FEDERAL COURT OF AUSTRALIA

Hewson v Gothard; In the matter of Allco Finance Group Ltd (Receivers and Managers Appointed) (In Liq) [2014] FCA 320

IN THE MATTER OF ALLCO FINANCE GROUP LTD (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN 077 721 129)

THE COURT ORDERS THAT:

1.    Subject to the orders and notes made by the Court on 28 November 2012, the Interlocutory Process filed by Alan Hewson and Patricia Ann Hewson on 19 October 2012 be dismissed.

2.    The questions of costs of and incidental to that Interlocutory Process be reserved.

3.    Within seven (7) days of the date of the making of these orders, the parties file a written submission of no more than two (2) pages in length in which each of them makes such submissions as they may be advised directed to the notation made in par 5 of the orders and notes made by Foster J on 28 November 2012 and to the question of costs.

4.    The matters specified in 3 above thereafter be determined on the papers.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE MATTER OF ALLCO FINANCE GROUP LTD (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN 077 721 129)

REASONS FOR JUDGMENT

1    The present applicants (Alan Hewson and Patricia Ann Hewson) (the Hewsons) are shareholders in their personal capacity in Allco Finance Group Limited (Receivers and Managers Appointed) (In Liquidation) (ACN 077 721 129) (Allco). They are also the trustees of “The Hewson Superannuation Fund” and hold additional shares in Allco in that capacity. They have made application to the Court for access to certain documents presently in the possession, custody, control or power of the original plaintiffs in this proceeding, Peter James Gothard and Steven John Sherman (Receivers). Messrs Gothard and Sherman hold the documents in question as Receivers and Managers of Allco.

2    At the time when they made their application, the Hewsons were considering bringing two sets of proceedings against Allco and Dr Fell on behalf of themselves and on behalf of the Hewsons Superannuation Fund as well as on behalf of certain classes of shareholders in Allco pursuant to Part IVA of the Federal Court of Australia Act, 1976 (Cth) (the FCA Act).

3    On 4 November 2008, Westpac Banking Corporation, as security trustee for the senior banking syndicate to the Allco Group of Companies, appointed Messrs Gothard and Sherman as joint and several Receivers and Managers of Allco. On the same day, Anthony Gregory McGrath and Joseph David Hayes were appointed joint administrators of Allco. On 26 May 2009, Allco was wound up pursuant to a resolution of its creditors. Messrs McGrath and Hayes were appointed as its liquidators.

4    On 20 November 2009, the Receivers commenced this proceeding. The relief which they claimed was the issue of ten Examination Summonses pursuant to s 596A of the Corporations Act 2001 (Cth) (the Act). Those summonses were issued. Each of the proposed examinees had been either a director or a secretary of Allco. Some examinations were conducted by the Receivers in March 2010, although not all persons who had been summonsed at their request were, in fact, examined at that time. Dr Gordon Edward Christopher Fell and Mr David Raymond Coe were among those persons who were examined by the Receivers in March 2010. Both of those persons had been directors of Allco.

5    Between February 2008 and at least late 2010, Australian Securities and Investments Commission (ASIC) carried out an investigation into the affairs of Allco. In 2009, ASIC conducted examinations of a number of persons connected with Allco, including Dr Fell and Mr Coe, pursuant to s 19 of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act).

6    In addition, ASIC issued notices to Dr Fell under ss 30 and 33 of the ASIC Act to produce documents relating to a transaction which has become known as “the Rubicon transaction”. I shall refer to this transaction in a little more detail later in these Reasons.

7    On each of 18 February 2010, 26 October 2010 and 7 April 2011, the Receivers obtained the issue of a subpoena directed to ASIC requiring the production of various documents. The classes of documents required to be produced by those three subpoenas included the transcripts of the s 19 examinations of a number of persons (in particular, Dr Fell and Mr Coe) and other documents relating to the Rubicon transaction. On each occasion when documents were produced to the Court by ASIC in answer to the subpoenas to which I have referred, a Registrar of the Court granted the Receivers access to all of the documents produced by ASIC. The Registrar also granted the Receivers leave to uplift, inspect and copy the documents. This access was subject to confidentiality undertakings proffered by the Receivers and accepted by ASIC. I shall refer to the documents produced to the Court by ASIC to which the Receivers have had access as the ASIC documents. In Gothard v Fell (2012) 203 FCR (Gothard) at 239-240 [12]-[26], Jacobson J gave a brief account of the course of events relating to the subpoena for production issued by the Receivers to ASIC.

8    The Receivers conducted a further examination of Dr Fell pursuant to s 596A of the Act on 8 September 2011.

9    In January 2012, the Receivers sought to be released from the confidentiality undertakings which they had given in respect of the ASIC documents. They wished to be free to use those documents for the purpose of discharging their duties as receivers and managers of Allco, and, if considered appropriate, for the purpose of instituting and maintaining proceedings against Dr Fell and Mr Coe for contraventions of the duties owed by them to Allco in relation to the Rubicon transaction.

10    In a judgment delivered on 15 May 2012 (Gothard), Jacobson J acceded to that application.

11    By Interlocutory Process filed on 19 October 2012 (the Hewsons’ application), the Hewsons sought the following relief pursuant to ss 486, 511 and 596F(1)(e) of the Act, namely:

1.    A direction, pursuant to s 596F(1)(e) of the Act, or alternatively an order, pursuant to ss 486 and 511 of the Act, that within 14 days the plaintiffs / respondents [the Receivers] make available for inspection and copying by the applicants [the Hewsons] the following records of the examinations that were conducted in this proceeding on 22 to 26 March 2010 and 8 September 2011, to the extent that they are in the possession, custody or power of the plaintiffs / respondents:

(a)    the transcripts of the examinations that were conducted on each of those dates (including, for the avoidance of doubt, any written record produced pursuant to s 597(13) of the Act);

(b)    all documents which were shown to the examinees and referred to in the said transcripts; and

(c)    all documents produced to the Court by the Australian Securities and Investments Commission pursuant to the subpoenas issued on 18 February 2010, 26 October 2010 and 7 April 2011;

(Records).

2.    To the extent necessary, the plaintiffs / respondents be released from any undertaking as to confidentiality, whether express or implied, in relation to the Records, so as to permit them to comply with the above order.

3.    Such further or other orders as the Court thinks fit.

12    Dr Fell was represented at the hearing of the Hewsons’ application, as were Thomas Mark Lennox and Neil Raymond Lewis, former directors of Allco. For some time prior to the hearing, Mr Coe was also represented. Unfortunately, Mr Coe passed away between the date when the Hewsons’ application was filed and the date when that application was heard. His legal personal representative did not wish to be heard at the hearing of the Hewsons’ application.

13    The parties agreed that access should be granted to the documents described in subpars 1(a) and 1(b) of the Hewsons’ application. As a result, on 28 November 2012, I made orders giving effect to that agreement. The documents specified in subpar 1(c) of the Hewsons’ application were expressly excluded from the scope of the orders which I made on 28 November 2012.

14    However, no agreement was reached in relation to the documents described in subpar 1(c) of that application. The Receivers neither consented nor opposed the relief sought by the Hewsons in subpar 1(c) of their application. Dr Fell, Mr Lennox and Mr Lewis all opposed that relief being granted to the Hewsons. ASIC neither supported nor opposed the relief claimed by the Hewsons in their application.

15    These Reasons for Judgment determine the Hewsons’ application for access to the documents described in subpar 1(c) of their application.

The relevant facts

16    Mr Coe was a director of Allco in the period from 16 January 2001 to 3 March 2008. He was also a director of Rubicon Holdings (Aust) Limited (Receivers and Managers Apptd) (In Liquidation) (RHL) from 7 November 2003 to 25 August 2009. Dr Fell was a director of Allco from 16 January 2001 to 3 March 2008 and a director of RHL from 10 January 2001 to 31 August 2009.

17    Mr Lennox was formerly the General Counsel and Company Secretary of Allco and Mr Lewis was formerly a non-executive director of Allco.

18    On or about 23 October 2007, Allco entered into an agreement to acquire from companies associated with Dr Fell, Mr Coe and Mr Mathew Cooper, the 79.6 per cent of the issued shares in RHL which Allco did not already own, subject to the approval of Allco’s shareholders. Allco’s shareholders voted to approve the Rubicon transaction on 12 December 2007 and the transaction was completed on 19 December 2007. The total cash consideration paid by Allco in connection with the Rubicon transaction was $63.69m. The balance required to be paid was to be satisfied by the issue by Allco to the vendors of 23,890.000 new ordinary shares in Allco.

19    RHL was the holding company of the Rubicon Group, an independent financial services group with capabilities in asset origination, principal investment and the creation, syndication and management of specialist funds. The Rubicon group had a particular focus on international real estate assets and, as at October 2007, managed real estate assets located in most of the world’s major economies, including the United States, Europe and Japan.

20    The financial difficulties experienced by Allco in 2008 culminated in the appointment of the Receivers and ultimately the appointment of the liquidators.

21    As at the date of the appointment of the Receivers, the debt owed by Allco to the secured creditors was in excess of $700m. By early 2013, it had been the considered position of the liquidators for some considerable time that there would not be sufficient net assets recovered in the liquidation to discharge all of those debts in full. As matters presently stand, the liquidators do not intend to take any further action in relation to the affairs of Allco. The liquidators are awaiting the retirement of the Receivers prior to finalising the liquidation. The Receivers are apparently still considering potential recoveries. No one expects that there will be any further funds available to unsecured creditors.

22    In 2008 and 2009, Dr Fell produced thousands of documents to ASIC relating to Allco, including documents relating to the Rubicon transaction.

23    In late November and early December 2009, Dr Fell was compulsorily examined by officers of ASIC for six days. The bulk of the questioning for five of those days concerned the Rubicon transaction.

24    During these examinations, Dr Fell made claims of privilege against self-incrimination and exposure to a civil penalty.

25    The examinations of Dr Fell conducted by ASIC were carried out pursuant to s 19 of the ASIC Act. For some time after the examinations had concluded, Dr Fell and his legal representatives were subject to confidentiality directions made by the examiner. Those directions have now expired.

26    Mr Coe was compulsorily examined by officers of ASIC for four days (on 7 April 2009 and on 7, 8 and 9 December 2009). The examinations on 7 and 9 December 2009 primarily concerned the Rubicon transaction. The examination on 8 December 2009 principally concerned Allco’s compliance with its banking covenants and Allco’s continuing disclosure obligations. Mr Coe also made claims for privilege against self-incrimination and exposure to a civil penalty during each of these examinations.

27    ASIC also examined a further 17 former directors, officers and employees of Allco as part of its investigation.

28    By letter dated 2 April 2012, ASIC informed both Dr Fell and Mr Coe that it had concluded its investigations into the affairs of Allco insofar as it related to them and that it did not presently intend to take any action either of them as a result of those investigations.

29    By letters dated 21 December 2011, ASIC had made identical statements to each of Mr Lennox and Mr Lewis.

30    As I have already mentioned, in March 2010 the Receivers conducted public examinations of a number of former directors and officers of Allco (including Dr Fell and Mr Coe). Dr Fell was publicly examined by the Receivers for a second time on 8 September 2011.

The Applicants’ contentions

31    The Hewsons’ application was supported by evidence from their solicitor, Mr Steven Foale, who is a consultant to Maurice Blackburn. Mr Foale swore two affidavits in support of the Hewsons’ application.

32    Mr Foale said that Maurice Blackburn also acted for approximately 1,450 other persons who:

(a)    acquired an interest in Allco shares during the period 21 August 2007 to 27 February 2008; and/or

(b)    held an interest in Allco shares in December 2007 at the time of the Rubicon transaction.

33    Mr Foale went on to state that the Hewsons, on behalf of themselves and the other persons for whom Maurice Blackburn was acting, were considering commencing two separate proceedings both under Part IVA of the FCA Act arising out of:

(a)    Allco’s announcements to the Australian Securities Exchange (ASX) during the period 21 August 2007 to 27 February 2008 (Proposed Continuous Disclosure Proceeding); and

(b)    the Rubicon transaction (Proposed Rubicon Proceeding).

34    Mr Foale went on to explain the essence of the case which the applicants and other persons represented by Maurice Blackburn would endeavour to put in the Proposed Continuous Disclosure Proceeding. He referred to a number of specific announcements made by Allco to ASX during 2007 and 2008 and said that Allco had been guilty of delaying an appropriate announcement concerning the fact that a market capitalisation review event had occurred. He also identified positive announcements which were, according to him, inaccurate. He claimed that, had the inaccurate announcements not been made and had the existence of the market capitalisation review event been promptly disclosed, the persons who purchased shares in the relevant period and suffered a loss by reason of such purchase would not have suffered that loss.

35    In the Proposed Rubicon Proceeding, Mr Foale said that it would be alleged that Dr Fell and Mr Coe failed to disclose to Allco shareholders, prior to their voting to approve the Rubicon transaction, important information regarding the financial performance of and outlook for Rubicon. It will be alleged that this conduct was misleading and deceptive and constituted contraventions of the ASIC Act and the relevant State Fair Trading Acts.

36    It will be alleged that, by reason of the Rubicon transaction, persons who were shareholders of Allco at the time suffered loss and damage as a result of Allco entering into that transaction.

37    Senior Counsel who appeared for the Hewsons at the hearing before me said that I should infer that the ASIC documents contain information of substantial relevance to questions associated with the collapse of Allco. In particular, Senior Counsel submitted that I should infer that the ASIC documents will almost certainly contain material relevant to the two sets of proceedings which the applicants and Maurice Blackburn currently have under consideration.

38    The Hewsons rely upon s 596F(1)(e) of the Act as the source of the Court’s power to grant the relief which they seek. In the alternative, they rely upon ss 486 and 511 of the Act.

39    Section 596F(1)(e) provides that, subject to s 597 of the Act, the Court may at any time give a direction about access to records of the examination. I pause to observe that “the examination” referred to in s 596F(1)(e) is an examination conducted pursuant to s 596A or s 596B of the Act. I also pause to observe that, in the present case, the only group of documents falling within subpar (1)(c) of the Hewsons’ application which is amenable to regulation pursuant to s 5976F(1)(e) comprises those of the documents produced by ASIC which also fall within subpar (1)(b) of the Hewsons’ Application. Documents produced by ASIC which were not shown to the examinees during the course of the examinations conducted by the Receivers would not be amenable to the Court’s power to grant access pursuant to s 596F(1)(e) because those documents do not constitute a record of an examination of the type the conduct of which is regulated by (inter alia) s 596F.

40    Senior Counsel for the Hewsons made the following submissions as to the principles to be applied with respect to s 596F(1)(e) of the Act. He submitted that:

16    The principles to be applied with respect to s 596F(1)(e) are:

(a)    a third party creditor’s access to documentation produced in aid of an examination may be justified on either one of the following two bases identified in Re New Cap Reinsurance Corporation Holdings Limited [2001] NSWSC 835 at [17] per Santow J (New Cap), endorsed by Jacobson J in Gothard at [38]-[39] and [48]:

(a)    it offers sufficient prospect of assisting the beneficial winding-up by increasing or protecting or conserving the assets available in the winding-up; or

(b)    it facilitates the prosecution of civil or criminal proceedings, whether contemplated or already commenced, including civil proceedings by individual creditors, where these civil or criminal proceedings bear upon the circumstances that have led to, or are associated with that corporate collapse, or where the company being wound up is a defendant or co-defendant in actual or contemplated legal proceedings, whether civil or criminal, that may have a bearing on the winding-up;

(b)    with respect to the first limb identified by Santow J in New Cap, there need only be a reasonable prospect of benefit to creditors, which may be indirect or prospective, but may not be beyond the reasonable bounds of possibility: New Cap at [23], [26];

(c)    the potential benefit to creditors may be merely that successful litigation by one creditor will decrease the number of creditors proving in the winding up, thereby increasing the distribution to other creditors: New Cap at [22],[24]; Eurostar at [13];

(d)    consistently with the expansion of creditor rights with respect to their role in compulsory examinations (see New Cap at [28] – [36]), access may be granted to a creditor who is pursuing his or her individual interests: New Cap at [18] – [19];

(e)    the Court has a discretion under s 596F(1)(e) to grant access to all documents produced in aid of the examination, whether specifically deployed in the examination or not; New Cap at [43]; Eurostar at [24]; Gothard at [76];

(f)    access may be refused to a document produced in aid of the examination if it was entirely extraneous to any possible purpose of the examination: New Cap at [39]; Gothard at [76]; and

(g)    the objectives of the regime in Div 1 of Part 5.9 of the Act include the wider statutory purpose of investigating and potentially instituting proceedings against those who have contributed to the corporate collapse: New Cap at [15]; Gothard at [48],[52],[60]; and those special considerations that arise from that legislative policy are therefore a qualification to the general principle of when a court will permit the use for purposes other than the proceedings in which they were obtained, of documents compulsorily produced: Eurostar at [15]; Gothard at [48], [60].

41    Having outlined the relevant principles, Counsel submitted on behalf of the Hewsons that the production of the documents described in subpar (1)(c) of the Hewsons’ application would facilitate the investigation and of prosecution of civil proceedings that bear upon the circumstances that led to or are associated with the collapse of Allco. It was then submitted that the Hewsons’ application fell directly within the second limb of the test articulated by Santow J in New Cap at [17].

42    In addition, it was submitted that there would be a clear benefit to be enjoyed by the larger group of potential applicants who are represented by Maurice Blackburn. Senior Counsel described that group as a “… large group of creditors …”. He then submitted that the Proposed Continuous Disclosure Proceeding and the Proposed Rubicon Proceeding would both provide a significant benefit to that group of creditors.

43    The Hewsons also relied upon ss 486 and 511 of the Act.

44    Section 486 of the Act provides that the Court may make an order for inspection of the books of a company. Books is defined in s 9 of the Act as including:

(a)    a register;

(b)    any other record of information;

(c)    financial reports or financial records, however compiled, recorded or stored;

(d)    a document;

…

45    It was submitted on behalf of the Hewsons that the documents called for by subpar (1)(c) of their application were books of Allco within the meaning of s 486 of the Act.

46    Reliance was also placed upon s 511 of the Act which is the source of the Court’s general power to determine questions which arise during the course of a winding up.

Consideration

47    Dr Fell opposed the relief sought by the Hewsons in respect of the ASIC documents. Messrs Lennox and Lewis did likewise.

48    Counsel who appeared for Dr Fell and Counsel who appeared for Messrs Lennox and Lewis submitted that evidence adduced on behalf of the Hewsons did not establish a reasonably arguable cause of action against anybody. They also submitted that no explanation had been given either by or on behalf of the Hewsons as to why they were unable to commence proceedings, obtain discovery and issue subpoenas in the usual way. They emphasised that the Hewsons had not sought preliminary discovery under Pt 7, Div 7.3, of the Federal Court Rules 2011 and, in any event, could not sensibly do so as against ASIC or the Receivers.

49    Counsel focussed on the tentative expression of the Hewsons’ present intentions and the fact that they had not even finally determined who were to be the defendants in either of the proposed proceedings. They emphasised that Allco would not be in a position to fund or defend any proceeding that might be permitted to be brought against it and would certainly not be in a position to pay any judgment that might be awarded against it.

50    The first issue which arises is whether s 596F(1)(e) is engaged at all in respect of the ASIC documents.

51    As I mentioned at [7] above, three subpoenas for production were issued to ASIC. Each subpoena required the production of a copy in electronic form of transcripts of certain specified examinations conducted by ASIC pursuant to s 19 of the ASIC Act in the course of its investigations into the affairs of Allco and a copy of any documents or bundle of documents used by ASIC in the preparation or conduct of those examinations. The subpoena issued on 7 April 2011 also required the production of an electronic copy of any database of electronic documents possessed or controlled by Rubicon Asset Management Limited (In Liquidation) produced to ASIC by that company in 2010.

52    Thus, the documents called for by the relevant subpoenas issued to ASIC comprise transcripts of s 19 examinations, documents shown to examinees during the course of those examinations and the Rubicon database described at [51] above.

53    Part 5.9, Div 1 of the Act, deals with examinations conducted pursuant to s 596A and s 596B of the Act. Section 597 provides for the procedures to be adopted during the course of examinations conducted pursuant to s 596A and s 596B. Generally, such examinations are to be held in public. In particular, s 597(13) provides that the Court may require a written record of an examination to be created and signed by the examinee. Section 597(14A) provides for that inspection of such a record. Section 596F provides a source of power for the Court to make directions concerning such examinations.

54    As I have already mentioned at [39] above, I do not think that s 596F is a source of power which permits the Court to regulate the disposition of the transcript of examinations conducted pursuant to s 19 of the ASIC Act or to regulate the disposition of collections or bundles of documents compiled for the purpose of and used in such examinations, at least to the extent that those documents were not read into or formed part of the record of such examinations. To the extent that this view is different from that expressed by Santow J at [43] in New Cap, I respectfully disagree with his Honour’s view.

55    I must look to the ASIC Act and the general power of the Court to issue subpoenas for production and to control documents produced in answer to such subpoenas as the source of the relevant power for the purposes of deciding whether the ASIC documents produced to the Court by ASIC pursuant to the subpoenas to which I have referred should be made available to the Hewsons at the present time.

56    Section 596F(1)(e) was a relevant source of power for the orders which I made on 28 November 2012 in respect of the documents called for by subpars (1)(a) and (1)(b) of the Hewsons’ application. It is not, however, a relevant source of power in respect of documents called for by subpar (1)(c) of that Application.

57    Counsel for Dr Fell and Counsel for Messrs Lennox and Lewis conceded that the ASIC documents were “records of the examination” for the purposes of s 596F(1)(e) of the Act and conducted the case upon the basis of that concession. They then made detailed submissions as to why the documents should nonetheless be denied to the Hewsons. I am not bound by that concession. I consider that it was wrongly made.

58    It was submitted by Counsel for the opposing parties that the Hewsons cannot bring themselves within the principles articulated by Santow J in New Cap (as approved by Jacobson J in Gothard) and that access should be denied for that reason.

59    There would be much force in the submissions made on behalf of Dr Fell and on behalf of Messrs Lennox and Lewis if s 596F(1)(e) was the correct source of the Court’s power to grant the access sought by the Hewsons in their application.

60    Were that the correct source of the Court’s power for present purposes, I would be inclined to accept those submissions.

61    But, as I have said, the bulk of the documents which remain in contest (those called for by subpar (1)(c) of the Hewsons’ application) comprise transcripts of compulsory examinations conducted by an officer of ASIC pursuant to s 19 of the ASIC Act and documents shown to or deployed in such examinations. It is, therefore, necessary to consider the terms of the relevant provisions of the ASIC Act.

62    Sections 19 to 22 of the ASIC Act provide:

19(1)    This section applies where ASIC, on reasonable grounds, suspects or believes that a person can give information relevant to a matter that it is investigating, or is to investigate, under Division 1.

19(2)    ASIC may, by written notice in the prescribed form given to the person, require the person:

(a)    to give to ASIC all reasonable assistance in connection with the investigation; and

(b)    to appear before a specified member or staff member for examination on oath and to answer questions.

19(3)    A notice given under subsection (2) must:

(a) state the general nature of the matter referred to in subsection (1); and

(b) set out the effect of subsection 23(1) and section 68.

20    The remaining provisions of this Division apply where, pursuant to a requirement made under section 19 for the purposes of an investigation under Division 1, a person (in this Division called the examinee ) appears before another person (in this Division called the inspector ) for examination.

21(1)    The inspector may examine the examinee on oath or affirmation and may, for that purpose:

(a)    require the examinee to either take an oath or make an affirmation; and

(b)    administer an oath or affirmation to the examinee.

21(1A)    An offence under subsection 63(3) relating to subsection (1) of this section is an offence of strict liability.

21(2)    The oath or affirmation to be taken or made by the examinee for the purposes of the examination is an oath or affirmation that the statements that the examinee will make will be true.

21(3)    The inspector may require the examinee to answer a question that is put to the examinee at the examination and is relevant to a matter that ASIC is investigating, or is to investigate, under Division 1.

22(1)    The examination must take place in private and the inspector may give directions about who may be present during it, or during a part of it.

22(2)    A person must not be present at the examination unless he or she:

(a) is the inspector, the examinee or a member; or

(b) is a staff member approved by ASIC; or

(c) is entitled to be present by virtue of:

(i) a direction under subsection (1); or

(ii) subsection 23(1).

22(3)    Subsection (2) is an offence of strict liability.

63    Section 23 provides that an examinee’s lawyer may be present at the relevant examination, subject to the terms of that section.

64    Sections 24 to 27 of the ASIC Act provide:

24(1)    The inspector may, and must if the examinee so requests, cause a record to be made of statements made at the examination.

24(2)    If a record made under subsection (1) is in writing or is reduced to writing:

(a)    the inspector may require the examinee to read it, or to have it read to him or her, and may require him or her to sign it; and

(b)    the inspector must, if requested in writing by the examinee to give to the examinee a copy of the written record, comply with the request without charge but subject to such conditions (if any) as the inspector imposes.

24(3)    An offence under subsection 63(3) relating to paragraph (2)(a) of this section is an offence of strict liability.

25(1)    ASIC may give a copy of a written record of the examination, or such a copy together with a copy of any related book, to a person's lawyer if the lawyer satisfies ASIC that the person is carrying on, or is contemplating in good faith, a proceeding in respect of a matter to which the examination related.

25(2)    If ASIC gives a copy to a person under subsection (1), the person, or any other person who has possession, custody or control of the copy or a copy of it, must not, except in connection with preparing, beginning or carrying on, or in the course of, a proceeding:

(a)    use the copy or a copy of it; or

(b)    publish, or communicate to a person, the copy, a copy of it, or any part of the copy's contents.

25(2A)    Subsection (2) is an offence of strict liability.

25(3)    ASIC may, subject to such conditions (if any) as it imposes, give to a person a copy of a written record of the examination, or such a copy together with a copy of any related book.

26(1)    If a copy is given to a person under subsection 24(2) or 25(3) subject to conditions, the person, and any other person who has possession, custody or control of the copy or a copy of it, must comply with the conditions.

26(2)    Subsection (1) is an offence of strict liability.

27(1)    If a report about the investigation referred to in section 20 is prepared under section 17, each record (if any) of the examination must accompany the report.

27(2)    If:

(a)    in ASIC's opinion, a statement made at an examination is relevant to any other investigation under Division 1; and

(b)    a record of the statement was made under section 24; and

(c)    a report about the other investigation is prepared under section 17;

    a copy of the record must accompany the report.

65    Under the ASIC Act, the disposition of the record of examinations conducted pursuant to s 19 of the ASIC Act and related books resides in ASIC. Under ss 25(3) and 26 of the ASIC Act, ASIC may provide copy of that record and any related book upon such conditions as it may, in its absolute discretion, impose.

66    I am told that ASIC has published a protocol which it has committed to following when requested to provide copies of the transcript of s 19 examinations and related books and that it routinely allows affected persons (principally the examinees) to make submissions to it before it makes available such records to any person other than the relevant examinee.

67    In the present case, the ASIC documents were produced to the Court and then released to the Receivers. They were released to the Receivers upon strict terms of confidentiality and use. Subsequently, Jacobson J relaxed some of those conditions (Gothard) but not to an extent which would permit the Receivers merely to hand over the documents to the Hewsons and to Maurice Blackburn.

68    The ASIC documents are, in my view, very much within the control of the Court pursuant to the Court’s power and authority to regulate its own processes, with particular regard to the way in which the Court allows access to documents produced in answer to subpoenas for production. The ASIC documents were brought to Court by ASIC in answer to subpoenas issued by the Receivers. The course followed was a compulsory forensic process authorised by the rules and practice of the Court. It was undertaken by the Receivers in aid of the examination undertaken by them pursuant to Pt 5.9 of the Act.

69    Thus, subject to considering the potential application of ss 486 and 511 of the Act, the Hewsons must persuade me that they should have access to the ASIC documents being documents produced in answer to subpoenas issued by the Receivers in circumstances where:

(a)    The transcripts of the s 19 examination comprise the records of compulsory examinations instigated by ASIC which are required to take place in private, the disposition of which records and “related books” is entirely at the discretion of ASIC, subject to the implications of its having published a protocol for dealing with such records. This is a very different setting from that which is contemplated by Pt 5.9, Div 1 of the Act;

(b)     The ASIC documents have been produced to the Receivers and allowed to be used by them upon strict terms and conditions as to confidentiality and use; and

(c)    The Hewsons have not yet commenced proceedings (as far as I know) and are only considering whether they will do so.

70    The fact that the Hewsons proposed to commence a class action pursuant to Part IVA of the FCA Act does not take the matter any further.

71    The simple fact is that the Hewsons are contemplating ordinary commercial litigation against the former directors of a failed company and are endeavouring to gain an impermissible forensic advantage by securing access to documents which were created for an entirely different purpose. The present application is tantamount to a litigant who is contemplating action against party X seeking access to documents produced by a stranger to existing litigation involving party X for the purpose of assessing his or her prospects in contemplated litigation. This approach to litigation is not generally one which the Court has countenanced or would countenance.

72    Furthermore, it is not to the point that, if the foreshadowed proceedings are eventually commenced, the ASIC documents might one day find their way legitimately into the forensic arena created by the commencement of those proceedings. The question of whether such documents would be required to be produced and the disposition of them after production would be a matter for the Court in due course, having regard to the issues that might arise in the contemplated proceedings.

73    In Gothard, Jacobson J said at 245 [77]-[79]:

Information obtained or documents produced pursuant to the compulsory process of an examination under the ASIC Act are subject to a limitation on the extent of disclosure and use to which the information and documents may be disseminated. The extent of the permitted dissemination or use is limited by the purpose for which the power of examination was conferred. Thus, the examinee has a claim to protection of confidentiality in the information: Johns v Australian Securities Commission (1993) 178 CLR 408 at 423 (per Brennan J); Maronis Holdings Limited v Nippon Credit Australia Ltd (2000) 18 ACLC 609 at [9] (per Bryson J).

However, as Bryson J said in Maronis at [9], the claim for protection of confidentiality is not unqualified because disclosure may take place in the course of proper use of the information for the purpose for which it was obtained.

Here, the use proposed by the Receivers is consistent with the qualification stated by Bryson J. It is also supported by the observations made by Lander J in the Southern Equities and in the other authorities referred to at [62] above. Just as ASIC would have been entitled to use the information and documents for the purpose of a prosecution or a civil proceeding under s 50 of the ASIC Act, so too the Receivers may have access to the information and documents and use them for the purpose of determining whether to bring proceedings against Mr Coe and Dr Fell, and if thought fit, to institute the proceedings.

74    These remarks are apposite in the circumstances of the present case.

75    For the above reasons, and subject to the arguments raised by the Hewsons based upon ss 486 and 511 of the Act, I would not be prepared to grant the relief claimed by the Hewsons in subpar (1)(c) of their Application.

76    I now turn to deal with the alternative arguments based upon ss 486 and 511 of the Act.

77    I think that the argument based upon s 486 of the Act fails at the start. I do not think that the ASIC documents are “books” of Allco within the meaning of that section. In Nut Trading Co (Aust) Pty Ltd v KKL (Kangaroo) Line Pty Limited (1997) 25 ACSR 580, Einstein J said (at 604) that, in the statutory provision which was the predecessor to s 486 of the Act, “books of the company” meant books in the possession of the company at the commencement of the winding up and not books created or retained during the course of the winding up, although Santow J, in New Cap, added a gloss to this observation by suggesting that copies of records of a company made after the company is placed into liquidation, although being of records which were in existence at the time the company was wound up, would be “books of the company” within the meaning of s 486 of the Act.

78    If the reasoning of Santow J in New Cap is correct, the collections or bundles of documents compiled by ASIC for the purposes of and deployed in the s 19 examinations may be amenable to production under s 486.

79    Even if that be correct, in the circumstances of this case, I would not be prepared to order production of that material to the Hewsons. Section 486 gives a discretion to the Court the exercise of which is to be guided by the interests of justice in all the circumstances of the case. For the same reasons as I have not allowed access to the ASIC documents by applying the relevant principles which govern the disposition of documents produced in answer to a subpoena for production, I am not prepared to make an order allowing access relying upon s 486 of the Act.

80    I do not think that s 511 of the Act takes the matter any further. Even if the section may properly be engaged in circumstances such as the present, I would not exercise the Court’s discretion in favour of access by relying upon the provisions of s 511 of the Act.

Conclusions

81    For all of the above reasons I am not prepared to grant access to the Hewsons and their lawyers to the documents described in subpar (1)(c) of their Application. To the extent that it remained in contest after I made orders on 28 November 2012, the Hewsons’ application will be dismissed. I will reserve the question of costs and invite submissions directed to that matter. There will be orders accordingly.

82    Before leaving the matter, I draw the attention of the parties to par 5 of the orders which I made on 28 November 2012. In that paragraph, I noted that the Hewsons intended to press as soon as may be practicable after 28 November 2012 for an order that, pursuant to s 597(14A) and 596(1)(e) of the Act, the Receivers make available for inspection by the Hewsons all documents which were shown to the examinees and referred to in the transcripts of examinations conducted by the Receivers in the period 22 – 26 March 2010 (except those documents called for by par (1)(c) of the Hewsons’ Application). I was told that an order for access to such documents was likely to be consented to by all relevant parties.

83    As far as I know, the subject matter of that notation remains outstanding. I propose to require the parties also to address that matter when addressing the question of costs.

Associate:

Dated:    1 April 2014