Gothard v Fell; in the matter of Allco Financial Group Ltd (receivers and managers appointed) (in liq) (2012) 88 ACSR 328

On 15 May 2012, Jacobson J of the Federal Court of Australia allowed an application by Receivers to be released from confidentiality undertakings so that use could be made of Australian Securities and Investments Commission (ASIC) examination transcripts.

Gordon Fell and David Coe (the first and second respondents) were both former directors of Allco Finance Group Limited (Allco), a listed public company. In October 2007 Allco purchased, from companies associated with Fell and Coe, shares in Rubicon Holdings (Aust) Ltd (Rubicon) for $64 million and shares in Allco (Rubicon Deal). Allco collapsed in late 2008. The ASIC conducted an investigation into Allco’s collapse, during which it examined Fell and Coe (among others) and obtained documents under its powers in Part 3 of the ASIC Act 2001 (Cth) (Act). Fell and Coe were both examined at length about the Rubicon Deal under section 19 of the Act.

During the course of Allco’s receivership the Receivers became aware of the existence of the section 19 examination transcripts (Transcripts) and subpoenaed ASIC to produce them. ASIC produced the Transcripts subject to as express confidentiality undertaking executed by the Receivers that they would not disclose the confidential information or documents except as required or permitted by an order of the Court, and that they would not use the confidential information or documents “for any purpose other than for the conduct of the proceedings” (Undertakings).

The Receivers sought to be released from the Undertakings so that they could consider the material in the course of the receivership of Allco and to pursue proceedings against Fell and/or Coe for contraventions of their duties as directors of Allco in respect of the Rubicon Deal.

In order to be released from an undertaking the person seeking to be released must show “special circumstances”. The “special circumstances” test, as stated by Wilcox J in Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217 and accepted by the Full Court in Liberty Funding Pty Ltd v Phoenix Capital Ltd (2005) 218 ALR 283 requires a party to show good reason why documents produced or information obtained in one piece of litigation should be used for the advantage of a party in another piece of litigation or for other non-litigious purposes. Essentially, the exercise of the discretion is a balancing act taking into account the nature of the material produced and the policy underlying the undertaking, with a view to determining whether the needs of justice are better served by releasing or maintaining the undertaking.

The Receivers submitted that using the Transcripts and document bundles to determine whether to pursue proceedings against Fell and Coe was consistent with the purpose for which the examinations were conducted, and that it was contemplated that the Receivers might use the documents for these purposes. The Court accepted that the “special circumstances” test was satisfied and allowed the Receivers to be released from the Undertakings.