Cannon v Griffiths & Ors (No 2)

On 29 July 2015 I heard a matter that had arisen out of a dispute over the taxation treatment of part of a settlement to this litigation that had been reached in a mediation. I made orders and gave reasons for those orders (Cannon v Griffiths & Ors [2015] NSWSC 1055; “Cannon (No 1)”). As a consequence of this judgment, those reasons will be publicly available on Caselaw with a few redactions. They explain the nature and background to the dispute.

The entire hearing of the proceedings and the reasons for judgment in Cannon (No 1) were subject to an interim order under s 10 of the Court Suppression and Non-publication Orders Act 2010 (the “Act”) prohibiting the disclosure by publication or otherwise to any person other than the parties of the evidence and submissions in the proceedings and the reasons for judgment in Cannon (No 1). These orders were made because, in broad terms, the position of all sides to the litigation (including Citigroup Pty Ltd, “Citibank”) was that, even though they were in dispute over one aspect of their settlement, both wished to preserve the confidentiality of their settlement and the confidentiality that attached to the mediation. In those circumstances the rationale for the making of the interim orders and the position going forward was explained in Cannon (No 1) at [3] to [5] as follows:

Consistent with Cannon (No 1) at [5] the parties took the opportunity to make submissions on the appropriate form of final orders.

The defendants and Citibank provided detailed submissions, a draft form of orders and a set of documents that contained colour markings of the material they contend should be the subject of a final order. I have reviewed that material closely to confirm that the markings reflect the submission they made as to the scope of any final order.

One of the evidential bases for their application is the mediation agreement between the parties that contained a number of clauses imposing obligations of confidentiality including an obligation on the mediator and the parties not to “disclose to any person not present at the mediation any information or document given to them during the mediation”. The other basis is the heads of agreement recording the settlement which imposed analogous obligations of confidentiality. The plaintiff supported the position of the defendants and Citibank but only in so far as it rested upon the confidentiality obligations imposed by the settlement agreement. It follows that this judgment should be read on the basis that there was no contradictor to the orders sought.

In its written submissions the defendants and Citibank identified the scope of the material in respect of which a suppression order was sought as the events of the mediation between the parties on 10 June 2015, the terms of the parties’ heads of agreement other than those provisions which are necessary to understand the judgment in Cannon (No 1) and the content of without “prejudice correspondence” between solicitors after the mediation which related to the “negotiation of formal deeds documenting the settlement reached at the mediation”.

Section 7 of the Act confers on the Court a power to make suppression and non-publication orders in respect of “information that comprises evidence or information about evidence, given in proceedings before the court”. The grounds for the making of such an order are set out in s 8(1) which provides:

The defendants and Citibank rely on s 8(1)(e) although aspects of their submissions appear to invoke s 8(1)(a). Four matters should be noted about the Act and in particular s 8(1)(e) at the outset.

First, the making of orders under the Act is governed by s 6 which obliges the Court to “take into account that a primary objective of the administration of justice is to safeguard the public interest in open justice”.

Second the use of the word “necessary” denotes a reasonably strict test in that “‘necessary’ is a strong word” (Hogan v Australian Crime Commission [2010] HCA 21; 240 CLR 651 at [30] per French CJ, Gummow, Hayne, Heydon and Kiefel JJ; “Hogan”; Rinehart v Welker [2011] NSWCA 403 at [27]; “Rinehart”).

Third, to grant an order based on s 8(1)(e) the public interest in non-disclosure or suppression must “significantly” outweigh the public interest in open justice.

Fourth, while contractual obligations of confidentiality imposed on parties are relevant to an assessment of whether the public interest warrants an order, they are not determinative. In Rinehart a clause of a Trust Deed which required that disputes arising under it would be resolved by “confidential” arbitration did not of itself warrant the making of a suppression order in respect of proceedings instituted in this Court of the same character. The Deed was held not to be determinative (at [51] per Bathurst CJ and McColl JA) and the subject matter of the proceedings was said to give rise to matters that warranted “close public scrutiny” which “was a proper factor to take into account in determining whether a suppression order was necessary” (at [52] per Bathurst CJ and McColl JA). In Rinehart the party seeking a suppression order had sought to rely on s 8(1)(a) of the Act but the Court’s reasoning is nevertheless apposite to s 8(1)(e).

The written submissions made on behalf of the defendants and Citibank pointed to the public interest in holding parties to their contractual agreements (Baltic Shipping Co v Dillon [1991] NSWCA 19; 22 NSWLR 1 at 9 per Gleeson CJ). This can be accepted but it does not advance the argument for a suppression order very far. If the Court were to refuse to make such an order in this case it would not mean that either party had failed to honour their contractual obligations or that the Court sanctioned them doing so. Instead the public interest in open justice would have simply required that their dispute be litigated publicly despite their wishes to the contrary.

The written submissions also pointed to the public interest in the preservation of the confidentiality of the mediation process and the process of negotiation over the settlement of litigation (see Sharjade Pty Ltd v RAAF (Landings) Ex-Servicemen Charitable Fund Pty Ltd [2008] NSWSC 1347 at [34] per Bergin CJ in Eq). This is a significant matter. I accept that there is a potential to undermine that aspect of the public interest, and the broader public interest in parties settling disputes by agreement, if the communications that led to the settlement and which relate to its documentation are made public if the parties litigate a dispute over one aspect of the settlement they arrived at. Further I also accepted that, in this case, there is a minimal or at least a reduced affectation of the public interest in open justice by making the orders sought to the extent they relate to the mediation process and the ensuing correspondence. This is so because, as events transpired, most of the material is of no great moment to the dispute that arose. To the extent that it is of significance its general character can be ascertained by reading the modified version of the judgment in Cannon (No 1).

The last aspect of the application concerns aspects of the settlement that was in fact achieved. As noted the parties bound themselves to preserve the confidentiality of the settlement as recorded in their heads of agreement. In their submissions the defendants and Citibank placed reliance on the judgment of the Full Court of the Federal Court in Australian Broadcasting Commission v Parish and Others [1980] FCA 33; 43 FLR 129 (“Parish”). In Parish the primary judge had declined to make an order restricting publication of an agreement despite finding that its dissemination would “seriously weaken” the negotiating strength of one party to the agreement and “may well require” the other party to “reconsider their adherence to the agreement” (at 134). On appeal a majority, Bowen CJ and Franki J, held that an order under s 50 of the Federal Court of Australia Act 1976 (Cth) was warranted. After referring to the primary judge’s finding as to the effect of disseminating the agreement, Bowen CJ concluded (at 134)

This passage was approved of in Hogan at 667.

In my view it is quite clear from reading the materials that a critical aspect of the successful resolution of the proceedings was the agreement of the parties to keep the terms of settlement confidential as far as possible. It is not necessary or appropriate to speculate as to why that is so. In my view the public interest in respecting that settlement would tend to be undermined by removing an assumption on which the settlement was arrived at, namely the confidentiality of its terms. Against that I do not consider that the public interest in open justice is much affected by making the proposed orders. The nature of the dispute that arose as well as the fact of and reasons for its resolution will still be publicly available. Accordingly, the criteria in s 8(1)(e) has been satisfied in respect of the proposed orders.

Finally I note that in the passage from Cannon (No 1) extracted above I expressed a concern that the Court might take some step that could be seen as denying information to the Commissioner of Taxation. The orders that I will make will not preclude the parties from providing information to the Commissioner. Further the publicly available version of Cannon (No 1) will disclose sufficient information to the Commissioner to enable him or her to pursue any such further inquiries that are considered appropriate.

Accordingly the Court orders that in proceedings 2014/213045 and the proceedings commenced by the summons filed on 29 July 2015: