A few days ago, the Victorian Court of Appeal handed down judgment in Hazell-Wright v 32 Domain Pty Ltd. The Court refused leave to appeal on the grounds that the one genuinely arguable issue raised by the applicant’s application for leave to appeal — whether the trial judge had erred by refusing to grant the applicant leave to file an amended defence and counterclaim on the grounds that the pleading had been prepared in breach of the applicant’s Harman obligations in another proceeding — had become moot by the time judgment was given. Nevertheless, the Court gave some consideration to this issue and its judgment contains useful dicta on the scope of parties’ Harman obligations in civil proceedings in Australia.
The proceedings in Hazell-Wright arose out of the breakdown of the applicant’s marriage to her former husband, Mr Wright. The respondent was a company associated with Mr Wright and was the registered proprietor of an apartment formerly occupied by the applicant and Mr Wright, in which the applicant and the children of the marriage had continued to live after the relationship broke down. In proceedings in the Family Court, it was ordered by consent that Mr Wright would pay the applicant a sum of money and that she and the children would vacate the property. However, following the conclusion of the Family Court proceedings, the respondent commenced proceedings against the applicant in the County Court, in which it claimed damages representing the rental income it claimed it had foregone by reason of the applicant’s continued occupation of the property.
During the course of the proceedings in the County Court, the applicant sought leave to file an amended defence and counterclaim alleging (amongst other things) that the doctrines of res judicata, issue estoppel, Anshun estoppel and abuse of process prevented the respondent from pursuing its claim in the County Court. In this regard, the applicant intended to submit that the question of her legal right to occupy the former matrimonial home had been finally determined in the Family Court proceedings, and could not be reopened by the respondent in proceedings in the County Court. In response, the respondent submitted that in drafting her amended pleading, the applicant had used documents filed in the Family Court proceedings for a purpose that was ‘ulterior or collateral’ to those proceedings, and had thus breached her ‘Harman‘ obligations in those proceedings. The trial judge accepted this submission and refused to grant the applicant leave to file her amended defence and counterclaim.
What argument was the applicant trying to make?
The doctrines of res judicata, issue estoppel, Anshun estoppel and (at least insofar as it is relevant to the present context) abuse of process are all broadly concerned with ensuring that once an issue has been resolved in a legal proceeding, it should not be relitigated in a second proceeding. The doctrines exist to promote finality in litigation, and reflect the fact that reopening issues that have already been determined in a proceeding is antithetical to the judicial function of effecting the ‘binding and authoritative decision of controversies‘ and is ‘calculated to erode public confidence in the administration of justice by generating conflicting decisions on the same issue.’ However, the four doctrines operate somewhat differently. In this regard:
- The doctrine of res judicata is concerned with preventing parties from relitigating a cause of action that has already been disposed of. In determining whether a proceeding is an attempt to relitigate an old cause of action, only the record of the earlier proceeding (in the form of the pleadings filed by the parties and the orders made by the court) may be examined.
- The doctrine of issue estoppel, on the other hand, is concerned with preventing parties from reopening questions of fact and law that have already been determined in an earlier proceeding. In determining whether a specific question has previously been resolved between the parties, ‘any material may be looked at which will show what issues were raised and decided‘ in the earlier proceeding. This includes affidavits and transcripts of oral evidence.
- Finally, Anshun estoppel operates to prevent a party from raising a cause of action or defence that it could and should have raised in an earlier proceeding, but which it did not.
Generally speaking, the doctrines of res judicata, issue estoppel and Anshun estoppel only apply where the two sets of proceedings involve the same parties (or persons who are in a relationship of privity with the parties). In this regard, the doctrine of abuse of process is different from the other three doctrines. An abuse of process may arise where a party seeks to assert a right or obligation the existence of which is inconsistent with a previous judgment that determines the legal status of some thing (such as an item of property or an administrative decision), even if the parties to the earlier proceeding were not the same as the parties to the later proceeding. Thus it is an abuse of process for a plaintiff to claim damages for false imprisonment if the lawfulness of the instrument authorising his detention has already been determined against him in earlier proceedings involving a different defendant. Because the doctrine of abuse of process is a flexible one — it has often been said that ‘the categories of abuse of process are not closed‘ — a court may have regard to a broad range of material in determining whether allowing a party to persist with a claim, defence or submission would be an abuse of process.
In Hazell-Wright, the basic point of the applicant’s argument was that the Family Court had finally determined the legal relationship between herself and the parties’ former matrimonial home, and that the proceedings brought by the respondent in the County Court were therefore aimed at producing a legal result that was inconsistent with the Family Court’s judgment. It followed, according to the applicant, that one or more of the doctrines described above operated to render the respondent’s claim untenable. To establish that this was the case, the applicant intended to refer to the affidavit material filed in the Family Court proceeding and to the Family Court’s orders.
What are the ‘Harman’ obligations?
The Harman obligations take their name from the judgment of the House of Lords in Harman v Secretary of State for the Home Department. In short, the Harman obligations mean that:
Where one party to litigation is compelled, either by reason of a rule of court, or by reason of a specific order of the court, or otherwise, to disclose documents or information, the party obtaining the disclosure cannot, without the leave of the court, use it for any purpose other than that for which it was given unless it is received into evidence.
It is often said that the purposes for which a person cannot use documents or information to which the Harman obligations apply are those that are ‘collateral’, ‘ulterior’ or ‘alien’ to the proceeding in which the documents or information were produced. The Harman obligations apply in both civil and criminal proceedings, and extend to documents produced to an accused pursuant to the prosecution’s common law obligation of disclosure. Breach of the Harman obligations is a serious matter and may, in an extreme case, result in imprisonment for contempt of court. A legal practitioner who breaches their Harman obligations may, in addition to being liable to punishment for contempt, face professional disciplinary action (including ‘the ultimate sanction of being struck off the role of practitioners‘).
There is no simple formula for determining whether a proposed use of documents or information would be contrary to the Harman obligations. However, the following uses of documents have been held not to be collateral, ulterior or alien to the conduct of the proceeding in which they were produced:
- In Deputy Commissioner of Taxation v Karas, Forrest J held that a party would not breach its Harman obligations by using affidavits filed in the course of an application for a freezing order in relation to a proceeding for the recovery of a tax debt for the purpose of conducting merits review and/or judicial review proceedings in relation to the tax assessments on which the debt recovery proceeding was based.
- In Allstate Life Insurance Co v ANZ Banking Group Ltd, Hill J stated that it would not ordinarily be a breach of the Harman obligations for an applicant to use discovered documents to formulate a new cause of action against the respondent, or for the respondent to use discovered documents to formulate a counterclaim. However, in Mann v Medical Defence Union Ltd, Ryan J emphasised that the new cause of action or counterclaim must have a ‘reasonable relation’ to the original cause of action. His Honour therefore held that an applicant in a claim for breach of an insurance contract could not use discovered documents for the purpose of formulating a claim against the respondent (and a further respondent) in the tort of defamation without breaching his Harman obligations.
- In Pinara Group Pty Ltd v Whiting, Besanko J applied the principles set out in Allstate and Mann and held that it would not be a breach of the applicant’s Harman obligations for it to use discovered documents for the purpose of joining two additional respondents and formulating claims against them.
- Finally, in Spalla v St George Motor Finance Ltd, Ryan J strongly doubted whether an accused would breach his Harman obligations by using documents disclosed to him by the prosecution in a criminal proceeding for the purpose of formulating and pursuing a claim for damages in the tort of malicious prosecution.
It follows that there are a range of circumstances in a which a party can, consistently with its Harman obligations, use documents or information produced in one proceeding for the purpose of advancing its interests in another proceeding in a different court involving different parties. While it is perhaps impossible to state a general formula for determining when a use of documents will be consistent with a party’s Harman obligations, a use of documents or information will generally be permitted where it is ‘ancillary to the wider dispute‘ of which the proceeding in which the documents or information were produced is a part. In a ‘borderline’ case, it is generally wise for a party who wishes to use documents for a purpose that might be characterised as ‘collateral’, ‘ulterior’ or ‘alien’ to seek an order from the court in which the documents were produced releasing them from their Harman obligations ‘for the avoidance of doubt‘. At least in my view, the prudent course of action is to make such an application before legal advice is provided with respect to the merits of the substantive claim, defence or application for which the party intends to use the documents.
What does all of this mean for the applicant’s case in Hazell-Wright?
When one bears in mind the purposes of the Harman obligations and of the doctrines that the applicant was attempting to invoke in Hazell-Wright, the rather extraordinary nature of the trial judge’s ruling becomes apparent. What the applicant in Hazell-Wright proposed to do with the affidavit material from the Family Court proceeding was to demonstrate to the County Court that the respondent’s claim against her was calculated to produce a result that was inconsistent with the Family Court’s final determination of her legal status with respect to the real property owned by the respondent. That is, she proposed to use the affidavit material for the purpose of ensuring that the Family Court’s orders were not undermined in another proceeding between different parties. In my view, it is very difficult to see how this purpose could possibly be regarded as ‘ulterior’, ‘collateral’ or ‘alien’ to the Family Court proceedings. However, this question ultimately became moot when, after some ‘discussion’ with the Court of Appeal, the respondent and Mr Wright agreed to cooperate with the applicant in seeking orders from the Family Court releasing the parties from their Harman obligations insofar as was necessary to enable them to ventilate the issues in the County Court proceeding.
Because the Harman obligation question had become moot, the Court of Appeal was not required to rule on it (and did not exercise its discretion to do so). Nevertheless, it made some useful observations on the relationship between the Family Court proceeding and the applicant’s proposed defences in the County Court proceeding:
In our view, there was much force in the applicant’s argument that each of the proposed defences ‘arises directly out of’ or is ‘legitimately’ connected with the property settlement issues concerning the apartment which appear to have been finally resolved by the Family Court proceeding. Rather than using the documents for a purpose ulterior to the Family Court proceeding, the applicant seeks to use them to demonstrate that the respondent seeks to undermine the Family Court proceeding. In these circumstances, it does not appear that there is any ‘collateral’ or ‘ulterior’ purpose in the proposed use of the documents and information subject to the Harman undertaking in the Family Court in the County Court proceeding. However, as already noted, we need not decide that question.
The Court’s dicta emphasise that it is a mistake to assume that any proposed use of documents produced to a party in one proceeding for the purpose of pursuing the party’s interests in another proceeding involves a breach of the party’s Harman obligations. To the contrary, there is a broad range of circumstances in which a single ‘wider dispute’ may spill over from one set of proceedings into another, such that using documents produced in the first proceeding for the purposes of the second proceeding will not contravene the Harman obligations. Determining whether this is the case requires attention to the nature of the wider dispute and to the place each set of proceedings occupies in that dispute.