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Federal Court of Australia
Karas v LK Law Pty Ltd (No 2) [2023] FCAFC 55
Appeal from: LK Law Pty Ltd v Karas [2022] FCA 762
File number: SAD 112 of 2022
Judgment of: CHARLESWORTH, O'CALLAGHAN AND COLVIN JJ
Date of judgment: 5 April 2023
Catchwords: PRACTICE AND PROCEDURE – where primary judge made a suppression order pursuant to ss 37AF(1)(b) and 37AG(1)(a) of the Federal Court of Australia Act 1976 (Cth) (Act) to treat certain documents as confidential –
interlocutory application by appellant seeking orders pursuant to ss 37AF(1)(b) and 37AG(1)(a) of the Act that parts of the reasons for judgment of Full Court be suppressed
Legislation: Federal Court of Australia Act 1976 (Cth) ss 37AF(1)(b), 37AG(1)(a)
Cases cited: Karas v LK Law Pty Ltd [2023] FCAFC 15
Division: General Division
Registry: South Australia
National Practice Area: Commercial and Corporations
Sub-area: Commercial Contracts, Banking, Finance and Insurance
Number of paragraphs: 24
Date of last submission/s: 3 March 2023
Date of hearing: Determined on the papers
Counsel for the Appellant: Mr J Sheahan KC with Mr G Kozminsky and Ms E Brumby
Solicitor for the Appellant: Arnold Bloch Leibler
Counsel for the Respondents: Mr B Roberts KC with Mr T Besanko and Ms H Doyle
Solicitor for the Respondents: Kerrs
ORDERS
SAD 112 of 2022
BETWEEN: JASON DEMETRIOS KARAS
Appellant
AND: LK LAW PTY LTD
First Respondent
SCIPIO JOHN LIPMAN
Second Respondent
LIPMAN FAMILY PTY LTD (ACN 627 125 580)
Third Respondent
order made by: CHARLESWORTH, O'CALLAGHAN AND COLVIN JJ
DATE OF ORDER: 5 APRIL 2023
THE COURT ORDERS THAT:
1. The Full Court's reasons for judgment in this matter in the form published to the parties, their legal representatives and Court staff on 17 February 2023 be amended in order to constitute the final reasons of the Court for general publication by redacting the content of paragraph [43] and in paragraph [54] by redacting the second sentence following the words "himself described".
2. The redactions provided for in order 1 remain in effect only for as long as any relevant suppression order applies in Proceeding No. SAD222/2021.
3. These orders take effect notwithstanding the suppression order made in Proceeding No. SAD222/2021.
4. The appellant's interlocutory application dated 23 February 2023 otherwise be dismissed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
THE COURT:
1 We published to the parties, their legal representatives and Court staff our reasons in this matter on 17 February 2023. See Karas v LK Law Pty Ltd [2023] FCAFC 15.
2 Orders 3, 4 and 5 of the orders made on that date were:
3. The reasons for judgment provided to the parties today (Reasons) be suppressed from publication on the grounds specified in s 37AG(1)(a) of the Federal Court of Australia Act 1976 (Cth) and otherwise kept confidential until:
(a) if an application is filed in accordance with paragraph 4, the date of the resolution of that application; or
(b) if no application is filed in accordance with paragraph 4, 10.00am (ACDT) on 24 February 2023.
4. Any application for ongoing suppression or confidentiality orders affecting the Reasons or any part of them is to be filed on or before 4.00pm (ACDT) on 23 February 2023.
5. Any application filed in accordance with paragraph 4 is to be determined on the papers.
3 On 27 April 2022, the docket judge in the proceeding below (O'Sullivan J) made the following order:
2. Pursuant to ss 37AF(1)(b) and 37AG(1)(a) of the Federal Court of Australia Act 1976 (Cth), on the ground that it is necessary to prevent prejudice to the proper administration of justice, the documents referred to in Schedule A to these orders and their contents be treated as confidential, not be published or disclosed to or by any person or entity and not be disclosed in open court or disclosed in the open part of any court transcript.
3. Pursuant to s 37AJ of the Federal Court Act, Order [2] shall operate until the determination of the respondents' interlocutory application filed on 15 March 2022 ('Interlocutory Application').
4 The documents referred to in Schedule A to that order were: "The emails, attachments and documents referred to or relied on in paragraphs 33 to 39, 40, 43, 45 to 52, 61, 62, 69, 71, 76, 78, 79, 82, 83 and 84.2 of the statement of claim filed in Proceeding No. SAD222/2021 on 21 December 2021".
5 On 1 July 2022, his Honour extended the operation of order 2 above as follows: "Pursuant to s 37AJ of the Federal Court of Australia Act 1976 (Cth), order 2 of the orders made 27 April 2022 is extended until the first day of the trial of the claim and the cross-claim in this matter".
6 As we understand it, the judge made and extended the suppression order on the basis of Mr Karas' evidence in his 11 March 2022 affidavit at [89] that "the allegations made in paragraphs 33 to 39, 40, 43, 45 to 52, 61, 62, 69, 71, 76, 78, 79, 82, 83 and 84.2 of the statement of claim are based on confidential information found by the applicants in my private emails and private documents (being those identified in the statement of claim) after obtaining access to them without my consent".
7 By interlocutory application dated 23 February 2023, Mr Karas sought orders pursuant to ss 37AF(1)(b) and 37AG(1)(a) of the Federal Court Act that the following parts of the reasons published to the parties, their legal representatives and Court staff on 17 February 2023 be suppressed:
(a) page 2, paragraph 6, between the words "render" and "wrongful";
(b) page 4, all of paragraph 20;
(c) page 4, paragraph 21, after the words "aware of";
(d) page 5, paragraph 23, the words between "aware of" and "he directed a search of", and the last three words of the first sentence;
(e) page 5, paragraph 26, first sentence, the words following "fraudulent design by";
(f) page 5, paragraph 27:
i. the words following "complaint that there were" until the end of the second sentence;
ii. the words following "obligations by" in the third sentence;
iii. the words following "meets the claim by" in the fourth sentence;
(g) page 7, paragraph 34, the words following "an iniquity being";
(h) page 10, all of paragraph 43;
(i) page 12, paragraph 49, final two sentences following the words "a sole practice";
(j) page 12, paragraph 51, the first sentence following the words "parts of the arrangements";
(k) page 13, all of paragraph 50;
(l) pages 12 to 13, paragraph 52:
i. on the bottom of page 12, the words between "as a partner to" and "not to place himself in";
ii. on page 13, the words between "provision of conflict and" until the end of that sentence;
iii. on page 13, the final sentence following the words "pursuant to the overarching partnership";
(m) on page 13, paragraph 53:
i. the second sentence following the words "the fact that";
ii. the third sentence following the words "generated by the firms and";
iii. the final four sentences;
(n) on page 13, paragraph 54, the second sentence following the words "himself described";
(o) on page 14, paragraph 56:
i. the second sentence following the words "explanation as to why";
ii. the final sentence following the words "fiduciary duties by";
(p) on page 18, paragraph 70, the final sentence;
(q) on page 19, paragraph 75, the final sentence following the words "certainly arguably that";
(r) on page 22, paragraph 89, the final sentence following the words "or public knowledge";
(s) on page 23, paragraph 95, the third sentence following the words "do not alter the";
(t) on page 23, paragraph 98, the first sentence following the words "the evidence shows that".
8 The application was supported by an affidavit sworn by Ms Elyse Hilton, a partner of Arnold Bloch Leibler. Ms Hilton exhibited the orders made by O'Sullivan J and deposed that "[p]arts of the reasons [for judgment] disclose the contents of the confidential documents the subject of [those] orders …"
9 We were, helpfully, also provided with a copy of the reasons marked up to show those parts over which a suppression order was sought.
10 The parties filed written submissions in respect of the application.
11 Mr Karas submitted that the suppression orders were made on the basis that preserving the confidentiality of the confidential documents was and is necessary to ensure that the final relief sought in his cross-claim, which includes orders for delivery up and destruction of the confidential documents, is not rendered nugatory. He also pointed to the fact that the suppression orders have not been varied or discharged and were not the subject of the appeal.
12 Mr Karas made the following other points:
(1) He is entitled to have his claim of breach of confidence heard and determined at a final hearing, notwithstanding our interlocutory findings denying the availability of interlocutory injunctive relief against the respondents, as persons who have "a real and direct interest in redressing" the alleged iniquity.
(2) The disclosure of the confidential documents the subject of the cross-claim or their contents prior to determination of his claim would destroy the very subject matter of it.
(3) Before the subject matter of the cross-claim is destroyed, he is entitled to have a range of questions of law and fact determined on a final basis, according to the civil standard of proof.
(4) It is necessary to prevent prejudice to the proper administration of justice in the cross-claim that the confidential documents or their contents not be disclosed until it has been finally determined.
(5) The proposed redactions go no further than is necessary to prevent prejudice to the administration of justice in the cross-claim (cf RS [6]).
(6) The proposed redactions are directed at parts of the reasons that, even if not all expressly disclosing the confidential documents, permit inferences to be drawn about their contents that has the practical effect of disclosure.
13 The respondents submitted that although, ultimately, it was a matter for the Court to decide:
(1) We may consider that the rationale for the existing orders no longer exists.
(2) A significant number of the proposed redactions do not appear to contain any reference to the documents the subject of the suppression order.
(3) The suppression orders have caused practical issues in the conduct of the primary proceedings.
14 In our view, save for the proposed redactions in respect of paragraphs [43] and [54] of the joint reasons of O'Callaghan and Colvin JJ, there is no basis for the making of any of the other proposed redactions.
15 Notwithstanding the fact that no suppression order was made in respect of the statement of claim, it appears that the parties have been proceeding on the basis that the order has that effect. Having regard to the conclusions we have reached in the appeal, we are not satisfied that there is a proper basis to continue to suppress the allegations made in the statement of claim. A sufficiently arguable case of iniquity has been demonstrated to defeat the claim to confidentiality in respect of those allegations. As to the detailed contents of documents, separate claims are made that they contain personal information of a kind that should be protected by suppression orders. As there is an existing order in place in that regard it is appropriate for that question to remain within the control of the docket judge.
16 Many of the proposed redactions seek to suppress parts of the joint reasons which do no more than summarise allegations or uncontroversial matters of context derived from the statement of claim, without any reference to the documents covered by the suppression order. The proposed redactions to paragraphs [20], [21], [23], [26], [27], [34], [49], [50], [51], [52], and [53] (last 7 lines) fall into that category. It follows that we will not make the suppression order sought in respect of those paragraphs.
17 Other portions of the joint reasons sought to be suppressed involve conclusions or observations about the existence of reasonably arguable claims against Mr Karas. The proposed redactions to [53] (lines 4, 6 and 7), [56], [70], [75], [95], and [98] fall into that category. So they ought not be the subject of any ongoing suppression either.
18 That leaves the proposed redactions in respect of paragraphs [43], [54], and [89].
19 Paragraph [43] recites details about the content of one of Mr Karas' "private emails". Consistently with the course of reserving whether there should be ongoing suppression on some basis other than that determined in the appeal, that paragraph will be redacted.
20 We also agree that the words in paragraph [54] following the words "himself described", should be redacted at this stage.
21 As to paragraph [89], the words are a wholly uncontroversial reference to generic description of "emails and calendar entries" which "in some cases" were marked confidential. So they ought not be the subject of any ongoing suppression either.
22 There are only four words sought to be redacted from paragraph [6] of the reasons of Charlesworth J. We do not understand why and we decline to redact them.
23 It seems to us that the redactions that we will provide for should only remain in effect for as long as any relevant suppression order is in force.
24 Orders will be made accordingly.
I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Charlesworth, O'Callaghan and Colvin .
Associate:
Dated: 5 April 2023