FEDERAL COURT OF AUSTRALIA
Pleash, in the matter of Equititrust Limited (In Liquidation) (Receivers and Managers Appointed) [2017] FCA 16
ORDERS
DATE OF ORDER: |
THE COURT ORDERS THAT:
1. Pursuant to s 596A of the Corporations Act 2001 (Cth), the following persons be summonsed for examination about the examinable affairs of Equititrust Limited ACN 061 383 944 (In Liquidation) (Receivers and Managers Appointed) (the “Company”):
(a) Troy Bingham;
(b) Christopher Richard Cook
(c) John Alexander Goddard;
(d) Thomas John Haney;
(e) David Hickie;
(f) Ross James Honeyman;
(g) The Honourable Justice David John Sandford Jackson;
(h) David John Kennedy;
(i) Jeffrey Ian McDermid;
(j) Mark McIvor;
(k) Wayne McIvor;
(l) Harvey Parker;
(m) Michael Richard Peldan;
(n) Warwick Powell;
(o) Sidney Super;
(p) Craig Granville Treasure;
(q) David Robert Walter Tucker;
(r) Stacey Blythe Turner (formerly McIvor); and
(s) Paul James Vincent.
2. Pursuant to s 596B of the Act, the following persons be summonsed for examination about the examinable affairs of the Company:
(a) Shane Beecroft;
(b) Luke McKenzie;
(c) Andrew Griffin;
(d) Graham Hayes;
(e) Russell McCart; and
(f) James Conomos,
(together with the persons named in paragraph 1 of the Orders) (the “Examinees”).
3. Pursuant to subsection 597(9) of the Act, the following persons be directed to produce at the examinations of Shane Beecroft, the books in their possession relating to the Company or its examinable affairs:
(a) AET SPV Management Pty Ltd ACN 088 261 349;
(b) Balmain NB Commercial Mortgages Limited ACN 074 619 980;
(c) Commonwealth Bank of Australia ACN 123 123 124;
(d) Morgan Stanley Australia Limited ACN 003 734 576.
4. Each summons and direction shall be in the form of the respective draft summonses and directions exhibited to the affidavit of Stephen Charles Russell filed 22 December 2016, save that in Schedule 1 to each summons, the expression “relevant period” shall mean “the period commencing on 1 July 2010”.
5. UPON the undertaking of the solicitors for the applicants that they shall keep in safe custody the documents produced to the Court and return the same to the Court forthwith on request from the Registrar or a Deputy Registrar, pursuant to para 596F(1)(e) of the Act, the applicants’ solicitors may uplift and take copies of all and any documents produced to the Court by any such person or by any Examinee.
6. Pursuant to subsection 597(13) of the Act:
(a) questions to the Examinees and answers given by the Examinees at the examination shall be recorded in writing (the “Transcript”);
(b) each Examinee shall authenticate the relevant Transcript by each Examinee signing at the foot of each page of the relevant Transcript.
7. Pursuant to para 596F(1)(d) of the Act, each Examinee shall, unless and until the applicants have concluded the examination of that Examinee be excluded from attending the examination of all other Examinees until the applicants have completed the examinations of all other Examinees.
8. Pursuant to para 596F(1)(f) of the Act, the Examinees shall not discuss their own examination with another Examinee until the applicants have completed the examinations of all other Examinees.
9. Subject to any matters of fact addressed by the Hon Justice Greenwood in reasons for judgment published arising out of the Court’s consideration of an application by the applicants filed on 22 December 2016, the contents of the applicant’s written outline of submissions dated 18 January 2017 be treated as confidential, pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth) (the “FCA Act”) until further order and not be provided or disclosed to the public except with the leave of a Judge of the Court, having regard to s 37AG(1)(a) of the FCA Act.
10. Pursuant to s 23 and s 37P of the Federal Court of Australia Act 1976 (Cth), rule 1.32 and rule 1.36 of the Federal Court Rules 2011, these orders and the reasons for judgment in support of these orders are made and published from Chambers.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
GREENWOOD J:
1 In these proceedings, the applicants, Mr Blair Alexander Pleash and Mr Richard Albarran, are the liquidators of Equititrust Limited (the “Corporation”). Receivers and Managers have also been appointed to the company.
2 On 15 February 2012, the directors of Equititrust resolved to appoint Mr Pleash, Mr Albarran and Mr Glen Peter Oldham as administrators of the company under s 436A of the Corporations Act 2001 (Cth) (the “Act”).
3 On 16 February 2012, Mr Colwell and Mr Moloney were appointed Receivers and Managers of the property of Equititrust. On 21 February 2012, Mr Harris, Mr Hayes and Mr Cronin were also appointed as Receivers and Managers of the property of Equititrust.
4 On 20 April 2012, the creditors of Equititrust resolved that the company be wound up pursuant to s 439C of the Act and the liquidators became the liquidators of Equititrust by operation of s 446A of the Act.
5 Section 596A of the Act addresses the topic of “mandatory examination”. It provides that the Court “is to summon a person for examination about a corporation’s examinable affairs” if an eligible applicant applies for the summons and the Court is satisfied that the person to be examined is or was an officer of the corporation during or after the two years ending according to the factors identified at s 596A(b)(i) to (iv).
6 The first of those factors identifies a two year period ending, if the corporation is under administration, on the s 513C day in relation to the administration.
7 The third factor identifies a two year period ending, if the corporation is being wound up, or has been wound up, when the winding up began.
8 By para 1 of the application, the applicants apply, pursuant to s 596A of the Act, for the issue of a summons to each of 19 individuals on the footing that each of them are either current officers of the Corporation (including receivers) or were either a director or secretary of the Corporation (or a receiver) in the two years ending on the day when the winding up began. An “officer” of a corporation is defined to include a director, a secretary or a receiver: s 9 of the Act.
9 The application is supported by two affidavits of Mr Stephen Charles Russell each sworn 22 December 2016. As to the shorter of those affidavits, Mr Russell exhibits a current and historical extract in respect of the Corporation based on the records maintained by the Australian Securities and Investments Commission (“ASIC”). That search demonstrates that each of the 19 individuals was an officer of the Corporation for periods within the relevant two year period. It is not necessary in these reasons to set out the name of each of the 19 individuals. They are recited at para 1 of the application.
10 Section 596A provides that the subject matter of the summons (and the consequent examination) is to be “about the corporation’s examinable affairs”.
11 By para 2 of the summons, the applicants seek an order under s 596B of the Act directed to six individuals.
12 Section 596B(1) provides that the Court may summon a person for examination about a corporation’s examinable affairs if an eligible applicant applies for the summons and the Court is satisfied that the person may be able to give information about the examinable affairs of the corporation: s 596B(1)(b)(ii). Unlike s 596A, which requires the Court to summon a person assuming the section is properly engaged, s 596B is permissive in the sense that it addresses a “discretionary examination”.
13 Both s 596A and s 596B provide that the subject matter of the summons (and the consequent examination) is to be “about the corporation’s examinable affairs”.
14 As to the notion of “examinable affairs”, s 9 of the Act defines that term in this way:
Examinable affairs, in relation to the 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, in so far 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 para (a) or (b).
15 Section 53 is framed in broad terms and provides that for the purposes of the definition of examinable affairs in s 9 of the Act, the affairs of the corporation include: the promotion, formation, membership, control, business, trading, transactions and dealings, property, liabilities, profits and other income, receipts, losses, outgoings and expenditure of the corporation; in the case of a corporation that is a trustee, matters connected with the ascertainment of the identity of the persons who are beneficiaries under the trust, their rights under the trust and any payments that they have received, or are entitled to receive, under the terms of the trust; the internal management and proceedings of the corporation; and any act or thing done by or on behalf of the corporation or in relation to the corporation or its business or property during periods identified at s 53(d)(i) to (iv); matters concerned with the ascertainment of the persons who are or have been financially interested in a success or failure, or apparent success or failure, of the corporation or are or have been able to control or materially influence the policy of the corporation: s 53(a), (b), (c), (d), (g).
16 The definition of examinable affairs in s 9 of the Act makes reference to the business affairs of a “connected entity” to the corporation. That term is also defined in s 9. It means a body corporate that is or has been related to the corporation or an entity that is or has been connected as defined by s 64B, with the corporation. A related body corporate is defined by s 50 of the Act. Section 64B provides that a body corporate is connected with a corporation if, and only if, as to the corporation, one of eight integers in that section is engaged: s 64B(1)(a) to (h).
17 In relation to the application under s 596B, the application is supported by an affidavit as required by s 596C(1). Section 596C(2) provides that the affidavit in support of that application “is not available for inspection except so far as the court orders”. The statute thus contemplates that the factual circumstances in support of the application under that section will not be publicly disclosed except so far as the Court orders. The affidavit of Mr Russell in support of the application for orders under s 596B addresses factual matters which seek to establish that each summons is directed to “the corporation’s examinable affairs”.
18 Having regard to s 596C(2), I propose to be circumspect about the factual matters I recite in these reasons going to the question of whether the applicants have demonstrated that each summons concerns an examination about a corporation’s examinable affairs.
19 The Corporation was a money lender operating on the Gold Coast. It was founded by Mr Mark McIvor. It raised funds for that purpose by means of registered managed investment schemes and, relevantly for present purposes, an unregistered trading trust known as the Equititrust Premium Fund (the “EPF”). It has about 50 members including many private superannuation funds. The Corporation was indebted to the Bank of Scotland International Australia Limited (“BOSI”) in a certain significant amount. The indebtedness was secured by a number of security interests over the assets of the EPF. Transactions in relation to the management and administration of the BOSI debt and the securities given in support of it, is a subject matter which the liquidators have been investigating. There are a range of issues in relation to the management, administration and governance of the Corporation’s affairs which concern the BOSI debt and the role of individuals in relation to it. The liquidators contemplate bringing proceedings against particular contemplated parties in relation to aspects of that matter.
20 Plainly enough, the conduct of an examination about the examinable affairs of the Corporation must be for a proper purpose and must not be exercised oppressively. I accept that the examination process may be undertaken by the liquidators to obtain information which may assist them in deciding whether proceedings may be brought to recover assets of the Corporation and that an examination to determine whether the Corporation would be likely to succeed in litigation against its officers, auditors or third parties would be within the examinable affairs of a corporation. That follows because such an examination would assist an eligible applicant in identifying a chose in action which is an asset of the Corporation. Further, an examination to determine whether any chose in action will be ultimately recoverable from any party (or that party’s insurer) is also within the contemplation of the section: Re New Tel Ltd (in liq); Evans v Wainter Pty Ltd (2005) 221 ALR 331, Lander J at [81] and [82]; Ryan J agreeing at [1] and Crennan J agreeing at [265]; Re HIH Insurance Ltd (In Liquidation) [2004] NSWSC 454; Re Finlen’s Contract Build Pty Ltd; Arnison v Schmierer (2000) 34 ACSR 499.
21 I am satisfied that a summons directed to an examination of a claim the liquidators wish to investigate and matters related to it is properly an examination of the examinable affairs of the Corporation.
22 I am satisfied that orders are required to be made that a summons issue under s 596A to each of the 19 individuals in the circumstances as earlier described and I am satisfied that orders ought to be made under s 596B, in the exercise of the discretion, in respect of the individuals identified at para 2 of the application.
23 Paragraph 3 of the application seeks an order under s 597(9) that four entities produce books in their possession relevant to matters to which the examination of each person to whom a summons will issue, relates.
24 Having regard to the affidavit material, I am satisfied that orders ought to be made in terms of para 3 of the application.
25 Consequential orders are sought by paras 4, 5, 6 and 7. I am satisfied that orders ought to be made in terms of those paragraphs.
I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. |
Associate:
