In the matter of Idoport Pty Limited (in liquidation)

[2015] NSWSC 1423

Supreme Court

New South Wales

Medium Neutral Citation:	In the matter of Idoport Pty Limited (in liquidation) [2015] NSWSC 1423
Hearing dates:	22 September 2015
Decision date:	22 September 2015
Jurisdiction:	Equity - Corporations List
Before:	Black J
Decision:	Orders in accordance with the short minutes of order providing for the confidentiality in respect of confidential exhibits SJS2 and SJS3.
Catchwords:	PROCEDURE – non-publication order – where confidential offer made to liquidator under a Deed of Release – whether to make a non-publication order under ss 8(1)(a) and (e) of the Court Suppression and Non-Publication Orders Act 2010 (NSW)
Legislation Cited:	- Corporations Act 2001 (Cth) - Court Suppression and Non-Publication Orders Act 2010 (NSW) s 8(1)
Cases Cited:	- Elderslie Finance Corporation Ltd v NewPage Pty Ltd (No 6) [2007] FCA 1030; (2007) 160 FCR 423 - Onefone Australia Pty Ltd v One.Tel Ltd [2010] NSWSC 498; (2010) 78 ACSR 163 - Re Bell Group [2013] WASC 409 - Re Great Southern Ltd (In Liq) [2015] WASC 171 - Re HIH Insurance Ltd [2005] NSWSC 731 - Re JN Taylor Holdings Ltd (In Liq) [2007] SASC 193
Category:	Procedural and other rulings
Parties:	National Australia Bank Limited & Ors (Plaintiffs) Idoport Pty Limited (in liquidation) (receivers appointed) (Defendant) Steven John Sherman in his capacity as liquidator of the Defendant (Applicant) National Australia Bank Limited (Party Appearing)
Representation:	Counsel: V E Whittaker (Applicant) J R Williams (Party Appearing)   Solicitors: Kemp Strang (Applicant) Herbert Smith Freehills (Party Appearing)
File Number(s):	2007/254047

Judgment – ex tempore

1. By Interlocutory Process filed 11 June 2015 Mr Sherman in his capacity as liquidator of Idoport Pty Ltd (In Liquidation) (Receivers Appointed) ("Idoport"), seeks a direction that he is justified in entering into a Deed of Release between Idoport and several other parties. He relies on his affidavit sworn 11 June 2015 filed in the proceedings in support of his application for that direction.

2. That affidavit in turn refers in paragraph 32 to a "confidential offer" made by National Australia Bank Ltd ("NAB") and to a request made by NAB that the consideration which it proposed to pay to Idoport for the release remain confidential. Mr Sherman there states that the offer from NAB is confidential and he does not propose to make the terms of it available to creditors of Idoport without the consent of NAB or as a consequence of any order this Court may make. The question for the Court at this point is not one of dealings between Mr Sherman and creditors but, as I will note below, whether a confidentiality or non-publication order should be made in respect of a copy of that offer that is sought to be tendered by Mr Sherman.

3. Mr Sherman's affidavit also refers, as confidential exhibit SJS3, to a copy of the proposed Deed of Release with NAB which he seeks the Court's direction that he would be justified entering into. Exhibit SJS4 is a copy of that confidential exhibit, with the release sum contained in the schedule masked. Accordingly, the confidentiality claimed in respect of confidential exhibit SJS3 is, in substance, to the release sum figure contained in it, since the balance of the document will be in evidence in a non-confidential form.

4. The orders for confidentiality are sought under ss 8(1)(a) and (e) of the Court Suppression and Non-Publication Orders Act 2010 (NSW). Those sections set relatively demanding standards for the making of confidentiality orders, or as they are now described in the section, suppression or non-publication orders, including, relevantly, that the order is necessary to prevent prejudice to the proper administration of justice in s 8(1)(a), or that it is otherwise necessary in the public interest for the order to be made and that public interest significantly outweighs the public interest in open justice, in s (8)(1)(e). I should pause to note the obvious proposition that confidentiality orders, or suppression orders, or non-publication orders, were never made and could not now be made under s 8(1) of the Court Suppression and Non-Publication Orders Act merely because a party requests them. That would be inconsistent with the public interest in open justice, which s 8(1)(e) of the Court Suppression and Non-Publication Orders Act recognises.

5. However, although Mr Sherman's request for a non-publication order, or a confidentiality order in this case, is plainly prompted, as his affidavit makes clear, by NAB's request that the relevant information remain confidential, it seems to me that it would be simplistic and misleading to treat the question as merely whether NAB's request should be acceded to.

6. The reason that approach is simplistic and misleading has been recognised in the case law. It will frequently be necessary for a liquidator, in the course of seeking to realise the assets of a company to the benefit of its creditors and contributories, and in order to meet the costs of a liquidation, to seek to engage in dealings with third parties. It would also be a matter of common experience that, at least in some circumstances, third parties will only be prepared to deal with a liquidator on a confidential basis, just as, as Ms Whittaker points out, parties engaged in commercial transactions may in the ordinary course agree between themselves that the terms of a particular transaction will be confidential. If a liquidator cannot agree to deal with a party on a confidential basis, or at least to use its best efforts to seek confidentiality orders in respect of a transaction, then that transaction may never take place, and that will in turn potentially prejudice the conduct of the liquidation and the interests of creditors and contributories.

7. If a liquidator can agree to deal with a third party on a confidential basis, as a matter of contract, but then cannot approach the Court for directions in respect of that dealing without disclosing the material which is the subject of that contractual confidential undertaking, then the liquidator is forced to an invidious choice between breaching any confidentiality obligation, and not exercising the right which the Corporations Act 2001 (Cth) would otherwise give it, to seek directions from the Court as to matters as to which directions are appropriately given.

8. It is in that sense, it seems to me, that this issue rises beyond the question of what a third party dealing with a liquidator wishes, to involve questions of prejudice to the proper administration of justice and the public interest. It seems to me plainly in the public interest that a liquidator ought to be able to contract with a third party on a confidential basis and ought to be able to exercise the rights which the Corporations Act provides to seek a direction from the Court in an appropriate case. Where that is in the public interest, as a general matter, the Court ought to conduct itself in a specific case so as to recognise that wider public interest. That approach is consistent with the authorities to which Ms Whittaker has drawn my attention. In Elderslie Finance Corporation Ltd v NewPage Pty Ltd (No 6) [2007] FCA 1030; (2007) 160 FCR 423 at [43] Lindgren J referred to several cases where applications by liquidators for confidentiality orders in respect of compromises for which they sought Court approval had been considered, including Re HIH Insurance Ltd [2005] NSWSC 731, and Re JN Taylor Holdings Ltd (In Liq) [2007] SASC 193. His Honour there observed that:

“The administration of justice, including the just and efficient winding up of a company, requires that proper compromises be facilitated rather than obstructed.”

9. His Honour noted in that case that the liquidator would have been entitled to bargain for and reach agreement in respect of a confidentiality regime, including where it was required by the other party to a transaction, but for the requirement for leave in that case, and that it would discourage the negotiation of compromises if such matters could not be protected by confidentiality when such leave was sought. It seems to me that his Honour's observations should be given considerable weight, both because of his Honour's experience as a corporations judge and because of the pragmatic and sensible approach which they disclose. It should also be noted that his Honour there expressly referred to the interest in the proper administration of justice being the criterion which is adopted in s 8(1)(a) of the Court Suppression and Non-Publication Orders Act.

10. Ms Whittaker also draws attention to the decision of Beech J in Re Great Southern Ltd (In Liq) [2015] WASC 171, where his Honour noted confidentiality orders are commonly made in applications of the kind there before him, namely an application by liquidators for approval to enter a settlement deed and for directions that they are justified in entering and performing that settlement deed. His Honour noted that the public interest in the due and orderly conduct of liquidations favoured the making of such orders and, absent the making of such orders, liquidators would be discouraged from engaging freely in the negotiation of such compromises. His Honour referred to several authorities which support this view, including Elderslie Finance Corporation Ltd v NewPage Pty Ltd above, and the more recent decisions of this Court in Onefone Australia Pty Ltd v One.Tel Ltd [2010] NSWSC 498; (2010) 78 ACSR 163, and Re Bell Group [2013] WASC 409.

11. In this case, by parity of reasoning with the approaches adopted in Elderslie Finance Corporation above and Re Great Southern Ltd (In Liq) above, it seems to me that it is necessary to make a confidentiality order in the form sought by the liquidator to prevent prejudice to the proper administration of justice, and alternatively on the ground that the public interest in such an order significantly outweighs the public interest in open justice. I should emphasise that does not turn upon any narrow question of what the other party to the deed of release, or the party which made the offer giving rise to a deed, wishes, but instead on the much wider question of a liquidator's ability to bargain with another party on terms that will allow confidential aspects of that bargain to be preserved and in turn to access the facility for obtaining directions as to that bargain from the Court.

12. Accordingly, I make orders in accordance with the short minutes of order initialled by me and placed in the file providing for confidentiality in respect of confidential exhibits SJS2 and SJS3.

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Decision last updated: 28 September 2015