FEDERAL COURT OF AUSTRALIA

Pleash, in the matter of Equititrust Limited (In Liquidation) (Receivers and Managers Appointed) (No 3) [2017] FCA 1074

REASONS FOR JUDGMENT

REEVES J:

1    On 11 July 2017, I delivered a judgment dismissing most of the paragraphs in Mr Tucker’s further amended interlocutory application (see [2017] FCA 758). However, there remained a further matter to be determined on that application, namely the order sought by paragraph 2. The documents identified in that paragraph were subsequently reduced by agreement between the parties to two categories. One category concerned the scope of the documents sought, primarily whether the Liquidators could obtain the financial records and other associated documents relating to the assets and liabilities of a number of discretionary trusts over which Mr Tucker exercised control. The other category concerned the relevance of certain documents relating to the BOSI Securities and a company called MS Asia (CPH) Pty Ltd. In these reasons for judgment, I will use the same abbreviations as I used in my reasons in [2017] FCA 758.

2    There is no dispute that this application constitutes a review of Deputy District Registrar Lynch’s order dated 14 June 2017 (the Order) under s 35A(5) of the Federal Court of Australia Act 1976 (Cth) (the FCA). It is also not in dispute that such a review proceeds as a rehearing de novo (see Re Kwiatek and Kwiatek; Ex parte Big J Ltd v Pattison (1989) 21 FCR 374 at 380–381). Additionally, subject to one qualification, the Liquidators agree that they bear the onus in this application. That qualification is that, in this instance, the Liquidators contend that the onus is evidential in character requiring them to establish the conditions necessary to obtain the Order, as set out in s 597(9) of the Corporations Act 2001 (Cth) (the Corporations Act). In particular, they contend that the central question raised by this application is whether the documents sought by them are, in the terms of that subsection, “relevant to matters to which the examination relates or will relate”. In this respect, it is not in dispute that Mr Tucker is an examinee for the purposes of Part 5.9 of the Corporations Act.

3    The Liquidators relied on some, but not all, of the materials that were before Deputy District Registrar Lynch. None of those materials was affected by the restrictions imposed by s 596C(2) of the Corporations Act, or the confidentiality orders made by Greenwood J on 20 January 2017 (see [2017] FCA 758 at [4]).

4    I will deal with the two remaining contentious categories of documents in the order set out above.

The scope of the documents sought

5    The item numbers, document descriptions and Mr Tucker’s grounds of objection for the documents falling into this category are as follows:

6    The particular documents corresponding to the item numbers above are as follows:

(ee)    Income tax returns of Mr Tucker for the years ended:-

(i)    30 June, 2013;

(ii)    30 June, 2014;

(iii)    30 June, 2015; and

(iv)    30 June, 2016;

(ff)    Any statement of the assets and liabilities or statement of financial position of the following persons in any period from 1 July, 2013 for any of:

(i)    Mr Tucker;

(ii)    Mr Tucker and his wife Jennifer Tucker jointly;

(iii)    Any superannuation fund in which Mr Tucker has an interest;

(gg)    Financial statements and income tax returns of the following persons for the years ended 30 June, 2015 and 2016:-

(i)    Tucker SF Pty Ltd;

(ii)    Tucker SF Pty Ltd as trustee of the Tucker Superannuation Fund;

(iii)    Tuckerloan Pty Ltd;

(iv)    Tucker Finance Pty Ltd;

(v)    Tucker Finance Pty Ltd as trustee of the Tucker Finance Trust;

(vi)    Tucker Property Pty Ltd;

(vii)    Tucker Property Pty Ltd as trustee of the Tucker Property Trust;

(viii)    Vikwood Pty Ltd;

(ix)    Vikwood Pty Ltd as trustee of the Vikwood Trust;

(x)     David’s Corporate Beneficiary Pty Ltd;

(xi)    Tucker SFPT Pty Ltd;

(xii)    Camp Seabee Properties Pty Ltd;

(xiii)    35 Chasely Street Auchenflower Pty Ltd;

(hh)    The most recently received bank statements for:-

(i)    Mr Tucker;

(ii)    Mr Tucker and his wife Jennifer Tucker jointly;

(iii)    Tucker SF Pty Ltd;

(iv)    Tucker SF Pty Ltd as trustee of the Tucker Superannuation Fund;

(v)    Tuckerloan Pty Ltd;

(vi)    Tucker Finance Pty Ltd;

(vii)    Tucker Finance Pty Ltd as trustee of the Tucker Finance Trust;

(viii)    Tucker Property Pty Ltd;

(ix)    Tucker Property Pty Ltd as trustee of the Tucker Property Trust;

(x)    Vikwood Pty Ltd;

(xi)    Vikwood Pty Ltd as trustee of the Vikwood Trust;

(xii)    David’s Corporate Beneficiary Pty Ltd;

(xiii)    Tucker SFPT Pty Ltd;

(xiv)    Camp Seabee Properties Pty Ltd;

(xv)    35 Chasely Street Auchenflower Pty Ltd;

7    I will deal first with items (ff), (gg) and (hh) above insofar as they relate to any superannuation fund ((ff)(iii)), or any trust or corporate trust with which Mr Tucker is associated ((gg)(i) to (xiii) and (hh)(iii) to (xv)).

8    The details of the trusts and the superannuation fund that are central to these items are set out in a number of affidavits that Mr Tucker filed in support of this application. Among other information, he has provided the details of the beneficiaries of each of the trusts and annexed the trust deeds for each. In brief summary, Mr Tucker’s affidavits reveal, first, that the trusts concerned are: the Tucker Finance Trust; the Tucker Property Trust; the Tuckerloan Trust; the Camp Seabee Properties Trust; the Tucker SF Property Trust; the Vikwood Trust; and the Tucker Superannuation Fund. Secondly, that the beneficiaries of each trust are divided into tiers and Mr Tucker is a primary, or first, beneficiary along with other members of his immediate family. There are also secondary and tertiary tier beneficiaries of each trust. Thirdly, that Mr Tucker is the sole director of: Tuckerloan Pty Ltd; Vikwood Pty Ltd; and Tucker Finance Pty Ltd. Fourthly, that those corporate entities are, in turn, the trustees for: the Tuckerloan Trust; the Vikwood Trust; and the Tucker Finance Trust, respectively. Fifthly, that the Vikwood Trust owns 100% of the shares in: Camp Seabee Properties Pty Ltd; 35 Chasely Street Auchenflower Pty Ltd; and David’s Corporate Beneficiary Pty Ltd and that Mr Tucker is the sole director of each of those corporate entities. Sixthly, that Camp Seabee Properties Pty Ltd is the corporate trustee for: the Camp Seabee Properties Trust. Seventhly, David’s Corporate Beneficiary Pty Ltd owns 100% of the shares in Tucker Property Pty Ltd, which is, in turn, the corporate trustee for the Tucker Property Trust. Eighthly, Mr Tucker claims that he was not the settlor and therefore not the appointer for any of the trusts. Ninthly, that Mr Tucker is also a trustee of the Tucker Practice Trust in its capacity as a partner of the firm Tucker & Cowen Solicitors. The other partner is the Cowen Practice Trust, of which Mr Cowen is the trustee. Mr Cowen has also incorporated the company TCS Solicitors Pty Ltd to carry on the business of Tucker & Cowen Solicitors. While he is an employee of TCS Solicitors Pty Ltd, Mr Tucker claims that he is not a director of, nor does he have any beneficial interest in, that entity. Tenthly, that Mr Tucker is also one of two directors (the other being his wife, Mrs Tucker) of the Tucker Superannuation Fund Pty Ltd, which is, in turn, the corporate trustee for the Tucker Superannuation Fund. Finally, that Tucker SFPT Pty Ltd is the trustee of the Tucker SF Property trust, which is beneficially owned by the Tucker Superannuation Fund.

9    Accepting that the Liquidators may conduct his examination in order to identify his ability to satisfy any judgment that they may be able to obtain against him (see [2017] FCA 758 at [36]), Mr Tucker submitted that the documents described in the items above are not within the scope of that inquiry because none of those documents is concerned with assets owned, and liabilities owed, by him personally, but instead all of them are concerned with the assets and liabilities of the discretionary trusts and the superannuation trust described above. He submitted that, as the beneficiary of the discretionary trusts, he does not hold a proprietary interest in the income or capital of those trusts.

10    In response, the Liquidators did not contend that Mr Tucker had a proprietary interest in the income or capital of any of the abovementioned trusts. Rather they contended that, as the sole director of each of the corporate trustees, Mr Tucker has control over the distribution of all of the income and capital of those trusts. Furthermore, the Liquidators submitted that it can be inferred from the following passage of one of Mr Tucker’s affidavit that he intended to use that control in the event that they were successful in obtaining a judgment against him:

If the liquidators sue me, and I suffer a judgment against me in the sums alleged by the liquidators’ solicitors, or indeed a fraction of those amounts, and it is not covered by insurance, I would not seek to have recourse to the assets of the trusts or superannuation fund described above, but rather I would file for bankruptcy.

11    The Liquidators therefore contended that Mr Tucker has the ability to cause the corporate trustees to pay the income or capital of the trusts to any of the identified beneficiaries, including himself as a primary beneficiary. The Liquidators also relied on the provisions in Part VI Division 4A of the Bankruptcy Act 1966 (Cth) (the Bankruptcy Act) and the potential for orders to be made under those provisions against entities which are controlled by a bankrupt person. Relevantly, those provisions are:

139A    Trustee may apply to Court

The trustee of a bankrupt’s estate may, at any time within 6 years after the date of the bankruptcy, apply to the Court for an order under this Division in relation to an entity (in this Division called the respondent entity).

…

139CA Definition of examinable period

(1)    For the purposes of this Division, the examinable period is:

(a)    in the case of an application for an order in relation to a related entity of the bankrupt—the period beginning:

(i)    if, at a time or times during the period of 1 year beginning 5 years before the commencement of the bankruptcy, the bankrupt became insolvent—at that time, or at the first of those times, as the case may be; or

(ii)    in any other case—4 years before the commencement of the bankruptcy;

and ending on the day on which the application is made; or

(b)    in any other case—the period beginning:

(i)    if, at a time or times during the period of 3 years beginning 5 years before the commencement of the bankruptcy, the bankrupt became insolvent—at that time, or at the first of those times, as the case may be; or

(ii)    in any other case—2 years before the commencement of the bankruptcy;

and ending on the day on which the application is made.

(2)    For the purposes of subparagraphs (1)(a)(i) and (b)(i), a rebuttable presumption arises that a bankrupt became insolvent at a time during the period referred to in the relevant subparagraph if it is established that the bankrupt:

(a)    had not, in respect of that time, kept such books, accounts and records as are usual and proper in relation to the business carried on by the transferor and as sufficiently disclose the transferor’s business transactions and financial position; or

(b)    having kept such books, accounts and records, has not preserved them.

139D    Order relating to property of entity other than a natural person

(1)    Where, on an application under section 139A for an order in relation to a respondent entity other than a natural person, the Court is satisfied that:

(a)    the bankrupt supplied personal services to, or for or on behalf of, the respondent entity at a time or times, during the examinable period and before the end of the bankruptcy, when the bankrupt controlled the entity in relation to the supply of those services;

(b)    either:

(i)    the bankrupt received for those services no remuneration in money or other property; or

(ii)    the remuneration in money or other property that the bankrupt received for those services was substantially less in amount or value than a person supplying those services in similar circumstances might reasonably be expected to have received if the person had dealt with the entity at arm’s length in relation to the supply of those services;

(c)    during the examinable period, the entity acquired an estate in particular property as a direct or indirect result of, or of matters including, the supply by the bankrupt of those services;

(d)    the bankrupt used, or derived (whether directly or indirectly) a benefit from, the property at a time or times during the examinable period when the bankrupt controlled the entity in relation to the property; and

(e)    the entity still has an estate in the property;

subsections (2) and (3) have effect, whether or not the bankrupt has ever had an estate in the property.

(2)    The Court may, by order, vest in the applicant:

(a)    the entity’s estate in the whole, or in a specified part, of the property; or

(b)    a specified estate in the whole, or in a specified part, of the property, being an estate that could, by virtue of the entity’s estate in the property, be so vested by or on behalf of the entity.

(3)    The Court may make an order directing:

(a)    the execution of an instrument;

(b)    the production of documents of title; or

(c)    the doing of any other act or thing;

in order to give effect to an order under this section made on the application.

…

139E    Order relating to net worth of entity other than a natural person

(1)    Where, on an application under section 139A for an order in relation to a respondent entity other than a natural person, the Court is satisfied that:

(a)    the bankrupt supplied personal services to, or for or on behalf of, the respondent entity at a time or times, during the examinable period and before the end of the bankruptcy, when the bankrupt controlled the entity in relation to the supply of those services;

(b)    either:

(i)    the bankrupt received for those services no remuneration in money or other property; or

(ii)    the remuneration in money or other property that the bankrupt received for those services was substantially less in amount or value than a person supplying those services in similar circumstances might reasonably be expected to have received if the person had dealt with the entity at arm’s length in relation to the supply of those services; and

(c)    the entity’s net worth at a particular time during the examinable period exceeded by a substantial amount what might reasonably be expected to have been the entity’s net worth at the last‑mentioned time if those services had not been supplied;

subsection (2) has effect.

(2)    The Court may by order direct:

(a)    if the entity is a partnership—a partner or partners in the partnership; or

(b)    in any other case—the entity;

to pay to the applicant a specified amount not exceeding the amount referred to in paragraph (1)(c).

12    The expressions “entity” and “related entity” are defined in s 5 of the Bankruptcy Act in the following terms:

entity means a natural person, company, partnership or trust.

related entity, in relation to a person, means any of the following:

(a)    a relative of the person;

(b)    a body corporate of which the person, or a relative of the person, is a director;

(c)    a body corporate that is related to the body corporate referred to in paragraph (b);

(d)    a director, or a relative of a director, of a body corporate referred to in paragraph (b) or (c);

(e)    a beneficiary under a trust of which the person, or a relative of the person, is a trustee;

(f)    a relative of such a beneficiary;

(g)    a relative of the spouse, or de facto partner, of such a beneficiary;

(h)    a trustee of a trust under which the person, or a relative of the person, is a beneficiary;

(i)    a member of a partnership of which the person, or a relative of the person, is a member;

For the purposes of paragraph (c) of this definition, the question whether a body corporate is related to another body corporate is to be determined in the same manner as that question is determined for the purposes of the Corporations Act 2001.

13    On this question of control, Mr Tucker did not dispute that, as the sole director of each of the corporate trustees above (save for the Tucker Superannuation Fund Pty Ltd), he alone holds the power to distribute to the respective beneficiaries of the trusts the income and capital of each trust in accordance with the terms of the trust deed for each trust. However, he contended that the control he held over the trusts did not affect the principle that, as a beneficiary of the trusts, he had no proprietary interests in their income or capital. On this aspect, he placed particular reliance on the judgment of Jackson J in Fordyce v Ryan [2016] QSC 307 (Fordyce v Ryan) at [26] and [37] as follows:

26    Usual analysis accepts that the beneficiary or discretionary object under a purely discretionary trust is not someone who has a property interest in the trust property. However, the applicant submits that the law is otherwise if the relevant beneficiary is someone who controls the trust to the requisite degree, relying on Australian Securities and Investments Commission v Carey (No 6) (“Richstar”) and Kennon v Spry

…

37    It is difficult to accept as a principle of reasoning that a beneficiary’s legal or de facto control of the trustee of a discretionary trust alters the character of the interest of the beneficiary so that it will constitute property of the bankrupt if the beneficiary becomes a bankrupt. To the extent that Richstar might be thought to support such a principle, it has not been followed or applied subsequently and it has been criticised academically. See J Glover, “A challenge to established law on discretionary trusts? - Re Richstar Enterprises”. In my view, there is no general principle of law of that kind.

14    For the reasons that follow, I do not consider the Liquidators’ contentions on this aspect can be accepted. Specifically, I do not consider that the control Mr Tucker agrees he has over the distribution of the income and capital of the abovementioned trusts alters the well-established principle that, as the beneficiary of a discretionary trust, he does not have any proprietary interests in the income or capital of those trusts. I also do not consider that the provisions of Part VI Division 4A of the Bankruptcy Act provide any support for the Liquidators obtaining access to the documents described in the items above.

15    It is worth recalling at the outset that the critical question on this aspect is that posed by s 597(9) of the Corporations Act: whether the documents identified in the items above are relevant to matters to which Mr Tucker’s examination relates (see at [2] above). On this aspect that matter, as expressed by Lander J in Evans v Wainter Pty Ltd (2005) 145 FCR 176; [2005] FCAFC 114 (Evans v Wainter) at [82], is whether a chose in action, namely a judgment that may be obtained against Mr Tucker at the behest of the Liquidators, will be ultimately recoverable from him, or from some other source such as his insurer.

16    I turn then to the control exception raised by the Liquidators. As Mr Tucker has highlighted in his contentions, Jackson J considered that issue in Fordyce v Ryan. That case dealt with the rights of a trustee of a bankrupt person’s estate to gain access to the income and capital of a “purely” discretionary trust with respect to which the bankrupt was a beneficiary and over which he held control as the sole director of the trust’s corporate trustee. After stating the usual position (Fordyce v Ryan at [26], set out at [13] above) and citing three cases which supported that position, his Honour turned to consider the exception posited by the trustee in bankruptcy, which relied upon the bankrupt beneficiary’s control over the distribution of the trust property. In considering whether that exception applied, Jackson J first considered the decision of French J in Australian Securities and Investments Commission v Carey (No 6) (2006) 153 FCR 509; [2006] FCA 814 (Carey) (referred to in Fordyce v Ryan by the abbreviation Richstar). As his Honour observed (Fordyce v Ryan at [31]–[32]), Carey dealt with “the concept of ‘property’ within the meaning of s 9 of the Corporations Act 2001 (Cth)”. In that context, his Honour noted that French J distinguished “the ‘ordinary case’ from the case in which the beneficiary effectively controls the trustee’s power of selection” noting that in that case there was “something which is akin to a proprietary interest in the beneficiary” (Carey at [29]). Of that exception, his Honour noted that French J went on to observe that “the beneficiary who effectively controls the trustee’s power of selection because he or she is the trustee or one of them and/or has the power to appoint a new trustee has something approaching a general power and the ownership of the trust property” (Carey at [37]).

17    However, Jackson J considered that those observations in Carey had to be confined to their particular context and did not therefore apply in the bankruptcy context. He said (Fordyce v Ryan at [33]):

At the outset, it is to be noted that [Carey] concerned the meaning of what is property for the purposes of the Corporations Act 2001 (Cth). That reasoning did not engage upon the reasoning of earlier cases in the bankruptcy context mentioned above.

18    Furthermore, after noting that, in Carey, French J had relied on cases under s 79 of the Family Law Act 1975 (Cth) (Family Law Act) (Fordyce v Ryan at [34]–[35]), Jackson J referred to the High Court decision in Kennon v Spry (2008) 238 CLR 366; [2008] HCA 56 (a case dealing with s 79 of the Family Law Act) where a similar distinction was made as follows (Fordyce v Ryan at [36]):

It was also held that a trustee’s power to apply assets or income of the trust to the beneficiary is able to be treated for the purposes of the [Family Law Act] as a species of property held by the trustee as a party to the marriage, although subject to the fiduciary duty to consider all beneficiaries. However these conclusions do not affect what constitutes property according to the general law.

19    Jackson J then rejected the trustee’s argument based upon the control exception identified in Carey (Fordyce v Ryan at [37] set out at [13] above).

20    Fordyce v Ryan therefore provides strong support for Mr Tucker’s contention that his control as the sole director of the corporate trustees for the trusts does not alter the character of his interests as a beneficiary of those trusts so that those interests constitute property for the purposes of any bankruptcy proceedings in which he may be involved in the future as a result of any judgment that may be obtained against him at the behest of the Liquidators.

21    The decision in Carey was considered quite recently, albeit in a different context, by a Full Court of this Court. In Swishette Pty Ltd v Australian Competition and Consumer Commission [2017] FCAFC 45 (Swishette), Mr Laski was the sole director and controller of a company called Swishette Pty Ltd, which company was the corporate trustee of a discretionary trust of which Mr Laski was a beneficiary. Under s 239 of the Australian Consumer Law (Schedule 2 to the Competition and Consumer Act 2010 (Cth) (the Australian Consumer Law)), Mr Laski was ordered to execute a direction on behalf of Swishette to apply certain funds held by his lawyers in their trust account, such funds forming part of the assets of the discretionary trust. The funds were to be used to repay Mr Laski’s dissatisfied customers and those of his company, Clinica Pty Ltd, following their contraventions of the Australian Consumer Law. After recording how the primary judge had relied upon Carey to justify imposing this order, the Court rejected that approach, stating that (at [21]):

Whilst Carey (No 6) is authority that an object of a discretionary trust may have a “property” interest for the purpose of s 1323 of the Corporations Act, the decision turned on the defined sense of the word “property” appearing in that section. So too, whilst there are decisions in the family law jurisdiction which have held that orders can be made under s 79 of the Family Law Act in respect of trust property held on the terms of a discretionary trust, those cases have also turned on the defined sense of the word “property” appearing in s 79. Section 239 is cast in different terms, though, to s 1323 of the Corporations Act and s 79 of the Family Law Act. The word “property” does not appear in s 239, nor is there a defined meaning of that word for the purposes of Sub-Division B of Division 4 of Part 5-2 of the Australian Consumer Law in which s 239 is contained.

22    Later in its judgment, in holding that this order was beyond the scope of s 239, the Court reached a similar conclusion about the general law position of the beneficiary, or object, of a discretionary trust to that of Jackson J in Fordyce v Ryan. It observed that the order (at [26]):

… was an order affecting assets in respect of which Mr Laski, as an object of the discretionary trust, has no legal or beneficial interest but only the right to due consideration and due administration of the Trust: Kennon v Spry; Spry v Kennon [2008] HCA 56; 238 CLR 366; In re Gulbenkian’s Settlements [1970] AC 508; McPhail v Doulton [1970] UKHL 1; [1971] AC 424. The fact that Mr Laski may control the Trust both as appointor and as director of the trustee company, does not give him an interest in the trust property amounting to ownership: DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties [1980] 1 NSWLR 510; Gartside v Inland Revenue Commissioners [1967] UKHL 6; [1968] AC 553 at 617–618. Objects of a discretionary trust have no beneficial interest in the property of the trust and their only interest is characterised as a mere expectancy coupled with a right to due administration of the trust. Whilst the right to due administration includes a right to due consideration in the exercise of the trustee’s discretionary power to distribute capital and income, until the exercise of the trustee’s power in favour of Mr Laski, Mr Laski has no entitlement to such capital or income. Moreover, Swishette as trustee is not free to exercise rights in respect of the trust property for its own benefit as if no trust existed. It has fiduciary and equitable obligations to administer the Trust in accordance with its terms, which the beneficiaries have the right to enforce.

23    These decisions both confirm the well-established principle (undisputed in this matter) that, as a beneficiary of the discretionary trusts concerned, Mr Tucker does not have any proprietary interests in the income and capital of those trusts. More importantly, they both reject the proposition that Mr Tucker’s control over the distribution of the income and capital of the trusts in his position as the sole director of each of the trustee companies (except as the trustee of the Tucker Superannuation Fund) operates to alter that well-established principle. Accepting the reasoning in these decisions, as I do (and consider I am bound to in the case of Swishette), the Liquidators’ contentions to the contrary must therefore be rejected. I should add that I do not consider the statement of future intentions in Mr Tucker’s affidavit has any effect on this conclusion. At its highest for the Liquidators, if that statement of intentions is ultimately acted on, it may give rise to an action seeking an order for due administration of the trust, or trusts, in question, of the kind mentioned in Swishette above, but even presuming the possibility of that action, I do not consider that alters the application of the principle I have mentioned above.

24    The Liquidators’ reliance upon the provisions of Division 4A of Part VI of the Bankruptcy Act confronts a different set of difficulties. They arise from the following features of those provisions. First, s 139A (see at [11] above) makes it clear that the use of the provisions of Division 4A is at the discretion of the bankrupt’s trustee in bankruptcy. They are not therefore provisions that will be directly available to, or controlled by, the Liquidators should they be able to obtain a judgment against Mr Tucker at some time in the future. Secondly, assuming that any sequestration order that is made against Mr Tucker’s estate will be based upon his insolvency at a time in the future when he is confronted with a successful judgment obtained by the Liquidators and that he will remain solvent in the meantime, s 139CA(1)(a)(i) will not apply with the consequence that the examinable period will then be determined under s 139CA(1)(a)(ii), namely the period of four years before the commencement of Mr Tucker’s presumed future bankruptcy. Since the proceedings contemplated by the Liquidators have not yet been commenced, and since those provisions will only come into effect if Mr Tucker is declared bankrupt as a consequence of a judgment the Liquidators are able to obtain against him, it is reasonable to conclude that this examinable period will not commence until sometime in the future, even the distant future. Thirdly, those provisions prescribe two alternative sets of quite complex conditions which Mr Tucker’s presumed future trustee in bankruptcy will have to meet in order to obtain an order relating to the property of any of the trusts. With both alternatives, I will assume that one, or more, of the trusts with which Mr Tucker is associated falls within the definition of the expression “related entity” in s 5 of the Bankruptcy Act (see at [12] above). Further, I will assume that Mr Tucker will maintain his current level of control over those trusts. On those assumptions, in broad summary, the two sets of conditions which the trustee will need to establish to obtain an order against the property of any of those trusts are these:

(a)    during the examinable period referred to above, one of those trusts acquired “an estate in particular property”; and Mr Tucker used, or derived a benefit, either directly, or indirectly, from that estate; and during the examinable period Mr Tucker provided personal services either gratuitously, or at substantially less than arms’ length value to, or for, or on behalf of, that trust; and the acquisition of that estate was “as a direct or indirect result of, or of matters including,” the supply of the aforesaid personal services (s 139D); or

(b)    during the examinable period referred to above, Mr Tucker supplied personal services to, or for, or on behalf of, one of the trusts in the circumstances outlined above and that resulted in that trust’s “net worth … exceed[ing] by a substantial amount what might reasonably be expected to have been [its] net worth at a particular time during the examinable period if those services had not been supplied” (s 139E).

25    In my view, these features of the relevant provisions of Division 4A demonstrate that the possibility of orders being made against the property of one, or more, of the trusts under those provisions are too remote in time and too dependent on too many unrelated contingencies to provide any support for the Liquidators’ case to gain access to the documents identified in the items above at the present time. This is so because, at the earliest, those provisions will apply, if at all, at some time well in the future and, even then, their application will depend upon Mr Tucker’s presumed trustee in bankruptcy being able to establish a host of quite complex factual conditions, many of which will be contingent on Mr Tucker’s future conduct and none of which has any relevance to the current income or asset position of all of the trusts. I do not therefore consider that the present income and capital positions of the trusts are sufficiently relevant to the operation of those provisions to justify the Liquidators having access to those documents.

26    For these reasons, I do not consider the documents described in items (gg)(i) to (xiii) and (hh)(iii) to (xv) above are relevant to the particular examinable matter presently under consideration, namely the recoverability from Mr Tucker of any judgment that may be obtained against him in the proceedings contemplated by the Liquidators.

27    The superannuation trust (item (ff)(iii) may be in a different category. Mr Tucker seemed to accept as much in his submissions where he said: “leaving aside the superannuation trust …, each other trust is a discretionary trust.” I take this to accept that the superannuation trust is not what Jackson J described in Fordyce v Ryan as a “purely” discretionary trust. This is consistent with the distinction the High Court appeared to draw in Finch v Telstra Super Fund Pty Ltd (2010) 242 CLR 254; [2010] HCA 36 at [30] where it was said of the trustee of a superannuation trust that:

The Trustee was trustee of a trust. It had a duty to distribute to those who fell within the definition of “Total and Permanent Invalidity” and a duty not to distribute to those who did not. That affected its role in relation to the forming of its opinion under limb (b). Forming that opinion was not a matter of discretionary power to think one thing or the other; it was an ingredient in the performance of a trust duty. That duty was owed to the Members, including the applicant. The applicant was not the object of a discretionary power of appointment. He was the beneficiary of a trust, and although the precise form and quantum of his beneficial interest was contingent on particular events, he did have a beneficial interest.

28    The Liquidators did not, however, rely upon this distinction. They claimed the documents in item (ff)(iii) were relevant because of “the potential application of Division 4A, Part VI of the Bankruptcy Act, but also in showing [Mr Tucker’s] contributions; hence they will shed some light on the level of his income and his wealth in general”. And further, “[t]he financial status of [Mr Tucker’s] superannuation fund will similarly show a resource available to him, should he choose to resort to it to satisfy a judgment” (emphasis omitted). I have already rejected the Liquidators’ attempt to rely upon Division 4A, Part VI of the Bankruptcy Act. The balance of these submissions appear to treat the assets of the superannuation trust as if they are Mr Tucker’s personal assets. Whether the superannuation trust is treated as a “purely” discretionary trust or not, the fact remains it is a discretionary trust to which the principles outlined above apply. Those principles do not support the proposition that Mr Tucker has a proprietary interest in the assets of that trust. In the absence of some articulation by the Liquidators as to why that principle does not apply to the superannuation trust, I do not consider they have discharged their onus with respect to the documents described in item (ff)(iii) above.

29    As for the documents relating to Mr Tucker’s tax returns (item (ee)) and his assets and liabilities (items (ff)(i) to (ii)), Mr Tucker contended that those documents contained “historical information” and were not therefore relevant to his personal worth. In making this contention, he relied upon a number of decisions, including Boys v Quigley (2002) 26 WAR 454; [2002] WASCA 99. The Liquidators, however, explained that those documents were not being sought to establish Mr Tucker’s personal worth, but rather to examine the extent to which Mr Tucker may have received a personal benefit from the MS Asia transaction. This is a reference to the transaction whereby an entity named “MS Asia” acquired a debt described as “the BOSI debt”. The brief details of that transaction are described in [2017] FCA 758 at [18]–[19]. It originated in July 2012. Noting that the tax returns and statements of financial position sought by the liquidators encapsulate the period since July 2012, I accept this explanation. I therefore consider the documents in items (ee) and (ff)(i) to (ii) fall within the legitimate scope of Mr Tucker’s examination. However, insofar as item (ff)(ii) is concerned, providing those documents may incidentally intrude on the private financial affairs of Mrs Tucker. It is therefore appropriate to record that the Liquidators have already acted to address this concern. They have consented to an order that this part of Mr Tucker’s examination be conducted in private and that the transcript of it be treated as confidential.

30    Finally, I need to address Mr Tucker’s contention that the documents described in items (hh)(i) to (ii) above sought “historical information” which was irrelevant to his “personal worth as at today”. In response to this claim, the Liquidators pointed out that they have already agreed to amend the description of the documents falling into this category so that Mr Tucker is only required to produce the “most recently received bank statements”. Amended in that form, I consider the documents described in item (hh) fall within the legitimate scope of Mr Tucker’s examination.

31    For these reasons, subject to the qualifications mentioned above, I will order that Mr Tucker produce the documents in the following items above, but not the remainder:

(a)    item 1(ee)

(b)    item 1(ff)(i) to (ii)

(c)    item 1(hh)(i) to (ii).

The Relevance of certain documents

32    The item numbers, document descriptions and grounds of objection for the documents falling into this category are as follows:

33    The particular documents corresponding to the item numbers above are as follows:

[Objections based on relevance]

(kk)    The spreadsheets (printed and in native format) sent from time to time from Mr Tucker (or others at Tucker & Cowen) to Mr Peldan (or others at Worrells), whereby he or they advised the amount of the debt due by the company to MS Asia;

(ll)    Covering emails or other correspondence forwarding such spreadsheets to Mr Peldan or his staff;

…

(pp)    In respect of the company, MS Asia (CPH) Pty Ltd:-

(i) all and any documents recording or referring to the business or proposed business of the company;

(ii) all and any documents recording or referring to or the purposes for incorporating the company;

(iii) agreements to which the company was party;

(iv) all and any documents recording or referring to the assets or liabilities of the income or expenses of the company.

34    Mr Tucker’s objection to the production of the documents in this category is based solely upon his “unchallenged evidence” about the relevance of these documents. There are two reasons why this objection must be rejected. First, as I observed in [2017] FCA 758 at [53], the Liquidators do not need to establish the relevance of these documents to the potential claim they are investigating. Hence this application is not to be treated as if it were an application for discovery, or a ruling on a relevance objection under s 55 of the Evidence Act 1995 (Cth). Rather the particular question of relevance presently under consideration is whether, in the terms of s 597(9) of the Corporations Act, the documents are “relevant to matters to which the examination relates or will relate” (see at [2] above). Moreover, as I also observed in [2017] FCA 758 at [29] by reference to Evans v Wainter, the ambit of that examination, conducted, as it is, under Part 5.9 of the Corporations Act, is “extremely wide”. Relevance for the purposes of s 597(9) must therefore be determined in that context. On that basis, I accept the Liquidators’ contention that these documents are relevant. Secondly, and in any event, I do not consider an examinee such as Mr Tucker can foreclose on the production of documents for the purposes of an examination under Part 5.9 by making assertions of this kind. As I observed about similar statements that Mr Tucker relied upon in the previous stage of this application: “If that were the position, the examination power under [that Part] would be significantly hindered, if not rendered totally nugatory” (see [2017] FCA 758 at [37]). For these reasons, I reject Mr Tucker’s objections to the production of the documents described in this category. I will therefore order that Mr Tucker produce the documents described in items 1(kk), 1(ll) and 1(pp) above.

Conclusion

35    I direct the parties to prepare and submit an amended set of the orders of Deputy Registrar Lynch dated 14 June 2017 to reflect these reasons.

Associate:    

Dated:    8 September 2017