Re Octaviar Administration Pty Ltd (in liq)

[2014] NSWSC 344

Supreme Court

New South Wales

Medium Neutral Citation:	In the matter of Octaviar Administration Pty Ltd (In Liquidation) [2014] NSWSC 344
Hearing dates:	25 March 2014
Decision date:	28 March 2014
Jurisdiction:	Equity Division
Before:	Ball J
Decision:	See paragraphs 21 to 23 of this judgment.
Catchwords:	PROCEDURE - civil - when a court should grant leave to access judgment material the subject of a suppression order - whether a party has sufficient interest in the question whether a suppression order should have been made - whether public interest in open justice outweighs public interest in the due and efficient administration of insolvent companies - whether confidential material should be redacted
Legislation Cited:	Corporations Act 2001 (Cth) Court Suppression and Non-Publication Orders Act 2010 (NSW) Practice Note SC Gen 2
Cases Cited:	Deloughery v Weston [2010] NSWCA 148 Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher [2011] FCAFC 89 John Fairfax & Sons Ltd v Police Tribunal (NSW) (1986) 5 NSWLR 465 Hogan v Australian Crime Commission [2010] HCA 21; (2010) 240 CLR 651 McGrath & Anor Re HIH Insurance Ltd & Ors [2005] NSWSC 731 Rinehart v Welker [2011] NSWCA 403
Category:	Interlocutory applications
Parties:	William John Fletcher and Katherine Elizabeth Barnet (First Plaintiffs/First Respondents) Octaviar Administration Pty Ltd (in liquidation) (Second Plaintiff/Second Respondent) Fortress Credit Corporation (Australia) II Pty Limited (Applicant)
Representation:	Counsel: N Hutley SC with CN Bova (Applicant) B Coles QC with S Aspinall (Respondents /Plaintiffs) Solicitors: Baker & McKenzie (Applicant) Henry Davis York (Respondents/Plaintiffs)
File Number(s):	2012/89484
Publication restriction:	Nil

Judgment

1. On 30 March 2012, Hammerschlag J on the ex parte application of the liquidators of Octaviar Administration Pty Ltd (in liquidation) (OA) (the Liquidators) made orders pursuant to s 477(2B) of the Corporations Act 2001 (Cth) (the Corporations Act) approving the entry by the Liquidators into a litigation funding deed with Octaviar Limited (Receivers and Managers Appointed) (in liquidation) (OL) in respect of proceedings commenced by OL in Queensland against Fortress Credit Corporation (Australia) II Pty Ltd (Fortress). The Liquidators are also the liquidators of OL. The approval was necessary under s 477(2B) because the litigation funding deed was an agreement entered into on OA's behalf which may end more than 3 months after it was entered into. Hammerschlag J also made an order pursuant to s 479(3) of the Corporations Act directing that the Liquidators were justified in entering into the litigation funding deed.

1. At the same time as making those orders, Hammerschlag J made the following orders:

(b) Until further order of the Court, the Second Affidavit of Katherine Elizabeth Barnet, sworn 19 March 2012, and Exhibit "KEB-2" to that affidavit be kept confidential and not be disclosed without leave of the Court.

(c) Until further order of the Court the reasons for judgment delivered this day remain in the court file in a sealed envelope marked "Confidential", not be accessed by any person and not be posted on the Caselaw New South Wales website.

(d) Until further order of the Court the transcripts of this proceeding, including the written submissions dated 20 March 2012 provided by counsel, not be provided to any non-party to this proceeding and be kept in the court file in an envelope marked "Confidential".

1. By notice of motion filed on 28 February 2014, Fortress seeks an order granting leave to it to access and to copy the material referred to in paras (b) and (c) of the orders made by Hammerschlag J. It does not seek access to the material referred to in para (d).

1. There is a question whether Hammerschlag J made the orders he did relying on the Court Suppression and Non-Publication Orders Act 2010 (NSW) (the Suppression Act) or the inherent power of the court. However, it was not suggested that different principles apply depending on the answer to that question.

1. Section 8(1) of the Suppression Act provides:

A court may make a suppression order or non-publication order on one or more of the following grounds:

(a) the order is necessary to prevent prejudice to the proper administration of justice,

(b) the order is necessary to prevent prejudice to the interests of the Commonwealth or a State or Territory in relation to national or international security,

(c) the order is necessary to protect the safety of any person,

(d) the order is necessary to avoid causing undue distress or embarrassment to a party to or witness in criminal proceedings involving an offence of a sexual nature (including an act of indecency),

(e) 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.

1. The relevant principles at common law were stated by McHugh JA (Glass JA agreeing) in these terms in John Fairfax & Sons Ltd v Police Tribunal (NSW) (1986) 5 NSWLR 465 at 476-7:

The fundamental rule of the common law is that the administration of justice must take place in open court. A court can only depart from this rule where its observance would frustrate the administration of justice or some other public interest for whose protection Parliament has modified the open justice rule. The principle of open justice also requires that nothing should be done to discourage the making of fair and accurate reports of what occurs in the courtroom. Accordingly, an order of a court prohibiting the publication of evidence is only valid if it is really necessary to secure the proper administration of justice in proceedings before it. Moreover, an order prohibiting publication of evidence must be clear in its terms and do no more than is necessary to achieve the due administration of justice. The making of the order must be reasonably necessary; and there must be some material before the court upon which it can reasonably reach the conclusion that it is necessary to make an order prohibiting publication. Mere belief that the order is necessary is insufficient.

This passage was approved by Bathurst CJ and McColl JA in Rinehart v Welker [2011] NSWCA 403 at [29].

1. As the High Court pointed out in Hogan v Australian Crime Commission [2010] HCA 21; (2010) 240 CLR 651 at [30] "necessary" in the context "is a strong word".

1. Fortress claims that it has an interest in obtaining access to the material the subject of the suppression orders made by Hammerschlag J because, as a party against whom the proceedings the subject of the litigation funding deed are brought, it has an interest in the substantive orders made by his Honour and, in particular, it has an interest in seeing the material for the purpose of determining whether it should make an application for leave to appeal against the orders made. In support of that submission, it points out that it was previously successful in the Full Court of the Federal Court of Australia in having orders made by Stone J giving approval to the Liquidators entering into an earlier funding agreement between OA and OL set aside: see Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher [2011] FCAFC 89.

1. Fortress takes issue with the notion that suppression of all the material to which Hammerschlag J had access, and suppression of the judgment itself, could be necessary to attain any of the objects set out in s 8 of the Suppression Act and, in particular, the object of securing of the proper administration of justice. It accepts that the documents to which it seeks access may contain confidential or privileged material to which it should not have access. However, it submits that that material could be redacted.

1. The liquidators resist any variation of the orders made by Hammerschlag J. They do so on 2 bases. First, they submit that Fortress does not have a sufficient interest to make the application. Its speculation or suspicion that Hammerschlag J's decision was wrong is not sufficient to give it that interest. Second, they submit that the suppression order was properly made and should remain in place.

1. In making the submission that Fortress does not have a sufficient interest in the orders made, the Liquidators place considerable reliance on the decision of the Court of Appeal in Deloughery v Weston [2010] NSWCA 148. In that case, the special purpose liquidator (SPL) of One.Tel Ltd sought orders under ss 477(2B) and 511 of the Corporations Act approving the SPL's entry into a number of agreements. The liquidator also sought directions to the effect that the SPL was justified in entering into one of those agreements without the prior approval of the committee of inspection and was justified in not providing the committee of inspection with certain information. The application was heard on 14 May 2010 by Barrett J (as he then was) who, at that time, made the orders and gave the directions sought by the SPL. At the same time, his Honour also made orders that the relevant interlocutory process, the evidence, the transcript and submissions be kept confidential and not be disclosed to any person other than the SPL and his lawyers without an order of a judge. Several days later, on 20 May 2010, Barrett J gave reasons for his decision and made an order that, until further order, those reasons remain in the court file in a sealed envelope marked "Confidential", that they not be accessed by any person and that they not be posted on the Caselaw website. At the same time, his Honour also published separate reasons in which his Honour gave reasons for his conclusion that the SPL was entitled to make the application he did ex parte and his conclusion that neither the committee of inspection nor the general body of creditors had any right that would be affected by the application.

1. Subsequently, 3 members of the committee of inspection made an application for access to the court file including Barrett J's judgment. They also sought an order that the orders made by Barrett J be set aside. That application came before White J who took the view that in substance the application was an appeal from the decision of Barrett J that the committee of inspection and the creditors of One.Tel were not entitled to be heard on the SPL's application. For that reason, his Honour ordered that the SPL's original application and the committee of inspection's application be removed to the Court of Appeal. The Court of Appeal concluded that Barrett J was right to conclude that the committee of inspection was not entitled to be heard on the SPL's application. Consequently, it dismissed the interlocutory application that had originally come before White J. It referred the interlocutory application for access to the judgment to Barrett J pursuant to the leave that his Honour had granted.

1. The decision in Deloughery v Weston is not inconsistent with the proposition that Fortress has an interest in obtaining access to material that is the subject of the suppression order made by Hammerschlag J. In Deloughery v Weston, the primary question before the court was whether the orders made by Barrett J should be set aside because the committee of inspection had been denied an opportunity to be heard. The Court of Appeal upheld Barrett J's conclusion that the committee of inspection was not entitled to be heard on the SPL's application. For that reason, it was not prepared to set aside the orders made by Barrett J on 14 May 2010. As Giles JA and Handley AJA (with whom Spigelman CJ agreed) said (at [60]):

The applicants only sought order 6 at this stage and said that, having seen the Agreement, they could decide whether to go further. That is misconceived. The basis for their application was that Barrett J's orders were vitiated because they had been denied their right to be heard. If that were so, the orders would be set aside, as was claimed in order 9, and the SPL's application would have to be reheard. The SPL could withdraw it, or ask the court to mould a confidentiality regime. Had the applicants' submissions been upheld, the result would not have been an order for immediate access to the Agreement.

Despite that conclusion, the court did refer to Barrett J the question whether the orders made by his Honour on 20 May 2010 should be set aside pursuant to the leave granted by those orders.

1. In the present case, the question is whether Fortress has a sufficient interest to set aside suppression orders made by Hammerschlag J. Unlike the committee of inspection in Deloughery v Weston, Fortress is not seeking at present to challenge the substantive orders. Its claim is simply that, as an entity affected by Hammerschlag J's orders, it has a sufficient interest in the question whether the suppression order should have been made. For the reasons it advances, I accept that submission.

1. As to the question whether the suppression order should remain in place, the Liquidators accept the principle stated in s 6 of the Suppression Act that "a primary objective of the administration of justice is to safeguard the public interest in open justice". However, in their submission, that principle must be balanced against the public interest in the due and efficient administration of insolvent companies. Proceedings under s 477(2B) of the Corporations Act are not adversarial in nature. Rather, they are proceedings by which the court exercises a supervisory role over its officers (in this case, the Liquidators). In their submission, that supervisory role is analogous to the supervisory role the court exercises over trustees when it gives judicial advice. It is a role that often involves liquidators placing confidential and privileged information before the court and the confidentiality of that process is necessary to protect its integrity.

1. In my opinion, no special principle applies to the exercise of the court's function under s 477(2B). The exercise of that function is as much a part of the administration of justice by the court as the resolution of adversarial proceedings. The exposure of the court's processes to public scrutiny is an important mechanism by which public confidence in the integrity of the judicial system is maintained. The need for that public confidence applies equally to proceedings embarked on by the court that are not adversarial in nature. That is particularly so where the proceedings involve the supervision of a public officer who performs the important social function of ensuring that the affairs of an insolvent company are wound up in an orderly manner in accordance with the law.

1. That is not to say, however, that there are not particular features of an application under s 477(2B) which may require particular orders concerning confidentiality. Necessarily, in an application of that type a liquidator is more likely to place confidential information before the court in discharge of his or her obligation to make full disclosure to the court of information relevant to the court's decision. The risk of inadvertent disclosure of that information and the difficulty of explaining to the court the relevant issues without expressly disclosing confidential information may justify an order that the court be closed: see, for example, McGrath & Anor Re HIH Insurance Ltd & Ors [2005] NSWSC 731. Similarly, to the extent that confidential information is placed before the court, it may be necessary to make orders restricting access to that confidential information. As a practical matter, it may be sensible to make general orders of the type made by Hammerschlag J, together with a grant of liberty to apply, rather than to require a liquidator to expend time and money identifying material that should be redacted because it is confidential on the off chance that someone who is entitled to obtain access to the non-confidential material seeks to exercise that entitlement. However, once the application is made by a person with sufficient interest, the onus is on the Liquidators to satisfy the court that the suppression orders were properly made.

1. In the present case, Fortress seeks access to 2 types of material. One is the judgment itself. Another is the material that was admitted into evidence.

1. There is no reason in principle why Fortress should not have access to those documents subject to the redaction of any material that could properly be regarded as confidential. Disclosure of those documents on that basis is consistent with Practice Note SC Gen 2. Paragraph 7 of that Practice Note states:

Access will normally be granted to non-parties in respect of:

• pleadings and judgments in proceedings that have been concluded, except in so far as an order has been made that they or portions of them be kept confidential;
• documents that record what was said or done in open court;
• material that was admitted into evidence; and
• information that would have been heard or seen by any person present in open court,

unless the Judge or registrar dealing with the application considers that the material or portions of it should be kept confidential. Access to other material will not be allowed unless a registrar or Judge is satisfied that exceptional circumstances exist.

1. Disclosure of the judgment and material admitted into evidence is necessary to understand the reasons for the orders made by Hammerschlag J and an understanding of those reasons is an essential aspect of the principle of open justice. On the other hand, it is difficult to see why the interests of the Liquidators cannot be adequately protected by redaction of confidential information.

1. I have read the judgment of Hammerschlag J. Much of it, at least, does not appear to me to be confidential. However, before making any order for the disclosure of that judgment or parts of it, and the evidence placed before Hammerschlag J, it is appropriate to give the Liquidators an opportunity to make submissions on which parts of the material to which access is sought is confidential and should remain the subject of a suppression order. Without intending to be exhaustive, that material would include material that would put the Liquidators in a disadvantageous position compared to that of an ordinary litigant. Disclosure of material of that type would not be conducive to the proper administration of justice. Fortress accepts that the court should hear submissions from the Liquidators on the question of confidentiality in its absence.

1. The matter should be stood over to a day in the week commencing 31 March 2014 to permit that to happen.

1. Fortress has been largely successful on its motion. In those circumstances, the respondents to the motion should pay its costs.

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