Re Fox Home Loans Pty Ltd

[2005] NSWSC 1050

CITATION:	Fox Home Loans Pty Ltd (in liq) [2005] NSWSC 1050
HEARING DATE(S):	17/10/05
JUDGMENT DATE :	17 October 2005
JURISDICTION:	Equity Division Corporations List
JUDGMENT OF:	Barrett J
DECISION:	Orders refused

CATCHWORDS:	CORPORATIONS - examination by liquidator - whether court should entertain application for payment made by examinee before examination complete - whether evidence of co-operation by liquidator with outside party indicates arguable case of abuse of process - whether s.536 is appropriate vehicle for abuse of process claim against liquidator - s.536 procedure discussed
LEGISLATION CITED:	Corporations Act 2001 (Cth), s.536
CASES CITED:	Burns Philp Investments Pty Ltd v Dickens (No 2) (1993) 10 ACSR 631 Re Bridgeport Advisers and Asset Managers Pty Limited [2005] NSWSC 753 Re Total Entity Pty Ltd (2003) 47 ACSR 577
PARTIES:	Fox Home Loans Pty Limited (in liquidation) - Plaintiff Angelo D'Angelo - Applicant Examinee
FILE NUMBER(S):	SC 1213/05
COUNSEL:	Mr K.D. Ginges - Applicant Mr J.T. Svehla - Liquidators of Plaintiff
SOLICITORS:	HAL Lawyers - Applicant Baker & McKenzie - Liquidators of Plaintiff

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

MONDAY 17 OCTOBER 2005

- APPLICANT

JUDGMENT

1 The applicant, Mr D’Angelo, is a solicitor upon whom an examination summons has been served by the liquidator of Fox Home Loans Pty Limited. By his interlocutory process filed on 12 October 2005, he seeks several orders. The first is an order that he be provided with “conduct money” for his past and future attendances in response to the examination summons. The second is expressed to be an order pursuant to s.536 of the Corporations Act 2001 (Cth) that the court enquire into “the current public examination proceedings” and direct that the liquidator file and serve an affidavit setting out particular matters. The third is also expressed to be an order pursuant to s.536 and is an order that the “current series of public examination hearings” be “suspended pending further order and compliance by the liquidator to the satisfaction of the court” with the second of the orders to which I have referred. The applicant is not the only person who has been or is to be examined.

2 The applicant thus seeks to ventilate two distinct matters by way of the interlocutory process. The relief the applicant seeks today is limited to a direction as to the filing of evidence by the liquidator and an order that, pending determination of the interlocutory process, all pending examinations by the liquidator be stayed.

3 The first of the matters the applicant seeks to pursue by means of the interlocutory process is concerned with time he has spent and outgoings he has incurred in complying to date with the examination summons and I assume related orders for the production of documents, plus future incurrings of that kind. The applicant is, as I have said, a solicitor. He appears from his affidavit to have approached his response to the requirements imposed upon him by the examination summons and orders for production as if they were matters undertaken by him upon the instructions of a client for which he was entitled to charge a fee. Thus, he says, for example, that he should be paid for the time he has spent in assembling and photocopying documents in the way that a solicitor would be paid if the solicitor assembled and photocopied documents at the request of a client.

4 Where a person served with an examination summons and order for production seeks payment of expenses, the desirable course is generally that the matter of appropriate reimbursement or financial allowance, if any, be looked at after the examination process has been completed in relation to the particular person. At that point, a proper assessment of the whole of the circumstances can be made against the criteria in s.597B and against the possibility that some aspect of the court’s inherent jurisdiction may be activated. These are matters to which I referred in Re Total Entity Pty Ltd (2003) 47 ACSR 577. There is no general right and should be no general expectation so far as payment of examinees is concerned and the court can best address any such request when the full picture is available.

5 The second aspect of the interlocutory process concerns an apprehension on the part of the applicant of the possibility of abuse of process by the liquidator in the pursuit of not only the applicant’s own examination but also the examinations of other persons. That seems to be based on some evidence, largely of a hearsay kind, which has a tendency to suggest that the liquidator may be working with a mortgage insurer in pursuing the examinations.

6 It can be said as a general principle that, even if a liquidator embarking upon a course of examinations is actuated by a desire to assist a third party or is assisted by a third party, it does not follow that the liquidator acts improperly. If the liquidator’s sole or predominant purpose were to serve some other interest, he or she would no doubt act improperly. But if the liquidator sees on reasonable grounds that co-operation with someone else would assist his or her understanding of the company’s position and dealings and throw light on matters relevant to the administration – and in that way is calculated to produce collateral advantages for the administration – there is no abuse of process. These are matters I recently examined in Re Bridgeport Advisers and Asset Managers Pty Limited [2005] NSWSC 753.

7 I note also that the jurisdiction the applicant seeks to invoke in seeking the second and third orders is the jurisdiction under s.536 which is really a section about disciplining liquidators. He does not seek to have his examination summons set aside. Section 536 applies where it appears to the court or ASIC that a liquidator has not faithfully or is not faithfully performing his or her duties and has not observed or is not observing a requirement of the court or a requirement of the Corporations Act, the regulations or the rules.

8 If there is to be any application under s.536 it needs to be brought in the correct way. The person seeking to make a complaint against a liquidator must, in the first instance, seek to show a prima facie case in such a way as enables the court, somewhat in the role of a committing magistrate, to decide whether or not to institute an enquiry into the conduct of the liquidator. The appropriate course was described by Young J in Burns Philp Investments Pty Ltd v Dickens (No 2) (1993) 10 ACSR 631. The present applicant has not taken that course.

9 I have some concern that, in making the complaints in relation to which he refers to s.536, the applicant is seeking to advance a case which goes beyond his own interests. Why he should be concerned about other examinees is not clear. It is said on his behalf that he is a solicitor who wishes to place before the court matters of concern which he thinks should be brought to the court’s notice. Another possible connotation is that he is acting in a collateral way in the interests of persons who have not come forward in a direct fashion seeking to challenge examination summonses served upon them. I make no findings on these matters. I merely raise the possibility.

10 The material the applicant has placed before the court does not show any sufficient apprehension that the liquidator is pursuing any examination for an ulterior purpose. The applicant has not demonstrated any need for any examination to be stayed. If he wishes to pursue the route of s.536 complaint, he should do so in the proper way.

11 I direct that the applicant file and serve an amended interlocutory process within seven days which is in pleaded form and gives full particulars of the grounds on which he maintains his claim as to the existence of a prima facie case that the court should conduct the enquiries under s.536 of the Corporations Act referred to in the interlocutory process filed on 12 October 2005, such amended interlocutory process to be accompanied by such further affidavits, if any, as the applicant intends to rely upon.

12 I direct that the liquidator serve within fourteen days after service of the amended interlocutory process such affidavits as he proposes to rely upon in relation thereto.

13 I decline to stay any examination.

(Mr Svehla sought costs; Mr Ginges sought costs be costs in the cause.)

14 The liquidator’s costs of the application with which I have dealt today will be paid by the applicant under the interlocutory process.

15 I order that the documents required to be produced pursuant to an extant order for production served upon Mr Angelo D’Angelo be produced in the Registry of the Court by 4pm on 18 October 2005.

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