Documents obtained in a proceeding: when can a party use them for another purpose?

Legal Directions

James G Oberg (Sales) Pty Ltd v Oberg [2012] FCA 722

The implied undertaking of a party to litigation that it not use documents obtained in a proceeding for a purpose other than that proceeding is well known.

In certain circumstances the court will make an order releasing that party from its implied undertaking. The party may then use the documents for consideration of and, if appropriate, commencing a proceeding against a non party.

In James G Oberg (Sales) Pty Ltd v Oberg [2012] FCA 722, Moray & Agnew acted for a party which was successful in such an application.

Facts

WealthSure Pty Ltd (‘WealthSure’) is a financial services licensee. Colin Oberg (‘Colin’) was WealthSure’s Authorised Representative. The plaintiffs were Colin’s parents and their family company. Colin was their financial planner.

It was alleged by the plaintiffs that whilst Colin was WealthSure’s Authorised Representative, he made unauthorised withdrawals from certain investment accounts held by the plaintiffs and misappropriated those funds.

WealthSure was alleged by the plaintiffs to be liable for Colin’s conduct pursuant to the provisions of Division 6 of Part 7.6 of the Corporations Act 2001 (Cth) and common law principles of agency.

During the course of the litigation documents were discovered by the plaintiffs and produced by the Australian Securities and Investments Commission (‘ASIC’) in response to a subpoena.

Our review of those documents led us to conclude that they would be useful to WealthSure in a number of ways including:

  • The defence of a different proceeding, which had issues and parties in common with this matter
  • Our consideration of a potential cross-claim in that different proceeding and / or our consideration of commencing another proceeding
  • If thought appropriate, pursuing the cross-claim or other proceeding.

Before WealthSure or we could use the documents for those purposes we needed to be released from our implied undertaking not to use the documents for another purpose.

The test

The decision of Edmonds J sets out the relevant test.

The test is whether ‘special circumstances’ exist which warrant the court releasing a party from its implied undertaking. If the court finds that ‘special circumstances’ exist then it has a broad discretion as to whether or not it grants leave to use the documents for other purposes.

Factors relevant to establishing ‘special circumstances’ include whether there is a connection between the two proceedings (i.e. the extant and contemplated proceeding), including commonality of facts and parties, the likely contribution of the document to achieving justice in another proceeding, the nature of the document and whether it is commercially sensitive, and the attitude of the author of the document and the person by whom the document was produced.

The decision

WealthSure was able to establish that special circumstances existed and that the court ought to exercise its discretion to grant leave to WealthSure and its lawyers to use the documents.

The special circumstances established by WealthSure included a commonality of facts and parties between the litigation and the contemplated proceeding; that some of the documents were of a nature that could be ordinarily produced on subpoena; and that without the documents WealthSure would not be in a position to assess the availability of a cross-claim and / or other proceeding and it would therefore be denied justice.

Other factors which were relevant to the court granting the leave included:

  • That the persons producing the documents (the plaintiffs and ASIC) did not oppose WealthSure’s application
  • WealthSure had identified with a sufficient level of detail the specific documents in respect of which it required the release.

Conclusion

During the course of litigation, documents may come to light which might be useful in other proceedings. A party cannot use those documents for those other proceedings unless and until it has been released from its implied undertaking.

This case sets out the matters a court may take into consideration before it is persuaded that a party ought be released from its implied undertaking. It is of great practical significance.

Authored by Susan Reid, Senior Associate, Sydney.


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