Jagelman v Sheahan
[2002] NSWSC 419
•13 May 2002
Reported Decision:
41 ACSR 487
New South Wales
Supreme Court
CITATION: Moage Ltd (in liq) [2002] NSWSC 419 CURRENT JURISDICTION: Equity Divisiion FILE NUMBER(S): SC 3734/01 HEARING DATE(S): 13/05/02 JUDGMENT DATE: 13 May 2002 PARTIES :
Mr Grant Jagelman - Applicant
Mr John Sheahan, Liquidator - RespondentJUDGMENT OF: Barrett J
COUNSEL : Mr A. Davis - Applicant
Mr K.G. Odgers - RespondentSOLICITORS: Snelgrove & Partners - Applicant
Kemp Strang - RespondentCATCHWORDS: CORPORATIONS - winding up - summons for examination - liquidator's continuing interest in defendant's financial means - whether fear of media misreporting warrants order that examination be in private LEGISLATION CITED: Corporations Act 2001 (Cth) CASES CITED: ASIC v Rich (2001) 51 NSWLR 643 DECISION: Applications to set aside or stay refused; direction to limit scope of examination refused; direction that examination be in private refused; direction deferring examination made
IN THE SUPREME COURT REVISED
OF NEW SOUTH WALES
EQUITY DIVISION
BARRETT J
MONDAY 13 MAY 2002
3734/01 - JOHN SHEAHAN AS LIQUIDATOR OF MOAGE LTD (IN LIQUIDATION)
JUDGMENT
1 The applicant, Mr Jagelman, seeks an order that an order setting side an examination summons directed to him in respect of the affairs of Moage Ltd, a company in liquidation. The summons has been issued under s.596A the Corporations Act 2001. The applicant seeks, in the alternative, an order that the examination be permanently stayed or stayed until the completion of the trial of proceedings 50067/01 in which the respondent liquidator is plaintiff and the applicant is the first defendant and first cross-claimant.
2 The application is advanced on the basis that it would be oppressive or an abuse of process for the applicant to be examined further, given that he has already been extensively examined by the liquidator. The new examination is due to start today.
3 The central issue, which it appears is still seen by the liquidator as requiring investigation, is the means or financial capacity of the applicant and other parties associated with him. It is said on his behalf that that matter was fully covered in examinations conducted in December 1997 and August 1998.
4 The respondent liquidator submits, however, that he has an ongoing interest in monitoring the financial strength of the applicant and the associated parties as part of his duty to decide whether it is prudent to continue with the proceedings in which they are defendants. The point is made that information obtained from examination in 1997 and 1998 might well now be quite out of date and that many relevant things may have happened in the intervening time, with the result that it is appropriate for the question of means to be looked at again.
5 I accept the submissions of the respondent on this aspect. The purpose of examinations of this kind is quite clear. It is to put the liquidator, who comes to the company as a stranger to its affairs, in a position of knowledge, enabling the liquidator to discharge the liquidator's functions. That can and does involve a task of ongoing monitoring. It is no bar that the examination relates to court proceedings already on foot, unless the purpose of the examination is to obtain some unfair advantage in the proceedings. That is not the case here, where the question is as to the capacity of defendants to meet any judgment and therefore the prudence of the liquidator's continuing with the proceedings.
6 I am therefore not prepared to make an order either setting aside the examination summons or staying, either permanently or for a time, the examination.
7 As the examination is to go ahead, the applicant says that there should be two directions made by the court. One is a direction that the examination be confined to issues concerning the assets, liabilities and financial wherewithal of the applicant and the associated entities. The other is a direction that the examination should take place in private.
8 As to the first, the respondent has said that the main reason for wanting to conduct the further examination goes to the question of financial means, but that the liquidator has an interest in the more general question of the prudence of continuing the proceedings and that questions beyond means might become relevant.
9 Recognising that financial means are seen as the main factor and that anything else would be subsidiary, I think it is sufficient for me to note the position of the liquidator on that and to leave it to the registrar or deputy registrar, before whom the examination is conducted, to ensure that it is kept within proper limits lines.
10 As to the application for a direction that the examination be conducted in private, it is said on behalf of the applicant that this is based on an apprehension that, in light of his past experience, matters coming out in the examination may be misrepresented in the media.
11 Under s.597(4) there is a statutory direction that an examination is to be held in public except to such extent, if any, as the court considers that, by reason of special circumstances, it is desirable to hold the examination in private. The fact that representatives of the press and other media can attend hearings in open court and report the proceedings cannot, of itself, be regarded as any form of special circumstance. That is part and parcel of the way justice is administered in our courts. There is no evidence to substantiate an allegation that this particular person has been the subject of misrepresentation as to the statements made by him in previous examinations. In addition, the court could not, for a moment, presume that there is some general tendency towards misrepresentation in media coverage and reporting of such proceedings.
12 I bring to mind the observations of Austin J in ASIC v Rich (2001) 51 NSWLR 643, a case involving media access to material in court files either actually or constructively read in open court. I would adopt, as pertinent to this case, the following observations at paras 39 and 40 of his Honour’s judgment:
- “A number of submissions were made to the effect that the media cannot be trusted to report, or even understand, the refined distinctions upon which it is said the law is required to operate. Thus it was confidently asserted that the media would not report in such a manner as to reflect the distinction between grounds for suspicion arising during the course of an investigation, and allegations made by the plaintiff after the investigatory process had been completed. It was also said that the media would not report in such a way as to reflect the distinction between direct evidence and hearsay and, in particular, second-hand and even later versions of hearsay.
- In my opinion, considerations of that kind could be relevant at the margins in certain cases. However, the present application relates to information concerning a corporate collapse, principally of interest to the financial media. Journalists in the financial media are likely to have significant experience of reporting investigations by the Commission and in dealing with matters of a commercial evidentiary character. There is a protection available to any person whose reputation is affected by media reports, to the extent that the report is not a fair protected report within s.24. Beyond all of that, I simply do not accept that the media, as a whole, will fail to understand and report relevant distinctions, set forth in the affidavit material, allowance being made for the limitations of time and space. I therefore do not regard this consideration as having substantial weight.”
13 In this case, I cannot regard the possibility of media coverage, through attendance of members of the media at the examination, as a special circumstance under s.497(4). It is a quite normal and ordinary circumstance.
14 For these reasons, I do not propose to make either of the directions the applicant seeks, either confining the scope of the examination or as to the examination being conducted in private.
15 The final matter which has been raised is the state of the applicant's health. There is ample evidence to show that he has been suffering from a serious and incapacitating illness. A report from Associate Professor Ward says that he is still suffering some residual effects of treatment, including some which would call into question his ability to function efficiently in the witness box. The report, I might say, is dated 3 May 2002. The report goes on to say that it will take some two months for him to recover from the effects of the treatment. I am prepared to accept this as evidence that the applicant will be labouring under difficulties which could involve unfairness to him if the examination were held within the period of two months referred to in the report.
16 What I propose to do, therefore, is to direct that the matter be remitted to the registrar to fix a new date for examination, such date to be not before 3 July 2002. I now make that direction, noting that, in view of the dates set for the trial, there will still be sufficient time.
17 I can see no reason why costs should not follow the event of this application, with the result that the respondent's costs on the application will be paid by the applicant. I so order.
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