Carpenter International Pty Ltd (In Liq) (No 2)
[2015] VSC 681
•27 November 2015
| IN THE SUPREME COURT OF VICTORIA AT MELBOURNE | Not Restricted |
COMMERCIAL COURT
CORPORATIONS LIST
S ECI 2015 0175
IN THE MATTER of
CARPENTER INTERNATIONAL PTY LIMITED (IN LIQUIDATION) (ACN 165 690 657)
| MATHEW JAMES DONNELLY, DAVID MARK HODGSON AND ANDREW STEWARD REED HEWITT IN THEIR CAPACITIES AS JOINT AND SEVERAL ADMINISTRATORS OF CARPENTER INTERNATIONAL PTY LTD (IN LIQUIDATION) (ACN 165 690 657) and CARPENTER INTERNATIONAL PTY LTD (IN LIQUIDATION) (ACN 165 690 657) | Plaintiffs |
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JUDGE: | Digby J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 26 November 2015 |
DATE OF JUDGMENT: | 27 November 2015 |
CASE MAY BE CITED AS: | Carpenter International Pty Ltd (In Liq) (No 2) |
MEDIUM NEUTRAL CITATION: | [2015] VSC 681 |
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PRACTICE AND PROCEDURE – Failure to make disclosures at ex parte application – Summonses for examination under s 596B of the Corporations Act 2001 (Cth) – Application for discharge of summonses for examination –– Abuse of process – Separate disclosure orders – Examinable affairs – Power to issue summonses for examination – Exercise of discretion
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr D F McAloon | Clayton Utz |
| For the Respondents Crimsondale Pty Ltd, Ian Albrecht and Dianne Albrecht | Mr A Silver | Hapgood Legal |
| For the Respondent Mathew Albrecht | Dr M Wolff | Blueprint Law |
HIS HONOUR:
Introduction
Pursuant to Rule 11.05 of the Supreme Court (Corporations) Rules 2013, Ian, Dianne and Mathew Albrecht (‘the Albrechts’) bring an application for orders discharging the Summonses for their examination (‘the Summonses for Examination’) which were ordered pursuant to s 596B of the Corporations Act 2001 on 17 November 2015 (‘the present application’).
The present application takes place in the context of interlocutory proceedings that have a long and somewhat convoluted history. In Carpenter International Pty Ltd (in Liq)[1] I outlined the history of these interlocutory proceedings from 18 August 2015 to 9 November 2015.
[1][2015] VSC 667, [11]-[24].
In summary, GG Feedlot Pty Ltd (‘GG Feedlot’) brought proceedings on 18 August 2015 in this Court asserting a proprietary interest over 1,277 head of cattle located at the company’s Feedlot against the plaintiffs. Before the question of the ownership of the 1,277 head of cattle could be determined, GG Feedlot sold 880 of the 1,277 head of cattle (‘the Sold Cattle’) to Crimsondale Pty Ltd (‘Crimsondale’). The plaintiffs have obtained injunctions directed to preventing any further dealings with the Sold Cattle and the proceeds of the sales to date of the Sold Cattle. The plaintiffs are now seeking to determine the whereabouts of the Sold Cattle, in an attempt, it can be inferred, to recover said cattle.
The critical features of this matter, at this time, are:
(a) a valuable asset, the Sold Cattle said to be worth about $750,000 have been, it appears, surreptitiously sold by Crimsondale, which is owned and controlled by Ian and Dianne Albrecht;
(b) Mathew Albrecht, the son of Ian and Dianne Albrecht, acted as Crimsondale’s agent for the sale of said cattle;
(c) the Albrechts maintain that they do not know the identity of the person who in about October 2015, purchased the 880 head of cattle;
(d) the Albrechts maintain that they do not know where the 880 head of cattle which they sold in October 2015 are presently located; and
(e) the plaintiffs who assert ownership of the 880 head of cattle are seeking to extract information from the Albrechts, including the information referred to in (c) and (d) above.
Urgency attends the need for the Court to determine the present applications being made by the Albrechts because delay in bringing to bear the available process of the court to restrain any further dealing with the subject cattle until the issues between the parties are determined, including appropriate restraints in relation to the proceeds of sales and possible subsequent sales of the assets, may defeat the preservation of the subject matter of the disputed claims and defeat the effectiveness of the Court’s processes. The Albrechts’ present application to discharge summonses for their examination must also be urgently determined because a Judicial Registrar of this Court has scheduled the examination empowered by those summons, on 2 December 2015.
Ex parte application
On 11 November 2015 at 7.30pm, an email with attached letter was sent from the solicitors of Mathew Albrecht and GG Feedlot objecting to the provision of an affidavit on the basis of an asserted privilege under s 128 of the Evidence Act 2008.[2]
[2]By Interlocutory Application dated 18 November 2015, supported by affidavit of Mathew Albrecht sworn 17 November 2015, Mathew Albrecht sought a declaration of dispensation from compliance with Orders made on 9 November 2015 that he swear and file an affidavit addressing certain matters. Mathew Albrecht’s application of 18 November 2015 was determined adversely to him as applicant, in Carpenter International Pty Ltd (In Liq) [2015] VSC 667.
On 17 November 2015, the plaintiffs brought an ex parte application seeking examination summonses be issued upon the Albrechts under s 596B of the Corporations Act 2001. That ex parte application was supported by the Seventh Affidavit of Mathew James Donnelly dated 13 November 2015 (‘Donnelly Affidavit No 7’), Interlocutory Process dated 13 November 2015, and Outline of Submissions dated 17 November 2015; all of which have subsequently been provided to the Albrechts.
The Donnelly Affidavit No 7 which supported the plaintiffs’ application for the Summonses for Examination deposed:
[22]The Sold Cattle are the subject of the Plaintiffs’ application heard on 24 to 26 August 2015 before Cameron J, in which judgment is presently reserved (except in respect of the orders sought concerning the sale of cattle, which orders have been granted). The remaining (and reserved) aspect of the application seeks orders and directions as to ownership in, amongst other cattle, the Sold Cattle. It concerns questions of security interests under the Personal Property Securities Act 2009 (Cth). If the Plaintiffs’ submissions and evidence are accepted, Carpenter will be found to own the Sold Cattle. If however the Plaintiffs’ submissions are not accepted, the Court may find that other parties have an interest in at least some of the Sold Cattle that is superior to any interest of Carpenter. In that event and subject to the Courts’ ultimate findings, if the Plaintiffs are required (but are unable) to account to those parties for the Sold Cattle or the proceeds derived from the sale of the Sold Cattle, that may have adverse consequences for the Plaintiffs and/or for Carpenter’s creditors.
[23]On 19 August 2015, GG Feedlot filed an interlocutory process seeking orders that it has a perfected security interest in cattle (including the Sold Cattle) which has priority over any other interest. This application has been adjourned and has not been heard or determined. There is presently an order that the parties mediate on 24 November 2015.
[24]I am informed by Paul James, and believe, that, by reason of the actions of GG Feedlot, Crimsondale, Mathew Albrecht, Ian Albrecht and Dianne Albrecht, any or all of those persons may be liable in conversion of Carpenter’s property in the Sold Cattle, subject to the determination of ownership of those cattle by resolution of the application referred to in paragraphs 22 and 23 above. I am informed by Mr James, and believe, that each person’s potential liability in conversion may arise irrespective of whether he, she or it received the Sold Cattle with or without notice of the competing proprietary claims to that cattle which are the subject of the proceedings.
[25]I am also informed by Mr James, and believe, that any other person who may have purchased the Sold Cattle from Crimsondale as a result of the transactions described in my affidavit above may also be liable in conversion for the same reasons identified in paragraph 24 above.
[26]I am further informed that the conduct of GG Feedlot in selling the Sold Cattle may also be a breach of a deed of settlement and release with Carpenter and its former administrators…
[27]As matters presently stand, I do not know, and I am informed by the two other liquidators of Carpenter (and the Second and Third Plaintiffs) that they do not know:
(a)where the Sold Cattle were taken after being removed from GG Feedlot’s feedlot;
(b)where the Sold Cattle are presently located;
(c)where the proceeds of any sale of the Sold Cattle beyond the transaction between GG Feedlot and Crimsondale may be located; and
(d)which third parties may have been involved in dealings with the Sold Cattle since they were the subject of the transactions deposed to in the affidavits filed and served in respect of the GG Feedlot Injunction Application and Crimsondale Application.
[28]In my view, the tracing of the Sold Cattle and any proceeds of the Sold Cattle are part of the examinable affairs of Carpenter, including as the Sold Cattle is:
(a)in the liquidators’ view and subject to final determination, property belonging to Carpenter; or
(b)alternatively, subject to security interests held by parties who may look to the Plaintiffs to satisfy any interest of those parties in the Sold Cattle that can no longer be satisfied by the delivery up of the Sold Cattle or remittance of the proceeds derived from their sale.
[29]It may also be relevant to a cause of action available to Carpenter for breach of contract, as referred to in paragraph 26 above. The evidence filed in the Crimsondale Application indicates that Mathew Albrecht has information which will reveal, or assist in investigating, the unknown matters referred to in paragraph 27 above. I believe that Ian and Dianne Albrecht may also have information concerning those unknown matters, including the source of the $59,915.30 referred to in paragraph 17(c) above. I believe that any such information obtained on examinations will ultimately assist the Plaintiffs in obtaining the best return for creditors of Carpenter.
[30]For the reasons outlined above, on behalf of the Plaintiffs, I respectfully request the Court to grant the orders sought in the Section 596B Application.
Following the hearing of the ex parte application, I made the following Orders on 17 November 2015:
1.The examination summonses, in the forms attached and marked "A", be issued pursuant to section 596B of the Corporations Act 2001 (Cth) to:
(a) Mathew Albert Albrecht (MA Summons);
(b) Ian Albert Albrecht (IA Summons); and
(c) Dianne Albrecht (DA Summons),
(together the Summonses).
2.Pursuant to Rule 11.4 of the Supreme Court (Corporations) Rules 2003:
(a)service of a copy of the MA Summons on Blueprint Law will be effective service of the MA Summons under the Rules; and
(b)service of a copy of the IA Summons and DA Summons on Richard Hapgood of Hapgood Law will be effective service of the IA Summons and the DA Summons under the Rules.
3.The costs of this application be costs in the liquidation of Carpenter International Pty Ltd (in liquidation).
The attached Summonses were in Form 17, as required by Reg 11.3 of the Supreme Court (Corporations) Rules 2013 and contained in Schedule 2 to those Rules. The Summonses identically provided that:
You are summoned under section 596B of the Corporations Act 2001 (Cth) to:
(a) attend before Judicial Registrar Hetyey at the Supreme Court of Victoria, 210 William Street, Melbourne at 10.30 am on Wednesday, 2 December 2015, and from day to day until excused by the Court, to be examined on oath or affirmation about the examinable affairs of Carpenter International Pty Ltd (in liquidation); and
(b) to produce at the examination the following books:
In the case of Mathew Albrecht, the required documents for production at the examination are:
all original contracts or written document (including any emails, tax invoices or banking records) which relate to or record any sale, proposed sale, negotiations for the sale of, or dealings with any of the Sold Cattle since 26 August 2015.
In this summons:
Document has the meaning given to that term in the Evidence Act 2008 (Vic).
Sold Cattle means the 880 head of cattle which were purported to have been sold by GG Feedlot Pty Ltd to Crimsondale Pty Ltd in or about September 2015 and October 2015.
In the case of Dianne Albrecht, the required documents for production at the examination are:
all original bank statements for the account referred to as the "IA & D Albrecht bank account" in paragraphs 18 and 20 of the affidavit of Ian Albert Albrecht sworn 8 November 2015 for the period 1 September 2015 to date.
In the case of Ian Albrecht, the required documents for production at the examination are:
(i) the originals of the documents comprising exhibits IAA-1 to IAA-5 to the affidavit of Ian Albert Albrecht sworn 8 November 2015 (Affidavit); and
(ii) all original bank statements for the account referred to as the "IA & D Albrecht bank account" in paragraphs 18 and 20 of the Affidavit for the period 1 September 2015 to date.
The Albrecht Affidavits
The Albrechts have filed the following relevant affidavits:
(a)Mathew Albrecht affidavit dated 19 October 2015, which deposed that GG Feedlot had sold the 880 head of cattle to Crimsondale and had fully used the proceeds of sale to pay its creditors;
(b) Ian Albrecht affidavit dated 29 October 2015, which deposed that:
(i)Crimsondale had sold the 880 head of cattle by oral agreement between Ian Albrecht and an agent;
(ii)Ian Albrecht could not disclose the identity of the agent because of a confidentiality agreement;
(iii)Crimsondale had retained $249,305.60 in sale proceeds and used it to pay unidentified creditors of Crimsondale;
(c)Ian Albrecht further affidavit dated 8 November 2015, which deposed that;
(i)the agent who had acted for Crimsondale in respect of the sale of the Sold Cattle was Mathew Albrecht;
(ii)Mathew Albrecht had informed Ian Albrecht that he had entered into an oral confidentiality agreement with the stock agent through which he sold the cattle and would not reveal the details of that person’s identity to Ian Albrecht; and
(d)Dianne Albrecht affidavit dated 8 November 2015, which deposed that Dianne Albrecht agreed with the further affidavit of Ian Albrecht and did not know the identity of the agent through which Mathew Albrecht sold the cattle or the end purchaser.
Throughout the course of these proceedings, the Court has made a series of Orders (on 15 October, 22 October, 4 November and 9 November 2015) designed to provide the plaintiffs with information regarding all the relevant circumstances in relation to GG Feedlot’s disposal of the Sold Cattle or any subsequent disposal of the Sold Cattle, the whereabouts of the Sold Cattle, and the destiny of the money received as a result of any relevant sale.[3] The respondents’ affidavits filed and served in purported compliance with those orders have omitted key details with the apparent intent of frustrating the plaintiffs’ enquiries and delaying their investigations.[4]
[3]Plaintiffs’ Outline of Submissions dated 17 November 2015, [8].
[4]Ibid.
As matters presently stand, the affidavit evidence provided by the Albrechts, both in their personal capacity and on behalf of GG Feedlot and Crimsondale, in summary, discloses the following:
(a) GG Feedlot sold the 880 head of cattle to Crimsondale;
(b) Crimsondale then onsold the 880 head of cattle, via Mathew Albrecht (director of GG Feedlot) as agent of Crimsondale;
(c) Mathew Albrecht sold the cattle through Scott Lord of Dairy Livestock Services Pty Ltd as stock agent. It is unclear from the Mathew Albrecht affidavit of 25 November 2015 whether Mr Lord was acting in a personal capacity, on behalf of Dairy Livestock Services Pty Ltd, or as agent for an undisclosed purchaser;
(d) None of the Albrecht affidavits disclose where the Sold Cattle are at present.
Submissions on the present application
Submissions of Ian and Dianne Albrecht
Ian and Dianne Albrecht seek orders discharging the Summonses dated 18 November 2015 on three bases:[5]
[5]Outline of Submissions of Ian and Dianne Albrecht (undated), [4]; and oral submissions of 26 November 2015.
(a) the Summonses are an abuse of process in circumstances where the plaintiffs have adopted an alternate court process to obtain information from Ian and Dianne Albrecht, and in particular while that process is still on foot;
(b) the plaintiffs’ applications to examine Ian and Dianne Albrecht do not satisfy s 596B of the Corporations Act 2001; and
(c) alternatively, upon a proper consideration of the relevant factors, the Court ought to exercise its discretion to discharge the Summonses.
Submissions of Mathew Albrecht
Mathew Albrecht seeks orders discharging the Summons dated 18 November 2015 on the following bases:[6]
[6]Applicant’s Interlocutory Application dated 25 November 2015; Outline of Submissions dated 24 November 2015 and oral submissions of 26 November 2015.
(a) application for the Summons failed to comply with the standard of disclosure required in ex parte applications;
(b) the Summons is an abuse of process (for the same reasons raised in the submissions of Ian and Dianne Albrecht) and is not for a proper purpose in that the plaintiffs are seeking to use the Summons to assist and/or inform a breach of contract claim against GG Feedlot for selling the Sold Cattle; and
(c) the conduct is oppressive in circumstances where the respondent to the Summons has not been provided with conduct money.
Conclusions
Failure to comply with obligation of disclosure
In my view the ex parte application by the plaintiffs on 17 November 2015, did not require the applicants to evaluate and communicate to the court the plaintiffs’ assessment of the arguable merits of the plaintiffs’ claims in this Interlocutory Process, or the arguable merits of the arguments which the plaintiffs understood were raised, or foreshadowed, by Mathew Albrecht and Ian and Dianne Albrecht in the relevant Interlocutory Processes, including in the Interlocutory Process in relation to which Cameron J has currently reserved her decision. This is because:
(i) the affidavit material before the court in this Interlocutory Process sufficiently detailed and acquainted the Court with the context of the applications for the summonses for examination and the positions and arguments being advanced by Mathew Albrecht and Ian and Dianne Albrecht and the plaintiffs;[7]
[7]Ian and Dianne Albrecht did not file written submissions to the effect that the plaintiffs had failed to make proper disclosure on the applications made on 17 November 2015. In oral argument on 26 November 2015, counsel for Ian and Dianne Albrecht, submitted no more than at the time the ex parte applications on 17 November 2015 the plaintiffs did not deal with all the considerations relevant to the court’s exercise of discretion under s 596B of the Corporations Act 2001; no disclosure on an ex parte application was not otherwise pressed by Ian and Dianne Albrecht.
(ii) the materials referred to in this Interlocutory Process disclose that there is far reaching dispute between the parties including about the plaintiffs’ entitlement to immediate possession of the subject cattle and their potential claim for conversion, and GG Feedlots’ asserted security interests, and related issues;
(iii) furthermore, no adequately informed evaluation of the merits of the above disputes and issues is presently possible on the materials in this Interlocutory Process; and
(iv) examinations of the relevant type are not confined to investigating the prospects of success of any particular potential cause of action, neither are they predicated on the establishment of an arguable cause of action or potential cause of action.
No abuse of process
The plaintiffs correctly submit, and it was not argued to the contrary by the respondents, that it is for the party asserting the existence of an abuse, or threatened abuse of process to establish such abuse, usually by exposing an improper purpose on the part of the party taking the action sought to be impugned.
I accept, as the respondents have argued, that a potential abuse of process might arise in circumstances where dual overlapping process of the court were sought to be invoked in circumstances which are inappropriate and, or oppressive.[8]
[8]See Re Metropolitan Bank (1880) 15 Ch D 139 at 142-143.
The Albrechts submit, in essence, that having sought and obtained orders on 15 October 2015, 22 October 2015, 4 November 2015 and 9 November 2015, which required disclosure of information from the Albrechts by way of affidavit evidence (‘the Disclosure Orders’), it was an abuse of process for the Liquidators to seek to issue summonses to also examine the Albrechts pursuant to s 596B of the Corporations Act 2001.
In my view in this proceeding there has been no abuse of process perpetrated by the Liquidators issuing Summonses for Examination because:
(v) here the s 596B processes have been employed by the Liquidators in the special circumstances of this matter, namely where affidavits filed by each of the Albrechts in purported compliance with orders of this Court have dribbled out elements of required information, put forward opaque and contradictory statements, and failed to provide important information and clarification, in a way I firmly consider to have been undertaken by each of those respondents to frustrate and delay the Liquidators’ inquiries and investigations;[9]
[9]For example, the M Albrecht Affidavit did not disclose that he was the agent that had acted for the purchaser of the Sold Cattle or that his parents were the directors of the corporate purchaser (Crimsondale Pty Ltd). In addition, the First I Albrecht Affidavit did not disclose that the “agent” who sold the Sold Cattle on behalf of Crimsondale Pty Ltd was Mathew Albrecht.
(vi) substantial deposits of money reflected in Exhibit “IAA-1” to Mr Ian Albrecht’s Affidavit of 8 November 2015, do not identify the source of such deposits nor specify the identity of the relevant depositors, and such depositors are not elsewhere detailed in the affidavits of Ian Albrecht or Dianne Albrecht;
(vii) although Dianne Albrecht has stated that she orally contracted with her agent Mathew Albrecht to deal with and sell the 880 head of cattle to a third party, Dianne Albrecht does not provide any detail of that oral contract and associated arrangements;[10]
[10]Dianne Albrecht affidavit dated 8 November 2015, [8]-[10]. Despite the central role of Dianne Albrecht, who Mathew Albrecht has identified as the person who entered into “verbal contracts in relation to the sale of the Sale Cattle”, Dianne’s affidavit dated 8 November 2015 substantively adopts both the form and content of the affidavits sworn by Ian Albrecht.
(viii) at the time the Summonses for Examination were issued on 17 November 2015, by leave, the Disclosure Orders had not been satisfactorily complied with by Mathew Albrecht who had by 11 November 2015, communicated by his lawyers that he would be making an application directed to seeking dispensation from compliance with orders requiring him to provide the information ordered by the Court on 9 November 2015. Accordingly, at the date of issue of the Summonses for Examination, adequate disclosure had not been made by Mathew Albrecht pursuant to the Disclosure Orders and may not have been made in the near future;
(ix) in summarising the above in relation to Mathew Albrecht I do not intend to convey that his parents, Ian and Dianne Albrecht have satisfactorily complied with the Disclosure Orders directed to them. As a result of the Albrechts’ conduct, to which I have referred, there were reasonable bases upon which to conclude, that the Albrechts were, in concert, seeking to frustrate and delay the Liquidators’ inquiries and investigations by failing to disclose information as they had been ordered to do, in a forthcoming, complete and expeditious manner;
(x) the timing of the issue of the Summonses for Examination, namely after the making of the earlier Disclosure Orders, is in my view not decisive of whether the abuse asserted by the respondents has occurred.[11]
[11]New Zealand Steel (Australia) P/L v Burton (1994) 13 ACSR 610, at 617: “New Zealand Steel has had, and will have, no discovery of documents in the action. I consider the fact that it sought to have discovery of documents in the action does not reveal some final election on its part to proceed along that path and thus is not to the point in determining whether the application for an order under s 596b is an abuse of process, vexatious or oppressive.”
I reject the submission on behalf of Ian and Dianne Albrecht that the plaintiffs have, at a material time, accepted that their affidavits provided as ordered by the Disclosure Orders, as adequate and complaint with those orders.
I consider that the correct position is as submitted by the plaintiffs namely, Ian Albrecht and Dianne Albrecht have only at best surrendered certain required information incrementally, and in a ‘drip feed’ way which has been unsatisfactory to the plaintiffs, and to the court, and has, it appears, been undertaken to frustrate and delay the Liquidators’ proper inquiries.
In my view the examination process is an appropriate and entirely justifiable one, particularly in the special circumstances of this matter which I have outlined above. Here also there is, in my view, a very strong case for the deployment of the examination process under the Corporations Act.
As Gray J stated in Re Normans Wines Ltd; Harvey v Burfield:[12]
“The purpose of the power given in Pt 5.9 of the Corporations Act is to provide a liquidator with the means of discovering the assets of a corporation, their whereabouts, the identity of creditors and the extent of the liabilities of the corporation. The Act further allows the liquidator to discover the reasons for the demise of the corporation and whether anyone, including those examined, might be guilty of some civil or criminal wrong.”
[12](2004) 49 ACSR 422, [122].
Further I consider that there is no abuse of process resulting from the issue of the Summonses for Examination even though an earlier disclosure process has been ordered and responded to by the Albrechts to varying degrees of compliance, as elsewhere addressed. This is because the scope of the examination of the Summonses of 17 November 2015 is broader than the subject matter of the disclosure orders, including because, as I have detailed, there remain unelucidated unknown matters, to date unsatisfactorily addressed by the Albrecht deponents, including Ian and Dianne Albrecht. Furthermore, no abuse arises in the circumstances because the forthcoming examination before the Judicial Registrar can legitimately extend to questions confirming the matters addressed to date by the Albrecht deponents.[13]
[13]See Re Southern Cross Petroleum Pty Ltd (in liq) v Hirsch & Anor [1998] 70 SASR 527 at 533-534.
I am also, for the above reasons, not at all satisfied that the dominant purpose of the Liquidators seeking to examine the Albrechts is an improper one. I am however satisfied that the Examination Summonses are deployed to obtain presently outstanding information in relation to the assets and the proceeds of any sale of those assets, which are legitimate purposes under the Act.
Examinable affairs
Ian and Dianne Albrecht argue that they are not able to give any more information about the examinable affairs of the company, and therefore the requirements of s 596B of the Corporations Act 2001 are not made out in that respect.
I am however satisfied on the balance of probabilities that there is information beyond the affidavit material which might fall within the scope of the said section of the Act, including information already referred to which it is legitimate for the Liquidators to seek to have confirmed in the forthcoming s 596B examinations, and additional information which I have referred to in paragraph [23].
I am not satisfied in the circumstances that the Liquidators’ Summonses for Examination are directed to attacking the Albrecht deponents in respect of the matter to which they have to date deposed, or seeking to attack their credit per se. I also note in this regard that the forthcoming examination process incorporates the significant protections referred to by Lander J in Re Southern Cross Petroleum Sales.[14]
[14]See Re Southern Cross Petroleum Pty Ltd (in liq) v Hirsch & Anor [1998] 70 SASR 527 at 535.
The definition of ‘Examinable Affairs’ in s 9 of the Corporations Act 2001, is broad and has been given a wide meaning by the Court. That definition, including via s 53(d) of the Act includes:
any act or thing done (including any contract made and any transaction entered into) by or on behalf of the [company], or to or in relation to the [company] or its business or property, at a time when…the [company] is being wound up… (emphasis added).
Ian and Dianne Albrecht assert that their affidavit material filed to date exhausts what they can depose to about the company’s examinable affairs.
However, for the reasons I have identified in paragraphs [23] and [31] hereof I reject the submission summarised in the last preceding paragraph.
Furthermore, as Lander J emphasised in Re Southern Cross Petroleum Pty Ltd, the Court need only be satisfied that the examiner may be able to give information about the examinable affairs of the subject corporation. I am so satisfied for the reason I have already stated.
Exercise of discretion
In my view the circumstances of this matter outlined above provide strong and cogent reasons for maintaining and enforcing the Summonses for Examination. In these circumstances the Summonses for Examination are likely to be of utility to the Liquidators in implementing the fundamental purpose of s 596B of the Act, as described by Gray J, extracted at paragraph [27] above.
Further, although I recognise that attendance for examination will be an inconvenient and unwelcome activity for the Albrechts who I also recognise are elderly and will have to travel for some time to attend Court, in my view those considerations are heavily outweighed by the likely utility, in this case, of the examination procedure and the apparent need for that procedure in the relatively urgent circumstances of this matter where the whereabouts of the relevant assets remains unknown and there may be imminent risk of subsequent sales and an increasingly cold trail.
In my view the discretion to issue the Examination Summonses, and to maintain them, is unimpugned by the Albrechts’ arguments, having regard to the purpose of the intended examinations, the importance of the information sought by the Liquidators, the seriousness of the subject of the summonses, and the utility of the sort of information sought, the lack of cooperation from the examinees and the great difficulty to date obtaining the information sought by the Liquidators from other sources. These same factors support the subject exercise of discretion.
Finally, I refer to Mathew Albrecht’s submission that the Examination Summonses are void or ineffective because they did not come with an offer of ‘conduct money’. No such argument was raised by Ian and Dianne Albrecht.
It was clarified in argument that at, and after, service of the Summonses for Examination, Mathew Albrecht did not seek, or in any way complain about, a lack of conduct money. Nor in argument was any statutory basis for a requirement for conduct money able to be identified. I consider this component of Mathew Albrecht’s argument to be wholly unmeritorious.
Costs
The plaintiffs apply for costs against Mathew Albrecht, in relation to Mathew Albrecht’s Interlocutory Application dated 18 November 2015, and associated costs and seeks such cost on an indemnity basis, to be paid forthwith.
The plaintiffs submit that Mathew Albrecht’s objection to compliance with Order [5] of 9 November 2015 has given rise to unnecessary delay, including because that unsuccessful objection necessitated a further hearing on 19 November 2015, and the necessitated judgment on the objections which was handed down on 23 November 2015.
The plaintiffs also complain that the unsuccessful objections raised by Mathew Albrecht resulted in an affidavit originally ordered to be filed on 11 November 2015, not being provided until 25 November 2015, in a setting where the matters required to be addressed in that affidavit are potentially critical to the present interlocutory proceedings, and where the present application is attended with, real urgency because delay may imperil the plaintiffs’ recovery of the subject cattle and proceeds of dealings with those cattle.
The plaintiffs also point out, in support of their claim for costs, that Mathew Albrecht’s unsuccessful objections to providing an affidavit, as ordered, generated the costs associated with the hearing on 19 November 2015 and the cost of a further court attendance on 23 November 2015.
The plaintiffs submit that it is open to infer that the objections raised to providing the affidavit ordered were calculated to delay and obstruct the Liquidators’ enquiries, and for that reason the court should order costs on an indemnity basis.
Mathew Albrecht’s submission on this application for costs did not take issue with a costs order being made in favour of the plaintiffs on a standard basis. It was submitted on his behalf, however, that an indemnity costs order against him was unwarranted in the circumstances.
Conclusion on Costs
I do not consider that there is a proper basis upon which to exercise my discretion in favour of indemnity costs against Mathew Albrecht in this instance.
In my view, the issues which Mr Albrecht raised in his submissions of 19 November 2015 were, although unsuccessful, arguable. Furthermore, his claim of common law privilege against self-incrimination was substantial and in my view bona fide. Given the fundamental and entrenched nature of this possible basis for resisting the swearing of the required affidavit, and given that Mr Albrecht’s claim in that regard was arguable, clear and persuasive, circumstances would need to exist to justify the conclusion that the applicant was raising such a defence for tactical reasons.
I am unpersuaded that Mr Albrecht sought to invoke the privilege against self-incrimination for the purpose of delaying and obstructing the Liquidators’ enquiries.
I shall order Mathew Albrecht to pay the plaintiffs’ costs of and associated with Mathew Albrecht’s Interlocutory Application dated 18 November 2015, on a standard basis.
I shall order that the costs payable by Mr Mathew Albrecht to the plaintiffs in respect of his Interlocutory Application of 18 November 2015, be payable forthwith although I note that rule 63.03 of the Supreme Court (General Civil Procedure) Rules 2015 provides “Costs which a party is required to pay under any of these Rules or an order of the Court shall, unless the Court otherwise orders, be paid forthwith”.
In relation to costs of the plaintiffs’ associated with successfully resisting the applications by Ian and Dianne Albrecht and by Mathew Albrecht by Interlocutory Application dated 25 November 2015, to discharge the Summonses for Examination dated 18 November 2015, I direct that any application for such costs be made by way of short written submissions by the plaintiffs of no more than two pages in length, to be filed and served by 4.00 pm on Monday 30 November 2015, and any submissions of the respondents in response to such application, of no more than two pages be filed and served by 4.00 pm on Wednesday 2 December 2015. Unless any party objects to this course, I shall thereafter rule on such cost application, “on the papers”.
Orders
(1) The applications of Ian Albrecht and Dianne Albrecht and Mathew Albrecht, to discharge the plaintiffs’ Summonses for Examination dated 17 November 2015, be dismissed.
(2) By 4.00 pm Monday 30 November 2015, the plaintiffs file and serve any submissions in support of any application for costs in relation to the Albrechts’ applications to discharge the Summonses for Examination, such submissions not to exceed two pages in length.
(3) By 4.00 pm Wednesday 2 December 2015, the respondents to any application for costs by the plaintiffs under (1) above shall file and serve, any submissions as to costs, such submissions not to exceed two pages in length.
(4) Costs reserved in relation to the subject of Orders (2) and (3) above.