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In ABC Learning Centres Limited, application by Walker
(No. 11) [2012] 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.
Judgment
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
a
specific purpose;
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.
Footnotes
1Adam P Brown Male Fashions Proprietary
Limited v Philip Morris Incorporated (1981) 148 CLR
170.
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