By Interlocutory Process filed on 31 March 2017 the Applicants, Mr Stephen Rockliff and Ms Michelle Rockliff, seek an order that they and their legal representatives and other partners and employees of the firm known as Rockliffs be released from any implied undertaking not to make use of information derived from proceedings in this Court, and documents referred to or produced in them in several schedules to the Interlocutory Process, so as to use such information and documents in other proceedings, Koonara Management v Rockliff & Anor in the Federal Court of Australia. They also seek an order that leave be granted to the Applicants to have access to the Court file in these proceedings, such access to include uplifting and copying documents, in respect of the relevant categories of documents. I propose to deal with the issues raised by this application at the level of principle, and it will be necessary for the parties, as events have developed, to bring in short minutes of order to give effect to my judgment.
The application is supported by three affidavits of Mr Snelgrove, the solicitor acting for the Applicants, dated 30 March 2017, 18 April 2017 and 19 April 2017. The first affidavit refers to an investment made by Mr Rockliff and Ms Rockliff in an investment scheme known as the Coonawarra Wine Grape Project, which was previously the subject of proceedings in this Court, in which Mr and Ms Rockliff and his firm acted as solicitors for the Plaintiffs. Mr Snelgrove sets out the history of proceedings in this Court, which were commenced in 2011 and ultimately settled in February 2016, immediately before a lengthy hearing was due to commence, and after a multitude of interlocutory applications, discovery disputes and disputes as to subpoenas and production of documents.
Mr Snelgrove refers to an application which was made in this Court, and was not successful, to join Mr Rockliff and Ms Rockliff as defendants to the proceedings in this Court, after they had been acting as solicitors for the Plaintiffs for a considerable time. That application was resolved on the basis that it was open to the Defendants in the proceedings in this Court to bring other proceedings against Mr and Ms Rockcliff, and they did so, initially in the Local Court and District Court of New South Wales, which have now been transferred to the Federal Court of Australia. Mr Snelgrove expresses the view, which does not appear to be contentious given the correspondence between the parties, that there is a substantial similarity and overlap of factual allegations and legal issues in the previous proceedings in this Court and the Federal Court proceedings against Mr and Ms Rockcliff. Similar statements are made in correspondence from the Respondents' solicitors, to which my attention has been drawn in the course of the evidence.
Mr Snelgrove's first affidavit identifies a number of bases on which Mr and Ms Rockliff seek access to the relevant documents. Mr Clarke, who appeared with Mr Hollo for the Applicants, put his submission on the primary basis, not that the particular documents sought to be accessed were necessarily relevant to the Federal Court proceedings, but instead that any assessment as to the relevance of those documents would itself require a release from the undertaking, before it could be undertaken. It seems to me that that recognised an important proposition, that may not have been sufficiently recognised in some of the correspondence between the parties to which my attention was drawn or, indeed, in Mr Stapleton's submissions for the Respondents, namely that much of the argument as to the detail of what is in issue in the Supreme Court proceedings has already drawn upon the parties' knowledge of documents that have been produced by compulsory process and of affidavits that have been served but not read in these proceedings. That emphasises a matter to which Mr Clarke draws attention, namely, that, irrespective of the relevance of particular matters in the Federal Court proceedings, the parties will almost inevitably give attention to the knowledge they already have of documents produced, and affidavits already served, in these proceedings, in determining what evidence they will draw upon in the Federal Court proceedings. The use of evidence in that way may itself involve an issue as to the compliance with the Harman undertaking, unless the leave that the Applicants seek is given to both parties.
The further affidavits of Mr Snelgrove dated 18 and 19 April 2017 deal with the views expressed by parties who have been given notice of this application, which appear to comprise all of the Plaintiffs in the Supreme Court proceedings, the Defendants in the Supreme Court proceedings, and a range of subpoenaed parties in the Supreme Court proceedings. The range of responses varies between no objection to the relief now sought by the Applicants, a failure to respond, a conditional objection by one party, subject to a condition which may not be satisfied, or neither consenting to nor opposing the relief which is sought.
Mr Clarke and Mr Hollo, who, as I have noted above, appear for the Applicants, made detailed submissions as to the applicable legal principles. They referred, in particular, to the nature of the implied undertaking, to which I have referred above, as the undertaking recognised in Harman v Secretary of State for Home Department [1983] 1 AC 280, and to the discussion of the scope of that undertaking by the plurality in the High Court of Australia in Hearne v Street [2008] HCA 36; (2008) 235 CLR 125. They also refer to a well-recognised exception to the implied undertaking, where affidavits or documents have been adduced into evidence, but point to a question, recognised by the Court of Appeal in British American Tobacco Australia Services Ltd v Cowell (No 2) [2003] VSCA 43; (2003) 8 VR 571 and more recently by Ward J (as her Honour then was) in Sapphire (SA) Pty Ltd v Barry Smith Grains Pty Ltd (in liq) [2011] NSWSC 1451 at [190]-[191] as to what is necessary for a document to be adduced in evidence. That issue may be uncertain, in particular, where the process that is often adopted in this Court that an affidavit will be "read" in a manner that does not disclose its content in open court. It seems to me that the Applicants are correct to recognise that it may be uncertain whether an affidavit read in that manner will be treated as having been read in open court, for the purposes of excluding it from a potential operation of the Harman undertaking. It is not necessary to determine that question in any final way, because any doubt as to that question can readily be addressed by release from the implied undertaking in an appropriate case.
The Applicants also refer to the circumstances in which a release may be granted from the undertaking, and to the observation in several cases, at least since the decision in Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217, that such a release may be granted where there are "special circumstances", involving a special feature of the case that affords a reason for modifying or releasing the undertaking that is not usually present. That test has been applied in many subsequent cases, including by the Full Court of the Federal Court in Liberty Funding Pty Ltd v Phoenix Capital Ltd [2005] FCAFC 3; (2005) 218 ALR 283 at [31], and I summarised the relevant authorities in Re Provident Capital Ltd (recs & mgrs apptd) (in liq) [2015] NSWSC 713 at [9]. I there noted that what would ordinarily be required is, not extraordinary factors, but simply that good reason be shown why, contrary to the usual position, the documents should be able to be used in other proceedings.
The Applicants in turn identify, in their submissions, the application to this case of several factors that have been recognised as relevant in the authorities. They note that the nature of the documents sought to be the released from the implied undertaking are, at least in part, affidavits prepared for use in the proceedings and documents annexed or exhibited to them, although documents are also sought which have been produced on discovery and subpoena in the proceedings. So far as the former class of documents is concerned, they indicate an anticipated use in the proceedings. So far as the latter category is concerned, there is stronger reason to order a release from the implied undertaking where, as in the proceedings in this Court, there were multiple disputes as to discovery and the production of documents. A decision not to release the implied undertaking and permit the use of those documents in the Federal Court proceedings would leave the parties and the Federal Court of Australia to the likely repetition of those disputes and the costs associated with them. The Applicants also refer to the circumstances in which the documents came into existence which, they point out, would ordinarily be transaction records or records of the relevant schemes, or records of financial dealings in connection with them.
The Applicants also refer to the attitude of the authors of relevant documents, a matter that has also been identified in the authorities, but is of limited relevance here, where many of those documents will be business records. I have noted above that the attitude of persons who have produced the documents has been addressed, by giving notice to them of the application, although they have indicated varied responses.
The Applicants also refer to the circumstances in which the documents came into the Applicants' possession as a relevant factor. In this case, the documents have come into the Applicants' possession as solicitors on the record in the proceedings in this Court, and those persons are now joined as Defendants in other proceedings in the Federal Court of Australia. In one respect, that is more rather than less reason to grant the release sought, where the Defendants would otherwise be in the position that they would have great difficulty in using much of the information that will almost inevitably be in their own minds, because that information has been derived from documents subject to the Harman undertaking in these proceedings. I will return to the particular complexities that arise from the existence of the solicitor-client relationship between the Plaintiffs in the Supreme Court and Mr Rockcliff and his wife below.
The Applicants also point to a factor identified in the case law, namely, the likely contribution of the documents to achieving justice in the other proceedings. It may well be that many of the documents, as Mr Stapleton points out, will not be relevant in other proceedings and therefore would not contribute to the delivery of justice in the other proceedings. However, the difficulty here is that the need for release from the implied undertaking arises at an anterior point, before documents are used in the other proceedings, when an assessment needs to be made as to their relevance or otherwise in the other proceedings, which can only be made by reference to the information which parties already have about them by reason of their participation in the Supreme Court proceedings. I would add that, in this case, as I have noted above, it seems to me that it is likely to be in the interests of justice, as well as in the interests of the parties, to avoid a repetition of the disputes as to discovery and document production which were experienced in the conduct of the proceedings in this Court.
The Respondents' position was put succinctly, in four paragraphs, in their submissions in response to the Applicants' application. Mr Stapleton somewhat expanded that position in oral submissions. The Respondents' initial position was that it was not appropriate to grant the relief sought by the Applicants, and that the Federal Court proceedings:
"should be fought on their own merits with the Applicants to this motion being compelled to issue subpoenas, notices to produce and having to justify orders for discovery based on arguments of relevance to the pleadings."
The proposition that the Federal Court proceedings should be fought on their own merits could hardly be disputed. The proposition that those merits would be promoted by the issue of further subpoenas, notices to produce and orders for discovery in those proceedings does not follow. The first difficulty is that it invites the parties to incur further costs which have already been incurred in the conduct of these proceedings in this Court. The second and more fundamental difficulty with it is that, in fact, both parties would face the difficulty that their decisions whether to issue subpoenas, notices to produce and what discovery to seek would inevitably draw upon the knowledge they have from documents which are subject to the implied undertaking in these proceedings. That difficult is real, whether or not it is recognised squarely. The Respondents also point out, and it is common ground, that any release from the implied undertaking should apply to both parties, and that must be the case where both parties face the same difficulty in this respect.
With that background, there is a need to consider the position separately as to the particular categories as to which release from the orders for production is sought. The first category of documents for which release from the implied undertaking is sought is, in Schedule 1, paragraphs 1-22, various affidavits which it appears have been read at interlocutory hearings in the proceedings in this Court. Mr Stapleton submits that the content of those affidavits is unlikely to be relevant in the Federal Court proceedings, and that submission may have considerable weight. Having said that, it seems to me that it is likely that the parties will wish to consider what were the issues that arose in the conduct of the similar proceedings in this Court, in conducting the proceedings in the Federal Court, and an obvious way in which to do so would be to draw on their recollection of events that were determined in interlocutory proceedings in this Court. It seems to me that, in doing so, they are likely, consciously or unconsciously, to draw upon their recollection of these affidavits, and that it is preferable that that be done in a way that does not involve a potential breach of the Harman undertaking. I am persuaded that special circumstances exist, having regard to the scale of the proceedings in this Court and their overlap with the proceedings in the Federal Court, and the interests of justice, for the parties to be released from the implied undertaking in respect of those affidavits, to permit them at least to be reviewed for the purposes of the Federal Court proceedings. It plainly does not follow that all, or any, will be read, or tendered, or otherwise used in the Federal Court proceedings, and it will be in the interests of all parties and the community if many of the interlocutory disputes which they record never have to be repeated.
The second Schedule of documents needs to be divided into two parts. Items 1-50 of that Schedule record affidavits of the Plaintiffs in the proceedings in the Supreme Court of New South Wales. It will be recalled that there were several individual plaintiffs in these proceedings, who were represented by Mr Rockliff and Ms Rockliff and their firm. It is not immediately apparent that those affidavits, so far as they may turn upon the individual circumstances of the Plaintiffs, would be relevant in the Federal Court proceedings, so far as the latter turn on the individual circumstances of Mr Rockliff and Ms Rockliff. However, as Mr Clarke points out, it is also possible that those affidavits deal with matters in respect of the conduct of the Coonawarra Wine Grape Project more generally, or exhibit documents in relation to that Project more generally, and are relevant to matters that are in issue in the Federal Court proceedings as to the Project more generally.
It seems to me that particular caution needs to be exercised in respect of the dealings with those affidavits. First, it is possible that those affidavits at least have relative confidentiality, notwithstanding that they may have been served on the Defendants, but have not been made available to the world in general. To the extent that those affidavits continue to have confidentiality, then Mr Rockliff, Ms Rockliff and their firm are bound by a continued duty of confidentiality to the Plaintiffs in these proceedings, their former clients, in respect of them, notwithstanding that any fiduciary obligation they owed to their clients would terminate when their retainer was terminated. Although the Plaintiffs in this proceeding have been given notice of this application, it appears that they have not been asked whether they wish to release confidentiality in their affidavits, still less have they have been advised as to the potential consequences of release of confidentiality, including the possibility that their personal affairs may be canvassed in Federal Court proceedings if they are potentially relevant in those proceedings. It seems to me that it may also be difficult to obtain the plaintiffs' consent, or at least their informed consent, to the use of their affidavits in the proceedings, without a clearer identification of what information from those affidavits is to be used in the proceedings and in what manner.
Mr Clarke points out, however, that the fundamental difficulty is that an analysis of how those affidavits or their contents would, or would not, be relevant in the Federal Court proceedings itself requires the use of the affidavits, which would have to be reviewed in order to determine whether they are relevant to the Federal Court proceedings, and whether consent should be sought from the Plaintiffs to their use in those proceedings, notwithstanding any confidentiality that may subsist in the affidavits. It seems to me that the proper course, in those circumstances, is to give narrower relief than that which was sought by the Plaintiffs in respect of the affidavits in paragraphs 1-50 of Schedule 2, so far as both parties should be released from the implied undertaking in respect of those affidavits, to the extent that may be necessary to identify any relevance of those affidavits in the Federal Court proceedings, and take any steps, including seeking consent, waiver of confidentiality, or applying for a release from the implied undertaking which may be necessary to use those affidavits or their exhibits in the Federal Court proceedings. Again, it does not follow from that order that those affidavits will in fact be relevant in the Federal Court proceedings, both because no application to use them may ever be made and, if it is made, it may not be granted and, finally, the Federal Court may not ultimately permit such affidavits to be read or tendered or otherwise used in the Federal Court proceedings.
It seems to me that items 51-70 in Schedule 2 do not raise a similar difficulty. So far as the affidavits of Mr Reschke are concerned, the Respondents in this application have already advised the Federal Court that they do not seek to rely on the Harman undertaking to seek to prevent the use of those affidavits in the Federal Court proceedings and, appropriately, Mr Stapleton adopted the same position in this Court. So far as the affidavits of other Defendants are concerned, Mr Stapleton submits that they are not parties to the proceedings in the Federal Court, but that does not seem to me to be to the point. To the extent that their evidence has been led in these proceedings, notwithstanding that their affidavits may not yet have been read, it is already known to Mr Rockliff and Ms Rockliff, and will be part of the stock of knowledge with which they approach the Federal Court proceedings. Again, the risk of unconscious use of the material contained in those affidavits is significant, and the difficulty of separating what is contained in them from the other knowledge of Mr Rockliff and Ms Rockliff would be substantial. That matter is properly addressed, in my view, by granting a release from the implied undertaking so that Mr Rockliff and Ms Rockliff, and indeed the principals of the Respondents in this application, are not put in the impossible position where they have to separate the stock of knowledge which they have generally from the particular knowledge which they have by reason of those affidavits.
So far as subpoenaed material and notices to produce are concerned, and so far as discovered documents are concerned, which are listed in Schedules 3 and 4 of the Interlocutory Process, it seems to me that the position is to be resolved by the principles to which I referred above. Again, the Respondents do not resist the use of documents produced, for example, by Mr Reschke or other entities associated with him, but point to the fact that some categories of documents have been produced by third parties, who have been given notice of this application and none of whom have appeared to oppose the orders sought. These do not involve the particular difficulties which arise in respect of access to the Plaintiffs' affidavits to which I have referred above. It seems to me that special circumstances exist, in respect of the scale of the proceedings in this Court, their overlap with the Federal Court, and the extent of difficulty which arose in respect of production of documents in this Court, that warrant the orders sought in respect of documents produced on subpoena, notice to produce and discovery. To put that proposition another way, it can scarcely be in the interests of justice that the parties would now repeat, in the Federal Court proceedings, in respect of a claim for a smaller amount, the range of interlocutory disputes which were conducted in this Court in respect of the production of documents.
Finally, release from the implied undertaking is sought, so far as this Court caused to be produced, in this Court, the files of various proceedings in other Courts, particularly South Australian Courts, in respect of other matters associated with the Coonawarra Wine Grape Project. It appears that the Applicants were not party to any of those proceedings, although they acted as solicitors for parties to three of those proceedings. It seems to me that the documents contained in those Court files are analogous to subpoenaed documents, or discovered documents, although the process of subpoena was obviously not adopted, where the documents were produced by other Courts. For the same reasons I have indicated as in respect of discovered and subpoenaed documents, it seems to me that special circumstances exist to warrant the order for release from the implied undertaking, and again that it would not be in the interests of justice that either of the parties should be put to the costs of requiring production, for a second time, in the Federal Court of Australia, of documents that have already been produced in these proceedings in this Court.
For these reasons, the Applicants should have substantially the relief sought in the Interlocutory Process, but qualified by the more limited relief that I have indicated in respect of paragraphs 1-50 of Schedule 2 of the Interlocutory Process. The parties should bring in agreed short minutes of order to give effect to this judgment, within 14 days. I will hear the parties as to costs, to the extent that they seek to be heard.
[3]
Costs
I have heard the parties in respect of the costs of this application which raise issues that are unusual. The costs of an application in this Court are, in the ordinary course, in the discretion of the Court, albeit that discretion is to be exercised judicially, and in a manner that will ordinarily provide for costs to follow the event. There is a qualification to that proposition, so far as a party who seeks leave to take a particular course, as the Applicants here do, may on occasion be ordered to pay the other parties' costs, or there may be no order as to costs.
In this case, the manner in which the application has developed has raised issues of particular difficulty. The Applicants, as I noted above, sought an order that they be released from the implied undertaking, as to which they have been substantially successful. The Respondents opposed that order, in short form in written submissions, and in a somewhat more expanded and nuanced manner in oral submissions, while nonetheless contending that, if the order was made, they should obtain the benefit of it. As Mr Clarke points out, aspects of that opposition were perverse, because the difficulties which the Applicants faced were equally faced by the Respondents, so far as all parties, in the Federal Court proceedings as they are now constituted, would inevitably have to draw upon their knowledge of documents produced in and evidence led in these proceedings, and indeed could not conceivably exclude that knowledge from their minds.
The Respondents in turn submit that the only reason this difficulty arises is because the Applicants have brought a Cross-Claim in the Federal Court proceedings which, it appears, raises wider issues than the Respondents' claim in the Federal Court, so far as that is a claim for money allegedly lent to the Applicants as part of the relevant scheme. There seem to me to be two difficulties with that proposition. The first is that that, as Mr Clarke points out, there is a Defence to the claim brought in the Federal Court proceedings which also raises issues as to the application of the scheme. The second is, it seems to me, that whether the fact that Cross-Claim raises those issues can be said to warrant any order for costs against the Applicants would depend, in part, upon its outcome. In particular, if the Cross-Claim is ultimately successful, then there can be no criticism of the Applicants in this matter for having brought it, so as to defend against a liability that is raised by the claim against them. That is only a matter for criticism if it is assumed in the Respondents' favour, in this application, that the Cross-Claim will ultimately fail.
These matters lead to difficulty as to costs. The Applicants' position is that the Respondents should pay at least half of their costs, and potentially more than half of their costs, in circumstances that they both needed to seek the same relief, and will benefit from that relief. They submit that more than half of those costs is justified, where, as well as needing the same relief, the Respondents in effect opposed the relief that both the Applicants and they needed. The Respondents' position is that there should be no order as to costs, reflecting the fact that this was an application for relief required by the Applicants, as well as that, as Mr Stapleton fairly points out, the Respondents' involvement will ultimately have added little to the overall costs of the application, so far as the Respondents led no evidence and Mr Stapleton's submissions were relatively short. That may, however, in turn oversimplify the matter. The Applicants were today represented by both Senior and Junior Counsel, and the ordinary course would suggest that that may not have been necessary, if there had been no opposition, however brief, to the application.
On balance, it seems to me that this is an unusual, and possibly unique, case. I must do the best to exercise my discretion, judicially, so as to promote the interests of justice and bring about a result that is appropriate, having regard to the parties' respective roles in the application. It seems to me that the parties' respective roles would not appropriately be reflected by an order that there be no order as to costs, in circumstances that the Respondents have, as I have observed, both benefitted from the relief sought, which they in fact required, and at the same time opposed it, and put the Applicants to greater risk in seeking it, and potentially to further costs in obtaining it, both by the time spent in contested submissions and potentially by the need for Senior Counsel to appear.
It seems to me that, in those circumstances, there is reason to order that the Respondents pay part of the Applicants' costs of the application, in the unusual circumstances which exist. It seems to me that an order which I had contemplated, and raised by the parties, that the costs be the Applicants' costs in the cause in the Federal Court proceedings would not do justice between the parties, not least because the outcome of such an order would not be known until the Federal Court proceedings are determined, sometime in the future. On balance, weighing the competing considerations to which I have referred above, it seems to me that the proper order in the present case is that the Respondents pay half of the Applicants' costs of the application, as agreed or as assessed. I do not need to make an order that those costs be payable forthwith, although they are in fact payable forthwith, because this is a discrete application in these proceedings rather than part of ongoing proceedings in this Court.
[4]
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Decision last updated: 12 May 2017