Supreme Court New South Wales Medium Neutral Citation: HQ Insurance Pty Ltd v Doughty [2022] NSWSC 400 Hearing dates: 5 April 2022 Decision date: 05 April 2022 Jurisdiction: Equity Before: Stevenson J Decision: Subject to qualification concerning certain financial records, application to restrict defendants' access to material to be relied on by plaintiff in application for preliminary discovery dismissed with costs Catchwords: PRACTICE AND PROCEDURE – application for preliminary discovery – application for orders restricting basis on which defendants to application for preliminary discovery have access to allegedly confidential material to be relied on by plaintiff for preliminary discovery Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW) Category: Procedural rulings Parties: HQ Insurance Pty Limited (Plaintiff/Applicant) Stuart Gordon Doughty (First Defendant/Respondent) Linda Carrie Buckley (Second Defendant/Respondent) Silks Insurance Pty Ltd (Third Defendant/Respondent) Representation: Counsel: S R Meehan (Plaintiff/Applicant) C O'Neill (First to Third Defendants/Respondents) Solicitors: Hall & Wilcox Lawyers (Plaintiff/Applicant) Esplins Solicitors (First to Third Defendants/Respondents) File Number(s): 2021/362167 EX TEMPORE Judgment (REVISED) 1. The plaintiff is a bloodstock and livestock insurance broker. 2. The first and second defendants were formerly employed by the plaintiff. The first defendant's employment ceased in May 2020. The second defendant's employment ceased in December 2020. 3. The first defendant is now the sole director of the third defendant, a company that he established the day before he ceased to be employed by the plaintiff. 4. The second defendant has, since May 2021, been an employee of the third defendant. 5. By Summons filed on 21 December 2021, the plaintiff seeks preliminary discovery against each of the defendants under Uniform Civil Procedure Rules 2005 (NSW) r 5.3, on the basis that, on having made reasonable enquiries, the plaintiff has been unable to obtain sufficient information to decide whether or not to commence proceedings against the defendants. 6. The prospective proceedings arise from the plaintiff's apprehension that the first and second defendants have acted in breach of their post contractual obligations, in breach of their fiduciary duties, have misused the plaintiff's confidential information and infringed the plaintiff's copyright. 7. The plaintiff's application relies upon an affidavit sworn by its managing director, Mr Wayne Aldridge. In his affidavit, Mr Aldridge refers to an "Exhibit GWA-1" which has been served on the defendants. Mr Aldridge also refers to a "Confidential Exhibit GWA-1", a copy of which has been served on the defendants' legal advisors, and the non-confidential parts of which have also now been served on the defendants themselves. 8. Now, by Notice of Motion filed on 28 February 2022, the plaintiff seeks orders that specified pages of the confidential exhibit be made available only to the defendants' solicitors and that those solicitors take "all proper and effective precautions" to prevent disclosure to the prospective defendants, otherwise than by showing a copy of the documents to the defendants for the purpose of taking instructions in relation to this application. 9. The stated effect of the proposed orders is that the defendants' solicitors may show the defendants the confidential material, but only in the defendants' solicitors' offices and in the presence of those solicitors. 10. The documents in question are documents upon which the plaintiff relies to enliven the Court's exceptional jurisdiction of ordering parties, not yet sued, to disclose to a prospective plaintiff documents which will enable the plaintiff to decide whether or not to commence proceedings against the defendants. 11. A powerful case would be required to cause the Court to restrict the prospective defendants' access to such documents. 12. The defendants, through their legal advisors, have agreed that "financial information relating to the quoting of insurance" should be redacted from the documents shown to the defendants, with the intent that such information not be disclosed to the defendants at all. 13. It is also common ground that the defendants, including the third defendant, are bound by the Harman undertaking. 14. Mr Meehan, who appeared for the plaintiff, submitted that the plaintiff's apprehension is that, while the defendants are no doubt mindful of their obligations under the Harman undertaking, there may be inadvertent disclosure, perhaps by employees of the third defendant, other than the first and second defendants, of such information to third parties. 15. However, the third defendant as a corporation is bound by the Harman undertaking. It would no doubt take all steps necessary to ensure that its employees, other than the first and second defendants, who are themselves of course bound by the Harman undertaking, did not cause the third defendant to breach the undertaking. 16. In those circumstances, subject to the carve out concerning the financial information to which I have referred, my conclusion is that the Harman undertaking provides sufficient protection to the plaintiff in relation to the material it wishes to rely upon in the forthcoming application for preliminary discovery; and that the plaintiff's Notice of Motion should otherwise be dismissed with costs. ********** Amendments 06 April 2022 - Jurisdiction on Coversheet amended DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 06 April 2022