MICHELETTO & CARRAFA AS TRUSTEES IN BANKRUPTCY OF THE ESTATE OF EL-DEBEL (No.2)

[2019] FCCA 2425

FEDERAL CIRCUIT COURT OF AUSTRALIA

MICHELETTO & CARRAFA AS TRUSTEES IN BANKRUPTCY OF THE ESTATE OF EL-DEBEL (No.2) [2019] FCCA 2425

Catchwords:
BANKRUPTCY – PRACTICE AND PROCEDURE – Application to set aside summonses for production purportedly issued under s.81(1) of the Bankruptcy Act 1966 (Cth) – whether one of the summonses calls for documents extending beyond examinable affairs of bankrupt – application dismissed.

Legislation:

Bankruptcy Act 1966 (Cth), s.81

First Applicant: RONIA AYAD

Second Applicant: TPS GROUP SERVICES PTY LTD ACN 600 953 035

Third Applicant: FATME EL-DEBEL

First Respondent: FABIAN KANE MICHELETTO IN HIS CAPACITY AS TRUSTEE OF THE BANKRUPT ESTATE OF BACHAR EL-DEBEL

Second Respondent: MICHAEL CARRAFA IN HIS CAPACITY AS TRUSTEE OF THE BANKRUPT ESTATE OF BACHAR EL-DEBEL

File Number: SYG 3047 of 2018

Judgment of: Judge Manousaridis

Hearing date: 28 August 2019

Date of Last Submission: 28 August 2019

Delivered at: Sydney

Delivered on: 30 August 2019

REPRESENTATION

Counsel for the Applicants in the application in a case: Mr D Allen

Solicitors for the Applicants in the application in a case: Avondale Lawyers

Solicitors for the Respondents in the application in a case: Mr D Anderson of ERA Legal

ORDERS

1. (1)    The interim application filed on 26 July 2019 is dismissed.

2. (2)    The costs of the application are reserved.

(1)    FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT Sydney

SYG 3047 of 2018

Ronia Ayad

First Applicant

TPS Group Services Pty Ltd ACN 600 953 035

Second Applicant

Fatme El-DeBEL

Third Applicant

And

Fabian Kane Micheletto In His Capacity As Trustee Of The Bankrupt Estate Of BaCHAr El-Debel

First Respondent

MICHAEL Carrafa in his capacity as trustee of the bankrupt estate of BACHAR El-Debel

Second Respondent

REASONS FOR JUDGMENT

1. 1. Before the Court is an interim application brought by three persons on each of whom there has been served an examination summons issued under s.81 of the Bankruptcy Act 1966 (Cth) (Act). The examination summonses were issued on the application of the trustees of the bankrupt estate of Mr Bachar El-Debel (Trustees). Each applicant seeks an order that the examination summons issued against it or her be discharged in whole or in part.

2. 2.  In support of their applications the applicants filed affidavits and written submissions. At the hearing before me, however, counsel for the applicants did not read any of the affidavits but instead tendered the summonses for examination, and a letter from the applicants’ solicitors to the solicitors for the Trustees. The limited grounds on which counsel for the applicants relied in relation to the summonses issued against the first and third applicants were resolved by Mr Anderson, who appeared for the Trustees, agreeing that those summonses should be read on the basis that certain passages were to be eliminated from them.

3. 3.  The only grounds that were argued at the hearing relate to the summons issued to the second applicant (TPS). Those grounds were directed to the following paragraphs of the summons:

   1.. . . .  all books and records of TPS Group Services which record the Bankrupt as an employee of the company for the period 29 July 2014 to 20 June 2019.

   2.All emails sent to, or received by the Bankrupt using the email address “[email protected]” during the period 29 July 2014 to 20 June 2019.

   3.All emails sent by TPS Group Services to the Bankrupt for the period 29 July 2014 to 20 June 2019.

   4.Where the relevant email account is under the control of TPS Group Services, all emails sent by any employee or officer of TPS Group Services to the Bankrupt during the period 29 July 2014 to 20 June 2019.

4. 4.  Counsel for the applicants submitted that these paragraphs call for documents that extend beyond the “examinable affairs” of Mr El-Debel. Counsel submitted that they call for documents that could not reasonably be considered to relate to the assets, liabilities, income, or expenses of Mr El-Debel.

5. 5.  Mr Anderson, on the other hand, submitted that the purpose of the Trustees seeking the documents described in the summons issued to TPS is to investigate the terms of Mr El-Debel’s employment with TPS, and also to investigate whether Mr El-Debel is the controlling mind of TPS. Mr Anderson relies on the confidential affidavits the Trustees filed in support of their application for the issue of the summonses. In his written submissions, and during oral address, Mr Anderson referred to evidence that suggests that a Youthsaver account in the name of Mr El-Debel’s prepubescent son has been and continues to be used as a transactional account for TPS, including the payment of wages to TPS’s employees.

6. 6.  The email address referred to in paragraph 2 of the summons issued to TPS is the email address contained in invoices issued by “Sydney Multi Services”. The evidence suggests that this is a name under which a company called Sydney Energy Group Pty Ltd trades (SEG), and that Mr El-Debel is involved with the operations of that company. The evidence further suggests that SEG also conducts its accounts through the use of the Youthsaver account. Mr Anderson submitted that an additional purpose of seeking the documents called in paragraph 2 of the summons is to investigate whether Mr El-Debel is the controlling mind of SEG.

7. 7.  Counsel for TPS submitted that the fact that an email may have passed between TPS or SEG on the one hand, and Mr El-Debel on the other, does not by itself show that Mr El-Debel was the controlling mind of either of those companies. That may be accepted. That, however, does not mean that emails considered together are incapable of proving Mr El-Debel was the controlling mind of either or both of the two companies. It is conceivable that the emails, when considered together, are capable of establishing either or both facts.

8. 8.  Counsel for the applicants also submitted that the fact that Mr El-Debel may be found to be the controlling mind of TPS or of SEG does not by itself establish that he has a legal or equitable interest in the shares issued by those companies. It may be accepted that a person’s being the controlling mind of a company does not necessarily establish that the person is the beneficial owner of the company. That a person is the controlling mind of a company, however, is or may be a rational basis for inferring that the person controls the company and its property which, in turn, is or may be a rational basis for inferring that this control is based on the person holding the beneficial interest.

9. 9.  Finally, counsel for the applicants submitted that, given the purposes for which the Trustees say they seek the documents described in the examination summons issued to TPS, the Trustees could have described the documents more narrowly to achieve the same purpose. I do not accept that submission. The documents are required for the purpose of conducting an investigation, and the scope of the description of the documents called for by the summons is reasonably suited to the stated purposes of the investigation. Further, the manner in which counsel for the applicants suggested the documents could be more narrowly described would call for the exercise of judgment about whether any given documents would fall within counsel’s suggested descriptions.

10. 10.    I am satisfied that the documents called for by the summons issued to TPS relate to the examinable affairs of Mr El-Debel, and that the summons ought not to be discharged. I propose, therefore, to order that the application be dismissed. The parties agreed that the costs of the application should be reserved, and I propose to reserve costs.

I certify that the preceding ten (10) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis

Associate: 

Date: 30 August 2019