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For the court's eyes only

Feature Articles

Cite as: (2008) 82(12) LIJ, p. 52

What does an implied undertaking not to use compulsorily acquired documents for any purpose other than for the relevant action really mean and can it be modified?

By Gabi Crafti

Documents obtained on discovery are subject to an implied undertaking that prevents their use for any purpose other than the legitimate purposes of the litigation in which the documents were obtained, except with the consent of the party who produced the documents or with the leave of the court.

The implied undertaking now has broad application, and extends to documents obtained by any compulsory means during legal proceedings. The High Court recently described the implied undertaking as “a substantive legal obligation”.1

Consequences

A person who uses, or attempts to use, material to which the implied undertaking attaches, without first getting the consent of the party who produced it or the court’s leave, will be guilty of contempt.

In addition, an action commenced in reliance on material to which the implied undertaking applies may be struck out as an abuse of process if the court has not granted a release from the undertaking.

The court may also:2

  • issue an injunction to prevent the use of documents in breach of the implied undertaking;
  • require appropriate express undertakings to be given as a condition of permitting the inspection or copying of any such documents;
  • limit the access to particular individuals or classes of individuals to the documents.

Rationale

Discovery ensures the proper conduct of legal proceedings. In Harman v Secretary of State for the Home Department, Lord Keith said:

“[Discovery] forms part of English legal procedure because the public interest in securing that justice is done between parties is considered to outweigh the private and public interest in confidentiality”.3

At the same time, the procedures for the compulsory production of material during legal proceedings constitute an invasion of the parties’ privacy.

The implied undertaking balances the public interest in full and frank disclosure between parties against the need to ensure that the adverse effects of any intrusion do not extend further than is absolutely necessary. It achieves this balance by limiting the use of the documents compulsorily produced to the proceeding at hand.

At the heart of the balancing exercise are considerations of fairness and equity. In Harman, Lord Diplock emphasised that a party acquiring documents through the judicial process of discovery would obtain an unfair advantage if that party were empowered to use those documents for purposes unconnected with the proper conduct of the action. Similarly, Sir Anthony Mason has 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.”4

Scope

Who gives the implied undertaking?

The implied undertaking applies to any person who receives documents or information to which the undertaking attaches.5

Recently, the High Court held that a party’s servants or agents who were aware of the origins of documents in legal proceedings were directly bound by the implied undertaking.6

Unsurprisingly, the implied undertaking applies to legal practitioners. In Harman, Lord Diplock said that a solicitor:

“ ... will not use or allow the documents or copies of them to be used for any collateral or ulterior purpose of his own, his client or anyone else; and any breach of that implied undertaking is a contempt of court by the solicitor himself”.7

Parties and their lawyers are presumed to be aware of the implied undertaking.
In the English case of Watkins v AJ Wright (Electrical) Ltd,8 the court:

  • held that neither a legal practitioner nor a party could claim ignorance of the implied undertaking as a defence to contempt proceedings for breach of the implied undertaking;
  • in deciding not to impose a penalty for the breach of the implied undertaking, took account of the ignorance of both the practitioner and the party and the fact that each had acted in good faith;
  • held that the practitioner ought to have been aware of the implied undertaking and ought to have advised his client on the importance of observing the undertaking; and
  • held that the failure of the practitioner to discharge these obligations provided a sufficient basis on which to order the practitioner to pay the costs of both parties to the proceeding instituted to enforce the implied undertaking.

The clear inference to be drawn from this decision is that legal practitioners bear the main responsibility for observing the implied undertaking.9

To which documents does the implied undertaking apply?

The implied undertaking applies to:

  • documents and material obtained as a result of the coercive processes of the court;10 and
  • information derived from those documents, “whether it is embodied in a copy or stored in the mind”.11

Examples of documents to which the implied undertaking applies:

  • documents produced on discovery;
  • documents produced on subpoena;12
  • answers to interrogatories;13
  • witness statements;14
  • affidavits and expert reports;15
  • documents obtained in criminal proceedings;16
  • documents produced for the purposes of taxation of costs;17
  • material provided in the course of an application for an Anton Piller order;18
  • material obtained by a liquidator as a result of directions issued in the course of winding up a company;19
  • material provided in accordance with the direction of a private arbitrator;20 and
  • material produced by a non-party in response to a subpoena to produce.21

What conduct does the implied undertaking restrict?

The implied undertaking restricts not only the use of documents obtained during legal proceedings, but also the creation and use of new documents that are derived from or based on information obtained during legal proceedings without consent or leave of the court to do so.22

Some recent examples of the operation of the implied undertaking include restricting the disclosure of:

  • affidavits and expert reports to a Minister and the Minister’s staff in an attempt to have Parliament pass legislation to protect a party from claims being made against that party;23 and
  • discovered documents to a party’s litigation funder.24

When does the implied undertaking cease to have effect?

The implied undertaking, once it attaches to a document, will endure despite the tender of the document in evidence.25

Although the implied undertaking does not cease to apply to a document simply because that document has been put into evidence, where a party to a proceeding has access to an alternative source of information about the contents of the document, then if that source is public, the party to whom the document was first discovered is as free to make use of that alternative source of information as is any member of the public.26

Release from the implied undertaking

Consent

A party who has produced documents pursuant to a coercive court process might consent to another party (to whom those documents have been produced) using the documents for a collateral purpose. However, it may be prudent for the party seeking to use the documents for a collateral purpose first to seek a direction from the court.27

Application for leave of the court

A party may apply to the court for leave to use documents in circumstances that would otherwise breach the implied undertaking. The general rule is that such an application should be made in the proceeding in which the implied undertaking was given to the court, even if that proceeding has since concluded.28

However, recent cases have indicated that where a party who has received a document in a proceeding under a coercive process wishes to use that document specifically in a separate court proceeding, that party should seek to be released from the implied undertaking in that second or subsequent proceeding, rather than in the proceeding in which the document was first obtained.29

Other legal requirements

The undertaking impliedly is necessarily subject to other requirements of the law.30

For example, the implied undertaking given in one proceeding in relation to a document is no answer to a subpoena for production of that document in another proceeding.31

The court’s discretion

The court may, in the exercise of its discretion, modify the implied undertaking to authorise use of discovered documents in other proceedings where there are “special circumstances”.32

For “special circumstances” to exist, it is sufficient that there is a special feature of the case that affords a reason for modifying or releasing the undertaking that is not usually present.33

Factors that the court may take into consideration include:

  • the nature of the document;
  • the circumstances under which the document came into existence;
  • the attitude of the author of the document and any prejudice that the author might sustain;
  • whether the document existed before the commencement of the litigation or was created for that purpose and therefore expected to enter the public domain;
  • the nature of the information in the document (and, 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
  • the likely contribution of the document to achieving justice in the second proceeding.

Pagone J recently said in Griffiths & Beerens Pty Ltd34 that “the mere existence of subsequent judicial proceedings ... is a powerful factor in favour of release if the release be necessary and [may be] a special circumstance to warrant release from the implied undertaking”.

Recent example

Gordon J recently applied these considerations in Cadbury Schweppes Pty Ltd v Amcor Limited.35 In that proceeding, her Honour had to consider the following:

  • witness proofs of evidence had been used in an earlier and separate proceeding that the ACCC had brought against Visy;
  • Cadbury Schweppes then brought a proceeding against Amcor and Visy, seeking damages – this was the proceeding before Gordon J;
  • the ACCC, which was not a party to the proceeding before Gordon J, claimed that Visy would be in breach of its implied undertaking if it were permitted to discover to Cadbury the witness proofs of evidence used in the earlier proceeding.

Gordon J held that:

  • Visy’s implied undertaking in the ACCC proceeding was no answer to its discovery obligations in the proceeding before her; and
  • there were “special circumstances” that justified releasing Visy from its implied undertaking.

For another recent example in which the Federal Court considered releasing a party from the implied undertaking on account of “special circumstances”, see Jarra Creek Central Packing Shed Pty Ltd v Amcor Limited.36

Conclusion

The implied undertaking on discovery, as it is sometimes known, is much broader in its scope and application than its title would suggest. A person who is permitted to inspect or copy another person’s document that was produced under a compulsory court process is subject to an obligation not to use, or permit to be used, the document or a copy of the document, or any knowledge acquired from inspecting the document, otherwise than for the purposes of the proceeding.

Legal practitioners must pay careful attention to the obligations that their clients (and their clients’ agents) owe, and to the obligations that they themselves owe, under the implied undertaking. Mastery of the applicable rules and principles is a key tool in the litigator’s toolkit.

GABI CRAFTI is a Victorian barrister, practising predominantly in commercial law and public law.


1. Hearne v Street [2008] HCA 36 at [3], [105]–[108].

2. US Surgical Corp v Hospital Products International Pty Ltd (NSWSC, ED No 2094/90, 7 May 1982, unreported).

3. [1983] 1 AC 280 at 308.

4. Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10 at 33 per Mason CJ (Brennan, Dawson and McHugh JJ agreeing).

5. Distillers Co (Biochemicals) Ltd v Times Newspapers Ltd [1975] QB 613 at 621.

6. Note 1 above, at [5] and [112].

7. Note 3 above, at 304.

8. Watkins v AJ Wright (Electrical) Ltd [1996] 3 All ER 31.

9. M Groves, “The implied undertaking restricting the use of material obtained during legal proceedings” (2003) 23 Australian Bar Review 314 at 318.

10. British American Tobacco Ltd v Cowell (No 2) (2003) 8 VR 571 at [19]–[20].

11. Crest Homes v Marks [1987] AC 829 at 854.

12. Boys v Australian Securities Commission [2001] FCA 1325.

13. Note 10 above, at [43].

14. Note 13 above, at [42]–[43].

15. Note 1 above.

16. Taylor v Director of the Serious Fraud Office [1999] 2 AC 177.

17. Bourns Inc v Raychem Corp [1999] 3 All ER 154 at 169–170.

18. Cobra Golf Inc v Rata [1998] Ch 109.

19. Addstone Pty Ltd (in liq), Re; Macks v Simmons (1998) 30 ACSR 162.

20. Note 4 above.

21. Eltran Pty Ltd v Westpac Banking Corporation (1990) 25 FCR 322.

22. Pacific Basin Exploration Pty Ltd v XLX (NL) [1985] WAR 11.

23. Note 1 above.

24. QPSX Limited v Ericsson Australia Ltd (No 5) [2007] FCA 244.

25. Note 10 above, at [20]–[34] following Harman, note 3 above, at 313. Note that in that jurisdiction, O.15 r18 of the Federal Court Rules provides that the implied undertaking ceases to apply to a document after it has been read to or by the Court or referred to in open court in such terms as to disclose its contents unless the Court otherwise orders.

26. Note 10 above, at [28].

27. Dagi v BHP Co Ltd [1996] 2 VR 567 at 572.

28. Morgan v Mallard [2000] SASC 445 at [115]; Camp Curlewis Resorts Pty Ltd & Fisher v Hamersley Iron Pty Ltd [1994] FCA 1566; Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217; Holpitt Pty Ltd v Varimu Pty Limited (1991) 29 FCR 576 at 577.

29. Griffiths & Beerens Pty Ltd v Duggan [2008] VSC 230 at [4] and [8]; Jarra Creek Central Packing Shed Pty Ltd v Amcor Ltd [2008] FCA 391.

30. Griffiths, note 29 above, at [4]–[5]; Patrick v Capital Finance Pty Ltd (No. 4) [2003] FCA 436 at [15]–[22]; note 4 above, at 32–3, 36–7 and 46.

31. Cadbury Schweppes Pty Ltd v Amcor Limited [2008] FCA 398 at [13].

32. Crest Homes plc v Marks [1987] AC 829 following Harman, note 3 above.

33. QPSX Limited v Ericsson Australia Ltd (No 5) [2007] FCA 244 at [17] following Springfield, note 28 above, at 225.

34. Note 29 above, at [11].

35. [2008] FCA 398 at [14]–[17].

36. [2008] FCA 391 and [2008] FCA 554.

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