Supreme Court New South Wales Medium Neutral Citation: NSW Mobile Fleet Services Pty Ltd v Max Mobile and Detailing Pty Ltd [2023] NSWSC 140 Hearing dates: 20 February 2023 Date of orders: 20 February 2023 Decision date: 20 February 2023 Jurisdiction: Common Law Before: Campbell J Decision: (1) Refuse the relief sought in the Notice of Motion filed in Chambers on 13 December 2022 so far as concerns prayers 6(c); (d) and (e); (2) Notice of motion is otherwise dismissed; (3) No order as to costs each party should bear its or their own costs. Catchwords: CIVIL PROCEDURE — implied undertakings — "Harman undertaking" — release from undertaking — special circumstances not established — release sought to make complaint regarding suspected illegality — no special circumstances found — prejudice to author considered Cases Cited: Ashby v Slipper (No 2) [2016] FCA 550 Bailey v Australian Broadcasting Corporation [1995] 1 Qd R 476 Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 Crest Homes PLC v Marks [1987] 1 AC 829 Harman v Secretary of State for the Home Department [1983] 1 AC 280 Liberty Funding Pty Ltd v Phoenix Capital Limited [2005] FCAFC 3; (2005) 218 ALR 283 Nowlan v Marson Transport (2001) 53 NSWLR 116; [2001] NSWCA 346 Papantoniou v Stonewall Hotel Pty Ltd [2018] NSWCA 85; (2018) 19 BPR 38,547 Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217 Texts Cited: Nil Category: Procedural rulings Parties: NSW Mobile Fleet Service Pty Limited trading as Running Gear Automotive (First Plaintiff) Giovanni Barbanera (Second Plaintiff) Tobian Clayton (Third Plaintiff) George Karayannopoulos (Fourth Plaintiff) Max Mobile Car Wash and Detailing Pty Limited trading as Max Mobile (First Defendant) Jack Volpes (Second Defendant) Representation: Counsel: MB Evans (Plaintiffs) D Mahendra (Defendants) Solicitors: Michael Vaughan & Co. (Plaintiffs) Piper Alderman (Defendants) File Number(s): 2021/115270 extempore JUDGMENT - revised 1. HIS HONOUR: The plaintiffs are seeking orders releasing them from their "Harman" undertaking in relation to documents obtained under the Court's powers of compulsion directed to third parties for the production of documents for the purpose of the litigation. It is necessary to set out briefly the background to the litigation to put the application in context. In this regard I have been greatly assisted by the written submissions of Mr Evans of counsel who appears for the plaintiffs today. 2. The plaintiffs' claim against the defendants is for damages for injurious falsehood and misleading or deceptive conduct. The background facts are that the first plaintiff company was formed for the purpose of providing motor vehicle fleet services largely to public sector entities. The defendants are also in that business and it may be said, obviously, that they are therefore commercial competitors. It seems that the fourth plaintiff through a corporate entity had prior to 12 March 2021 provided services to the first defendant including market research and canvassing potential customers. The business relationship between the fourth plaintiff and his company, on the one hand, and the first defendant, on the other, ceased on 12 March 2021 and the fourth plaintiff commenced working for the first plaintiff three days later, that is to say, 15 March 2021. 3. The second defendant, whom I take to be the directing mind of the first defendant, became aware that the fourth plaintiff had associated himself with the first plaintiff and at 11.00 pm on 19 March 2021 sent an e-mail to a large number of public sector entities to which the first defendant had been providing the services. The first defendant traded under the name of Max Mobile. The e-mail that the second defendant, Mr Volpes, sent is in the following terms: "Afternoon Please note that Tobian Clayton (Toby) is no longer employed by Max Mobile Car Wash and Detailing Pty Ltd t/as Max Mobile. It has come to our attention that Tobian Clayton may be in possession of details (including telephone numbers and e-mail addresses) taken from Max Mobile's servers. In the event that you are contacted by Tobian Clayton, it would be appreciated if you could please let us know and also forward any e-mails/correspondence received. If you would like to discuss this matter further, please do not hesitate to contact myself". The email was signed off by Mr Volpes describing himself as the owner of Max Mobile. 1. As part of the background I have been informed, without objection, that separate proceedings in the Equity Division seeking remedies for an alleged breach of an employee's duty of confidentiality brought by the first defendant against the fourth plaintiff have since been discontinued. I would infer that there is no mention of any operative contractual restraint of trade in the current dispute. 2. The documents the subject of this application were obtained through subpoenas issued to third parties. From the affidavit of Michael Vaughan, solicitor, sworn on 13 December 2022, on which Mr Evans moves, it is apparent that an officer of a certain government department with fleet responsibilities passed on to a large number of recipients information, I would infer for present purposes, he had received from Mr Volpes. There were two emails. The second email (both are dated 19 March) passes on the e-mail from Mr Volpes that I have set out above. The first e-mail was sent by the officer on 19 March 2021 at 10.09am and its substance states: "For those of you that use Max Mobile Mechanic, please be aware that an employee who has since left the business will try and make contact with you to try and reschedule services that have already been booked with Max's and say the Smart Fleet have said to use the new business instead. Please ignore any caller that says they are from Max Mobile unless it is from Brian, Jack or Joe. Please pass this on to everyone that is responsible for booking services in". I infer for present purposes that Mr Volpes is the source of this information. 1. I think it is fair to say, from the affidavit of Mr Vaughan, that the plaintiffs suspect that the officer is in cahoots with Mr Volpes and has knowingly passed on false information received from him to others for the purpose of harming the plaintiffs' legitimate commercial interests. As I say, that is what is suspected or believed by the plaintiffs. 2. By reference to the Notice of Motion, the relief sought today is for leave to publish the officer's emails to a relevant senior officer of his department, to bring their contents to the attention of the Independent Commission Against Corruption and to bring the contents of the emails, and I infer, the plaintiffs' belief about them to relevant senior officers of other government departments whose employees were recipients of the emails. It is relevant for me to observe that the officer who sent the emails has not received notice of this application. Mr Evans informed me that the view had been taken that unless and until leave was granted the plaintiffs were in no position to notify anyone about the matter. 3. In his very helpful written submissions, Mr Evans has referred me to what I take to be the relevant body of case law concerning release from the Harman undertaking (established by Harman v Secretary of State for the Home Department [1983] 1 AC 280). I think it is uncontroversial to say, without referring to all of the authorities, that it has been clearly established at least since the decision of Lord Oliver in Crest Homes PLC v Marks [1987] 1 AC 829 at 860, that an applicant for release from the undertaking, as a matter of general principle, must demonstrate special circumstances. Even when special circumstances are established there remains a residual discretion in the Court whether to authorise the release of the information, which will be exercised by reference to all of the circumstances of the case. 4. A particular Australian decision which has been influential in this area is that of Wilcox J of the Federal Court of Australia in Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217. For present purposes, it suffices to say that having accepted the correctness, with respect, of previous decisions of the Federal Court concerning the special circumstances formula stipulated in Crest, his Honour continued: "For special circumstances to exist it is enough that there is a special feature of the case which affords a reason for modifying or releasing the undertaking and is not usually present. The matter then becomes one of the proper exercise of the Court's discretion, many factors being relevant. It is neither possible nor desirable to propound an exhaustive list of those factors. But plainly they include the nature of the document, the circumstances under which it came into existence, the attitude of the author of the document and any prejudice the author may sustain, whether the document pre-existed the litigation or was created for that purpose and therefore expected to enter the public domain, the nature of the information in the document (in particular whether it contains personal data or commercially sensitive information), the circumstances in which the document came into the hands of the applicant for leave and, perhaps most important of all, the likely contribution of the document to achieving justice in the second proceedings". (My emphasis.) His Honour's exposition has been referred to with approval at the appellate level: See Papantoniou v Stonewall Hotel Pty Ltd [2018] NSWCA 85; (2018) 19 BPR 38, 547 at [30]; and Liberty Funding Pty Ltd v Phoenix Capital Ltd [2005] FCAFC 3; (2005) 218 ALR 283 at [31]. I have emphasised what Wilcox J said about the position of the author of the document and any prejudice the author may sustain because that factor may have relevance here having regard to the plaintiff's purpose. 1. I understand his Honour's reference to "the second proceedings" merely indicates that the most common scenario in which these applications are made is when a party who has come by documents covered by a Harman undertaking wishes to use them in separate proceedings. However, as Mr Evans points out that is not the only situation in which a party may legitimately seek leave to utilise the documents for a purpose other than the proceedings in which they were obtained. In particular Mr Evans referred me to the decision of Flick J in Ashby v Slipper (No 2) [2016] FCA 550; (2016) 343 ALR 351. Although not named in the title of the case, the Commonwealth of Australia was also a party to that employment related case and it sought leave of the Federal Court, or release from the implied undertaking, to refer documents obtained under the Court's powers of compulsion for the purpose of referring a matter to the Australian Federal Police concerning the disclosure of the contents of a confidential diary maintained as to his engagements by the respondent who was at the material time the Speaker of the House of Representatives. In the course of his analysis Flick J said the following (at [10]): "Reasons for relaxing the constraint frequently involve considerations going beyond the immediate interests of the parties to particular litigation (and those whose otherwise confidential materials have been subpoenaed) and involve the wider public interest, including the public interest in the administration of justice and the administration of the law more generally. In the present case, these considerations include the enforcement or administration of the criminal law". 1. His Honour referred to the decision of Lee J of the Supreme Court of Queensland in Bailey v Australian Broadcasting Corporation [1995] 1 Qd R 476 at 486 to 487. I will quote part of what Lee J said in that passage: "Does it then follow that a party who, through discovery, has come into possession of documents which disclose the commission of a criminal offence may, as of right, disclose them to criminal authorities? In my opinion, it does not. To so conclude one would have to be able to say that in every case where the criminal law is infringed, the public interest in pursuing a prosecution in respect of that infringement outweighs the public interest in ensuring the integrity of the discovery process. However, the law is not so black and white. Indeed the plaintiff conceded that it will not be in every case that the criminal law is infringed that the Court will grant the leave sought...The infringement may be of a trivial or inconsequential nature or the application for leave might be brought, not for the purpose of promoting the public interest, but rather out of malice or spite on the part of the applicant...[M]oreover, the disclosure may have been brought about by circumstances in which the respondent was unable to claim a privilege otherwise open to him...and that is a factor which may render it unfair or unjust for the Court to grant the leave sought. All of the circumstances must be looked to in order to determine the nature and extent of the countervailing public interest raised". 1. I should say that Flick J went on to release the Commonwealth from the Harman undertaking in order that the disclosure of that official information contained in the Speaker's diary could be investigated by the AFP. 2. It is apparent that the public interest that Mr Evans invokes relates to what the plaintiff would categorise as the misuse by the author of his public office and the legitimate interest his employer would have in investigating that. Mr Evans also refers to the consideration that by passing information on to other public officials they too may have been diverted from the impartial exercise of their public duties and the departments concerned should know about that. In each case it is submitted that there is a legitimate public interest in the possible misuse of an official position being investigated by those ultimately responsible for public administration, that is to say, the departments themselves. Finally, it is said that the facts, simple as they are, are redolent of corruption. As I have said earlier in my treatment of the background facts, the tenor of the submission, with respect, is that the author is in a conspiracy with Mr Volpes to promote his business and to harm the business of the plaintiff. 3. The public interest that Mr Evans invokes, as I have described it, I think in fairness would satisfy the special circumstances stipulation if I were satisfied that there was a proper factual foundation for the belief or suspicion that the plaintiffs' hold. Adopting the working definition of 'something out of the ordinary' as apt I think it would be difficult to gainsay that the implied breach of public trust which Mr Evans urges upon me satisfies that requirement. However, that is not the end of the matter. There is the question about whether the material justifies that belief or suspicion, and also, given the potentially serious consequences of the release sought from the undertaking for the author, whether the consideration that he has not been served and the possible prejudice that may flow to him justify me exercising my residual discretion to grant the leave sought. 4. With respect, while I can appreciate the plaintiffs' concern, I am not satisfied that the material that has been put before me provides reasonable grounds either for a belief that the author was a party to a conspiracy or the like, to harm the plaintiffs. Nor am I satisfied that the material put before me provides reasonable grounds even for a mere suspicion that the author of the documents was in some sort of conspiracy to that effect with Mr Volpes. It seems to me that the proofs that have been put forward in this regard, bearing in mind the seriousness of the implied allegation being made, are not sufficiently cogent or exact even to establish, as I have said, reasonable grounds for belief or suspicion bearing in mind the Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 requirements. I accept that the plaintiffs do not at this stage have to prove on the balance of probabilities that there is a conspiracy or malice of some other kind, but the seriousness of the allegations demand that there should be a strong foundation for drawing an inference of reasonableness in the formation of the belief or suspicion. 5. I regard it as equally open to infer from the materials I have, that even if in a misguided way, the author was merely passing on what he regarded as important information he had received from a reliable supplier of services to others who had a legitimate interest in the matter, that is to say, other persons in other government departments and like businesses concerned with the administration of departmental motor vehicle fleets. As is apparent from his first email, it was relayed to him that it was not Mr Volpes who was doing the wrong thing, to use a neutral expression, and while they are not named, by implication it was the plaintiffs (or some of them) who were doing the wrong thing. That can be readily seen from how the author expressed himself in the first email. In particular the concern that he passed on to other interested persons related to the prospect that an unauthorised person would attempt to pass himself off as a representative of Max Mobile for the purpose of cancelling appointments already arranged and substituting new appointments with a different entity but said to be new appointments with Max Mobile. To my mind whether or not he was authorised to do that by the constraints of his position, the point is that one can see an "innocent" purpose in the author passing on the information, which is an inference just as strong as any available inference that he was acting unlawfully or nefariously. 6. What is being sought, certainly in respect of his department and ICAC, is that he be subject to an investigation which may well be prejudicial to him in the sense that it may endanger his employment and may lead to an investigation into corruption which may result in the institution, ultimately, of criminal proceedings. Now, it may well be that if there is real evidence of corruption emerging at some stage then the fact that those consequences follow is fair enough. However, given the potential seriousness of the prejudice he could suffer and bearing in mind what both Wilcox J of the Federal Court of Australia and Lee J of the Supreme Court of Queensland said, I am of the opinion that the fact that he has not received notice of this application so that he might be given the opportunity of presenting evidence of an innocent explanation is a significant matter. For two reasons therefore, first, I am not satisfied that there are grounds for me to draw a reasonable suspicion or belief about illegality or misuse of public office and, secondly, given the possible prejudice to the author, I am not satisfied that I should grant the relief sought. 7. I should say in any event that to the extent to which the plaintiffs' loss might have been increased by the emails from the author, making the assumption for present purposes only, that the other elements of the tort are established, that additional loss is likely to be, as a matter of causation, connected to the facts asserted against Mr Volpes if in due course they are established. 8. I refuse the relief sought in the Notice of Motion filed in chambers on 13 December 2022 at least so far as concerns prayers 6(c), (d) and (e). The motion is otherwise dismissed. 9. Mr D Mahendra of counsel who appears for the defendants on the motion seeks costs. Although the defendants ultimately neither consented to nor opposed the relief sought by the plaintiffs, learned counsel submitted that the defendants had a legitimate reason to be here relating to prayer 6(a) of the Notice of Motion which sought leave to use the documents to obtain the advice of senior counsel as to whether a cause of action - I am paraphrasing - existed against the author of the emails the subject of my judgment "for either a separate proceeding or to be joined to these proceedings". It was the prospect of a joinder to the proceedings of a third party that Mr Mahendra submits concerned his client legitimately. Essentially their position is the matter is ready for trial and indeed has been fixed for trial with an estimate of four days and they were concerned that had 6(a) been pressed there was a prospect of those hearing dates being derailed with prejudice to their client resulting in wasted costs and delay in the resolution of this issue. 10. The submission goes that it was not until 15 February 2023 that the plaintiffs' solicitor advised the defendants' solicitors that prayers 6(a) and 6(b) would not be pressed and that their concern about that matter was assuaged. By then counsel had already been briefed and costs had already been incurred. Mr Mahendra told me that although he has been in the case for two years, he was retained to appear today at the time the date was set on or about 14 December 2022. 11. Although correspondence has been tendered to demonstrate the matters to which I have referred, the defendants did not ever avail themselves of an opportunity to write to the plaintiffs' solicitors to say that if 6(a) was pressed they would oppose any attempt to join any other person to these proceedings which have already been fixed for hearing. There was no evidence before me that there was any attempt to avoid that consequence or even that the plaintiffs were made known of that legitimate concern held by the defendants. 12. In Nowlan v Marson Transport Pty Ltd (2001) 53 NSWLR 116; [2001] NSWCA 346, Heydon JA indicated that responding parties to motions have an obligation to the moving party to raise with the moving party matters that may be in issue to avoid the possibility that the moving party may be caught by surprise in relation to a position adopted at the hearing. While his Honour mostly had in mind the concern that the moving party might be caught short of necessary evidence because of a point taken at the hearing not foreseen, in general terms openness in litigation between the parties to it is a feature of modern litigation particularly having regard to the overriding purpose. 13. It seems to me that had the matter been raised the costs could have been avoided by the parties coming to some arrangement in relation to that matter. I can understand perhaps that the defendants would wish to be represented at this hearing because even if they had no real interest in opposing the orders sought, they would have a legitimate interest in knowing what is happening but that matter of itself I do not think justifies an order for costs. 14. I am not persuaded that issue was sufficiently joined between the plaintiff and the defendants in terms of the nature of the relief sought that the event of my order can be counted as a win for the defendants, and I am of the view that the order I should make is that there be no order as to costs to the intent that each party should bear its or his own costs of this application. Orders 1. My orders are: 1. Refuse the relief sought in the Notice of Motion filed in Chambers on 13 December 2022 so far as concerns prayers 6(c); (d) and (e); 2. Notice of motion is otherwise dismissed; 3. No order as to costs each party should bear its or their own costs. ********** 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: 24 February 2023