Gerah Imports Pty Ltd v the Duke Group Ltd (in Liquidation) No. SCGRG 89/1087 Judgment No. 4383 Number of Pages 3 Corporations Winding up

[1994] SASC 4383

COURT IN THE SUPREME COURT OF SOUTH AUSTRALIA DEBELLE J

CWDS
Corporations - winding up - order of Master requiring applicants to submit to liquidator's examination - application for a stay of the Master's order pending the granting of leave to appeal to the High Court - substantial question of law to be considered by the High Court - grant of a stay not to unduly prejudice the administration of the liquidation - stay granted until hearing and determination of the application to the High Court. Corporations Law s.597. Jennings Construction Industries Ltd v Burgundy Royale Investments Pty Ltd (1986) 161 CLR 681, applied.

HRNG ADELAIDE, 14 January 1994 #DATE 14:1:1994
Counsel for appellant:     Mr S Lane
Solicitors for appellant:    Phillips Fox
Counsel for respondent:     Mr S Lipman with Mr A D'arcy
Solicitors for respondent: Fisher Jeffries

ORDER
1. Upon the undertaking of the applicants by their counsel to prosecute with all reasonable expedition the application for special leave to appeal from the judgment of the Full Court of the Supreme Court of South Australia delivered on 23 December 1993 and the application to extend the time within which to make the said application there will be an order staying the orders made by Master Bowen-Pain on 24 December 1993 until the hearing and determination of the said applications.
2. Liberty to apply.
3. Question of costs reserved.

JUDGE1 DEBELLE J On 22 September 1993, the applicants were ordered by Master Bowen-Pain to submit themselves to an examination pursuant to s.596(b) and s.597 of the Corporations Law and to produce certain documents. Master Bowen-Pain varied that order on 1 November 1993. The applicants appealed to the Full Court from the said order but their appeal was dismissed by the Full Court on 23 December 1993. No application for a stay of the order made by Master Bowen-Pain was then made. 2. On 24 December 1993, the defendant brought the matter on again before Master Bowen-Pain. The Master then ordered that the applicant produce the documents to the court by 28 January 1994 and attend for examination on 21 February 1994. 3. The applicants have prepared an application for leave to appeal to the High Court. The applicants produce a Notice of Appeal to the High Court and I am informed by counsel for the liquidators that they propose to lodge an application for leave to appeal today. I am also informed that it was likely that the application for leave will be heard by the High Court on 11 March 1994. 4. It appears that the applicants may be one day late in their application for leave to appeal. They therefore face two hurdles in the prosecution of their appeal. First, they must obtain an extension of the time within which to lodge the application for leave to appeal and, second, they must obtain leave to appeal. The fact that they must seek an extension of the time within which to appeal should not, I think, have any substantial weight in the determination of this application. At the end of the day the applicants are but one day late and any consideration of the application would presumably have regard to the fact that the Christmas vacation has intervened. In making those remarks, I do not, of course, in any way presume to predict the manner in which the High Court would deal with the application. 5. The purpose of a stay is to preserve the subject matter of the litigation. The matters to be addressed when determining whether a stay should be granted were considered by Brennan J in Jennings Construction Industries Limited v Burgundy Royale Investments Pty Ltd (1986) 161 CLR 681 and, in particular, the relevant factors are listed at p.685. 6. Having regard to all of those matters I believe that a stay should be granted. The documents the subject of these proceedings are, in large part, documents concerning the issue whether the applicants hold any policies of insurance. It appears that the applicants may have satisfied the order in relation to other documents. Those other documents relate to issues concerning the partnership and the applicants have already produced a large number of documents concerning those issues. Mr Lipman is unable to point to any deficiency in discovery of those documents but fairly points out that the question whether all documents have been produced is not within his knowledge but within the knowledge of the applicant. Mr Lipman does not suggest that there are any other documents outstanding other than what I might loosely call insurance documents. A substantial purpose of the appeal is to prevent the examination of those insurance documents and to prevent any oral enquiry as to the contents of those documents. It is true that the examination proposes also to examine partnership documents and the examination could proceed as ordered by Master Bowen-Pain, limited, perhaps, to the partnership issues. However, all but one of the applicants are interstate and, if a stay is to be ordered, as I think it should, in relation to the issues concerning insurance documents, then there seems to be little point in requiring these people to come to Adelaide to be examined in part and then return again to be examined as to the other matters, if the applicant's application for leave to appeal is dismissed. 7. The grant of a stay will not unduly delay the examination or unduly prejudice the administration of the liquidation. It is a complex liquidation with a number of difficult issues. In any event, the examination is not to be held until 21 February 1994. As I have said, the date on which the applicants' application for leave to appeal is anticipated to be heard is 11 March 1994, some three weeks later. The balance of convenience, therefore, plainly favours the grant of the stay. 8. There are I think substantial issues involved in the appeal which might attract the attention of the High Court to grant leave. It involves a question of law as to the extent to which, if at all, a party should be required in circumstances such as these to produce documents relating to policies of insurance. 9. For all of these reasons I believe that the stay should be granted pending the hearing and determination of the application for leave to appeal but on terms that the applicants undertake promptly to prosecute that application. 10. There will, therefore, be an order in the following terms:
    1. Upon the undertaking of the applicants by their counsel
    to prosecute with all reasonable expedition the application
    for special leave to appeal from the judgment of the Full
    Court of the Supreme Court of South Australia delivered on
    23 December 1993 and the application to extend the time
    within which to make the said application there will be an
    order staying the orders made by Master Bowen-Pain on 24
    December 1993 until the hearing and determination of the
    said applications.
    2. Liberty to apply.
    3. Question of costs reserved. 11. I certify the matter as fit for counsel.