The Contentions on the Motion
18 In support of the motion, Mr Harris of Counsel for St George referred to the judgment of the Victorian Court of Appeal (J D Phillips, Batt and Buchanan JJA) in British American Tobacco Australia Services Ltd v Cowell [2003] VSCA 43 ("the BAT case"). In that case the plaintiff, whose legal personal representative was the respondent to the appeal, had sought a declaration that she was not bound by the implied undertaking in respect of some 38 documents which had been tendered in evidence in proceedings commenced by the plaintiff on 25 January 2002. In essence, the plaintiff had contended that she was no longer bound by the implied undertaking because the 38 documents had been admitted into evidence in the earlier proceeding. As a result, so the contention went, she was free to use the documents for such lawful purposes as she wished, including their provision on request to the US Department of Justice and the Australian Competition and Consumer Commission which claimed to be investigating possible breaches of the Trade Practices Act 1974. It was common ground that the 38 documents had been produced under coercion either by reason of a notice to produce addressed to the defendant or subpoenas served on two firms of solicitors. Some 32 of the subject documents were held by the Court of appeal to be protected by legal professional privilege which had not been waived except for the limited purpose of an application in the earlier proceeding to strike out the defence. In relation to the implied undertaking, the Court of Appeal made these observations at [19]-[20] of its reasons;
'It was common ground before us that the 38 documents, the subject of this proceeding, were produced to the court only as a result of the coercive processes of the Court (whether by subpoena duces tecum addressed to the appellant's solicitors, or by notice to produce addressed to the appellant itself after discovery, or otherwise) and that, accordingly, all 38 were subject to an implied undertaking by the party gaining access to the documents not to make use of them or their contents otherwise than for the legitimate purposes of the litigation: Distillers Co. (Bio-chemicals) Ltd. v. Times Newspapers Ltd. [1975] Q.B. 613 at 618-20, Riddick v. Thames Board Mills Ltd. [1977] Q.B. 881 at 895-6, Harmanv. Secretary of State for the Home Department [1983] 1 A.C. 280, Sybron Corporation v. Barclays Bank Plc [1985] Ch. 299, Crest Homes PLC v. Marks [1987] A.C. 829 at 853, BibbyBulk Carriers Ltd. v. Cansulex Limited [1989] Q.B. 155 at 160-2, Esso Australia Resources Ltd. v. Plowman (1995) 183 C.L.R. 10 at 32, 46, Mobil Oil Australia Ltd. v. Guina Developments Pty. Ltd. [1996] 2 V.R. 34 at 37-38, and more recently Hamersley Iron Ltd. v. Lovell (1998) 19 W.A. R. 316, where the common law in respect of the implied undertaking is, if we may say so with respect, very helpfully explored, to name but a few.
The primary purpose of implying such an undertaking, it seems, is to protect the subject party's privacy and thereby inter alia to encourage full and frank disclosure whenever required for the purposes of the litigation. As Lord Roskill said in Harman [1983] 1 A.C. at 322-33, of documents obtained on discovery:-
"My Lords, a party to whom discovery has been made is in relation to his opponent's documents at a great advantage in comparison with the rest of the world. Their owner until the moment of discovery arrives is entitled, subject only to such exceptions as a subpoena duces tecum, to absolute protection and privacy for them against all who seek them out however meritorious the motives may be of those who seek them out in the search for truth. Regret it as some may, there is no freedom of information statute in force in this country. That absolute right is qualified once the moment for discovery in litigation has arrived. But it is only qualified as respects the other party to that litigation who thereupon acquires a privilege special to himself of seeing his opponent's documents but on terms that those documents may only be used by him or his advisers in furtherance of the litigation between them. This is a privilege or an advantage upon which our judicial process insists. Other judicial processes do not insist upon the like practice. But our judicial process insists upon this and that process involves invasion of an otherwise absolute right to privacy, albeit on strict terms in order that that privilege or advantage should not be abused. The sole purpose of according that privilege is that once discovery and inspection have taken place the party who has thus acquired this privilege or advantage may use those documents in the litigation against the party who has disclosed and produced them." [emphasis added by Court of Appeal]
To that end the party gaining access to the documents is bound to the court by means of the implied undertaking not to use the documents which it has been privileged to see for any "collateral or ulterior purpose", as that phrase was explained by Lord Diplock in Harman, at 302 - or at all events not to so use them without the leave of the court.'
19 Their Honours went on to note that the common law principle had been abrogated in England in 1987 (see O 24 r 14A of the Rules of the Supreme Court) and in this Court in 1989; see O 15 r 18, which provides;
'Any order or undertaking, whether express or implied, not to use a document for any purpose other than those of the proceedings in which it is disclosed shall cease to apply to such a document after it has been read to or by the Court or referred to, in open Court, in such terms as to disclose its contents unless the Court otherwise orders on the application of a party, or of a person to whom the document belongs.'
20 However, as the Court of appeal pointed out, the common law principle remains the law in Victoria and, I accept, applies with undiminished force to documents produced in the County Court in response to that Court's coercive powers and processes.
21 In the course of their reasons in the BAT case, their Honours at [40] distinguished a case much closer to the present, Eltran Pty Ltd v Westpac Banking Corporation (1990) 25 FCR 322 which they noted;
'concerned documents which had been produced under compulsion, this time in earlier criminal proceedings, and which had later been used to draft a statement of claim in a fresh proceeding. The question, however, was not contempt but whether the use of the documents constituted an abuse of process, so again the problem was a different one.'
22 Counsel for St George next referred to Taylor v Director of the Serious Fraud Office [1999] 2 AC 177. In that case a letter and file note had been brought into existence in the course of an investigation by the Serious Fraud Office ("SFO"). The documents contained suggestions that the first plaintiff, a solicitor, and the second plaintiff, a company controlled by the first plaintiff, had been guilty of conspiracy. No criminal charges were laid against the plaintiffs but criminal proceedings were instituted against two other persons and the documents were shown to their solicitors, presumably in discharge of the "prosecutorial duty of fairness" which has been invoked in the present case. Those solicitors showed the documents to the first plaintiff when asking him to give evidence for one of the accused. The plaintiffs then began an action in defamation based on the contents of the documents. At first instance the plaintiffs' action was struck out as an abuse of process on the ground that the disclosure of the documents had been subject to the implied undertaking that they would not be used for any purpose other than the defence to the criminal charges. The Court of Appeal held that there was no such implied undertaking but dismissed the plaintiffs' appeal on the ground that the documents were immune from suit because they had been brought into existence for the purposes of a criminal investigation. On appeal to the House of Lords, it was held that out of court statements made in the course of investigating a crime or possible crime were subject to an absolute immunity from suit in respect of an action for defamation. In addition, Lord Hoffmann with whom Lord Lloyd of Berwick (on this point), Lord Goff of Chieveley, Lord Hope of Craighead and Lord Hutton agreed, observed, at 212;
'In my opinion, therefore, the disclosure of documents by the prosecution as unused material under its common law obligations did generate an implied undertaking not to use them for any collateral purpose. I agree with the reasoning of Brooke J. on this point in Mahon v. Rahn and I think that Sir Michael Davies was right to strike out the action for the reasons which he gave.'
23 In Mahon v Rahn [1998] QB 424 documents including a letter, obtained by the SFO from a bank were similarly provided to the accused in criminal proceedings for fraud. The letter was read in open court during the criminal trial. After their acquittal the accused claimed damages for libel against the partners in the bank. The defendants moved to strike out that action as an abuse of process on the ground that the disclosure of the letter had been subject to an implied undertaking that it would not be used in any other proceedings without the leave of the Court. That claim was upheld by Sir Michael Davies at first instance, but on appeal to the Court of Appeal, it was held that no implied undertaking, analogous to that in Home Office v Harman (supra), existed in relation to material discovered in civil proceedings. It was further indicated that, had there been any such implied undertaking, it would cease to apply once the material had been read in open court.
24 In the course of his reasons for judgment on the appeal in Mahon v Rahn, Otton LJ observed, at 432, that "once the document has been read to or by the court or referred to in open court the matter is governed by R.S.C., Ord. 24 r.14A, which was brought into force in order to reverse the effect of Home Office v Harman", noted at [19] above. However, as I have observed at [20] above no similar rule governs the practice of the County Court in Victoria. His Lordship, with whom Schiemann and Staughton LJJ agreed, went on to observed, at 449;
'Accordingly, in my view exceptional or special circumstances in the criminal context can exist but should be confined to matters of public interest immunity, and absolute privilege. I do not regard the position of the Crown in a criminal case as analogous to that of a party in civil proceedings. The former is bound by a strict common law (and now statutory) duty to disclose documents of which the body is rarely the author or owner. Such documents are often obtained by compulsion. The disclosure must be 'in the interests of justice' so that the accused knows the nature of the case against him, and so that he has access to documents which might assist his case. I am unable to accept that public policy requires a duty on an accused not to use disclosed documents for any purpose other than the criminal proceedings on the ground that the Crown would be deterred from complying with their obligations of full disclosure in the interests of justice'. The common law duty ensured that this did not happen; it is now a statutory duty.'
25 It was next argued on behalf of St George that the documents in question had been obtained by ASIC and made available to Spalla and Still at a time whenitwas believed, in the light of Corporate Affairs Commission (NSW) v Yuill (1991) 172 CLR 319, that ASIC's coercive powers overrode the right to claim legal professional privilege. However, as that view of the law could no longer be maintained in the face of Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] 192 ALR 561, it was said that this Court should be astute to give full effectto the implied undertaking in relation to documents which have been made available by their owners or creators as a result of ASIC's exercise of its statutory powers. A similar approach was said to be ordained by Johns v Australian Securities Commission (1993) 178 CLR 408 in relation to the transcripts of examinations under s 19 of the ASIC Act.
26 Reliance was also placed, on behalf of St George, on Rank Film Distributors Ltd v Video Information Centre [1982] AC 380 where it was held that the privilege against self-incrimination could be invoked by a party required by an Anton Piller order to give discovery. That was so, the House of Lords held, notwithstanding the discretion of a subsequent criminal court to exclude evidence improperly obtained if to admit it would unfairly prejudice an accused person.
27 Mr Hayes QC who appeared with Mr Wotherspoon of Counsel for the applicants contended that the grant or withholding of a stay in these proceedings involved a weighing of competing policy considerations. He emphasised that the documents in question had been the subject of cross-examination in criminal proceedings in open court, had been brought into existence, not by investigators, but by primary accusers, and were part of the transaction which founded the cause of action in this Court. It was also emphasised that at least some of the subject documents had been provided voluntarily to ASIC and that St George, at the time of providing them, had not sought to impose any restrictions on the use to which they could be put. ASIC, in turn, did not seek to restrict the use to which the documents could be put when it furnished copies to the accused in the course of the criminal trial, although Mr Honey of ASIC was aware that Spalla and Still intended to use the documents to institute civil proceedings against St George and Corrs.
28 It was also submitted on behalf of the applicants that the letters of 27 May and 3 June 1999 had been written to the receivers and managers of Irlmond and APS in their capacity as such receivers and managers. Accordingly, they were the property of those companies and became available to Mr Rambaldi as liquidator of Irlmond, to use, without restriction, in that company's prosecution of the present proceedings.
29 Counsel for the applicants further contended that the implied undertaking not to use documents for a collateral purpose, if it had arisen in the circumstances of this case, was capable of being waived; see Dagi v The Broken Hill Proprietary Company Ltd [1996] VR 567 where Byrne J observed, at 572;
'The rationale underlying the implied undertaking which attaches to discovered material is, as I have mentioned in my judgment on the first application, that private rights of confidentiality be not disturbed except to the extent necessary for the purpose of the administration of justice. Although it is expressed in terms of an undertaking to the Court, the obligation of the party in receipt of discovered material may be modified or removed by consent of the other party without the intervention of the Court. In such a case as the present, it may be said that the confidentiality attaching to the reports has a dual nature. Insofar as they are based on discovered material, the obligation on the plaintiffs depends upon the implied undertaking to which I have referred. The obligation on the defendants arose from the acceptance by the parties before me that they should be treated as confidential. In each case the obligation is capable of modification by consent or waiver. Nor is there any reason why this consent or waiver should be express, although it would be imprudent for a party too readily to infer consent or waiver from some equivocal conduct of the other. The proper course is to deal with the matter openly and before the Court as did the plaintiffs on the first application.'
30 However, it is not clear what acts by St George are relied on as establishing waiver of the implied obligation (assuming it to have arisen) not to use the relevant documents for a collateral purpose. It may be that the applicants point to the time which has been allowed to elapse since the applicants' pleading of one or other version of the amended statements of claim first evinced resort to the subject documents. Equally, waiver may be said to have been constituted by St George's having allowed the documents to go to ASIC without any stipulation as to the use which could be made of them. I find these illustrations unhelpful. The lapse of time can only assist the applicants if it can be established that, in the intervening period, St George was aware that use of the documents for the purposes of the proceedings in this Court would be in breach of the implied undertaking and elected to do nothing about it. I am not persuaded that the evidence, in its present state, discloses any such election. Likewise, the provision by St George to ASIC of the relevant documents antedated the coming into existence of the implied undertaking. It can therefore hardly be said to have constituted a waiver of it.
31 A similar circularity may be involved in the applicants' contention that the implied undertaking does not prevail against the obligation of the other party to give inspection in a subsequent proceeding; see Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10 where Mason LJ pointed out, at 33, that:
'It would be inequitable if a party were compelled by court process to produce private documents for the purposes of the litigation yet be exposed to publication of them for other purposes. No doubt the implied obligation must yield to inconsistent statutory provisions and to the requirements of curial process in other litigation, eg discovery and inspection, but that circumstance is not a reason for denying the existence of the implied obligation.'
32 However, that observation presupposes, I consider, that the litigation in which the requirements of discovery and inspection have arisen has been instituted without recourse to documents or information subject to the implied obligation.
33 It was next urged on behalf of the applicants that they and their advisers have knowledge from other publicly available sources of information of the communications between Mr Carroll of Corrs and Mr Beck. One instance of such an alternative source was said to be correspondence from Mr Carroll to Victorian Lawyers RPA and the Ombudsman for the State of Victoria. In a related way it was pointed out that Deloittes, which, no less than St George, was entitled to assert confidentiality or legal professional privilege in the documents, had not joined in the present motion or a stay.
34 The distinction between voluntary production of the subject documents and their production in response to ASIC's coercive powers was said not to be persuasive or, at least decisive, in this case. However, it was noted that in Atlas v Director of Public Prosecutions [2001] 3 VR 211 Bongiorno J, at 227, noted that there are "serious restrictions implied by law affecting documents produced under compulsory process," and referred to the discussion in cases like Riddick v Thames Board Mills [1977] QB 881, Harman v Home Office (supra) and Taylor v Serious Fraud Office (supra). In Riddick v Thames Board Mills a plaintiff in an action against his former employer for wrongful arrest and false imprisonment had obtained discovery of a memorandum from an employee in the defendant's personnel department to the staff personnel manager questioning the plaintiff's efficiency and temperament. The plaintiff later brought a second action in defamation based on the memorandum. In holding that the plaintiff was not entitled to use the memorandum in that way, Lord Denning MR observed at 895;
'The reason for compelling discovery of documents in this way lies in the public interest in discovering the truth so that justice may be done between the parties. That public interest is to be put into the scales against the public interest in preserving privacy and protecting confidential information. The balance comes down in the ordinary way in favour of the public interest of discovering the truth, i.e. in making full disclosure. This balancing act, of weighing the competing public interests, is what I advocated in my judgment in D v National Society for the Prevention of Cruelty to Children [1976] 2 WLR 124 at 132-134. I did not intend in any way to diverge from the 16th Report of the Law Reform Committee (Privilege in Civil Proceedings) (1967) (Cmnd 3472), para 1. I went, no doubt, a little too far in suggesting a presumption in favour of confidentiality, as the House of Lords afterwards pointed out [1977] 2 WLR 201. But otherwise I find nothing in the speeches to detract from the balancing process. The thing to do in every case is to weigh the competing public interests and see which way the scales come down; and this, I gather, was the view preferred by Lord Simon of Glaisdale: see [1977] 2 WLR 201 at 229; and by Lord Edmund-Davies at p 233 (V) and (VI).
I proceed to hold the balance in the present case. On the one hand discovery has been had in the first action. It enabled that action to be disposed of. The public interest there has served its purpose. Should it go further so as to enable the memorandum of 16th April 1969 to be used for this libel action? I think not. The memorandum was obtained by compulsion. Compulsion is an invasion of a private right to keep one's documents to oneself. The public interest in privacy and confidence demands that this compulsion should not be pressed further than the course of justice requires. The courts should, therefore, not allow the other party, or anyone else, to use the documents for any ulterior or alien purpose. Otherwise the courts themselves would be doing injustice. Very often a party may disclose documents, such as inter-departmental memoranda, containing criticisms of other people or suggestions of negligence or misconduct. If these were permitted to found actions of libel, you would find that an order for discovery would be counter-productive. The interdepartmental memoranda would be lost or destroyed or said never to have existed. In order to encourage openness and fairness, the public interest requires that documents disclosed on discovery are not to be made use of except for the purpose of the action in which they are disclosed. They are not to be made a ground for comments in the newspapers, or for bringing a libel action, or for any other alien purpose. The principle was stated in a work of the highest authority 93 years ago by Bray J, Bray on Discovery, 1st ed (1885), p 238:
"A party who has obtained access to his adversary's documents under an order for production has no right to make their contents public or communicate them to any stranger to the suit: ..… nor to use them or copies of them for any collateral object ..... If necessary an undertaking to that effect will be made a condition of granting an order: ….."'
35 In the present case, so it was submitted, it is not possible to find that all of the subject documents had been provided by St George to ASIC by force of compulsion by ASIC. The provenance of some documents, whether from St George, Deloittes or Corrs, was uncertain. Some documents which had been provided by Corrs in a yellow folder were outside the dates stipulated in ASIC's notice for compulsory production and were conceded in a letter from Corrs dated 1 May 2001 to have been "inadvertently included."