Re GH1 Pty Ltd (in Liquidation) - [2020] WASC 443

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA
CITATION:   RE GH1 PTY LTD (IN LIQUIDATION); EX PARTE WILLIAM JAMES HARRIS and ROBERT MICHAEL KIRMAN as joint and several liquidators of GH1 PTY LTD (IN LIQUIDATION) [2020] WASC 443
CORAM:   MASTER SANDERSON
HEARD:   2 DECEMBER 2020
DELIVERED          :   2 DECEMBER 2020
PUBLISHED           :   3 DECEMBER 2020
FILE NO/S:   COR 54 of 2019
MATTER:   GH1 PTY LTD (IN LIQUIDATION), MNWA PTY LTD (IN LIQUIDATION), ACN 142 745 337 PTY LTD (IN LIQUIDATION), IME NOMINEES PTY LTD (IN LIQUIDATION) and STOCKHOLM DEVELOPMENTS PTY LTD (IN LIQUIDATION)

EX PARTE
WILLIAM JAMES HARRIS AND ROBERT MICHAEL KIRMAN as joint and several liquidators of GH1 PTY LTD (IN LIQUIDATION)
First Plaintiff
WILLIAM JAMES HARRIS AND ROBERT MICHAEL KIRMAN as joint and several liquidators of MNWA PTY LTD (IN LIQUIDATION)
Second Plaintiff
ROBERT MICHAEL KIRMAN as liquidator of ACN 142 745 337 PTY LTD (IN LIQUIDATION)
Third Plaintiff
WILLIAM JAMES HARRIS AND ROBERT MICHAEL KIRMAN as joint and several liquidator of STOCKHOLM DEVELOPMENTS PTY LTD (IN LIQUIDATION)
Fourth Plaintiff
WILLIAM JAMES HARRIS AND ROBERT MICHAEL KIRMAN as joint and several liquidators of I.M.E. NOMINEES PTY LTD (IN LIQUIDATION)
Fifth Plaintiff

FILE NO/S: COR 105 of 2020
MATTER: WHITBY LAND COMPANY PTY LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED)

EX PARTE
ROBERT MICHAEL KIRMAN AND WILLIAM JAMES HARRIS as joint and several liquidators of WHITBY LAND COMPANY PTY LTD (IN LIQUIDATION)
Plaintiff

Catchwords:

Corporation law - Application to set aside examination summons - Turns on own facts

Legislation:

Corporations Act 2001 (Cth)
Rules of the Supreme Court 1971 (WA)
Supreme Court (Corporations) (WA) Rules 2004

Result:

Application dismissed

Category: B

Representation:

COR 54 of 2019

Counsel:

First Plaintiff	:	J E Scovell
Second Plaintiff	:	J E Scovell
Third Plaintiff	:	J E Scovell
Fourth Plaintiff	:	J E Scovell
Fifth Plaintiff	:	J E Scovell
Examinees	:	J Schoombee

Solicitors:

First Plaintiff	:	HWL Ebsworth Lawyers (Perth)
Second Plaintiff	:	HWL Ebsworth Lawyers (Perth)
Third Plaintiff	:	HWL Ebsworth Lawyers (Perth)
Fourth Plaintiff	:	HWL Ebsworth Lawyers (Perth)
Fifth Plaintiff	:	HWL Ebsworth Lawyers (Perth)
Examinees	:	Alan Rumsley

COR 105 of 2020

Counsel:

Plaintiff	:	JE Scovell
Examinees	:	J Schoombee

Solicitors:

Plaintiff	:	Allens
Examinees	:	Alan Rumsley

Case(s) referred to in decision(s):

Ariff v Fong [2007] NSWCA 183
Secatore, In the matter of Last Lap Pty Ltd (in liq) (No 3) [2020] FCA 1289

MASTER SANDERSON:

Interlocutory applications in both of these matters were heard together. The proceedings are separate but related. The outcome in both was the same. I dismissed the interlocutory applications. These are my reasons for doing so.
In COR 54 of 2019 on 20 August 2020 I made the following orders:

1.The Court summons, pursuant to ss596A and 596B of the Corporations Act 2001 (Cth):
(a) TINA MICHELLE BAZZO for examination about the examinable affairs of MNWA Pty Ltd (In Liquidation) ACN 101 717 177, ACN 142 745 337 Pty Ltd (In Liquidation) ACN 142 745 337 and Stockholm Developments Pty Ltd (In Liquidation) ACN 165 977 257; and
(b) ALLEN BRUCE CARATTI for examination about the examinable affairs of GH1 Pty Ltd (In Liquidation) ACN 099 191 714 and MNWA Pty Ltd (In Liquidation) ACN 101 717 177.

2. The affidavit of Robert Michael Kirman sworn on 3 August 2020:
(a) will not be made available for inspection by any person unless the Court otherwise orders; and
(b) be classified as a document to which access is restricted pursuant to Order 67A rule 10(6) of the Rules of the Supreme Court 1971 (WA).

3. The Plaintiffs' costs of and incidental to this application be costs in the liquidation.

On the same day in COR 105 of 2020 I made the following orders:
1. Pursuant to section 596A of the Corporations Act 2001 (Cth) (Act) a summons in the form annexed to this Order and marked "A" be issued to Allen Bruce Caratti, which requires the attendance of Mr Caratti and the production of documents and is returnable on a date to be fixed.
2. Pursuant to section 596A of the Act that a summons in the form annexed to this Order and marked "B" be issued to Christina Marcia Caratti, which requires the attendance of Ms Caratti and the production of documents and is returnable on a date to be fixed.
3. Pursuant to section 596B of the Act that a summons in the form annexed to this Order and marked "C" be issued to Tina Michelle Bazzo, which requires the attendance of Ms Bazzo and the production of documents and is returnable on a date to be fixed.
4. Orders pursuant to section 597(9) of the Act that orders for production be issued to:
(a) Starbrake Holdings Pty Ltd (ACN 116 485 682);
(b) Gold Fortune Pty Ltd (ACN 067 295 578); and
(c) GHT(WA) Pty Ltd (ACN 167 091 269)
in the form annexed to this Order and marked "D".
5. The Plaintiffs are to liaise with the office of the Principal Registrar of the Supreme Court of Western Australia concerning the fixing of a first return date for the examination summonses referred to in paragraphs 1 to 2. At that first return date:
(a) the persons summonsed (the Examinees) will attend before a Registrar of the Supreme Court of Western Australia and produce any documents detailed in the respective summonses;
(b) the persons referred to in paragraph 4 will produce, or cause to be produced, any documents detailed in the orders described in paragraph 4; and
(c) the Registrar will issue further directions in relation to the time, place and duration of the examinations and make any ancillary orders including in relation to the documents.
6. The Examinees be excluded from any part of the examination during which they are not personally being examined and that publication or communication of information be prohibited to an Examinee about any examination from which he or she was excluded.
7. The Plaintiffs, their staff and the Plaintiffs' solicitors may, at any time after the production of any of the documents by the Examinees or the persons described in paragraph 4, take custody of the documents for the purpose of preparing for the examination.
8. Pursuant to section 597(13) of the Act, the questions put to the Examinees and the answers given by those persons in any such examination be transcribed and that a copy of the transcript be furnished to the Plaintiffs by the Registrar.
9. The Plaintiffs require the Examinees to authenticate the transcript of their examination in accordance with the provisions of the Act and/or the Supreme Court (Corporations) (WA) Rules 2004, the Examinees shall attend and authenticate the transcript.
10. The costs of and incidental to this application be costs in the liquidation of the Company.
In both matters orders for substituted service were made.[1] As a consequence of those orders the examination summonses were served on Mr Caratti and Ms Bazzo by post. Based on the uncontradicted evidence of Mr Caratti and Ms Bazzo, it seems the summonses in COR 105 of 2020 were served on the examinees on 27 October 2020. The summonses in COR 54 of 2019 were served on 5 November 2020. On 10 November 2020, in both matters, Mr Caratti and Ms Bazzo applied for an order discharging the summonses. In COR 54 of 2019 the form of the interlocutory process was as follows:
[1] Order of Master Sanderson 22 October 2020 (in both matters).
The applicants, Allen Bruce Caratti and Tina Michelle Bazzo, apply for the following relief –
1.Time for service of this applicant be abridged.
2.As to the examination of Mr Caratti and Ms Bazzo:
2.1The Affidavit of Robert Michael Kirman filed in support of the application for summonses for examination issues pursuant to sections 596A and 596B of the Corporations Act 2001 (Cth) be made available for inspection by Allen Bruce Caratti, Tina Michelle Bazzo and their respective legal representatives.
2.2Each of the summonses for examination issued pursuant to sections 596A and 596B of the Corporations Act 2001 (Cth), in the form approved by the Registrar, be discharged.
2.3Further or alternatively, each of the summonses for examination issued pursuant to sections 596A and 596B of the Corporations Act 2001 (Cth) be adjourned and the orders to produce stayed pending the discharge of those summonses.
2.4The Plaintiffs pay the costs.
The orders sought in COR 105 of 2020 was in almost identical terms. Both interlocutory processes were supported by affidavits of Mr Caratti and Ms Bazzo, each of which was sworn 10 November 2020. The interlocutory processes were returned in chambers on 19 November 2020. After hearing some preliminary argument, I listed the interlocutory processes for hearing on 3 December 2020. During the course of submissions on the first return date, counsel for the plaintiffs maintained no further affidavit material should be filed by the examinees. He submitted the examinees should be confined to the affidavit material already filed. Counsel for the examinees maintained his clients should be entitled to file further affidavit material. I left that question open for determination at the hearing. The examinees in COR 54 of 2019 lodged three further affidavits. One sworn by Benjamin Mick Caratti on 30 November 2020 and two affidavits of Alan Phillip Rumsley, one sworn 1 December 2020 and the other sworn 2 December 2020. In COR 105 of 2020 an affidavit of Mr Rumsley sworn 2 December 2020 was filed. Given the two matters are closely connected it really was of no great consequence which affidavit was filed in which proceeding.
At the hearing of the applications four issues fell for determination. They were:
(1)were the applications to set aside the examination summonses brought within time;
(2)if not, should time be extended to allow the examinees to make the applications;
(3)should the examinees have leave to rely on the further affidavit material above and beyond the affidavits filed by Ms Bazzo and Mr Caratti at the time the interlocutory process was lodged; and
(4)have the examinees established an arguable case that the summonses had been issued for an improper purpose or involved an abuse of the court's processes, such as to justify the examinees or their solicitors having access to the affidavits lodged in support of the application to issue the examination summonses.
At least so far as the interlocutory processes themselves are concerned, the examinees' solicitors appear to have approached this matter on the wrong basis. The interlocutory process seems to anticipate the examinees or their legal advisers having access to the affidavits that led to the issue of the examination summonses and then, having had access to those affidavits, the examinees arguing the examination summonses ought be set aside. The authorities make it clear it is necessary for a party seeking to discharge an examination summons to first establish a prima facie case that there has been an abuse of process. If the examinees clear the first hurdle, then, in most cases, it is appropriate for the court to consider the contents of the affidavit. If the court is satisfied the interests of justice require the examinees be provided with a copy of the affidavit, orders will be made to that effect. It is then for the examinees and their legal advisers to decide whether to persist with the application to set aside the examination summonses. So there is a stepped process. By the time this matter had reached a hearing, counsel had been engaged and he framed his argument to reflect the stepped process I have outlined. No application was made to amend the interlocutory process and, really, none was required.
Dealing then with each of the issues in turn, pursuant to r 11.5 of the Supreme Court (Corporations) (WA) Rules 2004, an application to discharge an examination summons must be filed within three days of the examinee being served with the summons.
Order 3 rule 2(2) of the Rules of the Supreme Court 1971 (WA) deals with 'reckoning periods of time'. It reads as follows:
Where less than 7 days is prescribed by these rules or limited by any judgment, order or direction for doing any act any day on which the Central Office is closed for business shall not be reckoned.
Clearly in COR 105 of 2019 the examinees are out of time. Ms Bazzo says she received the summons on 27 October 2020. That was a Tuesday, and it is excluded from calculation. That means Ms Bazzo and Mr Caratti had until 30 October to file their application. They are out of time by some margin.
In COR 54 of 2019 the documents were received on 5 November 2020. That was a Thursday. The weekend is excluded from calculation and therefore the application had to be made by 10 November. It was made on that day and no question arises of the application being out of time.
Sofar as COR 105 of 2020 is concerned, I would not be prepared to extend the time. In both cases the examinees were served pursuant to an order for substituted service. Substituted service was necessary because all efforts to serve Ms Bazzo and Mr Caratti had failed. While I could not, on the available evidence, conclude either of Ms Bazzo or Mr Caratti were actively evading service, the affidavits of Emerald Denise Petrie affirmed 16 October 2020, the affidavit of Cassandra Michelle Guy sworn 21 October 2020 and the affidavit of Eliza Dawn Wallace sworn 22 October 2020 make it plain both Ms Bazzo and Mr Caratti must have been aware long before they were actually served that an examination summons had been issued. Neither offers any real explanation as to why they did not take steps to accept service in an orderly and conventional manner. Nor do either explain why they did not act immediately to have the examination summonses set aside. I would dismiss the applications in COR 105 of 2019 on that basis. However, I will, in relation to both matters, deal with the other issues raised above.
As I discussed with counsel for the examinees during the course of the hearing, the timeframe for applying to set aside examination summonses is very short. It is difficult to think of another application which is subject to such tight restraints. It might be inferred the time is so short to ensure the processes of the court are not frustrated. When examination summonses are issued, a date for return of those summonses is included in the body of the document. If the date set is not to be lost, the application to set aside the summonses must be heard and determined as a matter of urgency. Be that as it may, the short timeframe imposes pressure on both the examinee personally and his or her legal advisers which must be acknowledged. There is nothing in the rules which prevents a court from receiving evidence lodged after the application to set aside the examination summonses is made. In this case, it is in the interests of justice to receive the additional affidavits filed by the examinees. Counsel for the plaintiffs did not point to any prejudice suffered as a consequence of these affidavits being admitted into evidence. On that basis, I am satisfied, with one caveat, that all of the affidavits I have referred to above should be admitted into evidence.
The caveat relates to part of the affidavit of Mr Benjamin Caratti which was sworn 30 November 2020. Included as attachment BMC3 to that affidavit is a copy of a statement of claim filed by GH1 Pty Ltd (in liquidation) in CIV 1653 of 2020. Attachment BMC5 to that affidavit is a copy of a chamber summons filed in the same proceedings. The action, CIV 1653 of 2020, was commenced by originating summons. The statement of claim was filed after the originating summons was issued – it was not indorsed on the originating summons. During the course of the hearing, counsel for the plaintiffs pointed out both attachments were subject to an implied undertaking and could not be referred to in other proceedings without an order of the court. Counsel for the examinees immediately realised that was correct and consented to an order striking out parts of Mr Benjamin Caratti's affidavits which referred to these two attachments. Counsel also made the point, Mr Benjamin Caratti's affidavit attached both documents on his advice and without considering the implied undertaking. I accept both documents were included in Mr Benjamin Caratti's affidavit inadvertently and apart from excluding them from the evidence, nothing further needs to be said on the issue.
That leaves the question of whether there is any material which gives rise to an arguable case the summonses had been issued for an improper purpose or involved an abuse of the court's processes.
There was no dispute between the parties as to the law on this issue. In Ariff v Fong [2007] NSWCA 183 the New South Wales Court of Appeal set out the principles in some detail. I would respectfully adopt [12] to [26] without repeating what is contained therein. It is important to note that the power to stay, is to prevent an abuse of process resulting in oppression even if the party who commenced proceedings has, or is to be assumed to have, a prima facie case. Really that is the touchstone of the jurisdiction.
With respect, there was nothing in the examinees' evidence which even hinted that the issue of the summonses might be an abuse of process resulting in oppression. It would appear that the argument of both Mr Caratti and Ms Bazzo was they were not directors or officers of any of the companies at any time that was material. That may be so. But a person may have taken part in a corporation's examinable affairs and may have information about those affairs without being an officer of the corporation or being involved in its management. That is clear on the face of s 596B of the Corporations Act 2001 (Cth). That principle is supported by numerous cases. The decision of Anderson J in Secatore, In the matter of Last Lap Pty Ltd (in liq) (No 3) [2020] FCA 1289 is perhaps the most recent.
It is true there are proceedings on foot brought by the plaintiff against a number of defendants, which involve allegations against Mr Caratti and Ms Bazzo. But in and of itself, that is not enough to suggest oppression. There is nothing to support a suggestion the examination summonses are being used as a dress rehearsal for cross‑examination in other proceedings. That argument was not, and could not have been raised by the examinees on this application. There seems rather to be a vague suggestion the mere fact proceedings were on foot was sufficient to satisfy the threshold requirements in relation to oppression. That submission must be rejected.
In all the circumstances, I was not satisfied the examinees were entitled to the relief they sought. On that basis I dismissed the interlocutory proceeding in both matters. The examinees ought pay the plaintiffs' costs of the application in each matter.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CB
Associate to Master Sanderson
3 DECEMBER 2020