Griffiths & Beerens v Duggan VSC 230
(Judgment by: Pagone J)
Judgment date: 24 June 2008
1 The plaintiffs have sought by summons dated 17 June 2008 to be released from their implied undertaking not to use, other than for the purposes of this proceeding, an affidavit sworn by Mr Kua Si Lin ('Mr Lin'). Mr Lin's affidavit was provided to the plaintiffs pursuant to orders made by the Court for the serving and filing of witness statements. I heard the proceeding over 33 days between 3 March 2008 and 2 May 2008, and on 11 June 2008 decided all issues in dispute between the parties except costs. The parties are still to file and serve further material upon which they wish to rely for their contending arguments about costs. Mr Lin was not a party to the proceedings although he, and his company Proline Private Ltd ('Proline), sought leave to intervene in the summons dated 17 June 2008 issued by the plaintiffs to be released from their implied undertaking ('the undertaking proceeding'). Mr Lin's company, however, is a party to other proceedings against one or more of the plaintiffs. On 2 October 2007 Proline filed proceeding numbered 8649 of 2007 for the winding up ('the winding up proceeding') of Griffiths & Beerens Pty Ltd ('GB'). On 2 November 2007 GB filed a writ and statement of claim against Proline alleging monies owed for goods and services delivered ('the debt recovery proceeding'). The defendants in the proceeding I heard are not parties to either the winding up proceeding or the debt recovery proceeding. The plaintiffs claimed in the undertaking proceeding that the affidavit sworn by Mr Lin in the proceeding heard by me contains statements that are relevant to their case in the winding up proceeding and the debt recovery proceeding.
2 Parties to litigation are bound by an implied undertaking not to use documents and affidavits disclosed in the course of litigation for any collateral purpose unless they are released from the undertaking by the court. In Harman v Secre-tary of State for the Home Department the House of Lords held, by majority, that an implied undertaking attached to documents received by a party, or the party's solicitors, during legal proceedings to prevent use of the documents for a collateral purpose. The principle has frequently been applied in Australia. In Harman, Lord Keith said:
The implied obligation not to make improper use of discovered documents is, however, independent of any obligation existing under the general law relating to confidentiality. It affords a particular protection accorded in the interests of the proper administration of justice. It is owed not to the owner of the documents but to the court, and the function of the court in seeing that the obligation is observed is directed to the maintenance of those interests, and not to the enforcement of the law relating to confidentiality.
In British American Tobacco Australia Services Ltd v Cowell (No 2) the Court of Appeal said:
The implied undertaking recognises that a party's own documents are personal and private and are not to be used in the same fashion as other evidence which comes forth in the course of the trial. That the implied undertaking attaches because the documents have been produced under coercion is recognised in the present instance by the appellant's not claiming protection for those documents which, though discovered, were subsequently tendered by the appellant itself in the course of the hearing of the application to strike out the defence.
Later the Court said:
For these reasons, it may be concluded as follows. Where documents are provided to a party to litigation under some coercive process of the court with the result that an implied undertaking attaches to the effect that, without the leave of the court, they not be used otherwise than for the purposes of the litigation, the party bound by that undertaking is not freed of it simply because the document in question is marked as an exhibit in the proceeding in the course of which it was provided.
Their Honours observed that the position would, at least arguably, be different if the party was seeking not to make use of the document itself, but to use only the information about it of which the public had become aware by reason of its use in open court.
3 In this case there was no doubt that Mr Lin's affidavit was received by the plaintiffs, and their solicitors, with an implied undertaking not to use the affidavit for purposes other than the proceedings in which it was filed. The parties had been required to file witness statements of the evidence upon which they sought to rely at the trial. The defendants filed a document described as the witness statement of Mr Lin dated 15 December 2006 stating that at the hearing of the proceeding they proposed to call Mr Lin to give the evidence set out in the affidavit he had sworn on 23 June 2006. The proceeding was within the Commercial and Equity Division of this court. Paragraph 10.5 of the Commercial List Practice Note No 4 of 20048 expressly states:
A party may refer to or use the contents of a witness statement served by another party before it is adopted by the intended witness and put into evidence, for the purposes of the proceeding, for example, for the preparation of the case to be answered, in opening submissions and in adducing evidence from a witness. A party receiving a witness statement is taken to have done so subject to an implied undertaking to the court that the witness statement and its contents will not be used for any purpose other than for the legitimate purposes of the proceeding.
Mr Lin was called to give evidence but his witness statement was not used at the trial. Parts of the affidavit were put to him in cross-examination but it was not read or tendered at trial.
4 I accept that the affidavit of Mr Lin was received by the plaintiffs, and their lawyers, with an implied undertaking that it not be used for purposes other than the proceeding before me, but I am not persuaded that its use by the plaintiffs in either the winding up proceeding or the debt recovery proceeding needs them to obtain a release. The implied undertaking does not diminish the authority or power of the court in other proceedings and 'must give way to any inconsistent statutory provision and to orders of a court in other proceedings for discovery and inspection', and I would add, any overriding compulsion or duty imposed by law or statute. The court hearing the winding up proceeding or the debt recovery proceeding has full power and authority to ensure that its decision is reached by reference to all material that is necessary and probative in the discharge of its jurisdiction and powers. The proper course for parties such as the plaintiffs is, in my view, to seek in those proceedings access to information and documents that may bear upon the facts and issues in those proceedings. That appears to have been the process followed in Jarra Creek Central Packing Shed Pty Ltd v Amcor Ltd. I was told from the bar table that discovery had not been sought from Proline in the other proceedings but there was no suggestion of any lack of power in the Court to do so in those proceedings or to issue subpoenas in those proceedings against Mr Lin or the parties who had been defendants in the proceedings before me. Any such step would not be 'to make use of the document itself, but to use only the information about it'. Any argument that a party would by that process be able 'to gain information to which it would not have access' would be met by the response that if that were so 'it follows from the use of the processes of the court itself' and not by any breach of an implied undertaking to the court.
5 The implied undertaking cannot restrict or fetter, and was not stated as a restriction or fetter, on a court's power in relation to its own processes in proceedings properly instituted before it. In Esso Australia Resources Ltd v Plowman Mason CJ said:
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. (My emphasis)
There may be instances where the implied undertaking would be inconsistent with statutory duties or powers and it would be a curious result if the effect of the implied undertaking would be to limit the powers of a court in subsequent cases to compel production of the documents necessary to ensure the integrity of its judicial function.
6 A different conclusion may have been adopted in other cases including Springfield Nominees Pty Ltd v Bridgelands Securities Ltd. That case concerned an application by a party to be released of the implied undertaking in respect of a witness statement which had been filed in earlier proceedings. The facts are, therefore, to that extent analogous to the ones with which I am concerned. His Honour applied the general principle from Harman v Secretary of State for the Home Department but did not consider whether the existence of the implied undertaking restricted the court's power in the second proceeding to order discovery as part of its process. On one view of his Honour's reasons, his Honour was saying only that the existence of the implied undertaking was a factor relevant to take into account in a subsequent proceeding in deciding whether a party should be permitted to use a document obtained in a previous proceeding.
7 Whether a document which is subject to an implied undertaking (like Mr Lin's affidavit) can be used by a party in subsequent proceedings is a matter that may potentially impinge upon the integrity and authority of two sets of judicial processes. That situation is quite different from the case where the subsequent use of a document obtained with an implied undertaking restricting its use is subject only to the continuing authority of the court which first compelled its production. In that case the party wishing to use the document can only do so if permitted by the court to which the implied undertaking is given. That is not this case. Nor is this a case in which the use of Mr Lin's affidavit may adversely impact upon my hearing and consideration of the issues in dispute before me: that dispute is finalised on all issues except costs.
8 Whether it should be used in the second proceeding is a question which is best dealt with by the judge in the second proceeding. It may be (as may be the case with Mr Lin's affidavit) that the document, although exchanged and filed in legal proceedings, continues to attract legal professional privilege or by reason of the implied undertaking ought in any subsequent proceeding not be ordered for discovery, production or inspection. However I need not pursue this aspect for three reasons. The first is that the case before me was argued upon the assumption that the proper process for the plaintiffs to follow was to apply to me to release them (or at least some of them) of the implied undertaking that prevented the use of Mr Lin's affidavit in the other proceedings pending in this court, and, therefore I did not have the benefit of full argument on this point. The plaintiffs did not contend that I should not make the orders they were seeking. The defendants and the interveners maintained that the orders should not be made as a matter of substance not that the summons should, or could, not have been issued. Secondly, the decision I have reached in this matter does not depend upon my adopting the view I have expressed about the preferable process. Thirdly, as a matter of power, it is probable that I retain the power to grant the relief sought even though it may be subject to another order by another court. I will proceed therefore, in conformity with the arguments before me, that the plaintiffs need me to release them from the implied undertaking if they are to use Mr Lin's affidavit in the other proceedings.
9 The primary case in the undertaking proceeding was, not that leave was unnecessary, but rather that there existed special circumstances that justified my release of the plaintiffs from their implied undertaking. In Holpitt Pty Ltd v Varimu Pty LtdHolpitt Pty Ltd v Varimu Pty Ltd Burchett J adopted the dicta in Crest Homes PLC v Marks that the court will not release or modify the implied undertaking 'save in special circumstances'. In Springfield Nominees Pty Ltd v Bridgelands Ltd Wilcox J said:
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, many factors being relevant. 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 in achieving justice in the second proceedings. (My emphasis)
The case before me in the undertaking proceeding was primarily concerned with whether or not this test had been met. The plaintiffs contended that Mr Lin's affidavit bears upon live issues in the winding up proceeding and in the debt re-covery proceeding. They said that in each proceeding there was an issue about whether it is Proline or Mr Lin who is the relevant contracting party. The winding up proceeding was commenced by Proline against GB for non compliance with a statutory demand made by Proline rather than by Mr Lin. In the debt recovery proceeding GB (together with Somers Engineering and GB Products Pty Ltd) sued Proline (rather than Mr Lin) for debt. In each case the issue concerned a debt by or to Proline rather than Mr Lin. The plaintiffs contended that the affidavit which had been sworn by Mr Lin bears upon those issues because, amongst other things, he was submitted to have used language to suggest that it was he who was personally entitled to commissions rather than Proline. In response to this it was asserted that the winding up proceeding had been determined in all respects except for that of costs. A hearing about costs in the winding up pro-ceeding is to come before Master Efthim on 5 August 2008. The debt recovery proceeding, I was told, had also been referred to Master Efthim for case management.
10 In my view those plaintiffs in the proceeding before me, who are also parties to the winding up proceeding and the debt recovery proceeding, should be released from the implied undertaking not to use Mr Lin's affidavit for purposes other than the proceeding which I have previously heard and determined in all respects except for costs. I base that conclusion primarily upon my view that questions about the relevance, admissibility and probative value of Mr Lin's affidavit in those proceedings should be determined in those proceedings, and by the judicial officer charged with those proceedings, and not collaterally by me. The material before me suggests that Mr Lin's affidavit is likely to have little, if any, weight in the other proceedings, but I would not wish the integrity of those proceedings to be in any way under-mined by such decision as I may make without the benefit of the full argument which can only occur properly in those proceedings. Indeed, I think it undesirable to encourage, in proceedings before me, the parties in a subsequent proceed-ing to conduct a mini hearing about relevance, admissibility or probative value of material that may be sought to be tendered in evidence in the other proceedings. Such a course is likely to undermine the integrity of the judicial system rather than to enhance it.
11 Each case must, of course, depend upon its own facts, and there may be other cases where the mere existence of subsequent judicial proceedings will not be sufficient to warrant the release of an implied undertaking, but in my view it is a powerful factor in favour of release if release be necessary and in this case is a special circumstance to warrant release from the implied undertaking. It would also be undesirable for a judge in one proceeding not to release a party from its implied undertaking and find that the same party was bound by a contrary order (for example to make discov-ery of a document subject to an 'unreleased' implied undertaking) by another judge in the same court or by a judge of a different court whether in the same jurisdiction or elsewhere. That may be a reason to conclude that the implied undertaking should not be construed to restrict the obligations which subsequent proceedings may impose upon a party. It is, however, also a reason in support of releasing a party from an implied undertaking. The foundation of the implied undertaking is that it is given to the court, not to the parties, to prevent the misuse of information provided pursuant to the court's powers of compulsion. Any information which is truly relevant, admissible and probative in subsequent proceedings will, all things being equal, generally not be an improper use of material previously obtained subject to an implied undertaking. If Mr Lin's affidavit is decided to be relevant, admissible and probative by Master Efthim, or a judge or any other judicial officer who may determine the issues in dispute in the winding up proceeding and the debt recovery proceeding, I would find it difficult to conclude either that its use by a party had been improper or that the party should not have been able to use something which the judge or judicial officer received as relevant, admissible and probative to the outcome. I would be reluctant to permit the implied undertaking to cloak a document with protection from use in other judicial proceedings where there are ample powers to ensure that its processes are not abused: especially in this case, where one of those other proceedings (the winding up proceeding) was commenced by Mr Lin's company Proline. It may be, as I have said, that the affidavit will be found to be irrelevant, inadmissible or of little probative value in those proceedings, but that is within the province of those proceedings.
12 I do not accept, therefore, that arguments about the relative insignificance of the material in Mr Lin's affidavit should be accepted by me. That is a matter for the judicial officer in the other proceedings. What is for me is primarily to ensure that those proceedings are not compromised by my decision in the undertaking proceedings instituted by summons. It was argued on behalf of the defendants that I should take into account the possibility that my decision of 11 June 2008 may be the subject of an appeal and may be overturned. In that regard it was said that whilst that prospect remains alive it is still possible that Mr Lin's affidavit may become relevant in, presumably, a re-hearing. The submission does not persuade me that I should not release the plaintiffs from the undertaking: they have the benefit of my decision and of the facts I have found unless and until overturned on appeal. Moreover, the submission was put on the basis of general possibilities rather than on the basis of probabilities or likelihoods.
13 It was also said on behalf of the defendants, and on behalf of Mr Lin and Proline, that I should take into account Mr Lin's attitude to the use of the affidavit in the other proceedings. A court might be ready to release a party from an undertaking if the party affected is willing for the release to be granted; it does not follow, however, that the unwilling-ness of the party affected will always weigh against release. Indeed, it may be that a party's unwillingness to release an opposing party from an implied undertaking will be because the information sought to be relied upon will have direct, immediate and substantial adverse impact in the other proceedings. In such a case the opposition of a party affected by release from the undertaking may be to gain some forensic or tactical advantage and may suggest or supply the very reason why an implied undertaking should be released. Release may however, perhaps, be denied even in such cases if it be shown that a party affected will suffer prejudice or inconvenience greater than the probative value of the document sought to be relied upon. That is not so here: the information is not commercially sensitive, there is no prospect of Mr Lin or Proline suffering unfair competition from a competitor, or that its use might result in damage to reputation or other loss. Accordingly, I will release the plaintiffs from the implied undertaking in relation to Mr Lin's affidavit.
14 In this proceeding, Mr Lin and Proline sought leave to intervene pursuant to r 9.06 Supreme Court (General Civil Procedure) Rules 2005. In Holpitt Pty Ltd v Varimu Pty Ltd the party whose interests were affected by the release which was sought was represented before the trial Judge in opposition to the motion. It appears from the report of the decision that the only parties to that application were the applicant and the person affected by it, but not any of the other parties to the primary proceeding. In the case before me it is not obvious what interest the defendants have in opposing the use of Mr Lin's affidavit in the winding up proceeding and the debt recovery proceeding (to neither of which any defendants are parties): Mr Lin's affidavit had been prepared and filed in a proceeding which is (subject to a possible appeal) concluded in all issues except costs. Nonetheless, the defendants were served with the summons in the undertaking proceeding and participated without objection by the plaintiffs or by the parties seeking to intervene. Mr Lin and Proline were not made parties to the summons in the undertaking proceedings but they were served with the summons and sought leave to intervene. I accept that each has a sufficient interest for them to be heard as interveners in the summons dated 17 June 2008 by which the plaintiffs sought to be released from their undertakings and grant them leave to intervene. Proline is a party in both of the other proceedings and may be affected by the use of Mr Lin's affidavit. Mr Lin is the deponent of the affidavit in question and his evidence (or his credit) in either proceeding may be affected in some way by what he said in the affidavit. I accept that they were entitled to be heard on the summons and I allowed them to participate, and they fully participated, as interveners subject to my formal ruling on their oral application by counsel.
15 The final issue for my consideration is that of costs. In Springfield Nominees Pty Ltd v Bridgelands Securities Ltd Wilcox J said:
Counsel for Aetna submits that, even if leave is granted, there ought to be no order for costs against his client. He says that HongKong Bank brought his client to the court seeking an indulgence; prima facie it ought to pay the costs, or at worst there ought to be no order for costs. I do not accept this submission. It is true that HongKong Bank served the notice of motion upon Aetna, taking the view that it ought to have the opportunity to put submissions on the matter. But it was not bound to do so. If Aetna had not opposed the motion, there would be no question of making an order for costs against it. But Aetna not only chose to oppose the motion. By questioning the provenance of the statement it, in effect, forced an adjournment and a second day's hearing. Aetna has vigorously defended the application, but failed. The usual rule should apply. It should pay the appellant's costs.
The facts before me were not quite like those in Springfield: significantly, there was no adjournment forced by virtue of the conduct of the defendants. On the other hand, they did appear and vigorously opposed the application: they need not have done so. Proline and Mr Lin specifically sought to intervene for the express purpose of opposing the application. It is true that the plaintiffs were seeking an indulgence and, ordinarily, they might be expected to bear the costs occasioned by such an application. However, the defendants would not have incurred costs had they not opposed the application and it is not the defendants who are likely to be affected directly by the use of Mr Lin's affidavit in the winding up proceeding or the debt recovery proceeding to which the defendants are not parties. In the circumstances I will order that the defendants and the interveners pay the plaintiffs' costs of the hearing before me on 24 June 2008 but make no order in favour of any party for the costs of or incidental to the plaintiffs' summons dated 17 June 2008 as may have been incurred prior to 24 June 2008. The defendants joined in seeking costs against the interveners in response to questions by me but no basis was given for that and I can see no reason for the defendants to secure any costs against the interveners.
16 Accordingly, I make the following orders:
- That Mr Kua Si Lin and Proline Private Ltd have leave pursuant to the oral application made by their counsel on 24 June 2008 to be heard as interveners pursuant to r 9.06 Supreme Court (General Civil Procedure) Rules 2005 on the summons dated 17 June 2008.
- That the plaintiffs in this proceeding who may also be parties in proceedings in this court numbered 8649 of 2007 and 9222 of 2007 ('the relevant plaintiffs') are released from their implied undertaking not to use, otherwise than for the purposes of this proceeding, the affidavit in Exhibit 'AJF-1' to the affidavit of Alan James Foster sworn 17 June 2008, for the purpose only of using that affidavit in the Supreme Court of Victoria proceedings numbered 8649 of 2007 and 9222 of 2007 or as may otherwise be ordered by a court with competent jurisdiction.
- That the defendants and the interveners pay the relevant plaintiffs' costs of the hearing on 24 June 2008 of their summons dated 17 June 2008.
Harman v Secretary of State for the Home Department  1 AC 280; see also Matthew Groves 'The implied undertaking restricting the use of material obtained during legal proceedings' (2003) 23 Australian Bar Review 314.
 1 AC 280.
Ibid, 308. (2003) 8 VR 571.
(2003) 8 VR 571
Ibid, 586 (Phillips, Batt and Buchanan JJA).
Ibid, 593 (Phillips, Batt and Buchanan JJA).
Ibid, 593 (Phillips, Batt and Buchanan JJA).
(2004) 8 VR 480.
Jarra Creek Central Packing Shed Pty Ltd v Amcor Ltd  FCA 391 (Unreported, Tamberlin J, 27 March 2008), 7; see also Esso Australia Resources Ltd v Plowman (1994) 183 CLR 10 at 32-33 (Mason CJ).
A government regulator who comes by documents in litigation may, perhaps, have a duty by law or statute to make use of that information notwithstanding that it was obtained in litigation. In such cases the implied undertaking may, perhaps, not arise.
 FCA 391 (Unreported, Tamberlin J, 27 March 2008).
British American Tobacco v Cowell (No 2) (2003) 8 VR 571 at 593 (Phillips, Batt and Buchanan JJA).
Trade Practices Commission v Pioneer Concrete (Vic) Pty Ltd (1981) 36 ALR 151 at 158 (Bowen CJ but in reference to a different issue).
Ibid, 158 (Bowen CJ but in reference to a different issue).
(1994) 183 CLR 10.
Ibid, 33; Brennan, Dawson and McHugh JJ each agreeing with the reasons of Mason CJ; Toohey J dissenting but not expressly doubting this proposition.
See Riddick v Thames Board Mills Ltd  1 QB 881; see also Groves, above n 1, 325-7 and cases cited at notes 69-73.
(1992) 38 FCR 217.
 1 AC 280.
At least where, as here, the first proceedings have substantially been concluded.
Nilsen Industrial Electronics Pty Ltd v National Semiconductor Corporation (1994) 48 FCR 337; Sevic v Roarty (1998) 44 NSWLR 287.
See Jarra Creek Central Packing Shed Pty Ltd v Amcor Ltd  FCA 391 (Unreported, Tamberlin J, 27 March 2008).
(1991) 29 FCR 576.
(1987) 1 AC 829.
(1992) 38 FCR 217.
Ibid, 225; Liberty Funding v Phoenix Capital Ltd (2005) 218 ALR 283; Jarra Creek Central Packing Shed Pty Ltd v Amcor Ltd  FCA 391; Esso Australia Resources v Plowman (1995) 183 CLR 10 at 37 (Brennan J).
Prudential Assurance Co Ltd v Fountain Page Ltd  3 All ER 878 at 885 (Hobhouse J); Hamersley Iron Pty Ltd v Lovell (1998) 19 WAR 316 at 338 (Anderson J).
Indeed, the agreement by a party may be sufficient in some cases: See Cross on Evidence (7th Australian Edition), 770; Dagi v BHP Co Ltd  2 VR 567 at 572 (Byrne J); Hamersley Iron Pty Ltd v Lovell (1998) 19 WAR 316 at 338 (Anderson J).
(1991) 29 FCR 576.
Zanca v Tisher; ex parte Law Institute of Victoria  VSC 349 (Unreported, Hedigan J, 21 September 1999), ; Australian Conservation Foundation v Commonwealth (1980) 146 CLR 493 at 527 (Gibbs J), 537-8 (Stephen J), 547 (Mason J); Onus v Alcoa Australia (1981) 149 CLR 27; Levy v Victoria (1997) 189 CLR 579 at 601-2 (Brennan CJ).
(1992) 110 ALR 685.