What's the harm? The practical consequences of breaching the Harman Rule

In a recent decision by her Honour Olsson J in the District Court of New South Wales, a creditor has learned the hard way about the consequences of breaching the Harman Rule which I recently wrote about (with the kind assistance of Kylie Salter) in my article Contempt, Confidentiality and the Courts.

The Harman Rule prohibits, absent leave of the court, the use of documents or information gained via the compulsory processes of the court for any purpose other than the proceedings in which the documents or information were disclosed.  It is frequently referred to as the “implied undertaking” to the court which arises when a party receives documents in connection with one of the Court’s processes.

In Katanga Developments Pty Ltd v Bokarelli (2015/259712) one of the parties served an affidavit on the other parties, but the party had yet to read (in essence, formally seek to rely on) the affidavit in open court.  The affidavit contained previously unknown information that another party to the proceedings then used to successfully issue a garnishee notice and obtain a six figure sum.

Two of the defendants in the proceedings, who had suddenly been deprived of the the benefit of the garnisheed money, brought a motion seeking to reverse the effect of the garnishee notice.

Her Honour Olsson J reportedly had the following exchange with the solicitor for the party which had issued the garnishee notice, referred to only as Mr C:

Olsson J: “So you used material in an affidavit that was served but yet to be deployed in the proceedings ergo still privileged to mount a garnishee order application?

Mr C: “Yes I did”.

Olsson J: “And you did not seek leave of the Court to use material that you had obtained in the process of this litigation to move another Court with material from it?”

Mr C: “I did not”

Olsson J: “Do you see the difficulty, Mr C?”

Her Honour’s unpublished judgment on the motion ordered that the funds obtained via the garnishee notice be returned.  It is not known if a costs order was made and if so, against whom.

This decision should serve as a valuable reminder to all of those frequently involved in ligation of the practical effect of the Harman Rule, and why it should never be ignored.

First published at ERA Legal.  Thanks to Beau Weigand for his assistance.