Lau (Liquidator), in the matter of Oli Capital Pty Ltd
[2024] FCA 910
•1 August 2024
FEDERAL COURT OF AUSTRALIA
Lau (Liquidator), in the matter of Oli Capital Pty Ltd [2024] FCA 910
File number(s): NSD 245 of 2024 Judgment of: WIGNEY J Date of judgment: 1 August 2024 Catchwords: PRACTICE AND PROCEDURE – application for leave to serve summons for examination outside of Australia – where evidence of close connection between person to be examined and affairs of companies – leave granted – application for arrest warrant – where person otherwise unlikely to appear at examination – warrant issued – application for suppression order – no exceptional circumstances demonstrated – suppression order not made Legislation: Corporations Act2001 (Cth) s 596
Federal Court of Australia Act 1976 (Cth) ss 37AF, 37AG
Federal Court Corporations Rules 2000 (Cth) rr 11.3, 11.10
Federal Court Rules 2011 (Cth) rr 2.32, 10.44, 10.46
Rules of Court 2012 (Malaysia) Orders 48 r 1, 62 r 3, 65 r 2A
Cases cited: Country Care Group Proprietary Limited v Commonwealth Director of Public Prosecutions (No 2) (2020) 275 FCR 377
Goyal, in the matter of Biotech Energy Pty Ltd (Receivers and Managers appointed) [2023] FCA 653
Horizon Capital Fund v BCC Trade Credit Pty Ltd [2023] NSWSC 1253
Krejci in his capacity as liquidator of Myoora Land Pty Ltd (in liq) [2023] FCA 620
Sargon Capital Pty Ltd (receivers and managers appointed) (in liq) [2023] FCA 1465
Waller v Freehills (2009) 177 FCR 507
Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 26 Date of hearing: 1 August 2024 Counsel for the Plaintiffs: Mr J Pokoney Solicitor for the Plaintiffs: Hall & Wilcox ORDERS
NSD 245 of 2024 IN THE MATTER OF OLI CAPITAL PTY LTD, OLI PRIVATE INVESTMENT PTY LTD AND OLI FUNDS MANAGEMENT PTY LTD
(MELISSA) POH BEE LAU AND CHRISTOPHER BASKERVILLE AS JOINT AND SEVERAL LIQUIDATORS OF OLI CAPITAL PTY LTD AND OLI PRIVATE INVESTMENT PTY LTD AND OLI FUNDS MANAGEMENT PTY LTD
Plaintiffs
ORDER MADE BY:
WIGNEY J
DATE OF ORDER:
1 AUGUST 2024
THE COURT ORDERS THAT:
1.Pursuant to rule 10.44 of the Federal Court Rules 2011 (Cth), the Plaintiff be granted leave to serve on Luo Qi:
(a)the examination summons to Luo Qi issued by the Court in this proceeding on 3 July 2024, a copy of which appears at Annexure A to the orders as entered (Qi Summons);
(b)the order for production to Luo Qi issued by the Court in this proceeding on 3 July 2024, a copy of which appears at Annexure B to the orders as entered; and
(c)the letter and attachments, a copy of which appears at Annexure C to the orders as entered, at the address identified in paragraph [16](d) of the affidavit of Melissa Lau affirmed on 4 July 2024.
2.Pursuant to rule 11.10(2)(a) of the Federal Court (Corporations) Rules 2000 (Cth), a warrant issue for the arrest of Luo Qi, to bring him before the Federal Court of Australia, 184 Phillip Street, Sydney, in the State of New South Wales to be examined under section 596A of the Corporations Act 2001 (Cth), on oath or affirmation, about the examinable affairs of Oli Capital Pty Ltd (In Liquidation) ACN 627 780 590 and Oli Private Investment Pty Ltd (In Liquidation) ACN 629 430 280 and Oli Funds Management Pty Ltd (In Liquidation) ACN 640 360 247, on the dates set out in the Qi Summons, or such other dates as the Court orders.
3.The affidavit of Melissa Lau affirmed on 4 July 2024, the annexure marked MPL-1 dated 4 July 2024, the affidavit of Ann Marrie Watson sworn on 26 July 2024, and the affidavit of Melissa Lau dated 11 February 2024 be treated as confidential for the purposes of rule 2.32(3) of the Federal Court Rules 2011 (Cth) until further order.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
(Revised from transcript)WIGNEY J:
The liquidators of three companies, Oli Capital Pty Ltd (in liquidation), Oli Private Investment Pty Ltd (in liquidation), and Oli Funds Management Pty Ltd (in liquidation) (collectively, the Oli companies), have applied for leave to serve an examination summons on the former director of those companies, who currently resides overseas. They also apply for the issue of a warrant for the arrest of the director so he can be brought to Court to be examined pursuant to the summons.
For the reasons that follow, it is appropriate to grant the relief sought by the liquidators.
The Oli companies formally held themselves out to be financial services and funds management providers. Mr Luo Qi was the sole director of each of the companies. Investigations conducted by the liquidators have revealed evidence which tends to suggest that the Oli companies in fact conducted a "Ponzi scheme", and that funds deposited with the companies by investors have been misappropriated. The funds that are suspected to have been misappropriated exceed $50 million.
Not surprisingly, in those circumstances, the liquidators wish to examine Mr Qi about the examinable affairs of the Oli companies. On March 2024, the Court issued an examination summons which compelled Mr Qi to attend the Court for examination. The liquidators have not, however, been able to serve Mr Qi with the examination summons. Investigations conducted by the liquidators have revealed that Mr Qi, who is a Chinese national but who holds an Australian passport, departed Australia, most likely at about the time that liquidators were first appointed to the Oli companies.
As discussed in more detail later, the circumstances in which Mr Qi departed Australia could accurately be characterised as him having absconded. The evidence currently available to the liquidators suggests that Mr Qi currently resides in Malaysia.
The liquidators’ application raises two questions: the first is whether the Court can and should grant the liquidators leave to serve Mr Qi in Malaysia; the second is whether the Court can and should issue a warrant for Mr Qi's arrest so as to secure his attendance at the examination.
Leave to serve overseas
The Court is empowered to issue an examination summons pursuant s 596 of the Corporations Act 2001 (Cth) to a foreign resident or citizen. That is because the Corporations Act relevantly applies extraterritorially: Waller v Freehills (2009) 177 FCR 507, [53]-[54]; [58]. Rule 10.44 of the Federal Court Rules 2011 (Cth) provides that any document other than an originating application may be served outside Australia with the leave of the Court. Rule 10.46 of the Rules provides that a document which is to be served outside Australia need not be personally served, so long as it is served on the person in accordance with the law of the country in which service is to be effected.
The liquidators have adduced evidence which establishes that the method by which they propose to serve Mr Qi in Malaysia would be in accordance with the law of Malaysia. The evidence indicates that Malaysia is not a party to any applicable convention in respect of the service of documents. In those circumstances, service of documents, including “foreign legal documents”, is governed by the Rules of Court 2012 (Malaysia), (the Malaysian Rules): see Horizon Capital Fund v BCC Trade Credit Pty Ltd [2023] NSWSC 1253.
Order 65 r 2A of the Malaysian Rules provides for an alternative mode of service of foreign legal process which does not involve a letter of request. It provides that:
The service of any such process within Malaysia may be affected by a method of service authorised by these rules for the service of analogous process issued by the Court.
Order 48, r 1(3) of the Malaysian Rules provides that an order for the examination of a judgment debtor must be served personally on the judgment debtor. Such an order may be taken to be analogous to an examination summons. Order 62, r 3 of the Malaysian Rules specifies how personal services is to be effected. It relevantly provides that personal service is effected by leaving a copy of the document with the person to be served.
The liquidators have adduced evidence which satisfies me that they propose to personally serve Mr Qi in Malaysia accordance with the Malaysian Rules.
I accept that it is necessary to exercise some caution when making orders for the service of processes of the Court on persons who reside overseas and who are not otherwise subject to the Court's jurisdiction. Caution is required because service in those circumstances may impinge on the jurisdiction of the country in which the person served resides: see Sargon Capital Pty Ltd (receivers and managers appointed) (in liq) [2023] FCA 1465, [7]-[8]; Krejci in his capacity as liquidator of Myoora Land Pty Ltd (in liq) [2023] FCA 620, [31]. It is in those circumstances generally necessary to pay close regard to the connection between the person sought to be examined and the company's examinable affairs before making an order permitting service of the examination summons overseas: see Sargon, [8]; Myoora, [32].
I am satisfied on the basis of the evidence adduced by the liquidators that there is a close connection between Mr Qi and the examinable affairs of the Oli companies. I am also satisfied that leave to serve Mr Qi in Malaysia in the manner proposed by the liquidators is appropriate and should be granted.
Arrest warrant
Rule 11.10(2) of the Federal Court (Corporations Rules) 2000 (Cth) provides that the Court may issue a warrant for the arrest of a person who has been summonsed or ordered to attend an examination. Rule 11.10(1) of the Corporations Rules identifies the circumstances in which that rule applies. One of those circumstances is specified in r 11.10(1)(b) as follows:
(b)before the day fixed for the examination, the person who applied for the summons or order satisfies the Court that there is reason to believe that the person summoned or ordered to attend for examination has absconded or is about to abscond.
I am satisfied, on the basis of the evidence adduced by the liquidators, that there is reason to believe that Mr Qi has absconded. I do not propose to refer to that evidence in any detail. Suffice it to say, the evidence concerning the conduct of the affairs of the Oli companies, coupled with the circumstances and timing of Mr Qi's departure from Australia, and his apparent reluctance to return, provides ample reason to believe that he has absconded.
While r 11.10 of the Corporations Rules has been engaged, the Court nevertheless retains a discretion as to whether or not to issue a warrant: see Goyal, in the matter of Biotech Energy Pty Ltd (Receivers and Managers appointed) [2023] FCA 653, [44]-[45].
Various factors or considerations may inform the exercise of that discretion. In my view, one of the most relevant conditions when it comes to the exercise of the discretion is whether the facts and circumstances suggest that, if a warrant is not issued, the proposed examinee is unlikely to appear at the examination. If that is established to be the case, there are likely to be strong grounds for the issue of a warrant, particularly given the importance of securing compliance with examination summonses, as well as the importance of the examination regime generally in facilitating the process of external administration: see Biotech Energy, [45].
The evidence adduced by the liquidators amply demonstrates that Mr Qi is unlikely to attend the examination if a warrant is not issued. Moreover, I am satisfied that the examination of Mr Qi, who appears to have been the main person responsible for the management of the Oli companies, is of critical importance to the liquidators' investigations and the conduct of the winding up more generally.
I am accordingly satisfied that a warrant should be issued for Mr Qi’s arrest.
Confidentiality of the supporting evidence
The liquidators have also applied for a suppression or non-publication order pursuant to s 37AF(1)(b) of the Federal Court of Australia Act 1976 (Cth) (FCA Act) in respect of the principal affidavit which was relied on in support of the present application, together with the lengthy documentary exhibit referred to in that affidavit, which I admitted into evidence. The ground for that order was said to be that a suppression or non-publication order in respect of those documents was necessary to prevent prejudice to the administration of justice.
The liquidators submitted that disclosure of the affidavit and exhibit would prejudice the administration of justice because those documents included information which was included in the affidavit which was relied on in support of the application for the examination summons. Rule r 11.3(7) of the Corporations Rules provides that, unless the Court otherwise orders, the affidavit in support of an application for an examination summons is not available for inspection by any person. It followed, so the liquidators submitted, that the information which was drawn from the affidavit which relied on in support of the application for the examination summons in this matter should also be protected by a suppression or non-publication order.
The liquidators also relied on the fact that the principal affidavit relied upon in support of the current application included information obtained by them in respect of Mr Qi's current whereabouts. They submitted that the disclosure of that information, and perhaps other information in the affidavit and exhibit, may cause Mr Qi to "go to ground".
I am not presently persuaded that there is a proper basis for the making of a suppression or non-publication order pursuant to s 37AF of the FCA Act in respect of the entirety of the affidavit and documentary exhibit. Suppression or non-publication orders should generally only be made in exceptional circumstances: see Country Care Group Proprietary Limited v Commonwealth Director of Public Prosecutions (No 2) (2020) 275 FCR 377, [8].
In order to obtain a suppression or non-publication order, the liquidators must establish that a suppression or non-publication order is “necessary” to prevent prejudice to the proper administration of justice: s 37AG(1)(a) of the FCA Act. The word "necessary" in that context is a strong word: see Country Care at [9] and the cases there cited. I am not satisfied that there are exceptional circumstances in this case that would justify the making of a suppression or non-publication order. Nor am I satisfied that such an order is necessary to prevent prejudice to the proper administration of justice.
I am, however, prepared at this stage to make an order that the principal affidavit and the exhibit thereto be treated as confidential for the purposes of r 2.32(3) of the Rules. That means that those documents will not be available for inspection by a non-party without leave. I should also make it abundantly clear that I do not consider Mr Qi to be a party to this proceeding for the purposes of r 2.32. Accordingly, Mr Qi will not be able to inspect the documents unless he obtains the Court’s leave, which in the present circumstances is highly unlikely. On the belated application of the liquidators, I will also extend that order to include two other affidavits that were relied on in support of the application.
It will also be open to the liquidators, should they choose to do so, to make another application for a suppression or non-publication order, supported by appropriate evidence, should circumstances change, or should they consider that any specific parts of the affidavit or any specific document within the documentary exhibit are particularly sensitive.
I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Wigney. Associate:
Dated: 13 August 2024
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