Jess & Jess (No 10)
[2023] FedCFamC1F 1013
•29 November 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Jess & Jess (No 10) [2023] FedCFamC1F 1013
File number MLF 3444 of 2006 Judgment of WILSON J Date of judgment 29 November 2023 Catchwords FAMILY LAW – MAJOR COMPLEX FINANCIAL PROCEEDINGS LIST – application to restrict production of protected matter from a named person – held, application refused. Legislation Family Law Act 1975 (Cth) Cases cited Jess & Jess [2021] FedCFamC1F 24 Division Division 1 First Instance Number of paragraphs 35 Date of last submissions 15 November 2023 Date of hearing 15 November 2023 Place Melbourne Counsel for the applicant Mr G Dickson KC Solicitors for the applicant Kenna Teasdale Lawyers Counsel for the second respondent Mr J Mereine and Mr Lum Solicitors for the second respondent HWL Ebsworth Lawyers Counsel for the first intervener Ms N Papaleo Solicitors for the first intervener Lander & Rogers Solicitors for the second intervener Baker McKenzie Counsel for the second intervener Mr P Liondas SC with Mr C Tsang ORDERS
MLF 3444 of 2006 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN MS JESS
Applicant
AND MR J AS LEGAL PERSONAL REPRESENTATIVE FOR MR JESS SNR (DECEASED)
First Respondent
MR JESS JNR & ORS (SECOND TO TWENTY-NINTH RESPONDENTS - THE REPRESENTED THIRD PARTIES)
Second to Twenty-Ninth respondents
MR K AND MR L AS TRUSTEES OF THE BANKRUPT ESTATE OF MR JESS SNR
First Intervener
AO PTY LTD
Second Intervener
ORDER MADE BY
WILSON J
DATE OF ORDER
29 NOVEMBER 2023
THE COURT ORDERS THAT
1.Paragraph 2 of the represented third parties’ application in a proceeding filed 18 October 2023 is dismissed.
2.No orders are made as to costs.
3.Any application for costs supported by affidavit material and submissions must be filed and served by midday on 8 December 2023.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym of Jess & Jess has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
WILSON J
INTRODUCTION
By application in a proceeding filed 18 October 2023, the represented third parties applied for a variation of paragraph 2 of the consent orders made on 18 September 2023.
The specific variation was for the inclusion of a new paragraph 2A in the following terms –
2A.Until further order, paragraph 2 above does not apply to [Mr AN] so as to permit him to receive from the Trustees (or their legal representatives) any accounts or reports of the Primary Proceedings disclosing the Protected Matter, including documents and information whether existing or pertaining to the future conduct of the Primary Proceedings.
AO Pty Ltd, the entity affected by the proposal in paragraph 2A, sought orders dismissing the application in a proceeding filed 18 October 2023.
As these reasons reveal, I am of the view that the application to include the proposed paragraph 2A as amendments to paragraph 2 to the 18 September 2023 consent orders should be dismissed. No basis has been demonstrated to exclude Mr AN from the operation of the 18 September 2023 orders.
RELEVANT FACTUAL SETTING
This litigation has been on foot for many years at very considerable cost to all parties. The wife, as applicant, has availed herself of litigation funding in order to continue with the proceeding.
The factual setting of the represented third parties’ application in paragraph 2A of their application in a proceeding was recorded in the affidavit of Mr AP made 11 November 2023. Some details about the litigation funding in this litigation was recorded in my decision in Jess & Jess[1] judgment in which was handed down on 8 September 2021. On the return of this application, Ms Papaleo of counsel for the trustees-in-bankruptcy informed me that only some aspects of my decision handed down on 8 September 2023 continued to be relevant.
[1] [2021] FedCFamC1F 24.
Mr AP deposed to being the solicitor for AO Pty Ltd. That is an anonymised name. Other pseudonyms were used in Mr AP’s affidavit. The more important matters that arose from his affidavit were as follows –
(a)on 7 July 2022, the trustees-in-bankruptcy commenced a proceeding in the Federal Court of Australia which is described as “the disclaimer proceeding”;
(b)the disclaimer proceeding relates to the terms pursuant to which the wife has been funded to advance the litigation in this court (before me and on appeal from any decisions by me);
(c)in substance, in the disclaimer proceeding the trustees-in-bankruptcy of the husband seek to extinguish any secured liability or obligation which the husband’s bankrupt estate owes to AO Pty Ltd;
(d)on 4 November 2022 McElwaine J of the Federal Court made orders in the disclaimer proceeding concerning redacting court documents to prevent the disclosure of information about, among other things, AO Pty Ltd’s funding arrangements which were to be kept confidential from the represented third parties;
(e)AO Pty Ltd is actively defending the disclaimer proceeding;
(f)in the disclaimer proceeding, one issue is the extent to which the bankrupt and his estate have benefitted from AO Pty Ltd’s provision of funding to the wife, having regard to the complexity of the proceeding in this court;
(g)material (described as “the protected matter”) is required in the disclaimer proceeding that sets out the names of the parties in this proceeding in this court, the factual background to this proceeding, the procedural history to this proceeding, court documents filed, reasons for judgment handed down and orders in this proceeding;
(h)AO Pty Ltd has authorised Mr AN to give instructions on its behalf in the disclaimer proceeding;
(i)Mr AP believes that Mr AN was involved in negotiating the funding provided by AO Pty Ltd for this litigation in this court; and
(j)Mr AN may be a witness in the disclaimer proceeding.
Before addressing other relevant aspects of Mr AP’s affidavit, it is utile to explain the regime recorded in the 18 September 2023 consent orders.
To those orders were attached –
(a)a definition section;
(b)annexure A;
(c)annexure B; and
(d)annexure C.
Annexure B identified six persons who were to give undertakings in the form for which provision was made in annexure A. Annexure C was headed “confidentiality undertaking from persons not named in annexure B”.
The manner in which each undertaking operated is addressed below.
Pursuant to paragraph 1 of the consent orders made 18 September 2023 the six persons named in annexure B who have given undertakings in the form of annexure A were entitled to receive from the trustees reports of this proceeding (being the defined term “primary proceeding” in the definitional section of the annexures to the orders) disclosing protected matter.
Pursuant to paragraph 2 of the consent orders, any person meeting one of the descriptions in annexure C (other than one of the six persons named in annexure B) and who gave an undertaking in the form of annexure C was permitted to receive from the trustees one or more accounts or reports of the primary proceeding disclosing the protected matter so long as the preconditions in paragraph 2.1 and 2.2 of the consent orders made 18 September 2023 had been satisfied.
It is unnecessary to address the undertaking in annexure A because Mr AN was not a person named in annexure B. Annexure C was the relevant document for the form of any undertaking to be given by Mr AN. While in ordinary circumstance it would better explain my path of reasoning in this decision if I were to set out the precise terms of the undertaking in annexure C, having regard to the commercial sensitivity of this application it is desirable for me to do no more than refer to the substantive operation of the provisions in the undertaking recorded in annexure C.
The undertaking was expressed to apply to persons who fell within any one of three categories of applicability. In the first category was a person who gave instructions in court in the disclaimer proceeding. In the second category was a person who was said to be a person who “will be called as a witness” in the disclaimer proceeding. The words in quotations are taken verbatim from annexure C. In the third category was a person in respect of whom it was “contemplated that (he or she) may be called as a witness on behalf of a party in the disclaimer proceeding.” Again, the words in quotations are taken verbatim from the wording of annexure C.
As has already been recorded, Mr AP deposed that Mr AP believed Mr AN is authorised by AO Pty Ltd to give instructions and that Mr AN may be called as witness on the basis that he (Mr AN) was involved in negotiating the funding provided by AO Pty Ltd for the litigation in this court.
Mr AN’s relevance to the three categories of annexure C appeared to be the first and third described above, namely, as a person engaged in the giving of instructions on behalf of AO Pty Ltd in the disclaimer proceeding and as a person who may be called as a witness on behalf of AO Pty Ltd in the disclaimer proceeding.
In essence, the represented third parties have sought the modification to the 18 September 2023 consent orders by the inclusion of the proposed paragraph 2A because they (or one or other of the several corporate entities among them by its controlling director) asserts that Mr AN is a director of AQ Pty Ltd, a competitor. They argue that any undertaking from Mr AN is worthless as he will not comply with the terms of the undertaking and that once the protected matter is in Mr AN’s hands he will disseminate it to the detriment of the represented third parties.
Both Mr AP and Mr AR, the solicitor for the represented third parties, exhibited to the affidavits of each various correspondence in the period 11 September 2023 to 17 October 2023. The following is an encapsulation of the more important matters that emerged from that chain of correspondence –
(a)on 11 September 2023 the solicitors for AO Pty Ltd disclosed to the represented third parties’ solicitors that Mr AN would be a recipient of the protected matter;
(b)on 15 September 2023 the represented third parties’ solicitors wrote to the solicitors for Haast stating that in order for them (the solicitors for the represented third parties) to consider their clients’ position in relation to the proposed disclosure, they needed details of the capacity in which Mr AN would receive the protected matter and why Mr AN will give instructions on behalf of AO Pty Ltd when another director of AO Pty Ltd could do so;
(c)on 25 September 2023, AO Pty Ltd’s solicitors wrote to the represented third parties’ solicitors stating that Mr AN will be assisting AO Pty Ltd to give instructions in the disclaimer proceeding, that more than one instructor is common in legal proceedings and that there was no reasonable basis to refuse to consent to Mr AN receiving the protected matter having regard to Mr AN’s willingness to execute the confidentiality agreement;
(d)on 27 September the solicitors for the represented third parties wrote to the solicitors for AO Pty Ltd pointing out that it had not been stated how Mr AN could give instructions in the disclaimer proceeding where he was the general manager of AQ Pty Ltd nor had Mr AN’s connection with AO Pty Ltd been identified;
(e)on 5 October 2023 the solicitors for AO Pty Ltd wrote to the represented third parties’ solicitors stating that Mr AN was to give instructions to AO Pty Ltd and that Mr AN was contemplated as being a witness;
(f)on 6 October 2023 the solicitors for the represented their parties wrote to the solicitors for AO Pty Ltd stating that the information given concerning Mr AN was “evasive” (their word), that for the first time a different basis was being relied on for Mr AN to receive the protected information and that “in the absence of a straightforward and satisfactory response” (their words) the represented third parties did not consent to the protected matter being supplied to Mr AN;
(g)on 12 October 2023 the solicitors for AO Pty Ltd sent an email to the represented third parties’ solicitors attaching an executed confidentiality agreement pursuant to which Mr AN (as the giver of the undertaking) stated that is was contemplated that he may be called as a witness in the disclaimer proceeding;
(h)on the same day (12 October 2023) Mr AP sent an email to Mr AR stating that Mr AN had executed the relevant confidentiality undertaking and that AO Pty Ltd would be proceeding to provide Mr AN with the protected matter;
(i)later still on 12 October 2023, the represented third parties’ solicitors sent an email to Mr AP pointing out that the protected matter must only be provided by the trustees (not by AO Pty Ltd) and that the protected matter must not be provided unless and until a period of five days had expired after the filing and service of the confidentiality undertaking and that AO Pty Ltd was not permitted to provide the protected matter to Mr AN because only the trustees could do that;
(j)on 13 October 2023 the solicitors for the represented third parties did not object to, (relevantly), Mr AN receiving the protected matter so long as his undertaking was filed with the court and not less than five days elapsed from the filing of the undertaking and the provision of the protected matter;
(k)later on 13 October 2023 the solicitors for AO Pty Ltd wrote to the solicitors for the represented third parties pointing out the consent of the represented third parties was not required;
(l)it was asserted that Mr AN’s undertaking was not in the form provided for in annexure C to the 18 September 2023 orders because Mr AN did not state his occupation nor did he state with what organisation he worked; and
(m)on 17 October 2023 the solicitors for the represented third parties wrote to the solicitors for AO Pty Ltd stating that the undertaking given by Mr AN did not comply with the form of undertaking recorded in the 18 September 2023 consent orders in that AO Pty Ltd was being evasive about Mr AN, that Mr AN failed to provide an undertaking in complete conformity with the form of annexure C, that Mr AN’s allegedly inexplicable assertion that his address was an accountant’s offices, that the statement that AO Pty Ltd would provide Mr AN with the protected matter and an asserted “fundamental misapprehension of the reasons for the safeguards” (those were the words of the 17 October 2023 letter).
CONSIDERATION
It will suffice for the purposes of these reasons to record that in the disclaimer proceeding, the trustees have applied to the Federal Court to disclaim a funding agreement on the basis that the success fee payable following the determination by Bennett J is excessive. One issue in the disclaimer proceeding is whether the lending contract is unprofitable on the basis that the lender receives what Ms Papaleo of counsel described as “an enormous amount of money for a very small contribution”.[2]
[2] Transcript 18 September 2023 T 5 L 3.
The trial of the disclaimer proceeding has been fixed for a date in July 2024.[3] The represented third parties are not involved, according to Mr Lum of counsel.
[3] Transcript 15 November 2023 T 74 L 38 – T 75 L 11.
Before addressing the submissions of the represented third parties on the arguments advanced before me on 15 November 2023, it is important to point out the way in which the provisions in paragraphs 2.1 and 2.2 of the 18 September 2023 orders operated. Paragraph 2.1 provided for the undertaking in the form of annexure C to be filed with the court and served on the solicitors for each of the other parties. Paragraph 2.2 provided that a period of five days was required to elapse between the filing and service of the signed undertaking and the disclosure of the protected material.
It will be noticed that paragraph 2 of the 18 September 2023 consent orders contains no substantive stipulation that the person providing the undertaking –
(a)is required to provide to the satisfaction of a party to this litigation that the person giving the undertaking has any particular occupation; nor
(b)is required to answer questions put to that person by any person, relevantly, by the solicitors for the represented third party.
Each of the three alternatives of clause 1 of annexure C requires the person giving the undertaking to provide a title at an organisation.
There is no provision in paragraph 2 of the consent orders by which a party in this litigation can object to a person who gives an annexure C undertaking being permitted to receive from the trustees the protected matters provided that the two elements in paragraphs 2.1 and 2.2 are satisfied. Those provisos do not speak of the need for the giver of the undertaking to state his or her address or occupation. That may be for the very sound reasons that the import of the undertaking is the party giving the signed undertaking agreeing to the terms of the undertaking. For that matter, a person giving a signed undertaking may change address or even occupation without invalidating the undertaking. It must not be overlooked that a witness giving evidence on oath in court at trial is sometimes relieved of the need to state his or her addresses or occupation.
The consent orders contain no provision to permit interrogation of a person who otherwise gave a signed undertaking that embedded word-perfectly paragraphs 2 to 13 of annexure C. Further, paragraph 2 of the consent orders did not empower a party to this litigation (here, the represented third parties) to dictate the circumstances in which the trustees might be permitted to provide the protected matter to a person who gave a signed undertaking that –
(a)identified which of the three alternatives in clause 1 were applicable; and
(b)otherwise contained the undertaking and statements in paragraph 2 to 13 of annexure C.
I gave leave to AO Pty Ltd to make submissions in the application that I heard on 15 November 2023. Counsel for AO Pty Ltd provided written submissions dated 14 November 2023 to which Mr Liondas SC spoke on 15 November 2023.
AO Pty Ltd contended that the represented third parties’ application to vary the 18 September 2023 orders should be dismissed. That was for four main reasons, namely –
(a)Mr AN is and continues to be authorised by AO Pty Ltd to provide instructions on behalf of AO Pty Ltd in the disclaimer proceeding;
(b)Mr AN may be called as a witness;
(c)Mr AN has executed a confidentiality undertaking in the form the court requires; and
(d)the represented third parties know that Mr AN is connected with AO Pty Ltd.
AO Pty Ltd submitted that it may call Mr AN and unless it has the protected matter to put before Mr AN for his instructions, AO Pty Ltd will not be in a position to prepare evidence in support of AO Pty Ltd’s opposition in the disclosure proceeding. AO Pty Ltd submitted that the concerns of the represented third parties are already adequately protected by Mr AN’s undertaking.
On 15 November 2023 I asked junior counsel then appearing for the represented third parties why those parties sought the order in paragraph 2A of the proposed modifications to the 18 September 2023 order.[4] The answer given was that the represented third parties fear that Mr AN, in his capacity as the officer of AQ Pty Ltd may exploit whatever information he receives and improperly use that information to benefit AQ Pty Ltd.
[4] T 90 L 1 – 24.
No evidence supported that so-called fear.
To the contrary – Mr AN gave an undertaking in the form of annexure C, whether or not he gave his address on that undertaking or his role with AQ Pty Ltd. He stated that he may (not will) give evidence and AO Pty Ltd has indicated it needs the documents Mr AN has undertaken to keep confidential so as to obtain instructions from Mr AN.
The consent orders in paragraph 2 contain no stipulation empowering the represented third parties to interrogate a person giving an undertaking that otherwise complies with the wording of annexure C.
The person giving the undertaking must be in one of the three categories set out in clause 1 of annexure C. Mr AN was. He signed the undertaking as required by paragraph 2.1. The undertaking he gave was consistent with the operative aspects of the undertaking in annexure C. Paragraph 2.2 was satisfied. No valid basis existed for his not being permitted to see the protected matter as provided to him by the trustees.
I dismiss the application in paragraph 2 of the represented third parties’ application in a proceeding filed 18 October 2023. If any party as well as AO Pty Ltd wishes to be heard on costs, that party or AO Pty Ltd must apply for such costs supported by affidavit material and with submissions by noon on 8 December 2023.
I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Wilson. Associate:
Dated: 29 November 2023