Case: Jackson v Sterling Industries Limited [1987] HCA 23 ; (1987) 162 CLR 612
Outcome: followed
council argued essentially that the issue for decision was properly characterised in my summary in Wingecarribee (No 1) [2009] FCA 503 at [10] where I said: "In my opinion, the question whether a respondent or defendant has assets that are available to satisfy a judgment and whether there is another party who may be liable, such as an insurer the subject of a charge under s 6 of the Law Reform (Miscellaneous Provisions) Act are matters which are within the power of the Court to require to be disclosed in the proceedings themselves: see Jackson v Sterling Industries Limited [1987] HCA 23 ; (1987) 162 CLR 612 at 622-623 per Deane J, where he discussed the ambit of s 23 of the Federal Court of Australia Act and the power of the court to grant relief in the nature of Mareva orders, including the disclosure of assets by a defendant or respondent." Section 23 of the Federal Court of Australia Act 1976 (Cth) provides that: "The Court has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders, and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate." The inherent or implied power of the Court as a superior court of record constituted under the Act may also give the court additional powers. Lehman Brothers argues that essentially there are two substantive reasons why there is either no power, or the circumstances of the proceedings are such as to condition and constrain the exercise of any such power. First, it points to the general principle that the courts have been unwilling to accept that insurance arrangements entered into between parties to proceedings for indemnity in respect of any liability that might be established against those parties in the proceedings are relevant or discoverable in the ordinary course of litigation or having regard to the principles on which discovery is given. The power of the Court to require a party to proceedings in which relief is sought against it to disclose its assets has been established authoritatively in Jackson v Sterling Industries Limited [1987] HCA 23 ; (1987) 162 CLR 612. In the leading judgment, Deane J ( Jackson 162 CLR at 622-623) discussed the power to make what are now known as Mareva orders ( Cardile v LED Builders Pty Ltd [1999] HCA 18 ; (1999) 198 CLR 380 at 401 [42] ) saying that (omitting citations): "That general power has been held to encompass an order requiring the disclosure by a defendant of his assets ... As a general proposition, it should now be accepted in this country that "a Mareva injunction can be granted ... if the circumstances are such that there is a danger of [the defendant's] absconding, or a danger of the assets being removed out of the jurisdiction or disposed of within the jurisdiction, or otherwise dealt with so that there is a danger that the plaintiff, if he gets judgment, will not be able to get it satisfied"." The other members of the High Court agreed with that approach: Jackson 162 CLR at 616 per Mason CJ, at 617 and 619 per Wilson and Dawson JJ. Indeed, Wilson and Dawson JJ said that the purpose of the grant of a Mareva order is to prevent the abuse of the process of the Court by frustration of its remedies. The power could be exercised for purposes including to prevent a defendant from removing assets in order to defeat a judgment: ( Jackson 162 CLR at 617). They explained that the power ( Jackson 162 CLR at 619): "... exists not to create additional rights but to enable a court to protect its process from abuse in relation to the enforcement of its orders. It is neither a species of anticipatory execution nor does it give a form of security for any judgment which may ultimately be awarded." Likewise, Brennan J, in agreeing, explained that the remedy was incidental to the exercise by the court of its jurisdiction to enter judgment for a debt or damages and was designed to prevent the defendant from divesting himself of his assets whereby enforcement of such a judgment might be frustrated ( Jackson 162 CLR at 621). There is no suggestion here that the administrators have the purpose of interfering with or frustrating the ordinary execution of the Court's orders. But, the effect of implementation of a deed of company arrangement, as opposed to a liquidation, can radically affect the ordinary rights of creditors. In a liquidation their rights would be converted into a right to prove in the liquidation which may be different to their rights under a deed of company arrangement. Indeed, some of the proposed terms of Lehman Brothers Asia Holdings' deed to which I have referred, such as the release of rights against third parties including directors and officers, could have a significant and adverse affect on a creditor being able to enforce its ordinary remedies. In addition, the suggested deed of company arrangement will make provision for the distribution of whatever entitlements may be available to creditors that would otherwise have had rights in respect of insurance policies, such as those written by insurers A, B or C that might respond to the various claims. Those proposals include ones affecting the creditors rights to proceed directly against insurers under s 6 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) or against the directors and officers of Lehman Brothers or their insurers. I am of opinion that the Court's power to require Lehman Brothers to produce the insurance documents is found in s 23 and the inherent or implied power of the Court to do justice in a matter before it. It is an important part of the Court's ordinary processes to permit litigants before it to have effective remedies and the means, if appropriate, of enforcing them when orders are made. The effect of the administration, as Pt 5.3A contemplates, will be to bind all creditors, including the council, in the event that a deed of company arrangement is entered into and is not terminated. Because that may produce outcomes that possibly may impact on the conduct of the current proceedings in a way that is not necessarily the same as in the ordinary course of every other piece of litigation, I am of opinion that it is appropriate to require production of the insurance information sought having regard to considerations to which I have referred: Jackson [1987] HCA 23 ; 162 CLR 612 ; Batistatos [2006] HCA 27 ; 226 CLR 256 ; Lopez [1997] FCA 454.