Plaintiff v Defendant

2 The plaintiff has discovered an unsigned employment contract with Cotton On Group Services Pty Ltd.[1] The covering letter bears the Cotton On Group letterhead. A reference to 'Cotton On' in this ruling is a reference to Cotton On as defined in paragraph 2 of the amended statement of claim filed 25 July 2016. That is, 'a group of related companies and entities more commonly known as 'Cotton On''.

3 This ruling concerns two interlocutory matters. First, whether the plaintiff is entitled to particular discovery of documents outlined in its summons filed 19 July 2016 ('the discovery summons'). Second, whether objections to the plaintiff's subpoenas should be allowed.

4 During the course of the hearing on 25 July 2016, further pleadings were filed by both parties. The plaintiff filed an amended statement of claim ('the ASOC') and a further amended reply ('amended Reply'). The defendant filed an amended defence ('the amended defence').

5 The plaintiff, defendant and subpoenaed parties made oral submissions at the hearing. In addition, the plaintiff and subpoenaed parties also provided written submissions. It is unnecessary to reiterate all the submissions in this ruling. The key submissions are referred to below.

6 For the reasons below, the Court will make orders for particular discovery of some, but not all, categories outlined in the discovery summons. The Court will allow some, but not all, of the objections to the plaintiff's subpoenas.

7 The discovery summons seeks discovery under r 29.11(a) or r 29.08 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) ('the Rules') of the following documents:

(a) Records of emails, telephone calls, text (SMS) messages, multimedia (MMS) messages, LinkedIn messages and all other forms of electronic documents evidencing or recording any communications made between the defendant and Cotton On (or any of its associated entities) and any of its directors, officers, servants, agents and employees in relation to any of the following:

(i) the defendant's recruitment by Cotton On;

(ii) the defendant's employment or proposed employment with Cotton On;

(iii) the plaintiff's restraints on the defendant following her employment by the plaintiff; and

(iv) the plaintiff's notice periods applicable to the defendant.

(i) the defendant's contract of employment with Cotton On;

(iii) all communications between the defendant and Cotton On or any other party in relation to that contract or any of those drafts.

(c) Legal advice received by the defendant in relation to her employment contract with the plaintiff.

8 Categories 1(b)(i),1(b)(ii) and 1(c) of the discovery summons are not pressed by the plaintiff. Accordingly, they are not dealt with in this ruling.

9 The plaintiff refers to paragraph 4 ('the discovery orders') of the orders made by consent on 3 June 2016.[2] The discovery orders required the parties to file and serve an affidavit of documents and make discovery of documents consisting of the following categories:

(a) each document referred to in the party's pleadings;

(b) any documents which may be produced by the party during evidence at trial;

(c) any document which may harm the party's case;

(d) any document or class of documents which any other party reasonably requests the party to discover.

10 The plaintiff says that the defendant's discovery is deficient because she has not discovered any communications between Cotton On and herself in relation to her engagement with Cotton On. The plaintiff says that the defendant has not asserted that there are no such documents in her possession, custody or power. The plaintiff says that the defendant is being selective in what she discovers.

11 The plaintiff relies on r 29.08, which empowers a Court to order an affidavit of documents "relating to any question in the proceeding". It says that the documents will relate to a question in the proceeding if they fall within categories (a)-(c) of the discovery orders. The plaintiff submits that documents that satisfy such criteria are directly relevant to the proceedings - in comparison to documents which may, directly or indirectly, lead to a train of inquiry that would advance or damage a party's case. The plaintiff's written submissions refer to authority in support of this principle. The plaintiff submits that, in identifying questions in the proceedings, it is necessary to consider the issues raised by the pleadings.

12 The plaintiff submits that the pleadings demonstrate that it is untenable for the defendant to maintain that documents concerning her recruitment and proposed employment with Cotton On are irrelevant. They refer to the allegations that the plaintiff and Cotton On were direct business competitors, that the plaintiff and the defendant entered into an employment contract, that the defendant was employed by the plaintiff as CFO and Company Secretary; and that the terms of the defendant's employment contract included a confidentiality clause and a restraint clause.

13 The restraint clause is pleaded in paragraph 7 of the ASOC (the 'restraint clause'):

Restraint of personal services

(a) The defendant must not anywhere in the Geographic Region for the Restricted Period - Personal Engagement, engage in Restricted Activities - Personal Engagement, except with the prior written consent of the Just Group (the restricted personal activities clause).

(b) Geographic Region means the geographic region of:

(i) Australia and New Zealand; or (if this is held to be invalid);

(ii) Australia; or (if this is held to be invalid);

(iii) Victoria.

(c) Restricted Period - Personal Engagement means during the defendant's employment and for the period of:

(i) 24 months after the Termination Date; or (if that period is held to be invalid);

(ii) 18 months after the Termination Date; or (if that period is held to be invalid);

(iii) 12 months after the Termination Date.

(d) Restricted Activities - Personal Engagement means directly or indirectly:

(i) being engaged, concerned or interested in;

(ii) assisting or advising in respect of; or

(iii) carrying on any activity:

(A) which is the same as, or similar to, any part of the speciality brand and fashion business of the Just Group in which the defendant was involved, or in respect of which the defendant received Confidential Information, in the Connection Period; or

(B) for or on behalf of any of the entities operating the brands listed in Annexure A, their assignees, successors or transmittees (from which, it is acknowledged, that the Just Group has a legitimate interest in withholding its confidential information and its connections with customers, employees and suppliers).

(e) Connection Period relevantly means, if the employment has ended, the period of up to 12 months immediately preceding the Termination Date, during which the defendant was employed by the Just Group.

(f) Annexure A included 'Cotton On' (item 9).

Particulars

The terms were express and contained in the employment contract.

14 The plaintiff refers to the allegation that the defendant informed it, in substance, that she had accepted an offer of employment from Cotton On to commence on 6 June 2016 (paragraph 14, ASOC). It refers to the allegations in paragraphs 15 and 16 of the ASOC that the Cotton On engagement is a breach, or threatened breach of the restraint clause in two alternative aspects, namely clauses (d)(i)(ii)(iii)(A) and (d)(i)(ii)(iii)(B) above. For convenience, in this ruling they will be respectively referred to as 'the similar activity restraint clause' and the 'Annexure A restraint clause'. The plaintiff also refers to its allegation of loss and damage (paragraph 18, ASOC).

15 The plaintiff submits that the documents sought go to the critical question of why the defendant has been engaged by Cotton On and the work she will (or may) be required to perform pursuant to the engagement. It says that they are relevant to four pleaded issues.

16 First, the plaintiff says that the Cotton On engagement is a breach of the restricted personal activities clause. It says the Cotton On engagement (pleaded in clause 14 of the ASOC) is denied. The documents sought concern the scope of the Cotton On engagement, including the particular tasks or responsibilities which the defendant may be called upon to perform. This falls within the definition of restricted personal activities in the restraint clause, proving a breach or apprehended breach of that clause. This is denied.

17 The plaintiff asserts that recruitment is a central issue in the proceeding. There is, the defendant says, no concluded employment agreement with Cotton On. A draft contract and a job description have been discovered. The pre-employment details are relevant.

18 Second, the plaintiff says that the defendant's breach of the restraint clause will cause the plaintiff to suffer loss and damage. It says that there may be conscious or inadvertent disclosure of confidential information, which is denied. Further, Cotton On would benefit from such disclosure, which is denied.

19 Third, the plaintiff says the restraint clause is enforceable and not excessive or unreasonable, as contended by the defendant. The plaintiff says the documents concern the scope of the engagement, degree of business competition, and the likelihood of disclosure of confidential information; and are therefore relevant to the reasonableness of the restraint. It also specifically seeks documents regarding communications between the defendant and Cotton On regarding the restraint and the defendant's notice period with the plaintiff.

20 Fourth, the plaintiff says it is entitled to the relief it seeks. It is concerned about the potential for misuse of the confidential information. It says that documents that bear upon why the defendant was recruited are relevant.

21 The defendant submitted that it was not in dispute that she would commence employment with Cotton On unless the restraint is held to be valid. If it operates, it will apply.

22 The defendant submits that it is not necessary to know the activities that she will be engaged in because Cotton On is an employer listed in Annexure A and therefore the Annexure A restraint clause is the relevant clause, not the similar activity restraint clause. It is not necessary to know the activity the defendant is engaged in because the Annexure A restraint clause applies to any activities for or on behalf of entities operating brands listed in Annexure A.

23 Rule 29.01.1(3) states the scope of documents to be discovered. The categories in (a)-(d) of that rule are the same as the categories provided in paragraph 4 of the discovery orders. Rule 29.01.1(5) provides that for the purposes of r 29.01.1(3), in making a reasonable search a party may take into account -

(a) the nature and complexity of the proceeding;

(c) the ease and cost of retrieving a document;

(d) the significance of any document to be found; and

24 Rule 29.08 provides that a court may make an order for particular discovery at any stage in the proceeding if "it appears to the Court from evidence or from the nature or circumstances of the case or from any document filed in the proceeding that there are grounds for a belief that some document or class of document relating to any question in the proceeding may be or may have been in the possession of a party". [emphasis added]

25 Rule 29.11(a) provides that where a party fails to make discovery of documents in accordance with r 29.03 and r 29.04, the Court may order the party to do such act as the case requires. Rule 29.03 relates to discovery after service of a notice of discovery. Rule 29.04 relates to the form of the affidavit of discovery.

26 The test for relevance is no longer satisfied by documents that may lead a party on a 'train of inquiry' to corroborate or refute allegations (the 'Peruvian Guano' test).[3] In Liesfield v SPI Electric Pty Ltd & Ors (Ruling No 1), J Forrest J stated:

I am also keenly aware of this Court's concern over a growing culture of discovery which aims to leave 'no stone unturned' or to 'search for the smoking gun.' The shift away from the Peruvian Guano test and amendments to both Federal and State court practice demonstrate the determination of the legislature and the Court to reverse this trend.[4] [citations omitted]

27 The scope of discovery has been narrowed by r 29.01.1 and the Civil Procedure Act 2010 ('the CPA'). Section 26(1) of the CPA imposes discovery obligations on parties regarding documents which are critical to the resolution of the dispute. Section 54 of the CPA requires discovery to be in accordance with the rules of the Court. Rule 29.01.1(3) refers to documents on which the party relies, documents that adversely affect the party's own case or the other party's case and documents that support another party's case. Rule 29.01.1(5) provides that in making a reasonable search for documents for discovery a party may take into account the nature and complexity of the proceeding, the number of documents involved, the ease and cost of retrieving a document, the significance of any document to be found and any other relevant matter.

28 The plaintiff relies upon its employment contract with the defendant dated 7 December 2015 ('the employment contract'). The plaintiff relies on the similar activity restraint clause and the Annexure A restraint clause in the employment contract. The ASOC alleges, in the alternative, that both have been breached (paragraphs 15 and 16).

29 The defendant admits executing the employment contract. She asserts that she entered into a new contract with the plaintiff on or about 22 February 2016 ('the new contract') and that it replaced previous terms (paragraph 4B of the amended defence). The defendant effectively denies the restraint clause is applicable: see paragraphs 7, 15-17 of the amended defence. She says the new contract is applicable. In the alternative, she asserts that the similar activity restraint clause is excessive, unreasonable and unenforceable at law, and unnecessary (paragraph 15 of the amended defence). The defendant also denies, in the alternative, that the Cotton On engagement falls within the Annexure A restraint clause (paragraph 16(c) of the amended defence). Further, in paragraph 17 of the amended defence, she denies the Annexure A restraint clause is enforceable because it 'is unreasonable in that it is unnecessarily wide in its scope and operation by reason that the covenant restrains the defendant from carrying on 'any activity' for or on behalf of the entities operating the 50 brands listed therein for a period of 24 months in any place in Australia and New Zealand where those entities / brands trade.'

30 Given the above, in dispute between the parties is whether the restraint clause is applicable, valid and enforceable.

31 The defendant's submission that, because Cotton On is named in Annexure A the similar activity restraint clause cannot be applicable, is a matter to be ventilated at trial. As discussed above, the defendant does not admit that the Annexure A restraint clause applies. Accordingly, the plaintiff's allegations that the defendant has breached one or the other limb of the restraint clause will be in dispute at trial, and documents relevant to those pleadings should be discovered.

32 The scope of the defendant's employment with Cotton On is directly relevant to whether she has breached the restraint clause. This is because the restraint clause refers to "being engaged, concerned or interested in; assisting or advising in respect of; or carrying on any activity..." in respect of the similar activity restraint clause. It also calls into question whether the activity "is the same as, or similar to, any part of the speciality brand and fashion business of the Just Group..." [emphasis added]

33 The scope of the defendant's prospective employment with Cotton On is not known by the plaintiff. It appears to be common ground between the parties that the defendant has not signed an employment contract with Cotton On. Indeed, by consent orders made on 3 June 2016, she has given an undertaking not to commence employment in any capacity whatsoever with Cotton On until the trial and determination of this proceeding, or if the proceeding is otherwise resolved, or per other order of this Court.

34 The communications sought in category 1(a)(i) and 1(a)(ii) of the discovery summons relate to communications between the defendant and Cotton On regarding the defendant's recruitment, employment or proposed employment with Cotton On. The documents regarding the recruitment and proposed employment are relevant to the scope of activities that the defendant may undertake in her proposed employment with Cotton On.

35 The documents sought in category 1(a)(iii) and 1(a)(iv) relate to communications between the defendant and Cotton On regarding the plaintiff's post-employment restraints and the applicable notice period. These are relevant to the allegations in clause 17 of the ASOC that the defendant has breached or threatens to breach the restraint clause.

36 Category 1(b)(iii) relates to communications between the defendant and Cotton On or any other party in relation to the employment contract or any draft. Communications between the defendant and Cotton On, and its directors, officers, servants, agents and employees, will be relevant for the reasons referred to above regarding the recruitment documents. As to communications with others regarding the contract, such as personal friends, there is no reason to assume that they will be relevant to the issues in dispute between the parties. Orders for particular discovery should be precise. The Court will restrict discovery of category 1(b)(iii) to communications between the defendant and Cotton On, its directors, officers, servants, agents and employees. For the sake of clarity, this includes recruitment agents.

37 For completeness, the Court observes that the orders for particular discovery are not made on the basis of the plaintiff's submissions regarding why the defendant has been engaged by Cotton On. That is, Cotton On's intentions for engaging the defendant. The primary issue to be determined is whether the restraint clause is applicable, valid and enforceable. The restraint clause imposes obligations on the defendant and she is the party to these proceedings. The defendant is an independent adult, making career decisions of her own free will. There is no evidence to suggest otherwise. Cotton On's intentions for engaging the defendant should not be imputed to the defendant. Cotton On is not a defendant to these proceedings.

38 In respect of the plaintiff's submissions regarding confidential information, it is noted that the allegation of a breach of the defendant's obligations regarding confidential information has been withdrawn (see deletion of paragraphs 19-22 in the ASOC).

39 In respect of the categories above in which particular discovery will be ordered, the defendant does not say whether she has the documents sought.[5] Rather, she says that they are not relevant. Rule 29.08 is applicable. The Court considers, from the nature or circumstances of this proceeding, there are grounds for the belief that the defendant may have the documents.

40 The plaintiff caused numerous subpoenas to be issued to the Cotton On group, related entities and officers or employees. Specifically, the plaintiff caused subpoenas to be issued on 16 June 2016 to the following: Nigel Grant Austin, Ashley James Hardwick, Michael John Hardwick, Cotton On Clothing Pty Ltd (ACN 052 130 462), Cotton On Group Services Pty Ltd (ACN 127 904 198), N A Investments (Vic) Pty Ltd (ACN 113 350 333), N A Investments (Vic) No 2 Pty Ltd (ACN 141 251 596), Clohibar Pty Ltd (ACN 089 744 409), ('the first set of subpoenas'). The plaintiff also caused subpoenas to be issued to: the same parties as the first set of subpoenas, save for Nigel Grant Austin and Ashley James Hardwick on 7 July 2016 (together, 'the second set of subpoenas').[6]

41 The subpoenaed parties objected to the subpoenas by letters to the Registrar dated 28 June 2016, 15 July 2016 and 20 July 2016. The objection in each letter is on the ground the subpoenas are not relevant to the issues in dispute in the proceeding. During submissions, the subpoenaed parties submitted that the documents are not 'sufficiently relevant' to any question in the proceeding, based on an analysis of the pleadings.

42 The subpoenaed parties were all represented by the same legal representatives. The hearing proceeded on the basis of the objections being heard together.

43 Orders 42 and 42A of the Supreme Court (General Civil Procedure) Rules 2015 ('the Rules') are relevant. Rule 42.04 provides for objections to subpoenas. The subpoenas were issued under Order 42A as subpoenas for production to the Prothonotary. Rule 42A.01 provides:

(1) This Order applies where a party who has a solicitor in the proceeding seeks to require a person not a party to produce any document for evidence before -

(a) the hearing of an interlocutory or other application in the proceeding; or

(b) the trial of the proceeding.

(2) Order 42 applies so far as is practicable to a subpoena to produce under this Order. [underline added]

44 The procedure under r 42A.01 is only available where the document is potentially required for evidence at the hearing of an application or the trial of the proceeding.[7] [emphasis added].

45 The effect of r 42A.01(2) is that Order 42 applies so far as is practicable to Order 42A subpoenas.

46 The applicable principles were largely agreed between the parties and need not be reiterated here. They are summarised by Derham AsJ in HRF Nominees Pty Ltd (In Liq) & Others v Man Civil Constructions Pty Ltd & Others (No.2) [2014] VSC 613.[8]

47 The relevant test may be summarised in the following way. Firstly, are the documents relevant to the issues in dispute? Secondly, if they are relevant, do they serve a legitimate forensic purpose in that they would materially assist the issuing party's case such that they serve a forensic purpose?

48 The first set of subpoenas were substantially the same although issued to different parties. Category 1 is as follows.

All documents, including records of emails, telephone calls, text messages, MMS messages and other forms of digital or internet communications, within the period between March 2016 to present evidencing or recording all communications between the defendant and Cotton On Clothing Pty Ltd (ACN 052 130 462) or any of its associated entitles within the meaning of s 50AAA of the Corporations Act 2001 (Cth) ('Cotton On') and any of its directors, officers, servants, agents and employees in relation to the Defendant's employment with the Plaintiff, and the Plaintiff's restraints and notice periods. Category 1 of the first set of subpoenas is for documents relating to the defendant's employment with the plaintiff, and her restraints and notice periods.

49 The subpoenaed parties say that there is no allegation that the defendant has divulged that information to Cotton On nor is there an allegation that she has breached any contractual provision or confidentiality obligation by communicating with Cotton On about the fact of, or any terms of, her employment with the plaintiff.

50 The plaintiff submitted that the subpoenaed documents were relevant and essentially refer to submissions made about relevance in support of its discovery summons. It is unnecessary to repeat them here.

51 The objections to Category 1 are not allowed. The documents are relevant to the pleading in paragraph 17 of the ASOC, that is, that the defendant has breached, threatens to breach and/or threatens to continue breaching the restraint clause.

All documents, including records of emails, telephone calls, text messages, mms messages and other forms of digital or internet communications, within the period between March 2016 to present evidencing or recording all communications between the defendant and Cotton On and any of its directors, officers, servants, agents and employees in relation to the Defendant's prospective employment with Cotton On or any of its directors, officers, servants, agents and employees.

All documents, including records of emails, telephone calls, text messages, mms messages and other forms of digital or internet communications, within the period between March 2016 to present evidencing or recording all communications between any two or more directors, officers, servants, agents or employees of Cotton On in relation to the Defendant's prospective employment with Cotton On.

53 Categories 2 and 3 seek documents regarding the defendant's prospective employment with Cotton On. The subpoenaed parties submit that the pleadings are about prospective employment rather than any actual engagement. They say the restraint clause does not prevent communications about prospective employment prior to the entry into an employment agreement and any such communications between the defendant and Cotton On would be irrelevant. For the same reason any internal communications within Cotton On would be irrelevant.

54 The objections to Categories 2 and 3 are not allowed. As discussed above in relation to the application for particular discovery, documents concerning the scope of the defendant's proposed activities with Cotton On are relevant to this proceeding.

All documents evidencing the employment agreement or the terms of employment between the Defendant and Cotton On.

56 Category 4 seeks documents evidencing the employment agreement or terms of employment between the defendant and Cotton On. The subpoenaed parties say no such document exists as there is no binding employment contract concluded.

57 As discussed above, it appears to be common ground between the parties that the plaintiff did not commence employment with Cotton On. It is not alleged by the plaintiff that she did. Paragraph 14 of the ASOC refers to an intention to commence employment. The terms of the plaintiff's prospective employment are included in Categories 2 and 3 of the subpoena. Orders will be made setting aside Category 4.

All documents, including all documents between any person, whether real or corporeal, engaged in the business of providing employment, recruitment or personnel services and Cotton On, with the period between January 2016 to present relating to any job vacancies or positions available for financial controllers, financial officers within Cotton On or for the position accepted by the Defendant with Cotton On in about May 2016.

59 Category 5 seeks documents regarding job vacancies or positions available for financial controllers, financial officers within Cotton On or for the position accepted by the defendant with Cotton On. The subpoenaed parties say whether Cotton On engaged and communicated with recruitment consultants about job vacancies is not an issue in this proceeding. Further, the paragraph is not anchored to the defendant. The plaintiff says that Category 5 is relevant to whether Cotton On drafted a position especially for the defendant or not.

60 Category 5 was drafted prior to the plaintiff inspecting the discovered documents. Paragraph 11 of the ASOC pleads that the defendant was offered the position of General Manager - Group Finance & Treasury and refers to discovered document 34 (draft employment contract and cover letter from the Cotton On Group). The plaintiff indicated it was prepared to narrow the category to the position above. Nevertheless, this category does not appear to be relevant. Whether or not Cotton On drafted a position especially for the defendant is not in issue in this proceeding. The terms of the defendant's prospective engagement with Cotton On are relevant, however they will fall within other categories of this subpoena. Orders will be made to set aside Category 5 of the subpoena.

All documents evidencing communications between Cotton On and the Defendant in relation to this proceeding including any arrangement or understanding that Cotton On pay the costs incurred by the Defendant in this proceeding or indemnify the Defendant for the costs incurred by her in this proceeding.

62 Category 6 seeks documents including any arrangement or understanding that Cotton On pay the defendant's legal costs of this proceeding. The subpoenaed parties say there is no allegation regarding this, let alone any allegations about the wrongfulness of any such arrangement or understanding.

63 The plaintiff accepts that Keogh J set aside a subpoena it issued which sought the production of effectively the same category of documents from the defendant's solicitors.[9] It says that decision was in the context of the application for an injunction against the defendant's solicitors, and that when the focus shifts to the issues in dispute in the substantive proceeding, the documents are broadly relevant. Further, it says they highlight the importance for Cotton On in securing the employment of the defendant and seeing her relieved from the contractual restraints she owes to the plaintiff. The defendant says this may be expected to serve a legitimate forensic purpose in cross-examination.

64 This issue has been substantially agitated before Justice Keogh. Cotton On is not a defendant in these proceedings. Category 6 is not relevant and orders will be made setting it aside.

65 The second set of subpoenas were substantially the same, although issued to different parties. The second set of subpoenas substantially contain the following schedule.

Cotton On means the group of companies known as the Cotton On Group and includes any entity that trades under any Cotton On brand.

Cotton On entity means any company or entity of Cotton On.

Cotton On brand means any of the fashion brands known as 'Cotton On', 'Cotton On Kids', 'Cotton On Body', 'Rubi', 'T-bar', 'Factorie', 'Supre' and 'Typo'.

Document, report or analysis (when used to describe a document) means any document, report or analysis in the possession, power or control of any Cotton On entity.

Group Executive means the committee or body (however described) comprising the Chief Executive Officer and other Group Executive managers or General Managers (or their predecessors or similar previous positions) described in the Cotton On website at the URL http://cottonongroup.com/about\_us/our-organisation#our-leaders.

Just Group means the group of companies known as 'Just Group' and includes the plaintiff.

Just Group brand means any of the fashion brands known as 'Just Jeans', 'Jay Jays', 'Jacqui E', 'Portmans', 'Dotti', 'Peter Alexander', and 'Smiggle' (including Smiggle in the United Kingdom).

The documents and things you must produce are as follows:

1. Any reports (however described) provided to, or considered by, any Board or Group Executive of any Cotton On entity, since 1 July 2014 that provide any analysis about:

2. Any reports (however described) provided to, or considered by, any Board or Group Executive of any Cotton On entity, since 1 July 2014 that refer to or describe competition for:

a. customers (however described) between any Cotton On entity or any Cotton On brand, and any Just Group company or any Just Group brand;

b. retail space or leaseholds (however described) between any Cotton On brand (or the Cotton On entity that is a tenant or potential tenant for a retail space or leasehold) and any Just Group brand (or Just Group company that is a tenant or potential tenant for a retail space or leasehold); or

c. employees or potential employees who might work for a Cotton On entity or a Cotton On brand, or a Just Group or a Just Group Brand.

3. Any reports (however described) provided to, or considered by, any Board or Group Executive of any Cotton On entity, since 1 July 2014 that analyse or describe the types of customers or potential customers (however described) who have or might purchase the produce of

4. Any report or analysis prepared by an external consultant or contractor for any Cotton On entity or Cotton On brand, and provided to or received by any General Manager of any Cotton On brand, that provides any analysis about a Cotton On brand and a Just Group brand.

5. Any document provided to, or considered by, the Board or Group Executive of Cotton On, since 1 January 2016, that shows the annual revenues of Cotton On for each Cotton On brand.

6. The most recent document showing or setting out:

b. the organisational structure of any Cotton On Board and Group Executive.

66 The subpoenaed parties submitted that there is no dispute that Cotton On carries on activities which are 'the same as, or similar to, any party of' the plaintiff (in the words of the similar activity restraint provision). Paragraph 3(a) of the amended defence admits that in some circumstances the plaintiff competes with Cotton On. This admitted fact is sufficient for the purpose of satisfying the expression above in the similar activity restraint provision.

67 The plaintiff says that the admission of competition in the defence is a partial one. Further, business competition varies in terms of activity and intensity of competition. The plaintiff's allegation that Cotton On is in intense competition with it means the restraint clause is reasonable. The degree of competition is relevant to whether or not it is reasonable. Further, Annexure A clause applies where there is fierce competition and so the degree of competition between the plaintiff and Cotton On is relevant.

68 The Court does not consider the subpoenaed documents to be relevant. Paragraph 3(a) of the defence makes an admission that there are companies within the plaintiff group of companies that compete with companies within the Cotton On group. The degree of the intense business competition between the plaintiff and Cotton On is not relevant. Further, the defendant asserts that the restraint is unreasonable on a number of grounds in paragraphs 15 and 17 of the amended defence. None of these grounds concern the degree of competition between the plaintiff and Cotton On. In paragraph 4 and 6 of its reply, the plaintiff responds to paragraphs 15 and 17 of the defence. It does not refer to the degree of competition between it and Cotton On. Rather, it refers to its legitimate interest in protecting its commercial interests. This does not bring into relevance the degree of intense business competition in circumstances where it is admitted there is competition.

69 The Court will make orders wholly setting aside the second set of subpoenas.

70 The Court will make orders for the defendant to make particular discovery pursuant to r 29.08 of the documents in the following categories of the plaintiff's discovery summons: 1(a)(i), 1(a)(ii), 1(a)(iii) and 1(b)(iii), save to say that 1(b)(iii) is to be limited to communications between the defendant and Cotton On its directors, officers, servants, agents and employees.

71 The Court will make orders setting aside the second set of subpoenas and categories 4, 5 and 6 of the first set of subpoenas.

72 The parties are requested to confer on the appropriate form of orders.

[1] Affidavit of Nicole Peck (Affidavit of Documents) affirmed 3 July 2016.

[2] Order of the Hon. Justice McDonald made 3 June 2016.

[3] Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Company (1882) 11 QBD 55, 63.

[4] [2013] VSC 634. See also: Matthews v SPI Electricity Pty Ltd & Ors [2011] VSC 401, [19]; The Shell Petroleum Company Ltd v Commissioner of Taxation [2005] FCA 982 at [14], [15] (Crennan J).

[5] These issues have been well ventilated between the solicitors for the plaintiff and defendant. See: affidavit of Zaven Mardirossian sworn 19 July 2016 and the exhibits to it.

[6] The plaintiff also caused a third subpoena to be issued to Clohibar Pty Ltd (ACN 089 744 409 on 11 July 2016). The schedule in the subpoena is identical to the schedule in the subpoena issued on 7 July 2016.

[7] See Kennedy Taylor (Vic) Pty Ltd v Grocon Pty Ltd [1999] VSC 242, [71] ('Kennedy Taylor') for an analysis of a predecessor rule to r 42A.01. See Oswal v Carson [2013] VSC 355, [52]-[53] ('Oswal v Carson') for a more recent discussion of Kennedy Taylor.

[9] Just Group Ltd v Peck [2016] VSC 375.