Second class action against Treasury Wine Estates granted leave to proceed
Court considers whether solicitors and counsel breached an undertaking by using in later action material contained in pleadings filed in earlier action
This decision concerned two shareholder class actions against Treasury Wine Estates Ltd (TWE). The first proceeding was filed in the Federal Court in July 2014, settled in November 2017 for $49 million, and was subsequently dismissed in August 2018 (Jones Proceeding). The second proceeding was filed in May 2020 in the Supreme Court of Victoria and is ongoing (Napier Proceeding). Maurice Blackburn (MB) acted for the applicant in the Jones Proceeding and acts for the applicant in the Napier Proceeding. Mr Guy Donnellan was briefed as Junior Counsel for the applicants in both the Jones and Napier Proceedings.
In preparing the Statement of Claim filed in the Napier Proceeding (Napier SOC), MB and Mr Donnellan used information contained in the Third Further Amended Statement of Claim (Jones 3FASOC) and the Second Further Amended Defence (Jones 2FAD) filed in the Jones Proceeding. The relevant information in the Jones 3FASOC and the Jones 2FAD was derived from information contained in documents discovered by TWE in the Jones Proceeding.
In June 2020, TWE filed a summons in the Napier Proceeding seeking to stay that proceeding on the basis that, by using information contained in the Jones 3FASOC and the Jones 2FAD to prepare the Napier SOC, MB and Mr Donnellan had breached the implied undertaking not to use documents obtained from TWE in the course of discovery in the Jones Proceeding for any collateral or ulterior purpose. This 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  1 AC 280). In Hearne v Street (2008) 235 CLR 125;  HCA 36, the High Court confirmed the application of the Harman undertaking under Australian law. Justice Foster thus referred to the implied undertaking as the ‘Hearne v Street obligation’ in his Honour’s reasons.
The filing of the summons and other interlocutory steps taken by TWE effectively stultified any real progress in the Napier Proceeding. In response, MB, Mr Donnellan and Mr Napier filed interlocutory applications in the Jones Proceeding seeking:
- a declaration that no Hearne v Street obligation applied to the Jones 3FASOC and the Jones 2FAD or any information contained within them (Jones Information); and
- in the alternative, orders releasing MB, Mr Donnellan and Mr Napier from any applicable Hearne v Street obligation, and granting them leave to use the Jones Information in the Napier Proceeding.
In support of their applications, MB, Mr Donnellan and Mr Napier submitted, inter alia, that:
- no Hearne v Street obligation applies to pleadings filed in the Federal Court, primarily because r 2.32(2) and (3) of the Federal Court Rules 2011 (Cth) provide that any member of the public is permitted to inspect any pleading filed in the Federal Court unless an order has been made denying access;
- once the information derived from TWE’s discovered documents was incorporated into the Jones 3FASOC and the Jones 2FAD, it thereafter took its character for the purposes of a Hearne v Street analysis from the fact that it was contained in pleadings rather than in the underlying discovered documents provided by TWE under compulsion;
- if a Hearne v Street obligation did apply to the Jones Information, it did not survive:
- the publication of the Jones 3FASOC and the Jones 2FAD on the Federal Court’s website, where they were made available to class members and the general public pursuant to orders of the Court;
- the making of settlement approval orders in the Jones Proceeding; and
- the Second Further Amended Statement of Claim (Jones 2FASOC), which was materially identical to the Jones 3FASOC, being admitted into evidence in connection with an application by the applicant in the Jones Proceeding in April 2017 to amend his Statement of Claim; and
- the Court should exercise its discretion to release MB, Mr Donnellan and Mr Napier from any Hearne v Street obligation that applied to the Jones Information in circumstances where the Jones 3FASOC and the Jones 2FAD remain publicly available on the Federal Court’s website and where MB, Mr Donnellan and Mr Napier are, according to TWE, the only persons in the entire world who are unable to use the Jones Information as they please.
On the other hand, TWE submitted, inter alia, that:
- the Hearne v Street obligation extends to pleadings filed in the Federal Court;
- the Hearne v Street obligation applies not only to discovered documents but also to information derived from those documents, and any document which embodies information derived from a discovered document (including a pleading) cannot be regarded as a secondary or independent source of that information; and
- the fact that third parties were able to access the Jones 3FASOC and the Jones 2FAD on the Federal Court website, and use that information as they pleased, did not have the effect that the Hearne v Street obligation imposed upon MB, Mr Donnellan and Mr Napier ceased to operate.
In light of the above principles, TWE submitted that MB and Mr Donnellan breached the Hearne v Street obligation because:
- TWE discovered documents in the Jones Proceeding and provided particulars of its defence under compulsion of court order;
- MB and Mr Donnellan were subject to the Hearne v Street obligation in respect of those documents, and the information derived from them;
- that information was used to prepare parts of the Jones 3FASOC, and was embodied in that pleading;
- this was a use made possible by TWE’s discovery (and by the provision of TWE’s further particulars of defence), and the Jones 3FASOC could not be regarded as an independent source of the information derived from TWE’s discovery and further particulars, to which the Hearne v Street obligation applied and continued to apply; and
- MB and Mr Donnellan used the information derived from TWE’s discovery and particulars of defence – which had been embodied in the Jones 3FASOC – to draft the Napier SOC.
Justice Foster overwhelmingly accepted the submissions made by MB, Mr Donnellan and Mr Napier, and rejected those made by TWE. His Honour found that the Jones Information was not subject to a Hearne v Street obligation. In so finding, his Honour said (at ):
In this Court, pleadings are available for inspection by any member of the public. In addition, in the present case, the information originally sourced in discovered documents which found its way into the Jones 3FASOC and the Jones 2FAD was included in those pleadings as a result of amendments sought by the relevant parties and granted by the Court and were so included as a result of the legitimate and quite proper exercise of the parties’ rights to seek such amendments in light of information gained from reading and considering discovered documents. No restriction was sought or placed upon public access to the information which had been included in the Jones 3FASOC and the Jones 2FAD which had been taken from discovered documents and that material was available for inspection by any member of the public as part of those pleadings. MB and Mr Donnellan did not access the primary source for that information (viz discovered documents) when they came to draft the Napier SOC. The only documents used by them for the purpose of drafting the Napier SOC were the Jones 3FASOC and the Jones 2FAD. The only information used by them for that purpose was information contained in those pleadings. Those pleadings were not subject to any Hearne v Street obligation insofar as MB and Mr Donnellan were concerned. Nor was the information in those pleadings extracted from discovered documents subject to any such obligation.
His Honour further held that, if he was wrong and a Hearne v Street obligation did exist, it nevertheless ceased to be enforceable when the pleadings were published on the Federal Court website and when the Jones 2FASOC was admitted into evidence at the amendment application in the Jones Proceeding in April 2017. His Honour thus made the declaration sought by MB, Mr Donnellan and Mr Napier.
Although strictly unnecessary, his Honour also made orders to the effect that, if any Hearne v Street obligation applied to the Jones Information, MB, Mr Donnellan and Mr Napier be released from that obligation and be granted leave to use the Jones Information in the Napier Proceeding.
(Postscript – on 20 August 2020 TWE filed an appeal from Foster J’s decision.)
Jones v Treasury Wine Estates Ltd; In the Matter of Treasury Wine Estates Ltd (No 4)  FCA 1131
Federal Court of Australia, Foster J,
6 August 2020
Applicant’s Solicitors in the Jones and Napier Proceeding: Maurice Blackburn;
Mr Donnellan’s Solicitors: Moray & Agnew;
Respondent’s Solicitors in the Jones and Napier Proceeding: Herbert Smith Freehills;
Applicant’s Funder in the Jones and Napier Proceeding: N/A
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