LQ. FEDERAL COURT OF AUSTRALIA CATCHWORDS 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 EQUITIES CORPORATION LIMITED (In Liquidation), WARDLEY AUSTRALIA LIMITED, LAWRENCE ROBERT CONNELL, WARDELY AUSTRALIA SECURITIES LIMITED, ROTHWELLS LIMITED (In Liquidation) JAMES PHILLIP YONGE and CROSS CLAIMANTS WAG 115, 116 and 118 of 1990 FRENCH J PERTH 1 APRIL 1996 13 JAN 1997 EDERAL COURT OF AUSTRALIA PRINCIPAL REGISTRY IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION BETWEEN: No. WAG 115, 116 and 118 of 1990 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 Gn 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 WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION BETWEEN: CORAM: FRENCH J. Perth 1 April 1996 wa we No. WAG 115, 116 and 118 of 1990 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 2. REASONS FOR JUDGMENT ON MOTION FOR INSPECTION OF 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 involvement 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 Corporation (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: "L All interlocutory applications in this action after the date of this order be heard by this honourable Court in camera. Until the conclusion of the trial of the Defendant LJ Carter upon charges made under Sections 412 and 420 of the Criminal Code and arising out of his audit of the Plaintiff for the years 1982 to 1988 (inclusive) or until further order: (a) all pleadings, further and better particulars, evidence and submissions filed by the Defendants to this action, shall remain confidential to the Court, the parties and their legal advisers, . the Plaintiffs Committee of Inspection and any witness for a party to whom the disclosure or publication of any such document is necessary in order to obtain that witness's evidence; (b) no pleadings, further and better particulars, evidence or submissions filed by the Defendants in this action, or any extract or summary thereof, are to be published or disclosed in any other way by any person or by the 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 member of the Plaintiff's Committee of 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 4, evidence, without a variation of this order for confidentiality. 3. Paragraph 2 of this order shall not apply to the disclosure or publication of any document pursuant to any statutory notice or court order requiring such disclosure or publication, provided that the Defendants herein are given not less than 24 hours notice of any application for any such court order. 4, The patties have liberty to apply on 24 hours notice for any variation of the above orders." In the course of these proceedings I declined to direct the production of the documents the subject of Master Adams order for inspection. It was, however, suggested to the applicant that it apply to the 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 the appropriate approach to comity as between this Court and the Federal Court, that is a matter which should be determined by the latter Court and not by this Court." 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. That the Fifth Respondent do 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. That the above documents may be disclosed or published but are otherwise to remain confidential to the following persons: (a) legal advisers representing the State, being those persons to be identified in a minute to be filed before the hearing of this motion; (b) the following other persons representing the State: (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 underway 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 he 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. — T awww - Associate: Date: 1 Al IAAL 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 8. Counsel for the Third Respondent: Mr N. Gentilli Solicitors for the Third Respondent: Jackson McDonald Counsel for the Fifth Respondent: Mr R. Douglas 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