FEDERAL COURT OF AUSTRALIA

Tolric Pty Ltd v Taylor as Liquidator of Bruck Textile Technologies Pty Ltd (in liq) [2015] FCA 1051

IN THE MATTER OF BRUCK TEXTILE TECHNOLOGIES PTY LTD (IN LIQUIDATION)

THE COURT ORDERS THAT:

1.    The opening sentence of paragraph 2 of the order for production issued to Tolric Pty Ltd be amended to read:

For the period commencing from 1 January 2011 to today’s date, any and all documents, file notes, records, minutes and correspondence recording or referring to:

2.    The opening sentence of paragraph 2 of the order for production issued to Mark Foys Pty Ltd be amended to read:

For the period commencing from 1 January 2011 to today’s date, any and all documents, file notes, records, minutes and correspondence recording or referring to:

3.    In responding to:

(a)    paragraph 2 in the order for production issued to Australian Textile Group Pty Ltd;

(b)    paragraphs 2 and 3 of the order for production issued to Sisely Properties Pty Ltd; and

(c)    paragraphs 2 and 3 of the order for production issued to Bruck Textiles Pty Ltd,

Australian Textile Group Pty Ltd, Sisely Properties Pty Ltd and Bruck Textiles Pty Ltd are not required to produce books or records that are caught by those paragraphs of the orders for production which have, prior to the issue of the orders for production, already been provided to the plaintiffs by those companies.

4.    Liberty to the parties to apply on 3 days’ notice to re-list the matter for the purpose of giving directions to deal with and resolve contested privilege claims in relation to production of documents in answer to the Examination Summonses issued to Mr Philip Bart or Mr Geoffrey Parker or in answer to orders for production issued to Australian Textile Mills Pty Ltd or Sisely Properties Pty Ltd.

5.    The date to produce documents pursuant to the orders for production issued to each of Tolric Pty Ltd, Mark Foys Pty Ltd, Australian Textile Mills Pty Ltd, Australian Textile Group Pty Ltd, Sisely Properties Pty Ltd and Bruck Textiles Pty Ltd is extended to 9:30am on Wednesday, 21 October 2015 before a Registrar.

6.    Otherwise dismiss the interlocutory application.

7.    The applicants to pay the respondents’ costs of the interlocutory application.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE MATTER OF BRUCK TEXTILE TECHNOLOGIES PTY LTD (IN LIQUIDATION)

REASONS FOR JUDGMENT

bACKGROUND

1    On 11 July 2014, Barry Anthony Taylor and Andrew Fletcher Needham were appointed liquidators of Bruck Textile Technologies Pty Ltd (Liquidators).

2    On 19 June 2015, the Court granted leave to issue summonses for examination under s 596A of the Corporations Act 2001 (Cth) (Act) to Mr Philip Bart and Mr Geoffrey Parker (Examination Summonses) and Orders for Production to Tolric Pty Ltd (Tolric), Mark Foys Pty Ltd (Mark Foys), Australian Textile Mills Pty Ltd (ATM), Australian Textile Group Pty Ltd (ATG), Bruck Textiles Pty Ltd (Bruck Sales) and Sisely Properties Pty Ltd (Sisely) (Orders for Production).

3    The Examination Summonses require attendance by each of Messrs Bart and Parker before this Court at 10:15 am on 26 October 2015 from day to day until excused by the Court to be examined on oath or affirmation about the examinable affairs of Bruck Textile Technologies Pty Ltd (in liquidation) (Company) and to produce the books referred to in the Schedule. The Schedule to each of the Examination Summonses is in identical terms.

4    The Orders for Production required production of the documents and things specified in Schedule 1 to each of those orders at 2:00 pm on 29 July 2015.

5    The corporate applicants are related entities. Mr Bart is the sole director of Tolric and Mark Foys while Messrs Bart and Parker are directors of each of ATM, ATG, Bruck Sales and Sisely and of the Company at the time it went into liquidation. The structure of the group is more fully described below.

6    On 21 July 2015, Tolric, Mark Foys, ATM, ATG, Bruck Sales, Sisely and Messrs Bart and Parker filed an interlocutory application seeking:

(1)    An order setting aside the Orders for Production.

(2)    An order setting aside the Schedules to the Examination Summonses.

(3)    In the alternative to orders 1 and 2:

(a)    an order that the Orders for Production and Schedules to the Examination Summonses be varied in such form as the Court considers appropriate; and

(b)    an order that the production of documents required by the Orders for Production is not required before 25 September 2015.

(4)    Costs.

(5)    Such further or other orders as the Court considers appropriate.

7    In support of the interlocutory application, the applicants rely on the affidavits of Ronald George Johnson and Ehood Leibovitch sworn on 21 July 2015 and 19 August 2015 respectively.

8    The applicants contend that the Examination Summonses seek documents that go beyond the examinable affairs of the Company and also impermissibly seek documents which would be subject to a claim for legal professional privilege. The applicants also contend that the Orders for Production are oppressive and thus beyond power. The applicants raise a number of bases upon which they say that conclusion ought be drawn.

9    The Liquidators oppose the orders sought in the interlocutory application and rely on an affidavit of Michael Russell Catchpoole sworn on 27 August 2015.

Legal Framework

Summons for Examination

10    The power of the Court to summons a person for examination is found in Div 1 in Pt 5.9 of the Act. Relevantly, s 596A of the Act provides:

Mandatory examination

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 officer or provisional liquidator of the corporation or was such an officer or provisional liquidator during or after the 2 years ending:

…

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

…

11    Section 596D of the Act sets out what is to be included in a summons issued under s 596A (or s 596B) of the Act. It provides:

Content of summons

(1)    [What summons may require] 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)    [Summons may require disclosure] 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)    [Production of books]    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.

12    Key to the operation of the examination process is the definition of “examinable affairs” included in s 9 of the Act in the following terms:

examinable affairs, in relation to a corporation means:

(a)    the promotion, formation, management, administration or winding up of the corporation; or

(b)    any other affairs of the corporation (including anything that is included in the corporation’s affairs because of section 53); or

(c)    the business affairs of a connected entity of the corporation, insofar as they are, or appear to be, relevant to the corporation or to anything that is included in the corporation’s examinable affairs because of paragraph (a) or (b).

13    Section 53 of the Act significantly expands the definition of “examinable affairs” to include things such as the promotion, formation, membership, control, business, trading, transactions, property, liabilities, profits, other income, receipts, losses, outgoings and internal management of the body and matters relating to the ownership and disposal of shares in the body.

14    The term “connected entity”, included in the definition of “examinable affairs”, is also defined in s 9 of the Act:

connected entity, in relation to a corporation, means:

(a)    a body corporate that is, or has been, related to the corporation; or

(b)    an entity that is, or has been, connected (as defined by section 64B) with the corporation.

15    As a preliminary matter, it is useful to set out the observations of Lander J (with whom Ryan and Crennan JJ agreed) in Evans v Wainter Pty Ltd (2005) 145 FCR 176 at [252] where his Honour succinctly set out the relevant principles relating to the power to examine under the Act emerging from the legislation and the authorities:

1.    The power given to the Court to summon a person for examination is a coercive power.

2.    The purpose of the power is to be gleaned from the legislation.

3.    The following legitimate purposes emerge:

3.1    First, an examination is designed to serve the purpose of enabling an eligible applicant to gather information to assist the eligible applicant in the administration of the corporation.

3.2    Second, it assists the corporation’s administrators to identify the corporation’s assets, both tangible and intangible. It also allows the corporation’s liabilities to be identified.

3.3    Third, the purpose is to protect the interests of the corporation’s creditors.

3.4    Fourth, it serves the purpose of enabling evidence and information to be obtained to support the bringing of proceedings against examinable officers and other persons in connection with the examinable affairs of the corporation.

3.5    Fifth, it assists in the regulation of corporations by providing a public forum for the examination of examinable officers of corporations.

16    In Re Bill Express Ltd (in liq) (2010) 238 FLR 329 (Re Bill Express), Davies J considered the operation of the examination provisions in the Act and the power to compel production of documents at an examination. At 334–335, her Honour noted:

[8]    … There is a clear legislative intent to assist eligible applicants to gather all relevant information about a corporation’s “examinable affairs”.

[9]    The assistance is given in the form of a power conferred on the Court to compel persons, by the issue of a summons, to attend at an examination for questioning about those affairs and, for that purpose, to produce documents …

[Citations omitted]

17    Her Honour observed that where documents are sought by an examination summons issued pursuant to s 596A or s 596B of the Act, s 596D places limitations on the documents that an examinee may be summonsed to be produce at that examination. Those limitations are described in the following terms at 337:

[18]    First, the documents must fall within the class of documents that “relate to the corporation or to any of its examinable affairs”.

[19]    Second, the documents must be ancillary to the purposes of the examination.

[20]    Third, the obligation on an examinee is to produce “specified books” in that class, which are in the “person’s possession” …

[Citations omitted.]

18    Her Honour went on to observe at 339–340:

[26]    … The legal limits of the power to make an order under s 596D are expressly defined in s 596D(2) in the requirement that the exercise of power be for the purposes of the examination. An examination may be confined by the order of the Court to particular matters and if so, the scope of documents that a court may order for production would similarly be confined. Where … no limitation is placed on the subject matter of the examination, other than that it must be about a corporation’s examinable affairs, an order for production in terms that the examinee must produce all books and records relating to the affairs of a corporation is within the power of the Court.

Orders for Production

19    It is common ground between the parties that the Orders for Production were issued pursuant to r 30.34 of the Federal Court Rules 2011 (Rules) which provides as follows:

(1)    At any hearing of a proceeding, including the trial of the proceeding, a party may apply to the Court for an order for the attendance of any person before the Court, a Registrar, an examiner, a referee, or other person authorised to take evidence:

(a)    for examination; or

(b)    for production by that person of any document or thing specified in the order.

…

20    It is accepted practice, endorsed by the Courts, that persons or entities not the subject of examination orders can be required to produce documents. The guiding principles for the exercise of such a power can be found in a series of cases relating to BPTC Ltd (in liquidation) (BPTC). Those principles were summarised by Bryson J in Re BPTC Ltd (in liq) (No 5) (1993) 10 ACSR 756 (Re BPTC (No 5)) at 762 - 763:

(1)    the power is to be exercised “where the production of documents is required for the exercise of the power to conduct an examination”;

(2)    the power to compel production is a wide one and, while there is a need for wide powers, there is also a need to avoid oppressive operation;

(3)    there must be a connection between the order for production of documents and the purpose of the examination under the relevant section of the Act; and

(4)    the production of documents is ancillary to the process of examination.

21    His Honour then continued at 763:

An order for production of documents which had the effect of compelling a production of documents which were not required for the examination would in my opinion be oppressive; an order for production which had that purpose would in my opinion be made in excess of the power to make such order.

The legal limits of the power in Pt 36 r 12 can be seen by asking whether a person acting judicially could reasonably be of the view that production of the document or thing described in the order was required for the purpose of examining a person within the bounds set by s 597 and the internal limitation in the examination orders. If a proposed order falls within this power, a discretion exists to make the order.

22    Section 597 of the Corporations Law referred to by Bryson J set out the parameters of an examination. The relevant sections under the Act are s 596A and s 596B.

23    The approach in Re BPTC (No 5) has been endorsed in a number of decisions: see for example, Re Bill Express; Meteyard v Love (2005) 65 NSWLR 36 (Meteyard); Onefone Australia Ltd v One.Tel Ltd [2007] NSWSC 1188 (Onefone); Re ABC Learning Centres Ltd; Application by Walker (No 11) (2012) 87 ACSR 106 (ABC Learning Centres).

Evidence

24    The applicants’ evidence is set out in the affidavits of Mr Johnson and Mr Leibovitch.

25    Mr Johnson is the Chief Financial Officer of ATG and its subsidiary companies. ATG’s subsidiary companies include ATM, Sisely, Bruck Sales and the Company. Mr Johnson is responsible for collating the documents sought in the Orders for Production issued to ATG, ATM, Sisely and Bruck Sales. Mark Foys owns 2,500 of the 2,502 shares issued in ATG. The remaining two shares in ATG are owned by Mr Bart. Tolric owns 100% of the shares in Mark Foys. Mr Bart owns all of the issued shares in Tolric.

26    The registration dates of the corporate applicants are:

Tolric    –    14 November 1985

Mark Foys    –    10 July 1991

ATG     –    16 November 2011

ATM    –    10 June 2014

Sisely    –    8 October 1987

Bruck Sales    –    12 June 2013

27    Mr Bart is the sole director and secretary of Tolric and Mark Foys and Messrs Bart and Parker are the directors of ATG, ATM, Sisely and Bruck Sales and of the Company.

28    According to Mr Johnson, ATG and its subsidiary companies have records on approximately 38 servers in six different locations which contain information relevant to those companies, the Company and other entities related to Mr Bart which conduct businesses unrelated to the business of ATG and its subsidiaries that have been served with Orders for Production.

29    Mr Johnson says that the cost of complying with the Orders for Production issued to the corporate applicants is approximately $65,000 and that it will take seven to ten weeks to collate the documents.

30    Mr Johnson has since their appointment, on an ongoing basis through to early 2015, provided the Liquidators with documents including all electronic records relating to financial statements, working files and emails and other hard copy documents requested.

31    Mr Johnson says that in relation to the Orders for Production addressed to Sisely, ATG and Bruck Sales, with the exception of item 1 to the schedules to each of those Orders for Production, the information sought has either already been provided to the Liquidators or is unrelated to the affairs of the Company.

32    Mr Leibovitch is an employee of Hytech RL Pty Ltd trading as Arel, a provider of IT services, which provides IT consulting services to ATM and the Company.

33    Mr Leibovitch says that information relevant to the Company was provided to the Liquidators. This was done by collecting information from across multiple servers in different locations and copying it onto a USB drive. Mr Leibovitch describes the sources and volume of the data included on the USB drive.

34    Mr Leibovitch provides detail of the difficulties that will be encountered, the steps that will need to be taken, the time it will take and the cost of undertaking the steps to collate the data required to comply with the Orders for Production. His estimate, which differs slightly from that provided by Mr Johnson and which ultimately depends on the time it will take to complete the work, is that it could take 10 to 13 calendar weeks to complete at a cost of $60,000.

35    Mr Catchpoole gave evidence on behalf of the Liquidators. In his affidavit, Mr Catchpoole sets out how the Liquidators say the documents sought in the Examination Summonses and the Orders for Production relate to the examinable affairs of the Company. In particular, he gives evidence that:

(1)    the Company performed chiefly manufacturing functions within the broader business of a group of companies, which includes the corporate applicants. Mr Catchpoole refers to this corporate group as the Bruck Group;

(2)    over a period commencing in about 2012, the Bruck Group entered into a series of transactions in which assets moved between various companies in the group including transactions in which assets moved from the Company to other entities in the Bruck Group thereby reducing the assets of the Company;

(3)    these transactions culminated in the sale of the Company’s business and assets to ATM, following which the Company went into liquidation;

(4)    as at 30 June 2012, the Company had approximately $37.2 million in assets according to its audited financial accounts. Until at least 30 June 2013, the Company had been trading profitably. As at 10 July 2014, the management accounts of the Company indicated a surplus of assets to liabilities of approximately $9.3 million. However, on 10 July 2014, the day before the appointment of the Liquidators to the Company, its business was sold to ATM for $1.00 plus the assumption of certain liabilities totalling approximately $11.9 million. At the conclusion of that sale, according to the report as to affairs provided by its directors, the Company had 58 employees and liabilities of $12,490,588 comprising:

(a)    $3,845,543 to employees as priority entitlements;

(b)    $8,024,815 to secured creditors; and

(c)    $620,330 to unsecured creditors.

36    Mr Catchpoole provides evidence of the details of the sale of the business of the Company in 2014, examples of inter-company transactions which may have had the effect of removing assets from the Company and therefore the assets available to satisfy its creditors and the relevance to the examinable affairs of the Company of the documents sought by the Liquidators in each of the Orders for Production and Examination Summonses.

37    Mr Catchpoole was cross-examined by counsel for the applicants. In summary, the effect of Mr Catchpoole’s evidence in cross-examination was that:

(1)    the Liquidators have not formed a view about the questions to be asked at the examinations. They wish to resolve production first. At this stage it is impossible to say what the subject of the examinations will be except to say that they will relate to the examinable affairs of the Company;

(2)    the Liquidators seek production of the documents in order to decide the course of the examinations and the questions to be asked. Some issues may be resolved on the basis of the documents produced;

(3)    the purpose of the Orders for Production is to conduct the examinations and to obtain documents to understand the examinable affairs of the Company;

(4)    the purpose for the documents required in the schedule to the Examination Summonses is to explore what has happened in the companies and to test the capacity of the examinees to meet any claim;

(5)    in relation to paragraph 20 of his affidavit, Mr Catchpoole noted that the “Other Transactions” referred to transactions which are on the “periphery” that the Liquidators are aware of and which they may wish to investigate;

(6)    Mr Catchpoole has reviewed the documents already provided to the Liquidators insofar as they have been uploaded on a forensic image but not in their “raw” form. He is aware of a concern on the part of the Liquidators that there has not been complete production. By way of example, he noted that he was unable to find board minutes for the “broader” group or for the Company.

38    Mr Catchpoole was also asked questions in cross examination about aspects of the individual Orders for Production and Examination Summonses.

Parties’ Submissions

39    Mr Giles, counsel for the applicants, submitted that the Court needed to consider separately the Orders for Production issued pursuant to r 30.34 of the Rules and the Examination Summonses issued pursuant to s 596A of the Act.

40    The applicants’ submissions in relation to the Orders for Production can be summarised as follows:

(1)    while categories are permitted, the power of the Court to issue the orders is not at large. An order for production in the nature of discovery is not permitted;

(2)    the power is limited to the examinable affairs of the Company. The evidence given by Mr Catchpoole in cross-examination as to purpose demonstrates that the Orders for Production seek categories of documents that go beyond the examinable affairs of Company;

(3)    the power is limited in that orders for production must be ancillary to an examination; they must be directed to a particular examination and the topics which will be the subject of examination;

(4)    it is not a power for collecting information which may be ancillary to a hypothetical examination. It was submitted that the Liquidators were, impermissibly, inverting the process by collecting the information and then determining, based on that information, the areas of examination;

(5)    the Liquidators have made the same error as that found by Barrett J in Onefone at [22] by failing to make a connection between the documents sought and the examinations;

(6)    section 597 of the Act and r 30.34 of the Rules do not abrogate legal professional privilege. While conceding that the rule considered by the court in Meteyard v Love was different in its terms to r 30.34, based on that authority it was submitted that there is no power to require the production of privileged material. Mr Giles submitted that if a category includes any documents which are subject to a claim for legal professional privilege then, absent a carve out of that material in the description of the category, the whole category fails.

41    The applicants’ submissions in relation to the Examinations Summonses can be summarised as follows:

(1)    the applicants accept the decision of Davies J in Re Bill Express that the limitation on what can be sought, absent any limit in the summons, is by reference to the examinable affairs of the company;

(2)    the applicants’ complaint in relation to the Examination Summonses is, in addition to the issue concerning the seeking of material subject to legal professional privilege which affects categories 1(b) and 1(a)(viii), confined to two categories: 1(a)(vii) and 1(a)(viii). Those categories are in the following terms:

(a)    All books including any and all documents, file notes, records, minutes and correspondence from the period commencing 1 January 2012 to today’s date recording or referring to:

…

(vii)    any tax return, accounts or other documents recording your financial position; and

(viii)    copies of any insurance policies held by you referring to any insurance held by you or on your behalf for acting as a director of the Group or the Company.”

(3)    in relation to both categories it was submitted that the use of the broad introductory language “recording or relating to” means that these categories seek documents beyond those referrable to the Company’s examinable affairs;

(4)    in relation to category 1(a)(vii), it was submitted that documents “recording or referring to” Messrs Bart and Parker’s historical financial position, as opposed to their current financial position, which it was conceded are relevant, do not concern the Company’s examinable affairs.

42    In response, Mr Kulevski, counsel for the respondent, took the Court to the relevant sections of the Act. He submitted that the six corporate applicants are related and thus come within the definition of “connected entity” as set out in the Act and thus the definition of “examinable affairs”, which is not restrictive. Further, a summons for examination can legitimately require the production of books relating to the finances of other companies in the group where they are relevant to the affairs of the company in liquidation.

43    Mr Kulevski noted that the applicants’ case is one of oppression beyond power and that their primary submission is that there is a distinction between what can be sought in a summons for examination issued pursuant to s 596A or s 596B of the Act and what can be sought in an order for production issued pursuant to r 30.34 of the Rules. In relation to that matter, the respondents’ submissions can be summarised as follows:

(1)    such a distinction leads to an absurd outcome in that, on the one hand, in order to activate r 30.34 of the Rules, it is necessary that a liquidator ascertain what it is he wishes to ask at the examinations while, on the other hand, for the purposes of an examination summons issued under the Act, a liquidator can ask for any documents provided they relate to a company’s examinable affairs as defined, without first identifying exact topics on which to examine and the questions to be asked.

(2)    there is in fact no difference between the approach set out in s 596D of the Act, insofar as it relates to what documents can be sought in an examination summons issued under the Act, and an order for production returnable in advance of an examination. Mr Kulevski submitted that conclusion is reached on a close reading of Re BPTC (No 5) and Re Bill Express;

(3)    it is not the case that a liquidator has to know the topics that he is going to inquire into and the questions he is going to ask as a pre-requisite to the issue of an order for production under r 30.34 of the Rules. The critical thing is that the documents relate to the examinable affairs of the company. The fact that a liquidator is not an ordinary litigant, a matter recognised in the authorities, supports this approach.

(4)    on other aspects of the applicants’ case, the respondents made the following submissions:

(a)    there is no more than a bare assertion that all of the documents are not relevant to the examinations and will not be used in the examinations. There is no explanation given in the applicants’ written outline of submissions as to how they say the documents sought in the Orders for Production do not form part of the examinable affairs of the Company. The applicants deploy a factual case with no facts led to support it;

(b)    in relation to the issue of privileged documents, the respondents rely on Re Southland Coal Pty Ltd (rec and mgrs apptd) (in liq) (2006) 58 ACSR 113 (Southland Coal) to the effect that where documents in a category sought in an order for production or an examination summons might include privileged documents, the procedure to follow is to deal with any objections to the production of those particular documents on a document by document and case by case basis.

Consideration

44    I now turn to considering the terms of the Examinations Summonses and the Orders for Production.

Examination Summonses

45    The applicants do not seek to have the Examination Summonses set aside on the basis that they were issued for an improper purpose. Rather, the applicants cavil with the terms of the schedule to the Examination Summonses by which production of documents is sought from each of the examinees, Messrs Bart and Parker.

46    In the schedule to their written submissions, the applicants set out under the heading “Specific Defect” their objections to categories 1(a) and 1(b) of the Examination Summonses as including documents that do not concern the Company’s examinable affairs and including documents which will not be the subject of examination. They also object to category 1(a) on the basis that it is framed in terms “so unclear as to not be permissible”. No particularisation is provided. In his oral submissions, Mr Giles, counsel for the applicants, clarified that the applicants’ objection to category 1(a) is limited to sub-paragraphs (vii) and (viii). The applicants also complain about the whole of category 1(b) on the basis that it calls for documents which are the subject of a claim for legal professional privilege.

47    The Examination Summonses must be ancillary to the purposes of the examination and comply with the limitations imposed by s 596D(2) of the Act in that they must seek documents that “relate to the corporation or any of its examinable affairs”. The obligation on the examinee is to produce “specified books” in that class which are in the examinee’s possession: Re Bill Express at [19] to [20].

48    The applicants object to the use of the expression “recording or referring to”. They say that the use of those words makes categories 1(a)(vii) and (viii) oppressive and would necessitate the production of documents not related to the examinable affairs of the Company.

49    In Re Bill Express the Court considered an argument that a requirement to produce “all books and records relating to the affairs of Bill Express” in an examination summons issued pursuant to s 596B was oppressive and that use of the term “relating to the affairs” was uncertain and too wide. That argument was rejected at first instance and on appeal by Davies J who found that it was “entirely permissible” for a summons to be expressed in broad terms and to seek production of all books and records relating to the affairs of the relevant company: Re Bill Express at [36].

50    To the extent that s 596D(2) requires the person to produce “specified books”, the summons must, as noted by Davies J in Re Bill Express at [33], identify the books and records to be produced with “sufficient clarity” to enable the recipient of the notice to know what documents come within the terms of the summons so that they can “form a reasonable view about what must be produced” in order to comply with it.

51    The definition of examinable affairs is broad. It includes the ascertainment of the financial viability of a prospective defendant and information relating to the insurance position of a prospective defendant. In Grosvenor Hill (Qld) Pty Ltd v Barber (1994) 48 FCR 301 (Grosvenor Hill), the Full Court considered the terms of a summons issued to valuers which relevantly sought production of their insurance policies. Those documents were required so that the liquidators could ascertain whether the prospective defendants had the ability to satisfy any judgment. The Full Court made the following comments at 306–307:

The necessity to obtain relevant information in relation to litigation by or against a company being wound up is but one instance of the broad general purpose identified in the decisions cited above and numerous other decisions to like effect. Clearly, one purpose of an examination in relation to pending or contemplated litigation is to determine whether or not there is evidence available to support a claim brought by the company to recover property or damages, or conversely to defend a claim brought against the company, and the strength of that evidence. That such is a purpose falling within the power contained in s 596B of the Law was not challenged by Grosvenor; the whole weight of authority is against such a challenge in any event.

The question is whether the Court is limited by the section to ordering an examination the purpose of which is to go no wider than to determine whether or not there are reasonable grounds, including evidence, to litigate a case to a successful judgment, or whether, the Court has power to order an examination, the purpose of which is to ascertain the likelihood of any judgment being satisfied; that is, whether it is a permitted purpose to inquire as to the worth of a potential defendant so as to be able to make a practical assessment as to the likelihood of a return to the company of the fruits of any favourable judgment and the necessary legal costs expended in obtaining it. Is the Court empowered under the section to order an examination or the production of documents to test the likelihood of the creditors in the winding up receiving a tangible benefit from the satisfaction of any judgment obtained and to enable the liquidator to determine whether it is prudent to commence or maintain litigation with knowledge as to the real likelihood of obtaining any tangible benefit beyond a mere judgment, including a judgment for costs, at the conclusion of the litigation?

In our view, the Court has such a broad power. Additionally, it is a power of long standing.

And at 311:

In our view, the ambit of the power is sufficiently wide to enable information to be sought from a defendant or potential defendant as to the ability of that person to satisfy any reasonable judgment which may be obtained in litigation instituted by the liquidator. In that context it is within power to order production of relevant documents, including insurance policies, to ascertain whether or not the person has an enforceable right to indemnity from an insurer or other person. The obtaining of such information by the liquidator in the course of the winding up is to facilitate the realisation of the chose in action to the best advantage of the company and its creditors.

52    The Full Court’s observations in Grosvenor Hill were referred to by Logan J in McEachern, in the matter of Gladstone Civil Pty Limited v Pleash (liquidator) [2014] FCA 1364. His Honour, in considering the terms of a summons issued under s 596B of the Act which sought documents evidencing the examinee’s financial position said (at [21]) that the liquidator is entitled under s 596B to engage “in what might be termed a fishing exercise, so long as that exercise can be seen to fall within the terms of s 596B(b) as to the recipient of a summons”. Logan J found that the paragraph of the summons in dispute before him was in its terms oppressive but allowed an amendment so that the relevant paragraph would read as follows:

3.3    Books, documents and records as to your financial position for the period 1 January 2012 to the present (the relevant period), as follows:

(a)    personal tax returns for the relevant period;

(b)    copies of all personal bank statements in respect of the relevant period;

(c)    documents evidencing all assets over the value of $10,000, not taking into account moneys owed with respect to the same, during the relevant period;

(d)    documents evidencing liabilities over the value of $10,000 and, in particular, copies of any loan agreements, credit card statements and financial facility agreements relating thereto.

53    The amendment made by Logan J allowed production over a period of time relevant to the matter before him. It also allowed the use of the term “documents evidencing”.

54    In the case of categories (a)(vii) and (viii), the Liquidator’s purpose is to ascertain whether the examinees, directors of the Company, will be able to satisfy a judgment should proceedings be brought. The use of the language complained of does not, in my view, take those categories beyond requiring documents relating to the Company or the examinable affairs of the Company. If some documents of the nature described by Mr Giles are caught – for example a letter from an accountant enclosing a tax return that says no more – I do not think that of itself affects the categories in a way that takes them outside the examinable affairs of the Company. The nature of the documents sought are identified with sufficient clarity and the obligation is for the examinees to produce documents which are in their possession and which fall within the ambit of those categories.

55    The next objection made on behalf of the applicants is that the documents called for by category 1(a)(vii), namely any tax return, accounts or other documents recording a financial position, only relate to the Company’s examinable affairs in their most recent or current version. Historical versions of those documents are said to be beyond the “examinable affairs” of the Company. I do not agree. The Examination Summonses seek documents from the period commencing 1 January 2012. Once it is accepted that an inquiry by liquidators as to the financial capacity of a prospective defendant falls within the examinable affairs of a corporation, there is no proper reason why that inquiry should be limited to the current period. The period for which documents are sought is narrower than that in which the transactions identified by the Liquidators appear to have taken place. In the circumstances of this matter, it is a proper and rational time period. Further, in my view, an examination into what has happened over a relevant period leading to the present will assist liquidators in understanding more fully the asset and liability position of a prospective defendant to proceedings and their capacity to meet a judgment should proceedings be pursued.

56    The last matter which arises for consideration in relation to the Examination Summonses is that category 1(b) and category 1(a)(viii) should be set aside because they will, if documents need to be produced, include some documents which will be subject to a claim for legal professional privilege. No evidence was led as to the nature of the documents that are in the possession of Messrs Bart and Parker that fall into those categories and the extent to which those documents would be subject to a claim for legal professional privilege.

57    The applicants relied on the decision in Meteyard v Love to make good that proposition. That matter concerned a number of examination summonses and orders for production of documents which were issued in relation to the affairs of Southland Coal at the request of its receivers and managers. The receivers were seeking to examine individuals and obtain documents relating to the assessment by those parties of an explosion at a coal mine, the majority owner of which was the company in receivership, in order to assess whether to commence proceedings against the insurer. In seeking to set aside the examination summonses and the orders for production, the claimants submitted that they were oppressive. In part they relied upon an argument, in relation to the orders for production, that a significant number of the documents sought were likely to be privileged. The NSW Court of Appeal set aside the orders for production. Its reasons for doing so were summarised by Austin J in Southland Coal at [56]. In particular, in dealing with the issues relating to the argument relying on the suggestion that the documents would be subject to a claim for privilege, Austin J noted the following findings:

…

(f)    orders for production made under Pt 36, r 12 of the Supreme Court rules are subject to the client legal privilege provisions of the Evidence Act, by virtue of Pt 36, r 13 which precludes the court from compelling production, even to itself, of a document that is subject to client legal privilege (at [76]–[78], [132] per Basten JA);

(g)    the court should not make an order for production that extends to documents that are subject to client legal privilege, and where it may be anticipated that questions of client legal privilege will arise, the court should either not make an ex parte order for production or include in the order an express exception for documents subject to privilege (at [132] per Basten JA);

(h)    in the present case, the orders for production should be set aside because it had been established that a significant proportion of the documents identified by the orders were likely to be protected by client legal privilege: at [133] per Basten JA.

58    In Southland Coal, the Court heard the application by the receivers and managers of that company, with all parties present, for the issue of new orders for production arising out of the same event considered in Meteyard v Love. The intended recipients of the orders for production made a submission to the effect that privileged documents are not properly the subject of an order for production because, in terms of s 596B(1)(b)(ii) of the Act, they cannot relate to information about the examinable affairs of the company that any of the examinees “may be able to give”. Austin J in considering that submission noted at [80] that the Court of Appeal’s reasoning in Meteyard v Love:

… does not mean that in every case, the order for production must contain such an express exclusion [being an order framed to exclude documents that a producing party would be entitled to withhold as privileged]. The Uniform Civil Procedure Rules set out a procedure by which claims for privilege are to be made. As I have explained, the person to whom the order is directed may object to producing the document and once the objection is made, cannot be compelled to do so unless and until the objection is overruled. That is the position as a matter of law. If orders were made expressly excluding documents subject to client legal privilege, there would be a risk that the persons to whom the orders were directed would regard themselves as exonerated from taking any co-operative steps with respect to documents that they regarded as privileged, such [sic] preparing lists or even embarking on any process of review. At least in some cases, it may be preferable simply to add a note to the orders drawing the reader’s attention to the relevant rules. But in my view it is unnecessary to take any such step in a fully contested inter partes matter where the parties are legally represented and I do not regard the Court of Appeal as suggesting otherwise. In such a case an acceptable course, in accordance with the rules is to make unqualified orders for production coupled with liberty to apply, which may be exercised for the purpose of giving directions designed to bring forward contested privileged claims for resolution, once specific documents have been identified and particular claims for privilege have been made in respect of those identified documents.

59    In the present case I have been asked to assume that category 1(b) and category 1(a)(viii) include documents which are subject to a claim for legal professional privilege. I am asked to draw that inference based on the terms of the category. There is no evidence before me to make good that proposition. I do not know if the documents that would be subject to such a claim would number in the tens or in the hundreds, would comprise all, most or only some of the documents to be produced. I cannot be satisfied that a “significant proportion” of the documents sought are likely to be protected by a claim for privilege. On this basis alone, in my view, the applicants’ submission fails.

60    I accept the submission on behalf of the respondents that a procedure could be designed to resolve contested privilege, to the extent such documents fall within category 1(b) or 1(a)(viii). There are accepted practices for dealing with objections to production on such grounds and I will grant liberty to apply to the parties which may be exercised for the purpose of giving directions designed to deal with and resolve contested privileged claims, once documents have been identified as subject to such a claim.

61    On the basis of the matters set out above, in my view, the Examination Summonses are not oppressive.

Orders for Production

62    There are six Orders for Production made pursuant to r 30.34 of the Rules. Before turning to consider the terms of each I will address the submissions that have been made about the principles that apply to orders for production.

63    There is no contest between the applicants and the respondents that the power to compel documents pursuant to an order for production issued under r 30.34 of the Rules must only be exercised for a purpose ancillary to an examination: that is, the production of documents must be required for the purpose of the exercise of a power to conduct an examination. The parties disagree about what that means.

64    The applicants’ position is that there is a distinction between what can be sought in an examination summons issued under the Act and what can be sought in an order for production issued under the Rules. The respondents’ position is that there is no relevant distinction between the two processes.

65    Addressing this issue requires an analysis of some of the relevant authorities starting with Re BPTC (No 5), which I have already referred to earlier in these reasons. That case concerned orders for production made pursuant to Pt 36 r 12 of the NSW Supreme Court Rules requiring the managing partner of a firm of solicitors, Freehills, to produce documents. The orders were ancillary to proceedings which had been commenced by the new trustees of the Estate Mortgage Trusts in relation to the affairs of the former trustee, BPTC. The orders had been obtained under s 597 of the Corporations Law requiring certain persons, including Mr Short, a former director of BPTC, to be examined in relation to the affairs of BPTC and produce documents. Mr Short was a former partner of Freehills.

66    Relevantly, the examination orders addressed to Mr Short (and another examinee) contained an internal limitation. They were to be examined on “any matters relating to the promotion, formation, management or administration of, or otherwise in relation to the affairs of BPTC as Trustee of the Estate Mortgage Trusts set out in the Schedule hereto”. In other words, not all of the affairs of BPTC were to be the subject of the examinations: see Re BPTC (No 5) at 762–763.

67    In considering the terms of the order for production which was before him, Bryson J, having referred to the fact that the power to examine is itself confined by the relevant section under which a summons is issued, in that case s 597 of the Corporations Law, acknowledged the width of the power while noting the need to avoid oppressive operation. His Honour found that there must be a relation between the order for production and the purpose of “examining persons” under the relevant section. He said “if information is to be obtained it is to be obtained from that examination, and the production of documents is ancillary to the process of examination.” If an order for production compelled production of documents not required for the examination it would be oppressive: see Re BPTC (No 5) at 763.

68    Bryson J went on to conclude at 763:

The legal limits of the power in Pt 36 r 12 can be seen by asking whether a person acting judicially could reasonably be of the view that production of the document or thing described in the order was required for the purpose of examining a person within the bounds set by s 597 and the internal limitation in the examination orders.

69    In the circumstances of the case before him, Bryson J set aside the order for production. The order for production was extensive, in some categories it called for documents over a period in excess of 30 years. While his Honour found that some parts of the order might be within power, other parts were found to be beyond power. At 767, Bryson J said:

I regard the calls for documents and the task of search and identifying documents which they impose on the applicant as excess to the requirements of the purpose in hand of examining Messrs Short and Turnbull under s 597, in light of the statement of purposes in the evidence of Miss Nixon on behalf of the plaintiffs.

70    In other words, the Court considered the terms of the order for production before it in light of the purposes of the examinations, which were limited by the terms of the order for examination made under s 597 and which were also explained in the evidence given on behalf of the new trustees.

71    In Re Bill Express, Davies J after considering the decision in Re BPTC (No 5) found at 339:

A consideration of these cases, including Re BPTC Ltd (in liq) (No 4), does not support the proposition for which the applicants in this case contend. These cases were each concerned with the parameters of the examination for which the documents were required. The cases confirm that the scope and exercise of the power to order the production of documents for the purposes of an examination depends on the scope and exercise of the power to order an examination.

72    I respectfully agree with Davies J. The effect of the decision in Re BPTC (No 5) is that orders for production must be made for a purpose ancillary to the exercise of a power to examine. The documents sought in the orders for production must be for the purpose of the examination. The purpose of the examination will be defined by the terms of the relevant section of the Act and the order for examination itself. Further evidence of purpose may be given, as was the case in Re BPTC (No 5) and, as is the case in the matter before me.

73    There is no suggestion in Re BPTC (No 5) that in order to establish that the documents sought are for the purpose of an examination it is necessary for the topics of examination and the questions to be asked to be known prior to the issue of the orders for production. I am of the view that the requirements of orders for production issued under r 30.34 of the Rules do not relevantly differ from the requirements of a summons for examination which also seeks production of documents. Such a distinction would lead to the awkward situation of the exercise of power to order production of documents under the Rules being constrained in a way that is not envisaged by the sections of the Act ancillary to which the power is exercised and in relation to which the power is called in aid.

74    The applicants submitted that the Liquidators have fallen into the same error as was found by Barrett J in Onefone at [22] as follows:

In short, the court is given by the SPL no means of being satisfied that the order he seeks under s.68 of the Civil Procedure Act by reference to the further Part 5.9 examinations of Mr Miller and Mr Green is concerned with documents bearing such a relationship to those examinations (or one or other of them) as to make the power conferred by s.68 exercisable in the way sought. The court has no way of making a connection between the two examinations and the particular documents. It is not enough to say that the examinations, of their nature, concern the “examinable affairs” of One.Tel and the documents also concern the “examinable affairs” of One.Tel. The court must be able to see that the particular examinations will be assisted or facilitated by the production of the particular documents.

75    However, in Onefone, there was no evidence given about the proposed examinations to which the order for production was to be ancillary. Barrett J noted as much when he said at [21]:

…..while there was reference from the bar table to re-activate two part 5.9 examinations in November ….there was no evidence given about the matter. The court was not told what the re-activated examinations are intended to achieve. It might perhaps be inferred that one of the documents bears a relevant relationship to the examination of Mr Miller … but even then, the description is not in any way confined to the content relevant to the affairs of One.Tel, let alone some aspect of them in relation to which Mr Miller may be further examined.

76    That is not the case here. The Examination Summonses have been issued. They require Messrs Bart and Parker to attend to be examined about the “examinable affairs” of the Company. In addition, the evidence of Mr Catchpoole relied on by the Liquidators sets out various transactions of which the Liquidators are aware and which they wish to further investigate. While each of the Orders for Production needs to be considered on its terms, in my view it cannot be said, as a general proposition, that the Court has no way of making a connection between the examinations and the documents sought in the Orders for Production.

77    Mr Giles also relies on ABC Learning Centres Ltd and submitted that Cowdroy J accepted the effect of submissions made on behalf of the Banks that only documents relating to the examinable affairs of the relevant corporation can be compelled, the requirements made by the order must not exceed the legitimate requirements of a particular occasion and, accordingly, an order for production compelling documents not required for an examination is oppressive and made in excess of power. In making his findings, Cowdroy J noted at [92] that the documents sought by the order for production must relate to the examinable affairs of the Company. His Honour at [111]–[113] concurred with and adopted the observations of Bryson J at 763 and 766 in Re BPTC Ltd (No 5) and set aside one paragraph of the order for production, finding the documents not within the examinable affairs of the company, but upheld the second paragraph on the basis that the documents did come within the examinable affairs of the relevant company.

78    Cowdroy J was concerned to find a connection between the order for production and the purpose of the examinations. He did so by considering whether the documents sought related to the company’s examinable affairs. His Honour had earlier found that there were ongoing examinations and that the order for production was not made in a vacuum. It appears the examinations were ordered pursuant to s 596B of the Act and related to the company’s “examinable affairs”, which was the purpose of the examination. To that extent, Cowdroy J’s approach did not differ to the approach in Re Bill Express.

79    I turn now to a consideration of the terms of each of the Orders for Production. In doing so I will first deal with issues raised by the applicants which are common to the terms of a number of the Orders for Production.

80    First, each of the corporate applicants is a “connected entity” as defined in s 9 of the Act in that each is a body corporate that is or has been related to the corporation because they are an intermediate or ultimate holding company of the Company or because they are a subsidiary of ATG and sit within the same corporate group and subject to the same structure and control as the Company. As a result “examinable affairs” includes the business affairs of the corporate applicants in so far as they are or appear to be relevant to the Company or to anything that is included in the Company’s examinable affairs because of paragraph (a) or (b) of the definition. The definition of business affairs in s 53AA of the Act is very wide and includes any of the body’s affairs and incorporates the definition in s 53 of the Act.

81    Secondly, evidence was led on behalf of the applicants that some of the material sought in the Orders for Production addressed to Sisely, ATG and Bruck Sales had already been provided. It was submitted that obtaining duplicates of documents or obtaining a counter party’s copy of the Company’s documents will rarely be the proper subject of an order for production. The extent of the overlap has not been identified. Mr Catchpoole in his evidence pointed out categories of documents which one would have expected to see in the Company’s records but which, based on his review, had not been provided. I am of the view that a party ought not to have to produce documents that have already been provided by it. It should not be put to that unnecessary use of time or cost. To the extent the relevant applicants have provided evidence that has occurred and, if I am satisfied that the relevant categories to which that evidence refers should not otherwise be set aside, I will make orders to that effect.

82    Thirdly, in almost all cases, the applicants contend that the documents sought will not be the subject of examination. They do not provide any detail of why that is so. If the applicants, by this objection, are contending that the Liquidators are seeking information independent of the examinations, or that they must know the topics on which they intend to examine and the documents must relate to those topics, as I have observed, what is permitted by an order for production must be framed by reference to the purpose of the examination. Thus the Orders for Production must seek documents that relate to the examinable affairs of the Company.

83    Finally, the applicants object to category 1(c) and category 3 of the Orders for Production addressed to ATM and Sisely respectively because they include documents which would be subject to a claim for legal professional privilege. In both cases I am asked to draw that inference based on the nature of categories. There is no evidence before me as to the type of documents that will fall within the categories and the extent to which they might be subject to a claim for legal professional privilege. I repeat my observations set out at [57]–[60] above in relation to this issue. I can make no finding as to whether a significant proportion of the documents caught by these categories would be subject to such a claim. Accordingly, should claims arise, a procedure can be agreed between the parties to deal with and resolve those claims.

84    I turn now to considering the terms of each of the orders for production and the specific objections made to the extent I have not dealt with them above.

Tolric and Mark Foys

85    The Orders for Production addressed to Tolric and Mark Foys are in substantially the same terms and so it is convenient for me to consider them together. In the outline to their written submissions, the applicants set out the specific defects they say arise in relation to each category of documents.

86    The applicants contend that category 1 in each case includes documents that do not concern the examinable affairs of the Company. Category 1 seeks the financial reports and management accounts for each company for the financial years ending 30 June 2012, 2013 and 2014 and to the date of the Orders for Production. Mr Catchpoole gave evidence that documents falling within this category will show the financial capacity of the companies to meet a claim and will show what has happened, in terms of related party transactions and other matters, across the group. It is beyond doubt that the existence and value of any property of a company in liquidation is part of the examinable affairs of the company. A party’s capacity to satisfy a judgment falls within the examinable affairs of a company: see Grosvenor Hill at 311. Further, given that Tolric is the ultimate holding company of the Company and the role of Mark Foys in some of the Relevant Transactions described by Mr Catchpoole in his affidavit, I am satisfied that category 1 seeks documents that relate to the examinable affairs of the Company.

87    The applicants contend that category 2 in each case includes documents that do not concern the examinable affairs of the Company and that will not be the subject of examination, that it is framed in terms so unclear as to be impermissible and appears to subsume category 1.

88    I am satisfied based on the evidence that the nature of the documents sought in category 2 relate to the examinable affairs of the Company and that its terms are clear. However, there is an issue that arises in relation to the period for which the documents are sought being from incorporation to the date of the orders for production. The evidence before the Court is that Tolric was incorporated on 14 November 1985 and that Mark Foys was incorporated on 25 October 1994. In cross-examination, Mr Catchpoole conceded that older documents caught by, for example, the sub-category seeking documents relating to board meetings would be relatively remote and may not be relevant. Mr Catchpoole noted that, had that issue been raised in correspondence by the applicants, the Liquidators would have considered limiting the time frame.

89    I am of the view that the period for which documents are sought in category 2 in each of the Orders for Production addressed to Tolric and Mark Foys is too long. Documents dating back over a 30 and almost 20 year period respectively cannot relate to the examinable affairs of the Company. Based on the evidence before me it appears that a connection to the examinable affairs of the Company arises from 1 January 2011. That is the earliest date on which the Relevant Transactions may have occurred.

90    I have been invited to amend the Orders for Production as an alternative to setting them aside. In this instance, where the nature of the documents sought relate to the examinable affairs of the Company but the period over which they are sought takes category 2 beyond the examinable affairs of the Company, I propose to do that. I will make orders to amend category 2 of the Orders for Production issued to Tolric and Mark Foys so that they seek documents for the period commencing 1 July 2011 to the date of the order for production.

91    I am not persuaded that the fact that one category in an order for production may subsume another makes the order oppressive. While there may be inelegance in drafting, the categories of documents sought are clear and, to the extent there is any overlap between the categories, the particular document need only be produced once.

ATM

92    The applicants contend that categories 1 and 2 of the order for production issued to ATM include documents that do not concern the examinable affairs of the Company and that will not be the subject of examination, are framed in terms so unclear as to be impermissible and that category 2 appears to subsume category 1.

93    ATM acquired the business of the Company on 10 July 2014, just prior to the Company entering liquidation. That sale is a matter which the Liquidators wish to investigate. Documents held by ATM relating to the sale are clearly within the examinable affairs of the Company. There can be no sustainable objection to category 1. I am also of the view that category 2 relates to the examinable affairs of the Company. Insofar as it may be subsumed in category 1, perhaps because the sale of the business by the Company is the only transaction, I repeat my comments at [91] above.

ATG

94    The applicants contend that categories 1, 2 and 3 of the order for production issued to ATG include documents that do not concern the examinable affairs of the Company and that will not be the subject of examination and that categories 2 and 3 are framed in terms so unclear as to be impermissible.

95    ATG is the immediate holding company of ATM, Sisley, Bruck Sales and the Company. It was a counter-party to some of the Relevant Transactions referred to in the affidavit of Mr Catchpoole. The Liquidators are also concerned that it may have been a counter-party to other transactions with the Company that may have been detrimental to its financial position. Mr Catchpoole gave further evidence in cross-examination that the purpose of seeking the documents specified in this order for production is to explain the examinable affairs of the Company.

96    I am of the view that the documents sought are within the examinable affairs of the company. Category 1 seeks the financial reports and management accounts of ATG for the financial years ending 30 June 2012, 2013 and 2014 and to the date of the Orders for Production. As I have already observed, the existence and value of any property, which includes a cause of action, of a company in liquidation is part of the examinable affairs of the company. As the holding company and the counter party to transactions which the Liquidators have identified, the documents sought in categories 2 and 3 in my view relate to the examinable affairs of the Company. The terms of categories 2 and 3 are not so unclear as to be impermissible.

Sisely

97    The applicants contend that categories 1, 2 and 3 of the order for production issued to Sisely include documents that do not concern the examinable affairs of the Company and that categories 1 and 3 include documents that will not be the subject of examination. They also contend that categories 2 and 3 are framed in terms so unclear as to be impermissible.

98    Sisely was a party to three of the Relevant Transactions described in Mr Catchpoole’s affidavit. In cross-examination, Mr Catchpoole provided further detail as to why various categories of the documents were sought from Sisley. Sisley was the owner of a property that was the subject of a lease to the Company. It had refused to provide consent for the property to be sold to a third party. That was a barrier to the Company being sold to an unrelated party as a going concern. When the business of the Company was sold to a related party, Sisley then assigned its lease to that party. Further, the Company paid rent at a rate of $700,000 per annum to Sisley when the property had a market value of less than $2 million.

99    In my view, given the relationship between Sisely and the Company and the evidence of Mr Catchpoole, the documents sought from Sisley relate to the examinable affairs of the Company. The terms of the categories are clear.

Bruck Sales

100    The applicants contend that categories 1 and 3 of the order for production issued to Bruck Sales include documents that do not concern the examinable affairs of the Company and that categories 2 and 3 include documents which will not be the subject of examination and are framed in terms so unclear as to be impermissible.

101    Bruck Sales was a counter-party to two of the Relevant Transactions referred to in Mr Catchpoole’s affidavit. Category 1 seeks financial reports, tax returns and accounts. The Liquidators are entitled to inquire into the ability of Bruck Sales to meet any judgment should proceedings be pursued. These documents are within the examinable affairs of the Company. I am of the view that the documents sought in categories 2 and 3 of the order for production relate to the examinable affairs of the Company and that those categories are clearly framed.

ConCLUSION

102    The orders I propose to make are as follows:

(1)    an order amending the Orders for Production issued to Tolric and Mark Foys to limit the period in category 2 of each of those orders so that it is expressed to be from 1 January 2011 to the date of the orders for production;

(2)    an order excluding the production of documents already provided to the Liquidators which would otherwise be produced in answer to category 2 in the order for production issued to ATG, categories 2 and 3 in the order for production issued to Sisely and categories 2 and 3 in the orders for production issued to Bruck Sales;

(3)    I note the evidence given on behalf of the applicants as to the time it will take to collate the documents in order to comply with the Orders for Production. Mr Leibovitch says it will take a minimum of seven weeks. I am also mindful that the examinations are scheduled to be heard commencing 26 October 2015. I propose to make orders that the Orders for Production be extended to 21 October 2015, at which time they will be made returnable before a registrar. I would expect the applicants to produce as much of the material as has been collated in answer to the Orders for Production on or by that day. If more time is required to complete production that is a matter that can be raised before the registrar with supporting evidence if that is required;

(4)    I will grant liberty to apply to the parties which may be exercised for the purpose of giving directions designed to deal with and resolve contested privileged claims, once documents have been identified as subject to such a claim.

Costs

103    In evidence before me is a letter dated 25 August 2015 from the Liquidators to the applicants. The Liquidators attempted to resolve the issues that had arisen between the parties by inviting the applicants to produce documents relating to the transactions set out in the schedule to that letter. No response was received from the applicants to that letter. That is unfortunate.

104    The Liquidators have had relative success on this application. I propose to order that the applicants pay the respondents’ cost of the application.

Associate:

Dated:    24 September 2015