Total Real Estate Training Pty Ltd v Howard [2011] NSWSC 735

Supreme Court New South Wales

Medium Neutral Citation: Total Real Estate Training Pty Ltd v Howard [2011] NSWSC 735 Hearing dates: 11 July 2011 Decision date: 11 July 2011 Jurisdiction: Equity Division Before: Gzell J Decision: Orders made for IT expert to interrogate. Catchwords: PROCEDURE - Inspection of Property - Uniform Procedure Rules 2005, Pt 23 r 23.8(1) - defendants utilised confidential computer database of plaintiffs - discovery defective - whether IT expert should interrogate defendants' computer and other digital storage devices Legislation Cited: Uniform Civil Procedure Rules 2005 Cases Cited: Cadence Australia Pty Ltd v Chew [2008] NSWSC 1074 Category: Interlocutory applications Parties: Total Real Estate Training Pty Ltd (First Plaintiff) MG Logistics Pty Ltd (Second Plaintiff) Leanne Howard (First Defendant) Helen Lowy (Second Defendant) Laura Watts (Third Defendant) Harcourts International Limited (Fourth Defendant) Harcourts Group (Australia) Pty Ltd (Fifth Defendant) Representation: Counsel M Jones (Plaintiffs) J Hynes (Defendants) Solicitors Clayton Utz (Plaintiffs) Minter Ellison Lawyers (SA) (Defendants) File Number(s): 2011/0073980

EX TEMPORE Judgment 1Before the Court is an application by the Plaintiff for orders enabling an IT expert to interrogate the Defendants' computers and other digital storage devices. 2The Uniform Civil Procedure Rules 2005, Pt 23 r 23.8(1) provides as follows: "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, (b) the taking of samples of any property, (c) the making of any observation of any property, (d) the trying of any experiment on or with any property, (e) the observation of any process." 3What is sought is, essentially, that the IT expert appointed by the Plaintiff be given access to information technology system components of the Defendants to the extent necessary to search those components for specified information. 4The case involves three individual Defendants who were employees of the first Plaintiff who left that employment to take up employment with the fourth Defendant or fifth Defendant. 5There is clear evidence that two of the individual Defendants copied to their individual laptops, or to laptops provided by their new employer, a database that had been built up over many years by the Plaintiff in the conduct of its activities in conducting conferences for real estate agents, its principal one being the Australian Real Estate Conference. 6It is well known that the first Plaintiff and the fifth Defendant are in competition with respect to this form of activity. 7The evidence thus far establishes that some components of the database developed by the Plaintiff found their way into a list of the persons utilised by the fourth or fifth Defendant in marketing a proposed conference in competition with the Plaintiff. This is so because the details of two named persons contained a mistake, a mistake that was also on the database of the Plaintiff. 8In opposition to the application, it is pointed out that the offer by the fifth Defendant to search its database differentiates this case from other decided cases. 9It is also pointed out that the application emerged after an argument between the solicitors for the parties as to the extent of discovery. It was submitted that the Plaintiff leaped from that argument to this invasive and expensive approach to a problem which, it is submitted, could be dealt with by an application for further discovery, and an offer is made to enable the Plaintiff's IT expert to recover deleted data and continue the approach by way of further discovery. 10In Cadence Australia Pty Ltd v Chew [2008] NSWSC 1074, Hamilton J took the view that the purpose of r 23.8(1) is that of enabling the proper determination of any matter in question in any proceedings. 11His Honour said the individual provisions of the rules should be construed in accordance with their words. No other criteria is stipulated by the rule. 12Furthermore, His Honour said that a Plaintiff is not bound to accept the Defendant's word that there is no other relevant material rather than seeking to examine the contents of the computer. 13It was submitted that in the decided cases, orders were made for inspection of specific property, and that in this case there is insufficient specificity. 14I do not agree with that submission. The annexures to the notice of motion detail the search parameters. 15It is clear that there has been a misuse of the Plaintiff's database. 16The only way in which the extent of that use can be discovered is for an attempt to be made by the expert to recover the deleted data. 17The offer that has been made will give rise to the same problems of the extent of the search as the proposed orders themselves. 18There are two matters of significance that lead me to the conclusion that the orders ought to be made and at this stage, notwithstanding that the process is an invasive and expensive one. 19The first is that Mr Taintey had no difficulty in determining which computers he needed to go to to produce his affidavit of discovery within the relatively short space of time limited by the order. 20The other matter is that the second Defendant was party to two emails that were the subject of additional discovery by the first and third Defendants as the emails passed between the second Defendant and them. But there has been no additional discovery by the second Defendant of those two emails or any other material that might be relevant. 21What has been demonstrated is that the discovery to date is insufficient and the supposed problems associated with identifying the computers that should be interrogated appear not to be as significant as is made out in Mr Taintey's affidavit. 22The Defendants have not objected to the regime apart from the arguments that I have addressed as to the origin of the dispute with respect to discovery and the differentiating aspect of the Harcourts offer of searching its database which does not overcome the problem of a lack of discovery of the use made of the database material to get it onto a list of the fourth or fifth Defendant. 23The complaint has been, by and large, that of oppression in being subject to the interrogation because of the number of devices that it is said would be the subject of scrutiny. 24I have already said that I doubt the extent of that difficulty in light of Mr Taintey's ease of providing discovery, and in light of the addition of the words "to the extent necessary" in the proposed order, which calls for the co-operation of the Defendants in directing the expert to those computers that could possibly contain relevant information. 25To summarise, the confidential client lists of the Plaintiffs have been taken. The information from those lists has been used in the Defendants' conference business. The facts of the case in terms of use are uniquely in the camp of the Defendants who have every reason, consciously or subconsciously, not to produce documents. 26The very nature of the case is one where the general principles concerning the adequacy of verified lists of documents ought not to be decisive. 27There has been no satisfactory discovery from the Defendants that assists in determining use. 28In my view, therefore, the Plaintiffs are entitled to the orders they seek. 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: 15 July 2011