Authentico Transnational Pty Ltd v Nagpal

[2004] NSWSC 12

CITATION:	Authentico Transnational Pty Ltd v Nagpal [2004] NSWSC 12
HEARING DATE(S):	21, 22 and 23 January 2004
JUDGMENT DATE:	23 January 2004
JURISDICTION:	Equity
JUDGMENT OF:	Hamilton J
DECISION:	Warrant for arrest issued.
CATCHWORDS:	PROCEDURE [112] - Supreme Court procedure - Practice under Supreme Court Rules - Evidence - Other matters - Order to attend for cross examination - Disobedience - Whether warrant may issue for arrest of person under Part 47 r 2 without service of notice of motion.
LEGISLATION CITED:	Bankruptcy Act 1966 (Cth) s 274B(1) Supreme Court Rules Part 19 r 2, Part 42 r 7, Part 43 r 1
CASES CITED:	Re Skase; Ex parte Donnelly (1992) 114 ALR 303 Schnabel v Lui (2002) 56 NSWLR 119
PARTIES :	Authentico Transnational Pty Ltd (P1) Anthony Milton Sims (P2) Scott Darren Pascoe (P3) Ajay Nagpal (D1) Arora Mohit (D2) Gulati Sumit (D3)
FILE NUMBER(S):	SC 1073/04
COUNSEL:	P M Biscoe QC (Ps) No appearance (Ds)
SOLICITORS:	Piper Alderman (Ps) No appearance (Ds)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

HAMILTON J

FRIDAY, 23 JANUARY 2004

1073/04 AUTHENTICO TRANSNATIONAL PTY LTD (Receivers & Managers Appointed) & ORS v AJAY NAGPAL & ORS

JUDGMENT

1 HIS HONOUR: This is an application by notice of motion filed on 21 January 2004 for the issue of warrants under Part 42 r 7 of the Supreme Court Rules 1970 ("the SCR") for the apprehension of the first, second and third defendants in order to have them brought before the Court to permit their cross examination. The matter arises in the following circumstances. The application is brought by the plaintiffs. Anthony Milton Sims and Scott Darren Pascoe, who are the second and third plaintiffs, have been appointed receivers and managers of the first plaintiff. They have, in their capacity as receivers, attempted to recover from the three defendants, who are directors of the first plaintiff, the first plaintiff's financial books and records.

2 The first plaintiff was up to the time of the appointment of the receivers conducting at Berala and at Parramatta a business of selling shoes. The evidence shows that the defendants failed to cooperate with the receivers. Although some books and papers of the company reached the receivers in various ways a great body of the financial records was not delivered. The evidence shows that although the receivers and their representatives did not come face to face with the second defendant, they did come face to face with the first defendant and the third defendant and that those defendants not only did not deliver the books but engaged in a course or courses of conduct designed to prevent the receivers from getting the books and records and obtaining proper information about the operations of the company, which had been in full swing until the receivers’ appointment.

3 The motion came before Dowd J last week. His Honour on 14 January ordered the defendants to deliver all relevant books and records and restrained them from preventing the receivers from taking possession of them. His Honour ordered that service of all documents in the proceedings on the defendants might be effected by serving them on Frank Ngo, solicitor, or leaving them at his office. On 15 January 2004 Dowd J further ordered that each of the defendants serve an affidavit by 4.00 pm on 19 January 2004 identifying all the books and records of the company, specifying the current residential and postal addresses, telephone numbers and email address of the defendants, and providing details of the company's bank accounts. His Honour further ordered the defendants to attend on Wednesday 21 January 2004 before the Equity Registrar “for cross examination ... in relation to the abovementioned affidavits.” None of the defendants did so attend. Hence the present application.

4 The orders of 14 January 2004 were made ex parte, but on 15 January 2004 Mr Frank Ngo, solicitor, was engaged to represent the defendants and Mr Wan of counsel attended before Dowd J on that day. However, Mr Ngo has subsequently ceased to act for the defendants and has filed a notice of ceasing to act.

5 Part of the conduct which has led me to the conclusion expressed above, that certainly the first defendant is attempting actively to keep the company's records and information concerning it from the receivers, is the extreme sparseness with which he is prepared to give out his address to any relevant people. Subpoenas were served by leave I granted on Mr Ngo and on the principal of the company's accountants, Mr Avenish Nichkawde. Those gentlemen attended in answer to those subpoenas and gave evidence before me.

6 Mr Ngo's evidence confirmed his engagement and dismissal by the three defendants. The engagement was effected not by the defendants themselves, but by Mr Som Bhatia, an employee in Mr Nichkawde's firm. Mr Ngo never met any of the defendants. He spoke to the first defendant by telephone on at least two occasions. He was never given an address of any of the defendants. The contact details he was given were a mobile telephone number for the first defendant and a mobile telephone number for the first defendant's wife. After the last telephone conversation that he had with the first defendant he tried repeatedly to contact the first defendant again on his mobile phone but was unable to do so, the phone on each occasion ringing out and being unanswered. Mr Ngo had been given $500 by Mr Som Bhatia as an advance on the defendants’ costs. In the above circumstances Mr Ngo decided that he would act no longer and filed the notice of ceasing to act.

7 Mr Nichkawde produced written records of his firm (which no doubt included any relevant notes Mr Bhatia made) in answer to a subpoena to produce. None of those was tendered and I infer that none of them showed a street address for any of the defendants. Mr Nichkawde had not met the defendants until after the appointment of the receivers, but did meet at least the first defendant on a Sunday in the midst of those events. Previously the company's affairs had been dealt with, so far as Mr Nichkawde's firm was concerned, by Mr Som Bhatia. Mr Nichkawde was unaware of the defendants’ street addresses and had only mobile telephone numbers. Mr Nichkawde made it plain that the $500 given to Mr Ngo by Mr Bhatia was not, so far as Mr Nichkawde was concerned, given by his firm and payment of that amount certainly was not made from a bank account of the firm.

8 On the first day the matter was before me there was no evidence as to the actual whereabouts of any of the three defendants and I was not inclined to issue any warrant, which seemed to me in those circumstances totally futile. But further investigations were made. They revealed, in the case of the first defendant, a street address in Sydney of his home provided by a person who had visited the home. The further evidence also included evidence that another person had recently spoken to the first defendant by phone and he had stated baldly that he was in India.

9 It is upon that state of the facts that application is made for the issue of a warrant under Part 42 r 7, which provides as follows:

“(1) Where the Court by subpoena or otherwise, makes an order in any proceedings for the attendance of a person:

(a) for the purpose of giving evidence,
(b) for the production of any document or thing,
(c) to answer a charge of contempt, or
(d) for any other purpose,

and the person defaults in attendance in accordance with the order, the Court may, on application by a party or of its own motion:

(e) issue, or make an order for the issue of, a warrant to the Sheriff or such other person as the Court may appoint for the arrest of the person in default and for the production of the person in default before the Court or before an examiner or other person for the purpose of the proceedings and for his detention in custody in the meantime, and
(f) order the person in default to pay any costs occasioned by the default.

(2) Where:

(a) the Court, by subpoena or otherwise, makes an order in any proceedings for the production by a corporation of any document or thing,
(b) the order is served in accordance with the rules, and
(c) the corporation defaults in producing the document or thing in accordance with the order,

the Court may, on application by a party or of its own motion:

(d) issue, or make an order for the issue of, a warrant to the Sheriff or such other person as the Court may appoint for the arrest of any officer of the corporation for the production of that officer before the Court or before an examiner or other person for the purpose of the proceedings and for his detention in custody in the meantime, and
(e) order the corporation to pay any costs occasioned by the default.

(3) Neither subrule (1) nor subrule (2) affects:

(a) the power of the Court to punish for contempt, or
(b) the provisions of Part 55 (which relates to contempt).”

10 The rule encompasses subpoenas, orders for examination under Part 43 of the SCR (relating to discovery in aid of enforcement) and ad hoc orders such as the present for the attendance of persons. Subpoenas to be effective must be served personally. Part 43 r 3(2) provides for personal service of an examination order under Part 43. There is no specific rule dealing with the mode of service of an order such as that at present under consideration. A number of questions arise. They include the following:

(1) Whether a warrant should issue for disobedience of an order to attend where there has not been personal service of the order.
(2) Whether service of a notice of motion is or should be required before a warrant may issue.
(3) Whether a warrant should issue against the first defendant, who it appears (on thin evidence) may be out of the country.

11 As to question (1), Mr Biscoe, of Queen’s Counsel in support of the application, conceded in general terms that service or communication of the order was necessary. However, he contended that it was sufficient that counsel for all three defendants was personally present in Court when Dowd J made the order, in combination with the terms of the direction for service on the defendants’ solicitor set out in [3] above. That is a view that I do not share, for here an infraction of the liberty of the subject is involved. Mr Biscoe pressed on me that the infraction was minor, because of the limited term of the custody provided for by the rule, but nonetheless the warrant provides for an infraction of liberty and I should not be inclined to issue a warrant without evidence either that personal service was effected or that the defendant involved had personal knowledge of the order. Whilst, as I have said, there is no specific service requirement in relation to this order, as opposed to the requirement that subpoenas be served personally and the requirement for personal service of Part 43 r 1 orders (or, indeed, of orders to be enforced under Part 42 r 8 of the SCR), it seems to me that certainly in general terms a warrant should not issue under Part 42 r 7 in respect of any order without evidence of personal service, or at the very least, knowledge, of the order. This precludes the issue of warrants against the second defendant and third defendant. They were not personally present when the order was made, and there is no evidence that the terms of the order were ever communicated to them. I do not think it sufficient that counsel who announced his appearance for them was present.

12 However, the situation is different in respect of the first defendant, because the evidence of his then solicitor, Mr Frank Ngo, is to the effect that in a telephone conversation he had with the first defendant he read to him in full over the telephone the terms of Dowd J's order of 15 January 2004. I find on that basis that the first defendant knew of the requirement to attend under order of the Court.

13 A second matter which may be thought to stultify the order as sought is that its terms are to allow cross examination upon an affidavit that did not exist (albeit its non existence was a default on the part of the first defendant). However, Mr Biscoe submitted the terms of the order were carefully and deliberately that cross examination was not to be “upon” any of the relevant affidavits but "in relation to" them. On that basis I have formed the view that the order is not stultified by the non existence of the affidavits. Cross examination concerning them, including their potential contents, is quite possible.

14 As to question (2), the application is made by notice of motion, and the notice of motion is directed in its terms to the three defendants. It would have been better if, instead of the notice of motion being directed to those defendants, it had borne at its foot a statement that it was not intended to serve the notice of motion upon them, since there was no intention at any stage to serve them. The submission was that service was not necessary or appropriate and that the issue of a warrant would not be prevented by non service of the motion.

15 The requirements as to service of notices of motion are contained in Part 19 r 2 of the SCR. Rule 2(2) provides as follows:

“(2) A person may move the Court without previously filing or serving notice of the motion:

(a) where the preparation of the notice, or the filing or service (as the case may be) of the notice would cause undue delay or other mischief to the applicant,
(b) where each respondent consents to the order,
(c) where under these rules or the practice of the Court for the time being the motion may properly be made without the prior filing or service (as the case may be) of notice of the motion, or
(d) where the Court dispenses with the requirements of subrule (1).”

16 In my view the case falls within two of the paragraphs of that rule. It falls within paragraph (a) of sub r (1), since service might cause undue delay or other mischief to the applicants, bearing in mind the intention evinced on the evidence by the first defendant not to be brought to book in respect of the records of the company. Furthermore, the case falls in my view within paragraph (c). In my view the practice, as I understand it, of this Court is to issue warrants under Part 42 r 7 without service of a notice of motion where a subpoena or other order for attendance has been disobeyed. Again, the reason for that practice is that it operates to permit the Court to apprehend and bring a witness to Court where an intention to disobey a subpoena or order for attendance has been evinced. The reason for that is twofold. One is the need for speed in the circumstances. The other is the opportunity that may be given by service for an unwilling attendee to abscond. In those circumstances the non service of this notice of motion will not prevent the issue of a warrant. Although the provision of the Bankruptcy Act 1966 (Cth) is in different terms (see s 274B(1)), it is clear that the practice of the Federal Court in relation to the issue of warrants under that section accords with this practice of this Court: see Re Skase; Ex parte Donnelly (1992) 114 ALR 303.

17 As to question (3), whether a warrant should issue against the first defendant despite the existence of evidence that he may not at present be in Australia, there is a discussion of the situation of an attendee absent from the jurisdiction in the Skase case. There, Drummond J took the view that a warrant would not be issued where the issue was a futility. In that case there was a great deal of evidence evincing an intention by Skase to remain absent from the jurisdiction and not to return. Drummond J took the view that there was power to issue the warrant despite absence from the jurisdiction (cf my recent decision in Schnabel v Lui (2002) 56 NSWLR 119 concerning the situation under Part 55 r 2 of the SCR). But his Honour was of the opinion, in view of the large body of evidence showing that Skase would not return, that the present issue of a warrant was so inutile that it should not occur.

18 However, as Mr Biscoe has put to me, the situation on the evidence in this case is not the same. The evidence is sparse, but it shows that the first defendant has a wife and that they have a residence in suburban Sydney which has been visited in the not too distant past. The only evidence suggesting the absence of the first defendant from the jurisdiction is evidence that one person has been told in a telephone conversation that he was in India, with no content at all of the conversation about his intentions to remain or return.

19 As I previously indicated, I was reluctant to order the immediate issue of a warrant where there was no evidence of any address or other evidence of where the first defendant might be located within the jurisdiction. Now, however, there is indication that, although recently in India, he does have a residence in Sydney either where he may be found or where further enquiries as to his whereabouts may be pursued. It is my view there is sufficient utility in the issue of the warrant for the issue to take place. Whether, if he is out of the jurisdiction, the existence of a warrant may inhibit his return with or without the records of the company is not in the circumstances a matter for the Court's consideration. The applicant pressed for its issue and the conclusion that I have come to is that I should issue it.

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Last Modified: 03/12/2004