IMO Calder Park Promotions Pty Ltd (in liquidation) Examinations
[2014] VSC 254
•30 May 2014
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
LIST E
S CI 2014 01828
IN THE MATTER of Calder Park Promotions Pty Ltd (in liquidation) (ACN 138 012 021)
| CALDER PARK PROMOTIONS PTY LTD (IN LIQUIDATION) (ACN 138 012 021) | First Plaintiff |
| - and - | |
| GLEN ANTHONY CRISP and TRAJAN JOHN KUKULOVSKI (in their capacity as Joint and Several Liquidators) of CALDER PARK PROMOTIONS PTY LTD (IN LIQUIDATION) (ACN 138 012 021) | Second Plaintiffs |
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JUDGE: | Randall AsJ | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 22 and 23 May 2014 | |
DATE OF JUDGMENT: | 30 May 2014 | |
CASE MAY BE CITED AS: | IMO Calder Park Promotions Pty Ltd (in liquidation) Examinations | |
MEDIUM NEUTRAL CITATION: | [2019] VSC 254 | |
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CORPORATIONS ACT – Examination summonses – Application to set aside – Application to inspect affidavit in support of application for the filing of examination summonses – Collateral or ulterior purpose – Whether the contended for collateral or ulterior purpose was a purpose of the liquidators or the predominant purpose of the liquidators or a by-product of the examinations — Onus of proof — Conflict of interest — Proceedings in the Family Court involving examinees and the funder of the liquidators.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Moore QC with Mr J Mereine | Mills Oakley Lawyers |
| For Robert Frederick Jane | Mr G McCormack | Goldsmiths Lawyers |
| For Laree Madonna Jane, Robert Nathan Jane, Charlotte Laree Jane, Courtenay Elizabeth Jane and Paul Ellul | Mr D J Christie | Kenna Teasdale Lawyers |
HIS HONOUR:
On 23 April 2014, I approved the filing of examination summonses pursuant to s 596A and s 596B of the Corporations Act 2001 (Cth) (‘the Act’) with respect to the examinable affairs of Calder Park Promotions Pty Ltd (in liquidation) (‘the company’). The examination summonses were directed to each of the examinees referred to in both interlocutory processes now before me and were also directed to two others.
Prior to the filing of the examination summonses, enquiries had been made with the Court and it was determined that 7 May 2014 would be available for the production of documents and the examinations would take place on 19, 20 and 22 May 2014 and, if need be, on 4, 5 and 6 June 2014. From the outset, it should be noted that the plaintiffs had sought the urgent conduct of the examinations, but that the dates allocated for the proposed examinations reflected the Court’s capacity to hear the examinations and not because the plaintiffs sought a hearing on any particular date.
There was an impediment to personally serving most of the examination summonses and orders for substituted service were made on 29 April 2014. Service pursuant to the orders for substituted service was effective and most of the examinees appeared on 7 May 2014, except for those not required by the plaintiffs; those examinees who, after service of the examination summonses, undertook an overseas trip which had been arranged prior to service of the examination summonses. Mr Robert Frederick Jane (‘Bob Jane’) did not attend as it was put that his health did not permit his attendance on that day.
Although there was argument about whether the examinations ought to proceed on 19 May 2014, I advised the plaintiffs and the examinees that the examinations could not proceed on that day as, in any event, the Associate Judge allocated to hear the same was indisposed. In those circumstances I directed that any of the examinees who might seek to set aside any relevant examination summons do so by 4.00pm on 20 May 2014 with such application returnable at 2.15pm on 22 May 2014.
Rule 11.5 of the Supreme Court (Corporations) Rules 2013 provides as follows:
11.5Discharge of examination summonses
(1)This Rule applies if a person is served with an examination summons.
(2)Within 3 days after the person is served with the examination summons, the person may apply to the Court for an order discharging the summons by filing—
(a)an interlocutory process seeking an order discharging the summons; and
(b)an affidavit stating the facts in support of the interlocutory process.
(3)As soon as practicable after filing the interlocutory process seeking the order and the supporting affidavit, the person must serve a copy of the interlocutory process and the supporting affidavit on—
(a)the person who applied for the examination; and
(b)unless that person is the ASIC or a person authorised by the ASIC—the ASIC.
The interlocutory process filed on behalf of Laree Madonna Jane, Robert Nathan Jane, Charlotte Laree Jane, Courtenay Elizabeth Jane and Paul Ellul seeks the following orders:
1.The time for the applicants to apply for an order discharging the Summons[es] for Examination served on them in this proceeding be extended to 20 May 2014.
2.The applicants have leave to inspect the affidavit(s) in support of the Summons[es] for Examination.
3.The Summons[es] for Examination be discharged.
4.In the alternative to 3, the Summons[es] for Examination be adjourned to the hearing and determination of Laree Madonna Jane’s application filed on 3 September 2013 in Family Court of Australia proceeding No. MLF 3444/2006.
5.Justin Mereine of [C]ounsel be restrained from appearing for the Liquidators on the Examinations.
6.The plaintiffs pay the costs of this application on an indemnity basis.
As the order sought in paragraph 5 of the interlocutory process sought the determination of whether an injunction ought to be granted, I obtained a reference from Ferguson J to hear and determine the interlocutory process.
The interlocutory process filed on behalf of Bob Jane sought the following orders:
1.That the Examination Summons dated 24 April 2014 be set aside.
2.That the affidavits filed by the Plaintiffs pursuant to Rule 11.3 of… Chapter V of the Supreme Court Rules be inspected and copied by Robert Frederick Jane and his legal representatives.
3.The Second Plaintiffs attend the hearing of this application and leave be given to cross-examine the Second Plaintiffs in respect [of] this application.
4.The hearing and the examination be adjourned until after the hearing and determination of this application and the Family Court proceedings.
5.If the application is to proceed then the examination be limited to director related transactions as set out in the demands by the Liquidators in their letters dated 1 October 2013 (exhibit “MGJ-1”) and 19 November 2013 (exhibit “MGJ-3”).
6.The examination be adjourned as a consequence of the ill health of Robert Frederick Jane.
7.The Plaintiffs pay Robert Frederick Jane’s costs of this application.
8.Such other and further orders as the Court deems relevant.
At an early stage, Mr McCormick conceded that there was insufficient material to press an adjournment on the grounds of health.
Background
The company was incorporated on 30 June 2009. The company was ordered to be wound up in insolvency by this Court on 26 June 2013. The petitioner was Nunn Media Pty Ltd. A further petition to wind up the company, brought by Bob Jane Corporation Pty Ltd (‘Bob Jane Corporation’) (a company representing the interests of Rodney Jane, a son of Bob Jane’s first marriage), was dismissed by order of this Court on 26 July 2013.
At the time of liquidation, Bob Jane was the sole director of the company. Relevant former directors were as follows:
Charlotte Laree Jane: 24 October 2011 to 2 December 2011 and from 4 April 2012 to 15 August 2012;
Courtney Elizabeth Jane: 3 August 2010 to 2 December 2011 and from 4 April 2012 to 18 July 2012; and
Robert Nathan Jane: 3 August 2010 to 2 December 2011.
On 1 October 2013, Bob Jane made out and verified a Report As To Affairs (RATA) with respect to the company. The unsecured creditors as detailed in Schedule H were $1,840,248.40. Of those unsecured creditors, it was set out that $15,200.62 was owed to Bob Jane Corporation, $78,272.89 was due to Adelaide International Raceway Pty Ltd (‘Adelaide International Raceway’), and $419,335.59 was due to Calder Park Raceway Pty Ltd (‘Calder Park Raceway’).
On 19 November 2013, the liquidators wrote to Bob Jane, alleging the payment of $400,000 (sic) to Bob Jane Global Tyre Corp (Hong Kong) Ltd and a reduction in his loan account of $277,507.63 were each ‘unreasonable director related transactions’ and sought repayment.
On 6 March 2014, the liquidators sent a circular letter to all creditors advising that ‘a number of matters require further investigation’ and requesting $250,000 to conduct public examinations. The letter also advised that ‘one creditor’ had expressed an interest in funding the examinations and potential litigation.
In early April 2014, the terms of the funding agreement were negotiated and by 16 April 2014 material had been collated for both the approval of the funding agreement and for the issue of examination summonses. Those summonses were approved by the Court on 23 April 2014. At the same time, entry into the funding agreement was approved.
The application for the approval of the funding agreement also relied upon confidential material that was filed in support of the issue of the examination summonses. Hence, the application for approval was also conducted on a confidential basis. There is nothing remarkable about the funding agreement and I do not approve of making an application for the same on a confidential basis unless it is demonstrated to be necessary. The result was that none of the creditors, save for those involved, was aware of the identity of the funders until Senior Counsel for the liquidators announced in court that the funding creditors were Bob Jane Corporation and Adelaide International Raceway. Both corporations are Rodney Jane companies.
The examination summons issued with respect of Bob Jane is pursuant to s 596A. The examination summons issued with respect to Laree Jane is pursuant to s 596B.
Bob Jane and Laree Jane separated in 2006 and were formally divorced on 2 May 2008. They have since reconciled. In 2006, Laree Jane commenced proceedings in the Family Court for adjustment of property interests. Rodney Jane was not a party to the original proceeding but was subsequently made a party, together with a number of corporate entities controlled by Rodney Jane, including Bob Jane Corporation, Adelaide International Raceway, Calder Park Raceway and the company.
In July 2007, after the commencement of the Family Court proceedings, Rodney Jane and others filed proceedings in the Supreme Court with respect to a declaration of trust allegedly made on 28 February 2002. The Family Court proceeding and the proceeding with respect to the declaration of trust were compromised in September of 2009.
In May of 2010, Bob Jane and Laree Jane reconciled. Laree Jane contends that Bob Jane admitted that Laree Jane had been defrauded by the deed of declaration of trust which he is said to have described as a sham. Accordingly, Laree Jane issued an application in the Family Court seeking orders with respect to the declaration of trust, setting aside the deed of settlement and the ensuing Binding Financial Agreement dated 20 September 2009.
The Family Court proceeding is listed for directions on 30 May 2014. I am informed by counsel that such directions will also include the resolution of outstanding discovery issues, which I am informed could be extensive. I am also informed that the application will be staged and that the first issue dealing with the declaration of trust is listed for 18 June 2014 for a duration of ten days.
Mr McCormick will appear for Bob Jane in the Family Court proceedings. Mr Mereine will appear as junior counsel in the Family Court proceedings for the Rodney Jane interests. Mr Mereine has also appeared for the Rodney Jane interests against the Bob Jane interests and/or the Laree Jane interests in a number of hearings in the Family Court and in proceedings variously reported at [2013] VSC 406, [2013] VSC 467, [2013] VSC 85, [2014] VSC 27 and [2012] VCC 807.
Urgency
On 9 August 2013, Sifris J gave judgment in [2013] VSC 406. On 4 September 2013, Sifris J gave judgment in relation to costs against Bob Jane in [2013] VSC 467. Two weeks later, on 17 September 2013, Bob Jane transferred to Laree Jane his interest in the property at 1 Holden Road, Diggers Rest, together with his claim for compensation with respect to compulsory acquisition. The Rodney Jane interests made application for a freezing order against Bob Jane, which was made on 22 October 2013. On 28 October 2013, the quantum subject to the freezing order was increased.
On 7 November 2013, the Rodney Jane interests commenced a second proceeding pursuant to s 172 of the Property Law Act 1958 (Vic) with respect to the transfer of land and assignment of the compensation claim. That claim was compromised in favour of the Rodney Jane interests. On the day of the compromise the freezing order was amended to increase the quantum to $1,200,00 with certain conditions. The quantum was subsequently increased on 10 April 2014 to $1,500,000.
In addition to the attempted disposition referred to in the preceding paragraphs, a number of transactions to be investigated in the liquidators’ examination involved dispositions by the company to Bob Jane or to corporations representing the interests of Laree Jane or Bob Jane. Counsel for the liquidators have argued, as was argued upon the application for the issue of the examination summonses, that the Bob Jane and Laree Jane interests show a pre-existing propensity to dispose of assets. Hence, the urgency. Any disposition by the company may or may not be set aside pursuant to Part 5.7B of the Act, but that is a matter for determination in curial proceedings after the completion of the examinations.
The issues
Counsel for Laree Jane submitted that the summonses had not been issued for a proper purpose but rather:
(a)for the collateral or ulterior purpose of giving Rodney Jane a forensic advantage against Laree Jane and Bob Jane in the Family Court proceeding;
(b)to cause Laree Jane inconvenience and cause her to incur unnecessary costs; and
(c)to distract Laree Jane from concentrating her attention and resources on the Family Court proceeding.
Counsel for Laree Jane also submitted that the use by the liquidators of Mr Mereine as examining counsel, who had previously appeared for the Rodney Jane interests in the Family Court and as detailed in these reasons, was designed to cause further angst to Laree Jane at a time she was immersed in the Family Court application. Mr Christie raised the issue of whether there had been full disclosure at the time of seeking approval for the filing of examination summonses and hence sought inspection of the affidavits in support thereof. Mr Christie also relied upon the contention that as the Rodney Jane interests were funding the conduct of the examinations, it was axiomatic that the liquidators had resiled from their duty and were exercising their judgement in favour of Rodney Jane rather than for the creditors in general.
It was put on behalf of Laree Jane that the liquidators had been influenced by Rodney Jane in circumstances where it was contended that the funding creditors were not creditors of the company. Mr Christie referred to the deed of settlement entered into on 30 October 2012. Although the deed operates to affect releases by Rodney Jane and Calder Park Raceway of the company from all then claims and future claims, neither Bob Jane Corporation nor Adelaide International Raceway was a party to that deed. Accordingly, it is irrelevant to the issues ventilated in this application.
Mr Christie relied upon cases set out in the following paragraphs.
Qintex Group Management Services Pty Ltd (in liq):
…there may be some cases in which it can be seen that liquidators are acting improperly in seeking to examine someone under the provisions of the Corporations Law. Examinations under the statute are capable of being or becoming oppressive if their real purpose is simply to exert pressure by inflicting costs, or causing undue inconvenience or embarrassment to the defendant. There may also be other ways in which they can operate harshly. Conducting a dress-rehearsal of cross-examination may conceivably be another instance…[1]
[1](1997) 2 QdR 91, [95] (Court of Appeal).
In Re Bankrupt Estate of Temple; Southern Hotels Pty Ltd[2] the trustee in bankruptcy had sought an order for the issue of examination summonses under s 81 of the Bankruptcy Act 1996 (Cth) for the public examination of the bankrupt. Prior to bankruptcy, Mr Temple and his parents were involved in bitter and protracted litigation in the Supreme Court of South Australia. The trustee in bankruptcy had retained a firm of solicitors who had been solicitors for a substantial creditor in the bankrupt’s estate and one of the protagonists in the Supreme Court proceedings.
[2][2000] FCA 1406 (‘Southern Hotels’).
The solicitors for another substantial creditor and one of the protagonists in the Supreme Court proceedings sought to remove the solicitors retained by the trustee as that firm had acted for one of the other protagonists in the Supreme Court proceeding. O’Loughlin J said:
The authorities emphasise that a trustee in bankruptcy must take the greatest care to avoid the potential for conflict. In my opinion what has been written about a trustee’s responsibilities applies with equal force to a solicitor who acts for trustee. Counsel for Southern Hotels submitted that Hynd and Co Pty Ltd was in “a hopeless position of conflict”. It was submitted that it could not advise the trustee impartially about the admissibility of a large claim by its client…nor could it advise the trustee impartially about the admissibility about another large claim…when its client and [the other creditor] were inimical to the interests of each other.[3]
[3]Ibid at 3.
O’Loughlin J further stated:
Finally, Mr Clayton submitted that Southern Hotels, as a creditor, had not made out a case that warranted the Court's interference. In one sense that is correct because the matter did not proceed to trial and no findings of fact have been made. But lest it be misunderstood, I should make it clear that the history of the antagonism between the Temple family and the Weeks' interest has been so intense and of such duration that it beggars belief that the solicitor acting for the Weeks' interest could possibly consider acting for the trustee when the respective claims of the two factions to be admitted as creditors in the estate would, in all probability, necessitate the trustee taking legal advice — the more so when it is disclosed that Mr Weeks is funding some part, or all, of the costs of the administration of the estate.[4]
[4]Ibid at 10.
The solicitors, of their own volition, ceased to act for the trustee. I assume that the strong words used by O’Loughlin J in the reasons were part of the discourse between the judge and counsel during the course of running.
In Southern Hotels, O’Loughlin J also referred to Re Pruzanski; Ex parte Horne,[5] which
…is authority for the proposition that a solicitor for a trustee in bankruptcy should not have the dual role of also being a solicitor for a major creditor in the bankruptcy if there is appropriate and reasonable opposition to that duality from another major creditor.[6]
[5](2000) FCA 151.
[6]Southern Hotels at .
In the matter of Affinity Capital Pty Ltd — Indrasith v Ku[7] Ward J said:
[41]In a case where the liquidator is conducting examinations funded by a creditor then the distinction to be drawn is between the purpose of the creditor funding the examination, its motives being to advance its own interests and the purpose of the liquidator in conducting the examination on the other. Where it is the creditor conducting (albeit through legal representatives) the examination such a distinction becomes meaningless. The purposes of the creditor and the person conducting the examination are one and the same and the question must be what is the predominant purpose (if there be more than one).
[42]Cases in which it is suggested that a creditor’s personal interest in the conduct of the examinations may render the use of the examination process improper have generally arisen in the context where a creditor is funding the liquidator to conduct the examinations. That of itself does not render the use of the examination process improper, as was recognised in Re Laurie Cottier and in Re Clutha, where Young J, as his Honour then was, said at [9]:
There was some material put before me that if the liquidator had to pay for the examination out of his own pocket or from the pockets of the unsecured creditors, he might not proceed with the examination. However, because he has been funded, he intends to do so. That said, somehow or the other, to be improper o[r] unwise. That is really a tangential issue in the case before me. In any event the point was decided adversely to the plaintiff in Re Laurie Cottier.
[7][2011] NSWSC 1158.
At [44], Ward J said:
The position of a creditor in conducting examinations of this kind is somewhat more problematic. The capacity of a creditor to conduct an examination was recognised by Lander J in New Tel (at [252]), at propositions 9 and 10 in his Honour’s summary of the relevant principles in relation to improper purpose in the context of other proceedings that the liquidator has brought is contemplating bringing:
4.If an eligible applicant applies for an order for the examination of a person for a purpose unconnected with the purposes authorised by the legislation that will be an abuse of process and the order, if obtained, will be set aside.
5.The procedure may not be used to allow a party to obtain a forensic advantage and, if it is, any order obtained will be set aside.
6.The procedure may not be used as a dress rehearsal for cross‑examination of a person and a pending or subsequent action. However, it is not improper to seek an order of the Court to summon the person for examination while litigation is pending against the person or entities connected with that person.
7.The question whether in any particular case the applicant has used the procedure abusively will depend upon the applicant’s purpose in seeking the order and all of the surrounding circumstances. It will not be an abuse unless an offensive purpose is at least the predominant purpose.
8.It will be an offensive purpose if the application cannot be characterised as being for the benefit of the corporation, its contributories or creditors.
9.A creditor may, if first authorised by ASIC, apply to the Court for an order to summon for examination a person for the purpose of obtaining information in relation to a debt owed to the creditor if such an examination would be in the interests of the corporation or its creditors as a whole.
10.A creditor may not use the procedure for the purpose of obtaining a forensic advantage which would not have been available to the creditor if the corporation had not gone into administration.
Ward J also said at [50]:
Whether an examination can be said to be an abuse of process if there is a real commercial possibility that an examination has as its object the benefiting of a particular creditor who is engaged in or contemplating litigation against the company or its directors or officers is subject to divergent views. One view is that it is not a proper use of the examination process for a liquidator or other eligible applicant to conduct examinations with the aim of assisting particular creditors in pursuing their own interests…On the other hand, it has been held that it is not an abuse of process for a liquidator or other eligible applicant to conduct an examination simply because this may operate to the benefit of a particular creditor…
On any view, the Family Court proceeding is not the type of litigation contemplated by any of the authorities. Enquiring into the examinable affairs of the company would not assist Rodney Jane or any of his interests forensically or otherwise, in the conduct of the Family Court proceeding. At its highest it might be said (and which I do not accept) that one of the purposes of Rodney Jane in funding the liquidator to conduct the examinations, is to cause the maximum amount of angst, inconvenience and cost to the potential examinees.
I do not accept that such a purpose can be distilled from the attendant circumstances. The liquidation is relevantly recent and although the s 564 report refers to no further enquiries being required, it is clear that the liquidators embarked upon enquiries as to payment at a fairly early stage (towards the end of 2013) and before seeking and obtaining the necessary funding to conduct the examinations.
The context of the timing cannot be considered without reference to the freezing orders and the s 172 application. This illustrates that the liquidators wish to examine without regard to when the Family Court proceeding has been fixed for trial. Further, it is only because the capacity of the Court to conduct the examinations that it transpired that they would be scheduled to be heard before the Family Court proceeding.
Whether there has been abuse of process will depend on the purpose rather than the result.[8] The Full Court in Worthley v England said:
It is apparent that the question whether there is, in a particular case, an
abuse of process will be a question which will depend upon the purpose of
the applicant seeking the order of the court and the circumstances of the
case. For an abuse to be found it will be necessary that the offensive purpose
be, at the least, the predominant purpose…
[8]Worthley v England (1994) 52 FCR 69 (‘Worthley v England’) (Full Court of the Federal Court).
That the statement referred to in the preceding paragraph was relied upon in Accord Pacific Holdings Pty Limited v Accord Pacific Land Pty Limited (in liq),[9] Ward J said:
It is clear that as to the objective purpose, it has to be the predominant purpose and the mere fact that there may be a collateral advantage or by‑product from the course sought to be adopted that works in the examiner’s favour is not sufficient.
[9][2011] NSWSC 707, [123].
I should add that the onus of establishing an abuse of process lies upon the examinees. It is ‘a heavy one’.[10]
[10]Williams v Spautz (1992) 174 CLR 509, 529.
The schedules annexed to the various summonses are elucidating. It can be distilled from the same that the liquidators seek to enquire about various payments made by, and transactions entered into, the company for a period limited to the financial years from June 2009 through to June 2013. Not only is the year 2002 not being enquired of but it is also manifestly clear that the declaration of trust, which will be the subject of the Family Court proceeding, is of no interest to the liquidator. Further, any judicial officer hearing such an examination would not permit questions to be asked which would fall outside the ambit of ‘examinable affairs’ of the company. Given that observation, none of the criteria listed in sub-paragraphs four to ten by Lander J in Re New Tel Ltd (in liq)[11] are agitated.
[11](2005) 145 FCR 176.
Although the applicants sought inspection of the supporting material to gain approval for the issue of the examination summonses, neither Mr Christie nor Mr McCormack were disadvantaged in making their respective applications. In any event, none of the applicants demonstrated that they should be given access to such material. None of the applicants demonstrated an arguable case of improper purpose or that access was necessary to fairly dispose of the applications. Accordingly, I did not permit inspection.
I am satisfied that not only have the applicant examinees not discharged the onus, but none of them have identified any improper purpose in the conducting of the examinations. Having said that, I do accept that being embroiled in the family law proceeding is a stressful predicament for each of Bob Jane and Laree Jane and in particular, Laree Jane. It can be said that any stress, inconvenience or cost incurred in the circumstances might be a by-product of the examinations, but certainly not a predominant purpose of, or any purpose of, the liquidators.
Mr Mereine
Mr Christie relied upon the cases dealing with conflicts perceived to arise, or actually arising, where a firm of solicitors acts for both the liquidator and a creditor. Mr Christie drew a parallel with those cases and submitted that Mr Mereine was in such a conflict. The submission did not recognise the role of the solicitors for the liquidators who had not been retained by any of the Rodney Jane interests. Nor did it seek to deal with the difference between the category of litigation which usually arises after the conclusion of examinations and the nature of the Family Court proceeding due to be heard. Mr Christie also relied upon Grimwade v Meagher.[12]
[12][1995] 1 VR 446 (‘Grimwade’).
Grimwade concerned the role of a Senior Counsel (the first defendant) in two related proceedings: a criminal proceeding in which the Senior Counsel was retained to prosecute Grimwade (the plaintiff) in relation to certain alleged criminal offences involving alleged commercial dishonesty;[13] and a civil proceeding brought against Grimwade by the other defendants. For the criminal proceeding, the Senior Counsel appeared for the prosecution in the committal proceedings, an abortive first trial, and a second trial of ‘exceptional and probably unexampled length’,[14] which resulted in Grimwade’s conviction. He continued to appear as Senior Counsel for the prosecution on appeal to the Court of Criminal Appeal, which decided that a third trial should not be ordered, and criticised the conduct of the prosecution case at the second trial. For the civil proceeding, Grimwade’s solicitor was informed that the Senior Counsel would be appearing as Senior Counsel for the plaintiffs in the civil proceeding (the other defendants). Grimwade, therefore, sought an order restraining the Senior Counsel from appearing for the plaintiffs in the civil proceeding.
[13]Ibid at 447.
[14]Ibid at 448.
Mandie J described the circumstances as ‘[t]hose unique, extraordinary and exceptional circumstances include the history of the matter and the various details of it which I have already recited’.[15]
[15]At [454].
His Honour went on to say:
These matters of themselves would in my view cause a fair-minded observer to apprehend a real risk that the [Senior Counsel] would be unable to appear in the said action and act with that objectivity and detachment which the court expects of counsel appearing before it and a real risk that the [Senior Counsel] would be unable to properly distinguish or avoid a conflict between his personal interests and his duty to his clients in the said action. Alternatively, to adopt the test propounded by [counsel for the Senior Counsel], I consider that there is a real and sensible risk of a lack of objectivity by the [Senior Counsel] which not only gives rise to an undue risk of unfairness or disadvantage to the plaintiff but gives rise to a substantial concern that a fair trial would not be had and hence gives rise to a concern for the integrity of the judicial process and the due administration of justice.
In Grimwade, it is clear that Mandie J was concerned that there may be an element of self‑justification which might sway counsel’s objectivity. There are no such circumstances which can be visited upon Mr Mereine. At its highest, it can only be said that Mr Mereine is the favoured counsel of Rodney Jane and the Rodney Jane interests. Those circumstances are far removed from those under review in Grimwade.
Cases such as Southern Hotels may be distinguished. Those cases usually revolve around the potential for liquidators to adopt courses which are at the request of a particular creditor or which may benefit a particular creditor in the conduct of current or proposed litigation concerning the assets of the company in liquidation. Here, the Family Court proceeding cannot be characterised as being for the benefit of the company or remotely relevant to the company’s examinable affairs. It is not the classical litigation involving a company’s property such as recovery pursuant to a chose in action or the Act.
In this matter, it has not been demonstrated that any conflict may arise. Nor has it been demonstrated that there is potential for conflict between Rodney Jane’s interests and the creditors in general. What is manifest, is that the Bob Jane and Laree Jane interests may be polar to those of the other creditors of the company, including the funding creditors. That is an insufficient platform to found the contention of conflict or possible conflict. If any proceeding is filed seeking recovery by the liquidators, the matter can be revisited if the issue of conflict resurfaces.
Senior Counsel for the liquidators pressed the issue of urgency and sought to resist any adjournment of the examinations. Senior counsel relied upon the propensity, demonstrated by past conduct, to put assets out of the reach of creditors or to thwart any judgment.
The liquidators also placed reliance upon the conduct of removing documents from the Calder Park Raceway. Ms Slocum, on behalf of the liquidators, swore an affidavit of 22 May 2014 detailing a conversation she had with an employee at Calder Park Raceway. That employee said that he had witnessed Bob Jane and others removing boxes, a safe and filing cabinets from Calder Park Raceway. He also said Bob Jane’s computer was no longer there. He was unable to identify when this occurred, but the chronology would suggest that it was some time in December 2012 when the company was required to quit. That was many months before the winding up of the company.
Mr Christie sought instructions from Laree Jane and informed me that personal items including trophies and memorabilia had been removed prior to the appointment of the liquidators. That position is, to a degree, corroborated by what is set out in paragraph ten of Ms Slocum’s affidavit. Ms Slocum deposed that Mr Crisp and one of his representatives had attended 1 Holden Road, Diggers Rest, and they were given access to the filing cabinets. The limited review of the filing cabinets failed to identify any company documents. Hence Mr Crisp did not conduct a more thorough search.
Accordingly, I determine that the contention that the company’s documents had been removed, is inconclusive at best. Further, it cannot be said to be a result of the service of examination summonses. I determine that it does not constitute a reason for maintaining the examination dates.
Although I accept that the past conduct justifies maintaining the liquidators’ position, the liquidators cannot identify any real prejudice if the examinations were to be adjourned for a relatively short period. Although that may give further opportunity to embark upon dispositions (which may be clawed back subsequently) relevant corporations have been on notice of the possibility of proceedings since the liquidation of the company, and certainly since the making of demands (albeit limited) last year.
I cannot discern any difference between the period of almost six months from those demands, which has already elapsed, and what may transpire in the relatively short period before the examinations are conducted and any further time required to file proceedings for recovery. If there are to be further dispositions, I cannot determine why holding onto the examination dates will prevent such dispositions. After all, it will take some time to digest the information derived from the examinations to determine if any cause of action ought to be pursued and to seek funding to maintain any such proposed proceeding. In the end, it is a balancing act between providing some fairness to Laree Jane to ease the stress of litigation, and maintaining a reasonably early examination date.
In those circumstances I propose to adjourn each of the examinations of Bob Jane and Laree Jane until after 2 July 2014. That adjournment may ease any stress that Laree Jane may experience from facing forthcoming examinations and family law proceedings at the same time. It will also enable her to devote her time and resources to conducting the Family Court proceedings for the time being.
If the liquidators wish to continue to hold on to 4, 5 and 6 June 2014 to conduct examinations of the other examinees, then they may do so. However, if the liquidators determine that they would seek to examine Bob Jane and Laree Jane first, then I will vacate those hearing dates upon request and fix all the examinations on a date after 2 July 2014.
Although I have adjourned the principal examinations for the reasons set out above, the applicants have been wholly unsuccessful in prosecuting each of the interlocutory processes. In those circumstances I will order that each of the applicants pay 85 per cent of the liquidators’ costs of and incidental to these applications. I have reduced the costs from 100 per cent as the liquidators should have had some regard to adjourning the summonses to allow Laree Jane to devote her attention to the Family Court proceeding.
I do not require the parties to appear to argue how the examinations should be conducted hereafter. It will be sufficient for the liquidators’ practitioners to provide, as soon as practicable, a minute of whether the examination dates in June will be retained.
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