Ubertas Funds Management Pty Ltd v PwC (release from implied undertaking)

[2017] VSC 735

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE
COMMON LAW DIVISION
PROFESSIONAL LIABILITY LIST

S ECI 2017 00109

Ubertas Funds Management Pty Ltd (ACN 101 997 853)	Plaintiff
v
PricewaterhouseCoopers (a firm) (ABN 52 780 433 757)	Defendant

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JUDGE:	Macaulay J
WHERE HELD:	Melbourne
DATE OF HEARING:	4 December 2017
DATE OF JUDGMENT:	4 December 2017
CASE MAY BE CITED AS:	Ubertas Funds Management Pty Ltd v PwC (release from implied undertaking)
MEDIUM NEUTRAL CITATION:	[2017] VSC 735

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PRACTICE AND PROCEDURE ‒ Release from Harman undertaking ‒ Release from obligation under s 27(1) Civil Procedure Act 2010 ‒ Consideration of special circumstances in context of a large body of documents sought to be used ‒ Leave granted.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr T. North Q.C. with Mr C. Salpigtidis	Brand Partners Commercial Lawyers
For the Defendant	Mr J. Slattery	King & Wood Mallesons

HIS HONOUR:

Introduction

1. Section 27 of the Civil Procedure Act 2010 (the Act) imposes an obligation upon any person who receives information or documents provided by another person involved in a civil proceeding, as a result of compulsory disclosure processes (see s 26 of the Act), not to use the information or documents other than in connection with the civil proceeding (the s 27 obligation).

1. The s 27 obligation is a statutory manifestation of a similar, longstanding common law obligation, taken to be an implied undertaking made to the Court, notably recognised in the UK in Harman v Secretary of State for Home Department[1] and in Australia, for example, in Hearne v Street[2].

   [1][1983] 1 AC 280.

   [2](2008) 235 CLR 125 (‘Hearne’).

1. In this application the parties to this proceeding—the plaintiff, Ubertas Funds Management Pty Ltd (UFM), and the defendant, PricewaterhouseCoopers (a firm) (PwC)—seek the Court’s leave to be released from the obligation and implied undertaking to enable them to use a very substantial body of documents disclosed by numerous parties in a previous civil proceeding.

1. That previous civil proceeding,[3] commenced in 2013 (the 2013 proceeding), was also conducted in this Court.  In it there were three plaintiffs, one of whom was the plaintiff in this proceeding, UFM.  There were 12 defendants and a number of third parties, only two of whom were not also defendants.  Each of those parties made discovery in that proceeding, some providing their discovery in multiple lists over a period of time.  Relevantly, two entities (who were not parties to the proceeding) produced documents to the Court in answer to subpoena—one was PwC and the other was Balanced Securities Ltd.

   [3]Proceeding number S CI 2013 00899.

1. From the combined discovery (4,704 documents) and subpoenaed documents, a court book was produced in readiness for the trial containing a total of 11,328 pages.  A supplementary court book was also served by the plaintiff on the defendants.

1. The trial commenced before Judd J on 13 April 2015, listed for 15 days.  At the close of opening addresses the trial was adjourned for mediation and the matter settled.

1. The present proceeding has only reached the point where a statement of claim has been filed. PwC has (with UFM’s consent) not yet filed a defence because PwC is awaiting the production of documents referred to in UFM’s statement of claim. UFM cannot presently provide PwC some (or many) of the documents referred to in the statement of claim because they are documents which it had received from the discovery made by other parties in the 2013 proceeding. To do so would contravene the s 27 obligation and UFM’s implied undertaking to the Court.

1. Additionally, PwC (and its present lawyers, King & Wood Mallesons) have been in possession of a copy of the court book from the 2013 proceeding containing many of the discovered documents from that proceeding.  That came about because a partner of PwC, Gregory Diamond, was to be a witness in the 2013 proceeding and, in preparation for giving evidence, had been provided with a copy of the court book by the solicitors for the defendants in that proceeding who were proposing to call him.  This circumstance came to light when PwC’s current solicitors revealed to UFM’s solicitors that they had possession of certain documents that had come from the court book in the 2013 proceeding and, indeed, sought to use them in a pre-litigation mediation between them.

1. So, PwC (and its lawyers) support (indeed, join in) UFM’s application for release from the obligations so as to ‘cure’ any past breach by PwC or UFM of the obligation.  King & Wood Mallesons has apologised to the Court for its use of the documents explaining that it had  assumed (incorrectly) that the documents had been tendered and read into evidence in the 2013 proceeding (thereby putting them into the public domain).

1. All of the parties to the 2013 proceeding have been made aware of this application—so has Balanced Securities Ltd.  In substance, none oppose the application insofar as UFM seeks to use documents which that relevant party discovered in the 2013 proceeding for the purpose of this proceeding.

1. Nevertheless, the obligation and the undertaking is taken to be one owed or given to the Court so it is for the Court to decide whether or not to release UFM.

Principles of law

1. The nature of the common law implied undertaking was explained in Hearne,[4] Hayne, Heydon and Crennan JJ:

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.

[4](2008) 235 CLR 125, 154-155 [96] (citations omitted).

1. Hayne, Heydon and Crennan JJ also stated in Hearne that the importance with which the courts have viewed the obligation is indicated by the fact that although it can be released or modified by the court, that dispensing power is not freely exercised, and will only be exercised where special circumstances appear.[5]

   [5]Ibid, 158-160 [107], following Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10 at 37.

1. The terms of s 27 of the Act are as follows:

27 Protection and use of information and documents disclosed under overarching obligation in section 26

(1)A person who receives any information or documents provided by another person involved in the civil proceeding as a result of disclosure in compliance with the overarching obligation in section 26 is subject to an obligation not to use the information or documents, or permit the information or documents to be used, for a purpose other than in connection with the civil proceeding.

(2)The obligation under subsection (1) is taken to be an obligation to the court, contravention of which constitutes contempt of court.

(3)       A person—

(a)may agree in writing to the use of information or documents otherwise protected under subsection (1); or

(b)may be released from the obligation imposed under subsection (1) by leave of the court.

(4)Without limiting this section or discovery in any civil proceeding any information or documents exchanged in compliance with the overarching obligation in section 26 is required to be discovered in the civil proceeding to be admissible in that proceeding.

(5)Nothing in this section limits any other undertaking to a court (implied or specific) whether at common law or otherwise, in relation to information or documents disclosed or discovered in a civil proceeding.

1. In Barrow v McLearnon[6] Beach J was prepared to proceed on the basis that the authorities that govern the release of a common law implied undertaking also govern the application of s 27(3)(b) of the Act, the Court’s release of a s 27 obligation. For the reasons his Honour gave, I am similarly prepared to proceed on that basis.

   [6][2012] VSC 134, [23].

1. In Australian Securities & Investments Commission v Marshall Bell Hawkins Limited,[7] Merkel J observed:

Generally, a party applying for the modification or release of the undertaking should:

·     specify the documents in respect of which the modification or release is sought;

·     specify the purpose for which the modification or release is sought; and

·     satisfy the Court that the special circumstances relied upon by the party warrant or justify the modification or release sought.

The requirements of specificity in respect of the documents to be used and the purpose for which they are to be used is appropriate because the implied undertaking should only be modified or released to the extent that it is in the interests of the administration of justice or in the public interest to do so. Thus, the modification or release should be no greater than is necessary or appropriate to meet the interests of the administration of justice or the public interest. Further, in determining whether to exercise its discretion to grant the modification or release sought, it will usually be necessary for the Court to identify with precision the documents to be released and the purpose of that release.

[7][2003] FCA 833, [12]–[13] (citations omitted).

1. In Springfield Nominees Pty Ltd v Bridgelands Securities Ltd,[8] Wilcox J amplified ‘special circumstances’, saying:

For ‘special circumstances’ to exist it is enough that there is a special feature of the case which affords a reason for modifying or releasing the undertaking and is not usually present. The matter then becomes one of the proper exercise of the court’s discretion, many factors being relevant. It is neither possible nor desirable to propound an exhaustive list of those factors. But plainly they include the nature of the document, the circumstances under which it 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 into the hands of the applicant for leave and, perhaps most important of all, the likely contribution of the document to achieving justice in the second proceeding.

[8](1992) 38 FCR 217, 225.

1. These observations have been cited with approval in many cases.[9]

   [9]The following list was collected by John Dixon J in Ah Choo Teo v Pacific Media Group Pty Ltd [2016] 626, n15: Fortis Business Holdings LLC v Commonwealth Bank of Australia [2009] VSC 274, Rowe v Silverstein [2008] VSC 572, Love v Roads Corp [2006] VSC 501, Citicorp Life Insurance Ltd v Lubransky [2005] VSC 101, Playcorp Ltd v Tyco Industries Inc [2000] VSC 440, Nicholls v Hertslet [2016] FCA 655, Construction Forestry Mining and Energy Union (CFMEU) v North Goonyella Coal Mine Pty Ltd [2013] FCA 1444, Re Allco Finance Group Ltd (recs and mgrs apptd) (in liq), Gothard v Fell (2012) 203 FCR 236; , Seeley International Pty Ltd v Cintro Pty Ltd [2011] FCA 712, Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 6) [2010] FCA 1009, Michael Wilson & Partners Ltd v Nicholls [2007] NSWSC 317, Moran v Schwartz Publishing Pty Ltd (No 4) [2015] WASC 328.

Submissions

1. Only UFM and PwC appeared on the hearing of the application.  A minute of order was produced containing a proposed order whereby the Court would grant leave to UFM to use documents identified in the schedule to the order for the purpose of the proceeding.

1. The schedule in turn referred to other lists of documents referrable to each party in the 2013 proceeding that were to be the subject of the release.  In all but two instances, those lists were a reduced sub-set of the entirety of that party’s discovery, generally confined to those documents that were a communication to which Mr Diamond (the PwC partner) was privy.

1. In the two instances where the scheduled documents comprised the entirety of that party’s discovery (HWL Ebsworth Lawyers and Cornwall Stodart Lawyers), neither party opposes the release.  UFM explained that it is highly likely that only a limited number of documents will be used from those two sources but time is required to review them to ascertain which may be relevant to this proceeding.

1. As the principles set out above reveal, typically the Court would be taken to the document or documents that are the subject to the application for release to be satisfied that special circumstances exist in respect of the individual document or documents to justify the parties being released from their obligation not to use it.

1. Here, the sheer volume of documentation the subject of the application presents a challenge to the practicality of the Court undertaking that level of consideration.  Neither party was able to refer me to an authority where the Court granted leave over a whole reservoir of documents.  But the parties submitted that in this particular case a combination of factors, taken together, constitute the special circumstances that would justify the Court granting the orders sought. 

Conclusion

1. In short, I agree.  Those factors are as follows:

(a)   the subject matter of the proceeding (as explained in the supporting affidavit and as is evident from the statement of claim) overlaps the subject matter of the 2013 proceeding;

(b)   the 2013 proceeding itself concerned two different time periods (events leading to December 2011 and events in 2013) which, in turn, involved very complex commercial interactions with shifting parts, generating a substantial body of documents that revealed the commercial elements in play at each point in time and, equally importantly, the knowledge of specific parties (especially PwC) about those commercial elements;

(c)    it would be inefficient, costly and burdensome for the parties in this case to have to obtain the same body of relevant material through the use of subpoenas directed to the parties in the 2013 proceeding;

(d)  it would be inefficient, costly and burdensome to the parties in the 2013 proceeding to be involved (again) in having to disclose and produce documents in their possession relevant to this proceeding;

(e)   UFM and PwC have already substantially culled those documents that are relevant to this proceeding from the larger body of material discovered in the other proceeding;

(f)     in the circumstances, placing reliance on the parties to this proceeding to undertake the exercise of narrowing the documents to those that are relevant and useful for the purpose of resolving the issues in dispute is a more efficient and just allocation of the burden than requiring the Court or the parties to the 2013 proceeding to do so; and

(g)   the parties to the 2013 proceeding have each been made aware of the documents UFM wishes to obtain leave to use in this proceeding, are each well-resourced to be able to assess their individual interests and have either consented to or not opposed the application.

1. Having regard to these factors and the Court’s duty to give effect to the overarching purpose as defined in the Act (ss 7 and 8), I am satisfied that it is appropriate to release UFM from its obligation under s 27(1) in respect of the documents identified in the schedule to the summons (reproduced in the minute of order). Equally, I am satisfied it is appropriate to release UFM from its implied undertaking at common law in respect to the same documents to enable it to use them in this proceeding.

1. Insofar as UFM or PwC, or their lawyers, have to date made use of the documents from the 2013 proceeding in breach of the obligation or undertaking, I accept that the parties have now taken appropriate steps to remedy those breaches.

1. I will make the orders sought.