Evans & Anor v Wainter Pty Ltd

[2005] HCATrans 881

[2005] HCATrans 881

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Perth  No P32 of 2005

B e t w e e n -

PAUL DOMINIC EVANS

First Applicant

DAVID WOOLFE

Second Applicant

and

WAINTER PTY LTD

Respondent

Application for special leave to appeal

GLEESON CJ
HAYNE J

TRANSCRIPT OF PROCEEDINGS

AT PERTH ON WEDNESDAY, 26 OCTOBER 2005, AT 9.49 AM

Copyright in the High Court of Australia

MR G.R. DONALDSON, SC:   May it please your Honours, with MS J. SYMINTON, I appear for the applicant.  (instructed by Freehills)

MR D.H. SOLOMON:   If it please the Court, I appear for the respondent.  (instructed by Solomon Brothers)

GLEESON CJ:   Yes, Mr Donaldson.

MR DONALDSON:   Your Honours, there are two housekeeping matters, as it were.  We sent down yesterday, your Honours, an amendment to the summary of argument which included the authorised reference to the cases.  I apologise that that did not reach your Honours before. 

GLEESON CJ:   Yes, we have that.  That is a two‑page document.

MR DONALDSON:   It is, your Honour.  The other matter, your Honour, and it is really a matter for my friend, but there is an affidavit which has been included in the application book of a Mr Williams which commences at page 120.

GLEESON CJ:   Yes.

MR DONALDSON:   We have no objection to that affidavit being read, your Honour.

GLEESON CJ:   Thank you, Mr Donaldson. Yes.

MR DONALDSON:   Your Honours, there is, in our submission, one essential reason why special leave ought be granted in this matter and that is that there are now, in our respectful submission, and in particular following the judgment of the Full Court in this case, a number of decisions of Full Courts and courts of appeal of Australian superior courts dealing with the power to stay examinations ordered pursuant to Part 5.9 of the Corporations Act where the reasoning of such decisions are inconsistent and, in our submission, difficult to reconcile.

GLEESON CJ:   Mr Donaldson, on page 153 of the application book in paragraph 13 there is a proposition put by your opponents.  What is your response to that?

MR DONALDSON:   My response to that is the Full Court did not, your Honour, in dealing with the question of potential benefit to New Tel, in fact deal with the submission that was put in response to that, and that is that any alleged potential benefit to New Tel was, in the circumstances of this case, in fact illusory.  That is because, if I could go back one step, the alleged benefit to New Tel is that if the plaintiff were to succeed against the firm of solicitors then its claim against New Tel would be reduced as a result – proportionately reduced. 

A contention which was put to the Full Court but did not find a place anywhere in the reasons was this, that having regard to the facts of this case, that is, that the alleged misleading or deceptive conduct arose out of a single telephone conversation at which the managing director of New Tel, Malone, and one of the solicitors was present, at which representations were alleged to be made. 

If they are the facts and the contravening conduct arises simply out of those facts, if an action were brought against the firm of solicitors in respect of that, the solicitors would in any action brought against them undoubtedly join New Tel.  That is because Malone, as the managing director of New Tel, was either the speaker of the words or was present while the words were spoken.  The contention then would be that the liability of the firm of solicitors and New Tel would be co‑ordinate and a contribution would be sought from New Tel in any action commenced against the firm of solicitors.

HAYNE J:   Now, is that a submission that assumes that all parties to this anticipated litigation are solvent and capable of meeting the judgment?

MR DONALDSON:   Well, the answer to that, your Honour, is that the plaintiff would be in no worse position then, proceeding in that way, than if they proceeded directly against the insolvent company.

HAYNE J:   At bottom, is this a submission that says that we know better where the commercial advantage lies for the applicant for examination?  The applicant sees commercial advantage in this but we know better and can demonstrate that really there is no or no sufficient commercial advantage in pursuing this course.

MR DONALDSON:   Your Honours, the question is not that, with respect, and that is not the contention.  The question or the issue is whether it can be demonstrated by the putative examiner that as a result of the examination there will be benefit to the company in liquidation.  In our submission, that cannot be demonstrated for the reason that I have advanced to your Honours.

HAYNE J:   You said that there were differences between intermediate courts about the test to be applied.

MR DONALDSON:   Yes.

HAYNE J:   Is there any decision of an intermediate court which you would point to which would result in refusal of the order for examination of your clients?

MR DONALDSON:   Perhaps this case, until about the last page or so, your Honours, was positive.  Sandhurst, if regard is had to Chief Justice Doyle’s judgment in Sandhurst and to his Honour’s essential reasoning – your Honours have that in the book of authorities.  If I could direct your Honours to page ‑ ‑ ‑

GLEESON CJ:   It starts at 199, I think.

MR DONALDSON:   Yes, the particular passage is at 211, your Honours, paragraphs 50 and 51.

GLEESON CJ:   Yes.

MR DONALDSON:   Likewise, your Honour, if regard is had to the ‑ ‑ ‑

GLEESON CJ:   But you are relying on the sentence, are you, that says:

the power is not conferred with a view to its exercise solely to benefit an individual with a claim of some kind against the corporation –

Is that what you – you rely on that word “solely”?

MR DONALDSON:   Relying upon that sentence, your Honour, but also in paragraph 50, the second sentence is:

It is to be exercised to enable inquiry to be made into the examinable affairs of a corporation, with a view to exposing misconduct –

that is not the case here –

or which might provide information that will advance (in a broad sense) the external administration of the corporation in question.

Now, it is difficult to see in this circumstance, where there is a liquidator in place, that the proposed examination in respect of an action against a third party would advance the external administration of New Tel, in this case, the corporation in liquidation.

GLEESON CJ:   This is at bottom an abuse of power argument, is it not?

MR DONALDSON:   It is.

GLEESON CJ:   Or an exercise of power for a purpose foreign to the purpose for which the power is given?

MR DONALDSON:   Yes.

GLEESON CJ:   Exercised by whom?

MR DONALDSON:   Exercisable by the putative examiner.  It is their purpose that is the subject of ‑ ‑ ‑

GLEESON CJ:   Whose exercise of power is under scrutiny?

MR DONALDSON:   It is the exercise of power by the examiner which has been authorised as an eligible applicant to conduct the examinations.

GLEESON CJ:   Is it not the exercise of power that is the subject of scrutiny the exercise of power by whoever approved ‑ ‑ ‑

MR DONALDSON:   It is, your Honour, a review of that decision, of the court’s decision to authorise it.

GLEESON CJ:   Yes, and it is that decision that is said to involve the exercise of power for a purpose foreign to the power.

MR DONALDSON:   Yes, your Honour.  I am sorry, I misunderstood your Honour earlier.  It is the purpose, however, to which regard is had for determining whether there is an abuse of the power.

GLEESON CJ:   That is to say the purpose of the person who exercises the power.

MR DONALDSON:   No, it is the purpose of the putative examiner, your Honour.  One has regard to their purpose in wishing to conduct the examination or what they intend to achieve as a result of the examination.

HAYNE J:   Is there any dispute here that a purpose – I emphasise “a purpose” – of the examination is the advancing of the possibility of bringing action against those who are to be examined?

MR DONALDSON:   There is no dispute.  That is the only purpose.

HAYNE J:   And if action is brought, were it to succeed and judgment were to be satisfied, that would advance the interests of the external administration, would it not?

MR DONALDSON:   Only to the extent, your Honour, that if the solicitors would not join or did not join New Tel, it would only follow ‑ ‑ ‑

HAYNE J:   Well, as I say, that seems to me to assume that everybody is solvent and equally able to meet a judgment.

MR DONALDSON:   Perhaps it is understood best this way, your Honour.  It is the substitution of a – let us call it a $60 million claim by the putative examiner with a claim to the same amount by the solicitors in the winding‑up.  It is a simple swap, your Honour, and if that is the case, with respect, it is difficult to see that that is of any benefit in the winding‑up of the corporation at all, particularly as it might be added that it would involve proceedings being issued and the participation of the liquidator in those proceedings. 

HAYNE J:   But at bottom, do not these examination questions come down, despite the rivers of ink that have been spilt on them, to those basic propositions, that the examiner in this case seeks to advance litigation which, if successful, will bring money into the administration which will stand for the benefit of the administration?

MR DONALDSON:   Well, it will not bring money into the administration, your Honour; it will bring money into the pocket of the plaintiff.  That is all that will be achieved by it, with respect.  Your Honour, if I might say the fundamental error in Justice Lander’s judgment, with the greatest of respect, is that his Honour had regard to questions of purpose, not only the purpose of the putative examiner – that can be characterised as a question of intention, or what the putative examiner proposes or wishes to achieve out of the examination.  His Honour dealt with that issue.  His Honour also dealt with purpose in a different sense or used in a different way, that is the statutory purpose sought to be achieved by sections 596A and 596B. 

His Honour, however, in his judgment went on to deal with the question of benefit in the winding‑up of New Tel, simply ignored the contention which was advanced, being that there would be no benefit to New Tel because of this question of joinder and an allegation of co‑ordinate liability.

GLEESON CJ:   Where do we find in his Honour’s judgment the error that you fasten onto?

MR DONALDSON:   If your Honours turns to page 109 of the book, your Honours will see there set out Justice Lander’s catalogue and your Honours will see over the page under the heading “The application of those principles to the facts on these appeals” at 256 Mr Waller’s purpose and at 257 and then the conclusion is at 259:

New Tel would benefit by being released from any liability it owed to the respondent.  The creditors would also benefit. 

But his Honour did not go on to deal with the contention which was put to him and which I have outlined to your Honours, that that benefit is in fact illusory because all that would occur is a substitution of a claim by the putative examiner with a claim by the firm of solicitors.

GLEESON CJ:   These are proceedings for judicial review of a decision of Mr Rassool, is that right?

MR DONALDSON:   No, your Honour.  That is another application that was made.  There were two applications brought before Justice Nicholson and as there customarily are in these matters, your Honour, one for review of the decision and another alleging an abuse upon the ordering of the examinations to take place.  So ASIC in exercise of its powers authorises a, in this case, creditor to be an eligible applicant as defined in section 9 and that decision of ASIC was the subject of review.  That matter does not arise in this appeal, your Honours.  This is, your Honours, an allegation of an abuse of process brought under rule 11.5 of the Corporations Rules and pursuant to the inherent jurisdiction of the court. 

GLEESON CJ:   This was an appeal to the Full Court of the Federal Court from a decision of Justice Nicholson, is that right?

MR DONALDSON:   Yes, it was.

GLEESON CJ:   And the decision of Justice Nicholson, or the reasons for the decision of Justice Nicholson, commence at where in the application book?

MR DONALDSON:   At 6, and the reasons of Justice Nicholson which follow it are the reasons of his Honour in the administrative review proceedings commencing at 22.  There was no appeal to the Full Court from the administrative review proceedings and that matter is not before the Court.  The only reason it is in the application book, your Honour, is that his Honour Justice Nicholson internally referred to the two decisions.  That can be seen, your Honour, at page 22 in the first paragraph.

GLEESON CJ:   Where is the application to which Justice Nicholson’s decision of 6 August 2004 responds?

MR DONALDSON:   The initiating process, your Honour, is not in the application book.  I can say to your Honour, however, that there were two, that is an initiating process in respect of the administrative review proceedings – and that is why they have a separate matter number – and an initiating process in respect of the abuse matter. 

GLEESON CJ:   If you look at page 6 of the application book in paragraph 2, they are the applications in question, are they?

MR DONALDSON:   Yes, one for Evans, one for Woolfe and one for Malone.

GLEESON CJ:   Yes, and they are for orders discharging a summons.  A summons to examine, I presume?

MR DONALDSON:   Yes, brought under, as I indicated to your Honours, the Federal Court ‑ ‑ ‑

GLEESON CJ:   Where would we find the grounds on which those orders were sought?

MR DONALDSON:   In the initiating process which is not before your Honour. 

GLEESON CJ:   Have you a copy of it there?

MR DONALDSON:   I do not, your Honour, I am afraid.

GLEESON CJ:   Do you remember what they were?

MR DONALDSON:   Yes.  I can say to your Honours that the interlocutory processes in respect of those matters were on the grounds that the putative examinations constitute an abuse of process.

GLEESON CJ:   That is what I want to understand.  Do you have a copy of it there?

MR DONALDSON:   Yes.

GLEESON CJ:   Just read it onto the record, if you would not mind.  What was the ground of the application, which I take it is the application with which we are concerned.

MR DONALDSON:   Yes.  The order that is sought is “The examination under 596A of the Corporations Act of Evans pursuant to a summons issued

by Wainter dated 10 March 2004 and all compliance with that summons be stayed until further order”.  So they were the orders that were sought.

GLEESON CJ:   Yes, on the grounds?

MR DONALDSON:   They do not appear, your Honour, on the interlocutory process but the grounds ‑ ‑ ‑

GLEESON CJ:   You are seeking special leave to appeal to this Court in relation to some proceedings that were commenced upon some grounds.  At some stage you ought to let us in on the secret about what the grounds are.

MR DONALDSON:   I have indicated to your Honour that the grounds were that the examinations, if they were to proceed, would constitute an abuse of process.

GLEESON CJ:   By the examiner?

MR DONALDSON:   Yes.

GLEESON CJ:   That is what I wanted to understand.

MR DONALDSON:   I am sorry, your Honour, I misunderstood you.  But the allegation is that the examinations would constitute, if they were to proceed, an abuse of process by the examiners.

GLEESON CJ:   For the reason that?

MR DONALDSON:   For the reason that the purpose sought to be advanced by the putative examiner is a purely private one and that it does not benefit the company in administration and Part 5.9 of the Corporations Act requires there to be established benefit to the corporation, in this instance the corporation in liquidation, for an examination to proceed, and if that cannot be demonstrated where, in particular, the putative examiner is a creditor and where the examination is to take place in respect of an alleged liability of a third party, that is an abuse.

GLEESON CJ:   Thank you, Mr Donaldson.  Yes, Mr Solomon.

MR SOLOMON:   If it please the Court, in considering the question of abuse of process, I think the first point is this, that there is a filtration process at the very outset which arises through the definition of “eligible applicant” in section 9 of the Corporations Act, that in order for a person who is not an officer, such as a liquidator or an administrator, one has to be approved by the regulator, by ASIC.  So we are approved.  There were proceedings to challenge the decision to approve us.  Justice Nicholson dismissed them and that is where that stands, but we have been through the first process which the legislation requires.  It is not open to anyone willy‑nilly to apply for an examination summons.  You must firstly go through a filtration process with the regulator, which we did, and Justice Nicholson’s decision shows that was a valid decision.

The primary thesis that has been put against us, although not articulated so much orally this morning, is that the real basis for the test for abuse of process was that enunciated by the Full Court in Re Excel Finance in a passage that is set out in paragraph 138 of Justice Lander’s judgment at page 84.

GLEESON CJ:   And it is referred to on page 11 of the judgment of Justice Nicholson in paragraph 22.

MR SOLOMON:   I am sure that is, your Honour, I am ‑ ‑ ‑

GLEESON CJ:   That is the judgment that is under appeal.  It was an unsuccessful appeal against the judgment of Justice Nicholson that brings us here.

MR SOLOMON:   Yes, that is true.  Your Honour, the test is as enunciated by the Full Federal Court:

that the use of the power to obtain an examination summons for the principal purpose of furthering the cause of the applicant for the summons or, as in this case, appointor of the applicant in litigation against third parties, not for the benefit of the corporation, its contributories or creditors (other than in the most indirect way) is a use of the power for a purpose foreign to that power and thus an abuse of the power.

Our point in the first place is to focus on that second aspect of that test, that is that there is no potential benefit to the corporation, its contributories or creditors.  My learned friend has articulated orally what is said in the submissions in writing at paragraphs 28 to 33 at the application book 144 to 145, that this will be an illusory benefit if a claim may result successfully from the examinations.  Our answer in writing is at paragraph 7.  As has been explained to your Honours, there was an inducing discussion deposed to by Mr Waller of a conference call between him at one end of the call, Mr Malone, the chief executive of New Tel and Mr Woolfe, a partner of Freehills, in that conference call.  Justice Lander sets out details of that at paragraphs 18 to 20 at the application book page 56. 

One can say immediately that there would be no basis for Freehills to be at all likely to be entitled to indemnity at the end of contribution proceedings, rather than some proportionate liability at best ‑ ‑ ‑

GLEESON CJ:   Mr Solomon, do you support the reasoning of Justice Nicholson?

MR SOLOMON:   Yes, and Justice Lander and Justice Crennan.

GLEESON CJ:   Could I just ask you about Justice Nicholson, who was the primary judge?

MR SOLOMON:   Yes.

GLEESON CJ:   On page 15, paragraph 34, he says “I propose to apply the law as enunciated in Sandhurst”.  Do you see that?

MR SOLOMON:   Yes.

GLEESON CJ:   Then he addresses a question of fact:

I now propose to address the matters raised in the affidavit of Mr Waller to support the view . . . that an examination conducted by Wainter has the potential to benefit New Tel and its creditors.

It is a question of fact.  He has accepted as the law the propositions of law supported by your opponent, Mr Donaldson.  Now he turns to the facts and he deals with the facts and then he makes a finding of fact in paragraph 38 on page 16:

I therefore find that the examination of the proposed examinees . . . has the possibility of assisting the liquidators of New Tel and ASIC.

Is that not finding of fact the crucial issue?

MR SOLOMON:   Yes, it is.

GLEESON CJ:   Well, that is what we should be concentrating on, is it not ‑ ‑ ‑

MR SOLOMON:   Yes, it is.

GLEESON CJ:   ‑ ‑ ‑ because unless that finding of fact can be disturbed by the appellant, then the ground on which special leave is sought, which is that there is some legal principle that requires clarification, disappears, does it not?

MR SOLOMON:   Yes, and more than that, my learned friend says that it was not dealt with in the Full Court and in that he is completely wrong.  If one looks at paragraph 268, Justice Crennan’s concurring judgment on page 113, her Honour deals with that very passage that your Honour has just read to me from the trial judge’s decision in referring to the application of the Sandhurst test, that:

there was a possibility of the examinations yielding useful information of insolvent trading and there was a possibility that a successful claim by Wainter against Freehills could result in a possible reduction of its proof of debt for the same loss, in any liquidation of New Tel.  Accordingly, the appellants had not shown the purpose of the examinations was predominately to advance the interests of the creditor and had failed to show the examinations would not be for the benefit of the liquidator of New Tel, its creditors or contributories.

GLEESON CJ:   All right.  Now, the argument against you, whether it is right or wrong, is that that is an error of fact on the part of Justice Nicholson and an error of fact on the part of Justice Crennan and that any benefit of the kind there referred to would be illusory.  That is what Mr Donaldson put.  Now, what is your answer to that?

MR SOLOMON:   My answer to that is every judge below is correct.  Justice Lander said the same thing at 257 at page 110 and Justice Ryan agreed with him, so all four judges who have considered the matter have come to the conclusion that a proof of debt has been lodged with the liquidator of New Tel by my client, by Wainter, the respondent here.  The same amount that is claimed in that proof of debt would be claimed from the solicitors from that same event, that same discussion.  If the claim against the solicitors succeeds, the proof of debt will be correspondingly, dollar for dollar, reduced.  That will be a benefit to all unsecured creditors of New Tel.

GLEESON CJ:   The argument against you, whether it is right or wrong, is that that is illusory because all that will happen is that there will be substituted for the claim by one creditor, a claim by another creditor.  I am not saying the argument is right; I am just wondering what your answer to it is.

MR SOLOMON:   There necessarily will not be a claim, dollar for dollar, by another creditor for the same amount.  If at the end of the day this all went to trial and there were proportionate liabilities decided between Freehills and New Tel, Freehills would not be a creditor for the amount of its proportionate liability to Wainter at all, so the proposition is just plainly wrong.  There will, at the end of the day, be a reduction in the overall claim of Wainter in the liquidation of New Tel which will be for the benefit of all unsecured creditors.  Whether that will be 100 per cent or 50 per cent, one does not need to say.  There will be a benefit.  The liquidator is interested in these examinations. 

The affidavit of Mr Williams, which my friend has said can be read, annexes a letter at page 124 where we are asked to keep the liquidator informed of the process with the examinations.  Mr Malone, the other party to the phone call, was an applicant before Justice Nicholson.  He was also an appellant before the Full Court.  He is not an applicant for special leave.  His examination is going to proceed regardless.  The utility of this appeal in those circumstances, where one party the conversation is going to examined because he has accepted the decision of the Full Federal Court, must be marginal at the extreme limits for two of the parties who are sought to be examined to have a stay when one does not. 

Our answer is that all of the judges below were correct and both Justice Ryan at paragraph 2 and Justice Crennan at paragraph 269 came to the conclusion that this was not a suitable case, even at the level of the Full Federal Court, to even grapple with issues of whether there are differences in the test between what was enunciated in Re Excel and what has been enunciated in the Court of Appeal in Victoria in Flanders v Beatty or what was enunciated in Sandhurst. 

GLEESON CJ:   But Justice Nicholson said he proposed to apply the law as enunciated in Sandhurst and that is the view of the law for which your opponent contends.

MR SOLOMON:   Yes, but in terms of special leave, your Honour, the point is that if there is a need for this Court to enunciate a test, if that can be done in more concrete terms for the general benefit of all, both Justice Ryan at paragraph 2, page 52 has said it was unnecessary to enter into that controversy and Justice Crennan has also said it is not necessary to determine it.  In those circumstances, when a majority of the Federal Court cannot conceive how the issues necessary to resolve any such conundrum would arise in this case, this could not be the suitable vehicle, if there is going to be one, to deal with this issue.

We enunciated, your Honours, in paragraph 2 what we thought would be the only possible test upon which the applicants could succeed.  It is not a test that has been enunciated by any court in terms and they conceded that they do not contend for that test.  That is why Justices Ryan and Crennan are correct.  There is no possibility that this will be a suitable vehicle. 

There are other problems with the position that they have taken.  They have confused the concepts of purpose and motive in the field of abuse of process.  We have mentioned in our submissions the decision of four Justices of the Court in Williams v Spautz and also your Honour the Chief Justice’s analysis of the difference between purpose and motive in News v South Sydney.  I could take your Honours to those passages if that would help.

GLEESON CJ:   No, we remember them.

MR SOLOMON:   Mr Waller in his affidavit said, “Well, our primary purpose is to recover our debt”.  He is being honest and frank in that.  He goes on and says, “If we do recover it, there will be benefit for the company”.  In terms of the jurisprudential analysis of purpose and motive in this context, what he was talking about was his motive, or the motive of the company.  The purpose is to conduct examinations for their proper purpose.  He does not want to conduct examinations to achieve some collateral result.  He wants to conduct examinations in order to run proceedings which may ultimately result in a reduction of the proof of debt.  That is not a foreign purpose.  He may have a motive of self‑benefit but it is not a foreign purpose as that term is understood in the field of abuse of process, but the applicant’s position depends on his affidavit being characterised as an admission of a foreign purpose for the purposes of the law of abuse of process.

The second problem or further problem with the argument is that they contend that there should be a distinction between purpose on the one hand and effect or consequence on the other.  That can be seen in their written submissions at paragraphs 22 and 24.  Now, interestingly, probably the clearest case to show that that is not the case is the case of Sandhurst which has been accepted in argument here this morning.  I would refer not to paragraphs 50 and 51 but paragraph 46 in Sandhurst 88 SASR 519 at 531 in Chief Justice Doyle’s judgment where his Honour says:

There is a further point to be made.  In Worthley I consider that the Full Court, in the passages cited, was distinguishing between an examination the main purpose of which was simply to improve the prospects of success in litigation of a particular creditor or class or creditors, and an examination which also had the purpose, or some prospect of, benefiting the corporation, its creditors or contributories in some way. 

By saying “or some prospect of” his Honour is bringing in a test of consequence or effect as an element of the Worthley test and, with respect, correctly construing what was said in Worthley in that regard.  So to say that purpose is to be completely distinguished from effect or consequence is to deny the effect of the latest detailed analysis of the test in Sandhurst that has been adopted by Justice Nicholson and by the Full Court in this matter.  Indeed, if one reads Re Excel 52 FCR 69 at 93 at the top of the page, their Honours there said:

there could be no objection to the use of the examination procedure on application by a creditor whose purpose was to ensure that his or her debt was paid.

That is why ultimately the test enunciated lower down on that page brings in the second element that it is not just for that motive but it also must not be for the benefit of the corporation, its creditors or contributories.  Something more must be required. 

There are two other cases that are mentioned in the authorities, both called Re Gartner Wines, one a decision of Justice Branson, one a decision of Justice Selway.  Both say virtually the same thing.  I was going to read them briefly.  I may have time just to mention them briefly.  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 passage and then her Honour says at [64]:

In determining whether the examination summons is being used for an improper purpose, Excel Finance discloses that two questions must be asked.  First, what is the principal purpose for which the examination summons is being used?  Second, if the principal purpose is that of furthering the cause of NAB in litigation against third parties, is that litigation for the benefit of the receivership?

So that is how it is put as a twofold test, and then at paragraph [69] on page 284, having quoted other authorities, her Honour says:

However, the authorities reveal that the mere fact that a third party may acquire a collateral advantage by reason of an examination does –

and the word “not” is missing clearly –

[not] render the purpose for which the examination summons was obtained improper:  Hong Kong Bank v Murphy –

a case your Honour the Chief Justice will perhaps recall having, I think, been involved with that. 

The other decision, the decision of Justice Selway, which is at tab 6, I just refer there to his Honour’s judgment at paragraph [24] about lines 26 to 30 in the report – this is in 44 ACSR 162. His Honour says:

Consequently, even if the evidence established that the examination was to be used solely for the purpose of assisting the creditor in the third party litigation, this still would not be sufficient to prove improper purpose.  In order to do that, the evidence would need to establish that the particular result in the third party litigation could not benefit the corporations, their contributories or their creditors.

Re Excel, New Zealand Steel (Aust) Ltd v Burton – that is a decision your Honour Justice Hayne in Victoria, Supreme Court – Re Southern Equities.  As his Honour notes, the onus on this is on the applicant asserting abuse of process.  We do not have an onus here in these proceedings to prove that it will necessarily benefit the corporation, its creditors or contributories.  His Honour Justice Selway was quite right.  It has to be proved against us that the third party litigation could not benefit the corporation, their contributories or their creditors, and that cannot possibly be shown on the evidence here.

New Zealand Steel is referred to in my learned friend’s reply.  He has not mentioned it orally.  I was going to go through some passages in it.  It certainly does not support the applicants’ case at all.  Your Honour there dismissed the summons for abuse because there may have been some benefit for the company in liquidation, even though it was plainly a summons to be done for the purpose of obtaining evidence for use in litigation. 

There has been no relevant error in the Full Court either.  Justice Lander’s approach, if one looks at it at paragraph 85 and 248 through to 251 and then the summary at 252, there is no material reviewable error.  My time has expired, thank you, your Honours.

GLEESON CJ:   Thank you, Mr Solomon.  Yes, Mr Donaldson.

MR DONALDSON:   Your Honours, if I could make one submission arising from my friend’s submissions.  If it is the case that the examination of Mr Malone is to proceed and if Mr Malone was party to the three party conversation and if, my friend put to your Honours, the examiner will find

out what it wishes from the examination of Mr Malone, it is difficult to see that there is any legitimate purpose then in proceeding with the examination against Woolfe or Evans.

GLEESON CJ:   Mr Donaldson, can I take you to page 16 of the application book, paragraph 38, the first sentence.  That is a finding of fact by Justice Nicholson.  That finding of fact was supported by the Full Court, was it not?

MR DONALDSON:   It was, your Honour. 

GLEESON CJ:   So you have concurrent findings of fact against you on an issue which, if correct, satisfy the requirements of the law as enunciated in Sandhurst?

MR DONALDSON:   It does.  I should say, your Honour, that fact was the subject of appeal.  It was a ground of appeal before ‑ ‑ ‑

GLEESON CJ:   That is why you have concurrent findings of fact because it was a ground of appeal. 

MR DONALDSON:   Yes, but in relation to the finding of fact by the Full Court, your Honour, Justice Lander, in whose judgment Justice Crennan and Justice Ryan concurred, simply did not address, however, the contention which has been advanced.  So even though his Honour arrived at a finding of fact, he did so without addressing in any way the case that was put against that finding, as it were.  May it please your Honours.

GLEESON CJ:   Having regard to the concurrent findings of fact made by Justice R.D. Nicholson and the Full Court of the Federal Court, we are of the view that there are insufficient prospects of success of an appeal to warrant a grant of special leave.  The application is dismissed with costs.

We will adjourn for a short time to reconstitute.

AT 10.32 AM THE MATTER WAS CONCLUDED