Re Aitken, L.R. v Ex parte Aitken, M.N

[1987] FCA 322

LN TEE E'DW COURT OF AUSTRALIA	)
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-	G	DIVISION	1
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BANKRUPTCY	DISTRICT	IN THE	1	No. W 935 of 1985
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I	STATE OF NEW SOUTH WAUS AND THE	1
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AUSTRAL- CBPITBL TERRITORY )

I Re : LINDSAY ROBERT AITKEN

Ex parte: WGARXT NOREEX AITREN

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Eznfeld J.

l , PLACE: Sydney

' DATE: - 16 March 1987

EX-TEMPORE JUDGMENT

Thls 1s an applicat ion to set aslde a summons issued undir section 81 o f

the Bankruptcy Act (hereinafter referred to as "the Act") and, as a

prelmznary point, the	applicant has sought access to the	onginal
application f o r the Issue	of the summons.

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~ MY attention has been drawn to two cases whlch bear upon the question as

~	to	whether access should	o r should not be granted to such fundamental
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! informatlon In relatlon to an appllcatlon of this kind: Re Abrahams; Ex

parte Thomas (1985) 9 FCR 232 and Re Stirllng Henry Limlded (in L q. )

i	and The Companies Act	(1972) 1 NSWLR 497.
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~ In Re Abrahams at 236, Mr. Justice Lockhart said:

I "It z s , I think, timely to comment that whether the document be

called an applicatlon for the lssue of a summons under S 69 or S

81 or a statement of reasons to ground the lssue of such a

summons or otherwlse, It should be sealed In an envelope by the

Registrar wlth a notatlon that it 1 s not to be opened wlthout

the order of a ~udge, the Reglstrar or a Deputy Reglstrar."

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~ I am informed that it was these observations of Mr. Justice Lockhart

that led to the Registry adopting the practice of seallng applications

'	of this	kind.	The application ln thls matter is so sealed, permission
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' to open being limited only to a judge and a reglstrar. Mr. Justice

Lockhart went on to say that this was a practice which has been

"followed in courts accustomed to deal with matters of insolvency for as

long as I can remember" - the "I" in thls case being his Honour. His

Honour also said that It was a practice approved by authority and quoted

by way of example Re Stirling Henry Lirmted (in Llq.1 (supra) - a

decision of Sir Laurence Street (then a Judge in Equity).

In Re Abrahams, Mr. Justlce Lockhart observed that the rationale

underlying the requlsement of secrecy was of varied quality. One of the

reascns S I F - - - * ~ - - yy'VLCAuy xhat h l s honour descrlbed as "the wisdom of this

practice" was:

n . . . that prima facie those who are to be examined should not

have access to the statement of the liquldator or the trustee

... stating why it is that they are proposed to be examined or

on what matters it 1s proposed to examine them."

With deepest respect to hls Honour, that 1s not a reason for adoptmg

the practlce but merely a consequence of the practice bemg adopted. In

the declslon of S i r Laurence Street to whlch his Honour referred, there

is a quotatlon at page 501 of Slr George Jessel, the Master of the

I	Rolls, in a case called Re Gold Company	(1379) 12 Ch.D. 77 at pages 82
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and 83, and again at page 8 4 . Hls Lordshl? recorded this practice In

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~ relation to a private examination In a wlndlng up, but did not state

anything about its background or, particxlarly, its rationale, other

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I than to indlcate as had Mr. Justlce Lockhazt, that If access was given

i	to such lnformation the examlnee mlghz be enabled	to defeat some
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: proceedlng that might be taken agalnst hlm. S1r Laurence Street, at

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page 503, in dealing with a request by counsel to have access to the

information in the case then before hls Honour, sald that so far as his

Honour was aware,'such a clalm had never been made in New South Wales

before then, that i s before 1972. Hls Honour went on:

"It is, it must be conceded, an unusual procedure for a court to

make an order upon material that is withheld from the person

against whom the order is made. But, although unusual i n a

general sense, it 1s hallowed by long practzce withln the fleld

of company law both in this country and in England, and it 1s

based upon sound reasons of public interest."

Once again, the reasons appear to escape detailed enunclation other than

a general statement i n the following paragraph to the effect that If

someone knows the basis upon whlch their examination was obtained they

may be put in a position to avoid Its effects.

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The publlc interest to whlch their Honours referred is one aspect of the

matter. There are others. Notwlthstanding my profound respect for the

eminence and &stinction, not to say experxence, of the two learned

judges whose judgments I have quoted, It seems to me to be unusual, to

say the least, that a person would be brought by compulsory process to

the court to be examlned about his or her affalrs by a party who IS

likely to place before the person In the course of the exarmnation all

or most of the materlal that formed the basls of the appllcation for the

issue of the orlginal summons - in circumstances where invariably and as

a matter of course that person was entltled to be, as It were,

potentlally ambushed and not be in a posltlon to know what his or her

attention was to be dlrected. In the malorlty of cases It would be an

advantage - and would have been an advantage In those cases wlth whlch P

have had prevlous experlence in this area, partlcularly under the

: Companies Code - for the questioners to have glven notice to the

examlnees of the material on which they were to be examlned, for the

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purpose of ensuring that the persons had obtained any necessam

documentary material to enable them to answer the questions and also t

stretch their recollections and make such other lnqulries as may assist

their answering questlons promptly and accurately.

Against this background, I have myself read the document in question in

this case, which IS the application by the trustee of the estate of

Lindsay Robert Aitken for the examination of hls wife Margaret Noreen

Aitken. Virtually the whole of this document contalns requests for

information, or a desire to obtain informatzon, from Mrs. Aitken about

matters on which the bankrupt hmself was exarmned earlier and to which

he either gave no answer, an unsatisfactory answer, o an answer which

requred a great deal more elucidatlon and detall.

I can see nothing In the document whxch would provlde Mrs Altken, or her

husband, wlth an opportunlty to avold any prosecution or other action that might be taken by anyone. Nor has the trustee suggested any. To the contrary it would seem to me that if she is made aware of the

information which the trustee is a m o u s to obtain she would be better

able to supply the answers. So far as the trustee 1s concerned he would

be in a better position to take a much more aggressive h n e In the

examlnatlon than would be the case if no notice was glven, because Mrs.

Aitken could not posslbly be expected to have at her fingertips the

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type of information which he says he IS seeklng in the course of the

section 8 1 proceedlng. In addztion, with such notice any prevaricatlon

could more easily be detected, albeit that a section	81	examnation
ltself 1s not prmarily for thls purpose.

In those circumstances, It 1 s my view that I am not constrelned by

authorlty from maklng available the applicatlon f r the summons m this

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' case, and I propose to do so. I note ln thls connection that counsel

appearlng for the trustee did not object to my making it available and

'	said that he hlmself would be likely to use lt durlng the course	of th
examinatlon of the examinee.

Whilst I think the practice suggested by Mr. Justlce Lockhart of seallng

the envelope and limitlng permission to open It should be continued, It

seems to me that each case should be consldered on its merits. If the

trustee consents to access to the examinee the Reglstrar o r Deputy

Registrar should make it available as no Judge or Officer of the Court

I will know more about Its potential for misuse than the trustee and

hls/her advisers.

If there 1s a dispute, the matter can be decemned by a Judge, or by a

RegistrarfDeputy Registrar if approprlate. The only crlterlon for

refusal of access which I can derive from authorlty, princlple and

, commonsense is a reasonable and reasonably based belief that the

, exanunee's knowledge of the document's contents would or may lead to

effective avoidance of a signlflcant purpose of the examinatlon such as

the destructlon or dlsposal of relevant documents, other tamperlng with

evldence or a re-ordering of events or evldence.

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