Polyaire Pty Ltd v K-Aire Pty Ltd

[2011] SASC 176

SUPREME COURT OF SOUTH AUSTRALIA

(Civil)

POLYAIRE PTY LTD v K-AIRE PTY LTD & ORS

[2011] SASC 176

Judgment of The Honourable Justice White

13 October 2011

PROCEDURE - CONTEMPT, ATTACHMENT AND SEQUESTRATION - CONTEMPT - WHAT CONSTITUTES - BREACH OF UNDERTAKING TO COURT

The plaintiff sought to use documents discovered, and affidavits filed, in a Supreme Court action in related Federal Court proceedings - the defendants contested this use, claiming that it would breach the implied undertaking which the plaintiff had given when receiving the documents, and that the use would be for an ulterior or collateral purpose.

Whether the plaintiff had breached the implied undertaking to date; whether special circumstances existed to justify a release from the implied undertaking.

Held:  applications granted nunc pro tunc - special circumstances do exist which justify a release from the implied undertaking - that being the case, it is unnecessary for the Court to determine whether the plaintiff was in breach to date.

Corporations Act 2011 (Cth) s 471B, s 1321(1)(d), referred to.
Polyaire Pty Ltd v K-Aire Pty Ltd & Ors (2003) 226 LSJS 109; Polyaire Pty Ltd v K-Aire Pty Ltd & Ors (2003) 60 IPR 512; Polyaire Pty Ltd v K-Aire Pty Ltd & Ors (2005) 221 CLR 287; Polyaire Pty Ltd v K-Aire Pty Ltd (No 2) [2005] SASC 386; Hearne v Street (2008) 235 CLR 125; Crest Homes PLC v Marks [1987] AC 829; Eso Australia Resources Ltd v Plowman (1995) 193 CLR 10; Harman v Secretary of State for the Home Department [1983] 1 AC 280; Bell Group Ltd v Westpac Banking Corporation (1998) 86 FCR 215; Commissioner for Corporate Affairs v Harvey [1980] VR 669; Forty Two International Pty Ltd v Barnes [2010] FCA 397; Barnes v Forty Two International Pty Ltd [2010] FCAFC 87, considered.

POLYAIRE PTY LTD v K-AIRE PTY LTD & ORS
[2011] SASC 176

Civil

1. WHITE J.             The plaintiff (Polyaire) seeks this Court’s permission to use two affidavits filed by a defendant in this action, as well as certain of the documents discovered by the defendants in this action, in proceedings which it has commenced in the Federal Court.  It is concerned that it should not breach the implied undertaking to use those documents only for the purposes of this action and not for any ulterior or collateral purpose.

2. The affidavits in question are those of the third defendant (Mr Colebatch) sworn and filed in the Court on 10 February 2006 (FDN 255) and 26 June 2007 (FDN 287) respectively (the Colebatch affidavits).  The discovered documents in question are certain of the documents discovered by some of the defendants in lists filed on 10 July 1998 (FDN 45), 21 February 2006 (FDN 257) and 6 July 2007 (FDN 290) (the Discovered documents).

   Background Circumstances

3. The action in this Court has a long history, only some of which is pertinent for present purposes.  The proceedings commenced in 1996 against nine defendants, all but the third and fourth of whom (Mr Colebatch and Mr Benfield) were corporate defendants.  Polyaire’s claim was that the defendants had infringed its registered design of certain air-conditioning components.

4. On 19 May 1999, the Court ordered that the issues of liability should be determined separately from, and in advance of, the remaining issues.

5. Polyaire succeeded in establishing the infringement of its design.[1]  When entering judgment on 5 March 2003, the trial Judge (Besanko J) made a number of orders for the purpose of enabling Polyaire to make an election between its claim for damages and its claim for an account of profits.  In particular, Besanko J ordered each defendant to file an affidavit providing information as to the profit which it or he had derived from the use of the infringing articles, as well as making discovery of relevant documents.  It seems that these orders may not have been acted upon pending the resolution of appeals.

   [1]    Polyaire Pty Ltd v K-Aire Pty Ltd [2003] SASC 41; (2003) 226 LSJS 109.

6. The defendants appealed against the judgment of Besanko J to the Full Court of the Federal Court, where they were successful.[2]  However, on further appeal to the High Court, the judgment of Besanko J was restored.[3]

   [2]    K-Aire Pty Ltd v Polyaire Pty Ltd [2003] FCAFC 310; (2003) 60 IPR 512.

   [3]    Polyaire Pty Ltd v K-Aire Pty Ltd  [2005] HCA 32; (2005) 221 CLR 287.

7. The matter then returned to this Court for determination of the quantum aspects.  On 25 August 2005 Besanko J, after revoking the orders which he had made on 5 March 2003 concerning disclosure, made orders (relevantly) as follows:

8. …

   4.For the purpose of enabling the plaintiff to make an election between its claim for damages and its claim for an account of profits, and reserving liberty to the plaintiff to apply for further directions before making the election:

   4.1    Each of the first, second, fifth, sixth, seventh, eighth and ninth defendants, by its proper officer, make file and serve on or before 12 December 2005 an affidavit setting out in respect of all the infringing articles (being exhibits P3 and P4 in this action), the total number of such articles manufactured, sold and otherwise disposed of by it, the price at which each such article was sold or otherwise disposed of, the cost to the defendant of the manufacture, sale and disposal [of] such article, the approximate amount of profit it contends it made by the manufacture, sale or disposal of the said article, the method of allocating overheads, if any, which the defendant regards as reasonably acceptable, and the steps or reasoning by which the approximate amount has been calculated.

   4.2    The third defendant make, file and serve on or before 12 December 2005, an affidavit setting out in respect of all infringing articles manufactured, sold or otherwise disposed of by each of the first, second, fifth, sixth, and ninth defendants, the approximate amount of profit the third defendant contends he made from such activity by each of the said defendants, the amount of any further deduction to which he claims he is entitled in respect thereof, and the steps or reasoning by which the approximate amount has been calculated.

   4.3    the fourth defendant make, file and serve on or before 12 December 2005, an affidavit setting out in respect of all the infringing articles manufactures, sold or otherwise disposed of by each of the first, [fifth], sixth, seventh and eighth defendants, the approximate amount of profit the fourth defendant contends he made from such activity by each of the said defendants, the amount of any further deduction to which he claims he is entitled in respect thereof, and the steps or reasoning by which the approximate amount has been calculated.

   4.4    Each of the defendants on or before 12 December 2005 make discovery on oath of all documents relating to the manufacture, sale or other disposal of the infringing articles and of all documents relied upon by the defendant for the purpose of making his or its affidavit referred to in the preceding sub-paragraphs hereof, and permit the plaintiff to inspect such documents by arrangement between the parties.

   …

   6.    The defendants file and serve on or before 22 September 2005 an affidavit deposing to the number of infringing articles sold, to whom such articles were sold and identifying the records kept in respect of such sales in the period from 1 October 2003 until 25 August 2005.

   …

9. Later, on 30 September 2005, Besanko J made further orders (relevantly) as follows:

10. …

    1.For the purpose of enabling the plaintiff to make an election between its claim for damages and its claim for an account of profits, and reserving liberty to the plaintiff to apply for further directions before making the election:

    1.1    Each of the first, second, fifth, seventh, [eighth] and ninth defendants, by its proper officer, make file and serve on or before 12 December 2005 an affidavit setting out in respect of all packages or kits which comprised all of the components necessary to install a ducted airconditioning system (“the packages”) which included the infringing articles (being the exhibits P3 and P4 in this action):-

    1.1.1the components comprised in the packages;

    1.1.2details of which such components the relevant defendant manufactured and which were acquired from third parties and the name of such third party;

    1.1.3the total number of the packages manufactured (if they were manufactured by the relevant defendant) sold and otherwise disposed of by it;

    1.1.4the price at which each such package was sold or otherwise disposed of;

    1.1.5the cost to the defendant of the manufacture (if applicable), sale or disposal of such package;

    1.1.6the approximate amount of profit it contends it made by the manufacture, sale or disposal of the said package;

    1.1.7the method of allocating overheads, if any, which the defendant regards as reasonably acceptable; and

    1.1.8 the steps or reasoning by which the approximate amount has been calculated.

    1.2    The third defendant make, file and serve on or before 12 December 2005, an affidavit setting out in respect of all the packages manufactured, sold or otherwise disposed of by each of the first, second, fifth, sixth, and ninth defendants, the approximate amount of profit the third defendant contends he made from such activity by each of the said defendants, the amount of any further deduction to which he claims he is entitled in respect thereof, and the steps or reasoning by which the approximate amount has been calculated.

    1.3    The fourth defendant make, file and serve on or before 12 December 2005, an affidavit setting out in respect of all the packages manufactured, sold or otherwise disposed of by each of the first, fifth, sixth, seventh and eighth defendants, the approximate amount of profit the fourth defendant contends he made from such activity by each of the said defendants, the amount of any further deduction to which he claims he is entitled in respect thereof, and the steps or reasoning by which the approximate amount has been calculated.

    1.4    Each of the defendants on or before 12 December 2005 make discovery on oath of all documents relating to the manufacture, sale or other disposal of the packages and of all documents relied upon by the defendant for the purpose of making his or its affidavit referred to in the preceding sub-paragraphs hereof, and permit the plaintiff to inspect such documents by arrangement between the parties.

    …

11. It can be seen that each of the above orders was expressed to have been made “for the purpose of enabling the plaintiff to make an election between its claim for damages and its claim for an account of profits”.[4]  The first required the filing of affidavits by all defendants and the making of discovery by all defendants of all documents of a specified kind.  The second required affidavits from all defendants containing information as to the products manufactured in infringement of the plaintiff’s design.

    [4]    See also the reasons of Besanko J for those orders:  Polyaire Pty Ltd v K-Aire Pty Ltd (No 2) [2005] SASC 386 at [20].

    The Colebatch Affidavits

12. On 10 February 2006, Mr Colebatch filed an affidavit (FDN 255).  In the affidavit Mr Colebatch deposed that, in addition to his capacity as third defendant, he was the director of all corporate defendants other than the eighth defendant (an unrelated entity).  He deposed that he made the affidavit pursuant to orders 4.1, 4.2 and 4.5 made by Besanko J on 25 August 2005 and pursuant to orders 1.1.and 1.2 made by Besanko J on 30 September 2005 (par 4), and further that he was authorised to swear the affidavit on behalf of the corporate defendants other than the eighth (par 3).  Mr Colebatch then deposed to a number of matters (which it is unnecessary to recite in these reasons) in order to comply with the orders of Besanko J.

13. Subsequently, on 23 February 2007 and following some revision of the orders originally made on 5 March 2003, Besanko J revoked a number of the orders made on 25 August 2005, including Order No 4.  His Honour then made further orders numbered 8 and 11, both of which were expressed to be “for the purpose of enabling the plaintiff to make an election between its claim for damages and its claim for an account of profits”.  The orders which Besanko J then made were relevantly in the same terms as Orders numbered 4 and 1 made on 25 August 2005 and 30 September 2005 respectively.

14. On 26 June 2007, Mr Colebatch filed a further affidavit sworn by him that day (FDN 287).  On this occasion Mr Colebatch announced himself as a director of the first, fifth and sixth defendants and deposed that he was authorised to swear the affidavit on their behalf.  Mr Colebatch also deposed that he made the affidavits pursuant to the orders 8.1, 8.2, 11.1 and 11.2 made by Besanko J on 23 February 2007.

15. These two affidavits are the Colebatch affidavits forming part of the subject matter of the present application.

    The Discovered Documents

16. In the course of the proceedings, the defendants have filed numerous lists of documents.  Three are relevant for present purposes.

17. The first was filed on 10 July 1998 (FDN 45) by the first, second and third defendants.  This list was filed pursuant to Order No 58 of the Supreme Court Rules 1987.

18. The next (pertinent) list was filed on 21 February 2006 by all of the corporate defendants (other than the eighth) and Mr Colebatch (FDN 257).  The list indicated on its face that it was a discovery of documents in compliance with Order 4.4 and 1.4 of the orders made by Besanko J on 25 August 2005 and 30 September 2005 respectively. 

19. The third list was filed on 6 July 2007 by Mr Benfield and the seventh and eighth defendants (FDN 292).  These defendants indicated that the list contained their discovery of documents in compliance with Orders 8.4 and 11.4 made by Besanko J on 23 February 2007.

20. The Discovered documents which are the subject of Polyaire’s present application were disclosed in one or other of these lists.

    Polyaire’s Election

21. On 19 October 2007, Polyaire elected for an account of profits.  Effectively, it can now pursue that relief against the second, third, fourth and ninth defendants only.  That is because the first, fifth, sixth, seventh and eighth defendants have been deregistered. 

22. The second and ninth defendants entered voluntary administration on 23 February 2006 and were placed in liquidation on 21 June 2006. Shortly thereafter, Polyaire sought the leave of this Court under s 471B of the Corporations Act 2001 (Cth) to proceed against them but that leave was refused on 12 June 2006.

23. About two years later, on 2 July 2008 Polyaire made a fresh application for leave to proceed against the second and ninth defendants, apparently in order to pursue in this Court the remedy of an account of profits.  As part of its preparation for the account, Polyaire instructed a forensic accountant, Mr Holmes, to prepare a report.  For this purpose, Polyaire provided Mr Holmes with a number of documents which included the Colebatch affidavits and the Discovered Documents. 

24. There were subsequent interlocutory hearings in this Court relating to a number of matters, including Polyaire’s application for permission to proceed and its requests for further documents. 

    Lodgment of Proofs of Debt

25. In August 2009, Polyaire adopted a different course.  On 17 August 2009, it lodged proofs of debt with the liquidators of each of the second and ninth defendants.  The debts asserted were the profits said to have been made by each defendant from the sale of the infringing articles ($450,983 in the case of the second defendant and $1,615,363 in the case of the ninth) as well as the costs of certain of the proceedings in this Court, the Federal Court and the High Court pursuant to which Polyaire was entitled.  In support of the proofs of debt, Polyaire provided the liquidators with a copy of Mr Holmes’ report dated 31 March 2009 prepared in connection with the proceedings in this Court and a letter of correction from Mr Holmes dated 17 April 2009. 

26. Shortly after lodging the proof of debts, Polyaire informed this Court that it no longer intended to pursue its application for permission to proceed against the second and ninth defendants and its application to that effect was subsequently dismissed.  The effect was that Polyaire was no longer pursuing in this Court an application for an account to be made by the second and ninth defendants of the profits which they had derived from their infringing conduct.  It maintained however its application for such an account in relation to the profits made by the third and fourth defendants.

27. Mr Jenner, who appeared for Polyaire on the present application, suggested that there had been some form of agreement between the parties that Polyaire should pursue its claims for an account of profit by way of proofs of debt in the liquidations, rather than in the proceedings in this Court.  However, counsel could not identify any evidentiary material to that effect and, in the circumstances, I think it inappropriate to attach any weight to this submission.

28. By notices dated 28 October 2010, the liquidators of the second and ninth defendants disallowed part of each of Polyaire’s proofs of debt.

    The Federal Court Proceedings

29. Subsequently, on 11 November 2010, Polyaire commenced in the Federal Court of Australia two applications under s 1321(1)(d) of the Corporations Act 2001 (Cth) by way of appeals against the liquidators’ partial disallowances. Mr Lanthois and Mr Duncan, the liquidators, are the respondents to both proceedings.[5]

    [5]    Actions numbered SAD183 and 184 of 2010 respectively.

30. Besanko J currently has the management of Polyaire’s applications in the Federal Court.  Pursuant to orders made by Besanko J, Polyaire has filed statements of claim in each of the Federal Court actions.  In each, Polyaire has particularised its claim for an account of profits by reference to the Colebatch affidavits and, as I understand it, by reference to the report of Mr Holmes.  By this latter means, it is making use indirectly in the Federal Court proceedings of the Discovered documents. 

31. It also seems that Polyaire will wish to make use, in an evidentiary way, of the Colebatch affidavits, in addition to leading evidence from Mr Holmes.

32. On 23 March 2011 in a directions hearing before Besanko J, concerns were raised that the use in the Federal Court of the Colebatch affidavits and of the Disovered documents may be an abuse of the implied undertaking imposed by the law on Polyaire in relation to those documents.  Subsequently, the liquidators foreshadowed an application in the Federal Court action to have each of Polyaire’s claims in the Federal Court struck out as an abuse of process.

33. Polyaire’s response was to issue the present interlocutory summons seeking this Court’s permission, nunc pro tunc, to use the Colebatch affidavits and the Discovered documents in the framing of its respective proofs of debt and in the two Federal Court actions.

34. It also makes a similar application in relation to documents which the liquidators have provided to it directly, ie, outside the discovery process in this Court.  However, no party suggest that this latter category of documents is impressed with the implied undertaking and I propose to say no more about it.

    General Principles

35. It was common ground on the present application that both the Colebatch affidavits and the Discovered documents are impressed with the implied undertaking by Polyaire not to use them otherwise than for the purpose for which they were prepared and disclosed.

36. The disclosure under coercive court process of documents which a litigant would otherwise be entitled to keep private requires that, so far as possible, the use of the disclosed documents should be limited.  Accordingly, the law imposes an obligation on a party receiving a document in such circumstances to use the document only for the purpose for which it was produced.[6]  The implied undertaking applies to a range of documents, including those discovered in the proceedings; affidavits and witness statements lodged in the action;[7] and extends not only to copies of the document but also to the information contained with them.[8]

    [6]    Hearne v Street [2008] HCA 36 at [96]; (2008) 235 CLR 125 at 154-5.

    [7] Ibid at [105]-[108]; 157-60.

    [8]    Crest Homes PLC v Marks [1987] AC 829 at 854.

1. The undertaking obliges parties not to use the documents for collateral or ulterior purposes.[9]  They may therefore not be used in a way which is not reasonably necessary for the conduct of a litigation,[10] or to obtain some advantage which, but for the production of the documents under the coercive process of the court, the party would not otherwise have enjoyed.[11]

   [9]    Esso Australia Resources Ltd v Plowman (1995) 193 CLR 10 at 36.

   [10]   Harman v Secretary of State for the Home Department [1983] 1 AC 280 at 302.

   [11] Ibid; Hearne v Street [2008] HCA 36 at [107]; (2008) 235 CLR 125 at 158-160.

2. A party may be released from the implied undertaking “in special circumstances and [when] the release or modification will not occasion injustice to the person giving discovery”.[12]

   [12]   Crest Homes PLC v Marks [1987] AC 829 at 860.

   Polyaire’s Request for an Adjournment

3. At the commencement of the hearing of its application, Polyaire contended that the Court should determine first whether its use in the Federal Court (both past and contemplated) of the Colebatch affidavits and the Discovered Documents amounted to a breach of the implied undertaking.  Polyaire contended that it had not breached the implied undertaking and sought, in effect, a declaration from this Court to that effect.

4. When it was pointed out to Polyaire that such a declaration went beyond the scope of its present application, and a declaration was a form of substantive rather than interlocutory relief, it sought an adjournment of the hearing in order to pursue a claim for such substantive relief.  The defendants did not consent to an adjournment.

5. I refused the adjournment application.  Apart from its lateness and the desirability of avoiding a multiplicity of proceedings, I considered that it was not necessary for the Court to make the determination sought by Polyaire before determining its application for release from the implied undertaking.  There is nothing hypothetical about Polyaire’s present interlocutory application.   Although it now disputes that it has, or will, breach the implied undertaking, it has previously accepted (in the Federal Court) that a release from the implied undertaking is necessary.  Further, the liquidators assert that there has been a breach and they have filed applications in the Federal Court seeking to have both actions struck out or dismissed as an abuse of process.  As I understand it, the liquidators rely upon the alleged breach of the implied undertaking for the abuse which they allege.  Further still, counsel for the second and ninth defendants (whose submissions were adopted by the third defendant) made an express submission on the hearing in this Court that Polyaire was in breach.

6. In these circumstances, I was satisfied that Polyaire’s present interlocutory application is not hypothetical and that it will not serve an illusory purpose.  That being so, the decision on Polyaire’s application for a release does not require a determination of whether it has already breached, or will breach, the implied undertaking in the use of the documents in relation to the proceedings in the Federal Court.

   Parties’ Submissions

7. Although I indicated during the hearing that I did not think it necessary for the purposes of the present application to determine whether Polyaire had breached the implied undertaking, both it and the defendants commenced their submissions with arguments directed to that issue.

8. Counsel for Polyaire directed his submissions to the nature of the collateral or ulterior purposes to which the implied undertaking is directed.  He submitted that the undertaking prohibited the use of documents only for some purpose which is different from that for which the Court compelled their disclosure in the first place.  In this respect counsel relied upon a passage in the reasons of Lord Diplock in Harman v Secretary of State for the Home Department.[13]Counsel then contended that Polyaire was still using the Colebatch affidavits and the Discovered Documents for the purpose, and only for the purpose, contemplated by the original orders in this Court, namely  to pursue its remedy of account of profits. 

   [13] [1983] AC 280 at 302.

9. Counsel submitted that it was immaterial for this purpose that Polyaire was doing so by means of lodgement of proofs of debt in the liquidations, and appeals against the liquidators’ disallowance of part of those proofs.  The submission in short was that the nature of the use of the documents is in substance the same as that contemplated by Besanko J’s original orders, and that the mere change in the procedural means by which Polyaire did so did not involve a breach of the implied undertaking.

10. Counsel then submitted that if the Court considered that Polyaire was breaching the implied undertaking, it should regard the circumstances just outlined as constituting a “special circumstance” of the kind contemplated in the authorities as warranting a release from the undertaking.

11. The second, third (Mr Colebatch) and ninth defendants opposed the Court releasing Polyaire from the implied undertaking.

12. The second and ninth defendants (whose submissions were adopted by Mr Colebatch) submitted that the use of the documents in the Federal Court proceedings was a collateral use, and that Polyaire had already breached the implied undertaking.  Counsel referred in this respect to the Bell Group Ltd (in liq) v Westpac Banking Corporation[14] in which the Full Court of the Federal Court held that the use in a liquidator’s examination in the Supreme Court of Western Australia of witness statements prepared for proceedings in the Federal Court would be a collateral use.  Counsel submitted that this Court should make a positive finding of a breach of the implied undertaking by Polyaire.

    [14] (1998) 86 FCR 215 at 220-1.

13. The defendants submitted that Polyaire had not proven special circumstances justifying a release.  They emphasised that the proceedings in the Federal Court involved separate actions, and different parties, and emphasised the evidential use which Polyaire seeks to make of the documents.  In this latter respect, counsel alluded to Polyaire’s intention, apparently foreshadowed in the Federal Court, to seek to rely upon statements in the Colebatch affidavits as admissions against interest which should bind the liquidators.

14. As an overarching submission, counsel submitted that Polyaire proposes using the Colebatch affidavits and the Discovered documents for a purpose which goes well beyond the purpose originally intended by Besanko J’s orders which, it was submitted, had required the Discovery to be made and the affidavits filed only for the limited purpose of facilitating Polyaire’s election between a remedy by way of account of profits, on the one hand, and damages, on the other.

    Consideration

15. I remain of the view that it is unnecessary for this Court to decide whether or not there has been a breach of the implied undertaking to date.  The making of such a determination is not a necessary pre-requisite to the grant of a release.  The Court should not, of course, decide hypothetical issues.  However, for the reasons given earlier I am satisfied that there is a real issue between the parties as to whether there has been such a breach, and that Polyaire is not raising a matter which is hypothetical only.

16. The proceedings in the Federal Court are separate and distinct from those in this Court but they do have particular features which are important for present purposes.

17. I refer first to the character of the proceedings in the Federal Court.  As already noted, Polyaire’s applications in that Court involve (relevantly) a claim for an account of profits made by each of the second and ninth defendants from the use of its registered design.  The forensic means by which Polyaire seeks the account of profits is different but, in substance, Polyaire is pursuing claims for the same relief and in respect of the same profits as was contemplated by the orders of Besanko J in this Court.

18. As noted earlier, counsel for the defendants emphasised the purpose for which Besanko J had ordered the affidavits and Discovery, namely, to assist Polyaire in making an election.  Counsel submitted that that purpose had concluded when Polyaire made its election on 19 October 2007.

19. In considering this submission, it is instructive to consider the probable course of events if Polyaire had continued to pursue its claims against the second and ninth defendants in this Court.  Once Polyaire made its election for an account of profits, the carrying out of the account would have occurred in the present proceedings.  Counsel for the defendants acknowledged that use by Polyaire of the Colebatch affidavits and the Discovered documents in these proceedings in the course of such an account would not have involved any breach of the implied undertaking.  Implicit in this concession was an acknowledgement that the purposes for which Besanko J ordered the filing of the affidavits and the discovery of documents included providing assistance to Polyaire not only in the making of its election, but also in its pursuit of the remedy for which it did elect (in particular an account of profits).

20. If the Colebatch affidavits and the Discovered documents could be used in the account of profits in these proceedings in this Court, then it is but a short step to conclude that the documents should be able to be used for the same purpose for (relevantly) the same account in the Federal Court proceedings.

21. In substance, the proceedings in the Federal Court are of the same kind, and involve the same use, or at least the same kind of use, of the documents had Polyaire pursued its claims in this Court.  As I have indicated, it is not necessary to decide whether this feature is sufficient to indicate that the deployment of the documents in the Federal Court proceedings is not a collateral use of the documents, but it is a very material consideration suggesting the existence of special circumstances warranting a grant of a release from the implied undertaking.

22. It is true that the parties to the respective sets of proceedings are different.  It is the liquidators who are the respondents to the proceedings in the Federal Court, whereas in this Court, relief is sought against the second and ninth defendants themselves.  However, in a context in which the respondents in the Federal Court proceedings are sued in their capacity as liquidators of the second and ninth defendants, this consideration loses much of its significance. 

23. The present case does not require any detailed discussion of the relationship between liquidators and the companies to which they are appointed.  Although liquidators are sometimes described as trustees of companies in liquidation, the better view is that they are agents, owing fiduciary duties to the companies.[15]  However, liquidators differ from normal agents as they are in the control of the actions of the company in liquidation, the putative principal.[16]  They are not the company itself, but subject to the duties imposed upon them by statute, their obligations as officers of the Court, and the duties which they owe to creditors and contributories, liquidators do, in many respects, stand in the position of the company.

    [15]   Commissioner for Corporate Affairs v Harvey [1980] VR 669 at 695; Thomsons Lawbook Co, “McPherson’s Law of Company Liquidation” at [8.400]-[8.430].

    [16]   Thomsons Lawbook Co, “McPherson’s Law of Company Liquidation” at [8.420].

24. In the present case, the liquidators are not the alter ego of the second and ninth defendants but they are the persons now defending in the Federal Court the applications involving (in effect) the second and ninth defendants.

25. I agree with counsel for the second and ninth defendants that Polyaire’s decision to seek relief by way of proofs of debt, and to commence in the Federal Court its applications under s 1321(1)(d) of the Corporations Act has created complications and has contributed to the difficulties which give rise to Polyaire’s present application. However, again it is instructive to keep in mind the probable course of events had Polyaire commenced its s 1321(1)(d) applications in this Court. There is a very real prospect that such applications would have been allocated for Judge management by the Judge managing the present proceedings. Further still, there is a very real prospect that the Court would have ordered a joint hearing of the present action and the applications made under s 1321(1)(d). Although it is not possible to be categorical, that may well have led to a circumstance in which evidence led in the one action would be regarded as evidence received in the other actions. To my mind this too is a factor in favour of the grant of the release sought by Polyaire.

26. The second and ninth defendants are concerned about the particular kind of evidentiary use which Polyaire will seek to make of the Colebatch affidavits, in particular, in the Federal Court proceedings.  As noted earlier, they are concerned that Polyaire will wish to rely upon statements made by Mr Colebatch in his affidavits as admissions which bind the liquidators.  In this way, the defendants are concerned about the kind of evidential use which may be made of the Colebatch affidavits, rather than their use per se, or their use as evidence altogether.

27. The defendants did not cite any authority to support the proposition that the particular kind of evidential use proposed by an applicant is a relevant consideration on an application of the present kind.  Ordinarily, one would expect that decisions regarding a particular proposed evidential use in another court of documents subject to the implied undertaking should be left for consideration by that court.  That is particularly so in the case of a State Supreme Court and the Federal Court.  At the very least, considerations of comity indicate that that should be so.

28. In my opinion, this Court should respect the authority of the Federal Court to determine for itself the evidence which may properly be placed before it in proceedings.  Generally speaking, it would not be appropriate for this Court to attempt to bind the Federal Court by stipulating that some proposed uses in the Federal Court are permissible, and some not.  If it is otherwise appropriate for Polyaire to be given a release from the implied undertaking so as to permit it to make use of documents in relation to the Federal Court proceedings, the particular forensic use in those proceedings to which Polyaire may put the documents should be controlled by the Federal Court.

29. This means that I am not satisfied that the kind of evidentiary purpose proposed by Polyaire of the Colebatch affidavits in the Federal Court proceedings is a material consideration for present purposes.

30. These circumstances in combination indicate that Polyaire should be given the release which it seeks.

31. I acknowledge that I have not heard from the first, fifth, sixth, seventh and eighth defendants, who discovered jointly some of the Discovered documents.  They cannot be heard because they have been deregistered.  However, in my opinion, this does not preclude the grant of the release.  In the circumstances it is unlikely that those defendants could have advanced any matter in opposition which was not made by the second, third and ninth defendants.

32. It was common ground that this Court may give an order releasing a party from the implied undertaking retrospective effect.  I am satisfied that that is so.[17]

    [17]   Forty Two International Pty Ltd v Barnes [2010] FCA 397 at [94]; Barnes v Forty Two International Pty Ltd [2010] FCAFC 87 at [11]-[12].

    Conclusion

33. For the reasons given above, I am satisfied that Polyaire has established special circumstances justifying a release from the implied undertaking in relation to the Colebatch affidavits and the Discovered documents. I grant such release but only for purposes related to the pursuit of Polyaire’s s 1321(1)(d) applications in the Federal Court. I direct that the release operate retrospectively with effect from 17 August 2009.