//
© 2026 Zoe. All rights reserved.
Zoe is a legal information platform. Always consult the Federal Register of Legislation for authoritative text.
[2018] WASC 81
Supreme Court of WA
2018-03-19
Mr P
Original judgment source is linked above.
1 MASTER SANDERSON: On 8 February 2018 the plaintiff issued a subpoena to Mr Simon Guy Theobald, former administrator of the defendant, requiring production of various documents relating to the sale of units and shares in the defendant.
2 In response to the subpoena, on 15 February 2018 Mr Theobald's solicitors delivered various documents to the court. These documents included a document headed 'Amending Agreement' between Shenton Engery Pty Ltd, Brockway DiCOM Facility Pty Ltd (Administrator appointed), Mr Theobald in his capacity as administrator of Brockway DiCOM Facility Pty Ltd, and other parties.
3 The Amending Agreement was produced to the court in a sealed envelope, subject to objections set out in Mr Theobald's solicitors' letter dated 15 February 2018.
4 On 23 February 2018 Mr Theobald provided the plaintiff with a redacted copy of the Amending Agreement.
5 The plaintiff objected to being provided with only a redacted copy of the Amending Agreement. On 28 February 2018, after hearing submissions on behalf of the plaintiff, Mr Theobald and the defendant, I ordered that Mr Theobald was to provide an unredacted copy of the Amending Agreement to the plaintiff. I indicated I would publish reasons for my decision. These are those reasons.
6 This action is being case managed under a commercial and managed cases regime. It is managed in conjunction with Corporations Act 2001 (Cth) matter being Western Metropolitan Regional Council v DiCOM AWT Operations Pty Ltd and Simon Guy Theobald. Although this present action and the corporation action are separate and distinct proceedings they are interrelated. Appearing under the heading 'Details of the Application' in the Corporations Act proceeding is the following:
The administration of DiCOM AWT Operations Pty Ltd (Administrator Appointed) should end (and control revert back to the company's director, or alternatively a nominee of the proposed Purchaser), subject to the administrations of Brockway DiCOM Facility Pty Ltd (Administrator Appointed) and Brockwaste WA Operations Pty Ltd (Administrator Appointed) also ending.
On the facts stated in the supporting affidavit, the Plaintiff seeks orders that:
7 In this action to date there has only been an indorsement of claim. That indorsement of claim is in the following terms:
8 The plaintiff objected to Mr Theobald redacting the Amending Agreement on a number of different grounds. First it was said that Mr Theobald had no standing to raise the objection. Mr Theobald put his objections on two grounds. In written submissions filed 27 February 2018 filed on behalf of Mr Theobald the objections were expressed in this way:
(a) relate to the disbursements of funds which are not, and have never been, an asset of the defendant;
(b) regulate the obligations of two non-parties to the litigation being the Purchaser and the Vendors (as defined);
(c) do not regulate or deal with any objections of the defendant; and
(d) further and in any event, deal with events which specifically postdate, or rely on, the ultimate resolution of this dispute.
9 In response to these submissions counsel for the plaintiff pointed out that Mr Theobald asserted no right of his own to confidentiality in the information in the redacted paragraphs and did not assert in any way that he might be affected adversely by inspection. There was no claim of privilege. On that basis counsel for the plaintiff submitted that not only did Mr Theobald not have standing to make any objection to producing an unredacted version of the Amending Agreement but there was no basis upon which such an objection could be made.
10 In my view the plaintiff's submissions should be accepted. It is always open to a third party who is required to produce a document pursuant to a subpoena to object to that production. But the grounds upon which such objection can be made are limited. The most obvious and most frequently raised objection is a claim of privilege. But commercial confidentiality is not in and of itself a ground for refusing to produce a document. It may lead to the imposition of a confidentiality regime but that is a different issue. The document itself is produced but on certain terms and conditions.
11 In this case not only was there no claim of privilege but Mr Theobald seems to be attempting to protect the interests of parties not involved in the litigation. There is no basis upon which that can be done and the objection to production of the entire document must be rejected on that basis.
12 However assuming that it was open to Mr Theobald to raise an objection to production of the unredacted version of the amended agreement it is my view production should nonetheless be ordered. The relevant principles governing the production of documents are set out in Stanley v Layne Christensen Co [2004] WASCA 50 [9] and Areva NC (Australia) Pty Ltd v Summit Resources (Australia) Pty Ltd [2007] WASC 276 [14] and [23] [24]. Inspection should only be refused if the redacted paragraphs are manifestly irrelevant. In this matter I accept the plaintiff's submission that not only are the paragraphs not manifestly irrelevant but they are relevant to the matters in issue between the parties.
13 The plaintiff put its position in this way. It was submitted the central issue of relevance in considering inspection of the Amended Agreement was whether the redacted clauses touch on the question of 'insolvency default' as defined in the Western Metropolitan Regional Council (WMRC) Waste Supply Agreement. It was submitted the issue was whether, pursuant to the Amended Agreement, DiCOM AWT Operations Pty Ltd (DiCOM) has entered into some type of arrangement involving its creditors or any of them that may be caught by the definition of 'insolvency default'.
14 For the purposes of the application there were three relevant creditors. They were first, Brockway DiCOM Facility Pty Ltd (Brockway) to which DiCOM owed $3,218,459 as an unsecured debt as at the date of Mr Theobald's s 439A report to creditors in the administration. Second, Mr Theobald who was a contingent creditor of DiCOM in respect of his administrator's fees. Thirdly, Shenton Energy Pty Ltd (Shenton) which had paid out DiCOM's eleven trade creditors to the value of $33,195.
15 Further Brockway was indebted to the vendors of the shares and units via investor loans which were unsecured loans worth $2,204,668 and to Mr Theobald for his fees. Brockway's ability to repay these debts was potentially contingent on DiCOM's ability to pay its loan to Brockway or the transaction completing.
16 On 10 February 2017 Mr Theobald and Shenton entered into Terms of Offer for the sale of the DiCOM Group. The purchase price was $8,000,000 and the transaction required Mr Theobald to ensure there was a minimum cash balance retained in the DiCOM Group of $2,000,000. By the time of the agreement these terms had been varied to a purchase price of $6,500,000 and cash at bank of $500,000. An escrow amount of $2,321,896.73 was to be deducted to provide for coverage for the WMRC claim against DiCOM. After payment of the escrow amount there was apparently sufficient purchase price remaining to discharge the investor loans and pay the administrator's fees.
17 At the second meeting of creditors of DiCOM Mr Theobald advised the meeting that Shenton was unable to complete the transaction in accordance with the agreement. The meeting was adjourned for up to 45 days. During the period of the adjournment Mr Theobald, Shenton and the vendors negotiated the Amended Agreement. Pursuant to the Amended Agreement the purchase price was reduced to $2,204,103.27 plus any future Deferred Consideration. From that purchase price an amount of $2,321,896 was required to be escrowed to cover the WMRC claim against DiCOM - that is the initial payment of the purchase price was insufficient to cover even the escrow amount let alone pay the administrator's fees or discharge the investor loans. Having inspected the redacted agreement the solicitors for the plaintiff concluded - reasonably in my view - that but for the arrangements in the redacted clauses the entire transaction would have fallen over and DiCOM Group would have been forced into liquidation.
18 From a reading of the redacted Amended Agreement it was submitted certain material provisions were clear. They were:
(a) as to Brockway, the loan owed to it by DiCOM was assigned to Shenton which as the incoming owner of shares and units had greater assets thereby benefiting Brockway;
(b) as to Brockway, it permitted Brockway to discharge the investor loans thereby removing them from the Brockway balance sheet;
(c) as to Mr Theobald, the amended agreement provided for Shenton to 'procure' payment of his fees without the necessity for court approval;
(d) as to Shenton, its loan to DiCOM was turned into additional Deposit; and
as to all of the above creditors the Amended Agreement allowed the transaction to proceed in lieu of liquidation.
19 On behalf of the plaintiff it was submitted that from these unredacted parts of the Amended Agreement there was a basis for WMRC to assert an insolvency default. I accept that submission. However, counsel for the plaintiff went further and drew certain inferences as to the content of the redacted clauses based upon the unredacted material. For the sake of completeness I should summarise these submissions.
20 In doing so I will leave to one side submissions found in par 17 of the written submissions filed on behalf of the plaintiff. That paragraph raises certain issues in relation to Mr Theobald's fees and objection was taken to it by counsel for Mr Theobald during the course of his submissions. In my view those objections were well founded and the issue raised can be put to one side.
21 Counsel submitted the redacted parts of cl 6 and cl 9 appear to relate to the circumstances in which the escrow amount is to be released and/or replaced. That appears to mean the vendors have effectively only received a promise of future consideration for the sale of the shares and units. That is because the Vendor Completion Payment goes entirely into escrow and the repayment of investor loans goes at least in part into escrow. The location of the redacted definition at page 9 of the Amended Agreement that begins with the word 'final' and expresses the last date for resolving the WMRC claim in cl 6 means there are some fetters on the right of Shenton to settle the WMRC claim and to access the escrow fund.
22 The WMRC claim is a contingent liability of DiCOM. Shenton is a creditor of DiCOM and as the parent company of DiCOM it is itself at risk in respect of the WMRC claim. The escrow fund subject to redacted cl 6 and cl 9 is an arrangement for the benefit of Shenton because it addresses the risk of the WMRC claim. DiCOM is a party to that arrangement because DiCOM is both a party to the Amended Agreement and is the contingent debtor of WMRC for which the escrow fund has been established. To the extent that the WMRC claim might be proven and the escrow fund does not respond because of the terms of cl 6 or cl 9 DiCOM may be insolvent in that it is unable to pay its debts. It was submitted the redacted clauses were clearly relevant to whether there is a current insolvency default on the part of DiCOM.
23 The General Security Deed that was produced by DiCOM by way of discovery shows Shenton has granted to the vendors a first ranking security over all of the present and future assets of Shenton including its shares in DiCOM and loans to DiCOM to secure the payment of the amounts referred to in cl 10 of the agreement. (Clause 10, it was submitted, related to payment of future tranches of deferred consideration). The plaintiff submits this is an arrangement for the benefit of all creditors of DiCOM as it is only through the deferred consideration regime the transaction could have been completed. Otherwise the DiCOM Group entities would have been liquidated. Given that DiCOM is the only operating entity in the DiCOM Group and therefore the sole source of income the provisions of the General Security Deed dealing with the establishment of and payments into a collection account (cl 7.5 and cl 7.6 of the Deed) would seem to be contemplating payments from income earned by DiCOM and charges levied against the plaintiff. Those funds would then be applied, so it was submitted, firstly to repaying part of the investor loans of the vendors which were diverted into the escrow fund and thereafter to the vendors as consideration for the sale of shares and units. It was submitted that such an arrangement is one that gives preference to certain creditors other than WMRC. It was submitted this was arguably an independent insolvency default by DiCOM as a party to the Amended Agreement.
24 It needs to be emphasised that all of these submissions made by the plaintiff were based upon the redacted version of the Amended Agreement. Effectively they amounted to extrapolations based upon what was available from the redacted version. In setting out counsel's submissions I am in no way suggesting that the Agreement was in terms as alleged. But the speculation - and it is speculation - was the only way counsel could make good his argument the unredacted copy of the Agreement should be produced.
25 In the end, as with all of these matters, it is really a question of what is in the interests of justice. The plaintiff wished to know what the actual nature of the Agreement was involving the defendant. It wanted to see the whole picture and its request was both reasonable and justified by an analysis of the redacted version of the Amended Agreement. Accordingly I ordered that a copy of the Agreement in unredacted form be provided by Mr Theobald to the plaintiff.