FEDERAL COURT OF AUSTRALIA

Kassiou v Heard (Liquidator) [2017] FCA 425

ORDERS

THE COURT ORDERS THAT:

1.    The amended application for leave to appeal filed on 5 April 2017 is dismissed.

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

REASONS FOR JUDGMENT

CHARLESWORTH J:

1    On 23 March 2017 the three applicants filed a notice of appeal against a judgment of a single judge of this Court: Heard, in the matter of GEBIE Services Pty Ltd (in liq) [2017] FCA 323. The judgment concerns the scope of examinations to be conducted under Pt 5.9 of the Corporations Act 2001 (Cth) and the production of documents at or in connection with the examinations.

2    An issue arises as to whether the judgment sought to be appealed against is interlocutory. No appeal lies against such a judgment except with the leave of the Court: Federal Court of Australia Act 1976 (Cth) (FCA Act), s 24(1A). The respondents foreshadowed an application for an order that the appeal be struck out as incompetent on that basis. In response, the applicants filed an application for leave to appeal and then an amended application for leave. They nonetheless persist in their primary position that they may appeal from the judgment as of right. Consistent with their primary position, they have not withdrawn the notice of appeal filed on 23 March 2017. It remains on the Court file and is in a different form to a draft notice of appeal annexed to the amended application for leave.

3    An application for leave to appeal must be heard and determined by a single judge unless (relevantly) a judge directs that the application be heard and determined by a Full Court: s 25(2)(a) and (3) of the FCA Act. At a case management hearing, the applicants made an oral application for a direction that the application for leave to appeal be listed before a Full Court together with the antecedent question of whether leave to appeal is required. I dismissed that application. The questions of whether leave was required and, if so, whether leave should be granted were then set down for hearing before me.

4    At the commencement of the hearing, the applicants made a renewed oral application for a direction that the question of whether leave to appeal is required be referred for determination by a Full Court, together with the application for leave (if required). For the reasons given at [6] to [14] below, that application, too, should be dismissed.

5    I have concluded that the judgment of the learned primary judge is interlocutory and that, accordingly, leave to appeal is required: see [15] to [43] below. For the reasons given at [44] to [82] below, the application for leave to appeal should be dismissed.

the applications for referral to the full court

6    Submissions on these two applications proceeded from the footing that the question of whether leave to appeal was required was one attended with unusual difficulty such that it was appropriate to be resolved by three minds rather than one. Further, it was submitted that a Full Court may, depending on the answer to that question, turn immediately to determine the application for leave to appeal and, at the same hearing (if leave be required and granted), the appeal itself.

7    Counsel for the applicants relied on the observations of French J in Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564 at [42] – [43]:

42.    The application of the leave requirement should not involve the expenditure of significant intellectual energy on the distinction between final and interlocutory judgments. Admittedly, that is a question ‘productive of much difficulty’ – Carr v Finance Corporation of Australia Ltd (No 1) (1981) 147 CLR 246 at 248 (Gibbs CJ). But the policy of the provision is plain enough. . . .

43.    Artificial distinctions may be drawn because of the requirement that the Court looks to the legal rather than the practical effect of the order in question. . . . But such artificiality as may arise can be overcome by a sensible exercise of the discretion to grant leave informed by the underlying policy of that requirement. Interlocutory orders cover a spectrum from those concerned solely with the mechanics of case management and pre-trial preparation to those which may, for one reason or another, have a significant impact upon the scope and outcome of the proceedings. . . .

8    It was submitted that these passages supported an approach whereby the question of whether leave is required should assume as little importance and consume as little of the Court’s time as possible, particularly in cases where the determination of whether a judgment was final or interlocutory might be difficult. In such cases, pragmatism would favour the grant of leave and the resources of the Court spent instead on determining the appeal on its substantive merits. I acknowledge the force in those submissions.

9    At the time that Johnson Tiles was decided, an application for leave to appeal from an interlocutory judgment could be made orally to the judge who pronounced the judgment or by motion on notice to another single judge or to a Full Court: see Johnson Tiles at [41] and the statutory provisions referred to therein. See also Wati v Minister for Immigration and Multicultural Affairs (1997) 78 FCR 543 at 547 – 548. Johnson Tiles itself was decided in a context in which the application for leave to appeal and the substantive merits of the appeal were listed to be heard together by a Full Court, and it was in that context that French J warned against the expenditure of “significant intellectual energy” and favoured a more pragmatic approach by the grant of leave.

10    The present legal context is different. The regime now established by s 24(1A) and s 25(2) of the FCA Act provides that an application for leave to appeal must be heard and determined by a single judge unless:

(1)    a judge directs that the application be heard and determined by a Full Court (s 25(2)(e)); or

(2)    the application is made in a proceeding that has already been assigned to a Full Court and the Full Court considers it appropriate that it hear and determine the application (s 25(2)(f)).

11    Section 25(6) provides that the Court constituted by a single judge may state any case or reserve any question concerning a matter for consideration by a Full Court. The question of whether a judgment is interlocutory or final is a question of a kind that may be referred to the Full Court under that provision.

12    It may be accepted that the degree of complexity or difficulty attending a question will be a relevant consideration in the exercise of the discretion to refer the question to the Full Court under s 25(6). But the mere existence of some difficulty is in my view insufficient. The policy underlying the status quo in s 25(2) ought be given considerable weight in determining whether the preliminary question of the kind arising in this matter ought to be heard and determined by a Full Court rather than a single judge. The referral of all questions of law involving some degree of difficulty to a Full Court would, to my mind, be an inefficient use of the overall resources of the Court and would undermine the overarching purpose of the Court’s practice and procedure provisions: FCA Act, s 37M.

13    For the following reasons, the overarching purpose in the present case is best served by proceeding as a single judge to hear and determine both the question of whether leave is required and, if that question be answered in the affirmative, the application for leave itself:

(1)    there is no guarantee that the Full Court to which the matter is referred would in its own discretion list the substantive appeal for hearing at the same time as the preliminary questions;

(2)    accordingly, if the preliminary questions were referred to a Full Court, there is a real risk that, if leave be required and granted, the substantive appeal would not be heard until at least the November or February appellate sittings;

(3)    the Court constituted of a single judge is presently able to determine the preliminary questions with reasonable expedition, such that if it be determined that no leave to appeal is required, or if leave be required and granted, the substantive appeal would in all likelihood be heard by a Full Court in the August appellate sittings;

(4)    although the question of whether leave to appeal is required is one that is attended with some difficulty, the degree of difficulty is not unusual and the point to be determined is by no means novel;

(5)    there is, as will be seen, decided authority informing the questions to be decided, and no party has sought to argue that the relevant decisions are plainly wrong such that they ought not be followed by a single judge;

(6)    insofar as the decided cases inform the question, there is no tension or conflict among them; and

(7)    although the parties would not have a right to appeal to the Full Court should the issue of leave be incorrectly decided, that is a natural consequence of the regime established by s 24(1A) and s 25(2) of the FCA Act, and one that affects all parties equally.

14    I dismissed the applicants’ first application for a referral to the Full Court for these reasons. I now dismiss the second application on the same basis.

IS LEAVE TO APPEAL REQUIRED?

The test

15    A judgment will be treated as final if it finally determines the substantive rights of the parties in the proceedings: Cubillo v Commonwealth (2001) 112 FCR 455. Otherwise the judgment will be treated as interlocutory. As French J observed in Johnson Tiles, “under that rubric there has been much taxonomic debate”.

16    The proposed appeal is said to be from the “whole” of the primary judgment. On closer analysis, however, only some aspects of the judgment are complained of and not all orders are sought to be disturbed.

17    The learned primary judge made four orders. Two of the orders are not the subject of any grounds of appeal and no relief is sought in respect of them. By the third order, the primary judge dismissed an interlocutory process filed by the applicants on 16 February 2017. Costs aside, it is apparent that the order dismissing the interlocutory process is the only order sought to be disturbed on appeal and the only order to which the grounds (or proposed grounds) of appeal appear to be directed. Even then, the decision to dismiss the interlocutory process is challenged only in some respects but not in others.

18    The question of whether his Honour’s order dismissing the interlocutory process is itself interlocutory turns on the legal rather than the practical effect of the order: Carr v Finance Corporation of Australia Ltd (No 1) (1981) 147 CLR 246 at 248 (Gibbs CJ) and 256 (Mason J). The legal context in which the interlocutory process was filed and the terms of the relief sought upon it therefore assume some importance.

The context

19    By s 35A(1)(h) of the FCA Act and r 16.1 of the Federal Court (Corporations) Rules 2000 a Registrar of the Court may exercise powers conferred by certain provisions of the Corporations Act. Those powers relevantly include:

(1)    the power under s 596A to summon a person for examination about a corporation’s examinable affairs;

(2)    the power under s 596D(2) to include in a summons issued under s 596A a requirement that the examinee produce at the examination all books that are in the examinee’s possession and that relate to the corporation or to any of its examinable affairs;

(3)    the power under s 596F(1)(a) to give a direction about the matters to be inquired into at an examination; and

(4)    the power under s 597(9) to direct a person to produce, at an examination of that person or any other person, books that are in the first-mentioned person’s possession and that are relevant to matters which the examination relates or will relate.

20    A party to a proceeding in which a Registrar has exercised such powers may apply to the Court to review the Registrar’s exercise of that power: s 35A(5) and (6) of the FCA Act. Such a review is in the nature of a hearing de novo: Mazukov v University of Tasmania [2004] FCAFC 159 at [24].

21    A person served with an examination summons may apply to the Court under r 11.5 of the Rules for an order discharging the summons. Such an application is to be made by way of an interlocutory process filed in the same proceeding in which the examination summons was issued. The power to discharge a summons under r 11.5 must be exercised by a judge of the Court: it is not among the powers exercisable by a Registrar.

22    The respondents are joint and several liquidators of GEBIE Services Pty Ltd (in liquidation). The first and second applicants, Ms Themelina Kassiou and Mr Gregory Francis Mitchell, are former directors of GEBIE. Ms Kassiou is the sole director and shareholder of the third applicant, Industries Services Training Pty Ltd (IST).

23    On 6 February 2017 a Registrar made orders, on the respondents’ application, by which she:

(1)    summoned (under s 596A) Ms Kassiou and Mr Mitchell to attend for examination about GEBIE’s examinable affairs;

(2)    included in each summons (under s 596D) a requirement that Ms Kassiou and Mr Mitchell produce certain books in their possession relating to the examinable affairs of GEBIE; and

(3)    ordered (under s 597(9)) that the proper officers of the following entities produce certain books in their possession relating to GEBIE’s examinable affairs:

(a)    IST;

(b)    IST’s banker, National Australia Bank Limited (NAB); and

(c)    Ms Kassiou’s banker, Australia and New Zealand Banking Group (ANZ).

24    The terms of the summonses issued to Ms Kassiou and Mr Mitchell are set out in Annexures A and B of the orders respectively. The categories of books required to be produced by them are set out in a schedule to each summons. The categories of books required to be produced by the non-examinee entities are set out in annexures to the order itself.

25    In respect of the subject matter of the examinations, the summonses directed to Ms Kassiou and Mr Mitchell relevantly state that they are “summoned … to attend … to be examined on oath or affirmation about the examinable affairs of [GEBIE]”. There are otherwise no additional words limiting the matters about which the examinees are to be questioned.

26    The applicants filed an interlocutory process on 16 February 2017 in the same proceeding in which the impugned summonses were issued. The relief sought on the interlocutory process was expressed in the following terms:

1.    Pursuant to section 596F(1) Corporations Act 2001, directions that:

a.    Only the matters related to the examinable affairs of GEBIE Services Pty Ltd be enquired into at the public examination conducted pursuant to the order of Registrar Colbran dated 6 February 2017 (‘the Order’ and ‘the Examination’);

b.    The Examination is not to enquire into the personal assets, liabilities and finances of any of the Applicants;

c.    Any, and all documents (including all copies and notes taken from or about the same), that are have been, or which are, produced to the plaintiff pursuant to any summons issued that relates to the personal assets, liabilities and finances of any of the Applicants be immediately:

i.    Delivered up to the Applicants care of their lawyer, Mr P Evans, level 26, 10 Eagle Street, Brisbane in the State of Queensland;

ii.    In the alternative, destroyed and an affidavit filed by the plaintiffs verifying the said destruction.

2.    That the affidavits filed by the plaintiff in support of the application for the issuing of public examination summons be provided to the Applicants and their lawyers.

3.    Pursuant to rule 11.5 Federal Court (Corporations) Rules 2000 the summons issued to National Australia Bank, Australia and New Zealand Banking Group and the proper officer of RSM Australia Pty Ltd each be discharged.

4.    Further, that the Order be varied by deleting from each of the annexures referred to in that Order all requirements, or references, that seek the production by any of the respondents to each of the summons to produce, or give evidence about:

a.    The personal assets, liabilities and finances of any of the Applicants;

b.    Any matter that that could not fairly be described as being a part of the examinable affairs of GEBIE Services Pty Ltd.

27    The learned primary judge refused to make any of the orders sought.

The applicants’ contentions

28    The applicants complain that the summonses and the orders for production of documents by the non-examinee entities are too wide. They contend (as they did before the learned primary judge) that they had a substantive right to maintain confidentiality in their personal affairs, referred to at times in the course of submissions as a right of privacy. It was submitted that the proceedings before the Registrar were commenced by the respondents’ application for the issue of the summons and the question of whether or not a summons should be issued in the terms sought by the respondents was the very issue, indeed the final issue, to be determined in the underlying proceedings. The question of whether documents should be produced could not, it was submitted, be regarded as a matter of mere practice and procedure: it was the very matter to be finally adjudicated upon by the Court. It followed, in the applicants’ submission, that the Registrar’s decision to issue each summons finally determined the substantive rights of the parties in the proceeding.

29    Relatedly, it was submitted that the orders for the production of documents containing personal and confidential information finally determined the controversy between the parties in that the orders impinged the applicants’ substantive right to privacy in their personal information in a way that could be neither reconsidered nor reversed at a later time.

Consideration

30    Any consideration of whether or not the dismissal of the interlocutory process comprised an interlocutory judgment must have as its starting point the statutory provisions pursuant to which orders were sought on that application. The following observations may be made:

(1)    The application was stated to be “made under” s 596F(1) of the Corporations Act and r 11.5 of the Rules. The reliance on s 596F(1) of the Corporations Act was emphasised in written submissions before the primary judge. The interlocutory process otherwise makes no reference to the Court’s power of review under s 35A(5) or (6) of the FCA Act, nor did the proceedings before the primary judge proceed on that footing.

(2)    The orders sought in subparagraphs 1(a) and 1(b) are clearly in the nature of directions about matters to be inquired into at an examination. To that extent the interlocutory process is indeed an application for directions under s 596F(1)(a) of the Corporations Act. I accept that if orders confining the scope of the examination were made in those terms, then consequential orders might be made varying the summonses for the production of documents so as to ensure that the categories of documents to be produced did not transgress the limits of the examination itself.

(3)    Paragraph 1(c) of the interlocutory process was said by the applicants to constitute an application for a “direction that a document that relates to the examination and that was created at the examination be destroyed” within the meaning of s 596F(1)(g) of the Corporations Act. I do not agree with that categorisation. The documents referred to in the proposed order were not “created at the examination” within the meaning of the provision. Rather, they are those documents that have already been produced in compliance with the impugned summonses and the Registrar’s orders, which were sought to be set aside in whole or in part. The relief is properly to be regarded as ancillary to the relief sought in paragraph 4 of the interlocutory process.

(4)    Paragraph 2 of the interlocutory process seeks an order requiring that the applicants be provided with the affidavit filed by the respondents in support of their application for the issue of each summons. Such an order is clearly interlocutory: Trevor (Liquidator) v Evans [2017] FCAFC 36 at [2], [3] (Jagot J, Middleton and Wigney JJ agreeing). However, the grounds of appeal do not impugn in any way the decision of the primary judge to refuse to make an order in the terms sought, nor is any relief sought on the proposed appeal in respect of it.

(5)    Paragraph 3 of the interlocutory process purports to invoke the Court’s jurisdiction under r 11.5 of the Rules. The rule confers jurisdiction on the Court to discharge an examination summons on the application of a person served with such a summons. Rule 11.1 defines the phrase “examination summons” to mean a summons issued under s 596A or s 596B of the Corporations Act. Neither ANZ nor NAB fall within that definition. Rather, they are non-examinees in respect of whom an order under s 597(9) of the Corporations Act has been directed.

(6)    Paragraph 4 seeks the variation of orders made by the Registrar on 6 February 2017, including variations to the terms of the summonses issued to Ms Kassiou and Mr Mitchell. Counsel for the applicants submitted that by paragraph 4, they had invited the learned primary judge to exercise afresh the power under s 597(9) of the Corporations Act. Counsel assayed any suggestion that the relief sought in that paragraph was an application for review of the exercise of the Registrar’s powers under s 596D or s 597(9) of the Corporations Act in relation to Ms Kassiou and Mr Mitchell. Counsel did not clearly articulate how the learned primary judge might vary the summons for the production of documents by Ms Kassiou and Mr Mitchell if not in the re-exercise of such powers on a de novo review under s 35A(5) of the FCA Act.

31    The respondents did not take any substantive point with the jurisdictional basis on which the application for orders sought in the interlocutory process was made at first instance. They submitted that it was unnecessary to resolve any ambiguity attending that question because an order made in the exercise of any one of the powers on which the applicants claimed to rely should be characterised as interlocutory in nature in any event. I accept that submission.

32    In Gerah Imports Pty Ltd v The Duke Group Pty Ltd (in liquidation) (1993) 61 SASR 557, the recipients of examination summonses issued pursuant to s 596B of the Corporations Law (as then in force) sought orders on appeal that the summonses be discharged on the basis that (among other things) documents required to be produced did not constitute a company’s “examinable affair” (see at 561). The Full Court of the Supreme Court of South Australia held that the orders made at first instance were interlocutory in nature in that they did not finally determine the rights of any party: at 561 (Olsson J, King CJ and Millhouse J agreeing). Although that appeal concerned the exercise of a discretionary power equivalent to that conferred by s 596B of the Corporations Act, rather than the mandatory power under s 596A, that distinction is immaterial for present purposes.

33    As a decision of an intermediate court in relation to the interpretation of common or uniform legislation, it is appropriate that Gerah Imports be followed by this Court: Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485 at 492. It would follow from the decision that, insofar as the interlocutory process in the present case constituted an application to discharge in full any summonses issued to ANZ and NAB, the dismissal of that application ought be categorised as interlocutory. Moreover, if the dismissal of an application to discharge a summons in full be interlocutory, it would necessarily follow that the dismissal of an application to discharge a summons in part is also interlocutory. A variation of a summons ought to be regarded as a partial discharge. Insofar as any order sought on the interlocutory process constituted an application of that kind, the conclusion reached in Gerah Imports would apply equally to it.

34    In O’Neill v Piscopo [2011] FCA 773 Emmett J held that an order dismissing an application to discharge an examination summons issued under s 81 of the Bankruptcy Act 1966 (Cth) was interlocutory such that leave to appeal against the order was required (at [7]). The order there under consideration is analogous to an order dismissing an application for the discharge of an examination summons under r 11.5 of the Rules and the result is consistent with that arrived at in Gerah Imports.

35    Further, in Contura Mining Pty Ltd, in the matter of B.J. Jarrad Pty Ltd (in liq) v Mableson [2015] FCA 1362 it was common ground that orders made pursuant to s 597(9) of the Corporations Act for the production of documents by a non-examinee was interlocutory, such that leave to appeal from the orders was required. White J proceeded on that basis and dismissed the application for leave to appeal. White J’s observation that there was “common ground” between the parties on that issue should not be read as a statement that his Honour did not satisfy himself that leave was required: it was simply unnecessary for his Honour to opine on it.

36    To the extent that the applicants assert that the primary judge was, by their interlocutory process, called upon to exercise the same or analogous powers to those at issue in Gerah Imports, O’Neill and Contura Mining, the authorities support the conclusion that his Honour’s refusal to do so is interlocutory.

37    Reverting to first principles, it is difficult to conceptualise proceedings for an examination as involving any contest over substantive rights and obligations of the same kind that might arise in a trial of a “matter,” being a pre-existing legal controversy brought before the Court for adjudication: Fencott v Muller (1983) 152 CLR 570 at 603 – 606; Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2000) 204 CLR 559 at [54]. Rather, the purpose of examination proceedings is to enable an eligible applicant (in this case joint and several liquidators charged with the responsibility of winding up a company) to gather information about the company’s examinable affairs and thereby assist the eligible applicant to discharge his or her statutory functions. In that regard, the “outcome” of the proceedings does not involve the resolution of a controversy over any substantive rights vis á vis the eligible applicant on the one hand and the examinee on the other (although controversies as to scope and procedure will invariably rise and fall for resolution, as they have here).

38    In Shapowloff v Stirling Henry Ltd (in Liq) (1972) 2 NSWLR 691, the New South Wales Court of Appeal dismissed an appeal concerning a summons issued under s 249(1) of the Companies Act 1961 (NSW), a provision in similar terms to s 596A of the Corporations Act as now in force. Jacobs P said (at 693):

All that [s 249(1)] does is to provide a procedure whereby in certain circumstances a person may be brought before the court. It is not a subsection which determines rights or imposes obligations, unless the obligation to attend the court is regarded as an infringement of a person’s rights. Such an obligation is not an infringement; it is part of the duty from time immemorial of a person to attend the Queen’s courts to give evidence. It is true that there are special features in s 249 and legislation of this kind which have been referred to in the cases. But those special features do not create either rights or obligations from the mere summons to attend. If there is a substantial challenge to the questions which are asked of the person so summoned that challenge may be made on the asking of the questions.

…

The summons to attend is not a summons against the person summoned in the substantive sense that it affects his rights. It is no different in this regard from a subpoena …

39    That analysis is equally applicable to the regime established under Pt 5.9 of the Corporations Act. It may be accepted that the legal effect of a summons is that the recipient is compelled by statute to do a thing he or she is not otherwise compelled to do. However, it does not follow that the recipient has a pre-existing substantive right not to be summonsed to attend at a court of law or a pre-existing substantive right not to produce documents pursuant to a summons or other compulsive process lawfully issued under the statute. Accordingly, the obligation to comply with the requirements of a summons issued pursuant to s 596A does not involve the infringement of a substantive right, nor does the issue of the summons itself determine the existence or otherwise of such a right. To the extent that the applicants submitted otherwise, the submission should be rejected.

40    Consistent with what was said in Shapowloff, the decision of the Registrar to summons Ms Kassiou and Mr Mitchell created an obligation analogous to the obligation imposed upon the addressee of a subpoena. The underlying proceedings were not finally resolved by the issue of the summons. Rather, the summons in each case is a procedural mechanism for securing the attendance of the examinees before the Court for the purpose of examinations that have now commenced and that are not yet complete. Indeed, the very fact that the proceedings are not yet complete compels the conclusion that the Registrar’s decision to summons Ms Kassiou and Mr Mitchell and the order of the primary judge dismissing the application to vary the Registrar’s orders were all interlocutory in nature.

41    As to the orders for the production of documents by IST, ANZ and NAB, it is well established that the compulsory production of documents by a person other than the examinee is available only for the purpose of facilitating the obtaining of information and evidence from the examinee: Re BPTC Ltd (in liq) (No 3) (1993) 29 NSWLR 708 at 712 (McLelland J). The circumstance that an order for the production of documents is one that serves to advance a more primary objective is a clear indicator that the order is interlocutory. The same must hold true in relation to an order refusing to vary a summons requiring the production of documents.

42    I accept that the orders sought on the interlocutory process would, if made, have affected the scope of the examinations, and perhaps drastically so. That is a relevant circumstance to be taken into account on the application for leave to appeal. But it does not, in and of itself, indicate that the judgment sought to be appealed against was interlocutory.

43    As to the contention that the legal effect of the judgment is that confidentiality in the documents will be lost for all time, any such loss, is of course, a relevant consideration on the application for leave to appeal. The asserted loss of confidentiality cannot, however, compel the conclusion that the judgment sought to be appealed against was final in the relevant sense, any more than it could compel such a conclusion in relation to an order for discovery or an order granting leave for the issue of a subpoena.

SHOULD LEAVE TO APPEAL BE GRANTED?

44    The power to grant leave to appeal is discretionary. The Full Court in Samsung Electronics Co Limited v Apple Inc [2013] FCAFC 138 at [19] confirmed the need for flexibility in its exercise:

The very width of the discretion and the prudence in not seeking to confine the manner in which it is to be exercised is a necessary corollary of the myriad of interlocutory decisions which may be made – ranging from interlocutory decisions affecting the substantive rights of parties (and effectively being final orders) to matters of practice and procedure (including decisions to extend time, the granting or refusal of adjournments and the filing of evidence). The different character of interlocutory decisions which may be made and the different factual and forensic circumstances in play when such decisions are made nevertheless have occasioned a different emphasis from one judgment to another upon one particular factor or factors rather than others.

45    The discretion is influenced, but not constrained, by the two stage test enunciated in Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 (Sheppard, Burchett and Heerey JJ). The Court looks to whether the judgment in issue is attended with sufficient doubt to warrant reconsideration by a Full Court and to whether “substantial injustice” would result if leave were refused, supposing the judgment to be wrong.

46    The discretion is to be exercised having regard to the underlying policy for the requirement of leave: the time and resources of the Court are ordinarily not to be taken up with appeals about decisions which do not finally determine the issues in dispute in the primary proceedings. The prospect of proceedings becoming fragmented and delayed by the parties’ seeking appellate intervention before the proceedings are finalised is clearly undesirable.

47    There are four proposed grounds of appeal. It is not necessary to extract them here in full. As expanded upon in the applicants’ written submissions, the proposed grounds rely on the correctness of three overlapping propositions. I am satisfied that the propositions encapsulate the issues to be determined on any appeal and subsume all of the grounds. I will decide the application for leave to appeal by reference to them.

48    The propositions are to the effect that the learned primary judge erred by:

(1)    adopting an impermissibly wide conceptualisation of the subject matter that might properly fall within GEBIE’s “examinable affairs” (grounds 1, 2 and 3);

(2)    determining that it was not necessary for the respondents to prove that litigation against the examinees was contemplated in order for the examinees to be questioned about, or produce documents concerning, their assets and liabilities (ground 3); and

(3)    failing to determine that the summonses for the production of documents were impermissibly broad (grounds 2 and 4).

Are the grounds of appeal reasonably arguable?

49    To the extent that the exercise of a power, or the refusal to exercise a power, by the learned primary judge involved a discretionary judgment, the applicants must establish that the error is one that may be disturbed on appeal in accordance with principles stated in House v The King (1936) 55 CLR 499 at 505:

It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so.

50    The grounds of appeal are to the effect that the learned primary judge misconstrued the statute and thereby acted on a wrong principle. I am satisfied that, if made out, the alleged errors are of a kind that may justify interference by an appellate court in accordance with the principles in House.

51    The factual context in which the interlocutory process came before the learned primary judge is set out at [6] — [17] of his Honour’s reasons. It is not necessary to recite all of the facts here. It is sufficient to say that GEBIE was the recipient of more than $5m in Commonwealth grant monies, paid for the purpose of funding indigenous training programs. Until 1 July 2014, GEBIE was a wholly owned subsidiary of The Groote Eylandt and Bickerton Island Enterprises Aboriginal Corporation ICN 3897 (GEBIEAC). GEBIEAC entered into a joint venture with IST pursuant to which the grant moneys were transferred by GEBIE to IST soon after their receipt. The grant money is said by the respondents to be unaccounted for (at least by reference to documents presently in their possession).

52    The applicants do not take issue with the factual basis upon which the learned primary judge determined the interlocutory process. Importantly, the facts as summarised by the learned primary judge are to be read as a summary of the matters the respondents’ seek to investigate. His Honour noted, as a matter of fairness, that Ms Kassiou had filed affidavits in which she had denied any wrongdoing in connection with the company. These reasons should be read in the same light.

53    The first observation that may be made about the arguments underlying the grounds of review is that they differ from the arguments advanced before the learned primary judge. Similarly, the relief sought on the appeal does not wholly correlate with the relief sought on the interlocutory process.

54    The orders sought in paragraphs 1(a) and 1(b) of the interlocutory process were, in effect, an attempt to obtain an advance ruling so as to circumscribe the topics in respect of which Ms Kassiou and Mr Mitchell might be examined. The position adopted on the interlocutory process was absolute: they sought to “carve out” from the examination all questions (and all documents) that drew out information concerning their personal or confidential affairs. At the heart of their submissions was a complaint that information that was private or confidential to the examinees could not also amount to information concerning GEBIE’s “examinable affairs”. The relief sought on the interlocutory process contemplated no circumstance in which a “book” produced at an examination or an answer given to a question may relate both to the company’s examinable affairs and to matters that were properly considered private and confidential to the examinees in the ordinary sense.

55    The phrase “examinable affairs” has a wide meaning: see s 9 and s 53 of the Corporations Act. It includes the company’s property, liabilities, transactions and management.

56    In their submissions on this application, the applicants acknowledged that information concerning their private or confidential information may also be fairly described as information “about” GEBIE’s examinable affairs. That acknowledgment was then qualified in some ways, including by their second proposition: the liquidators must first show (indeed, “declare”) that litigation against the examinees was in contemplation and the contemplated causes of action must be identified. In the absence of some kind of declaration to the effect that litigation was contemplated, it was submitted, the purpose of the proposed examinations could not be ascertained, the summonses should be regarded as too ambitiously drawn, and the orders providing for their issue were beyond power.

57    The submission does not have reasonable prospects of succeeding on an appeal.

58    It is well established that on an application for orders under Pt 5.9 of the Corporations Act and its predecessors, the Court may order an examination for the purpose of determining whether there are reasonable grounds, including evidence, to litigate a case to a successful judgment and to ascertain the likelihood of any judgment being satisfied: Grosvenor Hill (Qld) Pty Ltd v Barber (1994) 48 FCR 301 at 307.

59    In Contura Mining, an examination summons was issued to a person suspected of acting in the capacity of a de facto director. The recipient of the summons argued that it was necessary for the liquidators to prove that he had acted in that capacity in order for the examination summons to validly issue. White J rejected the argument. His Honour said (at [29]):

Contrary to the applicants’ submissions, it was not necessary for the respondents to adduce evidence, for the purposes of obtaining the order for production pursuant to s 579(9) [sic], that Mr Mallios was the particular officer within the applicants who had given instructions or directions to BJ Jarrad or Jarrad Equipment, or that those entities had been accustomed to act in accordance with those instructions or directions. As counsel for the respondents observed, the respondents were entitled to investigate the existence of shadow directorships, and did not have to adduce prima facie proof that such directorships existed before being able to examine on the topic. It is open to the respondents to examine Mr Mallios with a view to eliciting information bearing upon whether he, some other identified person, or some unidentified person within the applicant group had given instructions and directions to BJ Jarrad and Jarrad Equipment.

60    The applicants made no submission to the effect that the decision in Contura Mining is plainly wrong. The decision is consistent with the judgment of Gardiner AsJ in Re Banksia Securities Ltd [2013] VSC 416; (2013) 278 FLR 421 (at [25] — [26]) to the effect that questioning and production of documents on an examination may be required where the company (by its liquidators) has not made, described or articulated any claim against the examinee or the person to whom the order for production of documents is directed. It is also consistent with what Lander J said in Evans v Wainter Pty Ltd (2005) 145 FCR 176 at [64] (Ryan and Crennan JJ agreeing at [1], [271]):

The various parties referred to in the definition of ‘eligible applicant’ apart from ASIC assume responsibilities within the corporation in circumstances where they have had no previous involvement. They are all appointed for the purpose of protecting the assets of the corporation. They may or may not get assistance from the directors and officers of the corporation. In many cases they do not. In many cases their appointments follow some misconduct on the part of the corporation’s directors and officers. Indeed, as will shortly be seen, s 596B recognises that an eligible applicant may need to use the powers under Pt 5.9 to inquire into the conduct of the corporation’s officers for the purposes of establishing whether they have been guilty of misconduct. Whether eligible applicants get assistance or not, they need to be informed of the corporation’s examinable affairs.

61    His Honour’s reference in that passage to “misconduct” is to be understood as a reference to that word as defined in the Corporations Act to include fraud, negligence, default, breach of trust or breach of duty. His Honour continued (at [81] – [82]):

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. Such an examination would assist an eligible applicant in identifying a chose in action which is an asset of the corporation: Grosvenor Hill (Qld) Pty Ltd v Barber (1994) 48 FCR 301; Re Spedley Securities Ltd (in liq) (1990) 3 ACSR 366 at 376.

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: Gerah Imports Pty Ltd v Duke Group Ltd (in liq) (1993) 61 SASR 557. Indeed, such an examination may be of a person against whom litigation is contemplated or even pending: Re Hugh J Roberts Pty Ltd (1970) 91 WN (NSW) 537; Hamilton v Oades (1989) 166 CLR 486 at 497; Re Laurie Cottier Productions Pty Ltd (in liq) (1992) 9 ACSR 513.

62    There was no contention that a Full Court on this appeal would or should be invited to reconsider the correctness of the decisions in Evans v Wainter or Grosvenor Hill.

63    The relevant authorities were considered and applied by the learned primary judge in the present case for a purpose and in a manner that cannot reasonably be open to challenge: Reasons at [27] – [37]. His Honour rejected a submission to the effect that the decisions in Evans v Wainter and Grosvenor Hill were to the effect that an order for an examination could not be made for the purposes of enabling a liquidator to ascertain whether a cause of action existed, or for the purpose of investigating the likelihood of recovery without first contemplating and formulating a cause of action against the examinee. The challenges to this aspect of his Honour’s reasoning are not reasonably arguable.

64    His Honour went on to say (at [36]):

As already noted, Mr Phillips has deposed that the plaintiffs wish to ascertain whether causes of action exist in the name of GEBIE against Ms Kassiou, Mr Mitchell and/or IST and, if so, whether they will have the financial capacity to satisfy any potential judgment which may be obtained against them. Mr Phillips has also deposed that, should it appear that there is a potential cause of action available to GEBIE, the plaintiffs wish to ensure that there will be some prospect of Ms Kassiou, Mr Mitchell and/or IST being able to satisfy any judgment it obtains. I observe that the Applicants did not challenge Mr Phillips on his statement that the plaintiffs have this purpose, nor (other than as outlined above) did they contend that such a purpose is not a legitimate purpose.

65    The applicants have not demonstrated an arguable basis for challenging that aspect of his Honour’s judgment.

66    In respect of the remaining propositions underlying the grounds of appeal, Counsel for the applicants sought to demonstrate in a practical sense where the limits of questioning at an examination might be drawn. Counsel submitted that the matters personal to the applicants in respect of which they may legitimately be examined were limited to:

(1)    personal information whereby the respondents might assess whether the applicants currently have sufficient assets against which a judgment may be executed should proceedings be brought against them; and

(2)    personal information whereby the respondents might assess whether assets of the company have been directly transferred to them in circumstances that would give rise to a proprietary tracing remedy.

67    All other information of a personal or confidential nature was said to fall outside of GEBIE’s examinable affairs and could not, it was said, be relevant to the proper discharge of the respondents’ functions.

68    Counsel submitted that if money had been misappropriated from a company by its directors and expended, for example, on medical bills or at casinos or other “licensed” premises, then the money would be forever lost to the company’s creditors. It could, in Counsel’s submission, form no legitimate part of an examination to investigate the fact or circumstances of that expenditure (whether through documents or questioning or both) because there would no longer be any asset in existence that might form the subject of a proprietary remedy in the event that proceedings were commenced.

69    These submissions cannot possibly succeed on appeal. GEBIE’s examinable affairs are not limited to its tangible and traceable property. Its examinable affairs clearly include any causes of action that may lie against its former officers, whether or not proprietary in nature and whether or not any judgment against its former officers might ultimately be satisfied.

70    Further, as a question of fact, the learned primary judge held on the evidence before him that there was a proper evidentiary basis for examination summonses to have been issued to Ms Kassiou and Mr Mitchell. It was, his Honour held, a case in which it was not difficult to discern causes of action that might be available to the liquidators appointed to GEBIE (Reasons [66] – [67]). That assessment is not affected by any arguable appealable error.

71    There is a further erroneous assumption underlying the propositions sought to be advanced on the appeal. It was said that the summonses and orders requiring the production of bank statements for accounts held by the examinees and IST would contain “intimate details of their private lives such as their grocery shopping, Medicare receipts and so on” and so could not lawfully be ordered to be produced. The same complaint was made of paragraph 10 of the schedules to each of the summonses issued to Ms Kassiou and Mr Mitchell. That category was expressed as follows:

10.    Documents which concern, record or evidence the current assets and liabilities of:

10.1    IST;

10.2    Themelina Kassiou; and/or

10.3    Gregory Francis Mitchell.

72    It may be acknowledged that a book may contain information that relates to a company’s examinable affairs whilst also containing information that may fairly be described as private in nature. The personal information may well relate to the examinable affairs of the company or it may not. However, the circumstance that a book may contain both relevant and irrelevant information does not bring it outside of the range of documents a court may lawfully order be produced. To the extent that the applicants propose to submit otherwise on appeal, the submission could have no prospect of success.

73    Further, the learned primary judge found that the categories of documents specified in the summonses issued to Ms Kassiou and Mr Mitchell and in the orders directed to ANZ and NAB did not, on their face, require the production of any document that related solely to the examinees’ private information and that the categories were otherwise expressed in terms that did bear sufficient relation to GEBIE’s examinable affairs (Reasons [28], [42], [53] – [62]). The arguments advanced on the present application did not disclose any reasonable basis for questioning the correctness of those findings.

74    That is not to say that the summonses and orders would not have the practical effect of requiring the production of documents that do indeed contain intimate or commercially sensitive information. In that regard, the primary judge noted (with respect, correctly) that “examinations are a coercive process which involves an intrusion into matters which the Applicants are otherwise entitled to keep private” (at [35]). The fact that a summons might capture such information does not demand the conclusion that it is not confined to its statutory purpose. It simply reflects the ordinary consequence that a book may fall within a category of documents to be produced and yet at the same time contain personal information, some of which may bear upon a company’s examinable affairs and some of which may not.

75    To the extent that a relevant document also contains irrelevant personal information, the applicants might have applied to the primary judge for alternate remedies safeguarding their confidentiality. But they did not. They adopted an all or nothing approach on their interlocutory process, at least insofar as their personal information was concerned. It can form no part of the Court’s appellate jurisdiction to entertain an alternative compromise position when no such alternative compromise position was advanced before the learned primary judge: compare Contura Mining at [25]. That is especially so where the granting of orders for the preservation of confidentiality of documents produced pursuant to the summonses would involve the exercise of a discretion.

76    It has not been demonstrated by evidence or otherwise that the summonses would, on their terms, require the production of documents that could only contain information concerning the examinees’ private lives but not otherwise bear upon GEBIE’s examinable affairs. The contentions to that effect were founded on a misapprehension of the phrase “examinable affairs” and paid insufficient regard to the factual background against which the application for the issue of each summons was based.

77    I do not consider the applicants to have any reasonable prospect of succeeding on the appeal.

Substantial injustice

78    The requirement that an examination be “about” a company’s examinable affairs is to be regarded as a jurisdictional precondition to the exercise of the power to issue an examination summons: Meteyard v Love (2005) 65 NSWLR 36 at [32] (Basten JA, Santow and Beazley JJA agreeing). Supposing the primary judgment to be wrong, the applicants will suffer substantive injustice, in the sense that they will be compelled to answer questions and produce documents in answer to a summons that is not confined to the relevant statutory purpose and is therefore beyond power. I accept that, in a sense, the judgment sought to be appealed against practically affects the scope of the examination in a way that may prejudice the applicants and work a substantial injustice. That circumstance is one that ordinarily should be given considerable weight in the exercise of the discretion to grant leave to appeal.

79    However, the submission that confidentiality in information might be permanently lost is one that must be assessed by reference to the nature of the information and having regard to the availability of other safeguards limiting the use to which the information might be put. As I have said, the proposed appeal does not concern the exercise of any discretion concerning the availability or application of any of the safeguards that might ameliorate the feared incursion into the applicants’ personal privacy. It is concerned only to prevent the compulsive production of documents and information, not its subsequent disclosure or use. Notably, in the proceedings before the learned primary judge, the applicants did not pursue a contention that compliance with the summons would cause them commercial harm. In short, whilst an invasion of the examinees’ personal privacy is to be regarded as a significant incursion, I do not accept that the nature and degree of the incursion is as severe as that suggested by the applicants.

80    Counsel for the applicants submitted that the Court would err in law should it have regard to any prejudice that may be suffered by the respondents should leave to appeal be granted. That submission should be rejected. It is inconsistent with the flexibility attending the exercise of the discretion conferred by the Full Court in Samsung and has the effect of treating the guiding principles stated in Décor Corporation as an exhaustive statement of relevant considerations.

81    The grant of leave in the present case would result in the fragmentation and delay of the examinations. That is clearly a relevant consideration. It is that very kind of fragmentation and delay that underlies the requirement for the grant of leave to appeal. Having regard to the factual circumstances described by the learned primary judge, there is an obvious public interest in the examinations proceeding with appropriate expedition. I give that consideration considerable weight in the exercise of my discretion to refuse the grant of leave.

82    Having regard to all of the submissions and evidence, I am not satisfied that the applicants have demonstrated a sufficient likelihood of success on the appeal to justify the grant of leave in all of the circumstances.

Orders

83    The application for leave to appeal should be dismissed.

84    In the course of submissions I drew the parties’ attention to the notice of appeal filed on 23 March 2017 and invited submissions as to the status of that document should the application for leave to appeal be dismissed. The parties sought to have that question stood over pending delivery of judgment and these reasons. I will now hear the parties in connection with that issue.

Associate:

Dated:    28 April 2017