Blackrock Asset Management Australia Services Limited v Waked (No 2) [2011] FCA 479 (5 May 2011)

Last Updated: 13 May 2011

FEDERAL COURT OF AUSTRALIA

Blackrock Asset Management Australia Services Limited v Waked (No 2) [2011] FCA 479

Citation:		Blackrock Asset Management Australia Services Limited v Waked (No 2) [2011] FCA 479
Parties:		BLACKROCK ASSET MANAGEMENT AUSTRALIA SERVICES LIMITED ACN 060 129 133, BLACKROCK ASSET MANAGEMENT AUSTRALIA LIMITED ACN 001 804 566 and BLACKROCK INVESTMENT MANAGEMENT (AUSTRALIA) LIMITED ACN 006 165 975 v MORRY WAKED, NICHOLAS BURT, VINVA SERVICES PTY LIMITED ACN 006 165 975, ANDREW JACKSON and VINVA INVESTMENT MANAGEMENT LIMITED ACN 142 528 783
File number:		NSD 66 of 2011
Judge:		PERRAM J
Date of judgment:		5 May 2011
Catchwords:		PRACTICE AND PROCEDURE – Legal professional privilege – application to access documents produced under subpoena over which a claim for privilege had been made – principles relevant to a claim for privilege – application of dominant purpose test – generalised evidence – insufficient specification of topics for a claim for privilege PRACTICE AND PROCEDURE – Subpoena – application to set aside parts of subpoena – relevance of material sought – subpoena set aside PRACTICE AND PROCEDURE – Discovery – application for further discovery – principles relevant to general discovery – Federal Court Rules O 15 r 2 PRACTICE AND PROCEDURE – Witness – application to take evidence by video link – requirement to make out a case for such an order to be made – discussion of difficulties associated with video link evidence
Legislation:		Corporations Act 2001 (Cth) Evidence Act 1995 (Cth) s 125 Federal Court Rules O 15 r 2, r 5
Cases cited:		Australian Competition and Consumer Commission v Advanced Medical Institute Pty Ltd [2005] FCA 366 cited AWB Limited v Cole (No 5) [2006] FCA 1234; (2006) 155 FCR 30 cited Barnes v Federal Commissioner of Taxation [2007] FCAFC 88; (2007) 67 ATR 284 cited Blackrock Asset Management Australia Services Limited v Waked [2011] FCA 272 cited Campaign Master (UK) Ltd v Forty Two International Pty Ltd (No 3) [2009] FCA 1306; (2009) 181 FCR 152 cited Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No 2) [2006] FCA 1001; (2006) 155 FCR 1 cited Compagnie Financiere et Comerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55 cited Kennedy v Wallace [2004] FCAFC 337; (2004) 142 FCR 185 cited Metso Minerals (Australia) Ltd v Kalra (No 3) [2008] FCA 1201 explained Tetra Pak Marketing Pty Ltd v Musashi Pty Ltd [2000] FCA 1261 distinguished
Date of hearing:	5 May 2011
Place:	Sydney
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	52
Counsel for the Applicants:	Mr A Moses SC with Mr J Darams
Solicitor for the Applicants:	Lander & Rogers
Counsel for the First to Third and Fifth Respondents:	Mr I Jackman SC with Ms V Brigden
Solicitor for the First to Third and Fifth Respondents:	Blake Dawson
Counsel for the Fourth Respondent:	Mr D Robinson SC with Mr N Furlan
Solicitor for the Fourth Respondent:	Baker & McKenzie

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 66 of 2011

BETWEEN:	BLACKROCK ASSET MANAGEMENT AUSTRALIA SERVICES LIMITED ACN 060 129 133 First Plaintiff BLACKROCK ASSET MANAGEMENT AUSTRALIA LIMITED ACN 001 804 566 Second Plaintiff BLACKROCK INVESTMENT MANAGEMENT (AUSTRALIA) LIMITED ACN 006 165 975 Third Plaintiff
AND:	MORRY WAKED First Defendant NICHOLAS BURT Second Defendant VINVA SERVICES PTY LIMITED ACN 006 165 975 Third Defendant ANDREW JACKSON Fourth Defendant VINVA INVESTMENT MANAGEMENT LIMITED ACN 142 528 783 Fifth Defendant

JUDGE:	PERRAM J
DATE OF ORDER:	5 MAY 2011
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The applicants be granted access to the following documents produced to the Court under subpoena issued to Fadi Khoury dated 19 April 2011: the email from Mr Morry Waked to Mr David Cross of Tuesday 24 November 2009 at 10.15am, the email from Mr David Cross to Mr Morry Waked of Tuesday 24 November 2009 at 10.31am, the letter of engagement to Mr Nick Burt dated 2 March 2010 and the account enclosed in a letter to Mr Morry Waked dated 23 December 2009; and the applicants not otherwise be granted access to the documents produced to the Court under that subpoena over which a claim of privilege has been made.
2. The first, second, third and fifth respondents pay the applicants’ costs of the Notice of Motion filed on 4 May 2011 by the applicants for orders granting access to the documents produced to the Court under subpoena issued to Fadi Khoury dated 19 April 2011.
3. Paragraph 2 of the subpoenas issued to each of Messrs Cochrane, Forrest and Ganesalingam on 20 April 2011 be set aside.
4. The applicants pay the costs of Messrs Cochrane, Forrest and Ganesalingam on the Notice of Motion filed by them on 29 April 2011.
5. The Notice of Motion filed by the applicants on 4 May 2011 for orders that the evidence of Messrs Blake Grossman, Naozer Dadachanji and Robert Kapito be given by video conference be dismissed with costs.
6. The Notice of Motion filed by the applicants on 4 May 2011 for further discovery of documents be dismissed with costs.
   

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 66 of 2011

BETWEEN:	BLACKROCK ASSET MANAGEMENT AUSTRALIA SERVICES LIMITED ACN 060 129 133 First Plaintiff BLACKROCK ASSET MANAGEMENT AUSTRALIA LIMITED ACN 001 804 566 Second Plaintiff BLACKROCK INVESTMENT MANAGEMENT (AUSTRALIA) LIMITED ACN 006 165 975 Third Plaintiff
AND:	MORRY WAKED First Defendant NICHOLAS BURT Second Defendant VINVA SERVICES PTY LIMITED ACN 006 165 975 Third Defendant ANDREW JACKSON Fourth Defendant VINVA INVESTMENT MANAGEMENT LIMITED ACN 142 528 783 Fifth Defendant

JUDGE:	PERRAM J
DATE:	5 MAY 2011
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. There are, before the Court, four notices of motion. The first is brought by the applicants and relates to legal professional privilege claimed in certain documents produced on subpoena by a solicitor at Norton Rose. The second is a notice of motion brought by three persons who are strangers to the litigation, to set aside certain paragraphs of subpoenas addressed to them. The third is a motion by the applicants for further discovery; and the final motion is by the applicants that the evidence of three of their witnesses be taken by video link from the United States.
2. Those four notices of motion occur in the following, perhaps unusual, context. The proceedings were commenced a relatively short time ago on 31 January 2011. The background and the context to the proceedings are set out in a judgment given by me on 18 March 2011, at which time I acceded to the respondents’ application for expedition: Blackrock Asset Management Australia Services Limited v Waked [2011] FCA 272. On 24 March 2011 I fixed the matter for hearing commencing on 9 May 2011: that is, next Monday. Earlier this week, I adjourned the commencement of the hearing to Wednesday afternoon next week, that is, at 2.15pm on 11 May 2011.
3. This case is principally concerned with circumstances arising after the termination or cessation of an employment relationship and the setting up of a new business in competition with the former employer’s business. The proceedings have been, on any view, hard fought thus far. The parties have been kept very busy. This Court, unfortunately, is occupied tomorrow which prevents me giving judgment in this matter then. Judgment in these matters on Monday would be too late. Accordingly it has been necessary to hear the whole argument and to give judgment today. Consequently, these reasons are perhaps more shortly expressed than they might have been if there had been the luxury of a little more time.

1. PRIVILEGE

4. I turn, then, to the notice of motion concerning privilege. On 19 April 2011, a subpoena was issued to a Mr Fadi Khoury. Mr Khoury is a solicitor at Norton Rose. In obedience to the subpoena he produced documents to the registry of the Court. In respect of some documents, no privilege was claimed; in respect of others, a complete claim for privilege was made; and in respect of a third class, there was a limited claim made by means of masking. On 4 May 2011 the applicants filed a notice of motion seeking to overcome that claim for privilege. It was that motion I heard this morning.
5. In support of the motion, an affidavit of Mr Riekert of 3 May 2011 was read, together with an affidavit of Mr Morry Waked (the first respondent) of 28 April 2011 and an affidavit of Mr Nicholas Burt (the second respondent) of 28 April 2011. Both of those affidavits had been initially filed on behalf of the first, second, third and fifth respondents, in order to make good the claim for privilege. Mr Riekert’s affidavit was filed on behalf of the applicants and went, in contradistinction, to the reasons why that claim ought not to be upheld.
6. Three exhibits were also tendered on the application. Exhibit 1 was certain answers given by Mr Waked to interrogatories which were administered to him by leave. Exhibit 2 was a similar set of answers by Mr Burt, again in response to interrogatories administered by leave. Exhibit 3 was a retainer letter from Norton Rose to Mr Waked of 3 December 2009, which set forth the basis upon which Norton Rose would provide advice to Mr Waked in relation to certain issues he had about his contract of employment at that time.
7. It is common ground that the species of privilege with which the present application is concerned is legal advice privilege. Mr Moses SC, who appeared with Mr Darams for the applicants, made two broad submissions. First, he submitted that the claims which were made on behalf of the first, second, third and fifth respondents were not sufficiently or appropriately particular in order to justify the conclusion that privilege existed. Secondly, even if privilege did exist, it had been lost by means of the operation of s 125(1)(b) of the Evidence Act 1995 (Cth), in that the communications in question were “made in furtherance of a deliberate abuse of power”.
8. During the course of argument, the abuse of power was identified as consisting of the allegations set out at paragraphs 49 and 50 of the present pleading, which is the amended statement of claim. Paragraphs 49 and 50 provide:
   49. By reason of the matters pleaded in paragraphs 39 and 48, Waked solicited, induced or encouraged, Forrest to leave employment of BR Australia.
   50. The actions of Waked pleaded in paragraph 49 were breaches of the:

(a) Express term of Waked’s employment pleaded in paragraphs 13(a) above; further or alternatively
(b) Implied terms of Waked’s employment pleaded in paragraph 14(a) or 14(b); further or alternatively
(c) The fiduciary duty he owed to the Applicants pleaded in paragraph 16(a); further or alternatively
(d) The statutory duties Waked owed to the Applicants pleaded in paragraphs 17(a) and 17(b).

9. Insofar as the insufficiency of the claim is concerned, the argument proceeded as follows. In paragraph 4 of his affidavit of 28 April 2011 Mr Waked said:

From 12 February 2010, Nick Burt and I jointly sought advice from Fadi Khoury in relation to a separate matter. The legal advice sought from this date is the legal advice the subject of Norton Rose’s 2 March 2010 engagement letter addressed to Nick Burt.

10. The letter of 2 March 2010, which was attached in redacted form to Mr Riekert’s affidavit, was a letter of engagement of the usual kind. It was headed “Letter of engagement – Establishment of fund management business”. About two paragraphs into the letter, there was a heading: “Scope of engagement”. The version which was provided to Mr Riekert then had the entire first two paragraphs of that section of the retainer letter redacted, so that it was not possible to read those two paragraphs.
11. In the balance of Mr Waked’s affidavit, there were a series of paragraphs, particularly 12, 14, 16, 18, 20, 21, 22 and 23, in which words generally to this effect were said:

I assert a claim of privilege on the basis that each of the documents records confidential communications between myself and my solicitors at the time, Norton Rose, made for the dominant purpose of obtaining or receiving legal advice from various solicitors at Norton Rose, as detailed in Annexure A.

12. Annexure A to Mr Waked’s affidavit was a list of documents which were identified by reference to the date, the sender and the recipient. Annexure A, however, did not add anything by way of description to what the topic or subject matter of each of the communications might be. I will not set out the details of Mr Burt’s affidavit. It suffices for present purposes only to note that its structure was broadly the same and that the formula by which the privilege was claimed was, in substance, identical.
13. Mr Moses SC submitted that it was unclear from those two affidavits what the basis upon which the privilege has been claimed was. He made specific reference to the Full Court of this Court’s decision in Kennedy v Wallace [2004] FCAFC 337; (2004) 142 FCR 185, particularly at 189 [12]:

Mr Kennedy’s claim to legal professional privilege depends upon a positive finding about the purpose for which the two documents were brought into existence. The only evidence consisted of the assertions made by Mr Kennedy in his affidavits. Those assertions are conclusions that are not supported by any revealed reasoning process. Mr Kennedy gave no evidence as to the topics upon which he intended to consult Mr Hafner. He gave no evidence as to what he meant by “obtaining legal advice” in his affidavit of 1 March 2004.

14. Mr Moses SC also submitted that assistance is to be obtained, from his client’s perspective, from the well known decision of Young J in AWB Limited v Cole (No. 5) [2006] FCA 1234; (2006) 155 FCR 30, and in particular, the passage at 44 [44]. There, his Honour set out a number of principles which he distilled from the authorities. Mr Moses SC did not rely upon all of them. He did, however, rely upon the following excerpts from five of them:
    

(1) The party claiming privilege carries the onus of proving that the communication was undertaken, or the document was brought into existence, for the dominant purpose of giving or obtaining legal advice...

(2) The purpose for which a document is brought into existence is a question of fact that must be determined objectively...

(3) The existence of legal professional privilege is not established merely by the use of verbal formula ... Nor is a claim of privilege established by mere assertion that privilege applies to particular communications or that communications are undertaken for the purpose of obtaining or giving “legal advice” ... If assertions of that kind are received in evidence in support of the privilege claim, their conclusionary nature can leave unclear what advice was really being sought. There will be cases in which a claim for privilege will not be sustainable in the absence of evidence identifying the circumstances in which the relevant communication took place and the topics to which the instructions or advice were directed ...

...

(5) A “dominant purpose” is one that predominates over other purposes; it is the prevailing or paramount purpose ...

(6) An appropriate starting point when applying the dominant purpose test is to ask what was the intended use or uses of the document which accounted for it being brought into existence...

15. Mr Moses SC also placed reliance upon the Full Court’s decision in Barnes v Federal Commissioner of Taxation [2007] FCAFC 88; (2007) 67 ATR 284 at 289 [18]. There, the Full Court said, relevantly:

The authorities emphasise the need for focused and specific evidence in order to ground a claim for legal professional privilege ... Where possible the court should be assisted by evidence of the thought processes behind, or the nature and purpose of advice being sought in respect of, each particular document. The fact that generalised evidence is not challenged in cross-examination does not mean that such evidence must be accepted, particularly when it is manifestly inadequate as it is in this case.

16. Mr Moses SC submitted, in reliance upon those authorities, that there was no evidence about the thought process which lay behind the decision to claim the privilege, or the nature or the purpose of the advice being sought in respect of each document. The claim which was made was not focused or specific and neither was it the case that topics had been identified: cf AWB Limited v Cole (No 5) [2006] FCA 1234; (2006) 155 FCR 30 at [44(3)].
17. Mr Jackman SC, who appeared with Ms Brigden for the first, second, third and fifth respondents, on the other hand, submitted that it was clear that the advices in question were about the establishment of a fund management business and that this was the fund management business which was the respondents’ business (“VinvA”). That was clear, so Mr Jackman SC submitted, because one could see from Exhibit 3 and the title to that letter that “fund management business” was the subject of the letter and the only fund management business which was presently in issue was that which belonged to VinvA. He also submitted that Mr Waked’s and Mr Burt’s affidavits were exemplars of how a privilege claim should be made.
18. I do not agree. Because the scope of the retainer has been deleted from the retainer letter attached to Mr Riekert’s affidavit, that is, the 2 March 2010 letter, one simply cannot identify what the topics of the advice which was provided actually were. I am left none the wiser as to what it was that Mr Khoury was advising about. There was no specification of topic, nor of the category of advice being given. The reader of either of Mr Waked’s or Mr Burt’s affidavit is left completely in the dark, in my opinion, as to what exactly was being advised upon. This, so it seems to me, is precisely the kind of difficulty with which the Full Court in both Kennedy and Barnes was concerned. For that reason, I do not think that the evidence comes close to establishing a proper claim for privilege. In the language of Barnes, the evidence is manifestly insufficient.
19. That being so, the parties were in agreement that I should examine the documents for myself. Having done that, I am satisfied, with a number of minor exceptions, that the material is essentially privileged. The four exceptions, in my opinion, to that are: first, an email from Mr Waked to Mr David Cross of 24 November 2009, which, so far as I can see, is not conceivably privileged; secondly, an email from Mr Cross to Mr Waked of the same date which, again, is plainly not privileged; thirdly and more importantly, the retainer letter of 2 March 2010 in its unredacted form; and, fourthly, in the same category, the bill provided to Mr Waked of 23 December 2009. In my opinion, none of those documents are privileged, nor are they especially interesting when one reads them.
20. That leaves unresolved Mr Moses SC’s claim under s 125(1)(b) of the Evidence Act 1995 in relation to the balance of the documents, whose privilege I would otherwise uphold. There are, so it seems to me, a number of difficulties with that claim. In the first instance, the machinery of s 125 makes it necessary to identify an abuse of power. “Abuse of power” is a defined term in subsection (3) meaning a power conferred by or under an Australian law.
21. The paragraphs of the amended statement of claim identified by Mr Moses SC as setting out the abuse of power were paragraphs 49 and 50. They set out what may, no doubt, properly be characterised as breaches of director’s duties under the Corporations Act 2001 (Cth) and possibly breaches of fiduciary duties as well. However, I am by no means convinced that a breach of a director’s statutory duty is necessarily to be equated with an abuse of power within the meaning of s 125(3). It may well be the case that some breaches of statutory duty involve abuses of power, but that need not be the case. I do not need to decide the matter on that ground, however, because subsection (2), as Mr Jackman SC correctly submitted, requires, for the effective operation of the provision, that there be reasonable grounds for a finding of the existence of the abuse of power. That in turn requires a consideration of the evidentiary material before me on this application.
22. As I apprehend it, all that was put by Mr Moses SC was the bare terms of the pleading itself. It may be, ultimately, that evidence is led at the hearing which will make good those allegations, at which time it may be possible to revisit the questions which are enlivened by s 125(3). However, at this stage, it is sufficient unto the day to say that the requirements of subsection (2) have not been met. There are, at present, no reasonable grounds for finding that there has been an abuse of power. It follows that the argument under s 125(1)(b), that the privilege has been lost, should be dismissed.
23. The appropriate orders in those circumstances are that the applicants should be given access to the four documents to which I have made reference. In my opinion, if the retainer letters and bills had been provided at an earlier date it is most unlikely that the present application would have occurred at all because it would have been quite obvious what Mr Khoury was providing advice about. In those circumstances, the appropriate order is that the first, second, third and fifth respondents should pay the applicants’ costs of this motion.

2. SETTING ASIDE OF SUBPOENAS

24. I turn to the motion brought by Messrs Cochrane, Forrest and Ganesalingam to set aside paragraph 2 of each of the subpoenas issued to them. The three subpoenas are all dated 20 April 2011 and all three gentlemen are witnesses in the case.
25. Paragraph 2 of each of the subpoenas is in the following terms:

Statements of accounts from financial institutions in respect of accounts in which you had a direct or indirect interest in the period 1 December 2009 to 31 July 2010.

Of these three subpoenas, Mr Jackman SC submitted that there was in the pleadings no issue to which they could naturally be seen as being apposite. Put another way, he submitted in substance that what was involved was no more than a fishing expedition.

26. Mr Moses SC submitted that the test which was appropriate to be applied in the case of each subpoena was established in the more recent authorities of this Court to be a test of whether the result that the material would assist was “on the cards”. The relevance of the subpoenas or the material to be produced under the subpoenas for each gentlemen arose this way. Each gentleman was said to have been solicited from the employment of the applicants by the respondents, a proposition which was denied by the respondents. The applicants submitted that the material would assist in demonstrating that these employees had left the applicants to commence jobs which were already arranged, rather than simply leaving their employment of their own accord. Put another way, if they had another job to go to, their financial position would not be a concern to them. The reason that mattered was because an examination of their financial statements might well show that they were not in a position where they could have afforded to leave their present employment to go to the new employer without a promise of employment already being in existence.
27. I am prepared to accept the logic of that proposition. The question, though, is not whether one can follow the logic of it, the question is whether it passes the “on the cards” test. I do not think that it does. If there were some material which indicated that Messrs Cochrane or Forrest or Ganesalingam were on, as it were, “struggle street” and that there was an issue about this, that might be a different matter. But the only material before me is not capable of sustaining such a proposition. In that circumstance, it seems to me that Mr Jackman SC’s submission is essentially correct.
28. The orders I will make are:
    1. I set aside paragraph 2 of the subpoenas addressed to Messrs Cochrane, Forrest and Ganesalingam;
    2. I order that the applicants pay the costs of those three gentlemen.

3. FURTHER DISCOVERY

29. I turn to the motion for further discovery. The applicants apply for further discovery. The material which is sought is set out in a notice of motion dated 4 May 2011. The categories which are sought are as follows:
    1. ...

(a) Copies of statements of accounts from telecommunication carrier(s) for the first and second respondents’ home and mobile accounts in respect of calls made in the period 1 October 2009 to 31 January 2011.
(b) Financial statements of the third and fifth respondents for the period 1 March 2010 to 31 January 2011.
(c) Documents recording the investment models utilised by the fifth respondent in providing, or offering to provide, its services to clients or potential clients.
(d) Documents recording the formula or source code of any computer program used or deployed by the fifth respondent in providing its asset management services to clients or potential clients.
(e) Documents recording or referring to discussions occurring between any of the first and second respondent and any of Duncan Forrest, Gangeyan Ganesalingam, Robert Cochrane or Andrew Jackson in respect of their potential employment with the third respondent.

2. ...copies of emails sent to or from the email address [first respondent’s hotmail email address] to or from the following persons: Minder Cheng, Katherine Allchin, Charles Genocchio and John Coombe in February 2010.
   
30. Mr Moses SC made a number of submissions on this motion in relation to each of the categories. Generally, he submitted that the appropriate test to be applied to the question of whether there should be further discovery was that which obtained under the old rules relating to general discovery and he made reference to a line of cases having as their ultimate source the well-known decision of the Privy Council in Compagnie Financiere et Comerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55. That line of cases sets up a test for discoverability, which is whether the documents in question might lead to a train of inquiry. The emphasis is on the possibility that they might lead to a train of inquiry, not that they must lead to a train of inquiry.
31. Mr Jackman SC, on the other hand, pointed out that in 1999 the Federal Court Rules had been amended by the insertion of Order 15 rule 2 which provided for discovery on notice. Rule 2(3) provides:

(3) Without limiting rule 3 or 7, the documents required to be disclosed are any of the following documents of which the party giving discovery is, after a reasonable search, aware at the time discovery is given:
(a) documents on which the party relies; and
(b) documents that adversely affect the party’s own case; and
(c) documents that adversely affect another party’s case; and
(d) documents that support another party’s case.

32. It is apparent that the introduction of r 2(3) was apt to bring about a substantive difference to the way in which discovery debates had previously been conducted. The course of authority in this Court certainly establishes that that is exactly the way in which O 15 r 2(3) has been applied. That, however, is not the question which immediately arises. The relevant order I made on 24 March 2011 was order 4. It was in the following terms:

4. The Respondents are to serve verified lists of documents for general discovery on the liability issues by 4pm on 30 March 2011. The Respondents are to make available for inspection and copying all documents within Part 1 of the verified Lists of Documents within three business days of service of those lists.

33. It invokes the language of O 15 r 5 which is as follows:

(5) For subrule (3), in making a reasonable search, a party may take into account:
(a) the nature and complexity of the proceedings; and
(b) the number of documents involved; and
(c) the ease and cost of retrieving a document; and
(d) the significance of any document likely to be found; and
(e) any other relevant matter.

34. Mr Jackman SC submitted that since the introduction to the rules of O 15 r 2 the request for general discovery under O 15 r 5 has been brought into line with the procedure under that rule and therefore the Peruvian Guano test no longer has any application. Mr Moses SC submitted that that was not the case and that the Peruvian Guano test continued to be applicable to discovery provided under O 15 r 5. He relied upon a decision of Flick J in Metso Minerals (Australia) Ltd v Kalra (No. 3) [2008] FCA 1201. In that case general discovery was ordered, but a debate took place before his Honour as to what the likely effects or obligations arising from that order would be. Having discussed the circumstances which gave rise to that necessity, his Honour continued at [62] in the following terms:

In consenting to an order requiring general discovery, it is not understood that the parties are merely consenting to an order requiring discovery of only those documents as are contemplated by O 15 r 2(3)... It is understood that the parties are consenting to what was described by Beaumont J as an order in the “traditional form” requiring discovery of those documents which “may” – not “must – either directly or indirectly enable a party to advance its own case or damage that of his adversary...

35. Reading that, his Honour was, so far as I can see, not holding that O 15 r 5, when applied, requires the Peruvian Guano test. What he was saying was that the parties before him had proceeded on the basis that what they were consenting to was in fact the old Peruvian Guano test. I do not read his Honour’s judgment as determining that the procedure under O 15 r 5 is the Peruvian Guano procedure.
36. I am fortified in that conclusion because two other judges of the Court who have looked at this intriguing question have reached the same conclusion. The first of those is Collier J in her decision in Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No. 2) [2006] FCA 1001; (2006) 155 FCR 1. There, her Honour had to consider the same question and having looked at the matter in admirable detail, concluded at 22 [150] that the procedure under O 15 r 2(3) applied to general discovery under O 15 r 5.
37. In the same light, Lindgren J reached a similar conclusion in Australian Competition and Consumer Commission v Advanced Medical Institute Pty Ltd [2005] FCA 366 at [23] where his Honour gave an explanation which was inconsistent with the case being put today by the applicant. In those circumstances, the relevant test to be applied is not the Peruvian Guano test, but the O 15 r 2(3) test. Once that is appreciated, the issues which arise become relevantly straightforward. This is because the terms of O 15 r 2(3) are much more confined in their operation than the other test. Specifically, the documents will only be discoverable if they are documents on which a party relies or which adversely affect the party’s own case or adversely affect another party’s case, or support another party’s case; gone are the uncertainties about trains of inquiry.
38. Keeping that test in mind, together with the need affirmatively to be satisfied that the documents in question will perform one of the four functions identified in O 15 r 2(3), I do not think that any of the candidates for further discovery which are proposed are ones which ought to be granted. As to the documents under the category in paragraph 1(a) of the notice of motion, I can understand how, on a Peruvian Guano basis, it is possible that documents of that kind may well lead to a train of inquiry which could assist the applicants in the conduct of their case. But I do not think that copies of statements of account of telecommunications carriers would fit what is required by O 15 r 2(3).
39. The same may be said, I think, of the financial statements for the third and fifth respondents sought in paragraph 1(b). Granted, as Mr Moses SC submitted, these could throw light on the question of when it was that the first and second respondents first began to put in train steps to set up the business they had in mind, but I do not think that that conclusion allows one to say that the documents under that category would either assist or not assist. For that reason, I do not think that they fall within O 15 r 2(3). The same point can be made in relation to paragraphs 1(c) and (d). There, again, as I understood, the point being made was one which related to the timing of the establishment of the respondents’ business: that is, these documents would be likely to show, or might well show, if produced, that the steps to set up the business were taken at an earlier time and that would provide succour for the case now being put. But those documents may not say that. It is impossible to say that they fall within the requirements of O 15 r 2(3).
40. The same may be said of the documents in category 1(e). This relates to discussions between the present respondents and a number of other colleagues at the time. It is possible to imagine, on a Peruvian Guano basis, that they might be discoverable, but they are not discoverable under an O 15 r 2 basis. I make the same remark in relation to paragraph 2, being the emails which have passed between Mr Waked from his hotmail email address and Messrs Cheng, Genocchio and Coombe and Ms Allchin. One simply cannot say, by looking at the category, that the material would fall within the descriptions required in O 15 r 2(3). In those circumstances, I dismiss the applicants’ motion for further discovery with costs.

4. VIDEO LINK EVIDENCE

41. I turn, then, to the applicants’ notice of motion that evidence be taken by video link. That notice of motion was dated 4 May 2011. It is sought that the evidence of Messrs Blake Grossman, Naozer Dadachanji and Robert Kapito be given by video link. The notice of motion was supported by two affidavits of Mr Riekert: the first of 3 May 2011; and the second of 4 May 2011. I make no further mention of the affidavit of 3 May 2011. The affidavit of 4 May 2011 set out the basis upon which the order was sought. Mr Riekert swore that he had had a conversation with a Mr Peter Vaughan, a lawyer employed by BlackRock Inc in the United States. BlackRock Inc was the firm which had instructed Mr Riekert’s firm, that is, Lander & Rogers.
42. During the conversation with Mr Vaughan, Mr Riekert says Mr Vaughan informed him: first, that Mr Grossman was no longer employed by companies related to the applicants; secondly, that Mr Dadachanji, although still employed by related companies, unfortunately had work commitments in Brazil on 10, 11 and 12 May 2011; and that, thirdly, Mr Kapito was the president of BlackRock Inc, and had business commitments in the United States that prevented him from being present in Australia. Mr Moses SC submitted that that evidence demonstrated that it was certainly convenient for the evidence to be taken by video link and in that regard he drew my attention to a decision given by Katz J in Tetra Pak Marketing Pty Ltd v Musashi Pty Ltd [2000] FCA 1261. In that decision, Katz J concluded that there was “a strong current of authority in favour of permitting the relatively new video link technology to be used, in the absence of some considerable impediment telling against its use in a particular case” (at [25]).
43. Mr Moses SC submitted that this case was a very good example of the kind of thing which Katz J was talking about. Here, the case had been called on urgently, had been fixed on an expedited basis over the objection of the applicants and had been fixed only recently. There had been considerable inconvenience for the applicants in preparing for the case, and now they were confronted with the fact that these witnesses were overseas. It followed, so he submitted, that this was a case where their evidence, in light of the circumstances disclosed in Mr Riekert’s affidavit, should be taken via video link.
44. Mr Robinson SC, who appeared with Mr Furlan for the fourth respondent, Mr Jackson, submitted that the position which was undoubtedly articulated by Katz J in Tetra Pak had perhaps been overcome by a series of later decisions. He referred me in particular to the recent judgment of Buchanan J in Campaign Master (UK) Ltd v Forty Two International Pty Ltd (No. 3) (2009)181 FCR 152. In that judgment, his Honour surveyed a number of the cases dealing with the taking of evidence by video link, including the decision in Tetra Pak and a number of later decisions. His Honour concluded at 170-171 [77] as follows:
    

However, with respect to those who have taken a different view, I think there is a significant difference in emphasis in the two lines of authority. One, essentially pragmatic, matter which arises from the differences of view to which I have drawn attention is where the practical onus of persuasion lies. Despite the undoubted efficiencies available in an appropriate case, the trend of authority seems to me to emphasise the need for a persuasive case to be made out to use a video link to take evidence, particularly to impose it on an unwilling cross-examining party, rather than the reverse.

45. Particularly important in that paragraph is, so it seems to me, his Honour’s reference for there to be a need for a persuasive case. A question arises as to whether I should follow the position outlined by Katz J or the approach suggested by Buchanan J. Buchanan J put forward at 171 [78] a number of reasons why it was preferable to take the course he suggested. It provided:

I share the concerns expressed by Spender J in World Netscape and by Stone J in Dorajay about the limitation on the effectiveness of video link arrangements as a means of taking oral evidence. I am particularly troubled by the prospect (or possibility) that the cross-examination of an important witness might be rendered less effective by the limitations of video link technology or the absence of the witness from the courtroom. Although the days are gone when witnesses are expected to feel any sense of intimidation as an aid to telling the truth, there is no doubt in my mind that the requirement to give evidence on oath or affirmation in the (generally) solemn atmosphere of a courtroom in the presence of a judge, and to answer questions in cross-examination in the presence also of cross-examining counsel, has at least three potential benefits. It enhances the prospect that the witness will remain conscious of the nature and solemnity of the occasion and of his or her obligations. It affords the cross-examiner some reassurance that the gravity and immediacy of the moment, and of the supervising presence of the judge, are not lost on the witness and the cross-examination is not thereby rendered any less effective, to the possible prejudice of the cross-examining party. It provides the Court with a more satisfactory environment in which to assess the nature, quality and reliability of responses by a witness, both to questions and to the overall situation presented by the necessity to give evidence in court. To my mind there remains, even in the modern context, a certain “chemistry” in oral interchanges in a courtroom, whether between a judge and counsel (or other representative) or between cross-examiner and witness. I would not wish too lightly to deprive a cross-examiner of that traditional forensic element in the exchange although, as the cases universally make clear, the Court must now, if asked to do so, balance the interests of a cross-examining party against claimed inconvenience both in individual cases and with respect to individual witnesses. Notwithstanding the increased availability and use of video link technology, in my view, a case must be made out for the use of video link evidence if it is opposed by an affected party. I do not share the view expressed by Katz J. My own view and, I think, the weight of authority, is to the contrary.

46. In my opinion, these are powerful considerations. A trial is, in fact, a public event in which witnesses are confronted by their cross-examiners and in which they give evidence in front of the very people who are involved in the case. The giving of evidence by video link is unsatisfactory in a number of ways. That is not to say that in some cases it is not appropriate. So much I understood Mr Robinson SC did not deny. The point he made in relation to the first two of the witnesses who were to be examined by video link, that is, Mr Grossman and Mr Dadachanji, was this.
47. The case which was put against the fourth respondent client in the amended statement of claim appeared at paragraphs 23, 24 and 25. In effect, it was said that when Mr Jackson was offered the job of Head of Investments of the Scientifically-Driven Active Equity Business in Australia by BlackRock upon Mr Waked’s departure and confronted with the proposition that, if he accepted it, he had to stay for a certain period of time, Mr Jackson said nothing. The persons involved in that conversation were Mr Grossman and Mr Dadachanji. A question will arise at the trial as to whether that misleading and deceptive conduct case by silence is made out. Mr Robinson SC submitted that experience showed cases like that very precisely turned upon the context in which the discussions took place and upon nuances in what actually occurred. For that reason, the cross-examination of those two witnesses was likely to be particularly important from his client’s perspective. I accept that submission.
48. Mr Robinson SC submitted that that needed to be weighed against the strength of the explanation which had been proffered for why the witnesses could not attend and give evidence in person at the hearing. And here he drew attention to what he submitted were deficiencies in Mr Riekert’s affidavit. The point being made was that, in effect, when one looked at what had been said, it was not actually said in the case of Mr Grossman or Mr Dadachanji that they could not give evidence in person. All that Mr Riekert had been informed, by Mr Vaughan, was that Mr Grossman was no longer employed by companies related to the applicants and that Mr Dadachanji, while still employed by related companies, had work commitments in Brazil on 10, 11 and 12 May 2011. Mr Robinson SC pointed out that that evidence did not, in terms, say the witnesses could not attend to give evidence in person during the course of the hearing.
49. Even accepting that Mr Dadachanji needed to be in Brazil on 10, 11 and 12 May 2011, Mr Robinson SC submitted that that did not mean that his evidence could not be accommodated in the following week when the trial would also be conducted. He also submitted that the matter had been fixed for hearing on 24 March 2011, some five weeks ago, and that the relevance of these witnesses, since they are nominated in the actual pleading, must have been at once apparent to the applicants’ advisers. Further, to the extent that expense might ordinarily be thought to be a negative consideration for requiring witnesses to come across the world, he pointed out that this litigation was one in which expense did not seem to be an issue which was delaying anyone.
50. Mr Moses SC, on the other hand, in relation to these two witnesses, submitted that the matter had been expedited against their will, rushed on and only recently fixed. So far as Mr Grossman and Mr Dadachanji are concerned, I do not think that the explanation which has been provided by Mr Riekert through Mr Vaughan is sufficient. I cannot be satisfied that Mr Grossman is not available to come to Australia to give evidence. All I am told is that he is no longer employed by companies associated with the applicants. Nor am I told that Mr Dadachanji actually cannot come here. Even reading his evidence along the lines that he cannot come here, he can only not attend on 10, 11 and 12 May 2011. As far as I understand it, he can still attend the hearing to give evidence the following week. In relation to those two gentlemen, I am not prepared to make an order that their evidence be taken by video link.
51. The position of Mr Kapito is more difficult. Mr Kapito is the president of BlackRock Inc. The evidence in relation to him suggests that he has business commitments in the United States that prevent him from being in Australia. The affidavit does not say that he is prevented from being in Australia for any particular date range, but I infer that what is intended is that he is not available to be in Australia during the life of the trial. He does not, however, say what the business commitments are. He does not explain their importance. I am simply told that he has business commitments and he cannot come. It seems to me very likely, given the nature of Mr Kapito’s position as the head of an exceptionally large corporation, that Mr Kapito does in fact have obligations in other parts of the world, which probably would preclude him from attending here. It seems to me to be quite plausible that that is exactly the kind of engagement a man in his position would have. The difficulty is that Mr Vaughan has not brought himself to the level of explaining to Mr Riekert what those issues are. Although it is extremely inconvenient, I do not think, in those circumstances and given the nature of the explanation which was given, that I can be satisfied that this is an appropriate witness in respect of whom to make such an order.
52. I should say, in relation to Mr Kapito, that it would not surprise me if evidence of the appropriate kind was in fact available and I would not foreclose the running of a fresh application in relation to him explaining exactly why he cannot be here. The problem is, at the moment, in my opinion, it has not been satisfactorily explained why he cannot attend. In those circumstances, I decline to make the orders sought in the fourth notice of motion, which I dismiss with costs.
    

I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram.

Associate:

Dated: 5 May 2011