Re Pan Pharmaceuticals Ltd [2003] NSWSC 1204

Reported Decision : (2004) 22 ACLC 52

New South Wales Supreme Court

CITATION : Re Pan Pharmaceuticals Ltd [2003] NSWSC 1204 HEARING DATE(S) : 10/12/03 JUDGMENT DATE : 11 December 2003 JURISDICTION: Equity Division JUDGMENT OF : Barrett J DECISION : Direction against publication refused

CATCHWORDS : CORPORATIONS - winding up - public examination of officers - application for direction precluding publication of certain questions and answers - whether grounds exist - whether direction may be made before questions asked and answered LEGISLATION CITED : Corporations Act 2001 (Cth) Friedrich v Herald & Weekly Times Ltd [1990] VR 995 CASES CITED : Re Harris Scarfe Holdings Ltd [2001] SASC 283 Jagelman v Sheahan (as liq of Moage Ltd) (2002) 41 ACSR 487 Lamb v Fixler (1994) 13 ACSR 447 PARTIES : Anthony Gregory McGrath and Christopher John Honey as Liquidators FILE NUMBER(S) : SC 5579/03 COUNSEL : Mr P M Wood/Mr H W D Stowe - Liquidators Mr R J Weber SC - Mr James Selim SOLICITORS : Blake Dawson Waldron - Liquidators Aitken McLachlan Thorpe - Mr James Selim

THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

BARRETT J

THURSDAY 11 DECEMBER 2003

5579/03 - IN THE MATTER OF PAN PHARMACEUTICALS LTD

JUDGMENT

1 The applicant, Mr Selim, had been the managing director of Pan Pharmaceuticals Ltd for some time before it became subject to a form of creditors voluntary winding up that arises as a sequel to voluntary administration. An examination of Mr Selim under Pt 5.9 of the Corporations Act 2001 (Cth) is currently in progress before Acting Senior Deputy Registrar Wearne. 2 In the course of the examination yesterday Mr Wood, counsel for the liquidators, made it known to Mr Weber SC, counsel for Mr Selim, that he intended to embark upon a particular line of questioning. Mr Wood had already asked Mr Selim some questions about two notices of assessment issued to him by the Commissioner of Taxation, but without identifying any figures in them. Mr Wood indicated that he intended next to identify the sum shown in each such notice as Mr Selim's amended taxable income and to ask questions about the ways in which the income thus identified had been expended and applied. The two documents are at pages 203 and 204 of a bundle entitled "Financial Documents Volume 1" that is before the Acting Senior Deputy Registrar. 3 With that indication having been given, Mr Weber approached me as the Equity Division Duty Judge seeking a direction under s.596F(1)(f) of the Corporations Act prohibiting publication and communication of both the questions foreshadowed by Mr Wood and such answers to them as Mr Selim might give, making it clear, however, that any such direction should not be in terms that would inhibit the liquidators in using the questions and answers in the due and proper exercise of their functions and discharge of their duties. The main concern is, as I understand it, that the questions and answers should be shielded from media coverage. Mr Wood indicated that the liquidators' attitude to that application was essentially neutral, assuming that the qualification on any direction was sufficient in the liquidator's eyes to enable them to perform their tasks in a fully comprehensive way. 4 Mr Wood also indicated that he had it in mind to ask similar questions, that is questions identifying a particular sum of money and inquiring into the ways the money had been applied, with respect to the content of a further document, being the document at page 271 of the "Financial Documents Volume 1" bundle. 5 Mr Weber emphasised that the application is not an application for an order that the examination continue in private, that being an order that under s.597(4) can only be made if the court considers that "special circumstances" make it "desirable" that the examination be in private. Section 596F(1)(f) by contrast contains no guidance as to the matters the court is to take into account in deciding whether to prohibit publication or communication of information, including questions asked and answers given. 6 Mr Weber accepted that, as is made clear by the decision in Re Harris Scarfe Holdings Ltd [2001] SASC 283, it is for his client to make a positive case for the imposition of the restrictions sought. Mr Weber submitted that the matter must be approached by reference to the policy underlying Pt 5.9 as a whole. He referred, in that connection, to the decision of the Full Court of the Supreme Court of Victoria in Friedrich v Herald & Weekly Times Ltd [1990] VR 995. It was there said that there were two important public purposes in the structure of analogous predecessor provisions. First, to enable a liquidator to gather information concerning the winding up of a company, including, no doubt, by pursuing recovery possibilities against officers; and, second, to enable evidence and information to be obtained in relation to the bringing of charges. 7 Dealing then specifically with the task of a court asked to make an order prohibiting publication or communication of questions and answers, the Full Court said: "Whatever head of jurisdiction be invoked, an order cannot be justified unless it be shown that the particular question and answer or even, arguably, some particular line of questioning will, if published, result in prejudice of a kind which outweighs the need for publicity which the legislature sees as forming an essential element of the purposes of examinations under s.541."