Bondelmonte v Bondelmonte
[2017] FamCA 924
•15 November 2017
FAMILY COURT OF AUSTRALIA
| BONDELMONTE AND ORS & BONDELMONTE | [2017] FamCA 924 |
| FAMILY LAW – PRACTICE AND PROCEDURE – Interim – Where the wife has commenced proceedings pursuant to s 79A of the Family Law Act 1975 (Cth) – Where the wife alleges that the husband failed to fully disclose his financial circumstances at the time a property settlement order was made by consent – Where the husband and his brother were applicants in a hearing in the Federal Court of Australia and the wife seeks to inspect documents on that file – Where an order was previously made allowing the wife to inspect all documents produced by the Federal Court subject to any objection being raised by a party to the Federal Court proceedings – Where the applicants are the husband’s brother, sister in law and four companies which the husband control – Where the applicants oppose the wife inspecting certain documents – Where the applicants claim that the wife’s request to inspect failed to comply with Rule 15.34 Family Law Rules 2004 (Cth) – Where that rule does not stand in the way of a court making an order requesting documents from the Federal Court in circumstances where a party has not strictly complied with that rule – Where the applicants claim there has been a lack of procedural fairness – Where there has been no lack of procedural fairness – Where the applicants assert the wife’s request is irrelevant and a fishing expedition – Where the reasons delivered in the Federal Court proceedings demonstrate significant interconnection between the husband and other family members which could be relevant to the wife’s s 79A application but does not refer to her sister in law – Where the wife is ordered not to inspect identified documents involving her sister in law – Where confidentiality orders have been made in the Federal Court proceedings in respect to certain documents and orders are made that the wife not inspect those documents – Where it is asserted that the wife’s request is in breach of the Harman obligation – Where there is only one affidavit specifically identified as being subject to the Harman obligation – Where the Harman obligation applies to the wife – Where the court has implied power to make an order allowing the wife to inspect the documents produced by the Federal Court – Where there are special circumstances to make an order allowing the wife to inspect documents. |
| Evidence Act 1995 (Cth) Family Law Act 1975 (Cth) Family Law Rules 2004 (Cth) Federal Court Rules 2011 (Cth) |
| Australian Medi-Care Company Ltd v Hamilton Pharmaceutical Pty Limited (No 3) [2008] FCA 976 Clifford v Vegas Enterprises Pty Ltd [2009] FCA 1204 Commissioner of Taxation v Rawson Finances Ptd Ltd [2015] FCA 628 Crest Homes Plc v Marks & Ors [1987] AC 829 Distillers Co (Biochemicals) v Times Newspapers Ltd [1975] QB 613 DJL v The Central Authority (2000) 201 CLR 226 Esso Australia Resources Limited v Plowman (1995) 183 CLR 10 Griffiths & Beerens Pty Ltd & Ors v Duggan & Ors (No. 2) [2008] VSC 230 Harman v Secretary of State for Home Department [1983] 1 AC 280 Hearne v Street (2008) 235 CLR 125 Holpitt Pty Ltd v Varimu Pty Limited (1991) 29 FCR 576 Jarra Creek Central Packing Shed Pty Ltd v Amcor Limited [2008] FCA 554 McCabe v British American Tobacco Australia Services Limited [2002] VSC 150 Patrick v Capital Finance Pty Ltd (No 4) [2003] FCA 436 Re Universal Music (Australia) Pty Ltd v Sharman Licence Holdings Ltd; Ex parte Merlin BV [2008] FCA 783 Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217 Sweetman v Australian Thoroughbred Finance Pty Ltd (unreported, Federal Court, Lockhart J, 23 July 1992) Transfield Philippines Inc v Pacific Hydro Ltd [2006] VSC 175 |
| 1st APPLICANT: | Mr V Bondelmonte |
| 2nd APPLICANT: | Ms LL Bondelmonte |
| 3rd APPLICANT: | Q Finances Pty Limited |
| 4th APPLICANT: | KK Pty Ltd |
| 5th APPLICANT: | DI Pty Ltd |
| 6th APPLICANT: | ABC Finances Pty Limited |
| RESPONDENT: | Ms Bondelmonte |
| FILE NUMBER: | SYC | 4839 | of | 2011 |
| DATE DELIVERED: | 15 November 2017 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Watts J |
| HEARING DATE: | 27 October 2017 |
REPRESENTATION
| COUNSEL FOR THE 1ST & 2ND APPLICANTS: | Mr Lethbridge, SC |
| SOLICITOR FOR THE 1ST & 2ND APPLICANTS: | Braddon Marx |
| COUNSEL FOR THE 3RD TO 6TH APPLICANTS: | Mr Ardagna |
| SOLICITOR FOR THE 3RD TO 6TH APPLICANTS: | Brown Wright Stein |
| COUNSEL FOR THE RESPONDENT: | Mr Apelbaume |
| SOLICITOR FOR THE RESPONDENT: | Litigant in person |
Orders
Subject to any further leave the Federal Court might grant, the wife not inspect eight affidavits in respect of which the Federal Court has made a confidentiality order:
1.1.The affidavit of Mr GG dated 14 January 2015;
1.2.The affidavit of Mr GG dated 15 January 2015;
1.3.The affidavit of Mr HH dated 28 January 2015;
1.4.The affidavit of Mr GG dated 28 January 2015;
1.5.The affidavit of Mr II dated 28 January 2015;
1.6.The affidavit of Mr II dated 29 January 2015;
1.7.The affidavit of Mr II sworn 10 February 2015; and
1.8.The affidavit of Mr II sworn 10 February 2015.
The wife is not to inspect the following affidavits:
2.1.The affidavit of Mr GG dated 11 February 2016;
2.2.The affidavit of Mr JJ dated 19 February 2016;
2.3.The affidavit of Mr JJ dated 17 March 2016;
2.4.The affidavit of Mr MM dated 22 March 2016; and
2.5.The affidavit of Mr GG dated 17 May 2016.
Otherwise the applicants’ Amended Application in a Case filed 29 November 2016 to set aside the orders of 4 July 2016 is dismissed.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Bondelmonte and Ors & Bondelmonte has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT |
FILE NUMBER: SYC 4839 of 2011
| Mr V Bondelmonte |
1st Applicant
And
| Ms LL Bondelmonte |
2nd Applicant
And
| Q Finances Pty Limited |
3rd Applicant
And
| KK Pty Ltd |
4th Applicant
And
| DI Pty Ltd Pty Ltd |
5th Applicant
And
| B & I Finances Pty Limited |
6th Applicant
And
| Ms Bondelmonte |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
The wife has commenced proceedings, pursuant to s 79A(1)(a) Family Law Act 1975 (Cth) (“the Act”) to set aside a property settlement order on the basis that the husband failed to disclose relevant information at the time the final property settlement orders were made. It is alleged that the husband, his brother and other close family members and related companies participated in arrangements which involved assets being held outside the jurisdiction and financial dealings not known to the wife at the time she entered into the property settlement order.
The husband and his brother were applicants in a hearing over nine days in the Federal Court of Australia (proceedings … of 2015 (“FCA proceedings”)).
In late 2016 the Federal Court published reasons (“the reasons”). The parties consented to the reasons being tendered in evidence before me. Those reasons, in part, describe financial dealings and a scheme involving [Middle Eastern] banks for the purpose of evading tax in Australia.
The wife seeks to inspect documents which are on FCA proceedings file.
The applicants oppose her doing so claiming:
5.1.Failure to comply with the Family Law Rules 2004 (Cth)
5.2.Lack of procedural fairness
5.3.Irrelevance and fishing
5.4.Federal Court confidentiality orders in respect to certain documents
5.5.Breach of the Harman obligation.
For reasons that do not need to be explored, these interlocutory proceedings have taken almost a year to come on for hearing.
APPLICATIONS
The Applications in a Case are made severally by Mr V and Ms LL Bondelmonte as the 1st and 2nd applicants and four companies whom it was conceded the husband, Mr Bondelmonte, controlled, as the 3rd to 6th applicants. The applicants seek to have an order made 4 July 2016 set aside so as to prevent the wife from inspecting all documents produced to this court from the Federal Court. In the alternative, it was sought that the wife not inspect certain classes of documents.
Initially all applicants were represented by the one solicitor. The four companies did not appear on the last occasion the matter was mentioned for procedural directions but a lawyer attended and sought leave to participate in the hearing. That leave was granted on the basis that he file a Notice of Address for Service and his assurance that he would simply be relying upon written submissions previously filed by the 3rd to 6th applicants.
The wife filed a response on 6 December 2016 seeking the Application in a Case be dismissed or in the alternative, any restriction upon her ability to inspect documents, be limited to only certain documents.
MATERIAL RELIED UPON
I have considered the following material:
10.1.Affidavits of Ms NN filed 14 October 2016 and 14 November 2016.
10.2.Affidavit of the wife filed 6 December 2016.
10.3.The 1st and 2nd applicants did not file any evidence but relied on the evidence of their previous solicitor.
10.4.Written submissions from the 1st and 2nd applicants dated 19 December 2016 and 25 January 2017 and 1 August 2017.
10.5.Written submissions from the 3rd to 6th applicants filed 14 November 2016. The 1st and 2nd applicants also rely upon these submissions (see their submissions dated 1 August 2017).
10.6.Submissions from the wife filed 19 December 2016 and 20 January 2017.
10.7.My reasons of 4 July 2016.
10.8.Federal Court reasons of late 2016.
10.9.Email from the lawyers for the 1st and 2nd applicants to the wife’s lawyers dated 20 April 2017 (Exhibit 33). This document describes the documents in the FCA proceedings that fall within the description by the 1st and 2nd applicants of documents “with respect to [Mr V Bondelmonte] and [Ms LL Bondelmonte]”. I am aware that on 6 November 2017 the solicitor for the 1st and 2nd applicants sent an email to my associate attempting to substitute another document for Exhibit 33. For identification purposes, I have marked that document Exhibit 34. No application has been made to reopen the hearing to adduce further evidence. Notwithstanding that procedural irregularity, I have considered the terms of the new list. The material contained within the substituted list does not advance the question as to which of those documents or which parts of them might be the subject of the Harman obligation. The importance of that is discussed below.
ORDERS MADE ON 4 JULY 2016 AND REASONS FOR MAKING THOSE ORDERS
On 4 July 2016 I made the following orders:
1.Subject to the conditions contained in these orders, the Registrar of the Sydney Registry of the Family Court of Australia request the Registrar of the Sydney Registry of the Federal Court of Australia to make available to the Family Court of Australia the files, or copy of the files, for proceedings numbered … of 2015 and … of 2015.
2.The request by the Registrar of this Court to the Registrar of the Federal Court should ask the Registrar of the Federal Court to indicate if there are any logistical difficulties in complying with the request, arising from the volume of documents or the need to photocopy documents and if there are logistical difficulties, the Registrar of this court is to arrange for the matter to be relisted before me.
3.In the first instance, if the Registrar of the Federal Court requires the costs of any photocopying to be paid prior to the photocopying taking place, the wife is to be responsible for the costs of that photocopying in the first instance but shall be at liberty to make an application in relation to the husband paying all or part of those costs.
4.Pending any further order, leave be granted to the lawyers for the wife to inspect the files after the expiration of 28 days from the date of service of these orders upon all parties to those proceedings apart from the husband.
5.As soon as is practicable, the wife will serve a sealed copy of these orders and Reasons upon all parties to the proceedings referred to in order 1 apart from the husband.
6.Liberty is granted to any of the parties to the Federal Court proceedings apart from the husband to apply within 28 days of service of these orders if they wish to argue any objection to the wife’s lawyers inspecting the material on the Federal Court file.
7.Pending further order, inspection of any documents produced as a result of the request in order 1, be initially undertaken by the wife’s lawyers without the wife being present. The wife’s lawyers may convey to the wife information that they obtain as a result of the inspection of the documents but the wife is not, pending further order, to discuss that information with anybody other than the lawyers who have inspected the documents.
I concluded in my Reasons for Judgment dated 4 July 2016:
30.On its face, it seems that there may have been a suppression of information provided by the husband to the wife at the time the wife consented to the making of the s 79 order. It is not “fishing” in that context for the wife to attempt to acquire knowledge about the husband’s financial circumstances that, prima facie, are contained in documents filed in what appears to be extensive litigation in the Federal Court.
31.It is not necessary for the wife to particularise, in the way that the lawyers for the husband assert that she is required to do, all the facts and circumstances which give rise to the allegation of suppression of evidence and giving of false evidence and the precise nature of each piece of evidence which the wife alleges were suppressed or was given which was false. The wife should have an opportunity to know about the information that the husband and others have provided the Federal Court and after that time indicate to the husband what she knew and what she did not know at the time of the making of the s 79 order.
The orders made 4 July 2016 were forwarded to the solicitors then acting for all applicants in the Federal Court proceedings mentioned in the reasons by the solicitors then acting for the wife on 8 July 2016.
On 10 August 2016 new lawyers for the 1st and 2nd applicants wrote to the wife’s lawyers asserting that the 1st and 2nd applicants had not been served but based upon the limited evidence I have, I am prepared to infer that the 1st and 2nd applicants were aware of the existence of the orders shortly after 8 July 2016 when the 1st applicant’s then lawyers received them.
ARE THE THIRD TO SIXTH APPLICANTS PRECLUDED FROM OBJECTING TO INSPECTION OF DOCUMENTS?
The lawyer for the 3rd to 6th applicants conceded his corporate clients are controlled by the husband. Given orders have already been made against the husband I accept the submission that I should not entertain an application for identical orders by corporate entities which are the puppet or alter ego of the husband. If I am wrong about that, I will deal with the other submissions made by the 3rd to 6th applicants which are also adopted by the 1st and 2nd applicants.
COMPLIANCE WITH RULE 15.34 FAMILY LAW RULES
The applicants argue that the request order made by the court on 4 July 2016 was fundamentally flawed because rule 15.34 Family Law Rules was not complied with.
Rule 15.34 of the Family Law Rules provides:
(1) A party who seeks to produce to the court a document in the possession of another court must give the Registry Manager a written notice setting out:
(a) the name and address of the court having possession of the document;
(b) a description of the document to be produced;
(c) the date when the document is to be produced; and
(d) the reason for seeking production.
The request order was made as a result of an application which the wife filed on 2 March 2016 and was slightly amended in a Proposed Minute of Order which sought, amongst other things, an order in the following terms:
That the Family Court of Australia request the Registrar of the Federal Court of Australia to make available to the Family Court of Australia the files, or copy there of (sic), for proceedings number … of 2015 and … of 2015 and that leave be granted for the Applicant’s solicitor to inspect the files.
The applicants complain that by making a direct application to the court, the wife avoided the requirements of rule 15.34(1)(b), (c) and (d) or in the alternative the court should have had the requirements of the rule in mind when making the order.
Rule 15.34 embodies the general practice based upon comity between courts that letters of request are used in lieu of subpoenas being issued.
In so far as the applicants submissions suggest that the court should not have made an order until the rules have been complied with, it is akin to suggesting that a court should not make an order for production of documents unless rules in relation to the issue of subpoenas or production of documents have been complied with. As discussed below, the court has an implied power to control its own process and particularly in relation to matters of discovery and inspection. The court in the course of litigation is free to make orders where strict compliance with the rules have not been attended to (see rule 1.12(1)). The rules apply unless the court orders otherwise.
The real gravamen of this complaint however is that the orders sought by the wife and the consequent request order made by the court was quintessentially a fishing exercise and should not have been embraced. That issue is dealt with below.
I find that rule 15.34 does not stand in the way of the court making a request order in circumstances where a party has not strictly complied with the rule by giving the requisite written notice to the Registry Manager.
LACK OF PROCEDURAL FAIRNESS
The applicants submit that I recognised in my judgment of 4 July 2016 that there was an issue in relation to whether procedural fairness was afforded to the applicants prior to making the request order without all parties to the FCA proceedings having an opportunity to argue that the request order not be made.
The applicants complain that notwithstanding my acknowledgment of that concern, I nevertheless made the order and consequently the parties to the FCA proceedings were precluded from being heard on the fundamental question of whether a request order ought to have been made at all.
It is further submitted by the applicants that in the circumstances the interests of justice require the request order to be set aside and that the applicants be afforded the opportunity to be heard on the question of whether any request order ought to be made by the Family Court to the Federal Court in respect of the production of the Federal Court file and if so, the terms of that request.
In the reasons for judgment of 4 July 2016, I said at [29]:
I accept that there is an argument in relation to the procedural fairness of ordering that the Registrar of this court make a request of the Registrar of the Federal Court without all parties to that litigation being aware that that request is being made and without them having an opportunity to argue that either the request should not be made or that the documents or part of the documents should not be made available for inspection. For that reason, the implementation of the order will be deferred until 28 days after the service of the orders upon all parties to the Federal Court proceedings apart from the husband.
Whilst the order required the Registrar of the Family Court to immediately obtain material from the Federal Court, the applicants had a 28 day window from service of the order to argue that the wife should not be able to inspect the documents, including on the basis that the request should not have been made in the first place.
Notice to Ms LL Bondelmonte
Initially the wife was not aware that her sister in law was a party to the FCA proceedings. The 2nd applicant was not mentioned as a party in the Federal Court reasons of late 2016. Counsel for the wife conceded that the 2nd applicant is not a person who is mentioned in her Honour’s lengthy judgment. Ms LL Bondelmonte has not filed any affidavit to indicate when it was she became aware of the orders of 4 July 2016. I have found that her husband’s lawyers were served with the orders on 8 July 2016.
The wife’s first inkling that Ms LL Bondelmonte might have been affected by the 4 July 2016 orders was contained in oblique references in a letter written by Ms NN, the solicitor then acting for the applicants, to the wife’s lawyers on 10 August 2016. By 6 December 2016 the wife states in her affidavit “I understand that Ms LL Bondelmonte is a “Prospective Respondent” in the FCA proceedings and has been involved in interlocutory proceedings which affect her interests”.
Notice to the other Applicants
The 1st and 3rd to 6th applicants did not use the window that was given to them by the 4 July 2016 order to apply within the 28 days for the wife not to inspect anything that was produced by the Federal Court. Had they done so and been successful, the documents would have been returned to the Federal Court.
Having not made any application in the 28 day period, the Family Court copied the contents of the USB stick provided by the Federal Court on a CD and provided it to the wife. Upon the applicants raising concerns with the wife about the fact that she had already obtained access to the documents produced to the Family Court by the Federal Court, the wife returned the CD and the hard copy of the documents that the wife had printed from that CD to the Family Court registry.
Orders of 30 September 2016
On 30 September 2016 the parties subsequently agreed on an order in the following terms:
The First, Second, Third, Fourth, Fifth and Sixth Third Parties [the 1st to 6th applicants in this case] and their legal representatives are granted first access to the documents produced to the Court by the Federal Court of Australia in relation to Federal Court proceedings number … of 2015 pursuant to the orders made in the Family Court of Australia by Watts J on 4 July 2016 (the [FCA] documents) for a period of fourteen days from the date of these Orders. During this period, the applicant’s lawyers are not to have access to the [FCA] documents.
That the First, Second, Third, Fourth, Fifth and Six Third Parties are granted leave to file an application within fourteen days of these Orders if he wishes to argue any objection to the applicant’s lawyers having access to some or all of the [FCA] documents.
It can be seen that by 30 September 2016 all the applicants, including the 2nd applicant, had agreed to be a party to an order that allowed them to argue any objection they wished about the wife’s lawyers having access to some or all of the documents in the FCA proceedings.
I find that given the 1st and 3rd to 6th applicants were served with the 4 July 2016 orders on 8 July 2016, no claim by them based upon a lack of procedural fairness can be maintained.
Any unknown issue of lack of procedural fairness in respect of the 2nd applicant was cured when she consented to the 30 September 2016 order which gave her the opportunity to make the submissions which she now makes.
I conclude that there is no issue of lack of procedural fairness being afforded to the 1st to 6th applicants in the orders made on 4 July 2016.
RELEVANCE AND FISHING
Relevance of material in interlocutory application involving Ms LL Bondelmonte
In Ms NN’s affidavit filed 14 November 2016 she states that Ms LL Bondelmonte is the respondent to an interlocutory application dated 15 February 2016 filed in the FCA proceedings which seeks orders in relation to property solely owned by her. Ms NN lists the following affidavits which she has identified as relating to the interlocutory application filed against Ms LL Bondelmonte:
38.1.The affidavit of Mr GG dated 11 February 2016;
38.2.The affidavit of Mr JJ dated 19 February 2016;
38.3.The affidavit of Mr JJ dated 17 March 2016;
38.4.The affidavit of Mr MM dated 22 March 2016; and
38.5.The affidavit of Mr GG dated 17 May 2016.
Counsel for the wife submitted that the documents relating to Ms LL Bondelmonte were relevant to the wife’s s 79A application because the Federal Court reasons made it apparent that the husband’s finances are interconnected with members of his family.
I find that the wife has not demonstrated how seeing material relating to real property held by the 2nd applicant might be relevant to the wife’s s 79A application.
Relevance of the other documents
The Federal Court reasons of late 2016 were admitted by agreement. Notwithstanding no objection was taking pursuant to s 91 Evidence Act1995 (Cth), I accept the findings not to prove the existence of a fact that was in issue in those proceedings, but rather as findings which describe what the wife might expect to find in the documents from the FCA proceedings that have been produced by the Federal Court.
The Federal Court reasons demonstrate a significant interconnection between the husband, Mr V Bondelmonte and other family members.
The Federal Court reasons stated that the husband and Mr V Bondelmonte were in charge of the family’s tax disputes and found that the brothers knowingly instructed lawyers to serve in a tax appeal misleading evidence which did not refer to overseas cash deposits.
Further, counsel for the wife referred to numerous paragraphs in the Federal Court Reasons relating to overseas funds, offshore deposits, overseas transfers, management of the companies and payments.
Whilst it did not form part of the applicants submissions in chief, counsel for the 1st and 2nd applicants at the end of his submissions in reply in the vaguest of terms, raised the issue as to how documents in relation to the FCA proceedings could be relevant to the wife’s s 79A application on the basis that the transactional history referred to in the FCA orders which counsel asserted significantly predated the property settlement order between the husband and the wife. Although not referred to by counsel, the property settlement order between the husband and wife was made on 25 June 2014. True it is that the international activities of the husband as described by the FCA may have predated the consent orders, but there is no indication in any evidence produced by the applicants, that it is claimed the wife had any knowledge of any of these significant offshore financial activities. The wife’s evidence about her knowledge is contained in my reasons for judgment of 2016 at [14] to [23]. At [24] of those reasons I refer to the husband’s previous assertion that what the wife was doing was a “fishing expedition” and at [30] and [31] I rejected that submission.
It is probable that there is material in the documents produced by the Federal Court to the Family Court that are relevant to the wife’s s 79A application. It is not a “fishing expedition” for her to be given the right to inspect those documents.
CONFIDENTIALITY ORDERS
On 30 January 2015 orders were made in the Federal Court that the following affidavits be kept confidential until 11 February 2015:
47.1.The affidavit of Mr GG dated 14 January 2015;
47.2.The affidavit of Mr GG dated 15 January 2015;
47.3.The affidavit of Mr HH dated 28 January 2015;
47.4.The affidavit of Mr GG dated 28 January 2015;
47.5.The affidavit of Mr II dated 28 January 2015; and
47.6.The affidavit of Mr II dated 29 January 2015.
On 11 February 2015 an order was made in the Federal Court extending the order of 30 January 2015 to 13 February 2015.
On 13 February 2015 an order was made in the Federal Court that the orders made 30 January 2015 and 11 February 2015 be extended until further order. Two further affidavits of Mr II sworn 10 February 2015 were also added to the confidentiality orders.
Rule 2.32(3) and (4) of the Federal Court Rules 2011 (Cth) state:
(3) However, a person who is not a party is not entitled to inspect a document that the Court has ordered:
(a) be confidential; or
(b) is forbidden from, or restricted from publication to, the person or a class of persons of which the person is a member.
Note For the prohibition of publication of evidence or of the name of a party or witness, see section 50 of the Act.
(4) A person may apply to the Court for leave to inspect a document that the person is not otherwise entitled to inspect.
The documents in respect of which confidentiality orders have been made have now been identified. The confidentiality orders were not mentioned by the husband’s lawyers in the proceedings before me when the orders of 4 July 2016 were made. The wife has a remedy under rule 2.32(4) Federal Court Rules should she wish to pursue it. I shall not allow the wife to inspect the affidavits which are the subject of the confidentiality orders.
HARMAN OBLIGATION
The leading UK authority Harman v Secretary of State for Home Department [1983] 1 AC 280, gave its name to the implied undertaking or obligation upon which the applicants rely.
In Esso Australia Resources Limited v Plowman (1995) 183 CLR 10, Mason CJ said at pages 32 to 33:
In relation to documents produced by one party to another in the course of discovery in proceedings in a court, there is an implied undertaking, springing from the nature of discovery, by each party not to use any document disclosed for any purpose otherwise than in relation to the litigation in which it is disclosed. Over a century ago, Bray on Discovery stated:
"A party who has obtained access to his adversary's documents under an order for production has no right to make their contents public or communicate them to any stranger to the suit ... nor to use them or copies of them for any collateral object ... If necessary an undertaking to that effect will be made a condition of granting an order."
Because an undertaking is implied, it has not been the practice to condition the making of orders in that way. The implied undertaking is subject to the qualification that once material is adduced in evidence in court proceedings it becomes part of the public domain, unless the court restrains publication of it.
It would be inequitable if a party were compelled by court process to produce private documents for the purposes of the litigation yet be exposed to publication of them for other purposes. No doubt the implied obligation must yield to inconsistent statutory provisions and to the requirements of curial process in other litigation, eg discovery and inspection, but that circumstance is not a reason for denying the existence of the implied obligation.
(Footnotes omitted)
The plurality in Hearne v Street (2008) 235 CLR 125 (Hayne, Haydon & Crennan JJ) said (at paragraphs 96 - 97):
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.
…
It is common to speak of the relevant obligation as flowing from an “implied undertaking”.
(Footnotes omitted)
The plurality went on to say at paragraph 102:
…to call the obligation of the litigant who has received material generated by litigious processes one which arises from an "implied undertaking" is misleading unless it is understood that in truth it is an obligation of law arising from circumstances in which the material was generated and received.
In Hearne Gleeson CJ (at paragraph 3) agreed that the “implied undertaking” is now better understood as a “substantive legal obligation”.
As already mentioned, apart from the 1st and 2nd applicants and now belatedly again the 3rd to 6th applicants, no other party to the FCA proceedings has raised any objection to the wife inspecting documents held by the Federal Court.
Does the Harman obligation apply to the wife?
Counsel for the wife submitted that the Harman obligation did not apply to a person in the position of the wife.
In Hearne, the plurality point out (at paragraph 103) that the obligation is not only personal to the litigant, but also to third parties who know that the material was generated in legal proceedings.
Counsel for the wife referred to the following passage in Hearne at page 160 at paragraph 109:
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. It is likely that, in the future, documents and information will be provided to persons funding litigation, who will likewise be bound by the obligation.
Counsel for the wife submitted that the wife was not in the category of third parties referred to in paragraph 109 of Hearne and she is not related to those proceedings and did not receive documents/information pursuant to that litigious process.
The examples given in Hearne are not exclusive. The implied undertaking binds any third party to whom documents and information from litigious processes is provided (see also Distillers Co (Biochemicals) v Times Newspapers Ltd [1975] QB 613 at 621; a case in which a newspaper had been given some 10,000 bespoke documents by a party to a case involving a drug company which had marketed thalidomide to pregnant women. The newspaper was held to be bound by the Harman obligation).
The Harman obligation applies to somebody in the wife’s position.
What documents in the FCA proceedings might be the subject of the Harman obligation?
At [5(b) – (e)] of Ms NN’s affidavit filed 14 October 2016, Ms NN discusses the quantity of documents produced to the Family Court by the Federal Court. Printed in hard copy, that material comprised three large boxes. At [18] Ms NN says this printed material comprised 279 individual documents “including affidavits and exhibits which run to over 1,000 pages each”.
By 4 October 2016, Ms NN had conducted a “preliminary review” of the documents produced by the Federal Court. By 14 November 2016 her office had catalogued the documents.
At [10] to [15] of Ms NN’s affidavit of 14 November 2016, she describes the work that would need to be done to create precision about what documents the applicants asserted were covered by the Harman obligation.
There was a confidential annexure A to Ms NN’s 14 November 2016 affidavit. At the end of the hearing, counsel for the 1st and 2nd applicants sought to tender this confidential document. I rejected the tender on the basis that it had not been served on the wife and had not been filed.
Ms NN in her November affidavit has identified one affidavit of Mr XX dated 29 January 2015 which was filed but not read in the FCA proceedings. She also gives the following evidence:
Both the applicants and the respondents made numerous objections to affidavit evidence sought to be tendered during the course of the [FCA] Proceeding. A number of those objections were upheld with the result that parts of the affidavits filed were not read in open Court.
The affidavits produced to the Family Court that were filed in the [FCA] Proceeding do not contain any redaction or other notation to indicate which parts of the affidavits were the subject of successful objections.
The applicants further rely upon order 1 made by the Federal Court on 3 September 2015 which was in the following terms:
Unless a document, whether in the tender bundles of the parties or in an annexure or an exhibit to an affidavit, is expressly referred to in oral or written submissions or the Narrative (including in the footnotes), it is rejected on the ground of relevance, despite any earlier admission on a provisional or other basis, and will at the conclusion of the hearing be removed from the tender bundles of the parties or annexure or exhibit.
It is paradoxical that the applicants submit that the written submissions and the narrative attract the Harman obligation where those documents are necessary to work out what part of an annexure or exhibit was excluded by her Honour.
In the time they have had (almost a year), the applicants have not sought to identify what parts of the material produced by the Federal Court might be the subject of successful objection or otherwise covered by order 1 by the Federal Court on 3 September 2015.
In the end, the applicants have only specifically identified one affidavit that was not before the Federal Court.
Counsel for the 1st and 2nd applicants submit that it would be an onerous task to identify the material affected by the Harman obligation.
Going through a transcript and reading it and then redacting parts of affidavits whilst tedious, is not an intellectually difficult exercise.
Working out what the Federal Court did and did not take into account in the judgment I accept would be a more complex exercise. The fact that the applicants did not undertake those exercises means I am not in a position to know what documents are and are not the subject of the applicants’ Harman objection. It is a matter I can take into account in the exercise of my discretion that the applicants have not done that work. Whether or not that was laziness, a forensic tactic or simply arising from the assumption that that was a matter for the wife to attend to I do not know. Given the wife didn’t have rights to inspection of the documents I am not sure how any assumption that it was the wife’s task could have been made.
I do not accept that the applicants are excused from identifying the documents which they claim are affected by the Harman obligation. The only document which the applicants have actually identified is Mr XX’s affidavit. Accordingly, the applicants’ objection to the wife inspecting documents based on the applicants’ assertion that the wife is bound by the Harman obligation fails in relation to all documents except Mr XX’s affidavit.
In the written submissions of the 3rd to 6th applicants, it is asserted that in the event access is granted to affidavit evidence, such access should be limited to the bodies of the affidavits only and no access to any exhibit should be granted. The applicants rely upon statements made by Jacobson J in Re Universal Music (Australia) Pty Ltd v Sharman Licence Holdings Ltd; Ex parte Merlin BV [2008] FCA 783. His Honour’s comments need to be read in the light of the facts of that case. In this case, the applicants have not identified any specific exhibits to which this submission relates. The document which the 1st and 2nd applicants seek to substitute for Exhibit 33 refers to subpoenaed documents produced by the ANZ Bank but the applicants have led no evidence and have not developed any submission as to why those documents should be excluded from any ruling allowing inspection.
Does this court have the power to make an order which in effect relieves the wife from the Harman obligation owed to the Federal Court?
The question arises as to whether this court has the implied power to release the wife from the Harman obligation owed to the Federal Court. As indicated, the only document the applicants have specifically identified as being the subject of the Harman obligation is Mr XX’s affidavit. If I am wrong about that and the applicants’ general descriptions of documents that might be the subject of the Harman obligation are in fact adequate, then the answer to this question is also relevant to those documents.
The wife has brought a case relying on s 79A(1)(a) of the Act. That section is in the following terms:
(1) Where, on application by a person affected by an order made by a court under section 79 in property settlement proceedings, the court is satisfied that:
(a) there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance
…
the court may, in its discretion, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside.
The Family Law Rules make provision generally for discovery and inspection (Chapter 13). There is no rule which codifies the Harman obligation in respect of documents produced in the course of litigation in the Family Court from another court. The Act and Rules do not deal with the question I am considering.
The wife seeks to assert that the husband significantly misled not only herself but this court by not disclosing his true financial situation when asking the court to make a property settlement order. As the High Court made clear in DJL v The Central Authority (2000) 201 CLR 226 at 241:
A court exercising jurisdiction or powers conferred by statute “has powers expressly or by implication conferred by legislation which governs it” and “[t]his is a matter of statutory construction”; it also has “in addition such powers as are incidental and necessary to the exercise of the jurisdiction or the powers so conferred”. It would be inaccurate to use the term “inherent jurisdiction” here and the term should be avoided as an identification of the incidental and necessary power of a statutory court.
(Footnotes omitted)
There is implied power as a necessary incident of s 79A(1)(a) of the Act, particularly in circumstances where an order which has been regularly obtained is sought to be impeached on the basis that it was vitiated by fraud, to make orders for discovery and inspection including the request order which was made on 4 July 2016.
As set out above, at page 33 of Esso Australia Resources Limited v Plowman Mason CJ states that the “implied obligation must yield to inconsistent statutory provisions and to the requirements of curial process in other litigation, eg discovery and inspection, but that circumstance is not a reason for denying the existence of the implied obligation” (emphasis added).
There are at least six cases where one court has ordered discovery of documents even though the Harman obligation was owed to another court. Those cases are Holpitt Pty Ltd v VarimuPty Limited (1991) 29 FCR 576; McCabe v British American Tobacco Australia Services Limited [2002] VSC 150; Patrick v Capital Finance Pty Ltd (No 4) [2003] FCA 436; Jarra Creek Central Packing Shed Pty Ltd v Amcor Limited [2008] FCA 554; Australian Medi-Care Company Ltd v Hamilton Pharmaceutical Pty Limited (No 3) [2008] FCA 976; Clifford v Vegas Enterprises Pty Ltd [2009] FCA 1204.
In Holpitt Burchett J expressed the view that the application should properly be made to the court to which the implied undertaking was owed but also said there was no problem with him dealing with the matter given the court was invited by all parties to do so. In the other cases the power to make the order seems to have been assumed. The trial judges in these cases have all made an order similar to the one the wife asks me to make. It seems without articulating it, those judges have relied upon their implied power (or in McCabe, inherent power) to do so.
In Patrick the applicant sought the defendants make discovery of a letter that had been discovered in proceedings in the County Court involving one of the defendants in the proceedings in the Federal Court. Tamberlin J considered that if the letter was relevant he “could and should make such an order without requiring release of the undertakings by the County Court as a precondition” ([22]). Tamberlin J said at [20]:
There is a clash of two important public interest considerations in this case. First, there is the public interest in protecting the discovery process in the interest of encouraging openness and frankness in discovery made in the County Court proceeding by way of consistent and effectively enforced assurance to the party faced with compulsory discovery that the documents will not be used for any other purpose than the purpose for which they were discovered in that court. Second, there is the competing important public interest in the due and proper administration of justice in the proceedings before this Court by ensuring compliance with its orders. In these circumstances if the document was one which ought to have been discovered I am not persuaded either as a matter of power, discretion or comity that release of the undertaking must or should be first obtained from the County Court.
In Jarra Creek Central Parking Shed Pty Ltd v Amcor Limited [2008] FCA 554, Tamberlin J found, without doubting that he had power to do so, that parties should be released from their implied undertaking of non-disclosure arising out of earlier proceedings.
In Australian Medi-Care Company Lander J ordered discovery and production for inspection of the two witness statements created for the purposes of other proceedings. In that case, the applicant in the proceedings before Lander J had prepared a witness statement in Hong Kong proceedings and received a witness statement from the defendant in Hong Kong proceedings. The respondent in the proceedings before Lander J sought to inspect those documents. The defendants in the Hong Kong proceedings had no objection. The applicant sought to rely upon the Harman obligation owed to the Hong Kong court to resist the production of the witness statements. Lander J referred to the dicta of Mason CJ in Esso and said:
20. Chief Justice Mason’s dicta was applied by Tamberlin J in Patrick v Capital Finance Pty Ltd (No 4) [2003] FCA 436 at [15] to [21]. The point which the Chief Justice made and which was applied in Patrick v Capital Finance Pty Ltd (No 4) [2003] FCA 436 is that, notwithstanding the implied undertaking, if rules of court of a jurisdiction apply to a party who has a document in that party’s possession by reason of a process in another jurisdiction, that party is still obliged to comply with the processes in the second jurisdiction and make discovery of the document if it be an application for discovery and production if production follows upon discovery. For that reason, in my opinion, the document should be produced.
21. Secondly, there has been no suggestion made by the applicant that the applicant could not obtain a release from the implied undertaking in the High Court of Hong Kong. Indeed, the applicant has sought and obtained a release in relation to other documents. I infer from the fact that such a release has been obtained, that the applicant could obtain a release in relation to the implied undertaking in respect of the witness statement of Cheng Chun Keung. The same applies to the documents discovered by the defendants in the Hong Kong proceedings which are presently in the possession, custody or control of the applicant. The applicant has discovered those documents and the respondent seeks production of them.
22. Whilst those documents are subject to the implied undertaking referred to in O 24 r 14A of the Hong Kong Rules, in my opinion, consistent with the decisions in Esso Australia Resources Limited v Plowman 183 CLR 10 and Patrick v Capital Finance Pty Ltd (No 4) [2003] FCA 436, the applicant should make production of those documents in this jurisdiction. No doubt the applicant will, at or before making production, apply to the High Court of Hong Kong for a release from the implied undertaking in relation to those documents. I should say that the defendants in the Hong Kong proceedings have indicated they have no objection to the documents being produced.
Picking up the point that his Honour makes, in this case in the time they have had, the 1st to 6th applicants have not applied to the Federal Court for release of the Harman obligation to enable these documents to be made available in this case. They are certainly better placed to do so than the wife because they have the information necessary to identify what documents or parts of documents might in fact be affected by the Harman obligation.
In Clifford v Vegas Enterprises Pty Ltd the applicant for discovery in the Federal Court sought all documents and evidence filed in the Family Court relating to the acquisition and the value of certain shares. Barker J ordered that the Family Court documents should be discovered. His Honour said at [30]:
Even without the existence of the public domain exception, this Court has the power to grant leave for the documents used in the Family Court proceedings to be used in this Court: see Jarra Creek Central Packing Shed Pty Ltd v Amcor Ltd [2008] FCA 391; Holpitt Pty Ltd v Varimu Pty Ltd [1991] FCA 269; (1991) 29 FCR 576; Griffiths v Duggan (No 2) [2008] VSC 230.
Other cases question the power of a court in the second proceedings to release a party from an obligation owed to another court.
In Commissioner of Taxation v Rawson Finances Pty Ltd [2015] FCA 628 Flick J found that any application for a party to be relieved from the implied undertaken should be made in the proceedings in which the undertaken was given (relying on Holpitt at 577 and Transfield Philippines Inc v Pacific Hydro Ltd [2006] VSC 175 at [133] to [134]).
Hollingworth J in Transfield Philippines discussed cases in which an application to be released from the implied undertaking was heard and determined in proceedings other than the one in which the documents were originally produced at [112]:
…In Holpitt v Varimu, Burchett J said that such an application ought to be made in the proceeding in which the implied undertaking was given, a principle which was approved by Mandie J in Playcorp Ltd v Tyco Industries Inc and Byrne J in McCabe v British American Tobacco Australia Services Ltd (No 3). However, as all parties in Holpitt agreed that he should deal with the matter, and as both proceedings were in the Federal Court, Burchett J proceeded to determine the application. Likewise in McCabe, both proceedings had been brought in the Supreme Court of Victoria, and the respondent to the application did not take the point that the application ought properly to have been brought in the earlier proceeding.
(Footnotes omitted)
Hollingworth J said at [113] she was unaware of a case where a court determined an application to be released from the implied undertaking given to a completely different court but as discussed above, some now exist. Hollingworth J was (sitting in the Supreme Court of Victoria) also not persuaded that the court had inherent jurisdiction to release the party in that case from the implied undertaking, but, as discussed below, then went on to deal with the issue of whether she would have made an order for the release of documents if she did have inherent power, concluding she would not have made an order in any event.
The wife’s interlocutory application for discovery of the Federal Court file was made on 4 July 2016 and still has not been resolved. I am of the view the court has an implied power to facilitate the expeditious and just conduct of this case by making an order allowing the wife to inspect the documents produced by the Federal Court.
Should the power to make an order for inspection be exercised?
The next question is, should an order for inspection be made or should the wife be required to go to the Federal Court and seek orders there in a case which is otherwise concluded in that court.
Hollingworth J in Transfield Philippines states at [125]:
In so far as I do have the power to release some or all of the disputed documents from the implied undertaking, I would regard it as a power to be exercised sparingly. That is because the very essence of the implied undertaking is that the undertaking is given to that court or tribunal which orders compulsory production of the documents. That body is fully acquainted with the circumstances in which the documents were produced, the use that has or may be made of them, and whether any harm may flow as a result of the use of the documents for other purposes. As a matter of policy, it strikes me as highly undesirable that one court should interfere with an undertaking given to another court or, in this case, tribunal.
(Footnote omitted)
In contrast, in Griffiths & Beerens Pty Ltd & Ors v Duggan & Ors(No. 2) [2008] VSC 230, a company who was not a party in proceedings which had concluded (except for arguments about costs) asked the trial judge, Pagone J, to release it from the Harman obligation in respect of a witness statement not read in those proceedings. Pagone J dealt with the issue concerning the release from the Harman obligation in what he described as “conformity with the arguments before me” but expressed a view about what he described as the “preferable process”. Pagone J said:
4 … [the second court] … has full power and authority to ensure that its decision is reached by reference to all material that is necessary and probative in the discharge of its jurisdiction and powers. The proper course for parties such as the plaintiffs is, in my view, to seek in those proceedings access to information and documents that may bear upon the facts and issues in those proceedings. That appears to have been the process followed in Jarra Creek Central Packing Shed Pty Ltd v Amcor Ltd …
5 The implied undertaking cannot restrict or fetter, and was not stated as a restriction or fetter, on a court’s power in relation to its own processes in proceedings properly instituted before it. In Esso Australia Resources Ltd v Plowman Mason CJ said:
… it would be a curious result if the effect of the implied undertaking would be to limit the powers of a court in subsequent cases to compel production of the documents necessary to ensure the integrity of its judicial function.
…
7 Whether a document which is subject to an implied undertaking (like Mr Lin’s affidavit) can be used by a party in subsequent proceedings is a matter that may potentially impinge upon the integrity and authority of two sets of judicial processes. That situation is quite different from the case where the subsequent use of a document obtained with an implied undertaking restricting its use is subject only to the continuing authority of the court which first compelled its production. In that case the party wishing to use the document can only do so if permitted by the court to which the implied undertaking is given. That is not this case. Nor is this a case in which the use of Mr Lin’s affidavit may adversely impact upon my hearing and consideration of the issues in dispute before me: that dispute is finalised on all issues except costs.
8 Whether it should be used in the second proceeding is a question which is best dealt with by the judge in the second proceeding …
[footnotes omitted and emphasis added]
As in Griffiths, the FCA proceedings have concluded before the particular judge.
After stating that the use of a document obtained in discovery in one action as the foundation for a different action would be in breach of the implied undertaking, Lord Oliver continued to opine in Crest HomesPlc v Marks & Ors [1987] AC 829 that “the court will not release or modify the implied undertaking given on discovery save in special circumstances and where the release or modification will not occasion injustice to the person giving discovery.”
In Re Universal Music, Jacobson J found that special circumstances should exist before a party is released from the implied undertaking. Jacobson J relied on Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217 at 225 when he said that those special circumstances “include the nature of the document, the absence of prejudice to the author and the likely contribution of the document to achieving justice in the second proceeding”.
In Springfield Nominees Wilcox J made reference to Lockhart J’s decision in Sweetman v Australian Thoroughbred Finance Pty Ltd (unreported, Federal Court, Lockhart J, 23 July 1992) where Lockhart J granted the application because the extent of commonality between the two proceedings constituted special circumstances and the applicants would not be prejudiced by the granting of leave. However, Wilcox J noted that in coming to that decision Lockhart J “took into account that the documents had been compulsorily discovered but also the fact that they were not documents which would ordinarily attract a confidentiality order”. Wilcox J in Springfield Nominees at 225 sets out what “special circumstances” need to exist as follows:
…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. 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.
Burchett J in Holpitt also set out the test of special circumstances at 578 and 579:
…As far as the expression “special circumstances” is concerned, it is an expression which is liable to be misunderstood unless care is taken to ask and answer the question, special in relation to what? “Special” is one of those words which derive almost all their meaning from the context … If all that is required is that, among the great number of cases in the court in which documents have been discovered, this one must evince some special feature which affords a reason for releasing or modifying the undertaking, there will be no difficulty. Circumstances in which there is a legitimate reason why documents discovered in one proceeding should be made available in another will, viewed in this way, be rare. In the ordinary course, the ordinary rule should apply, there being no special circumstance to suggest otherwise.…
…
In my opinion, the court’s duty, in an application of this kind, is to consider whether the applicant has shown some circumstance which takes the matter out of the ordinary course, according to which production of documents pursuant to an obligation to make discovery involves the implied undertaking to the court; and, if so, whether an exercise of the court’s discretion in favour of the application would be in the interests of justice.
The request that has been made by the wife can be described as a rare one.
The wife argues that she should be relieved of the Harman obligation due to the special circumstances of this case. The wife believes that the husband failed to fully disclose his financial circumstances at the time when she consented to a property settlement order. The basis of that belief is information that has emerged from the FCA proceedings. No party to the FCA proceedings raises any objection except the husband, his brother and his brother’s wife and the husband’s companies. Information in the reasons indicates that the husband and his brother have had a close involvement together in significant financial dealings outside Australia. The judgment of 2016 at refers to some of the possible amounts of money involved. Apart from one affidavit, the 1st applicant has not identified what was not before the Federal Court.
Special circumstances exist to allow the wife to see the material on the FCA proceedings file, whether or not it was before the Federal Court judge apart from the affidavits referred to in the confidentiality orders and the documents produced in the interlocutory application involving Ms LL Bondelmonte .
CONCLUSION
Apart from the affidavits which are the subject of the confidentiality order and identified documents produced in the interlocutory application involving Ms LL Bondelmonte, the application to set aside the orders of 4 July 2016 will be dismissed.
It goes without saying the wife in these proceedings will be bound by a Harman obligation owed to this court in relation to documents in the Federal Court file which are inspected by her.
I certify that the preceding one hundred and seven (107) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts delivered on 15 November 2017.
Associate:
Date: 15.11.17
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