Federal Court of Australia

Shute (Liquidator), in the matter of Modliv Pty Ltd (in liq) [2025] FCA 224

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to r 11.10(2) of the Federal Court (Corporations) Rules 2000 (Cth), the issue of a warrant substantially in the form of Form 17A be authorised for the arrest of John Damir Tkalec to bring that person before the Federal Court of Australia, Law Courts Building, 184 Phillip Street, Queens Square in the State of New South Wales to be examined under s 596A of the Corporations Act 2001 (Cth) on oath or affirmation about the examinable affairs of Modliv Pty Ltd (in liq), detaining Mr Tkalec in custody in the meantime.

2.    Notice of the issue of the warrant be communicated to the Commissioner of the Australian Federal Police for the purposes of the warrant’s enforcement.

3.    The plaintiff send to Mr Tkalec by email at johntkalec6@gmail.com forthwith:

(a)    a sealed copy of this order; and

(b)    a copy of the reasons for making this order.

4.    The question of the costs of the plaintiff’s interlocutory process and the costs thrown away by the failure of Mr Tkalec to attend examination be reserved for determination by a Registrar of the Court.

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

REASONS FOR JUDGMENT

STEWART J:

1    The plaintiff is the liquidator of Modliv Pty Ltd who seeks the issue of an arrest warrant against John Damir Tkalec, a director of Modliv, pursuant to r 11.10 of the Federal Court (Corporations) Rules 2000 (Cth) for failure to attend court in accordance with a summons for examination.

2    The application has been heard ex parte, with Mr Tkalec not having been given notice of the application. That is a justifiable course of action in such circumstances: Struthers (in his capacity as liquidator) of PACI Pty Ltd [2005] NSWSC 864 at [47]. Although Brereton J referred there to s 97(2) of the Civil Procedure Act 2005 (NSW) which provides that an arrest warrant may be issued without notice, and there is no equivalent provision in the legislation governing the civil procedure of this Court, I consider that it is appropriate and justified to apply for a warrant without notice. That is not only apparently the usual, or at least frequent, practice of the Court (see, for example, Goyal, in the matter of Biotech Energy Pty Ltd (Receivers and Managers appointed) [2023] FCA 653 at [33] per Halley J and Nipps (Liquidator), in the matter of Ochre Group Holdings Ltd (in liq) (No 3) [2023] FCA 1404; 169 ACSR 524 at [16] per Jackson J), but it is the obvious course where the warrant is sought precisely because the proposed subject of the warrant has not previously responded to notice that was given. Moreover, as I will get to, in this case Mr Tkalec was advised that if he failed to appear as required by the examination summons an arrest warrant would be sought.

3    For the reasons that follow, I will make orders for the issue of a warrant for the arrest of Mr Tkalec.

Factual background

4    On 15 November 2024, Registrar Segal made orders in the proceeding for the issue of a summons pursuant to s 596A of the Corporations Act 2001 (Cth) and orders for production pursuant to r 30.34 of the Federal Court Rules 2011 (Cth) to Mr Tkalec. The orders for production and the examination summons, when issued, were dated 26 November 2024.

5    The initial return date specified on the orders for production was 9.30am on 18 December 2024. That was also the return date and time specified on the face of the summons. However, the “Notice of Filing and Hearing” affixed by the Court to the summons following sealing indicated that the “Time and date for hearing” for the summons was at 10.15am on 18 March 2025.

6    On 16 December 2024, Registrar Segal adjourned the return of the orders for production to 11.00am on 5 February 2025 because service had not been effected.

7    On 4 February 2025, Registrar O’Connor further adjourned the return of the orders for production to 11.00am on 5 March 2025 because service had still not been effected.

8    Following this, the summons, orders for production and the above-mentioned orders of Registrar O’Connor, as well as a covering letter from the plaintiff’s solicitors, were provided to a process server, Gavin Bellamy, with instruction to effect personal service on Mr Tkalec. The covering letter to Mr Tkalec made clear that the examination summons required attendance 18 March 2025 at 10.15am.

9    Mr Bellamy attended a property in Belmont North, New South Wales, at 8.50am on 22 February 2025. Mr Tkalec and his wife were the registered proprietors of the property and there was information that they lived there. Mr Bellamy encountered two male persons on the premises. He approached one of them, identified as “Male 1” in his affidavit, whom he believed to be Mr Tkalec from a photograph of Mr Tkalec that he had been given – Mr Tkalec’s sister had confirmed that the photograph was of Mr Tkalec. Following a short conversation in which Male 1 denied that he was Mr Tkalec, and both denied knowing Mr Tkalec and said that he did know Mr Tkalec, Mr Bellamy placed the documents including the summons at the feet of Male 1. Mr Bellamy has stated on affidavit that Male 1 is the person depicted on the photograph and identified as Mr Tkalec.

10    In the circumstances of Male 1’s denial that he was Mr Tkalec, the plaintiff applied to the Court for orders pursuant to r 10.23 of the Federal Court Rules that Mr Tkalec was deemed to have been personally served with the documents delivered by Mr Bellamy on 22 February 2025.

11    On 5 March 2025, Mr Tkalec failed to produce documents to the Court (or otherwise attend court for that purpose) in accordance with the orders for production varied by Registrar O’Connor on 4 February 2025. This necessitated a further adjournment by Registrar Lee of the orders for production to 10.15am on 18 March 2025, the same time and date as the examination under the summons.

12    On 6 March 2025, Registrar Segal determined the plaintiff’s application for orders relating to service. The Registrar in determining the application before him was presented with the plaintiff’s evidence on the likely identity of Male 1 being Mr Tkalec, and, so being satisfied, ordered that pursuant to r 10.23 of the Federal Court Rules:

the following documents are taken to have been personally served on John Damir Tkalec on 22 February 2025:

(a)    the Summons for Examination dated 26 November 2024; and

(b)    the Order for Production dated 26 November 2024.

The Registrar also ordered that the costs of the plaintiff’s application be reserved.

13    Mr Tkalec signed a Report on Company Activities and Property (ROCAP) form on 5 October 2023 as required of him as a director of the company. In the form he gave an email address and a mobile phone number as his contact details. He subsequently communicated with the liquidator from that email address, most recently on 13 December 2023. On 10 March 2025, a solicitor for the liquidator sent a letter to that email attaching certain documents. The documents included a covering letter making it clear that Mr Tkalec was required for examination under the examination summons at the court on 18 March 2025 at 10.15am and that if he failed to appear a warrant for his arrest would be sought. A copy of the summons and the cover sheet giving the date and time of the examination was also attached.

14    Further, on 11 March 2025, a paralegal in the employ of the solicitors for the liquidator sent a message Mr Tkalec’s mobile phone number which advised him of all the necessary details for his required attendance for examination on 18 March 2025. It also advised him that if he failed to appear a warrant for his arrest would be sought.

15    The evidence is that on the return of the examination summons and orders for production on 18 March 2025, there was no appearance by Mr Tkalec. To similar effect, the orders of Registrar Segal made that day adjourning the summons to a date to be fixed noted that “[t]he Summons for Examination addressed to John Damir Tkalec was called and there was no appearance before the Court.”

16    At the time of the hearing today, no response has been received from Mr Tkalec via any channel in response to the communications sent following the attendance of Mr Bellamy at the Belmont North property on 22 February 2025.

Legal basis

17    Rule 11.10 relevantly provides:

11.10    Default in relation to examination

(1)    This rule applies if a person is summoned or ordered by the Court to attend for examination, and:

(a)    without reasonable cause, the person:

(i)    fails to attend at the time and place appointed; or

(ii)     fails to attend from day to day until the conclusion of the examination;

…

(2)    The Court may:

(a)    issue a warrant for the arrest of the person summoned or ordered to attend for examination; and

(b)     make any other orders that the Court thinks just or necessary.

18    As summarised by Halley J in Goyal at [34], the authority to issue a warrant under this rule depends on proof of the following matters:

(1)    The person has been summoned or ordered by the Court to attend for examination;

(2)    They have failed to attend at the time or place appointed or failed to attend from day to day until the conclusion of the examination; and

(3)    Their failure to attend was without reasonable cause.

19    Clearly, Mr Tkalec was summoned to attend for examination on 18 March 2025. I am also satisfied that Mr Tkalec was served with the examination summons, as deemed by the order of Registrar Segal on 6 March 2025, and that all reasonable steps were otherwise taken to ensure that Mr Tkalec had notice of his required attendance. I am satisfied that as a consequence of those steps, it is probable that Mr Tkalec was aware of his obligation to attend for examination under the summons.

20    Even if there is an issue – despite the deeming order of Registrar Segal – with whether the actions of Mr Bellamy on 22 February 2025 amounted to formal service of the summons on Mr Tkalec, as Wigney J considered in Mensink v Parbery [2018] FCAFC 101; 264 FCR 265 at [44], r 11.10 “does not expressly provide that it is necessary to prove that the summons or order was served before a warrant can issue … The better view is that proof that the summons or order was brought to the attention of the proposed examinee is relevant to the element relating to reasonable cause.”

21    It is also clear that Mr Tkalec failed to attend court on the date and at the time required by the summons.

22    That leaves the question of whether Mr Tkalec had “reasonable cause” to not attend in accordance with the summons. There has been some divergence on whether the onus of proof to show a reasonable cause lies on the prospective examinee or whether the onus lies on the applicant for the warrant to show an absence of reasonable cause. Justice Jackson noted in Nipps at [8] that “courts have generally proceeded on the basis that there is an onus of negativing reasonable cause on the applicant for the warrant, although, since knowledge of the cause is almost exclusively in the possession of the prospective examinee, only slight evidence is needed to discharge that onus”. However, his Honour disagreed with that approach, considering that the better construction of r 11.10 was that “the onus of establishing that there is reasonable cause lies on the prospective examinee, not the other way around” (at [14]).

23    In the circumstances of this case, it does not matter which is the correct approach. I am satisfied that there is nothing on the evidence before me to suggest any reasonable cause for Mr Tkalec not having attended when required. As mentioned, I am satisfied that he probably did get notice of the hearing and that he was required to attend. If there is any onus on the plaintiff, it has been discharged.

24    Once the three conditions for r 11.10 have been met, as they have, the Court has a discretion whether or not to make the order: Parwan Valley Mushrooms Pty Ltd; in the matter of Re Parwan Valley Mushrooms Pty Ltd (in liq) [2024] FCA 1164 at [14] per O’Bryan J. Important considerations in the exercise of this discretion were identified by Brereton J in Struthers at [45] including:

(a)    the prima facie entitlement of a person who has procured the issue of a subpoena or examination summons which has not been set aside to have it complied with and, if not, enforced;

(b)    the importance of securing compliance with orders of the Court intended to enable to relevant evidence or information to be obtained in the interests of justice;

(c)    the reasonableness of steps already taken to obtain the cooperative attendance of the examinee or witness and the possibility of securing attendance by less extreme means; and

(d)    whether the burden imposed by the subpoena or summons is prima facie oppressive.

25    I consider that there is no discretionary factor which weighs against the issue of an arrest warrant against Mr Tkalec in the circumstances. Rather, the discretionary factors weigh in favour of the issue of the warrant in order to ensure the integrity of the examination process within the context of a company liquidation. The plaintiff has exhausted the reasonable means at its disposal to bring Mr Tkalec to court for examination without compulsion under a warrant. Non-compliance with the orders of the Court undermines the effective administration of justice, as many cases on this issue have observed. The arrest warrant should issue.

26    There is a question as to the precise form the arrest warrant should take. The plaintiff has furnished a draft arrest warrant in the Court’s Form 17A. However, that form is prescribed for arrest warrants issued pursuant to s 486B of the Corporations Act: see Corporations Rules, r 11A.01(3). Arrest warrants issued under r 11.10 are, as Brereton J noted in Re Struthers at [37] (with respect to the equivalent provision in the Supreme Court (Corporations) Rules 1999 (NSW)), “an independent source of power to issue a warrant”. While there is therefore no prescribed form for an arrest warrant under r 11.10, I do not consider there to be any reason why the warrant issued in this case should not be substantially in the form of Form 17A.

Costs

27    In an amended interlocutory application, the plaintiff initially sought further relief in respect of costs, relevantly:

2    The costs of and incidental to this interlocutory process be paid by John Damir Tkalec on a lump sum basis, in an amount to be determined by a Registrar of this Court.

3    The plaintiff’s costs thrown away of and incidental to the examination hearing of John Damir Tkalec on 18 March 2025 be paid by John Damir Tkalec on a lump sum basis, in an amount to be determined by a Registrar of this Court.

4    The costs of the plaintiff’s interlocutory process dated 28 February 2025 filed in this proceeding seeking deemed service of John Damir Tkalec be paid by John Damir Tkalec on a lump sum basis, in an amount to be determined by a Registrar of this Court.

28    The plaintiff relies on Krejci, in the matter of Sydney Exotic Aquariums Casual Pty Ltd (in liq) (No 2) [2025] FCA 211, in which Perry J in similar circumstances – although on a contested basis – ordered that the examinee in default pay the costs of the examination thrown away as well as the costs of the application for an arrest warrant, both on a lump sum basis. That was in reliance on r 11.10(2)(b), which her Honour considered (at [25]) “also provides a basis for the Court to order that an examinee who fails to attend an examination without reasonable excuse must pay the liquidator’s wasted costs of their failure to attend, as well as the liquidator’s costs in respect of the compulsion of the person’s attendance”, citing Re Firepower Operations Pty Ltd (in liq) (No 3) [2010] FCA 141; 183 FCR 150 at [19]-[20] per Siopis J.

29    It must be recognised, however, that the application before me has been brought ex parte and Mr Tkalec was not put on notice of any adverse costs order to be sought against him. While there is a power to order costs in the manner described above, I am not satisfied that it should be exercised in the present circumstances, at least until Mr Tkalec has been arrested and brought to the Court for examination. A costs order is a form of final relief which, as a general proposition, should not be determined other than on notice. The plaintiff accepted as much and asked that in those circumstances the costs be reserved.

30    Prayers 2, 3 and 4 of the amended interlocutory application are therefore reserved for determination by a Registrar of the Court when appropriate in the future.

Associate:

Dated:    19 March 2025