Seven Network (Operations) Limited v Amber Harrison

1. [1]

   HIS HONOUR: The plaintiffs (Seven) seek the continuation of interlocutory orders restraining the defendant (Ms Harrison) from breaching her obligations under a deed of release (the second deed) made on 14 November 2014. Ms Harrison opposes the continuation of those orders.

2. [2]

   At the conclusion of the hearing yesterday I ordered that the orders be continued until further order, with the exception of one paragraph relating to the second deed. I stood the matter over until today for the giving of reasons. What follows are my reasons for making the orders that I did.

Background

1. [3]

   From 1 July 2009 to 22 October 2013, Ms Harrison was employed by Pacific Magazines Pty Ltd. Pacific Magazines is a member of the group of companies of which the plaintiffs are also members. On 23 October 2013, Ms Harrison became employed by Seven, pursuant to a written agreement made on 22 October 2013.

2. [4]

   Ms Harrison's role in her employment by Seven was that of an executive assistant. Her employment contract included broad obligations of confidentiality (cl 9) which were expressed to survive termination (cl 14.1(d)). Ms Harrison's employment terminated with effect from 14 November 2014.

3. [5]

   Ms Harrison formed a sexual relationship with the Chief Executive Officer of Seven, Mr Worner, in (she says) around December 2012. That relationship seems to have continued up until mid 2014.

4. [6]

   In July 2014, Seven began an investigation into expenses incurred by Ms Harrison on her corporate credit card and on that of another employee, the then Chief Financial Officer of Seven, Mr Chan. According to Seven, Ms Harrison conceded that she had incurred about $14,000 worth of personal expenses on one or other of those cards. At the same time, Ms Harrison disclosed to senior human resources executives of Seven her relationship with Mr Worner.

5. [7]

   Seven and Ms Harrison reached an agreement which was embodied in a deed made on 1 August 2014 (the first deed). Under that deed, Seven agreed to pay Ms Harrison $100,000, and to employ her in a new role. Ms Harrison undertook to repay the $14,000 of personal expenses to which I have referred. The first deed imposed stringent confidentiality obligations on Ms Harrison.

6. [8]

   At the same time, Seven commissioned a more thorough investigation into Ms Harrison's transactions on her and Mr Chan's corporate credit cards. It retained Deloitte Touche Tohmatsu (Deloitte) to undertake that investigation. In late September 2014, Deloitte reported. The report stated that it was likely that, over the period October 2009 to July 2014, Ms Harrison had charged about $180,000 worth of unauthorised personal expenses to those cards.

7. [9]

   Seven sought Ms Harrison's response to the Deloitte report. Ms Harrison engaged Harmers Workplace Lawyers to act for her. After a mediation, Seven and Ms Harrison agreed to go their separate ways, on the terms of the second deed.

8. [10]

   Relevant provisions of the second deed include cll 2.1, 3.1, 7.4, 7.5 and cll 1 to 3, 5 and 6 of schedule 1. I set out those provisions:

9. [11]

   I set out also such of the definitions as are necessary to give further content to those provisions:

10. [12]

    Seven made the required payments to Ms Harrison up to and including that due in February 2015. It has not made any of the ten following payments. It has stopped making those payments, it says, because Ms Harrison refused to comply with a request made pursuant to cl 6 of schedule 1 to the second deed for access to her electronic devices and records. For reasons that I shall give later, her justification for not complying with that request reflects, at least, a misunderstanding of the relevant provisions of the second deed.

11. [13]

    Although the submissions put for Ms Harrison sought to defend her erroneous construction of the second deed on which she relied, they did not go so far as to suggest (were it relevant) that Seven's request for access to Ms Harrison's electronic devices and records was unreasonable, or against good faith, or otherwise tainted by some impropriety. In short, it was not put that Ms Harrison was discharged from compliance with the request simply by reason of its character, as opposed to the erroneous reason that was advanced.

12. [14]

    Matters rumbled along for some time. Seven maintained its position, that its obligations under cl 3.1 of the second deed were subject to Ms Harrison's compliance with her obligations. Seven said that Ms Harrison was in breach of, at least, cl 6 of schedule 1.

13. [15]

    On 18 December 2016, the dispute intensified when Ms Harrison adopted what might be called the nuclear option of resorting to social media, and the media more generally. She collaborated in the production of a "media statement", and either released or procured the release of that statement to the media. On any view, Ms Harrison’s complicity in the preparation and release of that statement (if established at a final hearing) would amount to a breach of her obligations under cl 2.1 of the second deed.

14. [16]

    I should note that the evidence that Ms Harrison was responsible for or procured the release of the media statement is circumstantial. However, she has never denied that she was involved one way or the other (including in her affidavit replying to Seven's evidence). And in the course of submissions, her counsel, Mr Catlin, effectively accepted that she had procured the release of the statement.

15. [17]

    The dispute quickly attained a high degree of public notoriety. Both Ms Harrison and Seven contributed to that. She gave interviews and released information in breach of her obligations under the second deed. Seven, in particular by the Chairman of its Board, Mr Stokes, and by a non-executive director, Mr Kennett, likewise descended into the welter of accusation and counter-accusation. I do not think that the social media battle that, in particular, Mr Kennett waged was well advised.

The competing submissions

1. [18]

   Dr Bell of Senior Counsel, who appeared with Mr Thomas of Counsel for Seven, submitted that there was a real danger that, unrestrained, Ms Harrison would continue to breach her obligations under the second deed. He submitted further that this was a case where equity, in its auxiliary jurisdiction, would grant an injunction to restrain breach of negative contractual stipulations. In the circumstances, Dr Bell submitted, there was a strong case for the continuation of the relief that had been granted originally ex parte and then continued, by consent but without admissions, to enable Ms Harrison to prepare her defence.

2. [19]

   Mr Catlin did not address directly the proposition that, unrestrained, his client would continue to breach her obligations. He submitted that interlocutory relief should be refused for a number of reasons:

   1. (1)

      (1) Seven had made incomplete disclosure on its initial, ex parte, application;

   2. (2)

      (2) Seven was using, and would continue to use, the injunction to "vilify" Ms Harrison in circumstances where, if enjoined, she could not respond;

   3. (3)

      (3) Seven was itself in breach of its obligations, because of its non-payment of the instalments due from March to December 2015, and thus Seven could be said to lack clean hands;

   4. (4)

      (4) Seven had "cherry-picked" from the Deloitte report, and had sought to use selected extracts from it "to brand Ms Harrison as a thief";

   5. (5)

      (5) much of the information was in the public domain - he referred specifically to the second deed and to the Deloitte report - and thus was no longer entitled to protection on the basis of confidentiality;

   6. (6)

      (6) Ms Harrison had sworn that she had no further information (as defined in the second deed) of Seven other than what she had produced pursuant to a notice to produce; and

3. [20]

   (7) the restraints would have the effect of stifling freedom of speech and open reporting, in the media, of matters of public interest.

4. [21]

   Mr Lewis of Counsel intervened with leave on behalf of two media organisations that sought to put submissions: Nationwide News, and Fairfax Media Publications. He submitted that the restraints should be substantially modified, to enable Ms Harrison to give her side of the story in relation to the allegations made by Messrs Stokes and Kennett.

5. [22]

   Mr Lewis submitted that the whole dispute was a matter of legitimate public interest, and not, as Dr Bell had put it, merely a matter of public notoriety. Mr Lewis relied, in particular, on the following matters:

   1. (1)

      the impact of the dispute on Seven's share price and on its shareholders (Seven, or the holding company, is of course publicly listed);

   2. (2)

      the impact of the dispute on issues of corporate governance at Seven; and

   3. (3)

      (3) Mr Kennett's supposedly inconsistent stance, as Chief Executive Officer of Beyond Blue (an organisation formed to raise awareness and promote treatment of depression) and as a director of Seven aggressively pursuing Ms Harrison, who claimed to be suffering from anxiety and depression, in his Twitter posts dealing with her alleged defalcations.

6. [23]

   Mr Lewis submitted that no journalist reporting responsibly on the dispute could do so without asking Ms Harrison to comment. However, he submitted, unless the orders were varied substantially, she could not do so.

7. [24]

   Dr Bell submitted in reply that Ms Harrison had had a full opportunity to tell her version of events in her affidavit, and had done so. He noted, correctly, that the interlocutory hearing had been conducted in open Court, and that the media had been given access to all the affidavits and exhibits with a few and very limited (and irrelevant) exceptions of matters that were the subject of confidentiality or suppression orders.

8. [25]

   Thus, Dr Bell submitted, the media were not gagged from reporting fully on the matter, subject to those limited and irrelevant exceptions. Dr Bell submitted that to cut down the restraints as sought would effectively destroy the contractual protection for which Seven had bargained.

9. [26]

   More fundamentally, Dr Bell submitted, it was not legitimate for Ms Harrison to seek to rely on her own breaches of contract to support what he called the self-reinforcing circularity that, thereby, the matter had become one of public interest so as to justify lifting, or substantial modification of, the protections afforded by the interlocutory injunctions.

10. [27]

    Dr Bell submitted that Seven was contractually entitled to withhold payment, and thus could not be said to lack clean hands.

11. [28]

    I raised with Dr Bell the concept that the topic of "Expenses", as defined in these interlocutory injunctions, should be excepted, given the comments that had been made by Messrs Stokes and Kennett. Dr Bell submitted that it would not be proper to do this, because:

    1. (1)

       (1) that topic was closely allied with other topics that were the subject of the restraints, and thus any comment on "Expenses" was very likely to impinge on the protection of those other topics; and

    2. (2)

       (2) in any event, Ms Harrison had had her chance to say what she wanted in open Court, and had availed herself of it.

Decision

1. [29]

   I start by observing that this is an application for the continuation of interlocutory injunctions. The questions to be considered are, therefore, whether there is a prima facie breach; whether damages would be an adequate remedy for any breach; and the question of balance of convenience apart from the adequacy of damages.

2. [30]

   Though it is conventional to deal with each question separately (and I shall do so), it is necessary to note that the assessment of each bears on the assessment of the others. Gummow and Hayne JJ made that clear in Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57 at [71], [72]. It is not necessary to set out the relevant paragraphs.

3. [31]

   What is sought is an injunction to restrain breach of negative stipulations in a contract. The starting point is often taken to be the speech of Lord Cairns LC in Doherty v Allman (1878) 3 App Cas 709, 720:

4. [32]

   His Lordship may have over-emphasised matters in suggesting that an injunction would go almost as of course. Certainly, Lord Blackburn, in the same case at 728-729, seems to have thought so. Regardless, there are two things to bear in mind when reflecting on what Lord Cairns said.

5. [33]

   The first is that the House of Lords was concerned with a decision, whether to grant a final injunction. By contrast, I am concerned with the decision, whether to grant an interlocutory injunction. The decision that I make (and the orders that I have made) will not finally settle rights, in either a legal or a practical sense (as to the latter, see the observations of McLelland J in Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 at 535-536). Thus, in this case, discretionary considerations remain important.

6. [34]

   Second, and as Brereton J demonstrated in Otis Elevator Co Pty Ltd v Nolan [2007] NSWSC 593 at [17] and following, there is now recognised, in this country at least, a discretion to withhold injunctive relief even where breach of a negative stipulation is proved. However, as his Honour said at [29], one would require "compelling discretionary reasons" to decline to enforce, by injunction, a negative contractual stipulation. His Honour drew on a decision in Maitland Main Collieries Pty Ltd v Hunter Valley Coal Corporation Pty Ltd [2006] NSWCA 258 at [62] in support of that proposition.

7. [35]

   In my respectful opinion, Brereton J correctly stated the position. I adopt, further, what his Honour said at [30]:

8. [36]

   I turn to the first of the three questions that I identified earlier: is there a prima facie case of breach?

9. [37]

   Neither Ms Harrison's affidavit nor Mr Catlin's submissions on her behalf sought to deny all the allegations of breach in Seven's evidence, let alone to suggest that Ms Harrison had fully and scrupulously performed all her obligations under the second deed. I am of the opinion that there is a strong prima facie case that Ms Harrison has indeed breached her obligations under cll 2.1(a), (c) to (f) and (i) to (k) of the second deed, picking up cl 6 of schedule 1. It is not necessary to go to all the detail of Seven's evidence. The case for Ms Harrison was that the effect of what she said was Seven's breach of its payment obligations under cl 3.1(c) was to dispense her from compliance, or to suspend her obligations to comply, with cl 2.1.

10. [38]

    However, I should note that it is clear from Ms Harrison's response to the notice to produce referred to earlier that she has not complied with her obligations under cll 2.1(i) to (k), picking up cll 1 to 3 of schedule 1. It is equally clear, as I have said, that Ms Harrison, by refusing Seven access to her electronic devices and records, breached cl 6 of schedule 1.

11. [39]

    Ms Harrison's argument as to the supposed effect of Seven's alleged breaches suffers from three fundamental flaws.

12. [40]

    The first flaw is that Ms Harrison's obligations under cl 2.1 are not dependent or conditional upon Seven's performance of its obligations under cl 3 (and other clauses). This is not a case where the principles explained in Peter Turnbull & Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd (1954) 90 CLR 235 have any application.

13. [41]

    The second flaw is that even if Seven were in breach, Ms Harrison has not sought to terminate the second deed so as to bring to an end her obligations under it. She has asserted that Seven has repudiated the second deed. She has done nothing to accept that repudiation. It is trite that unaccepted repudiation (assuming, for the moment, that Seven's conduct could be characterised as repudiatory) does not operate of itself to discharge a contract.

14. [42]

    The third flaw is that in my view Seven is not in breach. It suspended payment after Ms Harrison refused to deliver up her electronic devices and records. Her argument that she was not required to do so rests on an erroneous construction of cl 2.1(j), read in conjunction with cl 6 of schedule 1.

15. [43]

    Clause 6 of schedule 1 applies "on request by [Seven]". There is no express limitation as to the time when such a request may be made. Given the evident purpose of the clause (which is to enable Seven to monitor Ms Harrison's compliance with the five preceding undertakings), it seems to me to be clear that the request is one that can be made at any time, and indeed from time to time, during the life of the second deed.

16. [44]

    Clause 2.1(j) required Ms Harrison to "comply with the Undertakings set out in Schedule 1 to this Deed to [Seven] at the time of entering into this Deed" (my emphasis). The emphasised concluding words identify the time at which the schedule 1 undertakings were given. They do not mean that Seven's rights under, in particular, cl 6 of schedule 1 must be exercised, if at all, immediately and only "at the time of entry into" the second deed. The construction for which Mr Catlin contended would undermine entirely both the clear language of cl 6 and its evident purpose. As I have said, that purpose of necessity requires the right to be available at any time, upon request.

17. [45]

    There are no doubt cases where a persistent breach of contract, based on an honest but mistaken belief as to the proper construction of the contract, would not amount to repudiation. That however is not to the point. Breach resulting from an honest but mistaken belief as to the content of a contractual obligation is, nonetheless, breach. I should add that in the present case I do not find (nor could I find, on an interlocutory application) that Ms Harrison's asserted belief did, or for that matter did not, either exist or (if it did) have the quality of an honest mistake.

18. [46]

    I am satisfied that:

    1. (1)

       Ms Harrison has breached some at least of her obligations under the second deed; and

    2. (2)

       unless restrained, she is likely to continue to do so.

19. [47]

    The first conclusion follows from what I have just said.

20. [48]

    The second conclusion follows from a mass of evidence showing that Ms Harrison has threatened, in effect, to destroy Mr Worner's career and reputation, apparently as some sort of revenge for what she perceives as the wrongs done to her. That conclusion follows also from the social (and other) media campaign that Ms Harrison has waged from December 2016 until restrained, and from the very fact that, in breach of her obligations and without any lawful excuse, she has retained the electronic devices and records that she was required to deliver up. That is shown both by her Twitter campaign and by her response to Seven's notice to produce.

21. [49]

    Put simply, I am satisfied that there is a very serious risk that Ms Harrison will not perform her contractual obligations under the second deed unless she is constrained to do so by orders of this Court.

22. [50]

    I turn to the various specific points raised by Mr Catlin and by Mr Lewis.

23. [51]

    First, Mr Catlin submitted that Seven had made incomplete disclosure on its ex parte application. That appears to rest on a misunderstanding of both the extent of the evidence that Seven put before the Court and the submissions that Dr Bell made in respect of it. I am satisfied that there was no, let alone no relevant, incomplete disclosure.

24. [52]

    Next, as to the submission that Ms Harrison could not respond to Seven's campaign of "vilification", it is enough to point out that she has had a full opportunity of putting her case before the Court, in an affidavit that would be read in open Court. She has done so. She has said what she wishes to say as to the matter of expenses. Her response was, if I may put it this way, a little coy. She said that, had she but world enough and time, she would be able to justify "the majority" of the suspect expenses identified in the Deloitte report. That is far from a complete disavowal of any improper use of the cards.

25. [53]

    As to Mr Catlin's submission that Seven was itself in breach of its contractual obligations, I refer to what I have said already.

26. [54]

    Next, Mr Catlin submitted that Seven had "cherry-picked" from the Deloitte report. I do not agree that this is a correct characterisation of what happened. Seven has disclosed the existence and some of the conclusions set out in the report, in part in statements made to the ASX in satisfaction of continuous disclosure obligations. I am far from satisfied that this amounts to "cherry-picking" so as, somehow, to make it appropriate, let alone legitimate, for Ms Harrison to seek to do the same.

27. [55]

    As to information said to be in the public domain: I accept that the second deed is. It is in the public domain if only because Seven put it in its evidence, and did not seek any protection. Thus, I accept that the specific paragraph relating to disclosure of the second deed and its terms should not be continued (and the orders made yesterday reflect that). I do not accept that, by putting other material into the public domain (to the extent that she has) in breach of her confidentiality obligations, Ms Harrison should be held to have engineered a situation where she may continue to disregard those obligations.

28. [56]

    As to the next submission, I accept that Ms Harrison has sworn that she has no further information of Seven other than what was produced. But she certainly has not sworn, nor has she undertaken, not to continue to use that which she has in her possession. Nor has she said that, by providing a USB drive with the relevant information of it or otherwise, she has divested herself completely of electronic or other copies so as to prevent her from using it. Her silence in that respect is telling.

29. [57]

    Mr Catlin's final submission dealt with freedom of speech and open reporting. That overlapped with submissions that Mr Lewis put.

30. [58]

    In this context, Mr Catlin drew on the analogy of what he called a "defamation injunction". He submitted that, just as the Court should be slow to grant injunctions to restrain the publication of allegedly defamatory material, because to do so would have a significant impact on freedom of speech and freedom of the media, so too in this case the Court should be slow to intervene.

31. [59]

    The analogy is false. The cases of so-called defamation injunctions are exemplified by the decision in O'Neill. The plaintiff in that case sought an injunction to restrain the defendant from broadcasting material that was said to be defamatory. The High Court held that the Full Court of the Supreme Court of Tasmania had erred in allowing (by majority) the injunction to stand. In the course of their reasons, Gleeson CJ and Crennan J said at [32]:

32. [60]

    However, this is not a case where anyone seeks to restrain the publication of material simply on the basis that it is or may be defamatory. It may be - I do not know - that some of the material that Ms Harrison seeks to publish could be characterised as defamatory. But Seven's legal right to restrain publication depends not on the proposition that an injunction should go to prevent defamation but, rather, on the proposition that injunctive relief is necessary to protect its legitimate contractual interests under the negative stipulations, on Ms Harrison's part, in the second deed. That is a very different situation indeed.

33. [61]

    I do of course accept that what Gleeson CJ and Crennan J said in O'Neill is a matter of great importance. But it is important to put it into context. That context, as I have sought to make clear, is very different to the present.

34. [62]

    I am inclined to accept the submissions put by Mr Lewis, to the effect that this was more than a matter of public notoriety, and that there are legitimate questions of public interest. I accept that the dispute may involve the interests of Seven and its shareholders, both in a financial sense and in so far as the dispute may shed light on the way in which corporate governance is conducted at Seven. It does not however follow that the public interest in those matters outweighs Seven's legitimate interests under the bargain that it struck with Ms Harrison. Nor does it follow that reporting on those matters is restrained. There is ample material in the public arena already. Ms Harrison's side of the story, to the extent that she chose to tell it in her affidavit, is in the public arena. The media may make of that what they wish.

35. [63]

    I am not so sure that what Mr Lewis put as to Mr Kennett's supposedly inconsistent stances is a matter that really comes into play in this dispute. But it is not necessary to express a concluded view, because even if it did, it could not take the public interest point any further.

36. [64]

    I do accept of course that responsible reporting (something to be encouraged) should seek to take account of Ms Harrison's side of the story. At the risk of repetition, I point out that she has told her story to the extent that she wished to do so.

37. [65]

    What I have said to date deals very largely with relevant considerations bearing on the balance of convenience. It is plain however that damages would not be an adequate remedy for any further breach. Mr Catlin did not submit otherwise.

38. [66]

    The second deed protects not only Seven itself but also all the described "beneficiaries". Ms Harrison has made it clear, both in her social media campaign and in her affidavit, that she is reckless or indifferent to any collateral damage to the reputations of others. To the extent that those others are protected by her negative covenants in the second deed, the protection should be continued.

39. [67]

    As I have noted already, the trend of authority in this country favours the proposition that an injunction should be withheld only on the basis of compelling discretionary reasons. In this case, the evidence does not come within a country mile of establishing any such reasons. I do accept that one consequence of a continuation of the substance of the interlocutory restraints is that there will be some limitation on the ability of the media to report on the dispute. However, for the reasons I have given, that does not outweigh, or trump, Seven's legitimate interest in retaining the benefit of Ms Harrison's negative stipulations in the second deed.

40. [68]

    Beach J dealt with a very similar argument in A V Jennings Homes Ltd v John Fairfax Publications Pty Ltd [1999] VSC 426 at [11]. His Honour said:

41. [69]

    In my respectful opinion, his Honour's analysis was correct, and applies completely in the present case.

42. [70]

    As the injunctions were initially granted and extended, they prevented specifically disclosure of the second deed or its terms (para 2(f)). For the reasons I have given, that aspect of the interlocutory regime should not be continued.

Conclusion

1. [71]

   These are my reasons for making the substantive orders that I made on 21 February 2017.

2. [72]

   That leaves the question of costs. My present view is that costs should abide the outcome of the final hearing. Since the parties have not addressed on costs, I will do no more than reserve them.

3. [73]

   I make the following further orders:

   1. (1)

      reserve costs.

   2. (2)

      Direct that the exhibits be handed out.