No harm in using previous pleadings – an early win for plaintiff in TWE shareholder class action

Federal Court of Australia finds that solicitors and counsel did not breach Hearne v Street obligation by using pleadings from earlier proceedings that are publicly available.

This is a decision arising from an appeal by Treasury Wine Estates Ltd (TWE) from Jones v Treasury Wine Estates Ltd; In the matter of Treasury Wine Estates Ltd (No 4) (2020) 146 ACSR 302; [2020] FCA 1131 (Primary Decision). In July 2014, Maurice Blackburn (MB) commenced the Jones proceeding in the Federal Court of Australia (the settlement of which received Court approval in August 2018). In May 2020, MB commenced the Napier proceeding in the Supreme Court of Victoria. In preparing the statement of claim in the Napier proceeding (Napier SOC), MB and counsel (Mr Donnellan, being the third respondent) used information contained in the Third Further Amended Statement of Claim (Jones 3FASOC) and Second Further Amended Defence (Jones 2FAD) in the Jones proceeding (being documents available on the Federal Court’s website). TWE sought to stay the Napier proceeding, alleging that MB and Mr Donnellan had breached the obligation not to use documents obtained from TWE in the course of discovery in the Jones proceeding for any collateral or ulterior purpose. The obligation is colloquially known as the ‘Harman undertaking’ (named after the decision of the House of Lords in Harman v Secretary of State for the Home Department [1983] 1 AC 280). In Hearne v Street (2008) 235 CLR 125; [2008] HCA 36, the High Court confirmed the application of the Harman undertaking under Australian law. In response to TWE’s stay application, an interlocutory application was filed in the Jones proceeding seeking:

  • a declaration that the obligation did not apply to the Jones 3FASOC or Jones 2FAD; and
  • in the alternative, orders releasing MB and Mr Donnellan from the Hearne v Street obligation.

This application culminated in the Primary Decision, in which Foster J found in favour of MB and Mr Donnellan.

Whether Leave to Appeal Required

Their Honours did not consider that leave to appeal the Primary Decision was required. In reaching this decision, their Honours placed emphasis on the words “relating to” in s 24(1C)(b) of the Federal Court of Australia Act 1976 (Cth) (FCAA), which provides that leave to appeal is not required for an interlocutory judgment “in proceedings relating to contempt of the Court or any other court”. In seeking orders that the Hearne v Street obligation had not been breached at first instance “… the primary judge was necessarily finding whether or not the respondents had engaged in conduct which amounted to a contempt of this Court” (at [19]). Their Honours further noted that even if leave was required, they would have granted it.

The Hearne v Street Obligation

TWE argued that the primary judge had erred in respect of the Hearne v Street obligation by concluding that:

  • there was a public domain exception to the obligation;
  • the obligation did not apply to pleadings;
  • the documents were in the public domain for the purpose of the law of confidence so the obligation did not apply; and
  • if the obligation applied to the documents, the obligation was spent when the information in the Jones 2FASOC (containing the same information as the documents) was tendered in evidence.

In discussing the decision in Hearne v Street and other decisions considering Harman, their Honours noted (at [83(2)]):

In Hearne v Street the High Court adopted Harman but, in so doing, expressly framed the obligation as one which ceased to apply on the admission of the document (be it a discovered document or an affidavit or witness statement) into evidence… The rationale for this is that court hearings (subject to limited exceptions) must occur in public as a fundamental component of the requirement for open justice. Once a document is received into evidence, it is taken to be a public document which any member of the public may use (subject to an order from the court to the contrary). For the obligation not to use the document for any collateral purpose to continue to apply only to the parties and their privies would serve no useful purpose. In effect, they no longer hold a position of special advantage with respect to the document.

Their Honours also held that the Hearne v Street obligation applies not only to the documents themselves but to the information within them. At [83(3)] their Honours stated:

The proposition that the obligation applies not only to the documents themselves but also to the information in the documents must be correct… If it were otherwise, the obligation would be hollow.

Their Honours concluded that the primary judge was correct in finding that the Hearne v Street obligation did not apply because in preparing the Napier SOC, no direct use was made of any discovered document. Use had been made of documents which were derived in part from discovered documents (the Jones 3FASOC and Jones 2FAD), which had been published in full on the Court’s website. At [84] their Honours noted:

In these circumstances, we consider that the primary judge was not in error in concluding that the Hearne v Street obligation did not apply to the secondary documents. In our view, from the moment they were placed on the Court’s website pursuant to an order of the Court, the secondary documents ceased to be the subject of any Hearne v Street obligation.

Their Honours also considered that r 2.32 of the Federal Court Rules 2011 (Cth), which provides that any member of the public may inspect a pleading at the Court’s registry once it is filed, was an independent basis to conclude that the Hearne v Street obligation did not apply to the Jones 3FASOC and Jones 2FAD. In considering the rule, their Honours stated (at [88]-[89]):

[88] … Rule 2.32, by giving a stranger a right of inspection of such documents, necessarily assumes that the stranger will be able to use the documents for any purpose. The rule does not purport to place any limit on the use a stranger to the litigation might place on the documents… The necessary effect of the rule is that all such uses are permitted, despite the stranger knowing that the documents must have been created for the purpose of the litigation.

[89] In the present case, no orders restricting access to the Jones 3 FASOC and Jones 2 FAD were made either at the time they were filed or subsequently. Accordingly, on filing, any member of the public was entitled to inspect those documents and, it must be accepted, to use them for any purpose. Consistently with our reasoning in relation to the rationale underlying the obligation as discussed above, we are not persuaded that the obligation applies to a pleading filed in this Court. Once the pleading has been filed then, subject to any contrary order, it is a public document. There is no sound reason for the obligation to continue to apply to the parties and their privies when any other person in the world would be free to inspect and make use of the pleading as they saw fit. The distinction between the special advantage of a party and its privies compared to the position of a stranger, in our view, does not hold in the face of r 2.32(2).

Release from the Hearne v Street Obligation

Their Honours also concluded (at [105]) that even if there had been a breach of the Hearne v Street obligation by MB and Mr Donnellan, there were special circumstances to warrant the making of orders to release them from it, including:

  • the Jones 3FASOC and Jones 2FAD (and the information therein) had been publicly available on the Court’s website since September 2017 and TWE had not sought any orders to protect any information in the documents from public disclosure;
  • regardless of their publication on the Court’s website, r 2.32 provided that the Jones 3FASOC and Jones 2FAD were available to any member of the public to inspect and make use of (including for purposes unconnected to the proceeding) – further, it was taken that TWE would have known that the documents would enter the public domain unless an order was sought to the contrary;
  • the relevant information in the Jones 3FASOC and Jones 2FAD was also contained in the Jones 2FASOC which had been tendered into evidence without any order sought by TWE to protect the information contained therein from public disclosure;
  • TWE had not pointed to any prejudice it may suffer by reason of the fact that the same lawyers had brought the Jones proceeding and the Napier proceeding; and
  • by reason of the fact the information from the Jones 3FASOC and Jones 2FAD was included in the Napier SOC, it could be inferred that it was important to that proceeding and it was in the interests of the administration of justice that MB and Mr Donnellan should be able to use the information for that purpose.

Their Honours further held that the absence of MB and Mr Donnellan seeking orders releasing them from the Hearne v Street obligation prior to preparing the Napier SOC was not a reason to withhold releasing them from the obligation at a later stage. At [107] their Honours concluded:

There is no suggestion in the evidence that the respondents knew of the existence of the Hearne v Street obligation and disregarded it in preparing the Napier SOC in the hope of gaining some forensic advantage by not seeking the orders for release from the obligation in advance. To the contrary, the respondents always maintained they were not in breach of the obligation. The respondents’ position (which we have found to be correct) always involved a more than reasonably arguable approach to the relevant law… [T]his is not a case in which it can be said that the respondents have taken advantage of their own wrong.

Case details

Treasury Wine Estates Ltd v Maurice Blackburn Pty Ltd [2020] FCAFC 226
Federal Court of Australia, Jagot, Markovic and Thawley JJ;
17 December 2020;
Appellant’s Solicitors: Herbert Smith Freehills;
First and Second Respondent’s Solicitors: Maurice Blackburn;
Third Respondent’s Solicitors: Moray & Agnew;
Funder: N/A;
Austlii link: Accessible here

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