Federal Court of Australia

Koulouris v Sourasis (Confidentiality Application) [2025] FCA 452

ORDERS

THE COURT ORDERS THAT:

1.    The amended interlocutory application filed by the First to Fifth and Seventh to Thirteenth Defendants on 30 April 2025 be dismissed.

2.    The First to Fifth and Seventh to Thirteenth Defendants pay the Plaintiffs’ costs of the interlocutory application, to be taxed if not agreed.

3.    The interim suppression of the entirety of the file in proceeding QUD 3 of 2025 which was effected by Order 3 of the Orders dated 11 April 2025 be lifted with effect from the date of these Orders.

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

REASONS FOR JUDGMENT

(Delivered ex tempore, revised from transcript)

SARAH C DERRINGTON J:

1    Mr Jason Sourasis is the first defendant in a proceeding commenced against him and 12 corporate entities by Mr George Koulouris and two corporate entities pursuant to an originating application filed on 6 January 2025. In broad terms, Mr Koulouris claims that monies were advanced to the defendants in respect of several different investments under the defendants’ control, in particular the control of Mr Sourasis, which investments did not eventuate. Further, Mr Koulouris seeks to recover loans advanced to the defendants which, despite demand, remain outstanding. In the first to fifth and seventh to thirteenth defendants’ (Sourasis Defendants’) Defence filed on 29 April 2025, the allegations in respect of the outstanding loans are admitted.

2    On 12 March 2025, the Sourasis Defendants filed an application, pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth) (the FCA Act), for suppression and non-publication orders over the Court file to prevent the pleadings and affidavits coming into the public domain. An amended application was filed on 30 April 2025. The orders sought are for a limited duration, being the later of eight weeks or seven days after the termination of a mediation attended by the parties. Pending the determination of this application, third parties have not been granted access to the pleadings or the materials relating to the proceeding.

RELEVANT PRINCIPLES

3    A suppression or non-publication order can only be made if the requirements of s 37AG(1) of the FCA Act are satisfied. Section 37AG(1) provides:

(1)    The 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 a criminal proceeding involving an offence of a sexual nature (including an act of indecency).

4    The Sourasis Defendants submit that the relevant ground is s 37AG(1)(a) – that is, that suppression and non-publication orders are necessary here to prevent prejudice to the proper administration of justice. In making a suppression or non-publication order, the Court is required by s 37AE of the FCA Act to “take into account that a primary objective of the administration of justice is to safeguard the public interest in open justice”.

5    As was observed by Perram J in Saw v Seven Network (Operations) Ltd [2024] FCA 1210 at [7], “The principal business of this Court is the quelling of disputes between parties according to law. Disputes may be quelled by the trial of proceedings but they may also be quelled by parties agreeing to settle them. This is reflected in ss 37M(1) and (2) of the FCA Act”.

6    The relevant principles applicable to the making of suppression or non-publication orders under s 37AF of the FCA Act are not in dispute. Neither party disagrees that the principle of open justice is a fundamental principle of the Australian justice system: Rinehart v Welker [2011] NSWCA 403; 93 NSWLR 311 and John Fairfax Publications Pty Ltd v District Court of NSW [2004] NSWCA 324; 61 NSWLR 344 at [18]. It is accepted that the principle is not an end in itself, but is adopted to ensure public confidence in the administration of justice: Hogan v Hinch [2011] HCA 4; 243 CLR 506 at [20] per French CJ; John Fairfax Group Pty Ltd (Receivers and Managers appointed) v Local Court of NSW (1991) 26 NSWLR 131 at 163-164; Roberts-Smith v Fairfax Media Publications Pty Ltd [2019] FCA 36 at [16]-[17].

7    The Full Court summarised the position in The Country Care Group Pty Ltd v Commonwealth Director of Public Prosecutions (No 2) [2020] FCAFC 44; 275 FCR 377 at [7]-[9]:

The relevant principles in relation to the making of suppression or non-publication orders under s 37AF of the FCA Act are fairly well settled.

Suppression or non-publication orders should only be made in exceptional circumstances: Rinehart v Welker (2011) 93 NSWLR 311; [2011] NSWCA 403 at [27]; Rinehart v Rinehart (2014) 320 ALR 195; [2014] FCA 1241 at [23]. That is both because the operative word in s 37AG(1)(a) is “necessary” and because the court must take into account that a primary objective of the administration of justice is to safeguard the public interest in open justice: Rinehart v Welker at [32]; Rinehart v Rinehart at [25]. The paramount consideration is the need to do justice; publication can only be avoided where necessity compels departure from the open justice principle: Rinehart v Welker at [30]; Rinehart v Rinehart at [26].

The critical question is whether the making of a suppression or non-publication order is “necessary to prevent prejudice to the proper administration of justice”. The word “necessary” in that context is a “strong word”: Hogan v Australian Crime Commission (2010) 240 CLR 651; [2010] HCA 21 at [30]. It is nevertheless not to be given an unduly narrow construction: Fairfax Digital Australia and New Zealand Pty Ltd v Ibrahim (2012) 83 NSWLR 52; [2012] NSWCCA 125 at [8], citing Hodgson JA in R v Kwok (2005) 64 NSWLR 335; [2005] NSWCCA 245 at [13]. The question whether an order is necessary will depend on the particular circumstances of the case. Once the court is satisfied that an order is necessary, it would be an error not to make it: Hogan at [33]. There is no exercise of discretion or balancing exercise involved: Australian Competition and Consumer Commission v Air New Zealand Limited (No 3) [2012] FCA 1430 at [21].

(Emphasis added.)

8    More recently, in Farrell v Super Retail Group Limited (Confidentiality Applications) [2024] FCA 954 at [5], Lee J reiterated the deprecation by Full Courts of parties seeking inappropriately broad confidentiality and suppression orders notwithstanding the settled principles, and noted that courts have repeatedly sought to remind the profession of the express statutory limits on the making of such orders, the demanding nature of the statutory test involved, and the “very heavy” onus that needs to be discharged to obtain such an order.

SHOULD THE SUPPRESSION ORDER BE MADE?

9    In the present application, the Sourasis Defendants’ principal submission is that the publication of information in this proceeding to the media and the public will substantially prejudice the prospects of the parties resolving the matter at a mediation “to take place shortly”, and that any publication ought therefore be permitted only after a mediation takes place.

10    Two reasons were said to ground that submission. First, if the deal does not go through because of the adverse publicity, it would deprive the eighth defendant, Sayers Road, of the funds it proposes to use to redeem the plaintiffs’ units and to repay the plaintiffs’ loan amounts. Secondly, publication would have significant adverse commercial consequences for the defendants, including Mr Sourasis himself, and would thereby significantly hamper any goodwill between the parties that would be necessary for a successful mediation.

11    The Sourasis Defendants drew the Court’s attention to the decisions of Saw, to which reference has already been made, and Patterson v Westpac Banking Corporation [2024] FCA 629. In the latter case, Raper J recognised that “when determining the necessity of preventing prejudice to the proper administration of justice, account may be taken of the fact that the lack of access [to pleadings and other documents filed with the Court], may enhance the prospects of the parties’ negotiations” (at [21]) (citations omitted). That follows from the “very significant public interest” that exists “in the settlement of proceedings, particularly at an early stage”, and the fact that such negotiations “can be inhibited if the allegations which are the subject matter of the proceeding are fully in the public domain” (at [20], quoting Valentine v Fremantle media Australia Pty Ltd [2013] FCA 1293 at [14]). For these reasons, Raper J issued a non-publication and suppression order pursuant to s 37AF of the FCA Act over pleadings, applications, and related submissions and affidavit material until such time as the mediation process was terminated.

12    The Sourasis Defendants relied on two confidential affidavits of Mr Sourasis dated 11 March 2025 (the First Sourasis Affidavit) and 30 April 2025 (the Second Sourasis Affidavit). Those affidavits depose to the following relevant matters:

(a)    the ninth defendant (WMG Holdings), which owns the licence for the A-League team Western Melbourne Football Club, has entered into a Public Private Partnership with the Wyndham City Council for the development of a soccer stadium, training facilities and residential and retail lots at a substantial site in Sayers Road, Tarneit;

(b)    Sayers Road, as trustee of the Sayers Road Investment Trust, is the majority owner of the shares in WMG Group. Both the first and second plaintiffs, and numerous other investors, own units in the Sayers Road Investment Trust and therefore have an interest in the WMG Group development;

(c)    WMG Group has, for some time, been seeking an investor that would fund the development of the Tarneit precinct in exchange for an interest in WMG Group. Although discussions with potential investors were ongoing from at least July 2023, it was not until on or about 7 April 2025 that WMG Group, Sayers Road and a purchaser (amongst others) entered into a share purchase agreement and a subscription agreement for the purchase by the investor of a share of the development;

(d)    the agreements have not yet been made public and remain subject to a number of conditions precedent. One such condition precedent is a “material adverse change” clause, which entitles the investor to rescind the agreements if a “material adverse change” occurs to the parties or WMG Group’s business;

(e)    if the deal completes, Sayers Road will use the proceeds of sale of its shares in WMG Group (which will be sold to the investor) to:

(i)     redeem the units of those unitholders in the Sayers Road Investment Trust that no longer wish to remain involved in the development (including the plaintiffs’ units); and

(ii)     repay the loan amounts that Sayers Road and Jaszac Investments owe to the plaintiffs and which the plaintiffs claim in this proceeding.

13    In the Second Sourasis Affidavit, Mr Sourasis deposed that if the information in this proceeding is made public, “the investor might become concerned by adverse publicity and [that] might prejudice the investor’s willingness to complete the deal with WMG Group and Sayers Road”. He said further that, “Although the investor has now executed transaction documents, I still hold such a concern because any adverse publicity might either constitute a ‘material adverse change’ or might otherwise cause the investor to exercise rescission rights under a condition precedent that the investor might otherwise have waived”.

14    Two important matters arose in the course of exchanges with Counsel for the Sourasis Defendants. First, the Court was told that as at 9.30am this morning, the “deal” was made public, with the purchaser identified as a US entity called KAM. Secondly, the period of eight weeks sought as the duration for the suppression orders was chosen for the reason that the “deal” is likely to become unconditional within that timeframe.

15    As to the first matter relied on by the Sourasis Defendants to substantiate their claim that the mediation would be impeded by publication of the matters in the proceeding, namely that Sayers Road could be deprived of funds to satisfy the plaintiffs’ claims, Mr Koulouris criticised the evidence in support of the submission. Mr Koulouris submitted that the evidence as to the deal was “conclusionary hearsay speculation”. Although by this morning it appeared that the deal had in fact been done, there is force in Mr Koulouris’ submission that the details of the agreement reached are extremely thin. Whilst I accept that the agreement is prima facie confidential, the Sourasis Defendants were nevertheless prepared to disclose that it contained a “material adverse change” clause and a number of conditions precedent – but did not descend to any detail either of those clauses or any others. This is all the more so where Counsel for the Sourasis Defendants conceded that KAM already knows of the existence of this proceeding from its due diligence leading up to the conclusion of the deal.

16    I do not accept the submission that Mr Sourasis has “put forward the best evidence he could”; the evidence he has put forward has been highly selective. No information was provided to the Court, even on a confidential basis, as to the value of the deal or its timing, in circumstances where the defendants’ position is that the success of the deal would free up funds to repay Mr Koulouris, including the loan amounts they admit are owing. Nor was there any evidence as to the financial position of the defendants and how that might be improved if the deal is successful.

17    In this respect, the position is different from that in Patterson, where her Honour did not accept the submission of the third party, Fairfax Media, that the parties to the foreshadowed mediation were required to provide specific evidence as to how access to the documents would impede the mediation. In circumstances where the only parties suggesting that the mediation could be impeded are the same parties seeking the suppression orders, it is incumbent upon those parties to provide more than mere assertion that should the details of the proceeding be made public, the mediation would be impeded.

18    As to the second matter which the Sourasis Defendants contend could impede the mediation, namely the erosion of goodwill between the parties, the evidence did not support the proposition that there was any goodwill left between the parties in any event. The correspondence annexed to the affidavit of Laura Kate Anderson filed on 10 April 2025 is explicit that the plaintiffs have not yet agreed to mediate, contrary to the position sworn to in the First Sourasis Affidavit. Further, the plaintiffs said that they would not consider attending a mediation until the defendants have provided “a fulsome defence”. The plaintiffs maintain the position that they have not been provided with information about the status of their investments and the loans advanced.

19    To the extent that the Sourasis Defendants are concerned about adverse publicity of the claims made against them, it is apparent from the affidavit of Michelle Ball Jones filed on 30 April 2025 that there has been media coverage about the proposed deal, albeit without mention of KAM, since at least January of this year. There has also been adverse coverage of WMG’s financial circumstances, including on 28 March 2025 in relation to the Australian Tax Office’s application for a winding-up order. In an article published by the Australian Financial Review on 28 April 2025, there was significant coverage of various debts which remain unpaid by WMG. Mr Koulouris submits, and I accept, that it is apparent from the media coverage that the financial position of WMG and Sayers Road is a matter of public interest. Although the matters in the public domain do not directly mention the plaintiffs’ claims in this proceeding, it is tolerably clear that adverse matters concerning at least WMG are already in the public domain (see Young v Accenture Australia Pty Ltd [2024] FCA 1013).

20    Finally, Mr Koulouris criticises the breadth of the suppression order sought. He submits that Mr Sourasis’ evidence only addresses the WMG development deal and the interests of the tenth defendant, LPS Investment, a high-profile investor. No evidence was provided in respect of any of the other investments, loans and investment vehicles to justify suppression over claims made against all other defendants. As to LPS Investment, no reason other than its high profile was proffered as a reason for the suppression of material related to claims against it. It is well accepted that mere embarrassment is an insufficient basis for a suppression order: Ogawa v President of the Australian Human Rights Commission [2022] FCAFC 160; 294 FCR 221 at 227 [27] per Rares, Perry and Hespe JJ; Rinehart at 326 [54] per Bathurst CJ and McColl JA.

21    The present proceeding is different from those circumstances considered in Saw and Patterson. No mediation is either imminent (as in Saw) or on foot (as in Patterson). Unlike in Patterson, the parties do not agree that any prospective mediation is more likely to succeed if the Court file is suppressed. Unlike in Saw, and as was the case in Young, the matters which the Sourasis Defendants seek to protect, namely the true extent of financial claims against them, are already in the public domain, at least to some extent. The state of their financial position is one of the significant reasons why the plaintiffs are unconcerned about the potential effect of publication on any future mediation – they are not optimistic about the prospect of satisfaction of their claims.

22    The Sourasis Defendants have not demonstrated that an extension of the interim suppression and non-publication order over the Court file which I made on 11 April 2025 is necessary to prevent prejudice to the proper administration of justice. I am not persuaded that there is any prospect of a mediation being convened by the parties within the eight-week period posited by the Sourasis Defendants such that there is any risk that access to the Court file within that timeframe will impede any eventual mediation. As the Sourasis Defendants conceded, the risks identified by Mr Sourasis will likely have dissipated after eight weeks upon the deal becoming unconditional. Protection of a deal external to the matters the subject of a proceeding is not a proper basis for a suppression or non-publication order to be made.

DISPOSITION

23    The Sourasis Defendants’ amended interlocutory application dated 30 April 2025 is dismissed. The Sourasis Defendants must pay the plaintiffs’ costs of the application, to be taxed if not agreed.

Associate:

Dated:    6 May 2025

SCHEDULE OF PARTIES

QUD 3 of 2025

Defendants:

Fourth Defendant    SEAFORD BEACH TWO PTY LTD ACN 604 432 386 AS TRUSTEE FOR THE SEAFORD BEACH TWO UNIT TRUST

Fifth Defendant        DROMANA BEACH 333 PTY LTD ACN 616 749 430 AS TRUSTEE FOR DROMANA BEACH 333 UNIT TRUST

Sixth Defendant        DROMANA BEACH PTY LTD ACN 616 337 798

Seventh Defendant         SEAFORD BEACH THREE PTY LTD ACN 616 940 857 AS TRUSTEE FOR THE SEAFORD BEACH THREE UNIT TRUST

Eighth Defendant        SAYERS ROAD INVESTMENT CO PTY LTD ACN 630 881 720 AS TRUSTEE FOR THE SAYERS ROAD INVESTMENT CO UNIT TRUST

Ninth Defendant        WMG HOLDINGS CO PTY LTD ACN 631 286 238

Tenth Defendant         LPS INVESTMENT CO PTY LTD ACN 606 481 743

Eleventh Defendant        HEMISPHERE MANAGEMENT GROUP AUSTRALIA PTY LTD ACN 623 373 857

Twelfth Defendant         MCDONALD SPORTS & TALENT MANAGEMENT PTY LTD ACN 083 078 175

Thirteenth Defendant        CORPORATE KITCHEN PTY LTD ACN 162 864 557