FEDERAL COURT OF AUSTRALIA

Secatore, in the matter of Last Lap Pty Ltd (in liq) [2020] FCA 627

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to subsection 596C(2) of the Corporations Act 2001 (Cth), the affidavit of Bruno Anthony Robert Secatore sworn on 19 June 2019 and filed in this proceeding on 25 June 2019 (Secatore June 2019 Affidavit) be made available for inspection by the Interested Person and his legal advisors.

2.    Until further order, the Interested Person must keep the Secatore June 2019 Affidavit confidential and not disclose it, or its contents, to any person other than his legal advisors.

3.    The costs of the Interested Person’s interlocutory application dated 7 October 2019 be reserved.

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

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to subsection 70-90(3) of the Insolvency Practice Schedule (Corporations), the Second Defendant:

(a)    disclose to the Plaintiff in writing the identity of any person who has provided the Second Defendant with funds to enable the examination of various persons pursuant to sections 596A and 596B of the Corporations Act 2001 (Cth) (Examinations) in Federal Court of Australia Proceeding No. VID687/2019 in relation to the First Defendant; and

(b)    produce to the Plaintiff:

(i)    any agreement made between the Second Defendant and any third party in relation to the funding of the Examinations or any potential proceeding arising in connection with the subject of the Examinations; and

(ii)    any correspondence between the Second Defendant (or his solicitors on his behalf) and any third party in relation to the funding of the Examinations or any potential proceeding arising in connection with the subject of the Examinations.

2.    Until further order, the Plaintiff must maintain the confidentiality of the information and documents disclosed to it in accordance with paragraph 1 of this Order and must not disclose such information and documents to any third party, save for its legal advisors.

3.    The costs of the Plaintiff’s application is reserved.

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

REASONS FOR JUDGMENT

ANDERSON J:

Introduction

1    This decision involves two applications in related proceedings, namely proceeding VID 687 of 2019 (Examination Proceeding) and proceeding VID 1047 of 2019 (Funding Disclosure Proceeding). Both proceedings relate to the insolvency of Last Lap Pty Ltd (in liq) (Last Lap).

2    Last Lap has been in liquidation for nearly 28 years. The current liquidator of Last Lap, Mr Bruno Secatore (Liquidator), was appointed in April 2015 by order of the Supreme Court of Victoria on the application of Bob Jane Corporation Pty Ltd (Bob Jane Corp). Bob Jane Corp is one of the two unsecured creditors of Last Lap.

3    The Examination Proceeding was commenced by the Liquidator in June 2019. The Liquidator sought, and obtained from a Registrar of the Court, orders for the issuing of various summonses for examination (Summonses) pursuant to ss 596A and 596B of the Corporations Act 2001 (Cth) (Act). One of the summonses issued pursuant to s 596B was directed to Mr Rodney Bruce Jane (Rodney Jane).

4    Before the examinations pursuant to the Summonses were scheduled to occur, the Funding Disclosure Proceeding was commenced by Bob Jane Corp in September 2019. Bob Jane Corp sought orders that, broadly, the Liquidator disclose the identity of any person who had provided the Liquidator with funds to facilitate the examinations, and also disclose and produce any agreement between the Liquidator and any third party in relation to the funding of the examinations (Funding Disclosure Application).

5    Prior to the scheduled hearing of the Funding Disclosure Application, Rodney Jane filed an interlocutory application in the Examination Proceeding (Summonses Application) seeking disclosure of the Liquidator’s affidavit that was filed in support of the application for the issue of the Summonses (Secatore June 2019 Affidavit). The Summonses Application also seeks the discharge of each of the Summonses.

6    The Funding Disclosure Application and the Summonses Application (collectively, Applications) were referred by a Registrar for determination by a judge of the Court. I heard both of the Applications together on 7 April 2020. These reasons set out and explain my decision in relation to the Applications.

7    In summary, my conclusion in relation to Bob Jane Corp’s Funding Disclosure Application is that it was not unreasonable for the Liquidator to comply with Bob Jane Corp’s request for the documents regarding the funding of the examinations. As such, the Funding Disclosure Application is granted, and I order that the Liquidator provide the relevant information and documents to Bob Jane Corp.

8    In relation to Rodney Jane’s Summonses Application, my view is that Rodney Jane has established an arguable case that the issue of the summons directed to him exceeded the power of this Court under s 596B of the Act, and that access to the Secatore June 2019 Affidavit is likely to assist in determining the correctness of that challenge. As there is no other sufficient reason to prohibit disclosure, I accordingly order that the Liquidator make the Secatore June 2019 Affidavit available for inspection by Rodney Jane and his representatives.

9    Rodney Jane’s application for the discharge of the Summonses will be adjourned for future determination.

Background

Last Lap’s liquidation

10    As indicated above, Last Lap has been in liquidation for nearly 28 years. On 29 June 1992, Last Lap entered into a members’ voluntary winding up and remained in that state until 25 February 2015. Between 29 June 1992 and 25 February 2015, the liquidators of Last Lap were:

(a)    Ms Kathleen Rosel, who was appointed on 29 June 1992 and ceased in that role on 31 March 1994;

(b)    Mr Phillip Wayne Burnett, who was appointed on 29 June 1992 and ceased in that role on 25 July 1996;

(c)    Mr Arthur Ian Lee, who was appointed on 25 July 1996 and ceased in that role on 4 October 2015; and

(d)    Mr Timothy Norman and Mr Simon Wallace-Smith of Deloitte, who were appointed on 4 October 2015 as joint and several liquidators and ceased in that role on 25 February 2015.

11    On 25 February 2015, Last Lap entered into a creditors’ voluntary winding up. At that time, Mr Gess Michael Rambaldi and Mr Andrew Reginald Yeo were appointed joint and several liquidators of Last Lap. However, on 13 April 2015, Mr Rambaldi and Mr Yeo resigned as liquidators.

12    On 15 April 2015, the Liquidator was appointed as the liquidator of Last Lap by order of the Supreme Court of Victoria on the application of Bob Jane Corp. Soon thereafter, on 4 July 2019, the Liquidator estimated that:

(a)    the total realisation of Last Lap’s assets would be $10.00; and

(b)    there were two unsecured creditors of Last Lap (Bob Jane Corp being one), with estimated debts valued at a total of $2,434,544.70.

Commencement of the Examination Proceeding

13    On 21 June 2019, the Examination Proceeding was commenced by the Liquidator. The Liquidator’s originating process was filed on that date along with a confidential affidavit sworn by the Liquidator—i.e. the Secatore June 2019 Affidavit. Until this decision, access to the Secatore June 2019 Affidavit has been limited to the Liquidator and the Court.

14    On 21 August 2019, Registrar Allaway made the following orders:

1.     Summonses for examination be issued pursuant to section 596A of the Corporations Act 2001 (Cth), in the form approved by the Registrar, directed to Simon Alexander Wallace-Smith, Timothy Bryce Norman and Ian Arthur Lee.

2.     Summonses for examination be issued pursuant to section 596B of the Corporations Act 2001 (Cth), in the form approved by the Registrar, directed to Ken Glynn, Rodney Bruce Jane, Anthony Bradica, Gregory John Sargent, Jim Nanos and Laree Madonna Jane.

3.     The summonses referred to in paragraphs 1 and 2 be made returnable at 9:30am on 1 October 2019.

4.     The plaintiff is to serve a sealed copy of these orders with each of the summonses referred to in paragraphs 1 and 2.

  5.     Liberty to apply.

15    The nine summons referred to in the Registrar’s orders, including the summons directed to Rodney Jane (Rodney Jane Summons), were issued on the same date in accordance with the above orders. Relevantly, the Rodney Jane Summons required Rodney Jane to attend the Court on 1 October 2019 about the examinable affairs of Last Lap, and also required him to produce at the examination specified documents set out in the schedule to that summons. For reference, the schedule to the Rodney Jane Summons is set out in the annexure to these reasons (starting below at page 32).

Commencement of the Funding Disclosure Proceeding

16    On 26 September 2019, the Funding Disclosure Proceeding was commenced by Bob Jane Corp. The orders sought by Bob Jane Corp in the Funding Disclosure Application are extracted below at [26].

Procedural orders

17    On 1 October 2019, Registrar Gitsham made orders in the Examination Proceeding adjourning the date of the examination of Rodney Jane to 18 October 2019.

18    On 4 October 2019, Registrar Allaway made orders in the Funding Disclosure Proceeding that the Funding Disclosure Application be listed for hearing on 31 October 2019.

Summonses Application

19    On 7 October 2019, the Summonses Application was filed by Rodney Jane in the Examination Proceeding. The orders sought by Rodney Jane in the Summonses Application are extracted below at [57].

Referral to a judge of the Court

20    On 18 October 2019, Registrar Allaway made orders in both proceedings adjourning the Applications for hearing by a judge of the Court.

21    On 12 December 2019, I conducted a case management hearing in relation to both proceedings. As a result, I made orders that listed the Applications for hearing on 7 April 2020 and ancillary programming orders.

Hearing of the Applications

22    The Applications were heard via telephone on 7 April 2020. Ms Slocum of counsel appeared on behalf of the Liquidator in both proceedings, and Mr Waller QC appeared with Mr Mereine of counsel on behalf of Bob Jane Corp in the Funding Disclosure Proceeding and Rodney Jane in the Examination Proceeding. The parties had filed written outlines of submissions in advance of the hearing.

23    In respect of the Applications (as relevant):

(a)    the Liquidator relies on the Secatore June 2019 Affidavit, a partly confidential affidavit sworn by the Liquidator on 8 October 2019 (Secatore October 2019 Affidavit), and an affidavit of Reid Bettridge sworn 17 October 2019;

(b)    Bob Jane Corp relies on the affidavit of Richard Alan Mereine sworn on 24 September 2019 (Mereine September 2019 Affidavit); and

(c)    Rodney Jane relies on the affidavits of Richard Alan Mereine sworn on 7 October 2019 (Mereine October 2019 Affidavit) and 17 October 2019.

24    A redacted version of the Secatore October 2019 Affidavit was provided by the Liquidator to Bob Jane Corp on 31 March 2020 in advance of the hearing of the Applications. The Liquidator expressed in his written outline of submissions (dated 31 March 2020), and reiterated at the hearing, that he sought an order for confidentiality over the redacted parts of the Secatore October 2019 Affidavit, namely the description of annexure “BARS-6” in the table of contents, parts of paras 10 and 13, the entirety of paras 14–16 and annexure “BARS-6”. The Liquidator’s application for confidentiality of the Secatore October 2019 Affidavit is considered below at [107].

25    The parties accepted at the hearing that I should first determine the Funding Disclosure Application before addressing the Summonses Application.

Funding Disclosure Application

26    The originating process dated 24 September 2019 filed by Bob Jane Corp in the Funding Disclosure Proceeding detailed the Funding Disclosure Application as follows:

This application is made under section 600K of the Corporations Act 2001 (Cth) (the Act) and section 70-90 of Schedule 2 to the Insolvency Law Reform Act 2016 (Cth).

On the facts stated in the supporting affidavit, the Plaintiff claims:

1.    An order that the Second Defendant disclose to the Plaintiff the following:

(a)    The identity of any person who has provided the Second Defendant with funds to enable the examination of various persons pursuant to sections 596A and 596B of the Act (the Examinations) in Federal Court of Australia Proceeding No. VID687/2019 (the Proceeding) in relation to the First Defendant.

(b)    What agreement has been made between the Second Defendant and any third party in relation to the funding of the Examinations and any assets recovered as a consequence of the Examinations and/or subsequent proceedings.

2.    An order that the Second Defendant produce to the Plaintiff the following:

(a)    Any agreement made between the Second Defendant and any third party in relation to the funding of the Examinations and/or any subsequent proceedings;

(b)     Any correspondence between the Second Defendant (or his solicitors on his behalf) and any third party in relation to the funding of the Examinations and/or any subsequent proceedings.    

Legislative provisions

27    As specified in the originating process, the Funding Disclosure Application seeks orders under s 600K of the Act and s 70-90 of Pt 1 of Sch 2 (entitled the “Insolvency Practice Schedule (Corporations)”) (IPS) to the Insolvency Law Reform Act 2016 (Cth).

28    Section 600K of the Act simply gives effect to the IPS. Section 70-90 of the IPS in turn relevantly provides as follows:

Court may order relevant material to be given

(1)     The person or persons who made the request for the relevant material may apply to the Court for an order that the external administrator give the person or persons all or part of the relevant material.

…

(3)     On application under subsection (1) or (2), the Court may:

(a)     order the external administrator to give the person, or any or all of the persons, who made the request for the relevant material all or part of that material; and

   (b)     make such other orders, including orders as to costs, as it thinks fit.

29    As evident from the opening words of s 70-90(1), the Court’s power to order disclosure of the relevant material is dependent on there being a request, the statutory ability for which is addressed earlier in the IPS. Relevantly for the present case, s 70-45 of the IPS provides for an individual creditor of a company in liquidation to request certain materials:

Right of individual creditor to request information etc. from external administrator

(1)     A creditor may request the external administrator of a company to:

(a)     give information; or

(b)     provide a report; or

(c)     produce a document;

to the creditor.

(2)     The external administrator must comply with the request unless:

(a)     the information, report or document is not relevant to the external administration of the company; or

(b)     the external administrator would breach his or her duties in relation to the external administration of the company if the external administrator complied with the request; or

(c)     it is otherwise not reasonable for the external administrator to comply with the request.

(3)     The Insolvency Practice Rules may prescribe circumstances in which it is, or is not, reasonable for an external administrator of a company to comply with a request of a kind mentioned in subsection (1).

30    In accordance with s 70-45(3), the Insolvency Practice Rules (Corporations) 2016 (Cth) (IPR) prescribes circumstances as to whether or not a request made under s 70-45(1) is reasonable. Rule 70-15 of the IPR provides as follows:

Right of individual creditor to request information etc. from external administrator

(1)     This section is made for the purposes of section 70-45 of the Insolvency Practice Schedule (Corporations).

Unreasonable requests

(2)     It is not reasonable for an external administrator of a company to comply with a request to give information, provide a report or produce a document to a creditor if the external administrator, acting in good faith, is of the opinion that:

(a)     complying with the request would substantially prejudice the interests of one or more creditors or a third party and that prejudice outweighs the benefits of complying with the request; or

(b)     the information, report or document would be privileged from production in legal proceedings on the ground of legal professional privilege; or

(c)     disclosure of the information, report or document would found an action by a person for breach of confidence; or

   (d)     there is not sufficient available property to comply with the request; or

   (e)     the information, report or document has already been provided; or

(f)     the information, report or document is required to be provided under the Corporations legislation within 20 business days of the request being made; or

   (g)     the request is vexatious.

(3)     Without limiting paragraph (2)(g), a request may be taken to be vexatious if the external administrator receives the request within 20 business days of receiving a similar request from the creditor.

Reasonable requests

(4)     It is reasonable for an external administrator of a company to comply with a request to give information, provide a report or produce a document to a creditor if subsection (2) does not apply to the request.

(5)     Despite paragraph (2)(d), (e) or (f), it is also reasonable for an external administrator of a company to comply with a request to give information, provide a report or produce a document to the creditor if:

(a)     the creditor agrees to bear the cost of complying with the request; and

(b)     if required to do so by the external administrator—security for the cost of complying with the request is given to the external administrator before the request is complied with.

Request for information and documents by Bob Jane Corp

31    On 10 September 2019, the solicitors for Bob Jane Corp, HWL Ebsworth, after learning of the issuing of the Summonses, sent a letter to the solicitors for Liquidator, B2B Lawyers. The letter relevantly contained a request for certain information and documents as follows:

4.    … pursuant to section 600K of the Act and section 70-45(1)(a) of Schedule 2 to the Insolvency Law Reform Act 2016 (Cth) (ILRA), our client requires your client to give us the following information:

(a)    Who has provided your client with funds to enable the Examinations to be conducted?

(b)    What agreement has been made between your client and any third party funder in relation to the Examinations and any assets recovered as a consequence of the Examinations and/or subsequent proceedings?

(c)    In particular, what priority, if any, has been given by your client to the third party funder in respect of any assets which may be recovered as a consequence of the Examinations and/or subsequent proceedings?

5.     Further, pursuant to section 600K of the Act and section 70-45(1)(c) of Schedule 2 to the ILRA, our client also requires your client to produce the following documents:

(a)     A copy of any agreement entered into between your client and any third party for funding in relation to the Examinations and/or any subsequent proceedings.

(b)     Any correspondence between your client (or your firm on behalf of your client) and any third party in relation to the funding of the Examinations and/or any subsequent proceedings.

32    Further correspondence ensued between the solicitors. In particular, B2B Lawyers, on behalf of the Liquidator, sought confirmation as to whether HWL Ebsworth had, or expected to receive, instructions from Rodney Jane. On September 2019, HWL Ebsworth replied that, as at that date, it did not have instructions from Rodney Jane.

33    On 23 September 2019, B2B Lawyers provided its substantive response to HWL Ebsworth’s request for information and documents. The response relevantly provided as follows:

In our view based upon:

(a)    the contents of your correspondence referred to above;

(b)    your office previously having informed us that it does act for Mr Rodney Jane; and

(c)    your office actively avoiding confirming the status of its current instructions;

it is reasonable for our client (and the Court) to infer that your office does presently, or intends to, act for Mr. Rodney Jane and his interests in relation to the examinations being conducted in relation to the Company.

We further note that, as is apparent from the summonses issued by our client, he is presently investigating whether causes of action exist against Mr Rodney Jane and /or entities and persons associated with him.

That being so, it is apparent it would be unreasonable within the meaning of s 70-45(2)(c) of Schedule 2 (and by reason inter alia of matters stated in s 70-10(2)(a), (b) or (g) of the Insolvency Practice Rules (Corporations) 2016) for our client to comply with the request for information and documentation set out in your letter dated 10 September 2019. Our client also relies on s 70-45(2)(b) of Schedule 2.

Notwithstanding the above, and if it is of assistance, we confirm that our client has not extended any priority to a third-party funder in respect of assets which may be recovered as a consequence of the Company examinations and/or subsequent proceedings. We trust that this confirmation satisfies any legitimate purposes [Bob Jane Corp] may have for the request for information.

34    Three days later, on 26 September 2019, Bob Jane Corp commenced the Funding Disclosure Proceeding.

Submissions

Bob Jane Corp’s submissions

35    Bob Jane Corp argues that it is entitled to the information and documents sought in the Funding Disclosure Application because:

(a)    it is one of only two creditors of Last Lap;

(b)    as far as Bob Jane Corp is aware, Last Lap has no assets or income;

(c)    since the appointment of the Liquidator in April 2015, Bob Jane Corp has not received a single report from the Liquidator concerning the affairs of Last Lap, and no meeting of creditors of Last Lap has been convened; and

(d)    despite that, the Liquidator has issued the Summonses without explaining to the creditors of Last Lap how the prosecution of those Summonses is being funded and what is to happen in respect of any assets recovered as a consequence of the Summonses or in any subsequent proceedings. Bob Jane Corp submits that the Liquidator requires approval of the Court, or the two creditors of Last Lap, before entering into any funding agreement on behalf of Last Lap if the:

(i)    term of the agreement may end; or

(ii)    obligations of a party to the agreement may be discharged by performance;

more than three months after the agreement is entered into (see s 477(2B) of the Act). There has been no resolution passed by the two creditors of Last Lap and Bob Jane Corp is not aware of any application made by the Liquidator to the Court.

36    Bob Jane Corp explains that Last Lap’s directors once included the late Mr Robert Jane (Robert Jane), who is the father of Rodney Jane. According to Bob Jane Corp, this is relevant because:

(a)    for more than a decade, there have been bitter disputes and court proceedings among the Jane family, including between (among others) Robert Jane, his third wife Ms Laree Jane and Rodney Jane, regarding ownership and control of various assets and companies;

(b)    proceedings between Laree Jane and Rodney Jane have been on foot for nearly seven years in the Family Court of Australia; and

(c)    at present, it is impossible to know if that dispute in that Court has affected the Liquidator’s decision to commence these examinations because the Liquidator has refused to disclose information regarding their funding and the basis on which the Summonses were issued at his request to, amongst others, Rodney Jane.

37    Bob Jane Corp contends that its concerns about the purpose of the examinations are reinforced by the Liquidator’s refusal to serve the Secatore June 2019 Affidavit, the Liquidator’s refusal to disclose the identity of any funder, and the decision not to serve Laree Jane, one of the examinees, at the same time as serving every other examinee. Bob Jane Corp further submits that, if the examinations are being funded by a party who is not a creditor for an ulterior purpose, the examinations may also constitute an abuse of process.

38    Bob Jane Corp argues that the Liquidator has failed to establish that the request by HWL Ebsworth for documents and information was unreasonable. Bob Jane Corp submits its request was bona fide, and that none of the forms of unreasonableness specified in r 70-15(2) of the IPR are applicable.

Liquidator’s submissions

39    The Liquidator opposes Bob Jane Corp’s application for the relevant information and documents about the funding of the examinations.

40    The Liquidator first seeks an order from the Court that the Secatore October 2019 Affidavit remain confidential. The basis for seeking confidentiality of that affidavit is that it exhibits a copy of the confidential Secatore June 2019 Affidavit that was filed in the Examination Proceeding. The Liquidator notes that the redacted form of the Secatore October 2019 Affidavit (see above at [24]) was provided to Bob Jane Corp on 31 March 2020 in advance of the hearing of the Applications.

41    The Liquidator contends that it is “not reasonable” for him to comply with Bob Jane Corp’s request for information and documents because:

(a)    complying with that request would prejudice the interests of one or more creditors or a third party and that prejudice outweighs the benefits of complying with the request (r 70-15(2)(a) of the IPR);

(b)    the information or documents would be privileged from production in legal proceedings on the grounds of legal professional privilege (ibid, r 70-15(2)(b));

(c)    the information has already been provided (ibid, r 70-15(2)(e)). In this regard, the Liquidator notes that Bob Jane Corp has already been advised in correspondence that the Liquidator “has not extended any priority to a third-party funder in respect of assets which may be recovered” as a consequence of the examinations (see above at [33]); and

(d)    the request is vexatious (ibid, r 70-15(2)(g)).

Consideration

42    The IPS was inserted into the Act by the Insolvency Law Reform Act 2016 (Cth). The Explanatory Memorandum to the relevant Bill provides some context for the insertion of s 70-45 of the IPS (and r 70-15 of the IPR). The Explanatory Memorandum relevantly expresses the following:

Context of amendments

…

6.12     Information asymmetry interferes with the efficiency of the insolvency market and contributes to the risk of misconduct by market participants. The current regulatory barriers to creditors obtaining information entrenches the inherent problems creditors face in assessing the quality of the insolvency services provided.

…

Summary of new law

…

6.18     Creditors will be able to request information from a corporate insolvency practitioner and request that a creditors’ meeting be held during an external administration. Creditors and members with a financial interest will be able to make reasonable requests for information that practitioners would be obliged to meet provided there is funds available to meet the request. Reporting obligations during an administration will be prescribed by the Insolvency Practice Rules.

…

Comparison of key features of new law and current law

…

…

…

(Explanatory Memorandum, Insolvency Law Reform Bill 2015 (Cth) pp 165, 166 and 170.)

43    It was undisputed that Bob Jane Corp, as a creditor of Last Lap, had made a request for information or documents for the purposes of s 70-45(1) of the IPS. The Liquidator was accordingly compelled by s 70-45(2) to comply with that request unless one or more of the exceptions applied. The Liquidator contends it was not reasonable for him to comply with Bob Jane Corp’s request for the purposes of the exception in s 70-45(2)(c).

44    Although Bob Jane Corp, which is seeking an order of the Court under s 70-90(3) of the IPR, is the moving party on the Funding Disclosure Application, my view is that, for the purposes of s 70-45(3), the onus rests on the Liquidator to prove that it was “not reasonable” for the Liquidator to comply with Bob Jane Corp’s request for documents. This attribution of the onus of proof is consistent with the policy underpinning the mechanisms for information requests under the IPS, which acknowledges the information asymmetry between external administrators and creditors. It is moreover consistent with the fact that it will be the external administrator that is optimally placed to characterise the degree of reasonableness of him or her having to comply with a request for information, reports or documents.

45    The seven circumstances specified in r 70-15(2) of the IPR (as extracted above at [30]) provide a complete statement of the circumstances in which it is not reasonable for an external administrator of a company to comply with a request for information or documents: In the matter of 1st Fleet Pty Ltd (in liquidation) [2019] NSWSC 6 (1st Fleet) at [24] per Black J. The Liquidator relies on four of the circumstances to demonstrate the unreasonableness of him having to comply with Bob Jane Corp’s request, namely paragraphs (a), (b), (e) and (g) of r 70-15(2). The Liquidator predominantly relies on certain aspects of the (confidential) Secatore October 2019 Affidavit to establish that unreasonableness.

46    I have read the relevant aspects of the Secatore October 2019 Affidavit that are raised by the Liquidator to establish the unreasonableness of the Liquidator having to comply with Bob Jane Corp’s request for information and documents. However, having done so, I am not satisfied that:

(a)    the Liquidator complying with the request would substantially prejudice the interests of one or more creditors of Last Lap or a third party, and that prejudice outweighs the benefits of complying with the request (r 70-15(2)(a) of the IPR);

(b)    the documents requested would be privileged from production in legal proceedings on the ground of legal professional privilege (ibid, r 70-15(2)(b));

(c)    the documents requested have already been provided (ibid, r 70-15(2)(e)); or

(d)    Bob Jane Corp’s request is vexatious (ibid, r 70-15(2)(g)).

47    As for r 70-15(2)(a) (substantial prejudice to a creditor or third party), the Liquidator has not identified how complying with Bob Jane Corp’s request would substantially prejudice the interests of one or more of Last Lap’s creditors or a third party. In my view, the Liquidator providing the requested documents will not adversely affect the ability of the Liquidator to conduct the examinations. In this regard, it is not apparent on the relevant affidavit evidence how the information and documents requested are relevant to the subject matter of the examinations as detailed in the Summonses.

48    As for r 70-15(2)(b) (legal professional privilege), the Secatore October 2019 Affidavit merely asserts that complying with Bob Jane Corp’s request would require the Liquidator to disclose correspondence between the Liquidator’s solicitors, B2B Lawyers and the Liquidator’s firm, Cor Cordis, which is, amongst other things, “possibly privileged”. There is no material put forward by the Liquidator which would enable the Court to determine the validity of that assertion. This is insufficient to establish that the information and documents requested would be subject to legal professional privilege.

49    As for r 70-15(2)(e) (information and documents have already been provided), I do not accept that the information and documents requested by Bob Jane Corp have already been provided by the Liquidator. In this regard, the Liquidator relies on previous correspondence from his solicitor to HWL Ebsworth on 23 September 2019 (as extracted above at [33]) that relevantly expressed the following:

… if it is of assistance, we confirm that our client has not extended any priority to a third-party funder in respect of assets which may be recovered as a consequence of the Company examinations and/or subsequent proceedings. We trust that this confirmation satisfies any legitimate purposes [Bob Jane Corp] may have for the request for information.

Although that statement appears to address Bob Jane Corp’s enquiry set out at para 4(c) of HWL Ebsworth’s letter (see above at [31]), it does not address the significant balance of the information and documents requested.

50    As for r 70-15(2)(g) (vexatious request), I do not accept that Bob Jane Corp’s request for the information and documents was made for an improper purpose “in the sense of a purpose that was unrelated to the creditor’s claims in, or the conduct of, the external administration or was made for a purpose of harassing or annoying the external administrator or causing delay or detriment to the external administration”: 1st Fleet at [43].

51    Bob Jane Corp’s request for information and documents should be characterised in light of the unusual and particular circumstances of the external administration of Last Lap to date. These circumstances include the following:

(a)    Last Lap has been in liquidation for nearly 28 years;

(b)    between June 1992 and February 2015, there were five liquidators appointed to Last Lap;

(c)    in February 2015, Last Lap entered into a creditors’ voluntary winding up (with Messrs Rambaldi and Yeo being appointed as joint and several liquidators);

(d)    in April 2015, the Liquidator was appointed as the liquidator of Last Lap;

(e)    about four years later, on 4 July 2019, the Liquidator estimated that the total realisation of Last Lap’s assets would be $10, and that there were only two unsecured creditors of Last Lap (one of which is Bob Jane Corp) with estimated debts valued at a total of approximately $2.4 million;

(f)    since his appointment, the Liquidator has not provided to Bob Jane Corp (as one of the two creditors of Last Lap) any report concerning the affairs of Last Lap, and no meeting of creditors of Last Lap has been convened;

(g)    then, in August 2019, upon application by the Liquidator, the Summonses were issued without the Liquidator explaining to the creditors of Last Lap how the prosecution of those Summonses were to be funded, and what was to happen in respect of any assets recovered as a consequence of the Summonses or in any subsequent proceeding.

52    Given the prolonged timeframe in which no substantive action was taken by an external administrator of Last Lap; the fact that there is apparently only nominal assets held by Last Lap; and the fact that the Liquidator did not inform the creditors of the Liquidator’s objectives for the examinations, it was not unpredictable that Bob Jane Corp, as one of the creditors of Last Lap, would be surprised by the Liquidator’s sudden enthusiasm to take action. Bob Jane Corp’s request for information and documents regarding the funding of the examinations initiated by the Liquidator is consistent with an attempt by Bob Jane Corp to enquire into “the quality of the insolvency services”, a purpose expressly contemplated as legitimate by the Explanatory Memorandum underlying the IPS.

53    It is apparent, as submitted by the Liquidator, that Bob Jane Corp was also motivated to request the relevant information and documents out of a concern that the Liquidator was himself motivated in issuing the Summonses by interests concerning a Family Court proceeding involving the Jane family wealth. That motivation of Bob Jane Corp is clear from the written submissions filed on behalf of Bob Jane Corp (and Rodney Jane) in the proceeding. But, in light of the broader circumstances described above, that does not render Bob Jane Corp’s request for information and documents vexatious. Bob Jane Corp’s concerns regarding the motivations of the Liquidator is not a matter that is unrelated to Bob Jane Corp’s claims in, or the conduct of, the external administration of Last Lap. I do not agree with the Liquidator’s submission that Bob Jane Corp’s request can be characterised as the company simply trying to “flush out” or “fish for” a case that the Summonses should be set aside.

54    Finally, I add that there may be limited circumstances in which the Court, acting under s 70-90(3) of the IPS, will exercise its residual discretion to not order the production of the relevant material, although such circumstances are likely rare, such as where there is no longer any utility in making an order: 1st Fleet at [27]. There is no exceptional circumstance in the present case that would prevent me from making the orders sought by Bob Jane Corp.

Conclusion

55    For the reasons expressed above, Bob Jane Corp’s Funding Disclosure Application is granted. I will order (in the form set out below at [111]) that the Liquidator provide the relevant information and documents to Bob Jane Corp.

56    I will deal with the Liquidator’s application for a confidentiality order in respect of the Secatore October 2019 Affidavit after considering Rodney Jane’s Summonses Application.

Summonses Application

57    The interlocutory process dated 7 October 2019 filed by Rodney Jane in the Examination Proceeding detailed the Summonses Application as follows:

This application is made under section 596C(2) of the Corporations Act 2001 (Cth), rule 11.05 of the Federal Court (Corporations) Rules 2000 (Cth) and the Court's inherent jurisdiction.

On the facts stated in the supporting affidavit, Mr Rodney Bruce Jane seeks the following orders:

1.    The Affidavit of Bruno Anthony Robert Secatore filed in support of the application for summonses for examination issued pursuant to sections 596A and 596B of the Corporations Act 2001 (Cth) be made available for inspection by Rodney Bruce Jane and his legal representatives.

2.    Each of the summonses for examination issued pursuant to sections 569A and 596B of the Corporations Act 2001 (Cth), in the form approved by the Registrar, be discharged.

3.    Further or alternatively, each of the summonses for examination issued pursuant to sections 596A and 596B of the Corporations Act 2001 (Cth) be adjourned and the orders to produce stayed pending the discharge of those summonses.

4.    The Plaintiff pay the costs of Rodney Bruce Jane on an indemnity basis.

5.    Such further or other order that the Court considers appropriate.

58    The affidavit referred to in the first order sought by Rodney Jane is defined in these reasons as the “Secatore June 2019 Affidavit”.

Legislative provisions

59    In addition to this Court’s inherent jurisdiction, Rodney Jane invokes two sources of statutory power to make the orders sought in the Summonses Application. The first source is s 596C(2) of the Act, which is relevant to the order sought for disclosure of the Secatore June 2019 Affidavit. For reference, s 596C provides as follows:

Affidavit in support of application under section 596B

(1)     A person who applies under section 596B must file an affidavit that supports the application and complies with the rules.

(2)     The affidavit is not available for inspection except so far as the Court orders.

60    The second statutory source is r 11.5 of Federal Court (Corporations) Rules 2000 (Cth) (Corporations Rules). (The interlocutory process refers to r 11.05, but was intending to refer to r 11.5.) Rule 11.5, which is relevant to the orders sought for the discharge of the Summonses, provides as follows:

Discharge of examination summons

(1)     This rule applies if a person is served with an examination summons.

(2)     Within 3 days after the person is served with the examination summons, the person may apply to the Court for an order discharging the summons by filing:

(a)     an interlocutory process seeking an order discharging the summons; and

   (b)     an affidavit stating the facts in support of the interlocutory process.

(3)     As soon as practicable after filing the interlocutory process seeking the order and the supporting affidavit, the person must serve a copy of the interlocutory process and the supporting affidavit on:

(a)     the person who applied for the examination; and

(b)     unless that person is ASIC or a person authorised by ASIC—ASIC.

Submissions

Rodney Jane’s submissions

61    To support his application for inspection of the Secatore June 2019 Affidavit, Rodney Jane claims that he has an arguable case that the issue of his summons exceeded the power of the Court under s 596B. According to Rodney Jane, this is so for two broad reasons. The first is that the Liquidator failed to comply with his obligation to make full and frank disclosure to Registrar Allaway of all matters which may impact upon the decision to issue the Summonses. The second is that the scope of the Summonses goes beyond Last Lap’s examinable affairs in contravention of s 596B(1) of the Act.

62    Both of these complaints relate to the relationship between Last Lap and other entities. The Rodney Jane Summons seeks, among other things, documents which solely concern the business affairs of Bob Jane Corp, Bob Jane Properties and another entity named Calder Park Raceway Pty Ltd. However, according to Rodney Jane, Bob Jane Corp, Bob Jane Properties and Calder Park Raceway have no relationship with Last Lap that would bring the relevant documents sought by the summons within the examinable affairs of Last Lap.

63    In any event, Rodney Jane alternatively argues that there is no utility in his examination being conducted. This is because many of the documents sought by the Liquidator under the summons concern transactions which occurred almost 11 years ago and, accordingly, if there was any cause of action arising from those transactions, it is now statute barred. In these circumstances, Rodney Jane submits that the Registrar ought to have not exercised his discretion to issue the Summonses.

64    Rodney Jane contends that access to the Secatore June 2019 Affidavit should be granted because the affidavit is likely to assist in determining the correctness of his challenge to the Summonses. To this end, Rodney Jane submits that, at this point in time, the function of the Court is not to address his application for discharge of the Summonses. In his view, the immediate focus of the Summonses Application (the disclosure of the Secatore June 2019 Affidavit) concerns a prior question as to whether there is an arguable case that there was an abuse of process in the issue of the Summonses. He submits that, once there is material before the Court from which it appears that he has an arguable case, then the discretion under s 596C(2) should be exercised for the Secatore June 2019 Affidavit to be made available.

Liquidator’s submissions

65    The Liquidator conversely argues that the application for disclosure of the Secatore June 2019 Affidavit constitutes the “fishing” by Rodney Jane for a case that the issue of the Summonses exceeded the power of the Court, or that there had otherwise been a material non-disclosure by the Liquidator in obtaining the issue of the Summonses.

66    The Liquidator further contends that Rodney Jane has failed to establish any arguable case that the Summonses were issued for an improper purpose, or that there has been a material non-disclosure to the Court. In particular, the Liquidator submits that the subject matter of the Summonses, including those in relation to Bob Jane Properties and Calder Park Raceway, fall squarely within the “examinable affairs” of the Company. In this regard, the Liquidator points to the breadth of the definition of “examinable affairs” under the Act.

67    The Liquidator finally objects to the two-stage approach proposed by Rodney Jane, in which the Court would consider the disclosure of the Secatore June 2019 Affidavit separate to reaching a finding in relation to the discharge of the Summonses. In the Liquidator’s submission, these stages should be performed at the same time.

Relevant principles

Obligation of full and frank disclosure

68    Subsection 596C(1) of the Act requires a person who applies under s 596B for a summons to file an affidavit in support of that application. As such, an application is ordinarily made ex parte, the affidavit should include full and frank disclosure of all matters which may impact upon the decision to summons a person for examination: Re Southern Equities Corporation Ltd (in liq); Bond v England (1997) 25 ACSR 394 at 422–423; 15 ACLC 1582 at 1605 (Re Southern Equities) per Lander J, with Cox and Bleby JJ agreeing; see also Sutherland v Pascoe [2013] FCAFC 15; 297 ALR 44 at [50] per Jagot, Griffiths and Farrell JJ, Tucker v Pleash (as liquidators of Equititrust Ltd (in liq) (recs and mgrs apptd) [2017] FCA 758; 122 ACSR 299 at [51] per Reeves J, Re Bell Group NV (in liq) (No 2) [2017] FCA 927; 122 ACSR 418 at [44] per Jagot J and, in a personal bankruptcy context, Perazzoli v BankSA, a division of Westpac Banking Corporation Limited [2017] FCAFC 204 at [208] per Perram, Foster and Murphy JJ.

69    A failure to make full and frank disclosure may be a basis for setting aside the summons: Re Southern Equities at ACSR 423; ACLC 1605; see also, for example, Linker v Nilant [2003] FCA 1576; 48 ACSR 178 (Linker) at [19]–[20] per Gyles J. However, even where the summons is set aside, this does not prevent a fresh application for examination: ibid at [21].

Access to supporting affidavit: The discretion

70    Subsection 596C(2) provides that an affidavit filed in support of an application under s 596B is not available for inspection except insofar as the Court orders.

71    Mere application for access to the supporting affidavit is insufficient: Re Moage Ltd (in liq); Sheahan v Pitterino (1997) 77 FCR 81 (Re Moage) at 94–95 per Mansfield J. The purpose of granting access to the supporting affidavit is not to permit a party to “fish” for information that would establish that the summons for examination had been issued for an improper purpose: Excel Finance Corporation Ltd (rec and mgr apptd); Worthley v England (1994) 52 FCR 69 (Excel Finance) at 94 per Gummow, Hill and Cooper JJ; Simionato v Macks (1996) 19 ACSR 34 (Simionato) at 63 per Lander J; Re Moage at 95; Ariff v Fong [2007] NSWCA 183; 63 ACSR 384 (Ariff) at [17] per Beazley, Giles and Santow JJA. Moreover, the court, in exercising its discretion, should also be wary as to whether the examination process will be frustrated by the release of confidential information which may disclose matters upon which the examinee is sought to be examined: Excel Finance at 94; Simionato at 63; Re Moage at 95; see also Re Kaso (in their capacities as joint and several liquidators of Dalstonville Pty Ltd (in liq) and Don Leunig Pty Ltd (in liq) [2018] VSC 774; 133 ACSR 473 (Re Kaso) at [15] per Hetyey JR.

72    That said, the court should order disclosure of the supporting affidavit where the justice of the case so requires: Excel Finance at 93; Simionato at 63; Re Moage at 94–95. An applicant for disclosure will generally be given access to the supporting affidavit if an arguable case has been established that the issue of the summons exceeded the power of the court, and that access to the affidavit was likely to assist in determining the correctness of the challenge: Re Moage at 95; Fetzer v Irving as Liquidator of Mawson KLM Holdings Pty Ltd (In Liq) [2005] SASC 53; 91 SASR 54 (Fetzer) at [27]–[28] per Besanko J; Meteyard v Love (in their capacity as recs and mgrs of Southland Coal Pty Ltd (in liq)) [2005] NSWCA 44; 65 NSWLR 36 (Meteyard) at [141] per Basten JA (with Beazley and Santow JJA agreeing); Ariff at [25].

73    There must be material before the Court (other than the supporting affidavit) from which to discern the arguable case, to which the material is relevant, before the discretion should be exercised to make the supporting affidavit available: Excel Finance at 94; Simionato at 63–64; Ariff at [17]. However, an arguable case may emerge from the undisputed facts without any necessity to adduce specific evidence of the motives of the party that applied for, and obtained, the summons for examination: Re Leisure Development (Qld) (in liq); Ell v Palmer [2002] NSWSC 248; 41 ACSR 276 (Re Leisure Development) at [37] per Austin J, cited in Ariff at [21].

74    Where access to the supporting affidavit is granted, it may be appropriate for the court to limit the scope of inspection: Re Kaso at [16], citing Accord Pacific Holdings Pty Ltd v Accord Pacific Land Pty Ltd (in liq) [2011] NSWSC 707 (Accord) at [103] per Ward J and Re Bell Group NV (in liq) [2016] FCA 851; 116 ACSR 294 (Re Bell Group (No 1)) at [145]–[147] per Yates J.

Access to supporting affidavit: The process

75    Where a party applies for access to the supporting affidavit on the basis that there is an arguable case that the issue of a summons for examination is invalid, the court must first determine whether such a case is established on the material before the Court other than the supporting affidavit. Once the court is satisfied that an arguable case is established, it should then inspect the supporting affidavit itself and form a view as to whether or not it is in the interests of justice to permit the applicant to access the affidavit: Ariff at [22]; Accord at [103]; Re Bell Group (No 1) at [143].

76    The court should usually grant the applicant access to the affidavit prior to forming a final view as to the merits of any challenge to the validity of the summons for examination: Re Moage at 95; Re Leisure Development at [42]; Fetzer at [27]; Ariff at [23]; Re Bell Group (No 1) at [143]. As Austin J expressed in Re Leisure Development at [42], “it is of critical importance for the applicants to be informed about the specific matter which the liquidator intends to investigate by the examination process. Without knowing and being able to assess that information, the applicants cannot present a plausible case of abuse of process”.

77    Thus, turning to the present case, I accept the submission of Rodney Jane that the Court’s function at this juncture is not to determine whether or not the Summonses should be discharged. At this stage, I am only required to determine whether Rodney Jane ought to be granted access to the Secatore June 2019 Affidavit in accordance with the approach described above.

Arguable case?

78    On its face, the second order sought by Rodney Jane in the Summonses Application seeks the discharge of all of the Summonses, not just the Rodney Jane Summons (see above at [57]). The Liquidator contends that Rodney Jane does not have standing to apply for the setting aside of the Summonses other than the Rodney Jane Summons. However, this issue is not necessary to decide for the purposes of this decision. For the reasons mentioned in the preceding paragraphs, this decision only considers whether or not the Secatore June 2019 Affidavit should be disclosed. For this purpose, Rodney Jane focussed only on the summons addressed to him.

Scope of Rodney Jane Summons

79    The Rodney Jane Summons seeks the production of documents specified in the schedule to that summons, which, for reference, is extracted in the annexure to these reasons (starting below at page 32). As can be seen from the schedule, the Rodney Jane Summons appears to seek production of, amongst other things, documents that solely concern the business affairs of one or more of Bob Jane Corp, Calder Park Raceway and Bob Jane Properties (and not the relevant company in liquidation, Last Lap). In this regard, see the following items in the schedule to the Rodney Jane Summons:

(a)    items 3(a), 3(b) and 14 (concerning the raceway named “Calder Park Raceway”, which is owned by Calder Park Raceway, including the equity in that property);

(b)    item 5 (directly or indirectly related to the request by Anthony Bradica to the Australian Taxation Office for amended assessments to be issued for the years ended 30 June 2005 to 30 June 2008 for Bob Jane Corp);

(c)    item 10 (concerning the financial position of Calder Park Raceway Pty Ltd both in around 30 June 2009 and presently);

(d)    item 11 (concerning the sale by Bob Jane Properties of one or more of its properties in or around Queen Street, Melbourne on about 30 June 2009); and

(e)    item 13 (concerning the loan agreement between Calder Park Raceway and Bob Jane Corp dated on or around 24 September 2009);

(f)    item 20 (concerning the transfer of carparks and storage spaces in Elizabeth Street, Melbourne, in June 2009 from Bob Jane Properties to Kushinda Pty Ltd).

80    As discussed below, the first basis for Rodney Jane seeking to establish an arguable case that the issue of the Rodney Jane Summons exceeded the court’s power under s 596B (and that access to the Secatore June 2019 Affidavit was likely to assist in determining the correctness of the challenge) is that the scope of the documents sought under the Summonses concern matters going beyond the scope of Last Lap’s “examinable affairs”.

Last Lap’s “examinable affairs”

81    Last Lap’s “examinable affairs” is the focal point for defining the legitimate scope of the examinations pursuant to the Summonses. Section 596B(1) of the Act provides that “[t]he Court may summon a person for examination about a corporation’s examinable affairs”. In turn, a person summonsed is only required to attend court “to be examined on oath about a corporation’s examinable affairs” (s 596D(1)(b); see also s 597(5B)), and is only required to produce specified books that “related to the corporation or to any of its examinable affairs” (s 596D(2)(b)).

82    The “examinable affairs” of a corporation are defined in s 9 of the Act as meaning the following (with reference to the “corporation” being replaced with “Last Lap”):

(a)    the promotion, formation, management, administration or winding up of [Last Lap]; or

(b)    any other affairs of [Last Lap] (including anything that is included in [Last Lap’s] affairs because of section 53); or

(c)    the business affairs of a connected entity of [Last Lap], in so far as they are, or appear to be, relevant to [Last Lap] or to anything that is included in [Last Lap’s] examinable affairs because of paragraph (a) or (b).

83    The “affairs” of Last Lap for the purposes of para (b) of this definition are defined broadly in s 53 of the Act. The “business affairs” of a connected entity of Last Lap for the purposes of para (c) of this definition are also defined broadly by reference to the definition of “business affairs” in s 9, which in turn refers to ss 53AA, 53AB, 53AC and 53AD of the Act (depending on the legal nature of the connected entity).

84    A “connected entity” of Last Lap (for the purposes of para (c) of the definition of “examinable affairs”) is defined under s 9 of the Act as meaning:

(a)    a body corporate that is, or has been, related to [Last Lap]; or

(b)    an entity that is, or has been, connected … with [Last Lap].

85    For the purpose of this definition, whether a body corporate is, or has been, “related to” Last Lap is addressed by s 50 of the Act, which provides as follows:

Related bodies corporate

Where a body corporate is:

(a)     a holding company of [Last Lap]; or

(b)     a subsidiary of [Last Lap]; or

(c)     a subsidiary of a holding company of [Last Lap];

the first‑mentioned body and [Last Lap] are related to each other.

86    Moreover, for the purposes of the definition of a “connected entity”, whether an entity is, or has been, “connected with” Last Lap is addressed by s 64B of the Act, which, in relation to a body corporate, provides as follows:

Entities connected with a corporation

Body corporate

(1)     A body corporate is connected with [Last Lap] if, and only if, [Last Lap]:

(a)     can control, or influence materially, the body’s activities or internal affairs; or

   (b)     is a member of the body; or

(c)     is in a position to cast, or to control the casting of, a vote at a general meeting of the body; or

(d)     has power to dispose of, or to exercise control over the disposal of, a share in the body; or

(e)     is financially interested in the body’s success or failure or apparent success or failure; or

   (f)     is owed a debt by the body; or

   (g)     is engaged by the body under a contract for services; or

   (h)     acts as agent for the body in any transaction or dealing.

…

87    Turning to the facts of the present case, Rodney Jane contends that Bob Jane Corp, Bob Jane Properties and Calder Park Raceway are not connected to Last Lap for the purposes of the definition of a “connected entity” to Last Lap. He also contends that Bob Jane Corp and Calder Park Raceway are not related to Last Lap, although he accepts that Bob Jane Properties and Last Lap are related because they are both 100% subsidiaries of ACN 005 490 540 Pty Ltd (the ACN Company).

Evidence on transfer of shares in Bob Jane Properties

88    The evidence said by Rodney Jane to substantiate an arguable case is found in the Mereine October 2019 Affidavit sworn by Richard Mereine (Mr Mereine), a Partner at HWL Ebsworth. To start, that affidavit annexes, amongst other documents, a copy of the historical company extract for Bob Jane Properties dated 4 October 2019. The extract states, amongst other details, that:

(a)    the current sole director of Bob Jane Properties is Rodney Jane; and

(b)    the current sole shareholder of Bob Jane Properties is the ACN Company.

89    A historical company extract for the ACN Company dated 4 October 2019 also details, amongst other things, that the current sole director of the ACN Company is Rodney Jane.

90    Mr Mereine asserts that, since 2016, there has been a real and substantive dispute concerning the legal ownership of the issued share capital of Bob Jane Properties. According to Mr Mereine, Bob Jane Properties asserted in 2016, and continues to assert, that the ACN Company holds all of the issued share capital of Bob Jane Properties, but that the Liquidator asserted in 2016, and continues to assert, that Last Lap holds all of the issued share capital.

91    To detail this dispute, the Mereine October 2019 Affidavit recounts a sequence of events that occurred between October 2015 and November 2016. According to the relevant correspondence, the dispute centres on the legal effectiveness (or not) of a transfer of four million issued shares in Bob Jane Properties from the ACN Company, which is the trustee of the Mimulus Trust, to Last Lap. These reasons refer to this transaction (actual or purported) as the “BJP Shares Transfer”.

92    Bob Jane Properties says the BJP Shares Transfer was ineffective. The reasons for this are best summarised in a letter from HWL Ebsworth to the Liquidator dated 5 November 2015 (a reference to “the Company” is to the ACN Company and “BJP” means Bob Jane Properties):

Initial Acquisition in BJP by the Company (formerly The Australian Motorsport Club Pty Ltd and Mimulus Pty Limited)

1.    By the declaration of trust dated 31 December 1989, the Company declared that it held the shares in BJP on behalf of the Mimulus Trust and confirmed that Mimulus Trust had “provided all the money for the purchase of the security by the trustee”. A notice was also sent by the Company to BJP confirming the beneficial ownership by the Mimulus Trust.

2.    The annual return filed by BJP in 1989 records Mimulus Trust as the member holding 4,000,000 issued shares in BJP.

3.     The annual returned filed by BJP in 1990,1991,1996, 2000, 2002, 2003 and 2004 record the Company as the member holding 4,000,000 issued shares in BJP but not beneficially. Mimulus Trust was and remains the beneficial owner of the issued shares.

The Purported Transfer of the Shares from the Company to Last Lap (Purported Transfer)

4.    On or about 13 May 2005, a form 484 was executed by Gregory John Sargent (Mr Sargent), the secretary of BJP, advising ASIC that there had been a change in the Member’s Register Details of BJP by the transfer of 4,000,000 shares from the Company to Last Lap.

5.     It was said that the change occurred on 1 July 1990, some 15 years after the transfer was alleged to have occurred. It was noted that the shares were not beneficially held by Last Lap.

6.    The document is extraordinary and contrary to the records of Last Lap and the Company. Further, there is no evidence to support the Purported Transfer and, in particular, there is no record that:

  (a)     any party signed a share transfer;

(b)     a resolution was passed approving the transfer of share or authorising Mr Sargent on behalf of the Company to transfer the shares to Last Lap.

(c)     the Company or the Mimulus Trust otherwise approved or ratified the transfer;

  (d)     BJP recorded any transfer in its members register.

7.    Despite the Purported Transfer, the shareholdings continued to be shown in the accounts of the Mimulus Trust and not in the accounts of Last Lap.

8.    Further, the Purported Transfer could not have occurred on 13 May 2005 as Last Lap had been in liquidation since 29 June 1992.

9.    In all the circumstances, the Purported Transfer was ineffective or a nullity.

93    The letter dated 5 November 2015 attached various documentation in support of these matters, including documentation that, on its face, appears to substantiate the fact that the ACN Company’s shares in Bob Jane Properties were held on trust for the Mimulus Trust.

94    According to the Mereine October 2019 Affidavit, on 20 November 2015 a meeting of directors of Bob Jane Properties was held at which resolutions were passed that sought to have the ASIC records of Bob Jane Properties updated to reflect that the BJP Shares Transfer never took place.

95    The Mereine October 2019 Affidavit details further events and correspondence that occurred thereafter, which are unnecessary to detail for the purposes of this decision.

Conclusion as to arguable case

96    In light of the circumstances outlined above, I am satisfied that Rodney Jane has established an arguable case that the issue of the Rodney Jane Summons exceeded the power of this Court under s 596B of the Act, and that access to the Secatore June 2019 Affidavit is likely to assist in determining the correctness of that challenge.

97    If Rodney Jane’s contentions are accepted, then, although Bob Jane Properties is related (but not connected) to Last Lap, Bob Jane Corp and Calder Park Raceway are not related to, or connected with, Last Lap. There is clearly a real and substantive dispute as to the ownership of the shares in Bob Jane Properties. If the position of Bob Jane Properties in relation to the legal effectiveness of the BJP Shares Transfer is accepted (as Rodney Jane contends), then the ACN Company (and not Last Lap) holds, and has always held, 100% of the shares in Bob Jane Properties.

98    There is sufficient material before the Court (other than the Secatore June 2019 Affidavit) to establish that these contentions by Rodney Jane are arguable in the necessary sense. As such, in circumstances where the scope of the Rodney Jane Summons appears to extend to matters solely concerning the business affairs of one or more of Bob Jane Corp, Calder Park Raceway and Bob Jane Properties (and not Last Lap), there is an arguable case that the scope of the Rodney Jane Summons extends beyond the examinable affairs of Last Lap.

99    Contrary to the Liquidator’s submission, the relevant material before the Court establishes that Rodney Jane’s application for the disclosure of the Secatore June 2019 Affidavit is more than the mere “fishing” for a case. Instead, there is, pre-existing the disclosure of that affidavit, an arguable question that warrants further investigation. In this regard, the Liquidator criticised Rodney Jane’s submission that disclosure of the Secatore June 2019 Affidavit “might throw some light on” Rodney Jane’s claims of the excess of power under s 596B of the Act. However, there was no obligation at this stage for Rodney Jane to establish that the contents of the supporting affidavit tended to impugn the issue of the summons. Rodney Jane did not have access to the affidavit so he could not make any definitive submissions on the effect of its content. At this stage, it was only necessary for Rodney Jane to establish that the affidavit was “likely” to assist: see Ariff at [25], citing Meteyard at [141]. In my view, he has done so.

Disclosure of the Secatore June 2019 Affidavit

100    As explained above, once this Court is satisfied that an arguable case is established, it should then inspect the supporting affidavit itself and form a view as to whether or not it is in the interests of justice to permit the applicant to access the affidavit. Having satisfied myself that Rodney Jane has established an arguable case, I have examined the Secatore June 2019 Affidavit.

101    Having read and considered the Secatore June 2019 Affidavit, my view is that there is no basis to restrict its disclosure (even in part) to Rodney Jane and his representatives. Although the disclosure of the affidavit may possibly highlight the events and issues in respect of which the Liquidator presumably wishes to examine Rodney Jane, the release of that information will not, in my view, “impinge upon an effective examination”: Re Moage at 95 per Mansfield J. This is especially so given the “critical importance” that Rodney Jane be informed of the matters which the Liquidator intends to investigate in the examination process so as to present his case as to an abuse of process: Re Leisure Development at [42] per Austin J.

102    Although the Secatore June 2019 Affidavit will be disclosed to Rodney Jane and his representatives, I will make an order that the affidavit will continue to remain confidential to all other third parties, but that there be liberty to apply in that regard.

Issues that remain undecided

103    In reaching the conclusion above—that the entirety of the Secatore June 2019 Affidavit ought to be disclosed to Rodney Jane and his representatives—I have determined that it is unnecessary at this stage to address some issues raised by the parties at the hearing of the Applications.

104    The first issue, as explained above at [78], is whether or not Rodney Jane has standing to apply for the setting aside of the Summonses other than the Rodney Jane Summons. The Liquidator contends that Rodney Jane does not have such standing, but the determination of that issue can be reserved for future consideration if Rodney Jane continues to press the discharge of all of the Summonses.

105    The second issue is whether there was an arguable case for the disclosure of the Secatore June 2019 Affidavit on the basis that the Liquidator failed to comply with his obligation of full and frank disclosure in obtaining an order from Registrar Allaway for the issue of the Summonses. Rodney Jane, now with the benefit of the Secatore June 2019 Affidavit, will be able to form a view on whether to press his claim that the Summonses (or simply the Rodney Jane Summons) is invalid on the basis the Liquidator breached that obligation.

106    The third issue is whether there was an arguable case for the disclosure of the Secatore June 2019 Affidavit on the basis that, according to the submission by Rodney Jane, many of the documents sought by the Liquidator under the Rodney Jane Summons concern transactions which occurred almost 11 years ago, and any cause of action arising from those transactions is not statute barred. The Liquidator’s response is that the time elapsed between the transactions and the examinations is a matter for the Liquidator, and is not relevant to the question as to whether the examinations are being conducted for an improper purpose. This issue is one for future determination should it continue to be pressed by Rodney Jane.

Disclosure of the Secatore October 2019 Affidavit

107    As noted above at [24], the Liquidator reiterated at the hearing that he sought an order for confidentiality over the redacted parts of the Secatore October 2019 Affidavit, namely the description of annexure “BARS-6” in the table of contents, parts of paras 10 and 13 and the entirety of paras 14–16 and annexure “BARS-6”. (The unredacted parts of the Secatore October 2019 Affidavit made known that the document annexed as “BARS-6” was a copy of the Secatore June 2019 Affidavit.)

108    The Liquidator did not file any formal application seeking confidentiality in respect of the Secatore October 2019 Affidavit. However, my view is that it was not necessary for him to do so given the affidavit itself was expressed to be confidential (see paras 3 and 8).

109    That said, my view is that no confidentiality order should be made in respect of the Secatore October 2019 Affidavit. First, as I have determined above that the entirety of the Secatore June 2019 Affidavit ought to be disclosed to Rodney Jane and his representatives, it follows that no confidentiality order should be made in respect of the description of annexure “BARS-6” to the table of contents or annexure “BARS-6” to the Secatore October 2019 Affidavit. Similarly, no confidentiality order should be made in respect of the balance of the redacted parts of the Secatore October 2019 Affidavit, namely parts of paras 10 and 13 and the entirety of paras 14–16. As a broad statement, while disclosure of these aspects of the affidavit may reveal part of the Liquidator’s motivations in the proceedings, my view is that the disclosure will not threaten the opportunity for effective examinations pursuant to the Summonses.

Disposition

110    For the reasons expressed above, I make the following orders in the Examination Proceeding:

1.    Pursuant to subsection 596C(2) of the Corporations Act 2001 (Cth), the affidavit of Bruno Anthony Robert Secatore sworn on 19 June 2019 and filed in this proceeding on 25 June 2019 be made available for inspection by the Interested Person and his legal advisors.

2.    Until further order, the Interested Person must keep the Secatore June 2019 Affidavit confidential and not disclose it, or its contents, to any person other than his legal advisors.

3.    The costs of the Interested Person’s interlocutory application dated 7 October 2019 be reserved.

111    I also make the following orders in the Funding Disclosure Proceeding:

1.    Pursuant to subsection 70-90(3) of the Insolvency Practice Schedule (Corporations), the Second Defendant:

(a)    disclose to the Plaintiff in writing the identity of any person who has provided the Second Defendant with funds to enable the examination of various persons pursuant to sections 596A and 596B of the Corporations Act 2001 (Cth) (Examinations) in Federal Court of Australia Proceeding No. VID687/2019 in relation to the First Defendant; and

  (b)    produce to the Plaintiff:

(i)    any agreement made between the Second Defendant and any third party in relation to the funding of the Examinations or any potential proceeding arising in connection with the subject of the Examinations; and

(ii)    any correspondence between the Second Defendant (or his solicitors on his behalf) and any third party in relation to the funding of the Examinations or any potential proceeding arising in connection with the subject of the Examinations.

2.    Until further order, the Plaintiff must maintain the confidentiality of the information and documents disclosed to it in accordance with paragraph 1 of this Order and must not disclose such information and documents to any third party, save for its legal advisors.

3.    The costs of the Plaintiff’s application is reserved.

112    As can be seen from the orders, I have reserved the question of costs in relation to this decision. I will list a case management hearing in both proceedings for the parties to address me on any argument as to costs (unless the parties reach agreement in the interim). The case management hearing will also be an opportunity for the parties to address me on the manner in which Rodney Jane’s challenge to the Summonses in the Examination Proceeding is to proceed.

Associate:

Dated:        14 May 2020

ANNEXURE

SCHEDULE TO THE SUMMONS ISSUED TO RODNEY BRUCE JANE DATED 21 AUGUST 2019 PURSUANT TO SECTION 596B OF THE CORPORATIONS ACT 2001 (CTH) IN FEDERAL COURT OF AUSTRALIA PROCEEDING VID687/2019

SCHEDULE

Documents to be produced

A.     In this schedule the term “document” refers to any item (whether electronic or hardcopy) including but not limited to:-

i.     Correspondence (including but not limited to memoranda, advice, letters, facsimiles, emails, text message, instant messaging or the like, and including any further document attached enclosed linked or the like to any such document);

ii.     Written records (including but not limited to contracts, agreements, court documents, demands, tenders, valuations, Insurance policies, spreadsheets, statements, or the like);

iii.     Notes (including but not limited to handwritten or typed records, minutes of meetings, conferences or conversations, diary or journal notes, telephone notes, file notes, working papers, worksheets, or the like);

iv.     Financial records, including MYOB, Xero or other software based electronic or hardcopy accounts, projected or actual cash flows, profit and loss or balance sheets, asset registers, valuations, Insurance policies, receipts or other records for tax or GST or capital calculations, bank statement, bank records, cheque books, or any other item in your power possession or control, for the purpose of buying, selling, insuring, valuing, or raising funds or seeking a loan for or in relation to any relevant asset interest or business; and

v.     Recordings, including audio and audiovisual.

B.     The documents are to be produced whether they are held in your personal capacity, as a director of any entity or in any other capacity.

The documents you must produce are as follows:

1.    All documents concerning the circumstances in which Ian Arthur Lee was appointed liquidator of Last Lap Pty Ltd (ACN 004 532 030) in place of Philip Wayne Burnett.

2.    All documents concerning the circumstances in which Timothy Bryce Norman and Simon Alexander Wallace-Smith were appointed as liquidators of Last Lap Pty Ltd (ACN 004 532 030) in place of Ian Arthur Lee on 4 October 2005.

3.    All documents concerning the corporate and/or tax advice directly or indirectly concerning:

(a)    the Calder Park Raceway property;

(b)    income derived from activities at the Calder Park Raceway Property; and/or

(c)    the declaration of a dividend by Bob Jane Properties Pty Ltd (ACN 004 627 963) to Last Lap Pty Ltd (ACN 004 532 030) and ultimate distribution of that dividend through the Mimulus Trust to the Troyes Trust in September 2009;

provided by Deloitte Tax Services Pty Ltd, Deloitte Touche Tohmatsu Ltd and/or any other entity trading under the name “Deloitte” to one or more of Rodney Jane, Robert Jane and/or to any company to whom they, or one of them, are or have been a related entity (within the meaning of s 9 of the Corporations Act 2001 (Cth)), including but not limited to Bob Jane Properties Pty Ltd (ACN 004 627 963), Calder Park Raceway Pty Ltd (ACN 004 532 049), Bob Jane Corporation Pty Ltd (ACN 005 870 431), Last Lap Pty Ltd (ACN 004 532 030).

4.    All documents concerning the circumstances in which Mr Norman and Mr Wallace-Smith were replaced as liquidators of Last Lap Pty Ltd (ACN 004 532 030) on 25 February 2015 by Gess Michael Rimbaldi and Andrew Reginald Yeo.

5.    All documents directly or indirectly related to the request by Anthony Bradica of Deloitte Touche Tohmatsu Ltd to the Australian Tax Office for amended assessments to be issued for the years ended 30 June 2005 – 30 June 2008 for Bob Jane Corporation Pty Ltd (ACN 005 870 431) and Last Lap Pty Ltd (ACN 004 532 030) dated 8 December 2009.

6.    All documents regarding the Australian Tax Office Position Paper in relation to the assessable income from landfill operations to Last Lap Pty Ltd (ACN 004 532 030) dated 15 August 2012.

7.    All documents regarding the registration of the transfer of shares in Bob Jane Properties Pty Ltd from ACN 005 490 540 Pty Ltd to Last Lap Pty Ltd (ACN 004 532 030) on 13 May 2005.

8.    All documents regarding the execution and registration of the transfer of shares in Bob Jane Properties Pty Ltd from Last Lap Pty Ltd (ACN 004 532 030) to ACN 005 490 540 Pty Ltd on or about 28 October 2016.

9.    All documents concerning the assignment on around 30 June 2009 of a receivable of $2,764,987 owed to Last Lap Pty Ltd (ACN 004 532 030) by Bob Jane T-Marts Unit Trust to Calder Park Raceway Pty Ltd.

10.    All documents concerning the financial position of Calder Park Raceway Pty Ltd (ACN 004 532 049) both in around 30 June 2009 and presently, including but not limited to the ability by Calder Park Raceway Pty Ltd (ACN 004 532 049) to repay its the outstanding debt to Last Lap Pty Ltd (ACN 004 532 030) pursuant to the assignment of that liability from Bob Jane T-Marts Unit Trust on around 30 June 2009.

11.    All documents concerning the sale by Bob Jane Properties Pty Ltd (ACN 004 627 963) of one or more of its properties in or around Queen Street on about 30 June 2009.

12.    All documents concerning:

(a)    the dividend declared by Bob Jane Properties Pty Ltd (ACN 004 627 963) and paid to Last Lap Pty Ltd (ACN 004 532 030) on or about 24 September 2009 in the amount of $1,743,371;

(b)    the declaration and payment of a dividend of $1,743,371 by Last Lap Pty Ltd (ACN 004 532 030) in favour of the Mimulus Trust on 24 September 2009;

(c)    the declaration and payment of a dividend of $1,743,371 on 24 September 2009 by ACN 005 490 540 Pty Ltd atf the Mimulus Trust to the Troyes Trust; and/or

(d)    the final distribution by Mainline Transport Pty Ltd (ACN 006 154 150) atf the Troyes Trust of the net dividend of $1,743,371 from the Troyes Trust to Robert Frederick Jane on 24 September 2009.

13.    All documents concerning the loan agreement between Calder Park Raceway Pty Ltd (ACN 004 532 049) and Bob Jane Corporation Pty Ltd (ACN 005 870 431) dated on or around 24 September 2009, pursuant to which Bob Jane Corporation Pty Ltd (ACN 005 870 431) has appointed itself controller of the property at 377 and 479 Calder Freeway, Calder Park, Victoria (Property).

14.    All documents concerning the equity in the Property held by Calder Park Raceway Pty Ltd (ACN 004 532 049).

15.    All documents concerning the alleged debt of $865,691 (as at 31 August 2015) owing to Bob Jane Corporation Pty Ltd (ACN 005 870 431) by Last Lap Pty Ltd (ACN 004 532 030).

16.    All documents concerning the current financial position of Bob Jane Properties Pty Ltd (ACN 004 627 963).

17.    All documents concerning the purchase by Last Lap Pty Ltd (ACN 004 532 030) on around 1 July 1990 of 4,000,000 shares in Bob Jane Properties Pty Ltd (ACN 004 627 963) (formerly Bob Jane Corporation Limited) for $1,616,000 from the Mimulus Trust.

18.    Any documents regarding the declaration in or around 31 December 1989 by ACN 005 490 540 Pty Ltd (formerly The Australian Motorsport Club Pty Ltd and Mimulus Pty Ltd) that it held its shares in Bob Jane Properties Pty Ltd (formerly Bob Jane Corporation Pty Ltd) on trust for the Mimulus Trust.

19.    Any documents regarding notice by ACN 005 490 540 Pty Ltd (formerly The Australian Motorsport Club Pty Ltd and Mimulus Pty Ltd) to Bob Jane Properties Pty Ltd (ACN 004 627 963) (formerly Bob Jane Corporation Pty Ltd) confirming the Mimulus Trust was the beneficial owner of the Trust.

20.    All documents concerning the transfer of carparks and storage spaces in Elizabeth Street, Melbourne in June 2009 from Bob Jane Properties Pty Ltd (004 627 963) to Kushinda Pty Ltd (089 149 879).

SCHEDULE OF PARTIES