Federal Court of Australia

Jones v Treasury Wine Estates Limited; In the Matter of Treasury Wine Estates Limited (No 4) [2020] FCA 1131

ORDERS

THE COURT:

1.    ORDERS that the time for service of the Interlocutory Application filed herein by Maurice Blackburn Pty Ltd and Steven Napier on 22 June 2020 and all affidavits in support thereof be abridged to 22 June 2020.

2.    ORDERS that the time for service of the Interlocutory Application filed herein by Guy Donnellan on 22 June 2020 be abridged to 22 June 2020.

3.    ORDERS that the Interlocutory Application dated and filed on 23 June 2020 by the defendant herein, Treasury Wine Estates Limited, be dismissed.

4.    DECLARES that no obligation of the kind referred to in Hearne v Street (2008) 235 CLR 125 (Hearne v Street Obligation) applied or applies with respect to the Third Further Amended Statement of Claim or the Second Further Amended Defence filed in this proceeding or to any information contained in those pleadings (Jones Information).

5.    ORDERS, nunc pro tunc, to the extent that it may otherwise be necessary, that:

(a)    Maurice Blackburn Pty Limited, its staff, Guy Donnellan and Steven Napier be released from any Hearne v Street Obligation that applied or applies to the Jones Information; and

(b)    Each of the persons and the entity referred to in subpar (a) above have leave to use the Jones Information for the purpose of conducting proceedings Napier v Treasury Wine Estates Limited (Supreme Court of Victoria S ECI 2020 01983).

6.    ORDERS that the defendant herein pay the costs of Maurice Blackburn Pty Ltd, Guy Donnellan and Steven Napier of and incidental to the Interlocutory Applications referred to in Orders 1 and 2 above.

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

REASONS FOR JUDGMENT

FOSTER J:

1    Treasury Wine Estates Limited (TWE) is the defendant in this proceeding which was commenced by the plaintiff (Mr Jones) as a group proceeding under Pt IVA of the Federal Court of Australia Act 1976 (Cth) (the Act) on 2 July 2014. This proceeding was settled in November 2017. I made orders formally approving that settlement on 10 November 2017 and an order dismissing the proceeding on 10 August 2018.

2    TWE is also the defendant in a class action proceeding in the Supreme Court of Victoria commenced on 1 May 2020 by Steven Napier (Mr Napier) (Case: S ECI 2020 01983) (the Napier proceeding).

3    At all relevant times up to at least late August 2018, Maurice Blackburn Pty Ltd (MB) acted as the solicitors for Mr Jones in connection with this proceeding. Mr Guy Donnellan, of Counsel, was briefed by MB as Junior Counsel for Mr Jones. MB also represents Mr Napier in connection with the Napier proceeding and Mr Donnellan had been briefed by MB as Junior Counsel for Mr Napier in that proceeding. At the moment, he is not retained in that matter.

4    The Statement of Claim filed by Mr Napier in the Napier proceeding (Napier SOC) was prepared by MB and Mr Donnellan using, amongst other things, information set out in the Third Further Amended Statement of Claim filed on 19 July 2017 in this proceeding (Jones 3FASOC) and the Second Further Amended Defence filed by TWE in this proceeding on 24 July 2017 (Jones 2FAD).

5    In this proceeding, Mr Jones sued TWE for statutory compensation pursuant to causes of action based upon provisions of the Corporations Act 2001 (Cth), the Australian Securities and Investments Commission Act 2001 (Cth) and the NSW and Victorian analogues of the Australian Consumer Law. Mr Jones alleged that TWE engaged in misleading and deceptive conduct and also failed to comply with its continuous disclosure obligations under s 674 of the Corporations Act.

6    Mr Jones alleged that, in the period from 17 August 2012 to 14 July 2013, TWE failed to advise the Australian Securities Exchange (ASX) of information which was likely to have a material impact on the value of shares in TWE listed on that Exchange and also made statements from time to time that misled or deceived the market about TWE’s expected earnings. According to Mr Jones, the substance of the information that was not disclosed was that, at all times from about mid-2012, TWE’s US distributors were holding stock (wine) which was substantially in excess of their needs, which was rapidly becoming obsolete and which would, in the near future, become worthless. It was Mr Jones’ contention that the alleged concealment by TWE of the true position concerning the retention of stock in the US came to an end on 15 July 2013 when TWE announced expected provisions to its FY13 Financial Statements and lower than expected earnings growth for FY14. These announcements were made in an ASX Release published by TWE on 15 July 2013. In that Release, TWE said that it had determined to take action in respect of excessive wine inventory held by its US distributors.

7    Immediately after the ASX Release of 15 July 2013 was issued by TWE, the market price of TWE shares fell by almost 14%. That price fell even further in the period from 16 July 2013 to 19 July 2013. Mr Jones argued that these falls in the market price of TWE shares were caused by TWE’s conduct in not revealing until 15 July 2013 the true position that obtained throughout the period from 17 August 2012 to 15 July 2013 in relation to the levels of stock held by its US distributors and in not revealing the true position concerning its expected earnings for FY13 and FY14 until the same day.

8    Mr Jones contended that he suffered loss by reason of the above alleged contraventions on the part of TWE and that group members also suffered similar losses. Mr Jones’ claimed compensation was for the difference between the acquisition costs of his TWE shares and the true value of those shares.

9    Mr Napier’s case is also an investor class action based upon similar statutory causes of action as were pleaded by Mr Jones in this proceeding although the class members in the Napier proceeding are those shareholders who purchased shares in TWE in the period from 30 June 2018 to 28 January 2020. Notwithstanding the different acquisition period, Mr Napier relies, to some extent, upon facts, matters and circumstances concerning the US stock position in the earlier period (2011–2013) which was at the heart of the alleged contraventions pleaded by Mr Jones in this proceeding.

10    On 10 June 2020, TWE filed a Summons in the Napier proceeding (Stay Summons) seeking to stay the Napier proceeding upon the basis that, by their conduct in using information contained in the Jones 3FASOC and the Jones 2FAD to prepare the Napier SOC, MB and Mr Donnellan breached the implied obligation owed by them to this Court not to use or allow documents obtained from TWE in the course of discovery in this proceeding for any collateral or ulterior purpose of their own, of Mr Napier or of any other person. This obligation is frequently colloquially described as “the Harman undertaking”. The Harman undertaking is so described because the modern exposition of it is found in the House of Lords decision of Harman v Secretary of State for the Home Department [1983] 1 AC 280 (Harman). In these Reasons, I shall refer to the Harman undertaking as “the Harman obligation”.

11    By an Amended Summons filed in the Napier proceeding on 13 May 2020, TWE sought interlocutory injunctive relief in that proceeding in respect of alleged breaches of equitable duties of confidence alleged to be owed by MB, Mr Donnellan and Mr Napier to it in respect of the use which those parties made of certain allegedly confidential information the property of TWE. Interlocutory orders protecting TWE’s position were made on 18 May 2020. The information which is the subject of the breach of confidence claim is not the same as the information which is claimed to be protected by the Harman obligation presently at issue.

12    TWE also filed a Counterclaim seeking final relief in respect of the alleged breaches of confidence.

13    Mr Napier and MB then filed a Defence to Counterclaim relying on the same arguments as they have put before me in the present applications. TWE considers the pleading of that material to be fresh breaches of the Hearne v Street obligation.

14    By Points of Claim dated 19 June 2020 and filed in the Napier proceeding, TWE claimed relief staying the Napier proceeding based upon the alleged breaches by MB and Mr Donnellan of their Harman obligation in respect of documents discovered in this proceeding.

15    Mr Napier and MB are the named defendants in the Points of Claim. Mr Donnellan has been given formal notice of the Counterclaim.

16    The filing of the Stay Summons and other related interlocutory steps taken by TWE in the Napier proceeding have, for the time being, stultified any real progress in that proceeding. For this reason, on 22 June 2020, MB and Mr Napier filed an Interlocutory Application in this proceeding in which they sought an abridgement of the time for service of that Interlocutory Application together with the following relief:

3.    A declaration that no obligation of the kind referred to in Hearne v Street (2008) 235 CLR 125 (Hearne v Street Obligation) applied or applies with respect to the Third Further Amended Statement of Claim or the Second Further Amended Defence filed in these proceedings or to any information contained within them (Jones Information).

4.    Further or in the alternative, an order nunc pro tunc:

(a)    releasing Maurice Blackburn Pty Limited, its staff, Guy Donnellan and Mr Napier from any Hearne v Street Obligation that applied or applies to the Jones Information;

(b)    granting each of those persons leave to use the Jones Information for the purpose of conducting proceedings Napier v Treasury Wine Estates Limited (Supreme Court of Victoria S ECI 2020 01983).

5.    Costs.

6.    Such further or other order or orders as the Court considers appropriate.

17    Hearne v Street (2008) 235 CLR 125 (Hearne v Street) is the leading High Court authority on the content and scope of the Harman obligation. I shall refer to that obligation, as explained in Hearne v Street, as “the Hearne v Street obligation”. In Hearne v Street, the High Court confirmed the House of Lords exposition of the Harman obligation in Harman.

18    By Interlocutory Application filed on the same day, Mr Donnellan sought substantially the same relief in respect of himself.

19    On 22 June 2020, I fixed the hearing of the Interlocutory Applications to which I have referred at [16] and [18] above to commence at 10.15 am on 24 June 2020. The parties were informed of this on the same day.

20    Before me, MB, Mr Napier and Mr Donnellan argued that:

(a)    No Hearne v Street obligation applies with respect to pleadings (or the information contained in pleadings) that are filed in this Court and thus no such obligation bound any of MB, Mr Donnellan or Mr Napier in respect of either the Jones 3FASOC or the Jones 2FAD;

(b)    If (a) is wrong, and such an obligation did attach to those pleadings, that obligation did not survive:

(i)    The publication of the Jones 3FASOC and the Jones 2FAD on this Court’s website where it was made available to group members and to the public pursuant to Orders of this Court;

(ii)    The making of orders pursuant to s 33V of the Act approving the settlement of this proceeding; and

(iii)    The Second Further Amended Statement of Claim (Jones 2FASOC), which was materially identical to the Jones 3FASOC, being admitted into evidence in connection with an application by Mr Jones to amend his Statement of Claim; and

(c)    This Court should exercise its discretion to grant a release to MB, Mr Donnellan and Mr Napier of the kind discussed in Springfield Nominees Pty Limited v Bridgelands Securities Limited (1992) 38 FCR 217 (Springfield) in circumstances where the Jones 3FASOC and the Jones 2FAD remain on the Internet and where MB, Mr Napier and Mr Donnellan are apparently the only people in the entire world who are unable to use those pleadings or to use the information set out in them as they please.

21    By Interlocutory Application dated and filed on 23 June 2020, TWE applied for orders adjourning the hearing of the Interlocutory Applications referred to at [16] and [18] above for a relatively short time. TWE’s adjournment application was pressed at the commencement of the hearings on 24 June 2020. I refused that adjournment application and indicated to the parties that I would give brief reasons for that decision in the Reasons for Judgment which I intended to publish in due course in relation to the substantive claims for relief made by MB, Mr Napier and Mr Donnellan in the Interlocutory Applications filed by them.

The Alleged Harman Breaches

22    As part of the interlocutory steps undertaken by the parties in this proceeding, TWE provided discovery of documents. Included within the documents which it discovered were the distribution agreements into which it had entered with its key US distributors. In addition, under compulsion of an order of this Court, TWE provided particulars of its Defence filed in this proceeding, based upon information contained in documents which had also been discovered by TWE in this proceeding. In light of these matters, TWE contended that:

(a)    The detailed terms of TWE’s key US distribution agreements and related facts and matters pleaded and particularised in pars 18(i.a), 31A, 31B, 31C, 31D and 31E of the Jones 3FASOC were obtained from documents discovered in this proceeding and comprised information that had not been known either to MB or Mr Donnellan prior to those key US distribution agreements being discovered in this proceeding;

(b)    The fact that, at least from Financial Year 2011 to Financial Year 2013, TWE’s three key US distributors (SWS, the Charmer-Sunbelt Group and Glazer’s) (and associated entities) accounted for over 50% of TWE’s US sales between them (which was information taken from particulars provided at par 18(i.a) of the Jones 3FASOC) was also information which had been derived from discovered documents;

(c)    Certain particulars of its Defence in this proceeding provided under compulsion by TWE to Mr Jones by letter from its solicitors, Herbert Smith Freehills (HSF) to MB dated 1 December 2014 were also based upon documents provided by TWE to Mr Jones as part of the discovery process undertaken in this proceeding; and

(d)    MB and Mr Donnellan prepared the Napier SOC using the above information set out in the Jones 3FASOC and the Jones 2FAD by accessing that information in the Jones 3FASOC and the Jones 2FAD and thereafter using it for the purposes of drafting the Napier SOC. In particular, TWE’s US stock levels, TWE’s management of its US stock levels, the terms of TWE’s key US distribution agreements and its business practices in dealing with its US distributors which were addressed in the pleadings in this proceeding in the paragraphs specified in subpars (a) and (c) above were also matters addressed in the Napier SOC (esp at pars 48, 52 and 77). Those uses of that information constituted breaches of the relevant Hearne v Street obligation attached to that information.

23    The evidence before me established that the MB lawyer who drafted the Napier SOC and Mr Donnellan who settled that pleading used the Jones 3FASOC and the Jones 2FAD for the purpose of drafting the Napier SOC but did not access or use any other documents from this proceeding for that purpose. In particular, the evidence was that those individuals did not use any documents which had been discovered by TWE in this proceeding for the purpose of drafting the Napier SOC.

24    TWE accepted the evidence led on behalf of MB and Mr Napier to which I have referred at [23] above. In addition, TWE accepted that neither MB nor Mr Donnellan made use of any information which was not contained in the pleadings filed in this proceeding and which was the subject of a Hearne v Street obligation. It was also common ground between TWE and the other three parties that the information set out in the Jones 3FASOC and the Jones 2FAD which I have described at [22] above had all been taken from documents which had been discovered in this proceeding.

25    In an email sent on 16 June 2020 by HSF, TWE specified the basis upon which it contended that both MB and Mr Donnellan had breached a relevant Hearne v Street obligation. In that email, TWE’s lawyers (HSF) said the following:

To be clear, TWE alleges that (1) the implied undertaking applies not merely to discovered documents (or other documents subject to the implied undertaking, such as particulars of a defence) themselves, but also to information derived from those documents. If information derived from such documents is incorporated into a secondary source, such as a pleading, the implied undertaking subsists in respect of that information; and (2) further, pleadings (including particulars) are themselves subject to the implied undertaking.

A Few Additional Facts

26    For the purpose of drafting the Napier SOC, the lawyer at MB who drafted the Napier SOC had obtained both the Jones 3FASOC and the Jones 2FAD from this Court’s website using Google as a search engine.

27    On 27 April 2017, I heard argument as to whether Mr Jones ought to be permitted to amend the then current version of his Statement of Claim (the Jones FASOC). During the course of that hearing, the proposed Jones 2FASOC was tendered in evidence as an exhibit to the affidavit of Miranda Nagy sworn on 21 March 2017. The Jones 2FASOC was not materially different from the Jones 3FASOC. In particular, pars 18(i.a), 31A, 31B, 31C, 31D and 31E were included in the proposed Jones 2FASOC in the same form in which those paragraphs ultimately appeared in the Jones 3FASOC. Thus, the information taken from discovered documents and reproduced in, or used to draft, those paragraphs in the Jones 3FASOC had already been made available to the public from March 2017 when the Jones 2FASOC was filed.

28    The Jones 3FASOC and the Jones 2FAD are currently available to be accessed on this Court’s website. Those pleadings were first put up on that website in September 2017.

29    In addition, the Jones 3FASOC and the Jones 2FAD were both continuously available to be downloaded from this Court’s Class Actions Page on its website continuously from at least 15 September 2017 until 14 May 2019.

Consideration

TWE’s Submissions

30    TWE began its Submissions by referring to Harman at 304G–305A and 306B–D per Lord Diplock; at 307H–308B per Lord Keith of Kinkel and at 326G and at 327E per Lord Roskill. The effect of those passages was accurately summarised in the headnote in Harman in the following terms (at 280–281):

… a solicitor who in the course of discovery in litigation obtained possession of copies of documents belonging to his client’s adversary gave an implied undertaking to the court not to use the copies, nor to allow them to be used, for any purpose other than the proper conduct of the action on behalf of his client; …

31    TWE next submitted that the Harman undertaking extends to witness statements, affidavits, interrogatories, admissions of fact and pleadings. In support of its contention that the Harman undertaking extends to pleadings, TWE relied upon the following authorities: eisa Ltd v Brady [2000] NSWSC 929 (eisa) at [21] per Santow J; Springfield at 223 per Wilcox J; Chandrasekaran v Western Sydney Local Area Health District [2019] NSWSC 1461 (Chandrasekaran) at [9] per Ierace J; Eckert v National Australia Bank Ltd (1997) 191 LSJS 221 (Eckert) per Doyle CJ and Australian Competition and Consumer Commission v Telstra Corporation Ltd (2000) 96 FCR 317 at 318 [1] and at 323 [39] per Lindgren J.

32    Next, TWE submitted that the Harman obligation applies not only to discovered documents but also to information derived from those documents, whether that information is embodied in another document or stored in the mind. Any document which embodies information derived from a discovered document (including a pleading, transcript, expert report, draft expert report or any other form of document) cannot be regarded as a secondary or independent source of that information.

33    Accordingly, if, following the filing and service of a Statement of Claim and after a defendant has provided discovery to the plaintiff, the plaintiff incorporates the contents of documents which have been discovered by the defendant into an Amended Statement of Claim, that incorporation constitutes a use which has been made possible only by means of the discovery and the Amended Statement of Claim cannot be regarded as an independent source of the information derived from those discovered documents. TWE argued that, in such a case, the information embodied in the pleadings which has been derived from discovered documents should be regarded as being sourced from those discovered documents. TWE then submitted that, if that proposition is correct, then all of the submissions relied upon by MB, Mr Napier and Mr Donnellan fall away in the present case because the primary source material (the discovered documents themselves) were never tendered in evidence and were never placed on the Federal Court website or otherwise made publicly available.

34    Relying upon other observations of their Lordships in Harman, TWE also submitted that the rationale for the Harman obligation is independent of laws relating to confidentiality (as to which, see Harman at 280, 299 and 308).

35    In addition, TWE submitted that the Harman obligation is not concerned with whether documents have come into the public domain. TWE submitted that, at common law, the obligation subsists when documents have been exhibited to an affidavit or read out in open court, and may even subsist where a document has been tendered or referred to in open court. TWE placed particular reliance upon the Victorian Supreme Court authority of Connective Services Pty Ltd v Slea Pty Ltd (2017) 53 VR 130 (Connective) at 150 [61]–[62] per Almond J in support of these propositions. TWE accepted that the common law position has been modified by r 20.03 of the Federal Court Rules 2011 (FCR) which provides that the Harman obligation no longer applies if a document is read out or referred to in open court in a way that discloses its contents. However, TWE argued that r 20.03 FCR is not applicable on the present facts because the relevant discovered documents (TWE’s key US distribution agreements and the other discovered documents used by MB and Mr Donnellan to prepare the Jones 2FASOC) were not referred to or read in open court in a way that disclosed their contents. Furthermore, none of those documents were ever received into evidence in this proceeding. TWE submitted that, for this reason, the dicta of the High Court in Hearne v Street at 154–156 [95]–[98] per Hayne, Heydon and Crennan JJ did not apply in the present case.

36    Next, TWE submitted that there is a distinction between a third party who may access and use information subject to the Harman obligation without leave where that information is contained in a publicly available secondary source, for example, a transcript of a hearing, and a person bound by the Harman obligation who may not do so. TWE relied upon the English case of Sybron Corporation v Barclays Bank PLC [1985] 1 Ch 299 (Sybron) at 322 per Scott J (as his Lordship then was) to support this proposition. TWE submitted that the position of parties bound by a Harman obligation depends not on what third parties may be able to do but on the scope of the obligation that binds the parties to the litigation. The purpose of the Harman obligation is to protect, so far as it is consistent with the proper prosecution of the action, the confidentiality of the parties’ private documents and thereby to encourage the full and proper disclosure of documents that the administration of justice requires (Sybron at 321). TWE then submitted that the mere fact that third parties were able to access on the Federal Court website information derived from TWE’s discovered documents (which information had been incorporated into the Jones 3FASOC and the Jones 2FAD) and make such use of that information as they may wish, does not have the effect that the Harman obligation imposed upon MB and Mr Donnellan ceased to operate. Similarly, the fact that third parties might have been able to obtain copies of the pleadings in this proceeding from the Federal Court Registry under r 2.32(2) and (3) FCR does not have the effect that the Harman obligation imposed upon MB and Mr Donnellan ceased to operate.

37    TWE then submitted that if there is, in truth, any “public domain” exception to the general Harman principle, the exception is confined to discovered documents or information derived from those documents which pass into the “public domain” by reason of the deployment of those documents or that information in open court. That proposition was said to be anchored in observations made by the Victorian Court of Appeal in British American Tobacco Australia Services Ltd v Cowell (No 2) (2003) 8 VR 571 (Cowell) at 593 [48]–[49] per Phillips, Batt and Buchanan JJA.

38    If the last proposition advanced by TWE is correct, then the “public domain” exception has no application on the facts of the present case. The information derived from TWE’s key US distribution agreements never passed into the “public domain” by reason of the use of those documents in open court.

39    At par 14 of its Written Submissions dated 23 June 2020 and filed on 24 June 2020, TWE submitted the following:

Maurice Blackburn and Mr Donnellan have breached the implied undertaking:

a.    TWE discovered documents in the Jones Proceeding, and provided particulars of its defence under compulsion of court order which were based on information contained in documents discovered by it in the Jones Proceeding;

b.    Maurice Blackburn and Mr Donnellan were subject to the implied undertaking in respect of those documents, and the information derived from them;

c.    that information was used to prepare parts of the Jones 3FASOC, and was embodied that pleading;

d.    this was a use made possible by TWE’s discovery (and by the provision of TWE’s further particulars of defence), and the Jones 3FASOC cannot be regarded as an independent source of the information derived from TWE’s discovery (or as an independent source of the information derived from TWE’s further particulars of defence), to which the Harman obligation applied and continues to apply; and

e.     Maurice Blackburn and Mr Donnellan used the information derived from TWE’s discovery (and the information derived from TWE’s further particulars of defence) – which had been embodied in the Jones 3FASOC – to draft Mr Napier’s statement of claim in the Napier proceeding.

(Emphasis in original)

40    TWE next submitted that the Court should not grant the leave claimed by MB, Mr Napier and Mr Donnellan to use the pleadings in this proceeding for the reasons set out at pars 17 to 20 of its Written Submissions which are in the following terms:

First, a party in contempt will not be heard other than in limited circumstances, including to purge its contempt [Hadkinson v Hadkinson [1952] P 285, 288-290; Little v Lewis [1987] VR 798, 804-805]. A party who seeks to purge a contempt arising by reason of a breach of the implied undertaking must provide an “unreserved apology, compensation … and the payment of relevant costs on the indemnity basis”[Evans v Citibank Ltd [2000] NSWSC 1017, [5]]. Maurice Blackburn and Napier have not sought to pay TWE’s costs of this application and the stay application in the Napier Proceeding (by way of compensation) on an indemnity basis. They have not offered an apology.

Second, TWE will submit that Maurice Blackburn has committed multiple breaches of its Harman obligation. For the reasons set out in paragraph 15 above, TWE is not in a position to develop that submission at this time.

Third, Maurice Blackburn has used information subject to the implied Harman obligation in conjunction with information obtained by it in breach of confidence. The statement of claim in the Napier Proceeding rely on TWE’s confidential information which Maurice Blackburn improperly used together with information subject to the implied undertaking to make claims against TWE. The breach of confidence claim is before the Supreme Court [An application by TWE seeking interlocutory relief based on the breach of confidence is presently before the Court in the Napier Proceeding. Pleadings have also been filed for the final determination of the matter. Any consideration of release of the implied obligation by this Court should await determination of that interlocutory application by the Supreme Court]. The Court should not grant leave as to do so would be to enable Maurice Blackburn to benefit from its own wrong. That is a proper basis to refuse retrospective leave [In a slightly different context, see Miller v Scorey [1996] 3 All ER 1, 30].

Finally, the circumstances where a Court grants retrospective relief are rare [Miller v Scorey [1996] 3 All ER 1, 28]. A breach of the implied undertaking is a “matter of significant concern” and one “not to be excused lightly” [Barnes v Fortytwo International Pty Ltd [2010] FCAFC 87, [15]].

The Submissions of MB and Mr Napier

41    MB and Mr Napier submitted that, in this Court, pleadings are not subject to any Hearne v Street obligation. This is because, under r 2.32(2) and (3) FCR, a person who is not a party to a proceeding in this Court may inspect a pleading or particulars of a pleading or similar document unless the Court has ordered that the document is confidential or has otherwise restricted access. This proposition is supported by the judgment of Rares J in Llewellyn v Nine Network Australia Pty Ltd (2006) 154 FCR 293 (Llewellyn) at 297 [21]–[22]. The proposition is also supported by the judgment of Lee J in Haswell v Commonwealth of Australia [2020] FCA 915 (Haswell).

42    MB and Mr Napier also referred to two decisions of the Supreme Court of NSW (Helicopter Aerial Surveys Pty Ltd v Robertson [2015] NSWSC 2104 (Helicopter) at [35] per Brereton J and Canterbury-Bankstown Council v Payce Communities Pty Ltd [2019] NSWSC 1419 (Payce) at [126] per Henry J in support of the general proposition noted at [41] above. Those two cases, so it was submitted, put to rest the notion that, even in courts where there is no rule permitting inspection in the terms of r 2.32(2) and (3) FCR, the general proposition to the effect that pleadings are not subject to any Hearne v Street obligation nonetheless holds good.

43    The answer given by MB and Mr Napier to TWE’s fundamental propositions which I have explained at [31]–[36] above was that, once the information derived from TWE’s discovered documents was incorporated into the Jones 3FASOC and the Jones 2FAD by way of proper use of that information, the information thereafter took its character for the purposes of a Hearne v Street analysis from the fact that it was thereafter contained in pleadings filed in this proceeding (the Jones 3FASOC and the Jones 2FAD) rather than in the underlying discovered documents or the particulars that had been provided by TWE under compulsion in this proceeding.

44    MB and Mr Napier also submitted that, in the present case, any Hearne v Street obligation became unenforceable or was spent once the documents the subject of that obligation entered the “public domain”. In the present case, the Jones 3FASOC and the Jones 2FAD were published by the Federal Court Registry on the Internet on the Federal Court’s website pursuant to orders made by the Court and accordingly those documents thereby entered the “public domain” (as to which, see EPP Australia Pty Ltd v Levy [2001] NSWSC 482 at [26] per Barrett J; Australian Football League v The Age Company Ltd (2006) 15 VR 419 at 427–430 [36]–[47] per Kellam J).

45    Any Hearne v Street obligation imposed upon MB and Mr Donnellan ceased to be enforceable in respect of the Jones 3FASOC and the Jones 2FAD notwithstanding that the information utilised in those pleadings was derived from documents discovered by TWE in this proceeding and from particulars that were provided under compulsion by TWE in this proceeding which were, in turn, derived from documents discovered by TWE in this proceeding.

46    In addition, MB and Mr Napier relied upon the fact that, on 27 April 2017, I received into evidence the draft proposed Jones 2FASOC which contained the same paragraphs addressing TWE’s key US distribution agreements and related matters as were later set out in pars 18(i.a) and 31A, 31B, 31C, 31D and 31E in Jones 3FASOC.

47    In addition, MB and Mr Napier relied upon the fact that, because I necessarily acted upon the Jones 3FASOC and the Jones 2FAD when approving the settlement of this proceeding on 10 November 2017, those pleadings were in effect treated by the Court as if they had been tendered in evidence on that occasion.

48    At par 21 of their Written Submissions dated and filed on 22 June 2020, MB and Mr Napier submitted the following in support of their application for a release from any Hearne v Street obligation that subsisted at the time they made use of the Jones 3FASOC and the Jones 2FAD in connection with the Napier proceeding:

In the exercise of its discretion, the Court should make an order releasing MB, its staff, Donnellan and Napier from any Hearne v Street Obligation that applied or applies to the Jones Information and grant them access to use that information for the purposes of conducting the Napier Proceeding. The matters that are relevant to the exercise of that discretion were set out by Wilcox J in Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217 at 225. In short, ‘special circumstances’ exist where the documents were created for the purpose of the proceeding, there was an expectation that they would enter the public domain (it is the practice of this Court in representative proceedings to publish pleadings on its website), the documents were obtained by MB and Napier through the internet where the pleadings still remain, and perhaps most importantly the only people who are said to be restrained from using those publicly available documents are Napier, MB and Donnellan.

Mr Donnellan’s Submissions

49    Mr Donnellan adopted the submissions made on behalf of MB and Mr Napier.

50    Mr Donnellan emphasised that no Hearne v Street obligation attached to the pleadings in this proceeding in the first place. He also submitted that, in Hearne v Street, the High Court had overruled Cowell and that the passages relied upon by TWE in that case were no longer sound propositions of law.

51    At par 15 of his Written Submissions dated and filed on 23 June 2020, Mr Donnellan submitted the following:

Finally, and for the avoidance of any doubt, the Court should make an order nunc pro tunc releasing Mr Donnellan from any implied undertaking, for the reasons advanced in the MB Submissions. The pleadings were placed into the public arena. The whole world could use the information in them. It would be absurd if Mr Donnellan, merely because he happened to act in the earlier proceedings, would be uniquely under a prohibition against using them that would not apply to any other counsel. As observed by Debelle J in the passage quoted above, such a discriminatory approach would not enhance the solemnity of the undertaking but would erode confidence in it. No interest is served by the continued application of the implied undertaking in these circumstances, other than the procedural maneuverings [sic] of TWE in trying to hamper the prosecution of the Napier proceedings.

Analysis and Decision

52    In Hearne v Street, the High Court held that the Harman obligation being the “implied undertaking” not to use documents or information processes of the Court for a purpose unrelated to the conduct of the proceedings in which the documents and information were provided is a substantive obligation which arises by virtue of the circumstances under which the relevant person obtained the documents or information (per Gleeson CJ at 131 [3]; per Kirby J at 145 [56] and [57]; per Hayne, Heydon and Crennan JJ at 154–156 [96]–[98] and at 157–162 [105]–[113]).

53    At 154–156 [96]–[98], Hayne, Heydon and Crennan JJ expressed the relevant principles in the following terms (footnotes omitted):

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. The appellants did not dispute the existence of this principle, and in particular did not dispute its potential application to the affidavit of Mrs Hesse and the witness statement of Dr Tonin.

It is common to speak of the relevant obligation as flowing from an “implied undertaking”.

It may be noted that the general law protection is often buttressed by protection from rules of court. Thus until 15 August 2005, the New South Wales Supreme Court Rules 1970, Pt 65 r 7, prevented strangers to litigation from having access to documents or things on the court file without the leave of the Court: see also Practice Note No 97. From 1 March 2006, Practice Note SC Gen 2 prescribed procedures in relation to access to Supreme Court files. The most important paragraphs are:

“6.    Access to material in any proceedings is restricted to parties, except with the leave of the Court.

7.    Access will normally be granted to non-parties in respect of:

•    pleadings and judgments in proceedings that have been concluded, except in so far as an order has been made that they or portions of them be kept confidential;

•    documents that record what was said or done in open court;

•    material that was admitted into evidence; and

•    information that would have been heard or seen by any person present in open court,

unless the Judge or registrar dealing with the application considers that the material or portions of it should be kept confidential. Access to other material will not be allowed unless a registrar or Judge is satisfied that exceptional circumstances exist.”

54    It is noteworthy that the list of the types of material protected by the Harman obligation provided by Hayne, Heydon and Crennan JJ at 155 [96] did not include pleadings.

55    The Court also held that a third party will be bound by the Harman obligation if that party knew of the origins of the material.

56    TWE submitted that the observations of Hayne, Heydon and Crennan JJ at 154–155 [96] should be read as merely stating the position under various specific Rules of Court and should not be understood as stating the general law position. I disagree. It is quite clear, I think, that, in that paragraph of the joint judgment, their Honours stated the relevant common law principle.

57    In the present case, there is no dispute that the material set out in pars 18(i.a), 31A, 31B, 31C, 31D and 31E of the Jones 3FASOC and certain particulars provided by TWE in the Jones 2FAD were derived or taken from documents discovered by TWE in this proceeding. For that reason, the use by MB and Mr Donnellan of the relevant discovered documents and the relevant information extracted from those documents and subsequently included in the Jones 3FASOC and the relevant information extracted from those documents and deployed as particulars in the Jones 2FASOC was subject to a Hearne v Street obligation.

58    The material extracted from certain discovered documents (the primary source of that material) was legitimately used by MB and Mr Donnellan to amend Mr Jones’ Statement of Claim and to confine TWE’s Defence by reference to the particulars of allegations made in that pleading which were provided by TWE by paying appropriate regard to the contents of discovered documents. These uses of some of the documents discovered by TWE in this proceeding and the information contained in those documents was entirely proper and did not constitute a breach of the relevant Hearne v Street obligation. Importantly, TWE has never complained about these uses of the relevant documents and information nor did it seek any confidentiality orders in respect of this material when it was included in the Jones 3FASOC and the Jones 2FAD.

59    Under r 2.32(2) and (3) FCR, any member of the public is permitted to inspect any pleading filed in this Court unless an order has been made denying access.

60    In the present case, once the Jones 3FASOC and the Jones 2FASOC were filed, no order denying or restricting access to those pleadings having been made, any member of the public could inspect those pleadings and use the information for any purpose within the law which she desired.

61    At 297–298 [22]–[23] in Llewellyn, Rares J said:

Significantly, the rules of the Supreme Court of New South Wales are not the same as those in O 46, r 6. That Court had a rule in Supreme Court Rules 1970 (NSW), Pt 65, r 7, which provided that:

A person may not search in a registry for or inspect any document or thing in the proceedings without the leave of the Court.

This Court has clearly taken a very different approach in its rule and has not left it to the parties to keep confidential that which has at least been relied on as the process by which proceedings in this Court are initiated. Parties know that when they file in this Court the rules provide that applications and pleadings are, unless the court orders they be kept confidential, available for inspection. If there is a reason at the time of the filing of documents that any such document, ought not be available for inspection, O 46, r 6(1) provides a means for it to be kept confidential. The need for that exceptional course ought to be established on evidence at the time it is filed. Of course there may be cases of urgency or necessity where it is not always possible to do so and the Court is able, pursuant to its inherent powers and the powers under s 50 of the Act, to accommodate such situations. No such situation was made apparent in this case.

62    At [35] in Helicopter, after addressing the question of whether the Hearne v Street obligation applies to affidavits served in the ordinary course of litigation, Brereton J said:

Against that, it has never been the case that pleadings have been regarded as subject to the implied undertaking, nor other evidence served in support of the pleadings, such as the claim book in Attorney-General (N.T.) v Maurice [1986] HCA 80; (1986) 161 CLR 475. …

63    In Payce, Henry J recognised that, in the Supreme Court of NSW, the question of whether the Hearne v Street obligation applies to pleadings was not settled. After referring to eisa and Helicopter, her Honour said that she preferred the view of Brereton J in Helicopter. At [121]–[131], her Honour set out the reasons for that preference as follows:

First, pleadings are, in my view, of a different nature to the species of other documents to which the Implied Undertaking applies. A pleading is a document which a party voluntarily files with the Court and serves on another party to set out the scope of the issues to be determined by the Court. In that sense, pleadings are not produced on compulsion as part of a Court process.

Accepting that Council’s defence documents were served in accordance with orders made by this Court is not, in my opinion, enough to bring them within the “Harman” principle and subject to the Implied Undertaking. A defendant is not compelled by Court to put forward a defence by filing a list response, or to disclose evidence by way of documents and information at that time. The rules of the Court require a defendant, if it chooses to defend the claim by lodging a list response, to admit or deny the allegations and provide particulars in support.

Second, the purpose of the Implied Undertaking is to protect the privacy of the person disclosing (under compulsion) the relevant document and thereby encourage full and frank disclosure during litigation: Gavan v FSS Trustee Corporation [2019] NSWSC 667, British and American Tobacco Services Ltd v Cowell (No 2) (2003) 8 VR 571, at [20]. It is focused on the protection of a party’s private documents and the information contained within them, which are obtained during the Court process.

Third, pleadings are not, in the words of the High Court, “received into evidence”. They are not read onto the record and are not evidence. They communicate the nature of the parties claim and defence, and are the basis on which proceedings are conducted in open court from the start of the court process.

Fourth, and as Council seems to accept in its written submissions, the Implied Undertaking would not apply to a list statement as it is not a document which a party to litigation is compelled to produce. I query why, in those circumstances, the Implied Undertaking, which if breached is punishable by conviction for contempt of court, would extend to the pleading filed in response by a defendant.

Fifth, extending the Implied Undertaking to pleadings seems to me to be incompatible with the new practice of this Court, which is that access will normally be granted to non-parties in respect of pleadings in proceedings that have not been concluded with leave of a judge or a registrar: Practice Note SC Gen 2 dated 4 October 2019. Accepting that leave is required for access, why should a plaintiff to proceedings by bound by the Implied Undertaking in respect of a defence when it will be normal for non-parties to obtain access with leave and not be bound?

Sixth, in eisa Limited v Damien Brady and 2 Ors, Santow J had to consider and determine an application by a media organisation for access to the pleadings on the court file at a time when the practice notice was in different terms. His Honour’s references at [21] and [22] to the Implied Undertaking were by analogy, in the context where the media organisation seeking access to the court file had to demonstrate there were exceptional circumstances, akin to the need to show special circumstances if a party is to be released from the Implied Undertaking.

With respect to His Honour, the statement (at [21]) that “there is a further principle which applies to documents brought into existence or produced for the purposes of litigation” appears to go beyond the scope of the Harman principle, as accepted by the High Court in Hearne v Street. The Implied Undertaking does not apply to all documents brought into existence for the purposes of litigation. Rather, it applies to documents or information which a party to litigation is compelled to disclose to another party.

Other cases referred to by Council in its written submission (Tuquiri v Australian Rugby Union Ltd [2009] NSWSC 781, McLachlan v Brown & Australian Broadcasting Corporation (No 5) [2018] NSWSC 1976) are also less instructive as, like in eisa, they dealt with the question of whether a non-party (the media) could get access to pleadings on the court file under the previous practice note, and not whether the parties to proceedings were bound by an Implied Undertaking.

Seventh, and while not determinative, it is, to my mind, relevant that neither the High Court in Hearne v Street nor the commentary in JD Heydon, Cross on Evidence (11th ed, 2017, LexisNexis Australia) (at 913-914) refer to pleadings in the list of documents said to be caught by the Implied Undertaking, although I accept that neither list is exhaustive.

In conclusion, although there were orders of the Court for Council to file a List Response and to provide particulars, I am not satisfied that, as “quasi-pleadings”, the Council defence documents were documents produced under compulsion or of the type that are subject to the Implied Undertaking. It follows that I have concluded Payce has not breached the Implied Undertaking by serving a copy of the Daubney Report on Council and the Superintendent as part of the Final Payment Claim, and would not be in breach if it were to rely on it as part of the SoP Act process.

64    Justice Henry’s reasoning in Payce is compelling. Her observations at [126] apply a fortiori in this Court given the terms of r 2.32(2) and (3) FCR which allow inspection of pleadings filed in this Court without the need to seek the prior leave of the Court.

65    In Haswell, after explaining the relevant principles (at [11]–[15]), Lee J referred to r 20.03 FCR (at [16]) and then said (at [17]–[20]):

This rule is consistent with the position that would otherwise apply if the rule did not exist. Whatever might have been the position in the United Kingdom (see Harman at 306 (Lord Diplock), 309 (Lord Keith); 326 (Lord Roskill)), the position at common law in Australia is that the obligation comes to an end once a document is tendered in evidence or formally read in open court: Esso Australia Resources Limited v Plowman (1995) 183 CLR 10 (at 32–3 per Mason CJ); Ainsworth v Hanrahan (1991) 25 NSWLR 155 (at 164–5 per Kirby P). Although prior to Hearne v Street, there had been some contrary views expressed by intermediate courts of appeal about the width of the proposition I have just articulated (see Hamersley Iron Pty Ltd v Lovell (1998) 19 WAR 316 (at 342 per Anderson J) and British American Tobacco Australia Services Limited v Cowell [2003] VSCA 43; (2003) 8 VR 571 (at 586–7 [35] per Phillips, Batt and Buchanan JJA)), those doubts (based upon English authority) can be put to one side for at least two reasons.

First, even if it were thought (for some reason) that Mason CJ, unusually, did not mean what he said in observing that the obligation is subject to the qualification that once material is adduced in evidence it becomes part of the public domain (Plowman at 32–3), the majority of the High Court made the position as to documents going into evidence plain in Hearne v Street (at 154 – 5 [96] per Hayne, Heydon and Crennan JJ) (see the extract reproduced at [14] above).

Secondly, and more fundamentally, the continuing maintenance of the obligation is inconsistent with the relevant information being in the public domain. An aspect of open justice is that information (be it contained in evidence or submissions) is communicated publicly to those present in the court, which in turn allows public and professional scrutiny (including fair and accurate reports of judicial proceedings), and courts will not act contrary to the principle save in exceptional circumstances: see Commissioner of the Australian Federal Police v Zhao [2015] HCA 5; (2015) 316 ALR 378 (at 387 [44] per French CJ, Hayne, Kiefel, Bell and Keane JJ). This principle is fundamental to the principled exercise of Ch III judicial power. That open justice principles are jealously guarded finds reflection not only in the limited number of exceptions to the principle (e.g., s 121 of the Family Law Act 1975 (Cth)), but also in the fact that when it comes to the express statutory power to make suppression and non-publication orders in this Court, such orders will only be appropriate under s 37AG of the Act when “necessary” (a “strong word”: see Hogan v Australian Crime Commission [2010] HCA 21; (2010) 240 CLR 651 at 664 [30] per French CJ, Gummow, Hayne, Heydon and Kiefel JJ) and, in deciding to make them, the Court must take into account that a primary objective of the administration of justice is to safeguard the public interest in open justice: see s 37AE of the Act. For the obligation to continue in circumstances where the relevant information is in the public domain, would make no sense given all persons have a common law right to make a fair report of information revealed in any proceeding in open court: see Dickason v Dickason (1913) 17 CLR 50 (at 51 per Barton ACJ, Isaacs, Gavan Duffy, Powers and Rich JJ agreeing); Llewellyn v Nine Network Australia Pty Ltd [2006] FCA 836; (2006) 154 FCR 293 (at 296 [16], 298 [25] per Rares J).

The practical and more specific statement of the operation of these principles, in this Court, is that the Hearne v Street obligation no longer subsists in relation to information obtained from public domain documents such as: (a) publicly available Court documents, being pleadings or particulars of a pleading or a judgment or a transcript etc (see FCR 2.32); (b) documents that have been tendered; (c) affidavits which have been read; (d) expert reports which have been adduced into evidence; (e) answers to interrogatories tendered; and (f) a document read or referred to in open court in a way that discloses its contents (see FCR 20.03). As to the nature of a hearing in which such evidence is adduced (be it interlocutory, a voir dire, or a final hearing) this does not matter – as long as the hearing was in open court and there was no order made or relevant statutory exception applicable to the use or publication of the information.

66    TWE submitted that the authorities to which I have referred at [52]–[65] above do not provide an answer to its fundamental submissions to the effect that the Jones 3FASOC and the Jones 2FAD were not independent sources of the information in those pleadings which was subsequently deployed in the Napier SOC and that the use of that information was still protected by a Hearne v Street obligation imposed on MB and Mr Donnellan (as to which see [31]–[36] above).

67    Relying upon the observations of Lord Oliver of Aylmerton at 854A–D in Crest Homes PLC v Marks [1987] 1 AC 829 and the observations of Yates J at [69] in Forty Two International Limited v Barnes [2010] FCA 397, TWE submitted that the Hearne v Street obligation applies not only to discovered documents themselves but also to information derived from those documents whether that information be embodied in a copy of the documents or stored in the mind. This submission is correct and I accept it.

68    Counsel for TWE then addressed Connective. In that case, Counsel for Connective had read in open Court from documents which had been discovered by Slea. These documents were not tendered in evidence. Connective later tried to use in a different proceeding the transcript from the earlier proceeding which recorded the contents of discovered documents which had been read out in open Court. Justice Almond held that Connective could not use the transcript in that way. At 140–141 [24], Almond J quoted from the judgment of Scott J in Sybron at 321–322 where his Lordship said:

… In my judgment the undertaking that binds the party on whom it is imposed prevents use by him of the information contained in a discovered document unless he has obtained the information from a source which is independent of and is not derived from the discovery. If counsel reads a discovered document, if a witness refers to it or if the judge refers to it or reads it, in each case the use being made of the document would be a use made possible by the discovery and a transcript thereof could not in my judgment be regarded as an independent source. It follows that the fact that the contents of a discovered document may have reached the public domain does not, in my judgment, per se relieve a party from the implied undertaking. [Ibid 321-2]

69    TWE then referred me to 148–150 [54]–[62] in Connective where his Honour said:

Observations in Cowell

Connective relied on Cowell [(2003) 8 VR 571, 583 [28], 588 [38], 593 [49]] as authority for the proposition that the Harman undertaking does not prevent a party from making use of information contained in a discovered document if there is a secondary source of the information publicly available and the information is derived from that secondary source. Connective sought to apply this proposition to the facts of the case to justify having pleaded the relevant matters in the statement of claim. In my view, however, Cowell does not stand for the proposition espoused.

Connective’s proposition overstates what was said in Cowell. In Cowell, the Court of Appeal, in obiter dicta, expressed an opinion that parties and non-parties alike should be able to make use of what appears in reasons for judgment, and that once a document is copied or quoted in reasons for judgment the parties should be free to make use of that published information [Cowell (2003) 8 VR 571, 588 [38]]. The Court doubted the correctness of a statement of Scott J in Sybron to contrary effect [Ibid].

Other than in respect of information that appears in reasons for judgment, the Court of Appeal was relatively circumspect, observing that its remarks about the use of the contents of the reasons for judgment by party and non-party alike was ‘merely to emphasise the possible difference between the documents themselves and some alternative, albeit derivative, sources of information’ [Ibid 588 [38] (emphasis added)]. In my view, it does not follow from the persuasive observations in Cowell that the position would be the same with any publicly available secondary source. Further, I note that it is apparent from observations made in Cowell that the position in any given case may be influenced by whether the discovered document has been tendered in evidence and whether the disclosure of information from a discovered document has occurred at an interlocutory stage or at trial [Ibid 592 [47]].

Transcript of argument

In this case, the information from the 2010 Agreement has not been copied or quoted from reasons for judgment (or from a transcript of reasons for judgment). Instead, the information sought to be relied upon in the statement of claim was disclosed in court (substantially by counsel for Connective) during argument at the hearing of an interlocutory application in circumstances where the discovered document being read from had not been tendered in evidence.

I am not persuaded by Connective’s submission that the transcript of the argument at the 17 June hearing was able to be freely used by Connective as a secondary source of the contents of the document for the purposes of commencing this proceeding. If Connective’s submissions were accepted, a party could effortlessly sidestep the obligations which otherwise attach to private and personal documents disclosed under the coercive process of discovery.

The practical consequence would be to enable a party bound by the implied undertaking to self-reference the contents of a document through its counsel during argument, and in the process easily evade the substantive obligation inherent in the implied undertaking (to the extent that counsel has been able to read the document aloud and thereby cause the contents to be transcribed). If the contents of private and personal documents could be so easily accessed, it would likely operate as a disincentive to a party giving proper discovery and lead to ‘tactical manoeuvrings’ [Harman [1983] 1AC 280, 308] by parties to ensure that discovered documents were or were not read out in court.

In my view, this outcome cannot have been what the Court of Appeal in Cowell intended in its passing remarks about ‘alternative, albeit derivative, sources’, particularly given that the Court followed Harman and expressly endorsed the considerations underlying the decision of Scott J in Sybron. Rather, I expect the sources in contemplation include information derived from the transcript of reasons for judgment or information derived from the transcript of an unrelated court proceeding, where the contents of a discovered document in evidence in that unrelated proceeding are revealed in open court and are therefore truly in the public domain.

A key theme in the authorities, expressly or by implication, appears to be whether the contents of documents have entered the public domain. The position is not uniform between jurisdictions [The Federal Court Rules provide that the implied undertaking no longer applies if a document is read or referred to in open court in a way that discloses its contents: Federal Court Rules 2011 (Cth) r 20.03. Regulation 21.7 of the Uniform Civil Procedure Rules 2005 (NSW) provides that no copy of a document or information from a document may be disclosed or used otherwise than for the purpose of the conduct of the proceeding, except by leave of the court, unless the document has been received into evidence in open court.

In Deputy Commissioner of Taxation v Karas [[2012] VSC 143 (Karas)], J Forrest J had occasion to consider whether certain affidavits and exhibits used in interlocutory applications for freezing and related orders (which contained documents or information disclosed pursuant to coercive court orders) could be used by the Deputy Commissioner in the course of enforcement of a judgment debt obtained in a separate proceeding [Ibid [2]].

In determining whether the contents of documents had entered the public domain, J Forrest J stated that the mere filing of an affidavit in the course of a proceeding does not mean that its contents (or any exhibits) have entered the public domain and that, at the very minimum, it is necessary for the relevant affidavit to have been deployed in open court — in the sense that it constituted admissible evidence on a particular application or in a trial and was, in fact, utilised for the purpose of the decision. His Honour observed there may be cases where, notwithstanding the use of the affidavit and exhibits in the course of an application, the disclosed material could not properly be said to have entered the public domain [Ibid [50]]. The approach taken by J Forrest J in Karas fortifies my view that the contents of the document in issue in this case cannot properly be said to have entered the public domain.

70    It seems to me that the reasoning of Almond J in the above paragraphs of Connective and of Scott J in Sybron relied upon by Almond J is contrary to the observations of the Victorian Court of Appeal in Cowell at 583 [28] and 588 [38] to the effect that the Hearne v Street obligation does not prevent a party from making use of information contained in a discovered document if there is a secondary source of the information publicly available and the information is derived from that secondary source. For this reason, I consider that I am bound to follow Cowell on this point and propose to do so. In any event, with respect to Almond J, I think that his opinion to the contrary does not state the law in Australia.

71    The decision of Santow J in eisa should not be followed for the reasons explained by Henry J at [127]–[128] in Payce. In Chandrasekaran, the applicant conceded that pleadings are subject to the Hearne v Street obligation without explaining why.

72    TWE sought to obtain support for its fundamental argument from Eckert. It submitted that, although Doyle CJ did not expressly say so, his Honour’s approach to the facts in Eckert demonstrated that his Honour did not regard the earlier pleading under consideration in that case which embodied information taken from discovered documents as an independent or secondary source for that information. In my view, nothing in the Chief Justice’s judgment supports that submission and I reject it.

73    In K & S Corporation Ltd v Number 1 Betting Shop Ltd [2005] SASC 228, at [65], Debelle J said:

An important aspect of the reasoning in Harman and in British American Tobacco to justify the conclusion that persons subject to the obligations of the implied undertaking remain subject to these obligations notwithstanding that third parties may make what use they can of what they hear in court or read in transcript is that the party gaining access to another’s documents is in a privileged position by reason of the process of the court and it is that privilege which should not be abused: see the last sentence in para 38 of British American Tobacco, Lord Roskill in Harman at 322 – 323 and see also Scott J in Sybron Corporation at 322. There can be no doubt as to the solemn nature of the undertaking and the gravity of the obligation it imposes. However, once the document has been admitted into evidence, the rationale for the undertaking evaporates. If third parties are at liberty to make what use they can of the documents, the person to whom they are disclosed should also be able to use them. The fact that the documents were initially disclosed to a person does not justify discriminating between that person and members of the public. The solemnity of the undertaking is not enhanced by such a rule. Instead, the unequal operation of the rule is likely to erode confidence in it. Sanctions exist to punish those who flout the undertaking. Courts may make orders to protect the confidentiality of documents admitted into evidence. In short, no public purpose is served by discriminating between the person to whom the document is disclosed and the third parties who may make what use of what they can of what they have heard in court or what they see in a transcript.

74    I think that these remarks correctly state the law. I propose to apply them in the present case.

75    TWE’s submissions which I have endeavoured to summarise at [31]–[36] above cannot be sustained. The authorities relied upon by TWE either do not support its submissions or do not correctly state the relevant principles. In this Court, pleadings are available for inspection by any member of the public. In addition, in the present case, the information originally sourced in discovered documents which found its way into the Jones 3FASOC and the Jones 2FAD was included in those pleadings as a result of amendments sought by the relevant parties and granted by the Court and were so included as a result of the legitimate and quite proper exercise of the parties’ rights to seek such amendments in light of information gained from reading and considering discovered documents. No restriction was sought or placed upon public access to the information which had been included in the Jones 3FASOC and the Jones 2FAD which had been taken from discovered documents and that material was available for inspection by any member of the public as part of those pleadings. MB and Mr Donnellan did not access the primary source for that information (viz discovered documents) when they came to draft the Napier SOC. The only documents used by them for the purpose of drafting the Napier SOC were the Jones 3FASOC and the Jones 2FAD. The only information used by them for that purpose was information contained in those pleadings. Those pleadings were not subject to any Hearne v Street obligation insofar as MB and Mr Donnellan were concerned. Nor was the information in those pleadings extracted from discovered documents subject to any such obligation.

76    Accordingly, I am of the opinion that MB and Mr Donnellan are entitled to the declaration which they seek.

77    If I am wrong in this conclusion and the information which I have described at [22] above which was included in the Jones 3FASOC and the Jones 2FAD was subject to a relevant Hearne v Street obligation, that obligation ceased to be enforceable or was spent when the pleadings were published on the Federal Court website in the manner described in the evidence and when that information was tendered in evidence at the Amendment Application heard on 27 April 2017.

78    The “public domain” exception was explained by Lee J in Haswell at [18]–[20] (as to which, see [65] above).

79    TWE submitted that, if there was a common law public domain exception, it was only engaged if the document or the relevant information is made public by being deployed in open Court. In support of that proposition, TWE relied upon observations made by the Court in Cowell at 593 [48]–[49].

80    As submitted by Senior Counsel for MB and Mr Napier, TWE’s submission is to take a far too literal approach to the relevant statements of principle in Cowell (see esp the second half of 593 [49] in Cowell). At 593 [49] in Cowell, the Court said:

Given the particular considerations requiring that a party’s privacy be respected so far as compatible with the administration of justice in open court, there seems no logical, or indeed practical, reason why the mere passing of the document into evidence (as witness its being marked as an exhibit) should be taken to relieve the party bound by the implied undertaking from its obligations in that respect. Arguably at least, it would be different if that party was seeking not to make use of the document itself, but to use only the information about it of which the public had become aware (or which, to use another phrase, had passed into “the public domain”) by reason of its use in open court. We include in this last the use of a transcript of the proceedings in court or judgment delivered in which reference is made by counsel, the witness or the judge to the document in question. As to information which is thereby made known generally to the public at large — but only as to such information — there may well be no reason to distinguish between the position of the party bound by an undertaking as to the document itself and the position of any stranger to the litigation. But that is not this case.

81    The emphasis in that case placed upon the need for the relevant documents or information to be disclosed in open Court is explicable by the Court’s recognition of the fact that there must be a clear and readily accessible disclosure to the public before the protection given to the relevant documents or information by the Hearne v Street obligation is lost. In my view, a clear and readily accessible disclosure was made in the present case when the pleadings were placed on the Court’s website for all to see in a part of that website which was readily accessible. The public display of the pleadings on the Court’s website was put in place at the behest of the Court and was notified to those members of the public most interested in this proceeding through the medium of the Settlement Notice which I ordered to be published in September 2017. In this day and age, it is fair to say that placing the pleadings in a prominent position on the Court’s website was a much more effective way of making the contents of those pleadings “public” than reading them out in open Court.

82    I do not think that the making of the settlement approval orders on 10 November 2017 rendered the contents of the Jones 3FASOC and the Jones 2FAD publicly available. I do, however, think that the tender of the proposed Jones 2FASOC on 27 April 2017 did render the contents of that document publicly available.

83    I now turn to the question of leave. The need for the Court to grant leave nunc pro tunc to use the relevant information included in the Jones 3FASOC and the Jones 2FAD which was taken from discovered documents only arises if there was a breach of the relevant Hearne v Street obligation. I have held that there was no such breach. However, against the possibility that I am wrong in that conclusion, I will briefly address the question of whether leave should now be granted.

84    In Springfield, Wilcox J held (at 225) that special circumstances must exist for leave to be granted. He held that, 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 that is not usually present.

85    At [48] and [51] above, I have set out the Written Submissions made on behalf of MB, Mr Donnellan and Mr Napier in support of the grant of the appropriate leave. In addition, the following matters were relied upon in oral submissions:

(a)    The Jones 3FASOC and the Jones 2FAD were never private documents that existed independently of the litigation. They were brought into existence for the purpose of the litigation. They were created at a time when r 2.32 FCR provided that they would be open for inspection by any member of the public. For these reasons, there was no expectation of privacy in relation to those pleadings at the time they were filed;

(b)    The pleadings have been available on the Court’s website for many years;

(c)    There is no prejudice to the privacy interests of TWE because the pleadings were available to the public for a very long time and remain available to the public to this day;

(d)    Everyone else in the world can use the pleadings for any legal purpose that they desire but MB, Mr Donnellan and Mr Napier may not.

86    I do not consider the matters raised by TWE in opposition to the grant of leave as justifying a refusal of leave.

87    Although MB, Mr Donnellan and Mr Napier have not formally apologised to the Court, the absence of such an apology is explicable by the fact that the primary contention advanced on their behalf is that they never breached any relevant Hearne v Street obligation. I have upheld that contention. While it may be possible for those persons to offer a qualified apology along the lines of “if our primary contentions are not upheld and if the Court considers that we breached the relevant Hearne v Street obligation, we unreservedly apologise for doing so”, such a course is somewhat unreal and I do not consider that the absence of such a qualified apology is of any significance. In addition, in circumstances where I have held that there was no breach of any relevant Hearne v Street obligation, I do not consider it appropriate to order MB, Mr Donnellan or Mr Napier to pay TWE’s costs of the present applications.

88    Next, I do not accept that the grant of leave at the present time will unfairly prejudice the breach of confidence case which TWE now wishes to maintain in the Supreme Court.

89    Having carefully considered the matter, I am of the view that, for more abundant caution, I should make an order granting the appropriate leave to the extent that it may be necessary to do so. I do so for the reasons advanced by MB, Mr Donnellan and Mr Napier. In this way, the orders which I make will make clear that, had I not found that there was no breach of the relevant Hearne v Street obligation, I would have granted the leave applied for by MB, Mr Donnellan and Mr Napier.

TWE’s Adjournment Application

90    As I mentioned at [21] above, TWE made an application at the commencement of the hearing before me on 24 June 2020 for an adjournment of that hearing for a relatively short time. That adjournment application was supported by the affidavit of Alan Mitchell sworn on 23 June 2020. Mr Mitchell is the solicitor at Herbert Smith Freehills who has the carriage of this matter. TWE also filed a Written Submission in support of its adjournment application. That Submission was in the following terms:

1.    These submissions are made in support of TWE’s application for an adjournment of the hearing of the interlocutory application filed on 22 June 2020 by Maurice Blackburn and Steven Napier, and the interlocutory application filed on 22 June 2020 by Guy Donnellan.

2.    TWE relies on the affidavit of Alan Mitchell to be affirmed on 23 June 2020 (Mitchell Affidavit). The background facts are set out in paragraphs 4 to 22 of the Mitchell Affidavit. They are not repeated. These submissions adopt the defined terms in the Mitchell Affidavit.

3.    The following matters are relied upon.

4.    First, the applications were filed yesterday. They sought directions, not a final hearing, in the first instance [Mitchell Affidavit, [24]]. That is, with respect, the appropriate course.

5.    Second, there is no urgency that requires the applications to be heard tomorrow [Mitchell Affidavit, [34(d)]. No party has asserted otherwise [Mitchell Affidavit, [24]]. The applications will not resolve the issue of whether Mr Donnellan and Maurice Blackburn will be permitted to act in the Napier Proceeding [Mitchell Affidavit, [34(d)]. That matter will be determined by the Supreme Court on the hearing of TWE’s allegations of breach of confidence.

6.    Third, TWE senior counsel, Mr Young QC, is not available to appear tomorrow [Mitchell Affidavit, [34(e)].

7.    Fourth, TWE is not in a position to have all relevant evidence before the Court [Mitchell Affidavit, [34(f)]. The applications do not stand alone. Regard must be had to the Stay Application, Further Stay Application, and alleged breach of confidence claims made in the Napier Proceeding. TWE should be entitled to properly put its case on the interlocutory applications without risking the disclosure of its confidential information.

8.    Fifth, TWE has not had sufficient time to consider its position. There are a number of issues TWE must consider. For example:

a.    TWE has not had time to properly consider the question of retrospective leave (as that is not an issue relevant on the Stay Application);

b.    TWE has not had time to consider whether it may be proper for the Stay Application to be heard and determined before the interlocutory applications [See e.g. Spalla v St George Motor Finance Ltd (2004) 209 ALR 703].

9.    TWE requires time to consider those, and other, issues. There is no basis to deny TWE the opportunity to consider its position on those issues.

10.    Finally, TWE is proposing a prompt resolution of the dispute. Timetabling orders that will facilitate a hearing on 8, 9 or 10 July 2020 could not possibly cause any prejudice.

11.    No evidence has been adduced to suggest the hearing is urgent. It is not. The hearing of the applications tomorrow would deny TWE the opportunity to properly present its case. In the circumstances, a timetable should be put in place to ensure there is a fair hearing.

91    TWE’s adjournment application was opposed by MB, Mr Napier and Mr Donnellan. Those parties relied upon two affidavits affirmed by Rebecca Gilsenan: the first on 20 June 2020 and the second on 23 June 2020. Ms Gilsenan is one of the solicitors at MB who has the carriage of this matter.

92    The parties also tendered the exhibits to the affidavits to which I have referred at [90] and [91] above.

93    The parties developed their respective positions in relation to adjournment by making oral submissions on 24 June 2020.

94    I shall first of all address the Written Submissions made on behalf of TWE.

95    While it is correct that the Interlocutory Application filed by MB and Mr Napier sought directions, the Interlocutory Application filed by Mr Donnellan did not. In any event, the Court’s decision to list the matters for hearing on 24 June 2020, rather than for directions on that day, was notified to the parties at 9.42 am on Monday 22 June 2020, shortly after the Interlocutory Applications were filed. TWE could not have been misled in any way by the circumstance that MB and Mr Napier had sought directions in the Interlocutory Application filed by them.

96    Next, TWE submitted that the matter was not so urgent as to require that the Applications be heard on 24 June 2020 rather than in the two or three week period thereafter. TWE submitted that resolution of the Harman obligation dispute would not resolve the issue of whether MB and Mr Donnellan would be permitted to act in the Napier proceeding. While this is literally true, there was nevertheless, to my way of thinking, some urgency about the matter. In order for the Summonses in the Supreme Court of Victoria to be satisfactorily addressed by that Court, the questions surrounding the alleged breaches of the Harman obligation needed to be resolved promptly.

97    The unavailability of TWE’s Senior Counsel, although unfortunate, was not a matter which carried much weight in the circumstances of the present case. In addition, I was informed that, were I to accede to TWE’s application, Senior Counsel for MB and Mr Napier would not be available in the week beginning 29 June 2020.

98    Next, TWE contended that it was not in a position to bring before the Court all relevant evidence upon which it would rely in dealing with the applications filed on 22 June 2020. I shall return to this point in a moment.

99    TWE also submitted that it had not had sufficient time to consider its position. I did not accord much weight to this assertion, particularly when, notwithstanding the assertion, detailed and comprehensive Written Submissions were filed by TWE on 24 June 2020 against the possibility that its adjournment application was refused.

100    I now return to the proposition that I should have adjourned the hearing because TWE wished to adduce further evidence in relation to the substantive applications related to the potential additional alleged breach of a Harman obligation by MB, Mr Napier and Counsel presently appearing for those persons. The Counterclaim filed on behalf of TWE in the Napier proceeding sought injunctive and compensatory financial relief against Mr Napier and others (including MB) for the misuse of TWE’s confidential information. The Defence to Counterclaim filed on behalf of Mr Napier and MB included a defence to the effect that there is no protectable equitable confidence in an iniquity. In running that defence, the defendants to the Counterclaim have repeated the very same allegations, based upon TWE’s discovered documents in this proceeding, as are made in the Napier SOC. This gives rise to a potential further breach of a relevant Harman obligation albeit one which is based essentially upon the same alleged misuse of information. Counsel for TWE submitted that TWE was not in a position to tender the Counterclaim and the Defence to Counterclaim because of the restrictions binding TWE as to the use which can be made of those documents in this Court. In effect, he submitted that to tender those documents at the moment in this Court would be a breach of the relevant Harman obligation owed by TWE to the Supreme Court of Victoria. Counsel submitted that this material was highly relevant to the question of whether, assuming there was a breach of the relevant Harman obligation already alleged in this proceeding, leave to use the Jones 3FASOC and Jones 2FAD should nonetheless be granted.

101    I took the view that the potential for a further Harman obligation dispute to arise as between the parties presently before the Court ought not delay the progress of the present applications. The suggestion that MB and Mr Napier had committed a further Harman obligation breach in the manner relied upon by TWE was a matter which was entirely separate from the subject matter of the applications presently before the Court. Nonetheless, it was highly likely that the resolution of the matters presently before the Court would, in the hands of sensible litigants, resolve the foreshadowed further Harman breach application. In addition, as submitted by Senior Counsel for MB and Mr Napier, the foreshadowed further Harman obligation breach case would require those Counsel to return their briefs. This consequence seemed entirely unjustified. Also, I was not at all persuaded that TWE had not had sufficient time to bring before the Court the additional evidence which it argued it was being denied the opportunity to tender.

102    Accordingly, for all of the reasons which I have outlined, I refused TWE’s application for an adjournment of the hearing of the Interlocutory Applications presently before the Court.

Conclusions

103    In the result, I have held that none of MB, Mr Donnellan or Mr Napier breached any relevant Hearne v Street obligation by using the Jones 3FASOC and Jones 2FAD downloaded from this Court’s website in the drafting of the Napier SOC. For this reason, I will make the declaration sought by MB, Mr Donnellan and Mr Napier.

104    For more abundant caution and against the possibility that I am wrong in the conclusion which I have reached in relation to the alleged breaches of the Hearne v Street obligation, I will also grant to those parties leave to use the Jones 3FASOC and Jones 2FAD and the contents thereof in the Napier proceeding.

105    There is no reason why costs should not follow the event.

106    There will be orders accordingly.

Associate:

Dated:    6 August 2020