State of Western Australia v Southern Equities Corporation Ltd (in liquidation)
[1996] FCA 1165
•1 Apr 1996
PROCEDURE - inspection of documents sought - confidentiality orders made in Supreme
Court proceedings - pending criminal proceedings - documents relevant to proceedings in
Federal Court - limited disclosure ordered.
STATE OF WESTERN AUSTRALIA v. SOUTHERN EOUITIES CORPORATION LIMITED (In Liauidationl. WARDLEY AUSTRALIA LIMITED. LAWRENCE ROBERT CONNELL, WARDELY AUSTRALIA SECURITIES LIMITED, ROTHWELLS LIMITED (In Liauidation) JAMES PHILLlP YONGE and CROSS CLAIMANTS
WAG 115. 116 and 118 of 1990
FRENCH J
PERTH
1 APRIL 1996
13iAN 1497
FEDERAL COURT OF
AUSTRALIA PRINCIPAL REGISTRY
| IN THE FEDERAL COURT | ) | ||
| OF AUSTRALIA | 1 | ||
| WESTERN AUSTRALIA | ) | ||
| DISTRICT REGISTRY | ) | ||
| GENERAL DIVISION |
|
| B E T W E E N : | STATE OF WESTERN AUSTRALIA |
Applicant
and
SOUTHERN EQUITIES
CORPORATION LIMITED
(In Liquidation)
First Respondent
WARDLEY AUSTRALIA LIMITED
Second Respondent
LAWRENCE ROBERT CONNELL
Third Respondent
WARDLEY AUSTRALIA
SECURITIES LIMITED
Fourth Respondent
ROTHWELLS LIMITED
(In Liquidation)
Fifth Respondent
JAMES PHILLIP YONGE
Sixth Respondent
and
CROSS CLAIMANTS
MINUTE OF ORDER
| JUDGE MAKING ORDER: | FRENCH J. |
| DATE OF ORDER: | 1 APRIL 1996 |
| WHERE MADE: | PERTH |
| THE COURT ORDERS THAT: |
1. The Fifth Respondent produce to the Applicant for inspection all pleadings, further and better particulars, evidence and submissions filed by the defendants in Supreme Court of Western Australia Action No. 2462 of 1990 between Rothwells Limited (In Liquidation), Plaintiff, and Alexander and Others, Defendants.
2. The above documents are to remain confidential to persons to be identified by further order following production of a minute by the Applicant.
3. Costs reserved.
NOTE: Settlement and entry of Orders is dealt with in Order 36 of the
Federal Court Rules.
| IN THE FEDERAL COURT | ) | ||
| OF AUSTRALIA | 1 | ||
| WESTERN AUSTRALIA | 1 | ||
| DISTRICT REGISTRY | 1 | ||
| GENERAL DIVISION |
|
| B E T W E E N : | STATE OF WESTERN AUSTRALIA |
Applicant
and
| S O U T H E R N | E Q U I T I E S |
CORPORATION LIMITED
(In Liquidation)
First Respondent
WARDLEY AUSTRALIA LIMITED
Second Respondent
LAWRENCE ROBERT CONNELL
Third Respondent
| W A R D L E Y | A U S T R A L I A |
SECURITIES LIMITED
Fourth Respondent
ROTHWELLS LIMITED
(In Liquidation)
Fifth Respondent
JAMES PHILLIP YONGE
Sixth Respondent
and
CROSS CLAIMANTS
| CORAM: | FRENCH J. Perth 1 April 1996 |
REASONS FOR JUDGMENT
ON MOTION FOR INSPECTION O F DOCUMENTS
These proceedings were commenced in October 1990 when the State of
Western Australia (the Applicant) filed an application claiming damages for misleading or deceptive conduct against Bond Corporation Holdings Limited, Wardley Australia
Limited, Wardley Australia Securities Limited and Rothwells Limited. Damages were
also claimed against Lawrence Robert Connell (now deceased) and James Phillip Yonge for their alleged i~lvolvement in the misleading or deceptive conduct of the corporate
respondents. A claim was also made against Wardleys and Yonge for damages for
negligent misrepresentation and as against Connell a claim for damages for deceit.
Rothwells joined KMG Hungerfords by cross claim seeking to be
indemnified in respect of any damages which Rothwells might be ordered to pay to the
State. The alleged falsity of Rothwells' financial statements for the year ended 31 July
1987 is at issue in the proceedings in this Court. KMG Hungerfords are said to have
| been auditors at the relevant time. | The cross-claim by Rothwells against KMG |
Hungerfords is based upon causes of action asserted against KMG Hungerfords which
overlap with causes of action asserted in proceedings brought against that firm in the
Supreme Court. Those proceedings are in action 2462 of 1990.
The proceedings in the Supreme Court were initiated prior to the
proceedings in this Court. In the meantime criminal charges were laid against a number
of persons including Louis James Carter, a partner in KMG Hungerfords, who is said to have undertaken audits of the Rothwells' accounts. The general nature of that charge is
set out in the Reasons for Judgment in Western Australia v. Bond Cornoration (1992) 37
FCR 150 at 172.
On 21 February 1991 the late Master Adams made an order in the Supreme
Court proceedings which included the following:
| "1. | All i~iterlocutory | applications in this action after the date |
| of this order be heard by this l~o~iourable | Court in |
| camera. |
2. Until the conclusioii of the trial of the Defendant U Carter upon charges made under Sections 412 and 420 of the Crinrinnl Code and arising out of his audit of the Plaintiff for the years 1982 to 1988 (inclusive) or uutil further order:
|
| Plaintiffs | Conunittee | of |
Inspection and any witness for a party to whom the disclosure or publicatioii of any such document is necessary in order to obtain that witness's evidence;
| (b) | no pleadings, further and better particulars, evidence or subnussions filed by the Defendants in this action, or any extract or sununary thereof, are to be published or disclosed io any other way by any person or by tlie Court to any person who is not an officer of this Court, a party or an officer of a party, a legal adviser to a party, a u~en~ber of the | ||
|
Inspection, or a witness for a party to whom disclosure or publication of any such document is necessary in order to obtain that witness's
evidence, without a variatio~i o f t l i i s o r d e r f o r confidentiality.
3. Paragraph 2 of this order shall not apply to the disclosure or publication of any docunient pursuant to any statutory notice or court order requiring such disclosure or publicatio~i, provided that tlie Defendants herein are giveii not less than 24 hours notice of any
|
4 . Tlie parties have liberty to apply 011 24 hours notice for any variation of tlie above orders."
111 the course of these proceedings I declined to direct the production of tlie
| documeiits the subject of Master Adams order for inspection. | It was, however, suggested |
| to the applicant that it apply to tlie Supreme Court for a variation of that order. | On 27 |
April 1994, Master Adams dismissed the State's application for a variation of the
confidentiality orders. The State appealed against that decision to the Full Court which varied the original confidentiality order by inserting after the words "Court order" in the third line of paragraph 3, the words "whether of this Court or of the Federal Court of Australia" and deleting the word "Court" before the word "order" being the last word in
the paragraph.
The Full Court declined to make an order which would spell out the
precise extent to which there should be disclosure of documents for the purposes of the
Federal Court proceedings. Malcolm CJ (with whom the other two Judges on the Court
agreed) said:
"In my view, having regard to what I consider to be tlie appropriate approacli to comity as between tliis Court and tlie Federal Court, that is a nutter which should be determined by the latter Coun and not by tliis Coun."
On 18 August 1995, I ordered that the applicant do on or before 31 August
1995 file and serve any motion for disclosure of documents covered by the confidentiality
orders made in the Supreme Court. A motion was so filed on 31 August 1995 and set
down for hearing on 8 December 1995.
The orders sought by the applicant, as they presently stand, are:
1. Tliat tlie Fiftll Respondent do produce to tlie Applicaiit for inspection all pleadings, further and better particulars, evidence and subniissio~is filed by the Defendants in Supreme Court of Western Australia Action No. 2462 of 1990 between Rotliwells Limited (In Liquidation), Plaintiff, and Alexander and Others, Defendants.
2. That the above docun~ents nlay be disclosed or published but are otherwise to remain confidential to tlie following persons:
|
(i) Mr T. Gotse
(ii) Mr K. Whitehouse.
3. That the costs of the motion be in the cause.
It is to be noted that the present proceedings will not be able to go to trial
until the pending criminal proceedings have been completed. That trial has been undenvay for some months and would appear to have some considerable time to run, although it may have been shortened as a result of the death of one of the accused, Mr L.R. Connell. At this stage it seems unlikely that the trial of this action will commence
before 1997.
In opposition to the motion, counsel for KMG Hungerfords asserted that
while Mr Carter had relied upon the "blanket" confidentiality order made in the Supreme Court in pleading fully various matters and swearing various affidavits, the firm of which
be is a partner had taken a more cautious approach in this Court because of the case by
case approach to confidentiality which had been adopted. It was said to be unfair if, at this point, the confidentiality on which Mr Carter had relied in the Supreme Court, were to be compromised by a requirement that the pleadings and affidavits lodged in that Court be disclosed in this. Moreover, it was suggested that the conduct of the defence in the
criminal matter might be affected by an apprehension on the part of Mr Carter arising from even the limited disclosure proposed by the applicant. That apprehension could
extend to a concern that information could be leaked to potential witnesses through later extension of authorised disclosure. Further, it was submitted that the utility of the documents sought was small and outweighed by the prejudice that even limited disclosure would generate. The applicant was also said to be embarking on a fishing expedition in seeking access to these documents.
In my respectful opinion, none of the submissions provides a proper basis
for refusing the order sought. The overlap in proceedings is such that the documents
sought may have relevance. The privilege against self incrimination is not compromised as the documents have already been filed in the Supreme Court proceedings and will, for the time being, have only limited exposure in these. Any apprehension arising on the part of Mr Carter in relation to the possible impact on the criminal proceedings of the
7.
disclosure proposed is, in my opinion, baseless and to be overcome by proper advice.
The disclosure proposed is limited and the question of further disclosure is unlikely to
arise before the conclusion of the criminal trial. Nor am I satisfied that the applicant's motion is in aid of a fishing expedition. The documents plainly have potential relevance to these proceedings. I propose therefore to make orders in terms of the motion subject to the identification of the legal advisers and other persons representing the applicant to whom the disclosure may be made and to whom it will remain confidential. I am also prepared to address the question of disclosure to legal advisers representing other parties.
I certify that this and the preceding
six (6) pages are a true copy of the
Reasons for Judgment of his Honour
Justice R. French.
| Date: | \ | \ | 149 bl |
Counsel for the Applicant: Mr J. Allanson
Solicitor for the Applicant: Mr P.A. Panegyres, Crown Solicitor for the State of Western
Australia
Counsel for the Second and Fourth Respondents: Mr J. Chaney
Solicitors for the Second and Fourth Respondents: Minter Ellison Northmore Hale
Counsel for the Third Respondent: Mr N. Gentilli
| l | Solicitors for the Third Respondent: Jackson McDonald |
| I | Counsel for the Fifth Respondent: Mr R. Douglas |
| ~ | |
| l | |
| I | Solicitors for the Fifth Respondent: Blake Dawson Waldron |
| Counsel for the Sixth Respondent: Mr G. Dean | |
| Solicitors for the Sixth Respondent: Bennett & Co. | |
| Counsel for KMG Hungerfords: Mr S. Penglis and MS Ivey | |
| Solicitors for KMG Hungerfords: Freehill Hollingdale & Page | |
| Date of Hearing: 8 December 1995 | |
| Date of Judgment: 1 April 1996 |
0
0
0