Price v ClearView Life Nominees Pty Limited

This judgment concerns the operation of what is variously referred to as the “implied undertaking”, the “Harman undertaking”, the “implied obligation” or the obligation discussed in Hearne v Street (2008) 235 CLR 125; [2008] HCA 36. In these reasons I will refer to it as the implied undertaking.

These proceedings are a claim by the plaintiff, Mr Price, under a life insurance policy issued by the second defendant (ClearView Life Assurance Limited) for a total and permanent disablement (TPD) benefit. Mr Price alleges that from April 2019 he has been TPD within the meaning of the policy (TPD Policy) due to a major depressive condition, thereby entitling him to a lump sum benefit. ClearView, by its defence in these proceedings, does not admit that allegation.

Mr Price has a separate policy with ClearView (IP Policy) for income protection (IP) cover. From July 2019, and by subsequent claims lodged approximately monthly, Mr Price has claimed monthly payments of IP benefits of approximately $14,000 per month. Those claims have been accepted and paid by ClearView. There is currently no notified dispute, and no litigation, between Mr Price and ClearView concerning his entitlement to payments under the IP Policy.

During the course of these proceedings in relation to the TPD Policy, various reports, affidavits and documents have been produced pursuant to the processes of the Court and become available to ClearView for the purposes of these proceedings. That material is identified in [17] below.

ClearView, the applicant on the notice of motion determined by these reasons, wishes to use the material in assessing Mr Price’s ongoing entitlement to benefits under the IP Policy. “Assessing” is a somewhat anodyne expression. ClearView’s counsel candidly argued that the material would, as part of its “assessment”, enable ClearView to test or verify the information which Mr Price had given to it under the IP Policy.

For example, it was accepted that ClearView was entitled under the terms of the IP Policy to Mr Price’s income tax returns which had been produced in these proceedings. However, ClearView submitted that some of the material would enable it to test the veracity of what Mr Price had told it about his income, including what income Mr Price had declared in his tax returns. I record that no adverse allegation was made about Mr Price in that regard: the submission was expressed in terms of verification.

In these reasons, a reference to ClearView’s proposed use of the material means to use the material for the purpose of assessing Mr Price’s ongoing entitlement to benefits under the IP Policy, including in the sense of testing or verifying the information Mr Price had provided for the purposes of his claims under the IP Policy.

There was no dispute that the material was subject to ClearView’s implied undertaking in these proceedings. ClearView submits that the identity of the parties to the two policies, and the similarity of the issues to be considered under them, means that for ClearView to engage in the use would not be a breach of its implied undertaking. Alternatively, it submits that if the Court views that the use would be a breach, the identity of the parties and similarity of the issues constitute special circumstances justifying the Court exercising its discretion to relieve ClearView from the implied undertaking so it can engage in the use.

For the reasons which follow, the Court has determined, in summary:

Mr C Purdy of Counsel appeared for ClearView. Mr M Gollan of Counsel appeared for Mr Price.

Mr Price commenced these proceedings by statement of claim filed on 26 October 2021. Mr Price claims payment under the TPD Policy or damages by reason of ClearView’s failure to pay the TPD benefit.

By its defence filed on 18 March 2022, ClearView does not admit Mr Price’s entitlement to the TPD benefit.

The Court had made various directions for the filing of evidence, for Mr Price to undergo medical examinations, and information has been obtained pursuant to notices to produce and subpoenas.

By notice of motion filed on 9 April 2024, ClearView seeks relief including:

The motion was supported by an affidavit sworn on information and belief by ClearView’s solicitor, Mr Andrew Gawthorne. ClearView’s motion first came on for hearing before me in the Applications List on 3 May 2024. After some argument, the motion was adjourned part heard to enable ClearView to put on further evidence better describing the documents in relation to which it sought relief and the reasons why that relief was sought. This led to a further affidavit sworn by Mr Gawthorne. The hearing concluded with the benefit of Mr Gawthorne’s additional evidence on 16 May 2024.

As a result of the more detailed specification of the documents in issue in Mr Gawthorne’s further affidavit sworn on 9 May 2024, the scope of the dispute between the parties narrowed. This was because Mr Gollan, correctly in my respectful opinion, no longer pressed an objection to ClearView having access to and using those documents to which it would have been entitled to by making a request under the terms of the IP Policy.

The documents or categories which remained in dispute were:

There was no dispute that the implied undertaking is a substantive legal obligation. Where one party to litigation is compelled – by a court’s order, rules 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 has been received into evidence. The use of the documents remains under the authority of the court. These propositions derive from Hearne at pp 131[3], 154-155[96], 157[105] and 159[107].

The obligation is subject to inconsistent statutory provisions, curial process and other litigation. To this list I would add contractual rights. Nevertheless, the power to grant leave is not lightly exercised and will only be done where special circumstances can be shown: Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10; [1995] HCA 19 at pp 33 and 37.

The generally accepted explication of “special circumstances” is that of Wilcox J in Springfield Nominees Pty Ltd v Bridgelands Securities Limited (1992) 38 FCR 217 at 225:

I also respectfully adopt a slight variation to Wilcox J’s formulation proposed by Vickery J in Ambridge Investments Pty Ltd (No 3) v Baker [2010] VSC 545 (although without reliance on his Honour’s reference to the Victorian Charter of Human Rights):

To enable both the determination of whether or not there are “special circumstances” and how the discretion should be exercised, the individual document or information in respect of which the modification or release of the implied undertaking is sought, and the purpose for that modification and release, must be clearly identified: Ambridge at [43].

Not least because it was ClearView’s primary position that the use would not breach the implied undertaking, in addition to setting out the general principles, it is of assistance to undertake a short survey of some of the authorities to which the Court was referred.

Riddick v Thames Board Mills Ltd [1977] 3 All ER 677 concerned a dispute between Mr Riddick and his former employer. Mr Riddick brought proceedings for wrongful arrest and for false imprisonment arising from the circumstances of his dismissal. In those proceedings a certain memorandum was discovered. That action was settled.

Mr Riddick subsequently commenced proceedings for defamation arising from the contents of that memorandum. The Court of Appeal by majority (Lord Denning MR and Waller LJ; Stephenson LJ dissenting) held that Mr Riddick was not entitled to use the memorandum that had been produced in discovery in the first proceedings as the basis for his fresh proceedings on a different cause of action.

Lord Denning, The Master of the Rolls said at 687 – 688:

The decision of Hobhouse J in Prudential Assurance Co v Fountain Page Ltd [1991] 3 All ER 878 largely turns on the effect of the English rules of court in relation to documents that have been served where the proceedings were ultimately settled. Documents were then sought to be deployed by their recipient in subsequent proceedings in Texas. Hobhouse J determined that by reference to the relevant rules, the implied undertaking did not apply to an expert’s report that had been served, but did apply to witness statements. In declining to permit use of the witness statements, his Lordship said (at 895):

The decision of the Full Federal Court of Australia in Liberty Funding Pty Ltd v Phoenix Capital Ltd (2005) 218 ALR 283; [2005] FCAFC 3 concerned an application for leave to use an affidavit from Federal Court proceedings in an action in the Supreme Court of Victoria. The primary issue before the Full Court was whether or not the affidavit was privileged. The court determined it was not privileged, and therefore turned to the question of whether there should be a release from the implied undertaking. In granting that release, the Full Court applied Springfield Nominees with these observations (emphasis added):

In Northbuild Construction Pty Ltd v Discovery Beach Project Pty Ltd [2011] 1 Qd R 145; [2009] QCA 345, the Queensland Court of Appeal was considering whether the appellant could deploy financial and other information produced by the respondent in an earlier application for an interim freezing order at a subsequent arbitration in relation to one of aspect of the substantive dispute between the parties. McMurdo P (with whom Muir and Chesterman JJA agreed) determined that leave should be given for the documents to be used in the subsequent arbitration for reasons which her Honour summarised as:

However, Chesterman JA went on in his reasons to express the view in obiter dicta that, in any event, the implied undertaking did not apply in the circumstances of that case. After considering the authorities, his Honour said:

In Clark v National Australia Limited (2019) 136 ACSR 329; [2019] FCA 933, Middleton J was case managing a class action in which the plaintiff was suing in relation to “NAB Credit Card Cover”. The applicant sought to amend her pleadings to include a separate claim, which would have introduced different plaintiffs, in relation to “NAB Personal Loan Cover”. The amendment came about as a result of the plaintiff having used documents she had obtained by way of discovery and subpoena in the proceedings which were subject to the implied undertaking. One of the bases upon which the respondents objected to the amendment was that it was derived from the applicant’s breach of the implied undertaking. In permitting the amendment, Middleton J determined that the was no breach of the implied undertaking:

Among the similarities which his Honour found persuasive, the first two were that the type of policy was the same, with each product comprising of insurance in relation to a financial product held by a NAB customer; and, second, the material terms of the two policies were the same or substantially similar.

In the alternative, his Honour said:

The decision of the Victorian Court of Appeal in Hazell-Wright v 32 Domain Pty Ltd [2020] VSCA 129 concerned the use of affidavits filed in family law proceedings that had settled. In subsequent County Court proceedings, the recipient of those affidavits sought to amend their pleadings in a way that was based upon, and made express reference to, the affidavits filed in the Family Court proceeding.

The Court of Appeal ultimately did not have to determine the question concerning the implied undertaking. However, in closely considered obiter dicta, the court concluded:

Finally, it is necessary to notice the decision of Ward CJ in Eq (as the President then was) in Gavan v FSS Trustee Corporation [2019] NSWSC 667, being a case which ClearView submitted was relevantly similar to the case at bar. Ms Gavan was suing in relation to a TPD claim and had produced a number of documents pursuant to a notice to produce. Her Honour’s primary conclusion was that the insurer’s intended use of those documents for the purpose of determining her claim to TPD benefits did not involve a breach of the implied undertaking because (at [91]):

Her Honour adopted the caution of Chesterman JA in Northbuild Constructions not to adopt a too narrow and technical approach in concluding (at [92]) that the processes were connected in the sense that they would “inform and be relevant to the same primary issue”. In the same paragraph, her Honour observed:

Against the possibility that her Honour was in error, she went on to deal with whether the insurer should have leave to use the documents for the stated purpose.

Although obiter dicta, I respectfully adopt as correct her Honour’s summary of the relevant principles:

In that case, her Honour concluded that she would not have released the implied undertaking in the broad terms sought by the insurer because it did not specify with particularity the documents in respect of which the release was sought. Her Honour indicated that she would have adopted an approach which would have led to the insurer being able to identify particular documents or particular classes of documents and the matters relied upon to support the contention that special circumstances existed to release the implied undertaking.

The foundation of all of ClearView’s arguments was that the parties to the TPD Policy and the IP Policy were identical and that the issues which ClearView had to consider under both policies in relation to Mr Price’s medical situation and prognosis materially overlapped. The level of Mr Price’s disablement was central to the satisfaction of the TPD definition in the TPD Policy. The level of that disablement at specific points in time, particularly dates of examination by medical and psychological experts, informed assessments of his long-term prognosis which was an essential element of the TPD Policy. The same issues were “self-evidently critical” in determining Mr Price’s entitlement to IP benefits at or around those points in time.

It was submitted that the existence of the overlap between ClearView’s assessment task under the two policies was why the use would not infringe ClearView’s implied undertaking in these proceedings.

Alternatively, ClearView contended that the overlap represented special circumstances warranting the exercise of the Court’s undoubted discretion to relieve ClearView from the implied undertaking so that it could engage with the relevant documents. At an early stage of the argument, I raised with Mr Purdy that the authorities to which the Court had been referred all dealt with a situation where release from the implied undertaking was sought for the purposes of another, existing proceeding. In response, Mr Purdy submitted that the present circumstances were relevantly similar to those in Clark because the “dispute” element in that case was inchoate in the sense that the use of the documents in Clark would lead to a dispute. That dispute, it was submitted, would have the necessary close connection to the dispute in which the implied undertaking had arisen. The case at bar was said to be stronger than Clark because the inchoate dispute involved the same parties, whereas in Clark it would introduce new plaintiffs to the proceedings.

Mr Purdy then went on to lay particular emphasis on the explanation of the implied undertaking in Liberty Funding at [31] that “it is sufficient to say that, in all the circumstances, good reason must be shown why, contrary to the usual position, documents produced for information obtained in one piece of litigation should be used for the advantage of a party in another piece of litigation or for other non-litigious purposes.” (emphasis added). After drawing attention to the Full Court’s reference (taken from Springfield Nominees) that the most important consideration was “the likely contribution of the document to achieving justice in the other proceeding”, it was submitted that the Full Court’s express reference to use of documents for “non-litigious purposes” meant that the need to achieve justice must extend to uses for such purposes.

Finally, it was put that the use would be consistent with the public interest in the efficient and effective operation of the insurance industry. ClearView should not be restrained in its consideration of Mr Price’s disablement for one purpose, being his entitlement to the IP benefit, when it already had access to information for another very similar purpose, being Mr Price’s TPD benefit entitlement. It was submitted that the case at bar was on all fours with Gavan, including highlighting the difficulties her Honour identified in Gavan at [92] (see [37] above) that ClearView would have to quarantine internally two interconnected inquiries.

Mr Gollan’s fundamental response to ClearView’s submissions was that the acceptance of those submissions would reduce what the High Court had held in Hearne to be a substantive obligation (Mr Gollan’s submissions referred to it as a “rule of law”) to a mere formality. The common contractual relationship between the parties was insufficient either to negative the insurers implied undertaking with respect to the documents, or to provide special circumstances justifying relief from the undertaking.

Starting from that fundamental response, Mr Gollan’s further submissions may be summarised as:

The most distinctive feature of this case, when compared to the authorities which the Court has been taken, and which are set out in [24] to [40] above, is that there is currently no dispute, and no proceedings, between Mr Price and ClearView in relation to the IP Policy. In those circumstances, the use is plainly ulterior or collateral to the purposes for which the material was produced, being for the purposes of these proceedings. Identity of parties and some overlap of issues does not, in my respectful view, derogate from that conclusion. The Court, therefore, does not accept Mr Purdy’s submission that the use would not involve a breach of the implied undertaking.

That being said, the Court accepts that the identity of the parties to the TPD Policy and the IP Policy, when coupled with some overlap in the issues which ClearView has to consider under each of the policies, constitutes special circumstances, being “a special feature of the case which affords a reason for modifying or releasing the undertaking and is not usually present” (Springfield Nominees at p 225 – see [20] above). However, the fact that it affords “a reason” is not dispositive: the reason engages and informs the exercise of the Court’s discretion.

There are three reasons why the Court, in the exercise of its discretion, declines to relieve ClearView of its implied undertaking to engage in the use:

There are five other matters which have informed the Court’s conclusion.

First, in the absence of a dispute or proceedings about the IP Policy, it is unnecessary to undertake a precise examination of the degree of overlap between the terms of the TPD Policy and the IP Policy. While there is, in my respectful opinion, much to be said for Mr Gollan’s submissions that the two policies have less in common than Mr Purdy sought to advance, the parties agree there was some degree of overlap. Because of the absence of a dispute or proceedings, even if there was a substantial overlap I would have exercised the Court’s discretion in precisely the same way I propose in these reasons. The precise degree of overlap may be a more relevant consideration if there were also proceedings on foot between the parties in relation to the IP Policy, the degree of overlap then also being able to be assessed against the actual issues being litigated in the two proceedings.

Second, the same absence of a dispute or other proceedings means that it is not necessary for the Court to consider the different qualities of the various material. Having regard to the non-exhaustive list of factors identified by Wilcox J in Springfield Nominees (see [20] above), it will be apparent that, for example, different considerations may attach to the experts’ reports in these proceedings when compared to the bank statements produced by Westpac. The present application can be dealt with by considering the material as an undifferentiated class. Again, that may not have been the case if proceedings had already been on foot in relation to the IP Policy and the issues in the two cases were available for consideration.

Third, I accept Mr Gollan’s submission that the reference to “or for other non-litigious purposes” in Liberty Funding must be read in the context in which it appears, being an exception to the serious, substantive obligation which is the implied undertaking. It cannot be read as “any other non-litigious purposes” inviting broad application. In this case, what I have referred to as matters of convenience and opportunity are insufficiently substantial incidents of the proposed “other non-litigious purpose” to warrant the serious step of release from the implied undertaking. That is not to say that there cannot be cases where the nature of the information may warrant the release of the implied undertaking for a non-litigious purpose. One such purpose may be, for example, acting upon or reporting evidence of serious misconduct (assuming in such a case that there is no subsisting legal obligation to do so).

Fourth, I do not accept Mr Purdy’s submission that the present case is on all fours with Gavan. I express my respectful agreement with Ward CJ in Eq’s conclusion that the two stage process in that case was very much part and parcel of the one piece of litigation. That puts Gavan in the same line of authorities as Northbuild Constructions and Clark, but not this case. Gavan concerned a two stage process in the same proceedings in relation to the one policy not, as here, two different policies about one of which there was no dispute. I also accept Mr Gollan’s submission that ClearView has led no evidence that would enliven the potential concern of difficulty in compartmentalising information referred to by her Honour in Gavan at [92] (see [37] above).

Fifth, I do not accept Mr Purdy’s submission that this case is relevantly similar to Clark. In Clark the documents were sought to be used to bring a new, fully formulated claim in existing proceedings. That new claim was much more than “inchoate” to use Mr Purdy’s expression: it was the subject of an amendment application. In this case, there is no dispute in relation to the IP Policy and the use is for the purposes of the IP Policy, not to found an additional claim in these proceedings. The present position between the parties in relation to the IP Policy is at an anterior stage to that between the applicant and respondents in relation to NAB Personal Loan Cover, because in the latter case the documents had already been used to formulate the claim which was the subject of the amendment. In this case, the attempt to suggest equivalence due to an “inchoate” dispute fortifies the Court in its conclusion that the fact that the material could be used adversely to Mr Price in relation to the IP Policy is a powerful discretionary factor against relieving ClearView from the implied undertaking.

ClearView’s motion will be dismissed. Subject to hearing the parties, costs should follow the event.