Chand v Azurra Pty Ltd

Judgment - ex tempore 1I delivered judgment on 10 April 2013 ([2013] NSWSC 422) indicating that I was not then prepared to make orders in the form then sought by the liquidator of ACN 067 436 024 Pty Limited ("Company") in respect of transcripts of examinations as to which confidentiality orders had been made, in the absence of any offer of confidentiality undertakings to the Court by third parties to whom access was to be provided. I noted that it did not seem to me desirable for the Court to make orders granting access to third parties, and making orders as to confidentiality seeking to bind them, where they were not party to the proceedings, where it would be much more straightforward for those parties simply to offer a confidentiality undertaking to the Court in the usual way. 2The liquidator has now brought an application that he be permitted to provide the transcripts of examinations of Messrs McCarthy and Seller to a Mr Brent, who is a potential funder of proceedings which may be brought by the liquidator or by the Company, to permit Mr Brent to consider whether to fund the proposed proceedings. That application is straightforward in its character, and a similar order granting a funder access to an examination transcript was made, for example, in Walker v Commonwealth Bank of Australia [2012] FCA 40; (2012) 87 ACSR 106. While these proceedings involve the further complexity of subsisting criminal proceedings against Messrs McCarthy and Seller, it does not seem to me that the making of the transcripts of examination available to Mr Brent, subject to the confidentiality undertaking which is offered, would be inconsistent with the maintenance of Messrs McCarthy's and Seller's rights or would prejudice their defence in the criminal proceedings. Mr Bruckner, who appears for Mr McCarthy, does not contend to the contrary. 3The form of order which is sought, so far as access to Mr Brent is concerned, seems to me to reflect a proper compromise between Mr Brent's legitimate interest in considering whether to fund the proceedings, the liquidator's legitimate interest in the potential pursuit of the proceedings in creditors' interest, and the protection of the rights of Messrs Seller and McCarthy as defendants to criminal proceedings. 4The proposed orders also provide a notification regime so that, if any defendant to the proposed proceedings or third party seeks copies of access to documents in connection with the proposed proceedings, notice will be given to Messrs McCarthy and Seller of that access. Mr D'Arville, who appears for the liquidator, notes that an application may then be made to this Court or another Court so as to permit such access. It seems to me that that course is again an appropriate one, so far as it preserves Messrs McCarthy and Seller's rights to be heard in respect of an application for such access. As I noted in my earlier judgment, it may well be that access could be granted in those circumstances, for example to facilitate any settlement discussions in respect of the proposed proceedings, on terms that undertakings are given by the person seeking such access which will again properly protect the interests of Messrs McCarthy and Seller as defendants in the criminal proceedings. 5In these circumstances, I consider that I should make orders in the form of paragraphs 1 and 2 of the orders sought by the liquidator. The liquidator seeks an order that the interlocutory application filed 7 March 2013 otherwise be dismissed, and I consider that order is appropriate. Finally, the liquidator seeks an order that his costs of the interlocutory process be costs in the winding up of the company. It seems to me that order is also an appropriate order. While the liquidator was not successful in respect of his earlier application to the Court, that arose in circumstances that the Court had reservations as to the process which was to be adopted, and the application was not brought unreasonably and indeed was not opposed by Messrs McCarthy and Seller when it was brought. The application now made reflects a proper reaction to the concerns which the Court had raised and, in these circumstances, I can see no reason why the liquidator should be deprived of the usual order that his costs be costs in the winding up. 6Accordingly I will make orders in accordance with the short minutes of order initialled by me and placed in the file. Costs of Mr McCarthy 7As I have noted above, the liquidator of the Company sought certain orders under ss 596F and 597 of the Corporations Act 2001 (Cth). The liquidator initially sought orders that he be released from confidentiality attaching to records of examination of Messrs McCarthy and Seller and certain documents produced in their examinations, although orders in that form were ultimately not pressed when the matter was heard before me. When the matter was heard, orders in a narrower form that had been the subject of discussions between the liquidator and Mr McCarthy were sought. The Court ultimately did not grant those orders, for reasons which I indicated in my judgment delivered on 10 April 2013 ([2013] NSWSC 422). The Court has today granted narrower orders sought by the liquidator, on a somewhat different basis. 8A question as to costs has arisen between the liquidator, on the one hand, and Mr McCarthy, on the other. Mr McCarthy puts an application for costs on two bases. The first is that, he contends, costs should follow the event. He relies, in that regard, on the wider application initially raised by the liquidator in its interlocutory application, although ultimately not the subject of argument before me. He puts that wider application had been pressed, at least in dealings between the parties, although it was not pressed when the matter was ultimately before the court. Alternatively, he puts his application for costs on the narrower basis that the liquidator sought what could be characterised as an indulgence from the court, namely a release or limitation of orders restricting the use of transcripts for examination, and ought to pay Mr McCarthy's costs of appearing in respect of that matter. 9There was no debate, when the matter was listed before me, as to the capacity in which Mr McCarthy appeared. It may be that he was, strictly, a party to the interlocutory process, so far as he was a person whose interests would be affected by the form of relief that was sought. Even if he was not party to that process, he was plainly a person who was entitled to be heard, and could have been granted leave to be heard without becoming a party, under r 2.13 of the Supreme Court (Corporations) Rules 1999 (NSW). 10It seems to me that the liquidator ought to be ordered to pay Mr McCarthy's costs of the application on two bases. I do not consider that an analysis based on the principle that the costs should follow the event is of particular assistance, where, at least by the time the matter was heard before the Court, the liquidator and Mr McCarthy had reached substantially common ground as to the form of orders which should be made, although the Court was ultimately not prepared to make them in that form, and although the liquidator reserved the right to seek the wider orders. However, it is well recognised that, where a party seeks a dispensation from the court, it will generally be required to pay the costs of other parties which need to be notified of the claim and have acted reasonably in respect of the claim: Chand v Azurra Pty Ltd (in liq) [2011] NSWCA 58. While that principle was there applied in respect of a liquidator's costs of an application, it seems to me that it is equally applicable in the present case where Mr McCarthy was joined as party and made reasonable submissions in respect of the application. I do not consider that the decisions in Walker v Commonwealth Bank of Australia above or Re Clarecastle Pty Ltd (in liq) [2011] NSWSC 553; (2011) 251 FLR 225 are to the contrary. In the former case, the judgment does not refer to an application for costs having been made by the examinee and it is accordingly not authority that such an application would not have been granted had it been made. In the latter case, costs were not ordered in favour of the examinee because he was substantively unsuccessful in respect of the position he had put. 11The second basis on which costs might be ordered, even if Mr McCarthy's role was only as a person being heard in respect of the application under r 2.13 of the Corporations Rules, is that Mr McCarthy made submissions which were relevant and helpful to the Court in reaching its decision and, in those circumstances, the Court may make an order even in favour of a non-party for payment of costs under r 2.13: see, for example, Re HIH Casualty v General Insurance Ltd [2006] NSWSC 6, where Barrett J made such an order in favour of non-parties who had made helpful submissions in respect of an application before the Court. 12It seems to me that Mr McCarthy's role in this matter was helpful and constructive, both in respect of the attempt to reach a resolution with the liquidator as to the form of orders which should be made, and in respect of the submissions which had been made before the Court as to the issues arising from the form of order which was ultimately sought. In these circumstances, while I do not consider that the case can properly be described as one where the liquidator was unsuccessful and Mr McCarthy was successful, it seems to me that it can properly be described as one where Mr McCarthy's role was necessary and helpful to the resolution of the matters before the Court. I propose to order that the liquidator pay Mr McCarthy's costs of the interlocutory application, as agreed or as assessed, such costs to be treated as an expense falling within s 556(1)(a) of the Corporations Act. Neither party sought to be heard further in opposition to that form of order. 13Accordingly, I make the following order: