Australian Securities and Investments Commission v Mercorella

[2006] FCA 297

FEDERAL COURT OF AUSTRALIA

Australian Securities and Investments Commission v Mercorella [2006] FCA 297

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v GUISEPPE ANTONIO MERCORELLA and SEABAY INVESTMENTS PTY LTD ACN 097 021 773

SAD 160 of 2005

MANSFIELD J
22 MARCH 2006
ADELAIDE

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	SAD 160 OF 2005

BETWEEN:

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
APPLICANT

AND:

GUISEPPE ANTONIO MERCORELLA
FIRST RESPONDENT

SEABAY INVESTMENTS PTY LTD ACN 097 021 773
SECOND RESPONDENT

JUDGE:

MANSFIELD J

DATE OF ORDER:

22 MARCH 2006

WHERE MADE:

ADELAIDE

THE COURT ORDERS THAT:

1.The application of Anthony Sobey dated 17 March 2006 to set aside the summons for the production of documents issued pursuant to an order made on 24 February 2006 is refused. 

2.        Anthony Sobey pay to Colin Nicol his costs of and incidental to the application.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	SAD 160 OF 2005

BETWEEN:

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
APPLICANT

AND:

GUISEPPE ANTONIO MERCORELLA
FIRST RESPONDENT

SEABAY INVESTMENTS PTY LTD ACN 097 021 773
SECOND RESPONDENT

JUDGE:	MANSFIELD J
DATE:	22 MARCH 2006
PLACE:	ADELAIDE

REASONS FOR JUDGMENT

1. Colin Nicol, as receiver and manager of the property of the first defendant and the property of a scheme operated by the first defendant and as liquidator of that scheme and as liquidator of the corporate entities party to that scheme, applied to the Court for an order pursuant to s 597(9) of the Corporations Act that certain persons produce to the Court such books or records as are set out in the schedule.  On 24 February 2006, Registrar Christie made an order directing the production of certain banking records relating to six named entities or persons, including Anthony Sobey (the summons).

2. By application made on 17 March 2006, Mr Sobey has applied to review the orders of the Registrar.  He seeks three orders.  Firstly, to limit the production of documents ordered to be produced only to those documents that relate to the examinable affairs of the 10 corporations comprising the scheme or the disclosed transactions with those entities.  Secondly, to set up a regime to allow any documents produced pursuant to the summons to be produced to be examined first by him or his legal representatives so that they may then make submissions or object to the production to the Court, or the inspection by Mr Nicol of those documents, on the ground that they may not be relevant under s 597(9).  Thirdly, setting up a regime for confidentiality so that Mr Sobey's affairs are not the subject of inappropriate public scrutiny.

3. In essence, the first contention seeks to re-argue the question of whether the order of 24 February should have been made on the ground that it is not shown that the documents ordered to be produced are relevant to matters to which the examination relates or will relate.  The evidence before the Court is limited to the affidavit of Mr Sobey, sworn on 17 March 2006, and the transcript of the examination of Mr Sobey which, to date, has taken place on 22 December 2005, 17 February 2006 and 28 February 2006, together with certain exhibits which have been produced in the course of that examination.  Counsel for Mr Nicol has referred extensively to that material in support of the order for production of documents being maintained.

4. Mr Sobey's affidavit refers to his formal role or his relationship with each of the five corporate entities, apart from himself, whose banking records have been ordered to be produced.  I do not need to refer in detail to that information.

5. I note that the summons for the production of documents requires the documents to be produced at a time and place at which an examination of Mr Sobey is to occur.  It may be that, for reasons of convenience, he may not immediately be in attendance on the next hearing date for his examination, but the examination has taken place now on three occasions and has been adjourned to next Friday, 24 March 2006 when the documents are to be produced.  Consequently, in my view, the summons has validly been issued pursuant to s 597(9) subject to the issues as to relevance which have been raised:  see South Pacific Energy Trading Pty Ltd (in liq) (1996) 21 ACSR 435 at 437.

6. Having had the benefit of submissions from counsel for both Mr Sobey and Mr Nicol, in my view, the documents which have been ordered to be produced are documents which are relevant to matters to which the examination relates or will relate.  I have been referred to a number of passages in the transcript which indicate that Mr Sobey has referred to each of the five corporate entities whose banking records are ordered to be produced in addition to his own banking records in terms which indicate, in some way or another, his involvement with one or other of those companies and the possibility that his involvement with one or other of those companies includes or may include the passing of funds relating to the scheme through one or other of those companies.  I do not need to refer in detail to that material.

7. As counsel for Mr Nicol indicated, the concept of ‘examinable affairs’ is a very wide one.  Counsel for Mr Sobey did not dispute that.  In addition to permitting examination to explore the passage of funds of the scheme or relating to transactions with the scheme or with the companies which comprise the scheme, ‘examinable affairs’ extends to permitting Mr Nicol to examine the possibility of causes of action which may lie in his name as liquidator of the scheme or as liquidator of the companies or as receiver and manager of the property of the first defendant.  It also extends to permitting him to examine, in respect of any such potential cause of action, the prospects of recovering successfully any judgment procured against any person on behalf of any of the entities of which he is the liquidator or receiver and manager.

8. There are therefore a wide range of legitimate purposes for which the examination may take place or may in the future take place, in my view including inquiring into the banking affairs of Mr Sobey to the extent to which they are affected through the entities whose records have been subpoenaed.  Accordingly, I am of the view that the summons for the production of documents on 24 March 2006 was appropriately issued.

9. Counsel for Mr Sobey has accepted that he does not have any legitimate claim for legal professional privilege in respect of the documents to be produced.  As I have determined that the documents to be produced are relevant to the examination, I do not consider it appropriate to set out a regime which would entitle Mr Sobey or his legal representatives to examine the documents so produced for the purposes of filtering them in some way, and for the purposes of re-arguing before the examiner their relevance.  I have ruled upon their relevance.  As there is no other basis upon which a pre-emptive entitlement to examine those documents would lie with Mr Sobey or his legal representatives, I do not propose to make the second order which has been sought.

10. The examination is conducted in public.  The examiner does have the power to set up a regime or to make orders so that certain materials should be treated as confidential.  Mr Sobey's affidavit asserts in par 7.5 that the disclosure of financial information of the five corporate entities to third parties or the public at large will have the possible effect of affecting his business interests.  He does not explain in his affidavit how that may be the case.  That is not a criticism of the content of the affidavit.  As I indicated in the course of argument, in my view, such concerns as he may legitimately have about the disclosure of his personal affairs in the course of public examination can be addressed at the time of the examination.

11. I am not minded to make an order imposing a regime of confidentiality upon the course of the further examination of Mr Sobey when it takes place in respect of the documents to be produced pursuant to the summons.  That is a matter for the examining officer at the time.

12. For those reasons the application dated 17 March 2006 is refused.  I order that Mr Sobey pay to Mr Nicol his costs of and incidental to the application.

I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield.

Associate:

Dated:             28 March 2006

Counsel for the Applicant:	M Hoffmann QC
Solicitor for the Applicant:	Minter Ellison
Counsel for the Respondent:	A Lazarevich
Solicitor for the Respondent:	Robert Chrzaszcz & Associates
Date of Hearing:	22 March 2006
Date of Judgment:	22 March 2006