Seamus E. Byrne's - In Pursuit of Relevance

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Preliminary

Electronic documents, including e-mail, are increasingly raised in Australian courts as evidence to support an order for preliminary discovery. This entry highlights four recent cases.

Preliminary Discovery

Bernard Cairns, Associate Professor of Law at the University of Queensland (UQ), in Australian Civil Procedure (7th ed.) defines preliminary discovery as:

"discovery from a prospective defendant to allow the plaintiff to decide whether to proceed."

City Finance (WA) Pty Ltd v Murphy [2008] WASC 227

• The first respondent was employed by the applicant to provide financial services on behalf of the plaintiff's clients.
• The first respondent's employment was terminated (by apparent mutual consent).
• Another employee of the applicant was given access to the personal computer and e-mail profile (i.e. email mailbox, calendar, address book) ordinarily used by the first respondent during her period of employment.
• The employee identified a number of e-mails and electronic documents related to a third-party company.
• The applicant subsequently identified that the first respondent was a Director of, and licensed to provide financial services on behalf of, the third-party company.
• At [9]:

The plaintiff now says that it has suspicions that the first and second defendants, through the agency of the third defendant, have directed business away from the plaintiff. It says it does not know the full extent of the business that may have passed out of the plaintiff's control. It is for that purpose that it seeks discovery.

Beston Parks Management Pty Ltd & Anor v Sexton & Anor [2008] VSC 392

• The applicant employed the respondents in a senior executive capacity.
• Following resignation of the respondents, e-mails addressed to their former e-mail addresses at the applicant were actively monitored.
• Four months later, and for unknown reasons, e-mails addressed to the respondent were received by the applicant, which raised contractual concerns as to their on-going activities.
• At [87]:

87 I am satisfied that the applicants do not have sufficient information to enable them to decide whether to commence a proceeding against the respondents for breaches of the relevant contractual provisions. Nor could a statement of claim be properly drawn on the material currently available to the applicants. For example, they do not know: the circumstances in which the CVC and Happy Hallidays emails came about; what information was provided by the respondents to Barwon and/or CVC; whether the Barwon/CVC proposal has gone ahead; whether any information which has been provided by the respondents was “confidential” within the meaning of the relevant agreements; the extent of Dr Sexton’s involvement in the Happy Hallidays Holiday Park; and Mr Gerlach’s precise knowledge of, and involvement in, all of these matters.

Optiver Australia Pty Ltd v Tibra Trading Pty Ltd [2008] FCAFC 133

• Appeal to the Full Court.
• Five of the applicant's employees left to establish the respondent, a direct competitor.
• The applicant then identified a number of e-mails sent from the applicant’s former employees to their respective personal e-mail addresses.
• The e-mails contained commentary on improving the applicant’s software-based product.
• The e-mails also contained "key codes" for the technology which underpinned the applicant’s software-based product.
• At [49]:

49 Before his Honour Tibra argued that there were significant shortcomings in the evidence in this regard. On the appeal, senior counsel for Tibra elaborated on these alleged shortcomings at some length. We do not think it necessary in the circumstances to review these arguments, which in essence go to the ultimate merits of Optiver’s case. Optiver of course accepts that it does not have the evidence to support a case – that is the raison d’être for the present application. However, there is sufficient evidence, irrespective of the shortcomings relied upon by Tibra, to conclude that there is reasonable cause to believe Optiver may have a right to obtain relief. Five employees leave a business which depends on highly sophisticated software skills and set up a rival which achieves swift success in the circumstances set out previously. One of the emails which excited Optiver’s suspicions was sent by Mr King to a private address on the day of his resignation. [...]

Austal Ships Pty Ltd v Thurlow (No 2) [2007] FCA 202

• Confidential information of the applicant was sent by e-mail between two employees of the respondent, a direct competitor.
• One of the respondent's employees was a former employee of the applicant.
• The former employee purportedly had access to the confidential information.
• Preliminary discovery against the respondent's employees was ordered.
• Discovery revealed that the confidential information was sent to additional individuals associated with the respondent.
• Subsequent preliminary discovery to identify prospective defendants was ordered.
• At [15-16]:

15 It is to be noted that Austal seeks the examination order in aid of what it calls in its minute "Identity Discovery". That is, in the language of O 15A, it pursues the examination in order "to ascertain the description of a person sufficiently for the purpose of commencing a proceeding in the court against that person". It would appear to have sufficient material to decide whether to commence a proceeding for either or both breach of confidence or infringement of copyright against Messrs. Merrigan and Thurlow. It may be that, to the extent that Mr Thurlow was acting as an employee of Incat Europe, a cause of action may lie against that company which, as I observed in the reasons for judgment published on 7 September 2006, is apparently a member of the Incat Group. However the identification of Messrs Clifford and Carter as recipients of the two Austal Reports in June 2005 raises the possible involvement of other Incat companies in at least an infringement of Austal’s copyright. The Merrigan email predated the alleged disclosure of the Report by Mr Thurlow in May 2006.

16 What Messrs Clifford and Carter did with the Reports after they came into their hands may be relevant to the question whether Incat Tasmania, of which both are officers, is a party to an infringing reproduction, assuming copyright to subsist in favour of Austal. Mr Clifford is an officer of all of the Incat companies and the precise nature of his actions after receiving the Reports may enable the applicant to decide whether there is a basis for action against them.