Missingham v Shamin
[2012] NSWSC 288
•21 March 2012
Supreme Court
New South Wales
Medium Neutral Citation: Missingham v Shamin [2012] NSWSC 288 Hearing dates: 16 March 2012 Decision date: 21 March 2012 Jurisdiction: Equity Division Before: Ward J Decision: Permanent injunction granted to restrain defendant from breaching confidentiality obligations. Nominal damages and indemnity costs ordered against defendant
Catchwords: CONFIDENTIALITY - deed containing confidentiality provision - whether plaintiff disentitled to assert confidentiality due to unclean hands - whether disclosure of some terms of the deed due to ordinary legal processes such as filing a Notice of Discontinuance in court destroyed the confidentiality of the material - whether posting of judgment containing some terms of the deed in the NSW Caselaw website destroyed the confidentiality of the material - whether material entered public domain a matter of fact and degree - limited disclosure in these circumstances does not deprive the confidentiality provision of utility - HELD - permanent injunction granted and plaintiff entitled to costs of these proceedings on indemnity basis pursuant to relevant provision in deed Legislation Cited: Court Suppression and Non-publication Orders Act 2010 (NSW) Cases Cited: AG v Guardian Newspapers (No 2); AFL v The Age Co Limited (2006) 15 VR 419
Artedomus v Del Casale [2006] NSWSC 146
Attorney-General v Guardian Newspapers Ltd [No 2] [1990] 1 AC 109
Black Uhlans Inc v NSW Crime Commission & Ors [2002] NSWSC 1060
Brand v Monks [2009] NSWSC 1454
Carantinos v Magafas [2008] NSWCA 304
Dalgety Wine Estates Pty Ltd v Rizzon (1979) 141 CLR 552
Doherty v Allman (1878) 3 App Cas 709
Dow Jones & Company Inc v Gutnick 210 CLR 575
Evans Marshall & Co Ltd v Bertola SA [1973] 1 WLR 349, at 379; [1973] 1 All ER 992
G v Day [1982] 1 NSWLR 24
Interfirm Comparison (Australia) Pty Ltd v Law Society of New South Wales [1975] 2 NSWLR 104
Johns v ASC (1992) 178 CLR 408
Kation Pty Limited v Lamru Pty Limited [2009] 257 ALR 336
Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181
Missingham v Shamin [2011] NSWSC 1208
Orleans Investments Pty Ltd and Anor v Mindshare Communications Ltd [2009] NSWCA 40; (2009) 254 ALR 81
Rinehart v Welker [2011] NSWCA 403
Seven Network (Operations) Ltd and Ors v James Warburton (No 2) [2011] NSWSC 386Texts Cited: Cross, The Law of Intellectual Property: Copyright, Designs and Confidential Information Vol 2 Category: Principal judgment Parties: Walter Patrick Missingham (Plaintiff)
Alex Shamin (Defendant)Representation: Counsel
A T S Dawson (Plaintiff)
Self-represented (Defendant)
Solicitors
Yeldham Price O'Brien Lusk (Plaintiff)
File Number(s): 11/305541
Judgment
HER HONOUR:This matter came before me on 16 March 2012 on a summons filed on 22 September 2011 by the plaintiff (Mr Walter Missingham) seeking as against the defendant (Mr Alex Shamin) a permanent injunction to restrain him from publishing any matter concerning the settlement of earlier proceedings in this Court (2010/397452), or the contents of a deed of settlement entered into in connection with those proceedings, other than as provided for in that deed. Mr Missingham seeks damages for the breach of the settlement deed, though it is acknowledged that these will be nominal if a permanent injunction is granted. Mr Missingham also seeks his costs of these proceedings on an indemnity basis: first, on the basis that there has been a contumelious breach of the confidentiality provisions of the settlement deed and, secondly, by reference to a provision of the settlement deed providing an indemnity against all claims arising out of or in connection with a breach of the deed.
This matter first came before the Court on 22 September 2011 on an application before the then duty judge (Rein J) for an interim injunction. His Honour granted that injunction (dealing with the matter on an ex parte basis although there was a legal representative of the defendant physically in Court, though not appearing, at that time). The matter was adjourned to the duty list on 28 September 2011. On that occasion, Brereton J made orders in effect continuing the injunction (though narrowing its terms) until the hearing of this proceeding. His Honour gave ex tempore reasons on that occasion (Missingham v Shamin [2011] NSWSC 1208).
The defendant, who was self-represented when the matter was heard by me, had previously been represented by legal practitioners when the matter was before Brereton J. He has resisted the applications for both interlocutory and injunctive relief (before Brereton J and before me, respectively) and is not prepared to offer any undertaking to the Court as to future compliance with the confidentiality provisions of the settlement deed.
Background
Much of the background to the present application is not in dispute (rather, what was in dispute was exactly how much of the history of the disputes between the present parties and between the plaintiff and Mr Shamin's wife (Dr Larissa Koroleva) was of relevance to the current application).
In August 2010, Mr Missingham (the President of the Australian Kung-Fu (Wu-Shu) Federation, of which Dr Koroleva is a former member) commenced defamation proceedings in the Common Law Division of this Court against Dr Koroleva. Those proceedings were discontinued by a Notice of Discontinuance filed in Court on 12 September 2011 (following the participation by the parties to those proceedings on 7 September 2011 in a court-ordered mediation).
Both Mr Missingham and Dr Koroleva attended the mediation with their legal representatives. Dr Koroleva was accompanied by her husband, Mr Shamin. Mr Missingham was accompanied by another member of the Federation's Executive (Mr Neal Hardy). The mediation took place before a Registrar of this Court. It does not seem to be disputed that the mediation was conducted on the ordinary basis that what took place within the mediation was to be kept confidential and that those in attendance were bound by obligations of confidentiality.
On the present application, Mr Shamin sought to adduce evidence of what had transpired at the mediation or, perhaps more precisely, what had transpired before the first joint session took place at the mediation - there being potential room for dispute as to whether discussion before the first joint session was comprised within the mediation process and hence covered by confidentiality obligations or was anterior to that and not covered by those obligations. (I am not in a position to comment on this in the absence of evidence, which it would not have been appropriate to consider on the present application, as to the mediation process that took place.) Objection to such evidence was taken by Counsel for Mr Missingham (Mr ATS Dawson) both on the basis that the mediation communications were governed by s 131 privilege and because (since the evidence Mr Shamin sought to adduce had not been contained in the affidavits read on this application or had otherwise been in inadmissible form) any leave to permit the evidence to be adduced orally from Dr Koroleva would give rise to a difficulty for him in obtaining instructions from his client. After some debate, I gave leave for limited further evidence to be led in chief on this issue (which I noted would be received subject to relevance) and Dr Koroleva gave oral evidence and was cross-examined by Mr Dawson.
The thrust of Dr Koroleva's evidence (which I record in summary form without intending to cause any waiver of without prejudice privilege or confidentiality in relation thereto) was that objection had been taken to the participation in, or attendance at, the mediation by Mr Hardy (as was evident from a letter that had been written by her solicitors on 6 September 2011 the day before the mediation advising that she did not consent to Mr Hardy's "participation in the mediation") and that, while she understood that Mr Hardy had accompanied Mr Missingham to the mediation as Mr Missingham's 'support person', she had not been aware that Mr Hardy had remained in the building while the mediation took place. (In that regard, Dr Koroleva's evidence was inconsistent as to whether she had understood that Mr Hardy was remaining on the premises though in a separate room or that he was not in the building at all - her evidence in the witness box being the latter, her affidavit sworn in these proceedings having contained an inadmissible statement suggesting the former.) In any event, there is no dispute that Mr Hardy did not attend the joint mediation session or sessions. Nor is there any dispute that Dr Koroleva's solicitors must have known that Mr Hardy had remained in the building since, by letter dated 8 September 2011, they wrote confirming that it was clear that he had been there and to assert that Mr Hardy was bound by an obligation of confidentiality by reason of his participation in "numerous" discussions between Mr Missingham and Mr Missingham's legal advisers.
As noted above, I allowed this evidence subject to a ruling on relevance. I do not consider that there is any relevance to the complaint by Dr Koroleva (or, for that matter, any complaint now by Mr Shamin) as to Mr Hardy remaining on the premises (in a separate room) at the time of the mediation. There is no suggestion that he has breached any obligation of confidentiality arising by his participation in private sessions with Mr Missingham and Mr Missingham's lawyers during the course of the mediation. Dr Koroleva said in the witness box that had she known she would not have continued with the mediation. There is no such assertion anywhere else to be found. Moreover, even apart from the fact that her lawyers' knowledge of Mr Hardy's attendance on the day might well be imputed to her, she clearly knew enough on 8 September 2011 for her lawyers to be instructed to write on her behalf, as they did, to Mr Missingham's lawyers drawing attention to that fact. There was no suggestion at that time (nor does there seem to be any basis for a suggestion) that the settlement deed was liable to be set aside as a result of this issue. I consider this evidence to be of no relevance to the current application.
At the conclusion of the mediation, the parties thereto (and Mr Shamin, for reasons that I need not explore) entered into a deed of settlement. Confidential Exhibit B in the present proceedings is a copy of the Deed of Settlement dated 7 September 2011, that being the deed on which Mr Missingham now sues. The deed contained a confidentiality clause prohibiting disclosure either directly or indirectly of the terms of the deed with certain limited exceptions (including to enforce the deed and to the extent required to comply therewith). The deed also specified the form of public statement which the parties were entitled to make following the execution of the deed. The terms of that statement were no doubt carefully drafted. They included a statement that "The proceedings have now been settled on terms agreed. ... The settlement is confidential" and a statement that the parties had agreed to remove an identified website from the internet.
On 12 September 2011, the defamation proceedings were mentioned in Court before McCallum J and leave was granted for the filing in Court of a Notice of Discontinuance. It is conceded by Mr Missingham that there was a statement in open court that the proceedings had settled at mediation and that "the court was informed about arrangements in respect of costs orders". There is no transcript of what transpired on that occasion (and the evidence sought to be adduced of the recollection of Dr Koroleva's then solicitor, who no longer acts for Mr Shamin in the present proceedings, was objected to as hearsay).
Unfortunately for all parties (as events have transpired), this was not an end to the internet commentary on the dispute between Mr Missingham and Dr Koroleva. On 12 September 2011, a comment was posted on a website forum called "BLITZ Australasian Arts Magazine" by a contributor identified as "ffsguy" under a new "Walt Missingham" thread, directing readers to google a particular website. This led to a number of other comments being posted on that website, in the course of which "ffsguy" posted an entry that said "Walt" had asked him to post the first comment.
Mr Shamin (whose evidence was that he had previously taken objection to the content of some of the comments posted on this website in 2010 as misleading) formed the view (rightly or wrongly) that "ffsguy" was a person (whose identity he says is known in the martial arts community) associated with Mr Missingham. Mr Shamin says that he was concerned that the comment that had been posted on 12 September 2011 was going to escalate the dispute again. He seems to have regarded the post as a breach by Mr Missingham of his confidentiality obligations or at least as making it open for he, Mr Shamin, to publish comments in relation to the manner in which the defamation proceedings had been resolved that would otherwise have been precluded under the settlement deed.
(Although Mr Shamin remains convinced that "ffsguy" is a named person who is connected with Mr Missingham, the evidence of Mr Missingham on the present application - which was not challenged - was that he had not instructed any person to make any comments on the Blitz forum; does not know who the person "ffsguy" is on the forum; and did not authorise him or her or any other person to make a posting on the Blitz forum of any nature.)
On 17 September 2011 at 3.14am, Mr Shamin posted on the website an extract from a letter dated 13 September 2011 from Dr Koroleva's solicitor in the defamation proceedings (Mr Barrie Goldsmith) addressed (perhaps somewhat surprisingly given that Mr Goldsmith was then acting for Dr Koroleva not Mr Shamin) to Mr Shamin, the content of which confirmed the discontinuance of the defamation proceedings and went on to make various statements not all of which reported information that might be gleaned by reference to the Notice of Discontinuance as filed. I do not here reproduce the text of that letter. This post is the first of the alleged breaches by Mr Shamin of the Deed of Settlement. (Dr Koroleva's evidence was that although the letter was addressed to Mr Shamin this was the way her solicitor communicated through her, through Mr Shamin's email.)
On 21 September 2011, Mr Missingham's solicitors wrote to Mr Goldsmith by facsimile transmission, asserting that the material posted on the website forum was a clear breach of the confidentiality deed and the agreed statements that could be made publicly arising out of the confidential terms of settlement. They demanded the immediate removal of the comments posted on the forum and a written undertaking that no further breaches of the deed would occur. An application for urgent interlocutory relief, if an undertaking was not received by 1pm that day, was foreshadowed. (I should note that there is no dispute that Mr Shamin did post the relevant entry.)
Mr Shamin regards it as significant that this letter was written to Mr Goldsmith (his wife's solicitor) and not to him. He maintains that Mr Goldsmith's response to that letter was written without reference to him (a suggestion that seems to me to be surprising given that it implies a readiness on Mr Goldsmith's part to act without instructions though it does find some support in Mr Goldsmith's later email communications that day insofar as they note that he had not sought instructions on the letter at that stage). Mr Goldsmith was not called to give any evidence on the present application. Mr Shamin, in effect, considers that the communication to Mr Goldsmith (who I might add was the solicitor on the record in this matter until at least November 2011 and by whom a Notice of Intention to file Notice of Ceasing to Act was only filed on 3 November 2011; a Notice of Removal of Solicitor being filed by Mr Shamin on 7 November 2011) was in order to 'set him up' by depriving him of a reasonable opportunity voluntarily to remove the post from the website before an application was made to the Court for its removal.
In fact, it seems clear that Mr Shamin did have an opportunity to prevent the commencement of Court proceedings since, at least by 6.30pm on 21 September 2011 he had been copied into communications between Mr Goldsmith and Mr Missingham's solicitor in which removal of the post was demanded and Court proceedings were threatened.
The response sent by Mr Goldsmith's office (said by Mr Shamin to have been without instructions) sought information as to the alleged breaches. In response on the same day, Mr Missingham's solicitors identified the breach as the publication of the letter from Goldsmiths and sought a response by 10am on 22 September 2011, again foreshadowing urgent injunctive relief. A copy of that letter was emailed to Mr Goldsmith at 6.04pm on 21 September 2011.
At 11.45am on 22 September 2011, Mr Shamin added to his post on the website a copy of the Notice of Discontinuance. On that date he also replaced the extract from Mr Goldmsith's letter of 13 September 2011 with a complete copy of the letter (showing the letterhead). Those are the second and third breaches of the Deed of Settlement alleged against Mr Shamin.
It seems that at least one of the breaches on 22 September occurred after Mr Shamin was on notice of the complaint made by Mr Missingham through his lawyers the day before in respect of the posting of the extract from Mr Goldsmith's letter. I say this because Mr Goldsmith sent an email to the plaintiff's solicitor on 21 September 2011 at 6.30pm to which were attached the two letters of 21 September (from him and from Mr Horvath respectively). He copied that email to Mr Shamin's email address.
That email, somewhat surprisingly, given the assertion that the allegation made against Mr Shamin was a serious one, stated that the writer had "not sought instructions from our client upon your letter of this evening and will do so subject to your response to this e-mail". (Mr Goldsmith at this stage must clearly have thought Mr Shamin was his client, having referred to him as such, and, whether or not he had sought instructions in relation to the letter, he had there copied the letter to Mr Shamin.) Ordinarily, one would have expected that when a letter threatening urgent interlocutory relief was received by a solicitor, the solicitor would take steps as soon as possible to convey that information to the person against whom the threat was made (even if, as here it is said, the solicitor was formally acting for that person's wife not that person).
At 11.26 am on 22 September 2011, Mr Missingham's lawyers sent an email notifying Mr Goldsmith of their intention to approach the duty judge in relation to the matter at 11.45am. That email was the subject of a response copied to Mr Shamin at 11.36am. Less then ten minutes later (at the time that Mr Missingham's lawyers had indicated they would be approaching the Court), Mr Shamin posted the full copy of Mr Goldsmith's letter and the Notice of Discontinuance (conduct that seems inconsistent with Mr Shamin's assertion from the bar table that he would voluntarily have removed the material had he been given an opportunity to do so).
In the witness box, Dr Koroleva asserted that the letter from Mr Goldsmith (that had been reproduced by her husband on his post) had been sent following a request for advice as to what had occurred when the matter was in Court on 12 September 2011. It is not clear why that would have been the case (since Dr Koroleva confirmed that the matters stated in Mr Goldsmith's letter were matters of which she was already aware, having been in attendance at the mediation) or, if so, why the letter would have been written to her husband (other than by reference to the practice of communication that Dr Koroleva said had taken place). She did, however, suggest that there had been an issue as to whether there were to be amendments to the document filed in court that had been the subject of calls from her solicitor (Ms Cassimatis) on that morning. The inference Mr Dawson seems to have drawn from this was that the letter had been solicited from Mr Goldsmith for the very purpose of publication on the website but this was put to, and strongly denied by, Dr Koroleva. I can draw no inference against Mr Shamin in this regard.
Mr Shamin submitted from the bar table (in justification or defence of his actions in posting the relevant material on the website) that he had had a conversation with Mr Goldsmith in which the latter had intimated or suggested to him that it was open to him to publish the Notice of Discontinuance and/or the letter. (Mr Shamin at one point said that he had been advised that he could do so, although he was quick to disclaim the receipt of any advice as such from Mr Goldsmith.) If, indeed, Mr Goldsmith had encouraged Mr Shamin to post material on the website in apparent breach of his obligations under the Deed of Settlement, that would be conduct worthy of censure on Mr Goldsmith's part but there is no evidence (simply Mr Shamin's assertion) to that effect. It would be inappropriate for me to make any finding in that regard without Mr Goldsmith having had the opportunity to comment thereon.
In any event, Mr Shamin did not voluntarily remove the material he had posted on the website and he instructed his legal representatives, when the matter came back before Brereton J, to resist the application for an extension of the interim injunction (in part on the basis of alleged 'unclean hands' on the part of Mr Missingham). Similarly, he resisted the suggestion by me that he might be prepared to offer an undertaking in lieu of a permanent injunction (not that Mr Dawson had indicated that this would be acceptable to Mr Missingham). Mr Shamin's position in this regard is that he believes that this would expose him to further Court proceedings by Mr Missingham, who he believes would blame him for any information that might be published in the future by any third party in relation to the settlement. In this regard, it seems to me that the manner in which Mr Missingham responded to the discovery of the September 2011 posts is not indicative of some kind of vindictive or cowboy attitude to litigation. The posts in question on their face emanated from Mr Shamin (so it was not a case that an accusation was made without a reasonable basis to believe that Mr Shamin had been responsible for the disclosure). His lawyers quite properly drew Mr Goldsmith's attention to the matter, made their views as to breach known and sought the removal of the post and the giving of a written undertaking not to make any further breach. The time frame set for those demands was not unreasonable in the circumstances. Had there been prompt (or indeed any) compliance with those requests, the present proceedings would not have been necessary. Instead, Mr Goldsmith copied the correspondence to his client some time after it was received and maintained in correspondence that there was no breach as the Notice of Discontinuance had been filed in open court and the letter had merely "confirm[ed]" the discontinuance. (At least one difficulty with that stance was that the letter clearly went beyond confirmation of discontinuance of the proceedings.) I cannot draw from the events that have led to this application a threat of unwarranted litigation in the future by Mr Missingham as Mr Shamin fears if the permanent injunction is granted.
Clearly, there is distrust and suspicion on both sides in relation to this dispute (as was obvious from the submissions made by Mr Shamin, over the objection by Mr Dawson that they were both unsupported by evidence and irrelevant, as to the broader history to this dispute). Ironically, both sides (Mr Shamin in person and Mr Missingham through his Counsel) have impressed upon me their desire to have an end to the publicity over their disputes (something that one would have hoped would have been brought to an end by the settlement deed itself). I can only express the hope that the parties will therefore behave responsibly and refrain from any further blogs in relation to the dispute (including as to the outcome of this application). In the circumstances, I have suppressed publication of that part of the transcript that contains Mr Shamin's submissions in relation to the broader history of the dispute (on the basis that it is not relevant to the current application and that the publication of allegations of that kind unsupported by evidence is not appropriate). I will give the parties an opportunity to comment on how much of that transcript should remain suppressed and as to whether any portions of these reasons should be redacted before publication.
With the above background in mind, I turn to the determination of the present application.
Permanent injunction
I have already noted that there is a confidentiality provision in the settlement deed. I do not propose to set out the terms of the deed in the present judgment. It is alleged that Mr Shamin breached that provision on at least three occasions: first, when he posted on the internet on 17 September 2011 an extract from the letter dated 13 September 2011 from Mr Goldsmith; second, on 21 September 2011 when he posted on the internet the complete text of the said letter from Mr Goldsmith (I note Mr Shamin's comment from the bar table that Mr Goldsmith's only complaint about the posting of the letter had been that it was missing the firm letterhead, a comment that again Mr Goldsmith was not in court to accept or contradict, though this might explain the re-posting of the complete version of the letter); and, third, also on 21 September 2011, by posting on the internet the Notice of Discontinuance.
Mr Dawson submits, and I accept, that the posting of Mr Goldsmith's letter was a clear breach since the statements in the letter went beyond the agreed statement the parties could publicly make about the execution of the deed and disclosed indirectly some of its terms (those terms were identified in submissions before me but again I do not propose to reproduce here the relevant clauses). I do not accept the suggestion that Mr Goldsmith's letter did no more than confirm the discontinuance. It clearly went beyond that.
Mr Dawson also submits, and I accept, that the posting of the Notice of Discontinuance on the website itself constituted a separate breach of the confidentiality provision in that it too disclosed terms of the settlement deed. Insofar as that document was one that had been handed up in open court (and is on the court file), Mr Dawson submits that there is nevertheless a significant difference between handing up a document in a courtroom and posting it on the internet on a forum known to be visited by people who knew Mr Missingham.
Mr Shamin contended that there had been no breach because there were no words used in the blogs or posts that referred to the settlement deed nor were the terms of settlement there set out - rather there was just the Notice of Discontinuance and a document that he said explained what the Notice of Discontinuance meant (T 8). I find this a somewhat disingenuous argument. While there might be an argument that the Notice of Discontinuance itself was not covered by the confidentiality provision (although I think that is contradicted by the clear limitation on the public statement that the parties agreed could be made), having been filed in Court, the letter from Mr Goldsmith (even if it had done no more than explain the discontinuance - and unfortunately for Mr Shamin it went further than that) clearly went beyond any disclosure authorised under the deed.
I find that there has been a breach by Mr Shamin of the confidentiality provisions of the deed by reason of the publication of the posts referred to above.
Insofar as Mr Shamin contended that the disclosure had been justified (to prevent or close down ongoing comment on the website in relation to the matter) or that the material disclosed was not confidential because the Notice of Discontinuance had already been filed (and hence was in the public domain), the former would not justify a breach by Mr Shamin of the deed; the latter I consider later in these reasons.
Mr Missingham seeks a permanent injunction. It is submitted that a modified version of the interlocutory injunction granted by Brereton J on 28 September 2011 would be appropriate in this regard.
Mr Dawson relies on Orleans Investments Pty Ltd and Anor v Mindshare Communications Ltd [2009] NSWCA 40; (2009) 254 ALR 81 at 107-8, [94] to [95] (there citing Dalgety Wine Estates Pty Ltd v Rizzon (1979) 141 CLR 552 at 576, per Mason J) for the proposition that the breach of a negative covenant, especially where private rights only are concerned, "constitutes a strong foundation for relief by way of injunction" and submits that, in the absence of "good reasons to the contrary", the correct course is to grant the relief sought (referring to Orleans Investments Pty Ltd at ALR 107, [94], there citing Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181 at [102], per Callinan J).
In Orleans at [93], Spigelman CJ, Allsop P and Giles JA referred to what was said by Lord Cairns LC in Doherty v Allman (1878) 3 App Cas 709 at 719-720, namely that:
... if there had been a negative covenant, I apprehend, according to well-settled practice, a Court of Equity would have had no discretion to exercise. If parties for valuable consideration, with their eyes open, contract that a particular thing shall not be done, all that a Court of Equity has to do is to say, by way of injunction, that which the parties have already said by way of covenant, that the thing shall not be done; and in such case the injunction does nothing more than give sanction of the process of the Court to that which already is the contract between the parties. It is not then a question of the balance of convenience or inconvenience, or of the amount of the balance of convenience or inconvenience, or of the amount of damage or of injury - it is the specific performance, by the Court of that negative bargain which the parties have made, with their eyes open, between themselves. (my emphasis)
Having noted what was said in Maggbury by Callinan J, with whom Kirby J relevantly agreed, as to the correct course being the enforcement of a negative covenant unless there are good reasons to the contrary, their Honours included the observation by Yeldham J in Broken Hill Proprietary Co Ltd v Hapag-Lloyd Aktiengesellschaft (with whom Callinan J in Maggbury agreed), that:
[I]t is plain, in my opinion, from a long series of cases of authority, that the breach of a negative covenant, especially where private rights only are concerned, 'constitutes a strong foundation for relief by way of injunction'. In J C Williamson Ltd v Lukey and Mulholland Dixon J said: 'If ... a clear legal duty is imposed by contract to refrain from some act, then, prima facie, an injunction should go to restrain the doing of that act'.
Mr Dawson submits that the injunction sought in the present case was to give effect to the confidentiality obligation contained in the settlement deed in circumstances where that deed was negotiated and agreed with the benefit of legal advice by both parties, in the context of a history of acrimony between the parties, "with the purpose of bringing to an end the war of words between the parties" (something that can be inferred from the recitals contained in the deed). The history of acrimony and distrust was clear not only on the material before me but also having regard to the content of some of the submissions by Mr Shamin (the publication of which, as noted earlier, I directed to be suppressed pending the ultimate ruling on this application).
Mr Dawson submits that damages alone are not an adequate remedy for the breach because the benefit to Mr Missingham of compliance by Mr Shamin with the terms of the settlement deed cannot be readily quantified (nor can any loss suffered by the breach be readily assessed, as Mr Shamin himself submits); that it can be inferred that the threat of damages was insufficient to deter Mr Shamin from breaching the settlement deed since the material was not removed from the website until after urgent interlocutory relief in this proceeding had been obtained; and on the basis that there is uncertainty as to whether damages are likely to be recoverable from Mr Shamin. As to those matters, while I accept the first two reasons I have no evidence as to the financial position of Mr Shamin or his ability to meet an order for damages and so do not place weight on the third reason. (Mr Dawson notes that proof of past damage is not essential for a claim to injunctive relief (citing Orleans at [87]).)
As to the terms of the injunction that has been sought, Mr Dawson submits that they are clear and unambiguous (reflecting the agreement reached by the parties as to confidentiality in the first place). It is submitted that there is no room for Mr Shamin to wonder whether any future conduct will fall within the scope of the injunction but that, in the event of such a concern in the future or a change in circumstances, the provision of liberty to apply allows Mr Shamin to ask the Court to revisit the matter. At [97] in Orleans, their Honours noted that where the question is enforcement of a negative contractual stipulation "Certainty is important because contempt of court by infringement of the injunction may bring a heavy penalty, but "[e]xcessively narrow formalism in framing the injunction may wreak its own injustice" (citing Callinan J in Maggbury Pty Ltd v Hafele Australia Pty Ltd at [104]).
It is submitted by Mr Dawson that, in all the circumstances, it is not just that Mr Missingham should be confined to his remedy in damages, applying the test formulated by Sachs LJ in Evans Marshall & Co Ltd v Bertola SA [1973] 1 WLR 349, at 379; [1973] 1 All ER 992, at 1005.
The issues to be considered in the exercise of discretion in this regard include matters such as the absence (or otherwise) of any continuing threat of breaches (here, Mr Shamin's refusal to proffer an undertaking and the basis of his resistance to the relief sought means that there is a risk of continuing breaches even if that be due to a misunderstanding on his part of the kind he submits caused the present breaches); any uncertainty attaching to provisions of the deed or the terms of the injunction (as to which none has been suggested); any oppressive effect of the Injunction (the only matter raised in this regard being a concern by Mr Shamin, not based on any evidence, that Mr Missingham will seek to bring further such applications to the financial cost of Mr Shamin and his family).
In his written submissions, Mr Shamin contends that the application for a permanent injunction should be refused for three reasons: first, that (as was asserted when the matter was before Brereton J) Mr Missingham does not come to the Court "with clean hands"; second, that the relevant legal principles "militate against permanent injunctions"; and, third, that the substantial part of the publication in question has been in the public domain for some time (some of the terms of the settlement deed and the text of the 13 September letter having been reproduced in Brereton J's ex tempore judgment on the interlocutory injunction application). In his oral submissions emphasis was placed on the last matter.
As to the allegation of unclean hands, Mr Shamin refers to a number of matters.
First, he says that the original draft of the deed of settlement proposed by Mr Missingham at the mediation session contained a clause allowing disclosure of the terms of settlement to the members of the committee of the Federation (which it is said indicates that Mr Missingham has never been genuine in his insistence on the confidentiality of the settlement). The difficulty with this submission is that there is no evidence before me as to the drafting of the settlement deed. Even apart from the fact that the proceedings at mediation are confidential and whatever may have been said in relation to the negotiation of particular clauses of the deed would be without prejudice, one of the reasons that drafts of documents are not admissible in construing the contents of the final documents is that a party may change his or her mind as to the provisions of a draft agreement for many reasons during the course of negotiations. I could draw nothing from the fact that a previous draft of the settlement deed may have contained a different confidentiality clause even if that evidence were before me, which it is not.
Second, Mr Shamin submits that the posting on the Blitz Australasian Martial Arts Magazine forum was made by him in order to prevent the thread initiated by "ffsguy" (said to be an associate of Mr Missingham) from further escalation of abuse towards Mr Shamin and Dr Koroleva. There is no evidence as to the identity of "ffsguy". Even if Mr Shamin's confident assertions as to his identity are correct, there is no challenge to Mr Missingham's denial that he instructed anyone to post anything on the website. Furthermore, the posts themselves by "ffsguy", even if he be associated with Mr Missingham, are hearsay; they are not admissible as proof of the contents of the representation that Mr Missingham requested the post to be made.
Third, Mr Shamin submits that it is clear that the confidentiality of the terms of the settlement were disclosed as early as during the mediation session where the deed was signed, by reference to the alleged unauthorised "and concealed presence" of Mr Hardy at the mediation session. The difficulty with this submission is that there is no evidence that there was a disclosure of the terms of the deed, once it was signed, to Mr Hardy. The highest that the evidence goes is that Mr Hardy may have been privy to discussions as to the content of the deed before it was signed. Moreover, even if there were a breach of confidentiality in this context, it does not discharge Mr Shamin from his own obligation of confidentiality. Mr Dawson further submits, and I accept, that Mr Hardy's participation in the mediation can have no bearing on whether Mr Shamin subsequently breached the settlement deed, or whether the relief sought by Mr Missingham should be granted.
As to the fact that the Notice of Discontinuance was filed by Mr Missingham in open court, insofar as this was required by the deed it cannot be a breach of the confidentiality obligations. I also accept that the provisions of the settlement deed contemplated disclosure to the extent required to comply with a law or order of a Court, which would be wide enough to cover the handing up of the Notice of Discontinuance. Mr Dawson submits that it cannot have been intended that disclosure permitted for the filing of the Notice of Discontinuance would destroy the confidentiality of the matters made confidential within the deed, nor excuse the parties to the deed from the obligation otherwise to maintain confidentiality in relation to the terms of settlement. I agree.
Fourth, Mr Shamin calls in aid the fact that Mr Missingham had not sought any suppression orders on the Court's decisions regarding this matter. He notes that the Notice of Discontinuance was filed in open court (a matter I have already considered and which Brereton J, with whom with respect I agree, found did not defeat the purpose of the confidentiality obligations). Mr Shamin submits, however, that the limited disclosure constituted by the filing of the Notice of Discontinuance has been significantly broadened by the posting of Brereton J's ex tempore judgment (containing details never published by Mr Shamin) on the Court's own website. In his submissions, Mr Shamin places weight on the failure of Mr Missingham to prevent the publication of the judgment as demonstrating that his concerns about the confidentiality of the settlement of his defamation proceedings are not genuine.
In this regard, it is not apparent when the judgment was posted on the Court's Caselaw website, nor when Mr Missingham or his legal advisers became aware of it. (Mr Dawson informed me from the bar table that he had only become aware of it in the preceding days). Mr Dawson submits that reference to the material in the judgment can only have been an oversight, in circumstances where the Deed was tendered as a confidential exhibit on the application before Brereton J (as it was before me). I consider that the tenor of his Honour's judgment makes it clear that there was no intention by the posting of those reasons on the Court's Caselaw website to destroy confidentiality in the terms of the very deed the confidentiality of which was there is issue. In a busy duty list when ex tempore reasons are given of this kind, I think the most likely explanation is that the inclusion of the text of some of the deed was an oversight (and I note that his Honour's immediate concurrence with the redaction I have made to the judgment, when that was drawn to his attention, supports such a conclusion).
In any event, insofar as what Mr Shamin relies upon is the failure of Mr Missingham to seek a suppression order at that stage, Mr Dawson refers to the recent decision of the Court of Appeal in Rinehart v Welker [2011] NSWCA 403, where consideration was given to the operation of the provisions of the legislation under which suppression orders may be sought (Court Suppression and Non-publication Orders Act 2010 (NSW)). There, emphasis was given to the requirement, when exercising the statutory jurisdiction, that suppression be necessary for one or more of the reasons in s 8 of the Act. Mr Dawson submits that it would be difficult in this case to argue that suppression was necessary of an exhibit tendered on a confidential basis. I think there is force in that submission.
I consider later in these reasons the import of the posting of the judgment on the website insofar as whether there remains utility in enforcing the contractual obligation of confidentiality. Suffice it for the purposes of the fourth of the bases on which the unclean hands allegation is made, to note that I do not consider that any delay on Mr Missingham's part (the extent of which is unclear) in seeking to remove the judgment from the website operates as unclean hands in the sense in which that expression is understood in equity (where what is required is that the conduct have an immediate and necessary relation to the equity sued for - Black Uhlans Inc v NSW Crime Commission &Ors [2002] NSWSC 1060; Carantinos v Magafas [2008] NSWCA 304; Kation Pty Limited v Lamru Pty Limited [2009] 257 ALR 336).
As to the relevant principles in relation to the imposition of a permanent injunction (the second of the matters raised by Mr Shamin in resisting relief) I have set out above those principles. I consider that there is utility in enforcing confidentiality provisions of this kind, having regard to those principles. I accept the force of the observation by Brereton J at [10] of his ex tempore judgment that it is "at the very least seriously, if not strongly, arguable" that the purpose of the confidentiality clause was to ensure that the terms upon which the parties had settled their dispute be kept confidential and at [14] that the primary obligation of the parties was to adhere to their contractual promises and preserve confidentiality. In a different but not wholly dissimilar context in Seven Network (Operations) Ltd and Ors v James Warburton (No 2) [2011] NSWSC 386, Pembroke J noted at [3] that:
One of the abiding principles of a civilised system of law such as ours is that contracts are meant to be observed. Lawyers sometimes use the Latin phrase pacta sunt servanda to describe the principle. We make decisions on the assumption that contractual obligations will generally be performed and solemn commitments will not be ignored. The general policy of the law is that people should honour their contracts: Baltic Shipping Co v Dillon (1991) 22 NSWLR 1 at 9 (Gleeson CJ). If there were not adherence to such a principle, the conduct of private and commercial affairs would become an uncertain jumble. And certainty is what the law of contracts strives to achieve. ...
Finally, as to the third basis on which Mr Shamin resists the permanent injunction (the posting onto the Court's website of the ex tempore judgment on the interlocutory application), that has given me some pause. If the relevant information is and has been in the public domain for some time, is there sufficient confidentiality remaining in the information that should be protected or any utility that remains in the grant of an injunction of the kind sought?
Mr Dawson in this regard adopts what was said by Brereton J as to the continuing utility of an injunction notwithstanding disclosure to a limited extent. At [15], his Honour noted that:
...being in the public domain to that limited extent [there considering the announcements in Court when the defamation matter was finalised] does not mean that the purpose of the confidentiality obligations of the parties is totally defeated. It may reduce their effect to some extent, but part of the purpose of those obligations is to prevent parties using the terms of settlement each against the other and, in my view, that purpose can still be achieved. The subject matter is not so much in the public domain that the utility of confidentiality is lost.
Accepting for the purpose of the argument that the judgment was at least reproduced on the Court's Caselaw website, Mr Dawson submitted that the mere fact of availability did not prove that there had been actual publication in the sense that it had been accessed and/or downloaded by anyone. (Mr Shamin seemed to suggest that this could be inferred from the interest that martial arts community members seem to have displayed in the martial arts blogs themselves, but I do not consider that I can infer from that that there would have been considerable, or any particular, interest in reading judgments posted on the Court's Caselaw website.) In this regard, Mr Dawson referred to what was said in Dow Jones & Company Inc v Gutnick 210 CLR 575 by Gleeson CJ, McHugh, Gummow and Hayne JJ at [25] when confirming that for the tort of defamation in Australia focus lies upon publications causing damage to reputation (and hence Mr Dawson submits that in the current case what must be proved is not simply the publication on the internet but that there has been access thereto). Thus, Mr Dawson submits that it is not sufficient for Mr Shamin to point to the publication on the Court website of the judgment, what must be determined is what access there has or has not been to that judgment (as to which there is no evidence).
Further, it is submitted that, having come to Court to enforce rights under the deed of settlement (and for that purpose having revealed what the settlement was), it could not be consistent with the administration of justice for Mr Missingham thereby to lose an entitlement to preserve the value of the settlement (that value lying in the confidentiality of the settlement) merely because of the inclusion of some of the settlement terms in the judgment. Mr Dawson submits that it would be extraordinary if the posting of a judgment, as part of the process undertaken by the Court and consistent with the statutorily recognised principle of open justice, could deny a party the very right that party came to Court to enforce, particularly where any publication of the material in question occurred without his authorisation or knowledge.
As to the utility of enforcing a contractual obligation of confidence where there has been limited disclosure or the matter might be said to have entered the public domain to some extent, I note that there is a distinction between the situation where there is an equitable obligation of confidence (the retention of the quality of confidence being necessary to sustain relief in equity) and where the obligation of confidence is imposed by way of contract (as is here the case). I considered in Brand v Monks [2009] NSWSC 1454 the question whether a contractual obligation of confidence could be construed as extending to information already in the public domain or a matter of common knowledge (even though in such circumstances, in the absence of any express obligation, an equitable duty of confidence would not be implied - AG v Guardian Newspapers (No 2); AFL v The Age Co Limited (2006) 15 VR 419 at 427) and concluded that it was a question of fact and ultimately a matter of degree as to the extent of the disclosure in question.
(Although there I observed that it would be difficult in those circumstances to see how injunctive relief could be sought in relation to a breach or threatened breach of such an obligation, that was on the basis that it would be hard to see what damage would be suffered by the disclosure of something already public knowledge. Here, where the value in confidentiality goes to the issue of reputational damage, the utility in holding Mr Shamin to his contractual obligations is as has already been recognised by Brereton J.)
In Maggbury, the conclusion that confidentiality of the information in question had been lost by public disclosure was determined having regard to "the quantum and significance of the public disclosure".
I remain of the view that the question whether information has entered the public domain to such an extent as to permit its disclosure in the face of a contractual prohibition against disclosure is a question of fact and degree, taking into account the circumstances and the extent of any existing publication of the information. If only limited publication has occurred, and if relative secrecy remains, then the information may well retain its confidential character sufficient to make enforcement of that contractual obligation a matter of utility. Burchett AJ, in Artedomus v Del Casale [2006] NSWSC 146, referred to the statement in Cross, The Law of Intellectual Property: Copyright, Designs and Confidential Information Vol 2 section 25-85, that a claim for breach of confidence "is not to be defeated simply by proving that there are other people in the world who know the facts in question besides the man as to whom it is said that his disclosure would be a breach of confidence and those to whom he has disclosed them".
In Johns v ASC (1992) 178 CLR 408, the concept of confidential information entering the "public domain" was considered by Gaudron J (at 460-462) in the context of the question whether there is or should be a duty of confidence imposed on third parties (a question which her Honour considered must depend, at least in part, on the extent to which the information in question is generally known or available). Her Honour noted that there were two distinct aspects of the notion of "public domain" (the first concerned with the question whether any duty of confidence arises and the second with whether it has come to an end) and that the concept of "public domain", in relation to the law of confidence, was primarily significant by reason of the fact that no obligation of confidence (there referring to the situation where an equitable obligation of confidence might arise) and, hence, no right to confidence can come into existence unless the information involved has "the necessary quality of confidence". Her Honour went on to say that where there is a question whether an obligation of confidence is extinguished because of subsequent publication to the world at large by third parties or, even, by the person who owed the duty in the first place, and it is said that the information has passed into the public domain, "The question that then arises is, in essence, whether the information has lost its confidential quality. And as already pointed out, that is largely a question of fact".
Although in that case Brennan J, with whom Dawson J agreed, was of the view that:
When the proceedings of a court, tribunal or commission created by statute or in exercise of the prerogative are open to the public and a fair report of the proceedings can lawfully be published generally, it is not possible to regard information published in those proceedings as outside the public domain (Home Office v Harman, [1983] AC 280, at pp 303, 312). Information published in those circumstances enters the public domain by a lawful gate.
the balance of that passage refers to the use of such information on the basis that it has not been "imparted so as to import an obligation of confidence". Here, what is sought to be restrained is not the media report of proceedings in open court but breach of a confidentiality obligation on the part of a party to a settlement deed in circumstances where there is no evidence that there has been any wide publication of the contents of the judgment (and where the material in the judgment itself did not span the whole of the material that seems to me to be confidential under the deed itself).
The degree of accessibility to information said to be in the public domain has been seen as important (see Kellam J in AFL v The Age at 428-430). Mr Dawson accepts that the question whether something has entered the public domain is a question of fact and degree but notes that here the question is not as to whether the information in question has lost the necessary quality of confidence in order to preclude a duty of confidence arising in equity; rather the question is whether there is any utility in enforcing the confidentiality obligations in the deed having regard to the publication of the judgment on the court website.
Mr Dawson invites me to conclude in the present case, and I accept, that there has not been such disclosure to the world as to destroy confidentiality in the sense in which that was considered in Interfirm Comparison (Australia) Pty Ltd v Law Society of New South Wales [1975] 2 NSWLR 104 at 118-119 by Bowen CJ in Eq (as his Honour then was) or to lead to the exercise of discretion against the grant of a permanent injunction.
In G v Day [1982] 1 NSWLR 24 at 40-41, Yeldham J noted that "at least in cases not concerning trade secrets where full disclosure is made, the mere fact that some publication has occurred is not in itself a reason for declining to protect the plaintiff's right to confidentiality". His Honour went on to say:
Where, as here, there has been a limited publication of the plaintiff's name without his knowledge or approval, where he is entitled, to the knowledge of a newspaper publisher, to expect anonymity, and where any unauthorized publication of his identity will probably be to his detriment, I do not consider that the court should be astute to deprive him of relief merely by reason of that limited publication.
I have concluded that the inclusion of some of the terms of the settlement deed in the ex tempore judgment posted on the Court's website is at most a limited publication. I am not satisfied that it is to such an extent as necessarily to deprive the confidentiality obligation in the deed of any utility. There is no evidence that it has been accessed on a widespread basis since it was posted or by whom that access has been made. I accept that the Court should be astute not to deprive Mr Missingham of relief by reason of a limited publication in which he played no part (and which arose by reason of his invocation of the court processes in order to preserve the value of that very confidentiality).
After I had reserved my judgment in this matter, and was in the course of considering the submissions and preparing my reasons, I sought Brereton J's concurrence to the redaction of his ex tempore reasons in order to suppress the terms of the settlement deed (other than the confidentiality provision) and the terms of Mr Goldsmith's letter, so as to limit the extent of any unintended entry into the public domain of that material pending delivery of my judgment on the present application. I consider that those arrangements should remain. I suppressed that material on the basis that I formed the view that there had been an unintended dissemination of that material and that it was within the inherent jurisdiction of the Court to control publication of reasons in this respect. I also suppressed some of the transcript of Mr Shamin's submissions for that reason as noted earlier. When I hand down my reasons for judgment I will not publish them until I have given the parties an opportunity to review them for any unintended disclosure of confidential material. I will also indicate the (very small) portions of the transcript I think should remain suppressed.
For the above reasons, I will grant the permanent injunction that has been sought by Mr Missingham.
Damages
Mr Missingham also seeks damages for the breach of the settlement deed. Mr Dawson concedes that it is difficult to measure the harm suffered as a result of the defendant's breach. Insofar as any damage is by reference to the loss of reputation suffered, there is a question as to how many people read the letter and Notice of Discontinuance posted on the forum. Tendered in evidence, and admitted over objection by Mr Shamin but subject to relevance, was material produced on subpoena by Blitz Publications (the administrator of the Blitz website), as to the access made to the forum thread which shows that it was accessed or visited 68 times between the first publication of the letter on 17 September 2011 and the removal of the letter and the Notice of Discontinuance on the morning of 23 September 2011. However, as Mr Shamin contends, this does not indicate whether persons who visited the site had accessed it more than once (nor is it possible to know whether and how many times there was access by Mr Missingham or his legal representatives).
In circumstances where it is not possible to determine what loss has been suffered as a result of the breach, if any, but I accept that there was a clear breach, I consider that it is appropriate to award nominal damages of $10.
Costs application
Finally, Mr Missingham seeks an order for the costs of this application on an indemnity basis for two reasons: first it is said that the breaches were clear and contumelious breach; second, it is said that in any event the deed itself makes provision to that effect.
As to the first of those matters, it seems to me that there is a basis on which to find that this was a contumelious breach (not least because the posting of the updated material on 22 September seems to have occurred at a time when Mr Shamin was on notice of the complaint that had been made). The suggestion that Mr Shamin did so because his solicitor had intimated that it would be open to him to do so (or that there would be no consequences if he did) is troubling but not one that there is evidence to support (and in any event it would not gainsay the fact that there was a deliberate publication of material in the knowledge of the objection by Mr Missingham thereto on the basis of obligations in the deed). It seems to me therefore that this was a contumelious breach in the sense in which that expression is commonly understood. However, it is not necessary to make any final finding in this regard in circumstances where the deed itself contains provision that would warrant such an order.
I see no reason not to award indemnity costs of this application to enforce the confidentiality deed, pursuant to the agreement of the parties as to Mr Missingham's entitlement to such an indemnity if there were to be a breach of the deed.
Orders
For the reasons set out above I make the following orders:
1.The defendant be restrained by himself, his servants or agents from disclosing or permitting to be disclosed, directly, or indirectly, the terms of the deed of settlement and release dated 7 September 2011 between the plaintiff, Dr Larissa Koroleva and the defendant, (the Settlement Deed) except:
(a)with the express written consent of the other parties to the Settlement Deed on each and every occasion;
(b)on a confidential basis to their insurers (if any), legal and accounting advisors;
(c)to the extent required to comply with a law or order of a court; or
(d)to enforce the terms of the Settlement Deed.
2.The defendant also be restrained by himself, his servants or agents from publishing any statement of or pertaining to the settlement of proceedings 2010/397452 in this court, other than as permitted by clause 8.2 of the Settlement Deed.
3.Liberty to apply on reasonable notice.
4. The defendant is to pay to the plaintiff the sum of $10 as nominal damages for the breaches by him of the obligation contained in clause 8.1 of the Settlement Deed.
5.The defendant is to pay the plaintiff's costs of these proceedings on an indemnity basis.
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Decision last updated: 29 March 2012
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