Beeson v Carrello as liquidator of Gecko Management Pty Ltd (in liq) (ACN 083 043 243) - [2009] WASC 334

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: BEESON -v- CARRELLO as liquidator of GECKO MANAGEMENT PTY LTD (in liq) (ACN 083 043 243) [2009] WASC 334

CORAM: MASTER SANDERSON

HEARD: 10 NOVEMBER 2009

DELIVERED : 17 NOVEMBER 2009

FILE NO/S: COR 42 of 2009

BETWEEN: MARK JOHN BEESON
LYNDON EDWARD DYSON
DUNCAN NASH HANNAY
Applicants
AND
GIOVANNI MAURIZIO CARRELLO as liquidator of GECKO MANAGEMENT PTY LTD (in liq) (ACN 083 043 243)
Respondent

Catchwords:

Corporation law - Application to set aside summons issued by liquidator to examination directions - Turns on own facts

Legislation:

Nil

Result:

Application allowed in part

Category: B

Representation:

Counsel:

Applicants: Mr K L Christensen
Respondent: Mr M Holler

Solicitors:

Applicants: Haydn Robinson
Respondent: AustAsia Legal Pty Ltd

Case(s) referred to in judgment(s):

Bridgeport - Advisers and Assets Managers Pty Ltd [2005] NSWSC 757; (2005) 221 ALR 146

MASTER SANDERSON: On 12 March 2009, on the application of the plaintiff, I made orders that Mark John Beeson, Lyndon Edward Dyson, Duncan Nash Hannay and Lou Thomas be summonsed for examination about the affairs of Gecko Management Pty Ltd (in liquidation). The plaintiff is the liquidator of Gecko Management Pty Ltd.
By interlocutory process filed 10 June 2009, Mr Beeson, Mr Dyson and Mr Hannay sought orders allowing them access to the affidavit sworn by the plaintiff and lodged in support of the application to issue the examination summonses, and to have the summonses set aside or struck out as an abuse of process. During the course of negotiations between the parties prior to the hearing of the application, the plaintiff agreed to provide the examination parties (who I will refer to for the purposes of these reasons as 'the applicants') with a copy of his affidavit. That was done. In taking that step, the plaintiff's solicitors overlooked the provisions of s 596C(2) of the Corporations Act 2001 (Cth) which only allows for inspection of the affidavit if the court so permits. I was satisfied that there was no reason why the applicants should not see the affidavit and as the plaintiff clearly had no objection to its being viewed by the applicants at the commencement of the hearing I made an order permitting inspection. The matter then proceeded with the only question as to whether the summons ought be struck out as an abuse of process.
To understand the nature of the claim of abuse of process it is necessary to provide some background facts. These facts were not in dispute and the summary which follows is taken from the affidavit of Haydn Ross Robinson sworn 11 June 2006 and filed in support of the application, and the applicants' outline of submission lodged 28 October 2009. Three companies, Swansdale Pty Ltd, Munkberg Pty Ltd and Russmex Pty Ltd, have instituted proceedings against, amongst others, two of the applicants Mr Beeson and Mr Dyson. This is action CIV 2156 of 2008. These proceedings came after Swansdale Pty Ltd and Munkberg Pty Ltd sued the applicants Mr Beeson and Mr Dyson, Gecko Management Pty Ltd and other defendants in other proceedings in CIV 2302 of 2005. Munkberg Pty Ltd and Swansdale Pty Ltd are both companies associated with or controlled by a Mr Hamilton and a Mr Pearson. The two companies seek an accounting in dealing with certain transactions by Gecko Management Pty Ltd and the conduct of the same by the applicants. In CIV 2156 of 2008 the plaintiffs are not proceeding against Gecko Management Pty Ltd. However, a comparison of the statements of claim in the two actions I have referred to indicates that the claim in CIV 2156 of 2008 is almost identical to the claim against Gecko Management Pty Ltd in CIV 2302 of 2005.
It is common ground between the parties that there is no benefit in the prosecution of the two actions for Gecko Management Pty Ltd or its creditors.
Persons associated with Swansdale Pty Ltd and Munkberg Pty Ltd are funding the liquidator. AustAsia Legal Pty Ltd acts for the liquidator. A Mr Galic is a director of AustAsia Legal Pty Ltd and he has acted as counsel for the liquidator in relation to the examination that has been conducted to date. Mr Galic also carries on business as Galic & Co. Galic & Co act for the plaintiffs in both CIV 2302 of 2005 and CIV 2156 of 2008.
Everyone accepts that when the examinations are complete Swansdale Pty Ltd and Munkberg Pty Ltd will have access to the transcript of those examinations. They will also have access to any documents tendered during the course of the examination. The applicants' concern is that Mr Galic will also have access to documents produced pursuant to the summonses that may not be tendered during the course of the examination. As I understand the applicants' submission, they say that this puts Mr Galic in a position of conflict and thus represents an abuse of process which warrants the summonses being set aside. During the course of argument, counsel for the applicants suggested that one possible solution may be to stay the summonses to allow the plaintiff to appoint alternative solicitors. Counsel conceded that were this to occur there would be no basis on which to set the summonses aside.
Examination summonses are an abuse of process if the predominant purpose cannot be characterised as being for the benefit of the corporation, its contributories or its creditors: see Bridgeport - Advisers and Assets Managers Pty Ltd [2005] NSWSC 757; (2005) 221 ALR 146 per Barrett J at [45]. Again there was no dispute between the parties as to the test to be applied. Both counsel were content to adopt the formulation by Barrett J in the Bridgeport decision.
In response to this application, the plaintiff swore an affidavit dated 9 September 2009. A number of aspects of his evidence are worth highlighting. First, the plaintiff says, as liquidator of the company, he is not interested in disputes between former directors of the company. He says that he is only interested in matters relating to the examinable affairs of the company and nothing else. There was a debtor/creditor relationship between the company and two companies, Rochwood Pty Ltd and Whitcrest Pty Ltd, of which Mr Beeson and Mr Dyson are directors. The plaintiff says that some creditors of the company got paid and others did not and that is the reason for his investigation.
He goes on to say that the examination is not a fishing expedition and is not being used for the benefit of any one particular creditor. He says the purpose of the examination is to investigate matters which are separate to the matters in dispute between the former directors of the company. He is concerned not to reveal too much detail about the examination for fear that it may be compromised.
I am satisfied that there is no abuse of process in this matter. There may be grounds for the applicants seeking an injunction to prevent Mr Galic from acting for the plaintiff in relation to the examination. Without wishing in any way to prejudge the issue, there may be a conflict of interest on Mr Galic's part. But that is a separate question to what is to be considered here. What I have to determine is whether or not the predominant purpose cannot be characterised as being for the benefit of the corporation, its contributories or its creditors. Based on the evidence of the plaintiff, the answer to that question cannot be in any doubt. There is no abuse of process and accordingly the summonses ought not be set aside.
I will hear the parties as to the form of orders and as to costs.