Stinson and Stinson and Anor
[2012] FamCA 520
•9 July 2012
FAMILY COURT OF AUSTRALIA
| STINSON & STINSON AND ANOR | [2012] FamCA 520 |
| FAMILY LAW - PRACTICE AND PROCEDURE - Confidentiality agreement - Implied undertaking and circumstances under which an express undertaking can be sought - An undertaking in either form is really an acknowledgement of an obligation to keep documents confidential - Problems of court control - Need for court to define limits if undertaking orders. |
| Family Law Act 1975 (Cth) |
| Esso Australia Resources Limited v Plowman (1995) 183 CLR 10 Hearne v Street (2008) 235 CLR 125 Vincenzo [2012] FamCA 427 |
| APPLICANT: | Ms Stinson |
| RESPONDENT: | Mr Stinson |
| INTERVENOR: | Mr Hunt |
| FILE NUMBER: | MLC | 9869 | of | 2011 |
| DATE DELIVERED: | 9 July 2012 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Cronin J |
| HEARING DATE: | 26 June 2012 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Glick SC with Mr Sweeney |
| SOLICITOR FOR THE APPLICANT: | Taussig Cherrie Fildes |
| COUNSEL FOR THE RESPONDENT: | Mr Geddes QC |
| SOLICITOR FOR THE RESPONDENT: | Kennedy Partners |
| COUNSEL FOR THE INTERVENOR: | Mr Brown SC with Mr Weil |
| SOLICITOR FOR THE INTERVENOR: | HWL Ebsworth Lawyers |
Orders
That the wife forthwith execute an acknowledgement addressed to the applicant that she will keep all documents provided by him confidential and that they will not be used for any other purpose than the proceedings.
That the wife’s firm of solicitors execute an acknowledgement addressed to the applicant that:
(a)they will keep all documents provided by him confidential and that they will not be used for any other purpose than the proceedings;
(b)they will advise all professional advisers of the wife of that acknowledgement with a request that before being given any documents, they too will keep the documents confidential;
(c)they will ensure all their staff and agents are aware of their acknowledgement.
That for the purposes of paragraph 1, the wife’s acknowledgement include a statement that a breach of that confidentiality may expose her to an application:
(a) for damages; and
(b) that she be dealt with for contempt of court.
That for the purposes of paragraph 2, the solicitors acknowledgement include a statement that a breach of that confidentiality may expose them to an application:
(a) for damages; and
(b) that they be dealt with for contempt of court,
including in relation to breaches by staff, agents and other engaged professionals.
The application filed 18 May 2012 be otherwise dismissed save as to issues of costs.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Stinson & Stinson and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 9869 of 2011
| Ms Stinson |
Applicant
And
| Mr Stinson |
Respondent
And
| Mr Hunt |
Intervener
REASONS FOR JUDGMENT
In the property proceedings between the husband and the wife, an issue has arisen involving third party discovery. The third party is Mr Hunt who is involved in commercial ventures with the husband.
On 10 April 2012, Registrar Field ordered the husband to provide full documentary disclosure of his financial position to the wife. That would have in turn, exposed the interests of Mr Hunt. On 18 May 2012 by application, Mr Hunt sought orders that before documents relating to his commercial ventures which involved the husband, were disclosed to the wife, she and her advisers should execute a “confidentiality undertaking” which had been prepared by his solicitors and presented to the wife. The wife refused to sign.
In his affidavit filed 18 May 2012, Mr Hunt described the various entities with which he was concerned as conducting a national business with many agents, franchisees and independent operators. He said his solicitors asked for a complete prohibition on the wife accessing the discovered documents. He was content for the wife’s advisers to sign a confidentiality agreement but even had they done so, the wife was not to have access to the documents. It does not take much imagination to see the difficulty of precluding a litigant from having access to the documents. It would be a complete denial of natural justice if the wife was unrepresented and she could not see the husband’s financial circumstances. In any event, that issue was not pressed.
Mr Hunt noted that the solicitors for the wife rejected what he saw as his entitlement to a confidentiality agreement. They simply said the wife acknowledged her duty of confidentiality.
Mr Hunt said, and his counsel argued, the discoverable documents were not in the public domain and were confidential because the information would provide sensitive commercial detail to competitors to the prejudice of his group of companies. It was submitted that this dispute had nothing to do with Mr Hunt and as such, his confidentiality should not only be respected but protected.
The wife’s position as outlined in her solicitors’ letter to the solicitor for Mr Hunt was equally simple. It was said that Mr Hunt should take up the matter with the husband.
Senior counsel for the wife submitted that there was no evidence that would justify an injunction being granted requiring entry into a confidentiality agreement having regard to the express acknowledgment by the wife’s solicitor as to their client’s understanding of her duty. It was submitted that in Vincenzo & Vincenzo [2012] FamCA 427, I had imposed an injunction on the wife not to disclose business details but denied the husband the right to a confidentiality agreement. In that case, the husband was seeking the order to protect his own business interests as a result of his belief about what the wife might do with his information notwithstanding it would be against her own interests to disclose it. That case was distinguishable because it involved only the parties to the marriage. Here, I have a non-party who is being compelled by court order to disgorge documents.
Senior counsel for Mr Hunt said that what his client wanted was the comfort of knowing there was a complete protection from publication of the information in those documents.
In Hearne v Street (2008) 235 CLR 125 the plurality, Hayne, Heydon and Crennan JJ when discussing the extent of what was described as implied undertakings, referred to cases in which an express undertaking had been required. Their Honours said that it was commonly employed in relation to documents in which there was a desire to keep things secret to bring explicitly home to the minds of those giving the undertaking how important it was that the documents would only be used for the purposes of the proceedings. Their Honours noted that if a general practice grew of requiring express undertakings from every servant and agent of a party including lay and expert witnesses together with persons into whose hands the documents might come, it would be “extremely cumbersome, and extremely wasteful of time, energy and money”.
Thus, there must be something unusual about this case to warrant that cumbersome and expensive process; it must fall into the exceptional cases category. Mr Hunt through his solicitors, provided a document to be signed by the wife and her solicitors that included virtually every person into whose hands the documents might come. One might conclude that unlike Vincenzo & Vincenzo this was a case in which Mr Hunt was endeavouring to avoid information slipping out into the public domain not only deliberately but accidentally as well. To endeavour to achieve a blanket prohibition, one might consider court staff having to sign the same document and even closing the court to ensure that members of the public did not stumble across the sensitive material. If a competitor of Mr Hunt became aware of the proceedings, the material might be accessible simply by sitting in court. The question must be asked how far a confidentiality undertaking extends to avoid the supposed evil or, as Mr Hunt sought, the comfort of knowing the Court would protect the confidentiality. One must also ask about the efficacy of the attempts at absolute prohibition.
It was submitted by senior counsel for the wife that there were no exceptional circumstances here because on the evidence provided by Mr Hunt, the Court had to rely upon his word that the information was confidential. One has to be practical about that however because an investigation by the Court into any detail would potentially expose the risk that the applicant was trying to avoid. The determination must therefore be based upon a fear reasonably expressed, that having regard to the nature of the business, the risk of exposure and competitive damage is real.
It is very clear that discovery brings with it an obligation not to disclose documents to anyone outside the proceedings. The traditional reference to an “implied undertaking” is misnomer. It is clearly an imposed obligation not a voluntary one.
If Mr Hunt is seeking comfort, he would be entitled to be concerned about the extent to which his privacy was invaded and his personal interest exposed for the reasons set out above. In Esso Australia Resources Limited v Plowman (1995) 183 CLR 10 Mason CJ said that it would be inequitable if a party were compelled by the court’s process to produce private documents for the purposes of litigation if they were to be exposed to publication for other purposes. Family law litigation is no different from any other litigation save that the rules of court require the parties to the marriage to make comprehensive disclosure of any document that might enable the other party to the relationship to understand the financial circumstances in dispute. Of necessity, that obligation captures and infringes upon the privacy of third parties who are involved with a party to the marriage. It is for that reason that the Court provides the protection of what is described as the implied undertaking but which is in reality, an enforced obligation. In every case therefore, the enforced obligation is present and for the reasons outlined by the plurality in Hearne v Street (supra), only in exceptional cases should the Court reiterate that obligation expressly by requiring a written and wide-ranging acknowledgement of the obligation.
The circumstances therefore under which an express obligation can be sought and reiterated should be cases such as those where there is evidence that:
(a)the owner of the documents reasonably believes the release would be detrimental to the business because of the possibility of a competitive advantage being obtained by another even though the owner is aware that the rules of court provide protection and are treated seriously;
(b)in relation to the protection issue, the information is not in the public domain even though it is conceivable that it might become public through such things as an open court hearing; and
(c)the information is objectively seen to be sensitive taking into account the fact that the holder of the documents is not a party to the substantive dispute.
I am prepared to accept on the evidence of Mr Hunt that there are competitors involved in his industry who could take advantage of the commercial moves of his entities and his concern is reasonable because he simply seeks to have a reassurance that not only the Court but also the parties seeking the documents take the obligation seriously enough to have it reiterated by a signed undertaking. I accept that the only evidence is that the sensitive material is not in the public domain and that its commercial worth to Mr Hunt is significant. Those findings put Mr Hunt into that exceptional category.
Mr Hunt sought that a wide range of people execute an “undertaking” to keep the information confidential. The document provided did not indicate the consequences of a breach. It is not clear from the document whether a deliberate breach would bring about contempt proceedings or simply an action for damages for breach of confidentiality or both.
In most litigation but particularly that relating to financial matters under the Family Law Act 1975 (Cth) (“the Act”), many people will handle the documents concerned. Those people include solicitors and their staff, para-legals, barristers and potentially their administrative staff, forensic accountants and their staff and the list goes on. So too, the handling by court staff will be extensive. All of these people should understand the confidentiality obligation. Lawyers know of and about it as a matter of professionalism. A forensic accountant and valuer presumably knows it by virtue of understanding how sensitive information affects the value of something. The para-legals, typists and other administrative staff presumably would know little more than that they are required not to talk about their clients and the aspects of their cases.
The consequences of a breach of that obligation might be the same for each of the different participants in the handling process regardless of who it is. That alone creates problems if some or all are pursued by way of an application for contempt of court. That raises all of the questions of proof let alone the extent to which damages could be claimed because of principles of vicarious liability. Having regard to all of those complications, it seems to me that despite the exceptional circumstances referred to in Hearne v Street (supra) because of the possible consequences for Mr Hunt arising from the handling of the documents by so many people, the court should be cautious before simply requiring the execution of a confidentiality agreement. After all, it may be the same court that is required to enforce it by sanction and/or damages.
In my view, once satisfied that there is a basis to reiterate the obligation expressly, careful consideration needs to be given to how that obligation is executed. The power to limit the extent of that order lies in s 114(3) of the Act. Because the Court is being asked to reiterate the obligation it imposes, the Court should set the limits.
In my view, the undertaking should amount to an express acknowledgement of the obligation not to use the documents for any other purpose than specifically within the proceedings and that the obligation lies with the principals to be responsible for agents and servants. The undertaking must set out the consequences of a failure to comply on the basis that the Court might be asked to deal with the breach by way of contempt of court process. Because there is a prospect of an unwitting or negligent breach of the obligation, it should set out the prospect of damages being ordered in the event that they are proved to have befallen the claimant. Because of the jurisdictional problems of this Court associated with claims for damages, that needs to be carefully spelt out.
For those reasons, I am satisfied that it is appropriate for the wife and her solicitors to sign for the benefit of Mr Hunt an express acknowledgement of the obligation that they have to keep his documents confidential in the sense of not being used for any other purpose than the proceedings themselves.
I certify that the preceding Twenty One (21) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 9 July 2012.
Associate:
Date: 9 July 2012
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