Federal Court of Australia

Violi v Livingstone (Liquidator), in the matter of Suria Global (L) Pty Ltd (Receivers and Managers appointed) (in liq) [2023] FCA 1363

ORDERS

THE COURT ORDERS THAT:

1.    The interlocutory application filed on 17 October 2023 be dismissed.

2.    The parties provide mutually available dates for a hearing on costs to the Associate to Perram J by 4.00 pm on 10 November 2023.

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

REASONS FOR JUDGMENT

PERRAM J:

1    This is an application by Mr Violi to extend the time in which to bring an application to set aside a summons requiring Mr Violi to attend and be publicly examined in this Court about the affairs of a company in liquidation, Suria Global (L) Pty Ltd (Receivers and Managers Appointed) (In Liquidation) (‘Suria’). Rule 11.5(2) of the Federal Court (Corporations) Rules 2000 (Cth) (‘Corporations Rules’) permits a person served with an examination summons to apply for an order discharging it within 3 days after the person is served with the summons. Mr Violi was served with the summons on 5 September 2023 which required him to appear before this Court on 14 September 2023. Accordingly, r 11.5(2) required Mr Violi to bring his application by 8 September 2023. However, he did not formally apply to set it aside until 17 October 2023 when an interlocutory application to that effect was filed. The Court has the power to extend this time limit through the combined operation of r 1.3 of the Corporations Rules and r 1.39 of the Federal Court Rules 2011 (Cth).

2    I do not think that Mr Violi’s application for an extension of time should be granted. He has not adequately explained why the application was brought late and it is not therefore possible to assess whether the discretion should be exercised in his favour: Tamaya Resources Limited (in liq) v Deloitte Touche Tohmatsu (A Firm) [2016] FCAFC 2; 332 ALR 199 at [154]-[156]. The exercise of that discretion requires one to balance the merits or utility of the proposed application to set the summons aside against the delay and the reasons attending that delay. As I will explain, Mr Violi’s evidence does not in fact disclose the reasons why the application was brought late. Even if there had been evidence satisfactorily explaining the delay, I am not persuaded that if time was extended the proposed application to set aside the summons would succeed. On 3 November 2023 I heard Mr Violi’s application and dismissed it. These are my reasons for taking that course.

Delay

3    The interlocutory application was filed on 17 October 2023.

4    The evidence establishes the following matters:

(a)    Mr Violi and a company controlled by him are involved in litigation before the Supreme Court of New South Wales which relates to the affairs of Suria.

(b)    Between 22 June 2023, when the Supreme Court proceeding was commenced, and 3 September 2023 Mr Violi and his company were represented by Polczynski Robinson Lawyers.

(c)    On 4 September 2023 Mr Violi’s present solicitors, Mayweathers, went on the record in the Supreme Court. The former firm has been exercising a solicitors’ lien over the file and Mayweathers have been obliged to reconstruct the file as best they can from the Supreme Court’s file and with the assistance of the other parties. These efforts are continuing.

5    The day after Mayweathers went on the record in the Supreme Court, that is to say 5 September 2023, Mr Violi was served with the examination summons. Mayweathers were not retained by Mr Violi in relation to the examination summons until 12 September 2023. There is no evidence establishing what Mr Violi did with the examination summons between the time he was served with it and 12 September 2023 when he retained Mr Adams of Mayweathers to act on his behalf in relation to it. There is no evidence as to whether the former solicitors were previously retained by Mr Violi in that regard or not.

6    There is evidence from which it may be inferred that Mr Violi instructed Mr Adams to seek an adjournment of the examination summons. The day after Mayweathers were retained in relation to the examination summons they wrote to the liquidators’ solicitors, William James, confirming that certain matters had been agreed between the parties in relation to the production of documents and the adjournment of Mr Violi’s examination then listed on 14 September 2023. Mayweathers proffered that Mr Violi was available to be examined on 3, 4 and 9 to 19 October 2023 and between 11 and 15 December 2023. I draw the inference that Mr Violi instructed Mr Adams to seek to adjourn the summons to a date which was convenient to him. As a result of this correspondence the examination summons was adjourned to 19 October 2023. There is no evidence that Mr Violi was, or was not, aware of the possibility of setting the summons aside at this time. There is no evidence that the adjournment to a date suitable to him was, or was not, proposed by him on a misapprehension that he did not understand that he could apply to set the summons aside.

7    In the written submissions prepared on Mr Violi’s behalf it is submitted at [17] that the adjournment of the examination summons was sought to ‘enable the solicitors to properly prepare for and take instructions in relation to the Examination Summons, and find a date suitable to themselves and Mr Violi’s counsel’.

8    The present basis upon which Mr Violi wishes to set the summons aside relates to the fact that he is concerned that the examination will be used to his prejudice in the Supreme Court proceedings. The evidence shows that this concern had crystallized in Mr Adams’s mind no later than 28 September 2023. On that day Mr Adams wrote to the liquidators’ solicitors outlining his concern that Mr Violi’s examination might give rise to procedural unfairness relating to the conduct of the Supreme Court proceedings. He sought a deferment of the summons until after the Supreme Court proceedings were determined. On 9 October 2023 the solicitors for the liquidators wrote back and indicated that they would consider the request only when Mr Violi had produced certain documents. On 11 October 2023 Mr Violi’s solicitors asked the liquidators’ solicitors to clarify why their consideration of the deferral of the examination summons should be linked to the productions of those documents. On 17 October 2023 the liquidators’ solicitors responded saying that Mr Violi was outside the 3-day time limit to set aside the examination summons. It was following the receipt of that letter that Mr Adams took steps to make an application seeking an extension of time.

9    I am satisfied therefore that the delay between 28 September 2023 and 17 October 2023 is adequately explained. That brings into focus the delay between 8 September 2023 and 28 September 2023.

10    There are a number of things Mr Adams could have said about this period. He could have said that between 12 September 2023 and until 28 September 2023 it did not occur to him that the examination summons should be set aside. For example, he could have said that it was only as he began to assemble the Supreme Court file that the nature of the problem became apparent to him. But Mr Adams does not say this. Mr Adams could have said that he was unaware that a summons could be set aside until 28 September 2023 but he does not say that either. Pointedly, Mr Adams does not say when he became aware of the need to set aside the summons or even the possibility of it being set aside. More importantly, there is no evidence from Mr Violi on this topic at all. For example, Mr Violi does not explain: (a) when he first became aware that he could set the summons aside; (b) when he became aware of the 3-day time limit; (c) why he did not instruct Mr Adams until 12 September 2023; or (d) what role, if any, the former solicitors had in this affair.

11    I do not overlook Mr Adams’s evidence about the difficulties in reassembling the Supreme Court file. The problem is that Mr Adams does not give evidence that those difficulties in any way retarded the bringing of the application to set the summons aside. I could well understand that Mr Adams might have had difficulty in discerning the risk that the summons posed to the conduct of the Supreme Court litigation. But Mr Adams does not actually say that he had that difficulty. Even if Mr Adams had said that, I know nothing about what Mr Violi knew about the Supreme Court proceedings. As I will explain shortly, Mr Violi’s defence in the Supreme Court is that certain documents bearing his signature are forgeries. Presumably Mr Violi knew that was his defence. Mr Violi has not told me that it did, or it did not, cross his mind when he received the summons that this might bear on the Supreme Court proceedings. This is because Mr Violi has not told me anything.

12    On the state of the evidence, it is therefore not possible to make any finding about why Mr Violi did nothing about the summons between 5 September 2023, when he was served with it, and 28 September 2023, when Mr Adams wrote to the liquidators’ solicitors in relation to the procedural fairness risk it might pose. In that circumstance, it is impossible to assess whether the justice of the situation requires the time to be extended. Mr Violi has not shown his hand for the period between 8 September 2023 and 28 September 2023. Even if the application to set aside the summons were sufficiently meritorious it would not be possible to weigh those merits against the explanation for the delay. Thus even in that situation I would dismiss the application for an extension.

13    However, as I will now explain, I do not think that the proposed application has sufficient merit to warrant an extension of time.

Merits

14    The basic idea underpinning the application is that the pendency of a proceeding in the Supreme Court in which Mr Violi may give evidence and be cross-examined means that there is a difficulty in permitting him to be publicly examined in this Court before that case is determined or at least until he has been cross-examined in that proceeding.

15    The Supreme Court proceeding is entitled GEMI 169 Pty Ltd v Suria Global (L) Pty Ltd being proceeding number 2022/00181916. Mr Violi is the fourth defendant in that proceeding. A company owned by him, F & L Violi Pty Ltd, is the third defendant. This proceeding was commenced on 22 June 2022.

16    In the Supreme Court the plaintiffs seek to recover loans of around $24 million which they say were advanced to Suria. Suria is the first defendant and its sole director and shareholder, Mr Lutui, is the second defendant. Mr Lutui was also served with an examination summons but did not obey it shortly after which a warrant for his arrest was issued by Goodman J: Livingstone (Liquidator) v Lutui, in the matter of Suria Global (L) Pty Ltd (Receivers and Managers appointed) (in liq) [2023] FCA 609. Before the warrant could be executed Mr Lutui left for the United States.

17    The plaintiffs also sue Mr Violi and his company on a deed of guarantee and indemnity under which Mr Violi’s company appears to have secured the plaintiffs’ loans to Suria. The guarantee and indemnity are secured by mortgages over a high rise building at Redmyre Road in Strathfield (in Sydney) and over a shopping centre at Yambil Street in Griffith which is in the Riverina region of New South Wales. Both of these are owned by Mr Violi’s company. There is also a joint venture deed between Suria and Mr Violi’s company.

18    Mr Violi says that what appear to be his signatures on these two deeds are in fact forgeries and that he has no knowledge of the loans which the plaintiffs now seek to recover. Mr Violi’s signature appears to have been witnessed by a solicitor, Mr David. Mr David is a defendant in the Supreme Court proceedings and the liquidators have also issued an examination summons to him. Mr Violi has cross-claimed against Mr David. The nub of the allegation is that Mr Violi has been the victim of an elaborate fraudulent scheme in which Mr David is involved and that this scheme included forging his signature on documents of which he had no knowledge.

19    Mr Livingstone, one of the liquidators of Suria, has given evidence that none of the funds advanced by the plaintiffs were directly received by Suria. He also says that certain settlement records demonstrate that $2.5 million of the funds advanced by the plaintiffs were in fact received by an account entitled ‘FP & LW Violi’. A bank statement for that account affirms the correctness of that record.

20    The liquidators’ position is that they do not understand the affairs of Suria but they believe Mr Violi may be able to help them to do so. Where Mr Violi’s version of events is that he has been the victim of an elaborate fraud but where the evidence also shows he received $2.5 million of the plaintiffs’ loan funds, I accept Mr Livingstone’s evidence to the extent that it suggests that one of the reasons the liquidators wish to examine Mr Violi is to gather information to assist in their inquiries into the examinable affairs of Suria.

21    The basis of Mr Violi’s application is that it would be an abuse of process for the liquidators to proceed with the examination. Why? Here Mr Violi’s answer is that it is because the liquidators’ purpose in examining him is to assist the plaintiffs in the Supreme Court proceedings. There is of course no direct evidence of this. Mr Violi invites me to draw that inference because the plaintiffs in the Supreme Court proceedings have been funding the liquidation of Suria and because the plaintiffs’ counsel in the Supreme Court proceeding are also the counsel who will be conducting the examination.

22    There are competing views of the present factual circumstances. From Mr Violi’s perspective, which is understandable, he sees a piece of litigation in which there will be a substantial contest between the plaintiffs and him as to whether the signature on the two deeds are forgeries and whether, as he suggests, he has been the victim of an elaborate fraud. On this view, the plaintiffs were fraudulently induced into extending monies to Suria; the loan funds were drained away without reaching it; the fraud included putting up Mr Violi’s company’s properties without his knowledge or consent; and Mr Violi is now left holding a baby which is not his. This view accords with the fact that the sole director of Suria appears to have decamped from the jurisdiction in the face of an arrest warrant and with the fact, not disputed on the present application, that Suria appears to have no books and records of any kind. If this view is correct, the two victims of the fraud are the plaintiffs and Mr Violi.

23    What matters for present purposes is that the evidence of Mr Violi that the signature on the two deeds is not his is going to be crucial to the outcome of the Supreme Court litigation. The evidence of Mr David concerning the circumstances in which he appears to have witnessed Mr Violi’s signature will also be critical. It is not clear to me on the present application whether Mr David admits that he witnessed the signatures (so that the signatures are indeed Mr Violi’s) or whether he now denies witnessing the signatures at all. In any event, what is clear is that the Supreme Court proceeding is going to involve a close of examination of all of these matters and that it is quite likely that Mr Violi’s testimony about them is going to be central.

24    Another view of the factual circumstances is this: Suria appears to have been lent $24 million almost none of which appears to have found its way into Suria’s hands. The company has no books and records. Its sole director has fled the jurisdiction. Mr Violi’s signature appears to be on two deeds one of which suggests that his company guaranteed the debts of Suria and the other of which suggests that his company was in a joint venture with Suria. Further, out of the loan funds advanced to (or at the direction of) Suria, the sum of $2.5 million appears to have found its way into a bank account with Mr Violi’s name on it. Viewed from this perspective (which is the perspective of the liquidators) there are many unanswered questions. What was the joint venture between Suria and Mr Violi’s company? What was the business in which Suria was engaged? Where did the money it borrowed from the plaintiffs go? Why did $2.5 million of that money makes its way into a bank account with Mr Violi’s name on it?

25    It is an important fact that the plaintiffs in the Supreme Court proceeding have provided some limited funding to the liquidators. It is also important I think that at this stage there appear to be no other creditors of Suria apart from the plaintiffs. In my view, an inference is available that the plaintiffs would like to have the benefit of Mr Violi’s version of events prior to the conduct of the Supreme Court litigation. Why would they not? In the examination, Mr Violi will no doubt be asked about the two deeds and the nature of the transactions they disclose and it may be assumed, I think, that he will be questioned about why $2.5 million of the loan proceeds appeared in a bank account with his name on it. If Mr Violi is examined then he will have to give his version of these matters before he gives his evidence in the Supreme Court. If and when he comes to be cross-examined in the Supreme Court the plaintiffs will, I accept, have had the advantage of already knowing what Mr Violi has said about this topic. They will be able to explore in advance difficulties in any account he gives. Concomitantly Mr Violi is going to be locked into the version of events he gives at the examination and his forensic flexibility is thereafter going to be impaired. I would draw the inference that the plaintiffs would like to see Mr Violi examined before he gives his evidence in the Supreme Court proceedings. It is only natural that they would.

26    However, the question of whether the examination summons should be discharged does not turn on whether the plaintiffs will have these advantages arising from Mr Violi’s examination prior to the conduct of the Supreme Court litigation. Nor does it turn on whether they would wish the liquidators to proceed with the examination in order to confer upon them those advantages. It instead requires consideration of whether the liquidators are pursuing the examination of Mr Violi for the purpose of giving the plaintiffs that advantage.

27    One matter which is capable of supporting the drawing of the inference that this is indeed their purpose is that the liquidators are being funded by the plaintiffs. It is not I think surprising that the liquidators have accepted this funding. Suria has no assets and is entirely insolvent. The only prospects of a return to the creditors (who are the plaintiffs) is if the liquidators are successful in clawing back funds from third parties either by way of an insolvency remedy or by a suit enforcing some right that Suria has arising from the events surrounding the loan advances to it. At the moment, the third parties appear to be Mr Violi and Mr David but it is perhaps early days. Nevertheless, the liquidators’ best hope of recovering funds in this fashion is by means of funding from the plaintiffs. Another matter which is also capable of supporting the same inference is that the counsel who are acting for the plaintiffs are the same counsel that are acting for the liquidator in this Court.

28    I would accept that these matters could sustain an inference that the liquidators have the improper purpose Mr Violi alleges. However, there are matters tending in the opposite direction. They are the matters I have outlined above which underscore how little is actually known about the affairs of Suria and the more than tenuous evidence that Mr Violi is a person who is likely to be able to assist in throwing light on that question. That evidence therefore is capable of supporting an inference that the purpose the liquidators have in conducting the examination is no more than the due discharge of their statutory obligation to investigate the affairs of Suria.

29    Thus the objective evidence before the Court is capable of sustaining an inference in either direction. The conclusion that the liquidators are acting for an improper purpose is of course a serious one. Section 140(2) of the Evidence Act 1995 (Cth) requires me to take that matter into account in assessing whether the fact alleged has been proven. The evidence that the liquidators have the proper purposes I am satisfied they do have does not logically exclude the possibility that they also have the improper purpose Mr Violi alleges. A person may after all have multiple motivations for a particular course of action. However, the inference which Mr Violi now seeks to draw from the fact that the plaintiffs are funding the liquidators and are represented by the same counsel seems to me to be a bridge too far. Whilst I accept that it is possibly open it strikes me nevertheless as to some extent ambitious. Whilst I do not use the circumstances which suggest that the liquidators have proper purposes directly to negate Mr Violi’s suggestion that they have the improper purpose he alleges, I do think that those circumstances may be legitimately consulted to gauge the likelihood of that suggestion.

30    I am not persuaded on the balance of probabilities that Mr Violi has established that the purpose the liquidators have in pursing his examination is to assist the plaintiffs in the Supreme Court proceedings.

31    Also relevant is Mr Livingstone’s evidence at [39] of his affidavit:

To be clear, I am seeking to examine Mr Violi in order to gather information to assist me in the administration of the Company, and to enable evidence and information to be obtained to support the bringing of proceedings in connection with the examinable affairs of the Company. I am not seeking to obtain or confer any forensic advantage on the GEMI Creditors in their proceedings in the Supreme Court. The existence of those proceedings played no part in my decision to seek the Mr Violi’s Summons for Examination.

32    Mr Livingstone was not cross-examined to suggest [39] was false. Assuming in Mr Violi’s favour that it is open to me to reject this evidence on the basis that Mr Livingstone was mistaken about his own motivations, I would not reject it on this basis because, as I have explained, I am not satisfied that it has been shown at the civil standard that the liquidators’ motivations are as Mr Violi suggests.

33    In that circumstance, I am not persuaded that it has been shown that the pursuit by the liquidators of the examination of Mr Violi is for an improper purpose.

Result

34    The application for an extension of time should be refused. The delay was not adequately explained and the proposed application to discharge the summons would be refused even if leave to bring it out of time was granted. I will hear the parties on costs.

Associate:

Dated:    7 November 2023