Federal Court of Australia

McKenna (liquidator), in the matter of Raised Pty Ltd (in liq) [2025] FCA 699

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to rule 11.10(2) of the Federal Court (Corporations) Rules 2000 (Cth), a warrant be issued for the arrest of Khaled Ayache to bring Mr Ayache before the Federal Court of Australia, Commonwealth Law Courts Building, 305 William Street, Melbourne in the State of Victoria to be examined, under s 596A of the Corporations Act 2001 (Cth) on oath or affirmation, about the examinable affairs of Raised Pty Limited (in liquidation), detaining Mr Ayache in custody in the meantime.

2.    The return date of the summons for examination filed 3 April 2025 addressed to Khaled Ayache be adjourned to 11 July 2025 at 10:15 am AEST or such other date as to be fixed by the Court.

3.    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.

4.    The plaintiff send to Khaled Ayache by registered post, addressed to Khaled Ayache at 28 Glencairn Crescent, Broadmeadows VIC 3047, and by email at k_ayache5@hotmail.com forthwith:

(a)    a sealed copy of the order; and

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

5.    The costs of the plaintiff’s interlocutory process, and any issue concerning costs thrown away by the failure of Mr Ayache to attend examination, be reserved.

6.    Orders 1 and 3 be stayed until 9.30 am AEST on 7 July 2025.

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

REASONS FOR JUDGMENT

KENNETT J:

1    The plaintiff, who is the liquidator of Raised Pty Ltd (the liquidator), seeks the issue of an arrest warrant against Khaled Ayache 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 Ayache not having been given notice of the application. This is the usual course and a justifiable one in such circumstances, for reasons explained in Shute (Liquidator), in the matter of Modliv Pty Ltd (in liq) [2025] FCA 224 at [2] (Stewart J) (Shute).

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

Factual background

4    On 3 April 2025 leave was granted to the liquidator to file and serve a summons for examination, requiring Mr Ayache to attend for examination on 2 June 2025 at the Federal Court in Sydney, and an order for production, in the form submitted to the Court that day.

5    On 9 May 2025, following an interlocutory application by the liquidator, orders were made dispensing with the requirement for personal service of these documents on Mr Ayache and ordering substituted service. Pursuant to those orders, the documents were to be served by:

(a)    sending them by pre-paid ordinary post addressed to Mr Ayache at a specified address in Broadmeadows, Victoria; and

(b)    sending them by email to a specified email address.

6    The liquidator’s solicitor, Mr Fasullo, has given evidence that he caused the summons and order to production to be sent by both of these methods on 9 May 2025. A tracking record from Australia Post indicates that the bundle of documents sent by Mr Fasullo on that day was delivered to the address in Broadmeadows on 13 May 2025.

7    The order for production was returnable on 28 May 2025. There was no appearance by or on behalf of Mr Ayache on that day and no documents had been produced by him. Orders were made standing over the order for production to the date and time of the examination.

8    Mr Ayache did not attend the examination on 2 June 2025.

Legal basis

9    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; or

...

    ...

(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.

10    As summarised by Stewart J in Shute at [18] (referring to Goyal, in the matter of Biotech Energy Pty Ltd (Receivers and Managers appointed) [2023] FCA 653 at [34] (Halley J) (Goyal)), 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.

11    Clearly, Mr Ayache was summoned to attend for examination on 2 June 2025 and did not attend at the appointed time and place.

12    As to whether that failure was without reasonable cause, I am also satisfied that Mr Ayache was served with the examination summons in accordance with the orders that had been made for substituted service. The affidavit that was relied upon in seeking those orders provides a reasonable basis for concluding that, at least as at April 2025, Mr Ayache lived at the address in Broadmeadows and the email address referred to in the orders was his. This makes it probable that, as a consequence of the steps taken to effect substituted service, Mr Ayache was aware of his obligation to attend for examination under the summons. Even if that conclusion were contestable, to require more of the liquidator in this respect would effectively set at naught the orders permitting service to be effected by post and email. It is appropriate to proceed on the basis that Mr Ayache was aware of the requirement to attend for examination on 2 June 2025.

13    As noted by Stewart J in Shute at [22], there has been some divergence in the decided cases as to whether an onus to show the existence of a “reasonable cause” lies on the prospective examinee or whether there is an onus on the applicant for the warrant to show an absence of reasonable cause. My own view is that the absence of reasonable cause is an element of what must be established to engage the power in r 11.10 and there is an element of incongruity in expecting matters to be proved by a party who (given the nature of the application) is practically certain not to be present or represented at the hearing. However, the point does not need to be decided. There is authority (discussed in Goyal at [36]-[38]) that, if an onus to prove the absence of reasonable cause lies on the applicant for the warrant, it can be discharged by “relatively slight evidence” because any cause for non-attendance is almost exclusively in the knowledge of the prospective examinee. On the footing that Mr Ayache was aware of the examination, and in the absence of any evidence as to why he failed to attend, it can be inferred for present purposes that that failure was without reasonable cause.

Discretion

14    Once the three conditions for r 11.10 have been met, the Court has a discretion whether or not to make the order: Parwan Valley Mushrooms Pty Ltd, in the matter of Parwan Valley Mushrooms Pty Ltd (in liq) [2024] FCA 1164 at [14] (O’Bryan J). Recent decisions such as Shute and Goyal have treated the exercise of discretion as focusing on the considerations identified by Brereton J in Struthers (in his capacity as liquidator) of PACI Pty Ltd [2005] NSWSC 864 at [45]:

(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 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.

15    Halley J observed in Goyal at [45]-[46] that the first and second of these factors necessarily weigh heavily in favour of the issue of an arrest warrant.

16    As to the third factor, there is no evidence of any steps taken to obtain the cooperative attendance of Mr Ayache. However, that does not point to any unreasonableness or lack of effort on the part of the liquidator, who, on the evidence, has not succeeded in making contact with Mr Ayache. Nor, as to the fourth factor, is there any reason to suppose that the summons to attend the examination in Sydney imposed a burden that was oppressive. Coming to Sydney may well have been inconvenient for Mr Ayache, but it was open to him to propose an arrangement whereby he could be examined in Melbourne or by audio visual link.

17    I consider that there is no discretionary factor which weighs against the issue of an arrest warrant against Mr Ayache 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. The liquidator has made reasonable efforts to bring Mr Ayache to court for examination without compulsion. Non-compliance with the orders of the Court undermines the effective administration of justice, as previous cases on this issue have observed. The arrest warrant should issue.

18    I will therefore order that an arrest warrant issue. The liquidator has proposed a form of warrant requiring Mr Ayache to be brought before the Court in Melbourne and in my view this is appropriate. The liquidator has also agreed to orders requiring these reasons and my orders to be sent to Mr Ayache by post and email forthwith, and the order for the issue of the warrant being stayed for seven days. This is appropriate as a means of allowing Mr Ayache an opportunity to raise any issue that prevents him from attending the examination, or to arrange to appear by consent and avoid the embarrassment of arrest.

Costs

19    The liquidator’s interlocutory application seeks an order that Mr Ayache pay the liquidator’s costs of the application and the costs thrown away as a result of his failure to attend the examination. Although there appear to be sound reasons why Mr Ayache should be ordered to pay those costs, the application has been heard ex parte and the evidence before me does not establish that Mr Ayache was on notice of a potential adverse costs order.

20    A revised set of proposed orders handed up in court on 23 June 2025 contemplated that the question of costs would be referred for determination by a registrar. This is a sensible way to deal with the issue; however, I am not certain that the power of a registrar to award costs “of or in connection with an application heard by a Registrar” in item 29 of Schedule 2 to the Federal Court Rules 2011 (Cth) would extend to awarding the costs of this application. The costs of the application will simply be reserved.

Associate:

Dated:    27 June 2025