Cadence Australia Pty Ltd v Chew [2008] NSWSC 1074, 1076

[Bold text denotes emphasis added].

Cadence Australia Pty Ltd v Chew [2008] NSWSC 1074 (19 September 2008).
Cadence Australia Pty Ltd v Chew [2008] NSWSC 1076 (26 September 2008).

Preliminary

The recent decision of Hamilton J in the Equity Division of the Supreme Court of New South Wales demonstrates an arguably innovative method for obtaining access to the computer of another party.

The plaintiff, as the defendant's former employer, alleged that the defendant had breached specific restraint clauses within their employment contract. The relationship between the plaintiff and defendant was now considered competitive in business. Notwithstanding, for reasons outlined, His Honour noted, "the plaintiff's case against him (the defendant), as it appears to date, is very thin."

Section 68 Application

Due to the apparent "thinness of the case" and lack of available interlocutory relief, the plaintiff made an application under s 68 of the Civil Procedure Act 2005 (NSW):

[2] The plaintiff seeks, upon production of the computer, to have it examined to see whether or not it contains any material that would be relevant to a determination of the questions arising in these proceedings.

s 68 provides:

Subject to rules of court, the court may, by subpoena or otherwise, order any person to do either or both of the following:
(a) to attend court to be examined as a witness,
(b) to produce any document or thing to the court.

The comparable provision in the Federal Court of Australia may be noted as O 33 r 13.

The discretionary power to grant such an application is to be considered with Reg 23.8 of the Uniform Civil Procedure Rules 2005 (NSW).

Reg 23.8 provides:

(1) For the purpose of enabling the proper determination of any matter in question in any proceedings, the court may make orders for any of the following:
(a) the inspection of any property,

[...]

(2) An order under subrule (1) may authorise any person to enter any land, or to do any other thing, for the purpose of getting access to the property.

[...]

(6) In this rule, "property" includes any land and any document or other chattel, whether in the ownership or possession of a party or not.

His Honour rejected the defendant's suggestion that the provision and/or application is subject to a threshold test. For example, in drawing an analogy to an order for further discovery by satisfying more than a mere possibility that the computer contains documents material to the proceedings. In contrast, His Honour interpreted the relevant provisions on the "words of the rule itself".

His Honour also rejected the defendant's submission that no additional documents, material to the proceedings, other than those previously produced, were available on the computer.

Application Granted

His Honour allowed the plaintiff's application to inspect and examine the defendant's computer with the assistance of an independent computer expert.

At [12-13], His Honour emphasised that the parties should confer in relation to the appointment of an independent computer expert and agree upon a mutually suitable protocol for the examination.

[12] The parties should now confer to see if an arrangement can be come to for an examination by a suitable expert of the contents of the computer carried out in the way that least incommodes the defendant and protects his confidential information of a business or personal nature and protects confidential business information of Mr Harding's client.

[13] I ask that the parties attempt to work out a regime without further intervention of the Court. If, however, the Court’s intervention is necessary it will be provided.

Whilst the parties agreed upon an independent computer expert, they subsequently returned to the Court a week later to clarify the scope of examination.

At [11]:

The correct balance will be maintained in this case if I allow examination of the computer for the purpose of investigating contact with John Boyd Properties, to which, as I have said, the defendant does not now object, but refusing to allow examination in relation to other persons as to whom questions are not shown to arise on the material available.

An "Intrusive Power"?

Upon attendance to clarify the scope of examination, the defendant urged "the importance of limiting the use of this intrusive power."

At [10]:

On the one hand, it is most desirable that the Court have power to assist it in the just, cheap and quick determination of proceedings, in the words of s 56(1) of the Civil Procedure Act 2005. On the other hand, there must be a proper limit, as Lloyd J observed in the Azzopardi case, on the ambit of provisions that are intrusive into privacy.

In Onefone Australia Pty Ltd v One.Tel Ltd [2007] NSWC 1476, Barrett J also balanced the risk in granting an application under s 68:

[10] I did observe in the judgment of 23 October 2007 that resort to s 68 as a indirect form of third party discovery in existing inter partes proceedings ran the risk of being an abuse of process. That comment was made in relation to the possibility that s 68 may have been activated by reference solely to the commenced proceedings. That is not the case now before me. As I have said, the foundation for the resort to s 68 in this instance is the progressing of the Part 5.9 examinations which is a firm foundation.

[11] The degree of sensitivity to the possibility of abuse of process must, virtually by definition, be greater once proceedings have been commenced. But I do not think that the particular application now before me shows distinct hallmarks of abuse of process on that basis. Examinees and their advisors are always alive to the possibility that the proper bounds of examination will be overstepped, and no doubt the examinees in this case would make an appropriate application to the court if it should appear that the continuation of the examinations, either with or without the ASIC material the subject of the application with which I am presently concerned, was somehow beyond the proper purpose of such examinations.

[12] As things now stand, the special purpose liquidator has shown a proper basis for the making of the orders he seeks, and those orders will be made, although submissions made by ASIC suggest that there may be some fine tuning necessary.