Vincenzo and Vincenzo
[2012] FamCA 427
•7 June 2012
FAMILY COURT OF AUSTRALIA
| VINCENZO & VINCENZO | [2012] FamCA 427 |
| FAMILY LAW – INJUNCTIONS - Confidentiality agreement sought by the husband and refused - Injunction made against the wife disclosing business material on the basis that it is proper to do so |
| Family Law Act 1975 (Cth) |
| APPLICANT: | Mr Vincenzo |
| RESPONDENT: | Ms Vincenzo |
| FILE NUMBER: | MLC | 10204 | of | 2011 |
| DATE DELIVERED: | 7 June 2012 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Cronin J |
| HEARING DATE: | 29 May 2012 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Strum |
| SOLICITOR FOR THE APPLICANT: | Taussig Cherrie Fildes |
| COUNSEL FOR THE RESPONDENT: | Mr O’Shannessy |
| SOLICITOR FOR THE RESPONDENT: | Borchard & Moore |
Orders
That the wife be and is hereby restrained by injunction from disclosing to any person or persons other than those advising her in relation to the legal and accounting issues any information of a financial nature about the Vincenzo Group entities referred to in the application in a case filed 23 April 2012 until further order.
That the application in a case filed 23 April 2012 and the response thereto filed 17 May 2012 are otherwise dismissed save as to issue of costs.
That should any party seek costs arising out of these orders, such application be made by written submission and filed and served by no later than 5 July 2012 with such submission being endorsed with the fact that it has been so served on the other party and any recipient of such submission have until 19 July 2011 to file and serve any response and such response be endorsed with the fact that it has been so served on the other party and upon receipt of any such application for costs, it or they be determined in chambers.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Vincenzo & Vincenzo has been approved by the Chief Justice pursuant to s 121(9)(g) of the Act.
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 10204 of 2011
| Mr Vincenzo |
Applicant
And
| Ms Vincenzo |
Respondent
REASONS FOR JUDGMENT
Mr Vincenzo (“the husband”) and Ms Vincenzo (“the wife”) separated in the middle of August 2011 after about 16 years of marriage. By November 2011, their financial dispute had begun in this Court.
On 15 November 2011, the wife filed an application in which she sought undefined final financial orders but she also sought interim orders for spousal maintenance and litigation funding.
On 15 December 2011, the husband responded seeking parenting and personal injunctive orders concerning the parties’ five children who are aged between 11 and 15 years.
In addition to those matters, responding to the wife’s application, the husband sought undefined property orders. The parties were keeping their financial cards close to their chests.
In respect of interim financial matters, the husband agreed to pay some spousal maintenance, limited litigation funding and agreed to orders about valuations of the various properties.
The parties have numerous corporate entities and have been involved in the construction industry.
The dispute took on a new phase when on 23 April 2011, the husband filed an application. He sought orders that the wife execute and deliver up to his solicitors a confidentiality agreement which was annexed to the application. Further or in the alternative, he sought orders that the wife be restrained from disseminating to any person other than those advising her in relation to the legal and accounting issues, any financial business information of whatsoever nature and kind regarding the entities of the husband. The application for the injunction was actually wider than that but it does not matter for the purposes of my determination.
By her response filed 17 May 2011, the wife simply asked that the husband’s application be dismissed.
Counsel for the wife submitted that to impose what was in effect the equivalent of an implied undertaking on the wife meant that the husband carried a very heavy burden by way of onus of proof. An implied undertaking or more importantly, an injunction requiring the wife and/or her advisers to enter into a confidentiality agreement must lie in s 114 of the Family Law Act 1975 (Cth) (“the Act”).
Mr Strum of counsel for the husband took me through a number of authorities relating to courts imposing what was the equivalent of an implied undertaking in relation to discovery or the production of documents. In Church of Scientology of California v Department of Health and Social Security & Ors [29179] 3 All ER 97, the Court of Appeal in England said that there was always an inherent jurisdiction to prevent abuse of its process and went further to say that the court must take steps to prevent any illegality which was brought to its attention even on its own motion. The Court of Appeal said to use a document produced for inspection for a collateral or ulterior purpose was a misuse within the proceedings and one which the court would proceed for contempt or by injunction. As was pointed out, an undertaking in most cases is unnecessary because it is implied but their Lordships acknowledged that there was a very small hardcore of cases where an undertaking was not enough in circumstances where a party could not be trusted not to misuse the information and thereby abuse the process of the court.
In a similar decision in Warner-Lambert Co v Glaxo Laboratories Limited [1975] RPC 354 the same court expressed concern about what sanctions could be imposed if someone failed to faithfully observe any term of an undertaking which required the maintenance of confidentiality. Obviously, if material of a commercial nature was inappropriately released and did enormous damage to a business by being provided to a competitor, sanctions against the person who leaked the information or simply negligently allowed it to fall into the wrong hands, would be of little consolation.
There can be little doubt in my view that this Court does have the power in relation to those “hardcore of cases” where sensitivity is extremely important. In Hearne v Street [2008] HCA 36 the High Court of Australia said that the point of insisting on an express undertaking was to bring explicitly home to the minds of those giving it how important it was that the documents only be used for the purposes of the proceedings.
In Haile-Michael v Konstantinidis (2012) FCA 108 Marshall J had to deal with matters under the Australian Human Rights Act 1986 (Cth) in which the applicants claimed that they had suffered unlawful discrimination because of the contravention of s 9 of the Racial Discrimination Act 1975 (Cth). This case revolved around police documents and the Chief Commissioner sought a confidentiality undertaking. His Honour referred to Hearne v Street (supra) and said that exceptional or special circumstances had to be articulated to warrant the requirement that an express undertaking be given which extended not only to the applicants but also to their legal advisers. His Honour noted that it was not a case where trade secrets might be divulged or some commercial advantage might be lost as was the case in Hearne (supra). In Kirby v Centro Properties Limited (2009) FCA 605, Ryan J dealt with similar principles and noted that requiring an express undertaking from people outside of the immediate parties was not unusual or unreasonable.
In my view, it is not necessary for me to look at some inherent power to make the order. Section 114 of the Family Law Act 1975 (Cth) provides that in proceedings between the parties to a marriage for an order or injunction in circumstances arising out of the marital relationship, the Court may make such order or grant such injunction as it considers proper with respect to the matter to which the proceedings relate. That provision includes an injunction in relation to the property of the party to the marriage.
In exercising the jurisdiction, s 114(3) provides that the Court may grant an injunction in any case where it appeared to the Court to be just and convenient to do so including on such terms as it considered appropriate.
Schedule 1 of the Family Law Rules 2004 specifically provides that in pre-action procedures, parties are not to use a document disclosed by another party for any purpose other than the resolution or determination of the dispute to which the disclosure of the document relates. The schedule goes on to provide that any document so provided is done so on the basis of an undertaking by the party in receipt of the documents that they will not be used for any purpose other than the case. Another example can be seen in Rule 15.27(2)(a) in relation to documents produced under subpoenae. Those may only be used for the purposes of the case and must not be disclosed without permission of the Court to any person other than the parties to the proceedings.
It is clear that the Rules of the Court contain an implied undertaking. The whole foundation of the Rules in relation to disclosure impresses upon all parties their duty to be expansive in that disclosure. It would be absurd if there was not an implied undertaking attached to that duty.
I turn then to what the parties required me to consider. Each party relied upon an affidavit. Each was represented by counsel and made submissions. In an interlocutory hearing, with limited time and little opportunity to test the evidence by cross-examination, it is not appropriate that I make findings on contentious facts unless the inferences are clear and open to the persuasive standard. With that restriction in mind, I set out why the orders in the husband’s application should not be made but why there should be a limited interlocutory injunction against the wife.
In his affidavit filed 23 April 2012, the husband said that he had been concerned for some time about the conduct of the wife and those with whom she associated. He linked that behaviour, vague as it was there suggested, with the possible consequential impact on the value of the parties’ business entities. As counsel for the wife submitted, a vague assertion such as that, had to have some foundation. The husband’s affidavit went on to say that in September 2011 he was driving past the offices of the wife’s solicitors and he observed the wife with a friend named Ms M. He said he was concerned by this because Ms M and her husband conduct a business which was “a potential direct competitor” to his business group. He said he confronted the wife and she admitted that she had had a conversation in the presence of Ms M with her solicitor. The wife responded initially to say that she doubted whether the husband was simply driving past the offices of her solicitor and by inference was suggesting that he was specifically following her. She denied that Ms M’s husband was a competitor and she denied having revealed financial information relevant to the group from which Ms M’s husband could profit or that she had admitted to the husband that she had revealed that confidential information.
Although somewhat equivocal and possibly not an absolute denial, bearing in mind that the wife did not say what she did discuss, I accept that the wife meant that there was no foundation for the husband’s concern that she might deliberately or inadvertently give sensitive financial information to others.
Of some concern was the time that had elapsed after this observation by the husband before he took action.
Although not addressed specifically in the affidavit material, there was correspondence between practitioners about the incident outside of the solicitor’s office. That correspondence shows that in October 2011, the parties were still living together under the one roof. The wife’s interpretation of the incident can be seen in a letter her lawyers wrote complaining about the husband following her. The husband’s solicitor responded in October 2011 denying any such “following” but then raised the question of the wife’s conduct about leaking information to the potential competitor. Importantly, the letter from the husband’s solicitor did assert that in discussions with the wife, she had admitted discussing “particulars of the business” in the presence of Ms M. That letter was never responded to by the solicitors for the wife.
On the facts of those versions, a court should approach the wife’s protestations cautiously because it would seem that she was brushing off the husband’s concerns. However, the whole of this matter needs to be seen in some context.
This defining incident occurred before the wife issued her application in November 2011 and obviously before the husband filed his response on 15 December 2011. In his response, the husband did not seek any injunctive orders of the type that his application sought on 23 April 2012. There is no evidence that I can see that precipitated his reaction other than some concerns expressed in his affidavit about the wife’s refusal to agree to a confidentiality agreement.
On 19 December 2011, the parties were in court and I note there was an agreement for the various entities to be valued. The parties had actually agreed upon a specific valuer. That order seems inconsistent with the husband’s approach in the letter of 28 November 2011. However his interest in the confidentiality agreement was renewed in January 2012 when his solicitor wrote to the agreed expert and requested that once the confidentiality agreements were received, direct communication could take place with the accountants for the business if that was a useful exercise. Immediately after that correspondence, the wife’s solicitor indicated that the wife had refused to execute the confidentiality agreement. The husband’s solicitors renewed their request for the wife and others to sign the confidentiality agreement on 2 February 2012 and even followed that up with a further letter indicating there was a deadline.
I am unable to say whether it was simply an oversight that the issue was not raised at court on 19 December 2011 but I note two important things. First, orders of that nature were not sought amongst the interim orders pursued by the husband. Secondly, the husband was represented by senior counsel.
The husband’s affidavit then digressed to deal with the issue of how sensitive this information was. He pointed to the fact that another relative by marriage of the wife had been employed by the group and that particular person had something to do with the tender processes that enabled the companies to obtain significant work. There was reference in the affidavit to this particular person having had his employment terminated and a whole series of matters about emails being found in September that would suggest that the company’s intellectual property was at risk from this employee’s dealing with competitors. The only link that I could see with the application before me was the wife’s link by marriage to the terminated employee.
In paragraph 7(b) and 8 of her affidavit, the wife denied that she was motivated to cause the husband financial harm if that was in fact what he was inferring but importantly, she denied there was any need to execute a confidentiality agreement or to be even subject to an injunction because she knew the proceedings were confidential and must not be published to anyone.
It is trite to say that if the information of a sensitive nature about which I know little was provided to a competitor, significant damage would be done which might have a deleterious effect upon the valuation. However, there must be some basis upon which I could determine that it was proper to make the injunction. In this case, because of the wife’s equivocation and perhaps dismissive response to the husband’s concerns, I propose to make an order that she be restrained from disclosing information she receives to any person other than her legal and business advisers. That order is only on an interlocutory basis until such time as the matter can be properly before the Court where the evidence can be tested. Clearly, a breach of that order would amount to contemptuous conduct if it was deliberately undertaken.
In my view, that is the only order in the circumstances which is proper.
I certify that the preceding Thirty (30) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 7 June 2012.
Associate:
Date: 7 June 2012
3
2
1