In ABC Learning Centres Limited, application by Walker (No. 11)  FCA 40(3 February 2012) the plaintiffs (liquidators) (for whom we act) sought an order to release them from an undertaking to the Court to enable them to provide documents during public examinations to a litigation funder. The issue for determination if the principal litigation proceeded was whether charges over the assets given by the companies in liquidation in favour of a banking syndicate were voidable for the benefit of the creditors. The litigation funder would not provide financial assistance to the plaintiffs unless it was satisfied there were justifiable reasons to do so. Access to the documents was necessary for the litigation funder to make an informed decision to provide funding. The plaintiffs applied to vary the existing confidentiality agreement to provide all documents produced by the banks regardless of whether they were used in the examinations.
Section 596F(1)(e) Corporations Act 2001 gives the Court discretion to give access to documents produced for purposes of examinations which are not actually used in examination.
Cowdroy J held the original undertaking was not binding as the
terms were not suggestive that the plaintiffs would be permanently
bound. The documents were required for a specific purpose and the
use of the documents was to be subject to a further confidentiality
undertaking. In determining whether parties are bound by
undertakings, there is no 'rigid and exhaustive criteria'
for altering existing orders1. The legitimate interest
of the plaintiffs in obtaining access to the documents to fulfill
their statutory duties to
investigate the affairs of the company in liquidation outweighed the banks' interest in the continuation of the undertaking.
Lessons from the case
- The Court will vary an undertaking to give discovered documents to a non-party where:
- It is fundamental to assist in the investigation of a valid cause of action;
- The documents are not provided for general disclosure but for
- Documents are produced in a liquidators public examination and the documents fall within the definition of examinable affairs under ss9 and 53 Corporations Act 2001;
- The documents represent a compromise between the parties' competing interests and are subject to a further undertaking by the non-party to ensure confidentiality;
- The greater public interest in ensuring liquidators' fulfil their statutory obligations outweighs the interest of maintaining confidentiality of the documents.
The decision substantially enhances the ability of liquidators to access potential litigation funding.
1 Adam P Brown Male Fashions Proprietary Limited v Philip Morris Incorporated (1981) 148 CLR 170.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.