FEDERAL COURT OF AUSTRALIA

Liberty Financial Pty Ltd (ACN 077 248 983) v Scott [2002] FCA 345

PRACTICE AND PROCEDURE – application to set aside or discharge Anton Piller order – claim that applicant wrongfully obtained order – whether material non-disclosure – whether duty of candour on ex parte application met – test of materiality – whether real possibility of destruction or disappearance of evidence if order not granted - documents of a commercially sensitive nature – whether order in an appropriate form to safeguard rights of respondents

Anton Piller KG v Manufacturing Processes Ltd [1976] 1 Ch 55 at 61and 62 cited

Thermax Limited v Schott Industrial Glass Limited [1981] FSR 289 at 298 cited

Columbia Picture Industries Inc v Robinson [1987] 1 Ch 38 at 77 cited

Brink’s-MAT Ltd v Elcombe [1988] 3 All ER 188 at 194 cited

Milcap v Coranto (1995) 32 IPR 34 at 35 cited

Microsoft Corp v Goodview Electronics Pty Ltd (1999) AIPC 91-489 cited

Yousif v Salama [1980] 1 WLR 1540 referred to

Dunlop Holdings Ltd and Dunlop Ltd v Staravia [1982] Com LR 3 referred to

Booker McConnell plc v Plascow [1985] RPC 425 at 441-442 referred to

Roger Bullivant Ltd v Ellis [1987] FSR 172 at 181 cited

Dormeuil Freres SA v Nicolian Ltd [1988] 1 WLR 1362 at 1368-1369 cited

Dart Industries Inc v David Bryar (1997) 38 IPR 389 cited

Tate Access Floors Inc v Boswell [1991] Ch 512 at 534 cited

National Australia Bank Ltd v Idoport Pty Ltd [1999] NSWSC 964 cited

Mark Rich and Co Holding GMBH v Krasner (unreported, English Court of Appeal, 15 January 1999) referred to

Garrard v Email Furniture Pty Ltd (1993) 32 NSWLR 662 at 676 cited

Thomas A Edison Ltd v Bullock (1912) 15 CLR 679 referred to

LIBERTY FINANCIAL PTY LTD (ACN 077 248 983) AND SHERMAN MA v TREVOR WILLIAM SCOTT AND BLUESTONE GROUP PTY LIMITED T/A BLUESTONE MORTGAGES (ACN 091 201 357)

V1256 of 2001

WEINBERG J

26 MARCH 2002

MELBOURNE

THE COURT ORDERS THAT:

1.                  Paragraphs 1 and 2 of the Notice of Motion filed on behalf of the first respondent on 5 February 2002 seeking to have paragraphs 1-14 of the Anton Piller order made on 20 December 2001 set aside and/or discharged, and all documents seized pursuant to that order returned to the custody of the first respondent’s solicitors, be dismissed.

2.                  Paragraphs 1 and 2 of the Notice of Motion filed on behalf of the second respondent on 12 March 2002 seeking to have paragraphs 1-14 of the Anton Piller order made on 20 December 2001 set aside and/or discharged, and all documents seized pursuant to that order returned to the custody of the first respondent’s solicitors, be dismissed.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     By Notice of Motion filed on 5 February 2002, the first respondent seeks orders that the Anton Piller order that I made on 20 December 2001 be set aside and/or discharged and that all documents seized pursuant to that order be returned to the custody of his solicitors.  The second respondent by Notice of Motion filed on 12 March 2002 seeks relief in the same terms. 

2                     The principal ground upon which the respondents move relates to alleged non-disclosure of material facts at the time the Anton Piller order was sought.  The applicants deny that allegation.

background

3                     The first applicant, Liberty Financial Pty Ltd (“Liberty”), is a specialist lender in the business of providing tailored lending products to customers who are unable to obtain finance from traditional sources (“non-conforming loans”).  The second applicant, Mr Sherman Ma, is Liberty’s managing director. 

4                     Liberty commenced operating in January 1997.  In May 1997, the first respondent, Mr Trevor Scott, was hired as its Chief Account Manager.  In December 1998, he was appointed Senior Relationship Manager.  Obviously, in these positions, he had had access to information that was highly confidential and commercially sensitive. 

5                     During his employment with Liberty, Mr Scott signed three separate agreements.  These were:

·                     a Deed of Confidentiality entered into prior to commencing employment;

·                     an Executive Service Agreement entered into on 21 May 1997, upon being appointed Chief Account Manager; and

·                     an Executive Service Agreement entered into on 2 December 1998, upon being appointed Senior Relationship Manager.

6                     These three agreements each contained strict clauses concerning the protection of confidential information.  According to Mr Ma, Mr Scott was reminded on a number of occasions of the need to ensure that the material to which he was privy was kept confidential. 

7                     Mr Scott continued as Senior Relationship Manager until 15 December 1999 when he tendered his resignation.  He subsequently commenced employment in February 2000 with Australian Financial Group (Victoria) Pty Ltd (“AFG”), an association of financial brokers which was, and still is, one of what Liberty describes as its “introducers”.  He remained with AFG until about June 2000.  He then commenced employment with the second respondent, Bluestone Group Pty Ltd (t/a Bluestone Mortgages) (“Bluestone”).  Bluestone is a direct competitor of Liberty in the business of providing non-conforming loans. 

8                     In February 2001, as a result of certain information which had come to Liberty’s notice, its solicitors threatened proceedings against Mr Scott in relation to his alleged disclosure of confidential information.  On 2 April 2001, Mr Scott pre-empted these threatened proceedings by instituting his own action against Liberty in the Industrial Relations Commission of New South Wales.  By that action he sought to have certain of the provisions of his Executive Service Agreements with Liberty set aside or varied. 

9                     On 29 June 2001, Mr Scott’s solicitors were served with a writ and a statement of claim alleging breach of contract.  The action was brought in the County Court of Victoria.  On the same day, Liberty, through its solicitors, wrote to Mr Scott threatening to seek interlocutory injunctive relief unless he provided undertakings, within seven days, that he would not, during the term of the County Court proceeding, disseminate any information subject to the Deed of Confidentiality or the Executive Service Agreements. 

10                  On 5 July 2001, Mr Scott, through his solicitors, informed the applicants by letter that he was prepared to give such undertakings.  As a result, Liberty did not make any application for interlocutory injunctive relief. 

11                  On 13 August 2001, Mr Scott filed his defence in the County Court proceeding. 

12                  On 19 October 2001, the applicants applied, ex parte, to his Honour Judge Holt in the County Court for an Anton Piller order against Mr Scott.  That application was refused. 

13                  On 20 December 2001, the applicants applied to me, ex parte, for an Anton Piller order against Mr Scott, and also for injunctive relief.  They were successful in relation to the Anton Piller order.  That order was carefully drawn.  In addition to the safeguards normally contained in such orders, it provided for the attendance of two independent solicitors at Mr Scott’s home during the execution of the order.  Those solicitors were both named, and were members of the firm Blake Dawson Waldron.  Their role was to supervise the execution of the order, and to prepare a written report to be filed with the Court.  The order also provided for the preparation by the applicant’s solicitors of an inventory, specifying and describing each item to be removed from the premises.  It further provided that any documents so removed were to be delivered into the custody of the supervising solicitors pending the further hearing of the application for interlocutory relief which I adjourned to 24 December 2001.

the EVIDENCE IN SUPPORT OF the APPLICATION FOR THE anton piller order

14                  The application for the Anton Piller order was brought, as a matter of urgency, on the afternoon of 20 December 2001.  It was supported in the main by two affidavits, that of Mr Ma and another of Mr Suresh Kanapathippillai, who was Liberty’s Group Project Manager and Company Secretary. 

15                  Mr Ma recounted the events leading up to Liberty’s formation and described the nature of its business.  He discussed Mr Scott’s role with Liberty and emphasised the degree to which he had access to confidential and commercially sensitive information.  He said that he had told Mr Scott on several occasions of the absolute importance of confidentiality.  He exhibited copies of internal memoranda addressed to staff dealing with that subject. 

16                  Mr Ma said that in late November 2000 he became aware that a new competitor, Phoenix Capital Pty Ltd trading as Bluestone Mortgages (“Phoenix”), had entered the market offering non-conforming loans.  Phoenix was based in Sydney and had since changed its name to Bluestone Group Pty Ltd (t/a Bluestone Mortgages). 

17                  In December 2000 Mr Ma discovered that in July 2000 Mr Scott had commenced employment with Bluestone.  In January 2001 Mr Ma became aware of a table published by Bluestone which compared the non-conforming loan products on offer at that time by five providers of such loans to the Australian market (the “comparative table”). 

18                  In March 2001 Liberty commenced a proceeding in this Court against Phoenix alleging that the comparative table contained misleading and deceptive information.  That action was ultimately settled.  Mr Ma said that he believed that some of the information used by Bluestone to produce the comparative table could only have come from Mr Scott .  That information must have been provided in breach of his obligations of confidentiality to Liberty. 

19                  Mr Ma elaborated upon the action instituted by Mr Scott against Liberty in the Industrial Relations Commission of New South Wales.  In that proceeding Mr Scott sought to have clause 9 of his Executive Service Agreement of 2 December 1998 declared void, or varied, so that a restraint upon his revealing confidential information would only apply for a period of six months from the date of termination of his employment.  He also sought to have clause 7 of that agreement varied so that the definition of “confidential information” in that clause was limited to information that was not already in the public domain, and was still commercially sensitive. 

20                  Mr Ma said that Liberty had challenged the jurisdiction of the Industrial Relations Commission to hear Mr Scott’s application.  That challenge had not yet been determined.  He also claimed that that proceeding was being funded by Bluestone, and was being conducted on Mr Scott’s behalf by Allen Allen and Hemsley (now Allens Arthur Robinson (“Allens”)), the same solicitors who had acted for Phoenix in this Court.  Allens also represented Mr Scott in the County Court proceeding. 

21                  Mr Ma said that as part of the preparation for the challenge to the jurisdiction of the Industrial Relations Commission, he had asked Mr Kanapathippillai to gather evidence concerning the extent to which Mr Scott had performed duties in New South Wales during his period with Liberty.  Mr Kanapathippillai had examined Mr Scott’s electronic calendar which formed part of Microsoft Outlook (“Outlook”), the e-mail system used by Liberty.  He did not, at that time, review any of Mr Scott’s e-mails remaining on the Liberty computer system backup. 

22                  On about 4 September 2001, Mr Kanapathippillai undertook a further search of Mr Scott’s Outlook directory, in particular his “sent items” folder.  He discovered that Mr Scott had regularly sent e-mails to himself at a private e-mail address outside the Liberty e-mail system.  That address was twscott@c031.aone.net.com.  He became concerned that a large number of e-mails containing commercially sensitive information had been sent by Mr Scott to that address.  He immediately informed Mr Ma of what he had discovered. 

23                  On 6 and 7 September 2001, Mr Kanapathippillai continued to review Mr Scott’s Outlook directory.  He discovered that on 15 December 1999, at 11:40 am (which was less than two hours before Mr Scott informed Mr Ma of his resignation) an e-mail had been sent to Mr Scott’s private e-mail address.  That e-mail contained a comprehensive list of various people and organisations that were connected with Liberty, including what was said to be commercially sensitive information about Liberty’s “introducers”. 

24                  Mr Kanapathippillai produced a spreadsheet setting out the dates upon which material, now said to be copyright, and also confidential to Liberty, was sent to Mr Scott’s private e-mail address.  He noted that many of the e-mails had been forwarded within a few hours of their creation.  He also noted that Mr Scott had deleted some or all of his e-mail records from his directory two weeks prior to his resignation. 

25                  Mr Scott designated the address “twscott@c031.aone.net.au” as “Trevor W Scott”.  That designation was very similar to that of Mr Scott’s e-mail address at Liberty which was “Trevor Scott”. 

26                  Mr Kanathippillai said that the work related e-mails sent by Mr Scott to his private e-mail address were invariably sent without subject headings.  Mr Ma said that Mr Scott had been provided with a notebook computer so that he could access any information necessary to enable him to carry out his duties while travelling and visiting clients, or working from home.  Mr Kanapathippillai added that the reason that a notebook had been provided was to ensure that the information was stored on a computer over which Liberty had control, eliminating the need to transfer or transport information externally. 

27                  Mr Ma said that he had never authorised Mr Scott to e-mail any confidential or copyright material off-site (ie. to any e-mail address not controlled by Liberty).  He stressed the importance of the document sent by Mr Scott on 15 December 1999.  He said that that document contained a list of current and potential “introducers” which had been created over time from a variety of sources within Liberty, and also included comments regarding certain individuals so named. 

28                  Mr Ma said that he believed that both the list and the other documents e-mailed to “Trevor W Scott” had been used extensively by Mr Scott in the course of his employment with Bluestone.  He claimed that Mr Scott’s conduct was in clear breach of his contractual and fiduciary obligations to Liberty.  He gave as an example of this breach the information concerning Liberty’s wholesale limit, which had appeared in Bluestone’s comparative table, and which had been known to only a handful of senior Liberty staff.  He also referred to information provided to him by Mr John Mohnacheff, Liberty’s National Relationship Manager, to the effect that, after he commenced employment with Bluestone, Mr Scott had approached a number of Liberty’s top “introducers”, and sought to persuade them that the services offered by Bluestone were superior to those offered by Liberty. 

29                  Mr Ma said that after he discovered that Mr Scott had been using his private e-mail address to receive confidential documents, he became concerned that any evidence that those documents were still in Mr Scott’s possession might be destroyed.  He set out in detail his reasons for reaching that conclusion.  These included the matters already mentioned, together with the fact that Mr Scott’s actions were unauthorised and in direct conflict with his assurances to Mr Ma that he understood and would comply with Liberty’s strict confidentiality regime. 

the submissions in support of the Application for the anton piller order

30                  In support of the application for the Anton Piller order, counsel for the applicants first drew attention to the proceeding in the County Court.  They observed that when that proceeding was originally commenced, they had not made any claim for breach of copyright or breach of confidence.  A claim for breach of confidence was subsequently added by way of amendment to the pleadings. 

31                  Counsel for the applicants informed me that on 19 October 2001, the applicants had sought an Anton Piller order from his Honour Judge Holt in the County Court.  That application had been refused.  Apparently, his Honour was not satisfied, on the evidence then before him, that there was likely to be any material in Mr Scott’s possession that might be relevant to the claims made against him.  I was told that the material contained in the affidavits of Mr Ma and Mr Kanapathippillai had been placed before Judge Holt.  However, there was now additional evidence from a computer expert, Mr Gregory Bromage, an information technology administrator employed by the applicant’s solicitors, upon which the applicants sought to rely.

32                  In his affidavit, Mr Bromage said that he had read the affidavit of Mr Kanapathippillai and concluded that the overwhelming likelihood was that the private e-mail address referred to therein was one paid for by Mr Scott and accessed from a personal computer at his home.  He based that conclusion upon an investigation which had been carried out by Nationwide Investigation Services, a company retained on behalf of the applicants, to find out what computers, if any, Mr Scott owned.  Mr Bromage also said that if the confidential files had been sent to Mr Scott’s private address, and accessed from his personal computer at home, they would remain in its inbox folder.  Even if deleted, they might remain in the deleted items folder.  Even if deleted from there, they might remain in the “temp” directory, and even if deleted from there, they might remain on the hard disk.

33                  It was submitted that the evidence of Mr Bromage plainly filled whatever gap there might have been in the evidence placed before Judge Holt and demonstrated that there was a likelihood that the e-mails sent by Mr Scott to his private e-mail address would be found on his home computer.  Counsel for the applicants drew particular attention to the e-mail sent on 15 December 1999, noting that it contained not just the list of “introducers”, but also their contact details, including home telephone numbers.  They stressed the value of that information to a competitor such as Bluestone.  They referred to the concern which had arisen when it was discovered that Mr Scott had deleted some or all of his e-mail records some two weeks prior to his resignation.  They submitted that this fact sustained an inference that, in the absence of an Anton Piller order, there was a risk that documents would be deleted or destroyed.  They also submitted that the evidence before the Court, taken in its entirety, demonstrated that Mr Scott would be unlikely to comply with his obligations regarding discovery. 

34                  Counsel for the applicants submitted that Mr Scott’s use of a private e-mail address, which was very similar to that of his Liberty e-mail address, was unlikely to attract attention, and therefore indicated a degree of nefariousness on his part.  They relied upon the evidence concerning the comparative table as showing a propensity on the part of the respondents to misuse confidential information belonging to the applicants.  They relied also upon Bluestone’s funding of the proceedings in the Industrial Relations Commission as demonstrating its overall involvement in Mr Scott’s conduct.

35                  The applicants proffered the usual undertaking as to damages in the event that an Anton Piller order were granted.  They made it clear that the type of order sought was somewhat unusual in that extra precautions were to be taken to ensure that none of the material obtained as a result of its execution would be examined immediately.  Moreover, independent solicitors would be retained to supervise the search. 

36                  It was against that background, and in reliance upon that evidence, that the Anton Piller order was granted.

the respondents’ application to set aside and/or discharge the anton piller order

37                  The Anton Piller order was executed on Friday, 21 December 2001.  On the following Monday, 24 December 2001, the application came before Goldberg J as duty judge.  His Honour was told that the respondents would be seeking to have the Anton Piller order set aside or discharged.  He gave directions for the future conduct of the matter.  These included directions for the filing of any affidavits bearing upon the question whether there had been material non-disclosure.  Both the respondents and the applicants subsequently filed lengthy affidavits regarding that issue. 

38                  The respondents identified a large number of matters which they claimed were material, and ought to have been disclosed to the Court when the Anton Piller order was sought.  Among these matters were:

·                     the existence of undertakings proffered by Mr Scott in correspondence dated 5 July 2001 during the course of the County Court proceeding.  These undertakings were said to demonstrate that Mr Scott was a man of honesty and integrity, unlikely to have acted in the nefarious manner alleged;

·                     the fact that during the earlier unsuccessful application for an Anton Piller order in the County Court, Mr Kanapathippillai had included, in his affidavit, a reference to a request by Liberty’s IT section that staff delete e-mails in order to free memory on its computer system.  Mention of that request was omitted from his affidavit prepared in support of the application for the Anton Piller order in this Court;

·                     the fact that Mr Scott’s de facto, Ms Auchettl, had previously been the subject of allegations by Liberty of breach of confidentiality.  Indeed, Liberty had threatened to commence proceedings against her.  Liberty had also threatened to commence proceedings against Karvor Pty Ltd, a company controlled by Mr Scott and Ms Auchettl.  There was said to be a real possibility that any search of computer records at Mr Scott’s home would reveal matters confidential Ms Auchettl and Karvor.  The Anton Piller order did not make any allowance for that possibility;

·                     the fact that Mr Scott had significant experience in the non-conforming lending industry prior to joining Liberty and, as a consequence, would have had extensive business contacts of his own;

·                     the fact that while employed at Liberty Mr Scott sometimes worked from home, a fact known to Mr Ma;

·                     the fact that the documents which Mr Scott e-mailed to his private address were documents upon which he worked as part of his ordinary duties;

·                     the fact that some of the documents which Mr Scott sent to his private address were sent back to his Liberty address on the same evening, or shortly thereafter;

·                     the fact that there were likely to be documents at Mr Scott’s home relating to the County Court proceeding, the Industrial Relations Commission proceeding, and the earlier Federal Court proceeding, which were likely to be the subject of legal professional privilege;

·                     the fact that there was nothing unusual about the deletion of e-mails in light of the instruction given by Liberty to its staff to free up memory;

·                     the fact that there was nothing unusual about a lack of subject heading to an e-mail sent by a person to him or herself;

·                     the fact that the e-mail sent on 15 December 1999 had contained a number of names of persons who were not business contacts, but friends or associates of Mr Scott.  Moreover, it was said that this e-mail did not contain material of a commercially sensitive nature, as alleged by the applicants, but rather material which Mr Scott was known by Mr Ma to have in his possession, and which he was authorised to retain.

39                  The respondents’ case, put simply, was that the applicants had presented a misleading picture of Mr Scott’s conduct by failing to inform me of some, or all, of the abovementioned matters.  Counsel for the applicants had portrayed him as a thief who had stolen his former employer’s commercially sensitive information.  Had I been fully apprised, as I ought to have been, of the matters set out above, Mr Scott would have been viewed in a different light.  It was possible, in those circumstances, that I might have refused the Anton Piller order.

the respondents’ submissions as to the applicable legal principles

40                  The respondents referred to a number of cases which they submitted supported their contention that the Anton Piller order ought to be set aside.  The starting point was the decision of the Court of Appeal in Anton Piller KG v Manufacturing Processes Ltd [1976] 1 Ch 55.  Lord Denning Mr said, at 61, of the relief which was sought in that case:

“…It seems to me that such an order can be made by a judge ex parte but it should only be made where it is essential that the plaintiff should have inspection so that justice can be done between the parties: and when, if the defendant were forewarned, there is a grave danger that vital evidence will be destroyed…and so the ends of justice be defeated: and when the inspection would do no real harm to the defendant or his case.”

41                  Ormrod LJ described the proposed order as being at the “extremity” of the court’s powers.  Such orders would rarely be made, and only when there was no alternative way of ensuring that justice was done to the applicant.  His Lordship went on to say, at 62:

“There are three essential pre-conditions for the making of such an order, in my judgment.  First, there must be a strong prima facie case.  Secondly, the damage , potential or actual, must be very serious for the applicant.  Thirdly, there must be clear evidence that the defendants have in their possession incriminating documents or things, and that there is a real possibility that they may destroy such material before any application inter partes can be made.”

42                  Shaw LJ agreed with both judgments.

43                  In Thermax Limited v Schott Industrial Glass Limited [1981] FSR 289 Browne-Wilkinson J set aside an Anton Piller order in circumstances where material facts known to the plaintiff had not been disclosed to the judge who granted the order.  That was said to have been an error of judgment only, but an important one.  His Lordship said, at 298:

“…As time goes on and the granting of Anton Piller orders becomes more and more frequent, there is a tendency to forget how serous an intervention they are in the privacy and rights of defendants…In my judgment the rule of full disclosure to the court is almost more important in Anton Piller cases than in other ex parte applications.”

44                  The respondents next referred to Columbia Picture Industries Inc v Robinson [1987] 1 Ch 38, where Scott J spoke of the requirement that affidavits in support of Anton Piller orders err on the side of excessive disclosure.  His Lordship said, at 77,:

“…In the case of material falling into the grey area of possible relevance, the judge, not the plaintiffs’ solicitors, should be the judge of relevance.”

45                  The respondents also, very fairly, drew my attention to Brink’s-MAT Ltd v Elcombe [1988] 3 All ER 188, a case which was less helpful to their contentions.  In Brinks, Ralph Gibson LJ dealt, in the context of a Mareva injunction, with the principles which determine whether there has been material non-disclosure, and what consequence the court should attach to any failure to comply with the duty to make full and frank disclosure.  His Lordship observed that it was the duty of the applicant to make disclosure of all material facts. He said that the material facts were those which it was material for the judge to know in dealing with the application as made.  Materiality was to be decided by the court, and not by the assessment of the applicant or his legal advisers.  The applicant must make proper inquiries before making the application, and the duty of disclosure applied not only to material facts known to him or her, but also to any additional facts which could have been ascertained if reasonable inquiries had been made.  Whether a fact not disclosed was of sufficient materiality to justify or require the immediate discharge of a Mareva injunction without examination of the merits depended upon the importance of the fact.  Whether the non-disclosure was innocent, or deliberate, was an important consideration, but not decisive.  It was not for every omission that the injunction would be automatically discharged. 

46                  Balcombe LJ agreed with Ralph Gibson LJ that notwithstanding that an ex parte  injunction had been obtained without full disclosure, the court had a discretion to continue it, or to grant a fresh injunction in its place. 

47                  Slade J said, at 194:

“Particularly in heavy commercial cases, the borderline between material facts and non-material facts may be a somewhat uncertain one.  While in no way discounting the heavy duty of candour and care which falls on persons making ex parte applications, I do not think the application of the principle should be taken to extreme lengths.”

48                  Turning to the recent authorities in this Court regarding Anton Piller orders, the respondents referred to Milcap v Coranto (1995) 32 IPR 34.  In that case, Davies J dealt with an application to set aside an Anton Piller order that his Honour had previously made, on the basis of non-disclosure.  His Honour set aside the order, observing, at 35, that:

“When an ex parte order is sought, the person seeking the order must be frank and disclose to the court all the matters which, if put before the court, might have an effect upon the court’s decision.  The facts that should be disclosed go both to matters of liability and matters of discretion.  If a fact is material in that it would be a matter to be taken into account by a court in the making of the decision to grant an injunction or in the formulation of the order that is made, it is a matter that ought to be disclosed.”

49                  Finally the respondents referred to Microsoft Corp v Goodview Electronics Pty Ltd (1999) AIPC 91-489, where Branson J rejected an application for an Anton Piller order.  In a careful judgment, she outlined the very onerous requirements that had to be satisfied before such an order would be made.  These included:

·                     that there be a strong prima facie case;

·                     that the applicants be at risk of serious damage;

·                     that there be clear evidence that the respondents had in their possession incriminating documents; and

·                     that there be a high risk that, unless such an order is made, the respondents will destroy evidence or remove it from the jurisdiction.

50                  The respondents submitted that at least the first, third and fourth of these requirements had not been met on the material before me when the Anton Piller order was granted. 

the applicants’ submissions in relation to the respondents’ evidence

51                  Counsel for the applicants submitted that the respondents had engaged in a “trawling” exercise, designed to examine in the most minute detail the evidence placed before me in support of the Anton Piller order with a view to seeking to discover some basis, however tenuous, upon which an argument could be put that there had been material non-disclosure.  They submitted that in the end, none of the matters raised by the respondents, whether considered in isolation or taken together, demonstrated any such non-disclosure.

52                  Counsel for the applicants dealt specifically with each of the matters identified by the respondents as facts which were supposedly material, but which had not been disclosed. 

53                  Counsel for the applicants submitted that Mr Scott’s offer in correspondence to give the undertakings sought in relation to the County Court proceeding was not, in any sense, a material fact.  They submitted that the proffered undertakings went no further than the contractual obligations by which he was in any event bound.  They were prospective only, and afforded Liberty no comfort in relation to past transgressions.  The fact that Mr Scott was prepared to give such undertakings did not cast him in a more benevolent light.  They were, after all, given only in response to a threat by Liberty to seek interlocutory injunctive relief.  Mr Scott had nothing of any consequence to lose by giving these undertakings.  They submitted further that although Judge Holt had apparently taken the view, when this matter was last before him on an application by Liberty for leave to discontinue the proceeding, that he should have been informed of the proffered undertakings when, on 19 October 2001, the Anton Piller order had been sought from him, there was in truth no basis for that view. 

54                  It was next submitted that it was of no consequence that the affidavit sworn by Mr Kanapathippillai for the purpose of the Anton Piller order in this Court had not mentioned the Liberty IT directive to staff regarding the deletion of e-mails.  That was because the e-mail policy to which he had referred in that affidavit was not directed towards essential or commercially sensitive material. 

55                  Counsel for the applicants submitted that the failure to mention either Ms Auchettl or Karvor Pty Ltd could not amount to material non-disclosure.  That was because the procedures set in train for the execution of the Anton Piller order provided adequate protection for their interests, by ensuring that material that was the subject of legal professional privilege would remain confidential. 

56                  It was submitted that Mr Scott’s “significant experience” in the non-conforming lending industry was irrelevant.  There was nothing to suggest that his experience lay in the field of home mortgage financing. 

57                  The allegation that the applicants had failed to disclose that Mr Scott sometimes worked from  home while employed at Liberty was emphatically rejected.  That fact had been set out in terms at par 39 of Mr Ma’s original affidavit. 

58                  It was submitted that the complaint of a failure to disclose that the documents which Mr Scott sent to his private e-mail address were documents that he worked on as part of his ordinary duties at Liberty was equally without foundation.  The nature of those documents was readily apparent from the schedules to Mr Ma’s affidavit.

59                  It was submitted that the respondents’ allegation that the applicants ought to have disclosed that there were likely to be documents at Mr Scott’s premises that were the subject of legal professional privilege was misconceived.  That possibility was fully catered for by the form of the Anton Piller order which required that any documents taken be kept by the supervising solicitors until after the matter had come back to this Court for further directions. 

60                  Counsel for the applicants submitted that the remaining two matters raised, namely the fact that it was not unusual to delete files contained in an Outbox, and that the fact that there was nothing sinister about sending e-mails without subject headings to oneself, could not sensibly be described as “material”.  They were not matters that could conceivably have affected my decision to grant the Anton Piller order. 

61                  The e-mail sent on 15 December 1999 requires further comment.  Counsel for the applicants did not address a number of the contentions made on behalf of the respondents in relation to that e-mail.  That was largely because these contentions were made in written and oral submissions in reply. 

62                  One contention which they did address was based upon an affidavit regarding that document sworn by Mr Moorhouse, who was Mr Scott’s solicitor.  He said that Mr Scott had told him that [only] 52% of the entries in the list were business contacts, thereby implying that there had been a legitimate justification for transmitting it to his private e-mail address.  Counsel for the applicants submitted that upon a closer examination, even Mr Scott’s characterisation of the list revealed that only 11.6% of the total entries were described by Mr Scott as personal contacts.  In addition to the 52% of entries which were existing business contacts, 14.4% were acknowledged to be prospective business contacts.  These were, at least potentially, of commercial significance to Liberty.  So too were a number of the other names contained in the list, including some 11.3% which were “now not known” to Mr Scott. 

63                  More importantly, counsel for the respondents submitted in their written and oral submissions in reply, but not in chief, that the material contained in the list was not confidential because it was taken largely from a collection of business cards that Mr Scott had accumulated over the years.  They submitted that officers of Liberty, including Mr Ma, knew full well that Mr Scott had retained possession of those cards after his resignation.  The basis for that submission was the affidavit of Mr Moorhouse, which was affirmed on 15 March 2002.  Mr Moorhouse said that Mr Scott had told him that in or around January 2000, shortly after he left Liberty, he provided his former employer with a copy of all of the business cards in his possession.  He sent an e-mail to Mr Ma on 4 January 2000 in the following terms:

“The only other item I have is a sidscussed, [sic] the [sic] business cards, I will copy all of those when time permits (I’m going away tomorrow, will be back early next week) and forward a copy to Kylie.”

64                  Mr Ma replied on the same day. He said, inter alia:

“…As for the business cards, can you send them in and Kylie and photocopy? We will have a few new people starting and would like to distribute those cards to them.”

65                  Mr Moorhouse said that Mr Scott had told him that the business cards referred to in those e-mails were contained in his personal folders, collected and maintained by him both prior to and during his employment with Liberty.  There were five such folders and probably over 1000 individual cards.  Following the e-mail exchange referred to above, Mr Scott had photocopied the majority of the cards and sent those copies by mail to Ms Kylie Moon, at Liberty.  On 18 January 2000, Mr Scott sought confirmation from Ms Moon that she had received those copies.  Mr Moorhouse said that Mr Scott had told him that he had had no further conversation with Mr Ma, or any other Liberty employee, after that time.  At no stage was he asked to return the business cards themselves. 

66                  In counsel for Mr Scott’s written submissions in reply, the following comment was made:

“As to the 15 December list, as noted above, why should this list have been of particular concern to Liberty in circumstances where its officers, including Mr Ma, knew that Mr Scott had retained possession of the business cards from which the list was largely constructed?”

67                  Although counsel for the applicants did not deal with this point in their submissions, it seems to me that the answer lies in the fact that there is nothing to suggest that Mr Ma, or any other person in authority in Liberty, had the knowledge attributed to them.  Indeed, the e-mails show that Mr Ma had instructed Mr Scott to send the business cards to Ms Moon, but do not show any knowledge on his part that this did not occur.  The evidence concerning what happened with regard to the business cards is insufficient, in my view, to warrant the conclusion that the manner in which the list was dealt with during the course of the application for the Anton Piller order was tainted by non-disclosure. 

the appplicants’ submissions as to the applicable legal principles

68                  Counsel for the applicants referred to a number of authorities in dealing with the relevant legal principles governing this application.  Among those to which I was referred were Yousif v Salama [1980] 1 WLR 1540, Dunlop Holdings Ltd and Dunlop Ltd v Staravia [1982] Com LR 3 and Booker McConnell plc v Plascow [1985] RPC 425 at 441-442.

69                  Particular reference was made to Roger Bullivant Ltd v Ellis [1987] FSR 172, where Nourse LJ said, at 181, with reference to a card index that had been taken by the defendant which contained a ready and finite compilation of the names and addresses of those who might bring business to the plaintiffs:

“Having made deliberate and unlawful use of the plaintiffs’ property, he cannot complain if he finds that the eye of the law is unable to distinguish between those whom he could, had he chose, have contacted lawfully and those whom he could not.”

70                  Counsel also referred to Dormeuil Freres SA v Nicolian Ltd [1988] 1 WLR 1362 at 1368-1369, where Browne-Wilkinson VC commented upon the dangers of proceeding, in an application to discharge an ex parte order, on the basis of endeavouring to ascertain what happened in the past, rather than what should happen in the future. 

71                  In Dart Industries Inc v David Bryar (1997) 38 IPR 389, Goldberg J dealt with an application to discharge an Anton Piller order based upon alleged non-disclosure.  His Honour referred to the judgment of Ralph Gibson LJ in Brinks and also to the tentative view expressed by Browne-Wilkinson VC in Tate Access Floors Inc v Boswell [1991] Ch 512 at 534 that investigations of the circumstances in which an ex parte Anton Piller order was granted should be restricted to those cases where there had been a serious failure to make a material disclosure.  Goldberg J expressed his agreement with that view and directed that the application before the Court to discharge the Anton Piller order be put over to the trial of the proceeding.

72                  Finally, counsel for the applicants referred to National Australia Bank Ltd v Idoport Pty Ltd [1999] NSWSC 964, where Santow J observed that although the court placed great importance on the obligation to make full and frank disclosure of all material circumstances in ex parte matters, there was no automatic discharge in the event of non-disclosure even of matter which was material, or arguably so.  The fact that his Honour considered that on balance it would have been better had the material been disclosed did not lead to the conclusion that the ex parte injunction should be discharged.  He said that the “courts should not encourage the discharge of otherwise meritorious applications on the grounds of trifling errors”: see also Mark Rich and Co Holding GMBH v Krasner (unreported, English Court of Appeal, 15 January 1999).

conclusion

73                  In Garrard v Email Furniture Pty Ltd (1993) 32 NSWLR 662 Mahoney AP observed that where an order has been made ex parte, the party against whom it has been made has two inter-related rights.  First, he is entitled, on learning of the order to apply for its discharge.  This he may do irrespective of any irregularities in the making of it.  Second, he may make application for the discharge of the order upon the ground that it was irregularly obtained.  As his Honour said at 676:

“The courts have, for many years, required a high standard of candour and responsibility of those who seek ex parte orders … Dalglish v Jarvie (1850) 2 Mac & G 231;  42 ER 89.”

74                  His Honour went on to refer to the observation of Isaacs J in Thomas A Edison Ltd v Bullock (1912) 15 CLR 679 to the effect that it is the duty of the party asking for an injunction ex parte to bring to the notice of the court all facts material to the determination of his right to that injunction, and it is no excuse to say that that party was not aware of their importance. 

75                  The principles which lie behind the duty of candour to which the authorities refer are not in doubt.  It is their application to the facts of this particular case which is in issue. 

76                  Notwithstanding the comprehensive attack which the respondents have mounted upon the conduct of the applicants in obtaining the Anton Piller order, and the voluminous evidence which has been placed before me in an effort to have that order set aside and/or discharged, I am firmly of the view that the order should stand. 

77                  In my opinion the evidence adduced by the applicants in support of the Anton Pillerorder plainly established the existence of a strong prima facie case against Mr Scott.  The inferences for which they contended were clearly open upon the material.  In the absence of cogent evidence to rebut those inferences, some or all of them would be likely to be drawn. 

78                  There is no doubt in my mind that the applicants were entitled to submit, on that evidence, that there was a real possibility that unless the Anton Pillerorder were granted, Mr Scott would cause important evidence to be destroyed or deleted.  In arriving at that conclusion, I bear in mind the relative ease with which such evidence can be destroyed or deleted, the propensity evidence regarding the comparative table, the powerful incentive on the part of those who may have misappropriated confidential and commercially sensitive information to conceal evidence of their wrongdoing, and that fact that, unlike Bluestone, Mr Scott did not deny the allegations made against him on affidavit. 

79                  The applicants made full disclosure to the Court of all of the matters that were truly material to the issue of whether the Anton Piller order should be made.  They revealed the existence of the County Court proceeding and undertook to discontinue that proceeding forthwith.  The fact that they were later stymied in that intent by a refusal on the part of that Court to grant leave for that proceeding to be discontinued (even though they offered to pay the other party’s costs) could not reasonably have been anticipated.  They revealed that they had previously sought to obtain an Anton Piller order from the County Court, and that their application for such an order had been refused.  They explained why that earlier application had failed and adduced additional evidence before me to remedy the deficiency in their case which had previously led to its rejection. 

80                  I am unable to accept the respondents’ contention that the failure to disclose the undertakings proffered by Mr Scott in the County Court proceeding reflected a lack of candour on the part of the applicants.  Those undertakings were neutral in terms of demonstrating anything about Mr Scott’s honesty or integrity.  Proffering them was the type of conduct one would expect from any sensible defendant being pressed by a plaintiff threatening to seek interlocutory orders compelling compliance with existing obligations. 

81                  I am also unable to accept the respondents’ contention that the applicants presented a misleading picture to the Court regarding the e-mail of 15 December 1999.  I have summarised earlier in these reasons for judgment the evidence regarding that e-mail, including the explanation offered by Mr Scott, through his solicitor, as to how that document came to be compiled.  That evidence does not persuade me that the applicants overstated the importance of its timing, or its potential commercial value to a competitor.  I do not accept that that evidence demonstrates that Mr Ma was aware that Mr Scott had retained the original business cards upon which the list was based, and permitted him to keep them for his own purposes. 

82                  The other matters relied upon by the respondents as demonstrating material non-disclosure seem to me to be relatively inconsequential.  None of them, whether considered separately, or in combination, would have affected my decision to grant the Anton Piller order.

83                  It follows that in my view there was no material non-disclosure.  If I am wrong about that, I would still unhesitatingly exercise my discretion to refuse to discharge the Anton Piller order.  That order was granted upon strong evidence, and was carefully worded to ensure that Mr Scott’s rights, and those of his current employer, Bluestone, were fully protected. 

84                  To the extent that each Notice of Motion seeks the discharge of the Anton Piller order made on 20 December 2001, that Notice of Motion will be dismissed.

Associate:

Dated:              26 March 2002