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Solicitors:
King & Wood Mallesons (plaintiff/ first respondent)
Andrew Priestley and Associates (second defendant, third defendant, second respondent)
Piper Alderman (liquidator/applicant)
File Number(s): 2011/85140
[2]
Judgment (ex tempore)
HIS HONOUR: On 10 October 2014, the liquidators of the company SCW Pty Limited filed an interlocutory process by which they applied for a determination of the remuneration to which they were entitled in respect of the liquidation of the company for the period 1 July 2013 to 31 May 2014, applications for remuneration for three earlier periods having previously been made and determined by the Court by order made on 18 February 2014 and varied on 14 April 2014. The present application for remuneration is for a total sum of $94,017 plus GST. Included in it is a claim for $5,970 in connection with an investigation file and report to ASIC under (Cth) Corporations Act 2001, s 533.
The plaintiffs gave notice of objection to the present application for remuneration by notice dated 15 July 2014. Their objections included an objection to the whole of the claim for $5,970, and the grounds for that objection were set out in paragraph 2.5 of the Notice of Objection, relevantly as follows:
In the affidavit the liquidator provides no explanation for this work. The plaintiffs have also written to the liquidators' legal representatives seeking an explanation for this work. No explanation has been provided. The liquidator has consistently indicated that he has not and does not intend to prepare a report under section 533 of the Corporations Act. In the circumstances the plaintiffs object to the entirety of this work.
On 9 October 2014, the liquidator made a further affidavit in which at paragraphs 47 through 54, he set out an explanation of the work to which this claim related, including that notwithstanding his earlier indication that he did not intend to prepare such a report, based on advice received from his solicitors that there was no reasonably arguable claim again Ms Cantorella in respect of the allegations made by Mr Schirato, which advice had been disclosed to the shareholders, he had - following representations by the solicitors for the plaintiffs (the Schirato interests) to the effect that he ought to lodge such a report and that by failing to do so, he was in default of his obligations - he determined to take the prudent course of preparing and lodging such a report which was completed in April 2014. He also deposes that shortly after submitting the report, ASIC informed him that it had determined not to take any action in respect of the issues raised in the report.
On 21 October 2014, the plaintiff's solicitors served on the liquidator a notice to produce for inspection under (NSW) Uniform Civil Procedure Rules 2005, r 20.10, requiring production for inspection of:
1) The report lodged with ASIC under s 533 of the Corporations Act ...; and
2) All documents recording, referring to or constituting the response to the report from ASIC ...
The liquidators' solicitors took objection to that notice on a number of grounds, including confidentiality and that the notice allowed too short a time for production. In order to overcome any complaint about the time frame, the plaintiff's solicitors issued a further notice to produce, this time to the Court under UCPR. r 34.1, on 28 October 2014, requiring production to the Court on 3 November of the same documents. By interlocutory process filed by leave in court today, the liquidators seek an order that they not be required to produce for inspection the documents referred to in the notices to produce. Having complied with the notice for production to court by producing the documents to the Court, they oppose access being granted to those documents on substantially the same grounds.
As it seems to me, the first question to be resolved is whether the documents are privileged from inspection. The contention that they are so privileged arises essentially by inference, from Corporations Act, s 1274(2)(a)(iv). The context in which that provision appears is that s 1274(1) obliges ASIC to keep such registers as it considers necessary, in such form as it thinks fit, and subsection (2) then provides that 'a person may inspect any document lodged with ASIC subject to certain specified objections, one of which is a report made or lodged under s 533'.
As it seems to me, the only function of the exceptions is to exclude them from a person's entitlement to demand that they be produced by ASIC for inspection from the register. They do not clothe with confidentiality, let alone privilege from inspection under any other process, such a document. The view that such documents are not per se entitled to some form of public interest privilege is supported by the judgment of Lindgren J in Lord v Commissioner AFP (1987) 74 FCR 61 (at [92] to [93]).
Nor, at least in the context of the present case, is it possible to conclude that the document is entitled to public interest privilege on the basis of some "contents" claim since there is absolutely nothing before the Court that would suggest that any aspect of its contents that would warrant such protection - a conclusion that is fortified by the evidence that ASIC has determined to take no further action on the report, and that the material which is likely to underlie it - namely the advices that the liquidator obtained from his solicitors - have already been disclosed to the contributories. Accordingly, no claim for privilege precludes production of the report for inspection.
The next question is that of legitimate forensic purpose, and hand-in-hand with that, relevance. As will be apparent from the history of the proceedings to which I have referred, the claim for $5,970 related to the preparation and lodgment of this report is in issue in the proceedings, namely the application for remuneration. On the one hand, the liquidator says that the claim is justified by the time spent in preparing the report at the hourly rates that the liquidator says are applicable. On the other hand, the plaintiff disputes that incurring at least as much as was incurred was justified.
It is difficult to see how the liquidators' claim can possibly be tested otherwise than by examination of the report that was prepared and lodged. The size, scope and content of that report, and the extent to which it included or contained the independent input of the liquidator as distinct from just referring to the legal advice already obtained, will all inform whether the time spent and the rates charged for that work were justified. In short, it is impossible to escape the conclusion that the report is relevant to the quantum of remuneration claimed for its preparation. Even if there is some other motive for seeking its production, its relevance to matters directly in issue in these proceedings cannot seriously be doubted, and so long as its inspection for that purpose - to inform what submissions might be made about the liquidator's claim - is one of the purposes for which its production is sought, it cannot be said that there is a lack of legitimate forensic purpose in seeking to inspect it.
That then leaves the question as to whether inspection should be permitted now or, as the liquidators submitted, deferred on the basis that the Registrar when considering the remuneration application could consider whether she or he required access to the report for the purpose of determining the application.
It would be a curious course to leave to the judicial officer determining a matter a decision whether or not to permit access on the basis of the judicial officer's view as to whether or not it would assist, let alone be necessary to, determination of the matter.
Generally speaking, in an adversarial system, the parties decide what evidence should be placed before the decision maker, rather than the decision maker deciding what evidence would or would not assist. Particularly in an application for remuneration, which may well proceed in chambers without an oral hearing and in the absence of the parties, it is desirable that the parties be able to make in advance any submissions that might be appropriate. It will not be possible for that to be done unless access is permitted to the document so that the plaintiffs can decide what if any submissions ought to be made based on its contents.
All that said, if there were any reason to think that the contents were the subject of obligations of confidentiality, or that their release would otherwise unfairly and prejudicially affect anyone, there might be some reason to defer access. But not only is there no evidence to suggest that there is anything particularly confidential or prejudicial about the contents of the report; in this case, as I have said, the solicitors' advices that underpin it have already been disclosed. The practical effect of withholding access would be to deny the plaintiff an opportunity to make submissions based on the report that the amount claimed was disproportionate to the work that was or ought to have been involved in preparation of the report. It may be, of course, that inspection of the report will show that the amount charged is an entirely reasonable charge for the work involved. In any event, the report is not privileged, is relevant, and there is no reason to defer its inspection to a later time.
The Court orders that:
1. The parties may have access to the documents produced on notice by the liquidators.
2. The interlocutory process filed on 3 November 2014 be dismissed with costs assessed in the sum of $5,500.
[3]
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Decision last updated: 11 March 2015