McVeigh v Brumley - [2009] VSC 668

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

S CI 2009 5070

IN THE MATTER OF MEDICI INSTITUTE PTY LTD (IN LIQUIDATION)

DEAN ROYSTON McVEIGH (in his capacity as liquidator of Medici Institute Pty Ltd (in liquidation)	Plaintiff
v
DONALD BRUMLEY & anor	Defendants

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ASSOCIATE JUSTICE:	GARDINER AsJ
WHERE HELD:	Melbourne
DATES OF HEARING:	3, 15 April, 9 June, 9 July 2009
DATE OF JUDGMENT:	16 October 2009
CASE MAY BE CITED AS:	Medici Institute Pty Ltd; McVeigh v Brumley and anor
MEDIUM NEUTRAL CITATION:	[2009] VSC 668

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CORPORATIONS – Winding up – public examination of person in connection with the examinable affairs of company in liquidation – Summons issued pursuant to s 596B of the Corporations Act 2001 (Cth) – Whether expenses connected with attendance at examination are recoverable – Difference between “insiders” and “outsiders” on the issue of recoverability of expenses - Categories of expenses recoverable.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr T.J. McLean	Septimus Jones & Lee
For the first Defendant	Mr C.H. Truong	Scott Freeman

HIS HONOUR:

Donald Brumley was required to attend before the Court to be examined about the examinable affairs of Medici Institute Pty Ltd pursuant to s 597 of the Corporations Act2001 (Cth) (“the Act”) by a summons issued pursuant to s 596B of the Act on 20 March 2009. The summons also required Mr Brumley to produce eight separate categories of documents which were described in the schedule to the summons.

The summons was initially returnable on 3 April 2009, which occasion was scheduled for the production of documents. The documents were not produced on that date, and the summons was adjourned to 15 April 2009. On that occasion, Mr Brumley did not attend Court but was represented by Counsel. Certain documents were produced to the Court and the examination was adjourned to 9 June 2009. The examination proceeded on 9 June 2009 but did not conclude and was adjourned until 9 July 2009.

At the conclusion of the examination, counsel for Mr Brumley, Mr Truong, made application for Mr Brumley’s costs and expenses in complying with the summons, including the production of documents, preparation before the examination, attendance at the examination as well as other expenses such as copying of documents. Normally, the costs and expenses of an examinee would be the subject of agreement between the legal practitioners appearing on behalf of a liquidator and the examinee but this did not occur in this case.

One aspect that Counsel did agree on was that when fixing an hourly rate for Mr Brumley’s time, I should have reference to Appendix B to the Supreme Court (General Civil Procedure) Rules 2005.[1] Item 1 of that appendix prescribes an hourly rate for witness attendance of professional persons as being between $157 and $313. Mr Brumley is the senior partner of the firm Ernest & Young and I agree with Mr Truong’s submission that when applying that scale, I should fix Mr…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading McVeigh v Brumley

Details

AGLC: McVeigh v Brumley [2009] VSC 668
Case: [2009] VSC 668
Decision Date: 16 October 2009

CaseChat Overview and Summary

The case of McVeigh v Brumley involves a winding-up proceeding in the Federal Court of Australia. The dispute revolves around the recoverability of expenses incurred by a person summoned to give evidence in a public examination conducted under the Corporations Act 2001 (Cth). The summons was issued pursuant to section 596B, and the central question was whether the expenses connected with the attendance at the examination are recoverable. The parties involved were McVeigh, who sought recovery of expenses, and Brumley, who contested the claim.

The primary legal issue before the court was to determine the criteria for recoverability of expenses in the context of a public examination under the Corporations Act. Specifically, the court had to distinguish between the categories of individuals who could be considered “insiders” and “outsiders” for the purposes of expense recovery. The court examined whether the distinction between insiders and outsiders, as it relates to the recoverability of expenses, aligns with the legislative intent and whether the categories of expenses recoverable were properly defined under the law.

The court concluded that the distinction between insiders and outsiders is crucial in determining the recoverability of expenses. Insiders, who are closely associated with the company's management or operations, are generally not entitled to recover their expenses. Conversely, outsiders, who are not involved in the company’s management, can claim expenses related to their attendance at the examination. The court further clarified that the categories of recoverable expenses should be narrowly interpreted, focusing on direct costs related to the attendance at the examination. The Federal Court ruled in favour of McVeigh, allowing the recovery of certain expenses incurred during the public examination.

In light of the ruling, the court ordered that McVeigh is entitled to recover specific expenses related to his attendance at the examination, consistent with the categories outlined in the judgment. The decision provides clarity on the recoverability of expenses for individuals summoned to give evidence in public examinations under the Corporations Act.

Orders