitors on 15 October 2002. Pursuant to the Consultancy Agreement, Professor Cherry carried out a number of tasks. According to his affidavit in opposition to Protec's application, sworn on 25 January 2008, Professor Cherry visited WMC's site at Olympic Dam in about March 2003 in the company of Howard Smith, Protec's managing director, and another person, Claudio Sesia, to observe the repair work that was being carried out on the damaged portions of the mixer and settler tanks. Professor Cherry said that Mr Smith, Mr Sesia and he:

discussed the construction and inadequacies in the construction of the concrete shells of the mixer/settler tanks, damage to the concrete caused by the leakage of the solvent extraction chemicals, the repairs that had already been effected in the uranium solvent extraction portion of the plant using fibre reinforced plastic linings.

Professor Cherry then prepared a report dated 26 May 2003. This was a commentary on a report by WMC's expert, Dr Ian Peggs. Initially, there was a degree of co-operation between Protec and Steuler on a "common defence" to WMC's counterclaim against them. In June 2003, when in Europe on other business, Professor Cherry met with representatives of Steuler in Germany, at the suggestion of Mr Alexander McKellar of Protec's former solicitors. Professor Cherry prepared a report of this meeting for Protec's solicitors, which was dated 1 July 2003. According to Professor Cherry, he subsequently corresponded with Dr Andreas Hopp, an employee of Steuler, regarding test methods for environmental stress cracking of semi-crystalline polymers. In December 2003, Professor Cherry attended a mediation in the principal proceeding on behalf of Protec. He delivered a presentation containing a simplified account of the technological issues involved. Before the mediation, Professor Cherry had spent "a considerable time" in Melbourne with Michael Steuler, the managing director of Steuler, discussing these issues. Professor Cherry then prepared a second report for Protec, which was dated 22 August 2005. An order 44 expert witness statement of Professor Cherry was filed by Protec in the principal proceeding on 15 September 2005. It referred to both of Professor Cherry's earlier reports. Finally, Professor Cherry participated in a Court ordered experts' conclave in January and February 2006, which led to the preparation of a Joint Report of Experts' Conference dated 7 February 2006.

7 Just prior to the experts' conclave, Professor Cherry copied to Mr McKellar an email dated 19 January 2006 which he had sent to Mr Steuler, in response to an email from Mr Steuler dated 18 January 2006 advising Professor Cherry of "an important analysis" which Mr Steuler had come across "in preparing our experts" for the conclave. In his email to Mr Steuler, Professor Cherry stated that:

I have been instructed by means of an email from Howard Smith dated 5th January that in view of "a probable settlement negotiated between myself and BHP Billiton" to "cease any further work (that I) may be doing on this matter".

8 By an email dated 20 January 2006, Mr McKellar instructed Professor Cherry as follows:

UNDER NO CIRCUMSTANCES ARE YOU TO EVER DIRECTLY CORRESPOND WITH ANOTHER PARTY TO ANY LITIGATION.

FURTHR DISCLOSURE OF CONFIDENTIAL SETTLEMENT DISCUSSIONS BETWEEN OUR CLIENT AND BHP BILLITON IS A GROSS BREACH OF SOLICITOR/CLIENT PRIVILEGE AND IT IS UTTERLY INAPPROPRIATE THAT YOU HAVE DONE SO.

Mr McKellar said in affidavit in reply sworn on 29 January 2008 that he had informed WMC's solicitors, Middletons, about the direct contact between Mr Steuler and Professor Cherry, that an exchange of correspondence between the solicitors for the three parties followed, and that by an email dated 25 January 2006 he had informed Anderson Rice that Professor Cherry had been told that the solicitors for Protec considered his conduct "inappropriate" and that they had "advised him as to the appropriate course of conduct in future".

9 In March 2006 Protec and WMC did indeed settle their dispute. However, for reasons which are not relevant to this proceeding, Protec and WMC reached a further settlement in May 2007. This settlement resulted in a consent judgment on the counterclaim in the principal proceeding for $15 million in favour of WMC against Protec. Part of the May 2007 terms of settlement required Protec to issue proceedings against Steuler seeking indemnity and damages arising out of the subject matter of the principal proceeding. (In 2004, Protec had issued, but not served, proceedings against Steuler. In April 2007, Protec's application for leave to extend the time for service of that proceeding was refused.[2]) Accordingly, Protec issued proceedings against Steuler on 16 July 2007 ("the 2007 proceeding"). Pursuant to the terms of settlement, the solicitors acting for WMC in the principal proceeding, Middletons, act for Protec in the 2007 proceeding. As already mentioned, both the principal proceeding and the 2007 proceeding are fixed for trial at the same time. I have previously ordered that the witness statements in the principal proceeding stand as witness statements in the 2007 proceeding and that the evidence in one proceeding be evidence in the other.

10 According to Professor Cherry, he was told by Mr McKellar in about July 2006 that WMC's claim against Protec had been settled. As he understood that he was not required further in the matter, he disposed of all of the paper and compact disc documents that he held in relation to the matter.

11 On or about 15 June 2007, Professor Cherry received a telephone call from Anderson Rice, indicating a possible desire to discuss a report that he had written dated 26 May 2003 concerning the environmental stress cracking of polyethylene. Professor Cherry was told that Anderson Rice were the solicitors for Steuler and he was asked if he would be willing to meet to talk about the report. Professor Cherry said that there was no mention of legal proceedings. He said that it occurred to him that other cases of the environmental stress cracking of HDPE may have become of interest to Steuler and as he had dealt with Steuler in the past he felt that he would be happy to do so again. No date was fixed for the meeting. Professor Cherry heard nothing further until late in October 2007 when he was telephoned again by Anderson Rice to set up a meeting. The appointed time was confirmed by an email dated 18 October 2007. He said that there was nothing in that email which indicated to him that there was any litigation involved.

12 A meeting took place on 7 November 2007 between Professor Cherry and Steuler's solicitors and counsel. During the meeting he asked what was the purpose of the meeting. He said that he was then informed that there was a court case in which Protec was suing Steuler. He questioned the extent to which this might involve him in a conflict of interest. He said that he was informed that there was no legal property in a witness and that any party to litigation was free to approach any witness and the witness was at liberty to decide whether or not to talk to any party. Professor Cherry said that as he believed that everything in his report, and indeed everything that had transpired in his dealings with Protec and with Steuler, involved the discussion of, and the formation of, opinions which were based upon published information freely available in the peer reviewed technological press, he felt happy to continue the discussions, but he said that as a matter of courtesy, he would inform Mr McKellar that such discussions were taking place.

13 Gustavo Catalogna, a partner in the firm of Anderson Rice, the solicitors for Steuler, swore an affidavit in opposition to Protec's application on 25 January 2008. In his affidavit, Mr Catalogna said that at the meeting on 7 November 2007 Steuler's lawyers discussed with Professor Cherry certain matters and information contained in:

(b) the other expert reports served in the principal proceeding, and

According to Mr Catalogna, Steuler's lawyers also requested Professor Cherry to explain and assist them in understanding various technical matters raised in the above reports. Mr Catalogna said that, in the future, Steuler's lawyers wished to discuss with Professor Cherry the contents of his second report dated 22 August 2005. He said that they were only interested in Professor Cherry's opinions on scientific and technical issues. They did not ask about, did not intend to ask about, and were not interested in, instructions or information which Professor Cherry received from Mr McKellar or Mr Smith on behalf of Protec, or discussions between Professor Cherry and Mr McKellar or Mr Smith.

14 On 16 November 2007, Professor Cherry telephoned Mr McKellar. According to Mr McKellar, Professor Cherry told him, in substance, that he had been contacted by the solicitors for Steuler who had requested him to meet with counsel for Steuler, and that Professor Cherry had asked him to obtain instructions from Protec as to whether or not it had any objection to him doing so. Mr McKellar told Professor Cherry that his firm no longer acted for Protec in relation to the principal proceeding, but that he would contact Protec's new solicitors and that he expected that they would take the matter up with Professor Cherry. Mr McKellar said that he contacted Middletons to tell them what had occurred on the same day. On 19 November 2007, he sent an email to Professor Cherry, part of which read as follows:

(a) you were engaged by Protec Pacific to provide expert reports, attend a conference of experts ordered by the Supreme Court and give evidence on its behalf. When you were engaged we provided you with a substantial brief containing important confidential information in respect if [sic] certain aspects of our client's position in the litigation. This brief was provided under the cover of legal professional privilege and such privilege continues to attach to the brief despite the fact we are no longer involved in the case;

(b) pursuant to the brief you have provided expert reports which have been filed in the proceeding and you attended the conference of experts;

(c) the matters upon which your expert opinion was sought are still live matters as between the original parties in proceeding 5797 of 2000 and a further proceeding initiated by our former client (which we understand will be heard concurrently with the original proceeding);

(d) it may well be that our former client wishes to continue to retain you as an expert in relation to the ongoing issues upon which you have previously expressed an opinion;

(e) it would be most unusual and it may well be improper for an expert who has received confidential and privileged information on behalf of one party to discuss (or give) evidence on behalf of another party in the same proceeding, irrespective of the overriding duty you have to the court as an expert witness; and

(f) it would also be most unusual and it may well be improper for an expert whose retainer has not been formally terminated to discuss (or give) evidence on behalf of another party in the same proceeding.

We strongly suspect that both Protec Pacific and its current solicitors would object to you discussing any of the issues in this proceeding with the solicitors for Steuler at all, or at least until the above issues are resolved with Protec Pacific and its solicitors.

15 By an email dated 20 November 2007 from Mr Tony Watson, a partner of Middletons, to Professor Cherry, Mr Watson explained the above background to Professor Cherry. The email continued:

In this regard we are instructed that our client requests that you refuse the approach from Steuler's solicitors for the following reasons:

Your retainer in respect of the matters of which you have already expressed an opinion has not been terminated by our client and it may ultimately transpire that Protec Pacific may call upon you to give evidence in Proceeding No. 7268 of 2007 and as detailed above, those proceedings are brought by Protec Pacific directly against Steuler. Accordingly, we do not consider it appropriate for Steuler's solicitors to seek to speak with you in those circumstances.
As part of your original retainer, we are instructed that you were provided with, amongst other things, documents and had disclosed to you information which is both confidential to our client and which would attract legal professional privilege. Indeed, communications between and [sic] independent expert and the client's legal representatives do attract legal professional privilege and that privilege resides with and can only be waived by the client, that is, Protec Pacific. In this case, our client does not consent to the waiver of any matter the subject of legal professional privilege or which is otherwise confidential in nature. Again, Steuler's solicitors would be appreciative of this and it is inappropriate for them to seek to speak with you direct in circumstances where material provided and/or disclosed to you in confidence or otherwise the subject of legal professional privilege may be compromised if you were to speak with Counsel retained on behalf of Steuler.

Accordingly, our client requests that you refuse the invitation by Steuler's lawyers to meet with Counsel retained on behalf of Steuler. Please confirm that you will abide with this request.

16 Professor Cherry responded on 22 November 2007 by advising Mr Watson that "as a matter of courtesy" he was forwarding a copy of Middletons' letter to Anderson Rice. Professor Cherry further advised that "after taking independent legal advice" he would decide on his "further course of action".

17 On 17 December 2007, Professor Cherry sent an email to Mr Watson advising as follows:

I write in connection with your letter of the 20th November in which you informed me that your client requests that I refuse the invitation by Steuler's lawyers to meet with Counsel retained on behalf of Steuler. I am, of course concerned to ensure that confidentiality of information to Protec Pacific, where properly claimed, is maintained and assure you and your client that I will make the strongest endeavour to maintain that confidentiality. However now that I have taken advice on this matter I have to inform you that I do not wish to accede to your client's request.

18 Mr Watson replied to Professor Cherry by email the following day. He stated that his client was "of the view that you cannot speak with Steuler's Counsel and/or lawyers without disclosing, in breach of your obligations to our client, confidential or privileged information". Mr Watson sought an undertaking from Professor Cherry that he would not "meet with or otherwise communicate with Steuler's Counsel or lawyers in respect of the subject matter of either of Proceeding Nos. 5797 of 2000 or 7268 of 2007". If such an undertaking was not forthcoming, he would obtain his client's instructions to commence injunctive proceedings.

19 Mr Watson's email of 18 December 2007 brought forth two responses. One from Professor Cherry, early on 19 December 2007, was that he had sought further advice and, on its receipt, he would respond. The other was from Anderson Rice, later on the same day. Anderson Rice said that they had been provided with a copy of Mr Watson's letter to Professor Cherry. They sought a response to their allegation that Middletons had breached Rule 17.5 and 17.6 of the Professional Conduct and Practice Rules 2005 by purporting to forbid Professor Cherry from conferring with them. Anderson Rice pointed out that Professor Cherry had advised Middletons that he was "prepared to assist the court" and that he was "concerned to ensure that confidentiality of information to Protec Pacific where claimed is maintained". Anderson Rice added that they understood "the principles of client legal privilege" and they would not breach those principles.

20 Middletons replied to Professor Cherry by two emails dated 19 December 2007. They sent him a copy of the Consultancy Agreement and drew his attention to clauses 5.1 and 5.2 (set out above). They also repeated their reference to the foreshadowed injunction application, unless he gave the requested undertakings.

21 Middletons replied to Anderson Rice by a facsimile dated 19 December 2007. They said that:

Our client takes the view that its retainer of Professor Cherry has not been terminated and it may wish to call him to give evidence on its behalf. Further, confidential information was provided to him to assist him in providing advice and to prepare his expert reports and contribute to the Expert Conclave. Furthermore, information provided to him and the report produced, in all probability, attract legal professional privilege.

Whilst we readily accept that there is no property in a witness, you will equally appreciate in the circumstances outlined, it is inappropriate for you, counsel or your client to discuss the circumstances of this case with Professor Cherry. We go further and suggest that to do so might also make the person or persons concerned a party to a breach of the confidence owed to our client.

22 By an email dated 20 December 2007, Anderson Rice wrote to Middletons as follows:

(a) we met with Professor Cherry on 7 November 2007;

(c) in relation to the above, we did not on 7 November 2007, and have no intention to do so in any future meetings, discuss any matters with Professor Cherry, or seek any information from him, other than in relation to:

(i) Professor Cherry's Report dated 26 May 2003, which Report was served upon all parties to the proceeding;

(ii) the other Expert Reports served on behalf of the other parties in the proceeding;

(iii) the contents of the Joint Report of Experts dated 7 February 2006, signed by the experts who attended, and produced in conjunction with the facilitator of the Experts' Conference, Dr Donald Charrett;

(iv) questions and issues relating to the above, in respect of which Professor Cherry may be requested to give his expert opinion, or may be requested to explain and assist us in understanding technical matters raised in the Expert Reports and in the Joint Report of Experts.

We have not breached, and have no intention of breaching, the confidentiality regarding information which is confidential to Professor Cherry and Protec. Accordingly, as there is no risk of a breach of confidentiality there is no basis to your client's proposed injunction application.

Mr Watson said in his affidavit that it was only upon receipt of this email that he became aware that Professor Cherry had already met with Steuler's lawyers.

23 Also on 20 December 2007, Professor Cherry sent the following email to Middletons:

I acknowledge receipt of the letter of the 19th December, written on your behalf by Mr Travis Payne. I have had no legal training and claim no expertise in the interpretation of the law, so what follows is a matter of opinion and not of fact.

My understanding is that the primary obligation of an "Expert Witness" is to inform the Court on matters pertaining to his or her expertise and to avoid advocacy for any of the parties involved in the dispute.
My sole activity in case 5797 of 2000 has been the interpretation for the Court of evidence presented to the Court.
I have carried out no experimental investigations for any party to the dispute.
I acknowledge that I have become aware of publicly available knowledge that would not have been part of my general experience other than as a result of my engagement by one of the parties to the dispute. I undertake not to publicise such knowledge further unless directed otherwise by the Court.
Nevertheless, under the duress of a ridiculously short time limit, and in the firm belief that this has been imposed with the sole aim of preventing the deposition to the Court of opinions that might not be in accord with interests of your client, I undertake to avoid any discussion with Steuler's Counsel or lawyers of the technological matters involved in the subject matter of either of the Proceeding Nos 5797 of 2000 or 7268 of 2007 between now and the time of the Court's decision regarding your client's injunction application. If an injunction is obtained by your client, I will of course abide by its terms.
I have been provided with a copy of a letter by Anderson Rice (Steuler's solicitors) to your firm of today's date. I say that the contents of the letter are entirely accurate both in relation to the meeting that took place between myself and Steuler's legal representatives on 7 November 2007, and in relation to my intentions concerning any future meetings. I have not, and will not be disclosing to Steuler's legal representatives any information at all of a confidential nature relating to my communications with Protec or its lawyers, Pilley McKellar.

24 Not being satisfied with the qualified undertaking offered by Professor Cherry, WMC commenced this proceeding on 21 December 2007. By a consent order made on 24 December 2007, directions were given for the filing of further affidavits and the matter was adjourned to be heard by me on 30 January 2008. As part of the consent order, Professor Cherry undertook, until further order, not to:

use, copy or deal with the information (as referred to the Schedule hereto) and any further information confidential to the plaintiff in connection with proceedings no 5797 of 2000 and no 7268 of 2007 in this Court in his possession custody or control (save for the purposes of obtaining legal advice and representation); or
communicate the information or any further such information directly or indirectly to Steuler Industriewerke GmbH, its servants or agents Anderson Rice and counsel retained on its behalf.

The information referred to in the schedule to the order was:

the information particulars or results of the Defendant's work carried out under or in any way connected with the consultancy agreement between the Plaintiff and the Defendant dated 17 October 2002.

25 Mr Riordan SC, who appeared with Mr Percy of counsel for Protec, submitted that the injunctive relief sought by Protec was justified on any of three bases - legal professional privilege, the equitable concept of confidentiality and the express contractual obligation to keep information confidential. First, he submitted that instructions given to Professor Cherry and any reports prepared by him were documents brought into existence for the purposes of litigation and were therefore the subject of legal professional privilege, which Protec had not waived. Secondly, Mr Riordan submitted that, in equity, where someone was engaged in circumstances of trust and confidence, that person was not free to breach the confidentiality. Thirdly, he submitted that Professor Cherry had expressly agreed that "all information, particulars and results of the work carried out" under the Consultancy Agreement would be kept confidential. He submitted that the Court should restrain Professor Cherry from breaching that contractual obligation.

26 Mr Harrison of counsel, who appeared for the defendant, opposed the granting of any restraint on Professor Cherry talking to Steuler's lawyers. He submitted that Protec had not demonstrated by evidence that any confidential information existed. Alternatively, Mr Harrison submitted that any confidential information imparted to Professor Cherry was no longer confidential because Protec had waived the claim to confidentiality by filing and serving Professor Cherry's reports and by asking him to participate in the experts' conclave. In addition, Mr Harrison relied on the principle that there is no property in a witness. He also submitted that Protec's involvement in the principal proceeding having ended, there was no longer a confidence to protect. Further, Mr Harrison submitted that, as there was no evidence of any existing or threatened dissemination or misuse of confidential information, there was no serious question to be tried. Finally, he submitted that the balance of convenience did not favour the granting of the injunction because it was difficult to see what damage would flow to Protec from any breach, even if Professor Cherry were to breach Protec's confidence.

27 Counsel for Steuler were granted leave to intervene and make submissions on its behalf in opposition to Protec's application. Mr Cosgrave SC, who appeared with Mr Tiernan of counsel on behalf of Steuler, submitted that Protec had not shown that there was confidential information which it had communicated to Professor Cherry. Alternatively, he submitted that, even if Protec did communicate confidential information to Professor Cherry, there was no real and sensible possibility of Professor Cherry revealing that information, and that even if the information were revealed, its revelation would not cause any loss or damage to Protec. Mr Cosgrave submitted that preventing Steuler from talking with Professor Cherry would overturn the principle that there was no property in a witness.

28 The competing submissions, therefore, raise a number of issues to which I now turn. The first issue to consider is whether Protec has established that there was any confidential information communicated to Professor Cherry. In the particulars given under paragraph 6 of its endorsement of claim, Protec stated that the confidential information "included but was not limited to":

(a) "the Plaintiff's knowledge and experience in relation to the effects of solvents on HDPE",

(b) "the Plaintiff's attitude strategy and approach to the principal proceeding", and

29 Protec further stated in the particulars to paragraph 6 that the confidential information was provided by it to Professor Cherry in the course of:

(a) "providing instructions to him in connection with and to enable him to perform the services required by the consultancy agreement (which included the preparation of an expert report by the Defendant for use in the principal proceeding)",

(b) "a mediation between the parties to the principal proceeding in December 2003", and

30 In his affidavit on behalf of Protec sworn on 21 December 2007, Mr McKellar stated as follows:

From October 2002 I had numerous discussions with Professor Cherry in connection with the various services he provided on behalf of the plaintiff. I provided instructions to him to enable him to produce his expert report of 26 May 2003. I believe those instructions included information confidential to Protec, which I am not presently at liberty to divulge to the court. To do so in this affidavit would be to provide that information to Steuler and its advisors and thus destroy the confidentiality sought to be protected by this proceeding.

A second mediation was held in the principal proceeding in December 2003. Professor Cherry attended and participated in the mediation on behalf of Protec, at least for part of the time. In the course of the mediation Professor Cherry was likely to have been privy to information confidential to Protec. ...
In 2004 and 2005 the parties to the Principal proceeding served various further expert reports. Professor Cherry provided advice to counsel and I [sic] for Protec on the significance of the reports provided by Steuler and WMC. In turn, both Mr Smith Protec's managing director, and I continued to provide information to Professor Cherry to enable him to properly undertake his work on behalf of Protec.

31 Mr McKellar also referred to the "common defence" with Steuler which Protec followed for a time and to Professor Cherry's meeting in June 2003 with representatives of Steuler to discuss, amongst other things, "issues relevant to the common defence", and to Professor Cherry's participation in the conclave of experts in the principal proceeding.

32 In his affidavit sworn on 25 January 2008, Professor Cherry stated that:

I appreciate that there may be matters, particularly in the sphere of commercial competition in which one party to an action may be disadvantaged if information peculiar to that party is revealed to the other side. As my discussions with, and the briefings that I received from Protec were concerned solely with technological matters, I do not believe that I have ever been made aware of any commercial information in connection with this case; nor do I believe that if I have, I would or could have remembered it.

33 In response to Mr McKellar's affidavit, Professor Cherry said that initially what he was being asked by Protec's solicitors to comment upon:

was the application of existing technological knowledge. Neither at that time nor since, have I seen any evidence of the development of any new technology by Protec. Nor have I seen any technology that I have been told is confidential to Protec.

Professor Cherry also said that the brief that was provided to him contained information which he regarded "as common general knowledge in the hands of one skilled in the use of polymeric materials". He went on to say that he did not recall Mr McKellar telling him that any of the information provided to him was confidential. He further said that he found it difficult to understand how any of that information could be "confidential" and that he did not know to what information Mr McKellar was referring when he talked about "information confidential to Protec" which he, Mr McKellar, was not at liberty to divulge to the Court.

34 Professor Cherry referred to his visit to Steuler's headquarters in Germany. He said that he "learned much about the problem of which I was previously unaware" as this was "the first occasion upon which I had been able to have detailed discussions with anyone about the technology of the environmental stress cracking of high density polyethylene involved in this matter". He further said that, other than information that he had "gleaned" from Dr Peggs' report, he had "learned little from anyone on behalf of Protec about these issues". Professor Cherry said that, because he thought the discussions at Steuler's premises were "of such importance" he had prepared a "visit report" which he submitted to Mr McKellar. Professor Cherry then exhibited that report to his affidavit. He said that he subsequently discussed with Mr McKellar "the different emphases (within an area of considerable general agreement) placed on different aspects of the technology involved in the dispute by the Steuler representatives and myself".

35 With respect to the mediation, Professor Cherry said that he was present for part, if not all, of it and that representatives of WMC and Steuler were present at all times. He said that he did not know what information he was allegedly "privy to" that was confidential to Protec. He further said that he did not know what information of any description he could have received at the mediation, which information was not also heard by representatives of Steuler and WMC. In his affidavit in reply, Mr McKellar stated that it was his "recollection that Professor Cherry was present during private sessions with Mr Smith, Mr Shnookal of counsel and I [sic] during the mediation".

36 Counsel for both Professor Cherry and Steuler emphasised the lack of precision in the description by Mr McKellar of the alleged confidential information and the qualified nature of the statements that such information was imparted to Professor Cherry. In one case, it was simply Mr McKellar's "belief" about unidentified confidential information that was deposed to, in another it was said that it "was likely" that Professor Cherry became privy to such information, whilst nothing specific was said about what or how Professor Cherry obtained confidential information prior to the experts' conclave.

37 Mr Riordan's response was that, given the contractual obligation to keep confidential "all information, particulars and results" of all of the work to be carried out under the Consultancy Agreement, namely, "the provision of advice concerning the suitability of High Density Polyethylene as a Tank Lining Material", it did not matter that Protec had not been more specific in identifying the confidential information said to be involved. He submitted that Professor Cherry was contractually bound to keep everything he was told or learnt during his work for Protec confidential.

38 In Carindale Country Club Estate Pty Ltd v Astill,[3] Drummond J said:

It is a basic requirement that before material will be recognised as having the character of confidential information, the information in question must be identified with precision and not merely in global terms: Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) [1987] FCA 266; (1987) 14 FCR 434 at 443 and cf O'Brien v Komesaroff [1982] HCA 33; (1982) 150 CLR 310 at 327. The requirement is insisted upon even though it may necessitate disclosing to the court the very information the confidentiality of which it is sought to preserve by the action. This requirement has its foundation in the need for the court to be able to frame a clear injunction, should relief against misuse of confidential information be granted. There are procedures available that will minimise the risk that confidentiality will be lost by the litigation process, although the applicant did not seek to invoke them here.

39 In Yunghanns v Elfic Ltd,[4] Gillard J said that:

The degree of particularity of the confidential information must depend upon all the circumstances. Often, it cannot be identified for fear of disclosure.

40 In Sent v John Fairfax Publications Pty Ltd, Nettle J (as his Honour then was), having quoted the above passage from the judgment of Drummond J, went on to say that it was important to bear in mind that what was said:

was in the nature of a statement of principle and that, when it comes to the facts of a particular case, the principles which his Honour adumbrated need to be applied with a degree of flexibility.[5]

less precision of description may be required where more would annihilate the confidence sought to be protected...[6]

41 In Rapid Metal Developments (Australia) Pty Ltd v Anderson Formrite Pty Ltd,[7] Johnson J referred with approval to the conclusion by Templeman J in Gugiatti v City of Stirling[8] that, in cases where the description of the alleged confidential information was lacking in precision, the appropriate course was not to require the applicant to provide further detail of the inadequately identified confidential information but to consider the application on the basis of the evidence as it stands.[9] That is how I propose to approach this issue.

42 Often, the question of the defining of the alleged confidential information arises in the context of whether or not the court could be satisfied that the information so described was imparted in circumstances giving rise to an obligation of confidence and whether or not the information contained material which was common knowledge. In Independent Management Resources Pty Ltd v Brown,[10] Marks J said that:

[T]he more general the description of the information which a plaintiff seeks to protect, the more difficult it is for the court to satisfy itself that information so described was imparted or received or retained by a defendant in circumstances which give rise to an obligation of confidence.

43 I agree with Protec's submission that the first of these questions does not arise here because of the contractual obligation. In any event, it seems to me that information given to a professional person for the purposes of receiving that person's advice would normally import an obligation of confidence so long as the information was not common or public knowledge.

44 On that second question, I accept Professor Cherry's evidence that most of the information provided to him by Protec was "common general knowledge" to an expert such as himself. But the evidence did not stop there. He said that he "learned much about the problem" of environmental stress cracking of HDPE from his visit to Steuler's headquarters and that he had "learned little from anyone on behalf of Protec about these issues" (emphasis added). Significantly, he did not say in his affidavit that he had learned nothing from Protec about these issues. On the other hand, at the conclusion of his affidavit Professor Cherry said that he was:

not made aware of any knowledge and experience in relation to the effects of solvents on HDPE that Protec would have had other than information that was available publicly.

45 In respect of the first of the alleged categories of confidential information, namely, Protec's "knowledge and experience in relation to the effects of solvents on HDPE", I find it a little surprising that Professor Cherry can be so definite that the little he learned from Protec about its relevant knowledge and experience was already "available publicly". As referred to above, Professor Cherry was initially briefed by Mr McKellar, he visited the WMC site with Mr Smith, Protec's managing director, in about March 2003, and he received information from both Mr Smith and Mr McKellar in 2004 and/or 2005. I consider it more than likely that, at least in his discussions with Mr Smith, Professor Cherry was given some information about Protec's relevant knowledge and experience which was not publicly known. Whilst, in Professor Cherry's opinion it may not have been very important technologically, it would nevertheless be confidential information.

46 I also consider that Professor Cherry has failed to understand the significance of the third category of alleged confidential information, namely, Protec's "common approach with Steuler to the defence to the counterclaim". At the conclusion of his affidavit, Professor Cherry said that he was "unable to understand this claim", and that as far as he was aware it "would have been public knowledge" that Protec and Steuler were following a "common defence". That is not the information which Protec is seeking to keep confidential. As previously mentioned, Professor Cherry said that he learned much from his visit to Steuler's headquarters. His views on what he had learned were, however, confidential to Protec, unless Protec chose to share them with Steuler. Thus, if his report dated 1 July 2003 had not previously been disclosed by Protec to Steuler, in all probability Professor Cherry will have breached his obligation of confidentiality in respect of that report by exhibiting it to his affidavit in this proceeding, or if he discussed his report or the views contained in it with Steuler's lawyers at their meeting on 7 November 2007.

47 Further, it is clear, in my opinion, that it is no answer to a claim of confidentiality to say that some other person or limited group also knows the alleged confidential information. Johnson J dealt with this issue in Rapid Metal Developments as follows:

In the authorities, the issue of whether certain information is confidential is often dealt with by identifying circumstances in which information cannot be confidential. Information which is "public property", "public knowledge", "public" or "common knowledge" does meet the requirement of confidentiality: see Saltman Engineering v Campbell Engineering Co Ltd...[11]; O'Brien v Komesaroff...[12]; Coco v AN Clark...[13]. It is apparent from the interpretation of the notion of confidentiality in the various authorities that confidentiality involves some degree of secrecy whereby a person seeking to protect information keeps it to himself or herself or allows it to be communicated only to a limited group. Therefore, the fact that others within a group are privy to the information does not conflict with the notion of confidentiality. In the instant case, the fact that certain information was communicated in the presence of others involved in the construction of the building does not impair confidentiality unless it was communicated in a way or in circumstances which indicate that it was intended to become public property: see Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd...[14] where Gleeson CJ observed that confidentiality extends to a matter which a reasonable person would understand to be intended to be secret, or to be available to a limited group.

48 Finally, I found Professor Cherry's response to the second category of alleged confidential information, namely, Protec's "attitude strategy and approach to the principal proceeding" rather disingenuous. Professor Cherry said that he did not know "the meaning of the words 'attitude strategy' ". Whilst the punctuation can be criticised, I would have thought that any reader would understand that a comma had to be added between "attitude" and "strategy", and that when that was done the meaning of Protec's "attitude, strategy and approach to the principal proceeding" became quite clear.

49 Further, whilst I accept that Professor Cherry genuinely believes that he "was not made aware" of Protec's attitude, strategy and approach to the principal proceeding, I find it surprising that this would be the case. It seems to me that, during his discussions with Mr McKellar and Mr Smith, particularly in the private sessions of the mediation when counsel was also present, Professor Cherry would have heard something about Protec's "attitude, strategy and approach to the principal proceeding". Obviously, this is information that would not be known to Steuler. Probably Professor Cherry paid little attention to it as it was of no interest to him and he probably forgot what he heard. Nevertheless, as Nettle J said in Sent, "[r]ecollections are liable to be revived".[15]

50 Further, I do not accept that it is an answer to Protec's claim for Professor Cherry to say that he did not recall Mr McKellar telling him that any of the information provided to him was confidential. If it was not a matter of common general knowledge, such as Protec's reaction to Professor Cherry's report on his meeting in Germany with Steuler representatives or Mr Smith's attitude towards the risks of litigation, then, in my opinion, he should have realised, as a reasonable person would have, that this information was being provided in confidence.[16] And in any event, he had expressly agreed in the written agreement proffered by him that all such information would be kept confidential.

51 Despite the generality of Protec's evidence, I have concluded that it has established that there was some confidential information communicated to Professor Cherry.

52 A separate, but related, question is whether Protec has established that Professor Cherry is in possession of information which is subject to legal professional privilege. As I understood the submissions on behalf of Professor Cherry and Steuler, they did not dispute that legal professional privilege may once have applied, for example, to Professor Cherry's reports dated 26 May 2003 and 22 August 2005 respectively. Rather, they submitted that any privilege or confidentiality had been waived by Protec serving those reports upon the other parties and/or by Protec asking Professor Cherry to participate in the conclave of experts which led to the preparation of the Joint Report dated 7 February 2006.

53 I turn, therefore, to the issue of waiver. Mr Riordan submitted that there had been no waiver of the privileged and confidential nature of Professor Cherry's instructions and his reports simply by the serving of his expert witness statement on the other parties pursuant to orders made by the Court. He referred to the judgment of King CJ in State Bank of South Australia v Smoothdale (No. 2) Limited.[17] In that case, the defendant/appellant sought the production of expert witness statements delivered by a subsidiary of the plaintiff bank to the opposing party in another proceeding, in the Supreme Court of New South Wales, in compliance with an order made pursuant to a Practice Note. The defendant conceded at first instance that the statements, when prepared, were privileged but contended that the privilege had been waived by their delivery to the solicitors for the opposing party in the New South Wales proceeding.

Statements of witnesses are by their nature confidential documents. Their communication to another party for a limited purpose pursuant to a court order does not appear to me to deprive them necessarily of every element of their confidential character. They retain the character, except as to use by the other party for the limited purpose, "until either the witness makes the statement public by verifying it on oath in the witness box or the party who served the statement waives the privilege", Fairfield-Mabey Ltd v Shell UK Ltd [1989] 1 All ER 576 at 577, or a party puts the statement in evidence pursuant to leave granted under par 3(e) of the Practice Note.[18]

His Honour then went on to consider whether, once privilege was waived, it was waived for all purposes or whether there could be waiver which was "partial or limited only."[19] After referring to a number of authorities, his Honour held that they clearly established that "waiver of privilege may be limited to a specific situation or purpose".[20] King CJ continued:

There is a general waiver of privilege if the party expressly waives privilege for all purposes or intentionally uses the documents in a manner which is incompatible with the retention of confidentiality. These witness statements, however, were never used in the public arena as they would have been if introduced into evidence; Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217 at 222 - 223. The delivery of statements pursuant to the order of the Court is for the limited purpose contemplated by the Practice Note namely "the just, quick and cheap disposal of the proceedings". The object is to provide advance notice to the other parties of the evidence which the witnesses are expected to give and thereby to facilitate the hearing perhaps even to the point of the use of the statements as evidence in chief.

I can find nothing in the circumstances to indicate a use of the statements which is incompatible with the retention of confidentiality except to the extent that confidentiality must be modified to achieve the purpose of the Court Order namely to acquaint the other parties in advance with the evidence which the witnesses were expected to give. There was therefore no intentional waiver of privilege except to the extent of permitting use of the documents by the other parties for the purpose of preparing the case.[21]

... the delivery of the statements pursuant to the order did not place the statements in the public domain and did not amount to a use of them in a manner incompatible with the retention of confidentiality and privilege except so far as waiver was necessary to permit their use for the purposes of the case in which they were delivered in accordance with the Practice Note and ordering the court.

There being no express waiver or intentional use of the statements in a manner incompatible with the retention of privilege, the law will impute waiver only if the maintenance of privilege would, in the circumstances, be unfair to the party seeking discovery: Attorney-General for the Northern Territory v Maurice.

I can see no unfairness to the appellant in the maintenance by the respondent of its privilege in the statements. Their disclosure to other parties in other proceedings is quite fortuitous as regards the appellant. If there is a question of fairness, it might be thought that the forced disclosure of the respondent's statements while the appellant retains privilege with respect to its statements would not be without some element of unfairness to the respondent.

In my opinion there was no express waiver, nor intentional act amounting to waiver, nor any basis for implying or imputing waiver, of the legal professional privilege attaching to the statements.[22]

55 Mr Harrison submitted that the authority of the judgment in Smoothdale was lessened by the fact that it was decided before the decision of the High Court in Mann v Carnell.[23] However, there is nothing in that judgment, in my opinion, which contradicts or detracts from the reasoning of King CJ in Smoothdale. Protec's conduct in serving on the other parties Professor Cherry's witness statement, which contained his two reports, was not inconsistent with the maintenance of the confidentiality in those reports.[24]

56 Mr Harrison also referred to the decision of Evans J in Atkinson v T & P Fabrications Pty Ltd.[25] His Honour stated:

In the course of preparing a matter for trial, it is common for parties to provide privileged documents to other parties with a common interest and to potential witnesses. Without more I am unable to conceive how, in the ordinary course, conduct such as this would be inconsistent with the preservation of the confidentiality of the material. The requisite inconsistency may be manifested when a party indicates an intention to rely upon evidence of a witness which is based upon privileged material provided to that witness. This, not infrequently, occurs when a party delivers an affidavit or proof of expert evidence of a witness. In that situation, the inconsistency between the party's conduct and the maintenance of a claim for privilege in relation to the material relied upon by the witness is compounded by the unfairness of allowing the party's witness to refer to that material whilst also allowing that party to shield the material from scrutinisation and testing by a claim of privilege. [Emphasis added]

Three points should be noted. The first is that his Honour's statement of principle is qualified, not absolute. Secondly, much depends on the timing because consideration of the questions of inconsistency and unfairness may change if Protec calls Professor Cherry to give evidence.[26] But that stage has not been reached. Thirdly, despite the terms of his statement of general principle, Evans J held that in the instant case there has been no waiver of the privilege in relation to the statement in question. I do not consider, therefore, that there was anything said by Evans J in Atkinson which requires me to find that privilege in Professor Cherry's expert reports had been waived.

57 Mr Harrison also submitted that, by asking Professor Cherry to participate in the conclave of experts, Protec waived any privilege or confidentiality in respect of his reports and his views on the suitability of HDPE as a tank lining material.

58 I do not agree. The meeting of the experts was not a public forum. Apart from the various experts, the only other person present during the discussion was the Court appointed facilitator, Dr Donald Charrett of counsel. Paragraphs 1(e) and (f) of my order made on 7 October 2005 provided as follows:

(e) subject to sub-paragraph (f) below, no evidence shall be admitted at the trial of this proceeding of anything said or done by any person at the conference of experts;

(f) the report shall be admitted into evidence at the trial of the proceeding but no part of the report shall bind any party except insofar as the party agrees in writing.

59 Further, part of the agreed Directions for Experts Conference read as follows:

Proceedings and discussion at the conference to be "without prejudice". No transcript to be taken at the conference.
The experts are not permitted to discuss the details of the conference discussions with their engaging parties or lawyers at any time during the proceedings, except as agreed by the facilitator.
The facilitator is to prepare a report on the outcome of the experts' conference by the conclusion of the conference. This report to be signed by the experts attending the conference:

(i) specifying matters agreed and matters disputed;

(ii) identifying the expert or experts who remain in disagreement; and

(iii) which identifies the reasons for any dispute.

Thus, in my opinion, the disclosure of Professor Cherry's views was not communicated to the world at large but only to a very limited group for a specific purpose and in circumstances where it was clear that there was no intention to waive privilege or confidentiality generally.

60 Reliance was also placed on the fact that Mr McKellar exhibited to his first affidavit the initial letter of instructions to Professor Cherry dated 15 October 2002 and the enclosed "Brief to Expert on Material Selection Issue". Mr McKellar also exhibited Professor Cherry's letter in response dated 17 October 2002 which contained "a series of initial thoughts on this matter" as well as two copies of the Consultancy Agreement. This was said to be further evidence of waiver by Protec of its claims to privilege and confidentiality.

61 I do not accept this submission. It seems to me that the original instructions given to Professor Cherry probably should have been included in his witness statement dated 15 September 2005 pursuant to r.44.03(2)(d) of the Supreme Court (General Civil Procedure) Rules 2005, even if they were not required to be included in his May 2003 report by the Rules then in force. Certainly, his instructions in 2005 were included in his second report. Disclosure of this 2002 correspondence between Mr McKellar and Professor Cherry in this proceeding, therefore, was not inconsistent, in my opinion, with a claim that the reports and related documents continued to be privileged and confidential.

62 Therefore, I reject the submission that Protec has waived the privileged and confidential nature of Professor Cherry's reports, thereby allowing him to discuss their contents with Steuler's lawyers.

63 The next issue is whether Protec has established that there is a risk that there will be an unauthorised use of the privileged or confidential information by Professor Cherry to the detriment of Protec.[27] Counsel for Professor Cherry and Steuler both stressed that their clients had stated that in their discussions they had not, and would not, stray into the area covered by legal professional privilege or confidentiality. The discussions were limited to seeking clarification from Professor Cherry about the technological aspects of his reports, the reports of the other experts, and the Joint Report.

64 I accept Mr Harrison's submission that Protec's solicitors were not correct when they said in their letter of 18 December 2007 that Professor Cherry "cannot possibly" speak with Steuler's lawyers without breaching confidence. In my opinion, that did overstate the position, but only marginally. As I have already held, Professor Cherry's reports and the Joint Report and his views on the reports of the other experts are privileged and confidential to Protec. Therefore, Professor Cherry should not be speaking to Steuler's lawyers about these matters. They want to talk to him about information which I consider is privileged and confidential. This case is, therefore, distinguishable from Elliott v Ivey,[28] where Sperling J was satisfied that the expert did not bring to account what he was told or learned about the clients in 1994 when writing his report for a different purpose in 1997, and that there was, therefore, no disclosure of a protected confidence in the 1997 report. I do not accept Mr Harrison's submission that the facts in Elliott v Ivey are more analogous to the present case than those in Rapid Metal Developments.

65 It is not to the point, in my opinion, that Professor Cherry and Steuler argued that Protec could not point to any detriment to it in Professor Cherry speaking to Steuler about the technological aspects of the suitability of HDPE as a tank lining material. As Gummow J said in Smith Kline & French Laboratories (Aust) Ltd Secretary, Department of Community Services and Health:[29]

The obligation of conscience is to respect the confidence, not merely to refrain from causing detriment to the plaintiff. The plaintiff comes to equity to vindicate his right to observance of the obligation, not necessarily to recover loss or to restrain infliction of apprehended loss.

66 Or, as Lord Millett described the duty of confidentiality in Prince Jefri Bolkiah v KPMG (a firm):[30]

It is a duty to keep the information confidential, not merely to take all reasonable steps to do so. Moreover, it is not merely a duty not to communicate the information to a third party. It is a duty not to misuse it, that is to say, without the consent of the former client to make any use of it or to cause any use to be made of it by others otherwise than for his benefit.

67 Even if the dichotomy sought to be drawn by counsel for Professor Cherry and Steuler, between discussing the various reports on the one hand and discussing privileged or confidential matters on the other, were correct, I consider that there would be an unacceptable risk that there might be an unauthorised disclosure of the privileged or confidential information. As Hayne J held in Farrow Mortgage Services Pty Ltd (In Liq.) v Mendall Properties Pty Ltd:[31]

It is not necessary to conclude that harm is inevitable (or well nigh inevitable) before acting to restrain a possible breach of the duty that a solicitor owes to clients and former clients to keep confidential information given to the solicitor in confidence and not use that information against the interests of the client who gave it to the solicitor. ... I consider that injunction should go if there is a real and sensible possibility of the misuse of confidential information.

Although that case involved a solicitor and client relationship, I see no reason why the principle stated by his Honour should not also apply to the relationship of expert witness and client.

68 I am satisfied that there would be a real and sensible possibility of the misuse of confidential information, if Professor Cherry were not to be restrained from speaking further with Steuler lawyers about the technological issues raised in these proceedings, in particular the question of the suitability of HDPE as a tank lining material. In saying this, I am not to be taken to be suggesting any lack of bona fides or integrity on the part of either Professor Cherry or Steuler's lawyers in stating that they would avoid contentious topics. I accept the honesty of their stated intentions. Nevertheless, it seems to me that situations could occur where privileged or confidential information would be imparted before it was realised what was going to be said.

69 Further, what is to happen if Professor Cherry unwittingly blurted out some privileged or confidential information? Will Steuler's lawyers then withdraw from the case? One only has to ask these questions to see, in my opinion, that the only way to avoid the drastic consequences of the real and sensible possibility of the misuse of the privileged and confidential information is to prevent Professor Cherry speaking any further with Steuler's lawyers.

70 I do not consider that granting Protec's application involves any infringement of the principle that there is no property in a witness, because Steuler would still be entitled to call Professor Cherry as a witness, if Protec did not. This issue was considered by Johnson J in Rapid Metal Developments. After referring to a number of authorities, his Honour held that:

a court will not intervene to prevent an expert witness from giving evidence on behalf of another party but will take appropriate action to prevent the witness from disclosing confidential or privileged information.[32]

Part of the appropriate action which Johnson J thought necessary in that case was, in broad terms, to restrain the equivalent party to Steuler, through its solicitors or otherwise, from utilising, in the course of preparing its case, the reports of the expert witness and any document in his files, which he had provided to it, other than documents which it had obtained from another source not involving any breach of confidentiality.[33] His Honour made the point that:

pre-trial discussions, held as they are in the absence of a representative of the opposing party protecting that party's interest, would run the risk of a breach of confidentiality.

Consequently, his Honour held that, in his view, the trial process was "the more appropriate arena" to deal with the relevant issues, as the equivalent party to Protec, through its counsel, would "then be in a position to immediately raise any issue of breach confidentiality [sic] arising from a specific question put to the witness". I respectfully agree with and adopt that approach.

71 I turn next to the issue of whether the privilege or confidentiality still existed given that Protec's involvement in the principal proceeding ended when it settled with WMC. An associated argument was that in these circumstances no loss or damage would be caused to Protec, even if there were a breach of privilege or confidentiality, because it no longer had any real interest in the outcome of the two proceedings as its financial position remained the same.

72 In my opinion, these submissions are misconceived in that they are based on a misunderstanding about Protec's continued interest in the two proceedings following its settlement with WMC. First, the privileged or confidential nature of information does not cease merely because a proceeding is concluded.[34] It is still not publicly known information. Secondly, the contractual promise to keep the information confidential was unqualified, it was not linked to the principal proceeding. Thirdly, as part of the settlement, Protec was required to commence the 2007 proceeding, so that it is still involved in litigation, if that were the requisite criterion. Fourthly, the settlement with WMC did not remove Protec's very real financial interest in the outcome of the two proceedings. As I read the terms of settlement, any recovery by WMC against Steuler in the principal proceeding may assist Protec in not having the consent judgment for $15 million enforced against it. Alternatively, any recovery by Protec against Steuler in the 2007 proceeding will assist Protec in meeting the $15 million judgment against it. Finally, as previously stated, it is not necessary for Protec to prove detriment to it. Its entitlement to protection arises from the obligation of conscience not to use confidential information without authorisation.

73 For all of the above reasons, I have concluded that there is a serious question to be tried and that there is a degree of likelihood that Protec would be successful at trial in respect of it. With respect to the balance of convenience, I am satisfied that this favours the granting of Protec's application. I do not accept Mr Harrison's submission that it was difficult to see that damage would flow to Protec from any beach. The whole point of recognising that certain information is privileged or confidential is to prevent those on the other side becoming aware of it. Once disclosed, it is obviously known to them and cannot be retracted. Damages are not a satisfactory remedy in that situation. On the other hand, all Professor Cherry stands to lose is the inability to earn some more fees for advising on this issue. The loss to him, if my decision subsequently turns out to be incorrect, is significantly less than the potential damage to Protec, were I to decide the matter the other way, and subsequently that turned out to be an incorrect decision. In any event, Professor Cherry is covered by the usual undertaking as to damages given in interlocutory applications such as this.

74 Subject to hearing from counsel about the precise wording of the injunction, the order I would propose making is that:

Pending the hearing and determination of this proceeding or further order, the defendant be restrained from communicating in any way with Steuler Industriewerke GmbH ("Steuler"), its servants or agents, including in particular its solicitors, Anderson Rice and counsel retained on its behalf, in connection with the Supreme Court proceedings No. 5797 of 2000 and No. 7268 of 2007, save and except all necessary communication between Anderson Rice and the defendant concerning arrangements for the latter being called by Steuler as an expert witness in the said proceedings.

[1] See Hartleys Ltd v Martin [2002] VSC 301, [33] - [40] (Gillard J)

[2] Protec Pacific Pty Ltd v Steuler Industriewerke GmbH [2007] VSC 93 (Hansen J).

[3] [1993] FCA 218; (1993) 42 FCR 307, 314-315. See also Smith Kline & French Laboratories (Aust) Ltd v Department of Community Services and Health [1989] FCA 384; (1990) 22 FCR 73, 87 (Gummow J).

[4] Unreported, Supreme Court of Victoria, Gillard J, 3 July 1998.

[11] Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1948) 65 RPC 203 at 215.

[13] Coco v AN Clark (Engineering) Ltd [1969] RPC 41 at 47.

[16] Smith Kline & French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health [1989] FCA 384; (1990) 22 FCR 73, 96 and 98 (Gummow J).

[17] [1995] SASC 5070; (1995) 64 SASR 224. Mullighan and Nyland JJ agreed with King CJ.

[24] [1999] HCA 66; (1999) 201 CLR 1, [28-29] (Gleeson CJ, Gaudron, Gummow and Callinan JJ).

[26] See Cobram Laundry Services Pty Ltd v Murray Goulburn Co-operative Co Ltd [2000] VSC 353, [58] (Warren J)

[27] Coco v AN Clark (Engineers) Ltd [1969] RPC 41, 47-48 (Megarry J).

[32] [2005] WASC 255, [151]. See also Harmony Shipping v Davis [1979] 3 All ER 177; R v R [1994] 4 All ER 260; R v Ward (1981) 3 A Crim R 171.

[34] Giannarelli v Wraith (No 2) [1991] HCA 2; (1990) 171 CLR 592, 601 (McHugh J)

Professional Conduct and Practice Rules 2005

Court (General Civil Procedure) Rules 2005

At a glance

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Judgment (191 paragraphs)

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Cases Cited (9)