eisa Limited v Damien Brady & 2 Ors

BASIS OF APPLICATION 8 Counsel for the Applicant, Mr Smark, put fairly and comprehensively the arguments for that access. 9 The starting point is the basis for access put by the Australian Financial Review through a senior journalist Ms Hepworth which I quote below, taken from the original application of 21 September 2000: "eisa is being purchased by a publicly-listed company on the ASX. It is in the public interest, that I can report on these proceedings to the investment community. I would like the court to give me leave to inspect these documents because dealing with the parties, who have vested interests, has the potential to enmesh me in a conflict of interest. ….. I would add that Justice Santow raised issues of corporate governance in a publicly-listed company when he found these allegations 'prima facie indicate that certain monies belonging to eisa Ltd may have been applied to the detriment of the company'. (Judgment, August 3)"

10 She subsequently wrote on 25 September 2000 to my Chambers in the following terms. This letter read with the earlier application delineates the public interest basis put by the Australian Financial Review for the access sought: "Following my application last week, The Australian Financial Review would like to have access to the pleadings in the Eisa Ltd v Damien Brady & 2 ors case. We are seeking access to these documents on the grounds that the financial press publishing fair and accurate reports about legal actions involving this company is in the public interest. In this case, the public interest grounds are strong because, although the company is in voluntary administration, it is in the process of being purchased by a publicly-listed company, Austar. At the request of Justice Santow's office last week, I contacted the legal representatives for both parties about my application for non-party access to the statements of claim and defence. This afternoon Allen, Allen & Hemsley, representing the plaintiff, advised the voluntary administrators objected to my having access. Of more concern, Mr Brady's lawyer, Mr Mark Petrucco at The Argyle Partnership, said they objected to me having access to the pleadings because I could not have a 'fair understanding' of the case without access to documents the defence want to obtain throughout discovery. The Australian Financial Review has serious concerns about being denied access to the pleadings on these grounds. It is contrary to the fundamental notion of open justice if the court gives parties to actions, who have deeply vested interests, the ability to stonewall the media when it attempts to publish accurate reports about the initiating documents in legal proceedings. We are only seeking the pleadings and do not expect to be given discovered evidence that would bolster one side's case. Such a situation also raises the spectre of parties associated with the case disclosing documents to support their allegations. This puts pressure on journalists to report one side and creates a conflict of interest. The Australian Financial Review would like access to these documents from the court so that we can write about these proceedings fairly and accurately and my objectivity is not compromised by dealing with the parties."

11 I communicated through my Associate on 26 September 2000 to Ms Hepworth and the parties relevantly in the following terms: "Justice Santow has asked me to communicate the following. Having regard to the objection from the Defendant's Counsel, he has decided not to give access to the pleadings before the matter is again before the Court this Thursday at 10 am 28 September 2000. That hearing is in relation to an application by the Defendant to discharge the injunction which was originally granted ex parte. He will then, if satisfied that this is necessary to enable a proper understanding of Thursday's proceedings, grant access to the pleadings, unless sufficient justification is shown to deny that access, taking into account the matters in Practice Note 97."

DETERMINATION OF APPLICATION - RELEVANT PRINCIPLES 12 So far as the Supreme Court Rules are concerned, the position is clear enough. A person "may not search in the Registry for or inspect any document or thing in any proceedings except with the leave of the Court"; Pt 65 r7. 13 The discretionary basis upon which that leave is granted or withheld has been stated by the former Chief Justice of this Court in Practice Note No. 97 dated 9 March 1998 which I quote below "1 Access to material in any proceedings is restricted by Part 65 rule 7 of the Supreme Court Rules 1970 to parties, except with the leave of the Court. 2 Access will normally be granted to non-parties in respect of: (a) 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; (b) documents that record what was said or done in open court; (c) material that was admitted into evidence; and (d) 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. 3 It should not be assumed that material held by the Court comes within paragraph 2. Affidavits, and witness statements, that are filed in proceedings are often never read in open court. This can occur because they contain matter that is objected to and rejected on any one of a number of grounds or because the proceedings have settled before coming on for hearing. Affidavits, statements, exhibits and pleadings may contain matter that is scandalous, frivolous, vexatious, irrelevant or otherwise oppressive. Part 65 rule 5 allows the Court to order this type of matter to be struck out of a document. 4 If access to material is given prior to the conclusion of the proceedings to which it relates, material that is ultimately not read in open court or admitted into evidence would be seen. Thus, access will not normally be allowed prior to the conclusion of the proceedings. 5. Even where material has been read in open court or is included in pleadings, there may be good reason for refusing access. Material that has been rejected or not used or struck out as being scandalous, frivolous, vexatious, irrelevant or otherwise oppressive, may still be legible. Where access to material would be otherwise unobjectionable, it may concern matters that are required to be kept confidential by statute (eg the Criminal Records Act 1991) or by public interest immunity considerations (eg applications to authorise listening devices, affidavits in support of suppression orders). 6 Application by a person, who is not a party to proceedings, for access to material held by the Court in the proceedings shall be made in the attached form to the registrar of the appropriate Division, who will refer doubtful cases to the Chief Justice or to a Judge nominated by the Chief Justice. The registrar or Judge may notify interested parties before dealing with the application. The applicant must demonstrate that access should be granted in respect of the particular documents the subject of the application and state why the applicant desires access. Enquiries may be made to the Court's Public Information Officer. 7 The person to whom access to material is granted normally may copy or take extracts from the material and the registry may assist with copying."

14 Clearly enough Practice Note No. 97 offers authoritative guidance as to how the discretion imposed on the court should ordinarily be exercised. 15 That Practice Note in turn reflects the underlying principles and the distinctions made in the case law which has developed over the last ten to twelve years both in Australia and the United Kingdom. It is by recourse to those underlying principles that the Practice Note provides guidance though without preordaining the outcome. Here the critical discretionary matter to resolve is this. Has the Applicant as a financial newspaper made out such exceptional circumstances as would warrant giving it access to the parties' pleadings at a stage before any final hearing and against the objection of all parties? For this I turn first to the principles and their purpose. 16 Those underlying principles have as their paramount purpose that justice is done. First, but only to that end, justice must be visible and its processes transparent. That visibility reinforces the integrity of those processes. Courts therefore ordinarily conduct their hearings in public. Section 80 of the Supreme Court Act 1970 (NSW) reflects that principle, in allowing only limited exceptions to that fundamental principle. It is clear that closing the Court or lesser gradations of suppression or confidentiality of what occurs in court are by way of exception, requiring always to be justified. It is a fundamental rule that courts must ordinarily conduct their hearings in public. In order to justify the closing of the court it must be shown that the "paramount object of securing that justice is done would really be rendered doubtful of attainment if the order were not made": Scott v Scott [1913] AC 417 at 439. There is therefore a heavy onus on the party invoking that exception. This is because openness to the public in the court's proceedings is itself an important safeguard to ensure that justice is done and seen to be done in the public interest. Sometimes closure of the court can nonetheless be justified because that paramount requirement of justice would be prejudiced; for example publishing the name of a minor where this may be injurious because of the nature of the proceedings. 17 The importance of publicity and the mediating role of the Press is well explained by the Full Federal Court in R v Davis (1995) 57 FCR 512 at 513-4: "Whatever [the media's] motives in reporting, their opportunity to do so arises out of a principle that is fundamental to our society and method of government: except in extraordinary circumstances, the courts of the land are open to the public. This principle arises out of the belief that exposure to public scrutiny is the surest safeguard against any risk of the courts abusing their considerable powers. As few members of the public have the time, or even the inclination, to attend courts in person, in a practical sense this principle demands that the media be free to report what goes on in them. This includes the names of the parties to proceedings, which are ordinarily known to everyone in court ." (emphasis added.)

18 There is however necessarily tension between the media's understandable desire to have access to documents which help explain what may otherwise be uninformative in court proceedings and the concern of parties or indeed witnesses, that such access not occur at a premature stage so as to put at risk a fair trial or be unfairly prejudicial in that context. This competing concern arises where publicity about court documents which are not yet read in open court and any objections dealt with may unfairly prejudice the paramount requirement of a fair trial, or unfairly injure reputation in that context; as where a serious allegation in a pleading may not reflect what is ultimately pressed in the actual court proceedings when they occur or where the pleadings change in light of the pre-trial stages including new evidence. It is at the trial that public and Press will ordinarily have full and unfettered opportunity to be present and hear what is said, and where pleadings can be understood in their proper context. It may well then be possible to release a copy of the pleadings without danger of prematurity, though the circumstances need still to be considered. 19 There is a further factor bearing on prejudice which should not be overlooked. A fair report of court proceedings is protected by the statutory defence available for the publication of a fair report of "proceedings in public of a court"; see s24 of Defamation Act 1974 (NSW) Schedule 2 cl. 2(5). When a court document is made available to the Press that has not been read out in court or otherwise placed by the court in the public domain, that statutory defence may not apply to a Press report citing or quoting from that document, whether or not other defences apply. But at general law, documents such as pleadings or affidavits made in course of proceedings are in any event privileged; see Revis v Smith (1856) 18 CB 126; 139 ER 1314 and Lilley v Rouly (1892) 61 LJQB 727. Thus the privilege extends beyond the actual proceedings themselves to the necessary preparatory steps, such as proofing of witnesses and to any document published on an occasion properly incidental to judicial proceedings, and necessary for them; Mann v O'Neill [1997] Aust Torts R 64,309 at 64,312. That would include the initiating process and the pleadings; Jamieson v R (1993) 177 CLR 574 at 583. This is so though no hearing actually takes place; O'Neill v Mann (1994) 49 FCR 370 at 380. 20 Clearly if the court were thus to make available to the Press prematurely, affidavits or pleadings containing damaging allegations not read in court or sufficiently described in open court, this may severely and unfairly prejudice those the subject of these damaging allegations, with no necessary redress in defamation. That prejudice may not only go to reputation but may go further and actually prejudice the paramount requirement of a fair trial. If it became the norm for courts to release to the press pleadings not yet heard and tested in open court, serious and damaging allegations could be put in pleadings for the purpose of their Press exposure relatively free of defamation risk. Carefully crafted qualification to the pleadings may contrive to sidestep any liability for false swearing. That is an important factor to be weighed in any consideration of the public interest and in determining whether the necessary exceptional circumstances exist when proceedings are not yet concluded. 21 There is a further principle which applies to documents brought into existence or produced for the purpose of litigation. It is the so-called Harman principle from Home Office v Harman [1983] 1 AC 280. That principle imposes restrictions upon the party who gains access to documents pursuant to pre-trial processes by way of implied undertaking not to use them for a collateral purpose. Thus the principle is that such documents are to be used only for the purposes of the litigation and not for any collateral or ulterior purpose. That serves to constrain one party from gaining advantage by "feeding" court documents to the Press that favour its case, for that would be a collateral purpose. That principle provides some safeguard against the concern touched on by Ms Hepworth in the earlier quoted correspondence about conflict of interest from forced Press co-operation with a party to get documents which the court is not satisfied to release. As Mason P said in the Court of Appeal in Akins v Abigroup Ltd (1998) 43 NSWLR 539 said at 549 "a stranger to proceedings would not be in a position superior to that of a party and a party must show special circumstances before leave will be granted permitting the collateral use of documents subject to a Home Office v Harman undertaking". The principle applies at its core to pre-trial discovery, answers to interrogatories, witness statements, affidavits or any admission of facts but may be taken to include pleadings; compare Wilcox J in Springfield Nominees Pty Ltd v Bridgeland Securities Ltd (1992) 38 FCR 217 especially at 223.

APPLICATION OF PRINCIPLES IN PRESENT CASE 22 It may be contended, treating the Harman principle as applying to pleadings, that the Australian Financial Review cannot be placed in a position superior to that of a party either. But recognising that the Harman principle, like Practice Note 97 admits of exceptional circumstances, there is here an important caveat. Where the Press can show that the public interest in proper reporting of court proceedings requires access and that access would not be such as to jeopardise a fair trial or give rise to unfair prejudice to a party in that context, then that access should be allowed. (I am not here dealing with investigative as distinct from straight reporting, which more clearly invokes the Harman principle, though whether that should be a basis for distinction is for another day.) Hence Practice Note 97 lays down that exceptional circumstances must be shown for access to pleadings where the proceedings have not been concluded in which those pleadings arise. This is more especially at an interim or interlocutory stage before a final hearing. Clearly relevant in assessing an application for access are the circumstances of the proceedings, their nature such as civil or criminal, the stage reached in the proceedings, whether interlocutory or final, the state of the evidence, the nature and seriousness of the allegations pleaded, whether the pleadings are sworn, the likelihood of the pleadings changing, their relationship to admitted evidence or evidence yet to be admitted, the extent to which the pleadings have been read or outlined in open court or otherwise described in a judgment in the public domain, whether the proceedings are comprehensible without them and unfair prejudice to either party or a witness in that overall context. 23 Clearly enough the proceedings of 28 September 2000 were capable of being followed without the pleadings. This is for anyone who attended them or obtained a copy of the transcript aided by my earlier judgment. Indeed access to transcript is normally granted because the transcript is proxy for that direct attendance open to all. Only exceptionally, as Practice Note 97 and s80 of the Supreme Court Act 1970 (NSW) make clear, can there be reason otherwise. Then it would require a very strong case and probably only in relation to selected passages of transcript exceptionally justifying that restriction. Thus, dealing with the normal circumstances, I agree with what Harper J said in granting access to the transcript (on terms as to payment) in Linter Group Ltd (in liq) v Price Waterhouse ([2000] VSC 90, 20 March 2000, unreported): "It is highly unlikely that any media representative will be in attendance in court for more than a small proportion of that time. There is no point in lamenting that fact, still less in tailoring my response to this application on the basis that members of the media could attend if they chose to do so and thus put themselves in a position from which an accurate report of the proceedings could be compiled without recourse to the transcript. The reality is that the media will decide upon the level and frequency of its attendance here, as it will decide other issues concerning its priorities and the use it makes of its resources. In these circumstances, the availability of the transcript is important. It is undesirable that the media rely on the parties for information about the case. Indeed, the ethical rules by which the legal representatives of the parties are bound inhibits them from providing to the media all the information in which the media is likely to be interested. Access to the Linter transcript will therefore promote accuracy in reporting. It will also promote transparency in the administration of justice. The fundamental importance of that goal has long been recognised by the courts. Such recognition must inform every aspect of the trial process."

24 Taking the bases put in Ms Hepworth's application and taking into account what was said by the Plaintiff in the hearing before me, it could not be said that any public interest in relation to current proposals for eisa Limited, namely its prospective purchase by a publicly listed company on the ASX, Austar Limited, requires access to the pleadings. The general nature and quantum of the claim against Mr Brady is already in the public domain and the Plaintiff confirmed on 28 September 2000 that no further proceedings are in contemplation. In any event that cannot be a weighty factor or central to the public interest when weighed against unfair prejudice to the parties to the litigation in that context. 25 The other basis upon which the case for access is put is that the claims relate to the corporate governance of eisa whose ventilation is therefore claimed to be in the public interest. This is said to be more particularly in the context of the prospective sale of eisa to another listed company. But even if that were so, neither of those considerations outweigh the potentially prejudicial circumstances concerning the parties, and in particular the First Defendant, to which I now turn. 26 That prejudice lies in the prematurity of release, when the pleadings have not been tested in any court proceedings beyond the limited purpose of interlocutory relief and then only on an ex parte basis with final determination on the merits still awaited. I adopt here what was said in Stonham v Legislative Assembly (No. 1) (1999) 90 IR 325 at 332. This was a carefully reasoned decision of the Full Bench of the Industrial Relations Commission of New South Wales, in relation to an application by the ABC for court documents including pleadings, made in the context of investigative journalism rather than straight reporting: "The ABC submitted that access to the documents would assist full and fair reporting. However, this purpose would be best served if the dissemination of information occurred as part of the ordinary court proceedings where, after objection, documents were read in open court."

27 Pleadings, like affidavits, may be subject to objection and consequent revision when the matter is ultimately ventilated in Court in final proceedings or earlier in interlocutory process. The refinement of evidence and the process of discovery renders pleadings, like affidavits, subject to revision, often quite radical. 28 As was said in Stonham, at 333 so here: "It may reasonably be expected that the Court's file presently contains material of a contentious nature as between the parties and which will, no doubt, be subject to objection and vigorous testing in the substantive proceedings. That process, we hasten to add, will occur in open court during public proceedings. But to give access to the material pre-trial would, we are satisfied, raise the concern earlier expressed as to trial of such material in the media."

29 That of itself points to the danger to a fair trial, or unfair prejudice in that context, of premature release of pleadings. For example, a particular and damaging claim in the pleadings may be entirely dropped because the hearing or pre-trial discovery demonstrates there is not the evidence to justify it. That parties have engaged the court's processes does not mean that they impliedly consent to premature publicity about what may, but not necessarily, be ventilated in open court. Certainly that cannot be said of the defendant, who has not instigated the court process. Hence the stricture in Practice Note No. 97 that pleadings are not made available save in exceptional circumstances, before proceedings have been concluded, notwithstanding the legitimate concern of the Press to publish contemporaneously with events. 30 Consider now the present circumstances. At a so far interlocutory stage, allegations of a very serious nature have been made and are vigorously opposed. Even if, as may be expected with responsible journalists, that fact of opposition is scrupulously reported, it by no means follows that all of the allegations in the Statement of Claim will be pressed in a final proceeding. Further consideration of matters in discovery or at the hearing may lead to a different view of the proceedings. This may affect not only their eventual shape in terms of what is pressed and what is defended, but also indeed whether the matter is earlier settled. Settlement was indeed foreshadowed on 28 September 2000 as a possibility justifying vacation of the hearing dates. The Plaintiff's objection to premature release is that it may indeed prejudice settlement. This was put in terms of the overriding purpose of the Rules; "to facilitate the just, quick and cheap resolution of the real issues" (SCR 3(1)).

SUMMING UP 31 Weighing up these considerations is not so much a choice between right and wrong but between right and right; as was said by the late Professor Freund, in commenting on the great constitutional issues which come before the court; Paul A Freund, "Constitutional Dilemmas", 45 BUL Rev 13, 22 (1965). Press access to court documents promotes open justice through more accurate reporting. It may conflict with the need to ensure the absence of unfair prejudice to a party or witness from premature disclosure of court documents yet to be tested in open court. Granted the Australian Financial Review may be to some extent assisted in its present understanding by having access to the complete pleadings. But this should neither be overstated nor understated. There is already in the public domain a broad summation of what is alleged though it is not complete. It lacks particularity about the specific allegations. This is in terms not so much of their general nature as their specific content. But certainly the Press knows the nature of the allegations, whom they are about and the quantum involved. Moreover all parties are opposed to granting that access prematurely and for good reason. The interlocutory proceedings of 28 September 2000, in which the injunction has merely been discharged by consent orders and undertakings substituted inter partes, so far have been perfectly comprehensible without the pleadings. There are on-going settlement negotiations which may well be prejudiced by premature release of the pleadings, containing as they do serious allegations about a party. And no final hearing has yet taken place on the merits. If and when it does, the allegations may change in light of discovery and the evidence as it emerges. 32 In all the circumstances and taking into account the onus on the applicant to establish exceptional circumstances, I consider that fairness to the parties and the interests of justice, which include a fair trial and the avoidance of unfair prejudice in that context, dictate that, at this premature stage, access be denied. 33 Costs should follow the event and thus the Plaintiff and Defendant should receive their costs from the Applicant.

A PERSPECTIVE FOR THE FUTURE 34 When one weighs up all the factors, it is not overly difficult to discern where the balance lies in the present case. It was not in the end so close to the line. But the present negative result for Press access to pleadings should not be overstated in its implications. There will be cases where that balance does indeed favour access, if open justice is not to be an empty platitude; such as in a final hearing which cannot be properly understood without access to the pleadings, where conduct of the trial enables the judge to minimise risks to a fair trial or unfair prejudice in that context. 35 It is tempting to look for simple solutions through some statutory fiat. Yet it is worth noting that Article 6 of the United Kingdom Human Rights Act 1998 does not attempt to provide a simple and automatic answer, in laying down the requirements of a fair trial. Rather it mandates that the public may be excluded from all or part of a trial only in strictly defined circumstances. It is silent about access to court files as is Article 10, dealing with "Freedom of Expression". 36 Thus adopting a simple bright-line rule that access should always be allowed - or indeed never - in either case ignores that here there are genuinely competing principles to be weighed. There is open justice, its processes made as accessible as possible through a properly informed Press reporting to the wider community and which seek to be contemporaneous. There is the need to avoid injustice and unfair prejudice in the trial from disclosure of serious and as yet untested or incompletely tested allegations, where prematurity of disclosure is at issue and where there is likely to be no redress in defamation, no matter how malicious the pleaded allegation. Neither principle has a priori ascendancy. Both are subordinated to the interests of justice in which the community is vitally concerned as well as the parties. These questions must therefore be tested, case by case, against that overriding purpose of the interests of justice. 37 In conclusion, Practice Note 97 does not preordain any particular outcome. But by recourse to these principles, it can be expected to be interpreted, applied and refined in light of judicial experience of its practical application.

Last Modified: 10/05/2000 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.