Paviello and Paviello and Anor
[2018] FamCA 454
•13 April 2018
FAMILY COURT OF AUSTRALIA
| PAVIELLO & PAVIELLO AND ANOR | [2018] FamCA 454 |
| FAMILY LAW – PRACTICE AND PROCEDURE – Where the applicant sought access to documents from another Family Court matter – Where information contained therein may affect the outcome of the present matter – Whether there was any contempt of Court in attaching a document which was filed in separate proceedings to an affidavit – Where access was granted. |
| Family Law Act 1975 (Cth) |
| Ainsworth v Hanrahan (1991) 25 NSWLR 155 Commissioner of Taxation & Darling & Anor (2014) FLC 93-583 Crest Homes Plc v Marks [1987] AC 829 Harman v Secretary of State for the Home Department [1983] 1 AC 280 Hearne v Street (2008) 235 CLR 125 John Fairfax & Sons Pty Ltd v McRae (1955) 93 CLR 351 Liberty Funding Pty Ltd and Anor v Phoenix Capital Ltd (2005) 218 ALR 283 Oates & Q and Anor (2010) FLC 93-451 |
| APPLICANT: | Ms Paviello |
| FIRST RESPONDENT: | Mr A Paviello |
| SECOND RESPONDENT: | Mr B Paviello |
| FILE NUMBER: | SYC | 2323 | of | 2017 |
| DATE DELIVERED: | 13 April 2018 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Le Poer Trench J |
| HEARING DATE: | 12 February 2018 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Lethbridge |
| SOLICITOR FOR THE APPLICANT: | Jordan Djundja Lawyers |
| COUNSEL FOR FIRST RESPONDENT: | Mr Baxter |
| SOLICITOR FOR THE FIRST RESPONDENT: | Parker Law |
| COUNSEL FOR THE SECOND RESPONDENT: | Mr Tockar |
| SOLICITOR FOR THE SECOND RESPONDENT: | Blanchfield Nicholls Partners |
Orders
That the applicant wife and the respondent husband (should he so wish) be granted leave to inspect the following class of documents contained in the Family Court File SYC3563/2014 relating to the second respondent, Mr B Paviello, and his estranged wife Ms C Paviello:
(a)Any affidavit sworn by the second respondent which deals with property and/or financial matters.
(b)Any affidavit sworn by the husband.
(c)Any affidavit sworn by a witness in support of the second respondent which deals with property and/or financial matters.
(d)Any Financial Statement sworn by the second respondent.
For the purpose of implementation of order (1) the solicitor for the second respondent is to have first opportunity access to the Family Court file SYC3563/2014 for the purpose of compiling the documents which fit the description prescribed by order (1) hereof. That access is to take place in the presence and under the supervision of the Docket Registrar.
For the purpose of order (2) hereof the Docket Registrar is to appoint a time (in consultation with the solicitor for the second respondent) for the said file to be accessed in the presence of the Docket Registrar. If it is possible for that to occur within 14 days from the date hereof then it should occur within that time frame or so soon thereafter as the workload of the Docket Registrar allows.
Upon the solicitor for the second respondent identifying the documents which he/she contends fit the description specified in order (1) hereof, the Docket Registrar is then to inspect the file in the presence of the second respondent’s solicitor to determine whether in the opinion of the Docket Registrar there is any other document on the court file which he/she considers also fits the description of the category of documents specified in order (1) hereof.
Should the Docket Registrar identify further documents those documents are to be shown to the second respondent’s solicitor who is to then indicate whether he/she agrees the document should be included in the documents to which order (1) hereof refers, or alternatively is to state objection to the inclusion of the document.
If there be an objection to a particular document following the process specified in order (5) hereof the Docket Registrar is to cause the matter to be further listed before me to determine the issue. In relation to any such listing the husband and the wife in the primary proceeding are excused from attendance.
The applicant wife is not to use or publish any information obtained from the inspection of the documents, or use any copies of any document contained in the court file, otherwise than for the purpose of the proceeding in this court between the husband and the wife without further obtaining the permission of the court to such use or publication.
Each of the husband and wife is permitted to take one copy only of each document provided for inspection. No further copies of such documents are to be made. The copy of each document so taken is to remain in the custody of the solicitor acting for the party at the time the photocopy is taken. At the time of making final orders, unless the court orders otherwise, all copies of the documents made pursuant to these orders are to be delivered, by the solicitor acting for the party at the time the photocopy was taken, to the registry manager of the Family Court of Australia at Sydney, together with a copy of this order, and the registry manager is then to cause the copies to be destroyed.
Should any party seek a costs order, such application is to be made within 14 days in writing restricted to no more than three typed pages of submission. Each party against whom any such cost order is sought is to respond to such application (should they choose to do so) within 14 days of receipt of an application for costs and submission. The determination of any such application will be reserved.
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 Paviello & Paviello and Anor 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 SYDNEY |
FILE NUMBER: SYC 2323 of 2017
| Ms Paviello |
Applicant
And
| Mr A Paviello |
First Respondent
And
| Mr B Paviello |
Second Respondent
REASONS FOR JUDGMENT
Introduction
Before the Court is an Application in a Case filed by Ms Paviello (“the wife”) on 1 September 2017. The wife is the applicant for final property orders which she specified in an Initiating Application filed by her on 13 April 2017.
The order sought by the wife in her Application in a Case is concisely stated as follows:
That the Applicant wife be granted leave to inspect the Family Court File SYC3563/2014 relating to the second respondent, Mr B Paviello and his estranged wife Ms C Paviello.
The Court file number SYC3563/2014 to which the second respondent was a party will herein be referred to as “the Family Court File”.
The first respondent in this matter is the husband, Mr A Paviello (“the husband”). The second respondent is Mr B Paviello who is the brother of the husband.
The second respondent opposes the wife’s Application in a Case. The husband was represented before the Court during the hearing of the wife’s application, however, he informed the Court that he is not a party to this application.
The issue for determination arises, as can be seen in the evidence relied upon by the wife, because it is the wife’s case that the husband has a 50 per cent beneficial interest in a property at 1 D Street, Suburb E; a 50 per cent beneficial interest in a property at 2 D Street, Suburb E; and a 50 per cent beneficial interest in the B & A Paviello Family Trust. The wife asserts those interests are of substantial value. The husband denies he has any such interests.
The wife seeks access to the Family Court File because she says there it will provide evidence which supports her case in relation to the contended beneficial interest of the husband in the above specified assets. She relies upon the evidence of her former sister-in-law Ms C Paviello (the former wife of Mr B Paviello, the second respondent). Ms C Paviello does not oppose the file relating to her property proceeding with her husband being made available to the parties in this matter. The second respondent does object to inspection of the file.
Evidence
The wife read the following evidence to support her case. In her affidavit filed 13 April 2017 she relied on paragraphs 1, 6-8, 20-27, 29-36, 39-43, 45, 48-50, 55, 56, 60 and 65-69. She read the affidavit of Ms C Paviello sworn 1 September 2017. She read the Financial Statement filed by the husband on 22 May 2017. She read paragraphs 45, 56, 57 and 66 (as it appears on page 9) of the affidavit of the second respondent.
In her affidavit filed 13 April 2017 the wife deposed the following (as summarised by me):
·The husband and wife were married in 1983.
·The husband and the second respondent are brothers.
·There are five children of the marriage born between 1986 and 1994.
·Separation occurred under the one roof in 2012. The husband vacated in May 2016 and now lives in F Town.
·During the marriage the husband managed the financial matters and did not share information about same with the wife.
·During the marriage the wife worked as a full time homemaker and parent for the family. She did some tasks associated with businesses conducted by the husband, however, those tasks were limited to placing orders and banking takings.
·From time to time the wife signed documents provided to her by the husband.
·In 1995 the husband and the second respondent signed a lease agreement relating to a business premises at G Street, Suburb E. The lease was signed under the common seal of H Limited. The second respondent signed as a director of that company and the husband signed as secretary. Both the husband and the second respondent signed the lease guaranteeing the performance of the lessee company. The company also conducted a business at J Street, Suburb K.
·The husband was a trustee of the B & A Paviello Family Trust and resigned in December 2010. The wife said that happened at a time when she and the husband were experiencing difficulty in their marriage.
·The wife asserts that the husband has a beneficial interest in a property at 2 D Street, Suburb E. She says his interest was represented through the B & A Paviello Family Trust. The title to the property is held by L Pty Ltd, a company which the wife says holds the property upon trust for trusts the ultimate benefit of which flow to the husband as to 50 per cent.
·The wife asserts that although the title to the property at 1 D Street, Suburb E (the property next to number 2) stands in the name of the second respondent, the property is held in trust as to 50 per cent for the husband.
·The wife asserts the husband has a beneficial interest in a company M Pty Ltd, which company in 2006 had annual sales of $155,210,714.
·The husband held a beneficial interest in a number of townhouse units at N Street, Suburb O. His interest was held by L Pty Ltd. One of those units has been transferred to the parties’ son (in April 2016) without the knowledge or consent of the wife. No disclosure has been made by the husband as to the application of any sale proceeds.
·The wife has been informed by Ms C Paviello (in sworn affidavit evidence) that the second respondent represented in sworn evidence to the Family Court, in the property proceeding between them, that he holds substantial assets upon trust for the husband. The wife set out the specifics of what those assets and interests are said to be.
·The husband has asserted through his solicitors and his Financial Statement filed on 22 May 2017 that he has no beneficial interest in either L Pty Ltd (including, presumably any trust of which that company is a trustee) or M Pty Ltd.
·The wife has annexed a number of documents to her affidavit which, on the face of same, the wife says provide an inference that the husband had/has a beneficial interest in specified assets.
The wife relies upon an affidavit sworn by Ms C Paviello. That affidavit relevantly attests as follows:
·Ms C Paviello and the second respondent were married for 30 years and separated in 2013. There were family law proceedings between them conducted under file number SYC3563/2014 in the Sydney registry of the Family Court of Australia.
·Annexed to her affidavit is a copy of a balance sheet provided by the second respondent’s solicitor to her solicitor in about September 2014. She also annexed a copy of the Financial Statement sworn by the second respondent on 1 September 2014 and filed in their proceeding in this court.
·The wife relies upon the representation contained in the Financial Statement of the second respondent that he held one half of his interest in 1 D Street, Suburb E “in trust for brother Mr A Paviello”. Further, the representation that the second respondent had a beneficial interest in the Paviello Family Trust which owned a property at 2 D Street, Suburb E “(50 per cent held for [Mr A])”. Also “2 townhouses Lot [1] and Lot [2] held in trust for [Mr A]”. In relation to the B & A Paviello Trust the second respondent represented the trust was owed $398,748 by M Unit Trust Fund of which sum 50 per cent was beneficially owned by Mr A.
The wife relied upon paragraphs 45, 56 57 and 66 (on page 9) of the affidavit of the second respondent sworn 8 December 2017 (the affidavit contains 60 paragraphs). The evidence in those paragraphs can be summarised as follows:
·The husband has no interest in the property at 2 D Street, Suburb E, in M Unit Trust, or any company in which the second respondent has an interest.
The wife relied upon the representations made by the husband in his Financial Statement filed on 22 May 2017. The relevance of this document in this application is as follows:
·Apart from his joint ownership with the wife of the former matrimonial home at Suburb P, his only property/entitlements is in L Pty Ltd, a company which he says holds a property at 2 N Street, Suburb O upon trust for him AND additionally holds funds of his being approximately $600,000 arising from the sale of a property at 1 N Street, Suburb O.
The second respondent filed a Response to the wife’s Application in a Case. It was filed 8 December 2017. He seeks dismissal of the wife’s application and other consequential orders.
The second respondent reads an affidavit filed by him on 8 December 2017. The evidence can be summarised as follows:
·The second respondent objects to the applicant having access to any documents filed in the family law proceeding between he and Ms C Paviello.
·He submits the documents created for his litigation and now before the court as annexures to the affidavit of Ms C Paviello breach the “Harman principle”.
·He does not consent to the applicant having access to the Family Court File.
·He seeks an order that the applicant surrender to the custody of the court any documents provided by Ms C Paviello to the applicant.
Submissions
Submissions made by the applicant wife
The applicant directed the Court to paragraph 98 of the High Court decision in Hearne v Street (2008) 235 CLR 125, at 155 (“Hearne v Street”). Therein the decision of the majority set out the following:
It may be noted that the general law protection is often buttressed by protection from rules of court. Thus until 15 August 2005, the New South Wales Supreme Court Rules 1970 , Pt 65, r 7, prevented strangers to litigation from having access to documents or things on the court file without the leave of the Court: see also Practice Note No 97 [103] . From 1 March 2006, Practice Note SC Gen 2 prescribed procedures in relation to access to Supreme Court files. The most important paragraphs are:
“6.Access to material in any proceedings is restricted to parties, except with the leave of the Court.
7. Access will normally be granted to non-parties in respect of:
•pleadings and judgments in proceedings that have been concluded, except in so far as an order has been made that they or portions of them be kept confidential;
• documents that record what was said or done in open court;
• material that was admitted into evidence; and
• information that would have been heard or seen by any person present in open court,
unless the Judge or registrar dealing with the application considers that the material or portions of it should be kept confidential. Access to other material will not be allowed unless a registrar or Judge is satisfied that exceptional circumstances exist.”
The thrust of the wife’s submission is that court practice across civil litigation does permit access to information contained in court files relating to proceedings between strangers to the litigation in which an application for access is made. She submitted that courts have Rules and/or guidelines which set out the circumstances in which access will be permitted. At the root of such procedures is the need to prevent an injustice arising because access is refused. Coupled with that focus is also the desirability of preserving litigants’ privacy.
In answer to a submission by the second respondent that the wife has committed contempt of court by annexing the documents obtained from Ms C Paviello, the wife says that “public interest” is sufficient answer to any allegation of contempt. That it was necessary to annexe the documents and file them in court in order to illustrate how a substantial injustice to the wife in her proceedings will be occasioned if she is not permitted to have access to the Family Court File.
Submissions made by the second respondent
The second respondent provided written submissions in support of his objection to the wife obtaining leave to inspect his Family Court File.
He submitted that, as a matter of principle, the use of information obtained or produced under the compulsory processes of the court cannot be used for a collateral or ulterior purpose unrelated to the proceedings in which they were used. It was submitted that a restraint on the use of information obtained or produced in unrelated court proceedings gives rise to an implied undertaking known as the “Harman undertaking”. The Court was taken to number of cases in support of the second respondent’s submissions.
In relation to the second respondent’s submission that a breach of the implied undertaking should be treated as contempt of court, he relied on the case of Ainsworth v Hanrahan (1991) 25 NSWLR 155 at 168-9.
Law
Statement of principle: the Harman undertaking
The implied undertaking upon which the second respondent relies takes its name from the House of Lords decision in Harman v Secretary of State for the Home Department [1983] 1 AC 280. The implied undertaking describes the concept that documents obtained by compulsory court processes should not be used for a collateral purpose other than in those proceedings.
The concept was adopted by the High Court in Hearne v Street, where Hayne, Heydon and Crennan JJ (Gleeson CJ and Kirby J agreeing) held that the Harman undertaking is an obligation imposed by law. The majority said, at [96] – [97]:
Where one party to litigation is compelled, either by reason of a rule of court, or by reason of a specific order of the court, or otherwise, to disclose documents or information, the party obtaining the disclosure cannot, without the leave of the court, use it for any purpose other than that for which it was given unless it is received into evidence. The types of material disclosed to which this principle applies include documents inspected after discovery, answers to interrogatories, documents produced on subpoena, documents produced for the purposes of taxation of costs, documents produced pursuant to a direction from an arbitrator, documents seized pursuant to an Anton Piller order, witness statements served pursuant to a judicial direction and affidavits. …
(Emphasis added)
(Footnotes omitted)It is common to speak of the relevant obligation as flowing from an “implied undertaking”.
Their Honours continued at [107]:
The expression “implied undertaking” is thus merely a formula through which the law ensures that there is not placed upon litigants, who in giving discovery are suffering “a very serious invasion of the privacy and confidentiality of [their] affairs”, any burden which is “harsher or more oppressive … than is strictly required for the purpose of securing that justice is done.” To that statement by Lord Keith of Kinkel of the purpose of the “implied undertaking” may be added others. In Riddick v Thames Board Mills Ltd Lord Denning MR said:
Compulsion [to disclose on discovery] is an invasion of a private right to keep one’s documents to oneself. The public interest in privacy and confidence demands that this compulsion should not be pressed further than the course of justice requires. The courts should, therefore, not allow the other party – or anyone else – to use the documents for any ulterior or alien purpose. Otherwise the courts themselves would be doing injustice.
In Harman v Secretary of State for Home Department Lord Diplock said:
The use of discovery involves an inroad, in the interests of achieving justice, upon the right of the individual to keep his own documents to himself; it is an inroad that calls for safeguards against abuse, and these the English legal system provides … through its rules about abuse of process and contempt of court.
In a separate judgment, Gleeson CJ at [3] noted that the implied undertaking is better described as a “substantive legal obligation”.
Their Honours also found that the obligation also extends to third parties who receive documents and are aware of their origin in legal proceedings. The majority said at [109] and [111]:
The primary person bound by the relevant obligation is the litigant who receives documents or information from the other side pursuant to litigious processes. The implied undertaking also binds others to whom documents and information are given. For example, expert witnesses, who are not parties, commonly receive such documents and information and are bound by the obligation. It is likely that, in the future, documents and information will be provided to persons funding litigation, who will likewise be bound by the obligation.
…
If this principle did not exist, the “implied undertaking” or obligation on the litigant would be of little value because it could be evaded easily. That is why Lord Denning MR said in Riddick : “The courts should … not allow the other party — or anyone else — to use the documents for any ulterior or alien purpose. Otherwise the courts themselves would be doing injustice.” And in the same case Stephenson LJ also said: “[I]t is important to the public and in the public interest that the protection should be enforced against anybody who makes improper use of it.” Use with knowledge of the circumstances would be improper use.
In Commissioner of Taxation & Darling & Anor (2014) FLC 93-583 (“Commissioner of Taxation & Darling”) the Full Court of the Family Court found that, in that case, the implied obligation extended the Commissioner of Taxation who obtained documents which were filed in a Family Court matter of which they were not a party. The plurality stated, at [107]:
In any event, when regard is had to the underlying purpose of the obligation, we see no reason to treat a stranger to the litigation any differently to someone with a direct connection (provided the stranger is aware the documents were generated in, or for the purposes of, litigation). The primary purpose of the principle is to protect privacy and encourage frank disclosure in litigation. This purpose would not be fostered by reading down the principle. …
The House of Lords in Crest Homes Plc v Marks [1987] AC 829, 860 stated:
… the court will not release or modify the implied undertaking given on discovery save in special circumstances and where the release or modification will not occasion injustice to the person giving discovery… each case must turn on its own individual facts.
In Liberty Funding Pty Ltd and Anor v Phoenix Capital Ltd (2005) 218 ALR 283, the Full Court of the Federal Court held that a party seeking to be relieved from their obligations under an implied undertaking must demonstrate “special circumstances”. Their Honours Branson, Sundberg, and Allsop JJ held, at [31]:
In order to be released from the implied undertaking it has been said that a party in the position of the appellants must show “special circumstances”: see, for example, Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217; 110 ALR 685. It is unnecessary to examine the authorities in this area in any detail. The parties were not in disagreement as to the legal principles. The notion of “special circumstances” does not require that some extraordinary factors must bear on the question before the discretion will be exercised. It is sufficient to say that, in all the circumstances, good reason must be shown why, contrary to the usual position, documents produced or information obtained in one piece of litigation should be used for the advantage of a party in another piece of litigation or for other non-litigious purposes. The discretion is a broad one and all the circumstances of the case must be examined. (Emphasis added) In SpringfieldNominees, Wilcox J identified a number of considerations which may, depending upon the circumstances, be relevant to the exercise of the discretion. These were:
• the nature of the document;
• the circumstances under which the document came into existence;
• the attitude of the author of the document and any prejudice the author may sustain;
• whether the document pre-existed litigation or was created for that purpose and therefore expected to enter the public domain;
• the nature of the information in the document (in particular whether it contains personal data or commercially sensitive information);
• the circumstances in which the document came in to the hands of the applicant; and
•most importantly of all, the likely contribution of the document to achieving justice in the other proceeding.
Their Honours described the above considerations as “a helpful guide”.
The above authorities indicate that the significance of the implied obligation in maintaining privacy must be weighed against the consideration of public interest and/or achieving justice. This balancing of considerations was enlivened by the Full Court of the Family Court decision in Commissioner of Taxation & Darling. In that case, the Full Court found that the trial judge had erred in her exercise of discretion by not relieving the Commissioner of the implied obligation in respect of financial documents obtained from a Family Court file to which they were not a party. In the re‑exercise of discretion, their Honours said at [198] – [199]:
Recognising there is a range of competing considerations which does not admit of exhaustive definition, we consider the discretion should be exercised in favour of the Commissioner for the following reasons:
1. The Commissioner is performing an important public duty. There is no reason to doubt the opinion of his officers that having access to the documents will assist in the conduct of the audit. The public interest is advanced by ensuring all taxpayers pay their fair share of tax. (Deputy Commissioner of Taxation v Karas [2012] VSC 143 at [59]).
2. The Commissioner is engaged in a substantial, targeted audit. …
3. Although many of the annexures to the affidavits may be available to the Commissioner from other sources, the parties’ own assertions about the history of acquisition of assets would be available only to the Commissioner by interview with the parties in which they may have an incentive not to be frank. Furthermore, it is common ground, as examination of “JSS-11” would in any event suggest, that many of the assets are held outside the jurisdiction (Transcript, 31 January 2013, p 12). Contrary to the submissions made on behalf of the husband below (Transcript, 31 January 2013, p 15) the way in which assets were acquired, whether in Australia or overseas, would be a most material factor in determining whether there has been a full disclosure of income.
4. As we were not taken to the relevant documents, we are unable to comment on the cogency of the evidence contained in them; however, at this point the ATO is conducting only an audit and the cogency of the evidence would be the subject of scrutiny in any proceedings that may be instituted after the Commissioner completes the audit and makes assessments.
5. No explanation was provided to support the assertion that the release of the Commissioner from the obligation would be “inconvenient” to the husband. We see no inconvenience. Nor would there be any prejudice to the husband, unless the documents do establish he has not been meeting his taxation obligations: Bailey v Australian Broadcasting Corporation at 490. In any event, mere inconvenience is not a bar to the release of the obligation as may have been suggested by the way the husband’s submission was framed. See the full “test” in Griffiths & Beerens Pty Ltd v Duggan (No 2) [2008] VSC 230 at [13].
6. There are restrictions on the way in which the Commissioner can use the information obtained from the court file which would ensure that the documents do not venture into the public arena, thus ensuring there is no breach of s 121 of the Family Law Act: Bailey v Australian Broadcasting Corporation at 490.
7. The affidavits and financial statements were not given in discovery or obtained under a warrant but were sworn by the parties for the purposes of the proceedings and therefore in the expectation that they might be read in open court. Having served the documents, the decision as to whether the documents would pass into the public domain moved from the control of the party who filed them. Whilst in no way determinative, this factor is of significance: Moage Ltd (in liq) v Jagelam (2002) 43 ACSR 173 at [22].
8. The fact the Commissioner does not carry the burden of proving the accuracy of his assessment is, in our view, irrelevant and the primary judge was right in so concluding. The Commissioner can only assess an amount of tax payable on the basis of the information available to him. He could not legitimately assess an amount on the basis of speculation about what might be disclosed in documents to which he does not have access. If the husband chose to challenge the assessment, the fact the burden of proof is on the husband would be of little comfort to the Commissioner if he was denied use of relevant information.
9. Albeit brief, and expressed in general terms, the officer of the ATO in paragraph 18 of his affidavit, and in the annotations in “JSS-11”, sufficiently stated the purpose for which the documents were required.
10. The subpoenas the Commissioner wishes to use could not contain any confidential information, nor could the application documents. The court order only records the dismissal of the proceedings. The letter to the Court merely sought an amendment to directions. The affidavits and financial statements are relevant for the reasons earlier stated.
In our view the most important consideration is whether or not granting the Commissioner relief from the obligation is likely to discourage litigants from making a frank disclosure. There is already a heavy obligation on litigants in Family Court proceedings to make such a disclosure, and they are required to provide a written undertaking to the court that they have done so.
It is also worth noting that the Court has the power under Rule 24.13 of the Family Law Rules 2004 (Cth) to allow a person with a proper interest either “in the case” or “in information obtainable from the court record in the case” to search and copy documents pertaining to the court file. Relevantly, the Full Court in Oates & Q and Anor (2010) FLC 93-451 at [99] held that:
Rule 24.13 requires only that a person have a proper interest in the case or information obtainable from the court record. No other limitation is placed upon the circumstances in which the Court may grant a person access to the court record.
In that case, “proper interest” was demonstrated by a solicitor of one of the parties to litigation who sought to inspect the court file to prepare her defence in misconduct proceedings.
Moreover, insofar as the second respondent submitted that the applicant should not receive access to the Family Court File for the purposes of a “fishing” exercise, the Full Court in Oates & Q and Anor said, at [83]:
There is no prohibition placed on so called “fishing” by the terms of r 24.13. If the court determines that a person has the requisite proper interest, it is within the discretion of the court to grant access to the entire court record/file.
Contempt of court
The second respondent submitted that the applicant should be held in contempt of court for annexing the second respondent’s Financial Statement which had been filed in his Family Court proceedings with his wife.
In Hearne v Street, the majority said, at [160] – [161]:
… Hobhouse J said: “[A]ny person who knowingly … does acts which are inconsistent with the undertaking is himself in contempt and liable to sanctions” (132).
In Watkins v A J Wright (Electrical) Ltd (133) Blackburne J said:
“I cannot accept the submission that ignorance of the implied undertaking provides a person with a defence to proceedings for contempt arising out of his breach of the implied undertaking. As is well known, the implied undertaking arises by implication of law on the giving of discovery in the course of a civil action where discovery is required to be given.”
It is well understood, as indicated from the above authorities, that a breach of the implied undertaking known as the Harman undertaking may give rise to a finding of contempt.
The Family Court has power to punish for contempt of court pursuant to s 35 of the Family Law Act 1975 (Cth).
The Court has discretion whether to exercise its summary jurisdiction to deal with such a contempt. In John Fairfax & Sons Pty Ltd v McRae (1955) 93 CLR 351, the majority said:
Sometimes the court may think that, technically speaking, a contempt has been committed, but that, because the tendency to embarrass is slight, or because of special circumstances, it ought to refuse to exercise its summary jurisdiction.
The second respondent relied on the case of Ainsworth v Hanrahan (1991) 25 NSWLR 155 at 168-9. In that case, the NSW Court of Appeal considered whether a party to a litigation who disclosed, in separate proceedings, the answers of another party to interrogatories which arose from the litigation, would amount to contempt.
In Ainsworth v Hanrahan, Justice Kirby, sitting as Principal of the NSW Court of Appeal (with whom Samuels and Handley JJA agreed), discussed the distinction, for the purposes of contempt, between material disclosed to other parties through processes of discovery and material tendered and read in open court. His Honour said, at 164:
Notably, in the present, the answers given by the claimant to the interrogatories had never been disclosed in public, whether in court or otherwise. In such circumstances, the claimant relied on Harman only to establish that, by English law, the provision of documents produced on discovery for an extraneous or ulterior purpose unconnected with the litigation for which they were produced, is a contempt. The claimant relied upon the explanations of why this was so contained in the speeches of the majority. He pointed out that Lord Scarman's dissent had not questioned the fundamental principle. Lord Scarman said (at 319):
“The undertaking of the litigant and his solicitor not to use documents disclosed to them on discovery for any purpose other than the action does not apply to the documents once they have been produced and read out, in whole or in part, in the course of a public trial.”
His Honour further stated, at 168:
Once the answers are tendered or read in open court, pace Harman, the liability in contempt for their later use will evaporate: cf Gardner v Moult (1839) 10 Ad & El 464; 113 ER 176; Richards v Morgan (1863) 4 B & S 641; 122 ER 600 and Fleet, Administratrix of Mary Anne Ross v Perrins (1868) LR 3 QB 536 at 540.
Notwithstanding his Honour’s distinction, it is significant to note the Court of Appeal’s conclusion that although the relevant party was guilty of contempt, this did not warrant punishment due to the absence of intention to interfere in the administration of justice. His Honour said, at 168-9:
… They were released for their use in litigation other than that
in which they had been provided. Although innocent of any intended wrong
doing, such release constituted, for the reasons which I have explained, a
contempt of court. Defences (a) and (b) (above) must therefore be rejected.However, I readily accept defence (c). Without hesitation, I concede that
the opponent acted without intention to interfere in the administration of
justice. Intention is always relevant to punishment for contempt. Clearly, this is not a case where any punishment is called for.…
The claimant will have his declaration that a contempt has occurred. The
public interest in the proper administration of justice requires compliance
with undertakings to the court including those which the law imputes to
parties. Breach of such undertakings ought “not go without scrutiny and, if
appropriate, punishment”: see McIntyre v Perkes (1988) 15 NSWLR 417
at 436. But to discourage the unnecessary or at least premature invocation of
the jurisdiction of the Court to punish for contempt, the claimant should be
deprived of any costs.
Determination
I conclude that the application of the wife, as stated in paragraph 2 hereof should be granted subject to a limitation which I propose to impose.
The primary purpose in granting the wife’s application is to avoid the possibility of an injustice being perpetrated upon her.
Perhaps unusually, this exercise is not primarily a fishing expedition. The wife is able to identify a document which clearly has the capacity to support her case that the husband in this proceeding held an interest in entities with his brother, either directly or through other entities, at 1 September 2014.
Again, somewhat unusually, the only other party to the proceeding in this court to which the applicant seeks access to the court file, namely Ms C Paviello, does not oppose the applicant having access to the court file.
In relation to the “Harman Principle” I accept that the jurisprudence set out above does draw within its statement the circumstances of this case. In other words I am satisfied that “the implied undertaking also binds others (not parties to a relevant piece of litigation) to whom documents and information are given.” The question for the Court to decide in this hearing is whether the use sought to be made of the information (document) is in the circumstances improper. Is this a “special circumstance where the release or modification will not occasion injustice” to the person whose document it is?
The passage from the Full Court decision in Commissioner of Taxation & Darling which I consider has particular application to this case, is the following:
In our view the most important consideration is whether or not granting the Commissioner relief from the obligation is likely to discourage litigants from making a frank disclosure. There is already a heavy obligation on litigants in Family Court proceedings to make such a disclosure, and they are required to provide a written undertaking to the court that they have done so.
In this case I find that the granting of the wife’s application will deliver a salient lessen to those who would seek to hide potential deceit or fraud. Whilst accepting there may be other explanations for the second respondent opposing the order sought by the wife in this case, and without reaching any conclusion about his motivation, there is the possibility that he has the motivation of either assisting the husband in this family law litigation to hide assets or, alternatively, to avoid any possible s 79A application being pursued by his former wife, Ms C Paviello. Given the requirement for full and frank disclosure of all relevant financial fact in a s 79 proceeding, permitting the second respondent to potentially shelter from serious consequences of deception in such a proceeding would encourage similar behaviour and discourage the requirement of full disclosure. It would probably lead to cases requiring longer hearing time thereby incurring greater expense for litigants and reducing the capacity of the judges of the court to hear cases.
In this case the applicant wife seeks to use a document sworn by the second respondent in his proceeding with Ms C Paviello to demonstrate the order she seeks for access to all the documents filed in the proceeding SYC3563 of 2014. The wife says that, prima facie, the Financial Statement of the second respondent provides evidence of an interest which the husband in this proceeding held at the time of the swearing of the second respondent’s Financial Statement in 2014. Another possible explanation is that the second respondent was misrepresenting the truth when he swore that document. In such circumstance there is raised the possibility of a fraud being perpetrated upon Ms C Paviello in that proceeding.
Protection of privacy is also a matter to be considered by the court in the consideration of this application. The second respondent is entitled to have his personal details, as disclosed to the court in his proceeding in the court with his former wife, private. However, privacy must give way to obstruction of justice if that be the contest.
The next matter to consider is whether access to the court file by the applicant should be permitted as provided by the Family Law Rules. As stated earlier, Rule 24.13 permits a person to search the court record relating to a case and inspect and copy a document forming part of the court record. The Rule is stated as follows:
24.13 Searching court record and copying documents
(1) The following persons may search the court record relating to a case, and inspect and copy a document forming part of the court record:
(a) the Attorney‑General;
(b) a party, a lawyer for a party, or an independent children’s lawyer, in the case;
(ba) if the case affects, or may affect, the welfare of a child—a child welfare officer of a State or Territory;
(c) with the permission of the court, a person with a proper interest:
(i) in the case; or
(ii) in information obtainable from the court record in the case;
(d) with the permission of the court, a person researching the court record relating to the case.
(1A) An arbitrator conducting an arbitration relating to a case may search the court record relating to the case, and inspect and copy a document forming part of the court record.
(2) The parts of the court record that may be searched, inspected and copied in accordance with subrule (1) or (1A) are:
(a) court documents; and
(b) with the permission of the court—any other part of the court record.
(2A) A permission:
(a) for paragraphs (1)(c) and (d) and (2)(b)—may include conditions, including a requirement for consent from a person, or a person in a class of persons, mentioned in the court record; and
(b) for paragraph (1)(d)—must specify the research to which it applies.
(3) In considering whether to give permission under this rule, the court must consider the following matters:
(a) the purpose for which access is sought;
(b) whether the access sought is reasonable for that purpose;
(c) the need for security of court personnel, parties, children and witnesses;
(d) any limits or conditions that should be imposed on access to, or use of, the court record.
(4) In this rule:
court document includes a document filed in a case, but does not include correspondence or a transcript forming part of the court record.
Note 1: Section 121 of the Act restricts the publication of court proceedings.
Note 2: Access to court records may be affected by the National Security Information (Criminal and Civil Proceedings) Act 2004.
Considering the matters specified in Rule 24.13(3) the following are my findings and conclusions.
The purpose for which access is sought by the applicant to the court file is to provide evidence to support the wife’s property application. It is also potentially to avoid an injustice being perpetrated upon the wife. Although I have found the order sought by the wife could not be regarded as a “fishing exercise” because she is able to specifically identify a document on the court file which has potentially relevant content, there is no embargo against the court allowing same as was stated by the Full Court in Oates & Q and Anor. Such a determination would, no doubt, involve a determination that the inspection was reasonable and had an acceptable purpose.
It is, in my view, quite reasonable to allow access to the court file for the purpose stated by the wife. The word “reasonable” as used in the Rule also suggests consideration of the types of documents to be inspected. I propose to place restrictions on same as is evident hereafter.
There are limits and conditions which could and should be imposed on the access and the use of the documents and/or information obtained from such access. The privacy of the parties to the litigation involving the second respondent and his former wife should be guarded to a degree consistent with the requirement for the court to be able to do justice to the parties in this case. No more than is necessary to achieve that end should be permitted. Thus it may be necessary to limit the number of documents forming part of the court file and record, which may be inspected and/or copied.
I propose to restrict the inspection and “permission to copy” documents on the court file to those which directly provide evidence upon which the wife may rely in this proceeding to support her claim as to the assets of the parties which are available for the court to consider in the wife’s s.79 application.
Is there Contempt?
As can be seen in that set out earlier in these reasons “any person who knowingly does acts which are inconsistent with the undertaking is himself/herself in contempt and liable to sanctions” (Hearne v Street). However, the court has a discretion to refuse to exercise its summary jurisdiction to deal with such a contempt (John Fairfax & Sons Pty. Ltd. v McRae).
I conclude there is no evidence that the wife in this case sought to “interfere in the administration of justice”. The use of the second respondent’s sworn Financial Statement, as annexed to the affidavit of his former wife, has had very limited publication. It has been provided to the Court, the wife, the husband and the second respondent and those who they have each engaged to represent them. There is no suggestion the wife has sought to use the document provided to her in any other manner.
In the circumstance of this matter I conclude that the action of the wife, if it does amount to a contempt is one where the court would not exercise its jurisdiction to deal with it in a manner which imposed any penalty upon the wife.
Should the applicant wife be permitted to rely upon the Financial Statement of the second respondent provided by the former wife of the second respondent?
The application wife has relied upon the Financial Statement of the second respondent to establish the basis for her application to inspect the court file in that matter. The content of the Financial Statement provides the evidence which compels the granting of the wife’s application.
No determination permitting the wife to rely upon the Financial Statement of the second respondent, for the purpose of this application, will bind a trial judge, albeit the event may be a significant fact in an application to rely on the document in the trial.
I conclude the interests of justice dictate that the wife should be able to rely upon facts stated in the Financial Statement of the second respondent in this determination. I conclude that absent the wife being able to rely upon the document she may not ultimately be able to convince the trial judge that the evidence she can otherwise rely upon is sufficient to raise an inference that the husband has a greater asset portfolio, or access to same, to that which he now represents to the court in his Financial Statement filed in this case on 22 May 2017.
What orders should be made?
As stated earlier, I propose to permit the wife, and the husband should he so desire, to inspect the court file to which her application applies. I propose to limit the category of documents contained in the file which the husband and wife in this case may inspect. The documents will be those which I consider will potentially provide the wife with relevant evidence should there be any.
I propose to allow solicitor for the second respondent to inspect the file in the first place and place in a bundle those documents which he contends answer the order of the court permitting inspection. That process is to be overseen by the Docket Registrar and should there be a dispute about any further document being made avail for inspection, the matter is to be referred to me.
There will be an order permitting each of the husband and wife to take photocopies of the documents on the file subject to rigid restrictions on the use and disposal of same.
If any party seeks a cost order such application is to be made within 14 days by written submission restricted to 3 typed pages.
I certify that the preceding sixty-seven (67) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Le Poer Trench delivered on 13 April 2018.
Associate:
Date: 13 April 2018
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