Liberty Financial Pty Ltd v Bluestone Group Pty Ltd & Anor [2005] FCA 470

SECOND RESPONDENT

JUDGE: HEEREY J

DATE: 21 APRIL 2005

PLACE: MELBOURNE

REASONS FOR JUDGMENT 1 The applicant Liberty Financial Pty Ltd (Liberty Financial) complains of publication by the first respondent Bluestone Group Pty Ltd (Bluestone) of a document called the "Q&A Information Sheet". Liberty Financial and Bluestone are competitors in certain financial markets. Liberty Financial alleges that this document was sent by Bluestone to a number of commercial entities with whom Liberty Financial has dealings. The document itself purports to give information about litigation in which Liberty Financial and Bluestone are or have been engaged in the Federal Court and in the Supreme Court of Victoriaother courts, mostly arising out of the employment by Bluestone of a Mr Trevor Scott who formerly worked for Liberty Financial. Also involved in this litigation is Permanent Custodians Ltd which has acted as trustee for certain public issues by Bluestone. Liberty Financial says that the Q&A Information Sheet contains misleading and deceptive statements contrary to s 52 of Trade Practices Act 1974 (Cth) and is defamatory. 2 I have heard a number of interlocutory applications which have been resolved either by agreement or by decisions ex tempore. The one outstanding matter concerns Bluestone's application for discovery by Liberty Financial of documents said to be relevant to allegations in pars 6 and 7 of Liberty Financial's sSecond aAmended sStatement of cClaim (SASC). 3 In par 6 of SASC Liberty Financial alleges that in distributing and publishing the Q&A Information Sheet Bluestone made certain representations in trade or commerce. Those presently relevant are: "(d) that Liberty Financial engaged in litigation that was an abuse of process; (e) that Liberty Financial used litigation for the illegitimate purpose of attempting to damage or stifle the business of a competitor; and (f) that Liberty Financial had no legitimate interest or rights it was attempting to protect by litigation against Bluestone and Scott." 4 In par 7 of SASC it is alleged that representations alleged in par 6 were untrue. In relation to pars 6(d) (e) and (f) it is said: "(i) The application commenced by Liberty Financial against Permanent Custodians was properly commenced by Liberty Financial in protection of its legal rights, not as an abuse of process as represented by Bluestone in par 4 of the Q&A Information Sheet. (j) The litigation against Bluestone and Scott and other proceedings commenced by Liberty Financial against Bluestone has been properly commenced by Liberty Financial in protection of its legal rights not as an abuse of process as represented by Bluestone in par 9 of the Q & A Information Sheet." 5 By its amended defence Bluestone pleads a general denial in answer to par 6 of SASC and makes some assertions in relation to various sub-paragraphs, but says nothing specific in relation to par 6(d)-(f). In par 7 of the defence, dealing with the issue of falsity, Bluestone generally denies the allegations in par 7 of SASC and also says in par 7(d): "(1) In relation to sub-par 7(i) [of SASC]: i. The respondents have at all material [times] believed and held the opinion that the applicant commenced proceedings against Permanent Custodians for the purpose of interfering with the first respondent's $134 million loan securitisation project known as 'Sapphire 1'; and; ii. tThe circumstances in which the applicant sought to join Permanent Custodians to the current litigation set out in sub-par (c)(i) above were such as to provide a reasonable basis for that belief and opinion. (2) In relation to sub-par 7(j): i. The respondents at all material times believed and held the opinion that the applicant is using the courts in an attempt to defend its market share; and ii. The applicant's conduct in the current litigation, the First Federal Court Proceeding, the Federal Court Proceeding, the County Court proceeding, the IRC proceeding, Federal Court of Australia Proceeding No V 447 of 2004 and Supreme Court of New South Wales proceeding No 1584 of 2004 was such as to provide a reasonable basis for that belief and opinion." 6 Bluestone's request for discovery is for the following documents: "(1) All documents recording, referring or relating to the [sic] Liberty's purpose and/or intention in commencing and/or engaging in the following proceedings: (A) V213 of 2001 in the Federal Court of Australia (First Federal Court Proceedings); (B) V1256 of 2001 in the Federal Court of Australia (Copyright and Confidential Information Proceedings); (C) V477 of 2004 in the Federal Court of Australia (the DEF Proceedings); (D) the instant proceedings, namely, V714 of 2004 (the Q&A Proceedings); and (E) any other proceedings in which Bluestone is a defendant or respondent and which are funded by Liberty, including 1584 of 2004 in the Supreme Court of NSW (the Volpes Proceedings) (together, the Relevant Proceedings) including, but not limited to, all communications with external advisers of Liberty. (2) All documents recording, referring or relating to Liberty's purpose and/or intention in making the following applications in the Copyright and Confidential Information Proceedings: (A) application for preliminary discovery against Permanent Custodians on 1 March 2002; and (B) application to join Permanent Custodians on 30 April 2002. (together Relevant Applications).… (3) All documents recording, referring or relating to advice sought, obtained or provided to Liberty in connection with commencing and/or engaging in the Relevant Proceedings and the Relevant Applications. (4) All documents recording, referring or relating to Liberty's reason for or purpose and/or intention in proposing to join Alistair Jeffery as a respondent to the Q&A Proceedings. (5) All documents recording, referring or relating to a policy, program, strategy, approach or plan prepared or maintained by Liberty with respect to: (A) litigation against competitors; (B) damaging or stifling the business of a competitor through litigation; and (C) litigation for the purpose of defending Liberty's market share." 7 Clearly there are raised on the pleadings issues as to whether the Q & A Information Sheet conveyed, amongst other things, a representation that Liberty Financial, in commencing and continuing the various actions, had committed an abuse of process and, if so, whether that representation was true. Bluestone's plea of reasonable belief would not in itself be an answer to the s 52 claim. However Bluestone's general denial of par 7 puts in issue Liberty Financial's assertion that the representations pleaded in par 6 of SASC were untrue. The onus of proving untruth is on Liberty Financial. 8 Is Liberty Financial's state of mind in commencing or continuing the various actions relevant to the issue of abuse of process? In my opinion, yes. In Williams v Spautz (1992) 174 CLR 509 at 517 Mason CJ, Dawson, Toohey and McHugh JJ endorsed the following formulation by the trial judge: "The essence of an abuse of process action is that the proceedings complained of were instituted and/or maintained for a purpose other than that for which they were properly designed or exist, or to achieve for the person instituting them some collateral advantage beyond that which the law offers, or to exert pressure to effect an object not within the scope of the process. The focus in such a suit is on the dominant purpose of the person charged with abuse of process in instituting them." Their Honours noted (at 524) that the purpose of the party instituting the proceedings was of "crucial importance". Abuse of process might exist "even if the moving party has a prima facie case or must be assumed to have a prima facie case" (at 522). 9 Purpose here, as in most contexts in the law, means the actual subjective purpose held by the person in question (see for example News Ltd v South Sydney District Rugby League Football Club Ltd (2003) 200 ALR 157 at [39]). It is not the case, as senior counsel for Liberty Financial submitted, that the only question here is whether the pleadings in the various actions show on their face an arguable case and that the motivation, purpose or intention of Liberty Financial in commencing the actions is irrelevant. 10 An order for discovery remains a matter of discretion, and such an order might be refused where, for example it might work injustice or oppression or require effort and expense disproportionate to the forensic value likely to be achieved: see Tabe v Amalgamated Television Services Pty Ltd (1987) A Def R 50-025 at 40,124-40,125 per McLelland AJA. However the present case is really all about allegations of abuse of process and the question of Liberty Financial's purpose is central to that issue. Liberty Financial have not put on any evidence to support the contention that the proposed discovery would be unduly burdensome. It would not be fair to Bluestone to deny it a routine procedural step which might well be of assistance on a central issue. 11 On the issue of abuse of process I do not see any valid distinction between the commencement and continuance of actions. Either way there is a wrongful use of the court's process. 12 Questions of legal professional privilege and waiver may arise, but these cannot be decided in the abstract before discovery takes place and the documents the subject of any such claims identified. 13 The parties should bring in minutes of orders to give effect to these reasons and the other rulings. Costs will be reserved. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey.