MURRAY RIVERSIDE PTY LTD -v- TOSCANA (WA) RAVENSWOOD ESTATE PTY LTD [2022] WASCA 67 (10 June 2022)

4 When the appellant's solicitors realised that there had been, or may have been, a breach of the Harman obligation, the appellant applied for leave to be released from those obligations, including retrospectively. The first, second and third respondents applied to dismiss the primary proceedings as an abuse of process.

5 The master rejected the appellant's application for leave. He held that oral conferral was required and had not occurred and that, on that basis alone, the application must fail. The master then proceeded to consider aspects of the merits of the application, before concluding that the application should be dismissed. The master also concluded that the primary proceedings should be dismissed as an abuse of process.

7 Grounds 1 and 2 contend that the master should not have dismissed the appellant's application on the basis of the absence of oral conferral. Grounds 3 and 4 contend that the master failed to determine the critical question of whether there were special circumstances justifying the appellant being released from the Harman obligation and instead focused on whether there was a 'reasonable relation' between the Westpac proceedings and the primary proceedings. Ground 5 contends that the master failed to give adequate reasons for the decision to dismiss the primary proceedings as an abuse of process.

8 For the reasons that follow, the appellant has established all of its grounds of appeal. The appeal should be upheld and orders should be made in substance granting the appellant's application in the terms sought by it.

9 The following background facts were not in dispute.

10 Mr Palaniappan is the director of the appellant. On 1 July 2011, the appellant entered into facility agreements with St George Bank (a division of Westpac), comprising a loan facility and overdraft facility (the Facilities).[2]

11 The Facilities were secured by a personal guarantee and indemnity provided by Mr Palaniappan and mortgages over the appellant's real property in Pinjarra (the Pinjarra Properties).[3]

12 During 2011 and 2012, the appellant defaulted on its repayment obligations, leading to the appointment in July 2012 of receivers by Westpac over the Pinjarra Properties.[4]

13 The receivers appointed the first and second defendants in the primary proceedings, namely Garland Nominees (1855) Pty Ltd and Arthur John Garland (the Agents), as the selling agent to market and sell the appellant's Pinjarra Properties. The Agents communicated to the receivers an estimate of a sale price between $50 million and $60 million.

14 Ultimately, the properties were sold to the first and second respondents for a combined purchase price of $13.1 million which was insufficient to satisfy the total amount owing to Westpac under the Facilities. The third respondent controls the first and second respondents.

15 In March 2014, Westpac commenced the Westpac proceedings against Mr Palaniappan to enforce the terms of the guarantee and indemnity and recover the outstanding balance. On 18 December 2014, Westpac applied for and obtained summary judgment in the Westpac proceedings. On 7 August 2015, partial judgment was entered in favour of Westpac.

16 In February 2016 and May 2016, subpoenas were issued on behalf of Mr Palaniappan to the first respondent (Toscana) and to Mr Edward Turner, and documents were produced under them.[5]

17 The Westpac proceedings were settled between Westpac and Mr Palaniappan in December 2018, with orders made dismissing the proceedings in January 2019.[6]

18 In the primary proceedings, the appellant claimed against the Agents that they disclosed certain confidential information to the first to fourth respondents in connection with the sale of the Pinjarra Properties, such disclosure being in breach of fiduciary and equitable obligations. The appellant claimed against the first to fourth respondents that they knowingly received the confidential information and used it for their commercial benefit.

19 The appellant has discontinued the action against the Agents because of the terms of the settlement with Westpac in the Westpac proceedings.

20 In essence, the appellant's case in the primary proceedings against the remaining defendants, namely the first to fourth respondents, is that they were given confidential information about the amount that Westpac would have been prepared to accept for the properties and that, but for that disclosure which they knew to be in breach of confidence, the Pinjarra Properties would have sold for substantially greater amounts.

21 On 24 September 2019, the appellant issued a chamber summons seeking leave for Mr Palaniappan nunc pro tunc, that is retrospectively, to be released from the Harman obligation in relation to the documents listed in the schedule, so as to be permitted to use the documents for the purpose of providing them to the appellant for use by it in the primary proceedings.

22 The schedule to the chamber summons comprised three parts. The first part listed documents said to have been produced by Westpac on discovery in the Westpac proceedings. The second and third categories related to documents produced pursuant to the subpoenas issued in the Westpac proceedings to Toscana and to Mr Turner, referred to in [16] above.

23 In support of the application, the appellant relied upon an affidavit of Mr Palaniappan and the four affidavits of its solicitor, Mr Ebbs. The master summarised the effect of the affidavits, in terms not challenged on appeal, as follows:[7]

(1) Mr Ebbs formed the view the plaintiff may have a claim against the defendants. Advice was sought from Senior Counsel, Mr Penglis SC. Mr Penglis SC was provided with a brief containing a large number of documents. Included in those documents were the documents set out in Schedule 'A' to the plaintiff's chamber summons.

(2) Mr Penglis SC, in preparing his advice, considered only four documents which are listed in pt 2 of Schedule 'A'.

(3) The breach of the implied undertaking was occasioned by inadvertence on the part of the plaintiff's solicitor in particular by Mr Ebbs in his capacity as the solicitor or [sic] having conduct of the action.

(4) Mr Palaniappan was unaware of the breach of the undertaking.

(5) A draft statement of claim has been prepared and in the preparation of that draft, reference has been made to documents the subject of the implied undertaking.

24 Both applications came before the master at a special appointment on 15 January 2020. Following argument, orders were made granting leave to, and ordering, the appellant to provide to the first to fourth respondents, and to Westpac, the documents the subject of the application for leave. The application was adjourned.

25 Following compliance with those orders, the application was heard on 18 August 2020.

26 After setting out the nature of the application and other relevant background, the master identified the general principles on which the parties were agreed. The master expressed those principles in the following terms:[8]

... First, all parties accepted that documents produced in legal proceedings are subject to the substantive obligation such that they cannot be used for any collateral or ulterior purpose without leave: See Hearne v Street [2008] HCA 36; (2008) 235 CLR 125. The primary person bound by the substantive obligation is the litigant who receives the information or documents but it extends to any other party to whom information or documents are given. Only the court can release a party from the obligation in appropriate circumstances, irrespective of whether the producing party has consented. The court's power to release or modify the obligation is not freely exercised nor is it an easy matter to secure the court's indulgence. There is no 'hard and fast test' but ultimately good reason must be shown which involves a fact specific evaluation. 'Special circumstances' must exist and the modification or release must not occasion injustice.

In Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1998) 38 FCR 217, 693 Wilcox J said:

For 'special circumstances' to exist it is enough that there is a special feature of the case which affords a reason for modifying and releasing the undertaking and is not usually present. The matter then becomes one of the proper exercise of the court's discretion, many factors being relevant. It is neither possible nor desirable to propound an exhaustive list of those factors.

Wilcox J thereafter expressed the view that the relevant factors for consideration include the following:

(a) the nature of the document;

(b) the circumstances under which it came into existence;

(c) the attitude of the author of the document;

(d) any prejudice the author of the document may sustain;

(e) whether the document pre-existed litigation or was created for that purpose and therefore expected to enter the public domain;

(f) the nature of the information in the document (in particular, whether it contains personal data or commercially sensitive information);

(g) the circumstances in which the document came into the hands of the applicant for leave; and

(h) the likely contribution of the document to achieving justice in the second proceeding (which factor was described by his Honour as 'perhaps most important of all').

27 In light of the ground of appeal asserting the absence of adequate reasons, we will outline the steps in the master's reasons in some detail.

28 The master observed that it did not appear to be in dispute that if the action was struck out as an abuse of process the appellant would be at liberty to issue a fresh proceeding. However, in that event, the defendants to the proceedings may have available to them a limitation defence that would not exist in the primary proceedings. Both parties accepted that this was a relevant consideration.[9]

29 The master adopted the appellant's counsel's summary of the six issues between the parties, in the following terms:[10]

(1) Had the plaintiff complied with O 59 r 9 of the Rules of the Supreme Court 1971 (WA);

(2) is there a relevant or close connection between the matters the subject of these proceedings and the Westpac proceedings;

(3) are there special circumstances warranting the grant of leave to use the documents [nunc] pro tunc;

(4) is the importance of the documents to the plaintiff such that the justice of the matter requires leave to be given for their use;

(5) if leave is given [nunc] pro tunc, will that deprive the defendants of a limitation defence they might otherwise have; and

(6) could a party accessing the court record effectively have access to the documents by reading the pleading.

30 The master observed that some of those issues could be put to one side. He observed that the question of whether there were special circumstances requiring the grant of leave nunc pro tunc and the limitation issues were closely aligned, referring to his earlier comments on the latter issue. The master observed that the sixth issue could be dealt with by an order restricting public access to the pleadings.[11]

31 The master then turned to the first issue, namely that of conferral. The master noted the appellant's counsel's concession that there had been no oral conferral and that no waiver of conferral had been sought. The master observed that oral conferral must take place before an application is brought. In the absence of that happening and in the absence of an order waiving the requirement, the master said that the application must fail.[12] The master then concluded that:[13]

There was no conferral on this application and there is no basis upon which the failure to confer can be waived. On that basis alone, this application must fail. It is, however, appropriate to consider all issues raised at the hearing.

32 The master next turned to the second identified issue, namely whether there was a relevant or close connection between the matters the subject of the primary proceedings and the Westpac proceedings. The master found that 'on balance' he was not satisfied that the primary proceedings bore a 'reasonable relation' to the Westpac proceedings.[14] He explained that conclusion by reference to the decision in Mann v Medical Defence Union Ltd.[15] The master emphasised that the defendants in the primary proceedings were not parties to the Westpac proceedings, finding that there was 'simply too much distance' between the cause of action in the primary proceedings and the cause of action in the Westpac proceedings.[16]

33 The master then turned to the third and fourth issues. After observing that it was difficult to evaluate how important the use of the documents in question was to the appellant, he observed that this was perhaps best evaluated by noting (i) that the appellant had thought it necessary to use them in the course of preparing the case, and (ii) that the application had been pursued. The master found that, without examining the point in any detail, it was 'possible to say it is a matter which falls in the [appellant's] favour'.[17]

34 On the face of it, although the master observed at the outset that he was considering the third and fourth issue, the master's findings and reasoning appear to relate only to the fourth issue. We will return to this point.

35 The master turned, finally, to the question of whether it was appropriate for the appellant to have made the application in the primary proceedings rather than in the Westpac proceedings. The master found that given that the Westpac proceedings had been terminated, the procedural approach adopted by the appellant was appropriate.[18]

36 The master then concluded in the following terms:[19]

The [appellant's] application will be dismissed. I will make the orders sought by the [first to third respondents]. Parties ought confer as to the form of orders as to costs. If agreement cannot be reached, parties ought file competing minutes of proposed orders within seven (7) days.

37 The appellant advances five grounds of appeal, in the following terms:

1 The learned Master erred in law in concluding that oral conferral must always occur before an application is made (Master's reasons of 8 Oct 2020 (J) [25]); erred in fact and law in concluding that there was no conferral (J [26]); and erred in fact and law in concluding that the requirement to confer could not be waived in this case (J [26]), in circumstances where there was no oral conferral because the first, second and third respondents' solicitors asserted that oral conferral was pointless until they had been provided all of the documents obtained by the appellant in CIV 1307 of 2014 (Westpac Proceedings).

2 The learned Master:

2.1 erred in fact and law in dismissing the appellant's action in CIV 2247 of 2018 (2018 action) on the application of the first, second and third respondents (despite his finding that there had been no conferral); and

2.2 (if there had been no conferral or insufficient conferral) erred in fact and law, by:

2.2.1 not ordering (only) the dismissal of the appellant's application for leave nunc pro tunc to be released from the appellant's substantive obligation (Harman obligation) not to use documents obtained by the appellant in the Westpac Proceedings (thereby permitting the appellant to apply again for such leave following appropriate conferral); and/or

2.2.2 not ordering (only) the legal representatives (who had not sufficiently conferred) pay the costs occasioned thereby.

3 The learned Master erred in fact and law in failing to determine whether, in the circumstances of this case, there were 'special circumstances' (namely, whether in all of the circumstances, the use of the documents for the 2018 action was reasonably required to do justice between the parties and there was no relevant prejudice to the respondents) and in failing to conclude that, in the circumstances of this case, the appellant should be given leave nunc pro tunc to be released from the appellant's Harman obligation not to use documents obtained by the appellant in the Westpac Proceedings for the purposes of the 2018 action.

4 The learned Master erred in fact and law (J [27]-[32]) in, instead, determining whether there was a "reasonable relation" between the Westpac Proceedings and the appellant's 2018 action by misapplying the approach in Arnold Mann v Medical Defence Union Ltd [1997] FCA 45 (where Ryan J determined whether the use of a discovered document to found a new defamation claim was a collateral use in breach of the substantive Harman obligation and then separately considered whether there were 'special circumstances' to permit the use of the document).

5 The learned Master erred in law in failing to give adequate reasons for his decision to dismiss the appellant's 2018 action as an abuse of process: J [33], [35].

38 The fourth respondent has taken no part in the appeal. Hereafter, we will refer to the first to third respondents as 'the respondents'.

39 The respondents advanced a notice of contention in the following terms:

1. If, on the proper construction of the Reasons as a whole, contrary to the submissions in this answer (Submissions), the learned Master did not find that special circumstances sufficient to uphold the appellant's application (Special Circumstances) were not established, for the reasons detailed in the Submissions, Special Circumstances were not established.

2. The breach by the appellant of the [Harman] Obligation ... and the lack of Special Circumstances should have both been found by the learned Master because:

2.1. the set-off pleaded and relied on in the Westpac proceedings was liable to be struck out because it was inconsistent with the established elements of an equitable set-off; and

2.2. further or alternatively, inadvertence was not a reason to find:

2.2.1. there was not a breach of the [Harman] Obligation for the reasons detailed in para 16 of the Submissions; and

2.2.2. further or alternatively, Special Circumstances were established because:

2.2.2.1. precisely who had been inadvertent, how that inadvertence occurred and how and when the breach of the [Harman] Obligation were ascertained was not the subject of evidence by the appellant beyond a very general assertion of inadvertence by an unidentified person or persons; and

2.2.2.2 there was evidence that senior counsel who advised on commencing the action was in possession of a document making clear that documents relied on for the proposed proceedings were obtained under subpoena in the Westpac proceedings.

40 The appellant's principal submissions in support of grounds 1 and 2 were to the following effect:

(1) Order 59 r 9 of the Rules of the Supreme Court 1971 (WA) does not expressly require oral conferral and nor, on a proper construction of the rule, is it always necessary. Sometimes there may be good reason why oral conferral does not occur.

(2) The requirement to confer may be waived by the court for urgency or other good reason. Other good reasons include where the history of the matter makes it most unlikely that any agreement would have been reached or otherwise nothing would be achieved by compliance with the rules.

(3) The master erred in finding that there was no conferral in circumstances where:

(a) on 9 and 11 September 2019, the appellant's solicitors sought to confer with the respondents' solicitors by telephone and by email;

(b) on 11 September 2019, the respondents' solicitors declined the invitation to confer further and repeated their position that they would not confer unless and until they saw the documents that would be the subject of the application; and

(c) the absence of oral conferral was in part due to the position taken by the respondents' solicitors.

(4) In circumstances where there was an impasse about whether oral conferral had utility and where, after the hearing on 15 January 2020, the documents had been provided and it was clear that whether leave should be granted had been joined as an issue, the master should have waived any requirement for further conferral.

(5) Further, absence of conferral was not a basis for the dismissal of the primary proceedings.

(6) Any failure of conferral was the responsibility of the appellant's lawyers and should not have led to the appellant being, in effect, punished by the orders made by the master.

41 The respondents' principal submissions may be summarised as follows:

(1) The reason for the absence of oral conferral was the appellant's refusal to provide the respondents with copies of the documents on the basis that to do so would breach the undertaking. That assertion was wrong and misconceived. That was sole cause of the absence of conferral.

(2) The master was correct to find there was no basis to waive the failure to confer and that it could not be inferred that oral conferral would have failed to achieve its purpose of resolving or narrowing the scope of issues.

Grounds 1 and 2: absence of conferral - disposition

42 For the reasons that follow, in our respectful opinion, the master erred in dismissing the appellant's application on the basis of the appellant's failure to confer.

43 We do so essentially for the reasons advanced in the appellant's submissions summarised in [40(2) to (6)] above.

44 In order to explain our conclusion, it is necessary to outline the course of communications between the parties' solicitors.

45 By letter to the respondents' solicitors sent by email on 9 September 2019, the appellant's solicitor identified documents in Mr Palaniappan's possession for which leave would be required in order for them to be used in the primary proceedings. The letter also identified that the documents came into Mr Palaniappan's possession in the course of the Westpac proceedings. The letter asked whether the respondents would voluntarily produce the documents for use in the primary proceedings and thereby avoid the need for the leave application. Alternatively, the letter requested information as to whether the respondents would oppose the leave application.

46 Later that day, at 4.06 pm, the respondents' solicitor emailed the appellant's solicitor in response requesting (i) a draft of the statement of claim, (ii) copies of all the documents said to have been provided by the respondent pursuant to subpoena and (iii) detailed grounds in support of the leave application.[20] At 4.40 pm that day the appellant's solicitor responded, saying they could not provide a copy of the statement of claim as it could not be finalised until the question of leave had been determined; they could not provide the documents without leave of the court; and that a copy of the finalised application would be provided when it was filed.[21]

47 At 5.35 pm on 9 September 2019, the respondents' solicitor emailed the appellant's solicitor. The email:

(1) asserted that neither the appellant's letter nor email of that day enabled the respondents' solicitors to proper assess and seek instructions from their client; and

(2) asserted that the appellant's unwillingness to advise as to the grounds and evidence in support of the application constituted a failure to properly confer which would be relied on in any application.

48 Thus, within an hour of receipt of the appellant's email of 4.40 pm, and without any attempt to speak by telephone, the respondents were asserting a failure to confer that would be relied on at the hearing of the application. This is, to say the least, regrettable. It should go without saying that the object of O 59 r 9 is for parties to engage in constructive discussion, not to seek an opportunity to assert, and weaponise, an alleged failure to confer.

49 At 5.41 pm on 9 September 2019, the appellant's solicitor emailed again, saying that they had provided the respondents' solicitor with a list of the relevant documents in the possession of the appellant and had outlined the proposed application, observing that it was unclear what further information was required. In the email, the appellant's solicitor said that he did not accept there had been a failure to confer in circumstances where conferring was ongoing. He concluded by saying he was more than happy to confer over the phone or in person if that would assist the respondents' solicitor to better understand the appellant's solicitor's position.[22]

50 There was no evidence of a response to the appellant's solicitor's email of 5.41 pm on 9 September 2019.

51 On 11 September 2019, at 9.56 am, the appellant's solicitor emailed the respondents' solicitor, asking whether he was available to confer that day.

52 At 11.48 am, the respondents' solicitor replied by email. In that email, the respondents' solicitor:

(1) asserted that the appellant was unwilling to advise why it asserted there are special circumstances warranting a release of the Harman obligation;

(2) repeated the respondents' position that unless and until they had sufficient information as to the documents for which release is sought, namely an affidavit annexing copies of all relevant documents, and the precise scope of the proposed claim, together with why the appellant said the court ought to grant a release from the undertaking, the respondents were unable to properly consider whether to consent to any such request;

(3) asserted that the implied undertaking did not prevent the appellant from providing the above information for the purpose of conferral (but gave no reasons for that assertion);

(4) asserted that the appellant's contention that correspondence to date constituted proper conferral was 'risible'.

53 Three minutes later, at 11.51 am, the appellant's solicitor emailed the respondent's solicitor, again inquiring whether the respondents' solicitor was available to confer on that day.[23]

54 At 12.05 pm, the respondents' solicitor sent a further email repeating that they were not in a position to meaningly confer until they received the materials they had sought. The email stated that the appellant's solicitor's invitation to confer about a matter which the respondents said they could not meaningly confer without the requested material 'is a disingenuous invitation for us to waste time repeating what is stated in detail [in the 11.48 am email]'.

55 Very shortly thereafter, and not surprisingly, the appellant's solicitor sent an email taking exception to the terms in which the respondents' solicitor's emails were expressed. In a later email, with a degree of understatement, the appellant's solicitor described the comments as 'unhelpful'.[24] It should not need to be said that inflammatory and pejorative language such 'risible' and 'disingenuous' is antithetical to genuine and constructive engagement in the process of conferral. Regrettably, when, during the above email exchange, this was, in effect, pointed out to the respondents' solicitors, they responded that the senior practitioner responsible for that language considered 'and still considered' that it was 'appropriate and justified'.

56 As should be well understood, ordinarily at least, discharge of the obligation to confer will require oral communication. That is because, as we observed above, the object of the rule is to promote constructive discussion. As Martin CJ observed more than 15 years ago, the 'exchange of furious correspondence' is not meaningful conferral.[25] Nor is it consistent with the object of the rule for a party's solicitors to seek to unilaterally impose conditions on the other party's solicitors before they are prepared to engage in any discussion.

57 On appeal, the respondents assert the legal correctness of the position they adopted in conferral, namely that the implied undertaking did not prevent the appellant's solicitors from disclosing the documents for the purposes of conferral. The respondents describe the appellant's position in this respect as misconceived. That response misses the point of conferral. One of the purposes and effects of conferral can be to dispel a misconception on the part of one of the parties. What is significant for present purposes is that the respondents' solicitors made no attempt to speak to the appellant's solicitor to explain their position to the appellant's solicitor, and rebuffed the repeated requests by the appellant's solicitor to confer. The respondent's solicitors acted in this manner despite having given no explanation of the basis on which they asserted that the implied undertaking did not prevent the appellant's solicitors providing the requested information for the purposes of conferral.

58 In these circumstances, in our view, responsibility for the breakdown in communication and absence of proper conferral lay more with the respondents' solicitors than with the appellant's solicitor. By placing conditions upon their preparedness to speak with the appellant's solicitors and by responding to their concerns in meeting those conditions with invective, the respondents' solicitors adopted a posture that hindered, rather than promoted, the objects of O 59 r 9.

59 That being so, in our opinion, it was not open, on any reasonable exercise of discretion, to dismiss the application on the basis of the absence of conferral. To the extent there had been a failure to confer, the failure should have been waived.

60 Moreover, that conclusion is reinforced by the circumstance that, by the time that the application was heard in August 2020, the documents had been provided and the parties' respective positions had become clear, namely that issue had been joined. What could have been achieved by further conferral at that point is not apparent. To the extent there had been a failure to confer, the practical effect of the failure was that the parties and the court were involved in a hearing on 15 January 2020 that might potentially have been avoided (or shortened). At its highest, that might have justified an appropriate costs order. It was, however, in the circumstances we have described, unreasonable and plainly unjust that it resulted in the dismissal of the appellant's application for failure to confer.

61 For these reasons, we would uphold grounds 1 and 2.

Grounds 3 and 4: whether the master erred in refusing to grant leave

62 The parties advanced competing submissions concerning the principles governing the grant of leave to rely on documents the subject of the Harman obligation. We will say more about those submissions in the course of explaining the applicable legal principles.

63 In support of ground 3, the appellant submits that justice is best achieved by the grant of leave to use the documents for the limited purpose of pursuing the primary proceedings, taking into account the following matters and for the following reasons:

(1) The documents, which have been used for the purpose of bringing the primary proceedings, show that during a meeting on or about 7 December 2011 between Messrs Garland, Letari, Zohar and Turner, Mr Garland disclosed to Mr Letari confidential information as to the lowest price Westpac would likely accept for the Pinjarra Properties. These documents were important in the formulation of the claim against the respondents in the primary proceedings. They are not commercially sensitive and the nature of the information in them is not highly confidential or personal.

(2) The documents would be discoverable in the primary proceedings.

(3) The documents were not created only for the purpose of the Westpac proceedings.

(4) There is a public interest in ensuring that all relevant material is before the court to discharge its function.

(5) There is no evidence of material prejudice to the respondents if the documents are used for the primary proceedings. The force of any prejudice arising from the deprivation of the respondents of a limitation defence is diminished by the circumstance that, in this case, unlike in Miller v Scorey,[26] the subpoenaed documents were used inadvertently by the appellant's solicitors for the purpose of the primary proceedings and the appellant was unaware that this had occurred.

(6) The master failed to weigh or consider all of the relevant factors, thereby falling into error.

64 In support of ground 4, the appellant submits, in summary, as follows. Whether there is a reasonable relation between the Westpac proceedings and the primary proceedings is not the test of whether leave should be granted. In Mann, which the master purported to apply, Ryan J's conclusion that the new defamation claim was not reasonably related to the earlier claim was the first step of analysis, not the determining factor. Ryan J held that use of a document in a second proceeding which bore a reasonable relation to the proceeding in which it was discovered may not be a breach of the Harman obligation. The second step was then to consider whether, in the factual context of the case, there were special circumstances meriting the grant of leave. Here the master erred by, in effect, treating the question of reasonable relation as decisive.

65 The respondents' submissions on grounds 3 and 4 are to the following effect:

(1) Properly understood, the master's reasons reveal a recognition of the importance of the adoption by the plurality in Hearne v Street[27] of the principle enunciated in Prudential Assurance Co Ltd v Fountain Page Ltd [28] that special circumstances justifying a release from the obligation 'are hard to visualise, particularly where there is any risk the [document] might be used directly or indirectly to the prejudice of the serving party'.

(2) The master correctly concluded there was no reasonable relationship between the Westpac proceedings and the primary proceedings.

(3) The master's conclusion that the application should be dismissed was at least in part based on the prejudice found by the master.[29] The master observed that if fresh proceedings are issued the defendants may be able to avail themselves of a limitation defence not available in the primary proceedings.

(4) Further, the master implicitly found that special circumstances as referred to in the principles outlined in [17] to [19] of the primary reasons were not established because of the absence of a reasonable relationship and because of the prejudice that would be suffered by the respondents if a document produced by them under compulsion in proceedings to which they were not a party were to be used to commence new proceedings against them.

(5) Alternatively to (3) and (4), in support of the notice of contention, applying the legal principles advanced by the respondents as summarised in [77] below, the matters referred to in (3) and (4) should lead to the refusal of the application by this court in the re‑exercise of the discretion if error is established.

66 In support of ground 5, the appellant submits that:

(1) The master did not expressly conclude that the commencement of the primary proceedings was an abuse of process. Even if this can be inferred, such a finding did not necessarily require the primary proceedings to be dismissed. That was not inevitable as the court has a discretion in determining whether to strike out the proceedings or permanently stay it as an abuse of process.

(2) The master's reasons do not disclose the path of reasoning leading to a decision to dismiss the primary proceedings.

67 In response to ground 5, the respondents submit that the decision to dismiss the appellant's application for leave led to an inevitable conclusion that the primary proceedings were an abuse of process. That was an application of the passage from Mann cited in the primary reasons at [27].

68 We will outline the applicable legal principles before explaining our conclusions in relation to grounds 3, 4 and 5 and the notice of contention.

Legal principles governing release from the Harman obligation

69 Where one party to litigation is compelled, by reason of a rule or 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 the documents or information for any purpose other than that for which they are given, unless they are received into evidence. This principle applies to a range of material, including discovered documents, answers to interrogatories and documents produced on subpoena.[30]

70 Traditionally, the obligation not to disclose was described as an implied undertaking. However, properly understood it is an obligation of substantive law.[31]

71 Discovery is an invasion of the privacy and confidentiality of a litigant's affairs. The rationale for the imposition of the obligation in relation to discovered documents is to ensure that privacy and confidentiality are not invaded more than is necessary for the purpose of doing justice.[32] The same rationale applies with equal force in the context of the production of documents on subpoena, as this is also an invasion of the privacy and confidentiality of the affairs of the subpoena recipient.[33]

72 The power to dispense with or modify the Harman obligation is not freely exercised, but will be exercised if there are special circumstances.[34]

73 In a passage in Liberty Funding Pty Ltd v Phoenix Capital Ltd[35] that has been cited with approval many times,[36] the Full Court of the Federal Court said as follows:

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.

74 Among the considerations that may be relevant to the exercise of the discretion are:[37]

(a) the nature of the document;

(b) the circumstances under which the document came into existence;

(c) the attitude of the author of the document and any prejudice the author may sustain;

(d) whether the document existed before the litigation, or was created for that purpose and therefore expected to enter the public domain;

(e) the nature of the information in the document, in particular whether it contains personal data or commercially sensitive information;

(f) the circumstances in which the document came into the hands of the applicant; and

(g) the likely contribution of the document to achieving justice in another proceeding.

75 The last of these considerations has been recognised as being the most important.[38] There is a public interest in ensuring that all relevant material is before a court to enable it to discharge its function. It has been said that special circumstances will fairly readily be found where it is established that the use of documents discovered in proceedings is reasonably required for the purpose of doing justice between the parties in other proceedings.[39]

76 In the context of documents produced on discovery, it has been observed that, in weighing up the competing public interests, the importance of the public interest in the preservation of the confidentiality of discovered documents must be kept squarely in mind.[40] Similarly, in the present case the private and public interest in protecting the confidentiality of a person's private documents produced under compulsion to a court must be kept in mind.[41]

(1) In Hearne v Street,[42] Hayne, Heydon and Crennan JJ specifically adopted what was said by Hobhouse J in Prudential Assurance:[43]

Circumstances under which [the] relaxation would be allowed without the consent of the serving party are hard to visualise, particularly where there was any risk that the statement might be used directly or indirectly to the prejudice of the serving party. (emphasis added)

(While not mentioned by the respondents, it should be noted that Hobhouse J went on to observe, parenthetically, that this was, 'of course, always subject to any overriding principle of public policy'.)[44]

(2) Consequently, the effect of Hearne v Street is that what was said in that regard by Hobhouse J represents the law of Australia.

(3) Moreover, the plurality in Hearne v Street[45] cited what Brennan J had said in Esso v Plowman[46] - that the dispensing power is not freely exercised and is only exercised where special circumstances appear. In Esso v Plowman, Brennan J cited Crest Homes v Marks,[47] for the proposition that the dispensing power is not freely exercised. In Crest,[48] Lord Oliver stated:

I do not, for my part, think that it would be helpful to review these authorities for they are no more than examples and they illustrate no general principle beyond this, that the court will not release or modify the implied undertaking given on discovery save in special circumstances and where the release or modification will not occasion injustice to the person giving discovery. (emphasis added)

(4) These conclusions are reinforced by the approval in Deputy Commissioner of Taxation v Shi[49] by Kiefel CJ, Gageler and Gleeson JJ of what was said in Hearne v Street, as revealed by footnote 8 of their Honours' reasons.

(5) The result is that not only must special circumstances be shown, but, as a second condition of the grant of leave, it must be shown that release or modification of the Harman obligation does not occasion prejudice or injustice to the disclosing party. Alternatively, if only special circumstances must be established, the risk of use of the disclosed material, directly or indirectly, being to the prejudice of the disclosing party will usually prevent special circumstances being established.[50]

(6) The commencement of proceedings against a person on the basis of a document disclosed under a subpoena in the proceedings to which they were a stranger is 'overriding' prejudice that amounts of itself to injustice.[51]

(7) Lack of a reasonable relation between two proceedings necessarily has the effect that use of the compulsorily acquired material in the second proceedings against the disclosing party will always be prejudicial to the disclosing party.[52]

79 As always, it is important to commence by identifying the issues being addressed in Hearne v Street. The plurality in Hearne v Street were addressing two propositions which they described as damaging to the appellant's arguments. The first of those propositions was that the obligation in question is properly understood as a substantive obligation of law rather than as an implied undertaking. The second related to the scope of the obligation, which is not restricted to litigants and extends to third persons who know the circumstances in which the material was generated or received. In the passage on which the respondents rely, the court was addressing the first of those questions. In Hearne v Street, no application to be relieved from the Harman obligation was made at any stage.[53] Their Honours were not concerned with making, and did not purport to make, an authoritative statement as to the circumstances in which, or conditions under which, a party should be relieved of the Harman obligation. In this respect, we agree with the observations of Beach J in State Street Global v Maurice Blackburn[54] and of the Court of Appeal of the Australian Capital Territory in Shiels v Manny.[55]

80 Further, in the almost 14 years since it was decided, Hearne v Street has been cited in numerous cases. The respondents did not refer to any decisions in which Hearne v Street had been understood in the manner they invite. Our researches have not revealed any such decision.

81 Both Treasury Wine v Maurice Blackburn and Glencore v Franks were decisions of the Full Federal Court which considered the correctness of the primary judge's decision to grant, or to refuse, leave to depart from the Harman obligation. Thus, the principles relating to an application for waiver or modification of the Harman obligation were stated in the context where those principles were of direct application to resolution of the issues on appeal. In those decisions, the principles were outlined substantially in the manner set out at [72] to [75] above, without any reference to what was said by Hobhouse J in Prudential Assurance in the passage relied on by the respondents, or to the principles asserted by the respondents summarised in [77(5)] above.

82 Thus, we apply the principles we have set out at [69] to [76] above.

83 Although the position was not spelled out with clarity, it would appear that both parties to the appeal proceeded on the basis that a decision whether or not to grant a release or modification from the Harman obligation is a discretionary decision such that, on appeal, error of the kind explained in House v The King[56] must be demonstrated. We proceed on that basis, which is consistent with the approach of the Full Federal Court in Glencore v Franks.[57]

84 In identifying whether there is a House v The King error, the starting point is to consider the path of reasoning adopted by the primary decision maker. Unfortunately, the master's reasons are, with respect, unclear in significant respects. Most fundamentally, it is unclear whether the master dismissed the appellant's application solely on the basis of the absence of conferral, or on a second basis that the case for the application had not been made out.

85 We have set out the structure of the master's reasons in detail: see [28] to [36] above.

86 As already noted, the master adopted the appellant's counsel's summary of the six issues between the parties. Identification of the issues is, of course, of assistance in the efficient conduct and disposition of proceedings. However, the creation of a list of issues, without sufficient appreciation of the relationship between those issues and their respective significance and role in the disposition of the proceedings, may well be an unhelpful step. In the list of issues adopted by the master, some were considerably more significant than others and some were considerations relevant to the ultimate question, which was sufficiently captured in issue 3.

87 Having found that there was no conferral and that there was no basis upon which the failure to confer could be waived, the master observed that '[o]n that basis alone this application must fail'. The master then observed that it was appropriate to consider all issues raised at the hearing. In so observing, it is unclear whether the master thereby intended to give consideration to the other issues or to determine them.

88 The master clearly determined the second issue, namely whether the primary proceedings bore a reasonable relation to the Westpac proceedings, concluding that they did not.

89 As already noted, the master then referred compendiously to the third and fourth issues, immediately proceeding to discuss matters relating specifically to the fourth issue. The discussion comprised a single paragraph, in the following terms:[58]

Turning to the third and fourth issues, given the way the evidence stands in this case it is somewhat difficult to evaluate how important the use of these documents is to the plaintiff. Perhaps what can be said is that a limited number were of such importance they were used in preparing the indorsement of claim and in drafting a statement of claim. This is one of those instances where the importance of the documents is perhaps best evaluated by noting the plaintiff thought it necessary to use them in the course of preparing his case. Moreover, this application was pursued once it became clear the documents had been used without court approval. On that basis and without examining this point in any detail - both as to the facts and as to the law - I think it is possible to say it is a matter which falls in the plaintiff's favour.

90 As can be seen, the master concluded that it was 'possible to say' that this was a matter falling in the appellant's favour. That conclusion must be taken to have referred to the fourth issue - the importance of the documents to the plaintiff - rather than the third - the existence of special circumstances - as a favourable conclusion on the third would seem to amount to acceptance of the merits of the application. The fourth issue is an important consideration bearing on the third issue, but it is only one consideration. As the respondents accept on appeal,[59] apart from observing that he was turning to the third issue, the master said nothing about it.

91 The master then dealt with the sixth issue, which was a peripheral procedural issue, concluding that the appellant had followed the appropriate procedure.

92 Without further discussion or further findings, the master concluded that the application would be dismissed and that the orders sought by the respondents would be made.[60] The basis for this conclusion is, with respect, unclear. In particular, was the absence of conferral the sole basis, or was there a second basis, namely that the application failed on the merits?

93 We accept the respondents' submission that the master correctly stated the principles relevant to the grant of leave: see primary reasons [17] to [19]. However, we do not accept their submissions outlined at [65(3) and (4)] above. The master's reasons[61]dentified61 that it was relevant that in fresh proceedings (issued if the action was struck out as an abuse) the respondents may have available to them a limitation defence that would not exist in the primary proceedings. However, the master did not say in whose favour, if any, that consideration counted. There is room to see it as a factor pointing in either direction and, consequently, there is also room for seeing it as ultimately neutral. Reading the reasons as a whole, we are unable to infer that the master considered the limitation point as a substantial factor against the grant of leave.

94 Even allowing for what is fairly to be implied in judicial reasons, we are unable to discern a conclusion on the part of the master that, applying the principles he had earlier set out, the master was not satisfied that the Harman obligation should be modified or released. The master did not at any stage of the reasons explicitly express a view on that question. To extract a conclusion to that effect from what the master did say in his reasons seems to us to go beyond a process of implication or inference.

95 Consequently, on our reading of the master's reasons, the sole basis for the refusal of the application was the failure to confer. Ground 3 is thus established. Grounds 1 and 2 having succeeded, the master's orders must be set aside.

96 If and insofar as the master's reasons are to be read as including, by implication, a finding that special circumstances justifying release from the Harman obligation had not been demonstrated, we would uphold ground 4. In our view, insofar as the reasons are to be so read, they reveal that the absence of a reasonable relation between the Westpac proceedings and the primary proceedings was, in substance, given determinative significance. It is the only matter identified by the master as counting against the grant of leave sought by the appellant.

97 In our respectful view, to so reason is to misunderstand the case which the master applied, namely Mann v Medical Defence Union Ltd. The nature and extent of the connection between the proceedings in which documents are produced under compulsion and the proceedings in which a party seeks leave to be able to use them is undoubtedly a relevant matter. In some cases, the closeness of that connection will mean that there is no need for leave to be granted. But the existence of a close connection is not a necessary foundation for a grant of leave. Apart from anything else, that is demonstrated by the numerous cases in which the purpose for which leave is sought does not involve litigation of any kind. Once the absence of a close connection was identified, the broad discretionary question, having regard to all relevant matters, arose for determination. The master failed to consider all the circumstances in determining that question (assuming for present purposes that he did determine it).

98 For these reasons, in our view, grounds 3 and 4 have been established. Error in the master's decision has been demonstrated, with the result that it falls to this court to re‑exercise the discretion. In doing so, we have had regard to the respondents' notice of contention, which asserts reasons why special circumstances should be found not to exist.

99 We apply the principles in [69] to [76] above.

100 The power of the court to grant leave retrospectively is not in doubt: see, for example, Treasury Wine v Maurice Blackburn;[62] Forty Two International Pty Ltd v Barnes;[63] Barnes v Fortytwo International;[64] Slea Pty Ltd v Connective Services Pty Ltd.[65]

101 As the cases referred to in the previous paragraph illustrate, where leave is sought retrospectively, the circumstances in which the undertaking came to be breached (or, in some cases, arguably breached) bear upon the exercise of discretion.

102 Here, as the master found,[66] the breach of the Harman obligation by use of documents obtained through subpoena in the Westpac proceedings arose from inadvertence on the part of the appellant's solicitor; the appellant itself was unaware of, and played no part in, it. Moreover, as soon as the appellant's solicitor realised the situation, they took steps to remedy it by preparing the application for leave and, following attempts to confer, filing it.

103 Consequently, this case is very far removed from a case such as Miller v Scorey, where the parties in breach of the Harman obligation made a conscious decision to use documents that had been produced in an earlier action in circumstances where they were concerned to ensure that a relevant limitation period did not expire.[67] In the circumstances of the present case, to our minds the fact that, if the primary proceedings are dismissed as an abuse of process (following the refusal of leave), the respondents may have a limitation defence does not count, to any substantial extent, against the grant of leave to the appellant.

104 In the circumstances of this case, regard should be had to the approach that would have been taken had the appellant's solicitor identified the issue at an appropriately early stage, leading to the making of an application for prospective leave.[68] Taking into account the following matters, we consider that such an application would likely have succeeded.

105 The documents produced under subpoena were not the genesis, nor the sole foundation, of the proposed claim by the appellant against the present respondents. Mr Ebbs formed the view that Mr Palaniappan or the appellant may have a cause of action relating to Mr Garland's conduct. Mr Ebbs formed that view following discussions with Mr Palaniappan in the course of the Westpac proceedings and a discussion he had with Mr Zohar on 8 June 2017.[69]

106 The documents in question are not of a personal or inherently confidential nature. They were not created under compulsion, nor were they created for the purposes of the Westpac proceedings.

107 The documents in question would be discoverable in the primary proceedings. They are plainly relevant to the primary proceedings and are capable of bearing directly on issues of central significance to those proceedings. We consider that they are reasonably required for the purpose of doing justice in the primary proceedings.

108 We also give weight to the public interest in ensuring that all relevant material is before the court in the primary proceedings to enable it to do justice in those proceedings.

109 The only prejudice to the respondents identified by them was the prejudice they were said to suffer in facing a claim which, but for their compliance with the subpoena, they would not be facing.[70] For the reasons in [105] above, we do not accept that without the respondents' disclosure of documents under subpoena they would not be facing a claim. In any event, we do not consider that any prejudice of this kind suffered by the respondents sustains the refusal of the application in the face of the considerations to which we hav[71]referred.71

110 Bearing all these matters in mind, we are satisfied that special circumstances exist that make it in the interests of justice to grant the leave sought by the appellant. In short, the likely contribution of the documents in question to the achieving of justice in the primary proceedings is such that, in all the circumstances, the inadvertent failure of the appellant's solicitor to seek leave in advance should be excused, and the appellant and Mr Palaniappan should be relieved from their Harman obligations to the extent they seek.

111 For these reasons, we reject the respondents' notice of contention and would make orders substantially to the effect sought by the appellant.

112 The consequence of this conclusion is that the premise of the master's order striking out the primary proceedings as an abuse of process, namely the refusal of the appellant's application, no longer exists. Consequently, that order must be set aside and it is unnecessary to determine ground 5.

113 Were it necessary to do so, we would uphold ground 5. As we have explained, we read the master's reasons as refusing the appellant's application solely on the ground of absence of conferral. In those circumstances, it is by no means obvious that the primary proceedings should be struck out as an abuse of process. To the contrary, the appellant's application for leave having been dismissed by reason of absence of conferral would leave it open to the appellant to make a further application for leave. On the face of it, the determination of whether the primary proceedings were an abuse of process would properly await the resolution of any subsequent application. In the circumstances, in our respectful opinion, it was necessary for the master to explain his reasons for dismissing the primary proceedings as an abuse of process.

114 For the above reasons, we would make orders to the following effect:

(1) Leave to appeal is granted.

(2) The appeal is allowed.

(3) The orders of the master of 3 December 2020 are set aside and, in substitution, the following order be made:

(i) Leave is granted nunc pro tunc to the appellant and to its director, Mr Kasi Palaniappan, to be released from the obligation not to use the documents set out in schedule A of the amended chamber summons dated 8 January 2020 for a purpose other than in connection with Supreme Court proceedings CIV 1307 of 2014 for the limited purposes of providing the documents to the appellant for use by the appellant in these proceedings.

115 We would hear from the parties as to the costs of the proceedings before the master and as to the costs of the appeal to this court.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[1] Referring to Harman v Secretary of State for the Home Department [1983] 1 AC 280.

[2] Affidavit of Kasi Palaniappan sworn on 24 September 2019 [13].

[3] Affidavit of Kasi Palaniappan sworn on 24 September 2019 [14].

[4] Affidavit of Kasi Palaniappan sworn on 24 September 2019 [17] - [19.2].

[5] Affidavit of Kasi Palaniappan sworn on 24 September 2019 [6.2]. See also amended chamber summons, sch A [2], [3].

[6] Affidavit of Kasi Palaniappan sworn on 24 September 2019 [25] - [26].

[15] Mann v Medical Defence Union Ltd [1997] FCA 45.

[25] Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2006] WASC 161; (2006) 33 WAR 1 [4] - [5].

[26] Miller v Scorey [1996] 1 WLR 1122.

[27] Hearne v Street [2008] HCA 36; (2008) 235 CLR 125 [107].

[28] Prudential Assurance Co Ltd v Fountain Page Ltd [1991] 1 WLR 756, 775.

[31] Hearne v Street [106] - [108]; Minister for Education v Bailey [2000] WASCA 377; (2000) 23 WAR 149 [25].

[32] Hearne v Street [107]; Minister for Education v Bailey [25] ‑ [27]; Northbuild Construction Pty Ltd v Discovery Beach Project Pty Ltd (No 4) [2009] QCA 345; [2011] 1 Qd R 145 [13], [52].

[33] Ambridge Investments Pty Ltd (in liq) v Baker (No 3) [2010] VSC 545 [28] ‑ [30], [49]; Bedshed Franchising Pty Ltd v Battersby [No 2] [2015] WASC 281 [17].

[34] Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10, 37; Hearne v Street [107]; Deputy Commissioner of Taxation v Shi [2021] HCA 22; (2021) 95 ALJR 634 [50]; Minister for Education v Bailey [28].

[35] Liberty Funding Pty Ltd v Phoenix Capital Ltd [2005] FCAFC 3; (2005) 218 ALR 283 [31].

[36] Barnes v Fortytwo International Pty Ltd [2010] FCAFC 87 [14]; Gwynvill Properties Pty Ltd v UTSG Pty Ltd [2017] NSWCA 208 [17], [22].Treasury Wine Estates Ltd v Maurice Blackburn Pty Ltd [2020] FCAFC 226; (2020) 385 ALR 562 [98]; Glencore Coal Pty Ltd v Franks [2021] FCAFC 61; (2021) 284 FCR 622 [21]; Helicopter Aerial Surveys Pty Ltd v Robertson [2015] NSWSC 2104 [44]; Bedshed v Battersby [20] and cases there cited.

[37] Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217, 225; Minister for Education v Bailey [23]; Liberty Funding v Phoenix [31]; Gwynvill Properties v UTSG [17], [24]; Treasury Wine v Maurice Blackburn [96]; Glencore v Franks [22].

[38] See the cases in footnote 37, with the exception of Glencore v Franks.

[39] Australian Trade Commission v McMahon (1997) 73 FCR 211, 217; Minister for Education v Bailey [24]; Northbuild Construction v Discovery Beach [16]; Bedshed v Battersby [22]; State Street Global Advisors Trust Company v Maurice Blackburn Pty Ltd [2019] FCA 1464 [7].

[40] North East Equity Pty Ltd v Goldenwest Equities Pty Ltd [2008] WASC 190 [45]; Andrew Koh Nominees Pty Ltd v Pacific Corporation Ltd (No 2) [2009] WASC 207 [18].

[47] Crest Homes Plc v Marks [1987] AC 829, 860.

[49] Deputy Commissioner of Taxation v Shi [12].

[51] Appeal ts 54; First to third respondents' submissions [9].

[53] Hearne v Street [1], [5], [83] - [86].

[54] State Street Global v Maurice Blackburn [8] (save, of course, that this court is not bound to follow the Full Court of the Federal Court of Australia authority of Liberty Funding Pty Ltd v Phoenix Capital Ltd).

[55] Shiels v Manny [2012] ACTCA 22; (2012) 263 FLR 61 [32].

[56] House v The King (1936) 55 CLR 499.

[62] Treasury Wine v Maurice Blackburn [100].

[63] Forty Two International Pty Ltd v Barnes [2010] FCA 397 [94].

[64] Barnes v Fortytwo International [12].

[65] Slea Pty Ltd v Connective Services Pty Ltd [2017] VSC 706; (2017) 53 VR 161 [49]. The grant of leave nunc pro tunc in Slea v Connective Services Pty Ltd was noted without comment by the High Court in setting out the background in Connective Services Pty Ltd v Slea Pty Ltd [2019] HCA 33; (2019) 267 CLR 461 [29].

[67] Miller v Scorey (1126, 1130 - 1131, 1134)

[68] A similar approach was adopted in Treasury Wine v Maurice Blackburn [108].

[69] Affidavit of Nathan Ebbs sworn 18 November 2019 [6] - [8].

[71] See in this regard Barnes v Fortytwo International [18].