REASONS FOR JUDGMENT
1 The liquidators of Launcells Feedlot Systems Pty Ltd in liquidation (the company) have applied for the issuing of summonses, either to give evidence or produce documents or both, and also for the approval of their entering into certain agreements. The need for that approval arises because the agreements concerned may end or the obligations of a party to the agreements may be discharged more than three months after entering into those agreements. There is, therefore, a need, in light of that, for the liquidators to seek and obtain the Court's approval under s 477(2B) of the Corporations Act 2001 (Cth) (Corporations Act).
2 The nature of the proposed examinations and productions is such as to be inherently intertwined with a proposed course of recovery for the benefit of the creditors at the company by litigation or reasonable compromise. That intertwining is such that to disclose those who are proposed to be examinees or subject to an obligation to produce documents or both, would have a tendency to prejudice the administration of justice in terms of either successful recovery by litigation or successful recovery by compromise of litigation.
3 In so far as the application touches upon proposed examinations and obligations to produce documents, I am satisfied that there are persons proposed for examination whose examination the liquidators are entitled, as a right, to seek by virtue of s 596A of the Corporations Act and others in respect of whom I am satisfied, for the purposes of s 596B, that they may be able to give information about the examinable affairs of the corporation. That satisfaction extends to persons falling within the latter class who may be able to give evidence as to the worth of a potential defendant so as to enable the liquidators better to make a practical value judgment as to the likelihood of a return to the company in the event of the commencement of the litigation proposed: see as to the latter consideration, Grosvenor Hill (Qld) Pty Ltd v Barber (1994) 48 FCR 301 at 306-307.
4 I am also satisfied, in so far as production alone is sought, that the proposed recipient of a summons to produce is someone who may be able to produce documents which are relevant to the examinable affairs of the company. In expressing satisfaction in respect of the summonses I have expressly taken into account the scope of the obligation entailed, which appears respectively in the schedule to each of the summonses.
5 The proposed summonses are, in draft form, exhibited to an affidavit made on behalf of the liquidators by one of them, Ms Anne Meagher. Each of the summonses bears an appropriate annotation excluding from the obligation which is entailed in compliance that the summons that which is subject to legal professional privilege.
6 The more difficult question is whether to approve a number of proposed agreements to which the liquidators would become parties. Those agreements have become exhibits in the proceeding and are, respectively:
Exhibit 1, a proposed funding agreement as between the liquidators, the company and a particular creditor, and Russells, the solicitor's firm which acts for the liquidators (Russells);
Exhibit 2, a proposed professional services agreement as between Russells and the liquidators; and
Exhibit 3, a deed of mutual confidentiality and common interest as between the liquidators, the company in liquidation and that same creditor.
7 In addition to these exhibits, a further document was tendered and marked as an exhibit. This is an advice concerning proposed litigation furnished to the liquidators by Russells - Exhibit 4. I shall return to that advice in due course.
8 There is an application for confidentiality orders in respect of each of the exhibits, the material read in support of the application, the outline of submissions, the application and any order made on the application. The concern voiced by the liquidators which has led to the seeking of that order is the same as voiced to Justice Gilmour in Jones, Saker, Weaver and Stewart (Liquidators), in the matter of Great Southern Limited (in liq) (Receivers and Managers Appointed) [2012] FCA 1072 at [9] (Great Southern), save that in this case there is no consideration arising from the presence of confidential details of insurance policies. That aside, the affidavits of Ms Meagher and Exhibit 4, are replete with candid disclosures and considered professional value judgments, both by liquidators and lawyers, that no ordinary litigant would be required to disclose. That being so, and as Justice Gilmour observed in Great Southern at [9], the liquidators "as a matter of public policy … should not be required to publicly disclose by reason of the statutory requirement to seek directions of this Court". As his Honour observed there, that consideration "affects, objectively, the administration of justice in contrast to the particular prejudice to the Companies and their creditors".
9 His Honour's judgment in Great Southern was given at a time when the power of the court to make orders forbidding or restricting publication was found in s 50 of the Federal Court of Australia Act 1976 (Cth) (Federal Court of Australia Act). Since then, that provision has been repealed and replaced by Pt VAA of the Federal Court of Australia Act. Within that part, div 2 makes extensive provision in relation to suppression and non-publication orders, including a requirement that a suppression order or non-publication order be made on one or more of the grounds that are set out in s 37AG(1).
10 In this instance, the ground found in s 37AG(1)(a) is present in that an order is necessary to prevent prejudice to the proper administration of justice. It may be, though, that merely to make orders directed to the ability of persons other than the liquidators and their lawyers and court staff to access, without leave of the court, the originating application, the material filed in support of it, the exhibits and the outline of submissions would still admit of the possibility that an informed, inquisitive person, perhaps one potentially the subject of the proposed recovery proceedings, could learn of the nature of the application made by a federal law search, which disclosed the terms of the order sought.
11 That particular candidate for confidentiality, namely the court order, does not, in terms, appear to have been addressed in div 2 of Pt VAA of the Federal Court of Australia Act. The court, though, has, quite apart from Pt VAA, in s 23 of the Federal Court of Australia Act, power in relation to matters in which it has jurisdiction to make orders of such kinds as the court thinks appropriate. Here I consider that it would be appropriate to make an order which, until further order, prevented persons other than those I have mentioned from conducting a search which would disclose the contents of the orders made today.
12 In coming to the view I have as to a need for confidentiality, I have expressly taken into account and adopt the very helpful discussion in Great Southern by Justice Gilmour at [15] - [17]. Here, and at the risk of repetition, it would be quite prejudicial to the interests of the company and its unsecured creditors, which the liquidators seek to advance and protect, were the contents of any of the supporting materials or the exhibits or the outline of submissions or the orders to be made publicly available without an order granting leave. In other words, for the present, I accept the submission of the liquidators that it would prejudice the administration of justice not to make a confidentiality order of the kind indicated.
13 I turn, then, to the particular question of whether to approve the liquidators' entering into the agreements to which I have referred. The considerations which are pertinent are to be found summarised by Justice Gilmour in Great Southern at [29]. They are these:
1. The role of the court is to grant or deny approval to the Liquidators' proposal: Re The Bell Group Ltd (in liq) [2009] WASC 235 at [57].
2. The task of the court is not to reconsider all of the issues which have been weighed up by the Liquidators or to second guess the Liquidators' judgment. Thus the Court's role is not to determine if the Liquidators' proposal is the best available option, to develop some alternative proposal which might seem preferable or to substitute its own views for those of the Liquidators: Re The Bell Group Ltd (in liq) at [57]; Re Addstone Pty Ltd (In Liquidation) (1998) 83 FCR 583 at 593-594.
3. Rather, the court must review the Liquidators' proposal to "be satisfied that the liquidator is acting in good faith in the making of the commercial judgment in respect of which the Court is being asked to make an order": Re Addstone Pty Ltd (In Liquidation) at 594. The Court's approval of the proposal is thus not an endorsement of the proposed agreement. It is merely a permission to the Liquidators to exercise their own commercial judgment in the matter.
14 It is not for the Court, in respect of an application for approval, to micro-manage the commercial values judgments made by liquidators. Rather, as Justice Gilmour observed in Great Southern at [30] and by reference to pertinent authority:
If the court is satisfied that in entering into the Funding Agreement, the Liquidators have acted in good faith and for proper purposes the Court will give the Liquidators considerable latitude in exercising their commercial judgment.
15 Later, his Honour identified, at [32], in a non-inclusive way, factors which are relevant to the exercise of the court's discretion:
1. the nature and complexity of the matter and the risks involved in pursuing a claim or claims;
2. the prospects of success of the proposed action;
3. the amount of costs likely to be incurred in the conduct of the action and the extent to which the funder is to contribute to those costs;
4. the extent to which the funder will contribute towards the opponent's costs in the event that the action is not successful or towards any order for security for costs;
5. the circumstances surrounding the making of the contract, including the ability of the funder to meet its obligations;
6. the level of the funder's premium;
7. the extent to which the liquidators have canvassed other funding options and consulted with the creditors of the company;
8. the interests of creditors and the effect that the funding agreement may have on creditors of the company;
9. possible oppression to another party in the proceedings; and
10. the extent to which the liquidators maintain control over the proceedings.
In the end, the Court has to exercise a discretion on the facts of a particular case and there can, therefore, be no exhaustive statement of factors which are pertinent.
16 In this case, and having regard to factors which have been regarded as relevant in the past, I make the following observations: nature of the matter, risks involved and prospects of success. For all of the reasons canvassed candidly, both on behalf of the liquidators, by one of them, Ms Meagher, and also in the advice of their solicitors (Exhibit 4), the liquidators propose, in the first instance, to conduct a series of public examinations. The persons proposed to be examined and required to produce documents are persons who logically, having regard to the advice and the proposed course of recovery proceedings, ought to be examined or ought to be required to produce documents.
17 It is a reasonable and responsible value judgment that the liquidators have made to take this preliminary step. That examination and production has yet to occur provides a necessary caveat in respect of prospects of success. Those prospects, though, are nonetheless, on present materials, canvassed in the solicitor's advice. That advice canvasses both what one might term best- and worst-case scenarios. It is responsible for the solicitors so to advise and equally responsible for the liquidators to make a judgment by reference to each of those scenarios. The causes of action canvassed in the advice, as a matter of impression, appear to be causes of action that may well reasonably be open to the liquidators so as to recover funds for the benefit of, particularly, unsecured creditors.