Asenov & Karimi
[2023] FedCFamC1F 1105
•10 November 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Asenov & Karimi [2023] FedCFamC1F 1105
File number(s): MLC 8288 of 2023 Judgment of: STRUM J Date of judgment: 10 November 2023 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Harman undertaking – where the applicant wife sought to be released from the Harman undertaking in respect of material filed in this Court – where there is was no appearance by or on behalf of the respondent husband – where the second and third respondents do not oppose – where the wife seeks to use the documents in a hearing before the Supreme Court of New South Wales – where the court is satisfied that special circumstances exist – leave granted. Legislation: Family Law Act 1975 (Cth) ss 74, 79, 90AE
Federal Circuit and Family Court (Family Law) Rules 2021 (Cth) r 6.04
Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW) s 8(1) and s 5(1)
Cases cited: Canavan & Dowd [2023] FedCFamC1F 207
Corporate Affairs Commission (SA) v Australian Central Credit Union (1985) 157 CLR 201; [1985] HCA 64
Defries & Kemeny [2022] FedCFamC1F 13
Harman v Secretary of State for the Home Department [1983] 1 AC 280
Hearne v Street (2008) 235 CLR 125; [2008] HCA 36
Liberty Funding Pty Ltd v Phoenix Capital Limited [2005] FCAFC 3
Pace & Halkias [2021] FamCAFC 81
Plantier & Plantier [2022] FedCFamC2F 840
Re Edelsten (1988) 80 ALR 704; (1988) 18 FCR 434
Re W: Publication Application (1997) 21 Fam LR 788; [1997] FamCA 8
Sahadi & Savva and Anor (2016) FLC 93-704; [2016] FamCAFC 65
Springfield Nominees Proprietary Limited v Bridgeland Securities (1992) 38 FLR 217; [1992] FCA 720.
Division: Division 1 First Instance Number of paragraphs: 36 Date of hearing: 10 November 2023 Place: Melbourne Solicitor for the Applicant: Taussig Cherrie Fildes Solicitor for the First Respondent: The First Respondent did not appear Solicitor for the Second Respondent: The Second Respondent did not appear Solicitor for the Third Respondent: The Third Respondent did not appear ORDERS
MLC 8288 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS ASENOV
Applicant
AND: MR KARIMI
First Respondent
B PTY LTD
Second Respondent
B2 PTY LTD
Third Respondent
ORDER MADE BY:
STRUM J
DATE OF ORDER:
10 NOVEMBER 2023
THE COURT ORDERS THAT:
1.The Applicant and her legal advisers be relieved of the implied undertaking provided by the Applicant to this Honourable Court with respect to the use of the following documents produced in this proceeding MLC8288/2023 by or on behalf of the Second and Third Respondent’s documents:
(a)Response to Initiating Application filed on 11 September 2023; and
(b)Affidavit of Ms C filed on 11 September 2023 (exhibits omitted)
AND FOR THE AVOIDANCE OF DOUBT, THE COURT DECLARES THAT the implied undertaking does not apply to the Applicant’s following documents:
(a)Initiating Application on 26 July 2023;
(b)Affidavit filed on 25 July 2023
(c)Financial Statement filed on 25 July 2023;
2.The relief from the implied undertaking referred to in order 1 herein be limited solely to the use of the documents in the Supreme Court of New South Wales proceeding number … presently listed for hearing in late 2023 (and any adjournment thereof) and the Applicant be permitted to provide the said documents to her lawyers in those proceedings and/or to tender them in those proceedings.
3.The Application in a Proceeding dated 6 November 2023 be otherwise dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Asenov & Karimi has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
DELIVERED EX TEMPORESTRUM J:
By Application in a Proceeding filed by the applicant wife, Ms Asenov, on 6 November 2023, she seeks to be excused from her obligations pursuant to the implied undertaking arising from the decision in Harman v Secretary of State for the Home Department [1983] 1 AC 280, which was approved by the High Court of Australia in Hearne v Street (2008) 235 CLR 125, such that she can produce to the Supreme Court of New South Wales in proceeding number … (“the Supreme Court proceedings”) for the purpose of the final hearing in late 2023, copies of the following documents:
·her affidavit and Financial Statement filed on 25 July 2023;
·her Initiating Application filed on 26 July 2023; and
·the Response to Initiating Application and affidavit of Ms C, solicitor, filed on behalf of the second and third respondents on 11 September 2023 –
(collectively the “family law documents”).
The respondent husband is Mr Karimi. The husband and wife commenced living together in 2014. They were married in 2017 and separated finally on or about 6 June 2022. During their relationship, they operated a business through D Pty Ltd (now in liquidation). D Pty Ltd is the trustee of the E Trust. The husband and the wife were the only directors of D Pty Ltd until he resigned in mid-2022, shortly after separation, leaving her as the sole director of that company.
The second and third respondents in this proceeding are B Pty Ltd and B2 Pty Ltd (collectively “B Company”).
B Company appointed receivers to D Pty Ltd in late 2022 and subsequently D Pty Ltd entered into liquidation in early 2023.
In early 2023, B Company issued proceedings against the husband and the wife in the District Court of New South Wales in proceeding number … (“the District Court proceedings”). In the District Court proceedings, B Company allege, in summary, that D Pty Ltd entered into a line of credit facility agreement to borrow funds from B Company and that the husband and wife provided personal guarantees in the event of a default by D Pty Ltd.
B Company further allege that D Pty Ltd's failure to make payments in relation to the line of credit and entering into liquidation constitutes a breach of the facility agreement and, accordingly, seek that the husband and the wife, pursuant to the guarantees, be held personally liable for the funds said to be owing pursuant to the facility agreement, in the order of $273,000 as at 3 March 2023.
On 26 July 2023, the wife issued proceedings in Division 2 of this Court against the husband as the first respondent and against B Company as the second and third respondents. She sought interim orders for a transfer of the proceedings to Division 1 of this Court.
By way of final orders, the wife seeks, inter alia, orders pursuant to s 79 of the Family Law Act 1975 (Cth) (“Act”) for an adjustment of property interests; orders pursuant to s 74 of the Act for spousal maintenance; and an order pursuant to s 90AE of the Act in the event that the husband and she are found liable under any guarantee, such that her liability to B Company be substituted for the husband as to 100 per cent, given what she says is certain conduct by him, as deposed to by her in her affidavit filed on 25 July 2023. I make no comment, even preliminary, as to her prospects of success in relation to her s 90AE application.
Contemporaneously with the filing of her application in Division 2, the wife also filed a summons and an affidavit in the Supreme Court of New South Wales seeking, first, that pursuant to s 8(1) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW) ("Cross‑Vesting Act”), the District Court proceedings be transferred to the Supreme Court of New South Wales. Secondly, and consequent upon the previous order sought, she seeks that pursuant s 5(1) of the Cross-Vesting Act, the Supreme Court proceedings be transferred to Division 1 of this Court.
On 30 October 2023, these proceedings were transferred from Division 2 to Division 1, such that this Court is now a receiving jurisdiction for the purpose of the cross-vesting scheme as has survived High Court challenge.
The husband has declined to participate in the family law proceedings; he has not filed any responding material to date. He has participated in both the District Court proceedings and the Supreme Court proceedings in New South Wales, where he is represented by F Lawyers in both proceedings. I am satisfied that F Lawyers and the husband personally have each been put on notice of the wife's application to be excused from her Harman undertaking. G Lawyers, who act on behalf of B Company in both the District Court proceedings and the Supreme Court proceedings have also been put on notice of the wife's application.
I refer to the Affidavit of Service filed this day on behalf of the wife, pursuant to orders made by me earlier this day and note that G Lawyers have advised that B Company does not oppose the release of the wife from her Harman undertaking. The Supreme Court proceedings are listed for final hearing in late 2023. It is submitted, and I accept, that the family law documents are material to the issues before the Supreme Court of New South Wales for determination, including having regard to the matters which the wife must satisfy the Supreme Court in relation to a prospective transfer of jurisdiction pursuant to s 5(1)(b)(ii) of the Cross-Vesting Act. These matters are, first, whether in the opinion of the Supreme Court, apart from any law of the Commonwealth or another State relating to cross-vesting of jurisdiction, and apart from any accrued jurisdiction of the Federal Circuit and Family Court of Australia, the relevant proceeding or a substantial part of the relevant proceeding would have been incapable of being instituted in the Supreme Court and capable of being instituted in this Court. The second matter is the extent to which, in the opinion of the Supreme Court, the matters for determination in the proceedings there are matters arising under or involving questions as to the application, interpretation or validity of a law of the Commonwealth and not within the jurisdiction of the Supreme Court, apart from the Cross-Vesting Act and any law of the Commonwealth or another State relating to cross-vesting of jurisdiction. The third matter is the interests of justice.
The wife seeks to be excused from compliance with the Harman undertaking so that she may adduce evidence in the Supreme Court proceedings from the proceedings in this Court to demonstrate, inter alia, the inter-relationship between the matters for determination in relation to the District Court proceedings, the matters arising from the breakdown of the marital relationship between the husband and the wife and any liability arising from the purported breach of the facility agreement being ultimately a debt of the marriage to be considered as part of an overall adjustment pursuant to s 79 of the Act.
Secondly, she seeks to establish in the Supreme Court proceedings that it is in the interests of justice that the matters concerning the alleged B Company guarantee and the purported liability of the husband and the wife thereunder be heard in the one proceeding and jurisdiction, being this Court, including as, it is submitted, this Court has jurisdiction to hear and determine these matters. Further, she submits that, ultimately, B Company are already and will continue to be a party to these proceedings as a result of the wife's application pursuant to s 90AE of the Act. However, they are matters for another day, whether in the Supreme Court of New South Wales or in this Court.
As I have indicated earlier, the principle in Harman was approved by the High Court of Australia in Hearne v Street (2008) 235 CLR 125, where it held that where one party to litigation is compelled ‑ either by reason of a rule of court or by reason of a specific order of the court or otherwise ‑ to disclose documents or information, the party obtaining the disclosure cannot, without leave of the court, use it for any purpose other than that for which it was given, unless it is received into evidence.
It is important to emphasise that, in that passage, there is reference to two separate parties: first, a party who is compelled to provide or disclose documents or information and, secondly, the party who obtains that disclosure. Insofar as the applicant wife seeks to be relieved of the implied undertaking in relation to the three specified documents filed by her; namely, her Initiating Application, her Financial Statement and her affidavit, in my view, that is misconceived and unnecessary. The rationale behind the principle is the public interest in protecting the privacy of the person who is compelled to produce documents via a court’s coercive powers. That cannot be said of the applicant wife.
Whilst parties may be said to be privileged to be in possession of another litigant’s documents, in this case, the documents filed by her in these proceedings are her documents.
The collateral purpose to which the Harman undertaking applies includes the use of a document in different proceedings between the same parties and therefore that applies in the present case to the balance of the family law documents, namely, the Response to Initiating Application and the affidavit of the solicitor, both filed on behalf of the second and third respondents.
In Hearne v Street at [96] the High Court provided a list of some of the documents to which the obligation applies, including:
… documents inspected after discovery, answers to interrogatories, documents produced on subpoena, documents produced for the purposes of taxation of costs, documents produced pursuant to a direction from an arbitrator, documents seized pursuant to an Anton Piller order, witness statements served pursuant to a judicial direction and affidavits…
Insofar as affidavits are concerned, in my view, given that a financial statement is a sworn document, it is no different to ‑ and, indeed, might be said to be an affidavit.
The impact of breaching the implied undertaking can be serious. A party who attempts to use material to which the undertaking attaches without first obtaining leave of the court, may be guilty of contempt.
A proceeding commenced on the basis of information obtained in breach of the undertaking is liable to be struck out. An injunction may also be issued to restrain the use of documents in breach of the implied undertaking.
In Hearne v Street, the High Court agreed at [108] that:
The expression of the obligation as an implied undertaking given to the court derives from the historical origin of the principle. It is now in reality a legal obligation which arises by operation of law by virtue of the circumstances under which the relevant person obtained the documents or information.
There are exceptions to the above rule, including where the documents are evidence of fraud or a crime and where it is in the public interest. Another exception is where the document is read in open court or formally entered into evidence. It is not readily apparent to me whether the affidavit of the wife and the affidavit of the solicitor for the second and third respondents have yet been read in open court or formally entered into evidence but it matters not for present purposes. However, this is consistent with the principle of open courts and some courts have express rules governing the undertaking. Reference has been made in the written submissions for the wife to r 6.04 of the Federal Circuit and Family Court (Family Law) Rules 2021 (“Rules”); however, those exceptions are not presently germane.
As the implied undertaking is given to a court, relief from the undertaking can only be given by that particular court. The relevant test for leave is the establishment of special circumstances. The leading authority on that subject is Springfield Nominees Proprietary Limited v Bridgeland Securities (1992) 38 FLR 217, in which Wilcox J held at [26] that:
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.
If that test is satisfied, his Honour continued:
The matter then becomes one of the proper exercise of the Court's discretion, 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.
Insofar as one of the matters for consideration referred to by Wilcox J is “the attitude of the author of the document”, the only two documents which remain properly the subject of the application for release are, as I have indicated, the Response to Initiating Application and the solicitor’s affidavit, filed on behalf of the second and third respondents, and they do not oppose the wife’s present application ‑I place weight upon that factor. The Full Court of the Federal Court of Australia in Liberty Funding Pty Ltd v Phoenix Capital Limited [2005] FCAFC 3 adopted the test in Springfield Nominees. It considered, at [31] that:
The notion of "special circumstances" does not require that some extraordinary factors must bear on the question before the discretion will be exercised. It is sufficient to say that, in all the circumstances, good reason must be shown why, contrary to the usual position, documents produced or information obtained in one piece of litigation should be used for the advantage of a party in another piece of litigation or for other non-litigious purposes. The discretion is a broad one and all the circumstances of the case must be examined.
There are numerous examples where both the Family Court and the Federal Circuit Court, as they were previously known, and now Divisions 1 and 2 of the Federal Circuit and Family Court of Australia, have given leave to use court material in other proceedings, including Pace & Halkias [2021] FamCAFC 81; Defries & Kemeny [2022] FedCFamC1F 13; and Canavan & Dowd [2023] FedCFamC1F 207. It is submitted on behalf of the wife, and I agree, that this proceeding in this Court and the Supreme Court proceeding have a common element in that they each relate to a purported liability of the spouse parties.
This proceeding requires this Court to consider each of the husband and the wife's legal and proprietary rights in furtherance of its jurisdiction under s 79 of the Act. The pool of assets available for adjustment between the husband and wife appears to be modest and the purported liability arising from the breach of the alleged B Company guarantee and facility agreement, if they are established, is said to loom large, as the most significant liability of the marriage. Further, this proceeding and the Supreme Court proceeding involves the same litigants. There are no issues of confidentiality, privacy or commercial sensitivity in the subject documents. Indeed, I am told that the documents produced by each of the applicant and the second and third respondent in this proceeding and in the Supreme Court proceeding are very similar in substance.
As I have indicated earlier, the first respondent has not filed any documents in either proceeding. It is submitted that the public interest favours release, rather than restriction, of the documents of the second and third respondents, particularly where the subject matter of the two proceedings overlaps to a large degree and might be consolidated into one proceeding in this Court. I agree. I propose to release the applicant from her implied undertaking. She will only be able to use the documents for a proper purpose that is within the strict terms of the leave I propose to give. She will not have a carte blanche to use the documents otherwise. She seeks to be released from her implied undertaking solely for the purpose of the final hearing in the Supreme Court proceeding listed in late 2023 or such other date to which it might be adjourned and the release will be so limited.
As I have indicated, the applicant does not require release from the implied undertaking insofar as her documents are concerned and the second and third respondents do not oppose the release of their documents. Even if the husband had participated and opposed the wife's application, it is difficult to see how he could have standing to oppose the application, given that none of the documents emanate from him and so he is not a beneficiary of the undertaking.
Finally, in determining whether or not to grant leave to use the material subject to the implied undertaking in other proceedings, it has been held that the court ought not embark upon a consideration of its admissibility in the other court or the purpose to which it may be put, as that is properly a matter for the other court, namely, the Supreme Court of New South Wales. I refer to the decision of the Full Court of the Family Court in Sahadi & Savva and Anor [2016] FLC 93-704.
Whilst it is submitted that no issue arises under s 121 of the Act, given the exception contained in s 121(9)(a), which permits provision of documents to any persons concerned in proceedings in any court for use in those proceedings, I disagree. In my view, s 121 has no application whatsoever, such that the exception in subsection (9)(a) is not engaged.
Section 121(9) merely provides an exception to subsection (1). If it applies, subsection (1) is directed to the publication of documents - which is clearly not the case here - or the dissemination of documents to the public or to a section of the public. Subsection (1) is drafted in the disjunctive; whether it be a publication on the one hand or a dissemination to the public or a section of the public on the other hand. In Re Edelsten (1988) 80 ALR 704, Morling J expressed the view that the expression “disseminates to the public” should be "taken as a reference to widespread communication with the aim of reaching a wide audience”. It cannot “have been intended by the legislature that the restriction on dissemination should apply, for example, to conversations between a party to Family Court proceedings and a close personal friend".
In Re W: Publication Application (1997) 21 Fam LR 788, Fogarty and Baker JJ on appeal, relying on the majority judgment of the High Court of Australia in Corporate Affairs Commission (SA) v Australian Central Credit Union (1985) 157 CLR 201 at 208, took the view that “the transmission of the judgment of Jordan J. to the Queensland and New South Wales child welfare departments would not be to ‘the public’ or to a ‘section of the public’ and thus would not breach s 121, with the result that no authorisation by the Court of such transmission is necessary”.
In the circumstances, I propose to grant the relief sought by the wife and I make the orders sought by her.
I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the ex tempore Reasons for Judgment of the Honourable Justice Strum. Associate:
Dated: 18 December 2023
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