MICHAEL JOSEPH PATRICK RYAN & IAN CHARLES FRANCIS as Joint and Several Receivers and Manager or Receivers of the Companies in Receivership
[2003] WASC 212
MICHAEL JOSEPH PATRICK RYAN & IAN CHARLES FRANCIS as Joint and Several Receivers and Manager or Receivers of the Companies in Receivership [2003] WASC 212
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2003] WASC 212 | |
| Case No: | COR:282/2003 | 30 OCTOBER 2003 | |
| Coram: | MASTER SANDERSON | 4/11/03 | |
| 8 | Judgment Part: | 1 of 1 | |
| Result: | Stay granted | ||
| B | |||
| PDF Version |
| Parties: | MICHAEL JOSEPH PATRICK RYAN & IAN CHARLES FRANCIS as Joint and Several Receivers and Manager or Receivers of the Companies in Receivership ALLEN BRUCE CARATTI MAMMOTH INVESTMENTS PTY LTD BOBAN LTD RIVIERA ASSET PTY LTD |
Catchwords: | Corporation Law Application to stay examination summons on grounds of abuse of process Turns on own facts |
Legislation: | Nil |
Case References: | Running Pigmy Productions Pty Ltd v AMP General Insurance Co Ltd [2001] NSWSC 431 Simionato and Farrugia v Macks and Macks (1996) 19 ACSR 34 Brown v Parker [1961] WAR 194 Castanho v Brown & Root (UK) Ltd [1981] AC 557 Christmas Island Resort Pty Ltd v Geraldton Building Co Pty Ltd (No 5) 18 WAR 334 Commissioner for Railways v Small (1938) 38 SR (NSW) 564 Garrard v Email Furniture Pty Ltd (1993) 33 NSWLR 662 Packer v Meagher [1984] 1 NSWLR 486 Re BTPC (No 5) Ltd (In Liq) (1993) 10 ACSR 756 Re Excel Finance Corp Ltd; Worthley v England (1994) 14 ACSR 407 Re Moage Ltd (In Liq) (1997) 25 ACSR 53 Re South Pacific Energy Trading Energy Pty Ltd (In Liq) (1996) 40 NSWLR 264 Re Southern Equities Corporation Ltd (1997) 15 ACLC 1582 Southern Pacific Hotel Services Inc v Southern Pacific Hotel Corporation Ltd [1984] 1 NSWLR 710 Williams v Spautz (1992) 174 CLR 509 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
MATTER : PEAT RESOURCES OF AUSTRALIA PTY LTD (ACN 008 798 025) (Receivers and Managers Appointed) (In Liq)
- SOILAND GARDEN SUPPLIERS PTY LTD (ACN 063 883 732) (Receivers and Managers Appointed) (In Liq)
MM DEVELOPMENTS PTY LTD (ACN 064 032 631) (Receivers and Managers Appointed) (In Liq)
KWIK & SWIFT ENTERPRISES PTY LTD (ACN 009 470 124) (Receivers and Managers Appointed)
GARDEN WORLD HOLDINGS PTY LTD (ACN 070 673 924) (Receivers and Managers Appointed)
GOLDFIELDS CONTRACTORS WA PTY LTD (ACN 086 368 578) (Receivers and Managers Appointed) (In Liq)
ZIWT PTY LTD (ACN 075 902 895) (Receivers and Managers Appointed)
ALL TERRAIN AUST PTY LTD (ACN 075 227 566) (Receivers and Managers Appointed)
WESTGROUP PTY LTD (ACN 067 744 254) (Receivers Appointed)
(Page 2)
- ZPNS PTY LTD (ACN 008 842 911) (Receivers and Managers Appointed)
PASADENA HOLDINGS PTY LTD (ACN 058 609 635) (Administrator Appointed) (Receivers and Managers Appointed)
KALGOORLIE CONTRACTORS PTY LTD (ACN 009 460 931) (In Liq) (Receivers and Managers Appointed) (Subject to Deed of Company Arrangement)
BRICOM PTY LTD (ACN 070 221 064) (Receivers and Managers Appointed)
NETGLORY PTY LTD (ACN 086 196 812) (Administrator Appointed) (Receivers and Managers appointed)
WHITEWOOD PTY LTD (ACN 093 975 501) (Administrator Appointed) (Receivers and Managers Appointed) (together the "Companies in Receivership")
- Plaintiffs
Catchwords:
Corporation Law - Application to stay examination summons on grounds of abuse of process - Turns on own facts
Legislation:
Nil
Result:
Stay granted
(Page 3)
Category: B
Representation:
Counsel:
Plaintiffs : Mr K J Martin QC & Mr K L Christensen
Applicants : Mr C G Colvin SC & Mr J A Thomson
Solicitors:
Plaintiffs : Christensen Vaughan
Applicants : Mallesons Stephen Jaques
Case(s) referred to in judgment(s):
Running Pigmy Productions Pty Ltd v AMP General Insurance Co Ltd [2001] NSWSC 431
Simionato and Farrugia v Macks and Macks (1996) 19 ACSR 34
Case(s) also cited:
Brown v Parker [1961] WAR 194
Castanho v Brown & Root (UK) Ltd [1981] AC 557
Christmas Island Resort Pty Ltd v Geraldton Building Co Pty Ltd (No 5) 18 WAR 334
Commissioner for Railways v Small (1938) 38 SR (NSW) 564
Garrard v Email Furniture Pty Ltd (1993) 33 NSWLR 662
Packer v Meagher [1984] 1 NSWLR 486
Re BTPC (No 5) Ltd (In Liq) (1993) 10 ACSR 756
Re Excel Finance Corp Ltd; Worthley v England (1994) 14 ACSR 407
Re Moage Ltd (In Liq) (1997) 25 ACSR 53
Re South Pacific Energy Trading Energy Pty Ltd (In Liq) (1996) 40 NSWLR 264
Re Southern Equities Corporation Ltd (1997) 15 ACLC 1582
Southern Pacific Hotel Services Inc v Southern Pacific Hotel Corporation Ltd [1984] 1 NSWLR 710
(Page 4)
Williams v Spautz (1992) 174 CLR 509
(Page 5)
1 MASTER SANDERSON: This is the return of four interlocutory processes. Each of Allen Bruce Caratti ("Caratti"), Mammoth Investments Pty Ltd ("Mammoth"), Boban Pty Ltd ("Boban") and Riviera Asset Pty Ltd ("Riviera") seeks to permanently stay the proceedings. The orders are sought on the basis that the summonses and directions represent an abuse of process. In COR 115 of 2003 the plaintiffs obtained orders allowing a summons to be issued against Caratti and directions that Mammoth and Boban produce documents. In each case - that is, in both COR 115 of 2003 and in this case - orders were made under s 596B.
2 In COR 115 of 2003 the plaintiffs (who are the same plaintiffs as in these proceedings) relied upon an authorisation issued by the Australian Securities and Investments Commission ("ASIC") to satisfy the "eligible applicant" status required under s 596B(1)(a) as a precondition to the making of any order. The ASIC authorisation referred to the plaintiffs and to the National Australia Bank. An application was made by Caratti and others (whom I will refer to collectively as "the applicants") to set aside the orders made on the basis that proceedings could only be brought by the plaintiffs and the National Australia Bank. It was submitted that it was not open to the plaintiffs alone to make an application. I rejected that argument. From that decision Caratti appealed. The appeal, although expedited, is yet to be heard.
3 The plaintiffs, no doubt intent upon avoiding having their position undermined by an adverse decision on appeal, issued the present proceedings and obtained virtually identical orders to those obtained in COR 115 of 2003. The present applicants say that is an abuse of process. They say that unless the plaintiffs concede the appeal in COR 115 of 2003, orders made in those proceedings remain on foot and it is entirely inappropriate for these proceedings, duplicating, as they do, COR 115 of 2003, to stand.
4 The plaintiffs never served an examination summons on Caratti in COR 115 of 2003. Furthermore, they have not sought to enforce the directions to produce directed to Mammoth and Boban. The plaintiffs have advised the applicants that they do not intend to rely upon or pursue further compliance with the summons issued to any person or entity in COR 115 of 2003. The plaintiffs are prepared to formally undertake to the Court not to rely upon, or pursue, any further compliance in relation to the examination summons to Caratti or the directions to Mammoth and Boban in COR 115 of 2003.
(Page 6)
5 The plaintiffs say that in these circumstances there is no abuse of process as Caratti, Mammoth and Boban are not in jeopardy of being subject to two sets of proceedings in respect of the same subject matter. They say further that it is not an abuse of process to institute new proceedings where, arguably, the former proceedings are defective, so long as the previous proceedings are not pursued. In making this submission, the plaintiffs rely upon what might be called the "discontinuance" cases. The authorities suggest that it is not an abuse of process for a plaintiff to discontinue a proceeding merely in order to be able to bring the same proceeding later in circumstances in which the plaintiff believes there will be a greater prospect of success or a more substantial recovery: see Running Pigmy Productions Pty Ltd v AMP General Insurance Co Ltd [2001] NSWSC 431.
6 For their part the applicants say that the discontinuance cases are of no relevance in a situation such as this. They point to the fact that there has been no discontinuance. They accept that if the plaintiffs had discontinued in COR 115 of 2003, then the abuse of process argument as grounds for a stay in these proceedings would fall away. (As I understand it, it is not conceded that there might not be some other ground for staying these proceedings. However, the present argument is based upon abuse of process.) In support of their position the applicants rely upon the decision of Lander J in Simionato and Farrugia v Macks and Macks (1996) 19 ACSR 34.
7 For present purposes it is enough if I quote from the headnote in the Simionato decision:
"It was inappropriate for the liquidator to apply to the court for an order for the examination of an appellant in connection with companies in which there was extant an order for his examination, but which order was subject to appeal. The second application and the consequential order was an abuse of process of the court. On the evidence the predominant purpose in making the second application was to gain a collateral purpose, namely, the defeat of whatever rights the appellant may have had on appeal."
8 Counsel for the plaintiffs sought to distinguish Simionato on a number of different grounds. Essentially what was said was that the situation here was different because there was a fresh authorisation from ASIC in different terms from the authorisation in COR 115 of 2003. With respect, it seems to me the principle outlined by Lander J in
(Page 7)
- Simionato holds good in this case. The fact is that there are extant orders in COR 115 of 2003, albeit those orders are subject to appeal. Identical orders have been made in these proceedings. In my view, the fact that the authorisations are different in each case makes no difference.
9 Not without some reluctance I have come to the conclusion that a stay should be granted in this case. The fact is that these proceedings are a duplication of the proceedings in COR 115 of 2003. I cannot see that the discontinuance cases are relevant to this situation. These proceedings are an abuse of the process of the Court and there ought to be a stay.
10 In reaching this conclusion, I accept that the result might be seen as a victory for form over substance. Counsel for the plaintiffs, in his submissions, submitted that such a result would be "silly". But it is as well to bear in mind what is at stake in proceedings such as these. Section 596B allows for a discretionary examination. These plaintiffs do not have any statutory right to bring a party before the Court. They must first obtain the authorisation of ASIC so as to render them an eligible applicant. They then have to satisfy the Court that the party to be examined is either guilty or may have been guilty of misconduct in relation to the corporation or may be able to give information about the examinable affairs of the corporation. This is a coercive power which is directed not at an officer of the company, but at a third party. It is not a power to be used indiscriminately - the way in which s 596B is framed makes that clear. A party who is subject to an order under s 596B is entitled to the protection afforded to any litigant. No litigant should have to comply with orders which are an abuse of the Court process.
11 There can be no suggestion in this case that the plaintiffs are activated by malice or that they are guilty of what is often referred to as moral turpitude. It is clear that they simply want to obtain information and they do not want to be tripped up by what they see as technical objections to their inquiries. But the fact remains that they must meet the obligations imposed by s 596B and in bringing a second application they have, in my view, abused the Court process. While I sympathise with their position, I think it is proper that a stay ought be granted.
12 During the course of the hearing an issue was raised about the form of the authorisation in these proceedings. The form of ASIC authorisation is to be found in the affidavit of Paul Antony Sheiner sworn 27 October 2003. Relevantly, the authorisation reads as follows:
(Page 8)
- "This authorisation takes effect:
(a) from the date of this authorisation; and further
(b) to the extent permitted by law and to the extent that an authorisation signed by me on 16 April 2003 was ineffective to authorise the Receivers to make their application in COR 115 of 2003 under Corporations Act Division 1 Part 5.9 in relation to the Companies in Receivership, from 16 April 2003."
13 It was submitted on behalf of the applicants that this wording meant that the authorisation in these proceedings was only effective if the authorisation in COR 115 of 2003 was ineffective. In other words, if the appeal in COR 115 of 2003 failed, then the authorisation in these proceedings was of no force and effect. Therefore, it was proper, so it was said, to stay these proceedings pending determination of the appeal in COR 115 of 2003. Given the conclusion I have reached, it is not strictly necessary for me to deal with this issue. However, in my view, the point was properly taken by the applicants. It does seem to me that until the appeal in COR 115 of 2003 is resolved, there is doubt as to the status of the authorisation. That in itself would be good grounds for granting the stay sought by the applicants.
14 I will hear the parties as to the precise form of orders and as to costs.
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