FEDERAL COURT OF AUSTRALIA

Carter v Gartner, in the matter of Gartner Wines Pty Limited

and the Corporations Act 2001 [2003] FCA 653

CORPORATIONS – examination under s 596A of the Corporations Act 2001 (Cth) – application to set aside examination summons or staying examination – whether issue of examination summons resulted in abuse of process – whether examination summons obtained for improper purpose – purpose of receivership – same solicitor acting both for receiver and for party in third party litigation – whether documents obtained during examination will inevitably be used for improper purpose

CORPORATIONS – examination under s 596A of the Corporations Act 2001 (Cth) – affidavits filed in support of examination summons - application to inspect affidavits – whether affidavits can be inspected as a matter of right – whether Court unable to fairly and properly dispose of application to set aside summons without applicant viewing affidavits

Corporations Act 2001 (Cth) Division 1 of Part 5.9, ss 9, 596, 597

Federal Court of Australia Act 1976 (Cth) s 59

Corporations Law s 597

Federal Court (Corporations) Rules 2000 r 11

D’Arrigo v Carter [2003] FCA 5 followed

Douglas-Brown v Furzer (1994) 11 WAR 400 cited

Downsview Nominees Ltd v First City Corporation Ltd [1993] AC 295 cited

Harvey v Burfield [2003] SASC 192 approved

Henke v Carter [2002] FCA 252 distinguished

Hill v Smithfield Service Centre Pty Ltd (in liq) [2002] NSWSC 999; 196 ALR 246 cited

Hong Kong Bank of Australia Ltd v Murphy (1992) 28 NSWLR 512 cited

K Mart Australia Limited v Commissioner of Taxation, [1995] FCA 760 cited

Re B Johnson & Co (Builders) Ltd [1955] Ch 634 cited

Re Bosun Pty Ltd (in liq); Makris v Sheahan [2000] SASC 180 cited

Re Excel Finance Corporation Ltd (Receiver and Manager Appointed; Worthley v England (1994) 52 FCR 69 applied

Re Hugh J Roberts Pty Ltd [1970] 2 NSWR 541 cited

Re Southern Equities Corporation Ltd (in liq); Bond v England (1997) 25 ACSR 394 followed

Simionato v Macks (1996) 19 ACSR 34 cited

Williams v Spautz (1992) 174 CLR 509 cited

IN THE MATTER OF GARTNER WINES PTY LIMITED (Receivers and Managers Appointed) (Administrators Appointed) ACN 086 333 388 and OTHERS AND THE CORPORATIONS ACT 2001

BRUCE JAMES CARTER and JOHN RONALD HART v MICHAEL JOHN GARTNER

S 3015 of 2002

BRANSON J

30 JUNE 2003

SYDNEY VIA VIDEO LINK (HEARD IN ADELAIDE)

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	S 3015 of 2002

IN THE MATTER OF:	GARTNER WINES PTY LIMITED (Receivers and Managers Appointed) (Administrators Appointed) ACN 086 333 388 TYNSKI PTY LTD (Receivers and Managers Appointed) ACN 008 162 123 SKYBAY PTY LTD (Receivers and Managers Appointed) ACN 008 163 782 NORSBAY PTY LTD (Receivers and Managers Appointed) ACN 008 205 687 AUSVINE VITICULTURAL MANAGEMENT PTY LTD (Receivers and Managers Appointed) ACN 007 184 901 FRESREND PTY LTD (Receivers and Managers Appointed) ACN 008 174 990 VAMTOWN PTY LTD (Receivers and Managers Appointed) ACN 008 061 407 GARTNERS’ VINICULTURE MANAGEMENT PTY LTD (Receivers and Managers Appointed) (Administrators Appointed) ACN 080 534 989 M J GARTNER PTY LTD (Receivers and Managers Appointed) ACN 077 644 181 GARTNER FARMS PTY LTD (Receivers and Managers Appointed) (Administrators Appointed) ACN 086 128 850 AND THE CORPORATIONS ACT 2001
BETWEEN: AND:	BRUCE JAMES CARTER and JOHN RONALD HART APPLICANTS MICHAEL JOHN GARTNER EXAMINEE
JUDGE:	BRANSON J
DATE OF ORDER:	30 JUNE 2003
WHERE MADE:	SYDNEY VIA VIDEO LINK (HEARD IN ADELAIDE)

THE COURT ORDERS THAT the application be dismissed.

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	S 3015 OF 2002

IN THE MATTER OF:

GARTNER WINES PTY LIMITED (Receivers and Managers Appointed) (Administrators Appointed) ACN 086 333 388

TYNSKI PTY LTD (Receivers and Managers Appointed) ACN 008 162 123

SKYBAY PTY LTD (Receivers and Managers Appointed) ACN 008 163 782

NORSBAY PTY LTD (Receivers and Managers Appointed) ACN 008 205 687

AUSVINE VITICULTURAL MANAGEMENT PTY LTD (Receivers and Managers Appointed) ACN 007 184 901

FRESREND PTY LTD (Receivers and Managers Appointed) ACN 008 174 990

VAMTOWN PTY LTD (Receivers and Managers Appointed) ACN 008 061 407

GARTNERS’ VINICULTURE MANAGEMENT PTY LTD (Receivers and Managers Appointed) (Administrators Appointed) ACN 080 534 989

M J GARTNER PTY LTD (Receivers and Managers Appointed) ACN 077 644 181

GARTNER FARMS PTY LTD (Receivers and Managers Appointed) (Administrators Appointed) ACN 086 128 850

AND

THE CORPORATIONS ACT 2001

BETWEEN:

AND:

BRUCE JAMES CARTER and

JOHN RONALD HART

APPLICANTS

MICHAEL JOHN GARTNER

EXAMINEE

JUDGE:	BRANSON J
DATE:	30 JUNE 2003
PLACE:	SYDNEY (HEARD IN ADELAIDE)

REASONS FOR JUDGMENT

INTRODUCTION

1 This is another application requiring the Court to give consideration to whether the issue of an examination summons has resulted in an abuse of process. Michael John Gartner (‘Mr Gartner’) has been summoned for examination under s 596A of the Corporations Act 2001 (Cth) (‘the Act’). The Court issued the summons served on Mr Gartner (‘the examination summons’) on the application of the applicants. Mr Gartner asserts that, in the circumstances of this case, the relationship between the applicants and the National Australia Bank Limited (‘NAB’) renders the purpose for which the examination summons was obtained an improper purpose.

2 Mr Gartner, in effect, seeks an order setting aside the examination summons or, alternatively, staying his examination under the examination summons. Mr Gartner also seeks an order allowing him and his legal advisers to inspect the affidavits filed in support of the application for the examination summons.

3 For the reasons set out below, I have concluded that Mr Gartner’s application should be dismissed.

procedural history

4 By an amended interlocutory process dated 6 May 2003 the applicants applied to the Court under Division 1 of Part 5.9 of the Act. The applicants sought, amongst other things, the issue of various summons under s 596A and s 596B of the Act. Each of the applicants swore an affidavit in support of the application (‘the supporting affidavits’). As required by the Federal Court (Corporations) Rules 2000 (‘the Rules’) the affidavits were each filed in an envelope.

5 On 6 May 2003 the District Registrar (‘the Registrar’) made orders including the following:

‘1. Michael John Gartner of Lot 97, Riddoch Highway Coonawarra, South Australia be summoned pursuant to section 596A of the Act to attend before this Honourable Court to be examined in respect of the examinable affairs of:

1.1. Gartner Wines Pty Ltd (Receivers & Managers App.) (In Liquidation) ACN 086 333 388 (Gartner Wines);

1.2. Tynski Pty Ltd (Receivers & Managers App.) ACN 008 162 123 (Tynski);

1.3. Skybay Pty Ltd (Receivers & Managers App.) ACN 008 163 782 (Skybay);

1.4. Norsbay Pty Ltd (Receivers & Managers App.) ACN 008 205 687 (Norsbay);

1.5. Ausvine Viticultural Management Pty Ltd (Receivers & Managers App.) ACN 007 184 901 (AVM);

1.6. Fresrend Pty Ltd (Receivers & Managers App.) ACN 008 174 990 (Fresrend);

1.7. Vamtown Pty Ltd (Receivers & Managers App.) ACN 008 061 407 (Vamtown);

1.8. Gartners’ Viniculture Management Pty Ltd (Receivers & Managers App.) (Subject to a Deed of Company Arrangement) ACN 080 534 989 (GVM);

1.9. MJ Gartner Pty Ltd (Receivers & Managers App.) ACN 077 644 181 (MJ Gartner Pty Ltd); and

1.10. Gartner Farms Pty Ltd (Receivers & Managers App.) (Subject to a Deed of Company Arrangement) ACN 086 128 850 (Gartner Farms).

(which companies are collectively referred to as the Gartner Group).

2. Pursuant to section 596D of the Act, Michael John Gartner produce at his examination such books and records as are in his possession as are set out in the attached Schedule A.’

Schedule A attached to the Registrar’s order identifies a wide range of documents relating to the companies in respect of which Mr Gartner was to be examined. The documents include documents relating to a winery development with which the companies had an involvement and its financing.

6 On 9 May 2003 the examination summons was issued to Mr Gartner in accordance with the order of the Registrar dated 6 May 2003.

7 On 15 May 2003 Mr Gartner applied to the Court under rule 11.5 of the Rules for the following relief:

‘1. That the order of Registrar Christie of 6 May 2003 made pursuant to section 596A of the Corporations Act 2001 by which this Honourable Court ordered that Michael John Gartner be summoned to appear before this Honourable Court for examination … be set aside and that the summons dated 9 May 2003 be discharged.

2. That the order of Registrar Christie dated 6 May 2003 made pursuant to section 596D of the Corporations Act 2001 by which this Honourable Court ordered that Michael John Gartner produce to this Honourable Court all books and records in his possession be set aside.

3. An order pursuant to section 596C(2) of the Corporations Act 2001 and rule 11.3(7) of the Corporations Rules that Michael John Gartner and his legal advisers be at liberty to inspect the affidavits on the file numbered S3015 of 2002.

4. In the alternative, that the said orders be permanently stayed as an abuse of process.

5. Further, and in the alternative, that the time for compliance of the orders and summons be adjourned until further order.

6. Orders for the costs of and incidental to this application.

7. Such further or other orders and directions as this Honourable Court deems fit.’

legislative provisions

8 Division 1 of Part 5.9 of the Act relevantly contains the following provisions:

‘Mandatory examination

596A The Court is to summon a person for examination about a corporation's examinable affairs if:

(a) an eligible applicant applies for the summons; and

(b) the Court is satisfied that the person is an examinable officer of the corporation or was such an officer during or after the 2 years ending:

(i) if the corporation is under administration—on the section 513C day in relation to the administration; or

(ii) if the corporation has executed a deed of company arrangement that has not yet terminated—on the section 513C day in relation to the administration that ended when the deed was executed; or

(iii) if the corporation is being, or has been, wound up—when the winding up began; or

(iv) otherwise—when the application is made.

Discretionary examination

596B (1) The Court may summon a person for examination about a corporation’s examinable affairs if:

(a) an eligible applicant applies for the summons; and

(b) the Court is satisfied that the person:

(i) has taken part or been concerned in examinable affairs of the corporation and has been, or may have been, guilty of misconduct in relation to the corporation; or

(ii) may be able to give information about examinable affairs of the corporation.

(2) This section has effect subject to section 596A.

Affidavit in support of application under section 596B

596C (1) A person who applies under section 596B must file an affidavit that supports the application and complies with the rules.

(2) The affidavit is not available for inspection except so far as the Court orders.

Content of summons

596D (1) A summons to a person under section 596A or 596B is to require the person to attend before the Court:

(a) at a specified place and at a specified time on a specified day, being a place, time and day that are reasonable in the circumstances; and

(b) to be examined on oath about the corporation’s examinable affairs.

(2) A summons to a person under section 596A or 596B may require the person to produce at the examination specified books that:

(a) are in the person’s possession; and

(b) relate to the corporation or to any of its examinable affairs.

(3) A summons under section 596A is to require under subsection (2) of this section the production of such of the books requested in the application for the summons as the summons may so require.

Notice of examination

596E (1) If the Court summons a person for examination, the person who applied for the summons must give written notice of the examination to:

(a) as many of the corporation's creditors as reasonably practicable; and

(b) each eligible applicant in relation to the corporation, except:

(i) the person who applied for the examination; and

(ii) if a person authorised by ASIC applied for the examination—ASIC; and

(iii) a person who is such an eligible applicant only because the person is authorised by ASIC.

Court may give directions about examination

596F (1) Subject to section 597, the Court may at any time give one or more of the following:

(a) a direction about the matters to be inquired into at an examination;

(b) a direction about the procedure to be followed at an examination;

(d) a direction that a person be excluded from an examination, even while it is being held in public;

(e) a direction about access to records of the examination;

(f) a direction prohibiting publication or communication of information about the examination (including questions asked, and answers given, at the examination);

(g) a direction that a document that relates to the examination and was created at the examination be destroyed.

(2) The Court may give a direction under paragraph (1)(e), (f) or (g) in relation to all or part of an examination even if the examination, or that part, was held in public.

(3) A person must not contravene a direction under subsection (1).

Conduct of examination

597 (4) 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.

(5A) Any of the following may take part in an examination:

(a) ASIC;

(b) any other eligible applicant in relation to the corporation;

and for that purpose may be represented by a lawyer or by an agent authorised in writing for the purpose.

(5B) The Court may put, or allow to be put, to a person being examined such questions about the corporation or any of its examinable affairs as the Court thinks appropriate.

(6) A person who is summoned under section 596A or 596B to attend before the Court must not intentionally or recklessly:

(a) fail to attend as required by the summons; or

(b) fail to attend from day to day until the conclusion of the examination.’

9 The dictionary contained in s 9 of the Act relevantly defines an ‘eligible applicant’ as:

‘(a) ASIC [i.e. Australian Securities and Investments Commission]; or

(b) …

(d) …

(e) a person authorised in writing by ASIC to make:

(i) applications under the Division of Part 5.9 in which the expression occurs; or

(ii) such an application in relation to the corporation.’

10 Rule 11.3 of the Rules provides:

‘(1) An application for the issue of an examination summons must be made by filing an interlocutory process or an originating process, as the case requires.

(2) The application may be made without notice to any person.

(3) The originating process, or interlocutory process, seeking the issue of the examination summons must be:

(a) supported by an affidavit stating the facts in support of the process; and

(b) accompanied by a draft examination summons.

(4) The originating process, or interlocutory process, and supporting affidavit must be filed in a sealed envelope marked, as appropriate:

(a) “Application and supporting affidavit for issue of summons for examination under section 596A of the Corporations Law”; or

(b) “Application and supporting affidavit for issue of summons for examination under section 596B of the Corporations Law”.

(5) If the application is not made by the liquidator, the liquidator must be given notice of the application and, if required by the liquidator, served with a copy of the originating process, or interlocutory process, and the supporting affidavit.

(6) If the application is not made by the Commission, the Commission must be given notice of the application and, if required by the Commission, served with a copy of the originating process, or interlocutory process, and the supporting affidavit.

(7) Unless the Court otherwise orders, an affidavit in support of an application for an examination summons is not available for inspection by any person.

(8) An examination summons must be in accordance with Form 17.

background facts

11 Mr Gartner and his wife, Alice Winifred Gartner (together ‘Mr & Mrs Gartner’) have for many years carried on a farming business under the partnership name ‘MJ & AW Gartner’ on land owned by them in the Coonawarra district of South Australia. Since about 1988 various companies have been incorporated in which Mr & Mrs Gartner, or Mr Gartner alone, hold shares. Mr & Mrs Gartner and the companies in which they, or Mr Gartner, hold shares will be together referred to as the ‘Gartner Family Group’.

12 In late 1998 and early 1999 Mr Gartner commenced consideration of becoming involved in a winery business at Coonawarra.

13 In early May 2001, Mr Gartner retained Ernst & Young, a firm of chartered accountants, and Ernst & Young Corporate Finance Pty Limited, a firm of consultants, (together ‘E & Y’) to raise capital to enable the Gartner Family Group to construct a winery. E & Y, pursuant to the retainer, produced a document entitled ‘Financial Submission’. This document was provided to, amongst others, NAB.

14 On about 11 October NAB presented a document entitled ‘Corporate Letter of Offer’ to the Gartner Family Group. By this document NAB advised that it would agree to provide certain financial facilities to the Gartner Family Group to fund the construction of a winery. In November 2001 the Gartner Family Group accepted the NAB offer of financial facilities. Members of the Gartner Family Group entered into mortgages and debentures and executed guarantees in favour of NAB. E & Y were paid a services fee from the funds advanced by NAB.

15 On 20 February 2002, Bruce James Carter (‘Mr Carter’) was appointed by NAB to investigate the affairs of Gartner Wines Pty Limited. Sometime in February 2002 NAB refused to allow further drawings to be made from the financial facilities which it had agreed to provide to the Gartner Family Group. NAB proposed a variation of the financial facilities which the Gartner Family Group accepted.

16 On 8 August 2002 the Gartner Family Group purported to rescind the facilities, including the mortgages, debentures and guarantees entered into by the members of the Gartner Family Group. On 9 August 2002 NAB appointed the applicants as receivers and managers of the companies in the Gartner Family Group.

17 On 13 August 2002 the Gartner Family Group commenced a proceeding in this Court against E & Y and NAB (‘the Federal Court proceeding’). The proceeding as now formulated alleges against E &Y negligence, breach of contract, breach of fiduciary duty, unconscionable conduct and misleading and deceptive conduct. The precise claims which are intended to be pressed against NAB in the Federal Court proceeding are not entirely clear. It appears that they will include engaging in misleading and deceptive conduct, unconscionable conduct and breach of contract.

18 By letter dated 30 August 2002, the legal firm Finlaysons, acting for the applicants, requested Australian Securities and Investment Commission (‘ASIC’) to authorise the applicants to make applications under ss 596A and 596B of the Act in relation to the companies in the Gartner Family Group. An authorisation as sought dated 25 September 2002 was issued to the applicants by ASIC.

19 By a notice of motion dated 9 October 2002, filed in the Federal Court proceeding, NAB foreshadowed that it would seek an order that the question of the liability of NAB be tried separately from all other questions in the proceeding and that that separate trial be expedited. By a subsequent notice of motion, filed after the filing by NAB of a cross claim against the members of the Gartner Family Group, NAB foreshadowed that it would, amongst other things, seek orders that the claims of the members of the Gartner Family Group against NAB and the cross claims of NAB against the members of the Gartner Family Group be allocated a separate proceeding number and granted an expedited hearing.

20 The Federal Court proceeding was listed on 1 May 2003 to allow NAB to move the Court for orders in accordance with its later notice of motion. It became apparent on that day that it would be necessary for the respective claims of all parties to be further clarified before consideration could be given to the making of the orders sought by NAB. Orders were made on 1 May 2003 which were intended to lead to clarification of the respective claims of the parties. As I understand it, that clarification has not yet been fully achieved. Certainly no order has been made for the separate trial of the claims by the members of the Gartner Family Group against NAB and the cross claims of NAB against the members of the Gartner Family Group.

21 It is not in dispute that the legal firm Finlaysons acts for the applicants in respect of the summons issued under the Act and for NAB in the Federal Court proceeding. It is also not in dispute that the legal firm Cosoff Cudmore Knox acts not only for Mr Gartner but for all members of the Gartner Family Group.

Inspection of the Affidavits

22 It is convenient to consider first Mr Gartner’s claim for an order that the supporting affidavits be available for inspection by Mr Gartner and his legal advisers. Mr Gartner contended that he was entitled to such an order:

(a) as a matter of right;

or alternatively,

(b) as the Court will be unable fairly and properly to dispose of his application for an order setting aside the examination summons, or staying his examination thereunder, unless Mr Gartner and his legal advisors can inspect the supporting affidavits.

23 I turn first to the contention that Mr Gartner has a right to inspect the supporting affidavits. This right was said to flow from the failure of the Act expressly to provide that an affidavit filed in support of an application made under s 596A is not available for inspection except so far as the Court orders. Section 596C(2) makes such provision in respect of an affidavit filed in support of an application made under s 596B.

24 The above argument calls for consideration of the structure and operation of Division 1 of Part 5.9 of the Act. Division 1 of Part 5.9 of the Act does not require an application made under s 596A to be supported by an affidavit. This may be assumed to be because the Court has no discretion with respect to the issue of a summons under s 596A. The Court must summon a person for examination under s 596A if an eligible applicant applies for the summons and the Court is satisfied that the proposed examinee is an examinable officer of the corporation or was such an officer during a relevant time period specified by s 596A(b) (see [25] and [26] below). An applicant could satisfy the Court that he or she is an eligible applicant and that the proposed examinee is an examinable officer of the corporation, or was such an officer during a relevant time period, without filing an affidavit. The affidavit which s 596C requires to be filed in support of an application under s 596B is intended, at least principally, to contain the evidence upon which the applicant contends that the Court should be satisfied of the matters identified in s 596B(1)(b) and should exercise its discretion in favour of issuing the summons sought. In Re Southern Equities Corporation Ltd (in liq); Bond v England (1997) 25 ACSR 394 (‘Re Southern Equities’) at 523 Lander J, with whom Cox and Bleby JJ agreed, described the obligation imposed by s 596C on an applicant under s 596B as an obligation:

‘… to provide to the court all material which might impact upon the order sought, including all material which might lead the court to refuse the application.’

25 It is r 11.3(3)(a) of the Rules which requires an application under s 596A to be supported by an affidavit. Where the interlocutory process or originating process by which an application under s 596A is made deals with no other matter, the affidavit required by r 11.3(3)(a) may be expected to be confined to proof of the matters which establish the duty on the Court to issue the summons. The Court has no discretion to decline to issue a summons if an application is made under s 596A and the criteria identified in paragraphs (a) and (b) of the section are satisfied (Simionato v Macks (1996) 19 ACSR 34 per Lander J at 56; Hill v Smithfield Service Centre Pty Ltd (in liq) [2002] NSWSC 999; 196 ALR 246 per Austin J at [21]-[22] and [47]). I doubt that Debelle J intended to suggest otherwise in Re Bosun Pty Ltd (in liq); Makris v Sheahan [2000] SASC 180 at [17] where his Honour said:

‘Where a liquidator is entitled to an order under s596A of the Corporations Law, the duty of the court is limited to satisfying itself that the liquidator is not seeking to obtain a forensic advantage not otherwise available.’

His Honour was in that case hearing an appeal from a decision of a master refusing to order that an examination be permanently stayed as an abuse of process.

26 Contrary to a submission advanced on the hearing of this application, the decision of the Full Court in Re Excel Finance Corporation Ltd (Receiver and Manager Appointed; Worthley v England (1994) 52 FCR 69 (‘Excel Finance’) is not authority for the proposition that the Court has a discretion to refuse to issue a summons under s 596A where the issue of the summons would constitute an abuse of process. The Full Court in Excel Finance was concerned not with s 596A of the Act but with its predecessor provision, s 597 of the Corporations Law. On an application under s 597 of the Corporations Law, the power of the Court to issue an examination summons was a discretionary power. The Court on such an application was required to be satisfied that it was appropriate in all of the circumstances of the case for the examination summons to issue. The purpose of the applicant in seeking the issue of the summons was in this regard a critical matter. Nor is Henke v Carter [2002] FCA 252 authority for the proposition that the Court has a discretion to refuse to issue a summons under s 596A of the Act. In that case counsel for the liquidator, and the liquidator’s solicitors, conceded that an ulterior purpose on the part of the liquidator in seeking the issue of summonses under s 596A would be a ground upon which the Court could refuse to issue the summons. Gray J was not required to consider whether the concession was a proper one. The language used by his Honour, especially at [19], might be thought to suggest that he doubted that it was.

27 It is important to note that the fact that the Court must issue a summons under s 596A if the criteria for issue are satisfied does not mean that a person against whom a summons is issued has no remedy if the predominant purpose of the applicant is an improper purpose. Australian superior courts have jurisdiction, ordinarily described as inherent jurisdiction but in the case of this Court better described as implied jurisdiction, to stay proceedings which are an abuse of process (Williams v Spautz (1992) 174 CLR 509 per Mason CJ, Dawson, Toohey and McHugh JJ at 518). This jurisdiction may be invoked in an appropriate case to stay an examination pursuant to a summons issued under s 596A (Re Bosun Pty Ltd (in liq); Makris v Sheahan at [9]; Hill v Smithfield Service Centre Pty Ltd (in liq) at [52]). Further r 11.5 of the Rules authorises a person served with an examination summons, within three days of service, to apply to the Court for an order discharging the summons. That is the primary course followed by Mr Gartner in this case. It was not contended by the applicants that the terms of s 596A rendered the adoption of that course by Mr Gartner inappropriate. It is therefore unnecessary for me to consider whether they do.

28 Rule 11.3(7) of the Rules provides that, unless the Court otherwise orders, an affidavit in support of an application for an examination summons is not available for inspection by any person. No challenge was made in this case to the validity of r 11.3(7). However, it was argued that the rule should be read down ‘to the extent that it’s inconsistent with the regime of sections 596A, 596B and 596C’.

29 If the above argument was intended to be understood as contending that the Act, by implication, establishes a regime under which any affidavit filed in support of an application under s 596A is to be available for inspection, or perhaps, is to be available for inspection except so far as the Court orders otherwise, I reject the contention. The Act does not require that an affidavit be filed in support of an application under s 596A. The Act is silent on the topic of the rights, if any, of inspection of any affidavit that may be filed in support of an application under s 596A. The judges of the Court have the power to make Rules of Court for or in relation to the practice and procedure to be followed in the Court (s 59 of the Federal Court of Australia Act 1976 (Cth)). Rule 11.3 of the Rules has been made in the exercise of that power. As is mentioned above, r 11.3 requires an application under s 596A to be supported by an affidavit. The rule also regulates inspection of an affidavit filed in support of an application under s 596A. These are matters not dealt with by the Act either expressly or by implication. It is not necessary to read down r 11.3 to ensure its consistency with the Act.

30 I reject the contention that Mr Gartner and his legal advisers have a right to inspect the supporting affidavits. Rule 11.3(7) of the Rules prevents any person inspecting the supporting affidavits unless the Court otherwise orders.

31 I turn to the alternative basis upon which Mr Gartner sought an order allowing him and his legal advisors to inspect the supporting affidavits. Although the interlocutory process filed by Mr Gartner concentrates its attack on the orders made by the Registrar on 6 May 2003, it is only the summons issued on 9 May 2003 which is recognised by the Act and the Rules. It seems to me that the hearing of the application proceeded on that basis and that the applicants will suffer no prejudice by my determining the application on the basis that Mr Gartner seeks inspection of the supporting affidavits in furtherance of an application to discharge the examination summons or, in the alternative, to stay any examination of him under the examination summons.

32 The supporting affidavits, as is mentioned above, were not filed only to support an application under s 596A for a summons to issue to Mr Gartner. The supporting affidavits were also filed in support of applications made in respect of other persons under ss 596A and 596B of the Act. Summons have issued under ss 596A and 596B against persons other than Mr Gartner. None of those persons has yet been examined. None of those persons has sought an order allowing him to inspect the supporting affidavits. It appears that Mr Gartner’s legal advisers are also the legal advisers of the other persons to whom summons have issued.

33 If I were to conclude that an order should be made allowing Mr Gartner and his legal advisers to inspect the supporting affidavits, consideration would need to be given to the significance of the joint legal representation of Mr Gartner and those other persons. However, as I have concluded that no order should be made allowing Mr Gartner to inspect the supporting affidavits, this matter need not be considered further.

34 In arguing that the Court should be satisfied that it will, or may, be unable fairly and properly to dispose of this application if Mr Gartner and his legal advisers cannot inspect the supporting affidavits, Mr Gartner placed reliance on the approach adopted by the Full Court in Excel Finance. In Excel Finance at 93-94 the Court said:

‘In our view the Court has a discretion to order the disclosure, to a prospective examinee, of material lodged in support of the application for an examination order and should do so where the justice of the case so requires: cf Re British and Commonwealth Holdings Plc (Nos 1 and 2) [1992] Ch 342 at 355 per Nourse LJ and at 367 per Ralph Gibson LJ.

It does not follow that the Court would permit every examinee or potential examinee to have access to such material. There are sound reasons why inspection should not be freely granted for so to do could afford to an examinee information which could permit the examination process to be frustrated: cf per Sir George Jessel MR in Re Gold Co (supra). There could also be confidential information which should properly be withheld. However, we agree with Nourse LJ in Re British and Commonwealth Holdings Plc (at 355):

“… inspection of the statement should prima facie be allowed where the court is of the opinion that it will or may be unable fairly and properly to dispose of the application if part of the evidence is withheld from the person against whom the order is sought. It will then be for the officeholder to satisfy the court that confidentiality in whole or in part is nevertheless appropriate.”’

35 The applicants did not seek to argue that the approach adopted in Excel Finance was, by reason of the statutory changes referred to in [26] above, an inappropriate approach in the context of a summons issued under s 596A of the Act. I therefore proceed on the basis that I should adopt the approach taken by the Full Court in Excel Finance.

36 This application is premised on Mr Gartner’s contention that the examination summons was obtained for an improper purpose and that its issue therefore resulted in an abuse of process. The written submissions of Mr Gartner include the following paragraphs:

‘8. There is an implied undertaking that the person who has invoked the jurisdiction of the court for the purpose of obtaining documents will not use those documents for any purpose extraneous to the purpose for which they were made.

9. The implied duty imposed on a party and his solicitor not to make use of a document produced pursuant to a court order applies to documents produced to liquidators (and by implication receivers) and their lawyers: In Southern Equities, the Full Court approved at 435 this statement of the duty expressed by the Full Federal Court in Sentry Corporation v Peat Marwick Mitchell

“It was accepted by counsel for all parties before us in the appeal that Northrop J. correctly stated the law with respect to the use of documents and information contained in documents obtained on discovery. His Honour said:

‘It is clear that according to Australian law a person who acquires a document pursuant to the processes of the Court is under a duty not to disclose or make use of that document for purposes other than the Court proceedings without the leave of the Court or the person from whom the document has been obtained … if knowledge is acquired from a document and use is made of that knowledge for purposes other than the case itself then that document and that knowledge has been used in contravention of the general principle as set out by McLelland J. and also by other authorities’.”

10. It is apparent from the facts that the receivers are willing and active supporters of the position of National Australia Bank Limited (NAB) in its litigation against the Garter [sic] Family Group (the “Federal Court Proceedings”), and are content to be represented by the same solicitors (Finlaysons) as represent NAB in the Federal Court Proceedings. The receivers are not parties to the Federal Court proceedings and have no legitimate interest in those proceedings. They have made an informed election not to intervene.

11. The commencement of a cross claim by NAB against the Gartner Family Group which involves with the same central issues as the subject matter of these examination proceedings raises “without more” the possibility that the receivers and managers have sought the examination summons against Mr Gartner for an improper purpose.

12. Finlaysons will read the documents and information obtained by the receivers in the examination process. They are the same solicitors as act for NAB. The same partner, Mr Michael Barrett has the care of both clients. Finlaysons has a duty which it owes to NAB to disclose all knowledge which they have relevant to the interests of NAB, for whom they also act, and the Federal Court proceedings.

…

14. It follows that in these circumstances the common representation of the receivers and managers and NAB will necessarily result in the implied obligation not to use the documents for an ulterior purpose being subverted.

15. The election by the receivers and managers to engage the same firm of solicitors who represent NAB in the Federal Court proceedings will render it impossible for the receivers and managers and their solicitors (Finlaysons) not to breach that duty. The Court should not countenance that breach and misuse of its process.’ (footnotes omitted)

37 It was not entirely clear whether Mr Gartner contended that the Court should be satisfied that it will, or may, be unable fairly and properly to dispose of this application so far as it relied on the fact that the applicants and NAB have retained the same solicitors without Mr Gartner and his legal advisers being able to inspect the supporting affidavits. As is indicated above in [36], Mr Gartner contends that an abuse of the Court’s process is an inevitable result of the election of the applicants to engage the same firm of solicitors that represents NAB in the Federal Court proceeding. If that contention is right, Mr Gartner’s case so far as it depends on the contention would not, it seems, be strengthened by knowledge of the contents of the supporting affidavits. It was not, as I understand it, argued that the applicants’ purpose, or predominant purpose, in seeking the issue of the examination summons was to give the firm of Finlaysons access to documents produced by Mr Gartner. The predominant purpose which Mr Gartner sought to establish was a wider purpose, namely the purpose of assisting NAB generally in respect of the Federal Court proceeding.

38 I am not satisfied that the Court will, or may, be unable fairly and properly to dispose of this application so far as it is supported by the submissions set out in [36] above, if Mr Gartner and his legal advisers cannot inspect the supporting affidavits. Those submissions do not call for the resolution of any disputed issue of fact. Even if I am wrong in adopting this approach, I am not satisfied that Mr Gartner has demonstrated an arguable case that the content of the supporting affidavits has any relevance to this aspect of this case (see [43] and [44] below).

39 The second basis upon which Mr Gartner seeks a finding of abuse of process is that the predominant purpose of the applicants in obtaining the examination summons was to advance the interests of their appointor, NAB, in the Federal Court proceeding. Mr Gartner invites the Court to draw the inference that the applicants’ predominant purpose is that of assisting NAB in the Federal Court proceedings from the following facts:

(a) Mr Carter swore an affidavit in support of an application made by NAB for an expedited trial of the claims of the Gartner Family Group against NAB and the cross claims of NAB against the Gartner Family Group; and

(b) the applicants have obtained examination summons in respect of, and have examined, an accountant retained by the Gartner Family Group, a representative of the architects who designed the winery, an engineer involved in the construction of the winery and a representative of the Primary Industry Bank of Australia Ltd whose debt facility in favour of the Gartner Family Group was intended to be re-financed by NAB.

40 The affidavit sworn by Mr Carter in support of the application made by NAB for an expedited trial dealt expressly with the impact of the Federal Court proceeding on the receivership. Paragraph 22 of the affidavit reads:

’22. I am concerned that if the orders sought by the Respondent, the National, were not to be made and the trial of claims against the National delayed, that there will be serious prejudice to the receivership. This prejudice will arise from the following facts:

22.1 Mr Hart and I will be unable to deal with, and dispose of all of the assets to which our appointment as receivers and managers extends without the consent of the applicants. Accordingly, the receivership will be prolonged and extra and unnecessary costs will be incurred.

22.2 To the extent that the National is unable to take possession of the mortgaged property referred in paragraph 11.1 above, it means that the receivership of the incorporated applicants will continue with the attendant cost.

22.3 The defendants named in the proceedings referred to in the Barrett Affidavit will continue to defend the proceedings brought against them. The book debts in questions which are the subject of such proceedings total approximately $4 million and are a major asset of the Gartner Group and which need to be recovered in order for the National to recover as much as can be recovered from the assets the subject of its security.

22.4 The National will not be able to recover the debt owing to it by the sale and realisation of all assets secured in its favour. In the First Carter Affidavit and in particular paragraph 34, I deposed that the National was likely to sustain a loss of $2million. I now estimate that the loss to the National will be greater than this sum. Based on my current estimates as to the value of the assets secured in its favour, the National should, before taking into account book debts owing by various parties related to the National and which are referred to in paragraph 11.9, recover assets with a value of approximately $21million. My current estimate of the loss to the National is $6.2million to $11.7million depending on the exact amount recovered after realisation of the assets secured in favour of the National and the time it takes to realise those assets. In the event that the receivership becomes further prolonged as a consequence of the trial relating to the alleged rescission of the National’s securities being delayed until later this year or perhaps into 2004, I consider that it is much more likely that the loss will be at the higher end of the range referred to. In the absence of the National being able to make a full recovery as an unsecured creditor through the guarantees granted by amongst others, Mr and Mrs Gartner, the National will sustain such a loss.

22.5 I will need to seek further advances from the National for the costs referred to in paragraph 21 of this affidavit. As a result of the matters referred to in paragraph 22.4 of this affidavit, the National will be unable to recover these amounts. If I was in a position to put the vineyards to the market promptly, I anticipate that such costs would not need to be incurred.’

41 Nothing in the evidence placed before me causes me to doubt that Mr Carter, and by implication his co-receiver, were concerned that if the orders sought by NAB were not made the receivership would be seriously prejudiced. I am not satisfied that the swearing of the affidavit by Mr Carter reveals, or even tends to indicate, that the principal purpose of the applicants in obtaining the examination summons was to assist NAB as a litigant in the Federal Court proceeding other than to the extent that the interests of the receivership and NAB coincided.

42 The transcripts of two examinations conducted on behalf of the applicants have been placed in evidence before me. First, the transcript of the examination of Kenneth Raymond Beggs, a banker, and secondly the transcript of the examination of Danny Borzillo, an engineer. I have read the transcripts. The content of the examinations as revealed by the transcripts is, in my view, consistent with the examinations being conducted for the purpose of allowing the receivers to consider the merit of the claims made against E & Y in the Federal Court proceeding. I do not draw an inference from the content of the examinations that the principal purpose of the applicants in obtaining the examination summons was to assist NAB as a litigant in the Federal Court proceeding. The content of the examination is, in my view, consistent with the purpose of the receivers as outlined to ASIC (see [65] below) and to Mr Gartner’s solicitors (see [66] below).

43 The Full Court in Excel Finance at 94 said:

An applicant will not be permitted access to such material to enable him or her to ‘‘fish” for a case. There must be material before the court from which it appears that the applicant has an arguable case, to which the material is relevant, before the discretion should be exercised in favour of that applicant. But once that appears the discretion will normally be exercised in favour of the application. …

In the present case the commencement by the Trustee and debenture holders of proceedings against Mr Worthley raised, without more, the possibility that Mr England had sought the examination summons against Mr Worthley for an improper purpose. The material filed in support of the application in which Mr England stated its purpose was clearly relevant to the issue of that purpose.’

44 The Full Court of the Supreme Court of South Australia has adopted a similar approach. In Re Southern Equities at 437 Lander J, with whom Cox and Bleby JJ agreed, took the view that to gain access to the affidavit filed in support of an application under s 596B of the Act the examinees needed to be able ‘to demonstrate that they have an arguable case [i.e. of an improper purpose] and more particularly that the affidavit material is relevant to that arguable case’.

45 I am not satisfied that Mr Gartner has demonstrated that he has an arguable case that the examination summons was obtained for an improper purpose. Even if I were so satisfied, the second limb of the test for gaining access to the supporting affidavits seems to me to present an insuperable difficulty to Mr Gartner. Although the applicants consented to my reading the supporting affidavits, Mr Gartner submitted that I ought not to do so, at least before ruling on whether he was entitled to an order allowing him and his legal advisers to inspect the supporting affidavits. I accepted Mr Gartner’s submission in this regard. For this reason I do not know whether the applicants respectively have deposed in the supporting affidavits to their purpose in obtaining the examination summons. This case is to that extent distinguishable from Excel Finance. In the circumstances of that case Mr England could be presumed to have stated his purpose in the affidavit filed by him. In this case, however, the applicants had a statutory entitlement to have an examination summons issue to Mr Gartner. There was no necessity for the applicants to state in the supporting affidavits their particular purpose in seeking the issue of the examination summons as opposed to their purpose generally in seeking the various summons in respect of which they made their application to the Court. The evidence before me raises no necessary inference that they did so.

46 Of course, the possibility cannot be excluded that the supporting affidavits do state the applicants’ purpose in obtaining the examination summons. However, Mr Gartner is not entitled to an order that would allow him and his legal advisers to ‘fish’ through material, the relevance of which when filed was restricted to applications made in respect of other persons, for the purpose of ascertaining whether any of that material may throw light on the purpose of the applicants in causing the examination summons to issue to Mr Gartner. If Mr Gartner were entitled to an order which would allow him to do as he apparently wishes, there would appear to be little reason in principle why he could not assert the same entitlement in respect of affidavits filed in support of other interlocutory process or originating process seeking the issue of examination summons in respect of the examinable affairs of the companies in the Gartner Family Group. Recognition of an entitlement of this kind would seem to me to undermine the intention disclosed by the Act and the Rules that inspection of affidavits filed pursuant to Division 1 of Part 5.9 of the Act should be tightly controlled. It might also be thought to undermine the legislative intention that a summons properly sought under s 596A should issue as a right.

47 The application for an order allowing Mr Gartner and his legal advisers to inspect the supporting affidavits is dismissed.

Discharge of the Summons or Stay of the Examination

Implied Undertaking with respect to Documents

48 As is mentioned above, the first basis upon which Mr Gartner formally sought an order that the examination summons be set aside, or examination under it stayed, is that the election by the applicants to engage the same firm of solicitors that represents NAB in the Federal Court proceeding will render it impossible for the legal firm Finlaysons not to use documents obtained during, or for the purpose of the examination, for an improper or ulterior purpose (see [36] above). During the course of argument it was conceded on Mr Gartner’s behalf that the concerns raised by him with respect to the allegedly improper use of documents could, assuming his arguments to be correct, be adequately met by an order that his examination be stayed until the lawyers retained by the applicants were not the same lawyers as were retained by NAB for the purposes of the Federal Court proceeding. I note that in Harvey v Burfield [2003] SASC 192, a judgment published since the hearing of this application, Besanko J has concluded at [34] that it would be sufficient in such circumstances for an order to be made prohibiting the lawyers from making any improper use of the documents.

49 The argument that, in the circumstances of this receivership, the joint legal representation of the applicants and NAB would inevitably lead to a breach of an implied duty not to use documents to which access was obtained during the course of the examination for an ulterior purpose was addressed to Selway J in D’Arrigo v Carter [2003] FCA 5. His Honour rejected the argument. D’Arrigo v Carter concerned an examination summons issued to an accountant who was an examinable officer of some of the companies in the Gartner Family Group. The respondents in that proceeding were the applicants in this proceeding. Selway J at [20] concluded that, in the absence of any court order to the contrary, the disclosure by a receiver to the creditor by whom he or she was appointed of information or documents obtained in an examination under Part 5.9 of the Act is not a breach of any duty of confidentiality. His Honour concluded that such disclosure is ‘clearly envisaged’ by s 597(4) and (14A) of the Act. It was accepted by Mr Gartner that it would be appropriate for me to follow the decision of Selway J unless I were satisfied that it was plainly wrong (see K Mart Australia Limited v Commissioner of Taxation, [1995] FCA 760 and the authorities there cited).

50 In D’Arrigo v Carter Selway J referred to the decision of the Full Court of the Supreme Court of South Australia in Re Southern Equities and acknowledged that he should follow it. Re Southern Equities concerned an examination summons obtained by a liquidator of a corporation. Lander J at 437, with whom Cox and Bleby JJ agreed, accepted the accuracy of the following propositions:

‘… First, that an undertaking is imposed upon a liquidator with respect to documents produced to the court in response to an examination summons. Second, the undertaking is not to use the documents for a collateral or ulterior purpose. Third, the use of the documents in the liquidation is not a collateral or ulterior purpose.’

51 The argument before me proceeded on the basis that the first and second propositions accepted by Lander J in Re Southern Equities should be understood to apply mutatis mutandis to a receiver who is an ‘eligible applicant’ within the meaning of the Act. The debate before me concentrated on the third proposition and calls for consideration of the purpose of a receivership.

52 Mr Gartner contended that the position of a receiver when he or she conducts an examination is different from that of a liquidator. It was argued that, unlike a liquidator, a receiver is not obliged to perform a broad statutory function. It was further argued that a receiver is an officer of the company to which he or she has been appointed and therefore must not use the position to obtain an advantage for another person. As I understand the contention, it is that there is no proper ‘use of documents’ in a receivership comparable to ‘the use of documents in the liquidation’ to which Lander J referred. As a consequence, it was contended the common legal representation of the applicants and NAB will necessarily result in the implied obligation concerning the use of documents to which the applicants gain access by reason of the examination summons being breached.

53 A receiver and manager, appointed under a power contained in an instrument, of property of a body corporate is an ‘officer’ of the body corporate (see s 82A of the Act). However, this does not mean that the receiver and manager so appointed owes duties only to the body corporate. The Full Court of this Court in Excel Finance at 86-87 approved, without setting it out, a passage from the judgment of Jenkins LJ in Re B Johnson & Co (Builders) Ltd [1955] Ch 634, 661-663 which had earlier been expressly approved by the Privy Council in Downsview Nominees Ltd v First City Corporation Ltd [1993] AC 295 at 313-314. Having regard to Mr Gartner’s above contention, it is appropriate to set out part of the passage from the judgment of Jenkins LJ to which the Full Court referred. His Lordship observed:

‘… a receiver and manager for debenture holders is a person appointed by the debenture holders to whom the company has given powers of management pursuant to the contract of loan constituted by the debenture, and, as a condition of obtaining the loan, to enable him to preserve and realise the assets comprised in the security for the benefit of the debenture holders. The company gets the loan on terms that the lenders shall be entitled, for the purpose of making their security effective, to appoint a receiver with powers of sale and of management pending sale, and with full discretion as to the exercise and mode of exercising those powers. The primary duty of the receiver is to the debenture holders and not to the company. He is receiver and manager of the property of the company for the debenture holders, not manager of the company. The company is entitled to any surplus of assets remaining after the debenture debt has been discharged, and is entitled to proper accounts. But the whole purpose of the receiver and manager’s appointment would obviously be stultified if the company could claim that a receiver and manager owes it any duty comparable to the duty owed to a company by its own directors or managers.

…

In a word, in the absence of fraud or mala fides … the company cannot complain of any act or omission of the receiver and manager, provided that he does nothing that he is not empowered to do, and omits nothing that he is enjoined to do by the terms of his appointment ….’

54 I reject the suggestion that there is no proper use of documents in a receivership comparable to the use of documents in a liquidation. In my view, by parity of reasoning with a liquidator, the use by a receiver and manager of documents produced in response to an examination summons for the purpose of the receivership is not a collateral or ulterior purpose. Not only am I not satisfied that Selway J was plainly wrong to proceed on this basis, I am satisfied that he was right to do so.

55 The above conclusion calls for consideration to be given to the true ambit of the purpose of the receivership. Selway J in D’Arrigo v Carter expressed the view that disclosure by a receiver to the creditor by whom he or she was appointed of documents obtained in an examination fell within the purpose of receivership (see [49] above).

56 Besanko J in Harvey v Burfield has expressed what, at first glance, appears to be a contrary view. His Honour at [28]-[29] observed:

‘In Re Southern Equities the Court did not need to address the issue of whether the provision of documents or the information contained in documents by the liquidator to a creditor of the company for use in connection with proceedings instituted by the creditor is a collateral or ulterior purpose. I think that it is. Proceedings by the liquidator under Part 5.9 Division 1 or for the recovery of assets for the benefit of the company are quite distinct from proceedings by a creditor against a third party even though recovery by the creditor might indirectly benefit other creditors or contributories of the company. In my opinion, there is no reason to think that the implied undertaking does not arise in the case of separate actions, one by the liquidator against Deloitte and the other by a creditor (Sandhurst Trustees) against Deloitte. I do not think the rights given to creditors and others as a result of the amendments introduced by the Corporate Law Reform Act 1992 (Cth) (No 210 of 1992) dictate a different conclusion. Counsel for the liquidators referred to the reasons for judgment of Selway J in D’Arrigo v Carter, In the Matter of Gartner Wines Pty Limited (Rec. and Man. App) (Administrators App.) [2003] FCA 5. I note that during the course of his reasons, Selway J said (para 20):

“In particular, in the absence of any Court order to the contrary, the disclosure by the receiver to the creditor of the information or documents obtained in an examination is not a breach of any duty of confidentiality. Such disclosure is clearly envisaged by subs. 597 (4) and (14A) of the Act. Such disclosure involves the ‘use of the documents in the liquidation’ as envisaged by the statutory scheme.”

Subsections 597(4) and (14A) mean that a creditor may attend an examination and he may obtain a record of the examination. He may obtain information contained in documents produced to the Court insofar as that information is revealed in the transcript of an examination. He may by utilising the provisions of s 131 of the Supreme Court Act 1935 inspect or obtain copies of documentary material admitted into evidence in the examinations. However, putting these matters to one side, there is nothing in the relevant sections which gives a creditor the right to inspect and use documents produced to the Court on the application of a liquidator, or gives a liquidator the right to give documents to a creditor for use by that creditor. I think a liquidator is under an implied undertaking in the case of documents obtained under Part 5.9 Division 1 and that facilitating the use of those documents or the information contained in the documents by a creditor in proceedings instituted by that creditor is a collateral or ulterior purpose. I put the proposition in these terms because I recognise that there may be powerful arguments to the effect that there should be nothing to prevent a liquidator from communicating to creditors matters relevant to the liquidator’s administration including legal proceedings conducted by the liquidator and that this might involve communicating to creditors information in documents discovered by the other party to the proceedings.’

57 The extent to which the views expressed by Selway J in D’Arrigo v Carter conflict with those expressed by Besanko J in Harvey v Burfield is not entirely clear. Plainly, Selway J held that, in the absence of a court order to the contrary, disclosure by a receiver to the creditor of documents, the content of which were disclosed during a public examination or in a written record of an examination, would be a use of the documents in the receivership. I consider it appropriate to follow his Honour in this regard. It is not clear whether his Honour held that the receiver was entitled to allow the creditor to inspect and use documents merely because the documents were produced at the examination pursuant to a summons which required the production of documents.

58 A summons issued under ss 596A or 596B requires the person summoned to attend the Court to be examined. Where the summons requires the production of documents, the documents are required to be produced ‘at the examination’ (see s 596D(2) and (3)). The practice of this Court when documents are produced at an examination as required by a summons issued under ss 596A or 596B is for the documents to be taken into the custody of the Court. The party on whose application the summons was issued, and any other party entitled to take part on the examination (see s 597(4)), is required to apply to the Court to gain access to the documents. An application for access is ordinarily dealt with in the same, or a similar, way as a comparable application in respect of documents produced in response to a subpoena duces tecum. At best, the party seeking access to the documents might expect to be given leave, on the usual undertakings as to preservation and return, to uplift the documents from the Court’s files for the purpose of copying them. It would not ordinarily be expected that any person who attended the public examination of the person to whom the summons issued, or read the written record of the examination, would gain access to all documents produced pursuant to the summons or even learn of the existence of all such documents.

59 I am, with respect, inclined to agree with Besanko J, and I am not satisfied that Selway J expressed a view to the contrary, that there is nothing in the relevant sections of the Act that gives a creditor, and in particular a creditor who is not an eligible applicant in respect of the corporation, the right to inspect and use documents produced to a court pursuant to an examination summons. It might be thought, although as the precise issue was not argued before me I express no concluded view on it, that to imply an unrestricted right in a liquidator or receiver to pass on such documents to the creditor would be to allow the creditor to achieve indirectly what the Act does not authorise it to do directly.

60 However, if there be any relevant inconsistency between the approaches of Selway J and Besanko J it is not necessary for me to choose between them. I respectfully agree with both Selway J and Besanko J that the fact that the lawyers retained by a creditor will, by reason of their representation of an eligible applicant who has successfully applied for the issue of an examination summons, gain access to documents produced at the examination is not a reason to set aside the summons in its entirety or to stay any examination under it. So far as I am aware, no documents have as yet been produced by Mr Gartner pursuant to the examination summons. When Mr Gartner does produce to the Court the books and records referred to in the examination summons, the applicants will, presumably, apply for access to them. I would expect Mr Gartner, by his legal representative, to be heard on that application. At that time it may become clear, as I would expect, that copies of a significant number of those books and records are already in the possession of NAB. Indeed, it is at least theoretically possible that at that time NAB may be a party entitled to take part in the examination. Even if it is not, in respect of those books and records that are not in the possession of NAB, the applicants and their legal representatives may be willing to give undertaking to the Court that will address all of Mr Gartner’s concerns.

61 In my view, to the extent that this application is sought to be supported on the basis that the applicants have engaged the same firm of solicitors that represents NAB in the Federal Court proceeding, the application is, taken at its strongest, premature. I am not satisfied that the engagement by the applicants of the same firm of solicitors that represents NAB in the Federal Court proceeding will render it impossible for that firm not to use documents produced pursuant to the summon for an improper or ulterior purpose.

62 The second basis upon which Mr Gartner seeks an order setting aside the examination summons or staying his examination under the examination summons is that, as he contends, the predominant purpose of the applicants in seeking the summons was an improper purpose.

63 Mr Gartner contended that the decision of the Full Court in Excel Finance is authority for the proposition that it is not permissible for a receiver to conduct an examination in the interest of a creditor. Excel Finance is not authority for that proposition. The relevant passage from the judgment of the Full Court is at 93. It reads as follows:

‘… we are of the view that the use of the power to obtain an examination summons for the principal purpose of furthering the cause of the applicant for the summons or, as in this case, appointor of the applicant in litigation against third parties, not for the benefit of the corporation, its contributories or creditors (other than in the most indirect way) is a use of the power for a purpose foreign to that power and thus an abuse of the power.’ (emphasis added)

64 In determining whether the examination summons is being used for an improper purpose, Excel Finance discloses that two questions must be asked. First, what is the principal purpose for which the examination summons is being used? Secondly, if the principal purpose is that of furthering the cause of NAB in litigation against third parties, is that litigation for the benefit of the receivership?

65 In seeking the authorisation of ASIC to make application under ss 596A and 596B in respect of the companies in the Gartner Family Group, the applicants, by their solicitors, stated that their purpose in seeking examination summons would be to investigate the circumstances in which, and the transactions pursuant to which, certain assets of the companies in the Gartner Family Group were moved beyond the control of NAB and the applicants as receivers appointed by NAB. It is not suggested by Mr Gartner that this purpose constitutes an improper purpose.

66 By a letter dated 12 May 2003 addressed to the solicitors representing Mr Gartner, the solicitors for the applicants advised:

‘We are instructed that our clients, Messrs Carter and Hart, do not intend to examine your client Michael Gartner, or seek the provision of any information from him, in relation to any matter the subject of the claims and allegations raised against the National Australia Bank Limited in Federal Court proceedings S189 of 2002.

Our clients do intend to examine your client on a number of matters, including the merits of the claims made in proceeding S189 of 2002 against both Ernst & Young and Ernst & Young Corporate Finance Pty Ltd (EYCF), as they are required to do on the basis that the chose in action is an asset of Gartner Wines Pty Ltd (Receivers and Managers Appointed) (In Liquidation). It is necessary and incumbent upon our clients to obtain information from your client as to the merit or otherwise of the Federal Court Proceeding against Ernst & Young and EYCF. We note that your client apparently agrees with this given that he has, in his letter of 23 April 2003 requested a meeting with Messrs Carter and Hart to discuss the merits of that claim.’

67 In Hong Kong Bank of Australia Ltd v Murphy (1992) 28 NSWLR 512 at 518, Gleeson CJ, with whom Mahoney and Priestley JJA agreed, cited with approval the following passage from the judgment of Street J in Re Hugh J Roberts Pty Ltd [1970] 2 NSWR 541 at 582; 585:

‘A liquidator needs information concerning his company just as much in connection with current or contemplated litigation as in connection with other aspects of its affairs. In using the statutory machinery of private examination he will in many cases be gathering evidence as an ordinary and legitimate use of this procedure. …

In my judgment it is immaterial in basic substance whether the private examination is sought to be used by a liquidator to gather information in connection with proceedings he believes he might be able to bring, proceedings he contemplates bringing, proceedings he has decided to bring, and proceedings he has already brought. There is no presently relevant distinction in substance between gathering information referable to commencing proceedings and gathering information referable to continuing proceedings.’

It seems to me that a receiver will ordinarily have a similar need for information as a liquidator.

68 In Excel Finance at 91 the Full Court observed:

‘Whether there will be, in a particular case, a use of the process or an abuse of it will depend upon purpose rather than result. The consequence of an examination may well be that the examiner has conducted a ‘‘dress rehearsal” of cross-examination which may take place in a subsequent trial. The fact that the trial has commenced, or is contemplated, may throw light upon the purpose. But merely because other proceedings had been commenced or are contemplated would not involve, of itself, an abuse of process. This follows having regard to the nature of the investigative process which could throw light on the question, inter alia, whether there was evidence which would warrant a liquidator, for example, proceeding against an examinee. But it may be quite a different question where proceedings contemplated or instituted are not proceedings to be brought by the company, but proceedings brought by some other party for the advantage of that party rather than the company. For example, it would be an abuse of process for a creditor approved by the Commission for the purposes of s 597(1) to obtain an examination summons to conduct an examination for the purpose of obtaining evidence in proceedings which the creditor proposed to bring against the examinee for defamation. That would be a purpose completely foreign to the power of examination which is ultimately in aid of the company itself and not the personal advantage of the person seeking to conduct the examination.’

See also Re Southern Equities per Lander J at 432-433.

69 Mr Gartner contended that:

‘Matters alleged by the Gartner Companies in the Federal Court proceedings against Ernst & Young are inextricably linked with the matters alleged against NAB. To the extent that the receivers intend to examine Mr Gartner about the factual circumstances giving rise to the claims of the Gartner Companies against Ernst & Young, it is impossible for that examination not to be directed, also, the position of NAB both in its capacity as a respondent in the Federal Court proceedings and in its capacity as a cross claimant in the Federal Court proceedings.’

However, the authorities reveal that the mere fact that a third party may acquire a collateral advantage by reason of an examination does render the purpose for which the examination summons was obtained improper (Hong Kong Bank of Australia Ltd v Murphy at 519; Douglas-Brown v Furzer (1994) 11 WAR 400 per Malcolm CJ, with whom Ipp and Anderson JJ agreed, at 407-408).

70 I am satisfied that it is a proper use of the examination power under Part 5.9 of the Act for the applicants to examine Mr Gartner on matters touching on the merits of the claims made against E & Y in the Federal Court proceeding. The claims for loss and damage made against E & Y by the applicants in the Federal Court proceeding suggest that the causes of action against E & Y may be substantial potential assets of companies of which the applicants are receivers and managers.

71 While the claims made against NAB in the Federal Court proceeding, and the cross claim made by NAB against members of the Gartner Family Group in that proceeding, give rise to the possibility that the examination summons against Mr Gartner has been sought for an improper purpose, that possibility is largely answered by the assurance given to Mr Gartner’s solicitors referred to in [58] above. Having regard to the whole of the evidence before the Court, I am not satisfied that the principal purpose for which the examination summons is proposed to be used is to advance the cause of NAB as a litigant in the Federal Court proceeding or any improper purpose. To the extent, if any, that the applicants may seek to examine Mr Gartner for an improper purpose, s 597(5B) of the Act gives the Court adequate power to prevent such examination.

72 By his written outline of contentions, but not at the hearing, Mr Gartner contended:

‘Since an eligible applicant only has that status in respect of a specific corporation it follows that they may only examine about the examinable affairs of the corporation for which they are eligible applicants.

…

The undertaking imposed on an eligible applicant only to use documents in the particular administration or for the particular purpose for which they were provided cannot be enforced or supervised by the Court in circumstances where there are multiple corporations being examined in the same examination.

If the Court orders one undifferentiated examination into the affairs of different corporations the right or power of the judicial officer presiding over the examinations to order that it be conducted in private, at least insofar as it relates to the affairs of one of the corporations, is abrogated.’

I assume that Mr Gartner does not place reliance for present purposes on the above contentions. However, to the extent that the contentions are intended to suggest that the applicants are not entitled to examine an examinee about the affairs of more than one company in the Gartner Family Group during the course of the one examination, I reject the contentions.

73 The application for an order setting aside the examination summons or alternatively staying the examination of Mr Gartner under the examination summons will be dismissed.

74 I will hear counsel on the consequential orders, if any, that should be made.

I certify that the preceding seventy-four (74) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Branson.

Associate:

Dated: 30 June 2003

Counsel for the Applicant:	Mr J Cudmore

Solicitor for the Applicant:	Cossoff Cudmore Knox

Counsel for the Respondent:	Mr M Hoffmann and Ms Collett

Solicitor for the Respondent:	Finlaysons

Date of Hearing:	29-30 May 2003

Date of Judgment:	30 June 3003

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