Rowe v Silverstein & Ors [2009] VSC 157

2 At one time, the property was owned by Mr Silverstein and Mrs Rowe asserts that she has a beneficial interest in it. Subsequent to Mr Silverstein's ownership of the property, it was transferred to the second defendant, an incorporated association known as the Association for Visual Impairment, the Homeless and the Destitute ("the Association"). The fourth to eleventh defendants, all individuals, are members of the Association.

3 Mrs Rowe makes a large number of allegations against the various defendants. Reduced to its essence, her claim is that she has a beneficial interest in the property and that Mr Silverstein has acted in breach of trust and/or fraudulently. She asserts that the transfer to the Association was a sham and is tainted by fraud. The Association is also sued pursuant to the principles in Barnes v Addy.

4 There have been at least ten other pieces of associated litigation in this Court involving Mrs Rowe, Mr Silverstein's mortgage practice and/or the Association's development of the Bacchus Marsh land.

5 Prior to the commencement of the trial, I heard argument on 1 April concerning the release to Mrs Rowe of documents used in four of those proceedings.

6 I have determined that, in relation to three out of the four proceedings, it is appropriate to make the orders sought by Mrs Rowe. I made orders on 7 April giving effect to this conclusion. I now provide my reasons.

Relevant Principles: Obligation to use documents only in subject proceeding

7 It is now settled law that where documents are required to be produced under compulsion by reason of a rule of Court or specific order (express or implied), there is an obligation upon the other party or parties to the proceeding to use them only for the purpose related to the subject litigation. For the documents to be used in other litigation requires the leave of the Court.

In Hearne v Street, [1] Hayne, Heydon and Crennan JJ said:

"Where one party to litigation is compelled, either by reason of a rule of court, or by reason of a specific order of the court, or otherwise, to disclose documents or information, the party obtaining the disclosure cannot, without the leave of the court, use it for any purpose other than that for which it was given unless it is received into evidence. The types of material disclosed to which this principle applies include documents inspected after discovery, answers to interrogatories, documents produced on subpoena, documents produced for the purposes of taxation of costs, documents produced pursuant to a direction from an arbitrator, documents seized pursuant to an Anton Piller order, witness statements served pursuant to a judicial direction and affidavits." (My emphasis).[2]

8 It was accepted by the parties on this application that it was necessary for the plaintiff to demonstrate special circumstances which would warrant the release of the documents for use in this proceeding.[3] In Springfield Nominees Pty Ltd v Bridgelands Securities Ltd,[4] Wilcox J said of the circumstances where it was sought to release documents utilised in one piece of litigation for use in another relevantly connected piece of litigation:

"For 'special circumstances' to exist it is enough that there is a special feature of the case which affords a reason for modifying or releasing the undertaking and is not usually present. The matter then becomes one of the proper exercise of the Court's discretion."

His Honour then 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 that the author may sustain, whether the document pre-existed the 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 documents came into the hands of the applicant for leave and, perhaps most important of all, the likely contribution of the document in achieving justice in the second proceeding."[5]

The above considerations have been applied on a number of occasions by this Court and other Courts. [6]

The defalcation proceeding - proceeding 4927 of 1996

9 Mrs Rowe and an associated group of companies sued the Law Institute of Victoria, in this context the predecessor of the Legal Services Board (which I shall refer to as the Board), and others in respect of its liability for the alleged defalcation by Mr Silverstein of their funds. The proceeding was eventually settled.

10 In the course of that proceeding, the Board made discovery of a large number of documents, including those which came into existence when Mr Silverstein's practice was placed into receivership. Witness statements were also filed in accordance with orders of the Court.

11 As these documents were provided pursuant to the compulsory processes of the Court, then Mrs Rowe is, absent leave of the Court, obliged to maintain the confidentiality of the documents.

12 Mrs Rowe has, in a schedule, set out the documents in respect of which she wishes to be released from the obligation. The Board, with the exception of eight documents, does not oppose or consent to the release of the documents for use in this proceeding.[7] Mrs Rowe does not press for release of those the Board seeks to have excluded.

13 The following matters are germane to determining whether special circumstances have been demonstrated:

(a) The documents are, in my view, clearly relevant to Mrs Rowe's case in this proceeding as they relate directly to Mr Silverstein's handling of investment funds, including his dealings with the property. Patently, Mr Silverstein's handling of Mrs Rowe's funds generally and any fiduciary obligation attached thereto will require consideration in the course of the trial.

(b) The Board does not oppose Mrs Rowe using the documents in this proceeding.

(c) No prejudice has been demonstrated to any party, nor is there any question of commercial or personal sensitivity.

14 Each of these matters lead me to the conclusion that the materials Mrs Rowe seeks to use require her to be released from her obligation to keep this material confidential. Special circumstances have been demonstrated.

15 I do not accept the argument put on behalf of Mr Silverstein that there is insufficient material to justify a conclusion as to relevance. It is clear that the issues relate to Mr Silverstein's handling of Mrs Rowe's funds, and particularly any entitlement she may have to the property.

16 Nor do I accept the argument of Mr Silverstein and the members that a number of the affidavits and exhibits were originally produced in closed Court in the receivership hearing brought by the Council of the Law Institute of Victoria against Mr Silverstein in 1993.[8] Those documents were subsequently discovered and inspected in the defalcation proceeding and, given the attitude of the Board, I see no reason for that factor to prevent the release of those documents.

17 Accordingly, I propose to grant leave to the plaintiff to use the documents referred to in the schedule in this proceeding, with the exception of those documents I have identified.

18 In this proceeding, the Federal Commissioner of Taxation obtained orders in the form of a Mareva injunction preventing the second defendant, the Association, from continuing with the sub-division of the property[9]. By that time, it was the registered proprietor of the land. The Commissioner contended that there was a significant tax liability on the part of the Association. Mrs Rowe was not a party to this proceeding, although, in separate proceedings, she also obtained an injunction restraining the further subdivision of the land.[10]

19 The Commissioner filed four affidavits with exhibits in support of its application. The affidavits were tendered in open Court and an order was made by Dodds-Streeton J restraining further selling or otherwise dealing with the property.

20 I have read the affidavits made by four officers. Their contents are clearly relevant to the issues in this proceeding as they deal with the operations of the Association, Mr Silverstein's involvement with it and the development of the property. The Association's business, notwithstanding its name, appears to have been solely to operate as the developer of that land and, indeed, it had engaged in the selling of subdivided blocks up until the time at which the injunction was granted.

21 The Commissioner opposes the release of the documents, relying upon s 16(3) of the Income Tax Assessment Act 1936 ("ITAA") and s 3C(3) of the Taxation Administration Act 1953 ("TAA") which I set out below.

Subsection 16(3) of the ITAA provides:

"An officer shall not be required to produce in Court any return, assessment or notice of assessment, or to divulge or communicate to any Court any matter or thing coming under his notice in the performance of his duties as an officer, except when it is necessary to do so for the purpose of carrying into effect the provision of this Act or of any previous law of the Commonwealth relating to Income Tax."

22 Subsection 3C(3) of the TAA relevantly provides:

"Except when it is necessary to do so for the purpose of carrying into effect the provisions of a taxation law, a person who is or has been an officer shall not be required:

(a) to produce in court any document made or given under or for the purposes of this Act; or

(b) to divulge or communicate to a court a matter or thing with respect to information disclosed or obtained under or for the purposes of this Act;

being a document or information acquired by the person by reason of the person's appointment or employment by the Commonwealth or in the course of such employment, or by reason of the delegation to the person of powers or functions by the Commissioner, or in the course of the exercise of such powers or the performance of such functions, as the case may be."

23 The Commissioner did not assert that the documents were not relevant to this proceeding, nor that there was any commercial sensitivity associated with the documents. Rather, the Commissioner argues that the two sections should preclude the Court from permitting the release of the affidavits and exhibits utilised in the hearing before Dodds-Streeton J. The Commissioner contends that the terms of the two sections are broad enough to limit the use of documents in another proceeding notwithstanding that they have been deployed in open Court.

24 I do not accept the Commissioner's argument for the following reasons.

25 First, the affidavits are not, in my view, covered by the Harman obligation. These affidavits were not filed in the course of a compulsory process such as witness statements[11] or answers to interrogatories[12] where rules of a Court or orders of a Court require the production of such material. In this case, the affidavits were filed voluntarily by the Commissioner to obtain the injunction. In Uniflex (Australia) Pty Ltd v Hannybel,[13] Hasluck J held that the implied undertaking did not operate in relation to documents provided in the course of a Mareva injunction as they had been provided voluntarily to support the application in open Court. I agree and apply that proposition here.

26 Secondly, the documents were used in open court in the course of the application for the injunction and therefore have entered the public domain. In British American Tobacco Australia Services Ltd v Cowell,[14] the Court of Appeal said:

"In such circumstances we can see no reason why if it once attaches, the implied undertaking should not endure despite the tender of the document in evidence against the party seeking protection. The fact that, by reason of its tender, it has passed into 'the public domain' may be a consideration when leave is sought to use the document otherwise than for the purpose of the litigation in which it was produced, but it does not per se gainsay the continuance of the undertaking."

It follows that whilst the use of a document in open court does not of itself necessarily remove the obligation, it is nevertheless a highly relevant consideration. This is particularly so where the documents have been produced solely for the purpose of the litigation. Accordingly, at the least in this State, the entry into the public domain of the relevant documents is a relevant consideration but does not, of itself, remove the obligation.

27 Thirdly, the terms of the two sections relied upon, namely s 16(3) of the ITAA and s 3C(3) of the TAA, say nothing about the release of documents as opposed to their actual use in another Court hearing. The order sought by Mrs Rowe does not require any officer of the Commission to produce a document in this proceeding nor, at the present time, to divulge or communicate any matter such as set out in s 16(3) of the ITAA and s 3C of the TAA. The nub of the Commissioner's argument was as set out in the written submissions: "Consequently the Commissioner (and any officer of the ATO) cannot be required to give evidence". I accept that the thrust of the two sections are directed to that issue; however, that is not the issue that I am required to determine. It is only necessary for me to consider whether the documents should be released for use in this proceeding. Their use may not necessarily be that of the tender of documents which will be determined by the relevant evidentiary rules and applicable legislation. It may simply be to provide the basis for cross-examination or to facilitate further inquiries. If, at some point of time, Mrs Rowe seeks to use any of the relevant documents in the trial, then the Commissioner will have an opportunity to put further arguments to me concerning the effect of the two subsections.

28 In summary, I am satisfied that the interests of justice dictate that the affidavits and the exhibits be released for use in this proceeding, and that the relevant sections do not prevent such a release. Special circumstances have been demonstrated.

29 I propose to grant leave to the plaintiff to use the documents referred to in the schedule to the affidavit of John Vincent Sinisgalli sworn 31 March 2009 for the purpose of her conduct of this proceeding.

Proceeding 6932 of 2007 - the winding up of the Association

30 In this proceeding, Alinta Asset Management (2) Pty Ltd sought to wind up the association and the Commissioner joined in supporting this application. Mrs Rowe sought leave to appear, but this was refused.

31 The application was heard and determined by Master Efthim, who ordered that the Association be wound up; leave to appeal was refused by Robson J.

32 The Commissioner, in support of the winding up application, filed three affidavits with exhibits which were used by the Court in the course of the hearing and therefore have entered the public domain. The affidavits broadly related to similar matters to those deposed to in the FCT proceeding, namely the operations of the Association and the development of the land. Clearly, this material is relevant to this proceeding. No matters of commercial sensitivity have been identified.

33 The Commissioner opposed the release of the documents for use by Mrs Rowe on the same basis as that in the FCT proceeding.

34 For the reasons I have set out in the FCT proceeding, I conclude that the documents should be released to Mrs Rowe for the purpose of this proceeding.

35 I should add that although the purpose of the filing of the affidavits in the winding up proceeding was different to that in the FCT proceeding, the affidavits were not filed pursuant to any compulsory process of the Court, rather it was material deployed in support of the Commissioner's application.

36 In my view, it is in the interests of justice that Mrs Rowe be able to use the documents; special circumstances have been shown in relation to the use of the documents.

37 I propose to grant leave to the plaintiff to use the documents referred to in the schedule attached to the affidavit of John Vincent Sinisgalli for the purpose of her conduct of this proceeding.

38 In this proceeding, Bridget Benson sued Mr Silverstein, Mrs Rowe and others. She was a former employee of Mr Silverstein who, at one time, had owned the property. In that proceeding she alleged an interest in the property. She is not a member of the Association.

39 Mrs Rowe now seeks to be able to use an affidavit filed by Mrs Benson on 12 October 1998. Mrs Rowe was not a party to that proceeding. The affidavit was not used in open Court as the matter did not proceed to trial.

40 Mrs Benson has not been served with notice of this application and has not had the opportunity of putting any submissions to me.

41 As I indicated when delivering my ruling, I am not, at the present time, disposed to permit Mrs Rowe to use this affidavit in this proceeding. Putting aside how the affidavit would be deployed at the trial (which is a separate matter as I have already discussed), in my view, Mrs Benson should have the opportunity to make a submission in relation to the affidavit and its use in a separate proceeding. Moreover, I am not convinced that matters that Mrs Benson deposed to in her affidavit concerning her dealings with Mr Silverstein and the Association are necessarily relevant to this proceeding.

42 This does not, however, preclude the plaintiff from making a further application in the event that Mrs Benson is given notice of her intention to do so.

43 The plaintiff should be granted leave to use in this proceeding the documents I have described emanating from the defalcation proceeding, the FCT proceeding and the winding up application.

[1] [2008] HCA 36; (2008) 235 CLR 125 [96].

[2] See also Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10, 32.

[3] Crest Homes PLC v Marks (1987) AC 829, 860.

[4] (1992) 38 FCR 217, 225. See also Playcorp Limited v Tyco Industries [2000] VSC 440 [14] - [20].

[5] (1992) 38 FCR 217, 225.

[6] See Playcorp Limited v Tyco Industries [2000] VSC 440, Citicorp Life Insurance Limited v Lubransky [2005] VSC 101, Love v Roads Corp [2006] VSC 501, Michael Wilson & Partners Limited v Nicholls [2007] NSWSC 317, Jarra Creek Central Packing Shed Pty Ltd v Amcor Limited [2008] FCA 391, Liberty Funding Pty Ltd v Phoenix Capital Ltd [2005] FCAFC 3; (2005) 218 ALR 283.

[7] Documents 4 to 9 and 29 to 30 of the schedule.

[9] Orders of Williams J on 15 June 2006.

[10] Orders of Dodds-Streeton J on 28 June 2006.

[11] See Central Queensland Cement Pty Ltd v Hardy [1989] 2 QdR 509, 510-511.

[12] See Ainsworth v Hanrahan (1991) 25 NSWLR 155.

[13] [2001] WASC 138, [141] - [155], particularly at [148].

[14] [2003] VSCA 43; (2003) 8 VR 571 [35]