Heli-Muster Pty Ltd v Chubb
[2001] NSWSC 999
•12 October 2001
CITATION: Heli-Muster Pty Ltd v Chubb [2001] NSWSC 999 CURRENT JURISDICTION: Equity FILE NUMBER(S): SC 4305 of 2001 HEARING DATE(S): 12 October 2001 JUDGMENT DATE:
12 October 2001PARTIES :
Heli Muster Pty Limited (Applicant)
Morgan James Chubb as liquidator for Johnson Wire Forming Pty Limited (Plaintiff/Respondent)JUDGMENT OF: Windeyer J at 1
COUNSEL : Mr D E Grieve QC with him Mr T D Blackburn (Applicant)
Mr M J Walsh (Plaintiff/Respondent)SOLICITORS: Clout & Associates (Applicant)
Julie A Orsini (Plaintiff/Respondent)CATCHWORDS: CORPORATIONS - winding up - examination summonses and orders for production issued by liquidator - issued to directors and employees of a company which the company in liquidation is suing - whether an abuse of process LEGISLATION CITED: Corporations Law s446A DECISION: See paragraph 12
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IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
WINDEYER J
Friday 12 October 2001
4305/01 RE: JOHNSON WIRE FORMING PTY LIMITED (IN LIQUIDATION)
Judgment
1 HIS HONOUR: This is an application by amended interlocutory process to set aside summonses and orders for production served upon three applicants, Messrs Weymouth, Clancy, and Dale, who are, respectively, managing director of Heli-Muster Pty Ltd and two employees of that company. The summonses and orders for production were obtained by the liquidator of Johnson Wire Forming Pty Ltd, namely Mr Chubb, who was appointed administrator by a resolution on 27 April 2001 and, as a result of the creditors resolving to wind up the company, became liquidator pursuant to section 446A of the Corporations Law. It may be in this decision I should be referring to the Corporations Act, but it is accepted that the sections which are referred to are the same, so nothing will turn on that.
2 The company, Johnson Wire, has been engaged in litigation with Heli-Muster Pty Ltd in this Court since 1996, Johnson Wire bringing an action for breach of contract, negligence, and for misleading and deceptive conduct, in respect of the sale by Heli-Muster to it of a helicopter and the subsequent crash of that helicopter. It is not necessary to go into this in detail other than to say that the claim, as now maintained, is to recover the cost of the helicopter, damages of loss of opportunity to conduct a helicopter charter business with the aid of that helicopter, and exemplary damages. The claim has been amended on a number of occasions, lastly by an additional amended statement of claim filed pursuant to an order made on 17 April 2000.
3 In the ordinary conduct of that litigation witness statements by each of the persons now proposed to be examined have been served. While one would have expected it, I am informed that there has been no discovery or inspection of documents in the action, in spite of the plaintiff's solicitors in the claim having filed a certificate that the action was ready to proceed. Be that as it may, there can be no doubt that the procedures for discovery and inspection are available in this Court in that action.
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5 The orders for production are the same, in respect of each Messrs Weymouth, Clancy and Dale. In fact, it seems perfectly clear that the documents sought to be produced would be documents properly in the possession or power of Heli-Muster Pty Ltd. If they were not, which I do not accept to be the position, and were otherwise in the possession of Messrs Clancy and Dale, then they would be obtainable on subpoena. In general, what is sought are documents issued or held by Heli-Muster Pty Ltd. I should say that I accept that all those documents could well be relevant to the claim which Johnson Wire is making in the Supreme Court action against Heli-Muster.
6 The question, then, is whether or not the summonses and orders for production should stand or should be set aside.
7 The claim to set aside the orders and summonses is based on the argument that they are an abuse of process. That is because it is said that, as the three men have made witness statements - and I think at least two of them have made two statements - setting out the evidence which it is proposed to call from them in this action on behalf of Heli-Muster Pty Ltd, which evidence in accordance with the normal rules would not be allowed to be supplemented in any material way, then the purpose of examining any of those persons must be for an impermissible purpose; namely, to cross-examine them to cast doubt on their evidence or to cast doubt upon their credit, it being clear that is an impermissible use of the process otherwise allowed under section 596 of the Law.
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9 So far as the orders for production are concerned, it is argued that the clear law is that the availability of orders for production and examination on that production is not to be allowed to circumvent or go behind, to the advantage of a particular litigant, the ordinary processes available to that litigant in this Court in the ordinary conduct of litigation between plaintiff and the defendant.
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11 It is for the applicant to have the document set aside to establish the abuse claimed. It is not for the liquidator to prove before this Court on this application that he had a proper purpose in issuing the orders and summonses. I am, however, of the clear view, so far as the summonses involving Messrs Clancy and Dale are concerned, requiring them to attend for examination is an abuse and is not for the proper purposes of the liquidation because all that could be done by it would be to throw doubt upon the testimony which it is known they intend to give in the action. I am also of the clear view that the documents, which it is sought to have produced by them, are documents which, if they had them, would be documents within the power of Heli-Muster Pty Ltd, properly discoverable by that company, if required, by proper order for discovery. In those circumstances, I am of the view that the documents served upon Messrs Clancy and Dale should be set aside.
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13 So far as Mr Weymouth is concerned, it is argued that it is proper to require him to attend because in his position he would be able to give information as to the financial affairs of Heli-Muster Pty Ltd, this being relevant to whether or not the liquidator should decide to pursue the claim. I should say that I have the gravest doubt about this matter because none of the documents which Mr Weymouth has been required to produce, (under the order for production) have anything whatsoever to do with the ability of Heli-Muster Pty Ltd to satisfy any judgment. I should add that, in my view, as a statement of Mr Weymouth has been served, he should not be allowed to be examined, in respect of the general matters which arise in the litigation, because that would be an impermissible use of the process. However, I am not prepared to say that the liquidator did not have a proper purpose in requiring Mr Weymouth to attend for examination, as it may be, and I cannot assume otherwise, that it was thought that he may be able to give relevant information as to the financial ability of the company to meet any judgment.
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15 I should say, openly, that the liquidator has said that to be the position in his affidavit, in this Court, which otherwise I did not allow to be disclosed to the applicant in this matter. I am not prepared to hold that this basis put forward is not true, although I must say that, to some extent, I am concerned that it seems to be a basis which falls from word processors.
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17 In the circumstances, however, while I intend to set aside the order for production served on Mr Weymouth, I did not intend to set aside the summonses for examination served upon him.
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19 The orders are:
1. Order that the claim in paragraph 1 of the amended interlocutory process be dismissed.
2. Order that the examination summonses and order for production served upon the applicants Michael Clancy, Ian Phillip Scott Dale, be discharged. Order that the order for production served on the applicant John Victor Weymouth be discharged.
3. I stand over the examination of Mr Weymouth until 14 November and direct that any examination of him be limited to the ability of Heli-Muster Pty Ltd to meet any judgment that the plaintiff company may obtain.
4. Liberty to restore. So far as examination of Mr Weymouth is concerned, if documents are provided in the meantime, liberty to restore on three day's notice.
6. The exhibits can be returned.5. Order liquidator to pay 85 per cent of the applicants' costs to date.
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