FEDERAL COURT OF AUSTRALIA

James G Oberg (Sales) Pty Limited v Oberg [2012] FCA 722

THE COURT ORDERS THAT:

1.    Leave be granted to the second defendant and its solicitors and counsel to use the following documents in connection with Supreme Court of New South Wales proceedings No. 2011/411782 (including any cross-claim against NSW Trustee & Guardian or against BT Portfolio Services Limited or any entity related to or associated with BT Portfolio Services Limited) and any claim against BT Portfolio Services Limited or any entity related to or associated with BT Portfolio Services Limited:

(a)    plaintiffs’ discovery documents 30 to 33 inclusive;

(b)    the following documents produced by the Australian Securities and Investments Commission pursuant to a subpoena issued on 15 August 2011:

(i)    Ex 2 being certain documents produced in response to paragraphs 3, 4, 5 and 6 under the heading “Documents in respect of JRCC Finance Pty Ltd”;

(ii)    Ex 3 being certain documents produced by ASIC in response to paragraphs 7, 8, 9, 10 and 11 under the heading “Documents in respect of Ralph David Oberg”.

2.    No order be made as to costs of the second defendant’s interlocutory application filed 1 June 2012 with the intention that each party to that application bear their own costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

Orders made

1    On 28 June 2012 I made orders granting the second defendant (“WealthSure”) and its solicitors and counsel leave to use the following documents in connection with Supreme Court of New South Wales proceedings No 2011/411782 (including any cross-claim brought by WealthSure against the NSW Trustee & Guardian or against BT Portfolio Services Limited (“BT”) or any entity related to or associated with BT) and any claim brought by WealthSure against BT or any entity related to or associated with BT:

(1)    Documents 30 to 33 inclusive in the plaintiff’s List of Documents verified 5 July 2011;

(2)    the following documents produced by the Australian Securities and Investments Commission (“ASIC”) pursuant to a subpoena issued on 15 August 2011:

(i)    Exhibit 2 being documents produced in response to paras 3, 4, 5 and 6 under the heading “Documents in respect of JRCC Finance Pty Ltd”;

(ii)    exhibit 3 being documents produced by ASIC in response to paras 7, 8, 9, 10 and 11 under the heading “Documents in respect of Ralph David Oberg”.

2    Additionally, I ordered that there be no order as to costs.

3    I made these orders in the context of an application by WealthSure for a grant of leave to use the documents referred to in the orders in the proceedings there referred to, both extant and future, notwithstanding they were created or brought into existence for the purpose of these proceedings and are therefore, in the absence of leave being granted, subject to an implied undertaking that they will only be used for the purposes of these proceedings. The orders were made upon consideration of the evidence led on behalf of WealthSure and the submissions, both written and oral, made on its behalf. In doing so, I was mindful that of the respondents to the application, the plaintiffs and ASIC neither opposed nor consented to the relief sought.

4    I indicated at the time of making the orders that I would shortly publish my reasons, and I now do so.

5    In support of the application WealthSure relied on the affidavit of Susan Elizabeth Reid affirmed 1 June 2012 (Ex 1). It also provided to the Court three folders of documents produced on subpoena by ASIC, being the bulk of the documents in respect of which leave was sought (Exs 2 and 3) (the others are exhibited to Ex 1).

These proceedings

6    These proceedings were commenced by George Richard James Oberg, Shirley May Oberg and their company against their son, Colin James Oberg, and WealthSure in 2011 (Ex 1 at [4]–[5]).

7    By them the plaintiffs alleged that Colin Oberg, in his capacity as their financial adviser, made unauthorised withdrawals from certain “BT Wrap” accounts held by the plaintiffs during the period November 2007 to October 2008. It was alleged that the funds were transferred to Colin Oberg’s company, JRCC Finance Pty Ltd (“JRCC Finance”), and spent away. WealthSure, as the financial services licensee of which Colin Oberg was an authorised representative, was alleged to be liable for Colin Oberg’s conduct under Div 6 of Pt 7.6 of the Corporations Act 2001 (Cth) or under common law principles of agency (Ex 1 at [5]–[8]).

8    The proceedings were settled prior to hearing, but after discovery had been given and subpoenas issued and returned (Ex 1 at [9]).

Supreme Court Proceedings

9    The Supreme Court proceedings are brought by Ralph Oberg (by his tutor NSW Trustee & Guardian), who is George and Shirley Oberg’s son and Colin Oberg’s brother. Colin Oberg and WealthSure are the defendants (Ex 1 at [10]), although Ralph Oberg is proposing to discontinue against Colin Oberg in light of Colin Oberg’s recent bankruptcy.

10    Just as in these proceedings, in the Supreme Court proceedings:

(a)    Colin Oberg is alleged to have made unauthorised withdrawals from “BT Wrap” accounts held by Ralph Oberg (between 4 November 2008 and 16 July 2010) (Ex 1 at [12]);

(b)    the money is alleged to have been deposited to JRCC’s bank account and spent away (Ex 1 at [12]);

(c)    WealthSure is alleged to be liable for Colin Oberg’s conduct under Div 6 of Pt 7.6 of the Corporations Act (Ex 1 at [13]).

11    The causes of action also overlap those alleged in these proceedings, namely breach of fiduciary duty and negligence (Ex 1 at [7] and [13]).

The documents and their intended use

12    The documents in respect of which leave is sought comprise:

(a)    Four documents discovered by the plaintiffs (Ex 1 at [16](a)] and pp 24–51 of Ex SER1). These documents address complaints by the plaintiffs to the administrator of BT Wrap concerning Colin Oberg’s conduct in November 2008 and January 2009;

(b)    documents produced on subpoena by ASIC “in respect of JRCC Finance Pty Ltd” (Ex 1 at [16(b)(i)]). WealthSure has limited the documents it seeks leave in respect of to a small ring binder (Ex 2). Those documents comprise account statements for JRCC Finance’s account, trace records for transfers from BT Wrap accounts (principally those of the plaintiffs) to the JRCC Finance account and the account opening form for the JRCC Finance account;

(c)    documents produced on subpoena by ASIC “in respect of Ralph David Oberg” (Ex 1 at [16(b)(ii)]). The Ralph Oberg documents comprise two lever arch folders (Ex 3). The first volume appears to comprise Colin Oberg’s files. The second volume appears to comprise the files of NSW Trustee & Guardian and were presumably produced pursuant to a notice issued by ASIC under s 33 of the Australian Securities and Investments Commission Act 2001 (Cth).

13    WealthSure seeks leave to use the above documents in the manner set out in the following paragraphs.

Defence of the Supreme Court proceedings

14    The documents produced on subpoena by ASIC are relevant to WealthSure’s defence of the Supreme Court proceedings.

15    Dealing first with the documents “in respect of Ralph David Oberg”, reference to the subpoena categories pursuant to which they were produced (p 55 of Ex SER1, Ex 1) makes clear their relevance for that purpose. By way of example, the documents are relevant to:

(a)    Colin Oberg’s appointment as Ralph Oberg’s manager under the Protected Estates Act 1983 (NSW) (see para 3 of the statement of claim at p 9 of Ex SER1, Ex 1): e.g. pp 372–405 of vol 2 of Ex 3;

(b)    Colin Oberg’s removal from that position and the appointment of NSW Trustee & Guardian in his place (see paras 1 and 2 of the statement of claim at p 9 of Ex SER1, Ex 1): e.g. pp 674–733 of vol 2 of Ex 3;

(c)    the giving of directions and authorities by NSW Trustee & Guardian to Colin Oberg (see paras 4–7 and 13–14 of the statement of claim at pp 9–11 of Ex SER1, Ex 1): e.g. pp 457–458 of vol 2 of Ex 3;

(d)    the original investment of Ralph Oberg’s funds (see para 15 of the statement of claim at p 11 of Ex SER1, Ex 1): e.g. pp 562–563 of vol 2 of Ex 3;

(e)    Ralph Oberg’s investment in BT Wrap (see paras 17–19 of the statement of claim at p 11 of Ex SER1, Ex 1): e.g. pp 3–23, 29–42 and 50–134 of vol 1 of Ex 3;

(f)    statements for transactions on Ralph Oberg’s BT Wrap accounts (see paras 17–23 and 32 of the statement of claim at p 11 of Ex SER1, Ex 1): e.g. pp 135–300 of vol 1 of Ex 3 and pp 470–498, 581–603 and 608–609 of vol 2 of Ex 3;

(g)    statements for Ralph Oberg’s Commonwealth Bank account, which show periodical payments being made into that account, including payments that appear from their face to be from BT or Colin Oberg (see e.g. the credits on 16 and 19 June 2008 at page 329 of vol 1 of Ex 3): e.g. pp 301–340 of vol 1 of Ex 3. It is submitted that these statements may establish reductions that should be made to Ralph Oberg’s damages claim. This is supported by a file note of a conversation between NSW Trustee & Guardian and Ralph Oberg: p 551 of vol 2 of Ex 3.

16    The documents “in respect of JRCC Finance Pty Ltd” are principally relevant to:

(a)    the establishment of the JRCC Finance account (see paras 25–27 of the statement of claim at pp 11–12 of Ex SER1, Ex 1): pp 26–28 of Ex 2;

(b)    account statements for the JRCC Finance account during the period November 2008 to September 2010, showing deposits, withdrawals and the account balance (see paras 25–28 of the statement of claim at pp 11–12 of Ex SER1, Ex 1): pp 64–125 of Ex 2.

Cross-claim or claim against the administrator of BT Wrap

17    The four discovery documents (pages 24–51 of Ex SER1, Ex 1) evidence complaints by the plaintiffs to the administrator of “BT Wrap” on 6 November 2008, 20 November 2008 and 27 January 2009 about the conduct of Colin Oberg. The documents show that the complaint was one of fraud (see, e.g., p 24 of Ex SER1, Ex 1). They show that the complaint was against Colin Oberg in his capacity as the plaintiffs’ advisor (see, e.g. p 27 of Ex SER1, Ex 1).

18    The documents produced on subpoena in respect of JRCC Finance show:

(a)    large and frequent transfers from the plaintiffs’ BT Wrap accounts to JRCC Finance’s account between 27 November 2007 and 27 October 2008 (which details must have been available to the administrator at the time of the complaint): pp 1–25 of Ex 2;

(b)    large and frequent deposits to the JRCC Finance account from what appear to be other BT Wrap accounts, including that of Ralph Oberg, from November 2008 to September 2010, and large and frequent withdrawals from the JRCC Finance account: pp 64–125 of Ex 2.

19    The administrator of BT Wrap (believed to be BT Portfolio Services Limited) was aware that Colin Oberg was an authorised representative of WealthSure (see, e.g. p 608 of vol 2 of Ex 3). It must also have been aware that Colin Oberg had other clients with BT Wrap facilities. However, it apparently took no steps on or after 6 November 2008 to notify WealthSure (Ex 1 at [21]) of the allegations against Colin Oberg or to otherwise restrict Colin Oberg’s capacity to transact beyond the plaintiffs’ accounts.

20    In light of the fact that Ralph Oberg makes claims against WealthSure for funds transferred from his BT Wrap accounts after 6 November 2008, if the administrator of BT Wrap had taken steps to revoke Colin Oberg’s authority to transact on any BT Wrap account on 6 November 2008 that loss would not have been suffered. Further, if the administrator had notified WealthSure of the allegations against Colin Oberg, it would have inevitably taken steps to revoke Colin Oberg’s authority, in which case Ralph Oberg’s loss would not have been suffered or, alternatively, WealthSure could not (not accepting that it is) be responsible for the losses under Div 6 of Pt 7.6 of the Corporations Act.

21    The same may be said of the further claims that WealthSure has received from other clients of Colin Oberg who allege that Colin Oberg engaged in unauthorised dealings with their money on and from November 2008 (Ex 1 at [15]).

22    In the circumstances, the administrator of BT Wrap may have breached duties of care to each of WealthSure and Ralph Oberg or, among other things, engaged in misleading and deceptive conduct in relation to them. WealthSure may therefore be able to claim against the administrator of BT Wrap for any amount it is required to pay Ralph Oberg or Colin Oberg’s other clients or alternatively for contribution to any amount it is required to pay Ralph Oberg. (These facts may also permit a proportionate liability defence to be pleaded).

23    In the circumstances, WealthSure wishes to obtain advice on whether a cross-claim (or independent claim) against the administrator of BT Wrap is open and, if it is, it may wish to pursue it.

Cross-claim against NSW Trustee & Guardian

24    The potential for a cross-claim against NSW Trustee & Guardian arises from that officer (and his predecessor, NSW Protective Commissioner) being involved in supervising the management of Ralph Oberg’s estate. Ralph Oberg’s estate, at all relevant times, was under the management of Colin Oberg pursuant to the Protected Estates Act (Ex 1 at [11]). The documents produced on subpoena by ASIC relating to Ralph Oberg suggest certain failings by NSW Trustee & Guardian. For example, they include:

(a)    documents that show Colin Oberg was late in lodging accounts for the 2002 to 2007 financial years: e.g., pp 499, 508 and 658–661 of vol 2 of Ex 3;

(b)    documents that show Colin Oberg failed to lodge accounts he was required to lodge for the 2008, 2009 and 2010 financial years: e.g. pp 509–510, 515–517, 520, 536–538 and 648–650 of vol 2 of Ex 3;

(c)    documents that show NSW Trustee & Guardian had not obtained from Colin Oberg details of where all of Ralph Oberg’s funds were invested: e.g. pp 546 and 682–683 of vol 2 of Ex 3. This is despite having undertaken periodic reviews of Ralph Oberg’s file: e.g. pp 502–506 and 655–657 of vol 2 of Ex 3;

(d)    what is arguably an admission by NSW Trustee & Guardian as to his failures: p 545 of vol 2 of Ex 3.

25    Scope therefore exists for allegations of negligence against NSW Trustee & Guardian, which could be advanced by WealthSure in a cross-claim for contribution. In the circumstances, WealthSure wishes to obtain advice on whether such a cross-claim is open and, if it is, it may wish to pursue it.

Applicable test

26    For the Court to grant leave it needs to be satisfied that there are “special circumstances” warranting release of the implied undertaking. In Liberty Funding Pty Ltd v Phoenix Capital Ltd [2005] FCAFC 3 at [31] the Full Court observed:

“The notion of ‘special circumstances’ does not require that some extraordinary factors must bear on the question before the discretion will be exercised. It is sufficient to say that, in all the circumstances, good reason must be shown why, contrary to the usual position, documents produced or information obtained in one piece of litigation should be used for the advantage of a party in another piece of litigation or for other non-litigious purposes.”

27    If the Court finds special circumstances, it then has a broad discretion as to whether or not to grant leave. In Liberty Funding at [31] the Full Court stated of the discretion:

“The discretion is a broad one and all the circumstances of the case must be examined. In Springfield Nominees, Wilcox J identified a number of considerations which may, depending upon the circumstances, be relevant to the exercise of the discretion. These were:

•    the nature of the document;

•    the circumstances under which the document 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 in to the hands of the applicant; and

•    most importantly of all, the likely contribution of the document to achieving justice in the other proceeding.”

28    WealthSure submitted that the bases for granting leave addressed above are not affected by the observations of the High Court in Hearne v Street (2008) 235 CLR 125; Shiels v Manny [2012] ACTCA 22 at [32]. In Royal Guardian Mortgage Managers v Australian Mortgage Securities [2011] NSWSC 967 at [45], McDougall J said:

“I do not think that the plurality in Hearne was seeking to restate the relevant principles. Rather, I think, their Honours were doing two things of present relevance:

(1)    first, they emphasised the need to show ‘special circumstances’; and

(2)    secondly, they indicated that what was ‘special’ would depend, among other things, on the attitude of the person by whom documents were produced and the impact of the variation or release on that person.”

Basis for release of the undertaking in the present case

29    In Australian Prudential and Regulation Authority v Rural & General Insurance Limited (ACN 000 007 492) [2006] FCA 151 (“APRA v Rural”) at [9], Gyles J considered that special circumstances arose out of the fact that there was a connection between the two proceedings there under consideration. In Springfield Nominees Pty Limited v Bridgelands Securities Limited (1992) 38 FCR 217 at 224, Wilcox J referred to commonality between proceedings, both of facts and parties. There is obviously a connection or commonality between these proceedings and the Supreme Court proceedings and any claim against NSW Trustee & Guardian and the administrator of BT Wrap, the unifying factor being the actions of Colin Oberg toward his clients’ investments. There is also the commonality of defendants to these proceedings and the Supreme Court proceedings.

30    The relevance of the documents to the identified purposes has been referred to above. In Minister for Education v Bailey [2000] WASCA 377; 23 WAR 149 at [30] Steytler J (with whom Parker J agreed) considered the fact that a document was “highly relevant” to other proceedings was a factor in favour of there being special circumstances.

31    WealthSure submitted that the discretion to grant leave is therefore enlivened. That discretion is best considered in the context of each class of document.

Four discovered documents

32    The four discovered documents were produced by the plaintiffs. They do not object to leave being granted. Most importantly, without the documents, WealthSure will not be in a position to consider a claim against the administrator of BT Wrap and will therefore effectively be shut out from recovering from or sharing with the administrator of BT Wrap any loss it suffers in the Supreme Court proceedings (or other claims). It was submitted that it will thereby be denied justice.

33    It may be observed that:

(a)    in Ambridge Investments Pty Ltd v Baker [No 3] [2010] VSC 545 at [54], Vickery J considered on the facts before the Court that “without identification of the precise causes of action and the remedies sought in the second proceeding, it is impossible to undertake the critical balancing exercise and apply the necessary test” of special circumstances. It was submitted that those observations are of no application to the potential claim against the administrator of BT Wrap firstly because potential causes of action have been identified (see [24] above, although WealthSure would not wish to be confined to those causes of action) and secondly because the centrality of the four discovered documents (and, indeed, the JRCC Finance documents) to such a claim is manifest. Further, in Ambridge Vickery J varied the test applied by Wilcox J in Springfield Nominees (since accepted by Full Court of this Court in Liberty Funding): see at [33];

(b)    in Royal Guardian, MacDougall J refused an application for leave to use documents the subject of implied and express undertakings in a potential claim against a non-party to the litigation. His Honour did so partly for the reason that the foreshadowed claim was weak: see at [48]–[64]. It was submitted that that cannot be said of the potential claim against the administrator of BT Wrap. Further, in Royal Guardian, MacDougall J considered it important that the claim had not been advanced in the original proceeding (although it could have been) for tactical reasons: see at [48] and [65]–[73]. That is not the present case.

JRCC Finance documents

34    The JRCC Finance documents were produced on subpoena by ASIC. ASIC does not oppose a release being granted in respect of them.

35    The documents are largely bank statements and trace records of a kind that would ordinarily be produced on subpoena. In APRA v Rural at [9], Gyles J considered it relevant that the documents would more than likely have been subpoenaed in the other proceedings in the ordinary course and it would be unfortunate if the implied undertaking prevented use of the documents. That must also be true of the present documents.

36    The documents are also important to establishing causation and loss in respect of any claim or cross-claim against NSW Trustee & Guardian and the administrator of BT Wrap, which WealthSure should not be shut out of.

Ralph Oberg documents

37    The Ralph Oberg documents were produced on subpoena by ASIC, which does not oppose a release being granted in respect of them.

38    It is acknowledged that they are large in number. In Jarra Creek Central Packing Shed Pty Ltd v Amcor Limited [2008] FCA 391 at [20] Tamberlin J considered it appropriate on the facts before the Court only to consider a release in respect of particular documents rather than a broad class of documents. In Ambridge at [43], Vickery J said:

“[I]t is necessary for the individual document or piece of information in respect of which the modification or release is sought, and the purpose for that modification and release, to be clearly identified: Visy Board v D’Souza. It is not sufficient to merely identify categories of documents which are said to be the subject of the application, without identifying the specific documents and the specific purpose of the modification or release sought: Visy Board v D’Souza; Marshall Bell Hawkins.” (Citations omitted.)

39    While the Ralph Oberg documents are identified in the interlocutory application by reference to categories of a subpoena, the documents in fact comprise two identified folders (Ex 3) over which leave is sought. The relevance of the documents contained within the folders has been identified in [15] and [24] above. In this regard, it was submitted that the documents are identified with a sufficient level of detail to permit the Court to consider the appropriateness of a release.

40    Further, the subpoena categories pursuant to which the documents were produced make clear their connection with the Supreme Court proceedings. While is not possible to say that all documents will be required for the identified purposes, the Supreme Court proceedings are in their infancy and granting leave in respect of all documents now prevents the need for subsequent applications. It is submitted that granting leave in these circumstances is consistent with the approach taken by the Full Court in Liberty Funding where it was said at [33]:

“Whilst it cannot be said categorically that any particular end of justice will be furthered by the use of the Jeffery affidavit in the Supreme Court proceedings, it seems to us appropriate that, to the extent that it deals with issues relevant to the resolution of the controversy in the Supreme Court, the Supreme Court should have available to it relevant material, including such an affidavit, sworn in an earlier proceeding, which may illuminate matters in the Supreme Court.”

41    To the extent that the release is sought to consider and, if thought fit, bring a potential cross-claim against NSW Trustee & Guardian, the observations in [33] above were repeated; although WealthSure accepted that a claim against NSW Trustee & Guardian is perhaps less obvious than one against the administrator of BT Wrap. The documents do, however, establish certain failures by NSW Trustee & Guardian. Without the documents, it was submitted that WealthSure will not be in a position to assess the availability of such a claim.

42    While the documents in vol 2 of Ex 3 appear to be documents from NSW Trustee & Guardian’s files, the documents were in ASIC’s hands and produced by it in these proceedings. The plaintiffs were foreshadowing tendering the documents as “tendency” evidence at the hearing (Ex 1 at [16(b)(ii)]) and they would therefore likely have entered the public domain had these proceedings been heard. Further, to the extent the documents concern personal or confidential data, it is personal or confidential to Ralph Oberg, the plaintiff in the Supreme Court proceedings, and relevant to the subject matter which he has exposed by commencing those proceedings.

Conclusion

43    In all the circumstances it was submitted that it is not only appropriate but in the interests of justice that WealthSure be permitted to use the documents in its defence of the Supreme Court proceedings and to consider and if thought fit pursue claims against NSW Trustee & Guardian and the administrator of BT Wrap to reallocate or apportion responsibility for any liability WealthSure has in those proceedings and to other clients of Colin Oberg.

44    I agree with this overriding submission and for those reasons granted the relief sought in the form of the orders made.

A/g Associate:

Dated:    6 July 2012