Hazell-Wright v 32 Domain Pty Ltd
[2020] VSCA 129
•22 May 2020
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2019 0070
| CLARE HAZELL-WRIGHT | Applicant |
| v | |
| 32 DOMAIN PTY LTD (ACN 163 035 603) | Respondent |
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| JUDGES: | TATE, McLEISH and HARGRAVE JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 6 February 2020 |
| DATE OF JUDGMENT: | 22 May 2020 |
| MEDIUM NEUTRAL CITATION: | [2020] VSCA 129 |
| JUDGMENT APPEALED FROM: | [2019] VCC 629 (Judge A Ryan) |
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PRACTICE AND PROCEDURE – Interlocutory appeal – Harman undertaking – Whether documents filed in Family Court proceeding subject to Harman undertaking – Where documents proposed to be used in subsequent proceeding – Where proposed defence in subsequent proceeding pleads abuse of process and estoppel – Whether sufficient connection between proposed defences and issues in Family Court proceeding – Unnecessary to decide.
PRACTICE AND PROCEDURE – Interlocutory appeal – Refusal to allow filing of amended pleadings – Pleadings likely to cause real difficulty at trial – Pleadings embarrassing – Leave to appeal refused.
PRACTICE AND PROCEDURE – Interlocutory appeal – Joinder – Refusal to grant leave to join director of respondent corporation – Not a necessary or proper party – Leave to appeal refused.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr T J North QC with Mr E Kelly | Nicholes Family Lawyers |
| For the Respondent | Mr C E Shaw SC with Mr D Porteous | SBA Legal |
TATE JA
McLEISH JA
HARGRAVE JA:
This application for leave to appeal involves a proceeding commenced by the respondent company in the County Court. Following numerous interlocutory steps in a Family Court proceeding between the applicant and her ex-husband Ian Wright — who is the sole director, secretary and shareholder of the respondent — agreement was reached and consent orders were made in the Family Court disposing of all matrimonial property and child custody issues between them. A key issue in the Family Court proceeding concerned the applicant’s claim to be entitled to an interim, and then final, right to occupy an apartment owned by the respondent which had been the family home occupied by the applicant, Mr Wright and their children at the time the marriage irretrievably broke down. In summary, Mr Wright relied upon a pre-nuptial Binding Financial Agreement between him and the applicant made pursuant to s 90B of the Family Law Act 1975 (Cth) (‘the Act’), which provided that the assets of the respondent would not form part of the matrimonial pool of assets available for distribution between the parties in the event that their marriage failed. In response, the applicant sought to set aside the binding financial agreement and, in addition, claimed that the apartment was owned on a constructive trust for her. She lodged a caveat to protect that asserted interest.
In the result, the Family Court proceeding was resolved on the basis of consent orders that Mr Wright would pay the applicant a lump sum and the applicant and their children would vacate the apartment within 60 days of receipt of that sum, and child custody and access orders. On the face of it, these orders might have been thought to reflect the conclusion of, at least, financial disputation between Mr Wright and the applicant. However, Mr Wright then caused the respondent to commence the County Court proceeding, in which the respondent claims damages from the applicant for some of the period during which she and the children of the marriage resided in the apartment when the Family Court proceeding was pending (‘the relevant period’). The suggested damages are loss of rental income estimated at $331,200 and, further or alternatively, holding costs of the apartment that would not otherwise have been incurred, together with interest and costs.
The applicant’s previous solicitors filed a short defence which set out the terms of a restraining order made in the Magistrates’ Court against Mr Wright in favour of the applicant and her children, referred to the Family Court orders and, on that basis alone, alleged that the applicant ‘was permitted … to remain in the Apartment’ during the relevant period.
Following a change of solicitors, the applicant’s current solicitors provided the respondent’s solicitors with a proposed amended defence and counterclaim and sought consent to its filing. Following correspondence from the respondent’s solicitors objecting to the proposed pleading, a further version of the proposed pleading was put forward. Again, the respondent refused to consent to its filing. The principal purpose of the proposed amended defence and counterclaim is to allege that, by reason of the failure of Mr Wright or the respondent to raise the current claims in the Family Court proceeding, the respondent is estopped from making the allegations in this proceeding by reason of cause of action estoppel, issue estoppel, Anshun estoppel, or abuse of process. The applicant also seeks to join Mr Wright as a defendant to the proposed counterclaim.
The respondent’s objections to the proposed amended defence and counterclaim are based on three grounds. First, the respondent contends that leave to file the amended pleading should not be granted because the proposed pleading is in many respects based upon, and indeed expressly refers to, affidavits filed by Mr Wright in the Family Court proceeding — and that such use of those affidavits and the information contained in them represents a breach of the applicant’s implied undertaking in the Family Court proceeding that she would not use those documents except for the purposes of that proceeding. This implied undertaking is often referred to as the Harman undertaking, a reference to the House of Lords case of Harman v Secretary of State for the Home Department.[1]
[1][1983] 1 AC 280 (‘Harman’).
In Hearne v Street,[2] Hayne, Heydon and Crennan JJ described the Harman undertaking in the following terms:
Where one party to litigation is compelled, either by reason of a rule of court, or by reason of a specific order of the court, or otherwise, to disclose documents or information, the party obtaining the disclosure cannot, without the leave of the court, use it for any purpose other than that for which it was given unless it is received into evidence. The types of material disclosed to which this principle applies include documents inspected after discovery, answers to interrogatories, documents produced on subpoena, documents produced for the purposes of taxation of costs, documents produced pursuant to a direction from an arbitrator, documents seized pursuant to an Anton Piller order, witness statements served pursuant to a judicial direction and affidavits.[3]
[2](2008) 235 CLR 125; [2008] HCA 36.
[3]Ibid 154–5 [96] (citations omitted).
Second, the respondent opposes leave to file the proposed amended pleading on the basis of its form — contending that the primary judge was correct to refuse leave because the proposed pleading fails to plead material facts supporting the alleged estoppels and abuse of process; that it is prolix and full of cross-referencing such that it is unintelligible in important respects; and that the respondent does not know the case it has to meet at trial with the required specificity.
Third, the respondent contends that Mr Wright should not be joined as a party.
The applicant filed a summons seeking leave to file her proposed amended pleading. Following extensive argument on two separate days, the primary judge refused to allow the proposed amended pleading, accepting all of the respondent’s objections. There were two published rulings given by the primary judge. The first, or principal, ruling — which will be referred to as ‘Reasons’ — was delivered on 13 May 2019.[4] The primary judge held that the Harman undertaking remained in force in relation to some of the affidavits filed in the Family Court proceeding and that the applicant was not permitted to refer to them in her proposed pleading. The second ruling was made before the primary judge made any orders, as a result of an application by the applicant for leave to reopen the argument.[5]
[4]32 Domain Pty Ltd v Hazell-Wright [2019] VCC 629 (‘Reasons’).
[5]32 Domain Pty Ltd v Hazell-Wright (No 2) [2019] VCC 793 (‘Supplementary Ruling’).
In the result, the primary judge gave the applicant leave to serve a further proposed further amended defence and, if the respondent did not consent to its filing, gave the applicant leave to apply for leave to amend by a specified date. The applicant’s summons was otherwise dismissed with costs. The applicant then applied for, and was granted, a stay of the County Court proceeding pending the hearing and determination of this application for leave to appeal. In the meantime, the trial of the County Court proceeding was vacated, in circumstances where it was in any event not ready to proceed.
Proposed grounds of appeal
The proposed grounds of appeal are in a wholly unsatisfactory form. They contend that the primary judge erred in dismissing the applicant’s summons seeking leave to file the proposed amended defence and counterclaim, and leave to join Mr Wright as a defendant to counterclaim, because the judge ‘erred in finding, as a matter of law and as a matter of fact, that leave should not be granted with respect to the [applicant’s] application’:
(1) to file an amended defence in the form provided (ground 1);
(2) that Mr Wright be joined in the proceeding as a defendant by counterclaim (ground 2); and
(3) to file a counterclaim in the form provided to the court (ground 3).
Proposed ‘grounds’ of appeal in this form do no more than assert error in refusing to grant the relief sought by the summons, without in fact providing any grounds of appeal. It is thus necessary to turn to the written case for the applicant to determine the grounds on which the judge’s order dismissing the summons is said to be in error. That is a quite unacceptable state of affairs. However, the parties have joined issue in their written cases and, helpfully, have agreed on the issues to be determined on the application for leave to appeal. Informed by that agreement, the issues for determination on this application are as follows:
(1) Does the Harman undertaking apply to prevent the applicant from using any, and if so what, affidavits filed by Mr Wright in the Family Court proceeding for the purposes of the County Court proceeding?
(2) If the proposed amended pleading did not offend the Harman undertaking, was it so embarrassing that leave to file it ought to have been refused?
(3) Should leave to join Mr Wright as a defendant to the proposed counterclaim have been granted?
Does the Harman undertaking apply to the proposed defence in the County Court proceeding?
It is now unnecessary to decide the Harman undertaking issue. Following discussion with this Court, the respondent agreed to cooperate with the applicant to approach the Family Court to seek a consent order that both the applicant and Mr Wright, and to the extent necessary the respondent, be released from the Harman undertaking for the purposes of the County Court proceeding. Those orders were eventually made by the Family Court on 11 May 2020. Thus, the only remaining issues for determination are whether the primary judge erred in the exercise of her discretion to refuse the applicant leave to file her proposed amended defence and counterclaim and to join Mr Wright as a defendant by counterclaim.
However, before turning to consider those issues, we note that in our view, without deciding the question, there was real merit in the applicant’s principal contention that the Harman undertaking did not apply to her proposed amended defences based on estoppel and abuse of process. Thus, if the issue had not become moot, we would have granted leave to appeal on that issue. We would not have refused leave on one basis pressed by the respondent, namely, that no substantial injustice was demonstrated because it was always open for the applicant to apply to the Family Court for a release from the Harman undertaking.[6]
[6]Since the question is moot, we say nothing about the second ground upon which the respondent asserted that there was no substantial injustice, namely that the applicant already had leave to serve an amended defence alleging estoppel and abuse of process providing she did not breach the Harman undertaking.
First, if the undertaking did not apply there was no need to seek its release — especially in circumstances where there was no indication by the respondent that it would consent to a release until this Court suggested in argument that a refusal to consent might constitute a breach of the respondent’s overarching obligations under the Civil Procedure Act 2010. Second, the respondent contended before the primary judge that the Harman undertaking prevented use of Mr Wright’s affidavits in the Family Court for pleadings in the County Court and in evidence at the trial, and that the respondent would not be obliged to discover Mr Wright’s affidavits because r 29.01.1(4)(a) of the County Court Civil Procedure Rules 2018 provides that documents already in the possession of another party need not be discovered. By this conduct, the respondent evinced an intention that any application to the Family Court for a release would likely be opposed.
Before the primary judge, the applicant contended that:
The Harman obligation does not apply where the purpose for which applicable documents are sought to be relied upon in a subsequent proceeding is directly connected with, and intimately related to, the purpose for which they were initially made available in the earlier proceeding.
Based on this general proposition, the applicant now contends that:
As submitted before [the primary judge] in respect of the contested affidavits, the purpose for which these documents are sought to be relied upon by the defendant in the County Court Proceeding is directly connected with, and intimately related to, the purpose for which they were initially made available in the Family Court Proceeding by the plaintiff’s directing mind, Mr Wright: namely, to determine, with respect to the Apartment, issues of legal and equitable interests in, and authority to use and occupy, the Apartment.
The applicant contends that this general proposition is supported by four cases: (1) Spalla v St George Motor Finance Ltd;[7] (2) Northbuild Construction Pty Ltd v Discovery Beach Project Pty Ltd (No 4);[8] (3) Gavan v FSS Trustee Corporation;[9] and (4) Findex Group Ltd v iiNet Ltd.[10]
[7](2004) 209 ALR 703, 717 [39]; [2004] FCA 1014, [39] (Ryan J) (‘Spalla’).
[8][2011] 1 Qd R 145, [44]-[47] (Chesterman JA in obiter dicta) (‘Northbuild’).
[9][2019] NSWSC 667 (Ward CJ in Eq).
[10][2019] NSWSC 1198 (Ward CJ in Eq).
In our view, these cases provide support for a general proposition that there is a class of subsequent cases between the same parties, or their privies, where the connection between the two cases has the result that the Harman undertaking in the earlier case does not prevent use of documents or information subject to that undertaking in the subsequent proceeding. In this case, the connection to the proposed estoppel and abuse of process defences is particularly strong, as those defences depend entirely for their existence on the whole of the issues in, and the conduct of, the Family Court proceeding. We note that the Family Court is not a court of pleading. Instead, the substance of the respective claims and defences are required to be set out in affidavits, verified financial statements and the like. If it were a court of pleading, estoppel and abuse of process claims such as the applicant now seeks to raise could readily be made by reference to pleading documents without raising any Harman issue.
In our view, there was much force in the applicant’s argument that each of the proposed defences ‘arises directly out of’[11] or is ‘legitimately’ connected[12] with the property settlement issues concerning the apartment which appear to have been finally resolved by the Family Court proceeding. Rather than using the documents for a purpose ulterior to the Family Court proceeding, the applicant seeks to use them to demonstrate that the respondent seeks to undermine the Family Court proceeding. In these circumstances, it does not appear that there is any ‘collateral’ or ‘ulterior’ purpose in the proposed use of the documents and information subject to the Harman undertaking in the Family Court in the County Court proceeding.[13] However, as already noted, we need not decide that question.
[11]Spalla (2004) 209 ALR 703, 716, [38]; [2004] FCA 1014, [38].
[12]Findex Group Ltd v iiNet Ltd [2019] NSWSC 1198, [45].
[13]Cf Northbuild [2011] 1 Qd R 145, 154-6 [38]-[54].
Was the proposed pleading embarrassing?
The proposed amended defence and counterclaim comprises 28 closely-typed pages. It clearly contains allegations which are evidence or, at best, particulars. On the other hand, it fails to plead material facts which are necessary elements of the alleged estoppels and abuse of process — or only refers to those essential elements in particulars. On the crucial issues, there is wholesale cross-referencing to earlier ‘pleadings’ in a manner which requires the reader to make a list of the facts which are said to give rise to each of the estoppels and the abuse of process.
Although there are only six main paragraphs in the proposed pleading, paragraph [2] contains 21 sub-paragraphs (some with particulars), including particulars referring generally to affidavits of Mr Wright in the Family Court – without specifying which paragraphs or the effect of the evidence contained in them – and paragraph [3] contains 40 sub-paragraphs, some with like particulars.
The critical estoppel allegations are contained in paragraph [4(d)], which alleges that all of the estoppels arise by reason of the applicant and her children residing in the apartment during the relevant period and by reason of the 30 sub-paragraphs above. The particulars to paragraph [4(d)] comprise three pages of single-space typing – apparently designed to take the place of pleading the material facts supporting each essential element of the three estoppels. In these circumstances, we agree with the primary judge that paragraph [4(d)] of the proposed amended defence is embarrassing.[14] We note further that a pleading in that form is likely to cause real difficulty at trial. It is no answer to say that, at trial, the trial judge is likely to order a statement of issues be agreed between the parties or settled by the court.
[14]Reasons [15]-[22].
For these reasons, the applicant has failed to establish any error of the requisite kind in the primary judge’s interlocutory and discretionary decision, on a matter of practice and procedure, in refusing to allow the proposed amended defence and counterclaim to be filed.[15] There is no injustice, let alone substantial injustice, as the applicant was given leave to apply to file and serve a further version of an amended defence and counterclaim which was not embarrassing in the manner we have described, and as found by the primary judge. The restriction imposed by the judge, by reason of the Harman undertaking, on the proposed pleading in respect of which she granted leave, will no longer apply. The applicant has no real prospect of success on the pleading issue.
[15]House v The King (1936) 55 CLR 499, 505.
Should leave have been given to join Mr Wright as a defendant to the counterclaim?
The proposed counterclaim sought declaratory relief against Mr Wright in the form of declarations that, in effect, he was estopped from causing the respondent to bring the County Court proceeding, that this proceeding constitutes an abuse of process by him, and that he should be held personally liable for the costs of the proceeding. The primary judge was unpersuaded that the proposed counterclaim enjoyed any prospect of success.[16]
[16]Reasons [32].
As to the proposed estoppel declaration, the primary judge held that Mr Wright has made no claim in respect of which an estoppel could lie.[17] That was clearly correct.
[17]Ibid [26].
As to the proposed declaration that the County Court proceeding constitutes an abuse of process by Mr Wright, similar reasoning applies. Of course, the proceeding by the respondent is said to be an abuse of process because of the actions of Mr Wright in causing it to commence the proceeding.[18] He may well be an important witness in the County Court proceeding. But that does not mean that Mr Wright is a necessary or proper party to the proceeding.
[18]For example, UBS AG v Tyne (as trustee of the Argot Trust) (2018) 360 ALR 184, 197 [45]-[46]; [2018] HCA 45, [45]–[46].
As to the proposed declaration that Mr Wright is personally liable for the costs of the proceeding, that is not a proper or necessary reason to seek to join him. As the prayer for relief to the proposed counterclaim discloses, this aspect of the counterclaim does no more than rehearse the submissions which the applicant intends to make in support of an application to be made, in the event that she is successful in defending the proceeding, that a costs order should be made against Mr Wright personally – as the sole person in control of the respondent.[19] In the event that the applicant is successful in the County Court, she can apply for a costs order against Mr Wright personally (if he is on notice), without the need to join him as a party. Once again, no error of the requisite kind[20] has been demonstrated. The applicant had no real prospect of success on the joinder issue.
[19]Knight v FP Special Assets Ltd (1992) 174 CLR 178; [1992] HCA 28.
[20]House v The King (1936) 55 CLR 499, 505.
Conclusion
For the above reasons, while we are of the view that the Harman undertaking issue which was sought to be raised on appeal is well arguable, it became unnecessary to determine that issue by reason of events occurring during and after the hearing of the application for leave to appeal. The pleading and joinder issues have no real prospect of success. For these reasons, leave to appeal will be refused on all grounds. Subject to argument, our preliminary view is that the costs of the application for leave to appeal should, nevertheless, be the costs of each party in the County Court proceeding.
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