Sweetman, K.I. & Ors v Australian Thoroughbred Finance P/L & Ors Jones, G.M. & Ors v Mortgage Acceptance Nominees Ltd

[1992] FCA 1059

/OS? 92

JUDGMENT No. ........ ........ . J , .

IN THE FEDERAL COURT OF AUSTRALIA ) )

NEW SOUTH WALES DISTRICT REGISTRY No. NG 504 of 1991 .. .

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GENERAL DIVISION )

BETWEEN :	KENNETH IRWAN SWEETMAN &
ORS.

Applicants

AND:  AUSTRALIAN THOROUGHBRED

PRINCIPAL

REOISTRV FINANCE PTY LIMITED & ORS.

Respondents

IN THE FEDERAL COURT OF AUSTRALIA	)
1

NEW SOU TH WALES DISTRICT REGISTRY ) NO. NG 711 of 1991

GENERAL DIVISION 1

BETWEEN:  GRIFFITH MORGAN JONES & ORS.

Applicants

AND:  MORTGAGE ACCEPTANCE NOMINEES
LIMITED & ORS.

Respondents

23 JULY 1992

There are before the Court two motions: one motion is in matter G711 of 1991 and the other in G504 of 1991. The two motions are in substantially the same terms. The moving parties in each motion are the applicants in each matter in which the motions have been taken out. They seek orders that they and any the implied undertaking not to use, or permit to be used, other parties that the Court deems appropriate, be released from

REASONS FOR JUDGMENT

LOCKHART J.

documents produced to them on-discovery in the proceedings, .or . - I

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any knowledge acquired from inspection of them, otherwise than

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for the purpose of the proceedings and that the extent to which

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that release is sought is limited to the use of those documents

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and knowledge for the purpose of the other proceedings and not	l
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otherwise.	L
The motions have been taken out because of the principle that a party, or a party's representative, who is permitted to inspect or copy a document of another party produced by the compulsory process of discovery in the Court in a pending proceeding, is subject to an obligation (usually referred to as an implied obligation) not to use or permit to be used any such document or copy or any knowledge acquired from its inspection, otherwise than for the purpose of that proceeding without the consent of the document's owner or the Court's leave.
There is perhaps some question whether the doctrine applies to documents which are not of a confidential nature, but it is
not a matter which I find it necessary to decide in this case,	as the question of whether the documents are confidential is not
raised in this matter. Breach of the obligation may constitute
contempt of Court.	The principle is referred to in many cases.

It is sufficient if I refer to C r e s t Homes PLC vMarks (1987) AC

829 and the judgments of McLelland J. delivered 7 May 1982 of the

Supreme Court of New South Wales in United S t a t e s Surgical

Corporation v Hospital Products International P t y Limited,

referred to in Rich2efs Supreme-Court--Procedure NSW,-Volume 2 ,

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at paragraph 13 037; and the later judgment of Burchett J.. in

Holpi t t P t y Limited v Varimu P t y Limited (1991) 29 FCR 576.

In Holp i t t , Burchett J. said that motions of this kind should be taken out in the proceeding in which the implied undertaking to the Court is given, a view with which I respectfully agree, and it is a practice which has been followed in this case. His Honour held that in order to obtain a release or modification of the implied undertaking given on discovery, special circumstances are required and that it needs to be demonstrated that the modification would not occasion injustice to the person giving discovery.

His Honour took the notion of special circumstances from the judgment of Lord Oliver of Aylmerton in C r e s t Homes at 860.	His
Honour went on to say at 578:

" A s f a r a s the expression "special

circumstances" i s concerned, i t i s an

expression which i s l i a b l e t o be misunderstood unless care i s taken to ask and answer the quest ion, specia l i n r e l a t i o n

t o what?	'Special'	i s one o f those words
which der ive almost	a l l	t h e i r meaning from

the contex t . "

In proceeding G711 of 1991, which relates to what is called the "Trinity Syndicate" of horse breeding and persons who promoted the syndicate and participated in it, it is said by counsel for the applicants that similar issues arise, as they do

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in the other proceeding G504 of 1991, known as the' "Hallmark " >

Syndicate". I need not dwell on the nature of the litigat'ion	L
itself at any length. These cases, and other cases, are before	:
the Court at different stages of preparation and in the two	-;
matters the preparation for hearing is well advanced. They have	f .
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not been ordered to be heard together and they may not be heard	, ,
together; that will depend upon any motion that they be so heard.	! -'
It is plain from what has been said today that there may be
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opposition to that course being taken.	In my view, based on my

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knowledge of the cases, and what I have heard from counsel and	i I
solicitors in argument, the following may be deduced:

The applicants in each of the matters are different people

from each other.	i
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There is a degree of commonality between certain of the respondents, but there is not a complete commonality of respondents in each matter.	i
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Each of the matters relates to horse breeding or horse	!
racing syndicates, one is for the financial year, 30 June	F.
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1991 and one for the financial year ended 30 June 1990.	; :-
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Undoubtedly, there is a degree of commonality of fact	i ,
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between the two matters and the two syndicates but the
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precise extent of it, is not known at this stage. On the	P :
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other hand, there are areas of fact which plainly are not	, -.
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common to each of the matters.

The same counsel and solicitors appear for the applicants in each matter.

Counsel for the applicants submitted that in essence there is but one overall transaction, channelled into two separate syndicates, Trinity and Hallmark, for two separate financial years, but that in all other material respects the matters really could have been brought as one. This view of the applicants is one which is not assented to by certain of the respondents. I also should say at this point that some of the respondents take no stand to either support or oppose the course that is now soughtbythe applicants in these two motions. Those respondents that oppose the motions do so primarily because they say the onus is upon the applicants to establish that the partial release from the undertaking should be granted and that is not for them, the respondents, to assume any such onus. With that proposition I

prejudice is simply this: that documents which they have produced	agree. The respondents who have opposed the motion say that the
on discovery in one matter can then be available to applicants, who are different persons, in another matter in which they, the applicants, have no interest. They pose the question why their documents be submitted to the gaze of persons not involved in the relevant litigation? That is a point which I take it into account. It is in.princi.ple.not..right that parties gain-access.
to documents through discovery, a compulsory process of the Court, that they may not otherwise get, but that is but one matter that must be considered albeit a very important one.
Another matter which I have touched on briefly before is that it is not said that the documents are confidential in the sense in which that expression is used in the law (that is protected by some special order of the Court restricting access say to solicitors and counsel or extending at some times to experts). The documents are not of that character, and those that I have been referred to by the parties representatives this morning are plainly not of that character. It is also plain that a number of the documents produced by the parties in discovery do relate to each matter. It is also clear that others do not. The release that is sought would not be a general release; it would simply mean that the applicants in one matter would see documents produced on discovery by the respondents in the other matter. That is the extent to which the order would operate.
would still subsist. Beyond that the implied undertaking to which I have referred
In my view because of the commonality between certain of the parties and between certain of the issues and because of the commonality of legal representation of the applicants in both cases I am not dissuaded overall that there will be any real prejudice sustained by the respondents if the orders sought in

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the motions are granted. In my view the extent of such -

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commonality constitutes special circumstances. However, I ag>ee	l
with Burchett J. that special circumstances is a concept which	I
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must take its meaning from the context 0.f each case.	Overall,	I,
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I am of the view that the motions should succeed and the orders sought should be made.

The Court orders in each motion that the applicants: i '

(a) to the extent set out in paragraph l(b), be released from	1
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their implied undertaking not to use, or permit to be used,

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documents produced to them on discovery in this

proceedings, or any knowledge acquired from inspection of	r.
them, otherwise than for the purpose of this proceeding,	L :
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and	1
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(b) be granted leave to use such documents and knowledge for	!
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the purpose of the other of the two proceedings before the	1.
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Court this morning.	i
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2. Liberty is reserved to any party to apply for a similar order on three days notice to the other parties.

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3. The costs of each motion shall be the applicants costs in each proceeding.	B
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4. If the applicants seek leave to further amend their
application or statement of claim, they should within fourteen. .
days of today submit to.gl1 other parties a draft of the proposed

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amendments ; and if there is no opposition thereto, the .applicants

may formally move the Court on the next directions hearing for

orders giving them leave to amend their pleadings; otherwise the

applicants should restore the natter to the list on three days	I :
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notice.	, ,

I certify that this and the

preceding seven (7) pages are a true copy of the reasons for judgment herein of the Honourable Mr. Justice Lockhart.

Associate

Dated: 23 July 1992

Counsel for the Applicant : R. McDougall Q.C.
L.E. Einstein

Solicitors for the Applicant :	Gadens Ridgeway
Solicitors for First Respondent:	Foulsham & Geddes
Solicitors for Second Respondent:	Smits Leslie Barwick
Solicitors for Sixth Respondent:	Esplins
Date of Hearing	23 July 1992
Date of Judgment	23 July 1992