Ambridge Investments Pty Ltd v Baker & Ors (No 3)
[2010] VSC 545
•8 DECEMBER 2010
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 2014 of 2005
| AMBRIDGE INVESTMENTS PTY LTD (IN LIQUIDATION) (RECEIVER APPOINTED) (ACN 077 299 051) | Plaintiff |
| v | |
| THEODORE BAKER & OTHERS | Defendants |
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JUDGE: | VICKERY J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 14 OCTOBER 2010 | |
DATE OF JUDGMENT: | 8 DECEMBER 2010 | |
CASE MAY BE CITED AS: | AMBRIDGE INVESTMENTS PTY LTD v BAKER & ORS [No 3] | |
MEDIUM NEUTRAL CITATION: | [2010] VSC 545 | |
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Practice and Procedure — Application for release from the implied undertaking not to use documents and evidence produced by a party in the course of a trial – Hearne v Street (2008) 235 CLR 125 considered and applied – Consideration as to what may constitute “special circumstances” - Whether special circumstances – Necessity for documents the subject of the application to be identified - Necessity for the purpose of the application to be identified - Application refused.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr C G Juebner | Tress Cox Lawyers |
| For the First, Third, Fourth, Sixth and Seventh Defendants | Mr P J Bick QC and | Rigby Cooke Lawyers |
| For H2O Pty Ltd and Mr Gregory Taylor | Mr R Merkel QC and Ms C Harris | Obst Legal |
TABLE OF CONTENTS
Background......................................................................................................................................... 1
Legal Obligation as to Documents Produced to a Court Under Compulsion...................... 5
Special Circumstances...................................................................................................................... 8
Discretion to Release from the Undertaking............................................................................. 12
Necessity to Specify the Documents Sought to be Released................................................. 12
Documents to Which the Application Properly Relates......................................................... 14
Whether “Special Circumstances” are Present in Relation to the Category C Documents 15
Conclusion......................................................................................................................................... 16
HIS HONOUR:
Background
By its application made by summons dated 21 September 2010, the First, Third, Fourth, Sixth and Seventh Defendants (the “Applicant Defendants”), seek an order that they be released from the implied undertaking not to use a number of documents produced in or for the purposes of the first trial of the present proceeding and that they be permitted to use them for the purposes of issuing and prosecuting proceedings to challenge the appointment of Mr G S Andrews (“Mr Andrews”) as receiver of the Plaintiff, Ambridge Investments Pty Ltd (“Ambridge”), and for consequential orders and relief.
The documents in respect of which the release is sought were described in three categories in the summons as follows:
A.Exhibits numbered “D15”, “D16”, “D17”, “D18”, “D19”, “D20”, “D21”, “D22”, “D23”, “D24”, “D25”, “D26”, “D27”, “D28”, “D29”, “D30”, “D31”, “D32”, “D33”, “D34” and “D35” (the “Category A Documents”);
B. The transcript of evidence of Greg Taylor (the “Category B Documents”); and
C.The documents produced on subpoena by The H2O Company Pty Ltd pursuant to the subpoena dated 3 September 2009 (the “Category C Documents”).[1]
[1]The summons strictly referred to “documents produced on Subpoena by H2O Pty Ltd”. It is assumed that this reference was intended to be to “The H2O Company Pty Ltd”, and H2O did not take issue on this point.
In the course of submissions in the application before me, the Applicant Defendants also sought a release in relation to an affidavit of Angela Michelle Kennedy sworn 12 October 2010 and the 21 exhibits to that affidavit (the “Category D Documents”). This affidavit was volunteered by Ms Kennedy on behalf of Mr Gregory Andrews who is the receiver of Ambridge appointed on 18 August 2004. Ms Kennedy is an employee of Mr Andrews. The affidavit was filed in opposition to the summons of the Applicant Defendants in the present application.
The summons also sought a release in respect of documents produced pursuant to a subpoena dated 14 October 2009. However, the Applicant Defendants no longer press their application in relation to these documents.
The first trial of the proceeding (the “first trial”) commenced on 5 October 2009 before me and occupied 18 sitting days before concluding on 13 November 2009. The questions for determination at this trial were summarised in the judgment delivered on 12 March 2010. [2]
[2][2010] VSC 59 [27].
This application of the Applicant Defendants was heard on 14 October 2010.
The summons of the Applicant Defendants was supported by an affidavit of the First Defendant, Theodore Baker (“Baker”), sworn 16 September 2010. This set out the background to the application and claimed that the Sixth Defendant, Break Fast Investments Pty Ltd (“Break Fast”) is a creditor of the Plaintiff Ambridge.
Notice of the application of the Applicant Defendants was also given to Mr Gregory Taylor (“Taylor”) and to his company H2O Pty Ltd (“H2O”).
The documents in contention in this application were produced during an application made at the first trial by the Defendants for an amendment to their defence and counterclaim, which sought, in effect, to challenge the appointment of the receiver of Ambridge by H2O in the proceeding. I ruled in substance that there was not a sufficiently close connection between the proposed challenge to the appointment of the receiver and the principle matter in dispute in the first trial, namely whether Ambridge had any and what interest in the Wellington Parade Joint Venture. The amendment accordingly was refused.[3]
[3][2010] VSC 59 [55]–[90].
It is the intention of Break Fast, in a separate proceeding yet to be instituted, to challenge the appointment of the receiver to Ambridge and to challenge the validity of the H2O charge over the assets and undertakings of Ambridge which was relied upon for the appointment of the receiver.
The circumstances surrounding the appointment of the receiver to Ambridge were the subject of evidence and submissions taken in the course of the Defendants’ amendment application at the first trial. The documents which are the subject of this application of the Applicant Defendants were said by Mr Bick QC, who appeared with Mr Alstergren of counsel for the Applicant Defendants, to comprise “relevant information [which] was in the public domain by reason of having been ventilated by one means or another in open court”.
Mr Bick QC also said in the course of the application of the Applicant Defendants that “… the proceeding [the proposed future proceeding to challenge the appointment of the receiver to Ambridge and to challenge the validity of the H2O charge] can and will be commenced irrespective of the outcome of today’s application. However, the application has been brought as a precaution in order to avoid any perception or misperception that recourse to documents, the subject of an implied obligation of confidentiality for the purpose of the proceeding in which the documents were produced and the evidence adduced, has been breached. In other words, the application was precautionary. It will not affect one way or the other the ability of Break Fast to institute proceedings”.
The proceeding proposed to be instituted by Break Fast was stated to be founded upon s.418A Corporations Act 2001, which inter alia provides a facility for the Court to declare whether an appointment of a receiver of the property of a corporation is valid. It is in the following terms:
(1) Where there is doubt, on a specific ground, about:
(a)whether a purported appointment of a person, after 23 June 1993, as receiver of property of a corporation is valid; or
(b)whether a person who has entered into possession, or assumed control, of property of a corporation after 23 June 1993 did so validly under the terms of a charge on that property;
the person, the corporation or any of the corporation's creditors may apply to the Court for an order under subsection (2).
(2)On an application, the Court may make an order declaring whether or not:
(a) the purported appointment was valid; or
(b)the person entered into possession, or assumed control, validly under the terms of the charge;
as the case may be, on the ground specified in the application or on some other ground.
No proceeding to remove the receiver appointed to Ambridge, as foreshadowed by the Applicant Defendants, has yet been instituted.
Nevertheless, the bona fides of the Applicant Defendants, which included Break Fast, in proposing to institute its proposed proceeding was not challenged in the course of this application, even though their standing and their legal grounds for doing so were the subject of challenge. They claimed that H2O loaned Ambridge the sum of $240,000 to pay out its indebtedness to the Commonwealth Bank. The consideration for the advance by H2O included two first class round-the-world air tickets and payment of interest at the rate of 200 per cent or thereabouts in the event that the loan remained unpaid after a short period. Mr Taylor gave evidence during the amendment application made at the first trial that interest outstanding under the loan then stood in excess of $4 million. It was submitted by the Applicant Defendants in this application that the claim of H2O to payment of interest at this level under its loan to Ambridge, if successful, would dilute the assets available to the other creditors of Ambridge. Break Fast, it was claimed, is a creditor of Ambridge in the sum of approximately $2 million. The alleged indebtedness of Ambridge to Break Fast is put in issue by Ambridge, who appeared in the application of the Applicant Defendants by its counsel, Mr Juebner. He submitted that any monies owed by Ambridge to Break Fast are the subject of set-off against monies which are owed by Break Fast to Ambridge, thereby extinguishing Ambridge’s indebtedness. These matters do not call for determination in this application.
Legal Obligation as to Documents Produced to a Court Under Compulsion
The limitation imposed by the law on the use of documents generated by litigation is deeply entrenched. Restrictions on use were originally founded upon the giving of an express undertaking.[4]
[4]Richardson v Hastings (1844) 7 Beav 354 [49 ER 1102]; Hopkinson v Lord Burghley (1867) LR 2 Ch App 447.
However, parties disclosing documents to a court soon gained a legal right to the protection of those documents. Other parties to the proceeding became subject to a legal obligation not to make collateral use of documents disclosed, with this obligation arising automatically as an incident of the process of discovery or production.
The historical evolution of this development was traced by the High Court in Hearne v Street[5] in the following passages:[6]
Then in Williams v The Prince of Wales Life, etc, Co [7], Sir John Romilly MR, while requiring an express undertaking, put the matter in terms of legal rights: "[I]t is not the right of a Plaintiff, who has obtained access to the Defendants' papers, to make them public." The following year the protection was not said to rest on an express undertaking, but on a "rule" that "where documents have been produced in obedience to an order of this Court, the Court has a right to say to the person who has obtained their production: 'Those documents shall never be used by you except under the authority of the Court'."[8] In Alterskye v Scott[9], although Jenkins J referred to a concession by counsel that his client obtained discovery on an "implied undertaking", in the operative part of his reasoning he did not analyse the matter in terms of "undertaking", either express or implied, but in terms of an "implied obligation not to make an improper use of the documents." And other judges have preferred to the language of "implied undertaking" the words "implied obligation"[10] or "obligation"[11] or "duty".[12] Another formula is that the party obtaining discovery is "taken to undertake to the court that the documents obtained on discovery will not be used for any purpose other than the action in which they are produced".[13] In Harman v Secretary of State for the Home Department[14] Lords Simon of Glaisdale and Scarman, who accepted the general rule of limited use but disagreed with the majority about applying it to documents read in open court, said:
"Imposed by law the obligation is formulated as arising from an undertaking exacted by the court from the party and his solicitor to whom the documents are disclosed. It is the condition upon which discovery is ordered."
(Emphasis added.)
Lord Denning MR in Riddick v Thames Board Mills Ltd[15] said:
"A party who seeks discovery of documents gets it on condition that he will make use of them only for the purpose of that action, and no other purpose." (Emphasis added.)
The fact that the role of the word "undertaking" is merely to indicate the way in which an "obligation" which is "imposed by law" as a "condition" of discovery binds the disclosee highlights the substantive nature of the obligation. There is nothing voluntary about the "undertaking".
[5](2008) 235 CLR 125.
[6]Supra at [105]-[106] (per Hayne, Heydon and Crennan JJ).
[7](1857) 23 Beav 338 at 340 [53 ER 133].
[8] Reynolds v Godlee (1858) 4 K & J 88 at 92 [70 ER 37 at 39] per Sir William Page Wood V-C.
[9][1948] 1 All ER 469 at 470-471. Cf the reading given to the case in Distillers Co (Biochemicals) Ltd v Times Newspapers Ltd [1975] QB 613 at 618; Riddick v Thames Board Mills Ltd [1977] QB 881 at 896; Ainsworth v Hanrahan (1991) 25 NSWLR 155 at 163.
[10]Riddick v Thames Board Mills Ltd [1977] QB 881 at 901 per Stephenson LJ; Home Office v Harman [1981] QB 534 at 541 and 545 per Park J and 563-564 per Dunn LJ.
[11]Harman v Secretary of State for the Home Department [1983] 1 AC 280 at 312 per Lords Simon of Glaisdale and Scarman; State Bank of South Australia v Smoothdale (No 2) Ltd (1995) 64 SASR 224 at 229 per King CJ; Akins v Abigroup Ltd (1998) 43 NSWLR 539 at 548 per Mason P.
[12]Harman v Secretary of State for the Home Department [1983] 1 AC 280 at 302 per Lord Diplock and 314 per Lords Simon of Glaisdale and Scarman.
[13]Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] 2 VR 34 at 38 per Hayne JA (emphasis added).
[14][1983] 1 AC 280 at 313.
[15][1977] QB 881 at 896.
Thus the obligation, traditionally referred to as the “implied undertaking”, is better understood as a substantive legal obligation.[16] The obligation is imposed as a matter of law.
[16]Hearne v Street at [3] (per Gleeson CJ) and at [105]-[106] (per Hayne, Heydon and Crennan JJ).
Where a person is compelled, by reason of a rule of court, a specific order of the court, or other coercive process, to disclose documents or information in the course of a proceeding in court, the person obtaining the disclosure cannot, without the leave of the court, use it for any purpose other than that for which it was given, unless it is received into evidence.[17] As to the continued applicability of the rule in circumstances where a document is used in open court but where the document is not admitted into evidence, reference is made to the detailed analysis of Hargrave J in Citicorp Life Insurance Ltd v Lubransky; Bagiotas v Citicorp Life Insurance Ltd.[18]
[17]Hearne v Street at [96] (per Hayne, Heydon and Crennan JJ)
[18] [2005] VSC 101.
The rule has a wide scope in its application to a range of documents. As noted by the High Court in Hearne v Street,[19] included within the reach of the principle, for example are: documents inspected after discovery,[20] answers to interrogatories,[21] documents produced on subpoena,[22] documents produced for the purposes of taxation of costs,[23] documents produced pursuant to a direction from an arbitrator,[24] documents seized pursuant to an Anton Piller order,[25] witness statements served pursuant to a judicial direction[26] and affidavits.[27]
[19] Hearne v Street at [96] (per Hayne, Heydon and Crennan JJ).
[20]Riddick v Thames Board Mills Ltd [1977] QB 881; Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10 at 32-33; [1995] HCA 19.
[21] Central Queensland Cement Pty Ltd v Hardy [1989] 2 Qd R 509 at 510-511; Ainsworth v Hanrahan (1991) 25 NSWLR 155.
[22] Eltran Pty Ltd v Westpac Banking Corporation (1990) 25 FCR 322.
[23] Bourns Inc v Raychem Corp [1999] 3 All ER 154 at 169-170.
[24]Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10 at 33, 39, 46-47 and 48.
[25]Cobra Golf Inc v Rata [1996] FSR 819.
[26] Central Queensland Cement Pty Ltd v Hardy [1989] 2 Qd R 509; Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217 at 223; State Bank of South Australia v Smoothdale (No 2) Ltd (1995) 64 SASR 224 at 229.
[27]Medway v Doublelock Ltd [1978] 1 WLR 710; [1978] 1 All ER 1261; Re Addstone Pty Ltd (in liq); Ex parte Macks (1998) 30 ACSR 156.
The importance attributed to the obligation is reflected in the approach of the courts to its breach. A contravention is treated as contempt.
Further, the reach of the principle is extended to third parties who use the documents with knowledge of the circumstances of their production before a court. As Hayne, Heydon and Crennan JJ observed in Hearne v Street:
The primary person bound by the relevant obligation is the litigant who receives documents or information from the other side pursuant to litigious processes. The implied undertaking also binds others to whom documents and information are given. For example, expert witnesses, who are not parties, commonly receive such documents and information and are bound by the obligation.[28]
Their Honours further observed: “Use with knowledge of the circumstances would be improper use”[29] and:
There is no support in the authorities for the idea that knowledge of anything more than the origins of the material in legal proceedings need be established. In particular, there is no support for the idea that knowledge of the "implied undertaking" and its consequences should be proved, for that would be to require proof of knowledge of the law, and generally ignorance of the law does not prevent liability arising.[30]
[28]Ibid at [109].
[29]Ibid at [111].
[30]Ibid at [112].
These observations of Hayne, Heydon and Crennan JJ in Hearne v Street were founded upon the following reasoning:[31]
In Hamersley Iron Pty Ltd v Lovell[32] Anderson J (Pidgeon and Ipp JJ concurring) said: "The implied undertaking is binding upon anyone into whose hands the discovered documents come, if he knows that they were obtained by way of discovery". And Ryan J said in Spalla v St George Motor Finance Ltd:[33] "To be effective, the undertaking must bind the litigant by whom it is given and his or her privies."
If this principle did not exist, the "implied undertaking" or obligation on the litigant would be of little value because it could be evaded easily. That is why Lord Denning MR said in Riddick v Thames Board Mills Ltd:[34] "The courts should ... 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".[35] And in the same case[36] Stephenson LJ also said: "[I]t is important to the public and in the public interest that the protection should be enforced against anybody who makes improper use of it".
[31]Ibid at [110] and [111].
[32](1998) 19 WAR 316 at 334-335.
[33](2004) 209 ALR 703 at 717 [40].
[34][1977] QB 881 at 896.
[35]The comment in this footnote is omitted by reason of its irrelevance to the facts of the present case.
[36][1977] QB 881 at 902.
Special Circumstances
The fundamental principle is that the Court ought not to exercise its discretion to release or modify the implied undertaking unless there are “special circumstances” present which justify taking this course. So much was common ground.
However, it was submitted by Mr Merkel QC, who appeared with Ms Harris of counsel for Mr Taylor and his company, that in light of the High Court’s recent emphasis of the importance of the obligation in Hearne v Street,[37] the rights it protects, and the ends it is intended to further, it is apparent that the requirement of “special circumstances” must be understood as requiring the party seeking release to establish that a release is necessary in the interests of the administration of justice or the public interest. Reliance was placed on authority decided both prior and subsequent to Hearne v Street.[38]
[37]Ibid.
[38]Visy Board Pty Limited v D’Souza & Ors [2008] VSC 572 (Visy Board v D’Souza) at [18]-[19]; Fortis Business Holdings LLC v Commonwealth Bank of Australia [2009] VSC 274 at [41]; see also Moage Ltd (in liq) v Jagelman (2002) 43 ACSR 173 at [15]-[17]; Re Marshall Bell Hawkins Ltd; Australian Securities & Investments Commission v Marshall Bell Hawkins [2003] FCA 833 (Marshall Bell Hawkins) at [12]-[13].
I do not accept this formulation without qualification.
The rule has the purpose of protecting both private and public interests. The two are interrelated.
Protection of a private right to keep one’s documents to oneself, yielding only so far as is necessary to the interests of justice for the purposes of a proceeding in which the documents are compelled to be produced, is clearly championed by the rule. The rationale is to ensure that the privacy of the person from whom otherwise private or confidential information is coercively obtained is invaded no more than is necessary for the purposes of the administration of justice.[39]
[39]Hearne v Street at [107]; Minister for Education v Bailey [2000] WASCA 377 at [25]-[26]; BATAS v Cowell (No 2) (2003) 8 VR 571 at [20].
Of no less import is the public interest in maintaining privacy and confidence in relation to documents produced to a court under compulsion. This arises directly from protection of the private interest. Protection of the confidentiality of a person’s private documents encourages the full and proper disclosure of documents that the administration of justice requires. As such, it is an important element in maintaining public confidence in the conduct of legal proceedings in court and by this means securing constructive participation in its processes.
The call for an analysis of the twin aspects of the rule was highlighted in this case by the submissions made on behalf of Mr Taylor and his company. The High Court in Hearne v Street while not expressly considering the rule in this light, discussed the principles in a manner which was consistent with this approach, as illustrated in the following discussion on the part of Hayne, Heydon and Crennan JJ:[40]
[40]Ibid at [107].
The expression “implied undertaking” is thus merely a formula through which the law ensures that there is not placed upon litigants, who in giving discovery are suffering “a very serious invasion of the privacy and confidentiality of [their] affairs”, any burden which is “harsher or more oppressive … than is strictly required for the purpose of securing that justice is done”. To that statement by Lord Keith of Kinkel of the purpose of the “implied undertaking” may be added others. In Riddick v Thames Board Mills Ltd [[1977] QB 881 at 896] Lord Denning MR said:
“Compulsion [to disclose on discovery] 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 an ulterior or alien purpose. Otherwise the courts themselves would be doing an injustice”.
In Harman v Secretary of State for Home Department [[1983] 1 AC 280 at 300] Lord Diplock said:
“The use of discovery involves an inroad, in the interests of achieving justice, upon the right of an individual to keep his own documents to himself; it is an inroad that calls for safeguards against abuse, and these the English legal system provides … through its rules against abuse of process and contempt of court”.
In Watkins v A J Wright (Electrical) Ltd Blackburne J said:
“In my judgment, a serious inroad into [the safeguards referred to by Lord Diplock] and, therefore, into the utility of the discovery process in the just disposal of civil litigation would occur if it were open to a litigant (or his solicitor) to enjoy the fruits of discovery provided by the other side, but avoid the risk of committal for contempt for acting in breach of the countervailing implied obligation on the ground that he was unaware of the existence of the undertaking. I take the view that it does not lie in the mouth of a person to plead ignorance of the legal consequences of the discovery process”.
To speak in terms of “undertaking” serves:
“a useful purpose in that it confirms that the obligation is one which is owed to the court for the benefit of the parties, not one which is owed simply to the parties; likewise, it is an obligation which the court has the right to control and can modify or release a party from. It is an obligation which arises from legal process and therefore is within the control of the court, gives rise to direct sanctions which the court may impose (viz contempt of court) and can be relieved or modified by an order of the court”.
[Footnotes omitted.]
In my opinion, it is not possible nor desirable to confine the notion of “special circumstances” to an exhaustive list of factors. As Wilcox J said in Springfield Nominees Pty Ltd v Bridgelands Securities Ltd:[41] “For ‘special circumstances’ to exist it is enough that there is a special feature of the case which affords a reason for modifying or releasing the undertaking and is not usually present.”
[41](1992) 38 FCR 217 at 225.
However, in approaching a determination as to whether “special circumstances” are present in a particular case, consistently with the applicable case law as it has developed to this point, I would vary a little the formulation of Wilcox J in Springfield, to arrive at the following test: “special circumstances” may arise where there are special features (or a special feature) of the case which afford good reason for modifying or releasing the undertaking, being circumstances which are of sufficient gravity to override the private and public interest in protection of the confidentiality of a person’s private documents which are required by law to be produced to a court.
Factors beyond a strictly public interest may be present to satisfy the “special circumstances” criterion. Such factors may be circumstances of a private nature, for example where the party who produced the document in one proceeding waived any objection to it being used in another proceeding or expressly or impliedly consented to this course. Or they may be matters in relation to the character of a document, for example where the document in question was already in the public domain and where any semblance of it retaining a private character has been significantly compromised.
However, an important consideration in weighing the various factors which may enliven the discretion are also matters of a public interest character. They will include the likely contribution of the document in question to achieving justice in the second proceeding and the public interest in ensuring that all relevant material is before a court to enable it to properly discharge its function. The Victorian Charter of Human Rights[42] by s.24(1) reinforces the common law right of a party to a fair criminal or civil trial. Denial of relevant documents could compromise the exercise of this critically important right and deny justice to an accused or a litigant. If this was to occur, the public interest in furthering the administration of justice could be compromised or negated.
[42] Charter of Human Rights and Responsibilities Act 2006, s 24(1).
Discretion to Release from the Undertaking
The courts have a discretionary power to release a party from the obligation. However, as has already been observed, the exercise of the discretion is open only where the party seeking the modification or release first opens the gateway by establishing that “special circumstances” exist.
The High Court emphasised in Hearne v Street that the power is not to be freely exercised. It is necessarily circumscribed by the importance attributed to the obligation and the purposes it serves. In this respect, Hayne, Heydon and Crennan JJ observed:[43]
The importance with which the courts have viewed the obligation under discussion is indicated by the fact that although it can be released or modified by the court, that dispensing power is not freely exercised, and will only be exercised where special circumstances appear.[44]
"Circumstances under which that relaxation would be allowed without the consent of the serving party are hard to visualise, particularly where there was any risk that the statement might be used directly or indirectly to the prejudice of the serving party".[45]
[43]Ibid at [107] 159-160.
[44] Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10 at 37.
[45]Prudential Assurance Co Ltd v Fountain Page Ltd [1991] 1 WLR 756 at 775 per Hobhouse J; [1991] 3 All ER 878 at 895.
It was submitted further on behalf of the Taylor interests, that the modification of, or release from, the obligation should be no greater than is necessary or appropriate to meet the interests of the due administration of justice or the public interest.[46] I readily accept that this approach to the exercise of the discretion is consistent with both principle and authority.
[46]Visy Board v D’Souza at [24]; Marshall Bell Hawkins at [13].
Necessity to Specify the Documents Sought to be Released
In order to determine whether “special circumstances” exist and if so whether the discretion should be exercised in favour of permitting a modification of the obligation or granting a release in respect of it, it is necessary, as a first step, to specify the documents in respect of which the modification or release is sought. It is then necessary to identify the purpose of the modification or release.
The character of the document and its potential importance in the second proceeding will often be critical to the determination as to whether “special circumstances” exist.
Further, the character of the document will assume importance in the exercise of the court’s discretion, assuming the “special circumstances” threshold is satisfied. In Springfield, Wilcox J listed numbers of factors which may bear upon the exercise of the discretion, including factors directly relating to the document in question. His Honour observed in relation to the discretion:[47]
……. many factors being relevant. It is neither possible nor desirable to propound an exhaustive list of those factors. But plainly they include the nature of the document, the circumstances under which it came into existence, the attitude of the author of the document and any prejudice the author may sustain, whether the document pre-existed litigation or was created for that purpose and therefore expected to enter the public domain, the nature of the information in the document (in particular whether it contains personal data or commercially sensitive information), the circumstances in which the document came into the hands of the applicant for leave and, perhaps most important of all, the likely contribution of the document to achieving justice in the second proceeding.
[47]Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217 at 225.
Further, the purpose of the modification or release needs to be considered, not only in considering the factors which may give rise to “special circumstances”, but also in weighing the factors which may bear upon the exercise of the discretion.
Consequently, it is necessary for the individual document or piece of information in respect of which the modification or release is sought, and the purpose for that modification and release, to be clearly identified: Visy Board v D’Souza.[48] It is not sufficient to merely identify categories of documents which are said to be the subject of the application, without identifying the specific documents and the specific purpose of the modification or release sought: Visy Board v D’Souza;[49] Marshall Bell Hawkins.[50]
[48]Ibid at [24] and [30].
[49]Ibid at [30].
[50] Re Marshall Bell Hawkins Ltd; Australian Securities & Investments Commission v Marshall Bell Hawkins [2003] FCA 833 at [12]-[13].
Documents to Which the Application Properly Relates
The starting point is to examine each of the four categories of documents in respect of which a release is sought.
As to the Category A Documents, these documents were all tendered as exhibits during the trial. On 28 October 2009, on the twelfth day of the trial, the Defendants made application to further amend their defence and counterclaim. They sought leave to file and serve a Third Further Amended Defence and Counterclaim. I refused the amendment and expressed my reasons for doing so in the reasons of the Court delivered 12 March 2010.[51] The exhibits comprising the Category A Documents were all tendered in evidence by the Defendants as part of the unsuccessful amendment application.
[51]Ambridge Investments Pty Ltd v Baker & Ors [2010] VSC 59.
The Category A Documents, having been tendered in evidence at the trial are not the subject of the obligation: Hearne v Street at [96].[52] For this reason it was unnecessary for the Applicant Defendants to have made the present application in relation to these documents.
[52]Hearne v Street at [96] (per Hayne, Heydon and Crennan JJ).
The Category B Documents, being the transcript of evidence of Greg Taylor given at the trial on the amendment application comprises a record of the what was received into evidence, and similarly is not the subject of the obligation. Further, the transcript did not comprise confidential or private documents produced to the Court by a party under compulsion, and for this reason also the obligation did not arise. For these reasons it was unnecessary for the Applicant Defendants to have made the present application in relation to the transcript.
The Category D Documents, being the affidavit of Angela Michelle Kennedy sworn 12 October 2010 and the 21 exhibits to that affidavit were documents volunteered by Ms Kennedy for the purpose of opposing the summons of the Applicant Defendants in the present application. They were not in any sense produced under compulsion to the Court by reason of a rule of court, a specific order of the Court, or any other coercive process. For this reason it was unnecessary for the Applicant Defendants to have made the present application in relation to these documents.
As to the Category C Documents, comprising the documents produced on subpoena by The H2O Company Pty Ltd pursuant to the subpoena dated 3 September 2009, these documents were clearly produced pursuant to the coercive processes of the Court in the exercise of the subpoena powers under its rules. Further, the documents have not been admitted into evidence. The obligation comprised in the implied undertaking therefore arises and a release must be given if these documents are to be lawfully used in any subsequent proceeding.
Whether “Special Circumstances” are Present in Relation to the Category C Documents
The first question is, therefore, whether the Applicant Defendants have established in respect of the Category C Documents that there are special circumstances which warrant their release.
In my opinion it has not been established by the Applicant Defendants that there are special features of the case which afford a reason for modifying or releasing the undertaking sufficient to override the private and public interest in protection of the confidentiality of the private documents in question.
In the first place, the documents for which release is sought have not been specified in the application. This is fundamental. Without identification of the documents, it is impossible to apply the necessary test. The Applicant Defendants have therefore failed at the threshold to establish that special circumstances are present to justify release of the implied undertaking.
Second, and in any event, I find on the material before the Court that no special circumstances are present.
The Applicant Defendants have not yet issued any proceeding pursuant to s.418A Corporations Act 2001 or on any other basis. The scope of the causes of action and the remedies they may seek have not yet been defined. Again without identification of the precise causes of action and the remedies sought in the second proceeding, it is impossible to undertake the critical balancing exercise and apply the necessary test. It has not been demonstrated, for example, that the conduct of a fair hearing of the proposed second proceeding is in any way compromised by the absence of any particular documents comprised in the Category C Documents. For this reason too, the Applicant Defendants have therefore failed to establish that special circumstances are present to justify any release of the implied undertaking.
Finally, the Applicant Defendants stated in open court that the proposed second proceeding can and will be commenced irrespective of the outcome of their application made in their summons. Obtaining the Category C Documents, or any of them, has therefore not been shown to be necessary for the proper administration of justice.
Conclusion
The application of the Applicant Defendants is refused.
The summons dated 21 September 2010 is dismissed.
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