Escolar Documentos
Profissional Documentos
Cultura Documentos
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
---
JUDGE: HABERSBERGER J
WHERE HELD: MELBOURNE
DATE OF HEARING: 30 JANUARY 2008
DATE OF JUDGMENT: 19 MARCH 2008
CASE MAY BE CITED AS: PROTEC PACIFIC PTY LTD v CHERRY
MEDIUM NEUTRAL [2008] VSC 76
CITATION:
---
---
The Application
1 This is an application by Protec Pacific Pty Ltd (“Protec”) for an order that the defendant,
Brian Cherry, be restrained, pending the hearing and determination of this proceeding or
further order, from making any further contact with Steuler Industriewerke GmbH, its servants
or agents, including its solicitors Anderson Rice and counsel retained on its behalf, in
connection with the Supreme Court proceedings No. 5797 of 2000 and No. 7268 of 2007.
Alternatively, that he be restrained from using, copying or dealing with any information
confidential to Protec in connection with the said proceedings in his possession, custody or
control or from communicating the said information directly or indirectly to Steuler or its said
servants or agents.
2 Thus, the order sought was interlocutory in form. Counsel for the defendant submitted,
however, that I should “exercise great caution” before accepting the submissions of the
plaintiff because any order made would likely be final in effect, as the two proceedings are
fixed for trial at the same time in a hearing commencing before me on 31 March 2008. I agree
that, given this circumstance, the plaintiff has to establish that there is a degree of likelihood
that it would be successful at trial in obtaining a permanent injunction against the defendant. 1
3 In order to understand why Protec had considered it necessary to commence this proceeding
against its expert witness, Professor Cherry, it is necessary to set out the factual background in
some detail.
Protec against WMC (Olympic Dam Corporation) Pty Ltd, now known as BHP Billiton
Olympic Dam Corporation Pty Ltd (“WMC”), WMC counterclaimed against Protec and a
German company, Steuler Industriewerke GmbH (“Steuler”). The dispute concerned work
carried out by Protec in connection with the supply and installation of high density
polyethylene (“HDPE”) lining material to process tanks at WMC’s Olympic Dam mine in
1 See Hartleys Ltd v Martin [2002] VSC 301, [33] – [40] (Gillard J)
1 T0076
1998 and 1999. The HDPE lining material known as “Bekaplast” was manufactured and
supplied by Steuler. WMC alleged that the Bekaplast was not a suitable lining material and
that it had failed prematurely with the result that it had been replaced with a fibreglass lining at
5 In 2002, Professor Cherry was an Honorary Professorial Fellow in the Centre for Advanced
recently retired from the position of Professor and Associate Dean (Research and
October 2002 and made between Protec and Professor Cherry (“the Consultancy Agreement”),
Protec engaged Professor Cherry to provide “advice concerning the suitability of High Density
Polyethylene as a Tank Lining Material”. The written agreement had been proffered by
Professor Cherry following discussions with Protec’s then solicitors, which now practise under
the name Pilley McKellar Pty Ltd. Clause 5 of the Consultancy Agreement provided that:
5.1 The Consultant shall keep confidential all information, particulars and
results of all the Work carried out under this Agreement.
5.2 Each party acknowledges that all documents (other than any report
issued in the course of this consultation) and information disclosed by or
received from the other party remain the property of the party which
disclosed or produced them.
6 A draft “brief to expert” was provided to Professor Cherry by Protec’s solicitors on 15 October
2002. Pursuant to the Consultancy Agreement, Professor Cherry carried out a number of tasks.
Professor Cherry visited WMC’s site at Olympic Dam in about March 2003 in the company of
Howard Smith, Protec’s managing director, and another person, Claudio Sesia, to observe the
repair work that was being carried out on the damaged portions of the mixer and settler tanks.
2 T0076
Professor Cherry then prepared a report dated 26 May 2003. This was a commentary on a
report by WMC’s expert, Dr Ian Peggs. Initially, there was a degree of co-operation between
Protec and Steuler on a “common defence” to WMC’s counterclaim against them. In June
2003, when in Europe on other business, Professor Cherry met with representatives of Steuler
Professor Cherry prepared a report of this meeting for Protec’s solicitors, which was dated 1
Hopp, an employee of Steuler, regarding test methods for environmental stress cracking of
account of the technological issues involved. Before the mediation, Professor Cherry had
spent “a considerable time” in Melbourne with Michael Steuler, the managing director of
Steuler, discussing these issues. Professor Cherry then prepared a second report for Protec,
which was dated 22 August 2005. An order 44 expert witness statement of Professor Cherry
was filed by Protec in the principal proceeding on 15 September 2005. It referred to both of
Professor Cherry’s earlier reports. Finally, Professor Cherry participated in a Court ordered
experts’ conclave in January and February 2006, which led to the preparation of a Joint Report
7 Just prior to the experts’ conclave, Professor Cherry copied to Mr McKellar an email dated 19
January 2006 which he had sent to Mr Steuler, in response to an email from Mr Steuler dated
18 January 2006 advising Professor Cherry of “an important analysis” which Mr Steuler had
come across “in preparing our experts” for the conclave. In his email to Mr Steuler, Professor
I have been instructed by means of an email from Howard Smith dated 5th
January that in view of “a probable settlement negotiated between myself and
BHP Billiton” to “cease any further work (that I) may be doing on this matter”.
3 T0076
FURTHR DISCLOSURE OF CONFIDENTIAL SETTLEMENT
DISCUSSIONS BETWEEN OUR CLIENT AND BHP BILLITON IS A
GROSS BREACH OF SOLICITOR/CLIENT PRIVILEGE AND IT IS
UTTERLY INAPPROPRIATE THAT YOU HAVE DONE SO.
Mr McKellar said in affidavit in reply sworn on 29 January 2008 that he had informed WMC’s
solicitors, Middletons, about the direct contact between Mr Steuler and Professor Cherry, that
an exchange of correspondence between the solicitors for the three parties followed, and that
by an email dated 25 January 2006 he had informed Anderson Rice that Professor Cherry had
been told that the solicitors for Protec considered his conduct “inappropriate” and that they had
9 In March 2006 Protec and WMC did indeed settle their dispute. However, for reasons which
are not relevant to this proceeding, Protec and WMC reached a further settlement in May 2007.
This settlement resulted in a consent judgment on the counterclaim in the principal proceeding
for $15 million in favour of WMC against Protec. Part of the May 2007 terms of settlement
required Protec to issue proceedings against Steuler seeking indemnity and damages arising out
of the subject matter of the principal proceeding. (In 2004, Protec had issued, but not served,
proceedings against Steuler. In April 2007, Protec’s application for leave to extend the time
for service of that proceeding was refused. 2 ) Accordingly, Protec issued proceedings against
Steuler on 16 July 2007 (“the 2007 proceeding”). Pursuant to the terms of settlement, the
solicitors acting for WMC in the principal proceeding, Middletons, act for Protec in the 2007
proceeding. As already mentioned, both the principal proceeding and the 2007 proceeding are
fixed for trial at the same time. I have previously ordered that the witness statements in the
principal proceeding stand as witness statements in the 2007 proceeding and that the evidence
10 According to Professor Cherry, he was told by Mr McKellar in about July 2006 that WMC’s
claim against Protec had been settled. As he understood that he was not required further in the
matter, he disposed of all of the paper and compact disc documents that he held in relation to
the matter.
2 Protec Pacific Pty Ltd v Steuler Industriewerke GmbH [2007] VSC 93 (Hansen J).
4 T0076
11 On or about 15 June 2007, Professor Cherry received a telephone call from Anderson Rice,
indicating a possible desire to discuss a report that he had written dated 26 May 2003
concerning the environmental stress cracking of polyethylene. Professor Cherry was told that
Anderson Rice were the solicitors for Steuler and he was asked if he would be willing to meet
to talk about the report. Professor Cherry said that there was no mention of legal proceedings.
He said that it occurred to him that other cases of the environmental stress cracking of HDPE
may have become of interest to Steuler and as he had dealt with Steuler in the past he felt that
he would be happy to do so again. No date was fixed for the meeting. Professor Cherry heard
nothing further until late in October 2007 when he was telephoned again by Anderson Rice to
set up a meeting. The appointed time was confirmed by an email dated 18 October 2007. He
said that there was nothing in that email which indicated to him that there was any litigation
involved.
12 A meeting took place on 7 November 2007 between Professor Cherry and Steuler’s solicitors
and counsel. During the meeting he asked what was the purpose of the meeting. He said that
he was then informed that there was a court case in which Protec was suing Steuler. He
questioned the extent to which this might involve him in a conflict of interest. He said that he
was informed that there was no legal property in a witness and that any party to litigation was
free to approach any witness and the witness was at liberty to decide whether or not to talk to
any party. Professor Cherry said that as he believed that everything in his report, and indeed
everything that had transpired in his dealings with Protec and with Steuler, involved the
discussion of, and the formation of, opinions which were based upon published information
freely available in the peer reviewed technological press, he felt happy to continue the
discussions, but he said that as a matter of courtesy, he would inform Mr McKellar that such
13 Gustavo Catalogna, a partner in the firm of Anderson Rice, the solicitors for Steuler, swore an
Mr Catalogna said that at the meeting on 7 November 2007 Steuler’s lawyers discussed with
5 T0076
(a) Professor Cherry’s report dated 26 May 2003,
(b) the other expert reports served in the principal proceeding, and
According to Mr Catalogna, Steuler’s lawyers also requested Professor Cherry to explain and
assist them in understanding various technical matters raised in the above reports.
Mr Catalogna said that, in the future, Steuler’s lawyers wished to discuss with Professor
Cherry the contents of his second report dated 22 August 2005. He said that they were only
interested in Professor Cherry’s opinions on scientific and technical issues. They did not ask
about, did not intend to ask about, and were not interested in, instructions or information which
Mr McKellar, Professor Cherry told him, in substance, that he had been contacted by the
solicitors for Steuler who had requested him to meet with counsel for Steuler, and that
Professor Cherry had asked him to obtain instructions from Protec as to whether or not it had
any objection to him doing so. Mr McKellar told Professor Cherry that his firm no longer
acted for Protec in relation to the principal proceeding, but that he would contact Protec’s new
solicitors and that he expected that they would take the matter up with Professor Cherry.
Mr McKellar said that he contacted Middletons to tell them what had occurred on the same
day. On 19 November 2007, he sent an email to Professor Cherry, part of which read as
follows:
(a) you were engaged by Protec Pacific to provide expert reports, attend a
conference of experts ordered by the Supreme Court and give evidence
on its behalf. When you were engaged we provided you with a
substantial brief containing important confidential information in respect
if [sic] certain aspects of our client’s position in the litigation. This brief
was provided under the cover of legal professional privilege and such
privilege continues to attach to the brief despite the fact we are no longer
involved in the case;
6 T0076
(b) pursuant to the brief you have provided expert reports which have been
filed in the proceeding and you attended the conference of experts;
(c) the matters upon which your expert opinion was sought are still live
matters as between the original parties in proceeding 5797 of 2000 and a
further proceeding initiated by our former client (which we understand
will be heard concurrently with the original proceeding);
(d) it may well be that our former client wishes to continue to retain you as
an expert in relation to the ongoing issues upon which you have
previously expressed an opinion;
(e) it would be most unusual and it may well be improper for an expert who
has received confidential and privileged information on behalf of one
party to discuss (or give) evidence on behalf of another party in the same
proceeding, irrespective of the overriding duty you have to the court as
an expert witness; and
(f) it would also be most unusual and it may well be improper for an expert
whose retainer has not been formally terminated to discuss (or give)
evidence on behalf of another party in the same proceeding.
We strongly suspect that both Protec Pacific and its current solicitors would
object to you discussing any of the issues in this proceeding with the solicitors
for Steuler at all, or at least until the above issues are resolved with Protec
Pacific and its solicitors.
Professor Cherry, Mr Watson explained the above background to Professor Cherry. The email
continued:
In this regard we are instructed that our client requests that you refuse the
approach from Steuler’s solicitors for the following reasons:
7 T0076
in nature. Again, Steuler’s solicitors would be appreciative of this and it
is inappropriate for them to seek to speak with you direct in
circumstances where material provided and/or disclosed to you in
confidence or otherwise the subject of legal professional privilege may
be compromised if you were to speak with Counsel retained on behalf of
Steuler.
Accordingly, our client requests that you refuse the invitation by Steuler’s
lawyers to meet with Counsel retained on behalf of Steuler. Please confirm that
you will abide with this request.
16 Professor Cherry responded on 22 November 2007 by advising Mr Watson that “as a matter of
courtesy” he was forwarding a copy of Middletons’ letter to Anderson Rice. Professor Cherry
further advised that “after taking independent legal advice” he would decide on his “further
course of action”.
I write in connection with your letter of the 20th November in which you
informed me that your client requests that I refuse the invitation by Steuler’s
lawyers to meet with Counsel retained on behalf of Steuler. I am, of course
concerned to ensure that confidentiality of information to Protec Pacific, where
properly claimed, is maintained and assure you and your client that I will make
the strongest endeavour to maintain that confidentiality. However now that I
have taken advice on this matter I have to inform you that I do not wish to
accede to your client’s request.
18 Mr Watson replied to Professor Cherry by email the following day. He stated that his client
was “of the view that you cannot speak with Steuler’s Counsel and/or lawyers without
Mr Watson sought an undertaking from Professor Cherry that he would not “meet with or
otherwise communicate with Steuler’s Counsel or lawyers in respect of the subject matter of
either of Proceeding Nos. 5797 of 2000 or 7268 of 2007”. If such an undertaking was not
19 Mr Watson’s email of 18 December 2007 brought forth two responses. One from Professor
Cherry, early on 19 December 2007, was that he had sought further advice and, on its receipt,
he would respond. The other was from Anderson Rice, later on the same day. Anderson Rice
said that they had been provided with a copy of Mr Watson’s letter to Professor Cherry. They
sought a response to their allegation that Middletons had breached Rule 17.5 and 17.6 of the
8 T0076
Professional Conduct and Practice Rules 2005 by purporting to forbid Professor Cherry from
conferring with them. Anderson Rice pointed out that Professor Cherry had advised
Middletons that he was “prepared to assist the court” and that he was “concerned to ensure that
added that they understood “the principles of client legal privilege” and they would not breach
those principles.
20 Middletons replied to Professor Cherry by two emails dated 19 December 2007. They sent
him a copy of the Consultancy Agreement and drew his attention to clauses 5.1 and 5.2 (set out
above). They also repeated their reference to the foreshadowed injunction application, unless
21 Middletons replied to Anderson Rice by a facsimile dated 19 December 2007. They said that:
Our client takes the view that its retainer of Professor Cherry has not been
terminated and it may wish to call him to give evidence on its behalf. Further,
confidential information was provided to him to assist him in providing advice
and to prepare his expert reports and contribute to the Expert Conclave.
Furthermore, information provided to him and the report produced, in all
probability, attract legal professional privilege.
Whilst we readily accept that there is no property in a witness, you will equally
appreciate in the circumstances outlined, it is inappropriate for you, counsel or
your client to discuss the circumstances of this case with Professor Cherry. We
go further and suggest that to do so might also make the person or persons
concerned a party to a breach of the confidence owed to our client.
(c) in relation to the above, we did not on 7 November 2007, and have no
intention to do so in any future meetings, discuss any matters with
Professor Cherry, or seek any information from him, other than in
relation to:
(i) Professor Cherry’s Report dated 26 May 2003, which Report was
served upon all parties to the proceeding;
9 T0076
(ii) the other Expert Reports served on behalf of the other parties in
the proceeding;
Mr Watson said in his affidavit that it was only upon receipt of this email that he became aware
23 Also on 20 December 2007, Professor Cherry sent the following email to Middletons:
I acknowledge receipt of the letter of the 19th December, written on your behalf
by Mr Travis Payne. I have had no legal training and claim no expertise in the
interpretation of the law, so what follows is a matter of opinion and not of fact.
2. My sole activity in case 5797 of 2000 has been the interpretation for the
Court of evidence presented to the Court.
10 T0076
regarding your client’s injunction application. If an injunction is
obtained by your client, I will of course abide by its terms.
24 Not being satisfied with the qualified undertaking offered by Professor Cherry, WMC
2007, directions were given for the filing of further affidavits and the matter was adjourned to
be heard by me on 30 January 2008. As part of the consent order, Professor Cherry undertook,
a. use, copy or deal with the information (as referred to the Schedule
hereto) and any further information confidential to the plaintiff in
connection with proceedings no 5797 of 2000 and no 7268 of 2007 in
this Court in his possession custody or control (save for the purposes of
obtaining legal advice and representation); or
the information particulars or results of the Defendant’s work carried out under
or in any way connected with the consultancy agreement between the Plaintiff
and the Defendant dated 17 October 2002.
injunctive relief sought by Protec was justified on any of three bases – legal professional
privilege, the equitable concept of confidentiality and the express contractual obligation to
keep information confidential. First, he submitted that instructions given to Professor Cherry
and any reports prepared by him were documents brought into existence for the purposes of
litigation and were therefore the subject of legal professional privilege, which Protec had not
waived. Secondly, Mr Riordan submitted that, in equity, where someone was engaged in
11 T0076
circumstances of trust and confidence, that person was not free to breach the confidentiality.
Thirdly, he submitted that Professor Cherry had expressly agreed that “all information,
particulars and results of the work carried out” under the Consultancy Agreement would be
kept confidential. He submitted that the Court should restrain Professor Cherry from breaching
26 Mr Harrison of counsel, who appeared for the defendant, opposed the granting of any restraint
on Professor Cherry talking to Steuler’s lawyers. He submitted that Protec had not
Mr Harrison submitted that any confidential information imparted to Professor Cherry was no
longer confidential because Protec had waived the claim to confidentiality by filing and
serving Professor Cherry’s reports and by asking him to participate in the experts’ conclave. In
addition, Mr Harrison relied on the principle that there is no property in a witness. He also
submitted that Protec’s involvement in the principal proceeding having ended, there was no
longer a confidence to protect. Further, Mr Harrison submitted that, as there was no evidence
serious question to be tried. Finally, he submitted that the balance of convenience did not
favour the granting of the injunction because it was difficult to see what damage would flow to
Protec from any breach, even if Professor Cherry were to breach Protec’s confidence.
27 Counsel for Steuler were granted leave to intervene and make submissions on its behalf in
counsel on behalf of Steuler, submitted that Protec had not shown that there was confidential
even if Protec did communicate confidential information to Professor Cherry, there was no real
and sensible possibility of Professor Cherry revealing that information, and that even if the
information were revealed, its revelation would not cause any loss or damage to Protec.
Mr Cosgrave submitted that preventing Steuler from talking with Professor Cherry would
12 T0076
28 The competing submissions, therefore, raise a number of issues to which I now turn. The first
issue to consider is whether Protec has established that there was any confidential information
endorsement of claim, Protec stated that the confidential information “included but was not
limited to”:
(c) “at least until late 2005 early 2006 its common approach with Steuler to
the defence to the counterclaim …”
29 Protec further stated in the particulars to paragraph 6 that the confidential information was
follows:
31 Mr McKellar also referred to the “common defence” with Steuler which Protec followed for a
time and to Professor Cherry’s meeting in June 2003 with representatives of Steuler to discuss,
amongst other things, “issues relevant to the common defence”, and to Professor Cherry’s
33 In response to Mr McKellar’s affidavit, Professor Cherry said that initially what he was being
Professor Cherry also said that the brief that was provided to him contained information which
he regarded “as common general knowledge in the hands of one skilled in the use of polymeric
materials”. He went on to say that he did not recall Mr McKellar telling him that any of the
information provided to him was confidential. He further said that he found it difficult to
understand how any of that information could be “confidential” and that he did not know to
what information Mr McKellar was referring when he talked about “information confidential
to Protec” which he, Mr McKellar, was not at liberty to divulge to the Court.
34 Professor Cherry referred to his visit to Steuler’s headquarters in Germany. He said that he
“learned much about the problem of which I was previously unaware” as this was “the first
14 T0076
occasion upon which I had been able to have detailed discussions with anyone about the
technology of the environmental stress cracking of high density polyethylene involved in this
matter”. He further said that, other than information that he had “gleaned” from Dr Peggs’
report, he had “learned little from anyone on behalf of Protec about these issues”. Professor
Cherry said that, because he thought the discussions at Steuler’s premises were “of such
Cherry then exhibited that report to his affidavit. He said that he subsequently discussed with
placed on different aspects of the technology involved in the dispute by the Steuler
35 With respect to the mediation, Professor Cherry said that he was present for part, if not all, of it
and that representatives of WMC and Steuler were present at all times. He said that he did not
know what information he was allegedly “privy to” that was confidential to Protec. He further
said that he did not know what information of any description he could have received at the
mediation, which information was not also heard by representatives of Steuler and WMC. In
his affidavit in reply, Mr McKellar stated that it was his “recollection that Professor Cherry
was present during private sessions with Mr Smith, Mr Shnookal of counsel and I [sic] during
the mediation”.
36 Counsel for both Professor Cherry and Steuler emphasised the lack of precision in the
description by Mr McKellar of the alleged confidential information and the qualified nature of
the statements that such information was imparted to Professor Cherry. In one case, it was
simply Mr McKellar’s “belief” about unidentified confidential information that was deposed
to, in another it was said that it “was likely” that Professor Cherry became privy to such
information, whilst nothing specific was said about what or how Professor Cherry obtained
37 Mr Riordan’s response was that, given the contractual obligation to keep confidential “all
information, particulars and results” of all of the work to be carried out under the Consultancy
Agreement, namely, “the provision of advice concerning the suitability of High Density
15 T0076
Polyethylene as a Tank Lining Material”, it did not matter that Protec had not been more
Professor Cherry was contractually bound to keep everything he was told or learnt during his
The degree of particularity of the confidential information must depend upon all
the circumstances. Often, it cannot be identified for fear of disclosure.
40 In Sent v John Fairfax Publications Pty Ltd, Nettle J (as his Honour then was), having quoted
the above passage from the judgment of Drummond J, went on to say that it was important to
bear in mind that what was said:
was in the nature of a statement of principle and that, when it comes to the facts
of a particular case, the principles which his Honour adumbrated need to be
applied with a degree of flexibility. 5
less precision of description may be required where more would annihilate the
confidence sought to be protected... 6
3 (1993) 42 FCR 307, 314-315. See also Smith Kline & French Laboratories (Aust) Ltd v
Department of Community Services and Health (1990) 22 FCR 73, 87 (Gummow J).
4 Unreported, Supreme Court of Victoria, Gillard J, 3 July 1998.
5 [2002] VSC 429, [67].
6 [2002] VSC 429, [69].
16 T0076
41 In Rapid Metal Developments (Australia) Pty Ltd v Anderson Formrite Pty Ltd, 7 Johnson J
referred with approval to the conclusion by Templeman J in Gugiatti v City of Stirling 8 that, in
cases where the description of the alleged confidential information was lacking in precision,
the appropriate course was not to require the applicant to provide further detail of the
inadequately identified confidential information but to consider the application on the basis of
42 Often, the question of the defining of the alleged confidential information arises in the context
of whether or not the court could be satisfied that the information so described was imparted in
circumstances giving rise to an obligation of confidence and whether or not the information
[T]he more general the description of the information which a plaintiff seeks to
protect, the more difficult it is for the court to satisfy itself that information so
described was imparted or received or retained by a defendant in circumstances
which give rise to an obligation of confidence.
43 I agree with Protec’s submission that the first of these questions does not arise here because of
the contractual obligation. In any event, it seems to me that information given to a professional
person for the purposes of receiving that person’s advice would normally import an obligation
44 On that second question, I accept Professor Cherry’s evidence that most of the information
provided to him by Protec was “common general knowledge” to an expert such as himself.
But the evidence did not stop there. He said that he “learned much about the problem” of
environmental stress cracking of HDPE from his visit to Steuler’s headquarters and that he had
“learned little from anyone on behalf of Protec about these issues” (emphasis added).
Significantly, he did not say in his affidavit that he had learned nothing from Protec about
was:
not made aware of any knowledge and experience in relation to the effects of
solvents on HDPE that Protec would have had other than information that was
available publicly.
45 In respect of the first of the alleged categories of confidential information, namely, Protec’s
“knowledge and experience in relation to the effects of solvents on HDPE”, I find it a little
surprising that Professor Cherry can be so definite that the little he learned from Protec about
its relevant knowledge and experience was already “available publicly”. As referred to above,
Professor Cherry was initially briefed by Mr McKellar, he visited the WMC site with
Mr Smith, Protec’s managing director, in about March 2003, and he received information from
both Mr Smith and Mr McKellar in 2004 and/or 2005. I consider it more than likely that, at
least in his discussions with Mr Smith, Professor Cherry was given some information about
Protec’s relevant knowledge and experience which was not publicly known. Whilst, in
Professor Cherry’s opinion it may not have been very important technologically, it would
46 I also consider that Professor Cherry has failed to understand the significance of the third
category of alleged confidential information, namely, Protec’s “common approach with Steuler
to the defence to the counterclaim”. At the conclusion of his affidavit, Professor Cherry said
that he was “unable to understand this claim”, and that as far as he was aware it “would have
been public knowledge” that Protec and Steuler were following a “common defence”. That is
not the information which Protec is seeking to keep confidential. As previously mentioned,
Professor Cherry said that he learned much from his visit to Steuler’s headquarters. His views
on what he had learned were, however, confidential to Protec, unless Protec chose to share
them with Steuler. Thus, if his report dated 1 July 2003 had not previously been disclosed by
Protec to Steuler, in all probability Professor Cherry will have breached his obligation of
he discussed his report or the views contained in it with Steuler’s lawyers at their meeting on 7
November 2007.
18 T0076
47 Further, it is clear, in my opinion, that it is no answer to a claim of confidentiality to say that
some other person or limited group also knows the alleged confidential information. Johnson J
48 Finally, I found Professor Cherry’s response to the second category of alleged confidential
information, namely, Protec’s “attitude strategy and approach to the principal proceeding”
rather disingenuous. Professor Cherry said that he did not know “the meaning of the words
‘attitude strategy’ ”. Whilst the punctuation can be criticised, I would have thought that any
reader would understand that a comma had to be added between “attitude” and “strategy”, and
that when that was done the meaning of Protec’s “attitude, strategy and approach to the
49 Further, whilst I accept that Professor Cherry genuinely believes that he “was not made aware”
of Protec’s attitude, strategy and approach to the principal proceeding, I find it surprising that
this would be the case. It seems to me that, during his discussions with Mr McKellar and
Mr Smith, particularly in the private sessions of the mediation when counsel was also present,
11 Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1948) 65 RPC 203 at 215.
12 (1982) 150 CLR 310 at 326.
13 Coco v AN Clark (Engineering) Ltd [1969] RPC 41 at 47.
14 (2001) 208 CLR 199 at 224-5.
19 T0076
Professor Cherry would have heard something about Protec’s “attitude, strategy and approach
to the principal proceeding”. Obviously, this is information that would not be known to
Steuler. Probably Professor Cherry paid little attention to it as it was of no interest to him and
he probably forgot what he heard. Nevertheless, as Nettle J said in Sent, “[r]ecollections are
liable to be revived”. 15
50 Further, I do not accept that it is an answer to Protec’s claim for Professor Cherry to say that he
did not recall Mr McKellar telling him that any of the information provided to him was
confidential. If it was not a matter of common general knowledge, such as Protec’s reaction to
Mr Smith’s attitude towards the risks of litigation, then, in my opinion, he should have
realised, as a reasonable person would have, that this information was being provided in
confidence. 16 And in any event, he had expressly agreed in the written agreement proffered by
51 Despite the generality of Protec’s evidence, I have concluded that it has established that there
52 A separate, but related, question is whether Protec has established that Professor Cherry is in
professional privilege may once have applied, for example, to Professor Cherry’s reports dated
26 May 2003 and 22 August 2005 respectively. Rather, they submitted that any privilege or
confidentiality had been waived by Protec serving those reports upon the other parties and/or
by Protec asking Professor Cherry to participate in the conclave of experts which led to the
53 I turn, therefore, to the issue of waiver. Mr Riordan submitted that there had been no waiver of
the privileged and confidential nature of Professor Cherry’s instructions and his reports simply
the Court. He referred to the judgment of King CJ in State Bank of South Australia v
Smoothdale (No. 2) Limited. 17 In that case, the defendant/appellant sought the production of
expert witness statements delivered by a subsidiary of the plaintiff bank to the opposing party
in another proceeding, in the Supreme Court of New South Wales, in compliance with an order
made pursuant to a Practice Note. The defendant conceded at first instance that the statements,
when prepared, were privileged but contended that the privilege had been waived by their
delivery to the solicitors for the opposing party in the New South Wales proceeding.
54 King CJ said:
His Honour then went on to consider whether, once privilege was waived, it was waived for all
purposes or whether there could be waiver which was “partial or limited only.” 19 After
referring to a number of authorities, his Honour held that they clearly established that “waiver
of privilege may be limited to a specific situation or purpose”. 20 King CJ continued:
There is a general waiver of privilege if the party expressly waives privilege for
all purposes or intentionally uses the documents in a manner which is
incompatible with the retention of confidentiality. These witness statements,
however, were never used in the public arena as they would have been if
introduced into evidence; Springfield Nominees Pty Ltd v Bridgelands
Securities Ltd (1992) 38 FCR 217 at 222 - 223. The delivery of statements
pursuant to the order of the Court is for the limited purpose contemplated by the
Practice Note namely "the just, quick and cheap disposal of the proceedings".
The object is to provide advance notice to the other parties of the evidence
which the witnesses are expected to give and thereby to facilitate the hearing
perhaps even to the point of the use of the statements as evidence in chief.
17 (1995) 64 SASR 224. Mullighan and Nyland JJ agreed with King CJ.
18 (1995) 64 SASR 224, 226-227.
19 (1995) 64 SASR 224, 227.
20 (1995) 64 SASR 224, 228.
21 T0076
…
I can find nothing in the circumstances to indicate a use of the statements which
is incompatible with the retention of confidentiality except to the extent that
confidentiality must be modified to achieve the purpose of the Court Order
namely to acquaint the other parties in advance with the evidence which the
witnesses were expected to give. There was therefore no intentional waiver of
privilege except to the extent of permitting use of the documents by the other
parties for the purpose of preparing the case. 21
… the delivery of the statements pursuant to the order did not place the
statements in the public domain and did not amount to a use of them in a
manner incompatible with the retention of confidentiality and privilege except
so far as waiver was necessary to permit their use for the purposes of the case in
which they were delivered in accordance with the Practice Note and ordering
the court.
55 Mr Harrison submitted that the authority of the judgment in Smoothdale was lessened by the
fact that it was decided before the decision of the High Court in Mann v Carnell. 23 However,
there is nothing in that judgment, in my opinion, which contradicts or detracts from the
reasoning of King CJ in Smoothdale. Protec’s conduct in serving on the other parties Professor
Cherry’s witness statement, which contained his two reports, was not inconsistent with the
In the course of preparing a matter for trial, it is common for parties to provide
privileged documents to other parties with a common interest and to potential
witnesses. Without more I am unable to conceive how, in the ordinary course,
conduct such as this would be inconsistent with the preservation of the
confidentiality of the material. The requisite inconsistency may be manifested
when a party indicates an intention to rely upon evidence of a witness which is
based upon privileged material provided to that witness. This, not infrequently,
occurs when a party delivers an affidavit or proof of expert evidence of a
witness. In that situation, the inconsistency between the party's conduct and the
maintenance of a claim for privilege in relation to the material relied upon by
the witness is compounded by the unfairness of allowing the party's witness to
refer to that material whilst also allowing that party to shield the material from
scrutinisation and testing by a claim of privilege. [Emphasis added]
Three points should be noted. The first is that his Honour’s statement of principle is qualified,
not absolute. Secondly, much depends on the timing because consideration of the questions of
inconsistency and unfairness may change if Protec calls Professor Cherry to give evidence.26
But that stage has not been reached. Thirdly, despite the terms of his statement of general
principle, Evans J held that in the instant case there has been no waiver of the privilege in
relation to the statement in question. I do not consider, therefore, that there was anything said
by Evans J in Atkinson which requires me to find that privilege in Professor Cherry’s expert
57 Mr Harrison also submitted that, by asking Professor Cherry to participate in the conclave of
experts, Protec waived any privilege or confidentiality in respect of his reports and his views
58 I do not agree. The meeting of the experts was not a public forum. Apart from the various
experts, the only other person present during the discussion was the Court appointed facilitator,
Dr Donald Charrett of counsel. Paragraphs 1(e) and (f) of my order made on 7 October 2005
provided as follows:
(f) the report shall be admitted into evidence at the trial of the proceeding
but no part of the report shall bind any party except insofar as the party
agrees in writing.
59 Further, part of the agreed Directions for Experts Conference read as follows:
6. The experts are not permitted to discuss the details of the conference
discussions with their engaging parties or lawyers at any time during the
proceedings, except as agreed by the facilitator.
Thus, in my opinion, the disclosure of Professor Cherry’s views was not communicated to the
world at large but only to a very limited group for a specific purpose and in circumstances
where it was clear that there was no intention to waive privilege or confidentiality generally.
60 Reliance was also placed on the fact that Mr McKellar exhibited to his first affidavit the initial
letter of instructions to Professor Cherry dated 15 October 2002 and the enclosed “Brief to
Expert on Material Selection Issue”. Mr McKellar also exhibited Professor Cherry’s letter in
response dated 17 October 2002 which contained “a series of initial thoughts on this matter” as
well as two copies of the Consultancy Agreement. This was said to be further evidence of
61 I do not accept this submission. It seems to me that the original instructions given to Professor
Cherry probably should have been included in his witness statement dated 15 September 2005
pursuant to r.44.03(2)(d) of the Supreme Court (General Civil Procedure) Rules 2005, even if
they were not required to be included in his May 2003 report by the Rules then in force.
24 T0076
Certainly, his instructions in 2005 were included in his second report. Disclosure of this 2002
correspondence between Mr McKellar and Professor Cherry in this proceeding, therefore, was
not inconsistent, in my opinion, with a claim that the reports and related documents continued
62 Therefore, I reject the submission that Protec has waived the privileged and confidential nature
of Professor Cherry’s reports, thereby allowing him to discuss their contents with Steuler’s
lawyers.
63 The next issue is whether Protec has established that there is a risk that there will be an
detriment of Protec.27 Counsel for Professor Cherry and Steuler both stressed that their clients
had stated that in their discussions they had not, and would not, stray into the area covered by
clarification from Professor Cherry about the technological aspects of his reports, the reports of
64 I accept Mr Harrison’s submission that Protec’s solicitors were not correct when they said in
their letter of 18 December 2007 that Professor Cherry “cannot possibly” speak with Steuler’s
lawyers without breaching confidence. In my opinion, that did overstate the position, but only
marginally. As I have already held, Professor Cherry’s reports and the Joint Report and his
views on the reports of the other experts are privileged and confidential to Protec. Therefore,
Professor Cherry should not be speaking to Steuler’s lawyers about these matters. They want
to talk to him about information which I consider is privileged and confidential. This case is,
therefore, distinguishable from Elliott v Ivey, 28 where Sperling J was satisfied that the expert
did not bring to account what he was told or learned about the clients in 1994 when writing his
report for a different purpose in 1997, and that there was, therefore, no disclosure of a
protected confidence in the 1997 report. I do not accept Mr Harrison’s submission that the
27 Coco v AN Clark (Engineers) Ltd [1969] RPC 41, 47-48 (Megarry J).
28 [1998] NSWSC 116.
25 T0076
facts in Elliott v Ivey are more analogous to the present case than those in Rapid Metal
Developments.
65 It is not to the point, in my opinion, that Professor Cherry and Steuler argued that Protec could
not point to any detriment to it in Professor Cherry speaking to Steuler about the technological
aspects of the suitability of HDPE as a tank lining material. As Gummow J said in Smith Kline
& French Laboratories (Aust) Ltd Secretary, Department of Community Services and
Health: 29
66 Or, as Lord Millett described the duty of confidentiality in Prince Jefri Bolkiah v KPMG (a
firm): 30
67 Even if the dichotomy sought to be drawn by counsel for Professor Cherry and Steuler,
between discussing the various reports on the one hand and discussing privileged or
confidential matters on the other, were correct, I consider that there would be an unacceptable
information. As Hayne J held in Farrow Mortgage Services Pty Ltd (In Liq.) v Mendall
It is not necessary to conclude that harm is inevitable (or well nigh inevitable)
before acting to restrain a possible breach of the duty that a solicitor owes to
clients and former clients to keep confidential information given to the solicitor
in confidence and not use that information against the interests of the client who
gave it to the solicitor. … I consider that injunction should go if there is a real
and sensible possibility of the misuse of confidential information.
principle stated by his Honour should not also apply to the relationship of expert witness and
client.
68 I am satisfied that there would be a real and sensible possibility of the misuse of confidential
information, if Professor Cherry were not to be restrained from speaking further with Steuler
lawyers about the technological issues raised in these proceedings, in particular the question of
the suitability of HDPE as a tank lining material. In saying this, I am not to be taken to be
suggesting any lack of bona fides or integrity on the part of either Professor Cherry or Steuler’s
lawyers in stating that they would avoid contentious topics. I accept the honesty of their stated
confidential information would be imparted before it was realised what was going to be said.
69 Further, what is to happen if Professor Cherry unwittingly blurted out some privileged or
confidential information? Will Steuler’s lawyers then withdraw from the case? One only has
to ask these questions to see, in my opinion, that the only way to avoid the drastic
consequences of the real and sensible possibility of the misuse of the privileged and
confidential information is to prevent Professor Cherry speaking any further with Steuler’s
lawyers.
70 I do not consider that granting Protec’s application involves any infringement of the principle
that there is no property in a witness, because Steuler would still be entitled to call Professor
Cherry as a witness, if Protec did not. This issue was considered by Johnson J in Rapid Metal
a court will not intervene to prevent an expert witness from giving evidence on
behalf of another party but will take appropriate action to prevent the witness
from disclosing confidential or privileged information. 32
Part of the appropriate action which Johnson J thought necessary in that case was, in broad
terms, to restrain the equivalent party to Steuler, through its solicitors or otherwise, from
utilising, in the course of preparing its case, the reports of the expert witness and any document
32 [2005] WASC 255, [151]. See also Harmony Shipping v Davis [1979] 3 All ER 177; R v R
[1994] 4 All ER 260; R v Ward (1981) 3 A Crim R 171.
27 T0076
in his files, which he had provided to it, other than documents which it had obtained from
another source not involving any breach of confidentiality. 33 His Honour made the point that:
Consequently, his Honour held that, in his view, the trial process was “the more appropriate
arena” to deal with the relevant issues, as the equivalent party to Protec, through its counsel,
would “then be in a position to immediately raise any issue of breach confidentiality [sic]
arising from a specific question put to the witness”. I respectfully agree with and adopt that
approach.
71 I turn next to the issue of whether the privilege or confidentiality still existed given that
Protec’s involvement in the principal proceeding ended when it settled with WMC. An
associated argument was that in these circumstances no loss or damage would be caused to
Protec, even if there were a breach of privilege or confidentiality, because it no longer had any
real interest in the outcome of the two proceedings as its financial position remained the same.
misunderstanding about Protec’s continued interest in the two proceedings following its
settlement with WMC. First, the privileged or confidential nature of information does not
cease merely because a proceeding is concluded. 34 It is still not publicly known information.
Secondly, the contractual promise to keep the information confidential was unqualified, it was
not linked to the principal proceeding. Thirdly, as part of the settlement, Protec was required
to commence the 2007 proceeding, so that it is still involved in litigation, if that were the
requisite criterion. Fourthly, the settlement with WMC did not remove Protec’s very real
financial interest in the outcome of the two proceedings. As I read the terms of settlement, any
recovery by WMC against Steuler in the principal proceeding may assist Protec in not having
the consent judgment for $15 million enforced against it. Alternatively, any recovery by
Protec against Steuler in the 2007 proceeding will assist Protec in meeting the $15 million
detriment to it. Its entitlement to protection arises from the obligation of conscience not to use
73 For all of the above reasons, I have concluded that there is a serious question to be tried and
that there is a degree of likelihood that Protec would be successful at trial in respect of it. With
respect to the balance of convenience, I am satisfied that this favours the granting of Protec’s
application. I do not accept Mr Harrison’s submission that it was difficult to see that damage
would flow to Protec from any beach. The whole point of recognising that certain information
is privileged or confidential is to prevent those on the other side becoming aware of it. Once
disclosed, it is obviously known to them and cannot be retracted. Damages are not a
satisfactory remedy in that situation. On the other hand, all Professor Cherry stands to lose is
the inability to earn some more fees for advising on this issue. The loss to him, if my decision
subsequently turns out to be incorrect, is significantly less than the potential damage to Protec,
were I to decide the matter the other way, and subsequently that turned out to be an incorrect
decision. In any event, Professor Cherry is covered by the usual undertaking as to damages
Proposed Order
74 Subject to hearing from counsel about the precise wording of the injunction, the order I would
Pending the hearing and determination of this proceeding or further order, the
GmbH (“Steuler”), its servants or agents, including in particular its solicitors, Anderson
Rice and counsel retained on its behalf, in connection with the Supreme Court
proceedings No. 5797 of 2000 and No. 7268 of 2007, save and except all necessary
communication between Anderson Rice and the defendant concerning arrangements for
the latter being called by Steuler as an expert witness in the said proceedings.
---
29 T0076