Re Jury, Eric Abraham Ex Parte Prentice, Maxwell William

[1997] FCA 1128

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 7821 of 1997

RE:	ERIC ABRAHAM JURY
EX PARTE:	MAXWELL WILLIAM PRENTICE

JUDGE(S):	HILL J
DATE:	16 OCTOBER 1997
PLACE:	SYDNEY

REASONS FOR JUDGMENT

Mr Jury seeks review of a decision by a Registrar of the Court refusing to him access to an affidavit which founded an order made under s 81 of the Bankruptcy Act 1966 (Cth) for his examination. The proceedings in this Court, although referred to as a review, are a hearing de novo.

Counsel for Mr Jury tendered in evidence a page of a transcript of the examination which had commenced some time ago and which was being continued today. In the page of transcript, the Registrar referred to the procedure for issue of a summons under s 81. She referred to the fact that an affidavit would have been sworn by the trustee, that it was not enclosed in the sealed envelope but remained on the file and that at any time access to the affidavit could be available so that the examinee would know the areas of concern in the examination. She referred to the fact that the Bankruptcy Rules had been amended and that in considering the question of access reference would need to be made to O 46 of the Federal Court Rules. In fact, the application for a summons under s 81 was made before the amendments to the Bankruptcy Act making the Federal Court Rules applicable in bankruptcy proceedings, although in the end nothing turns upon this.

There is no provision in the Bankruptcy Rules specifically dealing with access to documents of the kind here in question. A perusal of O 46 of the Federal Court Rules to which the Registrar refers makes it clear that those Rules do not cover access to the present document either.  So the situation would seem to be the same whether the question is considered under the Federal Court Rules or under the Bankruptcy Rules.  This is not to say that access may not be given, but only to say that the matter is not one specifically dealt with in the Rules.

Counsel for Mr Jury tendered also in evidence a letter from Messrs Clayton Utz, the solicitors for the trustee, addressed to Mr Jury, referring to various sections of the Bankruptcy Act outlining offences which a bankrupt might commit and implying thereby that Mr Jury was likely to be examined and should review his notes concerning matters that might give rise to the offences listed.  It was on the basis of this evidence that counsel applied to the Court for access to the affidavit.  I was told from the bar table that there was an application before the Court to remove the trustee, but it is not suggested that the affidavit is required for the purpose of those proceedings.  If it had been, then other considerations might become relevant.

Counsel submitted that a proper balance required that his client be given access to the affidavit so as to enable him to answer the questions which were likely to be put to him, notwithstanding that at least possible areas of concern had been signalled in the letter and perhaps also in discussions between counsel.  The basis of the application was ultimately that it would assist Mr Jury to know the areas he was going to be examined upon, presumably, so as to enable him to better prepare his response to the questions which counsel for the trustee may put.

I was referred to a number of decisions pointing perhaps in different directions where the general question of whether an affidavit lodged in support of an examination summons, either in bankruptcy or for the purposes of the Corporations Law, should be made available for inspection by the person to be examined.  The earliest of these was the decision of Lockhart J in Re Abrahams; Ex parte Thomas (1985) 9 FCR 232. In that judgment, which related to a s 81 summons, Lockhart J referred to the practice of the courts in insolvency matters sealing the affidavit lodged in support of the issue of a summons with a notation that the sealed envelope is not to be opened without the order of the Court.

After a reference to this practice, as discussed by Street J in Re Stirling Henry Limited (In Liq) and The Companies Act [1972] 1 NSWLR 497, his Honour spoke of the rationale underlying the requirement of secrecy being as true in 1985 as it was in 1972 or earlier and whether the examination be for company law purposes or for bankruptcy purposes. His Honour said (at 236):

“There are various reasons supporting the wisdom of this practice, but it is sufficient to state one of them, namely, that prima facie those who are to be examined should not have access to the statement of the liquidator or the trustee given to the court or to a Registrar stating why it is that they are proposed to be examined or on what matters it is proposed to examine them.”

It is perhaps difficult to see why that is a reason rather than a result of the policy which his Honour refers to as being of long standing.

Lockhart J’s decision was doubted by Einfeld J in Re Aitken; Ex parte Aitken (1987) 74 ALR 349, again a case where access was sought to an affidavit filed in support of the issue of a summons under s 81 of the Bankruptcy Act.  In that case his Honour referred to the judgments in Re Stirling Henry Ltd and Re Abrahams and also to a judgment of Sir George Jessel in Re Gold Co (1879) 12 Ch D 77 at 82, 83 and 84. In the last of these cases Einfeld J observed that Sir George Jessel had merely indicated that if access were given to the information lodged in support of an examination summons the examinee might be enabled to defeat some proceeding that might be taken against him.

Ultimately Einfeld J (at 351) indicated that in his view each case should be considered on its merits.  His Honour said that of course if the trustee consents to the access then there was no reason why access should not be given but if there was a dispute that it could be determined by a judge indicating that the only criterion for refusal might well be that knowledge of the contents would lead to:

“... effective avoidance of a significant purpose of the examination such as the destruction or disposal of relevant documents, other tampering with evidence or a re-ordering of events or evidence.” (at 351-352)

It seems to be common ground that there was really no reason in principle why any different rationale should exist where access is sought to an affidavit grounding an examination summons sought by a liquidator on the one hand and to an affidavit grounding an examination summons under s 81 by a liquidator on the other. The former context was considered by a Full Court of this Court comprising Gummow, Hill and Cooper JJ in Re Excel Worthley v England (1994) 52 FCR 69. That case concerned an attempt to obtain access to the material lodged in support of an examination summons obtained by a liquidator.

There was a suggestion that there had been an abuse of process on the part of the receiver and manager in applying to the Registrar for the examination summons.  The Full Court said (at 93-94):

“In our view the Court has a discretion to order the disclosure, to a prospective examinee, of material lodged in support of the application for an examination order and should do so where the justice of the case so requires...

It does not follow that the Court would permit every examinee or potential examinee to have access to such material.  There are sound reasons why inspection should not be freely granted, for so to do could afford to an examinee information which could permit the examination process to be frustrated.”

The Court at this point referred to the passage in Re Gold to which Einfeld J had earlier referred.  The judgment continues:

“There could also be confidential information which should properly be withheld.

However, we agree with Lord Justice Nourse in Re British and Commonwealth Holdings Plc (Nos 1 and 2) [1992] Ch 342 at 355:

‘Inspection of the statement should prima facie be allowed where the Court is of the opinion that it will or may be unable fairly and properly to dispose of the application if part of the evidence is withheld from the person against whom the order is sought.  It will then be for the office holder to satisfy the court that confidentiality in whole or in part is nevertheless appropriate.’

An applicant will not be permitted access to such material to enable him or her to ‘fish’ for a case.  There must be material before the Court from which it appears that the applicant has an arguable case to which the material is relevant, before the discretion should be exercised in favour of that applicant.  But once that appears the discretion will normally be exercised in favour of the application.”

The reference to the judgment of Nourse LJ is reference to a decision in 1992 which indicates how there has been over the years a shift in views since Sir George Jessel gave judgment in Re Gold in 1879.

The decision of this Court in Worthley has been followed by single judges in Supreme Courts subsequently.

As is made clear by the decision in Worthley an applicant seeking access to an affidavit lodged in support of a request for an examination summons must do more than ask for it.  The applicant should demonstrate some reason other than curiosity for the material being made available.  If of course the applicant had made out some arguable case to which the material was relevant then clearly the discretion should be exercised in favour of the material being available but merely to refer to a statement of the Registrar which probably erroneously set out the law hardly provides a justification for the course of making available the affidavits. The reference is rather that Mr Jury wants to peruse the affidavit to see what he might make out of it.  That is precisely the sort of case that the Full Court of this Court suggested was one where an application should be refused.

In these circumstances I would dismiss the application reviewing the Registrar's decision with costs.

I certify that this and the preceding four (4) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Hill

Associate:

Dated:            24 October 1997

Counsel for the Trustee:	W Hodgekiss
Counsel for the Applicant:	J Halley
Solicitor for the Applicant:	Clayton Utz
Date of Hearing:	16 October 1997
Date of Judgment:	16 October 1997