Home Insights TGIF 9 April 2021 – Balancing Act: private examination allowed due to pending criminal proceedings

TGIF 9 April 2021 – Balancing Act: private examination allowed due to pending criminal proceedings

This week’s TGIF considers an application to the Federal Court for the private hearing of a public examination where separate criminal proceedings were also on foot.

Key takeaways 

  • Public examinations under the Corporations Act may be held in private where ‘special circumstances’ can be shown.

  • Ongoing or pending criminal proceedings may constitute special circumstances.

  • The Court will balance the interests of the corporation with both those of the examinee and the wider public interest. 

What happened?

Christian Sprowles was appointed liquidator of CWCN Pty Ltd (in liquidation) on 4 March 2020. As part of his investigation into the company’s affairs, Mr Sprowles sought examination of a Mr Lindsay Kirschberg. Mr Kirschberg is a director of Adelphi Finance Pty Ltd, a company which had significant business dealings with CWCN. A summons was issued to Mr Kirschberg in late 2020.

Separately, and earlier in 2020, Mr Kirschberg had been arrested and charged with conspiracy to defraud the Commonwealth, as well as conspiracy to deal with the proceeds of crime, money or property worth $1 million or more.

The Federal Police alleged that proceeds of crime were laundered through Adelphi disguised as loan payments. Criminal proceedings in both New South Wales and Queensland were pending at the time the summons was served.

Kirschberg’s application

Mr Kirschberg did not seek to adjourn or vacate his examination. However, he sought an order under Section 597 of the Corporations Act that his examination be held in private, and that the transcript be kept confidential. To be successful, it needed to be shown that ‘special circumstances’ existed justifying a private examination.

While accepting pending criminal proceedings would not automatically permit relief to be granted, Mr Kirschberg placed emphasis on the following matters in support of the orders sought:

  • he would not be entitled to refuse to answer questions in his examination on the grounds of self-incrimination;

  • the subject matter of the examination and the ongoing proceedings would likely overlap significantly;

  • orders had been made in the Queensland criminal case for Mr Kirschberg to be examined in private, with ancillary orders restricting access to information given in those proceedings. Accordingly, a public examination in this instance would frustrate those proceedings and the orders made; and

  • public availability of his examination answers could prejudice the other persons allegedly involved in the criminal proceedings.

Was a private examination justified?

In light of the above, the Court concluded that the pending criminal proceedings made the circumstances ‘special’ on the basis that Mr Kirschberg could suffer prejudice to his position through exposure of his evidence and lines of defence. The pending examination in Queensland and orders in that matter further weighed on the decision.

As a consequence, the Court also ordered the transcript be kept private, noting it would be illogical not to make both orders.

Given that the liquidator would still have access to the information derived from Mr Kirschberg’s examination evidence to discharge his duties to CWCN, the Court regarded the orders reflected an appropriate balance of the interests of CWCN’s creditors and the wider public interest in the conduct of fair criminal trials.


Although pending criminal proceedings will not automatically warrant that an examination be held in private, this case demonstrates there are a number of factors which will tend to favour such an application being successful.

The decision also provides comfort to insolvency practitioners that the Court will look to balance their interests, and duties on appointment, with those of any intended examinees.  


Restructuring and Insolvency

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