Capital Options (Aust) Pty Ltd v Hazratwala

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FEDERAL COURT OF AUSTRALIA

Capital Options (Aust) Pty Ltd v Hazratwala [2023] FCA 1431

Appeal from: Capital Options (Aust) Pty Ltd v Hazratwala, in the matter of Weststate Consortium (in liq) [2023] FCA 458
File number: QUD 258 of 2023
Judgment of: BEACH J
Date of judgment: 20 November 2023
Catchwords: CORPORATIONS – liquidation – summonses for examination – leave to appeal – summonses issued under ss 596A and 596B of the Corporations Act 2001 (Cth) – application to primary judge to discharge such summonses – orders made for discharge – whether orders for discharge are an interlocutory or final judgment – objections as to competency – leave to appeal necessary – extension of time within which to seek leave to appeal necessary – objections to competency upheld – notice of appeal struck out – extension of time to file application for leave to appeal granted – leave to appeal refused
Legislation:

Corporations Act 2001 (Cth) ss 9, 596A, 596B, 597(5A)

Federal Court of Australia Act 1976 s 24(1A)

Cases cited:

Bax v Legal Practitioners Admissions Board [2021] QCA 93

Capital Options (Aust) Pty Ltd v Hazratwala, in the matter of Weststate Consortium Pty Ltd (in liquidation) [2023] FCA 458

Carr v Finance Corp of Australia Ltd (1981) 147 CLR 246

Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397

Gerah Imports Pty Ltd v The Duke Group Ltd (in liquidation) (1993) 61 SASR 557

Jones v Porter [2022] FCA 1219

Kassiou v Heard [2017] FCA 425

Pitman v Park [2020] FCA 887

Shapowloff v Stirling Henry Ltd (in liq) [1972] 2 NSWLR 691

Division: General Division
Registry: Queensland
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Number of paragraphs: 75
Date of hearing: 14 November 2023
Counsel for the Appellant: Mr G. J. Radcliff
Solicitor for the Appellant: Senior Legal
Counsel for the First, Second, Third and Fifth Respondents: Mr D. Savage KC and Mr M. Walker
Solicitor for the First, Second, Third and Fifth Respondents: Connolly Suthers
Counsel for the Sixth Respondent: Mr C. A. Wilkins KC
Solicitor for the Sixth Respondent: Wilson Ryan Grose

ORDERS

QUD 258 of 2023
BETWEEN:

CAPITAL OPTIONS (AUST) PTY LTD ACN 163 767 235

Appellant
AND:

DR KIRAN HAZRATWALA

First Respondent

DR PETER MCEWEN

Second Respondent

DR KAUSHIK HAZRATWALA (and others named in the Schedule)

Third Respondent

ORDER MADE BY:

BEACH J

DATE OF ORDER:

20 NOVEMBER 2023

THE COURT ORDERS THAT:

1.The respondents’ notices of objection to competency be upheld.

2.The appellant be refused an extension of time within which to file and serve its notice of appeal.

3.The appellant’s notice of appeal dated 12 June 2023 be struck out.

4.The appellant be granted the necessary extension of time within which to apply for leave to appeal from the judgment of Sarah Derrington J given on 15 May 2023.

5.The appellant be refused leave to appeal from the said judgment.

6.The appellant pay the respondents’ costs of and incidental to the respondents’ notices of objection…

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Details
Case
[2023] FCA 1431
Decision Date

CaseChat Overview and Summary

In the matter of Capital Options (Aust) Pty Ltd v Hazratwala, the dispute involved summonses for examination issued under sections 596A and 596B of the Corporations Act 2001 (Cth). The primary judge, Sarah Derrington J, had discharged these summonses, leading to an application to appeal the decision. The central legal issue before the court was whether the orders for discharge were interlocutory or final judgments, and if leave to appeal was necessary. Additionally, the court had to consider whether an extension of time was warranted for seeking leave to appeal.

The court found that the primary judge’s judgment was interlocutory rather than final. The decision did not finally determine the rights of the parties, as Capital Options could still apply for new summonses if it satisfied the eligibility criteria. The nature of the summonses was procedural, aimed at gathering information rather than adjudicating substantive rights or obligations. The court further held that the concept of "finality" did not apply to the judgment since it did not dispose of any substantive rights or obligations of the parties. Consequently, leave to appeal was necessary to challenge the interlocutory judgment.

The court granted an extension of time to file an application for leave to appeal but ultimately refused leave to appeal from the primary judgment. The respondents' objections to the competency of the appeal were upheld, resulting in the appellant's notice of appeal being struck out. The court also ordered the appellant to pay the respondents' costs associated with the objections and related applications.

The final orders of the court were as follows: the respondents’ objections to competency were upheld; the appellant was refused an extension of time to file a notice of appeal; the appellant’s notice of appeal was struck out; the appellant was granted an extension of time to apply for leave to appeal; the appellant was refused leave to appeal; and the appellant was ordered to pay the respondents' costs.

Orders

Orders of the court

1. The respondents’ notices of objection to competency be upheld.

2. The appellant be refused an extension of time within which to file and serve its notice of appeal.

3. The appellant’s notice of appeal dated 12 June 2023 be struck out.

4. The appellant be granted the necessary extension of time within which to apply for leave to appeal from the judgment of Sarah Derrington J given on 15 May 2023.

5. The appellant be refused leave to appeal from the said judgment.

6. The appellant pay the respondents’ costs of and incidental to the respondents’ notices of objection to competency, the respondents’ interlocutory applications dated 27 June 2023 and 30 June 2023 and the appellant’s interlocutory application dated 19 September 2023.

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

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

For these reasons I have granted the necessary extension of time within which to seek leave to appeal. Let me turn then to the main questions. Is her Honour’s judgment interlocutory or final? In my view her Honour’s judgment given on 15 May 2023 was interlocutory and not final in the relevant sense. Accordingly, leave to appeal is necessary to challenge that judgment (see s 24(1A) of the Federal Court of Australia Act 1976 (Cth)). Her Honour’s judgment does not finally determine the rights of the parties in a relevant sense when one considers the legal rather than the practical effect of her judgment (see Carr v Finance Corp of Australia Ltd (1981) 147 CLR 246 at 248 per Gibbs CJ). First, Capital Options, providing that it can again satisfy the “eligible applicant” requirement, is able to bring a new application seeking the issuing of summonses provided of course that any new application is not an abuse of process. The fact that it can make a fresh application, assuming that it can again satisfy the standing requirement, is reason enough to characterise her Honour’s decision as interlocutory. Second, there is nothing in Capital Options’ point that one of her Honour’s orders was a dismissal of the originating process that had been before the Registrar, and that what was being dismissed demonstrated the “finality” of her Honour’s orders. The question of whether a judgment is final or interlocutory depends upon the nature of the judgment and not the form or nature of the application made to the Court. So much is apparent from the discussion of both Gibbs CJ and Mason J in Carr. Other points were made by Capital Options that her Honour was “functus officio” and that there was nothing left to decide other than as to costs. But these “finality” ideas misconceived the nature of the test to be applied as to the characterisation of her Honour’s 15 May 2023 judgment, and in any event did not engage with the fact that a new application could be made if the standing requirement was satisfied. Third, in terms of the requirement to finally dispose of rights, what was the right being exercised here by Capital Options which it was said was finally determined by her Honour’s judgment? A right to apply to have summonses for examination issued? But to so describe it is to demonstrate its procedural nature. Let me elaborate a little. Sections 596A and 596B and summonses for examination issued thereunder do not determine or require adjudication of substantive rights and obligations as such. They provide a procedural mechanism for bringing a person before the Court for examination. Moreover, the examination concerns the procuring of information about the examinable affairs of a corporation, which information may then be used in other proceedings involving substantive rights or obligations. The “resolution” of the summonses, and any prior application under ss 596A and 596B, is the holding of the relevant examination. And the “resolution” of the examination is the procuring of information. But none of this is the resolution or determination of substantive rights and obligations as such. Now true it is that Capital Options may have the right to apply for summonses for examination if it is an “eligible applicant”. And true it is that the issuing of a summons directed to a person has coercive effect. The examinee must attend Court at the appointed time to be examined. But could it be said that the examinee’s right is being infringed? I doubt it. Rather, a duty is being imposed upon him. But this is little different to that person being subjected to a subpoena (Shapowloff v Stirling Henry Ltd (in liq) [1972] 2 NSWLR 691 at 693 per Jacobs P). So, whether one views the matter from the perspective of the applicant for the summons for examination or from the perspective of the examinee, one is concerned with a procedural mechanism for the gathering of information. None of this concerns the adjudication or determination of substantive rights or obligations one way or the other concerning either the applicant for the summons or the proposed examinee.

Ratio Decidendi

Legal Principle Established

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