[2018] ACTSC 149

PRACTICE AND PROCEDURE - reports prepared for proceedings - application to use material otherwise than for the purpose of the proceedings - Harman undertaking - where serving party consents to the use of documents for collateral purpose - release from implied undertaking granted

Construction Occupations (Licensing) Act 2004 (ACT) pts 4, 5, 11, divs 1, 2

Blanch v Deputy Commissioner of Taxation [2004] NSWCA 461

Brooks v Law Society of New South Wales [2009] NSWSC 28

Council of the Law Society of the ACT v Legal Practitioner [2017] ACTSC 329

Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10

Harman v Secretary of State for Home Department [1983] 1 AC 280

Hearne v Street [2008] HCA 36; 235 CLR 125

Nicholls (Trustee) v Hertslet [2016] FCA 655

Prudential Assurance Co Ltd v Fountain Page Limited [1991] 3 All ER 878

Morris Construction Corporation Pty Ltd (First Defendant)

MPG Construction Services Pty Ltd (Second Defendant)

1. The present interlocutory application, filed by the Australian Capital Territory on 22 March 2018, concerns whether there should be a release in these proceedings from what is commonly referred to as the 'Harman undertaking' in respect of specified documents served by the plaintiff, which may be broadly categorised as expert reports and opinions.

2. The plaintiff is an owners corporation for Units Plan No. 3676. The owners are involved in a dispute seeking to recover damages arising from defects in the construction process for a residential apartment development of 120 units known as Kingston Place Apartments Stage 2 (Kingston Place).

3. The plaintiff has sued in negligence the builder, the developer, the design engineer, the Construction Occupations Registrar (Registrar), who is represented by the Territory pursuant to s 149 of the Building Act 2004 (ACT) (Building Act), and the License Holder and Builder's Nominee (who it asserts was an employee of the builder). They are the first to fifth defendants respectively. All defendants deny liability.

4. Various notices of contribution have been served by the defendants against each other. The first and second defendants (the builder and developer) have also served a third party notice on Saba Bros Tiling Pty Ltd, as the entity responsible for tiling the balconies at Kingston Place, alleging the work performed was defective for a variety of reasons which are not important for the context of the present interlocutory application.

5. What is relevant to this application is that on 17 August 2016 (prior to commencing proceedings), the plaintiff lodged a complaint with the Registrar, who has various regulatory powers and functions, primarily located in the Construction Occupations (Licensing) Act 2004 (ACT) (COL Act) and the Building Act.

6. Under pt 4 of the COL Act, the Registrar has the power to issue a rectification order against the builder or its employee (the first and fifth defendants). Under pt 5 of the COL Act, the Registrar also has the power to take disciplinary action against any of the licensees.

7. Under ss 61 and 62 of the Building Act, the Registrar has the power to issue a notice to carry out work to individual unit owners.

The application to be released from the 'Harman undertaking'

9. The Territory seeks to be released from the implied undertaking not to make use of a number of expert reports relevant to the further investigation by the Registrar as to whether he should exercise his regulatory powers, in response to the plaintiff's complaint.

10. The foundation for the implied undertaking is Harman v Secretary of State for Home Department [1983] 1 AC 280, as applied by the High Court of Australia in cases such as Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10 (Esso Resources) and Hearne v Street [2008] HCA 36; 235 CLR 125 (Hearne).

11. The application was initially in much broader terms, and covered documents that had not yet been created but might be filed in the future. Counsel for the Territory properly limited the release sought to specified and already existing documents prepared by the following:

(a) Dr Kamiran Abdouka, Ishtar Net Works;

(b) Mr Peter Leary, Peak Consulting;

(c) Mr Mal Wilson, Advanced Structural Designs; and

(d) Emeritus Professor Robert Warner.

12. The implied undertaking applies to witness statements served pursuant to a judicial direction: Hearne at [96]. It was not in dispute that the documents in respect of which a release was sought fell within this category.

13. It was also accepted that the purpose for which the Territory wants to use the documents (namely for the Registrar to consider whether to take action as part of his statutory regulatory functions) is a purpose that travels outside the nature of these proceedings. The Territory is sued as the fourth defendant not for failing to act on the complaint, but for issuing a certificate of occupancy in respect of Kingston Place.

14. Such a purpose is described as a 'collateral or ulterior purpose', although that phrase is not used in a pejorative sense, but merely to indicate some purpose different from that which was the only reason why, under a procedure designed to achieve justice in civil actions, parties are accorded the advantage which they would not otherwise have of receiving copies of other people's documents: Harman at 302; Esso Resources at 36-37.

15. The plaintiff consents to the release of the expert reports upon which it relies. In fact, individual owners have already provided them to the Registrar independently of these proceedings. However, the Territory still requires the leave of the Court, because the undertaking is to the Court, not the parties. It is an obligation which the Court has the right to control and thus to modify or grant a release from: Prudential Assurance Co Ltd v Fountain Page Limited [1991] 3 All ER 878, cited by Hearne at [107].

16. The Territory submits that the release is justified here where there is a public interest in the Registrar being able to make use of the documents in question in the carrying out of statutory functions. The Territory submitted that the purpose was similar to cases involving other regulators who wished to carry out enquiries, where a release had been granted as being in the public interest, such as Brooks v Law Society of New South Wales [2009] NSWSC 28; Council of the Law Society of the ACT v Legal Practitioner [2017] ACTSC 329; Blanch v Deputy Commissioner of Taxation [2004] NSWCA 461.

17. There was a perceived issue arising from the fact that the law firm representing the Territory had already breached the undertaking and whether an order should therefore be made nunc pro tunc. That is a regrettable circumstance, but fortunately for the Territory and its legal representatives, the breach had no operable consequence because the plaintiff had not only consented to the documents being provided to the Registrar but provided them itself. The circumstances thus do not warrant such an order, noting that one was made by Bromwich J in Nicholls (Trustee) v Hertslet [2016] FCA 655 at [47].

18. The application for leave is opposed by the first and second defendants who say that although they are not the serving party of the documents in question, they would be prejudiced. They were primarily concerned about any action taken by the Territory derailing settlement negotiations that were actively being pursued by the defendants around the time of the hearing of this application. A further concern was that the Territory was a defendant in the proceedings and was attempting to use its statutory power to pass on a liability alleged against it to a different party.

19. I accept the submission of the Territory that this is an appropriate case in which to release the Territory from the implied undertaking, for the limited purpose stated in the orders sought. The Territory has not indicated that it intends to issue any compliance orders yet; merely that it wishes to consider the expert reports and opinions so as to work out the appropriate action to be taken. Even if regulatory action is taken as a result of that consideration, I do not accept that it would have the consequences feared by the first and second defendants.

20. First, the plaintiff has consented to the documents being released. The purpose of the undertaking is really to protect the party who produces or prepares documents by compulsion, notwithstanding that the first and second defendants sought to argue for a broader protection of all parties.

21. Second, the evidence before the Court was that the plaintiff had recently indicated it proposes to undertake certain rectification works itself, and then to seek to recover the costs of such work as part of the damages in these proceedings. That course may overtake any urgent action that the Registrar wishes to consider, in terms of any safety considerations.

22. Third, the suggestion that the Territory may take regulatory action because it wishes to 'pass on' a liability that it may otherwise have is misconceived. Mitigation of loss to the plaintiff by way of rectification works is a limitation of liability. It does not take the place of the Court considering the facts that led to the damage being caused. Nor does it prevent whoever is required to carry out the rectification works (in the event that such a result flows from the Registrar's consideration) from seeking to recover the cost of that work as part of these proceedings from the entity or entities ultimately found to be liable.

23. Fourth, and for the same reason, any settlement discussions between the parties ought not be affected. However, as the Territory was content to delay the making of the orders it proposed out of an abundance of caution, that concern has now been accommodated.

24. Fifth, none of the concerns raised by the first and second defendants are really matters that appeared to me to be legally relevant to the consideration of whether a release of documents is appropriate. They were more forensic or strategic considerations, and while of course important to the first and second defendants, such matters ought not prevent the use of the documents once lawful justification for the release from the undertaking has been established.

25. Accordingly, the release will be granted in substantially the terms sought by the Territory.

26. As to the question of the costs of this application, the Territory sought that costs be reserved. As stated above, the Territory was required to seek the leave of the Court even if the first and second defendants had consented to the orders being made.

27. Further, the Territory limited its application during the hearing and this was in response to an indication that I would not be minded to grant a release in respect of documents that did not yet exist. The plaintiff may take a different attitude to any further reports it files in the proceedings and the parties ought not be deprived of an opportunity in the future to give proper consideration to what documents are covered by any release sought and how any release may affect them.

28. In these circumstances, I consider the appropriate order is that each party pay their own costs of the application.

1. The Australian Capital Territory and its employees, servants or agents including the Construction Occupations Registrar (Registrar) appointed under s 103(1) of the Construction Occupations (Licensing) Act 2004 (ACT) (COL Act), be released from their implied undertaking not to make use of (other than for the purposes of this proceeding) the documents referred to in Item 1 only of the Schedule attached to the application filed 22 March 2018, insofar as they are relevant to the further investigation by the Registrar as to whether he should exercise his regulatory powers:

a. Under pt 4, COL Act as regards a rectification order in relation to either or both of the first or fifth defendants;

b. Under pt 11, COL Act as regards the complaint as it is referred to at paragraph 7 of the affidavit of Zoe Robens affirmed 14 March 2018;

c. Pursuant to ss 61 and 62 of the Building Act 2004 (ACT) in relation to the plaintiff or any of the individual unit owners within Units Plan No. 3676; or

d. To take disciplinary action against any licensees under pt 5, divs 1 and 2 of the COL Act.

2. The parties are to pay their own costs of the application.

I certify that the preceding twenty-nine [29] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Associate Justice McWilliam