FEDERAL COURT OF AUSTRALIA

Anchorage Capital Partners Pty Limited v ACPA Pty Limited (No 2) [2014] FCA 1165

THE COURT ORDERS THAT:

1.    On condition that access to the documents produced under it be restricted to the applicant’s external lawyers, dismiss the respondents’ application to set aside the applicant’s notice to produce dated 22 October 2014.

2.    Liberty to the applicant to apply on 24 hours’ notice for leave in relation to particular documents if issues about instructions arise.

3.    All questions of costs be reserved.

4.    Liberty to the respondents to restore their application to use the email chain for purposes unrelated to this litigation to the list after judgment is delivered.

5.    The applicant serve any further evidence arising from the documents produced under the notice to produce by Friday 7 November 2014.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    This case will eventually determine whether two finance houses trading under the name ‘Anchorage Capital’ will both be able to continue to do so. In the meantime they are at loggerheads as to whether in the lead up to the trial, which is due to start on 15 December 2014, the US firm (as I will call the respondents together) must hand over unredacted versions of some of the documents it proposes to tender at trial. At present it has provided only redacted versions, asserting that the hidden parts of the documents are either confidential or irrelevant. This posture eventually provoked the issue by the Australian firm (as I will call the applicant) of a notice to produce the unredacted versions of the documents.

2    Upon the return of that notice to produce, Mr Dimitriadis of Senior Counsel, who appeared for the US firm, sought to set the notice aside. If I were satisfied that the portions of the documents which had been redacted were irrelevant to any issue in the proceeding in the sense that expression is used in s 55 of the Evidence Act 1995 (Cth), then I would readily set aside the notice to produce insofar as it sought the unredacted portions. However, I am not satisfied the material is irrelevant in the s 55 sense. By the time the matter was called on for hearing the parties had narrowed the scope of their debate to four classes of documents which were described as categories C1, C2, C3 and C5. Ms Gilchrist of Herbert Smith Freehills swore an affidavit on behalf of the US firm in which she explained what those particular categories were.

3    Category C1 was said to consist of presentations and letters to investors. It was Ms Gilchrist’s view that the manner in which her client had used the word Anchorage was clear from the redacted versions and accordingly it was not necessary for the applicant to know any more. That may well be so, but the redacted versions do not permit one to know in respect of which precise services the name Anchorage has been used. Mr Dimitriadis submitted that there was no issue that the two firms operated in the same milieu. He was not willing to concede when pressed, however, that for the purposes of the Australian firm’s claim for misleading and deceptive conduct this would not be an issue at trial. Accordingly, it is an issue at trial at least so far as I am presently concerned. For myself I tend to suspect that this is not very likely to be a large issue at trial but I cannot presently say that it is irrelevant in the s 55 sense.

4    Category C2 consisted of 3 pages which identified the names and personal details of potential investors. I do not accept that this is irrelevant either. The Australian firm is bound to prove that it has suffered some loss and damage by reason of the US firm’s allegedly misleading and deceptive conduct.

5    Ms Chrysanthou for the Australian firm submitted that her client was entitled to seek to prove, as part of its damages case, the diversion of its trade to the US firm and, on that basis, the identities of the investors and clients involved in these documents with whom it would appear the US firm was at least treating could not be said to be irrelevant in the s 55 sense. I agree.

6    Category C3 consisted of recent confidential expressions of interest ‘from the second respondent’ as Ms Gilchrist put it at [39] of her affidavit. For largely the same reason as in the preceding paragraph, I am not satisfied that this material is irrelevant in the requisite sense either.

7    Category C5 consisted of documents which would identify persons who had been involved in investing in the kinds of companies with which these two firms are concerned. By the time of the hearing on the present application the ambit of this dispute had been reduced to an argument as to pages 106 to 110 of the proposed tender bundle. This material is relevant, so it seems to me, to at least the issue of which services the Anchorage name was being used with respect to and also potentially the issue of client diversion. I therefore do not accept that the US firm is entitled to resist production of the unredacted portions of the documents, at least on the basis of relevance.

8    However, the US firm also asserted that it was entitled to mask the documents on the basis of a claim for confidentiality. It is important at the outset to appreciate that we are not presently here concerned with the tender of documents at a trial in open court. Instead, the present issue is only whether the US firm should be relieved from the obligation of compulsory production under the notice to produce to the applicant. Any material produced under the notice will be subject to the ordinary implied undertaking that it be used only for the purposes of the present proceedings: see Hearne v Street (2008) 235 CLR 125. Ordinarily the existence of that implied undertaking, a breach of which can result in fines, sequestration or imprisonment, is thought to be a sufficient protection for most concerns about confidentiality. It is accepted, however, that in the case of trade rivals it can be necessary to ensure that the businesses of litigants before the court are not damaged as a result of the actual processes of the litigation in which they are ensnared or by the disgorging of information which, whilst tedious to the public, might give an unfair advantage to a competitor.

9    Insofar as the Australian firm’s external lawyers are concerned there is no issue in my mind that the US firm is more than adequately protected by the implied undertaking. The question, really, is whether the material should now be provided to the Australian firm itself and in particular to its Managing Director, Chairperson and Chief Financial Officer. I incline to the view, having examined the material, that it would be useful, at least in a commercial sense, for the Australian firm’s management to see this material and it would confer upon that firm an advantage which, at least as presently advised, appears to me to be unfair. It reveals, for example, clients past and present, styles of approach to fundraising and particular attitudes to strategy.

10    As I say, I am not here confronted with the question of non-publication orders in respect of material which is being presented in a public trial. It may be doubted – I presently express no concluded view – whether the present material which the US firm points to will justify a suppression order if tendered at a public trial, contrary to the general principle of open justice.

11    Ordinarily I regard this as relatively straightforward. In Luxottica Retail Australia Pty Ltd v Specsavers Pty Ltd (No 3) [2011] FCA 793 I concluded that access ought not be granted to an in-house counsel who was the company secretary of the relevant party and that was in part because disclosure to that in-house counsel would have generated a conflict between his obligations under the implied undertaking and his duties as a fiduciary arising from the office of company secretary. This case, of course, is not precisely the same as that but nevertheless I was informed from the bar table that whilst the Australian firm has an in-house counsel who I assume is not on the board, he is presently subject to a conflict of interest from matters arising from his earlier employment and one has, therefore, the situation that it is proposed that disclosure should be made to persons who are in very senior positions within the Australian firm.

12    Disclosure, it seems to me, would generate a conflict of interest between the Hearne v Street obligation and the fiduciary duties of those persons to advance the interests of their employer. No doubt this situation creates an inconvenience in the sense that it is difficult to see how the applicant will be able to provide instructions about these documents, but that is an inconvenience which seems to me to be the Australian firm’s problem rather than the US firm’s. What I propose to do in those circumstances is therefore to prevent access to this material being granted to the Australian firm’s employees but otherwise to allow its external lawyers to see the material.

13    At the same time I will indicate that if those external lawyers find themselves with a need to obtain instructions about individual documents they may exercise the liberty to apply that I shall grant. I took a similar course in Specsavers. I should indicate that when the time comes to tender this material at trial it will be necessary, in order to obtain the corresponding suppression order, for the US firm to pass the standard set forth in Hogan v Australian Crime Commission (2010) 240 CLR 651. Presently advised it seems to me that there may be some difficulty in that regard, although I express no concluded view. However, what that does indicate is that the nature of the debate which is presently before the Court may not yet be entirely concluded.

14    It is not beyond the realm of the foreseeable that the US firm will either abandon the tender of the documents or seek to tender them and then fail to obtain a suppression order, in which case substantially the Australian firm will have prevailed in the debate at that time. In those circumstances I propose to reserve the costs of the present debate until such time as the documents have been tendered or their tender abandoned.

15    At the conclusion of the hearing Mr Dimitriadis applied for leave to use an email exchange which had come to light for purposes which were unrelated to the litigation. The email chain suggested that the Australian firm had come into possession of a letter written by the US firm in relation to what was referred to as an expression of interest in a company whose identity it is not presently necessary to reveal. The US firm wants to identify the source of this communication and possibly pursue actions for breach of confidence in relation to its disclosure. I am not presently disposed to permit the broadening of the present contretemps in that way until this case is concluded. I will stand the US firm’s application over until after final judgment in this matter when it can be mentioned.

16    Finally, I am concerned that this litigation is presently being pursued in a manner in which enthusiasm may be excessive. Involved is essentially a straightforward trade mark infringement suit with the usual claims for misleading and deceptive conduct thrown in for good measure. I encourage the parties to take a more cooperative posture with each other. If my invitation to a sensible style of litigation is declined I will make it more attractive by capping the recoverable costs. Whether I take this step is a matter which is up to the parties. The orders I make are:

(1)    On condition that access to the documents produced under it be restricted to the applicant’s external lawyers, dismiss the respondents’ application to set aside the applicant’s notice to produce dated 22 October 2014.

(2)    Liberty to the applicant to apply on 24 hours’ notice for leave in relation to particular documents if issues about instructions arise.

(3)    All questions of costs be reserved.

(4)    Liberty to the respondents to restore their application to use the email chain for purposes unrelated to this litigation to the list after judgment is delivered.

(5)    The applicant serve any further evidence arising from the documents produced under the notice to produce by Friday 7 November 2014.

Associate:

Dated:    5 November 2014