Gould, in the matter of the Bankrupt Estates of Terry v Lamb - [1999] FCA 1407

FEDERAL COURT OF AUSTRALIA
Gould, In the matter of the Bankrupt Estates of Terry v Lamb
[1999] FCA 1407
Re: The Bankrupt Estates of BRUCE MITCHELL TERRY and
JUDITH WENDY TERRY
Between: IAN GOULD
And: KENNETH WAYNE LAMB (as Trustee of the said Bankrupt Estates)
V 7094/99
RYAN J
MELBOURNE
12 OCTOBER 1999

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

V 7094 OF 1999

Re: The Bankrupt Estates of
BRUCE MITCHELL TERRY
and JUDITH WENDY TERRY)

BETWEEN:

IAN GOULD
Applicant

AND:

KENNETH WAYNE LAMB (as Trustee of the said Bankrupt Estates)
Respondent

JUDGE:

RYAN J

DATE OF ORDER:

12 OCTOBER 1999

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:
1. The motion on notice dated 7 October 1999 to set aside the summons be refused.
2.The costs of both parties of and incidental to the said motion be reserved to the Registrar conducting the examination of Ian Gould pursuant to s 81 of the Bankruptcy Act 1966.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

V 7094 OF 1999

Re: The Bankrupt Estates of
BRUCE MITCHELL TERRY
and JUDITH WENDY TERRY)

BETWEEN:

IAN GOULD
Applicant

AND:

KENNETH WAYNE LAMB (as Trustee of the said Bankrupt Estates)
Respondent

JUDGE:

RYAN J

DATE:

12 OCTOBER 1999

PLACE:

MELBOURNE

REASONS FOR JUDGMENT

There is before the Court a motion on notice dated 7 October 1999 seeking that the Court set aside a summons dated 17 September 1999 issued at the instance of Kenneth Wayne Lamb ("the Trustee") as trustee of the estates of Bruce Mitchell Terry and Judith Wendy Terry ("the bankrupts") requiring Mr Ian Gould to attend to be examined under s 81 of the Bankruptcy Act 1996 ("the Act"), and to give evidence in relation to the affairs of the bankrupts. Alternatively, the motion seeks an order that:
"The trustee provide the sum of $10,000 to Ian Gould being the reasonable fees of the said Ian Gould to locate and bring the books required by the Summons and the hearing of the Summons be adjourned for a further period of four weeks."
The summons which is the subject of this application, by paragraph 2, stipulates:
"You are also required to bring the following books with you and produce them at the Examination:-
(a) Taxation Returns for the last 10 financial years;
(b)Profit and loss accounts and balance sheets and any other financial accounts or statements for the last 10 financial years;
(c)Minutes of meetings of director(s) or trustee(s) held within the last 10 years;
(d)If the company is a trustee of a trust, the relevant trust deed and any amendments;
(e)The secretarial files of each company and trust including sealed registers;
(f)General ledger;
(g)Journal;
(h)Cash Book;
(i)Wages book and Employee Records;
(j)Contracts entered into including Hire Purchase and Leasing Contracts;
(k)Certificates of Title to any land owned, or details of Certificates not held;
(l)Certificates for any Shares and other Securities owned;
(m)Motor Vehicle Registration Certificates except in relation to cars owned by the Melbourne Car Shop Pty Ltd (ACN 006 239 112) for less than 6 months; and
(n)Any other Documents, Certificates or Articles which relate to the examinable affairs of the bankrupts or either of them;
in respect of the financial affairs of each of the bankrupts and of each of the companies referred to in Annexure "A" to this Summons and of each trust of which any such company might be, or have been at any time in the past 10 years, trustee.
Annexure A consists of a list of 12 identified private companies ("the companies"). The bankrupts, I have been told, were, before 1990, the sole directors and controllers of each of those companies, or at least those companies which were then in existence. After 1990 the children of the bankrupts and Ms Winch, a long-time employee of the businesses formerly conducted by the male bankrupt, became directors and assumed nominal control of most, if not all, of the companies.
Those new directors have been examined in the course of the administration of the estates of the bankrupts and have, I have been told from the Bar table, suggested that decisions in relation to the operation of the companies have effectively been taken by Mr Gould who apparently has been the accountant for each of the companies. As well, the evidence discloses that the male bankrupt referred to having relied on the advice of Mr Gould in the preparation of his statement of affairs. Moreover, it has been suggested that Mr Gould has had possession or custody of financial books and documents related to the companies.
I am satisfied that the application for the issue of a summons was accompanied by an affidavit in conformity with O 77 r 34 of the rules of this Court. I consider that rule, and not O 77 r 20 as suggested by Mr Clarke of counsel for Mr Gould, is the rule applicable to applications for the issue of summonses for examination of examinable persons under s 81(1) of the Act. I do not consider that O 77 r 34 requires the affidavit in support of the application for a summons to produce books to specify by name or date each document which is said to be related to the examinable affairs of the bankrupt. Of their nature, a trustee in bankruptcy or other applicant will usually have only a general, inferential, idea of the existence and nature of those documents.
Accordingly, I consider it sufficient for the documents to be described, as they have been here, in general terms, sufficient to alert the person summoned to the types or classes of documents which he or she is required to produce. Nor do I consider that O 77 r 34 (2)(c)(ii) requires the inquiry of which details have to be given to be made in respect of documents of precisely the same description as is employed in the draft summons. The purpose of paragraph (c), I infer, is to enable the Registrar issuing the summons to be satisfied that the applicant has given the proposed recipient of the summons an opportunity to avoid the inconvenience of attending to produce documents by voluntarily making them available to the applicant.
Mr Gould has sworn an affidavit to which he exhibits a request by letter dated 30 September 1999 to the Trustee in these terms:
"I refer to the Summons to attend examination served on me at 10.00 pm on 21 September 1999 together with $20 for expenses.
On an examination of the breadth of matters for examination and the volume of documentation sought, it is clear that many hours' preparation will be required by me and that the hearing may be lengthy. I note at this time, that a number of the documents sought are not in my possession or do not exist). I also understand that the estates of the bankrupts are devoid of assets with which to pay my fees. I estimate that approximately 50 - 60 hours work may be required in connection with the summons. My fees will be at the rate of $250 per hour.
I require the following:
1.That the sum of $5,000 be paid immediately on account of my fees to be incurred; that
2.I have a written personal indemnity from the Trustee of the bankrupts estate, with respect to the balance of my fees, charged as aforesaid; and
3.An extension of time. I have previously advised employees of the Trustee that I work as a full time employee for a finance company and perform tax and accounting work for a small number of clients out of office hours; ie. evenings and weekends. I need more time to compile the volume of information sought.
If my requirements are not satisfied by the end of the week, I will approach the court to seek leave under the requirements of the summons."
The solicitors for the Trustee responded by letter dated 5 October 1999 contending that Mr Gould's estimate that 50 to 60 hours of work would be required in connection with the summons was exaggerated and excessive. By the same letter it was indicated that any further claim for expenses by Mr Gould would be dealt with in accordance with the rules. That I take to have been a reference to O 77 r 39 which provides:
(1)A person (except a relevant person) who, in accordance with a summons, attends an examination to give evidence or produce documents is entitled to be paid:
(a)enough conduct money to cover the reasonable expenses of travelling from and to the place where the person lives, and any reasonable accommodation expenses, and
(b)reasonable expenses, in accordance with the Second Schedule, for the person's attendance as a witness.
(2)The expenses mentioned in paragraph (1)(a) must be paid to the person a reasonable time before the person is to attend the examination.
(3)Expenses under this rule must be paid by the applicant for the summons.”
I agree with the submission of Mr Bigmore QC, who appeared for the Trustee, that a person served with a summons of this kind is not entitled to insist, as a condition of compliance, that his or her self-assessed expenses of doing so be paid in advance. Recoupment to the person served of reasonable expenses of complying should, in my view, be left or to the proper application by the Registrar of the Second Schedule to the Rules at an appropriate point during, or after the completion of, the relevant examination.
I am not persuaded that, on its face, the summons to Mr Gould is oppressive or too wide. A Full Court of this Court, in Karounos v the Official Trustee (1988) 19 FCR 330, distilled at 335-336 the relevant principles governing the issue and setting aside of summonses of this kind. Their Honours identified the first principle as being:
"1.The power given by s 81 of the Act is an unusual and far-reaching one (Re North Australian Territory Company (1890) 45 Ch D 87 at 93, Ex parte Willey (1883) 23 Ch D 118 at 128) and its use could easily become oppressive and vexatious if it is not approached responsibly by applicants for summonses and controlled carefully by the Registrar and the court: see Re Price (No 3) (1948) 14 ABC 137 at 139-140).”
That principle, I consider, recognises that, rather than strike out a summons in limine as oppressive or too wide, the Court will usually leave it to the Registrar conducting the examination to ensure that a person summoned is not subjected to unnecessary or excessively wide examination and is not oppressively required to produce documents which are difficult to identify or collate. It is significant that Mr Gould has not asserted the existence of any such difficulty in the present case. He has contented himself with deposing:
"5.The sheer magnitude and volume of documents required to be produced by me is simply oppressive. If the Trustee wishes me to provide all such documents, although I'm unaware as to what he means by "any other documents, certificates or articles which relate to the examinable affairs of the bankrupts or either of them:" I will require at least a further four weeks to attempt to locate these documents. I am a full time employee and am only able to search for these documents after hours and on weekends.
6.Further, I believe I am entitled to be properly compensated for the time involved in locating or attempting to locate these documents. I also question the relevance of the documents requested."
The difficulty there indicated of identifying "other documents which relate to the examinable affairs of the bankrupts" can be overcome in the course of the examination of Mr Gould under s 81 by counsel for the Trustee indicating what documents answering that description are required to be produced. The Registrar who has conducted the other examinations of the bankrupts, their children and Ms Winch to which I have earlier referred, will be much better placed than the Court as presently constituted, to rule on whether documents of that description are genuinely related to the examinable affairs of the bankrupts.
For these reasons the motion to set aside the summons is refused. I shall order that the costs of both parties of and incidental to that motion be reserved to the Registrar conducting the examination of Mr Gould under s 81 of the Act.

I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice RYAN.
Associate:
Dated: 12 October 1999

Counsel for the Applicant: Mr G T Bigmore QC

Solicitor for the Applicant: Holding Redlich

Counsel for the Respondent: Mr M Clarke

Solicitor for the Respondent: D M Davidson

Date of Hearing: 12 October 1999

Date of Judgment: 12 October 1999

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 7094 OF 1999

Re: The Bankrupt Estates of BRUCE MITCHELL TERRY and JUDITH WENDY TERRY)
BETWEEN:	IAN GOULD Applicant
AND:	KENNETH WAYNE LAMB (as Trustee of the said Bankrupt Estates) Respondent
JUDGE:	RYAN J
DATE OF ORDER:	12 OCTOBER 1999
WHERE MADE:	MELBOURNE

Counsel for the Applicant:	Mr G T Bigmore QC
Solicitor for the Applicant:	Holding Redlich
Counsel for the Respondent:	Mr M Clarke
Solicitor for the Respondent:	D M Davidson
Date of Hearing:	12 October 1999
Date of Judgment:	12 October 1999