Re Cardinal Group Pty Ltd (in liq) - [2018] NSWSC 748

Supreme Court

New South Wales

Medium Neutral Citation: In the matter of Cardinal Group Pty Ltd (in liq) and Cardinal Project Services Pty Ltd (in liq) [2018] NSWSC 748
Hearing dates: 21 May 2018
Decision date: 24 May 2018
Before: Gleeson JA
Decision:
(1)   The amended notice of motion filed on 21 May 2018 be dismissed.

(2)   Direct that the respondents file and serve short written submissions (not exceeding three pages) on the question of costs and any supporting affidavits within seven days, and the applicants file and serve any short written submissions in response (not exceeding three pages) and any supporting affidavits within seven days thereafter.
(3)   Direct that the question of costs be determined on the papers.
Catchwords:
CORPORATIONS – winding up – public examinations by liquidators – application by examinee to set aside examination summons – where examinee’s application was served one day late – consideration of merits of the application – whether the Court should extend time for service of the application or dispense with the rules governing service of the application
CORPORATIONS – winding up – public examinations by liquidators – application by examinee to set aside examination summons – where liquidators commenced proceedings in Federal Court relating to an insolvency trading claim – where one of the examinee’s is a defendant in such proceedings – permissible scope of examinations – where liquidators seek to investigate the financial capacity of the defendant to meet any adverse judgment – whether the Supreme Court was an appropriate forum to conduct public examinations – whether the examinations would afford the liquidators an impermissible forensic advantage – whether impermissible use of the examination power under Corporations Act 2001 (Cth), s 597 – whether examination summons should be set aside
Legislation Cited: Corporations Act 2001 (Cth), ss 9, 58AA, 439C, 446A, 588G, 596A, 596B, 597
Supreme Court (Corporations) Rules 1999 (NSW), rr 1.3(1), 1.10, 11.5(2)
Cases Cited: Equititrust Ltd (in liq) (recs and mgrs. apptd) v Equititrust Ltd (in liq) (recs and mgrs. apptd) [2014] FCA 692; [2014] 13 ABC (NS) 191
In the matter of 82-84 Belmore Street Pty Ltd (in liq) [2014] NSWSC 1701
Meteyard v Love (in their capacity as recs and mgrs of Southland Coal Pty Ltd (in liq)) (2005) 65 NSWLR 36; [2005] NSWCA 444
Re Hugh J Roberts Pty Ltd (in liq) [1970] 2 NSWR 582
Re New Tel Ltd (in liq) (2005) 145 FCR 176
Wily re LED (South Coast) Pty Ltd (2009) 76 NSWLR 248; [2009] NSWSC 946
Category: Principal judgment
Parties: Mr Sam Ebeid and Ms Elize Malan (Applicants)
Richard Andrew Stone and Peter William Marsden as Liquidators of Cardinal Group Pty Ltd ACN 129 933 393 and Cardinal Project Services Pty Ltd ACN 090 113 705 (Respondents)
Representation:
Counsel:
Mr D Allen (Applicants)
Mr D Krochmalik (Respondents)
Solicitors:
Gardner Ekes Lawyers (Applicants)
Stacks Law Firm (Respondents)

File Number(s): 2014/151499

Judgment

GLEESON JA: Application is made by Mr Sam Ebeid and Ms Elize Malan (together, the applicants)…

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.

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Details

Case: [2018] NSWSC 748
Decision Date: 24 May 2018

CaseChat Overview and Summary

The case of Re Cardinal Group Pty Ltd (in liq) involved the liquidators of Cardinal Group, who sought to conduct public examinations of certain individuals in connection with the company’s liquidation. The application for these examinations was contested by one of the examinees, who argued that the summons should be set aside on the basis that the application was served one day late. The matter was heard in the Supreme Court of New South Wales.

The central legal issues before the court were whether the court should extend the time for service of the application, dispense with the rules governing service, and whether the examinations proposed by the liquidators were permissible under the Corporations Act 2001 (Cth). Specifically, the court needed to determine if the Supreme Court was an appropriate forum for these examinations and whether the liquidators were seeking to gain an impermissible forensic advantage through these examinations. Additionally, the court had to assess whether the liquidators’ actions amounted to an impermissible use of the examination power under section 597 of the Corporations Act 2001 (Cth).

The court considered the procedural issue of the late service of the application and acknowledged that while the application was served one day late, it did not find this to be a fatal defect. The court exercised its discretion to extend time for the service of the application. Regarding the substantive issues, the court found that the liquidators’ intention to investigate the financial capacity of one of the examinees, who was a defendant in related Federal Court proceedings, was legitimate. However, the court determined that the Supreme Court was not the appropriate forum for these examinations due to the pendency of related proceedings in the Federal Court. The court also held that the examinations did not afford the liquidators an impermissible forensic advantage and did not constitute an impermissible use of the examination power. Consequently, the court dismissed the application to set aside the examination summons.

The final orders of the court were that the application to set aside the examination summons was dismissed, and the liquidators were permitted to proceed with the examinations in the Supreme Court, subject to the limitations and conditions set by the court. The court also noted that the liquidators should take all reasonable steps to ensure that the examinations did not overlap with or interfere with the proceedings in the Federal Court.

Orders