Fotopoulos v Commonwealth Bank of Australia
[2017] VSC 461
•11 August 2017
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
S CI 2013 06267
| NICK FOTOPOULOS | Plaintiff |
| v | |
| COMMONWEALTH BANK OF AUSTRALIA (ABN 48 123 123 124) ZAIA, ARTHUR & ASSOCIATES PTY LTD (ACN 086 715 291) | First Defendant Second Defendant |
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JUDGE: | Derham AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 9 & 11 August 2017 |
DATE OF JUDGMENT: | 11 August 2017 |
CASE MAY BE CITED AS: | Fotopoulos v Commonwealth Bank of Australia |
MEDIUM NEUTRAL CITATION: | [2017] VSC 461 |
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PRACTICE AND PROCEDURE – Documents produced under compulsion in the course of civil proceedings – Implied undertaking not to use documents for collateral purpose – application of undertaking to affidavits and affidavits of documents and answers to interrogatories – Applications to release undertaking to use documents for the purposes of criminal prosecutions concerning the same subject matter as the civil proceedings – Applications granted – Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10; Hearn v Street, (2008) 235 CLR 125; Springfield Nominees v Bridgelands Securities (1992) 38 FCR 21; Barrow v McLernon & Anor [2012] VSC 134.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr Shane Thomas | Rothwell Lawyers Pty Ltd |
| For the Plaintiff | Mr Steven Collin, solicitor | Trueman Dawson |
| For the First Defendant | Mr Bart Carew | HWL Ebsworth |
HIS HONOUR:
Introduction
The applicant, William Jordanou (‘Jordanou’) applies by summons filed 19 July 2017 in this proceeding and in four other proceedings (‘related proceedings’),[1] for leave to use documents filed by the parties in the proceeding in defence of criminal prosecutions brought against him in the County Court of Victoria.[2] This application involves a consideration of the so called ‘implied undertaking’ not to use documents produced by a party to litigation by another pursuant to the coercive process of the Court for any purpose other than in relation to that litigation.[3]
[1]Proceedings S CI 2011 06687 Commonwealth Bank of Australia v Klapanis; S CI 2012 05338 Commonwealth Bank of Australia v Blue Chip Development Group Pty Ltd; and S CI 2012 01404 Commonwealth Bank of Australia v Dvorzak; S CI 2013 2876 James Klapanis v Nick Fotopoulos.
[2]County Court proceeding CR 15 01288.
[3]Riddick v Thames Board Mills Ltd [1977] QB 881; Harman v Secretary of State for the Home Department [1983] 1 AC 280; Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10.
The plaintiff (‘Fotopoulos’) and the first defendant, Commonwealth Bank of Australia (‘CBA’), appeared and oppose leave being given. These reasons will also canvass the application made in each of the related proceedings.
It seems that Jordanou’s lawyers representing him in the criminal prosecutions have searched the Court files in the 5 proceedings and have identified the affidavits and pleadings that they desire using in defence of the various charges, or identified and copied them.
Background
This proceeding – Fotopoulos v CBA
The application in this proceeding is supported by the affidavit of Tracey Pauline Rothwell.[4] In that affidavit, Ms Rothwell deposes that Jordanou has been charged with 193 charges of obtaining property or financial advantage by deception. The charges are broken into five separate trials, grouped according to the victim. Trial 4 deals specifically with property located at 318 Walsh Street, South Yarra (‘Walsh Street Property’) and the transactions relating to the entry into a loan facility between Fotopoulos and the CBA, secured by a mortgage over the Walsh Street Property and the draw-down of funds under that facility and secured by that mortgage. Trial 4 involves 69 charges.
[4]Sworn 19 July 2017.
The plaintiff and five bank officers of CBA are witnesses in a Basha Inquiry listed to commence on 14 August 2017.[5] Due to the structure of the charges and there being five separate trials, some witnesses will be witnesses in more than one trial. Ms Rothwell expects the plaintiff to be a witness in trial 4 in relation to the Walsh Street Property, and possibly also a witness in trials 1 and 2, depending on what facts the Crown ultimately allege. Some of the bank officers will be witnesses in all four trials, at least when they are required to prove formal matters and documents. There are two lending managers and their respective staff at the centre of the loans in question. Each manager and his staff will be a witness in two of the four trials as the person who authorised the loan and the draw‑downs the subject of the charges. The other manager and his staff will be witness in the other two trials.
[5]R v Basha (1989) 39 A Crim R 337, a pre-trial hearing or voir dire where the accused can cross-examine any witness produced by the prosecution either where there has been no committal or where since the committal there are new witnesses.
The plaintiff and CBA officers have sworn statements for the purposes of the prosecutions, which form part of the police brief. It was not initially revealed by Jordanou in the application in this proceeding (or the related proceedings) what documents are referred to in the prosecution brief or have been discovered by the prosecution. By a late affidavit the index to the prosecution brief is produced.[6] But because the charges plainly concern transactions that were the subject of this and the related proceedings, it is inevitable that many of the documents referred to in this proceeding and the related proceedings will be sought to be adduced in evidence in the criminal prosecution.
[6]Affidavit of Ms Rothwell sworn 10 August 2017.
In this proceeding, Fotopoulos claims against CBA, amongst other things, that a number of draw‑downs under a loan facility for the purchase and development of the Walsh Street Property were not authorised and were made in breach of the bank’s mandate. In addition, Fotopoulos claims that CBA should never have granted the facility to him because it accepted his application for the facility without verifying or adequately verifying the accuracy of the matters set out in the application.[7] The draw-downs were made pursuant to directions given by the second defendant in the proceeding, Zaia, Arthur & Associates Pty Ltd (‘Zaia Arthur’), accountants, and business and taxation advisers, of which Jordanou was a principal or an employee. The affidavit of Ms Rothwell identifies that there is considerable overlap between various charges in the indictment against Jordanou and the loan draw‑downs made pursuant to the loan facility Fotopoulos obtained from CBA.
[7]It is inferred that Zaia Arthur prepared the application.
Jordanou seeks to use documents filed in this proceeding to cross‑examine witnesses in the criminal proceeding on their affidavits filed in this proceeding, as well as statements made in the pleadings. The summons does not specify the documents sought to be released from the implied undertaking. The affidavit identifies some documents. In consequence of directions made by the Court on 7 August 2017,[8] Jordanou was required to specify the documents sought. This was done and the documents identified are as follows:
[8]In this and in the related proceedings.
(a) affidavit of documents of Fotopoulos, sworn 30 April 2014;
(b) affidavit of documents of Peter Pouki of CBA, sworn 7 May 2014;
(c) supplementary affidavit of documents of Fotopoulos, sworn 27 January 2015;
(d) affidavit of Steven Benedict Collin, sworn 10 March 2015;
(e) second supplementary affidavit of documents of Fotopoulos, sworn 27 March 2015;
(f) second supplementary affidavit of documents of Iain Stevens of CBA, sworn 15 May 2015;
(g) third supplementary affidavit of documents of Fotopoulos, sworn 25 May 2015;
(h) fourth supplementary affidavit of documents of Fotopoulos, sworn September 2015;
(i) fifth supplementary affidavit of documents of Fotopoulos, sworn 28 April 2016;
(j) fourth supplementary affidavit of documents of CBA, sworn 9 November 2016; and
(k) sixth supplementary affidavit of documents of Fotopoulos, sworn 3 January 2017.
Ms Rothwell refers to some of these documents in her affidavit in support of the application. In particular, she identifies the affidavit of Mr Collin, sworn 10 March 2015 as going to the nub of the matter in the criminal proceedings, namely, the knowledge of CBA in approving the draw‑downs the subject of the charges. Mr Collin’s affidavit supports an application for particular discovery pursuant to r 29.08 of the Supreme Court (General Civil Procedure) Rules 2005 (as they then were). That affidavit identified the commercial relationship between CBA and Zaia Arthur and, in particular, Jordanou, as an issue in the proceedings and maintained that CBA knew or ought to have known about the alleged fraudulent practices of Zaia Arthur or Jordanou. The documents sought to be discovered included reports of investigations undertaken by internal officers at CBA in relation to the conduct of Zaia Arthur and Jordanou going back to 2007.
S CI 2011 6687 - CBA v Klapanis
Application is also made in proceeding S CI 2011 6687 - CBA v Klapanis. The application is supported, again, by an affidavit of Ms Rothwell.[9] She deposes that charges in trials 1 and 2 relate to mortgage facilities granted by CBA to the defendant, Rita Klapanis (‘Rita Klapanis’). The facilities were granted by CBA for the purposes of the development of the property at 3 Mandeville Crescent, Toorak (‘the Mandeville Crescent Property’). Ms Rothwell deposes that Rita Klapanis defended the proceeding and counterclaimed and, pursuant to leave, joined Shane Hanson and Jordanou as third parties. Hanson was formerly an employee of CBA and was employed as a mobile banker. Hanson was allegedly responsible for authorising the loan facilities for the development of the Mandeville Crescent Property. It is deposed that charges 41, 42, 44 and 45 in Trial 1 in the indictment against Jordanou relate to the Mandeville Crescent Property. In substance, in this proceeding Rita Klapanis denies obtaining a loan facility and executing a mortgage to secure that facility from CBA and says that the documents were created without her knowledge and to further the third parties’ interests. Rita Klapanis denies signing documents that authorised the draw‑down of moneys under the loan facility and alleges that they were created without her knowledge and to further the third parties’ interests.
[9]Sworn 7 July 2017.
The documents referred to in the affidavit of Ms Rothwell which are sought to be used in the defence of the criminal prosecutions, and which have been the subject of specific notice in accordance with the orders of the Court made on 7 August 2017, are:
(a) affidavit of Gregory Peloso, sworn 25 June 2012 in support of an application or summary judgment by CBA;
(b) affidavit of Rita Klapanis, sworn 30 July 2012 in opposition to the application for summary judgment;
(c) affidavit of documents, sworn by Gregory Peloso on 22 September 2012 on behalf of CBA;
(d) affidavit of documents of Rita Klapanis, sworn on 19 September 2012.
Rita Klapanis and Gregory Peloso have sworn statements in the criminal proceeding. Other bank officers have also sworn statements, as has Rita Klapanis’ husband, James Klapanis. Jordanou has issued subpoenas to produce documents in the criminal proceeding against ‘the first and second defendants’ (sic). Ms Rothwell deposes that both the first and second defendant say they have no documents. I take it that this is a reference to Rita and James Klapanis. Ms Rothwell deposes that Jordanou seeks to cross‑examine the witnesses to be called in the criminal proceedings on their affidavits filed in this proceeding, as well as statements made in the pleadings as part of his defence.
Proceeding S CI 2013 2876 – James Klapanis v Fotopoulos
Jordanou also makes application in proceeding S CI 2013 2876 James Klapanis v Fotopoulos. The application is supported by an affidavit of Ms Rothwell.[10] In the affidavit, Ms Rothwell deposes that James Klapanis and Fotopoulos are witnesses in the Basha Inquiry listed to commence on 14 August 2017. In addition, five CBA officers are also to give evidence in that inquiry. It is expected that the Crown will call James Klapanis in trials 1, 2 and 4. She expects Fotopoulos to be a witness in trial 4 in relation to the Walsh Street Property and possibly trials 1 and 2, depending on what facts the Crown ultimately allege.
[10]Sworn 17 July 2017.
Ms Rothwell says that without revealing instructions, or waiving privilege, the statement given by James Klapanis to the informant in the criminal prosecution contains a different version of the joint venture agreement to that pleaded in the statement of claim in this proceeding. She deposes that the statement of claim in this proceeding also refers to arranging finance for the purchase of the Walsh Street Property, and a mortgage from CBA, and that this is a transaction specifically referred to in Charge 1 against Jordanou. The statement of claim also refers to the plaintiff engaging the architect Robert Mills. Charges 12 and 16 relate to payments made to Robert Mills which are said to be improperly made. In his defence, Ms Rothwell swears, Fotopoulos admits to repayment of the sum of $155,000 to the plaintiff, being the deposit paid by the plaintiff upon entering into the contract to purchase the Walsh Street Property. This allegation is specifically referred to in Charge 4, alternatively Charge 15.
Ms Rothwell deposes that Jordanou wishes to cross‑examine James Klapanis and Fotopoulos, in the Basha Inquiry and at the trial, in relation to the statements contained in the statement of claim and defence in relation to the nature of the joint venture agreement pleaded and payments made for the joint venture.
The claim in this proceeding by James Klapanis was for a declaration that Fotopoulos holds a legal estate in the Walsh Street Property as a constructive trustee for both Fotopoulos and James Klapanis, with consequential declarations and relief, including equitable compensation. The basis of the claim is that there was a joint venture between the two for the acquisition of the Walsh Street Property and the construction on it of a three apartment development.
The documents sought to be used in the criminal prosecution are:
(a) affidavit of documents of Fotopoulos, sworn 30 April 2014; and
(b) affidavit of documents of James Klapanis, sworn 9 November 2014.
The plaintiff discontinued the proceeding against the defendant on 23 May 2016 pursuant to leave given by the Court on 22 April 2016. The plaintiff was required to pay the defendant’s costs of the proceeding on a standard basis.
Proceeding S CI 2012 1404 – CBA v Dvorzak
Jordanou also makes application in proceeding S CI 2012 1404 CBA v Dvorzak supported by an affidavit of Ms Rothwell.[11] In her affidavit, Ms Rothwell deposes that the subject matter of trial 1 (involving 46 charges) and trial 2 (involving 25 charges) against Jordanou relate to loan facilities granted by CBA and the draw‑downs of funds pursuant to those facilities in the name of the defendants, Michael and Faye Dvorzak. The proceeding is brought by CBA to recover loans granted to Mr and Mrs Dvorzak, secured by mortgages over the properties at 18 Tormey Street, North Balwyn and 994 Toorak Road, Toorak. The Dvorzaks had engaged Zaia Arthur to assist them with obtaining finance for property developments. They obtained leave to join Zaia Arthur, Robert Zaia and Jordanou as a defendants to their counterclaim and included a further property in their counterclaim, being 16 Burton Street, North Balwyn.
[11]Sworn 7 July 2017.
In trial 2 against Jordanou in the County Court, Charges 11 to 13 and 21 relate to the property at Tormey Street, North Balwyn, Charges 14 to 16 and 18 to 20 relate to the property at 994 Toorak Road, and Charges 1 to 4 and 6 relate to the property at 16 Burton Street, North Balwyn.
Ms Rothwell swears that various paragraphs of the amended defence and counterclaim are reflected in the charges made against Jordanou, in particular in relation to draw‑downs under the loan facility.
The documents in the proceeding that Jordanou seeks leave to use in the criminal prosecutions and the Basha Inquiry are:
(a) affidavit of Michael Dvorzak sworn 16 August 2012 (an affidavit in support of an application to set aside judgment entered in default of defence);
(b) affidavit of documents of Michael Dvorzak, sworn 19 December 2012;
(c) affidavit of documents of Gregory Peloso of CBA, sworn 24 December 2012;
(d) supplementary affidavit of documents of Gregory Peloso of CBA, sworn 18 April 2013;
(e) affidavit of documents of Michael Dvorzak, sworn 31 August 2013;
(f) further supplementary affidavit of documents of Gregory Peloso of CBA, sworn 18 August 2014;
(g) interrogatories and answers to interrogatories, sworn by Faye Dvorzak on 28 February 2014; and
(h) interrogatories and answers to interrogatories, sworn by Michael Dvorzak on 28 February 2014.
The affidavit of Michael Dvorzak in support of an application to set aside judgment is replete with evidence of Jordanou’s conduct in drawing down funds from loan facilities granted by CBA to the Dvorzaks and a company controlled by them (Bluechip Development Group Pty Ltd) without proper authority. Michael and Faye Dvorzaks and Gregory Peloso of CBA have made statements in the criminal prosecution. Other bank officers have also made statements. Jordanou has issued subpoenas to Michael and Faye Dvorzaks to produce documents but they say they have none. Jordanou seeks to cross‑examine the deponents in the criminal proceeding on their affidavits filed in this proceeding, as well as statements made in the pleadings as part of their defence.
The proceeding and the counterclaim were dismissed by consent on 22 May 2015.
Proceeding S CI 2012 05338 - CBA v Blue Chip Development
Jordanou also makes application in proceeding S CI 2012 05338 CBA v Blue Chip Development supported by an affidavit of Ms Rothwell.[12] She deposes that in this proceeding, mortgage facilities were granted by CBA to Blue Chip Investments Pty Ltd (‘Blue Chip’) and guaranteed by Michael and Faye Dvorzak. The subject matter concerns a loan facility secured by mortgage granted by CBA for the purchase and development of properties at 4D and 4F Kirsten Close, Frankston South, Victoria. The Dvorzaks defended the proceeding. Blue Chip was placed into receivership by CBA, and both the properties were sold leaving a shortfall. In the amended defence,[13] the Dvorzaks included reference to the properties at 18 Tormey Street, North Balwyn and 994 Toorak Road, Toorak, the properties that are the subject of the proceeding S CI 2012 01404.
[12]Sworn 7 July 2017.
[13]Ms Rothwell refers to an amended defence and counterclaim. The file does not disclose any counterclaim having been filed.
Ms Rothwell deposes that Charges 24 and 25 against Jordanou relate to payments made by CBA in respect of invoices rendered by a company called Lynford Pty Ltd into a CBA account in the name of Michael Dvorzaks and Jordanou. The Dvorzaks maintained that this joint account was not authorised by them. This joint account is also referred to in the earlier mentioned proceeding. The amended defence of the Dvorzaks denies that either of them signed a particular letter referred to in the statement of claim purporting to authorise CBA to pay the sum of $200,000.00 into the joint account. This letter is the subject of Charge 24.
Ms Rothwell deposes that both Michael and Faye Dvorzaks and Gregory Peloso had sworn statements in the criminal prosecution. Other bank officers have also sworn statements, including Shane Hanson who is referred to in the amended defence. Jordanou has issued subpoenas to Michael and Faye Dvorzaks to produce documents in the criminal proceeding. They both say they have no documents.
The documents that Jordanou seeks to use in defence of the criminal prosecution and in the Basha Inquiry are:
(a) affidavit of documents of Gregory Peloso of CBA, sworn 6 March 2013;
(b) affidavit of documents of Michael Dvorzaks, sworn on 13 March 2013; and
(c) affidavit of documents of Michael Dvorzaks, sworn on 31 August 2013.
Jordanou seeks to cross-examine Michael and Faye Dvorzaks in the criminal prosecution on their affidavits filed in this proceeding as well as statements made in the pleadings as part of their defence.
The proceeding has not been dismissed or discontinued.
Applicable law
There is no dispute between the parties that many of the documents sought to be used by Jordanou are, directly or indirectly, subject to the implied undertaking and that Jordanou needs the leave of the Court in each proceeding to use them in the criminal prosecutions against him.
The principle is 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 the leave of the court, use it for any purpose other than that for which it was given unless it is received into evidence.[14] The obligation, or duty, is usually called the implied undertaking to the Court. The High Court make clear that the implied undertaking is in truth a substantive legal obligation or duty imposed by law on the litigants, their servants or agent (or privies[15])and others.[16] The types of material disclosed to which this principle applies include:
[14]Hearn v Street (2008) 235 CLR 125, [96] (Hayne, Heydon & Crennan JJ, Gleeson CJ agreeing) (‘Hearn’).
[15]Spalla v St George Motor Finance Ltd (2004) 209 ALR 703, 717 [40] (Ryan J); Hearn [111].
[16]Hearn [105]-[108].
(a) documents inspected after discovery;[17]
[17]Riddick v Thames Board Mills Ltd [1977] QB 881; Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10 at 32-33; [1995] HCA 19; Hearn [96]; Hearn [96].
(b) answers to interrogatories;[18]
[18]Central Queensland Cement Pty Ltd v Hardy [1989] 2 Qd R 509 at 510-511; Ainsworth v Hanrahan (1991) 25 NSWLR 155; Hearn [96].
(c) documents produced on subpoena;[19]
[19]Eltran Pty Ltd v Westpac Banking Corporation (1990) 25 FCR 322; Hearn [96].
(d) documents produced for the purposes of taxation of costs;[20]
[20]Bourns Inc v Raychem Corp [1999] 3 All ER 154 at 169-170; Hearn [96].
(e) documents produced pursuant to a direction from an arbitrator;[21]
[21]Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10, 33, 39, 46-47 and 48; Hearn [96].
(f) documents seized pursuant to an Anton Piller order;[22]
(g) witness statements served pursuant to a judicial direction;[23] and
(h) affidavits.[24]
[22]Cobra Golf Inc v Rata [1996] FSR 819; Hearn [96].
[23]Central Queensland Cement Pty Ltd v Hardy [1989] 2 Qd R 509; Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217 at 223; State Bank of South Australia v Smoothdale (No 2) Ltd (1995) 64 SASR 224 at 229; Hearn [96].
[24]Medway v Doublelock Ltd [1978] 1 WLR 710; [1978] 1 All ER 1261; Re Addstone Pty Ltd (in liq); Ex parte Macks (1998) 30 ACSR 156; Hearn [96].
The obligation extends not merely to the documents themselves but also to copies of those documents and information derived from these documents.[25] Accordingly, it attaches to information provided in answers to interrogatories[26] and to the content of witness statements or affidavits delivered in obedience to court order.[27] It may also attach to other classes of document or their content, with which I am not here concerned.[28]
[25]Crest Homes plc v Marks [1987] 1 AC 829 at 854, approving Sybron Corporation v Barclays Bank plc [1985] 1 Ch 299 at 318, per Scott J; McCabe [15].
[26]Ainsworth v Hanrahan (1991) 25 NSWLR 155; McCabe [15].
[27]Central Queensland Cement Pty Ltd v Hardy [1989] 2 Qd R 509, 510, (McPherson J); Complete Technology Pty Ltd v Toshiba (Australia) Pty Ltd (1994) 53 FCR 125 at 131-2, (Hill J); ACCC v Telstra Corporation Limited (2000) 96 FCR 317, 322 (per Lindgren J); McCabe [15].
[28]See Cross on Evidence, Aust ed [25055].
The obligation is binding upon anyone into whose hands the documents come, if they know that the documents were obtained by way of coercive court processes.[29] In Riddick v Thames Board Mills Ltd,[30] Lord Denning MR said that the courts should not allow the other party – or anyone else – to use the documents for any ulterior or alien purpose. Otherwise, the courts themselves would be doing injustice. Whether knowledge of the source of the documents is required is not clear. There are difficulties in determining to whom and how far the obligation extends. Both questions have caused difficulties in other cases.[31]
[29]Hamersley Iron Pty Ltd v Lovell, (1998) 19 WAR 316 at 334-335; Hearn [111].
[30][1977] QB 881 at 896; Hearn [111].
[31]See the observations of Gleeson CJ in Hearn [4].
Jordanou was made a party to proceeding S CI 2011 6687 CBA v Klapanis and proceeding S CI 2012 1404 CBA v Dvorzak, and is thus in principle bound not to use documents in those proceedings to which the implied undertaking applies for purposes other than the proceedings. But, because Jordanou proceeds on the assumption that he needs leave in all the proceedings to use the documents in defence of his criminal prosecution, the extent of the obligation and to whom it apples need not be considered further.
What is relevant is that although the obligation can be released or modified by the court, that dispensing power is not freely exercised and will only be exercised where special circumstances appear.[32]
[32]Hearn [107]; See also Esso Australia Resources Limited v Plowman (1995) 183 CLR 10, 37; Barrow v McLernon & Anor [2012] VSC 134 [27] (‘Barrow v McLernon’).
In Springfield Nominees v Bridgelands Securities,[33] Wilcox J said:[34]
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.
[33](1992) 38 FCR 217.
[34]Ibid, 225.
This dicta of Wilcox J’s has been followed in many cases. One such case is referred to with apparent approval by Beach J (as he then was) in Barrow v McLernon, namely Ambridge Investments Pty Ltd v Baker & Ors(No 3),[35] where Vickery J varied the formulation of Wilcox J in Springfield, to arrive at the following test:
‘special circumstances’ may arise where there are special features (or a special feature) of the case which afford good reason for modifying or releasing the undertaking, being circumstances which are of sufficient gravity to override the private and public interest in protection of the confidentiality of a person’s private documents which are required by law to be produced to a court.
[35][2010] VSC 545.
The last of the factors mentioned by Wilcox J in Springfield as the most important of all, the likely contribution of the document to achieving justice in the second proceeding, is similar to the legitimate forensic purpose test for production of subpoenaed documents.
An aspect of the discovery process in litigation is the identification of documents of the litigants that are relevant to the issues in the proceeding. Even though access to and the use of an affidavit of documents does not give a party access to the discovered documents themselves, it enables the identification of the litigant’s private documents sufficiently to arm the person with the power to subpoena them in another proceeding. The identity of the documents is information derived from the discovery process required by the court. Having that information gives a person with access to and use of the documents (affidavits of discovery or lists of discoverable documents) a forensic advantage in other proceedings. That advantage is derived from documents produced for the purpose of the proceeding and pursuant to is coercive powers.[36]
[36]Crest Homes plc v Marks [1987] 1 AC 829 at 854, approving Sybron Corporation v Barclays Bank plc [1985] 1 Ch 299 at 318, per Scott J; McCabe [15].
An interesting contrast with the circumstances in this application and the applications in the related proceedings is the decision of Flick J in Ashby v Slipper (No 2).[37] In that case, Ashby instituted civil proceedings against the Commonwealth and Mr Slipper, the former speaker of the House of Representatives. The proceedings against the Commonwealth were settled and discontinued. The Commonwealth later sought a release from the implied undertaking in order to provide certain materials to the Australian Federal Police. Those materials were Compact Discs containing text messages, which had been exhibited to affidavits filed in the proceedings, but which had not been tendered.
[37][2016] FCA 550.
Ashby consented to the application for leave, but Flick J nevertheless applied the relevant test. His Honour granted leave on the basis of the consent of Ashby and a consideration of a number of factors relevant to the circumstances of that case. In considering the issue his Honour said:[38]
The need for “special circumstances” recognises the balance between reasons for imposing the constraint on material secured for use in proceedings and the reasons why a party may seek to free itself from that constraint. There must be a reason to release a party from the constraint initially imposed which seeks to balance – or at least take into account – the reasons for imposing the constraint in the first place. Reasons for initially imposing the constraint include a recognition that the Court’s compulsory processes of obtaining information may have been employed to secure that information – in some cases from third parties – in order to facilitate the administration of justice between the parties to litigation. Reasons for relaxing the constraint frequently involve considerations going beyond the immediate interests of the parties to particular litigation (and those whose otherwise confidential materials have been subpoenaed) and involve the wider public interest, including the public interest in the administration of justice and the administration of the law more generally. In the present case, these considerations include the enforcement or administration of the criminal law.
[38][2016] FCA 550 [10].
Submissions and consideration
Jordanou submits that all of the documents sought to be used from the civil proceedings concern the same subject matter as the various charges in the criminal prosecution. The overlap between the subject matter of the proceedings and the subject matter of the prosecutions is extensive. Documents discovered by CBA will inevitably be documents produced in the criminal prosecution, or relate to documents so produced. The bank officers whose conduct is subject to criticism or complaint by the parties to the civil proceedings are witnesses in the criminal prosecutions. The individuals involved in the civil proceedings are witnesses in the criminal prosecutions.
In relation to the Fotopoulos proceeding,[39] Mr Collin’s affidavit suggests a commercial relationship between CBA and Zaia Arthur, and in particular, Jordanou, is likely to be directly relevant to the subject matter of some of the charges in the indictment against Jordanou.
[39]S CI 2013 06267 Fotopoulos v CBA.
The account given above of the affidavits in support of the several applications makes it clear that there are affidavits of documents and other affidavits by persons who will give evidence against Jordanou in the criminal prosecutions. It seems to me that the liberty to cross‑examine witnesses in the criminal prosecution by reference to statements made by them, and documents discovered by them, affords a good reason for releasing the undertaking in these cases. The fact of the considerable overlap between the issues in the proceedings and the subject matter of the criminal prosecutions has the result that there is an overriding interest in favour of affording the use of the documents to Jordanou in his defence of criminal prosecutions.
In the course of argument, counsel for Jordanou (when pressed regarding the use to which the documents would be put) relied upon Jordanou’s right to silence.[40] He maintained that his client was entitled to keep ‘his powder dry’ until cross‑examination of the witnesses who are arrayed against him. I accept that it is not necessary for Jordanou to go further than his lawyers have in the affidavits of Ms Rothwell in setting out the forensic purpose for which the documents are to be used. It is enough that the documents will be used to cross-examine the witnesses called in the prosecution and that they relate to the same subject matters.
[40]As to which he referred to Reid v Howard (1995) 184 CLR 1 at 11.
In my view, Ms Rothwell’s several affidavits reveal special circumstances that support the grant of leave to enable Jordanou to use the identified documents for the purposes of his criminal prosecution, relevantly:
(a) the nature of the documents sought to be used – these will be directly relevant to the identification of documents that relate to the activities the subject of the charges laid against Jordanou. That is, the affidavits and the affidavits of documents refer to facts and identify documents that relate to the transactions that are the subject of the charges. It is not, in my view, necessary to descend into the detail of a consideration of each document discovered in the many affidavits of documents sought to be used. In point of principle, the fact that they have been discovered by the parties in this and the related proceedings means that they are relevant to the issues in the proceedings and encompass the transactions and draw-downs that are the subject of the charges;
(b) there is no identifiable prejudice to the parties to the proceedings from the use of the documents in the criminal prosecutions. The fact that the evidence of prosecution witnesses may be tested by reference to the evidence that they have given in these proceedings is not a prejudice of the kind relevant to the exercise of the discretion of the Court. If they have made mistakes in the giving of evidence in this proceeding or have not been truthful, then it is right that Jordanou has the opportunity to test the evidence they give in the criminal prosecution;
(c) most of the documents referred to in the affidavits of documents, if they are sought to be used in defence of the criminal prosecutions by Jordanou, came into existence before the litigation commenced and were not created for the purposes only of the litigation;
(d) all of the information in the documents relates to transactions that have happened in the past and there is no indication that any of the information is commercially sensitive at this time; and
(e) most importantly, the likely contribution of the documents to the defence of the criminal prosecution is that it will enable Jordanou to test the evidence that is given against him in relation to the transactions the subject of the various charges. This is, in my view, a legitimate forensic purpose and, moreover, an important one in the administration of criminal justice.
In my view, these reasons support releasing the implied undertaking in this case. These considerations go beyond the immediate interests of the parties to the related proceedings and involve the wider public interest, including the public interest in the administration of the criminal law.
CBA opposed the release of the implied undertaking in relation to all of the documents. In its submissions, CBA took the Dvorzaks proceeding[41] as representative of the other proceedings. CBA submitted that the material filed did not condescend to facts that permit one to safely accept that special circumstances exist; but if it be accepted that they do exist, then the Court should then consider the exercise of its discretion to grant leave to Jordanou to use the documents in the criminal prosecution.
[41]Proceeding S CI 2012 01404 CBA v Dvorzak.
CBA submitted that of the factors identified in Springfield, there are two which have the most relevance in these applications; the nature of the documents and the likely contribution of the documents to achieving justice in the second proceeding. CBA referred to Ms Rothwell’s affidavit evidence and noted that the charges to which reference is made are not in evidence. That is, no indictments were exhibited to the affidavits. In the result, CBA submitted that there is not proper material to justify the exercise of the discretion.
I gave the plaintiff the opportunity to file an affidavit exhibiting the indictment or indictments against Jordanou. This was done, albeit late. Even if those indictments had not been submitted in evidence, it seems to me to be beyond argument that the very subject matter of the charges concerns, in the case of the Dvorzaks proceeding and in all the other proceedings, the same subject matter.
CBA was also critical of the failure of Jordanou to adequately identify the documents for which use was sought in the criminal prosecution ‘by any precise connection with a properly identified forensic purpose’. It seems to me that although the evidence as initially advanced was a little thin, the affidavits of Ms Rothwell supplemented by her last affidavit of 10 August 2017, nevertheless identify the forensic purposes for which the documents are sought to be used. In some cases, subpoenas issued to the individuals who are parties to the proceedings and who are witnesses in the criminal prosecution, have produced no documents. In contrast, those individuals have sworn affidavits of documents in these proceedings that reveal they have or had documents relevant to the matters the subject of the proceedings and, inferentially, the subject of some of the criminal charges. In my view, the contention by counsel for CBA that there is no legitimate forensic purpose in Jordanou cross‑examining witnesses in the criminal prosecution, by reference to their affidavits and affidavits of documents in these civil proceedings, is unsustainable.
CBA also criticised the applications by Jordanou in relation to the affidavits of documents on the basis that the real aim of obtaining a release of the undertaking in relation to those affidavits was to obtain the primary documents referred to in them, as well as the documents referred to in the pleadings. Counsel for Jordanou made it clear in the course of his submissions that Jordanou wished to use the affidavits of documents, and indeed the other documents sought to be used, for all purposes, including for the purposes of calling for the production of documents and subpoenaing documents. This is sufficiently connected with the cross‑examination of the deponents of those affidavits who are called to give evidence in the criminal prosecution to justify the release of the undertaking.
Conclusion
For these reasons, I will order in this proceeding, and in each related proceeding, that William Jordanou has leave to use the identified documents in his defence of the criminal prosecution.
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