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Carter v Gartner

Carter v Gartner

Case [2003] FCA 653 30 June 2003

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FEDERAL COURT OF AUSTRALIA
Carter v Gartner, in the matter of Gartner Wines Pty Limited
and the Corporations Act 2001 [2003] FCA 653
CORPORATIONS – examination under s 596A of the Corporations Act 2001 (Cth) – application to set aside examination summons or staying examination – whether issue of examination summons resulted in abuse of process – whether examination summons obtained for improper purpose – purpose of receivership – same solicitor acting both for receiver and for party in third party litigation – whether documents obtained during examination will inevitably be used for improper purpose
CORPORATIONS – examination under s 596A of the Corporations Act 2001 (Cth) – affidavits filed in support of examination summons - application to inspect affidavits – whether affidavits can be inspected as a matter of right – whether Court unable to fairly and properly dispose of application to set aside summons without applicant viewing affidavits
Corporations Act 2001 (Cth) Division 1 of Part 5.9, ss 9, 596, 597
Federal Court of Australia Act 1976 (Cth) s 59
Corporations Law s 597
Federal Court (Corporations) Rules 2000 r 11
D’Arrigo v Carter [2003] FCA 5 followed
Douglas-Brown v Furzer (1994) 11 WAR 400 cited
Downsview Nominees Ltd v First City Corporation Ltd [1993] AC 295 cited
Harvey v Burfield [2003] SASC 192 approved
Henke v Carter [2002] FCA 252 distinguished
Hill v Smithfield Service Centre Pty Ltd (in liq) [2002] NSWSC 999; 196 ALR 246 cited
Hong Kong Bank of Australia Ltd v Murphy (1992) 28 NSWLR 512 cited
K Mart Australia Limited v Commissioner of Taxation, [1995] FCA 760 cited
Re B Johnson & Co (Builders) Ltd [1955] Ch 634 cited
Re Bosun Pty Ltd (in liq); Makris v Sheahan [2000] SASC 180 cited
Re Excel Finance Corporation Ltd (Receiver and Manager Appointed; Worthley v England (1994) 52 FCR 69 applied
Re Hugh J Roberts Pty Ltd [1970] 2 NSWR 541 cited
Re Southern Equities Corporation Ltd (in liq); Bond v England (1997) 25 ACSR 394 followed
Simionato v Macks (1996) 19 ACSR 34 cited
Williams v Spautz (1992) 174 CLR 509 cited
IN THE MATTER OF GARTNER WINES PTY LIMITED (Receivers and Managers Appointed) (Administrators Appointed) ACN 086 333 388 and OTHERS AND THE CORPORATIONS ACT 2001
BRUCE JAMES CARTER and JOHN RONALD HART v MICHAEL JOHN GARTNER
S 3015 of 2002
BRANSON J
30 JUNE 2003
SYDNEY VIA VIDEO LINK (HEARD IN ADELAIDE)

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY

S 3015 of 2002

IN THE MATTER OF:

GARTNER WINES PTY LIMITED (Receivers and Managers Appointed) (Administrators Appointed) ACN 086 333 388
TYNSKI PTY LTD (Receivers and Managers Appointed) ACN 008 162 123
SKYBAY PTY LTD (Receivers and Managers Appointed) ACN 008 163 782
NORSBAY PTY LTD (Receivers and Managers Appointed) ACN 008 205 687
AUSVINE VITICULTURAL MANAGEMENT PTY LTD (Receivers and Managers Appointed) ACN 007 184 901
FRESREND PTY LTD (Receivers and Managers Appointed) ACN 008 174 990
VAMTOWN PTY LTD (Receivers and Managers Appointed) ACN 008 061…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Carter v Gartner

Details

AGLC: Carter v Gartner [2003] FCA 653
Case: [2003] FCA 653
Decision Date: 30 JUNE 2003

CaseChat Overview and Summary

The case of Carter v Gartner involved the plaintiff, Carter, seeking an order for the defendant, Gartner, to comply with an examination summons issued under the Corporations Law. The summons was issued in the context of an investigation into the financial dealings of the Gartner Family Group, which included various companies and partnerships involving Gartner and his wife. The summons required Gartner to provide documents and information relevant to the investigation, which he had not complied with.

The legal issues before the court included whether the application for the examination summons was properly made in accordance with Rule 11.3 of the Rules, and whether the summons was valid and enforceable. The court also needed to determine whether there were grounds to set aside the summons on the basis of an alleged failure to comply with certain procedural requirements.

The court found that the application for the summons was properly made and in compliance with Rule 11.3. The summons itself was valid and enforceable. The court rejected the argument that there had been a failure to comply with procedural requirements, finding that the summons had been issued in accordance with the proper legal standards. As a result, the court ordered Gartner to comply with the summons and provide the required documents and information.

The final orders of the court included an order that Gartner comply with the summons and provide the documents and information within a specified timeframe, as well as an order for Gartner to pay the costs of the application.

Orders

Orders of the court

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Background

Background to the litigation

Rule 11.3 of the Rules provides:‘(1)An application for the issue of an examination summons must be made by filing an interlocutory process or an originating process, as the case requires. (2)The application may be made without notice to any person. (3)The originating process, or interlocutory process, seeking the issue of the examination summons must be: (a)supported by an affidavit stating the facts in support of the process; and (b)accompanied by a draft examination summons. (4)The originating process, or interlocutory process, and supporting affidavit must be filed in a sealed envelope marked, as appropriate: (a)“Application and supporting affidavit for issue of summons for examination under section 596A of the Corporations Law”; or (b)“Application and supporting affidavit for issue of summons for examination under section 596B of the Corporations Law”. (5)If the application is not made by the liquidator, the liquidator must be given notice of the application and, if required by the liquidator, served with a copy of the originating process, or interlocutory process, and the supporting affidavit. (6)If the application is not made by the Commission, the Commission must be given notice of the application and, if required by the Commission, served with a copy of the originating process, or interlocutory process, and the supporting affidavit. (7)Unless the Court otherwise orders, an affidavit in support of an application for an examination summons is not available for inspection by any person.(8)An examination summons must be in accordance with Form 17.BACKGROUND FACTS Mr Gartner and his wife, Alice Winifred Gartner (together ‘Mr & Mrs Gartner’) have for many years carried on a farming business under the partnership name ‘MJ & AW Gartner’ on land owned by them in the Coonawarra district of South Australia. Since about 1988 various companies have been incorporated in which Mr & Mrs Gartner, or Mr Gartner alone, hold shares. Mr & Mrs Gartner and the companies in which they, or Mr Gartner, hold shares will be together referred to as the ‘Gartner Family Group’. In late 1998 and early 1999 Mr Gartner commenced consideration of becoming involved in a winery business at Coonawarra. In early May 2001, Mr Gartner retained Ernst & Young, a firm of chartered accountants, and Ernst & Young Corporate Finance Pty Limited, a firm of consultants, (together ‘E & Y’) to raise capital to enable the Gartner Family Group to construct a winery. E & Y, pursuant to the retainer, produced a document entitled ‘Financial Submission’. This document was provided to, amongst others, NAB. On about 11 October NAB presented a document entitled ‘Corporate Letter of Offer’ to the Gartner Family Group. By this document NAB advised that it would agree to provide certain financial facilities to the Gartner Family Group to fund the construction of a winery. In November 2001 the Gartner Family Group accepted the NAB offer of financial facilities. Members of the Gartner Family Group entered into mortgages and debentures and executed guarantees in favour of NAB. E & Y were paid a services fee from the funds advanced by NAB.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

BRANSON J

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Established by: BRANSON J

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Actions

Citations

Carter v Gartner [2003] FCA 653

Most Recent Citation

Re Bill Express Ltd (in liq) [2010] VSC 101

Cases Citing This Decision

Kirk, in the matter of Westlink Pty Ltd (Receivers Appointed) [2023] FCA 893
Citation 1 (Para 9)

…icated nevertheless that they considered themselves bound by the implied undertaking in accordance with the decision of Branson J in Carter v Gartner [2003] FCA 653; 130 FCR 99 at [60]. Disposition…
Thomas, in the matter of La La Land Byron Bay Pty Ltd (In Liq) [2019] FCA 552
Citation 2 (Para 25)

…resulting examination is otherwise found to amount to an abuse of process. In that regard, the Full Court accepted what was said in Carter v Gartner (2003) 130 FCR 99 (“ Carter ”) at [27] and referred to a number of cases that held that subject to statutory provision to the contrary, a court possess the power to co…
In the matter of Dalstonville Pty Ltd (in Liq) and Don Leunig Pty Ltd (in Liq) [2018] VSC 774
Citation 3 (Para 1)

…nation summons is seeking to achieve some purpose foreign to that which the legislature intended.[26] [25] Carter v Gartner; Re Gartner Wines Pty Ltd (2003) 130 FCR 99, 108 [27]. [26] New Zealand Steel (Australia) Pty Ltd v Burton (1994) 13 ACSR 610; In the Matter of DW Marketing Pty Ltd (in liquidation) [2009] VSC…
Kimberley Diamonds Ltd, in the matter of Kimberley Diamond Company Pty Ltd (in liq) [2016] FCA 1016
Citation 4 (Para 15)

…The Court has implied jurisdiction to stay an examination pursuant to a summons issued under s 596A which is an abuse of process: Carter v Gartner [2003] FCA 653; (2003) 130 FCR 99 at [27]. As Branson J observed: It is important to note that the fact that the Court must issue a summons under s 596A if the criteri…
Beeson v Carrello as Liquidator of Gecko MANAGMENT Pty Ltd (in liq) [2010] WASCA 155
Citation 5 (Para 15)

…ditor or another may obtain information or a collateral advantage does not of itself render the purpose of the examination improper: Carter v Gartner [2003] FCA 653; (2003) 130 FCR 99 [69].…
Re Bill Express Ltd (in liq) [2010] VSC 101
Citation 6 (Para 1)

…rugia v Macks & Macks (1996) 19 ACSR 34, 56; Hill v Smithfield Service Centre Pty Ltd (In Liq) (2002) 196 ALR 246, [21], [47]; Carter v Gartner (2003) 46 ACSR 264; Re New Tel Limited (In Liq) ; Evans v Wainter Pty Ltd [2005] FCAFC 114, [83]–[85]. [20] Southern Cross Petroleum Sales (SA) Pty Ltd v Hirsch (1998) 70 SAS…
Murray Roderick Godfrey as Liquidator of Pobjie Agencies Pty Ltd (in liquidation) ACN 000 859 405 [2007] NSWSC 138
Citation 7

…Fair Trading v Pobjie Agencies Pty Ltd & Ors [2005] NSWSC 13 Meteyard v Love (2005) 65 NSWLR 36 Carter v Gartner (2003) 130 FCR 99 Re Southern Equities Corporation Ltd (in liq); Bond & Anor v England (1997) 25 ACSR 394 Re Coretel Pty Ltd; Linker v Nilant (2003) 48 ACSR 178 In the Matter of Mendarma Pty Ltd; King &…
Re Westgate Wool Co Pty Ltd (in liq) [2006] SASC 372
Citation 8 (Para 19)

…necessarily result in any breach of duty on the part of Kelly & Co towards BWKE: D’Arrigo v Carter (2003) 44 ACSR 162 at [20] and Carter v Gartner (2003) 130 FCR 99 at [49].…
Evans & Anor v Wainter Pty Ltd [2005] HCATrans 881
Citation 9

…In our respect they demonstrate that the approach by the Full Court in this case which is consistent with them. The first one is at tab 7, Re Gartner 46 ACSR 264. That is Justice Branson’s decision. It is at paragraphs [63] to [64] at page 282 in that case. It refers there to Excel and quotes the relevant pass…
Evans v Wainter Pty Ltd [2005] FCAFC 114
Citation 10 (Para 7)

…cks and Macks (1996) 19 ACSR 34 at 56; Hill v Smithfield Service Centre Pty Ltd (in liq) (2003) 196 ALR 246 at [21]-[22] and [47]; Carter v Gartner (2003) 46 ACSR 264.…
Wainter Pty Ltd, in the matter of New Tel Limited (in liq) [2004] FCA 1021
Citation 11 (Para 26)

…New Zealand (1990) 3 ACSR 366 at 374-375; Re Excel Finance at 93 and Re Gartner Wines Pty Ltd (Receivers and Managers Appointed); Carter v Gartner (2003) 46 ACSR 264 at 282. See also Hong Kong Bank of Australia v Murphy (1992) 28 NSWLR 512 at 519.…
In the matter of Normans Wines Ltd (Receivers and Managers appointed) (in liq); Harvey v Burfield [2004] SASC 171
Citation 12 (Para 12)

…s. There are other cases which support his conclusions, eg Carter v Gartner, in the matter of Gartner Wines Pty Limited and the Corporations Act 2001 [2003] FCA 653.…
Gartner v Carter [2004] FCA 258
Citation 13 (Para 3)

…ecision of Branson J given in this matter on 30 June 2003: Carter v Gartner; in the matter of Gartner Wines Pty Limited and the Corporations Act 2001 [2003] FCA 653, and partly from an affidavit sworn by Mr Bruce Carter (‘Mr Carter’). The contents of Mr Carter’s affidavit were largely uncontested at the hearing o…
Harvey v Sandhurst Trustees Limited No. Scciv-02-1364 [2003] SASC 370
Citation 14 (Para 7)

…fidential affidavits because that approach was taken by Besanko J in Harvey and Ors v Burfield and Smith and by Branson J in Carter and Ors v Gartner (2003) 46 ACSR 264.…

See all citing cases →

Cases Cited

Harvey v Liquidators of Normans Wines Ltd (REC & Man App) (in Liq) No. Scciv-02-1364 [2003] SASC 192
Citation 1 (Para 9)

…the applicants were not the same lawyers as were retained by NAB for the purposes of the Federal Court proceeding. I note that in Harvey v Burfield [2003] SASC 192, a judgment published since the hearing of this application, Besanko J has concluded at [34] that it would be sufficient in such circumstances for an o…
D'Arrigo v Carter, in the matter of Gartner Wines Pty Ltd [2003] FCA 5
Citation 2 (Para 10)

…documents to which access was obtained during the course of the examination for an ulterior purpose was addressed to Selway J in D’Arrigo v Carter [2003] FCA 5. His Honour rejected the argument. D’Arrigo v Carter concerned an examination summons issued to an accountant who was an examinable officer of some of…
Hill v Smithfield Service Centre Pty Ltd (in liq) [2002] NSWSC 999
Citation 3 (Para 7)

…(a) and (b) of the section are satisfied ( Simionato v Macks (1996) 19 ACSR 34 per Lander J at 56; Hill v Smithfield Service Centre Pty Ltd (in liq) [2002] NSWSC 999; 196 ALR 246 per Austin J at [21]-[22] and [47]). I doubt that Debelle J intended to suggest otherwise in Re Bosun Pty Ltd (in liq); Makris v Sheahan…
Henke v Carter [2002] FCA 252
Citation 4 (Para 8)

…on summons to issue. The purpose of the applicant in seeking the issue of the summons was in this regard a critical matter. Nor is Henke v Carter [2002] FCA 252 authority for the proposition that the Court has a discretion to refuse to issue a summons under s 596A of the Act. In that case counsel for the liquidat…
Re Bosun Pty Ltd (in liq); Makris v Sheahan [2000] SASC 180
Citation 5 (Para 7)

…196 ALR 246 per Austin J at [21]-[22] and [47]). I doubt that Debelle J intended to suggest otherwise in Re Bosun Pty Ltd (in liq); Makris v Sheahan [2000] SASC 180 at [17] where his Honour said: ‘Where a liquidator is entitled to an order under s596A of the Corporations Law, the duty of the court is limited to s…
Re Southern Equities Corporation Ltd (in liq); Bond & Caboche v England [1997] SASC 6399
Citation 6 (Para 6)

…6B(1)(b) and should exercise its discretion in favour of issuing the summons sought. In Re Southern Equities Corporation Ltd (in liq); Bond v England (1997) 25 ACSR 394 ( ‘Re Southern Equities’ ) at 523 Lander J, with whom Cox and Bleby JJ agreed, described the obligation imposed by s 596C on an applicant under s 596…
K Mart Australia Ltd v Commissioner of Taxation [1995] FCA 760
Citation 7 (Para 10)

…o follow the decision of Selway J unless I were satisfied that it was plainly wrong (see K Mart Australia Limited v Commissioner of Taxation, [1995] FCA 760 and the authorities there cited).…
Williams v Spautz [1992] HCA 34
Citation 8 (Para 9)

…diction but in the case of this Court better described as implied jurisdiction, to stay proceedings which are an abuse of process ( Williams v Spautz (1992) 174 CLR 509 per Mason CJ, Dawson, Toohey and McHugh JJ at 518). This jurisdiction may be invoked in an appropriate case to stay an examination pursuant to a summ…
Bond v England (A-59) CHH [1997] HCATrans 344
Citation 9 (Para 6)

…ntified in s 596B(1)(b) and should exercise its discretion in favour of issuing the summons sought. In Re Southern Equities Corporation Ltd (in liq); Bond v England (1997) 25 ACSR 394 ( ‘Re Southern Equities’ ) at 523 Lander J, with whom Cox and Bleby JJ agreed, described the obligation imposed by s 596C on an applicant…
Re-Excel Finance Corporation Ltd; Worthley v England [1994] FCA 551
Citation 10 (Para 8)

…e hearing of this application, the decision of the Full Court in Re Excel Finance Corporation Ltd (Receiver and Manager Appointed; Worthley v England (1994) 52 FCR 69 (‘ Excel Finance ’) is not authority for the proposition that the Court has a discretion to refuse to issue a summons under s 596A where the issue of…
[1993] AC 295 [1993] AC 295
Citation 11 (Para 14)

…Ltd [1955] Ch 634, 661-663 which had earlier been expressly approved by the Privy Council in Downsview Nominees Ltd v First City Corporation Ltd [1993] AC 295 at 313-314. Having regard to Mr Gartner’s above contention, it is appropriate to set out part of the passage from the judgment of Jenkins LJ to which the…

Legislation Cited

Federal Court (Corporations) Rules 2000 (Cth) 11
2 mentions (from Para 4)
Federal Court of Australia Act 1976 (Cth) 59
2 mentions (from Para 11)
Corporate Law Reform Act 1992 (Cth)
1 mention (from Para 17)
Corporations Act 2001 (Cth)
1 mention (from Para 1)
Supreme Court Act 1935 (WA)
1 mention (from Para 17)

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	S 3015 of 2002