Jennings v McCullagh - [2022] TASSC 22

[2022] TASSC 22

COURT: SUPREME COURT OF TASMANIA

CITATION: Jennings v McCullagh [2022] TASSC 22

PARTIES:  JENNINGS, Desmond Perce David
  v
  McCULLAGH, Andrew Paul Bryan

FILE NO:  1770/2021
DELIVERED ON:  13 April 2022
DELIVERED AT:  Hobart
HEARING DATE:  30 March 2022
JUDGMENT OF:  Blow CJ

CATCHWORDS:

Courts and Judges – Contempt – Particular contempts – Breach of undertaking to court – Implied undertaking – Extracts from discovered documents published on Facebook site.
Hearne v Street [2008] HCA 36, 235 CLR 125, referred to.

Aust Dig Courts and Judges [145]

REPRESENTATION:

Counsel:
             Applicant:  D F M Zeeman
             Respondent:  In person
Solicitors:
             Applicant:  Butler McIntyre & Butler

Judgment Number: [2022] TASSC 22
Number of paragraphs: 40

Serial No 22/2022
File No 1770/2021

DESMOND PERCE DAVID JENNINGS
v ANDREW PAUL BRYAN McCULLAGH

REASONS FOR JUDGMENT BLOW CJ

13 April 2022

This is an application for a litigant to be fined for contempt of court. The applicant is the general manager of the Northern Midlands Council ("the council"). The respondent is a ratepayer who operates a Facebook site entitled "Northern Midlands Council Watch". In 2020 the applicant commenced an action against the respondent in this Court claiming damages for defamation in respect of material published by the respondent, including material published on that Facebook site. That action is still pending. In July 2021, after the applicant had made discovery in that action, the respondent published material from the discovered documents on the Facebook site. Publishing those documents without the leave of the Court amounted to contempt of court, for reasons that I will explain. The respondent has conceded that he is guilty of contempt.
In civil litigation, there is a well established rule that, when a litigant is compelled to make discovery of documents to another party to the litigation, that other party may not use the documents or information derived from them for any purpose unrelated to the conduct of the proceedings: Harman v Secretary of State for Home Department [1983] 1 AC 280; Hearne v Street [2008] HCA 36, 235 CLR 125. Contravention of that rule amounts to contempt of court. For many years, courts have said that a party who receives or inspects discovered documents gives an "implied undertaking" not to use the documents or information from them for a purpose unrelated to the conduct of the proceedings. The rule in question does not apply if the court gives leave for the documents or information to be published or used, or if the material has been received into evidence.
The principal reasons for the existence of the relevant rule were summarised by Kirby J in Hearne v Street (above) as follows, at [51]:
"·   Materials prepared for use in court may sometimes be provided under legal compulsion and are deserving of protection on that basis;
·   Such materials may occasionally disclose private, confidential or secret information in respect of which the disclosing party might wish to seek protection at the trial from the court concerned;
·   The material is not, as such, evidence in court until formally received, and some such material might be excluded by the court as irrelevant, objectionable, unfairly prejudicial or otherwise inadmissible; and
·   Judicial supervision of the admission of evidence in a trial affords protection not only to those providing the evidence and to the parties to the proceedings, but also to third parties and the public, whose interests might be affected adversely by the privileged publication, and consequent republication, of the evidence."
In that case, at [105], Hayne, Heydon and Crennan JJ traced the history of the development of the "implied undertaking" concept. During the 19^th century the restriction on the use of discovered documents depended on an express undertaking, but from at least 1857 it was said that there was a rule that, where documents were produced in obedience to an order of a court, they were never to be used except under the authority of the court. The use of the term "implied undertaking" can be traced back at least as far as 1948.
In Hearne v Street, Hayne, Heydon and Crennan JJ also said the following, at [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."
At [46], Kirby J said that, "the so-called 'implied undertaking' of non-disclosure should now be viewed as, in truth, an obligation imposed by the law on those subject to its requirements".

The facts

During 2018 the council was considering a proposal that it acquire some land for the purpose of a stormwater project. In relation to that project, emails and valuation documentation were sent to it by an officer of a State Government department. At a council meeting on 10 December 2018, the project was discussed and a decision was made. The part of the meeting during which the stormwater project was discussed was closed to the public pursuant to reg 15 of the Local Government (Meetings Procedures) Regulations 2015 because it involved the discussion of commercial information of a confidential nature. The council was contemplating the acquisition of some land, and did not want to make public its information in relation to an appropriate price.
In the defamation proceedings, the applicant's solicitors prepared a list of documents which he verified by an affidavit affirmed on 19 May 2021. The respondent inspected the discovered documents on 7 July 2021. He requested copies of some of the documents, and they were provided to him on that day. In particular, he was provided with copies of the emails and valuation documentation that I have referred to, a report presented during the closed part of the meeting of 10 December 2018, and the minutes of the closed part of the meeting when the proposed acquisition was discussed.
On 12 July 2021 the respondent published an extract from the relevant report and the relevant minutes on his "Northern Midlands Council Watch" Facebook site. I accept that he did not know that it was unlawful for him to do so.
The applicant's solicitor became aware of the publication of the documents on the Facebook site on 12 July 2021. Two days later, on 14 July, he sent the respondent a letter by email, together with a copy of the High Court's decision in Hearne v Street (above). His letter included the following:
"The use of discovered documents for any purpose other than in the proceeding which they were discovered is a contempt of Court. For your benefit, I attach a copy of the decision of the High Court of Australia in Hearne v Street (2008) 235 CLR 125 relevant to this issue.
I am instructed to give you notice that unless the documents referred to above are immediately removed from your Facebook posts I will apply to the Court for an injunction that your Facebook site be taken down and for any other sanction that the Court considers appropriate against you.
Unless I have a confirmation from you by the close of business today that you have complied with this demand you can expect to be served with an appropriate application to the Court. Should that become necessary, I will produce a copy of this letter to the Court in support of such an application and in support of an application that you pay the costs of that application."
The applicant was, and still is, defending the defamation action without legal representation. He is a property developer by occupation. He may well have found Hearne v Street difficult to digest. That was not a case about discovery. It was a case about the Luna Park amusement park on the foreshore of Sydney Harbour. Two individuals were charged with contempt after sending to a Minister of the Crown part of an expert report provided in proceedings to which they were not parties. Hayne, Heydon and Crennan JJ made it quite clear at [96] that the "implied undertaking" principle applies to documents inspected after discovery, referring to relevant English and Australian cases in footnote 94, but the respondent's attention was not drawn to that passage or any other.
On Thursday, 15 July 2021 he responded to the letter with an email, which read as follows:
"Daniel
I am still working through this.
I am not convinced your argument is 100% valid.
In saying that I don't intend any unfair dealings.
I will likely remove with [sic] Post later today with commentary on where I think things are at, and we can get an adjudication Monday from Associate Justice Holt.
Regards
AM."
The published material was still on the Facebook site on the following morning. At some stage the respondent also published the applicant's solicitor's letter of 14 July on the Facebook site.
At the hearing of this application, the respondent told me that he took down the extracts from the discovered documents on either 16 July or 17 July. That assertion was not contradicted.
On 19 and 20 July 2021 Holt AsJ heard an interlocutory application in the defamation proceedings. The respondent attended that hearing. The applicant was seeking an extension of time in respect of four items published by the respondent more than one year before the issue of the writ. He was unsuccessful. Nothing was said during those proceedings about the improper publication of material from discovered documents on the Facebook site.
On or about 21 July 2021 the respondent published four pages of the minutes of the meeting of 10 December 2018 on his Facebook site. The applicant saw them on that site on 22 July. The application that is now before me was filed on 23 July.
Holt AsJ conducted a directions hearing in relation to both the defamation action and this contempt application on 30 July 2021. In the defamation proceedings, he granted an interlocutory injunction restraining the respondent from disclosing any document or information coming to his attention by reason of the applicant's discovery of documents, without leave of the Court, other than for the purposes of the litigation. He adjourned the contempt proceedings. He made it quite clear to the respondent that it was unlawful for him to post anything from the applicant's discovered documents on his Facebook site without leave of the Court.
The directions hearing concluded at 3.07pm. At 3.30pm the respondent sent an email to the applicant's solicitor, containing an apology which he asked him to forward to his client. The apology, addressed to the applicant, read as follows:
"Dear Sir
Please accept my unreserved apology for posting content pertaining to the current Defamation Action obtained through discovery, on the Northern Midlands Council Facebook watch site.
I have been advised by the Associate Justice of the Supreme Court such is not lawful, nor in the spirit of the process, and my actions were not appropriate.
Should you be accepting of this apology I will happily run this letter on the NMCFBW site, as at no stage do I intend to engage with you ion a [sic] unfair manner.
I will also attend to compensation for the inconvenience caused.
Regards and Thanks
Andrew McCullagh"
The last sentence in that communication appears to have been a promise to pay the costs of the contempt and injunction proceedings.
That apology was rejected as unacceptable. The applicant's solicitor emailed a letter to the respondent on 2 August 2021 in which he said this:
"I am instructed that apology emailed to my office is wholly unacceptable to my client. Attached is the form of the apology my client requires of you, which is to be published on your Facebook page entitled 'Northern Midlands Council Watch' and which is to be dated and personally signed by you and delivered to my office in hard copy."
The accompanying form of apology read as follows:
"On 7 July 2021, I inspected documents produced by Mr Jennings in his Supreme Court of Tasmania defamation action against me. In breach of the implied undertaking I gave not to use such documents for any purpose other than in that action, and in contempt of the Supreme Court of Tasmania, I published parts of some of the documents I had inspected on this Facebook page on 12 July 2021. As a result of that publication, Mr Jennings' lawyers wrote to me and gave me notice that my publication of those documents was unlawful. Despite that warning, I published further parts of those documents on 16 and 22 July 2021 in further breach of the implied undertaking referred to above and in further contempt of the Supreme Court of Tasmania. As a result of my actions, Mr Jennings obtained an injunction against me on 30 July 2021 preventing me from further publishing copies of any of Mr Jennings' documents I have inspected and giving me notice that if I breach that injunction I am liable to imprisonment or sequestration of my property. Also, as a result of my actions, Mr Jennings has applied to the Supreme Court of Tasmania that I be fined for my contempt. By this publication, I give notice that I apologise unreservedly to Mr Jennings for the breaches of my implied undertaking and for my contempt of the Supreme Court of Tasmania. I have also agreed to pay all of Mr Jennings' legal costs relating to his applications to the Supreme court of Tasmania as a result of my actions."
The respondent refused to sign and publish an apology in the form demanded, apparently because he had not knowingly given an implied undertaking, and had, at least initially, no idea that he was committing a contempt.
Nine minutes after the applicant's letter was sent to him, the respondent replied by email, as follows:
"Hi Daniel
I will look at this later but i suspect we will not be able to agree on this.
The content as i read it is not correct. I am only able to agree to factual and actual occurrences and not something contrived for public opinion.
I will take a look later and adjust ... outside of that i will face the list the matter for a further hearing and state my position.
This email is in good faith ... But it needs to work both ways."
The respondent sent the applicant's solicitor a further email on the following morning, 3 August:
"Hi Daniel
I have looked at the prepared apology and I as previously indicated, I cannot and will not sign such.
As indicated last week to yourself and the Associate Judge, I considered it unlikely we would be able to achieve a result.
It is simply not factual and is the words of the Plaintiff not me.
If you [sic] client doesn't want an apology, please advise and I will review my position and we can set the matter down again to deal with it or simply deal with September 14th.
I will be posting also post that the General Manager refused my apology."
There has been a stalemate ever since. The applicant's solicitors gave the respondent a second chance to sign and publish the apology drafted by them. They sent him the draft again by an email on 9 August 2021. He responded later that day as follows:
"Hi Daniel
Thanks for your email.
I again reiterate I will not be signing the document you have provided, and confirm that I have provided the form of apology I am prepared too [sic] provide to your client. It is succinct and while your client wishes to go on about an 'implied undertaking', I knew nothing about that until it was clarified by the Court. You would have noted in my affidavit that I was actually in agreement with the outcome prior to Associate Judges Holts ruling.
I cannot sign that document or I would find myself again in a contempt of court by signing an untruthful document, aside from the Principals [sic] around such.
It seems your client likes to try and assert some form of authority when he finds himself on the back foot and actually is digging a bigger and bigger hole for himself. I also remind your client, that while documents are privileged at this point they become public when presented in evidence as was stated in Court. He can ponder that point also.
Additionally you suggested the costs would be $750 to $1000 and now seem to have escalated to something substantially greater. I have no doubt at the request of your client as opposed to any rational process for assessing such.
That point is insulting and actually places us further apart in any likely compromise.
I will also remind your client, he has a pending costs matter for the previous matter that I am yet to claim which will be far higher.
I may have made a small error it [sic] on this occasion, and again apologise to you and your client for that, but I can assure you to [sic] will not happen again, and I remain extremely confident in my position for the remainder of this matter. The number of people wishing to provide evidence s quite incredible.
It would appear from what I am understanding, your client has far greater matters fronting him than the terms of an [sic] small apology from myself. It may be a case your client is not even with council on September 14th, but we will have to see how matters unfold.
All of the above rhetoric aside, I am prepared to provide the apology in the format provided previous, publish unequivocally on the NMCW FB page, and pay the sum of $1000.00 for costs.
I continue to work with you to achieve an outcome but it appears that the attitude of your client is never likely to change. Such is life.
Regards and Thanks for your efforts Daniel, I appreciate the sometimes difficult position you find yourself in.
I reamin [sic] willing to compromise where possible."
The result of all this is that the apology offered by the respondent on 30 July 2021 was not accepted, that no other written apology has been offered, and that no apology has been published on the Facebook site. At the hearing of the contempt application, the respondent took the opportunity to apologise unequivocally to the applicant and the Court.
I am not able to make a finding as to the extent to which the respondent's publication of the discovered material was motivated by concerns about the expenditure of rate payers' money, nor the extent to which the publication was motivated by hostility towards the applicant. It may be that both motives were present.
There is no suggestion that the council was in any way disadvantaged by the publication of the material to which this application relates. I infer that it was appropriate for the council to keep the material confidential in December 2018 when negotiations for the purchase of real estate were anticipated or perhaps pending, but that no acquisition were contemplated when the improper acts of publication occurred in July 2021.

Penalty

When the respondent first published extracts from the discovered documents on 12 July 2021, he did not know that what he was doing was against the law.
When the applicant's solicitor told him that the publication of the material was against the law, he evidently was not willing to take his word for that, but he removed the offending material from the Facebook site within days.
When he published material from a discovered document on the second occasion, he should have known better. It took application to the Court to get him to take the material down.
The applicant's solicitor/counsel, Mr D Zeeman, relied at the hearing on the various emails relating to the respondent's rejected apology and the applicant's proposed apology. In essence, his contention was that the respondent was not appropriately contrite. The gravamen of his submission was that the respondent, in his apology of 30 July 2021, failed to acknowledge that his contempt continued after he received the emailed letter of 14 July 2021 informing him that what he had done was a contempt of court, and forwarding a copy of the decision in Hearne v Street so that he could understand why that was so.
The inappropriate material was on the Facebook site for less than three weeks. The council was not financially disadvantaged. But for intransigence on the part of the applicant and/or his solicitor, an apology would have been published on the respondent's Facebook site months ago. The respondent will have to pay a substantial sum by way of costs. In the circumstances, I think a small fine is an appropriate penalty.

Section 7(e) of the Sentencing Act 1997 makes it possible for a fine to be imposed without a conviction being recorded. It counts in the respondent's favour that the first publication of the relevant material occurred when he was understandably ignorant of his obligations, that the council was not financially disadvantaged, and that there is no evidence as to prior offending or bad character. If I impose a conviction, that could have inappropriate consequences for the respondent in all sorts of contexts, including commercial dealings, visa applications, and the obtaining of insurance cover. In the circumstances, I think it appropriate to fine the respondent $300 without recording a conviction.

Costs

At the conclusion of the hearing, counsel for the applicant sought an order that the respondent pay the applicant's costs on an indemnity basis. After I explained to the respondent what that meant, he accepted that there should be an order for costs against him, but made a submission to the effect that costs should be ordered on a party/party basis.
Mr Zeeman submitted that I should order costs on an indemnity basis because the respondent was unwilling to acknowledge in a public apology that his contumacious conduct had continued after the warning letter of 14 July 2021. No other basis for an indemnity costs order was suggested.
An indemnity costs order is generally only made if "there is some special or unusual feature in the case to justify the court exercising its discretion in that way": Preston v Preston [1982] 1 All ER 41 at 58; Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 at 232-233; Zhao v T R & K R Shipton Pty Ltd [2017] TASFC 5 at [4]. Indemnity costs "serve the purpose of compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the Court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs": Hamod v New South Wales [2002] FCA 424, 188 ALR 659 at [20]; Zhao at [5].
Generally courts are more reluctant to make orders for indemnity costs against unrepresented litigants than against represented litigants: Ogawa v University of Melbourne (No 2) [2004] FCA 1275 at [42]; Bhagat v Royal & Sun Alliance Assurance Australia Ltd [2000] NSWSC 159 at [13]; Zhao at [6].
The respondent was sincere in his apology of 30 July 2021. He was willing to apologise publicly and unreservedly and to pay the applicant's costs of the contempt application. He had no legal or moral obligation to make a public confession as to just how bad his contempt had been. A sincere apology in his own words may well have made it far clearer to the public how contrite he was than an apology that had very conspicuously been drafted by his opponent's lawyer. In the circumstances, I am not persuaded that I should make an order for indemnity costs.

Conclusion

For these reasons, my orders are as follows:
1 That the respondent pay a fine of $300 within 28 days.
2 That the respondent pay the applicant's costs of and incidental to the originating application on a party/party basis.