Elliott v Macks No. Scgrg-95-1021 Judgment No. S262

EMANUEL INVESTMENTS PTY LTD (IN LIQUIDATION);
ELLIOTT & ORS V MACKS

[1999] SASC 262

JUDGE BURLEY. In March of this year Peter Ivan Macks, the liquidator of the Emanuel Group of Companies, obtained orders, pursuant to Section 596B of the Corporations Law, for the examination of Bruce Elliott and William Douglas Gardiner and orders, pursuant to Section 597(9) of the Law, directing that Glenmore Park Estate Ltd, Elfic Ltd and Lensworth Properties Pty Ltd (In Liquidation) produce certain documents for the examination of Mr Elliott. By amended applications (Document 363 and 364 on the Court file) the examinees and the companies required to produce documents the subject of the orders just referred to have applied for orders discharging the examination and production orders. Those applications are set down for hearing before me in mid-July. The amended applications also seek orders pursuant to Section 596C(2) of the Law permitting inspection by the applicants of the affidavits relied upon by the liquidator in support of his applications for examination and production. The applications for leave to inspect the liquidator’s affidavits are the subject of these reasons.
The applicants for access to the liquidator’s affidavits are the two examinees and the three companies who have been ordered to produce documents at the examinations. It was not submitted by the liquidator that any distinction was to be made between an examinee and a person ordered to produce documents on an examination and, consequently, I have assumed that a person ordered to produce documents on an examination is entitled to apply for access to the liquidator’s affidavit pursuant to Section 596C(2) of the Law.
The principles applicable to an application pursuant to Section 596C(2) of the Law are set out in the judgment of Mansfield J in Re Moage Ltd (in liq) (1997) 25 ACSR 53 at 63-68. I have derived considerable assistance from the judgment and I gratefully adopt his Honour’s analysis and conclusions as set out in the following passage from his reasons:-
“Division 1 of Pt 5.9 of the Law deals with examining a person about a corporation. Much of that division was amended by the Corporate Law Reform Act 1992 (Cth), effective from 23 June 1993, including in particular ss 596A, 596B, 596C and 597(9). The history of those provisions, and their ancestors, is set out in some detail in Re Excel Finance Corp Ltd (rec and mgr apptd); Worthley v England (1994) 52 FCR 69; 34 ALD 85; 24 ALR 281; 14 ACSR 407 at FCR 79-81, discussing the relevant provisions before their amendment to their current form, and in Simionato v Macks (1996) 19 ACSR 34 at 53-6. It is unnecessary to repeat that history.
The current provisions provide for the mandatory examination of certain persons upon the application of a liquidator or other identified category of person, if the person sought to be examined is an ‘examinable person of the corporation’ (as defined) and certain other conditions are met: s596A. Section 596B(1) then provides:
The Court may summon a person for examination about a corporation’s examinable affairs if:
(a).... an eligible applicant applies for the summons; and
(b).... the Court is satisfied that the person:
(i)..... has taken part or been concerned in examinable affairs of the corporation and has been, or may have been, guilty of misconduct in relation to the corporation; or
(ii)... may be able to give information about examinable affairs of the corporation.
Section 596C provides:
(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 also convenient here to note the terms of s 597(9):
The Court may direct a person to produce, at an examination of that or any other person, books that are in the first-mentioned person’s possession and are relevant to matters to which the examination relates or will relate.
The purpose of an examination under s 596A or s 596B of the Act is primarily to enable a liquidator or some other eligible applicant to bring an examinee before the court to procure information about the affairs of a corporation. This is not the occasion to review the scope of the legitimate exercise of that power, or where its boundaries are exceeded. That may arise in the course of determining the various motions to discharge the examination orders and the production orders. It is sufficient for present purposes to note that it is established clearly by authority that it is a legitimate use of that power by a liquidator to obtain information which might assist in the conduct of litigation. Such information may be sought whether or not proceedings are sought to be commenced or to be continued. It may be sought to identify the nature and extent of evidence available to support a claim in proposed or actual proceedings, and to determine the probability or otherwise of success in those proposed or actual proceedings. It may be sought to assess the prospects of recovery in proceedings. It should also be noted that the mere fact that proceedings have been commenced does not, of itself, mean that the examination power cannot be used, or that its use in relation to those existing proceedings is necessarily an abuse of process on the part of the liquidator: see generally Hamilton v Oades (1989) 166 CLR 486; 85 ALR 1; 15 ACLR 123; Hong Kong Bank of Australia Ltd v Murphy (1992) 28 NSWLR 512; 8 ACSR 736; Gerah Imports Pty Ltd v The Duke Group Ltd (in liq) (1993) 61 SASR 557; 12 ACSR 513; Worthley, above; Grosvenor Hill (Qld) Pty Ltd v Barber (1994) 48 FCR 301; 120 ALR 262; 12 ACSR 646.
Furthermore, it has been recognised that, in bringing a proposed examinee before the court, it is generally or often desirable that the proposed examinee not be forewarned of the subjects upon which the examination is proposed. The informal practice of keeping confidential the grounds for the application for examination, which has existed over many years, is now reflected in s 596C of the Act. Order 71 r 81(3) also recognises that it may be appropriate for the affidavit to be sealed, so that access to it is not given to proposed examinees. The reason is that liquidators should not have to disclose to the proposed examinee the matters upon which that person is to be examined, as such disclosure may enable the person to defeat the purpose of the examination, or any proceeding contemplated to be taken against him: Re Gold Co (1879) 12 ChD 77 at 82-4, Worthley at first instance (1993) 41 FCR 3463; 113 ALR 54; 10 ACSR 255 at FCR 355-6; Simionato, above at 63. As Lander J pointed out in Simionato, the proposed examinee is nevertheless subject to various protections in the examination, including the right to representation, to take objection to questions, to lead evidence if the court considers it just for the purpose of enabling the examinee to explain or qualify any answers for evidence given, and the general overall role of the court in regulating the examination so as to ensure the examinee suffers no injustice: ss 596F and 597(5B); Hamilton, above.
The discharge of the examination orders will, on the ground identified in submissions, be made out only if the purpose of the liquidator in procuring the examination orders was an impermissible one. The Full Court in Worthley, above, at 89-91 discussed certain decisions dealing with that topic. The relevant test, as it indicated, is:
... whether the person seeking the examination order has the purpose of obtaining a forensic advantage not otherwise available: see per Gleeson CJ in Hong Kong Bank of Australia Ltd v Murphy (1992) 28 NSWLR 512 at 519.
However, it is also plain that the possibility that a forensic advantage will be gained by an examination does not mean that the making of an order will not advance a purpose intended to be secured by the legislation. The comments of Street J in Re Hugh J Roberts Pty Ltd (in liq) [1970] 2 NSWR 582 at 585, much quoted with approval, recognises the position of a liquidator needing information concerning his company in connection with current or contemplated litigation, and the legitimacy of using the examination procedure to gather information in connection with such proceedings.
The Full Court in Worthley, above at FCR 91, noted some illustrations where the purpose for conducting such an examination might be an abuse. In particular, it identified the summonsing of a prospective or probable witness to be examined simply for the purpose of destroying that person’s credit, as that would involve using the examination process to obtain a forensic advantage in litigation. It noted also that to conduct an examination to enable a ‘dress rehearsal’ of cross examination of an impending or contemplated proceeding would also amount to an improper purpose. It referred to other examples, including the use of the examination summons to obtain defacto discovery where a discovery order had been refused in proceedings already on foot. Those examples were relied upon by the various applicants before me. Appropriately, the Full Court concluded its reference to those illustrations in the following terms (at FCR 91):
It is neither possible nor desirable to catalogue all the circumstances where use of an examination summons might constitute an abuse of process.
Whether there will be, in a particular case, a use of the process or an abuse of it will depend upon purpose rather than result. The consequence of an examination may well be that the examiner has conducted a ‘dress rehearsal’ of cross-examination which may take place in a subsequent trial. The fact that the trial has commenced, or is contemplated, may throw light upon the purpose. But merely because other proceedings had been commenced or are contemplated would not involve, of itself, an abuse of process. This follows having regard to the nature of the investigative process which could throw light on the question, inter alia, whether there was evidence which would warrant a liquidator, for example, proceeding against an examinee.
This is not the occasion to decide whether that impermissible purpose is made out. That is because at present I am merely considering interlocutory applications preceding the hearing and determination of that question.
It is plain from the terms of s 596C(2) that the court has a discretion to release the affidavit. Lander J in Simionato, above at 63, said that:
... ordinarily the court would exercise its discretion to order disclosure where the justice of the case so required it ... It is not in every case where a party makes an application to set aside an order for examination that the proposed examinee ought to be entitled to inspect the affidavit upon which the original order was made. Otherwise the very reason for sealing the affidavit would stand frustrated and the examination process would be likely to be frustrated.
He referred to Re British & Commonwealth Holdings Plc (Nos 1 and 2) [1992] 1 Ch 342 where Nourse LJ said at 355:
In my judgment inspection of the statement should prima facie be allowed where the court is of the opinion that it will or may be unable fairly and properly to dispose of the application if part of the evidence is withheld from the person against whom the order is sought. It will then be for the office holder to satisfy the court that confidentiality in whole or in part is nevertheless appropriate.
I agree with those observations.
Thus, the applicants on the present motions must establish some reason why the court should exercise its discretion to make available the affidavit for inspection. The fact of the application itself will not be sufficient. Although in Worthley, above, the receiver and manager’s affidavit in support of the examination order under challenge had been provided voluntarily to the proposed examinee, there was a dispute as to whether the court should direct release of the documents upon which the receiver and manager had sought authorisation from the Australian Securities Commission to apply for the examination orders under the then s 597(1) of the Law. It was accepted by counsel before me that, in the case of an application such as the present, the observations of the Full Court in Worthley, above, nevertheless set out an appropriate ‘test’ for determining how the discretion should be exercised.
There are two particular passages in the judgment of the Full Court in Worthley, above, which it is important to note. Firstly, the court (at FCR 93), stressed the court has a discretion to order the disclosure to a prospective examinee of material lodged in support of the application for an examination order, and should do so where the justice of the case so requires. That discretion being unrestricted on its face, I bear in mind the words of Bray CJ said Ulowski v Miller [1968] SASR 277 at 280:
It must be remembered that we are dealing here with a discretion and in my view it ought not to be fettered by any absolute or inflexible rules.
The Full Court referred with approval to Re British & Commonwealth Holdings, above. It affirmed that the mere application is not itself a reason for granting such access, lest the examination process be frustrated, or lest confidential information which should properly be withheld be released. Then, the court said (at 94):
An applicant will not be permitted access to such material to enable him or her to ‘fish’ for a case. There must be material before the Court from which it appears that the applicant has an arguable case, to which the matter is relevant, before the discretion should be exercised in favour of that applicant. But once that appears the discretion will normally be exercised in favour of the application.
It is tempting, but in my view inappropriate, to seek to elevate those observations of the Full Court in Worthley, above, which were relied upon by Lander J in Simionato, above, beyond their terms. It is entirely sensible, as the Full Court has said, that the discretion to authorise the inspection of the affidavit should not be exercised in favour of a proposed examinee without reason. The fundamental judgment is based upon what the justice of the case in the particular circumstances demands. In making that determination, regard will need to be had to the content of the affidavit, so that where appropriate the purpose of the examination is not frustrated or confidential information or potentially significant information which might if released impinge upon an effective examination is not inappropriately released. If there are no particular considerations arising from the affidavit or its terms, or from the material referred to, then provided that the applicant for the release of the affidavit presents ‘an arguable case’ or some sensible grounds for maintaining the application, to which the affidavit is relevant, then generally the discretion will be exercised in favour of that applicant. The context of those observations of the Full Court illustrate that the expression ‘arguable case’ was not used as a refined term of art. In my view, it is an unnecessary and ultimately sterile inquiry at this point of the proceedings to determine whether it is necessary upon the ultimate hearing of the application to discharge the examination orders to decide whether the alleged inappropriate purpose of the liquidator need be his sole purpose or only a predominant purpose. Similarly, I think it is both inappropriate and sterile for the purposes of the present applications to seek to attribute some scientific exactitude to the degree of satisfaction of “an arguable case” which needs to be made out by the applicant. In my view it involves no more than that the court requires to be satisfied to an appropriate level of satisfaction that the applicant is not pursuing the application without good cause or without good reason, and in particular is not doing so purely in the hope that, by procuring the release of the affidavit, some evidentiary foundation for the allegation will be made out. In other words, if the applicant is merely ‘fishing’ for a case, then no reason for exercising the discretion in its favour will exist; if it presents material from which it is shown that it has passed the threshold beyond fishing, and has an arguable case based on that material, then the discretion may be exercised in its favour. Refinements of degrees of arguability is, in my view, unnecessary.
It must also be borne in mind that, at this stage of the proceedings, the court is not adjudicating in point of fact upon whether the purpose is, or is likely to be, made out in any sense. It is asked only to review the material presented to it, absent the affidavit, to determine whether the application is brought making such allegation without any foundation or with a foundation which is not frivolous or without some rational basis. What will satisfy the necessary degree of arguability will vary from case to case, and will need to be assessed in all the particular circumstances.”
The applicants relied upon two affidavits of Mr Gareth Jenkins which were sworn on 31 March 1999. Mr Jenkins is a solicitor in the employ of Messrs Clayton Utz, the applicants’ Queensland solicitors. In his first affidavit he stated that the applicants contend that the applications for examination orders made by the liquidator constitute an abuse of process because the bringing of the application contravened two undertakings: first, an undertaking by senior counsel for the liquidator during the examination of John Francis O’Grady on 1 May 1996; and, second, an undertaking given by the liquidator’s solicitor by letter dated 16 January 1997. The first undertaking is set out at paragraph 16 of Mr Jenkins’ first affidavit of 31 March 1999 and the second undertaking forms part of the bundle of correspondence and other documents which is Exhibit “DTM1” to the affidavit of Mr McGrath (the liquidator’s solicitor) sworn on 11 May 1999.
It is convenient at this stage to deal with this aspect of the applicants’ applications for access to the liquidator’s affidavits. I bear in mind (as I do throughout these reasons) that it is not the Court’s function on an application such as this to determine those matters which will fall for determination on the applicants’ applications to discharge the examination and production orders to be heard in July. The question of whether or not the applicants have an “arguable case” as characterised by Mansfield J in Re Moage is to be decided by reference to the question of whether or not the Court, on the application to discharge the examination and production orders, will or may be unable fairly and properly to dispose of the application if part of the evidence is withheld from the person against whom the order is sought: see Re British & Commonwealth Holdings Plc (Nos 1 and 2) [1992] 1 Ch 342.
I should mention that when the applications for examination and production orders were heard by me ex parte, I made the following comment which was, at my direction, included in the Court file as a matter of public record:
“[The liquidator’s affidavit] discloses a number of matters in paragraph 20 which go to the question of whether or not an order for examination or production should be made. My approach to that is that I make no determination at the moment as to whether or not the matters disclosed in paragraph 20 disentitle the liquidator from any of the orders sought other than to conclude that for the purposes of this ex parte application they do not constitute a basis for refusal of the order. That finding will have to be the subject of further consideration if it becomes material to any application to set aside the order for examination or production as the case may be.”
What I said has been referred to in paragraph 20 of Mr Jenkins’ first affidavit of 31 March 1999. My remarks, taken at face value, might indicate that there was proper case for giving access to the applicants to paragraph 20 of the relevant affidavit of the liquidator because of the principles stated in Re British & Commonwealth Holdings Plc. However, as did Mansfield J in Re Moage, I have had recourse to the content of the liquidator’s affidavit itself and, in particular, to paragraph 20. Having done so I am unable to conclude that I will or may be unable fairly and properly to dispose of the applications to discharge the examination and production orders if the applicants are not given access to paragraph 20 because it is abundantly clear that the applicants are already in possession of the information they would otherwise have if access were given to paragraph 20.

Two other grounds said to be material to the application to discharge the examination and production orders and therefore material to these applications for access to the liquidator’s affidavits are identified in Mr Jenkins’ affidavits. They are:
(a).... that the orders were obtained for an improper purpose; and
(b).... there was a material non-disclosure when the orders were obtained.
To some degree there was an overlap between the alleged material non-disclosure ground and the abuse of process said to arise from the applications allegedly having been made in contravention of the previous undertakings referred to. The factual background relied upon by the applicants relating to these two further grounds is set out in paragraphs 7 to 14 of Mr Jenkins’ first affidavit which are as follows:
“7..... By summons no. 2420 of 1996 dated 24 December 1996 two of the Emanuel Group companies, Emanuel Management Pty. Ltd. and Elizabeth House Pty. Ltd. together with the liquidator commenced proceedings against, inter alia, EFG Finance Limited. EFG Finance Limited is now known as Glenmore Park Estate Limited and is the subject of one of the orders for production of documents made on 19 March 1999.
8...... On 20 March 1998, the Emanuel Group companies together with the liquidator caused further proceedings being action No.411 of 1998 to be issued against Foster’s Brewing Group Limited, Glenmore Park Estate Limited, Elfic Limited, Lensworth Properties Pty Ltd., Kinglington Pty. Ltd., Caloundra Downs Pty. Ltd., Caboolture Waters Pty. Ltd., Mango Hills Development Pty. Ltd., Mr John Francis O’Grady and Mr John Daniel Crosby (the ‘EFG defenants’). My firm acts for the EFG defendants in those proceedings.
9...... In separate Supreme Court proceedings numbered 167 of 1997, the liquidator and a number of Emanuel Group companies brought proceedings against Coopers & Lybrand and others.
10.... By order dated 25 August 1998 actions numbered 2420 of 1996, 167 of 1997 and 411 of 1998 were consolidated. I refer to the pleadings which have been delivered in the consolidated action and filed in this Honourable Court, namely -
(a).... the consolidated statement of claim dated 27 August 1998;
(b)... the defence of the EFG defendants dated 22 December 1998; and
(c)... the plaintiffs’ reply dated 19 March 1999.
11.... On 8 February 1999 the defendants to the consolidated proceedings brought applications for orders that the proceedings be transferred to the Supreme Court of Queensland pursuant to section 5 of the Jurisdiction of Court (Cross-Vesting) Act. On 26 February 1999 His Honour Mr Justice Debelle ordered that the action be transferred to the Supreme Court of Queensland but stayed the operation of the order for reasons outlined in his reasons for judgment. Now produced and shown to me and marked with the letters ‘GJJ1’ is a true copy of His Honour Mr Justice Debelle’s judgment.
12.... On 19 March 1999 the cross-vesting application was again mentioned before His Honour Mr Justice Debelle. Now produced and shown to me and marked with the letters ‘GJJ2’ is a true copy of the relevant transcript dated 19 March 1999.
13.... The cross-vesting application is set down for further hearing on Friday, 9 April 1999. The parties have been directed to exchange outlines of argument.
14.... Once the cross-vesting application has been resolved, it is anticipated that the parties will embark upon discovery of documents. An enormous number of documents is involved: I estimate that the EFG defendants’ documents comprise 300 to 400 arch lever folders, and I have been informed by Mr Madsen of Ward & Partners and I verily believe that the plaintiffs documents comprised approximately 1 million pages. I estimate that the process of obtaining discovery in this action will take in the order four to six months. The parties have conducted preliminary conferences with respect to this issue with a view to reaching agreement on matters such as:
(a).... development of document data bases;
(b)... development of numbering protocols;
(c)... compatibility of software.”
In paragraphs 22 to 28 of Mr Jenkins’ first affidavit he refers to the difficulties which would be experienced by both the examinees and the companies ordered to produce documents if required to produce documents as ordered. He gives further evidence in his second affidavit of 31 March 1999 relating to the position of Lensworth Group Ltd and Lensworth Pine Rivers Pty Ltd but they are not material on this application because paragraph 2 of the amended application dated 14 April 1999 only refers to the production orders made against Glenmore Park Estate Ltd, Elfic Ltd and Lensworth Properties Pty Ltd (In Liquidation).
Paragraphs 22 to 28 of the first affidavit of 31 March 1999 are as follows:-
“22... The applicants contend that the jurisdiction conferred on the Court by s. 597(9) of the Corporations Law to direct the production of books at an examination under s. 596B is constrained by the requirement that the books be relevant to matters to which the examination of the relevant examinee relates or will relate.
23.... The orders for production of documents directed to the applicant companies require the production of:-
(a).... ‘all documents, agreements, papers, writings, notes and correspondence of [the company] relating to any debts owed to that company by any one or more of the companies set forth in schedule “A” during the period 1 January 1998 to 17 March 1995 . . .’.; and
(b)... ‘all other books, papers, deeds, writings and other documents in its [the company’s] possession, custody or power in any way relating to the examinable affairs of the companies in Schedule A hereto ...’.
24.... I am informed by Mr Elliott and verily believe that:
(a).... his period of involvement with the Emanuel Group was limited to the period July/August 1990 to 31 December 1990;
(b)... his sole involvement related to the redemption of the A and B class preference shares as referred to in the consolidated statement of claim and the EFG defendants’ defence;
(c)... he had no involvement with other transactions between the Emanuel Group and EFG;
(d)... his role within the finance and administration section at the time of the redemption of the preference shares was with respect to taxation. It was in this role that he learned of the existence of the preference shares;
(e)... his role with respect to taxation matters meant that he had no involvement in the day to day management of accounts and as such he had no involvement with the Emanuel Group loan accounts either at the time of the redemption or subsequently.
25.... Accordingly, the applicants contend that:
(a).... the breadth of the categories of documents sought is such that many of the documents (especially those brought into existence after 31 December 1990) could not be relevant to matters to which the examination of Mr Elliott relates or will relate; and
(b)... it may be inferred that the documents have been sought for a purpose other than the legitimate examination of Mr Elliott.
Abuse of Process: Oppressive Diversion of Resources
26.... One effect of the orders made by this Honourable Court on 19 March 1999 is that my firm will be required to review the documents and prepare them for production on two different bases. In the first place consideration would have to be given to the documents which fall within the description contained within the orders. Secondly, consideration would have to be given to the issues arising on the pleadings in the consolidated action in order that the applicants comply with their discovery obligations in that action.
27.... This will result in complication and a considerable amount of double handling. There will also be considerable disruption caused by the removal from my firm’s offices of the original documents required to be produced to the liquidator. The parties to the action are in the process of imaging documents and preparing document data bases. The disruption caused by the removal of originals with the consequent need to copy them and place the copy within the relevant file in place of the original will cause delay and additional costs. This will also inevitably extend and make much more costly the already lengthy discovery process. It is my preliminary view that an additional solicitor and para-legal will need to be allocated to the task as a consequence of any orders for production.
28.... Further a consequence of the orders made in the liquidation would appear to be that documents to which the liquidator may not be entitled on discovery in the consolidated action will be required to be produced to him in any event adding unnecessarily to the costs to be borne by the EFG defendants and providing him with an advantage in the litigation.”
According to Mr Jenkins, the matters deposed to in paragraphs 22 to 25 of his affidavit justify the inference that documents have been sought for a purpose other than the legitimate examination of Mr Elliott.
I turn to a consideration of whether or not the applicants have made out an arguable case to this extent. It is clear that the breadth of the documentation to be produced is considerable and, in light of Mr Elliott’s instructions to Mr Jenkins, as set out in paragraph 24 of Mr Jenkins’ affidavit, it is possible that much of the documentation produced will not be relevant to the examination of Mr Elliott but that, in my view, is not sufficient to demonstrate an arguable case for the setting aside of the production orders based on the contention that the orders have been sought for an improper purpose. The liquidator, when he made the application, was not to know the extent of Mr Elliott’s knowledge about the documentation which he now seeks to have produced. Had he been aware of the matters referred to in paragraph 24 of Mr Jenkins’ affidavit the situation might have been otherwise, but no evidence has been adduced by the applicants to show that the liquidator was aware of those matters. In those circumstances I cannot be satisfied on this application that the applicants have demonstrated an arguable case that the production orders have been obtained for an impermissible purpose as set out in paragraphs 22 to 25 of Mr Jenkins’ affidavit. I emphasise that I have reached this conclusion only for the purposes of these applications for access to the liquidator’s affidavits and it does not constitute a final determination in relation to the matter. My conclusion merely means that because the applicants have failed to demonstrate an arguable case on this application, they may not obtain an order for access to the liquidator’s affidavits based on the matters set out in paragraphs 22 to 25 of Mr Jenkins’ first affidavit.
The factual basis giving rise to the contention that there will be an oppressive diversion of resources required if the production orders are not discharged (as set out in paragraphs 26 to 28 of Mr Jenkins’ affidavit) do not, in my view, provide a basis for the granting of leave to the applicants to have access to the liquidator’s affidavits or any part thereof. Paragraphs 26 to 28 of Mr Jenkins’ affidavit raise matters which might be quite material on an application to discharge the production orders but they do not depend for their force upon the content of the liquidator’s affidavits. In other words, I am not satisfied that the Court will or may be unable fairly and properly to dispose of the application to discharge the examination or production orders if access to the liquidator’s affidavits is denied: Re British & Commonwealth Holdings Plc (supra) per Nourse LJ at 355.
It was contended by Mr Fraser QC, counsel for the applicants, that other impermissible purposes apply to the examinations. I was referred to Hong Kong Bank of Australia v Murphy (supra) at 519 where it was held that the relevant test as to whether or not an impermissible purpose is pursued is whether the liquidator has the purpose of obtaining a forensic advantage in the litigation not otherwise available. It was asserted that the impermissible purpose to be attributed to the liquidator was the rehearsal of the proposed cross-examination at the trial of Supreme Court proceedings of defence witnesses in an attempt by the liquidator to discredit those witnesses. If that were the purpose it is clear that it is an impermissible purpose as defined in Hong Kong Bank of Australia v Murphy. To support the submission that the applicants have demonstrated an arguable case in this regard, Mr Fraser referred to the alleged breach of an undertaking given by senior counsel for the liquidator in making the application for examination and production, to the fact that the legal proceedings in this Court had been brought by the liquidator, to the fact that no notice was given to the applicants of the making of the applications and to the alleged failure of the liquidator to depose on oath to a permissible purpose. He also asserted, the liquidator must have known that Mr Elliott and Mr Gardiner were likely defence witnesses in the action,
As to the alleged failure to depose to a permissible purpose, the applicants have not adduced any evidence to support this contention.
When the other grounds relied upon are taken together, I think that the applicants, Mr Elliott and Mr Gardiner, have sufficiently demonstrated that it may not be possible for the Court, on the application to discharge the examination and production orders relating to them, to deal fairly with that application unless access is given to the relevant parts of the liquidator’s affidavits. Like Mansfield J in Re Moage, I am of the view that only those parts of the affidavit which relate respectively to Mr Elliott and Mr Gardiner should be disclosed. In other words, the whole of the affidavits are not to be made available to them. I propose to order that Mr Elliott have access to paragraphs 11, 12, 13 and 14 of the affidavit of the liquidator sworn on 12 March 1999 and that Mr Gardiner have access to paragraphs 28 and 29 of that affidavit and in addition paragraphs 9 and 10 of the affidavit of the liquidator sworn on 19 March 1999.
On the ground of material non-disclosure, it was submitted that the liquidator should have disclosed the matters set out at paragraph 19 of the applicants’ written submissions. The answer to such a submission is that there has been no evidence adduced by the applicants that the liquidator failed to do so nor, from any of the evidence adduced, may the inference be drawn that there has been a failure on the part of the liquidator to do so. If I were to permit access to the liquidator’s affidavit on such grounds, it would be tantamount to permitting the applicants to embark upon a fishing expedition, something which is not permitted by the authorities: Re British & Commonwealth Holdings Plc (supra) at 94.
In summary, the applicants have failed to satisfy me that they have an arguable case in relation to the production orders and, consequently, access to the liquidator’s affidavits is to be denied to the applicants to that extent. The applicants Mr Elliott and Mr Gardiner have, in pursuance of their contention that the applications for examination have been pursued for an improper purpose, have satisfied me that there is an arguable case in the sense that it would be unfair to them not to permit them to have access to parts of the liquidator’s affidavits prior to the hearing of the applications to discharge the examination and production orders. With that exception, the applications for access to the liquidator’s affidavits must be refused.
I am tentatively of the view that the costs of these applications should be reserved until after a decision has been given in relation to the applications to discharge the orders but I will hear submissions in that regard if necessary. I will also hear the parties as to the form of the order to be made.

[1999] SASC 262

24 June 1999