Onefone Australia Pty Limited v One.Tel Limited

CATCHWORDS : CORPORATIONS - previous orders made by Barrett J for confidentiality of evidence and reasons given on application by special purpose liquidator in respect of appointment and entry into agreements - application by committee of inspection for access to confidential evidence and reasons - application to stay and set aside orders - issues should be determined by Court of Appeal - removal of proceedings to Court of Appeal under Uniform Civil Procedure Rules, r 1.21 - relevant proceedings for removal under r 1.21

CASES CITED : BP Australia Ltd v Brown [2003] NSWCA 216; (2003) 58 NSWLR 322 Onefone Australia Pty Ltd v One.Tel Pty Ltd [2010] NSWSC 498

Onefone Australia Pty Limited (First Plaintiff) DCA Resources Austrralia Pty Limited (ACN 086 919 351) (Second Plaintiff) Pacific Finance Group Pty Limited (ACN 062 783 813) (Third Plaintiff) PARTIES : Concept Systems (Australia Pty Limited (ACN 010 602 892) (Fourth Plaintiff) One.Tel Limited (in liquidation) (ACN 068 193 153) First Defendant Steven Sherman (Second Defendant) Peter Walker (Third Defendant) John Deloughery, Barbara Galloon, Gary Phillips, SingTel Optus Limited (Applicants)

COUNSEL : C R C Newlinds SC (Applicants) N A Cotman SC/R D Glasson (Special Purpose Liquidator)

SOLICITORS : Baker & McKenzie (Applicants) O'Neill Partners Commercial Lawyers (Special Purpose Liquidator)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

2003/86446 Onefone Australia Pty Limited v One.Tel Limited (in liquidation) JUDGMENT 1 HIS HONOUR: On 14 May 2010 the special purpose liquidator filed an interlocutory process seeking, amongst other orders, orders that the affidavits sworn in connection with the application, the transcript and written submissions be kept confidential and not be disclosed to any persons other than the special purpose liquidator and his lawyers without the order of a judge. The substantive orders sought in the interlocutory process included a variation to the terms specified as the purpose of the special purpose liquidator's appointment, and orders approving his entry into, or a direction that he is justified in entering into, certain agreements called a Release and an Agreement. 2 Orders were also sought that the special purpose liquidator was justified in entering into the Release and the Agreement without the prior approval of the committee of inspection or the creditors of One.Tel, and that he was justified in not providing to the committee of inspection or creditors of One.Tel details of the identity of the parties to the Release and the Agreement. 3 That application was heard by Barrett J in closed court. On 20 May 2010 his Honour delivered reasons which his Honour said could be published generally. It appears that his Honour gave separate reasons to which confidentiality applies. In his Honour's published reasons of 20 May 2010 (Onefone Australia Pty Ltd and One.Tel Pty Ltd [2010] NSWSC 498) his Honour said that the application concerned the funding of the litigation that the special purpose liquidator has commenced against Publishing and Broadcasting Limited and others. 4 His Honour made the orders sought by the special purpose liquidator. He dealt with the question whether the committee of inspection or the creditors had any right or expectation that would be compromised if the special purpose liquidator went ahead and took steps approved by the court under s 477(2)(B) of the Corporations Act 2001 (Cth) without consultation. His Honour answered that question in the negative. 5 His Honour also found that the members of the committee of inspection and individual creditors did not occupy any position attracting the protection of the principles of procedural fairness associated with inter alia BP Australia Ltd v Brown [2003] NSWCA 216; (2003) 58 NSWLR 322. His Honour found that the application was appropriately made ex parte and that the members of the committee of inspection and creditors were not entitled to be heard on the application. 6 On 20 May 2010 the special purpose liquidator advised members of the committee of inspection that Barrett J had delivered judgments in relation to confidential applications he had made the previous week. 7 On 26 May 2010 three individuals, who state that they are three of the four members of the committee of inspection of One.Tel, and Singtel Optus Limited, who asserts standing as a creditor of One.Tel, filed in court an interlocutory process. I made an order for short service and the application has been returned before me today. 8 The substantive relief sought in the applicants' interlocutory process of 26 May 2010 is that they be granted immediate access to the evidence put before the court on the special purpose liquidator's application of 14 May 2010 on such confidentiality arrangements as the court thinks appropriate; that they be given access to the unpublished reasons of Barrett J delivered to the special purpose liquidator; that Barrett J's orders of 20 May 2010 be stayed; and that his Honour's orders be set aside. 9 Under r 36.16(2)(b) of the Uniform Civil Procedure Rules the court has power to set aside or vary a judgment or order after it has been entered if the judgment or order has been given or made in the absence of a party, whether or not the party had notice of the hearing. There is a question as to whether the present applicants could be considered a "party" to attract the operation of that rule. Be that as it may, this is a case in which Barrett J has considered whether the members of the committee of inspection or creditors should be heard on the special purpose liquidator's application and has determined that they need not be heard. It appears to me that if a single judge were to entertain the applicants' interlocutory process by which they seek to inspect documents which are the subject of his Honour's confidentiality orders, and by which they seek to set aside his Honour's orders, the primary judge would be, in a substantial sense, sitting on an appeal from Barrett J's orders. Even the application to inspect documents, if allowed, would strike at the basis upon which Barrett J proceeded. 10 There is also a real question as to whether the applicants would have standing to appeal from his Honour's orders. Mr Cotman SC, who appears with Mr Glasson for the special purpose liquidator, submitted that the applicants would have no such standing. It is therefore not appropriate simply to deal with the present interlocutory process by saying that the applicants should seek to appeal, or seek leave to appeal, from Barrett J's orders. 11 In my view the issues raised on the applicants' interlocutory process should be determined by the Court of Appeal because that process, in substance, challenges the validity of his Honour's orders, or seeks to appeal from them. The determination of the application would require a judge to decide whether Barrett J proceeded correctly. That is not a task that a single judge of the Division ought to undertake. 12 Under r 1.21 of the Uniform Civil Procedure Rules the Supreme Court in a Division may, in relation to proceedings commenced in the Division, make an order that the proceedings be removed into the Court of Appeal if, inter alia, the court, having stated the question to be decided or determined, is satisfied that special circumstances exist, that render it desirable to make an order for their removal of the Court of Appeal. For the reasons I have given special circumstances exist. The question to be decided or determined is whether the applicants were entitled to be heard on the application brought by the special purpose liquidator on 14 May 2010 in the 2003 proceedings, and, if so, what consequence flows from their not having been heard.

13 Under r 1.21 it is the "proceedings" that are to be removed into the Court of Appeal. There is a distinction between "a proceeding" or "proceedings" and a step taken in the proceedings. "Proceedings" often means an action. The position is complicated by the Supreme Court (Corporations) Rules. Rule 2.2 of those rules provides that: " 2.2 Originating process and interlocutory process - Forms 2 and 3 (1) Unless these Rules otherwise provide, a person must make an application required or permitted by the Corporations Act to be made to the Court: (a) if the application is not made in a proceeding already commenced in the Court - by filing an originating process, and (b) in any other case, and whether interlocutory relief or final relief is claimed - by filing an interlocutory process. "

14 Proceedings were commented in 2003 as an application by Onefone Australia Pty Limited to appoint a special purpose liquidator of One.Tel Limited which was subject to a creditors' voluntary winding-up. There have been numerous applications made in that "proceeding". In a substantive sense, the special purpose liquidator's application of 14 May 2010 can be considered as a separate proceeding as he sought orders under ss 477(2B) and 511(1) of the Corporations Act which, but for the peculiarity of the rules and practice in relation to matters under the Corporations Act, would have been commenced as a separate action. Neither party suggests that the whole of the matters in the "proceeding" 5291/03 (2003/86446) should be removed to the Court of Appeal. 15 There are other interlocutory processes in that "proceeding" which are listed before Barrett J and which have no bearing on the present application. In my view, for the purposes of r 1.21, the relevant proceeding is the special purpose liquidator's interlocutory process of 14 May 2010 and the applicants' interlocutory process filed on 26 May 2010. 16 For these reasons I order that the special purpose liquidator's interlocutory process of 14 May 2010 and the applicants' interlocutory process of 26 May 2010 be removed into the Court of Appeal. 17 A question also arose in relation to orders made by Barrett J on 20 May 2010 in proceeding number 2007/255083 that the time for serving of the statement of claim in those proceedings be extended to 25 August 2010. The applicants' submitted that they were entitled to be heard before that order was made. No interlocutory process has been filed in proceeding 2007/255083. I would not, in any event, be satisfied that the same grounds exist for the applicants to argue that they were entitled to be heard on that order. But it is unnecessary to consider the matter further because there is no relevant application before me in relation to that matter. 18 I order that if and insofar as an order has been made that the interlocutory process filed by the special purpose liquidator on 14 May 2010 be kept confidential and not be disclosed to any other person, that that order, in its application to the interlocutory process, be discharged. 19 I order that the respondent to the applicants' interlocutory process of 26 May 2010 file and serve within seven days any affidavit to be relied upon in relation to that interlocutory process. I think it is a matter for the Court of Appeal to fix the applicants' interlocutory process for hearing before a judge or judges of appeal. 20 The applicants seek to have the matter brought before the Court of Appeal urgently in order for them to press their claim to have access to the documents the subject of the confidentiality orders. I think any application for an urgent listing of the matter in the Court of Appeal should be made to the Registrar. The costs of the present application will be costs in the applicants' interlocutory process.

07/06/2010 - Amendment to hearing date from 26/5/10 to 27/5/10 - Paragraph(s) 0

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.