In the matter of Normans Wines Ltd (Receivers and Managers appointed) (in liq); Harvey v Burfield

In the matter of Normans Wines Ltd (Receivers and Managers appointed) (in liq); Harvey v Burfield, the appellants, who were auditors of a public company, challenged the decision of a single Judge of the Supreme Court which dismissed their application to discharge an order made by a Master. The company had appointed voluntary liquidators and was subsequently wound up. The respondents in this case are the liquidators of the company who had applied to a Master for the issue of a summons to examine the auditors about the examinable affairs of the company and for the production of documents pursuant to section 596B of the Corporations Act 2001 (Cth). The liquidators filed affidavits deposing to the purpose of the application that referred to confidential affidavits filed by the liquidators in previous applications for examination. The Master made orders for examination and production of documents. The auditors applied to a single Judge of this Court for an order discharging the order of the Master or for an order that the auditors be permitted to inspect the confidential affidavits. The Judge dismissed the application and the auditors appealed against the decision of the single Judge. The legal issues the court was required to decide included whether the Judge erred in his findings of fact, whether the discretion to order examination and production of documents should not have been exercised because the auditors made offers to cooperate with the liquidators and to answer questions, whether the auditors discharged the onus of establishing an arguable case that the liquidators had a sole or dominant improper purpose when applying for the orders, whether the predominant purpose of the auditors was to assist a separate company in its investigations of claims against the auditors in a separate action, and whether the auditors should be permitted to inspect the confidential affidavits filed by the liquidators. The court's reasoning and outcome was that the appeal was dismissed by majority. The court found that the offer to cooperate by the auditors fell far short of the advantages offered by an examination, and the examinees required notice in writing of the proposed questions and there was no unqualified commitment to respond to the questions that may be asked. The court also found that the offer of cooperation was disclosed to the Master and there was nothing to suggest that the Master did not take it into account. The court concluded that an order should be made that the confidential affidavits be produced to the examinees and Deloitte, and if upon production no further matters of substance arise, the appeal should be dismissed. The court also found that the liquidators were entitled to disclose part of the contents of the confidential affidavits without being obliged to produce the entire affidavits. The court rejected the submission that partial disclosure gave rise to any waiver of confidentiality on principles akin to waiver of privilege. The appeal was dismissed for the reasons given by Mullighan J. The final orders of the court were that the application of the examinees and Deloitte to set aside the examination and production orders was dismissed. The judge rejected the submission that the liquidators had failed to make full and frank disclosure or that an arguable case of improper purpose had been made out. The judge rejected an argument that there had been an offer of cooperation that negated the need for an order. The judge considered that the liquidators were entitled to disclose part of the contents of the confidential affidavits without being obliged to produce the entire affidavits. He rejected the submission that partial disclosure gave rise to any waiver of confidentiality on principles akin to waiver of privilege.