New South Wales Supreme Court CITATION : NAK Australia Pty Ltd v Starkey Consulting Pty Ltd [2008] NSWSC 1142 HEARING DATE(S) : 9 October 2008 JURISDICTION : Equity Division Expedition List JUDGMENT OF : Brereton J EX TEMPORE JUDGMENT DATE : 10 October 2008 DECISION : Plaintiff to provide to defendants access to computer and email account. CATCHWORDS : PROCEDURE – DISCOVERY – computer access – application by defendants for access to a computer and email account – where authenticity of copy of relevant email in dispute – where plaintiff proposes to tender contents of computer as evidence – where computer not within previously ordered categories of discovery – expanding categories of discovery – whether independent expert should be appointed to inspect the computer – whether defendant should be present at inspection. CATEGORY : Procedural and other rulings CASES CITED : NAK Australia Pty Ltd v Starkey Consulting Pty Ltd & ors [2008] NSWSC 1136 NAK Australia Pty Ltd (plaintiff) PARTIES : Starkey Consulting Pty Ltd (first defendant) Geoffrey Brook Starkey (second defendant) Oil Seal Supplies Pty Ltd (third defendant) FILE NUMBER(S) : SC 6032/07 COUNSEL : Ms M Painter (plaintiff) Mr E White (defendants) SOLICITORS : Truman Hoyle Lawyers (plaintiff) Robilliard & Robilliard (defendants) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EXPEDITION LIST BRERETON J Friday, 10 October 2008 6032/07 NAK Australia Pty Ltd v Starkey Consulting Pty Ltd & ors JUDGMENT (ex tempore) 1 HIS HONOUR: The defendants seek orders that the plaintiff NAK Australia Pty Ltd ("NAK") provide them with access to a computer processing unit, formerly used by the second defendant Mr Starkey while he was provided to NAK as a consultant by the first defendant Starkey Consulting Pty Ltd ("Starkey Consulting"), together with access to the email account and directory which he used during that period until 29 June 2007. 2 In these proceedings, NAK asserts that the defendants have, amongst other things, diverted for their own benefit commercial opportunities of NAK. In that respect, NAK relies on an email of 24 May 2007, apparently sent by Mr Starkey to one Helen, an officer or agent or employee of one of NAK's suppliers or manufacturers, a copy of which was annexed to an affidavit sworn by NAK's principal, Mr Tesoriero. In his responsive affidavit, Mr Starkey disputed the authenticity of that copy email. He alleges that it has been tampered with by Mr Tesoriero or on behalf of NAK. In his subsequent affidavit, Mr Tesoriero does not respond to that allegation. 3 As a result of previous disputes about discovery, on 30 July 2008 I made a number of orders, in the context that two previous attempts to obtain electronic copies of the original email had, for one reason or another, failed. The orders then made included: 2. That by Wednesday, 6 August 2008, the plaintiff produce to the defendants printouts of unforwarded originals of the emails referred to in the plaintiff's discovered document 6.25, together with a CD-ROM containing those original emails. 4 My recollection is that at that time I contemplated the possibility of simply ordering access to the computer, but that I preferred at that stage to permit NAK to make a further attempt to discover, by producing, as the order provided, hardcopy unforwarded originals, and an electronic replica, of the relevant email. The purpose of the order was to ensure that the defendants would have access to an email in its original format, which had not been forwarded to another account, or saved in a different format, and thus could have been the subject of alteration. 5 On the same day, I made directions for the service of further evidence, including extending time for NAK's evidence – which had already been the subject of prior extension on more than one occasion – to 15 August 2008, and limiting to 22 August 2008 time for the defendants' evidence (in circumstances where the defendants were pressing for an early hearing and were restrained by an interlocutory injunction, and indicated that as a price of obtaining an early hearing they were prepared to accept that short time limit). 6 On 6 August, NAK's solicitors forwarded to the defendants' solicitors a CD-ROM with copies of the relevant emails in a PDF format; that is a format different to that in which the evidence indicates the emails were originally created on the computer, namely HTML. The evidence indicates that saving in a different format permits alteration, and thus did not comply with the letter or the intent of my order of 30 July. 7 On 8 August, I heard a contested application by NAK, substantially for further and better discovery against the defendants. Judgment on that application was delivered on 11 August [NAK Australia Pty Ltd v Starkey Consulting Pty Ltd & ors [2008] NSWSC 1136]. At that stage, no issue or complaint was raised by the defendants as to compliance with the orders of 30 July, or the sufficiency of the CD-ROM provided on 6 August. Whether or not it was the result of anything expressly said, I must say I was then of the impression that there was acceptance that there had been compliance with those orders. 8 On 15 August, albeit apparently after 5:00pm, NAK served their further evidence. That evidence included an affidavit of NAK's IT Manager, one Mr Des Stirling, which exhibited a CD-ROM containing what was said to be a "snapshot" as at 29 June 2007 of the contents of the computer that Mr Starkey had used until that date. Neither the contents of the computer, nor the "snapshot", had been the subject of discovery; that is not a matter for criticism, because discovery of a category which included those documents had not been sought. 9 However, it is now clear that NAK wishes to put into evidence the contents of Mr Starkey's computer as at 29 June 2007. Mr Tesoriero, in his affidavit material, deposes that that computer has been sealed and isolated – although his evidence does not apparently make plain exactly when that took place. Mr Starkey alleges that the so-called "snapshot" is incomplete, and that some documents which were on his computer are not reflected in the "snapshot". 10 After an informal arrangement was made between the parties allowing some additional time for the defendants to serve their evidence, the matter returned before me for further directions on 27 August, when I was told that the evidence was complete save for some affidavits in reply by NAK, in respect of which a direction was made. On that basis, I adjourned the proceedings to the Expedition Judge's list on 29 August. On that day, Palmer J was again assured that the evidence was complete. His Honour adjourned the matter to 31 October, in the Expedition List, with a view to that day fixing the matter for hearing some time in early 2009. 11 Meanwhile, however, on 20 August, after receipt of Mr Stirling's affidavit, the defendants' solicitors requested access to the subject computer. On 21 August, NAK's solicitors indicated that their preliminary instructions were that their client would accede to that request, subject to a number of specified provisos, including that the scope of the search be defined and agreed; that a current curriculum vitae of the proposed IT expert be provided; that Mr Starkey personally and on behalf of the corporate defendants, together with the IT expert, his solicitor and counsel, execute appropriate confidentiality undertakings; and that NAK be provided with a copy of any written report prepared within 24 hours. On 22 August, the defendants' solicitors responded, agreeing to provide the confidentiality undertakings, but otherwise indicating less than agreement to the other requests, and requesting submissions of draft confidentiality undertakings. There being no response, they pressed the matter on 28 August, and again on 12 September. On 16 September, NAK's solicitors eventually responded, invoking the directions previously made as excluding any further evidence on the part of the defendants, and asserting that as the defendants' evidence was now closed there was little utility in acceding to the request to inspect the computer. 12 Against that background, the defendants bring the present motion for access to the computer and the email account. I must say that I would have thought that it was self-evident that, in circumstances where NAK wanted to put into evidence a "snapshot" of the computer, the defendants ought be permitted an opportunity to at least verify that the "snapshot" is an accurate one, and/or to obtain alternative information and evidence from the computer in question. 13 In the judgment I gave on 11 August, I indicated that where it was sought, in effect, to add an additional class of documents to those in respect of which discovery had been ordered, some reason for doing so ought to be identified. In this case, I would have thought that the fact that NAK put into evidence a document not previously discovered, being a "snapshot" of the computer, was ample reason for extending discovery to include the contents of the computer, in order to enable the defendants to test and verify the accuracy of the evidence NAK sought to adduce. 14 The position now is as follows. First, the original electronic format of the email traffic between Mr Starkey and "Helen" is plainly relevant in circumstances where Mr Starkey disputes the authenticity of at least some of what has been put into evidence and alleges that there has been tampering. Repeated attempts to obtain the original electronic format have, for one reason or another, failed. The practical solution to that is, as I think I foreshadowed as long ago as 30 July, access to the email account. Secondly, NAK wishes to rely on secondary evidence of the contents of the computer as at 29 June 2007 by tendering a CD-ROM containing the "snapshot". The defendants must be entitled, as a matter of fairness and justice, to inspect the computer in order to verify the accuracy of the "snapshot" and ascertain whether there is any additional material on the computer which they might wish to tender in response. It may be that if it is desired to adduce evidence of an expert, an application for leave to adduce further evidence would be required, but that is not a necessary condition to granting access. Access to the computer may serve to provide documents which, even without the defendants themselves adducing further affidavit evidence, can be tendered, or used to found cross-examination. 15 Against the application, it can be said that if this matter was to be raised, it could and should have been, if not on 8 August, then on 11 August, or at the very latest on 27 or 29 August, on all of which occasions the matter has been before the Court, since service of the CD-ROM containing the PDF format of emails on 6 August, and the latter two occasions after service of Mr Stirling's affidavit and the CD-ROM containing the "snapshot" of the computer. 16 The significance of those considerations is mitigated by a number of matters. First, at least prior to 29 August, it appeared that there was likely to be agreement to access to the computer. Secondly, as I have foreshadowed, it does not necessarily follow that the adducing of further evidence will be involved, at least of further affidavit evidence such as might require leave. Thirdly, the trial will not take place at least until early 2009, a matter which was not known in July and August. Fourthly, any prejudice arising from delay will be suffered much more by the defendants than by NAK who has the benefit of the interlocutory injunction. Fifthly, it cannot be overlooked that the history of the case involves a number of defaults by NAK in serving their affidavit material in time in respect of which they have been granted indulgences in the past. In that context, it is far from unreasonable that the defendants should have a like indulgence if required. 17 It was submitted on behalf of NAK that the inspection should be by a jointly instructed independent expert, appointed either as a joint expert or as a court appointed expert under the (NSW) Uniform Civil Procedure Rules. I do not think that course is appropriate in this type of case. First, NAK has already had the opportunity to examine the computer and adduce what evidence it wants from it through their own means, an opportunity that they have availed of through Mr Stirling. They retain that ability. It would impose an unreasonable constraint on the defendants' ability to investigate the accuracy of his evidence if the only instructions that an expert would be given were those agreed by the parties or, if not agreed, settled by the Court. While the relevant expert should be an independent one, he or she should be one retained and instructed by the defendants. Whether a report is ultimately served is entirely a matter for the defendants. 18 The remaining question is whether Mr Starkey should be present during the inspection. NAK opposes this on the basis that it gives him access to what NAK says is confidential information, although on the present application no evidence to support that claim has been put before me. NAK's original position, in its solicitors' letter of 21 August, envisaged Mr Starkey personally and on behalf of the other defendants giving confidentiality undertakings – and thus, implicitly, himself having some form of access, otherwise no such undertaking would have been relevant. His involvement is likely to facilitate and expedite whatever computer search is required. It seems to me very unlikely that, 15 months after the event, the material which might be accessed would be highly sensitive from a confidentiality point of view, or of much current market relevance or utility. In circumstances where NAK wishes to rely on the contents of the relevant computer, and Mr Starkey alone knows what those contents were at the relevant time, it seems to me practically impossible that justice could be done in the case while precluding him from access to the computer. But I think it is fair to say that counsel was not heard fully on this issue, and at the conclusion of this judgment I will afford a further opportunity to address the confidentiality question lest there be anything I have overlooked in that respect, although as presently minded I am inclined to the view that Mr Starkey should be permitted to be present during the inspection. 19 My orders are: (1) Order that the plaintiff provide to the defendants access to the computer processing unit formerly used by Mr Starkey until 29 June 2007, at premises agreed by the parties or failing agreement at the office of the plaintiff's solicitor, together with all necessary facilities including a monitor and appropriate power to permit its proper inspection. (2) Order that the plaintiff provide to the defendants full access to the email account and directory styled geoff@nak.com.au. (3) Direct that such access on behalf of the defendants shall be exercised by an independent computer expert retained by the defendants. (4) Reserve liberty to apply in the event of any difficulty arising in the implementation of these orders. (5) Note that what is envisaged by "full access" is full co-operation in access to all aspects of the CPU for a reasonable period for the purposes of an inspection of the contents of the CPU, which the parties agree is likely to be about one working day. (6) Direct that such access be conditional upon the expert and Mr Starkey executing a confidentiality undertaking to the effect that they will use the information derived from the inspection only for the purposes of these proceedings and keep it confidential and not further disseminate it. (7) Direct that, subject to the condition already indicated, Mr Starkey and also a computer expert nominated by the plaintiff may be present during the inspection. (8) Order that the plaintiff pay the defendants' costs of the motion. ********** 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.