Barilla & Barilla (No 5)
[2023] FedCFamC1F 1001
•22 November 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Barilla & Barilla (No 5) [2023] FedCFamC1F 1001
File number(s): CAC 1604 of 2018 Judgment of: GILL J Date of judgment: 22 November 2023 Catchwords: FAMILY LAW – PROPERTY – Where a liquidator has been appointed for a corporate trustee – Application for approval pursuant to s 477 of the Corporations Act 2001 – Application for directions and approval pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations) 2016 – Where the liquidator seeks a confidentiality order in relation to an affidavit and letter of advice from counsel -Where creditors oppose the confidentiality – Where the material would confer an unfair advantage on the husband and wife – Confidentiality order made Legislation: Corporations Act 2001 (Cth) – s 477
Insolvency Practice Schedule (Corporations) 2016 – s 90-15
Cases cited: Krejci, in the matter of Union Standard International Group Pty Limited (No 8) [2023] FCA 1054 Division: Division 1 First Instance Number of paragraphs: 9 Date of hearing: 22 November 2023 Place: Canberra Solicitor for the Applicant: Ms Fox, Farrar Gesini Dunn Solicitor for the Respondent: Litigant in Person Counsel for the Intervener: Mr Blank Solicitor for the Intervener: Parker Coles Curtis ORDERS
CAC 1604 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS BARILLA
Applicant
AND: MR BARILLA
Respondent
MR MARRIOTT (LIQUIDATOR FOR B PTY LTD)
Intervener
ORDER MADE BY:
GILL J
DATE OF ORDER:
22 NOVEMBER 2023
THE COURT ORDERS THAT:
1.The advice prepared by Mr L for the Liquidator to be tendered in court is to be kept confidential, subject to any further order of the court and is to be maintained on the court file in a manner that secures it such confidentiality.
2.The affidavit to be tendered in court by the Liquidator dated 20 November 2023 is to be treated as confidential and is not to be released to the parties and is to be retained on the court file in a manner that safeguards that confidentiality, subject to any further order of the court.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym, Barilla & Barilla, has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
EX TEMPORE REASONS FOR JUDGMENT
GILL J
Those proceedings involve an application by the liquidator of B Pty Ltd (In Liquidation) (“the liquidator”) to obtain approval for the compromise of debt claims against the husband and wife.
These proceedings concern an application by the liquidator for approval pursuant to s 477 of the Corporations Act 2001 (Cth) to enter into a compromise of debt claims that he holds against the husband and wife in the family law proceedings. They further concern an application by the liquidator for directions and approval to be given to him pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations) 2016 in relation to his proposal to compromise statutory and equitable claims against the husband, wife and the real property that is the subject of the dispute between them in the family law jurisdiction.
In support of that application, the liquidator has filed an affidavit containing a report made to creditors. In addition to that material, the liquidator further seeks to rely upon two documents, the first being an affidavit prepared by the liquidator, but presently unfiled, that sets out a number of matters of evidence and his opinions in relation to such in so far as they deal with the compromises that he seeks to enter into. He further seeks to rely upon an advice prepared by counsel in relation to entering into the compromises. It may be observed that the nature of the compromise proposed by the liquidator is a settlement of debt, statutory and equitable claims against the husband and wife, and as against their real property by means of the wife paying a sum of $170,000. The result of which will be the cessation of claims thereafter against the husband, wife and in respect of that item of real property.
The liquidator notes that the anticipated result of settlement will be for the priority creditors to receive 3 cents in the dollar in relation to their claims and the other creditors to receive nothing in relation to their claims.
In seeking to rely upon the affidavit and advice, the liquidator seeks a confidentiality order on the basis that disclosure of that affidavit and advice would confer an unfair forensic advantage upon the husband and wife, in particular under circumstances where approval is not forthcoming from the court.
Under those circumstances that may be anticipated that further litigation will ensue in these proceedings involving contested claims against the husband, wife, and in relation to the item of real property the subject of the dispute before this court. As helpfully set out by Justice Cheeseman in the matter of Krejci, in the matter of Union Standard International Group Pty Limited (No 8) [2023] FCA 1054 such an order is not lightly to be made and must be necessary to prevent prejudice to the proper administration of justice. Her Honour noted that it is not sufficient that it merely be desirable that such confidentiality be given, that is an apt description given as her Honour also noted that a primary objective of the administration of justice is to safeguard the public interest in open justice.
Accordingly, the two creditors who have attended today have opposed the documents being clothed with confidentiality. They point to the difficulty in dealing with material that is kept secret from them and secret more generally, and note the difficulties that that presents to them in arguing the case in relation to the proposed approvals.
However, given the description of the material and noting as it was observed by her Honour that information of the kind which the liquidator now seeks to keep confidential, is routinely the subject of a court ordered confidentiality regime it may be observed that the disclosure of the material would confer unfair advantage upon the husband and wife in future litigation contrary to the interests of the company and interests of the liquidator in the pursuit of claims. It is material that has the potential to undermine the liquidator’s claims if exploited in future litigation.
Under those circumstances it is appropriate that the documents be kept confidential in the interests of justice.
I certify that the preceding nine (9) numbered paragraphs are a true copy of the ex tempore Reasons for Judgment of the Honourable Justice Gill. Associate:
Dated: 22 November 2023
0
1
2