FEDERAL COURT OF AUSTRALIA

Healey v Rubynet Pty Ltd, in the matter of Rubynet Pty Ltd [2015] FCA 695

IN THE MATTER OF RUBYNET PTY LTD (ACN 091 395 041)

THE COURT ORDERS THAT:

1.    The applicant, Mr James Kevin Pollock, has leave to amend his interlocutory application dated 17 April 2015 in terms of the minute dated 21 April 2015.

2.    Pursuant to Rule 2.32(4) of the Federal Court Rules 2011 (Cth), the applicant is given leave to inspect the Affidavit of Allen Bruce Caratti sworn 11 March 2011 and filed in this proceeding (Caratti Affidavit).

3.    Pursuant to Rule 2.32(5) of the Federal Court Rules 2011 (Cth), the applicant, upon payment of the prescribed fee, be given a copy of the Caratti Affidavit.

4.    The applicant and the plaintiff be released from the implied undertaking in relation to the Caratti Affidavit.

5.    The applicant be granted leave to use the Caratti Affidavit in the Supreme Court of Western Australia proceeding COR 60 of 2014.

6.    The proceeding be reinstated for the purpose of providing the relief sought in the amended interlocutory application.

7.    As to costs:

(a)    the applicant is to file submissions in relation to costs by 4.00 pm on 29 April 2015;

(b)    Mr Allen Caratti file and serve any affidavit in respect of costs and submissions in response by 4.00 pm on 6 May 2015; and

(c)    the applicant file and serve any affidavit and submissions in reply by 4.00 pm on 11 May 2015.

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

IN THE MATTER OF DONCASTER ENTERPRISES PTY LTD (ACN 101 158 301)

THE COURT ORDERS THAT:

1.    The applicant, Mr James Kevin Pollock, has leave to amend his interlocutory application dated 17 April 2015 in terms of the minute dated 21 April 2015.

2.    Pursuant to Rule 2.32(4) of the Federal Court Rules 2011 (Cth), the applicant is given leave to inspect the Affidavit of Allen Bruce Caratti sworn 11 March 2011 and filed in this proceeding (Caratti Affidavit).

3.    Pursuant to Rule 2.32(5) of the Federal Court Rules 2011 (Cth), the applicant, upon payment of the prescribed fee, be given a copy of the Caratti Affidavit.

4.    The applicant and the plaintiff be released from the implied undertaking in relation to the Caratti Affidavit.

5.    The applicant be granted leave to use the Caratti Affidavit in the Supreme Court of Western Australia proceeding COR 60 of 2014.

6.    The proceeding be reinstated for the purpose of providing the relief sought in the amended interlocutory application.

7.    As to costs:

(a)    the applicant is to file submissions in relation to costs by 4.00 pm on 29 April 2015;

(b)    Mr Allen Caratti file and serve any affidavit in respect of costs and submissions in response by 4.00 pm on 6 May 2015; and

(c)    the applicant file and serve any affidavit and submissions in reply by 4.00 pm on 11 May 2015.

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

IN THE MATTER OF RUBYNET PTY LTD (ACN 091 395 041)

IN THE MATTER OF DONCASTER ENTERPRISES PTY LTD (ACN 101 158 301)

REASONS FOR JUDGMENT

1    This is an application by Mr Jamie Kevin Pollock for leave to use in a proceeding in the Supreme Court of Western Australia (the Supreme Court), an affidavit which was filed in this proceeding. By his amended originating application, Mr Pollock seeks the following relief:

(a)    pursuant to r 2.32(4) of the Federal Court Rules 2011 (Cth), that the applicant be granted leave to inspect the affidavit of Mr Allen Bruce Caratti, sworn on 11 March 2011, and filed in this proceeding;

(b)    on the payment of a prescribed fee, Mr Pollock be given a copy of the affidavit of Mr Caratti of 11 March 2011;

(c)    that Mr Pollock, be released from the implied undertaking in relation to the use of the affidavit of Mr Caratti of 11 March 2011, and that he be granted leave to use that affidavit in the Supreme Court proceeding COR 60 of 2014, and

(d)    an order that this proceeding be reinstated in order to permit that application to be made.

2    The background to Mr Pollock’s application today is as follows.

3    In 2010, Ms Carina Lee-Anne Healey commenced an originating application (WAD 414 of 2010) against Rubynet Pty Ltd (Rubynet) in this Court for relief under s 247A of the Corporations Act 2001 (Cth). Ms Healey sought an order that a forensic accountant, nominated by her, be permitted to inspect and take copies of the financial records of the defendant company. At the same time, Ms Healey commenced an application against Doncaster Enterprises Pty Ltd (Doncaster Enterprises) (WAD 415 of 2010) seeking relief to the same effect.

4    The evidence reveals that Ms Healey is the sister of the applicant, Mr Pollock, and that she and members of the Pollock family were for a number of years in a business relationship with Mr Allen Caratti and members of the Caratti family.

5    The evidence also shows that the two families jointly engaged in the business of developing real estate in Western Australia by the subdivision and sale of the land; and that they would use a different corporate vehicle for the conduct of each subdivisional project. The complaint made by Ms Healey in WAD 414 of 2010 and WAD 415 of 2010 was that she had been denied access by the Caratti interests to information about the business being carried out by each of two such corporate vehicles, namely, Rubynet and Doncaster Enterprises.

6    In the course of each of the applications in WAD 414 of 2010 and WAD 415 of 2010 progressing to trial, directions were given for the filing of affidavits upon which the parties proposed to rely. One of the affidavits filed by the solicitors representing Rubynet and Doncaster Enterprises was an affidavit of Mr Caratti of 11 March 2011.

7    As it transpired, Ms Healey did not prosecute her claims against the two companies with any degree of diligence; and, eventually, on 17 August 2012, the Court dismissed each of her applications in circumstances where Mr Caratti’s affidavit of 11 March 2011 was not read into evidence.

8    I turn now to COR 60 of 2014, which is the proceeding pending in the Supreme Court. This is a proceeding which was commenced by Mr Allen Caratti. An issue in that proceeding is whether Mr Pollock was a director of a company, Boban Pty Ltd (Boban), another of the companies used by the families in the conduct of the real estate development business. Mr Pollock says that, contrary to the allegation made by Mr Caratti in COR 60 of 2014, Mr Caratti has, in his affidavit of 11 March 2011, sworn that Mr Pollock was, indeed, a director of Boban.

9    However, since this application was commenced last week the parties appear to have reached settlement in relation to that question. The basis upon which the Mr Pollock now puts his application is that he seeks leave to use Mr Caratti’s affidavit in relation to determining the costs to be awarded in COR 60 of 2014.

10    I might say that there are three other related proceedings currently in the Supreme Court between the Caratti parties, and the Pollock parties, namely, COR 23 of 2014, which is a winding-up application which has been brought by a company in the Pollock stable, and COR 59 of 2014 and COR 58 of 2014 in which voluntary administrators of joint venture vehicle companies are seeking declarations that they have been validly appointed because Mr Caratti is challenging the validity of their appointments. So there is a fair degree of animosity as reflected in this litigation between the two different camps.

11    An important aspect of this application is the fact that Ms Healey, who was the party before this Court in WAD 414 of 2010 and WAD 415 of 2010, is subject to the implied undertaking to the Court not to use affidavits filed in those proceedings for a purpose other than in relation to those proceedings. Mr Caratti’s affidavit of 11 March 2011 would be subject to that undertaking and the intended use of the affidavit in COR 60 of 2014, in the absence of the Court giving leave, would breach that undertaking.

12    The evidence also shows that Mr Pollock, whilst not a party to each of WAD 414 of 2010 and WAD 415 of 2010, was assisting his sister, Ms Healey, in the conduct of those proceedings, and it was in that capacity that he came to know of the existence of Mr Caratti’s affidavit of 11 March 2011. I was not taken to any authority on that question but, on reflection, I am of the view that Mr Pollock, having become aware of the affidavit in the capacity of assisting his sister in the conduct of her litigation, would also be subject to the implied undertaking. I am, therefore, treating this as an application which is made both by Mr Pollock on his own behalf, and on behalf of his sister, to be released from the implied undertaking to the extent sought in this application.

13    However, I take the application in respect of the use which may be made of the affidavit, to be made only by Mr Pollock. As I understand it, Ms Healey is an undischarged bankrupt and is not a party to COR 60 of 2014. Nor is she a party to this application.

14    The question of whether a party should be released from the implied undertaking has recently been considered by Gleeson J in BCI Finances Pty Limited (in liquidation) v Commissioner of Taxation (2014) 317 ALR 727. Gleeson J cited with approval the following observations of the Full Court in Liberty Funding Pty Ltd v Phoenix Capital Ltd (2005) 218 ALR 283 at [31]:

In order to be released from the implied undertaking it has been said that a party in the position of the appellants must show “special circumstances”: see, for example, Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217…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. 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.

15    Mr Dillon, who appeared for Mr Caratti, made several submissions in opposition to the orders sought by Mr Pollock.

16    First, he observed that the application had only been filed last week and complained that the application had been brought with undue haste.

17    Secondly, Mr Dillon referred to O 36 r 9 and r 10 in the Rules of the Supreme Court 1971 (WA) (the Supreme Court Rules) and contended that those rules only permitted evidence adduced in a different court, to be adduced in a Supreme Court proceeding, when the parties were the same in both proceedings.

18    Thirdly, Mr Dillon said that Mr Caratti’s affidavit had not been read in WAD 414 of 2010 and WAD 415 of 2010 and, therefore, Mr Caratti would be prejudiced by his affidavit being used in COR 60 of 2014 because Mr Caratti had not had the opportunity in WAD 414 of 2010 and WAD 415 of 2010 to amplify or explain his affidavit evidence.

19    Fourthly, Mr Dillon pointed to the fact that a settlement had been reached and, therefore, this question of whether Mr Pollock was truly a director of Boban is no longer in issue.

20    In my view, there are a number of significant factors which are relevant to the determining whether the Court’s discretion will be exercised in favour of making the orders sought.

21    First, the document in question is an affidavit which was sworn by Mr Caratti in anticipation of it being used as evidence-in-chief in a legal proceeding. It is, therefore, a document on oath and a document in respect of which care would have been taken to ensure that the contents were true and correct. It is, in other words, a serious document which was intended to enter the public domain.

22    Secondly, Mr Caratti filed his 11 March 2011 affidavit in a proceeding dealing with the conduct of the very property development business between the Caratti family and the Pollock family which is the subject of COR 60 of 2014 in the Supreme Court. Mr Dillon pointed out during his submissions, each of the corporate vehicles used by the business for the conduct of each project was a different legal person and a different legal party. Whilst Mr Dillon is, of course, correct in this submission, nevertheless, the substance of the dispute in both courts is one which relates to the conduct of the business between these two families. There is, therefore, a great degree of commonality between the interests in respect of which the affidavit was initially sworn, and the interests which are the subject of the Supreme Court proceeding.

23    Therefore, there can, in my view, be little legitimate complaint from the deponent of an affidavit which he brought into existence to be used for the purpose of litigation arising from a dispute about the affairs of a property development business conducted jointly by members two families, being used for that purpose, albeit, in different proceedings.

24    There is also the question of the intended use of the affidavit in COR 60 of 2014 in the Supreme Court. I am satisfied that the affidavit is of potential probative value at a costs hearing in the sense of it being capable of supporting a contention that when Mr Caratti commenced COR 60 of 2014 in the Supreme Court he knew, because he had sworn to that effect in different proceedings, that Mr Pollock was, in fact, a director of Boban.

25    These are, in my view, strong factors in favour of concluding that there are special circumstances which would permit the granting of the orders.

26    I now deal with Mr Dillon’s points.

27    I place little weight on the haste or delay issue. I was told at the hearing on Monday that the reason for the haste with which this hearing was brought on, was that the Supreme Court proceeding was due to commence tomorrow. I do accept, however, that Mr Pollock delayed until the last moment in bringing the application and it may have been better if the application had been brought earlier.

28    In relation to the limitations imposed by the Supreme Court Rules, that is a matter which can be argued and determined before the Supreme Court at the appropriate time. In my view, that consideration does not weigh heavily in relation to the question as to whether this Court should relieve the parties from the implied undertaking and give Mr Pollock leave to use Mr Caratti’s affidavit as sought. Whether Mr Pollock ultimately succeeds in using the affidavit in the manner sought is a different issue.

29    As to the question of Mr Caratti being prejudiced because he was deprived of the opportunity to amplify or comment upon the affidavit before this Court, this is also not a matter which would preclude this Court from releasing a party from the undertaking or granting leave to use the affidavit in a different proceeding. Assuming that Mr Caratti’s affidavit goes into evidence, or is otherwise deployed, in COR 60 of 2014, it will be up to Mr Caratti to make such comment or amplification as he sees fit in that proceeding.

30    I do not think that anything turns on the fact that the parties to WAD 414 of 2010 and WAD 415 of 2010 are different to the parties in COR 60 of 2014. I observe that in Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217, the party that applied for the permission to use a witness statement in a different proceeding had not been a party to the proceeding before the Federal Court. In any event, I have already observed that there is a great deal of commonality between the issues for which Mr Caratti’s affidavit in this proceeding was filed and the issues which are the subject of the proceeding COR 60 of 2014.

31    In my view, there are special circumstances in this case which warrant the making of the orders sought by Mr Pollock, and I, therefore, make those orders and also release Ms Healey from her implied undertaking.

Associate:

Dated:    8 July 2015