Oswal v Burrup Holdings Limited [2012] FCA 1187 | Case summary

whether undertaking given to the court 24 Submissions made on behalf of Mr Oswal: Senior counsel for Mr Oswal notes that the contempt charge is based on two principal allegations: first, that there was an undertaking that was breached; and secondly, that the applicant was subject to an implied undertaking arising from the order of 3 June 2011. The applicant says if those propositions are wrong at law, then the charge and contempt application must be dismissed. 25 Senior counsel notes that the relevant undertaking signed by the applicant, a copy of which was provided to the solicitors for the second respondent, was not filed in the Court. There was no hearing before the Court where the undertaking was presented to the Court or at which the terms of the undertaking were considered by the Court. As to these factual matters, senior counsel for the applicant correctly notes that there is no difference between the parties. 26 To push the point, senior counsel further notes that there is nothing on the court record that indicates the Court ever turned its mind to accepting the undertaking signed and was never aware that the applicant gave an undertaking or as to the terms of any such undertaking. 27 It is submitted that any document expressed to be an undertaking can never be an undertaking "to the Court" unless the Court has considered it and accepted it. Accordingly, the provision of an undertaking requires an acceptance by the Court and as an incident of the Court's powers. For example, the Court can, in lieu of granting an injunction, accept an undertaking by a party to do or not to do something. Senior counsel submits however that there are limits on the Court's ability to do that and it is not a wide ranging ability. The Court is constrained in the way it does so and that is why it is essential that the Court actually has the undertaking, turns its mind to its terms and formally accepts the undertaking before it can be said to have been given to the Court. 28 In this regard, senior counsel refers to Thomson Australian Holdings Proprietary Limited v The Trade Practices Commission (1981) 148 CLR 150. This was a decision of the High Court dealing with a proceeding in which ultimately the Court accepted undertakings to dispose of the proceedings and one question the Court had to consider was whether or not the Court ought to have accepted the undertakings. Senior counsel draws attention to what was said in the joint judgment of Gibbs CJ, Stephen, Mason and Wilson JJ, at 164, namely, that: The power to accept and to enforce an undertaking is…'an invariable attribute of a superior court whose proceedings are protected by rules relating to contempt of court and is inherent in the grant of jurisdiction to grant injunctive relief'. An undertaking to the court is given in lieu of an injunction and, if broken, is treated as the equivalent of an order for the purpose of enforcement. 29 It is submitted a court would never grant an injunction in terms it has no knowledge of. An undertaking is in lieu of an injunction in such circumstances and the way a court approaches acceptance of an undertaking must be guided by the principles by which the Court would grant an injunction. So it could never be the case that an undertaking to the Court arises when the Court has no knowledge of it and no knowledge of its terms and has not accepted it. Because it is in lieu of an injunction or the equivalent of an order for the purposes of enforcement it may be enforced in the same manner as an injunction. 30 Senior counsel then draws attention to what was said in the joint judgment, at 165, namely, that: As an undertaking is given in lieu of an injunction and is enforceable in like manner, the principles which govern the grant of an injunction by a court must guide it in deciding whether it should accept an undertaking. Limitations which affect the Court's jurisdiction or power to grant a final injunction must be observed in the acceptance of an undertaking when it is offered as a substitute for a final injunction. 31 Senior counsel notes that in the joint judgment their Honours, at 165, also note that the Court cannot escape such limitations by the expedient of accepting an undertaking in lieu of an injunction: The court cannot put itself in the position of enforcing conduct which it has no capacity to command or compel. 32 Senior counsel submits that this passage identifies the significance and importance of accepting an undertaking, something that simply did not occur in relation to the undertaking signed by the applicant and given to the second respondent pursuant to the order made by the Court of 3 June 2011. 33 It is thus submitted that the Court did not receive the undertaking and it did nothing constructively to accept the undertaking in lieu of an injunction. The Court did not know the terms of the undertaking. 34 Senior counsel submits the significance of the Court receiving and knowing the terms of an undertaking and formally accepting the undertaking has been referred to in a number of cases. First, attention is drawn to Housewives United Buyers Co-operative Ltd v Trustees of the Sisters of St Joseph (1980) 42 FLR 106 (Housewives United Buyers Co-operative Ltd), where a matter was resolved and terms of settlement were handed to the primary judge and in those terms of settlement, express undertakings were included. Subsequently, the question for determination was whether or not those express undertakings recorded in the terms of the settlement were undertakings to the Court. 35 When the matter came before Sweeney J, his Honour noted, at 108, that the first question raised was whether the undertaking given in the circumstances referred to, was an undertaking to the Court. It was argued that it was purely an undertaking inter partes. His Honour, however, thought it an important consideration that it was included in the terms of settlement which were put before the Court. Senior counsel for Mr Oswal submits that this is an important consideration because on the facts of that case, it could be said that the Court sanctioned a particular course of action. The Court read the undertakings. 36 Justice Sweeney also referred to Australian Consolidated Press Limited v Morgan (1965) 112 CLR 483 (Australian Consolidated Press), where the High Court dealt with an undertaking then before it as one given to the Court. In that case an action was brought in the Metropolitan District Court at Sydney for damages for an alleged breach of copyright. The action was compromised, one party giving a written undertaking to the other. Later, in an action on the undertaking, the Court treated this as an undertaking to the Court such that a breach of it was a contempt no less than a breach of the order. 37 Justice Sweeney, at 107, observed that in the proceeding before the Court the primary judge, his Honour, had asked the solicitor for the trustees whether on behalf of the clients he gave the undertakings set out in the terms of the settlement, to which the answer given was "Yes, your Honour". 38 In Housewives United Buyers Co-operative Ltd, at 108, Sweeney J considered that in the case before him the undertaking mentioned in Court was: something more than a bargain inter partes. Had it been no more than that and his Honour having read it when the terms were handed up to him, there would seem no purpose in him asking the solicitor for the trustees if he gave on behalf of his clients the undertakings set out in the terms of settlement, and indeed there would seem no point in the solicitor then doing so. 39 Senior counsel submits that once again the important consideration in finding that there was an undertaking to the Court was the fact that the Court had read the undertaking given by one party to the other and confirmed the resolution of the matter on those terms. 40 Leaving aside the question whether, in the present case, the Court on 3 June 2011 could, within power, have made the access orders subject to a confidentiality undertaking being given "to the Court" (and perhaps filed in the Court to emphasise the nature of the undertaking), senior counsel for Mr Oswal submitted that that course did not happen and that the Court's orders did not require any undertaking to be given to the Court. 41 Senior counsel emphasises, however, that even if in the present case it may be said that the Court was aware, by its order, that if access were provided then undertakings must be given and so it was cognisant of the likelihood of the undertakings being given, nonetheless the Court never had any opportunity to consider those undertakings and it did not require any undertaking "to the Court". In short, there was no precision in the order made as to the undertaking being a undertaking to the Court. 42 Senior counsel submits that there is no debate between the parties about the construction of the order. The Court therefore can proceed on the basis that the parties understood that the common construction of the order was that there was no requirement for an undertaking to the Court. In that regard, the circumstances are unlike that of the Housewives United Buyers Co-operative Ltd case where the Court actually saw the undertaking and asked the solicitor whether it was given in the terms mentioned. Thus, when the question was asked of the solicitor whether the undertaking was given on behalf of his clients, it was plainly understood that the question being asked was whether the undertaking was given to the Court. 43 Secondly, senior counsel draws attention to U & I Global Trading (Australia) Pty Ltd v Tasman-Warajay Pty Ltd (1995) 60 FCR 26 (U & I Global Trading). This proceeding was for contempt of an undertaking given by the respondent to the applicant that until it obtained a patent it would not threaten infringement proceedings. Although the fact that the undertaking had been offered by the respondent had been mentioned to the court during an earlier proceeding, it had not been formally given to the Court. Justice Cooper, at 28, expressly noted that the undertaking "was not an undertaking given to the Court". His Honour considered that was clear from the circumstances in which the possibility of an interlocutory injunction or undertaking to the Court were dealt with by Spender J when the matter came before his Honour on a relevant occasion. After Spender J asked what had happened to the interlocutory injunction, counsel advised him that "an undertaking has been offered at court this morning by the respondent. The undertaking in its terms is not totally acceptable although it does take a lot of the heat out of our urgency for an urgent hearing date for an injunction". After further discussion, counsel for the other side was asked whether he was happy with that, to which he answered that he was and asked the Judge if he "wishes to see it". His Honour answered that he did not. He stated that if the parties want an undertaking to be given to the court, it has to be accompanied with an assurance by the representatives that their clients know what it is all about, because an undertaking is the "equivalent of an injunction," and that is different to an agreement between the parties. Counsel said he was not instructed to go that far. 44 Senior counsel submits the approach adopted confirms an appreciation that not every reference to some arrangement or undertaking between parties will constitute an undertaking to the Court. Justice Cooper ultimately held, at 30-31, that while the undertaking between the parties was mentioned in the Court it was not an undertaking given to the Court and was unenforceable by way of contempt proceedings. 45 Thirdly, senior counsel refers to the unreported decision of Hawke v ACN 117 688 356 Pty Ltd [2007] NSWSC 1262. Again this was a case concerning whether or not an undertaking to the Court had been given on a contempt motion. At [2], Brereton J explained how in the course of the application for expedition, counsel for the plaintiff had tendered a document, a copy of which counsel for the defendant did not then have. Before him there was a dispute as to what was said between the parties as to the provision of a copy. His Honour considered that because an undertaking to the Court is a serious and formal matter and because, if given, such an undertaking is always recorded in the record of proceedings, as distinct from the transcript - at least in his Honour's practice - an undertaking to the Court would not or could not have been given, no formal notation of the undertaking having been made by him or his associate. 46 Senior counsel for the applicant, accepting that Brereton J was speaking of his own practice, noted nonetheless that the Court reflected a more general practice that acceptance of a undertaking by the Court is an important ingredient of any finding by a court that an undertaking has been given to the Court in a particular circumstance. In other words, that the Court should not lightly find that undertakings, that may have penal consequences if not complied with, have in fact been given. In relation to the present case, senior counsel emphasises that there was no requirement for an undertaking to the Court and if the matter had been raised in those terms, the Court may have had a discretion to consider the matter, but the matter simply did not arise in those terms. 47 Senior counsel, generally accepting that there may well be civil actions available to a party such as the second respondent, where an undertaking has been given in circumstances such as those here by a person in a position of the applicant, submits this does not bespeak a necessary contempt of court. That there are contractual or fiduciary duties that may arguably have been breached does not mean the Court should feel compelled to consider a contempt proceeding as appropriate and that the undertaking given here was one given to the Court. 48 Senior counsel expressly submits that even if one supposed that there were no remedy available to the second respondent for an alleged breach of the undertaking of Mr Oswal, this should not lead to an extension of law, so that a matter which cannot be a contempt of court becomes one, by construing an undertaking which plainly is not to the Court, as if it were - all for the purpose of overcoming a lacuna in the civil law. 49 Submissions made on behalf of BFPL: BFPL submits that the written undertaking of the applicant should be construed as an undertaking to the Court. 50 BFPL accepts that before a person can be found in contempt for breaching an undertaking to the Court there must be an undertaking expressed in clear, certain and unambiguous language, as explained in Australian Consolidated Press Ltd at 503, 506, 514-516 and in Concrete Constructions Pty Ltd v Plumbers and Gasfitters Employees' Union (No 2) (1987) 15 FCR 64 at 71-72. 51 It also accepts the person giving the undertaking must have knowledge of the undertaking, as explained in Sun Newspapers Pty Ltd v Brisbane TV Ltd (1989) 92 ALR 535 at 538. 52 BFPL submits the undertaking given by Mr Oswal was expressed in clear, certain and unambiguous language. It is submitted the document signed by him and delivered to the second respondent to procure its compliance with the order to produce documents expressly purported to be, in clear, certain and unambiguous terms, an undertaking given to the Court. 53 It is further submitted that the "surrounding circumstances" are consistent with the interpretation that the undertaking was an undertaking to the Court: 1. Mr Oswal by his submissions made in support of his application in effect represented to the Court that he was willing to give an undertaking to the Court. 2. The Court made the orders subject to him and his agents giving confidentiality undertakings. 3. The first draft of the undertaking was prepared by his then solicitors and was in the express form of an undertaking to the Court. 4. The undertaking was on a document which was drawn in a form that clearly suggested it would be filed in the proceedings. 5. Although other aspects of the first draft were changed by agreement, the form of the document essentially remained unchanged from the form that was originally proffered by his solicitors. 6. The then solicitors for Mr Oswal did not provide the second respondent with the originals of the undertakings but only copies. 7. There is a "stark contrast" between the applicant's undertaking and his undertaking to pay the costs of BFPL associated with the inspection, in that the undertaking as to costs was written on the letterhead of Oswal Projects Ltd, was not titled as if it were a document in the proceeding and was not expressed as being given to the Court. 54 BFPL says the test to be applied when determining whether particular words gave rise to an undertaking to the Court is the same as that to be adopted when construing judicial orders, namely, the test is an objective one, not a subjective one: Hamersley Iron Pty Ltd v The National Competition Council [2008] FCA 598; (2008) 247 ALR 385 at [151]. In that case, the question was whether words used by counsel in the course of a hearing gave rise to an undertaking or whether they were merely an informal assurance. The second respondent submits the same principle applies to a document proffered by one party out of court. 55 BFPL submits that in view of the clear words used in the undertaking and in the context of the surrounding circumstances the applicant's undertaking was not one made inter partes, as in U & I Global Trading discussed above, but one given to the Court. 56 It further submits that as Mr Oswal signed the undertaking it can be inferred that he had knowledge of the undertaking and its terms and actually intended to give it to the Court, at least at the time he signed it. 57 It is submitted the surrounding circumstances referred to above further support that inference. 58 BFPL also submits that the Court "would have had the power" to make orders in the same or similar terms as that set out in Mr Oswal's undertaking. 59 As to the fact that the written undertaking of Mr Oswal (as with other such undertakings) was never actually filed in the Court, BFPL says it further appears that prior to the commencement of the application the Court was not made aware of the fact or the terms of the undertaking. Thus, the Court has not expressly accepted the undertaking of the applicant. Indeed, BFPL did not become aware of these facts until they were disclosed in a letter dated 2 December 2011 from the applicant's new solicitors, but by that time it had already provided access to the confidential documents. BFPL says that in these circumstances the question that arises is whether an application can be made for punishment for contempt on the basis of an undertaking that is expressed to be an undertaking to the Court and which otherwise was made in circumstances in which the person giving the undertaking intended that it be given to the Court, but where the undertaking is never communicated to the Court and, as a consequence, it is never expressly accepted by the Court. 60 BFPL notes that it has not been able to identify any authority, in Australia or elsewhere, that has dealt with this particular question and further notes there is nothing in the former or current Rules of this Court to suggest that an undertaking to the Court must be filed before it takes effect. 61 In these circumstances, and in the absence of any authority or Rule, BFPL submits it is necessary to consider the underlying principles. Amongst the principles upon which the second respondent apparently relies is the power of the Court under s 31 of the Federal Court of Australia Act 1976 (Cth) to punish contempts, which it notes it is a power wide enough to protect the Court's administration of justice under whichever head of jurisdiction is invoked: The State of Victoria v The Australian Building Construction Employees' and Builders Labourers' Federation (1982) 152 CLR 25 at 164. 62 BFPL accepts that order 2(a) made 3 June 2011 did not require the undertaking to be given to the Court. However, it required the undertaking to be in a form agreed by the parties or otherwise determined by the Court. It submits that having made the substantive decision and leaving it to the parties to agree if they could, the form of the undertaking, then the phrase "a form" would include whether the undertaking would be to the Court or inter partes. 63 BFPL says further that the Court had knowledge that Mr Oswal was to give a confidentiality undertaking, that he represented he was willing to give one and the Court sanctioned a particular course of action which facilitated the giving of the confidentiality undertaking. In this regard, BFPL refers to the Housewives United Buyers Co-operative Ltd case discussed above, at 108-110. BFPL accepts, however, the analogy it seeks to make by reference to this authority is imperfect but that the case is illustrative. 64 BFPL says that the undertaking can be seen as the price the applicant paid for obtaining the orders and in this regard refers to Smith Kline & French Laboratories (Australia) Ltd v Secretary, Department of Community and Health (1989) 89 ALR 366 at 369, a case which refers to the usual undertaking as to damages as the price for obtaining an interlocutory injunction. 65 The point BFPL seeks to make is that in order to gain access to the documents the subject of the orders, the applicant expressly represented in his undertaking that he undertook to the Court to comply with its terms. The original was not provided to BFPL. There is no suggestion that it had not been filed in the Court or that BFPL could not take comfort from the undertaking to the Court. The matter was only raised well after the disclosure and the commencement of the application. Thus, BFPL submits that the Court should find that the undertaking expressed to be to the Court was, in fact, an undertaking to the Court. 66 BFPL develops its submissions concerning the fact the undertaking was not filed. It submits that if, as a matter of principle, the Court finds that the undertaking was an undertaking to the Court it should not lose that character simply because it was not filed. It says that Mr Oswal should not gain an advantage from his failure to do what was represented would be done by the terms of the undertaking. It submits the Court should, in any event, exercise its power under R 1.34 of the Federal Court Rules 2011 (Cth) to dispense with compliance in respect of filing in this case. 67 As to the question of the Court accepting the undertaking, and the fact that ordinarily an undertaking is actually communicated to the Court, it should not follow that undertakings that are given to the Court need to have been actually communicated to the Court before they are enforceable. Rather, the ultimate question is whether an undertaking is filed with or communicated to (or accepted by) the Court. The issue will always be whether the breach of such an undertaking amounts to interference with the due administration of justice that justifies the imposition of punishment for contempt. 68 Finally, BFPL says the Court has the power to accept Mr Oswal's undertaking nunc pro tunc and so retrospectively accept the giving of an undertaking or an implied undertaking. 69 It is submitted by BFPL that had the undertaking been filed at the time it was made, the Court would have accepted it as the price for making the orders. 70 Submissions in reply: Senior counsel for Mr Oswal responded to each of the principal submissions made on behalf of BFPL to the following effect: The subjective intention of the applicant in signing the confidentiality undertaking is irrelevant to the construction issue. It really does not matter what was actually intended or what the Court inferred was actually intended. What matters is what occurred and whether what occurred constitutes an undertaking to the Court. Whether or not the Court would have a power to make orders in the same or similar terms is hypothetical. The fact that the second respondent did not find out until later that the undertaking had not been filed is not final, the relevant point being whether or not the undertaking was accepted by the Court. It never came before a judge of the Court or was accepted by the Court on any other basis. The appeal to the Rule enabling a retrospective acceptance should not be considered as it would, apart from anything else, make a person liable retrospectively for contempt. It would highly dangerous for the Court to find that the applicant through his own failure to file his confidentiality undertaking could circumvent the Court's power to control the process. In any event, it assumes that there was some obligation to do so. The question is whether there has been an undertaking to the Court which the Court has accepted. The proposition that undertakings have to actually be communicated before they are enforceable is not supported by authority. The broad proposition, that the issue is whether a breach of an undertaking amounts to an interference with a due administration of justice, must also be rejected because the question is always whether there has been an undertaking to the Court. Further, concerning the notion of retrospective acceptance, there has never been an application and to purport to accept an undertaking to the Court after the event would be wrong and it would convert non-contemptuous conduct into contemptuous conduct; converting an undertaking not to the Court as one to the Court. 71 Consideration: In my view, the "confidentiality undertaking of applicant" signed by the applicant on 14 July 2011 did not thereby constitute an undertaking to the Court in the terms contained in that document. In that regard, I largely accept the submissions made on behalf of the applicant as to the proper inference to be drawn, having regard to the relevant circumstances that include the making of the order of 3 June 2011 and the subsequent dealings between the parties that saw the document signed by the applicant. 72 In so finding, there is no doubt that the confidentiality undertaking actually given by Mr Oswal to the second respondent was unambiguous. If it were, for example, a contractual document, there would be little or no argument about what the terms of the confidentiality undertaking were. 73 The critical question for present purposes is whether the undertaking so given constitutes an undertaking given to the Court such that non-compliance with it enables the second respondent to maintain an action for contempt for breach of the undertaking. 74 The authorities relied on by the parties, such as Housewives United Buyers Co-operative Ltd and U & I Global Trading, indicate that the question whether a party has made an undertaking to the Court to do or refrain from doing something, will be determined as a question of fact, including by making proper inferences in all the circumstances of the case. 75 Senior counsel for the applicant presses the view that the factual assessment necessarily involves an evaluation of whether the Court was aware of the undertaking being given, its terms and whether or not the Court accepted the undertaking. 76 In my view, there is much to be said for the analysis contended for on behalf of Mr Oswal, that in the absence of clear terms of an undertaking of which a court is aware and accepts, it is difficult to conclude that a relevant undertaking to the Court was given. 77 However, that is not to say, that the acceptance of an undertaking to the Court will necessarily always be found recorded or express in some way. There may well be circumstances in which the Court can properly draw the inference that by reason of the conduct of a party or the parties, not only was a clear undertaking given, but also that the Court accepted it so that it became operative. 78 This is not so much an analysis in contract formation where classically one expects to find an offer and an acceptance before there is a contract, although that analogy may be considered helpful. Where the consequences of a party's failure to honour an undertaking given to the Court may be the prosecution of a contempt proceeding against them, not only is it necessary for the undertaking given to be clear - so there is less room for argument about whether or not it has been breached - but it must also be clear that the Court accepted - whether tacitly or expressly - the undertaking offered. 79 In this case it is accepted by both parties that the order made (following the submission of the minute of proposed orders by the applicant and in effect acceded to by the second respondent) included 2, that the inspection by any person pursuant to the order be subject to, relevantly: (a) the prior receipt by the solicitors of BFPL of a signed confidentiality undertaking by the aforementioned person in a form agreed by the parties or otherwise determined by the Court. 80 This order did not expressly provide that the confidentiality undertaking so provided was to be one made to the Court. The question is whether on the proper construction of the order, or, as the second respondent would have it, on the proper construction of the order taking into account the surrounding circumstances identified by it, the giving of the confidentiality undertaking necessarily constituted the giving of that undertaking to the Court. 81 The fact that the order in 2 does not make any reference "to the Court" is an important one. The missing words should not be readily imported, particularly in circumstances where, as I have already explained, the consequences of not complying with a relevant undertaking may be punishment for contempt. The question really is whether the additional words concerning the form of the undertaking in 2, "or otherwise determined by the Court", gives some relevant content and meaning to the nature of the confidentiality undertaking when agreed by the parties without reference to the Court. On balance I do not think that it does. 82 Nor do I consider that all of the surrounding circumstances relied upon by BFPL, concerning the circumstances in which Mr Oswal applied for access to documents and was successful in that regard, whereby he recognised that it would be appropriate and necessary to offer a confidentiality undertaking, alter that view. 83 What might be said is that while BFPL, at all material times, and very likely Mr Oswal at all material times, believed that the giving of a signed confidentiality undertaking under 2 of the order, was intended to be an undertaking to the Court, on the proper construction of the order actually made, with the knowledge of the parties, that was not expressly provided for. This is not a case where, as in the case of a contractual dispute, one party might seek to rectify the terms of a written contract to reflect the common agreement of the parties. This is an order, in respect of which one party now says the other party failed to honour an undertaking to the Court, where the order does not actually specify the undertaking to the Court asserted. To some extent, as noted above, the second respondent seeks to respond to that difficulty by suggesting that retrospectively the problem might be cured by the Court now accepting an undertaking offered to the Court in clear terms and waiving any Court rule concerning the late filing of the documents, if necessary. 84 When one considers that the terms of the order might well have been cast differently in order to cover the eventuality that has given rise to this contempt application, the point made becomes clearer. For example, one can readily imagine circumstances in which, in proceedings, an order is made by the Court providing one party with access to confidential documents held by another party, where it is appropriate for the Court also to make an order to protect confidential information. That might be done by the order requiring the giving of a confidentiality undertaking prior to access. In such a case the Court might not only refer to the giving of the confidentiality undertaking, as it did here in the relevant order 2, but it might also take the further step of specifying the confidentiality undertaking as a part of the order and ensuring that the terms of that confidentiality undertaking are to the Court quite expressly. If that had been done in this case there would be no real issue (subject to any argument about the power of the Court to make an order in such terms - about which I do not think there would be any real issue). 85 However, in this case, the fact that there is real debate, and BFPL has been obliged to advance contentions to deal with the issue in the way that it has, only serves to confirm the view that there is, in my view, nothing in the terms of order 2 and the signing of the confidentiality undertaking in question by Mr Oswal, that result in the undertaking signed being one given to the Court. The fact that the applicant purported to give the undertaking to the Court cannot, of itself, in my view make any relevant difference in all the circumstances of this case. It is not necessary for me to try and imagine circumstances in which the signing of a undertaking which is expressed to be to the Court might possibly be construed as having the asserted effect. In this case, however, I do not consider that on the proper construction of the terms of order 2 taken with the signing of the confidentiality undertaking in question by Mr Oswal in the terms that it is in, mean that the undertaking so given was one given to the Court. The particular problems identified by senior counsel for Mr Oswal are well made. The Court assumed that the confidentiality undertaking would be given. But at no stage was it asked to consider the terms of that document or did it do so. As much as the Court facilitated the giving of the confidentiality undertaking by Mr Oswal as a pre-condition to access to relevant documents, it did not thereby exact the undertaking as one "to the Court" for the making of the order. It was merely a pre-condition to the access order. 86 I would therefore uphold this first plank of the applicant's no case submission.

implied undertaking to the court 87 Submissions made on behalf of BFPL: It is appropriate in considering this second plank of the applicant's no case submission to consider first the submissions made on behalf of BFPL as to why, if there is no express or constructive undertaking to the Court to comply with the confidentiality regime, there is an implied undertaking not to use the documents or information in them for a purpose other than which they were supplied, that arises from the terms of order 2 in the circumstances of the signing of the document. 88 BFPL submits that Mr Oswal by disclosing the BDO report or causing it to be disclosed to The Australian newspaper, the applicant breached the implied undertaking and committed a contempt. 89 Senior counsel for BFPL submits the starting point in relation to this submission is Hearne v Street [2008] HCA 36; (2008) 235 CLR 125 (Hearne v Street). Reference is also made to Harman v Secretary of State for the Home Department [1983] 1 AC 280. 90 By reference to what the Court said in Hearne v Street at [96], the second respondent submits that when a party is compelled by reason of a specific order of a court to disclose documents or information, the party obtaining the disclosure cannot without the leave of the Court use it for any other purpose other than that for which it was given, unless it is received into evidence. It is submitted that the consequential implied obligation or undertaking referred to is in truth an obligation of law arising from the circumstances in which the material was generated and received, as suggested at [102] of Hearne v Street. 91 It is submitted the principle emerged in the context of documents provided under the discovery of processes of courts. For example, in the old case of Reynolds v Godlee (1858) 4 K&J 88 at [92]; 70 ER 37 at 39 (cited in Hearne v Street at [105]) it was observed that it is rule that "where documents have been produced in obedience to an order of this Court, the Court has a right to say to the person who has obtained their production: 'Those documents shall never be used by you except under the authority of the Court'". 92 Senior counsel points out that this principle has been applied to numerous other categories of documents or information: see for example, Central Queensland Cement Pty Ltd v Hardy [1989] 2 Qd R 509 (Central Queensland Cement Pty Ltd v Hardy) in relation to documentary witness statements and answers to interrogatories; Ainsworth v Hanrahan (1991) 25 NSWLR 155 (Ainsworth v Hanrahan) in relation to answers to interrogatories; as well as in relation to other categories of documents and information such as documents produced on subpoena, documents produced for the purposes of taxation of costs, documents produced pursuant to a direction from an arbitrator, documents seized pursuant to an Anton Piller order, witness statements served pursuant to a judicial direction and affidavits, as discussed in Hearne v Street at [96]. 93 Senior counsel acknowledges, however, that counsel has been unable to identify authorities that have considered whether an implied undertaking is imposed on a director under the circumstances that exist in this case, where as a director the applicant has obtained an order for access to documents (with the pre-condition that the confidentiality undertaking be given, as discussed above). The second respondent says that accordingly the question must be considered by reference to the underlying principle, namely, that a document furnished for use for one purpose may not legitimately be used for another. In the context of compulsion, it is submitted that the policy underlying the principle is, in simple terms, to prevent the effects of compulsion going beyond what the purpose of the compulsion was designed to achieve. 94 Senior counsel submits that this principle should apply in a case where a company resists the director's application for access to confidential documents pursuant to common law and/or statutory rights and it is only through the exercise of the Court's powers that access is ultimately obtained. In this case, for example, it is said that in Oswal v Burrup Holdings Ltd the Court balanced Mr Oswal's rights as a director of the two companies with confidentiality issues, the risk of misuse and the impact inspection might have on the management of the receivership and after balancing those rights, inspection was permitted on conditions. 95 Senior counsel submits that the Court has chosen to use its powers for a particular purpose and the orders were not intended to mean, and did not mean, that the documents lost all protection and could be distributed or used in any way Mr Oswal chose. He was obliged not to use the documents for any purpose other than the purpose for which inspection was granted. Indeed, this was implicitly acknowledged by the applicant in saying the confidentiality undertaking that he gave, limited his use to use in pursuance of his duties as a director of BFPL and for the purpose of proceedings to which he was a party in his capacity as a director of BFPL. 96 Although acknowledged not to be directly on point, senior counsel submits the decision in Carey v Korda [2010] WASC 362 (Carey) provides some support for the application of the implied undertaking principle to the present case. In Carey the Court was considering an application under s 421(2) of the Corporations Act 2001 (Cth) to inspect financial records kept by the receivers in circumstances where the plaintiffs were not entitled to inspect the records. The issue was whether the receivers were entitled to redact information from documents that otherwise fell under s 421(2) but which related to the companies and which was therefore not relevant to the companies in respect of which there was a right to inspect. The Court held the receivers were entitled to redact forming the view that the situation was analogous to the discovery of document rules. 97 Finally, senior counsel submits that the fact that an order was made in this case requiring the signing of an express confidentiality undertaking to gain access does not displace the existence of an implied undertaking, particularly if it is found that no express undertaking to the Court was given. 98 Submissions made on behalf of Mr Oswal: The applicant rejects the implied undertaking contention. Firstly, senior counsel for Mr Oswal draws attention to the origins of the implied undertaking and that it arose initially in the course of discovery or disclosure obligations under Court orders. Senior counsel submits that the rationale for the rule was and is that the party having the privilege of discovery had no prior or present entitlement to inspect such documents. The Court's compulsory processes enable it to gain that access. The price of the exercise of the compulsory processes was the implied obligation. 99 Senior counsel, recognising that the implied undertaking now extends to many circumstances beyond discovery and inspection submits that all the instances referred to above on behalf of BFPL, involves circumstances where the party using the compulsory processes has no other right or independent right to seek access to documents. 100 Senior counsel therefore submits there is no authority, as BFPL acknowledges, that determines that a party who seeks to vindicate an existing right where they obtain an order for access, is the subject of an implied obligation. The applicant says there is good reason for this and that is because there is no obligation and the circumstances do not sit with the rationale for the rule. 101 Senior counsel accepts that Mr Oswal was forced to come to the Court to vindicate his common law rights and to exercise his statutory rights, but that is all he was doing. The Court did not have to enforce the right to the full extent but to the extent that it did enforce the right it was giving relief and recognising the common law right. 102 Senior counsel submits that none of the authorities have dealt with the implied obligation in this type of situation, where a director has a wide general right to inspect documents. He suggested the issue of access can arise in a joint venture arrangement. The two parties may have an arrangement where they can each inspect documents for the joint venture, but only for the use of the joint venture. There may be contractual obligations. There might also be equitable obligations for limited use. One party may wish to get access to documents from the other side which is rejected. If they go to Court for access, they approach the Court asking for the use of a compulsory process to gain access to documents they have an existing right to access. An implied obligation simply does not apply. 103 Senior counsel refers to Ainsworth v Hanrahan, relied upon by the second respondent. There the Court had to deal with whether or not the implied obligation applied to the provision of interrogatories and held that it did. President Kirby (as he then was) went into the history of interrogatories and discovery and found there was no general power that existed to order discovery. Then his Honour stated, at 162, that however disagreeable it was to a party to be forced in this way to make disclosure notwithstanding personal interests, and however fatal such answers might be, the practice was to scrape the conscience. Then at 163, his Honour noted that compulsion is an invasion of a private right to keep one's documents to one's self. 104 President Kirby then, at 165, mentioned the decision in Central Queensland Cement Pty Ltd v Hardy, also referred to and relied upon by BFPL here. His Honour particularly highlighted the references to the procedures available being intended for use only for the purpose of properly conducting the litigation and for no other. 105 Senior counsel therefore submits that in no case has the implied undertaking proposition been found to justify an extension of that implied obligation to a circumstance where a person comes to court to vindicate a right, as opposed to the use of a compulsory process for the purpose of litigation, where one does not otherwise have an entitlement to documents. 106 Senior counsel accepts that nonetheless there will be circumstances where the provision of the document for one purpose means that it cannot be used for another, for example, duties of confidence cases, where a court will grant a civil remedy. It might also happen in a contractual setting where an employee will not be free in the ordinary course to use documents received from the employer for the purposes of employment for their own purposes. Again, there will be civil remedies. However he submits that none of those settings support the view that there is an implied obligation in a case such as the present or in those cases that can be the subject of a contempt proceeding. 107 Senior counsel also makes reference to ABC Learning Centres Limited, in the matter of ABC Learning Centres Limited; application by Walker (No 11) [2012] FCA 40; (2012) 87 ACSR 106. This case dealt with an express undertaking and a liquidator's application to seek a variation of it that was granted and discussed the implied undertaking that arises when a liquidator uses the compulsory processes of the Court and obtains a court order for a production notice. The liquidator is under an implied obligation with respect to the use of documents. Senior counsel says that the liquidator does not have any right to the documents as no present right is vindicated. Rather, there is a compulsory process to obtain documents the liquidator is not otherwise entitled to. 108 Senior counsel for the applicant submits the decision in Hearne v Street plainly has regard to the existence of an implied undertaking given by a party who receives documents or information from another party in litigation pursuant to the Court processes. 109 By contrast, in this case, Mr Oswal approached the Court to vindicate a pre-existing right and the orders obtained cannot be considered subject to any implied undertaking not to use them for any purpose other than the proceeding. 110 Senior counsel also makes particular reference to Central Queensland Cement Pty Ltd v Hardy, referred to above, where, at 510, McPherson J confirmed the well settled rule that a party who inspects a document is under an implied obligation not to use it for another purpose. That purpose is the purpose of litigation, not a more general proposition. 111 Senior counsel notes that McPherson J, at 511, repeated the implied obligation rationale but then referred to a broad general principle not to use a document given for one purpose for another, where his Honour referred to Saltman Engineering Co v Campbell Engineering Co Ltd [1963] 3 All ER 413; (1948) 65 RPC 203 as well as Coco v A. N. Clark (Engineers) Limited [196] FSR 415. On behalf of Mr Oswal it is submitted that these two cases have nothing to do with contempt and are cases that deal with confidential information and duties of equitable confidence. 112 Senior counsel accepted, however, that McPherson J is correct to observe that in many cases the circumstances will be such that a document that has been provided to one person by another may well afford a civil remedy if it is used for some other improper purpose, whether it be a claim in breach of confidence or breach of contract or some other action. 113 Senior counsel recognises that a party in Mr Oswal's position is not free under the general law to do anything they want with documents they receive as a director under orders made by the Court in a case such as the present, even though there may be no implied obligation arising from the Court order of the type contended by the second respondent. Senior counsel observed that the applicant, like any person, receiving the documents as a director, has the obligation he owes to the company. But that is not an implied obligation of the type that can be enforced by a court by way of contempt proceedings. The obligation arises separately by reason of his office. 114 In a similar vein it is submitted, by reference to what is said in the joint judgment in Hearne v Street, that the implied obligation arises where the document to which the party is not otherwise entitled is produced for the purposes of the litigation. 115 Finally, senior counsel refers to Clone Pty Ltd v Players Pty Ltd (In Liquidation Receivers Appointed) [2012] SASC 12. There the Court, at 179, recognised that the implied obligation arises because the party who was obliged to produce a document is having a general law right "abrogated". The privilege of the other party to have the right to inspect such a document gives rise to the implied obligation. Senior counsel for the applicant says this is the crux of the proposition put on behalf of the applicant. The Court has no further role to play in terms of the documents to which Mr Oswal was entitled to inspect. They were not documents to be produced to the Court. They were not documents which dealt with a court proceeding. The Court had completed its function by making the orders for relief. The applicant was not exercising a privilege; he was vindicating his entitlement to access. 116 BFPL's submissions in reply: Senior counsel for the second respondent, having had the opportunity to both read the written submissions filed on behalf of the applicant in respect of the express and implied undertaking arguments, as well as the oral development of those arguments, addressed each in the submissions. In relation to the implied undertaking contention, senior counsel submitted the critical issue was not the nature of the application but what the Court is being asked to do in any case. Senior counsel submitted that the second respondent starts with this principle and says that the principle applies to a number of different scenarios, the categories of which are not closed. 117 In relation to the contest between joint venturers for access to documents that the others held, posited by senior counsel for the applicant in argument, senior counsel for the second respondent submitted that it may well be that there is an implied undertaking not to use the documents other than for the purpose for which they were granted, should the Court make a declaration about access rights or orders facilitating access. 118 Senior counsel also drew attention to the fact that some of the orders made by the Court for access to documents arose under s 198F of the Corporations Act and submitted there was no reason why an implied undertaking should not arise when an order was made for access reliant on that provision. 119 Senior counsel confirmed the second respondent's position that there is no authority one way or the other to say whether or not in the situation presently before the Court, the implied undertaking or implied obligation principle can apply. Senior counsel submitted that it is for the Court to determine what the critical underlying philosophy or principle is behind the law. One possible outcome, contended for on behalf of the second respondent, is that where a court actually exercises its powers obliging documents to be produced that there is an implied undertaking to use those documents only for the purpose for which they were given. 120 Consideration: In my view, the second plank of the applicant's no case submission, that there is no implied undertaking to the Court not to use the documents provided for any purpose other than that for which they were provided, should be upheld. At a broad level I do not accept the invitation made on behalf of the second respondent to apply the "implied undertaking" or "implied obligation" jurisprudence beyond the general circumstances in which it has been applied in the authorities cited. No doubt it is correct to say, as senior counsel for BFPL did, that the category of cases in that regard is not closed, but in my view the authorities, particularly Hearne v Street, establish that it is in circumstances where a party has no present obligation to provide another party with access to a document, which are altered by an order of the Court pursuant to its compulsory powers, that the implied undertaking or implied obligation arises to use the document or the information to which access is given for the limited purpose of the proceeding. 121 The point is further made, as submitted on behalf of the applicant, by the realisation that upon the Court making the final orders for access to documents in this proceeding, that it did on 3 June 2011, there was no further work for the Court to do. The question of access pursuant to the general law and having regard to the relevant provisions of the Corporations Act, was complete. The order for access was made on the terms stated. 122 In my view, the applicant may well have, at all material times, laboured under certain obligations at law or at equity in relation to the use of the documents and information in them, by reason of his position as a director of BFPL, or possibly otherwise. But the remedies for breach of any relevant rule applied by law or equity to the applicant in these circumstances, is not a proceeding for contempt for breach of an implied undertaking to the Court not to use the documents for any purpose other than those stipulated in the confidentiality undertaking. 123 To an extent the same considerations that arose above in relation to whether or not there was an express or a constructive undertaking to the Court also arise in relation to this issue. At no time was the Court aware of the particular terms of the undertaking of the parties ultimately agreed upon. But, it cannot be said with ease that whatever was in the confidential undertaking that the parties agreed, was known to the Court. In a general sense it could be assumed that there would be confidentiality limitations. The Court might even be able to guess at them. It cannot be said that the Court was aware of them. This too suggests that the Court was not given an undertaking, by implication, not to use the documents except for the purposes for which they were given. 124 In broad terms, therefore, I accept that this is a case where the orders made by the Court, including order 2, were made in circumstances where the applicant was vindicating his general law and other rights as a director of the second respondent to have access to documents, albeit on the reasonably well understood basis that the provision of those documents or access to them was to facilitate his exercise of duties as a director. Having vindicated that right by obtaining the orders in question, it cannot be said that Mr Oswal was thereby subject to an implied obligation or implied undertaking to the Court not to use the documents or information in them save on the terms set out in the confidentiality undertaking that he actually signed, or more generally. It is unnecessary for the Court to imply obligations or undertakings concerning the use of the documents or information in them in these circumstances, when there may be general law obligations, at law or equity, that govern the use of the documents to which access has been given. This position is to be contrasted with the circumstances in which, for example in Hearne v Street, the Court has recognised the existence of an implied obligation or implied undertaking in relation to the use of documents where, but for the Court's orders, there was no present or pre-existing right to the documents or the information in them. 125 For these reasons I would uphold the second plank of the applicant's no case submission.

Oswal v Burrup Holdings Limited

At a glance

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Before

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Judgment (16 paragraphs)

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Legislation Cited (3)

Cases Cited (24)

Cited By (1)