Re Bagomba Pastoral Company Pty Ltd (in Liq) and the Corporations Law

[1999] NSWSC 902

CITATION:	Re Bagomba Pastoral Company Pty Ltd (in Liq) & The Corporations Law [1999] NSWSC 902 revised - 08/09/99
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	4235/98
HEARING DATE(S):	1 & 2 September 1999
JUDGMENT DATE:	2 September 1999
PARTIES :	Gregory Paul Kelly in his capacity as Liquidator of Bagomba Pastoral Company Pty Ltd (in Liq) (P)
JUDGMENT OF:	Hamilton J

COUNSEL :	P J Dowdy (P)
SOLICITORS:	Henry Davis York (P)
CATCHWORDS:	CORPORATIONS [322] - Supervision, regulation and correction - Examination - Scope of examination - Access to documents - Solicitor's lien not ground not to produce in answer to order under Corporations Law s 597 - Conditions on which access to documents produced will be granted; PROFESSIONS [170] - Lawyers - Liens - Possessory liens - Incidents of lien - Production - Lien not ground not to produce in answer to order under Corporations Law s 597 - Conditions on which access to documents produced will be granted.
ACTS CITED:	Corporations Law, s 597
CASES CITED:	Bolster v McCallum (1966) 85 WN (Pt 1) (NSW) 281 Hammerstone Pty Ltd v Lewis [1994] 2 QdR 267 In the Marriage of Rhode; Borthwick Butler and Yee, Intervening, (1983) 9 FamLR 159 R v Storer (1993) 111 FLR 243 Re Electronic Learning Systems International Pty Ltd (In Liq) [1988] 2 QdR 144
DECISION:	Documents ordered to be produced. Access granted on conditions.

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

HAMILTON J

FRIDAY, 2 SEPTEMBER 1999

4235/98 RE BAGOMBA PASTORAL COMPANY PTY LTD (IN LIQUIDATION) and THE CORPORATIONS LAW

APPLICATION OF GREGORY PAUL KELLY IN HIS CAPACITY AS LIQUIDATOR OF BAGOMBA PASTORAL COMPANY PTY LTD (IN LIQUIDATION)

JUDGMENT

His Honour:

1 Mr Paul Conway, solicitor, has appeared this morning in answer to an order recently made by me under s 597(9) of the Corporations Law (“the Law”) to produce documents. There had been an earlier order to the same effect. There was earlier a deal of controversy and difficulty over the production of the documents. Under the order made by me a considerable quantity of documents has been produced to the Court. This morning a further smaller number of documents, in a single orange folder, has been produced and added to the documents already held in the custody of the Court. Mr Dowdy, of counsel for the liquidator, has applied for access to the documents. The documents are required for the purposes of an examination under s 597 before a Registrar of this Court of certain persons, including officers of the company in liquidation.

2    The documents ordered to be produced by Mr Conway are documents held by him as solicitor acting for the company and for certain members of the Headon family who are associated with the company. Mr Conway has claimed a lien for costs over the documents in relation to his acting for the company and those members of the Headon family. No evidence has been laid before me of what costs are outstanding to him, and by whom, which would provide the factual basis for the existence of such a lien. However, I need not get into the question of whether a lien in fact exists, or the extent to which a lien must be established before it is given effect to by the Court in circumstances such as the present, for reasons which appear hereafter in this judgment.

3    Mr Conway initially sought not to produce the documents claimed to be held under the lien to the Court at all. I peremptorily ordered him to produce the documents to the Court, but on the basis that they would be held in the custody of the Court and no access would be granted to any person until his point about the lien had been debated. That has been debated this morning on the application by Mr Dowdy on behalf of liquidator to have access to the documents. In support of his argument that the documents should not be required to be produced to the Court at all, and that access certainly ought not be granted to the liquidator, Mr Conway has relied upon the decision of the Court of Appeal in Bolster v McCallum (1966) 85 WN (Pt 1) (NSW) 281 and particularly what was said by Jacobs JA in a passage that runs from the bottom of 283 to the top of 284.

4 Mr Dowdy presses his application for access relying on two bases, first, s 597 and, secondly, the common law. He says, first and primarily, that the terms of s 597 (10) of the Law make it plain that, whatever the common law may have been, or may be, relating to the production on subpoena of documents the subject of a lien and restriction on their use when produced, it is the intention of the legislature that such documents be produced and their proper use permitted on examinations under the Law. If this argument be correct, the terms of that subsection itself make it plain that the production and use do not of themselves destroy the lien. In support of that interpretation of the section, Mr Dowdy has drawn my attention to the decision of Williams J in the Supreme Court of Queensland in Re Electronic Learning Systems International Pty Ltd (In Liq) [1988] 2 QdR 144. What Mr Dowdy has put to me appears to me correct, from my reading of the statute. And this is supported by the decision of Williams J, which respectfully appears to me to be entirely correct in this regard.

5 It is probably not necessary, in those circumstances, for me to deal with the common law situation. However, what was said by Jacobs JA about the common law position in the passage referred to above must be read in light of the fact that the decision of the Court of Appeal was that the lien must yield to the dictates of justice and that the District Court Judge appealed from was wrong in not compelling production of and allowing access to the documents: see per Jacobs JA lower on 284 and Asprey JA at 286-7. Walsh JA at 282 agreed with Asprey JA. The production, however, should be ordered subject to such conditions as can be modelled best to protect the lien. This course is also endorsed and followed in other authorities that Mr Conway has cited to me: In the Marriage of Rhode; Borthwick, Butler and Yee intervening, (1983) 9 FamLR 159; R v Storer (1993) 111 FLR 243 and Hammerstone Pty Ltd v Lewis [1994] 2 QdR 267. However, as I say, in my view, I do not have to act under the common law because the statutory regime created by the Law prevails.

6 Just as at common law steps were taken to protect the lien so far as possible, in my view, the lien should similarly be protected where production is ordered under s 597. Mr Dowdy does not dispute this, and for that reason it is not necessary, for present purposes, to investigate to what degree the lien is established or is required to be established; Mr Dowdy is prepared, on behalf of his client, to accommodate the situation by agreeing to measures to protect the lien on the basis that the claim is made. Indeed, it may be relevant for subsequent purposes to record that Mr Dowdy states that his client has at all times been ready to come to a sensible accommodation on this subject matter. I indicated to Mr Dowdy that I thought that the protection that should be given was to the general effect that, when access is had to the documents, only such documents should be copied as are necessary for use upon the examinations already mentioned; that those copies should be used only for the purposes of those examinations; and that the liquidator should not provide copies of any of the documents to any other person, or allow any other person further to copy them. On the basis of that indication by me, conditions of access have been agreed and have been embodied in short minutes of order.

7 I should say that before access can be had, a separate argument remains to be raised on behalf of members of the Headon family, who object to access on the ground that they claim legal professional privilege in the documents, or some of them, but that claim is to be determined separately and arrangements have been made for its determination. Costs are sought on behalf of the liquidator against Mr Conway personally. Those costs are sought under Pt 42 r 7 of the Supreme Court Rules against Mr Conway in his guise as a person the subject of an order for production. Arrangements will be made for the further argument of that question of costs.

8    It remains only for me to dispose of the matter for the present by making orders in accordance with the short minutes initialled by me and placed with the papers. Full answer has not yet been made to the order for production of the documents. The matter is again before me at 10 o'clock next Wednesday, 8 September 1999 for further answer to the order to produce and I shall, at that time, make an appointment for the hearing of the costs argument.

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Last Modified: 09/08/1999