Litigation 101: The implied undertaking and how to manage your obligations

Jonathan Slater, Emily Tranter and Simon Agnello
07 Jul 2022 Time to read: 4 MIN

Complying with an implied undertaking requires educating your business, and managing your documents.

One of the obligations to the Court most commonly misunderstood by litigants is the implied undertaking. In this article, we explain how the implied undertaking works, when it ends and provide some practical tips for those involved in litigation, to assist litigants to manage their implied undertaking obligations.

What is the implied undertaking?

The implied undertaking, also known as the Harman undertaking, precludes litigants from using documents produced under compulsion of a Court rule or a Court order. Without the leave of the Court, the party receiving the documents cannot use or disclose the documents (or information within those documents) for a collateral or ulterior purpose. That is, the documents can only be used for the purposes of the litigation in which they were obtained.

In Australia:

  • The implied undertaking is a substantive legal obligation at common law which is owed to the Court by the receiving party. The principle recognises that the compulsory production of documents is an invasion of privacy, and public interest demands that this compulsion should not be pressed further than the course of justice requires.
  • Only a Court can release a receiving party from the undertaking, even if the producing party has given clear and informed consent for the collateral or ulterior use of the documents.
  • The undertaking is “implied” because the receiving party is not required to give an express commitment not the use the documents for another purpose. Rather, it is an unspoken commitment that automatically arises on the compulsory production of documents.
  • The undertaking also applies to any third party who receives documents and is aware they were produced under compulsion during Court proceedings, even if they are not aware of the existence of the undertaking.
  • A breach of the undertaking is serious and is punishable by contempt of Court. Penalties include fines and/or imprisonment in serious cases, so it is important that any inadvertent breach of the implied undertaking is rectified as soon as possible.

What does it apply to?

The implied undertaking applies to several different categories of documents, including:

  • documents produced on discovery during a Court proceeding;
  • documents seized under an Anton Piller order;
  • witness statements, expert reports and affidavits served pursuant to a Court order;
  • documents produced under subpoena;
  • documents produced for taxation of costs;
  • documents produced pursuant to a direction from an arbitrator; and
  • copies of these documents and information derived from them.

What are permitted uses?

The implied undertaking does not prohibit the receiving party from using documents produced to it, as long as the use is reasonably related to the Court proceedings. For example, the documents may be disclosed to a litigant’s solicitors and advisors for the purposes of the Court proceedings who will themselves be also bound by the undertaking.

There may also be occasions where a party holds documents subject to the implied undertaking but is compelled to produce them in a subsequent or unrelated proceeding. This often occurs when the documents are relevant to a party’s discovery obligations to produce documents in their possession in a separate, unrelated proceeding. Where these competing and inconsistent obligations arise, the party is obliged to produce the documents in discovery because the implied undertaking generally yields to the statutory provisions and requirements of Australian Court processes, such as discovery, in the other litigation.

What is a collateral or ulterior purpose?

Documents subject to the implied undertaking cannot be used for a collateral or ulterior purpose. In general terms, this means a purpose not connected with the conduct of the proceeding through which the documents were received, such as:

  • disclosing information to a regulator or Minister for the purposes of lobbying;
  • using information for a business purpose, or to gain a competitive advantage;
  • using information from one proceeding to maintain a different proceeding, even where the parties and causes of action are the same;
  • using documents in different proceedings between the same parties; and
  • disclosing information to the media to expose an alleged wrongdoing.

When does it end?

The implied undertaking generally ends when the document is tendered in evidence, or referred to in open Court because the document will then be in the public domain, unless the Court restrains its publication.

Parties can also be released from the implied undertaking on application for orders from the Court to whom the obligation is owed. While the application should generally be made to the same Court, there are cases where other Australian Courts have released parties from an undertaking owed to a different Court.

Special circumstances are required for a Court to release a party from the implied undertaking, including the nature of the document, how the document came into existence, whether the document was in existence prior to the litigation, the nature of the information in the document (particularly if it contains personal or commercially sensitive information) and the likely contribution of the document in achieving justice in the separate proceeding.

Practical tips for litigants and in-house counsel to ensure they stay on top of obligations arising from the implied undertaking

  • Educate the business

    Prior to commencing any proceedings, in-house counsel should work with the business to ensure staff who will be involved have a general understanding of the implied undertaking, what it applies to, and the prohibitions on disclosure.

  • Maintain appropriate document management systems

    It is important to have document management systems properly set up from the beginning to capture, mark and clearly identify documents which are subject to the undertaking to minimise the risk of inappropriate use and breaches of the undertaking. Consider restrictions over who can have access to shared files to avoid inadvertent breaches.

  • Identify the documents that may be subject to the implied undertaking

    When seeking to rely on documents in a proceeding that are not your personal/business records, it is important to identify the provenance of those documents.

    Below is a step-by-step chart will help you identify whether a document received may be subject to the implied undertaking and if so, what uses may be made of it:

 

step-by-step chart

  • Once the litigation has concluded, consider what steps must be taken in respect of documents that remain subject to the implied undertaking

Discuss what, if any, documents you may wish to use in future and consider whether those documents remain subject to the implied undertaking or if you need to apply to the Court for a release from the undertaking. This is also a good opportunity to ensure your document management systems are set up properly, and accurately identify documents which remain subject to the undertaking.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.