Baker v Paul
[2011] NSWSC 957
•17 June 2011
Supreme Court
New South Wales
Medium Neutral Citation: Baker & anor v Paul & anor [2011] NSWSC 957 Hearing dates: 17/06/2011 Decision date: 17 June 2011 Jurisdiction: Equity Division - Duty List Before: Brereton J Decision: Grant leave to plaintiffs/cross-defendants to use affidavit of director of defendant company in security for costs proceeding.
Catchwords: PRACTICE AND PROCEDURE - Plaintiff seeks to use affidavit evidence filed by defendant pursuant to asset preservation order in security of costs application - whether leave required to use evidence for purpose other than for what it was given - use to be made of evidence in same proceeding relevant factor - nature of asset preservation order and connection with security for costs order also relevant factor - leave granted. Legislation Cited: (UK) Matrimonial Causes Act 1973
(NSW) Uniform Civil Procedure Rules 2005, r 42.21Cases Cited: Bhattcharya v Freedman [2001] NSWSC 498
Hearne v Street (2008) 235 CLR 125
Medway v Doublelock Ltd [1978] 1 WLR 710
Rajski v Computer Manufacture and Design Pty Ltd (1982) 2 NSWLR 443Category: Procedural and other rulings Parties: Kenneth James Baker (first plaintiff)
KJB Media Pty Ltd (second plaintiff)
Anthony Christopher Paul (first defendant)
ACN 129 258 546 Pty Ltd (second defendant)Representation: Counsel:
Mr M W Sneddon (plaintiffs)
Solicitors:
McLaughlin & Riordan (plaintiffs)
File Number(s): 2010/285602
Judgment (ex tempore)
By notice of motion, the plaintiffs Kenneth James Baker and KJB Media Pty Ltd (who are also the cross-defendants, the second defendant ACN 068 258 546 Pty Ltd having brought a cross-claim against them), seek a security for costs order pursuant either to (NSW) Uniform Civil Procedure Rules (2005), r 42.21, or the inherent power of the Court to make such orders to "procure the proper and effective administration of justice and prevent abuse of process" [see Rajski v Computer Manufacture and Design Pty Ltd (1982) 2 NSWLR 443, [447]-[448], (Holland J); Bhattcharya v Freedman [2001] NSWSC 498, [27], (Badgery-Parker AJ). In support of that application, the plaintiffs wish to rely on evidence contained in an affidavit of Anthony Christopher Paul, sworn 14 September 2010. That affidavit is itself annexed to an affidavit sworn 24 May 2011 by Andrew Gordon Cameron, a partner in the firm of solicitors who represent the plaintiffs/cross-defendants, relied on by the plaintiffs for the purposes of the present application, which arises from the fact that Mr Paul's affidavit was sworn as an affidavit of assets and liabilities in compliance with obligations imposed by an asset preservation order made by Slattery J on 1 September 2010.
In Hearne v Street (2008) 235 CLR 125, the High Court dealt with a case involving directors of a defendant corporation who had disclosed material, contained in an affidavit and a report sworn and filed by the plaintiffs in proceedings before the Court, but not yet adduced in evidence, to a Minister of the Crown and her staff, in an endeavour to have laws pertaining to the amusement park known as 'Luna Park' changed. Parliament was eventually prompted to change the law, shielding the corporate defendant from the plaintiff residents' action in nuisance. Upon discovering the disclosure of the material, the residents brought contempt proceedings against the directors, for breach of an implied undertaking not to use the affidavit and report for purposes not directly connected with the conduct of proceedings. Hayne, Heydon and Crennan JJ JJ said (at [96]):
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 the leave of the court, use it for any purpose other than that for which it was given unless it is received into evidence. The types of material disclosed to which the principle applies include documents inspected after discovery, answers to interrogatories, documents produced on subpoena, documents produced for purposes of taxation of costs, documents seized pursuant to an Anton Piller order, witness statements served pursuant to a judicial direction and affidavits.
Their Honours emphasised (at [105]-[108]) that the so-called 'implied undertaking' was not a mere voluntary undertaking proffered by a party, and was not an obligation as between the parties, but an obligation of a substantive nature, imposed by law, and an obligation to the Court. Their Honours observed (at [105]) that "in truth it is an obligation of law arising from circumstances in which the material was generated and received". Gleeson CJ said that the obligation was now better understood as a substantive legal obligation (at [3]).
Given that it is an obligation to the Court, it is an obligation within the control of the Court, entailing that the Court can impose sanctions for its breach, or, conversely, relieve or modify the obligation in particular circumstances. But this dispensing power is not to be freely exercised, and only where special circumstances arise (at [107]).
It is therefore, at least arguable that the plaintiffs cannot, without the leave of the court, use for any purpose, other than that for which it was provided, the affidavit of assets and liabilities sworn by the defendant in answer to the obligations imposed by the asset preservation order. That purpose, of course, was to identify the defendant's assets in aid of an order that they might not be alienated or encumbered such as to render any judgment that the plaintiffs might ultimately obtain worthless.
The plaintiffs seek leave, if it be required, to use that affidavit to demonstrate the defendant's financial position for the purposes of the plaintiff's application for security for the costs of a cross-claim now brought by the second defendant.
Although it is true that the High Court describes the undertaking in terms of one that prohibits use without leave of the court "for any purpose other than that for which it was given", conventionally it has often been expressed in terms of use "for the purpose of the proceedings in which they were produced".
I am not presently conscious of any case in which it has been considered necessary to obtain leave to use material produced under compulsory process in the proceedings in which it was produced, albeit it for a purpose different from the production. As I have said, it is at least arguable, based on what the High Court has said, that leave is required; but it also seems to me that the circumstance that the use to be made is in the same proceeding is a relevant consideration, and one which distinguishes this case from Medway v Doublelock Ltd [1978] 1 WLR 710. In that case, Goulding J dealt with a situation where a plaintiff, who was a party to proceedings under the (UK) M atrimonial Causes Act 1973 and had been ordered to provide affidavit evidence as to his assets and liabilities for the purpose of those proceedings, sought to prevent the defendant in proceedings in the Queens Bench Division relating to a company he controlled, from adducing such evidence in a security for costs application. Goulding J held (at 715), that the defendants were not entitled to use the affidavits in the security for costs proceedings.
An additional relevant consideration here is that the use proposed to be made of the affidavit is in connection with an application for security for costs, which is intended to ensure that ultimately any costs order obtained by the plaintiffs/cross-defendants against the cross-claimant will not be rendered futile by reason of insufficiency of assets. There is a very close connection between that and the purpose of a freezing order.
In those circumstances, it seems to me in this case appropriate to grant the leave sought.
I therefore grant leave to the plaintiffs/cross-defendants to use the affidavit of Anthony Christopher Paul sworn 14 September 2010 in these proceedings, in connection with the plaintiffs/cross-defendants' application for security for costs.
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Decision last updated: 26 August 2011
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