FEDERAL COURT OF AUSTRALIA
Bryant, in the matter of Gunns Limited (in liq) v L.V. Dohnt & Co Pty Ltd [2019] FCA 328
ORDERS
DATE OF ORDER: |
THE COURT ORDERS THAT:
1. The trial of this proceeding listed to commence in the week of 4 March 2019 be vacated.
2. Subject to orders 3 and 4, pursuant to section 37AF(1) of the Federal Court of Australia Act 1976 (Cth), on the ground that non-disclosure of the evidence is necessary to prevent prejudice to the proper administration of justice, that:
2.1 the affidavit of Craig David Crosbie sworn on 7 March 2019 and the confidential exhibit thereto (Crosbie Affidavit); and
2.2 the plaintiffs’ outline of written submissions in support of the plaintiffs’ interlocutory application dated 7 March 2019 (Submissions);
(collectively, the Documents)
be placed in a sealed envelope marked “not to be accessed without the leave of a Judge of the Court”.
3. A copy of the Crosbie Affidavit be made available for inspection on the Court file with the following paragraphs redacted: 6(a), 6(b), 6(c), 7(b), 8(a), 9 from after the word “continue” until the words “In addition”, 12 from after the word “material” until the end of the paragraph, 19(a), 19(a)(i), 19(a)(ii), 19(b), 20(a), 20(a)(i), 20(a)(ii), 20(b), 20(c), 22(a), 22(a)(i), 22(a)(ii), 22(a)(iii), 22(a)(iv), 22(b), 22(c), Exhibit CDC-1.
4. A copy of the Submissions be made available for inspection on the Court file with the following paragraphs redacted: 2, 3 (first sentence only), 6.1, 6.2, 6.3, 6.3(a), 6.3(a)(i), 6.3(a)(ii), 6.3(b), 6.3(c), 6.4(a) (section quoted only), 6.4(b)(i), 6.4(b)(ii), 14 (last sentence only), 19.1, 20, 22.1, 22.2, 22.3, 22.4.
5. Pursuant to s 477(2B) of the Corporations Act 2001 (Cth), the plaintiffs in their capacities as joint and several liquidators of Gunns Limited (in liquidation) (receivers and managers appointed) (ACN 009 478 148) (Gunns) and Auspine Limited (in liquidation) (receivers and managers appointed) (ACN 004 289 730) (Auspine) have approval to enter into and cause Gunns and Auspine to enter into the Deed of Settlement appearing within Confidential Exhibit CDC-1 to the Crosbie Affidavit.
6. The plaintiffs’ costs of and incidental to the plaintiffs’ interlocutory application dated 7 March 2019 be costs in the liquidations of Gunns and Auspine.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
DAVIES J:
1 On 8 March 2019 I made an order pursuant to s 477(2B) of the Corporations Act 2001 (Cth) (“the Act”) that the plaintiffs in their capacities as joint and several liquidators of Gunns Limited (in liquidation) (receivers and managers appointed) (“Gunns”) and Auspine Limited (in liquidation) (receivers and managers appointed) (“Auspine”) have approval to enter into, and to cause Gunns and Auspine to enter into, the Deed of Settlement appearing in confidential exhibit “CDC-1” to the affidavit of Craig David Crosbie sworn on 7 March 2019. I also made orders pursuant to s 37AF(1) and s 37AG(1) of the Federal Court of Australia Act 1976 (Cth) (“the Federal Court Act”) that certain parts of Mr Crosbie’s affidavit and of the plaintiffs’ outline of submissions in support of the plaintiffs’ application for approval under s 477(2B) of the Act be kept confidential and not disclosed to any persons other than the plaintiffs, the defendant and their respective legal representatives until further order of the Court. These are my reasons for making those orders.
Confidentiality orders
2 Section 37AF(1)(b)(iv) of the Federal Court Act provides that the Court may, by making a suppression order or non-publication order, prohibit or restrict the publication or other disclosure of information lodged or filed with the Court that relates to a proceeding before the Court. The grounds upon which such an order may be made are prescribed by s 37AG(1)(a), and include that the order is necessary to prevent prejudice to the proper administration of justice. By s 37AE of the Federal Court Act, in deciding whether to make a suppression or non-publication order, the Court must take into account that a primary objective of the administration of justice is to safeguard the public interest in open justice.
3 The material over which the confidentiality order was made comprises the terms upon which the parties have agreed to settle these proceedings, timelines with respect to the liquidation of the Gunns Group, which includes Gunns and Auspine, and the matters considered by Mr Crosbie in concluding that it is commercially appropriate and in the best interests of the creditors of Gunns and Auspine that the plaintiffs execute the Deed of Settlement, having relied upon advice received from the plaintiffs’ solicitors and counsel. Having reviewed the material, I accepted that this material contains information of a commercially sensitive nature. In making the confidentiality order, I also had regard to the reasons that Mr Crosbie gave in his affidavit for his belief that creditors of the Gunns Group as a whole may suffer significant detriment if that commercially sensitive material is disclosed. Those reasons in themselves are commercially sensitive but it is evident from the matters which he deposed to that Mr Crosbie reasonably holds that belief. As the authorities indicate, the public interest in the due and beneficial administration of the estates of insolvent companies for the benefit of creditors is a relevant consideration in favour of s 37AF orders: Hancock (liquidator), in the matter of South Townsville Developments Pty Limited (in liq) [2019] FCA 71 and the cases cited at [9]-[11]. Accordingly I considered that it was appropriate to make the confidentiality order sought in order to prevent prejudice to the proper administration of justice and I was satisfied that the order did not go beyond what was reasonably necessary to achieve the purpose for which it was made: Hayes, in the matter of Denham Constructions Pty Limited (in liq) [2018] FCA 2053 at [24].
Approval application
4 Section 477(2B) of the Act provides:
Powers of liquidator
…
(2B) Except with the approval of the Court, of the committee of inspection or of a resolution of the creditors, a liquidator of a company must not enter into an agreement on the company’s behalf (for example, but without limitation, a lease or an agreement under which a security interest arises or is created) if:
(a) without limiting paragraph (b), the term of the agreement may end; or
(b) obligations of a party to the agreement may, according to the terms of the agreement, be discharged by performance;
more than 3 months after the agreement is entered into, even if the term may end, or the obligations may be discharged, within those 3 months.
5 The relevant principles to apply in the exercise of the Court’s power pursuant to s 477(2B) of the Act are usefully summarised in Stewart, in the matter of Newtronics Pty Ltd [2007] FCA 1375 at [25]–[26]. In short, and relevant to this application, those principles are:
(a) the Court does not simply “rubber stamp” whatever is put forward by a liquidator;
(b) the Court will not approve an agreement if its terms are unclear;
(c) the role of the Court is to grant or deny approval to the liquidator’s proposal. Its role is not to develop some alternative proposal which might seem preferable;
(d) the task of the Court is simply to review the liquidator’s proposal, paying due regard to his or her commercial judgment and knowledge of all the circumstances of the liquidation, satisfying itself there is no error of law or ground for suspecting bad faith or impropriety, and weighing up whether there is any good reason to intervene in terms of the “expeditious and beneficial administration” of the winding up; and
(e) generally, the Court grants approval under s 477(2B) of the Act only where the transaction is the proper realisation of the assets of the company or otherwise assists in the winding up of the company.
6 In addition to those matters, the Court will have regard to the impact that entering the agreement will have upon the duration of the liquidation and whether that impact is, in all the circumstances, reasonable in the interests of the administration: Re FAI Film Distribution Pty Ltd [2014] NSWSC 1904 at [18].
7 In view of the confidentiality order made, these reasons must necessarily express in general terms the matters taken into consideration in granting the approval.
8 In his affidavit, Mr Crosbie set out his reasons for concluding that it is commercially appropriate and in the best interests of the creditors of Gunns and Auspine that the liquidators execute the Deed of Settlement on the plaintiffs’ behalf. In reaching that conclusion, Mr Crosbie deposed that he had considered and relied upon advice received from the plaintiffs’ solicitors and counsel. Mr Crosbie also deposed to his belief, and why he has the belief, that the settlement will not delay the finalisation of the liquidation of the Gunns Group. Having regard to the matters identified by Mr Crosbie I am satisfied that there is no ground for suspecting bad faith or impropriety, no error of law is apparent and the proposed settlement is consistent with the expeditious and beneficial administration of the winding up and is unlikely to impact on the duration of the liquidation.
9 In the circumstances, I was satisfied that the plaintiffs’ entry into the Deed of Settlement is a proper exercise of their power.
I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Davies. |
Associate:
Schedule 1 – Gunns Group of Companies
1. Gunns Limited ACN 009 478 148
2. Gunns Plantations Limited ACN 091 232 209
3. S.E.A.S. Sapfor Forests Proprietary Limited ACN 007 872 120
4. Associated Forest Holdings Proprietary Limited ACN 004 352 078
5. Auspine Limited ACN 004 289 730
6. Auspine Plantations Pty Ltd ACN 002 327 808
7. Auspine Tree Farms Pty Ltd ACN 100 307 373
8. East Coast Pastoral Co Pty Ltd ACN 009 519 528
9. GTP Alexandra Pty Ltd ACN 121 653 772
10. GTP China Pty Ltd ACN 093 919 414
11. GTP Heyfield Pty Ltd ACN 000 041 814
12. GTP Holdings Pty Ltd ACN 009 478 068
13. GTP Seymour Pty Ltd ACN 091 652 550
14. GTP Southwood Pty Ltd ACN 081 613 710
15. Gunns Consolidated Investments Pty Ltd ACN 128 619 045
16. Gunns Finance Pty Ltd ACN 091 861 700
17. Gunns Forest Products Pty Ltd ACN 004 208 904
18. Gunns Holdings Pty Ltd ACN 009 520 085
19. Gunns New Zealand Pty Ltd ACN 069 051 378
20. Kauri Timber Company Ltd ACN 004 085 714
21. KVVIC Pty Ltd ACN 126 089 950
22. Manna Holdings Pty Ltd ACN 008 008 197
23. Northern Forest Investments Pty Ltd ACN 009 493 707
24. S.E.A.S. Estates Pty Ltd ACN 007 923 971
25. S.E.A.S. Plantations Pty Ltd ACN 005 791 695
26. S.E.A.S. Sapfor Harvesting Proprietary Limited ACN 007 511 211
27. S.E.A.S. Sapfor Investment Services Proprietary Limited ACN 008 164 289
28. Sapfor Trading Proprietary Limited ACN 007 924 254
29. Sorisdale Pty Ltd ACN 054 548 971
30. South East Afforestation Services Proprietary Limited ACN 007 898 259
31. Tasmanian Pulp & Forest Holdings Limited ACN 009 488 733
32. Tasmanian Softwoods Pty Ltd ACN 009 501 786
33. Taspine Pty Ltd ACN 009 477 730
34. TBVIC Pty Ltd ACN 004 161 782
35. Timbersales Proprietary Limited ACN 004 848 864
36. Wesley Vale Engineering Pty Ltd ACN 006 955 568
