MILFORD & DOUMAS
[2017] FamCA 339
•23 May 2017
FAMILY COURT OF AUSTRALIA
| MILFORD & DOUMAS | [2017] FamCA 339 |
| FAMILY LAW – PRACTICE AND PROCEDURE – Confidentiality agreement – where the applicant seeks an order that the respondent execute a confidentiality agreement – where the applicant alleges the respondent has disclosed financial information to a third party – where the respondent denies disclosing financial information to a third party – where the evidence does not constitute exceptional circumstances to require a confidentiality agreement – application for confidentiality agreement dismissed. |
| Family Law Act 1975 (Cth) s 114(3) |
Family Law Rules 2004 (Cth) r 9.08(3), sch 1 pt 1 cl 4(8), 4(9)
| Harman v Secretary of State for Home Department [1983] 1 AC 280 |
| APPLICANT: | Mr Milford |
| RESPONDENT: | Ms Doumas |
| FILE NUMBER: | MLC | 8603 | of | 2016 |
| DATE DELIVERED: | 23 May 2017 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Thornton J |
| HEARING DATE: | 4 April 2017 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Brown QC |
| SOLICITOR FOR THE APPLICANT: | Kennedy Partners |
| COUNSEL FOR THE RESPONDENT: | Mr Sweeney |
| SOLICITOR FOR THE RESPONDENT: | Kenna Teasdale Lawyers |
Orders
Paragraph 7 of the applicant husband’s Response to an Application in a Case filed 2 March 2017 be dismissed.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Milford & Doumas has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 8603 of 2016
| Mr Milford |
Applicant
And
| Ms Doumas |
Respondent
REASONS FOR JUDGMENT
The application
The husband seeks an interim order that the wife execute a confidentiality agreement with respect to the business documents disclosed by him, including those which disclose information in relation to the financial circumstances of third parties. This is the order sought pursuant to paragraph 7 of the husband’s Response to the wife’s Application in a Case filed by the husband on 2 March 2017.
The wife opposes the application on the basis that there is no evidentiary foundation for the order sought.
The substantive proceedings concern competing applications for property settlement pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”) and an application by the wife for spousal maintenance. Orders have previously been made for discovery. The husband is also seeking orders in relation to parenting in the substantive proceedings.
Background
The parties separated in July 2015 after an 11 year marriage. The husband is aged 54. Since 1995 he has been a businessman. The wife is aged 44 and is a health professional.
Interim consent orders were made on 3 March 2017 by Registrar Mestrovic following an Application in a Case filed by the wife on 20 January 2017 and a Response to the wife’s Application in a Case filed by the husband on 2 March 2017.
As part of those interim orders, at paragraph 7.3, the husband agreed to file with the Court within 7 days an undertaking stating that:
(a)he will not disclose the contents of the patient records or the information therein to any person;
(b)will destroy the copies of patient records upon the wife’s compliance with order 9.1 hereof;
(c)he did not access any patient records or information during his entry into the home on 20 September 2016 (or any other date after separation of the parties) other than those returned to the wife;
(d)who he has already disclosed details to or provided any information from those documents to.
A number of other orders were made and all extant interim applications dismissed save and except for paragraph 7 of the husband’s Response to the wife’s Application in a Case which was adjourned to the Judicial Duty List on 4 April 2017.
Documents relied upon
The applicant husband relied upon paragraphs 41-46 of his affidavit filed 2 March 2017 and paragraph 7 of his Response to an Application in a Case filed on the same date.
The wife relied upon paragraphs 30-46 of her affidavit filed 20 January 2017 and her affidavit filed 31 March 2017.
The application proceeded by way of submissions only in the Judicial Duty List. Counsel for the husband provided a written Outline of Submissions.
Counsel for the wife objected to an affidavit of the husband filed the day before the hearing and that affidavit was ruled inadmissible because it did not comply with Rule 9.08(3) of the Family Law Rules 2004 (Cth) (“the Rules”).
Submissions for the husband
The husband relies upon his affidavit at paragraphs 41-46. At paragraph 41 he states:
I am aware that [the wife] has discussed these proceedings, and in particular, financial matters with the next door neighbour at [B] Street, [Mr C]. I believe that [the wife] has provided Mr [C] with some of the financial documents provided by me to her as part of my disclosure in these proceedings.
The husband deposes to all of his business interests involving third parties and in particular his business partner and his associated entities. He deposes to the documents which he has provided to the wife including details of the financial interests of these third parties and a concern that the wife’s failure to adhere to her obligations in relation to confidentiality of these documents affects third parties as well as him. He deposes to the documents which he has provided by way of discovery being commercially sensitive and if disclosed to competitors prejudicing his own business interests and those of various third parties involved. He deposes that the documents and information disclosed are not in the public domain and have significant commercial worth. The husband deposes to being concerned that the wife has refused his request to sign an acknowledgement confirming her understanding of her obligation to keep information provided to her in the course of these proceedings confidential.
The husband relies on paragraph 8 and Annexure SMD-4 to the affidavit of the wife filed 31 March 2017 which is a letter dated 14 March 2017 from her solicitors to the husband’s solicitors. That letter points out on page 1 that the husband has failed to specify the basis upon which he is “aware” that the wife has discussed his financial matters with Mr C, or the basis upon which he has formed the belief that the wife has provided Mr C with the husband’s financial documents. The solicitors for the wife refer to a previous letter dated 10 November 2016 in which they wrote:
…our client instructs us that she has not provided to Mr [C] copies of any of the financial documents you have provided to us. Given our client’s financial naivety, she has sought general advice from Mr [C] including advice as to sourcing appropriate valuers. She has not, however, discussed sensitive financial or business information with Mr [C]. She does not have any such knowledge. There is no basis for an undertaking to be given by our client or our office.”
Counsel for the husband relied on the solicitor’s suggestion that the wife had “sought general advice” from Mr C including advice as to sourcing appropriate valuers as the basis for the husband’s concern that the wife has provided Mr C with financial documents disclosed to her in the substantive proceedings.
Counsel for the husband submitted at paragraph 14 of the written Outline of Submissions that:
... in circumstances where since separation, the wife has behaved without consideration to the detrimental financial impact of her conduct on the personal and business affairs of the husband, and inconsistently with the implied undertaking to the court in relation to confidentiality of the husband’s business documents and information, it is appropriate that she be required to enter into a confidentiality agreement in relation to such documents and information.
Counsel for the husband referred to the fact that the husband had given the wife “comfort” by consenting to orders and signing and filing with the Court the undertaking sought by the wife to acknowledge the confidential nature of the wife’s patient records which also contained relevant financial information. He submitted that it was appropriate for the wife to reciprocate by providing the undertaking sought by the husband.
Counsel for the husband relied upon the decision of Cronin J in Vincenzo & Vincenzo [2012] FamCA 427 (“Vincenzo & Vincenzo”) where the husband sought that the wife sign a confidentiality agreement with respect to documents and information relating to the husband’s business activities in the construction industry on the basis of allegations made about the wife’s conduct and the possible consequential impact on the value of those business entities. He submitted that it was held by Cronin J at [29] that:
… there must be some basis upon which I could determine that it was proper to make the injunction. In this case, because of the wife’s equivocation and perhaps dismissive response to the husband’s concerns, I propose to make an order that she be restrained from disclosing information she receives to any person other than her legal and business advisors.
Counsel for the husband relied on Stinson & Stinson and Anor [2012] FamCA 520 (“Stinson & Stinson & Anor”), where Cronin J at [14] set out the circumstances under which an express obligation can be sought and reiterated as those where there is evidence that:
(a)the owner of the documents reasonably believes the release would be detrimental to the business because of the possibility of a competitive advantage being obtained by another even though the owner is aware that the rules of court provide protection and are treated seriously;
(b)in relation to the protection issue, the information is not in the public domain even though it is conceivable that it might become public through things as an open court hearing; and
(c)the information is objectively seen to be sensitive taking into account the fact that the holder of the documents is not a party to the substantive dispute.
Submissions for the wife
In her affidavit filed 31 March 2017, the wife deposes to the husband accusing her of discussing financial matters associated with this proceeding with her next door neighbour, Mr C, on the same day that he admitted that he entered her home on 20 September 2016 without her knowledge or consent whilst she was away and photographed her confidential patient medical records. This conduct of the husband was the trigger for the husband providing the undertaking by consent.
The wife deposes at paragraph 4 that no particulars have been provided by the husband as to the “financial documents” she allegedly provided to the neighbour. The wife denies that she has provided or discussed with the neighbour “any financial documentation” relating to the husband. The wife communicated this denial to the husband’s lawyers, through her lawyers on 10 November 2016 and further denied discussing any sensitive financial or business information with the neighbour.[1]
[1] Wife’s affidavit filed 31 March 2017, par 5; Wife’s affidavit filed 20 January 2017, Annexure SMD-23.
Counsel for the wife emphasised that the husband’s application concerned documents and not information. He also highlighted the fact that no confidentiality agreement had even been put into draft form specifying what was sought.
Counsel for the wife submitted that the decision of Vincenzo & Vincenzo is distinguishable in that it was not made on the same basis as is sought here and emphasised that the Court refused to make the order for a confidentiality agreement but instead made an injunction against the wife.
Concerning the decision of Stinson & Stinson & Anor, counsel for the wife emphasised that the decision involved a non-party seeking a confidentiality agreement and therefore the circumstances of that case are distinguishable. In the circumstances of this case, the party concerned is the husband and it is the business of the parties which is the subject of his concern.
Counsel for the wife referring to the High Court decision of Hearne v Street (2008) 235 CLR 125 (“Hearne v Street”) emphasised that only in exceptional circumstances should such an order be made.
Referring to paragraphs 43 and 44 of the husband’s affidavit, counsel for the wife submitted that there is nothing to warrant a confidentiality agreement being signed and that these paragraphs are bald assertions and not evidence. He referred to paragraph 44 as commentary only which was not linked with any malfeasance on the part of the wife.
Conclusion
There is no dispute that under s 114(3) of the Act, the Court has the discretionary power to make the order sought by the husband “…in any case which it appears to the court to be just or convenient to do so and either unconditionally or upon such terms and conditions as the court considers appropriate”.
There would appear to be no dispute that the financial documents of the business provided by the husband to the wife by way of disclosure are commercially sensitive and may be detrimental to the business if disclosed to a competitor.
Parties to litigation are bound by an “implied undertaking” preventing them from using documents obtained from the other party during the course of disclosure or produced under subpoena for any purpose other than that for which the documents were given, without leave of the Court.[2] In addition to this implied undertaking, the wife is already bound by an undertaking that the documents she has received will only be used for the purpose of the case and she must not use any document disclosed for a purpose other than the resolution or determination of the dispute to which the disclosure of the document relates.[3]
[2] Harman v Secretary of State for Home Department [1983] 1 AC 280.
[3] Family Law Rules 2004 (Cth) sch 1 pt 1 cl 4(8), 4(9).
Counsel for the husband in his written Outline of Submissions, relied on Hearne v Street at [116] where the High Court said:
…The point of insisting on an express undertaking, commonly employed in relation to documents which it is particularly desired to keep secret, is to bring explicitly home to the minds of those giving it how important it is that the documents only be used for the purpose of the proceedings.
However at [16], the High Court went on to say “It does not follow that the obligation in question does not exist in more routine cases without the need for an express undertaking.” The High Court also referred to the current practice and suggested that an express undertaking is given in “exceptional cases for particular reasons”.[4] This was also emphasised by counsel for the wife during submissions.
[4] Hearne v Street (2008) 235 CLR 125, 116.
Whilst the cases referred to by counsel for the husband are helpful, I accept the submissions of counsel for the wife that the cases of Vincenzo & Vincenzo and Stinson& Stinson & Anor are distinguishable on the facts. Stinson involved a non-party seeking a confidentiality agreement and in Vincenzo & Vincenzo there was evidence that wife was seen with a business competitor in the wife’s solicitor’s offices and the wife admitted that she had had a conversation in the presence of the competitor with her solicitor.
The fact that the husband has consented to an undertaking in circumstances where he unilaterally obtained confidential patient records from the wife does not provide a proper basis to make the order sought by the husband. Different circumstances surrounding the disclosure to the wife apply. Reciprocity cannot be a proper basis here.
Although I cannot make findings where the evidence is untested, there is no evidence that the wife has provided documents or information to the neighbour arising from the disclosure by the husband. The wife has acknowledged that the neighbour is also a friend of both parties and he has “discussed general commercial references with me on occasions, based on his extensive business experience”.[5] However she denies having provided any financial documents relating to the husband to the neighbour and denied discussing any financial documents with him. The wife denies the allegations made by the husband but concedes that her lawyers referred to her having sought advice from the neighbour as to sourcing appropriate real property valuers. From this evidence, the husband seeks to have the inference drawn that the wife has discussed and revealed financial documents relevant to his business. In an interlocutory hearing, with limited time and limited opportunity to test the evidence by cross examination, it is not appropriate to make findings unless the inferences are clear.
[5] Wife’s affidavit filed 31 March 2017, par 4.
Given the implied and express undertaking which already applies to the wife, I am not satisfied on the balance of probabilities that there is a proper evidentiary foundation upon which the Court could determine that it is proper to make the order sought by the husband. There is no evidence of a need to bring home explicitly to the wife the importance of the documents only being used for the purpose of the proceedings. I am not satisfied that the evidence constitutes exceptional circumstances for the purpose of requiring a confidentiality agreement where in this case any breach of confidentiality by the wife would be detrimental to her own case. For these reasons, I propose to make an order that paragraph 7 of the husband’s Response to an Application in a Case filed 2 March 2017 be dismissed.
I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Thornton delivered on 23 May 2017.
Associate:
Date: 23 May 2017
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