Arnold Mann v Medical Defence Union Ltd [1997] FCA 45 (7 February 1997)

CATCHWORDS

Practice and Procedure - Discovery - Use of document discovered in action for breach of contract and contravention of Trade Practices Act 1977 to frame new cause of action in defamation and to join added respondent - whether leave of the court required - whether proposed use of document was for ulterior or collateral purpose - circumstances relevant to court's discretion to grant leave to use the document.

Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10

Riddick v Thames Board Mills Ltd QB 881

Wilden Pump & Engineering Company v Fusfeld [1985] FSR 581

Allstate Life Insurance Co v Australian and New Zealand Banking Group Ltd (1995) 57 FCR 360

Sybron Corporation v Barclays Bank Plc [1985] Ch 299

Crest Homes Plc v Marks [1987] AC 829

Halcon International Inc v Shell Transport and Trading Co [1979] RPC 97

Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217

ARNOLD MANN v MEDICAL DEFENCE UNION LIMITED

VG 131 of 1993

Ryan J

Melbourne

7 February 1997

IN THE FEDERAL COURT OF AUSTRALIA )

)

VICTORIA DISTRICT REGISTRY ) No VG 131 of 1993

)

GENERAL DIVISION )

BETWEEN: Arnold Mann

(Applicant)

AND: Medical Defence Union Limited

(Respondent)

CORAM: Ryan J

DATE: 7 February 1997

PLACE: Melbourne

MINUTES OF ORDER

IT IS ORDERED:

1. That the leave granted to the applicant by the order of Ryan J of 5 February 1997 to file and serve a further amended statement of claim be rescinded.

2. That the applicant have leave to file and serve a further amended statement of claim in the form of the draft which is exhibit "SK2" to the affidavit of Patrick Simon Kearney excluding paragraphs 52, 53, 54 and 55 and the joinder as a respondent of Craig Martin Lilienthal.

3. That the applicant pay the respondent's costs of the motion on notice dated 5 September 1996.

4. That paragraph 1 of this order be stayed until 4.15pm on 28 February 1997 or further order.

5. That paragraph 3 of the order of Ryan J of 5 February 1997 be varied by substituting for the date "7 February 1997" the date "28 February 1997".

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules

IN THE FEDERAL COURT OF AUSTRALIA )

)

VICTORIA DISTRICT REGISTRY ) No VG 131 of 1993

)

GENERAL DIVISION )

BETWEEN: Arnold Mann

(Applicant)

AND: Medical Defence Union Limited

(Respondent)

CORAM: Ryan J

DATE: 7 February 1997

PLACE: Melbourne

REASONS FOR JUDGMENT

RYAN J: By his amended statement of claim, the applicant, who is a medical practitioner, has invoked causes of action for breach of contract and contravention of the Trade Practices Act 1976 against the respondent ("the MDU"). In essence, the applicant's complaint is that the MDU has failed to pay his legal costs or indemnify him in respect of those costs in connection with an action which he instituted in the Supreme Court of the Australian Capital Territory against the former Board of Health of that Territory.

By notice of motion dated 5 September 1996 the applicant seeks from the Court orders:

1. That Craig Martin Lilienthal be added as a respondent to the application;

2. That the applicant have leave to amend the statement of claim generally in accordance with the second further amended statement of claim being exhibit PSK1 to the affidavit of Patrick Simon Kearney sworn on 5th September 1996 and filed herein.

3. That the applicant have leave to amend the application generally in accordance with the second further amended application being exhibit PSK2 to the affidavit of Patrick Simon Kearney sworn on 5th September 1996 and filed herein.

4. Such further and other orders as to the Court may seem meet.

In his affidavit sworn 5 September 1996 Mr Kearney, solicitor for the applicant, deposed that the further amended application and the further amended statement of claim which I take to be a reference to the amended statement of claim to which I have already referred, had been drawn by the applicant personally. Since his firm has been retained, Mr Kearney deposed, there had been substantial discovery from the respondent. In the light of that discovery, Counsel have advised that leave should be sought to make the amendments embodied in Exhibit "SK1" to Mr Kearney's affidavit ("the draft statement of claim").

Paragraphs 49 to 56 of the draft statement of claim plead a new cause of action in defamation against both the proposed additional respondent and the MDU. The allegedly defamatory material is contained in a document which is annexed as Schedule A to the draft statement of claim. Discovery of that document was provided by the MDU which included it as item 88 in its verified list of documents. Save for the paragraphs pleading the claim in defamation, the amendments which it is sought to make to the amended statement of claim were said by Mr Dreyfus of Counsel for the applicant to do no more than properly articulate causes of action already disclosed.

On behalf of the MDU there was generally no objection to the amendments incorporated in the draft statement of claim except to the extent that they raised a new cause of action in defamation. However, Mr Bennett QC, who appeared with Mr McGarvie for the MDU, also foreshadowed some criticisms, which were not fully developed on the hearing of the motion, of sub-paragraphs (vi), (vii) and (viii) subjoined to paragraph 57 of the draft statement of claim.

On 12 June 1996 Olney J heard a motion seeking, amongst other things, that document no. 88 of the MDU's list of discovered documents not be used for any purpose other than the proper conduct of this proceeding.

Paragraph 2 of Olney J's order of that day is as follows:

2. Upon the usual undertaking as to damages given by the respondent through its Counsel until further order the applicant be restrained from making any further use of documents to which he has obtained access in the course of discovery from the respondent in this proceeding for any purpose other than the proper conduct of this proceeding.

The main issues raised for determination by the present motion are:

1. Is leave of the court required to make use of discovered document no. 88 ("the document") to substantiate a claim for defamation in these proceedings?

2. Should that leave be granted in the circumstances surrounding the motion presently before the Court?

For the MDU, Mr Bennett QC submitted that the applicant proposed to use the document for a collateral object within the meaning of the authorities and therefore not for the proper conduct of this proceeding. Further, such use could only occur with the leave of the Court having regard to the terms of Olney J's order reproduced above and to the implied undertaking restricting the use by a solicitor of documents to which he or she gains access through the process of discovery.

Implied undertaking

In respect of documents which a party to an arbitration conducted in private which a party was compelled by the arbitrator to disclose to the other side, Mason CJ observed in Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10 at 32:

In relation to documents produced by one party to another in the course of discovery in proceedings in a court, there is an implied undertaking, springing from the nature of discovery, by each party not to use any document disclosed for any purpose otherwise than in relation to the litigation in which it is disclosed [Alterskye v Scott [1948] 1 ALL ER 469 at 471; Distillers Co (Biochemicals) Ltd v Times Newspapers Ltd [1975] QB 613 at 618-620, per Talbot J; Riddick v Thames Board Mills Ltd [1977] QB 881 at 895-896, per Lord Denning MR; Home Office v Harman [1983] 1 AC 280.]. Over a century ago, Bray on Discovery stated:

"A party who has obtained access to his adversary's documents under an order for production has no right to make their contents public or communicate them to any stranger to the suit ... nor to use them or copies of them for any collateral object ... If necessary an undertaking to that effect will be made a condition of granting an order."

Because an undertaking is implied, it has not been the practice to condition the making of orders in that way. The implied undertaking is subject to the qualification that once material is adduced in court proceedings it becomes part of the public domain, unless the court restrains publication of it.

It would be inequitable if a party were compelled by court process to produce private documents for the purposes of the litigation yet be exposed to publication of them for other purposes. No doubt the implied obligation must yield to inconsistent statutory provisions and to the requirements of curial process in other litigation, eg discovery and inspection, but that circumstance is not a reason for denying the existence of the implied obligation.

The rationale for precluding the use of discovered documents for any collateral or ulterior purpose was enunciated by Lord Denning MR in these terms in Riddick v Thames Board Mills Ltd [1977] QB 881 at 896:

On the one hand discovery has been had in the first action. It enabled that action to be disposed of. The public interest there has served its purpose. Should it go further to enable the memorandum of April 16, 1969 to be used for this libel action? I think not. The memorandum was obtained by compulsion. Compulsion is an invasion of a private right to keep one's documents to oneself. The public interest in privacy and confidence demands that this compulsion should not be pressed further than the course of justice requires. The courts should, therefore not allow the other party - or anyone else - to use the documents for any ulterior or alien purpose. Otherwise the courts themselves would be doing injustice. Very often a party may disclose documents, such as inter-departmental memoranda, containing criticisms of other people or suggestions of negligence or misconduct. If these were permitted to found actions of libel, you would find that an order for discovery would be counter-productive. The inter-departmental memoranda would be lost or destroyed or said never to have existed. In order to encourage openness and fairness, the public interest requires that documents disclosed on discovery are not to be made use of except for the purposes of the action in which they are disclosed. They are not to be made a ground for comments in the newspapers, nor for bringing a libel action, or for any other alien purpose.

That exposition of the rule was submitted to apply squarely to the document in the present case which is in the form of a handwritten memorandum initialled by Mr Lilienthal, the Secretary in Australia of the MDU. It contains a character sketch of the applicant and details the treatment of two patients in which the applicant was concerned. In the proposed further amended statement of claim it is pleaded that Mr Lilienthal by himself and as an officer of the MDU "falsely and maliciously wrote and published of the applicant and of the applicant in the way of his profession and in relation to his conduct therein" the document. It is then pleaded in paragraph 50 of the draft statement of claim that the document "was published to persons such as Dr J. Vallentine, Dr M. Saunders, Dr. K.M. Allsop and Mrs Francoise Bernard". Paragraph 53 of the draft statement of claim sets out some seventeen meanings which the words of the document are said in their ordinary natural meaning to bear and to have been understood to mean. It is then pleaded that by reason of the publication of the words of the document "the applicant has been gravely injured in his reputation and credit and in the way of his profession and office and has been brought into public scandal, odium and contempt".

Falconer J in Wilden Pump & Engineering Company v Fusfeld [1985] FSR 581 after examining the relevant authorities said at 605:

On the authorities I have referred to earlier, especially the opinions of their Lordships in the House of Lords in the Harman case, I take the implied undertaking given by the solicitor to a party, in civil litigation, to whom discovery has been given by the other party, to be that the disclosed documents will only be used for the purpose of the proper conduct of the litigation in furtherance of his client's case and that he will not himself use or allow his client or anyone else to use the disclosed documents for any collateral or ulterior purpose not reasonably necessary for the proper conduct of the litigation on his client's behalf.

An undertaking corresponding with that discussed by Falconer J was said on behalf of the MDU to have been imposed expressly by paragraph 2 of the order of Olney J of 12 June 1996.

In reliance on Wilden Pump & Engineering Co v Fusfeld, Counsel for the MDU submitted that the use of the document to found a cause of action in defamation would go beyond the proper conduct of the present litigation in furtherance of the applicant's case as presently constituted. However, Mr Dreyfus of Counsel for the applicant contended that the authorities on which the MDU has relied did not preclude the use of a discovered document to found an amendment pleading a new cause of action in the proceedings in which the discovery has been given or to support an application to join an additional respondent. He relied in particular on Allstate v ANZ Banking Group Ltd 57 FCR 360 where Hill J observed at 378:

The cases make it clear, however, that it will not be a collateral or ulterior purpose to use documents disclosed on discovery to add new causes of action or parties to the action in which the documents have been disclosed: P Mathews and H M Malek, Discovery (1992), Ch 12, p257; Wilden Pump Engineering Co v Fusfeld [1985] FSR 581; Sybron Corporation v Barclays Bank Plc [1985] Ch 299.

In my view, the passage from the textbook to which his Honour referred goes too far if it is understood as asserting that it can never be a collateral or ulterior purpose to use documents disclosed on discovery to add new causes of action or parties to the action in which the documents have been disclosed. The learned authors acknowledge at p. 256 of the same work that:

Usually, if not invariably, the use of documents disclosed in one action for the purposes of another action will be a collateral or ulterior purpose, even where the parties to both actions are identical and where the causes of action are identical. If a party begins an action based on documents disclosed in other proceedings, the action is liable to be struck out as an abuse of the process of the court.

An exceptional case may be where documents disclosed in one action are used in separate proceedings, the sole purpose of the separate proceedings being the furtherance of the party's case in the original action. In such a case it has been held that there is no breach of the implied undertaking. It is submitted that in any case where it is intended to use documents disclosed in one action for the purposes of bringing another action, even in such an exceptional case, the prudent and proper course is to seek leave of the Court to do so.

The full text of the relevant passage at p. 257 is in these terms:

It is not a collateral or ulterior use to use documents disclosed on discovery for the purposes of adding new causes of action or parties to the action in which the documents have been disclosed. Joinder of additional parties as a consequence of discovery is a common procedural occurrence Sybron Corporation v. Barclays Bank Plc [1985] 1 Ch. 299 at 328. In a case such as Norwich Pharmacal Co. v. Commissioners of Customs & Excise [1973] UKHL 6; [1974] A.C. 133, where the object of the proceedings is to identify a wrongdoer, there is no breach of the undertaking in bringing subsequent proceedings against the wrongdoer once identified; Wilden Pump v. Fusfeld [1985] FSR 581 at 590.

The Sybron Case arose out of an action ("the 1981 action") for fraudulent conspiracy by Sybron against other companies in which it was alleged that certain senior employees of Sybron, whilst in its employ, had arranged to use its trade secrets and divert its customers and business to the defendant companies. Certain bankers' books and other documents were produced by Barclays Bank on subpoena or disclosed by way of discovery in the 1981 action to which the bank had been joined as a defendant. The plaintiff then sought to use those documents in a later action ("the 1983 action") also for fraudulent conspiracy against three employees of the bank.

In granting leave to the plaintiffs to use the documents for the purposes of the 1983 action, Scott J said, at 327:

I come back, therefore, to Mr. Brodie's second proposition, the causes of action in the 1981 action and the 1983 action are the same. That being so, common sense seems to me to argue in favour of granting leave. Use of the documents in the 1983 action is, as I have held, outside the scope of the implied undertaking given as a term of the discovery in the 1981 action. But it is not inconsistent with the broad purpose for which that discovery was given. Whitford J. in the Halcon case [1979] R.P.C. 97, 109-110 suggested that the furtherance of a private interest could not justify the grant of leave to use discovered documents for the purpose of other proceedings and that some overriding public interest would normally be required. The 1983 action is certainly nothing more than the furtherance of a private interest. I can find no public interest which requires the plaintiffs to be permitted to use the documents for the purposes of the 1983 action. However, while I would respectfully accept Whitford J.'s proposition as a valuable general guide, it does not, in my view, assist in the unusual circumstances of the present case. Joinder of additional parties as a consequence of discovery is a common procedural occurrence. Neither I nor counsel have ever in practice heard of an objection to such joinder on the ground that discovered documents ought not to be used for such a purpose. If, instead of a joinder, a new action is started, the substance of the situation does not seem to me relevantly different. I cannot see any sensible reason why the court should regard this new action as inappropriate for the use of the discovered documents. For these reasons in my judgment the plaintiffs ought to have leave to use the documents for the purposes of the 1983 action.

The other case cited by Hill J as supporting the proposition which he derived from Mathews & Malek on Discovery is Wilden Pump & Engineering Co v Fusfeld (supra) in which, as already indicated, the force of the implied undertaking was given full recognition. That was a case where a subsidiary action ("the Cursons action") was commenced for the express purpose of obtaining discovery from Mr Cursons of documents to be used in the principal action which was for breach of copyright by manufacturing or authorising others to manufacture pumps and components of pumps. Mr Cursons had allegedly been involved in infringement of the plaintiffs' copyright. In support of their application for discovery in the Cursons action, the plaintiffs exhibited to an affidavit documents which had been disclosed to them on discovery by the defendants in the principal action. After an extensive review of the authorities, Falconer J concluded that the use of the defendants' documents in the Cursons action was not a breach of the implied undertaking not to use them except for the purpose of the proper conduct of the principal litigation in which they had been obtained. His Lordship relied heavily on the fact that the sole purpose of bringing the Cursons action had been to further the interests of the plaintiffs in the principal action and immediately after the observations quoted above, he concluded:

Except, possibly, for the concluding sentence in the passage I have cited above from the opinion of Lord Roskill, I do not find in the opinions of their Lordships in the Harman case any narrower formulation of the implied undertaking that, without the leave of the court or the party giving discovery, would restrict use of the disclosed documents to use only in the action in which they have been disclosed and that would prevent, without such leave, use such as has been made by the plaintiffs of these defendants' documents in the Cursons action. It is true, of course, that those documents were used for the purpose of the Cursons action; but the sole purpose of bringing the Cursons action was for the purpose of the conduct of this action on the plaintiffs' behalf and the furtherance of their case in this action.

In Allstate v ANZ Banking Group Ltd (supra) proceedings had been issued in relation to the priority of interests of creditors in the liquidation of a group of companies. Fifteen bank creditors had concededly used documents discovered in the main proceedings to frame cross-claims alleging fraud which they sought leave to file. After enunciating the general principles distilled from Mathews & Malek on Discovery which I have already quoted, Hill J continued at 379:

Curiously there appear to have been no cases which have considered the issue in the context of the use of the discovered material for the purpose of bringing cross-claims. If the rule be formulated broadly, as it was by Mason CJ in Esso Australia Resources Ltd in the use of the words "in relation to the litigation", such use would not contravene the undertaking. Various formulations of the rule have been made in various contexts. Lord Diplock in Harman distinguished between collateral and ulterior purposes on the one hand, and purposes "necessary for the proper conduct of the action" on the other. Lord Denning MR in Riddick likewise spoke of the "purposes of the action". Wilcox J in Springfield Nominees Pty Ltd v Bridgelands Securities Ltd spoke of "the purposes of the litigation". In Complete Technology Pty Ltd v Toshiba (Australia) Pty Ltd [1994] FCA 1314; (1994) 53 FCR 125, I spoke in terms of the "purposes of the proceedings". A like formulation was accepted by Lockhart J in Sentry Corporation v Peat Marwick Mitchell & Co (1990) 95 ALR 11 at 38, although Northrop J at first instance in that case, spoke of use of documents other than for the "purposes of the case itself".

Two rationales are given for the rule. The first is that discovery is a coercive process involving an invasion of a private right so that the invasion should not be allowed to extend beyond that which the course of justice dictates (see Lord Denning MR in Riddick at 896). This rationale shows that the rule is directed, at least in part, to maintaining the privacy and confidence that attaches to private documents. The second rationale is to be found in the emphasis which the courts place on preserving the integrity of the discovery process: see Waller LJ in Riddick at 910. Unless a litigant is secure in the knowledge that confidential material will not be improperly used, the litigant might be less inclined to give full and frank discovery.

The ambit of discovery is defined by the pleadings which will ordinarily have been settled by the time discovery is given. Thus it would be possible to argue that any use beyond the case as pleaded would be in contravention of the implied undertaking. The cases which indicate both that new parties can be added on the basis of discovery and that new claims can be added indicate that this is not the case. The reasons for these exceptions can be found in the basic philosophy of the Judicature Act systems as expressed, for example, in s 22 of the Federal Court of Australia Act (Cth), namely, that, so far as may be possible, all matters in controversy between the parties are to be completely and finally determined in the one set of proceedings and multiplicity of proceedings concerning the matter before the Court is to be avoided. To this end the rules of the Court permit the adjoinder in one proceeding of multiple claims in respect of more than one cause of action (Federal Court Rules 1979 (Cth), O 6, r 1) and the joinder of parties, particularly where common questions of law or fact arise or the relief claimed arises out of the same transaction or series of transactions: O 6, r 2.

Similarly, the rules permit the bringing of cross-claims consistently with the provisions of s 22 of the Federal Court of Australia Act: O 5, r 1. Although a cross-claim must comprehend a claim which could have been brought in a separate proceeding if against the original applicant and which is related to or connected with the subject matter of the main proceeding if brought against some other party, once the cross claim is brought, with or without leave as the case may be, that claim falls to be decided as part of the proceedings as a totality (cf O 5, r 2) and indeed the application for leave under O 5, r 8 is itself an interlocutory application in the main proceedings.

It seems to me to follow that, in principle, there should be no difference between the use of discovered materials by an applicant in adding new causes of action against a respondent, on the one hand, or indeed new respondents, and an application by a respondent to the main proceedings for leave to cross-claim against a party not a party to the main proceedings or for the bringing of a cross-claim against an applicant by a respondent, on the other. In my view the principle in Harman has no application to any of these cases. In all of them use of discovered material is a use for the purpose of the legal proceedings and involves no contempt.

I accept that whether the proposed use of a discovered document is for the purposes of the action in which it has been discovered is not to be determined by concentrating on the causes of action so far pleaded or the parties to that action as constituted at the time when discovery was given. Nevertheless, the authorities to which I have been referred make it clear that the proposed use must bear a reasonable relation to the prosecution of the case sought to be made or the mounting of a defence to that case. So it is that the use of a discovered document to frame a case of fraud in addition to one of breach of contract is permissible if the fraud is said to have infected the same transaction even if additional parties are alleged to have been implicated or the allegations of fraud are sought to be raised by way of cross-claim. Allstate v ANZ Banking Group Ltd (supra) I regard as a case of this kind.

However, I do not consider a claim in defamation to have the requisite relationship with a claim for damages in the form of financial loss occasioned by breach of contract or contravention of the Trade Practices Act by misrepresentations which are alleged to have induced an applicant to enter into a contract. The damages sought to be recovered in an action for defamation are for injury to reputation. Moreover, such an action involves questions of the nature and extent of publication and a defence to it may raise issues such as qualified privilege and malice which are quite extraneous to matters in controversy between parties to a contract. The attack which the applicant seeks to make against the MDU by pleading a cause of action in defamation could succeed or fail quite without reference to the resolution of other existing issues between the parties. I therefore regard it as entirely collateral to the attack which the applicant seeks to mount through the remaining parts of his proposed further amended statement of claim. Accordingly, leave is required before the applicant can make use of the document to frame allegations of defamation against the MDU and Mr Lilienthal, whether in the existing proceedings before this Court or by way of a separate action.

Should the plaintiff have leave to use the document to frame a claim in defamation?

I have proceeded to answer this question on the assumption that it requires the exercise of a general discretion without any predisposition suggested as a matter of principle by the authorities. That may have been unduly favourable to the applicant as Lord Oliver of Aylmerton in Crest Homes Plc v Marks [1987] AC 829 after referring to Halcon International Inc v Shell Transport and Trading Co [1979] RPC 97 and Sybron Corporation v Barclays Bank (supra) observed, at 860:

I do not, for my part think that it would be helpful to review these authorities for they are no more than examples and they illustrate no general principle beyond this, that the court will not release or modify the implied undertaking given on discovery save in special circumstances and where the release or modification will not occasion injustice to the person giving discovery.

For a discussion of the concept of "special circumstances" in this context see Springfield Nominees Pty Ltd v Bridgland Securities Ltd (1992) 38 FCR 217 per Wilcox J at 223.

In any event for the reasons which I have already indicated, I regard the bringing of an action in libel as alien, in the sense used by Lord Denning M.R. in the passage from Riddick v Thames Board Mills Ltd which I have already quoted, to the purposes of the present action. I am unable in the circumstances of this case to discern any factor which outweighs the public interest, to which his Lordship referred, in the preservation and frank and open disclosure of material like the document. It is true, as Mr Dreyfus pointed out, that another member of the Court of Appeal in Riddick, Stephenson L.J. at 902 preferred to base refusal of leave to use the document on the ground that its use, having regard to the delay involved, would amount to an abuse of process and acknowledged that there may be cases in which a plaintiff would be justified in bringing an action on a document disclosed in an earlier action. However, it is not suggested by Stephenson L.J. that, absent abuse of process, there is some prima facie entitlement to use a discovered document to erect an extraneous claim in defamation.

In the ordinary course of things, an action in defamation is instituted because publication of the allegedly defamatory material has come to the notice of the plaintiff. In the present case, there is nothing to suggest that the publication of the document which, it seems, was severely restricted, would ever have come to the notice of the applicant had it not been for the MDU's obligation to give discovery of it in the present action. To allow its use to frame a cause of action in defamation would expose the MDU to a hazard or potential liability quite unrelated to that in contemplation when it was discovered. I therefore regard it as an inappropriate exercise of the Court's discretion to grant leave to use it to frame a cause of action in defamation against either the MDU or Mr Lilienthal.

Form of Order

On 5 February 1997, because of an apprehension by the applicant that his cause of action in defamation might become statute-barred before these reasons for judgment could be published, I ordered that the order of Olney J of 12 July 1996 be suspended and that the applicant have leave, pending publication of these reasons, to file a further amended statement of claim in the form of the draft which is exhibit "PSK2" to the affidavit of Patrick Simon Kearney sworn 5 September 1996. That draft pleading included paragraphs charging the MDU and Mr Lilienthal with liability in defamation.

In an ancillary way, I ordered that the further amended statement of claim as so filed be sealed up and not published to any person before 4.15pm today, or further order. That was intended to preclude the applicant, should the conclusions which I have now reached be adverse to him, from asserting that the document had been released into the public domain and that he was thereby freed from the constraints presumptively arising from its disclosure to him under compulsion of discovery.

It follows from the conclusions which I have expressed today that the leave which I granted on 5 February 1997 must be rescinded. In lieu thereof, I shall grant leave to the applicant to file and serve a further amended statement of claim in the form of the draft which is exhibit "PSK2" to the affidavit of Patrick Simon Kearney excluding paragraphs 52, 53, 54 and 55 and the joinder as a respondent of Craig Martin Lilienthal. The applicant must pay MDU's costs of the motion on notice dated 5 September 1996.

I certify that this and the preceding fifteen (15) pages are a true copy of the Reasons for Judgment of his Honour Justice Ryan.

Associate:

Date:

Counsel for the Applicant : Mr M. Dreyfus

Solicitors for the Applicant : Kearneys

Counsel for the Respondent : Mr D. Bennett, QC

with Mr R.W. McGarvie

Solicitors for the Respondent : Tress Cocks & Maddox

Date of Hearing : 12 September 1996

Date of Judgment : 7 February 1997