FEDERAL COURT OF AUSTRALIA

Evans as Trustee of the Kamiyacho Superannuation Fund v BankWest

[2007] FCA 506

COSTS – examinations – summons to attend – order for production of documents – recovery of costs by examinee – recovery of costs by recipient of order – where neither is party to proceedings – relevant principles – power of court to order costs – no order for costs

Chapman v Luminis Pty Ltd [2003] FCAFC 162 cited

Re BPTC Ltd (in liq) (1993) 10 ACSR 756 applied

Re Struthers, Liquidator of Project Management, Architecture and Construction, Interior (PACI) Pty Ltd in Liquidation (No. 3) (2005) 64 NSWLR 392 referred to

Re The Minister for Immigration and Ethnic Affairs of the Commonwealth; Ex parte Lai Qin (1997) 186 CLR 622 followed

Ryan v Australian Securities and Investments Commission; in the matter of Allstate Explorations NL (Subject to Deed of Company Arrangement) [2007] FCA 59 referred to

IN THE MATTER OF ALLSTATE EXPLORATIONS NL (SUBJECT TO DEED OF COMPANY ARRANGEMENT) ACN 000 679 023; SIMON EVANS & KATHRYN EVANS AS TRUSTEE OF THE KAMIYACHO SUPERANNUATION FUND v BANK OF WESTERN AUSTRALIA LIMITED AND GARRY TREVOR

NSD 1551 OF 2006

JACOBSON J

5 APRIL 2007

SYDNEY

IN THE MATTER OF ALLSTATE EXPLORATIONS NL (SUBJECT TO DEED OF COMPANY ARRANGEMENT) ACN 000 679 023

THE COURT ORDERS THAT:

1.                  There be no order as to costs in respect of Mr Garry Trevor and the Bank of Western Australia Limited.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE MATTER OF ALLSTATE EXPLORATIONS NL (SUBJECT TO DEED OF COMPANY ARRANGEMENT) ACN 000 679 023

REASONS FOR JUDGMENT

(REVISED FROM TRANSCRIPT)

1                     The Bank of Western Australia (“BankWest”) and Mr Garry Trevor seek orders that the applicants to these proceedings pay the costs of BankWest and of Mr Trevor of the proceedings.  The relevant background facts can be stated shortly. 

2                     On 1 September 2006, a Registrar of the Court granted leave to issue a summons to Mr Trevor to be examined and produce documents pursuant to s 596B of the Corporations Act 2001 (Cth).  On the same date, an order was made by the Registrar providing for BankWest to produce documents in the same terms as the examination summons. 

3                     Paragraph 4 of the examination summons issued to Mr Trevor was in the following terms:

“All documents recording any communications between Macquarie, BGOLD, Allstate and/or Michael Ryan (Ryan) and/or Antony Woodings (Woodings) and/or any other party in respect of the Beaconsfield Gold Mine between 8 June 2001 and 12 March 2004 including but not limited to the ongoing management of the mine or its potential sale.”

4                     Paragraph 4 of the order made in respect of BankWest was in virtually identical terms. 

5                     On 7 September 2006, the solicitors for Mr Trevor and BankWest wrote to the solicitors for the applicants stating inter alia that the terms of the order as regards BankWest were too wide.  They pointed to the fact that none of the documents sought pertained to the business or commercial relationship between BankWest and Allstate.  They also stated that BankWest was very concerned that it would be put to considerable expense in reviewing the large quantity of documents which it held in respect of Allstate. 

6                     I should add here that Mr Trevor was the receiver of Beaconsfield Gold Limited which was a joint venturer of Allstate Explorations.  Mr Trevor was appointed as the receiver by BankWest.  The respondents submit that BankWest has never been a banker to nor had any commercial relationship as such with Allstate.

7                     On 15 September 2006, the solicitors for the applicants proposed an amendment to the terms of [4] of the production order to BankWest. 

8                     On 22 September 2006, Mr Trevor filed an interlocutory application which sought inter alia an order that the examination summons be discharged.  On the same day, BankWest filed an interlocutory application seeking an order that the order made by the Registrar on 1 September 2006 for the production of documents be set aside in whole or in part. 

9                     On 19 March 2007, I made consent orders which provided that the examination summons issued to Mr Trevor be discharged and that Mr Trevor’s application be dismissed.  My orders also provided for the order for production made in respect of BankWest to be set aside.  The question of the costs in respect of the examination summons, including the costs of Mr Trevor’s application of 22 September 2006, and the costs of the production order made in respect of BankWest together with the costs of its application to set aside the order were stood over initially to 16 April 2007.  The date of the application to resolve the costs question was subsequently brought forward to today. 

10                  The gravamen of the application for costs made by BankWest and Mr Trevor is that the order for production of documents set forth in [4] was in each case so broad and unnecessary for the purpose of conducting examinations into the examinable affairs of Allstate, that BankWest and Mr Trevor were left with no choice but to seek to have the orders set aside.  Mr Thawley, who appears for Mr Trevor and BankWest, points to the fact that his clients were obliged to either answer the orders or to move to set them aside within 21 days.  Thus, he submits that on 22 September 2006, there was simply no other choice but to move the Court for the relief sought in the interlocutory processes. 

11                  The principles which relate to the production of documents for examination of an examinee under the provisions of the Corporations Act were dealt with by Bryson J in Re BPTC Ltd (in liq) (1993) 10 ACSR 756.  His Honour referred to earlier authority which recognised the need for a relation between the order for production of documents and the purposes of examining persons under the then s 597.  His Honour also observed at page 763 that “[an] order for production of documents which had the effect of compelling a production of documents which were not required for the examination would […] be oppressive”. 

12                  At page 766, his Honour remarked that it would not be appropriate in the case of a mandatory order directed to a person to perform stated acts that the validity of the order should be saved by some process of severance.  He pointed out that it is unlikely the judicial officer who made the order would have intended that some severable part of the order would be valid if other parts of it were not valid.  Thus, the contemplation must be that the whole of the order would stand in view of the consequences of failure to comply with such an order.

13                  It does seem to me that in light of the observations of Bryson J in Re BPTC there is some force in Mr Thawley’s submission that the category of documents sought by [4] was so broad that it could not have been necessary for the proper conduct of the proposed examination of the affairs of Allstate. 

14                  Mr Thawley conceded that [4] included documents relevant to the examinable affairs of Allstate but he submitted that its terms were not confined to relevant documents.  I do not accept that the terms of the order were so broad that they extended beyond the examinable affairs of Allstate.  Mr Thawley’s concession must clearly be correct, particularly in light of the fact that Mr Thawley has not had access to the confidential affidavit which gave rise to the orders of the Registrar made on 1 September 2006. 

15                  Mr Lee, for the applicants, submitted that it is plain from the exchange of correspondence and the concession made on 15 September to which I have referred, that the applicants were prepared to limit the scope of production in a sensible manner.  Whilst I think that is correct, nonetheless, it seems to me that in the absence of any actual agreement between the parties to limit the scope of [4] by the deadline of 22 September, Mr Trevor and BankWest had to file their applications on that day. 

16                  However, it is plain that each of the interlocutory applications of Mr Trevor and BankWest are not confined in the manner which underlies the basis upon which Mr Thawley seeks costs.  The interlocutory applications each commence in [1] seeking an order that Mr Trevor and BankWest be granted access to the confidential affidavit filed by the applicants in support of their application to issue the examination summons.  That is an issue which I have not had to determine simply because the orders of 19 March 2007 disposed of the interlocutory applications reserving for further consideration only the question of costs. 

17                  It seems to me, therefore, that the principles which were stated by McHugh J in Re The Minister for Immigration and Ethnic Affairs of the Commonwealth; Ex parte Lai Qin (1997) 186 CLR 622 at 624-625 apply.  That is to say, the Court does not embark upon a hypothetical trial to determine what the result of the application would have been.  Whilst it is true that in certain circumstances the Court can make an order for costs where proceedings have not proceeded to trial, the usual rule will be that there be no order as to costs; see also Chapman v Luminis Pty Ltd [2003] FCAFC 162 at [7]. 

18                  In my view, it is plain that Mr Trevor and BankWest needed to obtain an order in terms of [1] of their interlocutory applications.  This is because, without access to the confidential affidavit, it would have been difficult, if not impossible, for them to properly address the Court on the question of whether the production order infringed the principles referred to by Bryson J in Re BPTC. 

19                  Thus, whether or not an order for access to the confidential affidavit was the primary relief that was sought, it was an essential part of each of the applications and without determining that issue, I cannot determine what the result would have been.  It may well be that the result would have been adverse to Mr Thawley’s clients. 

20                  The background to these proceedings may be seen in the decision of Gyles J in Ryan v Australian Securities and Investments Commission; in the matter of Allstate Explorations NL (Subject to Deed of Company Arrangement) [2007] FCA 59.  It is to be noted that ASIC approved the applicants as persons who could seek examination orders.  Nevertheless, in view of what I have said above, these are not matters which I need to consider in determining the costs question. 

21                  Mr Thawley also relied upon a submission to the effect that as non-parties, Mr Trevor and BankWest ought to have been entitled to costs orders, particularly where the orders for production were in as wide terms as were stated in [4] of the examination summons and production order.  He relied on the observations of Heerey J in ACCC v Boral Ltd [1999] FCA 663.  However, Heerey J was dealing there with the question of discovery by a non-party. 

22                  Different considerations seem to me to apply to an application to set aside an examination summons.  In Re Struthers, Liquidator of Project Management, Architecture and Construction, Interior (PACI) Pty Ltd in Liquidation (No. 3) (2005) 64 NSWLR 392 at [38], Brereton J pointed out that an examination summons in analogous to a subpoena;  “Both may, in appropriate circumstances, be set aside on the application of the witness or the examinee”.  The witness or the examinee does not become a party to the proceedings in which the subpoena or the summons is issued.  Nonetheless, as his Honour observed at [59], the Court does have power to make a costs order against persons who are not parties to the proceedings. 

23                  For the reasons that I have given, it seems to me that it is appropriate that the application for the costs of Mr Trevor and BankWest be refused consistent with the principles stated by McHugh J in Ex parte Lai Qin, and applied by the Full Court. 

24                  The appropriate order seems to me to be that there be no order as to costs and I would indicate that I would make the same order in relation to today’s application.

Associate:

Dated:         5 April 2007