Cammarano v Powell - [2019] SASC 131

SUPREME COURT OF SOUTH AUSTRALIA
(Appeal from a Master)
CAMMARANO & ORS v POWELL & ANOR
[2019] SASC 131
Judgment of The Honourable Auxiliary Justice David
1 August 2019
CORPORATIONS - EXAMINATIONS RELATING TO INSOLVENCY - GENERALLY
CORPORATIONS - EXAMINATIONS RELATING TO INSOLVENCY - PROCEDURAL MATTERS
Appeal against the decisions of a Judge of the Supreme Court – appeal dismissed – original decisions of the Judge upheld – issue of valid examination summonses by the Court pursuant to s 596B of the Corporations Act 2001 (Cth) – whether the provision of material to liquidators, upon which examination summonses applications were made, was authorised – whether provision was made under the authorisation – whether summonses should be set aside – whether examinees should have access to s 596C affidavit.
Corporations Act 2001 (Cth) s 596A, s 596B, s 596C and s 597(9); Return to Work Act 2014 (SA) s 183 and s 185, referred to.
Re Southern Equities Corporation Ltd (in liq); Bond & Anor v England (1997) 25 ACSR 394, applied.
Powell & Anor [2019] SASC 63, discussed.

CAMMARANO & ORS v POWELL & ANOR
[2019] SASC 131
Appeal from a Master

DAVID AJ: These reasons deal with the appeal by Robert Cammarano, Daniel Idropico and Delilah Idropico, the Appellants, against the decisions of Judge Dart made in this matter on 24 April 2019 and 24 May 2019 (with accompanying reasons), primarily being that it was lawful for ReturnToWorkSA to provide witness statements of the Appellants to Christopher Robert Powell and Peter James Lanthois in their capacity as liquidators of Ticon Group Pty Ltd (in liquidation) ACN 165 577 604, the Respondents.
I dismiss the appeal and uphold the decisions and reasons of Judge Dart. In doing so I provide a brief background to the matter before dealing with each of the grounds of appeal in turn.
Background
The Respondents are the joint liquidators of Ticon Group Pty Ltd (In Liquidation) (“Ticon”). The Respondents applied to the Court[1] on 14 November 2018 for, inter alia, orders for examination summonses against a number of people in relation to the affairs of Ticon, pursuant to s 596A, s 596B and s 597(9) of the Corporations Act 2001 (Cth) (“the Act”). The Respondents supported the application by filing an affidavit in accordance with s 596C of the Act.[2] The Act provides that the affidavit is not available for inspection, except so far as the Court orders. It would be unusual for inspection to be permitted.
[1] Originating Process, FDN1.
[2] Affidavit of Christopher Robert Powell filed 14 November 2018, FDN2.
The orders sought by the Respondents were made on 23 November 2018. The Respondents filed a further affidavit,[3] which was open, and disclosed a series of facts and circumstances which gave reason for the Respondents to believe there had been intermingling of affairs between Ticon, and a related entity called R C Commercial Business Consulting Pty Ltd (“R C Commercial”). The Respondents also suspected phoenix activity.
[3] Affidavit of Christopher Robert Powell filed 14 January 2019, FDN19.
The Appellants were the proposed examinees named in the examination summonses, for their suspected involvement with Ticon, R C Commercial and a company called Australian Labour Hire Pty Ltd (“ALH”). The summonses were issued pursuant to s 596B of the Act.
Each of the examinees and ALH have filed interlocutory applications,[4] which seek access to the s 596C affidavit, and the setting aside of the examination orders.
[4] Application of Daniel Idropico filed 5 December 2018, FDN10; application of Robert Cammarano filed 5 December 2018, FDN11; application of Delilah Idropico filed 5 December 2018, FDN12 and application of Australian Labour Hire Pty Ltd filed 7 December 2018, FDN14.
The Respondents are aware that the principal creditors of Ticon include ReturnToWorkSA (“RWSA”), which has lodged a proof of debt in the amount of $953,184.55, and the Australian Tax Office, which has lodged a proof of debt in the amount of $110,967.82. The claim of RWSA is for unpaid workers’ compensation premiums over a period of several years.
The disclosure and authorisations of RWSA
As RWSA suspected that Ticon owed them significant debts, they undertook a series of investigations of Ticon. During these investigations, an officer of RWSA gathered statements from a number of individuals (“the Statements”).
The Statements were gathered pursuant to RWSA’s powers under s 183 of the Return to Work Act 2014 (SA) (“RTW Act”):
183—Powers of entry and inspection
(1)     For the purposes of this Act, an authorised officer may, at any reasonable time—
(a)enter any workplace;
(b)inspect the workplace, anything at the workplace and work there in progress;
(c)require a person who has custody or control of books, documents or records relevant to any matter arising under this Act to produce those books, documents or records;
(d)examine, copy and take extracts from any such books, documents or records, or require an employer to provide a copy of any such books, documents or records;
(e)take photographs, films or video or audio recordings;
(f)take measurements, make notes and records and carry out tests;
(g)require (directly or through an interpreter) any person to answer, to the best of that person's knowledge, information and belief, any question relevant to any matter arising under this Act;
(h)require an employer to produce any document, or a copy of any document, that is required to be prepared or kept under this Act;
(i)seize any document that has been mistakenly provided by the Corporation under this Act.
(2)     If—
(a)a person whose native language is not English is suspected of having breached this Act; and
(b)the person is interviewed by an authorised officer in relation to that suspected breach; and
(c)the person is not reasonably fluent in English, the person is entitled to be assisted by an interpreter during the interview.
(3)     A person is not required—
(a)to provide information under this section that is privileged on the ground of legal professional privilege; or
(b)to answer a question under this section if the answer would tend to incriminate that person of an offence.
(4)     An authorised officer, who suspects on reasonable grounds that an offence against this Act has been committed, may seize and retain anything that affords evidence of that offence.
(5)     An authorised officer must, at the request of any person from whose possession evidentiary material is seized under subsection (4), provide a receipt for that material.
(6)     Where anything has been seized under subsection (4) the following provisions apply:
(a)the thing seized must be held pending proceedings for an offence against this Act related to the thing seized, unless the Minister, on application, authorises its release to the person from whom it was seized, or any person who had legal title to it at the time of its seizure, subject to such conditions as the Minister thinks fit (including conditions as to the giving of security for satisfaction of an order under paragraph (b)(ii));
(b)where proceedings for an offence against this Act relating to the thing seized are instituted within 6 months of its seizure and the person charged is found guilty of the offence, the court may—
(i)order that it be forfeited to the Crown; or
(ii)where it has been released pursuant to paragraph (a)—order that it be forfeited to the Crown or that the person to whom it was released pay to the Minister an amount equal to its market value at the time of its seizure, as the court thinks fit;
(c)where—
(i)proceedings are not instituted for an offence against this Act relating to the thing seized within 6 months after its seizure; or
(ii)proceedings having been so instituted—
(A)the person charged is found not guilty of the offence; or
(B)the person charged is found guilty of the offence but no order for forfeiture is made under paragraph (b),
the person from whom the thing was seized, or any person with legal title to it, is entitled to recover from the Minister, by action in a court of competent jurisdiction, the thing itself, or if it has deteriorated or been destroyed, compensation of an amount equal to its market value at the time of its seizure.
(7)     In the exercise of powers under this section, an authorised officer may be accompanied by such assistants as may be necessary or desirable in the circumstances.
(8)     An employer whose workplace is subject to an inspection under this section must provide such assistance as may be necessary to facilitate the exercise of the powers conferred by this section.
(9)     A person must not—
(a)hinder or obstruct an authorised officer in the exercise of a power conferred by this section; or
(b)refuse or fail, without lawful excuse, to comply with a requirement under this section.
Maximum penalty: $10,000.
(10)   An authorised officer, or a person assisting an authorised officer, who in the course of exercising powers under this section in relation to an employer—
(a)unreasonably hinders or obstructs the employer ins the day to day running of his or her business;
(b)addresses offensive language to the employer or to any other person at the workplace;
(c)assaults the employer or any other person at the workplace, is guilty of an offence.
Maximum penalty:
(a)    for an offence against paragraph (a) or (b)—$5 000;
(b)for an offence against paragraph (c)—$5 000 or imprisonment for 1 year.
Certain information obtained by RWSA is to be kept confidential, as per, and subject to, s 185 of the RTW Act:
185—Confidentiality to be maintained
(1)     A person must not disclose information (except as permitted by subsection (3)) if—
(a)the person obtained the information in the course of carrying out functions in, or in relation to, the administration, operation or enforcement of this Act; and
(b)the information is—
(i)about commercial or trading operations; or
(ii)about the physical or mental condition, or the personal circumstances or affairs, of a worker or other person; or
(iii)information provided in a return or in response to a request for information under this Act.
Maximum penalty: $10 000.
(2)     The Corporation may enter into arrangements with corresponding workers compensation authorities about sharing information obtained in the course of carrying out functions related to the administration, operation or enforcement of this Act or a corresponding law.
(3)     A disclosure of information is permitted if it is—
(a)a disclosure in the course of official duties; or
(b)a disclosure of statistical information; or
(c)a disclosure made with the consent of the person to whom the information relates, or who furnished the information; or
(d)a disclosure made to a corresponding workers compensation authority in accordance with an arrangement entered into under subsection (2); or
(e)a disclosure authorised or required under any other Act or law; or
(f)a disclosure required by a court or tribunal constituted by law, or before a review authority; or
(g)a disclosure to the Corporation or a self-insured employer; or
(h)a disclosure to an injured worker's employer in accordance with this Act; or
(i)a disclosure to the Lifetime Support Authority of South Australia (the LSS Authority)—
(i)for purposes associated with the operation of section 176 of this Act, section 55 of the Motor Vehicle Accidents (Lifetime Support Scheme) Act 2013, or an agreement envisaged by those sections; or
(ii)without limiting subparagraph (i), so that the LSS Authority may provide services and exercise powers and discretions under this Act or the Motor Vehicle Accidents (Lifetime Support Scheme) Act 2013; or
(j)a disclosure made under the authorisation of the Minister; or
(k)a disclosure authorised by regulation.
(4)     A regulation made for the purposes of subsection (3)(k) cannot take effect unless it has been laid before both Houses of Parliament and—
(a)no motion for disallowance is moved within the time for such a motion; or
(b)every motion for disallowance of the regulation has been defeated or withdrawn, or has lapsed.
(5)     In this section—
corresponding workers compensation authority means any person or authority in another State or a Territory of the Commonwealth with power to determine or manage claims for compensation for injuries arising from employment.
When the Respondents were appointed as the liquidators for Ticon, they made a request to RWSA for all information which related to Ticon, and Ticon’s unpaid debts owing to RWSA. Subsequently, the Respondents were provided with the Statements from RWSA, amongst other documents and information. The Statements were disclosed by RWSA to the Respondents on two separate occasions, namely 15 March 2016 and 6 December 2016 (“the Disclosures”).
At the time of making each of the Disclosures, RWSA had received corresponding authorisations on 3 November 2015 and 28 June 2016 (“the Authorisations”).
The Appellants’ First Ground of Appeal
It is the submission of the Appellants that the Disclosures were unlawful as the Authorisations were not valid pursuant to s 185(3)(j) of the RTW Act, therefore not permitted under s 185, and as such the Disclosures should never have occurred. This argument was put to the Court in the Appellant’s original application before Judge Dart. Judge Dart dismissed the application on the basis that the Authorisations were valid pursuant to s 185(3)(j).
This submission is the first ground of the appeal, and it is put by the Appellants that Judge Dart, at [26] of Powell & Anor [2019] SASC 63 (“the April Reasons of Judge Dart”), erred in his decision that the Disclosures were lawful as:[5]
14.1 Each of the 3 November 2015 document and the 28 June 2016 document, taken as a whole, is a ministerial authorization.
14.2 Further, the “recommendation” part of each document, read in the context of the document as a whole was plainly intended to facilitate the provision of information to regulatory authorities only.
[5] Paragraph 14 of the Outline of Submissions of the Appellants.
I accept that the Authorisations were ministerial authorizations, but I reject that the Authorisations intended to facilitate the provision of information to regulatory authorities only, and uphold the original decision of Judge Dart in finding that the Authorisations were valid, and accordingly the Disclosures were legal.
The argument advanced by the Appellants attempted to set out that the Authorisations should be read down, and their true authority only enabled the provision of the Statements to regulatory authorities.
The authorisation from the RWSA authority dated 3 November 2015 was made in the following terms (“the First Authority”):[6]
[6] Affidavit of William Scott Willoughby sworn 1 February 2019, FDN27, Exhibit WSW-2.
It is recommended that—
1. you authorise the disclosure of information under section 185(3)(j) of the Return to Work Act 2014 in relation to investigations into labour hire practices and/or investigations to identify whether parties supplying labour are properly characterised as contractors, where disclosure would potentially facilitate—
•the investigation of non-payment or underpayment of premiums due to ReturnToWorkSA or of amounts due to any other State or federal regulatory authority, or
•the investigation or prosecution of breaches of the RTWA or regulations under the RTWA, or the Work Health and Safety Act 2012 or regulations under that Act, or
•the investigation or prosecution of breaches of the Fair Work Act 2009 or any regulation under that Act, or
•the investigation or prosecution of breaches of any law or regulation administered by a regulatory authority, or
•the recovery of premiums or other money due to ReturnToWorkSA.
2. That this authorisation expires on 30 June 2016.
The First Authority was executed by the [then] Minister, endorsing same.
The second RWSA authority dated 28 June 2016 provided the following authorisations (“the Second Authority”):[7]
[7] Affidavit of William Scott Willoughby sworn 1 February 2019, FDN27, Exhibit WSW-2.
It is recommended that—
1. you authorise the disclosure of information under section 185(3)(j) of the Return to Work Act 2014 in relation to investigations into labour hire practices, potential illegal phoenix activity, dishonest practices and premium avoidance activity where disclosure would or would potentially facilitate—
•the investigation of non-payment or underpayment of premiums due to ReturnToWorkSA or of amounts due to any other State or Federal regulatory authority, or
•the investigation or prosecution of breaches of the RTWA or regulations under the RTWA, or the Work Health and Safety Act 2012 or regulations under that Act, or
•the investigation or prosecution of breaches of the Fair Work Act 2009 or any regulation under that Act, or
•the investigation or prosecution of breaches of any law or regulation administered by a State or Federal regulatory authority, or
•the recovery of premiums or other money due to ReturnToWorkSA.
2. This authorisation expires on 30 June 2018.
The Second Authority was accordingly executed by the [then] Minister, again endorsing same.
It is the submission of the Respondents that the purpose for which the Disclosures took place clearly fit under dot points 1, 2, 4 and 5 of the Authorities under paragraph 1, as well as numbered paragraph 1 itself.
I agree with the Respondents. To read down the Authorisations such that the Disclosures were to no longer fall within the identified categories would require materially changing or overlooking the express wording of the Authorisations.
I note that the Appellants advanced their argument on the basis that the First Authorisation contained a sentence under the “Purpose” heading, at the beginning of the document, which referred to an upcoming meeting with Revenue SA and the Commissioner for State Taxation and possible disclosure to them.[8] This sentence only forms part of the “Purpose” section, along with another identified purpose of investigating labour hire. This section of the document does sit separately to the “Recommendation” section, which effectively forms the authorisation. Although the “Purpose” section may have guided the minister in providing the authorisations, it would be inappropriate to read down the First Authorisation so significantly that the wording of the authorisation is ignored and effectively replaced or limited to regulatory bodies. There is no corresponding text in the Second Authorisation, which is more directly focused on the issue of illegal phoenix activity. This argument fails to limit the Authorisations.
[8] Affidavit of William Scott Willoughby sworn 1 February 2019, FDN27, Exhibit WSW-2.
The Second Ground of Appeal
It is the Respondents’ second ground of appeal that even if the Authorisations were lawful, the Disclosures were invalid as they were not “made under” the Authorisations.
If the Authorisations were valid, and the Disclosures took place as authorised, the Appellant’s requirement for specifically acting under the Authorisations becomes an academic point since the conduct of RWSA is prima facie legal.

Regardless, the evidence of the Respondent states that RWSA completed the Disclosures with conscious reference to the Authorisations.[9]
[9] Affidavit of William Scott Willoughby sworn 1 February 2019, FDN27 at [15] – [17].
On this point, I find in favour of the Respondents that if the Authorisations actually required the Disclosures to be “made under” them, the Disclosures were indeed “made under” the Authorisations.
The Third Ground of Appeal
The Appellants, under this ground of appeal, sought to have the examination summonses set aside on the grounds of material non-disclosure. The material non-disclosure is alleged to have occurred when the Respondents failed to advise the Court that the Disclosures had been obtained under allegedly invalid Authorisations.
In the first instance this ground can be dismissed on the basis that the Authorisations were valid, and as such no further disclosure needed to occur.
For completeness, I find that the Respondents have not committed any material non-disclosure. As Judge Dart set out in his reasons dated 22 May 2019 (“the May Reasons of Judge Dart”), the obligation to provide relevant material is set out in Re Southern Equities Corporation Ltd (in liq); Bond & Anor v England,[10] where the principal of the judgment of the Full Court, Lander J, stated:[11]
There can be no doubt, in my opinion, that a person who makes an application of this kind is under an obligation to bring all facts and material to the court's attention which might bear upon the order to be made. The applicant has no lesser obligation than that imposed upon a party seeking an injunction ex parte. Indeed, in my opinion, the obligation for frankness and candour is even greater in an application of this kind. That is because, unlike on the return of an interlocutory injunction obtained ex parte, on the return of an examination summons the material supporting the application is not ordinarily made available to the proposed examinee.
…
The obligation is to provide to the court all material which might impact upon the order sought, including all material which might lead the court to refuse the application. The applicant must act in the place of the proposed examinee and therefore draw to the attention of the court anything which might lead the court to refuse the application.
…
It cannot be said that an order obtained in circumstances where there has been a failure to disclose material facts must necessarily be set aside. Whether or not the order ought to be set aside for failing to disclose material facts will depend upon the facts not disclosed and the circumstances in which the non disclosure came about. An error of judgment in failing to disclose a fact which later becomes material may not necessarily lead to the setting aside of the order previously obtained. So also an innocent non-disclosure may not necessarily require the setting aside of the order for the examination.
[10] (1997) 25 ACSR 394.
[11] (1997) 25 ACSR 394 at 422-424.
The obligation placed on the Respondents was to put before the Court all material facts which might have an impact on the orders sought, including all material which may lead the Court to refuse an application. But even where there has been a failure to do so, it does not necessarily follow that an order will be set aside.
The Respondents were under the impression that RWSA validly obtained the statements which were the subject of the Disclosures, and that the Disclosures were authorised. There is no reason for the Respondents to have doubted RWSA. They put forward all material information which they possessed.
Further, Judge Dart found that if there had been some form of non-disclosure on the part of the Respondents, it would not have necessarily been so persuasive as to lead the Court, or might lead the Court, to refuse the application.
I reject this ground of appeal and agree with the May Reasons of Judge Dart.
The Fourth Ground of Appeal
The fourth ground of appeal advanced by the Appellants is that Judge Dart erred in not allowing the Appellants to access the s 596C affidavit which was filed in support of the application for the examination summonses, and then cross examine Mr Willoughby and Mr Powell in respect of their evidence. Section 596C of the Act provides that:
596C Affidavit in support of application under section 596B
(1)A person who applies under section 596B must file an affidavit that supports the application and complies with the rules.
(2)The affidavit is not available for inspection except so far as the Court orders.
It is at the discretion of the Court as to whether the s 596C affidavit is made available for inspection. I agree with Jude Dart’s refusal to allow access to the s 596C affidavit, and find that the Appellants have failed to advance an appropriate argument to allow inspection of the s 596C affidavit or to cross-examine Mr Willoughby and Mr Powell.
The Fifth Ground of Appeal
The final ground of appeal put forward by the Appellants is that Judge Dart erred in permitting the Respondents to lift and copy documents produced by the Appellants pursuant to the summonses.
I find no issue and agree with Judge Dart’s decision to allow the lifting and copying of documents produced by the Appellants. I dismiss this ground of appeal.
Conclusion
I dismiss the appeal on each of the five grounds advanced by the Appellants. The Authorisations were valid, the Disclosures were legal and the examination summonses were validly issued. The examinations will proceed.