Plaintiff v Defendants

For Connective Services Pty Ltd and Connective OSN Pty Ltd

Mr A Myers AC, one of Her Majesty's Counsel with Mr D Guidolin

1 Two applications, each made by a summons dated 2 June 2017 in a different proceeding, came before the court for hearing at the same time. They involved the same subject matter and parties. Both applications were made by Connective Services Pty Ltd and Connective OSN Pty Ltd. I will refer to the applicants as the Connective Companies. The first summons was issued in proceeding S CI 2011 004332 in which Slea Pty Ltd is plaintiff and the Connective Companies are the first two defendants. That proceeding became known as the 'Oppression Proceeding'.

2 The second summons was issued in proceeding S ECI 2016 001168, in which the Connective Companies are plaintiffs and Slea and Minerva Financial Group Pty Ltd are defendants. That proceeding became known as the 'Pre-emptive Rights Proceeding'. It was commenced on 11 August 2016.

3 By the first summons, the Connective Companies sought leave to use, in the Pre-emptive Rights Proceeding, a discovered document described as the 'Accommodation Agreement', executed by Slea and Minerva on or about 12 August 2010. They sought retrospective relief to validate the use of the document to commence that proceeding.

4 By the second summons, the Connective Companies sought the lifting of a stay of the Pre-emptive Rights Proceeding. The stay had been granted by Almond J on 12 May 2017.

5 The applications by the Connective Companies followed a judgment by Almond J, delivered 12 May 2017,[1] in which His Honour found that the Pre-emptive Rights Proceeding had been commenced in reliance on the contents of the Accommodation Agreement in breach of an implied undertaking not to use a document for a purpose unconnected with the Oppression Proceeding. The document had been produced in discovery. His Honour found that the use of the document was an abuse of process, and stayed the proceeding pursuant to r 23.01 of the rules of court.

6 The shareholding in each of the Connective Companies is identical. Both have issued 1,800 ordinary shares. Slea holds 600 shares in each company. Sofianos Tsialtas is the sole director of Slea. Mark Shamus Haron holds 300 shares in each company, and Millsave Holdings Pty Ltd holds 900 shares. Glenn Andrew Lees is a director of Millsave, and a director of the Connective Companies. Mr Haron is a director of the Connective Companies, as is Graham Edward Maloney. Mr Maloney does not appear to have a shareholding.

7 In the Pre-emptive Rights Proceeding, Millsave Holdings and Mr Haron are joined as defendants, although no relief is sought against them. It is alleged they are joined as necessary and proper parties. The relief sought by the Connective Companies in that proceeding is to compel Slea to offer its shares to Millsave and Mr Haron in compliance with cl 77.3 of their respective constitutions, which confer pre-emptive rights to acquire the shares of another shareholder in prescribed circumstances. Ancillary relief is also sought to prevent Slea from dealing with the shares otherwise than in accordance with the pre-emptive rights.

8 By their statement of claim, the Connective Companies allege a breach by Slea in 2009 of the pre-emptive rights provisions, arising out of an agreement to transfer its shareholding in the Connective Companies to Minerva. When the 2009 transfer agreement was disclosed to the other shareholders, they objected. As a consequence, Slea agreed not to proceed with the transfer of the shares. The Connective Companies allege that Slea failed to honour its agreement and instead, entered into the Accommodation Agreement under which Slea agreed, in prescribed circumstances, to transfer its shareholding to Minerva. The Connective Companies allege that the purpose of the Accommodation Agreement was to wrongfully subvert or avoid the pre-emptive rights conferred under the respective constitutions. The Pre-emptive Rights Proceeding was commenced the day before the expiry of six years from the date of the Accommodation Agreement.

9 It seems common ground that Slea did not disclose the existence of the Accommodation Agreement to its co-shareholders in the Connective Companies until late 2011. Slea maintained that the Accommodation Agreement was disclosed by it to the Connective Companies on 15 December 2011 by way of discovery in the Haron Proceeding.[2] The Haron Proceeding involved claims brought by Mr Haron against Slea, Millsave and the Connective Companies. In his statement of claim, Mr Haron alleged an agreement made in 2006 with the defendants, under which Slea and Millsave would sell to him 25 per cent of their shares in the Connective Companies, following a share split. While the share split took place, Mr Haron alleged that Slea and Millsave failed to transfer the agreed number of shares.

10 When advancing their respective cases on the applications before this Court, the Connective Companies and Slea identified a number of related proceedings, and relied on a chronology of events involving the disclosure and use of the Accommodation Agreement in those proceedings. For Slea, the first relevant event was discovery of the Accommodation Agreement in the Haron Proceeding. Slea contended that once discovered on 15 December 2011, the Connective Companies continued to be bound by their implied undertaking. The Connective Companies, however, pointed out that the Accommodation Agreement had been pleaded by Slea in its amended defence in the Haron Proceeding.

11 By an amended defence filed on 14 December 2011, Slea alleged that it would be inequitable and unjust to grant Mr Haron the relief he sought by reason of his laches, acquiescence and delay. Slea pleaded:

As a result of the failure of Mr Haron and Slea to enter into an agreement to sell 25 per cent of Slea's shares in Connective Services and Connective OSN to Mr Haron, in August 2010 Slea entered into an accommodation agreement with Minerva Financial Group Pty Ltd to give first right of refusal to purchase its shares in Connective Services and Connective OSN should the opportunity arise.

12 Slea sought to deflect the significance of this use of the document through the evidence of Justin Taede Vaastra, who filed an affidavit sworn 3 July 2017, in which he deposed:

The Accommodation Agreement was discovered in the Haron Proceeding on 15 December 2011. The Connective Companies have had access to the Accommodation Agreement since that time.

On 26 September 2012 Slea filed a further Amended Defence in the Haron Proceeding. That pleading did not make mention of the Accommodation Agreement.

13 While it is true that the Accommodation Agreement had been discovered in the Haron Proceeding on 15 December 2011, it would appear that it had been advanced by Slea as part of an affirmative defence shortly before or around the same time.[3]

14 The Haron Proceeding was ultimately settled. No application was made by the Connective Companies in that proceeding to use the Accommodation Agreement for the purpose of another proceeding.

15 On 17 August 2011, Slea commenced the Oppression Proceeding in which it claimed relief against the Connective Companies and others under s 233 of the Corporations Act 2001. By its statement of claim, Slea alleged a failure to pay dividends, the inappropriate retention of dividends, the inappropriate payment of directors' fees, the inappropriate recording of directors' fees as unsecured loans, and unexplained board appointments. The Accommodation Agreement was formally discovered by Slea on 25 March 2015. It was also pleaded by the Connective Companies, Mr Haron and Slea.

16 By their defence, filed on 4 September 2014, the Connective Companies alleged a sequence of events surrounding dealings between Slea and Liberty Financial Pty Ltd or Minerva, concerning Slea's shareholding in the Connective Companies. The Accommodation Agreement was pleaded as an extension of the initial 2009 agreement between Slea and Liberty. Particulars of the agreement referred back to Slea's amended defence in the Haron Proceeding. The particulars provided that a copy of the Accommodation Agreement was available for inspection by appointment at the solicitors for the Connective Companies. The Court was not informed of any objection raised by Slea to the deployment of the Accommodation Agreement by the Connective Companies in their defence in the Oppression Proceeding.

17 In the Oppression Proceeding, Slea pleaded by way of reply, filed on 9 December 2014:

On or about 12 August 2010, in its capacity as trustee for the Tsialtas Family Trust, Slea entered into a confidential agreement with Minerva in relation to Slea's interest in Connective OSN and Connective Services (the accommodation agreement).

Thus, once again, Slea appeared to voluntarily assert reliance on the Accommodation Agreement.

18 On 27 May 2016, Slea filed an amended summons in the Oppression Proceeding seeking leave to bring a derivative proceeding in the name of the Connective Companies, against its directors and Macquarie Bank Ltd. That application was recently heard by Robson J. The decision is reserved. It is common ground that the Accommodation Agreement was introduced into evidence during the hearing of that application. I was informed that evidence was given about the agreement by the director of Slea, and extensive submissions were made about its meaning and effect. The Connective Companies contended that the derivative proceeding application was brought by Slea in order to advance the interests of Minerva under the Accommodation Agreement.

19 The Connective Companies argued that the creation and terms of the Accommodation Agreement are central to the Oppression Proceeding. They argued that, by reason of the Accommodation Agreement, Slea was subject to the control of Minerva in certain material respects. Slea has filed witness statements which traverse the events leading to the Accommodation Agreement. Witnesses for the Connective Companies propose to give evidence of the circumstances in which they learned of the existence of the Accommodation Agreement.

20 The next event occurred on 17 June 2016, when Slea objected to subpoenas issued by the Connective Companies in the Oppression Proceeding. At a hearing, before Associate Justice Randall, reference was made to the Accommodation Agreement. On 3 November 2016, the Accommodation Agreement was tendered in evidence during a hearing of objections to a subpoena issued by the Connective Companies in the Oppression Proceeding.

21 There are other proceedings involving disputes between Connective and related parties,[4] all of which seemed to relate in some way to shareholdings in the Connective Companies.

22 Shortly after the Pre-emptive Rights Proceeding was commenced, Slea wrote to the Connective Companies alleging a lack of standing, a contravention of s 260A of the Corporations Act, and a breach of the implied undertaking through their use of the Accommodation Agreement to support the new proceeding. Slea relied upon its disclosure of the Accommodation Agreement under discovery obligations. The Connective Companies responded by contending that the Accommodation Agreement had been put into evidence during a hearing on 17 June 2016 before Randall AsJ by senior counsel for Slea. They also relied on an affidavit of Mr Tsialtas, sworn 2 August 2016, in support of the derivative proceeding application, to which he exhibited a witness statement prepared on his behalf, and filed in the Oppression Proceeding, which disclosed the Accommodation Agreement. The Connective Companies alleged voluntary disclosure, stating in a letter from their solicitors:

As the Accommodation Agreement has been provided by your client voluntarily and not pursuant to a coercive curial process or under compulsion, the implied undertaking is not engaged.

23 Most, but not all, of the foregoing events were relied upon by the Connective Companies to resist an application by Slea and Minerva, brought by summons dated 4 October 2016, to dismiss or stay the Pre-emptive Rights Proceeding on the ground that the Connective Companies had breached an implied undertaking by using the Accommodation Agreement for an unauthorised purpose.

24 From the reasons for judgment published by Almond J it does not appear that the Connective Companies argued that Slea's voluntary disclosure of the Accommodation Agreement, by pleading the agreement in its defence in the Haron Proceeding, and in its reply in the Oppression Proceeding, was inconsistent with an intention to maintain confidentiality of the document. After all, the rationale for the implied undertaking is to aid the discovery process by protecting a party's confidentiality in material through restricted use. Various explanations for the implied undertaking, as an obligation of substantive law, are helpfully set out by the plurality in Hearne v Street.[5] It may be observed from the joint judgment that the right of a party to maintain confidentiality of its own material lies at the root of the protection afforded by the implied undertaking.

25 To apply by analogy the common law principles relating to waiver of privilege, established by the High Court in Mann v Carnell,[6] the conduct of Slea, in advancing the Accommodation Agreement in the pleadings, affidavits and submissions might be characterised as voluntary acts inconsistent with an intention to maintain the confidentiality of the document and its contents. It has been held in a number of cases that, if a party voluntarily discloses or otherwise demonstrates that it no longer intends to maintain confidentiality, the implication of the undertaking is no longer required to protect confidentiality of discovered documents by restricting use.[7]

26 Nor did the Connective Companies advance a 'voluntary disclosure' contention in support of the applications now before the Court. That was not surprising as they quite properly did not seek to disturb the finding of breach. But the facts which might support such a contention are also relevant to the application for leave.

27 The Connective Companies were criticised for traversing, on these applications, material advanced before Almond J to resist Slea's application for a stay. To some extent that was inevitable, when the questions before this Court, on these applications, are (1) whether special circumstances exist to excuse the Connective Companies from the consequences of the breach; (2) whether leave should be granted retrospectively; and (3) whether the stay should be lifted. The circumstances in which the Accommodation Agreement has been disclosed and deployed by all sides in the suite of litigation are relevant.

28 It is unfortunate that a cross application for leave to use the Accommodation Agreement to commence the Pre-emptive Rights Proceeding, was not made at the same time as the application for a stay before Almond J. Furthermore, had a cross application for leave been made before Almond J, it would have been absent the background of a formal finding of contempt, and an order that the proceeding be stayed. Such an application, if made, would not have required this Court to re-canvass many of the same facts, as were before Almond J, and to make findings about some of them, albeit for a different purpose.

29 Slea did not contend that the failure to make an application for leave before Almond J disqualified the Connective Companies from making the applications presently before the Court. Slea did, however, contend that in the face of the finding of contempt, absent a successful appeal, the Connective Companies were required to purge their contempt before the application for leave could be heard. According to Slea, the Connective Companies were required to deliver an unreserved apology, compensation or reparation for damages suffered by it, and the payment of relevant costs on an indemnity basis.[8]

30 There is no point speculating about why a cross application was not made to Almond J. Failure to do so might be explained by any number of factors, including the degree of conviction held by the Connective Companies about their position, and the implicit concession underlying such an application. From the outset, the Connective Companies maintained that they were not bound by any continuing implied undertaking.

31 The Connective Companies argued that there is no requirement that they must purge their contempt before making these applications. The contest over the question of breach having been resolved against them by Almond J, the Connective Companies characterised this application as one to retrospectively vary or adjust the implied undertaking they had been found to have breached. While the Connective Companies have kept open the opportunity to challenge the finding of contempt on appeal, they proceeded, as they must, on the basis that they were at the relevant time bound by the implied undertaking, and seek relief from the obligation to the extent necessary to validate the commencement of the Pre-emptive Rights Proceeding.

32 A threshold contention of Slea was to the effect that this Court should not entertain the application for leave unless the Connective Companies purged their contempt. Implicit in their contention was the elevation of the finding of contempt by Almond J, into an additional hurdle, absent a successful appeal.

33 It is true that the findings and orders made by Almond J resulted in the grant of a stay, which must be lifted if the grant of leave is to have any utility. But, the finding of breach, contempt and consequently, a finding that the new proceeding constituted an abuse of process would, in any event, have been implicit upon a successful application for leave if made at any time after 11 August 2016. That is because a grant of leave would assume a continuing obligation which had been breached by the commencement of the Pre-emptive Rights Proceeding.

34 The Connective Companies' application was for a retrospective order. It was common ground that the implied undertaking found to exist by Almond J was amenable to retrospective variation or adjustments. This characteristic of the implied undertaking distinguishes the obligation from other obligations which might only be capable of variation or adjustment on appeal. While acknowledging the variability of such undertakings, much of Slea's submission seemed to assume that the obligation in respect of the Accommodation Agreement could only be adjusted on appeal. That seems clear from its primary reliance upon the judgments in Hadkinson v Hadkinson.[9]

35 The relief sought by the Connective Companies involves three elements. First, they must establish special circumstances to justify their release from the implied undertaking that binds a party on whom it is imposed, preventing the use of information contained in a discovered document otherwise than for the purpose of the proceeding in which that discovery was given. Second, the Connective Companies sought retrospective leave to validate the misuse of the information for the purpose of commencing the Pre-emptive Rights Proceeding. Third, because the Pre-emptive Rights Proceeding has been stayed, circumstances must exist to justify lifting of the stay, and thus permit that proceeding to be prosecuted to trial.

36 While each element warrants separate consideration, they cannot be completely quarantined, one from the other. If the grant of leave is to have real utility, the stay must be lifted, or a new proceeding commenced which, Slea pointed out, will be amenable to a limitation of actions defence. If the Pre-emptive Rights Proceeding is to be litigated, leave must be granted retrospectively. Thus, when considering whether special circumstances exist to justify release from the implied undertakings, such circumstances must support the full suite of relief sought by the Connective Companies.

37 Slea correctly identified some uncertainty in the jurisprudence relating to the consequence of a finding of contempt on a subsequent application. In Hadkinson,[10] Romer LJ, with whom Somervell LJ agreed, speaking of the conduct of a mother who, in direct violation of a court order, removed a child from the United Kingdom to Australia, said:

... her conduct was in direct violation of the order of December 21 1950, and constituted, prima facie, a gross contempt of court; and, secondly, it nullified the arrangements to which she had agreed for access by the father. ...

His Lordship discussed the unqualified obligation of every person to obey court orders, and continued-

Such being the nature of this obligation, two consequences will, in general, follow from its breach. The first is that anyone who disobeys an order of the court (and I am not now considering disobedience of orders relating merely to matters of procedure) is in contempt and may be punished by committal or attachment or otherwise. The second is that no application to the court by such a person will be entertained until he has purged himself of his contempt.

38 Slea seized on this passage to mount their argument that the Connective Companies must either appeal or purge their contempt. Romer LJ noted only two exceptions to 'the general rule'; namely, an application for the purpose of purging contempt and an appeal with a view to setting aside the order upon which the contempt is founded. Depending on the nature of the underlying obligation, there is a third - an application to vary or adjust the underlying obligation. The appeal under contemplation by the Connective Companies, against the finding of breach made by Almond J, is of a different character. Such an appeal does not seek to set aside or vary the obligation upon which the contempt is founded. Slea did not contend that any such variation or adjustment could not be made at this time, or depended upon a successful appeal. By its very nature, the implied undertaking is amenable to adjustment at any time by the Court, in an appropriate case.

39 Slea accepted that there was some uncertainty as to whether a strict, rule-based approach, applied in Hadkinson prevailed, or whether a more 'modern' approach, reflected in the judgment of Lord Denning, and later cases, now applied. While reaching the same conclusion, that until the boy was returned to England the court would decline to hear the appeal,[11] Lord Denning said:

I need hardly say that it is very rare for this court to refuse to hear counsel for an appellant. No matter how badly a litigant has behaved, nevertheless, generally speaking, if he has a right of appeal, he has a right to be heard; for the simple reason that, if he is not heard, his right of appeal is valueless. The present case is, I believe, the first occasion on which this court, since it was set up 80 years ago, has refused to hear an appellant who has been heard by the court below. Our course requires, therefore, to be justified.

The rule which we are asked to invoke - that a party in contempt will not be heard - was never a rule of the common law. It was a rule of the canon law, which was adopted by the ecclesiastical courts and the Chancery court. ... But each of those courts also adopted the rule of the canon law that they would not hear a party who had disobeyed its orders. The question in this case is: how far does that rule apply today?

...

Those cases seem to me to point the way to the modern rule. It is a strong thing for a court to refuse to hear a party to a cause and it is only to be justified by grave considerations of public policy. It is a step which a court will only take when the contempt itself impedes the course of justice and there is no other effective means of securing his compliance. ... extreme measures are sometimes necessary to preserve men's rights, that is, if no other pertinent remedy can be found. ... Applying this principle I am of the opinion that the fact that a party to a cause has disobeyed an order of the court is not of itself a bar to his being heard, but if his disobedience is such that, so long as it continues, it impedes the course of justice in the cause, by making it more difficult for the court to ascertain the truth or to enforce the orders which it may make, then the court may in its discretion refuse to hear him until the impediment is removed or good reason is shown why it should not be removed.

The present case is a good example of a case where the disobedience of the party impedes the course of justice. So long as this boy remains in Australia it is impossible for this court to enforce its orders in respect of him.

40 What may be observed from the authorities are different approaches by courts in the application of competing principles and policies. On the one hand is the importance attaching to a breach of a substantive order or undertaking; while on the other, the right of access to the courts, modern case management principles and practices, and the influence of unique fact circumstances to modify what might otherwise appear as an immutable rule. In Hadkinson, the child had been removed from the jurisdiction of the court in direct breach of a court order. An urgent and practical response was required to remedy that breach, by ensuring that the child was returned to the jurisdiction.

41 In Chamberlain Group Pty Ltd v Kids for Life Academy Pty Ltd,[12] the New South Wales Court of Appeal, dealing with a preliminary issue concerning the failure of the appellant to comply with orders of the trial judge requiring it to grant a lease, recognised a 'general principle' but adopted a more pragmatic approach:

Failure to comply with orders of the court amounts to contempt of court. There is a general principle that, until any contempt is purged, a party guilty of contempt should not be heard on any application for relief beyond an application to set aside or vary an order (or undertaking to the court) in respect of which he, she or it is in contempt or an appeal designed to set aside or vary that order or undertaking ... Such a course would have been inappropriate here, given that the matter was relatively urgent and ready to proceed.

42 In Stokes v McCourt,[13] Lindsay J reviewed the authorities in the context of an objection made by the plaintiff to the defendant being heard on a motion for summary dismissal. The objection was based upon the general principle that until any contempt is purged, a party found guilty of contempt should not be heard on any application for relief, beyond an application to set aside or vary an order (or undertaking to the court) in respect of which he, she or it is in contempt or an appeal designed to set aside or vary that order or undertaking.

43 There are examples of the more rigid 'rule' having been applied in Victoria.[14] Since then, however, the framework for the conduct of parties engaged in litigation, and the discovery process in particular, has changed. Aided by the Civil Procedure Act 2010, there has been a shift away from the traditional notions of the adversarial system, in which the burdens and responsibilities of the parties in litigation went largely unsupervised, unless a dispute arose. The process of discovery, along with all other interlocutory steps, is now closely supervised by a managing judge. Litigants and their lawyers are no longer left to their own devices when undertaking the discovery process.

44 It is important to properly characterise the nature of the obligation breached by the litigant, and the relevant conduct of the party found in breach. The breach found by Almond J involved the consideration of a complex factual matrix and uncertain law. There was a genuine dispute over the question whether a breach had occurred at all. This was not a case of flagrant breach of an order of the Court, or of an order only amenable to adjustment on appeal. It did not involve special circumstance that would require a step to be taken by the Connective Companies to rectify a state of affairs (such as the return of a child to jurisdiction) before justice could be achieved. The impugned conduct involved the initiation of a proceeding which would thereafter continue under the supervision and management of the Court.

45 A requirement that a party found in contempt of an order or undertaking purge the contempt, before any application may be entertained, is plainly justified where it is necessary to do justice between the parties. But even in Hadkinson, Romer LJ acknowledged exceptions which would, in my view, permit this application to be made without 'purging the contempt'. In the present case, a successful application for retrospective leave will transform the impugned conduct, found to be in breach of an implied undertaking, into a valid act. The modern approach, reflected in the judgment of Lindsay J in Stokes, reflects a departure from rigid rules, in favour of the exercise of a discretion based upon broad principles. It is also consistent with modern case management. While there are cases in which a party found in contempt may justifiably be denied a hearing, such circumstances must be rare.

46 A requirement imposed on the Connective Companies to purge their contempt before making any application for the relief now sought is inconsistent with the accepted right to apply to retrospectively vary the underlying obligation. The elements of purging initially demanded by Slea seem illogical and inapt. Slea demanded an unequivocal apology. It is somewhat artificial and meaningless to require an unequivocal apology from a party who vigorously argued against the existence of the underlying obligation, and who now seeks to be relieved of its operation.

47 According to Slea, the Connective Companies are required to pay indemnity costs. But for what? Slea did not seek indemnity costs before Almond J. It might have done so had there been a proper basis. Slea did not contend that the Connective Companies ought to have paid indemnity costs because its case was entirely without merit, or should not have been advanced at all, or because of a finding of contempt. Slea would ordinarily be entitled to indemnity costs in respect of the present applications. Slea also mentioned compensation, although that aspect of purging was not pressed.

48 In Stokes v McCourt,[15] Lindsay J helpfully explained the modern context in which courts respond to applications by a litigant found in breach of an order or undertaking. His Honour said:

Whether the general principle is best stated as "a rule subject to exceptions" or as a "discretionary rule" is the subject of debate in New South Wales (Kayserian Nominees (No 1) Pty Ltd v JR Garner Pty Limited [2008] NSW 1011 at [3]-[4]), a debate which must now be viewed in the context of the case management provisions of ss 56-64 of the Civil Procedure Act 2005 NSW and the Uniform Civil Procedure Rules 2005 NSW.

CPA s 56 mandates that, in civil proceedings, the Court give effect to the "overriding purpose" of facilitating the just, quick and cheap resolution of the real issues in the proceedings. CPA s 57 mandates that the Court strive to ensure the attainment of case management objectives defined in terms of both efficiency and justice in the determination of proceedings. CPA s 58 mandates that, in the management of proceedings, the Court must seek to act in accordance with the dictates of justice. CPA ss 59-64 contain ancillary provisions which, in their legislative context, point in the same direction.

The ambit of "exceptions" to the general rule that a contemnor cannot be heard in his own cause appears often, if not universally, to have been described by reference to felt necessities in the due administration of justice generally and by the dictates of justice in the particular case. The felt necessities appear to have varied over time and to have depended, in part, on each court's practice and procedure, not limited to particular provisions in rules of court.

49 Slea accepted that the Court had jurisdiction, in an appropriate case, to grant retrospective relief. Putting to one side the question whether retrospective relief ought to be granted in this case, the jurisdiction to entertain an application for retrospective relief assumes relief granted in the face of a breach having occurred. There is no doubt that this Court has jurisdiction to grant such relief, and relieve the Connective Companies retrospectively from a breach of their implied undertaking.[16]

50 I am not persuaded that, before the Connective Companies' application for leave can be entertained I should require them to purge their contempt in the manner proposed by Slea or otherwise. The application is to retrospectively vary the implied undertaking attaching to the document to the extent required to enable the Connective Companies to prosecute the Pre-emptive Rights Proceeding. Such an application is, in any event, acknowledged by the authorities to fall within an exception to the 'general rule'.

51 In Springfield Nominees Pty Ltd v Bridgelands Securities Ltd,[17] Wilcox J said:

For "special circumstances" to exist such as to justify the grant of leave it is enough that there is a special feature of the case which affords a reason for modifying or releasing the undertaking of confidentiality and which is not usually present. The matter then becomes one for the proper exercise of the court's discretion, many factors being relevant.

52 His Honour set out the factors which may be relevant to determining whether special circumstances exist:

It is neither possible nor desirable to propound an exhaustive list of those factors. But plainly they include the nature of the document, the circumstances under which it came into existence, the attitude of the author of the document and any prejudice the author may sustain, whether the document pre-existed litigation or was created for that purpose and therefore expected to enter the public domain, the nature of the information in the document (in particular whether it contains personal data or commercially sensitive information), the circumstances in which the document came into the hands of the applicant for leave and, perhaps most important of all, the likely contribution of the document to achieving justice in the second proceeding.

53 Putting to one side, for the moment, the question of retrospective relief, I am satisfied that special circumstances exist which justify the grant of leave to the Connective Companies to use the Accommodation Agreement. As Wilcox J pointed out in Springfield Nominees, perhaps the most important consideration is 'the likely contribution of the document to achieving justice in the second Proceeding.'

54 The Connective Companies submitted that there is a substantial overlap between the issues in the Oppression Proceeding, the Pre-emptive Rights Proceeding and the Mortgage Results Proceeding, all of which concern share entitlements in the Connective Companies. I accept that the issues in the Oppression Proceeding and the Pre-emptive Rights Proceeding substantially intersect. For present purposes, it is enough to acknowledge that the making and terms of the Accommodation Agreement are highly relevant to each proceeding. Applications have been made, or foreshadowed, to have the various proceedings heard together. That is not surprising but, according to Slea, irrelevant to this application. Much would depend upon the basis for any such application, which may be dominated by factors other than the significance of the Accommodation Agreement.

55 The Connective Companies might have brought their proceeding as a cross-claim in the Oppression Proceeding. Such a course might have been resisted, and leave refused based on case management principles, although it would have proved difficult for Slea to complain that a cross claim, relying upon the document already pleaded, should be rejected for that reason. But the point remains, there is a community of interest and issue between the various proceedings. The utility of the Accommodation Agreement in the formulation of those issues is obvious.

56 Whatever might be said about the confidentiality of the Accommodation Agreement to Slea prior to pleading the agreement or producing a document in discovery, there is no longer any secret about its existence or contents. Slea submitted, correctly in my view, that the fact of a subsequent disclosure does not excuse an earlier breach of the implied undertaking. On the other hand, voluntary disclosure by Slea must be a relevant consideration on the question of leave.

57 The Connective Companies relied upon the content of the Accommodation Agreement as a relevant factor. They contended that by entering into the agreement Slea agreed to do the bidding of Minerva, with the object of ultimately obtaining ownership of Slea's shares in the Connective Companies. They contended they are entitled to protect the contractual rights enshrined in their respective constitutions. I have not been invited to address the merits of the claims, but I accept that there is a question to be tried about the content and effect of the Accommodation Agreement. The agreement touches upon the essence of the disputes between the various shareholders in the Connective Companies, and continues to do so.

58 To these factors must be added Slea's conduct in propounding the Accommodation Agreement as part of an affirmative plea in the Haron Proceeding, and the Oppression Proceeding, and in aid of its application before Robson J. I do not rely upon such conduct to establish that there was no breach. Almond J has made findings and orders that a breach occurred. That decision may be the subject of an appeal. For the purpose of these applications, such conduct is relevant only to the question of leave, retrospectivity and the lifting of the stay.

59 The first item of conduct pre-dated or was contemporaneous with discovery in the Haron Proceeding, and pre-dated the commencement of the Pre-emptive Rights Proceeding, as did the second. There were other instances where Slea propounded the agreement, or evidence about it, before and after the commencement of the Pre-emptive Rights Proceeding. In my view, these deployments by Slea of the Accommodation Agreement suggest that while the agreement might once have been regarded as confidential, it was advanced by Slea for its own purposes. By voluntarily propounding the document Slea may be taken to have indicated that it no longer seeks to protect its confidentiality. Furthermore, it is arguable that the document ought to have been disclosed to the Connective Companies and its other shareholders from its creation, if only because of the terms under which Minerva agreed to provide Slea with all reasonable assistance necessary to take any action or bring proceedings to procure the shares in the Connective Companies.

60 Slea contended that the Connective Companies failed to explain the inordinate delay in commencing the proceeding, having first obtained the Accommodation Agreement on 15 December 2011 in the Haron Proceeding. Slea also contended that there was no explanation of the purpose for which the Connective Companies, rather than the beneficiaries of the contractual Pre-emptive Rights, brought the proceeding.

61 Factors such as delay and a requirement for an explanation of its purpose, are relevant to the application for leave made by the Connective Companies. In the present case, the absence of the explanation of purpose has, to some extent, been overtaken by Slea's application to bring a derivative proceeding. The Connective Companies contend, of course, that they have a real interest in enforcing the rights conferred by their respective constitutions. In the circumstances, I do not regard the absence of an explanation of purpose on these applications as fatal.

62 I am not persuaded that the delay in commencing a new proceeding requires further explanation or has caused Slea any material prejudice. The Accommodation Agreement is relied upon by both sides in the Oppression Proceeding. A cross application might have been made in that proceeding seeking similar relief to that sought in the Pre-emptive Rights Proceeding. I do not regard these additional factors to in some way disqualify the Connective Companies from making their applications, or to otherwise militate against the grant of leave or other relief.

63 Should leave be granted retrospectively? Slea relied on Miller v Scorey[18] to contend that an identical 'special consideration' existed that should lead to the rejection of retrospective relief. In Miller, Rimer J did not find it necessary to decide whether he had jurisdiction to grant retrospective leave, but concluded that if he did, there was no good reason to grant such leave. His Honour emphasised the importance of the implied undertaking in respect of discovered documents, and held that a finding that a discovered document had been misused in the commencement of a proceeding suggested that the action should be struck out. While accepting that such a result would not inevitably follow, his Honour was obviously concerned that to grant retrospective leave would amount to a de facto validation of what had happened to date. That must be so in every case in which an application is made for retrospective leave.

64 His Honour ultimately adopted a position where, subject to a 'special consideration', he would have permitted the case to continue, perhaps with an appropriate order as to costs, to achieve the practical consequence of an overall saving of costs in the prospect of an earlier trial of a proper claim. The special consideration, to which his Honour referred, was the availability of a limitation defence to the defendant if the proceeding was dismissed, and a new proceeding had to be commenced. If the action were to be allowed to continue, the defendant in the proceeding would lose the opportunity to advance such a defence. His Honour decided to strike out the action because, as his Honour reasoned, to allow the plaintiffs to continue to prosecute the claim would be to allow them to take unfair advantage of their wrong. Rimer J said:[19]

To allow the plaintiffs to continue to prosecute that action, and in consequence to deny MIA the benefit of the limitation defence which would be open to it if the plaintiffs are compelled to start again, would be to allow the plaintiffs to take unfair advantage of their own wrong. I do not consider that the court should subscribe to that.

65 It might equally be said that, if circumstances justify relaxing the implied undertaking, unless the Connective Companies are permitted to continue to prosecute the Pre-emptive Rights Proceeding, Slea will have conferred on it a windfall opportunity to raise a defence not otherwise available. Slea characterised the loss of opportunity to raise the defence as a material prejudice. The Connective Companies sought to ameliorate the force of Slea's alleged prejudice by raising the possibility that concealment might be pleaded to extend the period within which the claim might be made.

66 The spectre of a limitation defence is, in my view, unhelpful. Is a court, on an application for leave, to inquire into the merits of such a defence? I think not. In my view the kind of prejudice advanced by Slea elevates an unpleaded allegation into a conclusion and, if the limitation allegation had merit, would render the grant of leave worthless. To require the Connective Companies to commence a new proceeding would be to, in effect, contrive circumstances that would create for Slea the opportunity to raise a limitation defence, not otherwise available.

67 Unlike the facts in Miller, the Pre-emptive Rights Proceeding has been stayed, not struck out or dismissed. A stay may be lifted, given a change to circumstances, in which event, the action would proceed in the ordinary way. While there is some similarity between the facts in Miller and this case, there was a material difference in the conduct of the plaintiff in that proceeding, when compared with the Connective Companies, which goes to the question of 'wrongdoing'. In Miller, the plaintiffs issued the new writ, relying on the protected information, in September 1995, and prosecuted the proceeding through various interlocutory steps until January 1996, when a third defendant applied to strike out the writ and statement of claim. There was no serious contention by the plaintiff that it was entitled to use the material to commence a new proceeding.

68 Unlike the facts in Miller, the 'confidential' information in the Accommodation Agreement has been widely deployed in various ways in different proceedings from as early as 2011. Shortly after the Pre-emptive Rights Proceeding was commenced, solicitors for Slea raised a number of objections to the proceeding, including the use of the Accommodation Agreement which had been discovered in the Haron Proceeding. A few days later, the Connective Companies' solicitors responded by justifying their use of the Accommodation Agreement. Thus, a significant distinguishing factor in the present case is the existence of a genuine dispute between the parties concerning the primary question of breach.

69 The Connective Companies submitted that, had an application for leave been made prior to the commencement of the Pre-emptive Rights Proceeding it would probably have been granted. I agree. There were special circumstances to warrant the grant of leave immediately prior to commencing the Pre-emptive Rights Proceeding. Are the Connective Companies to be, in effect, punished for their failure to seek and obtain leave at that time, by the denial of meaningful relief? What if it be found that they had a reasonable (although incorrect) basis to believe that any implied undertaking was no longer binding?

70 In my view, any grant of leave should be coupled with the ability to prosecute the proceeding to trial. To require the Connective Companies to start a new proceeding would lack utility and offend the principles of modern case management.

71 Any utility in the retrospective grant of leave will require the stay to be lifted or a new proceeding to be commenced. It was not contended by Slea that if retrospective leave were granted, the stay should not be lifted to facilitate prosecution of the Pre-emptive Rights Proceeding. The grant of leave is a changed circumstance which will justify such a course. If leave is granted, the interests of justice require the proceeding to be prosecuted to conclusion in the usual way.

72 The overarching purpose of the Civil Procedure Act, and the rules of court in relation to civil proceedings, is to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute between the parties. A court is obliged to give effect to the overarching purpose in the exercise of any of its powers. In my opinion, the just, efficient, timely and cost-effective resolution of the real issues in dispute between Slea and the Connective Companies requires a proper adjudication of the purpose and operation of the Accommodation Agreement. To require the Connective Companies to start again, by commencing a new proceeding, would not achieve that purpose.

73 Having regard to the nature of the applications made by the Connective Companies, for leave and to lift the stay, such relief should be granted on condition that they indemnify Slea for its reasonable costs of the applications. Accordingly, I will make the following orders:

(1) The Connective Companies have leave, nunc pro tunc, to use the Accommodation Agreement for the purpose of commencing the Pre-emptive Rights Proceeding.

(2) The stay granted by Almond J on 12 May 2017 is lifted.

(3) The Connective Companies pay Slea's costs of and incidental to the summonses in each proceeding dated 2 June 2017 on an indemnity basis.

[1] [2017] VSC 182.

[3] In the Haron Proceeding, the Accommodation Agreement was also exhibited to an affidavit of Robert Michael McGirr, of Slea's solicitors, sworn 3 February 2012. The purpose of the affidavit was to oppose an application that an earlier proceeding be tried at the same time as the Haron Proceeding. Paragraph 13 of the affidavit was devoted to the Accommodation Agreement, and set out its terms at some length. No mention was made by the parties of this affidavit at the hearing. Consequently, I do not rely upon it for the purpose of deciding the applications.

[4] S ECI 2016 001144; S ECI 2016 001185; S CI 2013 05099.

[5] [2008] HCA 36; (2008) 235 CLR 125, [105]-[108].

[6] [1999] HCA 66; (1999) 201 CLR 1.

[7] Uniflex (Australia) Pty Ltd v Hanneybel [2001] WASC 138, [140]-[150]; Rowe v Silverstein [2009] VSC 157, [25].

[8] United Telecasters Sydney Ltd v Hardy (1991) 23 NSWLR 323, 340.

[9] [1952] P 285 ('Hadkinson').

[10] [1952] P 285 at 288, emphasis added.

[11] The appeal in question was from an order requiring the mother to return the child to within the jurisdiction by a particular date. It was not an appeal against the order that the child not be removed from the jurisdiction.

[12] [2015] NSWCA 241, [17].

[13] [2013] NSWSC 1014, [18].

[14] Little v Lewis [1987] VicRp 64; [1987] VR 798.

[15] [2013] NSWSC 1014, [30]-[32].

[16] Barnes v Forty Two International Pty Ltd [2010] FCAFC 87, [16]-[17].

[17] [1992] FCA 472; (1992) 38 FCR 217, 225.

[18] [1996] 3 All ER 18; [1996] 1 WLR 1122.

[19] Miller v Scorey [1996] 3 All ER 18, 30.