The Supreme Court of Western Australia recently considered whether public examinations of certain company directors should be held in private in the matter of Kirman & Harris as Joint liquidators of GH1 Pty Ltd (Receivers and Managers Appointed) (In Liquidation) v Bazzo.1 The starting point was that examinations ought to be conducted in public. The central issue was whether the fact of long running and substantial investigations into the affairs of the examinees, and the prospect of criminal charges against the examinees, amounted to “special circumstances” that warranted an order that the examinations be conducted in private.
The examinees had been under an investigation by the Australian Federal Police and Australian Taxation Office since 2008.
During 2017 and 2018, the two companies in question entered into liquidation. The liquidators sought orders to examine the directors of each of the companies. It was not disputed that it was appropriate that such orders be made. However, the examinees sought orders to the effect that the examinations be conducted in private.
Kenneth Martin J stated that he was:
prepared to evaluate both these matters on the basis that there is a strong likelihood, at some presently uncertain future time, that both [examinees] will face significant criminal charges arising out of the financial and trading affairs of the many corporations with which they are associated – including the financial affairs of the two corporations whose liquidators make the present examination applications.2
The examinees argued that, having regard to the long running investigations into their affairs, an examination in public by the liquidators posed a real risk to ‘the integrity and fairness of a trial in light of the accusatorial process’.3 They referred to an observation by French CJ and Crennan J in X7 v Australian Crime Commission  HCA 29 at :
Given the onus on the prosecution to prove an offence, and the non-compellability of an accused, in the absence of a factor such as the independent sourcing of evidence it is not possible to reconcile a fair trial with reliance on evidence against a person at trial which derives from compulsorily obtained material establishing that person's guilt, or disclosing defences.
Relatedly, the examinees argued that prejudice may result from indirect or derivative use of information obtained from a liquidator’s examination.
Section 597(4) of the Corporations Act4 provides:
An examination is to be held in public except to such extent (if any) as the Court considers that, by reason of special circumstances, it is desirable to hold the examination in private.
In this case, Kenneth Martin J noted that the term ‘special circumstances’ was not defined under the Corporations Act but went on to state that ‘…there is a suggestion in some cases that a pendency of related criminal charges, depending on the circumstances, can constitute special circumstances’.5
Although the examinees were the subject of a long running investigation, there were no criminal charges pending against them. As set out above, his Honour concluded that it was appropriate to determine the application on the basis that there was a strong likelihood of charges being laid.
His Honour concluded that a perceived likelihood of criminal charges against the examinees on its own was not sufficient. His Honour reasoned that this argument was ‘pitched only at that theoretical and plenary level’6 and that ‘[m]ore is necessary … to constitute a sufficient basis to depart from the default position as it is textually set down under the Corporations Act.’7
Quoting Mason CJ in Hamilton v Oades (1989) 166 CLR 486, Kenneth Martin J reiterated that:
The honest conduct of the affairs of companies is a matter of great public concern today. If the legislature thinks that in this field the public interest overcomes some of the common law’s traditional consideration for the individual, then effect must be given to the statute which embodies this policy.8
Ultimately, the Court was not persuaded that the “special circumstances” existed which warranted the examinations being conducted in private.
The decision highlights the legislative intention that examinations under s596A (and presumably s596B) of the Corporations Act be conducted in public. The strong likelihood of an examinee facing serious criminal charges is not sufficient, on its own, to amount to special circumstances that would warrant a departure from that approach.
  WASC 45.
 Ibid .
 Ibid .
 2001 (Cth).
 Ibid .
 lbid .
 Ibid .