Dispute Resolution Senior Associate, Ben Hartley, looks at the decision in Melbourne City Investments Pty Ltd v Leighton Holdings Limited  VSC 7 in which the Supreme Court of Victoria restrained a plaintiff in a group proceeding from reliance on a document in its Statement of Claim that contained “highly sensitive legal advice” and was confidential to Leighton Holdings.
The plaintiff, Melbourne City Investments Pty Ltd, commenced a group proceeding against Leighton Holdings Limited in which allegations were made regarding the failure by Leighton Holdings to make disclosures to the market which in turn may have had a material effect on its share price. In response, Leighton Holdings, sought, amongst others, an order for the delivery up of a letter prepared by Leighton Holdings’ solicitor to its Chief Operating Officer and an injunction restraining the Melbourne City Investments from making use of the information contained in that letter. Critically, the letter in question and its contents had been pleaded as a material fact by Melbourne City Investments.At paragraph 12 of Melbourne City Investments’ amended statement of claim it was alleged:
“On 20 December 2010, Malcolm David of Herbert Geer, solicitors, also reported credible findings of misconduct, fraud, breach of contract and breach of fiduciary duties…
The particulars relied upon in support was a letter from Malcolm David, a solicitor at Herbert Geer, to the Chief Operating Officer of Leighton Holdings dated 20 December 2010. Unsurprisingly Leighton Holdings took immediate steps to protect its confidential information notwithstanding that parts of the letter had been published in newspapers and had come into the possession of Melbourne City Investments and its solicitor. Leighton Holdings did not press and the Court was not concerned with questions of legal professional privilege given the letter was already in the possession of Melbourne City Investments. Rather the Court was concerned with a claim in equity to protect confidentiality.
In order for the protection in equity over confidential information, a party must satisfy certain criteria as outlined below.
- It must be able to identify with specificity the information in question.
- It must show that the information has the quality of confidentiality.
- It must show the information was received by that party in circumstances that imply an obligation of confidence.
- It must show that there is actual or threatened misuse of the information.
The letter contained legal advice from a partner of Herbert Geer to the Chief Operating Officer of Leighton Holdings. It was headed, ‘Subject to legal professional privilege’. It was assumed that at the time of writing, legal professional privilege was intended, thus supporting the notion that the communication was confidential. His Honour Justice Judd noted that the letter contains highly sensitive legal advice and in the absence of evidence to the contrary it would be fanciful to conclude that Leighton Holdings, to whom the advice was directed, did not also intend that the communication was and should remain confidential.
Central to Melbourne City Investments’ argument was the fact that the content of the letter had been released and published in at least two newspaper articles in October 2013, and Leighton Holdings, by its conduct had waived or in some way abandoned its claim for confidentiality by not taking steps to assert that the publications had occurred in breach of an obligation of confidence owed by another party to it. This argument was disregarded as the issue before the Court was the prevention of the use of the letter and its contents by Melbourne City Investments in the case at bar.
Melbourne City Investments contended that the information they received was not subject to any obligation to keep it private and thus could not be regarded as confidential. However, Melbourne City Investments did not advance any evidence to explain how the letter had come into its possession and, in the opinion of Justice Judd, overlooked a material difference between that which was published in newspapers and the intended use of the letter that had come into its possession. There was also no evidence to suggest that Melbourne City Investments had made enquiries with Leighton Holdings to ascertain the status of the letter. In the circumstances Justice Judd was prepared to infer that Melbourne City Investments and its solicitor (who was also a director) knew or at least suspected that any enquiry made of Leighton Holdings would prompt an application for an injunction to prevent its use of the letter. Deploying the letter in its amended statement of claim was according to his Honour a misuse of information regarded by Leighton Holdings as confidential and accordingly orders were made to restrain further use of the letter as well as striking out the offending paragraph in the amended statement of claim.
The decision of the Supreme Court of Victoria in Melbourne City Investments is important as it demonstrates the importance given to confidential information in circumstances where there is actual or threatened use of that confidential information, particularly in circumstances where legal professional privilege has been lost courtesy of the confidential and otherwise privilege information coming into the possession of another party. Care must be taken by parties when deploying information in support of their case, more so where the information relied upon is likely to be treated by the opposing party as confidential.