Federal Court of Australia Naude v DRA Global Limited [2023] FCA 493 File number: WAD 43 of 2023 Judgment of: SNADEN J Date of judgment: 19 May 2023 Catchwords: PRACTICE AND PROCEDURE – interlocutory application for non-publication orders pursuant to s 37AF(1) of the Federal Court of Australia Act 1976 (Cth) – where statement of claim alleged to disclose information subject to without-prejudice privilege – where pleading in part alleged to be scandalous, vexatious or containing bare allegations – whether non-publication orders necessary to protect against prejudice to the administration of justice – application dismissed Legislation: Fair Work Act 2009 (Cth) s 570 Federal Court of Australia Act 1976 (Cth) Pt VAA ss 37AA, 37AE, 37AI, 37AF, 37AG Federal Court Rules 2011 (Cth) r 2.32 Cases cited: Appleroth v Ferrari Australasia Pty Ltd [2020] FCA 756 Australian Rail, Tram and Bus Industry Union v Busways Northern Beaches Pty Ltd [2021] FCAFC 188 David Syme & Co v General Motors-Holden's Ltd [1984] 2 NSWLR 294 Herald & Weekly Times Ltd v Williams (2003) 130 FCR 435 Hogan v Australian Crime Commission (2010) 240 CLR 651 Huikeshoven v Secretary, Department of Education, Skills and Employment [2021] FCA 1359 John Fairfax Group Pty Ltd (Receivers and Managers Appointed) v Local Court (NSW) (1991) 26 NSWLR 131 Keyzer v La Trobe University (2019) 165 ALD 93 Pigozzo v Mineral Resources Ltd [2022] FCA 1166 R v Davis (1995) 57 FCR 512 Reynolds v JP Morgan Administrative Services Australia Ltd (No 2) (2011) 193 FCR 507 The Country Care Group Pty Ltd v Director of Public Prosecutions (Cth) (No 2) (2020) 275 FCR 377 Williams v Forgie (2003) 54 ATR 236 Division: Fair Work Division Registry: Western Australia National Practice Area: Employment and Industrial Relations Number of paragraphs: 40 Date of last submissions 10 May 2023 (First to Sixth Respondents) 16 May 2023 (Applicant) Date of hearing: Determined on the papers Counsel for the Applicant: Mr A Pollock Solicitor for the Applicant: Bennett Law Counsel for the First, Second, Third, Fourth, Fifth and Sixth Respondents: Mr I Taylor SC with Ms H Millar Solicitor for the First, Second, Third, Fourth, Fifth and Sixth Respondents: HWL Ebsworth Lawyers Counsel for the Seventh, Eighth and Ninth Respondents: Mr J Healy Solicitor for the Seventh, Eighth and Ninth Respondents: Clyde & Co Solicitor for the Tenth Respondent: Mr C Hood, Hamilton Locke ORDERS WAD 43 of 2023 BETWEEN: ANDREW JAMES NAUDE Applicant AND: DRA GLOBAL LIMITED First Respondent PETER JOHN MANSELL Second Respondent KATHLEEN BOZANIC (and others named in the Schedule) Third Respondent order made by: SNADEN J DATE OF ORDER: 19 May 2023 THE COURT ORDERS THAT: 1. The first-to-sixth respondents' amended interlocutory application dated 28 April 2023 be dismissed. 2. Orders 5 and 7 of the orders made herein on 2 May 2023 be vacated with effect from 9:00 am (AWST) on Monday, 22 May 2023. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT SNADEN J: 1 On Tuesday, 2 May 2023, the court made orders on the application of the first-to-sixth respondents under s 37AI of the Federal Court of Australia Act 1976 (Cth) (the "FCA Act"). By those orders, the court temporarily prohibited publication of identified passages contained within the statement of claim herein and gave the parties a short window of time within which to make submissions as to whether or not permanent orders of that nature should be made pursuant to s 37AF(1) of the FCA Act. Those submissions have since been filed (the latest on Tuesday, 16 May 2023) and, in accordance with the position adopted by the parties, the substantive application is to be determined on the papers. 2 For the reasons that follow, the first-to-sixth respondents' application for orders under s 37AF(1) of the FCA Act (hereafter, the "NPO Application") will be dismissed. The interim orders made on 2 May 2023 will be dissolved. Background 3 The applicant is a former employee of the first respondent's. The other respondents hold various offices within the first respondent. By an originating application and statement of claim (each dated 23 February 2023) the applicant makes various claims concerning his employment and its termination, including claims based upon provisions of the Fair Work Act 2009 (Cth) (the "FW Act"). 4 After its commencement, the matter was listed for a case-management hearing to be conducted on Tuesday, 2 May 2023. The NPO Application was filed a few days prior to that hearing, on Thursday, 27 April 2023 (and was the subject of refinement prior to 2 May 2023). At the hearing of Tuesday, 2 May 2023, the parties were agreed that some time should be afforded to them to prepare and advance submissions as to why the orders that were sought should or should not be made. In the interim, it was accepted that the court should make orders under s 37AI of the FCA Act to preserve the status quo. 5 That is the course that played out. Orders were made pursuant to s 37AI(1) of the FCA Act prohibiting publication of identified passages in the applicant's statement of claim. The first-to-sixth respondents were directed to file with the registry a redacted version of that document (that is, a version in which the offending passages were redacted) and the non-redacted version was declared "confidential" for the purposes of r 2.32(3) of the Federal Court Rules 2011 (Cth) (the "FCA Rules"). 6 During the course of the hearing of 2 May 2023—which was conducted by remote means—the court was moved to field submissions from a journalist, Mr Prior. Perhaps more accurately, Mr Prior was moved to ask some questions about the operation of the interim orders that were then foreshadowed. Those matters needn't here be particularised; it suffices to note that no opposition was raised against the making of the orders that the court then proceeded to make. 7 The NPO Application focuses upon two aspects of the applicant's statement of claim. The first concerns the matters that are pleaded at paragraphs 58 and 59 thereof. Those paragraphs relate to discussions that are said to have been had with the applicant about the terms upon which his employment with the first respondent would (or might) end. It is submitted that those discussions were in the nature of "legally privileged without prejudice communications", the publication of which would constitute a form of prejudice to the administration of justice. The second concerns matters that are spelt out in particulars that appear later in the statement of claim; and which relate to measures in which it is alleged that certain non-parties engaged in connection with the applicant's employment or with matters that the applicant raised during its twilight. It is said that the matters alleged amount to "…scandalous and vexatious bare allegations made by [the applicant] against non-parties" and, again, that their publication would constitute a form of prejudice to the administration of justice. The Legislative framework 8 Part VAA of the FCA Act is entitled "suppression and non-publication orders". Section 37AF confers upon the court a power to make what are styled "non-publication order[s]". The section provides as follows, namely: 37AF Power to make orders (1) The Court may, by making a suppression order or non-publication order on grounds permitted by this Part, prohibit or restrict the publication or other disclosure of: (a) information tending to reveal the identity of or otherwise concerning any party to or witness in a proceeding before the Court or any person who is related to or otherwise associated with any party to or witness in a proceeding before the Court; or (b) information that relates to a proceeding before the Court and is: (i) information that comprises evidence or information about evidence; or (ii) information obtained by the process of discovery; or (iii) information produced under a subpoena; or (iv) information lodged with or filed in the Court. (2) The Court may make such orders as it thinks appropriate to give effect to an order under subsection (1). 9 A "non-publication order" is "…an order that prohibits or restricts the publication of information (but that does not otherwise prohibit or restrict the disclosure of information)": FCA Act, s 37AA. 10 The court is empowered to make a non-publication order on any one or more of the grounds identified in s 37AG(1) of the FCA Act. That section provides as follows, namely: 37AG Grounds for making an order (1) The Court may make a suppression order or non-publication order on one or more of the following grounds: (a) the order is necessary to prevent prejudice to the proper administration of justice; (b) the order is necessary to prevent prejudice to the interests of the Commonwealth or a State or Territory in relation to national or international security; (c) the order is necessary to protect the safety of any person; (d) the order is necessary to avoid causing undue distress or embarrassment to a party to or witness in a criminal proceeding involving an offence of a sexual nature (including an act of indecency). Presently, the only ground upon which the NPO Application proceeds is the ground identified in s 37AG(1)(a) of the FCA Act. 11 Section 37AI of the FCA Act confers upon the court a separate power to make an interim non-publication order: 37AI Interim orders (1) If an application is made to the Court for a suppression order or non-publication order, the Court may, without determining the merits of the application, make the order as an interim order to have effect, subject to revocation by the Court, until the application is determined. (2) If an order is made as an interim order, the Court must determine the application as a matter of urgency. 12 In deciding whether to make a non-publication order, the court must take into account that a primary objective of the administration of justice is to safeguard the public interest in open justice: FCA Act, s 37AE. Principles to be applied 13 In R v Davis (1995) 57 FCR 512 (Wilcox, Burchett and Hill JJ), this court observed (at 514): Whatever their motives in reporting, [the media's] opportunity to do so arises out of a principle that is fundamental to our society and method of government: except in extraordinary circumstances, the courts of the land are open to the public. This principle arises out of the belief that exposure to public scrutiny is the surest safeguard against any risk of the courts abusing their considerable powers. As few members of the public have the time, or even the inclination, to attend courts in person, in a practical sense this principle demands that the media be free to report what goes on in them. 14 The exclusion of public access to the processes with which a court deals is only to be effected in exceptional cases: The Country Care Group Pty Ltd v Director of Public Prosecutions (Cth) (No 2) (2020) 275 FCR 377, 379 [8] (Allsop CJ, Wigney and Abraham JJ; hereafter "Country Care Group"); David Syme & Co v General Motors-Holden's Ltd [1984] 2 NSWLR 294, 299 (Street CJ), 307 (Hutley AP, Samuels JA agreeing). In John Fairfax Group Pty Ltd (Receivers and Managers Appointed) v Local Court (NSW) (1991) 26 NSWLR 131, Kirby P (in dissent but not on this issue) said (at 142-143): It has often been acknowledged that an unfortunate incident of the open administration of justice is that embarrassing, damaging and even dangerous facts occasionally come to light. Such considerations have never been regarded as a reason for the closure of courts, or the issue of suppression orders in their various alternative forms… A significant reason for adhering to a stringent principle, despite sympathy for those who suffer embarrassment, invasions of privacy or even damage by publicity of their proceedings is that such interests must be sacrificed to the greater public interest in adhering to an open system of justice. Otherwise, powerful litigants may come to think that they can extract from courts or prosecuting authorities protection greater than that enjoyed by ordinary parties whose problems come before the courts and may be openly reported. 15 It is well accepted that "…mere embarrassment, inconvenience or annoyance will not suffice to ground an application for suppression or non-publication": Keyzer v La Trobe University (2019) 165 ALD 93, 99 [29] (Anastassiou J). It is a feature of open justice that those to whom court processes refer may thereby suffer embarrassment or distress; but "…that is a price the community has to pay for the undoubted benefit of court proceedings being, except in very exceptional circumstances, conducted in public": Williams v Forgie (2003) 54 ATR 236, 239 [14] (Heerey J). 16 With those principles stated, attention can turn to the passages within the statement of claim to which the NPO Application pertains. The "without prejudice" matters 17 The first-to-sixth respondents submit that [58] and [59] of the statement of claim operate to disclose matters to which without-prejudice privilege attached at common law. It is necessary to trace the matters to which objection is taken. 18 Leading up to [58] and [59], the statement of claim records various events that are said to have spawned discussions between the applicant and representatives of the first respondent about the termination of his employment. Reference is made to an announcement that was to be made to the Australian Stock Exchange, and to an objection that the applicant raised as to its terms. At [57], the statement of claim refers to matters that were raised for discussion at a board meeting that took place on 15 March 2022, including as to the applicant's departure from the first respondent's business and the terms upon which that departure would take place. 19 Paragraph 58 pleads a conversation that the applicant is said to have had with the second respondent on 16 March 2022. Specifically, that discussion is said to have pertained to the terms of a "separation deed" that appears to have been drawn with a view to recording the terms that would regulate the termination of the applicant's employment by the first respondent. Paragraph 59 pleads a further conversation between the applicant and the second respondent that is said to have occurred on 17 March 2022. Again, it is said that that discussion touched upon the first respondent's attitude to the terms of the then-proposed "separation deed". 20 The first-to-sixth respondents maintain that the matters upon which [58] and [59] of the statement of claim touch concerned negotiations in which the parties (or, at the least, the applicant and the first respondent) were engaged as to the terms upon which the applicant's employment would or might terminate. They claim that a dispute had arisen in respect of those terms and that the communications that are the subject of the impugned paragraphs were communications that were engaged in with a view to negotiating the settlement of a dispute that then existed (namely as to the terms upon which the applicant's employment might terminate). 21 The applicant maintains that no without-prejudice privilege attaches to the discussions that are the subject of [58] and [59] of the statement of claim. He submits that (amongst other things) they did not pertain to any existing or foreshadowed litigation. 22 No affidavit material has been filed to establish that the matters pleaded at [58] and [59] in fact occurred. Instead, the parties appear to intend that the court should presume that the communications there referred to occurred, and that they comprised of the content and had the character that is thereby attributed to them. 23 Even assuming that to be so, I do not consider it necessary for present purposes (if, indeed, it is possible) to make any findings about the content or character of the discussions that are pleaded. I consider that the passages should not be made subject to a non-publication order because such an order is not necessary in the sense required by s 37AG(1)(a) of the FCA Act. To explain that conclusion, it is necessary to explore the nature of the privilege that the first-to-sixth respondents assert. 24 In Pigozzo v Mineral Resources Ltd [2022] FCA 1166 (Feutrill J; hereafter "Pigozzo"), the court made the following observations about without-prejudice privilege: Without prejudice privilege under the common law At common law, communications genuinely aimed at negotiating a settlement of an existing dispute are prima facie confidential and subject to without prejudice privilege: Quad Consulting Pty Ltd v David R Bleakley & Associates Pty Ltd (1990) 27 FCR 86 at 89-90; Rodgers v Rodgers (1964) 114 CLR 608 at 614; Rush & Tompkins Ltd v Greater London Council [1989] AC 1280 at 1299-1300. It is a joint privilege that cannot be waived by one party unilaterally: Re Turf Enterprises Pty Ltd [1975] Qd R 266 at 267; Walker v Wilsher (1889) 23 QBD 335 at 337. Subject to certain exceptions, it operates to prevent disclosure of the without prejudice communication to third parties and to prevent them from being admitted into evidence: Oceanbulk Shipping SA v TMT Asia Ltd [2011] 1 AC 662 at [19] – [29]; Unilever Plc v The Procter & Gamble Co [2000] 1 WLR 2436 at 2441-2442, 2444-2446, 2448-2450; Rush & Tompkins at 1299-1301; Pihiga at [80] – [97]. The rationale for the common law without prejudice privilege is founded in the public interest in encouraging full and frank negotiations in connection with the settlement of disputes. Also, an express or implied agreement of the parties that communications between them are confidential and are not admissible in evidence if the negotiations do not lead to a settlement: Pihiga at [82] – [86]; Unilever at 2448-2449; Oceanbulk at [26] – [27]. Common law exceptions to without prejudice privilege At common law, a person is not precluded from relying upon and giving evidence of a communication that is otherwise without prejudice if exclusion of the evidence would suppress a threat if an offer is not accepted or would act as a cloak for perjury, blackmail or other unambiguous impropriety: Rush & Tompkins at 1300; Unilever at 2444. 25 If, as the first-to-sixth respondents contend, [58] and [59] of the statement of claim plead matters to which without-prejudice privilege properly attaches, that might—indeed, probably would—serve as a basis upon which the court might be moved to strike them out. The privilege exists to promote the settlement of disputes and, thereby, the public interest in the proper administration of justice (realised, as it inevitably would be, by the freeing up of necessarily limited judicial resources): see, for example, the observations of Rares J in Reynolds v JP Morgan Administrative Services Australia Ltd (No 2) (2011) 193 FCR 507, 514 [30]. The disclosure in a pleading of—and consequent reliance of a party upon—communications to which privilege attaches would, generally speaking, undermine the public interest in the administration of justice because it would essentially amount to "…a party that is prima facie in breach of a duty of confidence [taking] advantage of its own wrong": Pigozzo, [170] (Feutrill J). 26 It does not follow, however, that a passage in a pleading that undermines the proper administration of justice (assuming, momentarily, that that is what here confronts the court) should be made the subject of a non-publication order. For present purposes, such an order may be made only if it is necessary to prevent prejudice to the proper administration of justice. That it might be convenient, reasonable or sensible, or otherwise might serve some notion of public interest is not enough: Hogan v Australian Crime Commission (2010) 240 CLR 651, 664 [31] (French CJ, Gummow, Hayne, Heydon and Kiefel JJ); Australian Rail, Tram and Bus Industry Union v Busways Northern Beaches Pty Ltd [2021] FCAFC 188, [8] (Bromberg, Wheelahan and Snaden JJ). The word "necessary" in s 37AG(1)(a) is a strong one: Country Care Group, 379 [9] (Allsop CJ, Wigney and Abraham JJ). 27 Here, the prejudice that [58] and [59] will visit upon the proper administration of justice (assuming that there is any) inures not in any publication or republication of the matters that are pleaded; but in the applicant's reliance upon them in the prosecution of his case. There is no additional or marginal prejudice to the proper administration of justice—and certainly none that the first-to-sixth respondents have identified—that attaches or might conceivably attach to the publication or potential publication of those matters. It is not "necessary" that an order be made to prevent any such prejudice because there isn't any to prevent (or, again, none that has been made apparent). 28 The position might be different if there were some aspect of commercial or other sensitivity to the confidence that necessarily attaches to communications that are subject to without prejudice privilege. A distinction is to be drawn between a communication that is confidential (in the sense that the law recognises an expectation that it will not be shared) and a communication that is sensitive (in the sense that its disclosure might visit some form of injury). It is accepted that some prospective litigants may feel deterred from taking legal action to vindicate their rights because doing so might require disclosure of sensitive information; and that that deterrence can qualify as a form of prejudice to the proper administration of justice: Huikeshoven v Secretary, Department of Education, Skills and Employment [2021] FCA 1359, [57]-[58] (Jackson J) and the authorities to which his Honour there refers. But the mere fact that information is confidential in some sense is not, of itself, reason to conclude that a non-publication order is necessary in the sense that s 37AG(1)(a) contemplates: see, to equivalent effect, Herald & Weekly Times Ltd v Williams (2003) 130 FCR 435, 443 [31] (Merkel J, with whom Finn and Stone JJ agreed). 29 No such sensitivity is here in play (or said to be). The first-to-sixth respondents merely seek to restrict publication because they assert that the communications in question are subject to without-prejudice privilege. If they are right about that, then one can well understand why they should wish to protect the confidence that attends the communications. But so to acknowledge is not to identify prejudice to the proper administration of justice, the prevention of which requires that an order be made under s 37AF(1) of the FCA Act. No such prejudice has been identified. There is, thus, no occasion for the court to entertain the orders that are sought. The "Scandalous and vexatious" matters 30 The first-to-sixth respondents also move the court for an order under s 37AF(1) of the FCA Act relating to a suite of matters that are articulated in identified particulars set out elsewhere in the statement of claim. It is not necessary that I should record the nature or content of those passages. It suffices to note that they contain allegations that might properly be described as serious. Some raise allegations of professional impropriety or misconduct. 31 By their written submission in support of the NPO Application, the first-to-sixth respondents contend that relief should be granted in respect of the impugned passages (which, again, it is not necessary for me here to repeat) for five reasons: …First, a number of these particulars make serious allegations of professional impropriety and misconduct against persons holding senior professional roles. Second, the allegations in the relevant particulars are not themselves properly particularised and are not supported by any material facts. Third, the allegations set out in the relevant particulars cannot properly be said to be particulars of a material fact pleaded in the body of the [statement of claim]. Fourth, these serious allegations are made against individuals who are not parties to the claim. Fifth, taken together the allegations against [the first respondent's] leadership, including individuals with legal and fiduciary responsibilities, if published, could potentially cause [the first respondent] serious reputational and commercial harm. 32 The first-to-sixth respondents accept that "…parties and witnesses must accept that litigation may lead to embarrassment and damage to reputations"; but maintain that "…the proper administration of justice requires that there be reasonable limits to the embarrassment and reputational damage [that] individuals must endure". No case law is cited as authority for that latter proposition. 33 With respect, there is no substance to the submissions summarised above. Even assuming that the passages that are sought to be suppressed can be impugned in the ways that are identified, that falls well short of establishing any prejudice to the proper administration of justice that can be prevented only by means of an order under s 37AF(1). The court is not here concerned with the propriety of the applicant's pleading. At issue presently is whether it imperils the proper administration of justice so as to require intervention under Pt VAA of the FCA Act. No such peril has here been demonstrated. 34 In saying so, I do not mean to doubt that pleadings might conceivably contain allegations that are established, by evidence, to be so scandalous or abusive of the court's processes that the risk of their publication might be said to engage the court as an instrument of injustice; and, thereby, to prejudice the proper administration of justice. That, though, is not something that the first-to-sixth respondents contend is presently in prospect. Instead and more simply, they submit that relief should be granted to spare the reputational discomfort to which the impugned passages of the statement of claim give rise. I do not wish to understate the nature or consequence of what has been pleaded; but I do not accept that its publication (if it were to occur) is of the kind that would reflect adversely upon the court. Disposition 35 The NPO Application should (and will) be dismissed. Orders 5 and 7 of the orders made herein on 2 May 2023 should (and will) be vacated. By operation of s 570 of the FW Act, there should (and will) be no order as to costs. 36 Given the nature of what I have decided—and for the reasons that I identified in Appleroth v Ferrari Australasia Pty Ltd [2020] FCA 756, [16] (Snaden J)—I consider that it is appropriate to stay the application of the orders proposed above for a very short period. The vacation of orders 5 and 7 of the orders made herein on 2 May 2023 will take effect at 9:00am (AWST) on Monday, 22 May 2023. 37 By their written submissions in support of the NPO Application, the first-to-sixth respondents sought to extend the application of any orders made under s 37AF(1) of the FCA Act to the parties' written submissions. Plainly, that is not something that the court need entertain in circumstances where no substantive relief is to be granted. 38 The first-to-sixth respondents also ask that the court restrict non-party access to any amended statement of claim that the applicant files pursuant to the leave that was given to him to that end on 2 May 2023. They submit that any amended pleading should "remain confidential" until such time as they have had an opportunity to review it. 39 I do not consider that to be appropriate. To grant pre-emptive relief under s 37AI of the FCA Act (or howsoever otherwise) in respect of a document that doesn't yet exist would necessarily involve the court's assuming that what is to be filed will require intervention. There is no basis for such an assumption. Any amended statement of claim will not "remain" confidential unless or until the court orders that it should be confidential: FCA Rules, r 2.32(3). There is no basis upon which to make such an order pre-emptively. 40 If, upon service of any amended statement of claim, the respondents take the view that an application should be made for orders under Pt VAA of the FCA Act, then they will be at liberty to make one and the court will hear and determine it—and make such interim orders as might be necessary or convenient—with requisite haste. I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Snaden. Associate: Dated: 19 May 2023 SCHEDULE OF PARTIES WAD 43 of 2023 Respondents Fourth Respondent: LEE GORDON GUTHRIE Fifth Respondent: PAULUS CORNELIUS LOMBARD Sixth Respondent: JONATHAN ANDREW VELLOZA Seventh Respondent: JAMES ANDREW HART SMITH Eighth Respondent: ALISTAIR BRADLEY HODGKINSON Ninth Respondent: DARREN STEPHEN NAYLOR Tenth Respondent: BRIAN WILLIAM DOWDING