BURKE (IN THE MATTER OF COSHOTT)
[2009] FMCA 822
•28 August 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BURKE (IN THE MATTER OF COSHOTT) | [2009] FMCA 822 |
| BANKRUPTCY – Ex parte application on behalf of the Trustee of the bankrupt estate of Mr Coshott – to inspect material on the files in the hearing of the Creditor’s Petition and the uncontested entitlement to sequestration order – contents of files relevant to the investigation by the Trustee – Registrar ruling denied access to affidavits under O.46, r.6(3) of the Federal Court Rules (Cth) – affidavits admitted into evidence and subject to cross examination – principle of open justice – Registrar’s ruling set aside. |
| Federal Court of Australia Act 1976 (Cth), s.50 Federal Court Rules (Cth), O.46, r.6 Federal Magistrates Court Rules 2001 (Cth), rr.1.05, 2.08 Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth) Federal Proceedings (Costs) Act 1981 (Cth) |
| Australian Competition & Consumer Commission v ABB Transmission & Distribution Ltd (No. 3) [2002] FCA 609 Coshott v B & W Windows Pty Ltd [2007] FMCA 981 Coshott v Shipton Lodge Cobbitty Pty Ltd [2008] FMCA 202 P v Australian Crime Commission [2008] FCA 1336 Re Universal Music (Australia) Pty Ltd v Sharman Licence Holdings Ltd; Ex parte Merlin BV [2008] FCA 783 Shipton Lodge Cobbitty Pty Ltd v Coshott [2008] FMCA 1294 Shipton Lodge Cobbitty Pty Ltd v Coshott (No.2) [2008] FMCA 1552 |
| Applicant: | JOHN CHRISTOPHER BURKE |
| File Number: | SYG 832 of 2009 |
| Judgment of: | Lloyd-Jones FM |
| Hearing date: | 9 April 2009 |
| Delivered at: | Sydney |
| Delivered on: | 28 August 2009 |
REPRESENTATION
| Solicitors for the Applicant: | Ms S Nash of Sally Nash & Co. |
ORDERS
That the decision of Segal R to refuse access to the bankrupt’s filed affidavits in proceedings –
(a)Shipton Lodge Cobbitty Pty Ltd v Coshott [2008] FMCA 1294 (SYG 590 of 2008);
(b)Coshott v Shipton Lodge Cobbitty Pty Ltd [2008] FMCA 202 (SYG 3992 of 2007); and
(c)Coshott v B & W Windows Pty Ltd [2007] FMCA 981 (SYG 1575 of 2007)
be set aside.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 832 of 2009
| JOHN CHRISTOPHER BURKE |
Applicant
And
| ROBERT GILBERT COSHOTT |
Respondent
REASONS FOR JUDGMENT
The proceedings
I have before me an ex parte application to set aside a decision of Segal R refusing access to three named Court files. Ms Nash, solicitor for the Trustee, John Christopher Burke, applied for the Court to dispense with compliance with the rule allowing for a non-party to inspect Court files. Ms Nash also applied that the Trustee be given photocopy access to the files. Finally, Ms Nash applied for costs to be paid under the Federal Proceedings (Costs) Act 1981 (Cth).
A sequestration order was made against the estate of Robert Gilbert Coshott on 7 November 2008 by Smith FM which is recorded in Shipton Lodge Cobbitty Pty Ltd v Coshott (No.2) [2008] FMCA 1552. Mr Burke was appointed Trustee of Mr Coshott’s estate. Mr Burke wrote to the Federal Magistrates Court requesting inspection of certain Court files concerning Mr Coshott. He was advised that inspection was available. On 7 April 2009, Ms Nash attended the Federal Magistrates Court to inspect the files but Segal R, who was the Duty Registrar that day, declined to grant access to any of Mr Coshott’s affidavits but did allow access to the judgments, orders, applications and notices of opposition.
Ms Nash brought the Court’s attention to two judgments of Smith FM being:
Shipton Lodge Cobbitty Pty Ltd v Coshott [2008] FMCA 1294 (2 September 2008)
Shipton Lodge Cobbitty Pty Ltd v Coshott (No.2) [2008] FMCA 1552 (7 November 2008)
On 2 September 2008, Smith FM heard an application to adjourn a Creditor’s Petition against Mr Coshott. The matter was adjourned to 7 November 2008. Relevantly in Shipton Lodge Cobbitty Pty Ltd v Coshott [2008] FMCA 1294 at [4]-[5] His Honour states:
[4] He has filed an affidavit seeking to establish this, and has been cross-examined on it. The net effect of this evidence, in my opinion, falls short of satisfying the onus of proof which Hely J discussed in Australia & New Zealand Banking Group Pty Ltd v Foyster [2000] FCA 400. Most of the “realisable” assets which he relies on are not at all shown to be “capable of ready realisation”, and his contingent assets are very far from this. He also has admitted to substantial liabilities, and there is apparently a prospect of further contingent liabilities.
[5] It is very difficult for the Court today to be satisfied that he is able to pay his debts with sufficient speed so as to disprove a presumption of insolvency arising from the absence of payment of the debt relied on in the petition. However, Mr Coshott’s evidence has raised in my mind a real possibility that he has equity in his home jointly owned with his wife, which could be drawn upon to raise sufficient cash to pay the creditor’s debt, and also to allow the speedy payment of the costs orders that he has incurred in the bankruptcy proceedings and the appeal, once those costs have been assessed.
Mr Coshott filed a Notice of Opposition and an affidavit and was cross-examined on those matters.
On 7 November 2008, Smith FM delivered the second judgment in that case and Mr Coshott did not appear when it was handed down. His Honour stated:
4. However, I was prepared to give Mr Coshott an opportunity to give proof to his optimism that he would be able to raise money to pay the applicant’s debt during a two months adjournment of the petition. He had argued that he could do this from equity which he shared with his wife in his home, or from his other assets…
On that date a sequestration order was made and a Trustee, Mr Burke was appointed by the Court to investigate for the benefit of the creditors and for public policy matters. In light of a proposed public examination, Mr Burke subsequently approached the Court to inspect certain documents. However the Registrar refused access under O.46, r.6(3) of the Federal Court Rules (Cth), there being no equivalent rule in the Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth).
Orders sought by the Trustee
1. That the decision of Registrar Segal to refuse access to the bankrupts filed affidavits in proceedings:-
(a) Shipton Lodge Cobbitty Pty Ltd v Coshott (2008) FMCA 1294 (SYG 590 of 2008)
(b) Coshott v Shipton Lodge Cobbitty Pty Ltd (2008) FMCA 2020 (SYG 3992 of 2007)
(c) Coshott v B & W Windows Pty Ltd (2007) FMCA 981 (SYG 1575 of 2007)
be set aside.
2. That the Court dispense with compliance of the rules allowing for a non party to inspect files being: -
(a) Shipton Lodge Cobbitty Pty Ltd v Coshott (2008) FMCA 1294 (SYG 590 of 2008)
(b) Coshott v Shipton Lodge Cobbitty Pty Ltd (2008) FMCA 2020 (SYG 3992 of 2007)
(c) Coshott v B & W Windows Pty Ltd (2007) FMCA 981 (SYG 1575 of 2007)
3. That photocopy access to the complete files set out in paragraph 1 be granted to John Christopher Burke, the Trustee of the property of Robert Gilbert Coshott, a bankrupt, together with his solicitor and barrister.
4. That the costs of this application be paid under the Federal Proceedings (Costs) Act, 1981 and this Court grant a Certificate to the applicant.
Evidence
The following affidavit was filed in the proceedings:
a)Affidavit of Sally Susan Nash sworn 8 April 2009
Federal Court Rules Order 46 Rule 6 – Inspection of documents
To complete an inspection of files an application is made to a Registrar under o.46, r.6 of the Federal Court Rules which states:
(6) Inspection of documents
(1) A person may search in the Registry for, and inspect, a document in a proceeding that is specified in subrule (2), unless the Court, or a Judge, has ordered that the document is confidential.
(2) For the purposes of subrule (1), the documents are:
(a) an application or other originating process;
(b) a notice of appearance;
(c) a pleading or particulars of a pleading;
(d) a notice of motion or other application;
(e) a judgment;
(f) an order;
(g) a written submission;
(h) a notice of appeal;
(i) a notice of discontinuance;
(j) a notice of change of solicitors;
(k) a notice of ceasing to act;
(l) in a proceeding to which Order 78 applies:
(i) an affidavit accompanying an application, or an amended application under subsection 61 of the Native Title Act 1993;
(ii) an extract from the Register of Native Title Claims received by the Court from the Native Title Registrar;
(m) reasons for judgment.
(3) Except with the leave of the Court or a Judge, a person who is not a party to a proceeding must not inspect any of the following documents in the proceeding;
(a) an affidavit (other than an affidavit mentioned in subparagraph (2)((l)(i);
(b) unsworn statement of evidence filed in accordance with a direction given by the Court or a Judge;
(c) interrogatories or answers to interrogatories;
(d) a list of documents given on discovery;
(e) an admission;
(f) evidence taken on deposition;
(g) [Repealed]
(h) a subpoena or document lodged with the Registrar in answer to a subpoena for production of a document;
(i) a judgment, order, or other document that the Court has ordered is confidential.
(4) Except with the leave of the Court or a Judge, or with the permission of the Registrar, a person who is not a party to a proceeding must not inspect any document in the proceeding that is not referred to in subrule (2) or (3).
(5) Except with the leave of the Court or a Judge, a party to a proceeding or other person must not search in the Registry for, or inspect:
(a) a transcript of this proceeding; or
(b) a document filed in the proceeding to support an application for an order that a document, evidence or thing be privileged from production.
(6) A party to a proceeding or other person may copy a document in the proceeding if:
(a) the document is produced by the Court, a Judge or the Registrar for inspection by the party or other person; and
(b) the Registrar gives the party or other person permission to copy the document; and
(c) the party or other person has paid the prescribed fee.
(7) In this Rule:
Native Title Registrar has the same meaning as in Order 78
Registrar of Native Title Claims has the same meaning as in the Native Title Act 1993.
Authorities
The Court’s attention was directed to published commentary contained in Thomson Service at [FCR.6.20] regarding inspection of documents which refers to Australian Competition & Consumer Commission v ABB Transmission & Distribution Ltd (No. 3) [2002] FCA 609:
Finkelstein J ordered that a non-party should be granted access to statements of agreed facts and outlines of submissions submitted jointly by the parties in proceedings commenced by the condition alleging contraventions of s.45 and s.45A of the Trade Practices Act 1974 (Cth). In ordering that access be granted His Honour held:
[7]…access should be allowed unless the interest of justice requires a different course. It is only be adopting this approach that, in a practical sense, the principles of open justice will be preserved. Put differently, in my view there is a strong presumption in favour of allowing any member of the public who wishes to do so to inspect any document or thing that is put into evidence. Inspection should only be refused in exceptional circumstances. I think the position is a fortiori when the material has been read by the judge in private and is not read out in Court.
A helpful review and summary of the relevant authorities is found in Re Universal Music (Australia) Pty Ltd v Sharman Licence Holdings Ltd; Ex parte Merlin BV [2008] FCA 783 at [30]-[44] per Jacobson J:
[30] With the exception of one authority to which I will refer later, the principles which govern the exercise of the discretion to grant access by a non-party under O 46 r 6 are to be found in cases dealing with applications by media organisations.
[31] This is hardly surprising because the principle which informs the exercise of the power is that of open justice, the underlying rationale being the belief that exposure to public scrutiny is the surest safeguard against abuse of power of the courts: see Seven Network at [21]ff; Re Richstar Enterprises Pty Ltd; ; Australian Securities and Investments Commission v Carey (No 2) (2006) 232 ALR 398 at [16]ff; Rich v Harrington (2007) 99 ALD 297 at [17]ff.
[32] In Australian Competition and Consumer Commission v ABB Transmission & Distribution Ltd (No 3) [2002] FCA 609, Finkelstein J said at [7] that the proper approach is that access should be allowed unless the interests of justice require a different course. His Honour went on to say that there is a strong presumption in favour of allowing any member of the public who wishes to do so to inspect any document or thing that is put into evidence.
[33] Sackville J has expressed his agreement with the abovementioned statements of principle by Finkelstein J: Seven Network at [25]. However, I do not think it follows that the principle is as broad as was submitted by Dr Bell SC for Merlin. Dr Bell’s submission was that, at least with respect to documents which have been admitted into evidence, exceptional circumstances are required for an application under O 46 r 6(3) to be refused.
[34] It is true that in ACCC v ABB Finkelstein J expressed the principle in terms which reflect Dr Bell’s submission. It is also true that Sackville J has expressed his agreement with the passage of the judgment; Seven Network at [25]; see also Nyangatjatjara Aboriginal Corporation v Registrar of Aboriginal Corporations [2006] FCA 606 at [14]. But in my opinion, Seven Network and other relevant authorities do not establish a rule that there must be exceptional circumstances for an application to be refused.
[35] As Sackville J observed in Seven Network at [24], O 46 r 6 does not confer a right on a non-party to obtain access to documents admitted into evidence. Leave from the Court is required. His Honour referred with approval to the statement made by Spigelman CJ in John Fairfax Publications Pty Ltd v Ryde Local Court (2005) 62 NSWLR 512 at [29] that open justice is a principle, not a “freestanding right”.
[36] The guiding principle seems to me to be as stated by Sackville J in Seven Network at [27]. His Honour there said that, unless the interests of justice require otherwise, the Court would ordinarily take the view that a non-party should have access to all non-confidential documents and other material admitted into evidence.
[37] Sackville J went on at [27] to make the important point that in each application the Court will have to take into account the particular circumstances of the case. A convenient “touchstone” will be whether the documents have been admitted into evidence. Access to that material:
… can be expected to be helpful to a person seeking to understand or explain the proceedings, or to evaluate, the court’s determination of the issues arising in the proceedings: see Seven Network at [27].
[38] This was the view taken by French J in Richstar at [18] where his Honour agreed with the observations of Sackville J in Seven Network to which I have referred in the two preceding paragraphs of my judgment. So too did Branson J in Rich v Harrington at [23]. Her Honour said that this approach recognises that the discretion under O 46 r 6 must be exercised having regard to the particular circumstances of the case.
[39] Branson J went on to say at [24] that where a non-party seeks access to material which has been relied upon by a judge, the proper approach tends more strongly in favour of public disclosure; access should be allowed save where the interests of justice require a different course. That is not identical with the exceptional circumstances test stated by Finkelstein J.
[40] ACCC v ABB is the only Australian authority to which I have referred in which access was granted to a non-party who was not a media organisation. The applicant was a non-party who sought access to a statement of agreed facts and joint submissions of the parties in proceedings brought by the Commission against a company and its executives for civil penalties for contravention of s 45 of the Trade Practices Act 1974 (Cth): see ACCC v ABB at [1]. The applicant sought access to those documents to determine whether it should bring an action to recover losses suffered as a consequence of the admitted breaches.
[41] The extension of the principle of open justice to those circumstances is perfectly understandable. The Commission’s proceedings were brought in the public interest and parties affected by the contravention ought to be given access to determine whether a private action for damages caused by the contravention would be justified. The documents sought were confined in nature. The applicant did not seek to trawl willy-nilly through the court file.
[42] The question of whether access should be granted to Merlin arises in different circumstances. The authorities to which I have referred indicate, in my view, that the discretion is one to be exercised in the interests of justice, having regard to all the circumstances.
[43] Where leave is sought to inspect documents that have not been read in open court, or at least tendered in evidence and considered by the judge as evidence or submission, the rule in my opinion is that leave will ordinarily be refused to inspect that material. This approach is consistent with that suggested by Sackville J in Macquarie Radio Network Pty Ltd v ABA [2002] FCA 1408 at [21]; cf. ACCC v ABB at [6].
[44] It is true, as Finkelstein J said in ACCC v ABB at [6] that O 46 r 6(3) does not distinguish between documents that have been admitted into evidence and those which have not. But as Santow J observed in eisa Ltd v Brady [2000] NSWSC 929, there is a risk of serious injustice if untested allegations can be published to the world at large: cited in Macquarie Radio Network at [21].
Application of the Federal Magistrates Court Rules
Federal Magistrates Court Rules 2001 (Cth), r.1.05 states:
Application
(1) It is intended that the practice and procedure of the Federal Magistrates Court be governed principally by these Rules.
(2) However, if in a particular case the Rules are insufficient or inappropriate, the Court may apply the Federal Court Rules or the Family Law Rules 2004 or the Family Law Rules 1984, in whole or in part and modified or dispensed with, as necessary.
Under r.1.06 the Court may dispense with rules:
(1) The Court may in the interests of justice dispense with compliance, or full compliance, with any of these Rules at any time.
(2) If, in a proceeding, the Court gives a direction or makes an order that is inconsistent with any of these Rules, the direction or order of the Court prevails in that proceeding.
Order 46, rule 6 of the Federal Court Rules applies in the Federal Magistrates Court by the operation of r.2.08 of the Federal Magistrates Court Rules which states:
(1) Subject to any order of the Court, the following persons may search the records of the Court relating to a family law or child support proceeding, or inspect or copy a document forming part of the records:
(a) the Attorney‑General;
(b) a party, a lawyer for a party or an independent children's lawyer in the proceeding;
(c) a person who demonstrates a proper interest in searching the records or inspecting the document and has been granted leave of the Court or a Registrar to do so.
Consideration
In accordance with the provisions of the Federal Magistrates Court Rules and in the absence of any authority indicating a contrary intention it is appropriate for this Court to adopt O.46, r.6 of the Federal Court Rules in respect of this application.
Shipton Lodge Cobbitty Ptd v Coshott [2008] FMCA 1294 at [4] indicates that the affidavit filed in those proceedings was admitted into evidence and Mr Coshott was cross-examined on its contents.
I am guided by P v Australian Crime Commission [2008] FCA 1336 at [18]-[20] where Emmett J states:
[18] In general, the Court is obliged to exercise its jurisdiction in open court. Thus, once material has been admitted into evidence, either as an exhibit or as affidavit or viva voce testimony, the principle of open justice requires that the material be open to and available for the public. That is clear from s 17(1) of the Federal Court of Australia Act, which gives statutory force to the principle that justice must be administered publicly in open court and gives recognition to the weight of public interest that attaches to that principle.
[19] However, that principle has nothing to do with material that, albeit is on the Court’s file and might be available for one of the parties to deploy at a trial or at a hearing, has not in fact been admitted into evidence. No principle of open justice requires that a person other than the parties should, in the ordinary course, have access to material that is not in evidence. The fact that the parties have filed affidavits in anticipation of a hearing does not of itself compel them to rely on the affidavits. It may be that an opposing party could tender an affidavit against the party who filed it. Such an affidavit would then be in the same category as any other evidence. Until that time, in the ordinary course, however, there is no reason why a person other than the parties should have access to the material, simply because it is on the Court’s file. In the ordinary course, exhibits to affidavits should not be filed and should therefore not be on the Court file. It is only when exhibits are tendered that they become part of the Court record.
[20] From the point of view of open justice, there is no reason to grant access to material that has not been tendered by either party or, if tendered, has not been accepted into evidence. There is no case for granting leave to the Interveners to have access to such material.
Mr Coshott’s affidavit was read into evidence. The third matter Coshott v B & W Windows Pty Ltd [2007] FMCA 981 is a judgment prepared by myself and records that two affidavits of Mr Coshott – dated 18 May 2007 and 1 June 2007 respectively – were admitted into evidence. Consequently, all the affidavits contained in the relevant files have been admitted into evidence.
None of the affidavits are subject to any claim for privilege and this issue is not relevant in this application. Nor is there any order indicating that access to any document should be protected by the operation of provisions such as s.50 of the Federal Court of Australia Act 1976 (Cth). Similarly there has been no application that the affidavits be restricted on the ground of confidentiality. The spirit of O.46, r.2 is that amongst other things a document which identifies the nature of the controversy tendered for resolution by the Court should generally be made available, unless it is confidential.
Order 46, r.6 regulates the extent to which a non-party can have access to documents contained in Court files. It does so by drawing a distinction between specified classes of documents which may be inspected without prior leave of the Court (O.46, r.6(2)) and other specific categories which a non-party “must not inspect” except with leave of the Court (O.46, r.6(3)). Similarly, transcripts may not be inspected except with leave: O.46, r.6(8). However this is not in issue in this application.
Annexed to the affidavit of Ms Nash is the affidavit of John Christopher Burke sworn on 23 March 2008 which contains a Statement of Affairs prepared and submitted by Mr Coshott. Mr Burke’s affidavit states that he has read 34 judgments involving Mr Coshott in preparation for the public examination. Mr Burke indicates that he has been informed that the 34 judgments are not necessarily all the judgments in which Mr Coshott in involved. Furthermore, a number of serious inconsistencies surfaced between those judgments and the Statement of Affairs. As a consequence of that review, the Trustee approached the Court, being aware of these inconsistencies and in light of the proposed public examination, for permission to inspect documents.
Ms Nash also applied for the contents of Mr Burke’s affidavit be kept confidential. The basis of this application was that in delivering judgment in respect of this application would be published taking into account the sensitivities of the matters raised in Mr Burke’s affidavit and in all candour about the trustee’s difficulties in accepting the current position in relation to the Statement of Affairs, the contents of Mr Burke’s affidavit should be confidential. In the circumstances and in light of the material revealed in the affidavit, confidentiality was granted.
On the material before the Court, I am satisfied that in the interests of the administration of justice that access should be granted to the affidavits contained in the three nominated Court files set out below. Consequently I set aside the decision of Segal R to refuse access (including photocopy access) to the affidavits in proceedings:
a)Shipton Lodge Cobbitty Pty Ltd v Coshott [2008] FMCA 1294 (SYG 590 of 2008)
b)Coshott v Shipton Lodge Cobbitty Pty Ltd [2008] FMCA 202 (SYG 3992 of 2007)
c)Coshott v B & W Windows Pty Ltd [2007] FMCA 981 (SYG 1575 of 2007)
The application seeks that the costs of the application be paid under the Federal Proceedings (Costs) Act. However that Act do not provide for a review of a Registrar’s decision of this Court. As the costs were incurred in the administration of a bankrupt estate, the costs should be recoverable from the estate. If the Trustee seeks to make submissions on the issue of costs, I shall grant liberty to apply.
I certify that the preceding twenty-two (22) paragraphs are a true copy of the reasons for judgment of Lloyd-Jones FM.
Associate:
Date: 28 August 2009
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