HIS HONOUR: In the substantive proceedings, the plaintiff Helicopter Aerial Surveys Pty Ltd sues the defendant Garry Robertson, a former employee, for injunctive and compensatory relief in respect of the alleged misuse by Mr Robertson of what is said to be confidential information, and the alleged breach of his fiduciary duties said to be owed to the plaintiff. Mr Robertson denies the allegations and also says that he has returned to the plaintiff all documents of the plaintiff that were formerly in his possession, custody or power. Since then, and in the course of the proceedings, Mr Robertson has requested that the plaintiff produce, effectively by way of disclosure, various documents, and the plaintiff has, without any formal order for disclosure being made, done so. Each of the parties has prepared, sworn and served affidavits in the proceedings; in the case of the plaintiff, by non-party witnesses, as well as by the plaintiff's principal.
By notice of motion filed on 30 October 2015, the plaintiff seeks the following orders:
1. With seven days the defendant shall, subject to order 2:
(a) Deliver any documents, whether in written or electronic form containing information as to clients, modes of operation, pricing of services, details of suppliers, customers and areas of operation to the plaintiff (HAS' Confidential Information) as remain in his possession, custody or control to the plaintiff.
(b) Destroy any copies of documents constituting HAS' Confidential Information as remain in his possession, custody or control after compliance with order 1(a).
(c) File and serve an affidavit deposing:
(i) in respect of any of the documents constituting HAS' Confidential Information as are no longer in his possession, custody or control, a description of what became of such documents;
(ii) as to whether he emailed or otherwise showed or disclosed to any person copies, extracts or summaries of any documents constituting HAS' Confidential Information and if so full particulars of such disclosure;
(iii) that no copies of the documents, electronic, in print or otherwise, remain within his possession, custody or control.
2. Order 1 shall not apply to:
(a) Documents or copies provided by the plaintiff to the defendant in the context of these proceedings; and
(b) Documents used in evidence in these proceedings.
3. The defendant shall not use the documents described in order 2 for any purpose outside these proceedings without leave of the Court.
In the alternative to orders 1, 2 and 3 above:
4. The Defendant undertakes to the Court that:
(a) except for the documents identified in Order 5, he has delivered to the Plaintiff all documents, whether in written or electronic form, containing information as to clients, modes of operation, pricing of services, details of suppliers, customers and areas of operation of the Plaintiff (HAS' Confidential Information) in his possession, custody or control.
(b) except for the documents identified in Order 5, he has destroyed all copies of documents constituting HAS' Confidential Information that are or were in his possession, custody or control;
(c) he will destroy any documents constituting HAS' Confidential Information that he later discovers remain in his possession, custody or control after giving this undertaking;
(d) except to the extent deposed in his affidavit of 10 February 2015, he has not emailed or otherwise showed or disclosed to any person copies, extracts or summaries of any documents constituting HAS' Confidential Information; and
(e) except for the documents identified in Order 5, no copies of documents constituting HAS' Confidential Information remain within his possession, custody or control.
5. The undertaking in Orders 4(a), (b) and (e) does not apply to:
(a) documents or copies of documents provided to the Defendant by the Plaintiff in the context of these proceedings; or
(b) documents used in evidence in these proceedings.
6. The Defendant undertakes to the Court that he will not use or otherwise show or disclose to any person copies, extracts or summaries of any documents described in Order 5 above without leave of the Court.
In addition to either of the alternatives set out above:
7. The Defendant to comply with items 1, 2, 3, 6, 12, 13, 14, 15, 16, 17 and 18 of the Notice to Produce served upon him on 29 July 2015.
By notice of motion filed on 3 November 2015, the defendant seeks the following orders:
1. Within seven days the defendant shall, subject to order 2:
(a) Deliver any documents, whether in written or electronic form containing information as to clients, modes of operation, pricing of services, details of suppliers, customers and areas of operation to the plaintiff (HAS' Confidential Information) as remain in his possession, custody or control to the plaintiff.
(b) Destroy any copies of documents constituting HAS' Confidential Information as remain in his possession, custody or control after compliance with order 1(a).
(c) File and serve an affidavit deposing:
(i) in respect of any of the documents constituting HAS' Confidential Information as are no longer in his possession, custody or control, a description of what became of such documents;
(ii) as to whether he emailed or otherwise showed or disclosed to any person copies, extracts or summaries of any documents constituting HAS' Confidential Information and if so full particulars of such disclosure;
(iii) that no copies of the documents, electronic, in print or otherwise, remain within his possession, custody or control.
2. Order 1 shall not apply to:
(a) Documents or copies provided by the plaintiff to the defendant in the context of these proceedings; and
(b) Documents used in evidence in these proceedings.
3. Leave be granted to the Defendant and his legal representatives to use documents described in Schedule A or information contained in those documents for the purpose of:
(a) complying with his obligations to produce documents on subpoena and to make discovery and produce the discovered documents for inspection in:
(i) related proceedings or proposed related proceedings; and
(ii) proceedings commenced or proposed in the Federal Court of Australia or an authority or court of competent jurisdiction in which criminal penalties may be imposed.
(b) to obtain advice in respect of:
(i) related proceedings or proposed related proceedings; and
(ii) proceedings commenced or proposed in the Federal Court of Australia or an authority or court of competent jurisdiction in which criminal penalties may be imposed.
4. Order 3 shall not apply to information as to clients, pricing of services, details of suppliers, customers and areas of operation of the plaintiff.
SCHEDULE A
i. Affidavit of Barry Edward Jones sworn 23 December 2014.
ii. Affidavit of Barry Edward Jones sworn 21 May 2015.
iii. Affidavit of Barry Edward Jones sworn 9 October 2015.
iv. Affidavit of Garry James Robertson sworn 10 February 2015.
v. Affidavit of Garry James Robertson sworn 5 March 2015.
vi. Affidavit of Garry James Robertson sworn 16 March 2015.
vii. Affidavit of Garry James Robertson sworn 19 June 2015.
viii. Affidavit of Garry James Robertson sworn 5 August 2015.
ix. Affidavit of Mervyn Mark Kanard sworn 8 October 2015.
x. Affidavit of Arlyn Ventura Permelona sworn 9 October 2015.
xi. Affidavit of Alma R Asuncion sworn 8 October 2015.
xii. Affidavit of James Garyth Robertson sworn 3 November 2015.
xiii. Such further affidavits as are served in the proceedings.
xiv. Open correspondence between Michael Burns (solicitor), Carneys Lawyers and the defendant.
It will be immediately apparent that claims 1 and 2 in each motion are identical, and thus that the defendant consents to the relief sought by the plaintiff in that respect. Accordingly, those aspects of the motions do not require further consideration.
The defendant proposes, in his orders 3 and 4, an alternative regime to what is sought by the plaintiff in order 3, and it is in respect of those claims that the hearing before me and this judgment are principally concerned.
The plaintiff does not press order 7 in its notice of motion. So far as orders 4, 5 and 6 in the plaintiff's motion are concerned, they are expressed as an alternative to orders 1, 2 and 3, and the case will be decided on the principle relief and not the alternative relief. In any event, the Court cannot order a party to give an undertaking to the Court as contemplated by order 4, although it can impose a condition or grant an injunction to that effect. That, of course, is not to say that such an obligation cannot arise by way of implied undertaking, to which I shall in due course come.
Although it was not apparent on the face of the motion or from the plaintiff's written submissions that this was so, order 3 sought in the plaintiff's motion is propounded on the basis that it is intended to clarify that documents provided by way of disclosure voluntarily by the plaintiff - as distinct from pursuant to any compulsory process - were to be treated as if subject to the usual implied Harman v Secretary of State for the Home Department [1983] 1 AC 280 undertaking; that is, that they not be used for any purpose extraneous to the proceedings in which they were produced. Otherwise, the issue - both on paragraph 3 of the plaintiff's motion, and paragraphs 3 and 4 of the defendant's motion - is whether the defendant should be released from the implied undertaking insofar as it otherwise applies, for the limited purposes sought in paragraph 3 of the defendant's motion.
Accordingly, the issues for resolution are:
1. whether the implied undertaking attaches or should attach to documents produced by way of disclosure under informal arrangements for disclosure in the absence of an order for discovery or other compulsory process; and
2. whether the defendant should be released from the implied undertaking for the purposes referred to in paragraph 3 of his motion.
[3]
Whether the implied undertaking attaches to documents produced by way of disclosure under informal arrangements
As to the first of those issues, the scope of the implied undertaking was described by the High Court of Australia in Hearne v Street [2008] HCA 36; (2008) 235 CLR 125 (at 155 [96]) by Hayne, Heydon and Crennan JJ in the following broad terms:
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.
It will be necessary to return to some aspects of that statement in due course. However, the touchstone of the obligation appears to be that of compulsion, as referred to in the opening sentence of the above passage, although in some of the cases, another strand that appears in the reasoning is simply that a document that is obtained for one purpose should not be used for another [see Central Queensland Cement Pty Ltd v Hardy [1989] 2 Qd R 509 at 510 (McPherson J), cited in Springfield Nominees Pty Ltd v Bridgelands Securities Limited (1992) 38 FCR 217 at 222-223 (Wilcox J)].
It is true that there was no current or immediate compulsion in the sense of an order for discovery or notice to produce invoking the rules of Court requiring the plaintiff to produce the documents in question, but it was open to the defendant, if not immediately then later in the course of the proceedings, to have compelled disclosure by notice under (NSW) Uniform Civil Procedure Rules 2005, r 21.10, or by applying for an order for discovery under UCPR, r 21.2, or for that matter, by issuing a subpoena for production of documents.
In principle, a party who voluntarily produces documents by way of disclosure for the purpose of proceedings in response to an informal request to do so, and thereby obviates the need for the additional costs, expense and time involved in an application for disclosure pursuant to compulsory process, ought not be disadvantaged in terms of the use that can be made of the documents by having adopted that course. Indeed, such a cooperative approach should be encouraged and facilitated, rather than discouraged.
In the opening sentence of the passage to which I have referred from Hearne v Street, reference was made to compulsion not only by reason of a rule of Court or a specific order of the Court, but also "or otherwise", and in that respect, reference was made by the High Court to the judgment of Laddie J in Bourns Inc v Raychem Corporation [1999] 1 All ER 908, a judgment which was affirmed in the Court of Appeal [Bourns Inc v Raychem Corporation [1999] 3 All ER 154 at 169-170]. In that case, the question was whether the implied undertaking extended to documents produced, not as a result of the discovery process, but "voluntarily" by a party to a taxing officer on a taxation of costs. Laddie J said (at 916):
There is no doubt that the disclosure of documents for the purpose of a taxation is not a process of discovery. As Hobhouse J pointed out in Pamplin v Express Newspapers Limited [1985] 2 All ER 185 at 190, the taxing master does not have power to order discovery to be given. The documents only need to be supplied to him, he cannot force the payee to pass them on to the payer but the reason for this should be borne in mind, in taxations most of the documents produced by the payee are ones to which privilege will attach. It is because as a generality the documents and particularly the most important ones are likely to be highly confidential that they are not automatically passed on to the payer. Therefore an obligation to give general discovery subject to the right to withhold privileged material would be an exercise of limited value...
Laddie J then pointed out that, in a sense, the decision of the payee to produce the documents was voluntary, but that in the context in which it occurred, to say that compliance with such a request was voluntary was misconceived because the payee must effectively elect between complying with the request or withdrawing reliance on the documents. His Lordship continued:
On the same hypothesis it could be said that discovery given by a plaintiff in the action is voluntary since he could always avoid the necessity for doing so by abandoning his claims. In my view any payee attempting to enforce an order for costs in his favour by embarking on a taxation is compelled to produce his documents to the taxing master and where the payer demands a view of them is effectively compelled to produce to him as well. Although the handover is not automatic, it is no less a compulsory disclosure of private documents for the purposes of the taxation.
His Lordship concluded:
All the considerations which make it appropriate to imply an undertaking not to make collateral use of discovery documents apply equally strongly to collateral use of documents produced on taxation. To adopt the language of the Prudential case, by virtue of the circumstances under which the payer obtains the documents and in the course of taxation, a legal obligation is imposed on him by operation of law not to make collateral use of them.
His Lordship then goes on to set out the circumstances of that case, which involved a request for the production of vouchers by the solicitors acting for the payer, and concludes that it was reasonable in those circumstances for the payee to proceed on the basis that if it wanted to maintain its claims for costs, it would have to disclose the documents, and for that reason the disclosure should be treated as under compulsion and subject to an undertaking.
In my view, that case and circumstances are closely analogous to the present. Although an immediate legal obligation to produce the documents for inspection may not have crystallised, they were produced in the context where disclosure could have been obtained if it were not provided voluntarily by one of the various processes to which I have referred. The documents should be treated in that context as having been produced under compulsion and subject to the implied undertaking. The implied undertaking should in principle be regarded as attaching not only to documents produced as a result of the actual invocation of compulsory process, but equally to documents produced in response to an informal request for disclosure in the context of proceedings in which, but for informal disclosure, a formal order could have been obtained.
It follows that, except to the extent that leave is granted, the defendant is not entitled to use documents produced voluntarily by the plaintiff in response to the defendant's requests, for any purpose extraneous to these proceedings. I did not understand Mr Robertson to contend to the contrary.
[4]
Release of the defendant from the implied undertaking
That then leads to the second issue, which is whether the defendant should be released from the implied undertaking as sought in paragraph 3 of his motion. His application for such a release is made in the context of a threat by a third party to bring proceedings against him in respect of matters which are also the subject of or are related to his dispute with the present plaintiff, and/or to make a complaint to regulatory or police authorities with a view to having a prosecution instituted against him.
On 10 October 2014, a Philippines Law firm Cruz Enverga & Lucero wrote to Mr Robertson, claiming to write on behalf of "our client Venjo Aviation Support Services Inc (VASS) and its business partners Tropic Helicopters Limited and Helicopter Aerial Surveys Pty Ltd". It will be observed that the third entity named is the present plaintiff. The letter then proceeds as follows:
Our clients informed us that they have received copies of correspondence dated 17 September 2014 originating from Helix Aviation Support Services Ltd, and a copy of an e-mail emanating from Boston Securities Pty Ltd, apparently authored by you that contain a number of allegations and demands that are detrimental to our clients and some personnel of the Civil Aviation Authority of the Philippines (CAAP). Copies of said correspondence were forwarded to us for our file and appropriate action.
Our clients likewise apprised us that senior CAAP personnel and our clients' designated CAAP liaison officer have executed affidavits attesting to their actual interaction with you. The affiants confirmed your plan of purchasing the company and disclosed that you made certain offers of inducement to ensure that there would be no problems with the aircraft certification documents and pilots licensing from the Authority when you became the owner of the company. This approach was rejected and notes were made by the concerned parties.
Finally, our clients informed us that in the course of your engagement as their Quality Manager and/or interested buyer of the company, you were provided access to their financial and other important and confidential documents/records, in violation of the trust reposed on you, however, you have taken, without their knowledge and consent, some vital documents/records containing confidential information and you are now using the same to gain monetary advantage from our clients.
Please be advised that your aforesaid actions are considered criminal offense/s in Philippine jurisdiction. Our Australian Correspondent lawyer likewise advised that Australia has similar legislation under its Criminal Code. All this, notwithstanding, our clients advised us that they want to resolve the matter in a sensible manner.
In view thereof, formal demand is hereby made upon you to return to our client VASS, or to any of its business partners, all their records, files and certificates, whether original or copied, electronic media and data howsoever created or recorded, that have been constructed, accessed and retained by you without their consent, within fifteen (15) days from receipt hereof.
Your failure to heed this demand and/or should at any time in the future that any actions, statements, etc be done that would have an adverse effect on our client VASS or any of its above-stated business partners and their officers/employees, regardless of whether being made by yourself or another person that could be reasonably be considered emanating from you, was instigated by you or in any way gave cause to consider that you in any way did any act to cause damage, we will be compelled to institute the appropriate cases, administrative, civil and/or criminal, against you here in the Philippines, Australia and/or other appropriate jurisdictions, and charge you, in addition, with damages, attorney's fees and other litigation expenses to protect our client's interest.
We trust that you will give this matter your most immediate and preferential attention.
It will be observed that the letter contains a number of allegations. In the second paragraph, it asserts that Mr Robertson is responsible for a number of allegations and demands detrimental to the persons for whom the law firm claims to act. The third paragraph contains an allegation that Mr Robertson made offers of inducement to ensure that there would be no problems with aircraft certification documents and pilot's licensing when, as was apparently contemplated, he became the owner of the company. The fourth paragraph contains an allegation that, in the course of his engagement as quality manager and/or interested buyer of "the company", he was provided with confidential information and has misused that confidential information.
The letter then proceeds to assert that "Your aforesaid actions" - apparently a reference to at least the second and third of the allegations to which I have referred, if not all of them - are criminal offences in the Philippines, and are said to be also offences in Australia. Against that background, the authors then say that their clients "want to resolve the matter in a sensible manner". In other words, against the background of raising the spectre of a criminal prosecution, they appear to want to negotiate a settlement. They then demand return "to our client VASS or to any of its business partners" of the alleged confidential information, and foreshadow that otherwise proceedings "administrative, civil and/or criminal" may be instituted in the Philippines, Australia or elsewhere.
On 17 October, Mr Robertson sent an email to Mr Barry Jones, the principal of the plaintiff, and with reference to the allegation in the third paragraph of the 10 October letter - that affidavits had been executed by certain people - saying:
Benjo has instructed its lawyers that senior CAAP personnel and their clients' designated CAAP liaison officer have executed affidavits attesting to their actual interaction with me. No copies of these affidavits have been provided to me and the suggested contents are rubbish. I look forward to receipt of these at some stage and fail to see any relevance to the issue at hand.
That correspondence, in October 2014, preceded the institution of the present proceedings by summons filed on 24 December 2014.
After more time had elapsed, on 3 March 2015, Cruz Enverga & Lucero wrote again to Mr Robertson, in the following terms:
We refer to our previous letter dated 10 October 2014 in behalf of our client, VENJO AVIATION SUPPORT SERVICES, INC ("VASS") and its business partners, Tropic Helicopters, Ltd and Helicopter Aerial Survey Pty Ltd and note that no response has been received to date.
Our client apprised us that certain discussions have taken place between Helicopter Aerial Surveys Pty Ltd ("HAS") and Carneys Lawyers of Sydney and yourself dealing with a number of issues contained in your correspondence of 18 September and 2 October 2014. Our client was informed that certain undertakings have been provided by you with regard to missing documents and files and that the matter between the parties may be close to a resolution.
We would like to make it clear that our client VASS is not a party to any of these negotiations or resulting agreements therefrom. While VASS will respect any such agreements or resolutions, it will only be to the extent that VASS' interests are not compromised.
Our client notes from your response to HAS on the 16th October 2014 that you deride the fact that a number of affidavits, clearly detailing your actions in attempting to secure the cooperation of VASS personnel and officers of the Civil Aviation Authority of the Philippines (CAAP) for ongoing financial incentives in the event that you purchased the business of HAS and Tropic, have been made. You in fact use the word "rubbish".
Please be aware that CAAP Airworthiness Inspectors are official government representatives of the Government of the Republic of the Philippines under the definitions of the Criminal Code Act 1995 of the Commonwealth of Australia. While said legislation does not apply to Philippine jurisdiction, we have advised our client that the affidavits should be provided to the Department of Justice's National Bureau of Investigation (NBI) for a formal complaint to be made to the Australian Federal Police for appropriate action under Australian jurisdiction.
Our client has placed the matter on hold due to the recent advice of ongoing negotiation between you and HAS and that the current issues that are before the court in Australia appear to be close to a resolution.
Notwithstanding this, you are advised that should you consider the affidavits executed by the VASS personnel and CAAP officials "rubbish", then do so at your own peril.
While the matter has been placed on hold pending assessment of further information that has come at hand, you are placed on notice, that if at any time an incident or occurrence comes into being that in any way affects the commercial activities of any of the business entities affected by your allegations, any of the staff or principals of the business or their families or their interests in any way, whether directly attributed to you, or indirectly linked to you in any way, shape or form, our client will ensure that the affidavits are approximately processed and submitted to the Australian Federal police through the Philippines Department of Justice together with parallel action from the Department of Foreign Affairs. This is without prejudice to all other legal remedies available here in the Philippines, in Australia and/or other appropriate jurisdictions, to protect our clients' interests.
It will be noted that this letter indicates that VAAS had been apprised of discussions said to have taken place between the plaintiff and the defendant with reference to a number of the issues contained in or referred to in earlier correspondence, and that VASS was not a party to those negotiations or resulting agreements and would have respected such agreements only to the extent that its interests were not compromised; that it appeared from Mr Robertson's response to Mr Jones of 16 October that he "derided" the affidavits said to have been provided by CAAP personnel - making clear that VAAS had been informed of Mr Robertson's response to Mr Jones in that respect; and that it again raised the spectre of criminal proceedings in Australia against Mr Robertson. In that context, the letter then says that the matter had been placed on hold due to the ongoing negotiations between the defendant and the plaintiff, but foreshadowed that it may be submitted to the Australian Federal Police through police and diplomatic channels if any of the business entities were affected by the allegations.
Finally, on 23 October 2015, Cruz Enverga & Lucero sent a letter to the Civil Aviation Authority of the Philippines which, inter alia, noted that Mr Robertson had apparently sent some letters to CAAP requesting copies of VASS company records, asserting that Mr Robertson had no connection with VASS, and alleging that he had initiated several actions detrimental to the plaintiff "in an attempt to gain undue monetary advantage by making serious allegations using HAS corporate records, including confidential files...which he obtained whilst employed by HAS".
Against that background, Mr Robertson, who is currently unrepresented, wishes to be able to use the affidavits that have been served in these proceedings, primarily to prepare his defence to the threatened proceedings, and also to consider bringing proceedings for defamation in respect of the allegations against him in the 23 October letter. He does not, at this stage, propose to disseminate the information, but to use it only to prepare for his defence - save that he may submit it to a lawyer for advice, in which event he accepts that he would have to inform the lawyer of the terms upon which he was permitted to use those documents.
By paragraph 3(a) of his motion, he also seeks to be able to disclose the documents, if required, by any obligations of disclosure or discovery in the threatened proceedings. As to that part of his application, it is doubtful in the extreme that the reference to (or production of) documents in an affidavit of discovery or pursuant to a subpoena or notice to produce is a "use" of the documents of the kind that would be precluded by the implied undertaking. It is well established that obligations of confidentiality owed to a third party in respect of documents in the possession, custody or power of a party to proceedings provide no answer to an obligation to produce them on subpoena or to disclose them in an affidavit of discovery. The obligation imposed by the so-called implied undertaking is analogous to an obligation of confidentiality. In my view, it would have to yield to a positive obligation to disclose or produce the documents such as would be imposed by a subpoena or an order for discovery. However, given that parties have not uncommonly been criticised and even punished for breaches of the implied undertaking, it is understandable enough that for more abundant caution one might seek to make clear that it would not be a contravention of any obligation to do so. Accordingly, although I doubt that it is necessary, I will, for more abundant caution, make an order to the effect of paragraph 3(a) of the defendant's motion.
So far as the balance of the defendant's application is concerned, the documents to which it refers are, essentially, affidavits in the proceedings and open correspondence in the proceedings. I do not think it has ever been suggested that the implied undertaking attaches to open correspondence. For my part, I doubt that it attaches to affidavits, other than affidavits which disclose information in answer to an order or rule that requires information to be disclosed.
It is true that in Hearne v Street, in the passage to which I have been referred, reference is made, amongst the classes of documents to which the principle is said to apply, to witness statements served pursuant to a judicial direction and to affidavits. For authority of the application of the principle to affidavits, the High Court cited (at footnote 74) two cases. The first was Medway v Doublelock Ltd [1978] 1 WLR 710; [1978] 1 All ER 1261. That was a case in which the plaintiff Mr Medway had been, and remained, the respondent in matrimonial proceedings in the Family Division, in the course of which an order had been made under a rule of the Court that he make an affidavit giving full particulars of his financial circumstances. His wife's solicitor provided copies of those affidavits to the defendant in other proceedings in which Mr Medway's company was a plaintiff, and the defendant in those proceedings attempted to use them in support of an application for security for costs in those proceedings. Goulding J in the Chancery Division restrained the defendant in the other proceedings from doing so, on the basis that the public interest in promoting full disclosure in matrimonial litigation outweighed the public interest in having full disclosure in a security for costs application. But what is fundamental for present purposes is that while the subject matter of that proceeding was an affidavit, it was one made in response to an order for disclosure of personal information. As Goulding J said (at 1264), this was a circumstance in which Mr Medway was compelled by process of law to make what may be damaging disclosures for the purpose of a particular suit, and he should not thereby be put at risk of their use for other purposes. Essentially, that affidavit was a form of compulsory disclosure.
The other case referred to by the High Court in footnote 74 was Re Addstone Pty Ltd (in liq); Ex parte Macks (1998) 30 ACSR 156, a judgment of Mansfield J in the Federal Court of Australia. That was a case in which a liquidator had made affidavits in support of applications for directions under Corporations Law, s 479, as to whether he had certain powers. As is not uncommon on an application under s 479, orders were made the effect of which was that the affidavits and the transcript of the hearing were confidential and not available for inspection. A number of creditors of the company in liquidation made application to the Court for access to that material, as they wished to apply to the Court to review some aspects of the orders it had made on the liquidator's application. The liquidator agreed that they could be provided with the confidential affidavits, but there was a question as to whether the creditors should be entitled to use that information not only in the instant proceedings but also in their capacity as creditors generally. Mansfield J said that an order to disclose confidential material was equivalent to an order for discovery and would be the subject of an implied undertaking that the documents will not be used other than in respect of any application in respect of the instant proceedings. Again, while the subject matter happened to be an affidavit, the circumstances were not that of an affidavit served in the ordinary course of proceedings for use in the hearing, but the provision of access to an otherwise confidential affidavit by way of a compulsory process.
Accordingly, in my view, the two cases referred to in Hearne v Street provide scant, if any, support for a general proposition that the principle extends to affidavits served in the ordinary course of litigation.
It is true that the authority in respect of witness statements served pursuant to a judicial direction is rather stronger and it might, at first sight, be thought that by analogy the same principle applied to affidavits. The principal authority in respect of witness statements is the well-known judgment of Wilcox J in Springfield Nominees v Bridgelands. In that case, his Honour pointed out, with reference to Central Queensland Cement (to which I have already referred), that the service of a witness statement was analogous to answers to interrogatories, and that this was fortified by the rule of the Federal Court that affidavits filed were not open for inspection without leave unless and until ultimately read. What his Honour emphasised, as McPherson J in Central Queensland Cement had also done, was that the practice directions pursuant to which witness statements were served were a means of making information available only for the purpose of the proper preparation and conduct of the litigation.
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. The basis upon which witness statements are treated as subject to the implied undertaking was helpfully explained by King CJ of South Australia in State Bank of South Australia v Smoothdale (No 2) Limited (1995) 64 SASR 224. That case was concerned with witness statements which had been served under the then New South Wales Practice Note, but ultimately not read or tendered in the proceedings. His Honour reasoned that, prima facie, witness statements were privileged in the hands of the party who obtained the statement from the witness. That, with respect, is undoubtedly correct. Conventionally and traditionally, a witness statement remained the privileged document of the party who obtained it, and provided the proof which would go into counsel's brief and presumably be used by counsel to elicit the witness' oral evidence in Court. In the absence of some waiver - for example, by resort to the statement for refreshing recollection or the like - the witness statement remained confidential and privileged. As King CJ said:
Statements of witnesses are by their nature confidential documents. Their communication to another party for a limited purpose pursuant to a court order does not appear to me to deprive them necessarily of every element of their confidential character. They retain the character, except as the use by the other party for the limited purpose, until either the witness makes the statement public by verifying it on oath in the witness box, or the party who served the statement waives the privilege, or a party puts the statement in evidence pursuant to leave granted under the practice note.
The Chief Justice distinguished the circumstances of the claim books in Attorney-General (N.T.) v Maurice by observing that the claim books' very purpose was to communicate the particulars of the claim to the other parties, and that once communicated, there could be no evidence of confidentiality. The purpose of requiring the advance service of witness statements was to facilitate the just, quick and cheap disposal of the proceedings and provide advance notice to the other parties of the evidence which the witnesses are expected to give, and thereby to facilitate the hearing, perhaps even to the point of the use of the statements as evidence-in-chief. But from that analysis, it is tolerably clear that the view that the implied undertaking applies to witness statements until they are deployed in open court derives from their original and initial confidential and privileged character.
The same cannot be said of an affidavit. An affidavit is a written statement made by a person who swears or affirms before a duly authorised functionary that the statement is true. Historically, in the Court of Chancery, where evidence was generally given on affidavit, the affidavit was the testimony of the witness. Indeed, if the affidavit was lost, the evidence was lost. Although nowadays, for reasons of convenience, affidavits may be sworn before solicitors - even before the solicitor acting for the party making the affidavit, though that is often regarded as undesirable as a matter of practice - historically that was not permitted; thus, the swearing of the affidavit took place not privately but before a functionary, such as a Commissioner for Affidavits or Justice of the Peace. And the affidavit is not mere advance notice of the evidence that it is expected a witness will give, but is the evidence of the witness. It is made, unlike a witness statement, not in the context that it might be regarded as confidential until and unless required to be deployed, but on the basis that it will serve as a person's sworn evidence in proceedings. As is observed in Wigmore on Evidence (1972, 4th ed, Chadbourn Revision) at paragraph 1331, in theory, the testimony or deposition was the writing and nothing else. In Daniell's The Practice of the High Court of Chancery (vol 1, 4th ed) at pages 824-825, it was observed that an affidavit must be made in some cause or matter actually pending at the time it is sworn, and otherwise cannot be received. While that has been departed from in some respects in the modern law, that reveals another distinction between an affidavit and a witness statement, and reinforces the view that an affidavit sworn in proceedings is not a confidential, let alone privileged, document. These matters place an affidavit in a markedly different position from a witness statement.
The plaintiff has referred in submissions to a recent observation of Johnson J in Prime Finance Pty Limited v Randall [2009] NSWSC 361 (at [17]), referring to Hearne v Street as authority for the proposition that the principle applies to witness statements served pursuant to a judicial direction and to affidavits. But, in any view, that takes it no further.
Accordingly, I seriously doubt whether in principle the implied obligation attaches to affidavits sworn and served in the ordinary way in the course of proceedings. By reference to "the ordinary way", I exclude affidavits sworn in response to orders for disclosure, such as of the type referred to in Medway v Doublelock. But, in referring above to "the ordinary course", I do not regard a mere timetable requiring affidavits to be used in proceedings to be served by a particular date as amounting to compulsory process. Such a timetable does not compel a party to disclose information that it does not wish to disclose, and it does not compel a witness to disclose any information; it simply fixes a time by which any evidence to be relied on must be served. It is quite distinct from an order which requires a party to make an affidavit deposing to certain matters, which would amount to compulsory process in the relevant sense.
However, all that said, it must be acknowledged that Hearne v Street itself upheld a conviction for contempt of court which related to the use, in breach of the implied undertaking, of part of an affidavit and a witness statement. The High Court did not have to decide this point, as their Honours observed (at 155 [96]):
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.
While the High Court did not have to decide this particular question, in circumstances where it upheld the decision based on the application of the principle to, inter alia, an affidavit, I ought not, sitting at first instance, depart from that position. Thus, I will proceed on the basis that affidavits do attract the implied undertaking. And, in any event, given the judgment of the High Court in Hearne v Street, a litigant would act very reasonably in proceeding on that basis.
However, it seems to me that the voluntary nature of the affidavit, the intent that it be used and read in open court, and the circumstance that it is not a confidential, let alone privileged document, are highly relevant to the approach that one takes on an application for leave to use the material for an extraneous purpose.
The cases refer, on an application for leave to use documents subject to the implied undertaking for extraneous purposes, to a test of "special circumstances" [see Crest Homes plc v Marks [1987] 1 AC 829 at 860 (Lord Oliver); Esso Australia Resources Limited v The Honourable Sidney James Plowman [1995] HCA 19; (1995) 183 CLR 10 at [37] (Brennan J)]. However, not too much should be read into the word "special" [see Ainsworth v Hanrahan (1991) 25 NSWLR 155 at [168] (Kirby P); Holpitt Pty Limited v Varima Pty Limited (1991) 29 FCR 576 at [579]-[579] (Burchett J); Springfield Nominees v Bridgelands at [222]-[224] (Wilcox J)].
Generally, all that is required by special circumstances is some good reason - or, as I would be inclined to put it, some circumstance - that warrants relief from the undertaking. In State of New South Wales v McCarthy [2015] NSWSC 1780, Fagan J adopted with approval the dicta of the full Federal Court in Liberty Funding Pty Limited v Phoenix Capital Limited [2005] FCAFC 3; (2005) 218 ALR 283 at [31]. In particular, his Honour stated::
…The notion of special circumstances does not require that some extraordinary factors must bear on the question before the discretion will be exercised. It is sufficient to say that in all the circumstances good reason must be shown why, contrary to the usual position, documents produced or information obtained in one piece of litigation should be used for the advantage of a party in another piece of litigation or for other non-litigious purposes. The discretion is a broad one and all the circumstances of the case must be examined…[see also Global Medical Solutions Australia Pty Ltd v Axion Molecular Pty Limited [2013] NSWSC 665 at [21] (Stevenson J)].
In the present case, VASS is related to the plaintiff. The evidence indicates that VASS is an entity owned by a person who holds the plaintiff's aircraft on trust for the plaintiff, and who is the general manager of the plaintiff. Next, it appears from the correspondence to which I have referred that VASS, although not committing itself to be bound by any agreement reached by the plaintiff with the defendant, is effectively making common cause against the defendant with the plaintiff. Thirdly, VASS and the plaintiff appear to have shared information in respect of these proceedings and their claims against the defendant.
Fourthly, there is a commonality of issues on at least two counts. First, the allegations made on behalf of VASS in the fourth paragraph of the 10 October letter closely overlap with the allegations made by the plaintiff in these proceedings. I do not accept that it is a reference only to these proceedings (which at the time of that letter were not on foot), and as the following paragraph of the 10 October letter makes clear, the VASS allegations included that the defendant's alleged conduct amounted to criminal offences. Secondly, as Mr Robertson pointed out in his submissions, at least one of the affidavits sworn and received in these proceedings contains assertions directly pertinent to the allegations made in the third paragraph of the 10 October letter.
Fifthly, the use that Mr Robertson proposes to make of this information is essentially defensive, although there is an aspect of offence in the potential defamation claim. Sixthly, the use he proposes to make of this information is at this stage limited to preparing his defence or, conceivably, a defamation claim, and does not involve, at least at this stage, dissemination to third parties (other than potentially a lawyer) or the deployment in open court of the material - although it may well be that such would be permitted in due course on a further application. Seventhly, even to that limited extent, Mr Robertson proposes to exclude from such utilisation information which might be sensitive to the plaintiff's business, as referred to in paragraph 4 of his motion. No submission was made on the part of the plaintiff that that exclusion should be any wider. Eighthly, as I have already foreshadowed, the voluntary nature of the information in question, being affidavits not pursuant to any compulsory disclosure regime, weighs heavily in favour of permitting its use. This material was prepared in expectation that it would be used in open court.
It is not possible to say at this stage that these documents, or any of them, will be highly important to Mr Robertson's defence if the contemplated proceedings against him ever materialise. But it is clear enough that they touch on some aspects of it and deal with some matters relevant to them, and at least have the potential to assist in the preparation of his defence.
The plaintiff submitted that there was a risk of misuse of the information by Mr Robertson. It pointed, first, to his demonstrable ability to identify readily documents in the plaintiff's possession which he had allegedly returned and no longer held. But Mr Robertson offered on affidavit an acceptable explanation for his ability to do so, and without either of the deponents being cross-examined on the question, it is impossible to resolve that issue any further.
The plaintiff also pointed to evidence of a witness to whom Mr Robertson allegedly admitted that he had retained copies of all the documents he had ostensibly returned. Mr Robertson denies any such admission, and points to circumstances which might be thought to make it improbable. Again, I cannot resolve that issue on this application one way or the other. But what I think I can comfortably resolve is that an order permitting use of the documents to the limited extent sought by Mr Robertson does not increase in the slightest any risk of misuse of the information beyond its current level.
Accordingly, in my view, Mr Robertson should be given leave to use the documents referred to in schedule A for the limited purposes for which he seeks. It follows that the Court will make orders substantially in accordance with paragraphs 1 and 2 of the plaintiff's motion, and 3 and 4 of the defendant's motion.
The Court, by consent, orders that:
1. Within seven days, the defendant shall, subject to order 2:
1. deliver any documents, whether in written or electronic form, containing information as to clients, modes of operation, pricing of services, details of suppliers, customers, and areas of operation of the plaintiff ("HAS Confidential Information") as remain in his possession, custody or control to the plaintiff;
2. destroy any copies of documents constituting HAS Confidential Information as remain within his possession, custody or control after compliance with order 1(a);
3. file and serve an affidavit deposing:
1. in respect of any of the documents constituting HAS Confidential Information as are no longer in his possession custody or control, a description of what became of such documents;
2. as to whether he emailed or otherwise showed or disclosed to any person copies, extracts or summaries of any documents constituting HAS Confidential Information, and, if so, particulars of such disclosure;
3. that no copies of the documents (electronic, in print or otherwise) remain within his possession, custody or control.
1. Order 1 shall not apply to:
1. documents or copies of documents provided by the plaintiff to the defendant in the context of these proceedings; or
2. documents used in evidence in these proceedings.
The Court further orders that:
1. The defendant and any legal representative of the defendant may use documents described in Schedule A, or information contained in those documents, for the purpose of:
1. complying with any obligation of the defendant to produce documents on subpoena and to make discovery and produce the discovered documents for inspection in any other proceedings which might arise out of the matters referred to in the letter dated 10 October 2014 from Cruz Enverga & Lucero to the defendant;
2. to prepare his defence and obtain advice in respect of those allegations and any proceedings which may arise out of them, and also to obtain advice in respect of and prepare any claim arising out of the allegations made against him in the letter of 23 October 2015 from Cruz Enverga & Lucero to the Civil Aviation Authority of the Philippines.
1. This order does not extend to permit the deployment of such information in evidence or to a third party other than a lawyer retained by the defendant except with the further leave of the Court.
2. In the event that the defendant provides the information referred to in this order to a lawyer for advice, the defendant must also provide to the lawyer at the same time a copy of this order.
3. Order 3 does not apply to information in respect of, or as to, clients, pricing of services, details of suppliers, customers, and areas of operation of the plaintiff.
[5]
SCHEDULE A
1. Affidavit of Barry Edward Jones sworn 23 December 2014.
2. Affidavit of Barry Edward Jones sworn 21 May 2015.
3. Affidavit of Barry Edward Jones sworn 9 October 2015.
4. Affidavit of Garry James Robertson sworn 10 February 2015.
5. Affidavit of Garry James Robertson sworn 5 March 2015.
6. Affidavit of Garry James Robertson sworn 16 March 2015.
7. Affidavit of Garry James Robertson sworn 19 June 2015.
8. Affidavit of Garry James Robertson sworn 5 August 2015.
9. Affidavit of Mervyn Mark Kanard sworn 8 October 2015.
10. Affidavit of Arlyn Ventura Permelona sworn 9 October 2015.
11. Affidavit of Alma R Asuncion sworn 8 October 2015.
12. Affidavit of James Garyth Robertson sworn 3 November 2015.
13. Such further affidavits as are served in the proceedings.
14. Open correspondence between Michael Burns (solicitor), Carneys Lawyers and the defendant.
The Court further orders that the plaintiff pay the defendant's costs of the motion.
The Court further orders that the proceedings be fixed for hearing before me commencing on 23 February 2016 with a three day estimate. The Court makes the usual order for hearing referred to in annexure 3 to Practice Note SC Eq 3, liberty to apply by arrangement with my associate in the event of any difficulty arising in the readying the matter for trial.
[6]
Amendments
22 September 2016 - Typographical errors at paragraphs [34], [35] and [38].
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.
Decision last updated: 22 September 2016