Federal Court of Australia

Secatore, in the matter of Last Lap Pty Ltd (in liq) (No 3) [2020] FCA 1289

ORDERS

THE COURT ORDERS THAT:

1.    The application of Mr Rodney Bruce Jane dated 7 October 2019, seeking to discharge the summonses issued in this proceeding on 21 August 2019, is dismissed.

2.    Mr Rodney Bruce Jane will pay the Plaintiff’s costs of and incidental to this application, to be assessed if not agreed.

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

REASONS FOR JUDGMENT

ANDERSON J:

Summary

1    By way of summary, Mr Rodney Bruce Jane’s application dated 7 October 2019 sought to have set aside summonses for examination dated 21 August 2019 issued to Mr Jane and others (summonses). I have previously dealt with other aspects of that interlocutory application in Secatore, in the matter of Last Lap Pty Ltd (in liq) [2020] FCA 627. In that judgment, Mr Jane’s application for the discharge of the summonses was adjourned for future determination. This judgment concerns that application.

2    Mr Jane’s interlocutory application dated 7 October 2019 sought that the summonses be set aside on two main bases. First, Mr Jane submitted that the matters which were addressed by the summonses, or which the Plaintiff (who is the Liquidator of Last Lap Pty Ltd (in liquidation) (Last Lap)) intends to examine at the relevant examinations, impermissibly stray beyond the “examinable affairs” of Last Lap. Mr Jane said that, as a result, those matters are not properly supported by the relevant statutory provisions in the Corporations Act 2001 (Cth) and the summonses should be set aside.

3    I do not accept that contention. I have examined the categories of documents listed in the summonses and each party’s arguments as to why matters referred to in those categories of documents do or do not fall within the examinable affairs of Last Lap. I have revisited the documents referred to in the liquidator’s affidavit sworn on 19 June 2019, which supported the liquidator’s application for the issuance of the summonses (Liquidator’s affidavit). I am not persuaded that the categories of documents listed in the summonses establish a real risk that the matters the Liquidator intends to examine are not “about” the examinable affairs of Last Lap such that the summonses should be set aside at this stage even before the examination has occurred. I am not persuaded that those matters do not relate to legitimate questions or issues related to the business affairs of Last Lap or are otherwise not about the wide statutory concept of “examinable affairs”. To the extent a particular question asked or particular documents produced at the examination might not be about Last Lap’s examinable affairs, any such issue should be dealt with at the examination.

4    Second, Mr Jane sought to impugn the Liquidator’s affidavit which supported the Liquidator’s application for, and the Court’s issuance of, the summonses. Mr Jane said the Liquidator’s affidavit contained serious and material non-disclosures and the summonses should be set aside on that basis. I have considered the Liquidator’s affidavit and assessed the parties’ competing arguments as to whether or not it contained material non-disclosures. Having conducted that assessment, I am not persuaded that the Liquidator’s affidavit contained material non-disclosures. To the extent there was a non-disclosure, I am not persuaded that it may have caused the Court to refuse to issue the summonses.

5    In these circumstances, I will not set aside the summonses issued to Mr Jane, and certain other persons, on the bases Mr Jane has advanced. Mr Jane’s application will be dismissed with costs.

Procedural history

6    As to the context of this application, on 21 August 2019, Judicial Registrar Allaway issued two sets of summonses. First, Allaway JR ordered that summonses for examination be issued pursuant to s 596A of the Corporations Act 2001 (Cth) (Corporations Act), in the form approved by the Registrar, directed to Mr Simon Wallace-Smith, Mr Timothy Norman and Mr Ian Lee. Second, Allaway JR issued summonses for examination pursuant to s 596B of the Corporations Act, in the form approved by the Registrar, directed to Mr Rodney Jane, Mr Ken Glynn, Mr Anthony Bradica, Mr Gregory Sargent, Mr Jim Nanos, and Ms Laree Jane. Each of the summonses requires the examinee both to produce documents and to attend Court for examination. As indicated in [1] above, I will refer to these as “the summonses” in this judgment.

7    By way of an interlocutory application dated 7 October 2019, Mr Rodney Jane sought an order that each of the summonses be discharged. (As an aside, the phrases “discharged” and “set aside” were at times used interchangeably at the hearing of this matter. While the relevant statutory provision, being r 11.5(2) of the Federal Court (Corporations) Rules 2000 (Cth) (Corporations Rules), uses the word “discharge”, I have used the words “discharge” and “set aside” interchangeably as well.) The relevant terms of Mr Jane’s interlocutory application were as follows:

This application is made under section 596C(2) of the [Corporations Act], rule 11.05 [sic] of the [Corporations Rules] and the Court's inherent jurisdiction.

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

1.     …

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

3.     …

4.     The [Liquidator] pay the costs of Rodney Bruce Jane on an indemnity basis …

8    The Liquidator opposes that application.

9    On 27 July 2020, my Associate received correspondence from the solicitors for Mr Wallace-Smith, Mr Norman, Mr Bradica and Deloitte Tax Services Pty Ltd (being certain of the other proposed examinees in this matter) (the Deloitte Parties). The Deloitte Parties’ solicitors noted that the Deloitte Parties would not be appearing at the hearing of this matter on 29 July 2020 and continued to reserve their rights to seek leave to be heard subsequently if required. The Deloitte Parties did not appear at the hearing of this application on 29 July 2020 and 30 July 2020 and otherwise made no submissions concerning Mr Rodney Jane’s application. The other examinees (ie besides Mr Jane and the Deloitte Parties) also did not appear or make any submissions related to this application.

Rodney Jane’s submissions

10    Mr Jane’s submissions can be summarised in the following way. First, it was submitted that the jurisdictional pre-conditions to the exercise of the Court’s power to summon a person for examination under ss 596A or 596B of the Corporations Act include the condition that the subject matter about which the information is to be given is within the “examinable affairs” of the relevant company. In this respect, a good deal of Mr Jane’s submissions were directed to setting out why it was said that the matters referred to in the relevant summonses went beyond the “examinable affairs” of Last Lap. The detail of these submissions are addressed later in these reasons.

11    Second, it was submitted that Mr Rodney Jane could challenge both the summons directed to him, and the summonses directed to the other interested persons. Mr Jane submitted that, if the summons directed to Mr Rodney Jane was impugned on the basis that it goes beyond the “examinable affairs” of Last Lap, then it necessarily followed that the issue of the other summonses (to the extent that they are in the same or similar terms) were also beyond the Court's jurisdiction and must be discharged by the Court pursuant to r 1.32 of the Federal Court Rules 2011 (Cth) and/or section 35A(6) of the Federal Court of Australia Act 1976 (Cth).

12    Third, Mr Jane pointed to alleged material non-disclosures by the Liquidator. Mr Jane submitted that, if the Orders which authorised the issuance of the summonses were obtained by the Liquidator in circumstances where the Liquidator failed to disclose to the Court any matter which may have caused the Court to refuse to make such orders, then all of the summonses should be set aside or discharged by the Court pursuant to r 1.32 of the Federal Court Rules 2011 (Cth) and/or s 35A(6) of the Federal Court Act. A good deal of Mr Jane’s submissions were directed towards identifying matters which it was said showed that there was a material non-disclosure in the Liquidator’s affidavit. In short, Mr Jane sought to identify how the Liquidator’s affidavit purportedly did not adequately present certain matters. Mr Jane says that, as a result, the Liquidator’s affidavit failed to discharge the Liquidator’s heavy obligation to make full and frank disclosure of all matters which may have impacted upon the Court’s decision to issue the relevant summonses. Mr Jane submitted that non-disclosure infected all of the summonses and, on that basis, the summonses should be set aside.

13    By way of example:

(1)    Mr Jane submitted that the Judicial Registrar was not taken through certain letters sent to the Liquidator by Mr Jane’s solicitors and was not “accurately told of their import”. Mr Jane said that, as a result, the Court was not made aware that there is in fact a real and substantive dispute concerning the legal and beneficial ownership of certain shares. Mr Jane submitted that the Court was not made aware of the potential effect of that dispute on the extent of Last Lap's “examinable affairs” and the consequent limits on the Court's power to issue the relevant summonses. Mr Jane submitted that the Liquidator’s affidavit failed to draw to the Court’s attention the substance of a letter to the Liquidator from Mr Jane’s solicitors which addressed this dispute regarding particular shares.

(2)    Mr Jane submitted that the Liquidator’s affidavit did not disclose that a particular corporation was, Mr Jane submitted, not an entity that is or has been connected to Last Lap. Mr Jane said that, as a result, the Court would not have been aware that it did not have the power to compel the production of documents, or answers to questions, in relation to the affairs of that particular corporation.

(3)    Mr Jane also submitted that the Liquidator’s affidavit referred to certain transactions in June 2009 and September 2009, and a number of the documents sought in the summons served on Rodney Jane relate to these transactions which occurred almost 11 years ago. It was said that, if there was any cause of action arising from these transactions (and Mr Jane expressly denied that any such cause of action arose), it is likely to be statute barred. In these circumstances, Mr Jane submitted that the Liquidator should have clearly told the Court what the utility is of conducting examinations in relation to these purportedly “stale” transactions. Without that disclosure, it was said that the Court could not be satisfied that the examinations are not being used simply to cause undue inconvenience or embarrassment to the examinee or to inflict costs.

14    Mr Jane submitted that, given these considerations (among others), each of the summonses should be set aside.

The liquidator’s submissions

Submissions concerning ss 596A and 596B

15    The Liquidator’s submissions on the construction of ss 596A and 596B of the Corporations Act can be summarised as follows. First, the Liquidator says the Court has no discretion under s 596A of the Corporations Act; rather, if the requirements of s 596A are met, the issue of a summons is mandatory.

16    Second, the Liquidator submitted that s 596B of the Corporations Act gives the Court a discretion to summons a person (who is not, or was not, an officer of the company) if the Court is satisfied that the person “may be able to give information about examinable affairs” of the company (citing s 596B(1)(b)(ii)). The Liquidator says this provision directs attention to two matters: first, whether the proposed examinee is a person who may be able to give information about the company's examinable affairs and, second, whether the court should exercise its discretion in favour of granting the examination order.

17    As to whether the proposed examinee is a person who “may be able to give information about the company's examinable affairs”, the Liquidator submitted that it is unnecessary for a liquidator to demonstrate that the proposed examinee has taken part in or been concerned in the company's examinable affairs. The Liquidator submitted it is only necessary that they may be able to give information about the examinable affairs (citing Re Southern Equities Corp Ltd (in liq), Re; Bond & Caboche v England (1997) 25 ACSR 394 (Re Southern Equities) at 398). The Liquidator submitted that it is unnecessary for the liquidator to demonstrate that the person will be able to provide such information (citing Re Bill Express Ltd (in liq) [2010] VSC 101; 77 ACSR 556, Davies J at [13]; S & V Nominees Pty Ltd (in liq) v Rabobank Australia Ltd (2010) 78 ACSR 85, Besanko J at 94 [35]).

18    As to how a Court can be satisfied that the proposed examinee “may” have relevant information, the Liquidator submitted that, first, the Court must be satisfied of the existence of a reasonable hypothesis or scenario which raises the likelihood or possibility that the examinee has the information and, second, there must be facts or circumstances before the Court which support that hypothesis or scenario (citing Re Australasian Liquid Storage Pty Ltd (in liq) [2017] FCA 559 per Derrington J at [26]). The Liquidator noted that the discretion under s 596B is wide and unfettered, though it must be exercised judicially (citing Pitman v Park [2020] FCA 887 at [41]). The Liquidator submitted that the Court is required to have regard to the expressed purpose of the examination and the importance of the information sought, the seriousness of the matters to be inquired into and the use to which the information will ultimately be put (citing Southern Cross Petroleum (SA) Pty Ltd (in liq) v Hirsch (1998) 70 SASR 527 per Lander J at 536-537). The Liquidator’s submissions then proceeded to set out how the matters addressed by the summonses fell within the examinable affairs of Last Lap.

Submissions concerning the alleged non-disclosure

19    The Liquidator made the following main submissions in relation to any relevant non-disclosure by the Liquidator. First, it was submitted that an application for an examination order may be made ex parte. It was submitted that, in such an application, the liquidator is obliged to bring to the Court's attention all information that is relevant to the granting of an examination order (citing Re Southern Equities at 422). The Liquidator accepted that in such an application a liquidator must bring to the Court’s attention anything which might lead the Court to refuse the application. The Liquidator accepted that a failure to do so may be a sufficient basis to set aside the examination order (citing Re Southern Equities at 423).

20    Second, the Liquidator noted the relevance of a material non-disclosure. The Liquidator submitted that whether a material non-disclosure justifies setting aside the examination order depends on the undisclosed facts and the circumstances in which the non-disclosure occurred. It was said that an innocent non-disclosure or an error of judgment on the part of the liquidator may not support a setting aside of the order (citing Re Southern Equities at 423-4). It was submitted that the onus is on the applicant that seeks to set aside the summons to demonstrate that there has been a non-disclosure which is material. It was submitted that “material” in that context meant “would have led to the Court refusing to issue the summons” (citing Re Southern Equities at 424).

21    The Liquidator’s minor premise was that, in the present case, there has been no non-disclosure which would have been material to the Judicial Registrar's decision to issue the summonses. A good deal of the Liquidator’s submissions set out matters which it was said ensured there was no material non-disclosure in the Liquidator’s affidavit. The Liquidator therefore submitted that any non-disclosure in this case did not provide an adequate basis to set aside the summonses.

Liquidator’s submissions concerning Mr Jane setting aside the summonses not directed to Mr Jane

22    The Liquidator also took issue with Mr Jane’s application seeking orders to set aside the summonses which were not directed to Mr Jane. The Liquidator submitted that the Corporations Rules do not permit a person served with a summons to apply for the discharge of summonses served on third parties/other persons. It was said that Mr Jane cannot apply to set aside the summonses addressed to persons other than Mr Jane.

Consideration: Can Mr Jane set aside summonses not issued to him?

23    Rule 11.5(1) of the Corporations Rules has application “if a person is served with an examination summons”. In such circumstances, “[w]ithin 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” taking certain steps (Corporations Rules, r 11.5(2); emphasis added). The use of the definite article “the” confirms that the person to whom the summons is directed can apply to discharge that summons. However, it would appear to indicate that a stranger to a particular summons is not permitted under r 11.5 to apply to set aside the summons. (If any person could apply to set aside any summons, instead of using the word “the”, the statutory provision could have used the indefinite article “a” or a word with a broader connotation, such as “any”.) If that be correct, it is impermissible under r 11.5 for Mr Jane to apply to set aside the summonses issued to others (ie not Mr Jane).

24    However, notwithstanding that position, Mr Jane contended that this Court has the power to review the issuance of summonses directed to persons other than Mr Jane on two other bases. As stated above, those bases were Division 1.3 and r 1.32 of the Federal Court Rules 2011 (Cth) and s 35A(6) of the Federal Court of Australia Act 1976 (Cth). The latter provision provides that the Court “may, on application … or of its own motion, review an exercise of power by a Registrar … and may make such order or orders as it thinks fit with respect to the matter with respect to which the power was exercised”. There were no submissions as to whether or not the standard or process of review under these provisions differed to a review under r 11.5 of the Corporations Rules.

25    After considering these statutory provisions, this is not a proper occasion to determine whether a person can apply to set aside a summons issued to a third party. That is because, as explained further below, regardless of whether or not Mr Jane can apply to set aside the summonses not issued to him, I have decided that Mr Jane’s arguments fail. As a result, each of the summonses directed to Mr Jane and others should not be set aside. Put differently, any conclusion on whether or not Mr Jane can set aside the summonses issued to third parties would make no difference to the outcome of this application. As a result, determination of that question should await an occasion where it is squarely in issue.

Consideration: statutory pre-conditions in sections 596A and 596B

Were the statutory pre-conditions in s 596A satisfied?

26    Certain of the summonses were issued to Mr Wallace-Smith, Mr Norman and Mr Lee (collectively, the Former Liquidators) under s 596A. Section 596A provides as follows:

596A Mandatory examination

The Court is to summon a person for examination about a corporation’s examinable affairs if:

(a)    an eligible applicant applies for the summons; and

(b)     the Court is satisfied that the person is an officer or provisional liquidator of the corporation or was such an officer or provisional liquidator during or after the 2 years ending:

(i)     if the corporation is under administration—on the section 513C day in relation to the administration; or

(ii)     if the corporation has executed a deed of company arrangement that has not yet terminated—on the section 513C day in relation to the administration that ended when the deed was executed; or

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

(iv)     otherwise—when the application is made.

27    An “officer” of a corporation includes “a liquidator of the corporation” (Corporations Act, s 9).

28    Two “criteria must be satisfied before a court is to summon a person under s 596A for examination about a corporation’s examinable affairs” (Palmer v Ayres [2017] HCA 5, 259 CLR 478 (Palmer v Ayres) at [12] per Kiefel, Keane, Nettle and Gordon JJ). First, “an “eligible applicant” must apply for the summons” and a “liquidator of the corporation, amongst others, is an “eligible applicant” …” (ibid). Second, “the court must be satisfied that the person to be summoned is either a current officer or provisional liquidator of the corporation, or a former officer or provisional liquidator during or after the two years ending on the occurrence of a specified event” (ibid). “If those criteria are satisfied, the court is to summon that person (the examinee) “to attend before the [c]ourt” at a specified place and time on a specified day “to be examined on oath about the corporation’s examinable affairs” …” (ibid at [13]). “A summons may also require the examinee to produce at the examination specified books in the examinee’s possession that relate to the corporation or to any of its examinable affairs” (ibid at [15]; citing s 596D(2) of the Corporations Act).

29    As to the application of these statutory pre-conditions in this case, Mr Jane accepts that the Liquidator is an “eligible applicant”. That is correct: an eligible applicant includes “a liquidator … of the corporation” (Corporations Act, s 9 (definition of “eligible applicant”)) and the Liquidator has applied for the relevant summonses. As a result, the statutory condition in s 596A(a) has been satisfied. Mr Jane also accepts that the Former Liquidators were “officers” of Last Lap within the time period specified in s 596A(b).

30    It follows that the Court was to summon the Former Liquidators “to attend before the [c]ourt” at a specified place and time on a specified day “to be examined on oath about the corporation’s examinable affairs”. That is, given the two criteria set out above are met, the Court must issue the summonses – there “is no discretion” (Kimberley Diamonds Ltd v Arnautovic [2017] FCAFC 91; 252 FCR 244 (Kimberley Diamonds) at [20] per Foster, Wigney and Markovic JJ).

31    That is precisely what happened here: the Registrar issued the summons in a form which complied with s 596D of the Corporations Act.

32    Nevertheless, as stated above, Mr Jane focusses on the introductory words in s 596A and asserts that, even if the statutory pre-conditions are satisfied, there is only power to “summon a person for examination about a corporation’s examinable affairs”.

33    That argument directs attention to the concept of “examinable affairs”, which is a variable that is common to both s 596A and s 596B. It is a concept that has the same content regardless of whether it is used in s 596A or s 596B. As a result, before assessing the scope of Last Lap’s examinable affairs, it is useful to be clear that the statutory pre-conditions in s 596B are satisfied as well.

Were the statutory pre-conditions in section 596B satisfied?

34    Mr Jane also seeks to have set aside summonses issued, under s 596B, to Ken Glynn, Mr Jane, Anthony Bradica, Gregory John Sargent, Jim Nanos and Laree Madonna Jane.

35    Section 596B(1) provides that:

596B Discretionary examination

(1)     The Court may summon a person for examination about a corporation’s examinable affairs if:

(a)     an eligible applicant applies for the summons; and

(b)     the Court is satisfied that the person:

(i)     has taken part or been concerned in examinable affairs of the corporation and has been, or may have been, guilty of misconduct in relation to the corporation; or

(ii)     may be able to give information about examinable affairs of the corporation.

36    As stated above, the Liquidator is an “eligible applicant”. As a result, s 596B(1)(a) is satisfied.

“May be able to give information about examinable affairs of the corporation”

37    For the statutory pre-condition in s 596B(1)(b) to be met, the Court must be satisfied of the integer in s 596B(1)(b)(i) or that the person summonsed “may be able to give information about examinable affairs of the corporation” (being the integer in s 596B(1)(b)(ii)).

38    In obtaining “the order for an examination under s 596B the eligible applicant does not have to establish that the prospective examinee can give information about examinable affairs of the corporation” (Southern Cross Petroleum Sales (SA) Pty Ltd (In Liq) v Hirsch and Another (1998) 70 SASR 527 (Southern Cross Petroleum) at 535 per Lander J). The eligible applicant “only needs to satisfy the court that they may be able to give such information” (ibid; underlining added; see also Meteyard and Others v Love and Others as Receivers and Managers of Southland Coal Pty Ltd [2005] NSWCA 444 (Meteyard) at [6]). This is “not a high threshold” (Re Bill Express Ltd (in liq) [2010] VSC 101 at [10]-[13] per Davies J). It “is only necessary that the evidence adduced by the eligible applicant satisfy the court to the civil standard that the prospective examinee may be able to give information about examinable affairs of the corporation” (Southern Cross Petroleum at 535).

39    In Meteyard, Basten JA (Beazley JA agreeing and Santow JA agreeing generally) observed (at [39]) that:

A consideration of the terms of s 596B(1)(b)(ii) suggests that the scope of the power is delimited by four considerations, namely that:

(a)     the proposed examinee may have “information” to give;

(b)     the information must be relevant in the sense that it is about “examinable affairs of the corporation”;

(c)     because the purpose of the section is to allow the receivers and managers to be informed of facts about the affairs of the company, the information should be information not within their knowledge, although the extent of knowledge will not be precisely definable, and

(d)     there must be a factual basis for the Court to form a reasonable state of satisfaction that a proposed examinee may have relevant information.

40    In addition, “the persons to whom a summons issued under the authority of s 596B might be directed … are persons who may hold no office within the corporation, but may simply be persons who may be able to give information about examinable affairs of the corporation” (Simionato & Farrugia v Macks & Macks (1996) 19 ACSR 34 at 56). They “may be persons who have dealt at arm's length with the corporation and have no knowledge whatsoever of the internal circumstances of the corporation” (ibid). In those circumstances, “the legislation requires the court to be satisfied that it would be appropriate to issue a summons for the purpose of the examination of that person” (ibid). Persons “outside the corporation who have dealt with the corporation may also be able to give information about the examinable affairs of the corporation” (Southern Cross Petroleum at 535). “Whether they can in due course will depend, of course, upon the examination itself” (ibid).

41    In this respect, Mr Jane argued that he was 18 years old when certain events (which were referred to in the documents required to be provided under the summons) occurred. Mr Jane argued that, as a result, there was no reasonable hypothesis or scenario which raises the likelihood or possibility that Mr Jane may have relevant information about such events.

42    I do not accept that position for reasons which will become apparent later in these reasons when the examinable affairs of Last Lap are assessed. By way of example, there are documents before the Court which it appears Mr Jane executed. The Liquidator evidently seeks to enquire about those matters. There is evidence before the Court that Mr Jane is a current director of Bob Jane Properties Pty Ltd (which, as explained later in these reasons, is a company that is related to Last Lap and appears relevant to the examinations). Mr Jane appears to be a director of ACN 005 490 540 Pty Ltd, which appears to be the corporate trustee of a trust which may have been involved in transactions or dealings related to Last Lap. Mr Jane also appears to be a director of Calder Park Raceway Pty Ltd which is an entity seemingly involved in acts or things done in relation to Last Lap whilst Last Lap was in liquidation. These matters are addressed in more detail later in these reasons.

43    Following my review of the Liquidator’s affidavit, I am also satisfied that the other persons summonsed may be able to provide information about the examinable affairs of Last Lap. For reasons which will become clearer when I set out below an assessment of Last Lap’s examinable affairs, the persons summonsed, it appears, executed relevant documents or were involved in acts or things done related to Last Lap, or Last Lap’s transactions or dealings, while Last Lap was being wound up. These documents, set out in more detail below, provide the satisfaction required by s 596B(1)(b)(ii).

44    Mr Jane’s submissions were otherwise not directed to whether the other persons summonsed (ie the persons other than Mr Jane) were in a position to provide information at the examination about the examinable affairs of Last Lap. In this respect, there is reason to doubt that Mr Jane could have provided, and it is not apparent that Mr Jane did provide in this application, evidence to the Court to the effect that the third parties summonsed could not provide such information. That is more typically a matter which should be raised by those other persons at the examination.

45    In these circumstances, to the extent Mr Jane contends that the Court should not be satisfied that either he or the other persons summonsed are in a position to provide information about Last Lap’s examinable affairs, I do not accept that contention at this stage. That question can await “the examination itself” (Southern Cross Petroleum at 535). It “will usually become evident at an early stage of the examination whether or not the examinee is in a position to give information about the examinable affairs of the corporation” (ibid).

The residual discretion

46    Even if the statutory pre-conditions in ss 569B(1)(a) and (b) are satisfied, the Court retains a certain discretion in the context of s 596B (which is different to the position under s 596A). In “the case of a s 596B summons, even if the Court is satisfied that the two [relevant] criteria have been made out, the Court is not required to issue the summons” (Kimberley Diamonds at [24]). “It retains a discretion whether or not to do so” – the Court “could, in such circumstances, decline to exercise the discretion if it was not satisfied, for example, that the proposed examination was sufficiently justified, or would have any practical utility” (ibid).

47    That discretion “is a wide one” and it “is to be exercised to enable inquiry to be made into the examinable affairs of a corporation” (Sandhurst Trustees Ltd v Harvey and Others [2004] SASC 157 (Sandhurst Trustees), Doyle CJ (Perry and Bleby JJ agreeing) at [50]). In Meteyard, Santow JA observed the following at [9]:

Insofar as the scope of the power depends upon whether the enquiry is directed to the “examinable affairs” of the corporation, I would emphasise the need for caution in any a priori observations seeking to limit the scope of that very broadly defined expression. It will often be only when the matter is looked on in closer detail, that the court will be in any position to ascertain whether the scope of the power has been exceeded or the power abused by its use in a vexatious or oppressive manner. That may only emerge when the examination is under way, though it can emerge earlier in a clear-cut case.

…

As I observed in Re New Cap Reinsurance Corporation Holdings Ltd [2001] NSWSC 835, the 1992 legislative changes to the Corporations Law and the judicial interpretation of the amendments enacted with the passage of that Act reflect an expansionist approach to permitting examinations under the Corporations Act. They further underpin the wisdom of generally permitting the examinations to go ahead, given that there remains the protective safeguard of an intervention more precisely focussed at the examination stage. That said, if a clear-cut case of abuse emerges earlier, courts have to intervene if examinees are not to be put to potentially huge expense and inconvenience.

48    To the extent there is an issue about whether a particular person summonsed by the Liquidator may not be able to provide information about the examinable affairs of Last Lap, I would not set aside the relevant summonses on that basis at this stage. Based on an assessment of the Last Lap’s examinable affairs and a review of the Liquidator’s affidavit (which assessment is set out further below), I am satisfied that the persons summonsed may be able to give information about examinable affairs of the corporation. I am also satisfied that the examinations are justified, have practical utility and that it is a proper exercise of the Court’s discretion to issue the relevant summonses under s 596B. An assessment of the matters identified in the Liquidator’s affidavit indicates that there are legitimate issues which can be addressed by the examinations, and there is no indication that the Liquidator might be able to retrieve the relevant information by other means (Southern Cross Petroleum at 536-537; see also Cunningham, in the matter of Australasian Liquid Storage Pty Ltd (in liq) [2017] FCA 559 at [45] per Derrington J).

49    If one of the examinees does not have or is not able to give information in response to a particular question or matter raised at the examination, such an issue can be and is properly raised at the examination. The Registrar “conducting the examination has the obligation to ensure that the examiner is limited to questions relating to the examinable affairs of the corporation and that no questions go outside those affairs” (Southern Cross Petroleum at 535-536).

consideration: the examinable affairs of last lap

50    As stated above, I am satisfied that the relevant statutory pre-conditions in ss 596A and 596B were met. The summonses were issued on that basis. However, even so, Mr Jane submits that is not the end of the matter because, in Mr Jane’s submissions, there is only power to “summon a person for examination about a corporation’s examinable affairs”.

51    On its face, that position is correct. However, that is a matter which is typically ascertained at the examination when questions are asked and documents produced (see eg Southern Cross Petroleum at 535-536). In this case, no examination has yet occurred. There is also no indication in the statute that a Registrar is required to be satisfied at the time the summons is issued that all conceivable questions at the eventual examination are “about a corporation’s examinable affairs”. Such matters can be dealt with concretely at the examination – in this respect, the Court “may put, or allow to be put, to a person being examined such questions about the corporation or any of its examinable affairs as the Court thinks appropriate” (Corporations Act, s 597(5B)).

52    That said, in this case, the relevant summonses also listed documents to be produced at the examination (which is permissible under s 596D(2)). Based on those listed documents and presumably from the matters set out in correspondence between Mr Jane’s solicitors and the Liquidator’s solicitors, Mr Jane says the matters which are sought to be examined at the eventual examination are, in Mr Jane’s view, outside the examinable affairs of Last Lap.

53    In this respect, the parties’ submissions each addressed whether certain categories of documents listed in the relevant summonses were within the examinable affairs of Last Lap. I need not set out all of the possible permutations in which those categories (and presumably the questions which might be asked at the examination about those categories) could be said to fall within the broad scope of the definition of “examinable affairs” of Last Lap. It is sufficient to say that I am satisfied that they are prima facie within the examinable affairs of Last Lap and therefore do not provide a basis for those summonses to be set aside. This is so for the following reasons.

The concept of “examinable affairs”

Statutory provisions

54    “Examinable affairs” in relation to Last Lap means:

(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 [of the Corporations Act]); 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). (Corporations Act, s 9.)

55    A “body corporate’s business affairs include (without limitation) … any of the body’s affairs (including anything that is included in the body’s affairs because of section 53); and … matters concerned with ascertaining the corporations with which the body is or has been connected” (Corporations Act, s 53AA). A “connected entity” in “relation to a corporation, means … a body corporate that is, or has been, related to the corporation; or … an entity that is, or has been, connected (as defined by section 64B) with the corporation” (Corporations Act, s 9). “Affairs” in relation to Last Lap “has, in the provisions referred to in section 53, a meaning affected by that section” (Corporations Act, s 9).

56    Section 53 relevantly provides as follows:

For the purposes of the definition of examinable affairs in section 9, section 53AA, 232, 233 or 234, paragraph 461(1)(e), section 487, subsection 1307(1) or section 1309, or of a prescribed provision of this [the Corporations Act], the affairs of a body corporate include:

(a)     the promotion, formation, membership, control, business, trading, transactions and dealings (whether alone or jointly with any other person or persons and including transactions and dealings as agent, bailee or trustee), property (whether held alone or jointly with any other person or persons and including property held as agent, bailee or trustee), liabilities (including liabilities owed jointly with any other person or persons and liabilities as trustee), profits and other income, receipts, losses, outgoings and expenditure of the body; and

(b)     in the case of a body corporate (not being a licensed trustee company or the Public Trustee of a State or Territory) that is a trustee (but without limiting the generality of paragraph (a))—matters concerned with the ascertainment of the identity of the persons who are beneficiaries under the trust, their rights under the trust and any payments that they have received, or are entitled to receive, under the terms of the trust; and

(c)     the internal management and proceedings of the body; and

(d)     any act or thing done (including any contract made and any transaction entered into) by or on behalf of the body, or to or in relation to the body or its business or property, at a time when … the body is being wound up[,] and without limiting the generality of the foregoing, any conduct of … an administrator of the body, … or of a liquidator … of the body; and

    …

(g)     matters concerned with the ascertainment of the persons who are or have been financially interested in the success or failure, or apparent success or failure, of the body or are or have been able to control or materially to influence the policy of the body; and

…

(k)     matters relating to or arising out of the audit of, or working papers or reports of an auditor concerning, any matters referred to in a preceding paragraph.

General principles

57    These provisions have been considered in a number of authorities. In Cunningham, in the matter of Australasian Liquid Storage Pty Ltd (in liq) [2017] FCA 559 (Cunningham), the relevant company in liquidation had been engaged in the installation of a number of large water tanks. One such water tank collapsed in the process of it being filled. As a result, a number of third parties suffered injuries, the relevant company suffered significant and irreparable damage to its reputation, and the company was unable to obtain new work which ultimately led to its insolvency. Derrington J reasoned that the “collapse of the tank was an event occurring in the “business, trading, transactions and dealings” of the body corporate and it also gave rise to the liabilities or potential liabilities of the body corporate” (Cunningham at [16]). Derrington J stated that, as a result, “information “about” [this incident] will be information about the “examinable affairs of the corporation” …” (ibid). That statement provides a concrete example of the considerable breadth of the concept of “examinable affairs”.

58    In Kimberley Diamonds, the Full Federal Court (Foster, Wigney and Markovic JJ) observed that s 53 of the Corporations Act “provides a further non-exhaustive list of matters or things that may constitute the affairs of a body corporate for the purposes of the definition of examinable affairs” (Kimberley Diamonds at [12]). That list “relevantly includes “any act or thing done … by or on behalf of the body, or to or in relation to the body or its business or property, at a time when … the body is being wound up” … “(ibid; citing s 53(d)(iv)).

59    The Full Court stated the following (at [103]-[104]):

It would be entirely proper for an eligible applicant to apply for and obtain an examination summons under s 596A for the purpose of obtaining information concerning legitimate issues, or to obtain answers to legitimate questions, which relate to the management of the company, including while it is in the process of being wound up. That would be the case even if, at that stage, the information that was available to the eligible applicant was not such that it could be said that the applicant had an arguable case, or that the examination was likely to reveal conduct capable of supporting a claim. The obtaining of answers to otherwise unanswered questions, or the quelling of a perceived controversy concerning the management of a company can, in a broad sense, be regarded as amounting to a benefit to the company, its creditors or contributories, and as therefore fulfilling a purpose of s 596A. An examination that achieves nothing more than that may still reasonably be regarded as having some practical utility. It would not necessarily be an abuse of process.

The position may be different if the examinee is able to demonstrate that the controversy, or the perceived controversy, or the unanswered questions, do not genuinely relate to or arise from the examinable affairs of the company, or are otherwise speculative, far-fetched or misconceived. In such circumstances, it could well be concluded that the examination was an abuse of process. The use of the examination process for such a purpose could rightly be found to be vexatious or oppressive and to bring the administration of justice into disrepute. The “heavy” onus of demonstrating this rests on the party seeking to stay the summons …

60    In Kimberley Diamonds the Full Court noted that the primary judge’s reasoning in that case failed to adequately appreciate that “the main purpose of the examination … was to explore and obtain information about the very facts and matters that the primary judge considered were missing from the evidence” (Kimberley Diamonds at [107]). This was problematic given that there was “nothing to suggest” the questions which were evidently to be pursued in the examination “were speculative, far-fetched, misconceived or vexatious” (ibid). The primary judge’s reasoning unsoundly “effectively required” that evidence be provided “concerning the very matters that [the relevant company] wanted to ascertain from the examination” (ibid). The Full Court noted that an approach which “would effectively require the Court, under the guise of an application for a stay on the basis of an abuse of process, to conduct a mini-trial into the possible end result of the examination at a stage when the available information and evidence was not complete … would unduly stultify the operation of s 596A” (ibid at [109]).

61    While those statements were made in relation to staying an examination as an abuse of process, there is no reason to suspect that they do not have applicability to the process of applying the concept of “examinable affairs” to the types of issues raised in this application.

62    It is to that task that I now turn.

Are the matters identified by Mr Jane outside Last Lap’s examinable affairs?

63    The categories of matters Mr Jane complained about can be assessed by reference to the following topics.

The Former Liquidators

64    The Liquidator has sought all documents concerning the circumstances in which Ian Arthur Lee was appointed liquidator of Last Lap in place of Philip Wayne Burnett (Summons to Mr Jane, Schedule, item 1). The Liquidator has also sought documents concerning the circumstances in which Timothy Bryce Norman and Simon Alexander Wallace-Smith were appointed as liquidators of Last Lap in place of Ian Arthur Lee on 4 October 2005 (Summons to Mr Jane, Schedule, item 2). Mr Jane says these documents relate to the appointment of liquidators some many years ago.

65    These matters may have occurred some years ago. However, the “examinable affairs” of Last Lap include “any act or thing done … in relation to [Last Lap] or its business or property, at a time when … [Last Lap] is being wound up … and … any conduct … of a liquidator … of [Last Lap]”. These matters occurred whilst Last Lap was being wound up and they are “act[s] or thing[s]” done in relation to Last Lap. They fall within the examinable affairs of Last Lap at least on that basis.

Calder Park Raceway

66    Mr Jane submitted that certain of the documents which are required to be produced at the examination “relate to transactions that occurred on or around 30 June 2009” and “in September 2009”, “more than 5 years before Last Lap was placed into a creditors’ voluntary winding up”. To make good that proposition, Mr Jane referred to the following categories of documents listed in the summonses:

(1)    The summons sought documents concerning the assignment to Calder Park Raceway Pty Ltd on around 30 June 2009 of a receivable owed to Last Lap by Bob Jane T-Marts Unit Trust (Summons to Rodney Jane, Schedule, item 9).

(2)    The summons sought documents concerning the financial position of Calder Park Raceway Pty Ltd both in around 30 June 2009 and presently, including but not limited to the ability of Calder Park Raceway Pty Ltd to repay a purported outstanding debt to Last Lap.

(3)    The Liquidator also sought documents concerning a loan agreement between Calder Park Raceway Pty Ltd and Bob Jane Corporation Pty Ltd, pursuant to which it is said Bob Jane Corporation Pty Ltd appointed itself controller of a property at 377 and 479 Calder Freeway, Calder Park, Victoria (Summons to Rodney Jane, Schedule, items 10 and 13).

67    These categories are about “act[s] or thing[s] done … in relation to [Last Lap] or its business or property, at a time when … [Last Lap] is being wound up … and … any conduct … of a liquidator … of [Last Lap]” or the transactions or dealings of Last Lap. They are within Last Lap’s examinable affairs. By way of example:

(1)    There is a document which at least indicates that Last Lap assigned a debt to Calder Park Raceway Pty Ltd. This appears to have occurred while Last Lap was in liquidation – it is an act or thing done in relation to Last Lap. It appears a trustee of a certain trust was indebted to Last Lap and there is an issue whether Last Lap agreed to assign this debt to Calder Park Raceway Pty Ltd. This also appears to be a “transaction or dealing” of Last Lap and would form part of Last Lap’s examinable affairs on that basis as well.

(2)    There is an issue concerning what the effect of that document was. There appears to be an issue concerning the basis for this transaction – there appears to be a question why the debt was assigned in circumstances where the trustee of the trust might have been able to repay this debt to Last Lap, but, by reason of other documents identified by the Liquidator, there is a question whether Calder Park Raceway Pty Ltd can repay that debt. This transaction was dated 30 June 2009 and appears to be signed by the relevant liquidator at the time. It is therefore relevant to the “conduct … of a liquidator … of” Last Lap.

(3)    In addition, there is a letter to the Deputy Commissioner of Taxation from Deloitte dated 8 December 2009 (the Deloitte Letter). The letter is signed by two proposed examinees, Mr Bradica and Mr Nanos. The letter sought an amended assessment which was said to be required “to correctly reflect the agreement in relation to a loan from Bob Jane Corporation Pty Ltd … to Calder Park Raceway Pty Ltd …, a member of the Last Lap Pty Ltd (in liquidation) tax consolidated group (Last Lap Group)”. This “tax consolidated group” appears to be a transaction or dealing of Last Lap. There is also an Australian Taxation Office position paper which identifies as an issue whether income generated by certain activities carried out at, it appears, a property at Calder Park “is assessable to Last Lap” for certain income years. These matters appear to fall within the “business” of Last Lap, or its “transactions and dealings” or perhaps its “liabilities” or “other income”.

(4)    Mr Jane also took issue with the Liquidator seeking categories of documents concerning the equity in any property held by Calder Park Raceway Pty Ltd. Mr Jane submitted this was outside the examinable affairs of Last Lap. However, “examinable affairs” includes “the business affairs of a connected entity of the corporation, in so far as they are, or appear to be, relevant to the corporation” (Corporations Act, s 9 (definition of “examinable affairs”)). A “connected entity” includes “a body corporate that is, or has been, related to the corporation” (Corporations Act, s 9 (definition of “connected entity”). Where corporation “A” is a “subsidiary of a holding company” of corporation “B”, corporation “A” and corporation “B” “are related to each other” (see Corporations Act, s 50).

In this regard, Bob Jane Properties Pty Ltd (Bob Jane Properties) and Last Lap relevantly share a holding company. Bob Jane Properties is therefore a “subsidiary of a holding company” of Last Lap. Bob Jane Properties and Last Lap are, as a result, related bodies corporate and are therefore also “connected entities”. In these circumstances, to the extent the “business affairs” of Bob Jane Properties “appear to be” “relevant to” Last Lap, they are within Last Lap’s examinable affairs.

One of the business affairs of Bob Jane Properties is Bob Jane Properties’ ownership of all of the shares in Calder Park Raceway Pty Ltd. That appears to be relevant to Last Lap because, as stated above, there appears to be an issue as to whether Calder Park Raceway Pty Ltd owes a debt to Last Lap. To the extent the equity in any property held by Calder Park Raceway Pty Ltd is properly referable to Bob Jane Properties’ business, transactions or dealings, property, profits and other income, or internal management and proceedings, it is within the examinable affairs of Last Lap. That might be the type of issue which needs to be addressed by reference to a particular document or question at the examination. However, given the matters I have set out above, I am not presently satisfied that documents related to the equity in any property held by Calder Park Raceway Pty Ltd are beyond the examinable affairs of Last Lap.

68    I am satisfied that these matters prima facie fall within the examinable affairs of Last Lap and do not afford a basis to set aside the summonses.

Certain car parks

69    Mr Jane noted that the Liquidator had sought documents concerning the sale by Bob Jane Properties of one or more of its properties near Queen Street in or around June 2009 (Summons to Rodney Jane, Schedule, item 11). The Liquidator has also sought documents concerning the transfer of carparks and storage spaces in Elizabeth Street, Melbourne in June 2009 from Bob Jane Properties to another entity (Summons to Rodney Jane, Schedule, item 20). Mr Jane submitted that these were outside the examinable affairs of Last Lap.

70    These appear to relate to matters within the examinable affairs of Last Lap for the following reasons:

(1)    As I have stated, Bob Jane Properties is a “connected entity” of Last Lap (by reason of Bob Jane Properties sharing a holding company with, and therefore being a related body corporate of, Last Lap). To the extent the business affairs of Bob Jane Properties are relevant to Last Lap, they are therefore within Last Lap’s examinable affairs.

(2)    These properties are prima facie relevant to Last Lap because the Liquidator has identified a “Form 507” “Report as to affairs” provided to the corporate regulator, ASIC, in relation to Last Lap. That document listed that Last Lap had an “interest in land” described as the “Queen St Carparks”. There appears to be an issue whether these are the same or different car parks when compared to certain car parks which (the Liquidator has identified) appear to have been sold by Bob Jane Properties in or around June 2009. If they are, other issues may arise (for example, there might be a question as to how these properties were transferred to Bob Jane Properties from Last Lap whilst Last Lap was being wound up).

Tax advice

71    Mr Jane observed that the Liquidator has called for the production of documents concerning certain tax advice regarding the “Calder Park Raceway” property, and income derived from activities at the Calder Park Raceway Property (Summons to Rodney Jane, Schedule, items 3(a) and 3(b)). This request was related to the Deloitte Letter, being correspondence to the Australian Tax Office by Mr Anthony Bradica of Deloitte concerning certain amended assessments being issued for Bob Jane Corporation Pty Ltd and Last Lap (Summons to Rodney Jane, Schedule, item 5). (It should be noted that Mr Bradica is one of the proposed examinees.) Mr Jane said these matters cannot be within the examinable affairs of Last Lap.

72    However, these documents appear to be within the examinable affairs of Last Lap because, as stated above, the Liquidator has identified the Deloitte Letter. This matter and other matters described in that letter (for example, the concept of the “Last Lap Group” and Last Lap’s participation in it) appear to be dealings of Last Lap. They are also acts or things done in relation to Last Lap when Last Lap was being wound up. In addition, the letter purports to be signed by the “Public Officer” of Last Lap, namely one of the proposed examinees, Mr Jim Nanos. This appears to be an act or thing done on behalf of Last Lap at a time when Last Lap was being wound up. These matters are prima facie within Last Lap’s examinable affairs.

Certain dividends

73    The Liquidator has sought documents concerning certain dividends (Summons to Rodney Jane, Schedule, items 3(c) and 12). Mr Jane said these were not within Last Lap’s examinable affairs.

74    However, these matters are prima face within the examinable of Last Lap for the following reasons:

(1)    The Liquidator has identified a document dated 24 September 2009 that appears to be signed by Mr Jane, which purports to record Bob Jane Properties declaring a dividend to a “shareholder”, Last Lap. This appears to be a transaction or dealing of Last Lap. It was also an act or thing done in relation to Last Lap whilst Last Lap was being wound up.

(2)    The Liquidator has identified a separate document which indicates that on the same day, 24 September 2009, Mr Jane signed a document which recorded that Last Lap had paid a dividend to “Mimulus Trust”. That appears to be, for example, a dealing of Last Lap.

(3)    The Liquidator has then identified a third document that is signed by another of the examinees, Mr Jim Nanos, which also appears to be dated 24 September 2009. It indicates that the trustee of the Mimulus Trust paid a dividend in the same amount to Mainline Transport Pty Ltd as trustee for the “Troyes Trust”. The Liquidator has then identified that Mainline Transport Pty Ltd, on the same day, 24 September 2009, declared a dividend for the same amount to a third party.

75    In short, these appear to be part of the one transaction or dealing which Last Lap was a part of or participated in. They are also prima facie acts or things done in relation to Last Lap at a time when Last Lap was being wound up. They are about the examinable affairs of Last Lap.

Bob Jane Properties

76    Mr Jane took issue with the Liquidator seeking the production of all documents concerning the current financial position of Bob Jane Properties (Summons to Rodney Jane, Summons, item 16). Mr Jane submitted that Bob Jane Properties is merely a related entity of Last Lap and Bob Jane Properties’ financial position cannot be within the examinable affairs of Last Lap.

77    However, as stated above, Bob Jane Properties and Last Lap appear to be connected entities. Last Lap’s examinable affairs therefore include the business affairs of Bob Jane Properties “in so far as they are, or appear to be, relevant to [Last Lap]”. The current financial position of Bob Jane Properties appears to be relevant to Last Lap. By way of example:

(1)    The Liquidator has identified that, in 2005, while Last Lap was being wound up, there was a notification sent to the corporate regulator which, on its face (and without having regard to certain other documents), indicates Last Lap obtained certain shares in Bob Jane Properties. The effect of that document and its basis is evidently especially contested by Mr Jane.

(2)    However, that document was an “act or thing done” “in relation to” Last Lap at a time when Last Lap was being wound up. The value of that transaction and any shares purportedly obtained by Last Lap (if any were obtained) might well be relevant, for example, to the conduct of the liquidator of Last Lap at the time or to Last Lap’s business.

78    In these circumstances, before the examination has even occurred, I am not prepared to determine that matters related to Bob Jane Properties’ financial position are not “about” Last Lap’s examinable affairs or “do not genuinely relate to or arise from the examinable affairs of the company, or are otherwise speculative, far-fetched or misconceived” (Kimberley Diamonds at [104]). The Liquidator seeking this category of documents does not afford a basis to set aside the summonses. There might be a specific question or matter related to Bob Jane Properties that is raised at the examination and which might not be “about” the examinable affairs of Last Lap. But that is an issue which can and should be dealt with at the examination.

Summary on examinable affairs

79    It will be apparent to the parties that I have not dealt with every document listed in the summonses to Rodney Jane or the other examinees. It is unnecessary for me to do so. I have dealt with the primary documents which Mr Jane’s submissions cited as support for Mr Jane’s contention that the Liquidator is seeking to assess matters which lie outside Last Lap’s examinable affairs.

80    It should be readily apparent that I am not satisfied that the categories of documents sought by the Liquidator, and which Mr Jane complains about, are prima facie outside the examinable affairs of Last Lap. The material before the Court indicates those categories are prima facie about the examinable affairs of Last Lap and appear to relate to “legitimate issues” and “legitimate questions” that fall within the examinable affairs of Last Lap (Kimberley Diamonds at [103]).

81    If there is a particular objection to a document being produced at the examination, a particular objection to a question being asked at the examination, or an issue with the use of a particular document at the examination, such matters should be dealt with at the examination in the usual way (see Meteyard at [13] per Santow JA).

Consideration: the issue of a purported non-disclosure

82    Mr Jane also submitted that the Liquidator’s affidavit contained material non-disclosures and the summonses should be set aside on the basis. For the reasons set out below, I am not persuaded that there was a material non-disclosure in the Liquidator’s affidavit. The summonses should not be set aside on the bases contended by Mr Jane.

Relevant statutory provisions for setting aside a summons

83    A “person who applies under section 596B must file an affidavit that supports the application and complies with the rules” (Corporations Act, s 596D). An “application for the issue of an examination summons must be made by filing an interlocutory process or an originating process, as the case requires” (Corporations Rules, r 11.3(1)). The “application may be made without notice to any person” (Corporations Rules, r 11.3(2)). The “originating process, or interlocutory process, seeking the issue of the examination summons must be … supported by an affidavit stating the facts in support of the process … and … accompanied by a draft examination summons” (Corporations Rules, r 11.3(3)). An “examination summons must be in accordance with Form 17” (Corporations Rules, r 11.3(8)). “Form 17” appears in Schedule 1 of the Corporations Rules.

Relevant principles concerning a liquidator’s disclosure obligation

84    There is “a heavy obligation upon the person applying for the examination summons to make full and frank disclosure of all matters which may impact upon the decision to summon a person for examination about a corporation’s examinable affairs” (Re Southern Equities per Lander J (Cox and Bleby JJ agreeing) at 422-423).

85    A “person who makes an application of this kind is under an obligation to bring all facts and material to the court's attention which might bear upon the order to be made” (ibid). “The applicant has no lesser obligation than that imposed upon a party seeking an injunction ex parte” (ibid). The obligation of “frankness and candour is even greater in an application of this kind … because, unlike on the return of an interlocutory inunction obtained ex parte, on the return of an examination summons[,] the material supporting the application is not ordinarily made available to the proposed examinee” (ibid). “Because the proposed examinee, ordinarily, is not privy to the information or material which was used to support the application for the examination summons, the person applying for the examination summons has the very highest obligation relating to frankness and candour and any breach of that obligation … ought to be viewed very seriously by the court” (ibid).

86    The “obligation is to provide to the court all material which might impact upon the order sought, including all material which might lead the court to refuse the application” (ibid). The “applicant must act in the place of the proposed examinee and therefore draw to the attention of the court anything which might lead the court to refuse the application” (ibid).

87    If “an applicant fails to provide all of the information bearing upon the order sought … that might be sufficient ground to set aside the order” (ibid). That is because “the order will have been obtained in circumstances where the court has not been apprised of a reason or reasons for the refusal of the order” (ibid).

88    However, Lander J in Re Southern Equities did “not agree with the submission that the order must necessarily be set aside when a material non-disclosure has been established” (ibid). Whether or not “the order ought to be set aside for failing to disclose material facts will depend upon the facts not disclosed and the circumstances in which the non-disclosure came about” (ibid at 424). “On every occasion where there has been a non-disclosure and an order obtained it will be a matter of inquiry as to whether or not that non-disclosure should lead to the setting aside of the order” (ibid).

89    In Re Southern Equities, Lander J stated that, in order for the relevant summonses to be set aside, the applicants in that case were required to establish that, “at the time of the application” there was a failure “to disclose facts material to the orders made” (ibid). If it can be established “that there has been such a failure to disclose material facts then it would be necessary to consider whether the particular failure made a case for the setting aside of the [relevant] orders” obtained (ibid).

90    These principles have been applied in a number of cases. In Linker v Nilant [2003] FCA 1576; 48 ACSR 178 (Linker), Gyles J stated that the relevant affidavit, which supported the application to issue the relevant summonses, did not disclose certain matters. His Honour noted at [15] that the affidavit made “no mention … of the existence of [certain] Western Australian proceedings, of the interlocutory steps which had been taken in either of them, of the impending counterclaim to be filed in one of those proceedings …, of [certain] litigation funding arrangements or of the link between the administration and the litigation disclosed in the reports to creditors by the [relevant] [a]dministrators”. Gyles J then concluded that “the matters which were not disclosed were clearly material (and may have been critical) to the decision to be made as to whether the purpose in seeking the examinations was the obtaining of a forensic advantage not otherwise available in connection with [certain] Western Australian proceedings” (Linker at [19])). That “which was not disclosed made [a] paragraph … of the affidavit positively misleading” (ibid). “Even if strict compliance with s 596C [was] not a condition precedent to the exercise of the s 596B power[,] … the failure to adequately disclose the true situation [in Linker was] such as to require that each of the examination summonses be discharged …” (ibid; citations omitted).

91    In Sutherland v Pascoe; in the matter of Matrix Group Limited as Trustee for the Matrix Group Unit Trust (in liq) ACN 061 549 371 [2013] FCAFC 15; 297 ALR 44 (Sutherland), the liquidator filed an application for the issue of examination summonses against various people and orders for the production of documents, relying on ss 596B and 596D of the Corporations Act. The proposed examinees sought to have the examination summonses and notices for production of documents set aside. The proposed examinees argued that a related proceeding had not been properly disclosed in the affidavit which supported the issuance of the summonses (Sutherland at [47]).

92    The Full Federal Court (Jagot, Griffiths and Farrell JJ) noted that “… the applicants’ central complaint [was] that the primary judge erred in concluding that the overlap with [certain] Supreme Court proceedings had been “fully disclosed” in the [relevant liquidator’s] affidavit” (Sutherland at [47]-[48]). The Full Federal Court concluded that “the primary judge’s finding of fact was one which was plainly open to him to make”: “the fact that the Supreme Court proceedings included a claim of breach of directors’ duties under ss 181 and 182 of the [Corporations Act] was disclosed in the [liquidator’s] affidavit” (ibid). That was “because the liquidator attached to his affidavit a full copy of the [the second further amended statement of claim (SFASC) in the relevant Supreme Court proceedings] in which the claims were explicitly pleaded” (ibid; emphasis added).

93    The Full Court in Sutherland (at [50]-[51]) did “not doubt the correctness” of the following observations of Allsop J (as the Chief Justice then was) in Walter Rau Neusser Oel und Fett AG v Cross Pacific Trading Ltd [2005] FCA 955 (Walter Rau) at [38]:

In an ex parte hearing, it is the obligation of the party seeking orders, through its representatives, to take the place of the absent party to the extent of bringing forward all the material facts which that party would have brought forward in defence of the application: Thomas A Edison Ltd v Bullock (1912) 15 CLR 678 at 681–82 per Isaacs J. That does not mean stating matters obliquely, including documents in voluminous exhibits, and merely not mis-stating the position. It means squarely putting the other side’s case, if there is one, by coherently expressing the known facts in a way such that the court can understand, in the urgent context in which the application is brought forward, what might be said against the making of the orders. It is not for the court to search out, organise and bring together what can be said on the respondents’ behalf. That is the responsibility of the applicant, through its representatives.

94    The Full Court observed that, although the now Chief Justice’s “remarks were not directed to the position of a liquidator applying for an examination summons under s 596B of the Act”, the Full Court considered “that the standard of frankness and candour expected of a liquidator is at least as high as that of an applicant seeking an ex parte order in other contexts” (Sutherland (at [50]-[51]). The Full Court observed that “there is much to be said for the view expressed by Lander J in Southern Equities at 422–3” to the effect that “the obligation of frankness and candour may be even greater where a liquidator makes an application for an examination summons” (ibid).

95    The Full Court noted that the difficulty in these types of matters “relates not so much to the formulation of that very high standard, but rather to its application to particular facts” (ibid). The “standard cannot be applied in a vacuum and careful consideration has to be given to the relevant surrounding circumstances in which a non-disclosure has occurred” (ibid).

96    The Full Court stated (at [52]-[54]) that, “without diminishing the very high standard of frankness and candour required of a liquidator in making an application under s 596B”, “it was open to the primary judge to conclude” that a relevant overlap with certain Supreme Court “proceedings was fully disclosed by the liquidator by exhibiting the entire SFASC” to the liquidator’s relevant affidavit. That was so even though “no express reference was made in the body of the [liquidator’s] affidavit to the bringing of the ss 181 and 182 claims in [certain] Supreme Court proceedings” (ibid).

The applicable test

97    It was common ground between the parties that the applicable test was that which was stated (and set out above) in Re Southern Equities and Sutherland. The question becomes whether the Liquidator’s affidavit complied with the standard of disclosure required by those authorities. Mr Jane submitted that there were five purported non-disclosures in the Liquidator’s affidavit. Each of those purported non-disclosures is addressed below.

The first alleged non-disclosure

98    Mr Jane submitted that the Liquidator’s affidavit did not draw the attention of the Court to the existence of a “substantive dispute” concerning the ownership of certain shares in Bob Jane Properties. It was submitted that the Liquidator’s affidavit did not convey to the Court “the fact that Bob Jane Properties maintains that its shares are, and have always been, held by” the corporate trustee of the Mimulus Trust. Mr Jane’s submission was essentially that the Liquidator should have prominently conveyed to the Court the position that was set out in a letter to the Liquidator from Mr Jane’s solicitors, HWL Ebsworth Lawyers, dated 5 November 2015 (5 November 2015 Letter).

99    However, this should not be accepted as a material non-disclosure, for the following reasons:

(1)    As to the examinable affairs of Last Lap, the Liquidator’s affidavit stated that the matters set out in his affidavit were based on his review of Last Lap’s books and records and the Liquidator’s investigations of Last Lap’s affairs since his appointment (Liquidator’s Affidavit, [6]).

(2)    The Liquidator’s affidavit stated that the Liquidator was “informed by [the 5 November 2015 Letter], that Bob Jane Properties asserts that its shares were held beneficially by the Mimulus Trust” (Liquidator’s Affidavit, [7]; emphasis added). Mr Jane emphasised the use of the word “were” in this sentence. Mr Jane said this should have at least said “were and are” or perhaps “were, are and always have been” and then set out the other disclosures set out above which Mr Jane says were necessary for proper disclosure.

(3)    However, the sentence immediately succeeding the sentence Mr Jane seeks to impugn reads as follows: “[n]ow produced and shown to me and marked “BARS-5” is a true copy of [the 5 November 2015 Letter] containing inter alia a copy of a declaration of trust in respect of the shares in Bob Jane Properties dated 31 December 1989” (ibid). That is, the Liquidator’s affidavit immediately referred the reader of the affidavit to the 5 November 2015 Letter.

(4)    Mr Jane says that was too oblique a reference and the letter should not have been, it was submitted, buried in a voluminous affidavit. There is, in the abstract, some force to that submission. Liquidators and their advisors will need to exercise judgment to ensure matters are properly brought to the Court’s attention in these types of applications. However, in the context of this affidavit, the submission should not be accepted for the following reasons.

(5)    The first annexure to the affidavit are copies of the draft summonses. That is required by Corporations Rules, r 11.3(3). No criticism can be levelled at the Liquidator for annexing those documents first. The second annexure is the Liquidator’s curriculum vitae which is a reasonably formal matter. The third annexure is an ASIC search of Last Lap and it is necessary for it be established that the relevant company is properly registered. That document also provides the usual historical information concerning Last Lap. The fourth annexure is an ASIC search of Bob Jane Properties. This is again a document which should be included in the affidavit.

(6)    The fifth and first substantive annexure is the 5 November 2015 Letter, being the letter referred to at [7] of the Liquidator’s affidavit. The position put in the 5 November 2015 Letter is the position which Mr Jane says should have been given more prominence in the Liquidator’s affidavit.

(7)    However, given this letter appears as the fifth annexure after four annexures which essentially record formal matters, it should not be accepted that it was referred to merely obliquely or in a manner that was insufficiently direct or candid: it is the first substantive annexure annexed to the Liquidator’s affidavit and it was referred to expressly by the Liquidator’s affidavit.

(8)    Moreover, the position put by the 5 November 2015 Letter was clear from its terms. A reader of the 5 November 2015 would be in no doubt as to Mr Jane’s position concerning the ownership of the relevant shares in Bob Jane Properties.

(9)    In this respect, it should also be noted that a position contrary to the 5 November 2015 Letter is not “speculative, far-fetched or misconceived” (Kimberley Diamonds at [104] (per Foster, Wigney and Markovic JJ)). Indeed, on closer inspection, the 5 November 2015 Letter appears to contain a potential internal inconsistency. The letter first sets out a document which purports to be a basis for a purported transfer of shares and then states that there is “no evidence” for that purported transfer. However, either there is a document which supports the purported transfer or there is “no evidence” to support that transfer – prima facie, both of those positions cannot be true. Evidently, what might have been intended by the 5 November 2015 Letter was that, in Mr Jane’s view, the evidence which exists for the purported transfer should not be accepted or it should be accepted that evidence contrary to that purported transfer outweighs, or should be accepted in priority to, the evidence for the purported transfer.

(10)    In any event, the alternative course the Liquidator might have taken was to summarise or extract part of the 5 November 2015 Letter into the body of the Liquidator’s affidavit (as opposed to annexing that letter to the Liquidator’s affidavit). However, if the Liquidator had taken that course, the Liquidator would have been open to the potential criticism that the Liquidator had selectively disclosed the position conveyed by the 5 November 2015 Letter or otherwise placed an unwarranted gloss on it. In the circumstances, the 5 November 2015 Letter speaks for itself and it was appropriate that it was annexed in its entirety as the first substantial annexure.

100    In the circumstances of this case, that position discharged the Liquidator’s disclosure obligations in relation to the matter Mr Jane complains about. I am not persuaded that there was a material non-disclosure. Like the liquidator’s affidavit in Sutherland, the position in the 5 November 2015 Letter was “fully disclosed” by the Liquidator annexing it to the Liquidator’s affidavit as the first substantive annexure (see Sutherland at [47]-[48]; [52]-[54]).

101    Mr Jane also says that the Liquidator’s affidavit should have conveyed to the Court that, if the position in the 5 November 2015 Letter is accepted, there would be an effect on the scope of the “examinable affairs” of Last Lap. However, even if that contention can be accepted, two matters should be noted.

102    First, for the reasons set out earlier in this judgment, the concept of “examinable affairs” is broad and, even if the position in the 5 November 2015 Letter is accepted, it is not sufficiently clear that there would be a material effect on the “examinable affairs” of Last Lap. By way of example, the purported transfer which is referred to in the 5 November 2015 Letter would still be an “act or thing done … in relation to” Last Lap “at a time when” Last Lap is being wound up.

103    Second, even if the Liquidator had conveyed to the Court that there is a dispute as to the ownership of the shares in Bob Jane Properties and that might impact the scope of Last Lap’s “examinable affairs”, the proper course is to do precisely what the Registrar did, namely issue the summonses in order to investigate the dispute. The Court has powers to conduct the examination (see Corporations Act, s 597) and there are cost consequences if a summons is “obtained without reasonable cause” (Corporations Act, s 597B). But those are matters for the conduct of the examination – in this case, they were not material to whether the summonses should have been issued.

The second alleged non-disclosure

104    Mr Jane also claimed that the substance of a separate letter to the Liquidator from Mr Jane’s solicitors dated 3 November 2016 (3 November 2016 Letter) was not disclosed in the Liquidator’s affidavit. However, like the 5 November 2015 Letter, the 3 November 2016 Letter was annexed to the Liquidator’s affidavit and, in any event, its substance was also recorded in the 5 November 2015 Letter. In these circumstances, any failure to refer expressly to the 3 November 2016 Letter in the body of the Liquidator’s affidavit was not a material non-disclosure.

The third alleged non-disclosure

105    Mr Jane also referred to paragraph [45] of the Liquidator’s affidavit. That paragraph stated (among other things) that, “[o]n or about 28 October 2016, … a Form 484 change of company details” was executed and “sought to record a [certain] change in the legal ownership of 4,000,000 shares held by” Last Lap. The Liquidator’s affidavit stated: “I do not know the basis upon which” this change was sought. Mr Jane submitted this was a non-disclosure because the Liquidator was informed of such a basis (at least as asserted by Mr Jane’s solicitors) in the 3 November 2016 Letter. The 3 November 2016 Letter conveyed the position that this Form 484 “notifie[d] ASIC of a change to the register of members” and “was necessary to reflect the” matters set out in the 5 November 2015 Letter.

106    A number of matters are apparent from this documentation. The Liquidator has referred to the matter as a change to an existing state of affairs. The 3 November 2016 Letter refers to it as a notification to regularise what is said to be an uncontroversial continuing position, not a change. These respective positions seemingly reflect the substantive dispute which appears to exist concerning the shares in issue. As I have stated above, that dispute was adequately disclosed to the Court by the Liquidator’s affidavit annexing, and referring to, the 5 November 2015 Letter. In addition, as stated above, the 5 November 2015 Letter, on the one hand, accepts the existence of evidence for the purported transfer of shares but, on the other hand, asserts that there is “no evidence” for that transfer.

107    In these circumstances, it might well be the case that the Liquidator does not know precisely how or why the 5 November 2015 Letter asserts that the relevant matters were a mere notification of an uncontroversial position (and not a change).

108    At most, and as a counsel of perfection, it might have been more appropriate with the benefit of hindsight if the Liquidator had deposed that he did not fully understand, fully appreciate or perhaps was not persuaded by the matters asserted in the 5 November 2015 Letter and the 3 November 2016 Letter. (However, that is already descending into potential arguments about degrees of knowledge, which tends to indicate the immateriality of the words used in the Liquidator’s affidavit.) Presuming that to be correct (and, in fairness, only the Liquidator can say precisely what was in his mind when he swore the affidavit), the impugned words in the Liquidator’s affidavit should be categorised as a minor non-disclosure. In short, whether the Liquidator used the words “I do not fully understand or accept” (or some other qualified formulation), instead of the words “I do not know”, is immaterial. It could not have caused the Court to refuse to issue the summonses.

The fourth alleged non-disclosure

109    Mr Jane also complained that the Liquidator’s affidavit did not draw the Court’s attention to the fact that Bob Jane Corporation Pty Ltd is not related to Last Lap and is not an entity that is, or has been, connected with Last Lap. However, relatedness and connectedness is not the beginning and end of the considerably broad concept of a corporation’s examinable affairs. If Last Lap had a “transaction or dealing” with Bob Jane Corporation Pty Ltd, that “transaction or dealing” may well fall within the “examinable affairs” of Last Lap. In addition, as stated earlier in this judgment, if particular issues related to Bob Jane Corporation Pty Ltd are not properly within the examinable affairs of Last Lap, that should be addressed at the examination. It is at the examination that any objections to concrete issues about any relations between Last Lap and Bob Jane Corporation Pty Ltd can have the benefit of proper enquiry. It is not a matter which materially affects the initial issuance of the summons.

The fifth alleged non-disclosure

110    Mr Jane further argued that many of the matters referred to in the categories of documents sought by way of the summonses related to transactions which occurred some time ago. It was submitted that, as a result, any claims arising from those transactions are “likely” statute-barred. However, the parties’ submissions were not addressed to the factually intense enquiry typically required to properly assess whether any particular claim (which may or may not arise from the examination) is time-barred. (Indeed, that could hardly be done at this stage given the precise nature of any such claim has not been identified and formulated and therefore is not in a position to be assessed.) An application for a summons for examination is not a proper occasion to conduct that type of detailed enquiry.

111    This is particularly so given, for example, it is not necessarily the case that an “examination summons issued under s 596A can be discharged or stayed as an abuse of process simply because the Court cannot be satisfied, on the evidence then available, that there is a reasonable or realistic prospect that the end result of the process will be the disclosure of a viable claim against the examinee or another person” (Kimberley Diamonds at [100]). A summons should not be set aside “simply because the Court is not satisfied, on the evidence available at that stage, that there are reasonable prospects that the examination will … disclose a viable cause of action which may benefit the company” (ibid at [102]). That “would ignore the fact that an examination summons under s 596A is essentially an information gathering process” (ibid). It would be “entirely proper for an eligible applicant to apply for and obtain an examination summons under s 596A for the purpose of obtaining information concerning legitimate issues, or to obtain answers to legitimate questions, which relate to the management of the company …” (ibid at [103]). That would be “the case even if, at that stage, the information that was available to the eligible applicant was not such that it could be said that the applicant had an arguable case, or that the examination was likely to reveal conduct capable of supporting a claim” (ibid). While these statements were made in relation to s 596A, there is little reason to doubt that they do not have applicability in relation to s 596B as well. They also have application to whether the asserted possibility of a time-bar should ensure that an examination cannot proceed.

112    In these circumstances, Mr Jane’s contention that the matters the Liquidator might examine are, in Mr Jane’s view, “likely … statute barred” is an inadequate basis to set aside the summonses. Even if such a position was an adequate basis, the matters set out in the Liquidator’s affidavit, and the documents annexed to it, adequately disclosed that some of the issues the Liquidator intends to enquire about are comparatively aged. As a result, to the extent any issue concerning the age of those matters should have been disclosed, it was readily ascertainable from the Liquidator’s affidavit and, in any event, does not constitute a material non-disclosure.

No material non-disclosure which affords a basis to set aside relevant summonses

113    For the reasons set out above, none of the alleged non-disclosures asserted by Mr Jane provide a basis to set aside the relevant summonses.

disposition

114    It follows from the reasons set out in this judgment and the material provided to the Court that Mr Jane’s application to discharge the summonses must be dismissed with costs.

Associate:

Dated:    15 September 2020