Re Mueller, K.F. v Ex parte Morphett Finance Pty Ltd
[1988] FCA 239
•31 MARCH 1988
Re: KLAUS FELIX MUELLER
Ex Parte: MORPHETT FINANCE PTY LTD; MAXWELL ROAD (1986) PTY. LTD; RELLEUMPTY
LTD; KLEMZIG NURSING HOME PTY LTD; K & F INVESTMENTS (1986) PTY LTD; MAXWELL
ROAD (1980) PTY LTD; K & F LAND SERVICES (1986) PTY LTD; 839 VALLEY VIEW PTY
LTD; LINK LOOP SERVICES (1986) PTY LTD; MAXWELL ROAD INVESTMENTS (1986) PTY
LTD; MORPHETT STREET HOLDINGS PTY LTD; FULLARTON HOUSE PTY LTD; K & F LAND
SERVICES PTY LTD; WAYCROSS (1980) PTY LTD; LINK LOOP SERVICES PTY LTD; THE
ELECTRICAL CONNECTION PTY LTD; K & F FINANCE PTY LTD; PAUL DESMOND TEISSEIRE
and OLCO PTY. LTD.
No. 665 of 1987
Bankruptcy
COURT
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF SOUTH AUSTRALIA
Fisher J.(1)
CATCHWORDS
Bankruptcy - examination of witnesses before Registrar - application to set aside summonses to attend - whether summonses in the circumstances were vexatious or oppressive or too wide - sufficiency of material before Registrar and of grounds in application - summons directed to a company to produce documents.
Bankruptcy Act 1966 - s.81 - r.129
HEARING
ADELAIDE
#DATE 31:3:1988
Counsel for Official Receiver: Mr. R.D. Lawson with Mr. G. Gretsas
Solicitors: Australian Government Solicitor
Counsel for Applicants: Mr. D.J. Bleby Q.C. with Mr. M. Blue
Solicitors: Thomson Simmons & Co.
ORDER
The application to discharge the summons directed to Paul Desmond Teisseire be dismissed.
The summons directed to Olco Pty. Limited be set aside.
There be no order as to the costs of this application.
Note: Settlement and entry of order is dealt with in Bankruptcy Rule 124.
JUDGE1
This is an application made in the first instance by the abovenamed applicants other than Paul Desmond Teisseire ("Mr. Teisseire") and Olco Pty. Ltd. ("Olco"). The latter two applicants were joined on 17 March 1988 in circumstances hereafter related. The application sought an order that the summonses under s.81 of the Bankruptcy Act 1966 ("the Act") issued to Mr. Teisseire, Malcolm Blue and Thomson Simmons & Co all dated 17 February 1988 and to Olco dated 16 February 1988 be set aside. On the first day of hearing of the application, namely 17 March 1988, the Official Receiver on behalf of the Official Trustee in Bankruptcy as the trustee of the bankrupt estate of Klaus Felix Mueller ("the bankrupt") consented to the summonses against Malcolm Blue and Thomson Simmons & Co, which only sought production of documents, being set aside.
The summonses directed to Mr. Teisseire & Olco were issued by the Registrar in Bankruptcy on the application in each instance of the Official Receiver. The applicants seek a review under sub.s 14(5) of the Act of the decision by the Registrar to issue these summonses. This review is of course of a decision of the Registrar arrived at in the exercise of his discretion (Lucas Industries Ltd. infra at p.558). The application for such a review did not specify the grounds upon which it was sought and these grounds were subsequently provided on 15 March 1988. They were as follows, with the ground specified in sub-paragraph 1.8 being added by leave on 17 March 1988. I draw particular attention to paragraph 3.
"GROUNDS OF APPLICATION
DATED 2ND MARCH 1988
1. In respect of the Summons under Section 81 of the Bankruptcy Act issued herein to Thomson Simmons & Co. dated 17th February 1988 it is an abuse of process, oppressive and vexatious in that:-
1.1 There are substantive proceedings in this Honourable Court between the Official Trustee and the Applicants, that there are normal Court procedures and processes of discovery which are available to the Official Trustee;
1.2 The Summons is in too wide and vague terms and in particular requires the witness (and the Applicants) to identify files concerning the bankrupt, the Maxwell Group of Companies and the Atlas Group of Companies;
1.3 There is no connection or in the alternative no expressed or established connection between the files subpoenaed and the affairs of the bankrupt;
1.4 In respect of the files identified generically in the Summons, there can of necessity be no established connection between the files and the affairs of the bankrupt;
1.5 In respect of the files specifically identified in the Summons, the information was obtained:-
(a) By the Official Trustee illegally and improperly;
(b) Alternatively, by officers of the Australian Taxation Office by means of an abuse of their power and who in turn conveyed such information to the Official Trustee or the Registrar illegally and improperly;
(c) By the Official Trustee by being an accessory to the commission of an illegal act by officers of the Australian Taxation Office;
1.6 The files subpoenaed in the Summons relate to private affairs of the Applicants and that no proper basis has been established by the Official Trustee for:-
(a) Their connection with the affairs of the bankrupt;
(b) Their production to Court.
1.7 The Summons causes undue hardship to the Applicants by exposing their private affairs.
1.8 That there was no material or no adequate material before the Registrar to justify the issue of the summons, and in particular no material showing the connection of each or any of the documents referred to in the summons with the trade dealings, property or affairs of the bankrupt.
2. Further and in the alternative the Summons under Section 81 issued herein to Thomson Simmons & Co, dated 17th February 1988 was issued to a partnership, a non legal entity and as such is void and of no effect.
3. The same grounds as are set out in paragraph 1 hereof apply to the Summonses under Section 81 issued herein to Paul Desmond Teisseire and Malcolm Blue both dated 17th February 1988 and Olco Pty. Ltd. dated 16th February 1988.
4. In the absence of sighting the material placed before the Registrar by the Official Trustee for the purposes of obtaining the said summonses, the Applicants are unable to give any more specific grounds of application.
DATED the 15th day of March 1988.
Signed THOMSON SIMMONS & CO"
The summons of 17 February 1988 directed to Mr. Teisseire was as follows:
BANKRUPTCY ACT, 1966
SUMMONS UNDER SECTION 81 OF THE BANKRUPTCY ACT
Bankruptcy District of the
State of South Australia No.665 of 1987
Re: KLAUS FELIX MUELLER
The bankrupt
Ex Parte: The Official Receiver as trustee
To: PAUL DESMOND TEISSEIRE
of: 47 Waymouth Street, Adelaide S.A 5000
In pursuance of the power conferred on th Registrar by Section 81 of the Bankruptcy Act, 1966, the Registrar hereby summons you to appear before the Registrar at the Bankruptcy Courtroom, 9th Floor, Grenfell Centre, 25 Grenfell Street, Adelaide on the 18th day of February, 1988 at 10.30 o'clock in the fore noon to give evidence concerning:-
1. The formation of a group of companies known as the Maxwell Group of Companies.
2. The transfer of assets valued at $10 million from the group of companies known as the Maxwell Group to a charity trust. The full details of the reasons why that trust was formed and the beneficiaries of that or those specific trusts.
3. The conditions under which the assets of those trusts were to be held and the benefits to be derived from those trusts by the bankrupt.
4. The purchase of a house property at 18 St. Tropez Terrace, Sorrento, Queensland, the provision of funds for the purchase of that house and reasons why it was to be bought by the bankrupt or by him as the trustee for some other entity.
5. The details and circumstances of his appointment as alternate director of the bankrupt in a number of companies within the Maxwell Group of Companies.
6. The creation of a trust to purchase the house property at 18 St. Tropez, Sorrento, Queensland.
7. Details and the reasons for the number of trusts that are within the Maxwell Group of companies or are controlled by companies in that group or as part of that group
and that he then and there have and produce the files kept by the said Paul Desmond Teisseire and or the firm of Thomson Simmons and Co. in relation to the bankrupt Klaus Felix Mueller, the Atlas Group and the Maxwell Group of Companies.
The files listed below relating to the bankrupt Klaus Felix Mueller the Maxwell Group of Companies and or the Atlas Group of Companies which were in the possession of Olssons and are now in the possession, care or custody of Thomson Simmons and Co. or the said Paul Desmond Teisseire.
Mueller-Fullarton House Pty Ltd 65524 Mueller Holding Company 65786 Mueller Purchase of Company No Number Known Re Muellers Company No Number Known Maxwell Road Investments 61470 Tax Planning 62044 Matrimonial Affair G1828 65106 Klemzig Nursing Home J657 67540 Maxwell Group of Companies 61809 Mueller-Assignment of Debenture 65537 Atlas Group Super 66107 John Perry Industries and Atlas Housing 66108
DATED this 17th day of February 1988
Signed Peter Carey
REGISTRAR"
The summons directed to Olco for its part only required the production of documents and it was in the following terms:
"Bankruptcy Act, 1966
SUMMONS UNDER SECTION 81 OF THE BANKRUPTCY ACT
Bankruptcy District of the
State of South Australia No. 665 of 1987
Re: KLAUS FELIX MUELLER
The bankrupt
Ex Parte: The Official Receiver as trustee
To: The Public Officer of Olco Pty. Ltd.
of: 135 Currie Street, Adelaide, S.A.5000
In pursuance of the power conferred on the Registrar by Section 81 of the Bankruptcy Act, 1966, the Registrar hereby summons you to appear before the Registrar at the Bankruptcy Courtroom, 9th Floor, Grenfell Centre, 25 Grenfell Street, Adelaide on the 18th day of February, 1988 at 10.30 o'clock in the fore noon to produce files kept by Olco Pty. Ltd. in relation to the affairs of the bankrupt Klaus Felix Mueller and the Maxwell Group of Companies.
The specific files required to be produced are as follows:-
In relation to he bankrupt Klaus Felix Mueller
Pioneer Homes H832 68146 Will G1297 68811
In relation to Electrical Connection Pty. Ltd.
Harrison-Industrial Court ApplicationJ1005 67768 Video Copyright Opinion J1418 68652
In relation to Maxwell Group of Companies
Heritage Classification G659 64287 Workers Comp. Claim - Calides H497 66302 San Michelle Travel Pty. Ltd. H1275 67538 The Stable Restaurant J303 67539 Claim by Clarksons G1965 68140 One Tree Hill Water Agreement J131 68141 Lot 43 One Tree Hill - Easement J210 68142 The Electrical Connection Pty. Ltd. J540 68143 K. & P. Fund Pty. Ltd. Eject. ProceedJ1027 68144 W.M. Beveridge G1438 68673 Kaye Electronics G1439 68674 The Electrical Connection - Criminal K194 69777 Purchase of Rocca Bros J432 70473 Construction Services & Mueller H1362 71784 Service Agreement - J.W. Alfred K21 71785 Electrical Connection Pty Ltd. Rental Agreement J1072 72332 J1431 72333 Video Hire Advice J1099 72334
In relation to Maxwell Road Investments Pty. Ltd.
Sale of Land to Faulkner F2019 64446 Sale of Land to Callahan F2006 64433 Sale of Lot 34 McGulp Road One Tree Hill J293 67317 Sale of Lot 38 " J17 67331 Sale of Lot 40 " J833 67541
These other files recorded on an index card heading "Robins"
Maxwell Road Investment Sale Lot 38 One Tree Hill 67331 Lot 39 One Tree Hill 66904 Mrs C.G. Mueller - Business Name 66967 K. & F. Land Services Pty. Ltd. - Change of Name 68157 Heiduk and Kryston Management Trust 68824 Heiduk and Robins - Amendment to Trust 68827 A. Heiduk - Deed Poll 61468 Maxwell Road Investment Pty. Ltd - Purchase of Land from Stain
Atlas Housing Group - Appointment New Trustees 62482 - Fire Control Pty. Ltd. 62483 Maxwell Road Investment - Purchase of further property 62487 Mueller - Morphett Street property 63286 Stable Restaurant 63291 Mueller - Purchase Morphett Street property 64414 Mueller - Rose Park property 64415 Kryston Nominees - Purchase of property 65074 Kryston Nominees - Sale of Property 65075 Kryston - Sale of unit (Gawler) 65443 Maxwell Investment - subdivision 65449 Mueller - Silver Lake Pools 65518 Mueller - Purchase of Fullarton Road, buildings 65522 Kryston Nominees - sale of units 66109
In addition to the files listed above you are required to produce all and any other files in your care and custody which relate to the affairs of the bankrupt Klaus Felix Mueller and or the Maxwell Group of Companies.
DATED this 17th day of February 1988.
Signed Peter Carey
REGISTRAR"
At the commencement of the hearing on 17 March 1988 counsel for the then applicants sought, as foreshadowed in paragraph 4 of his clients' grounds of application, the production of the Official Receiver's applications to the Registrar for issue under s.81 of the summonses. Upon being asked by the Court to provide authority in support of his clients' standing to seek a review under sub.s 14(5), none of them being persons summonsed to give evidence or produce documents, no authority was forthcoming. Likewise doubt was raised as to the propriety of permitting his clients to view the applications to issue summonses directed to Mr. Teisseire and Olco. Counsel's only reply was that all of the then applicants were respondents to various proceedings initiated by the Official Receiver. After an adjournment an application was made to join Mr. Teisseire and Olco as additional applicants in these proceedings, neither having taken any earlier action to set aside the summons directed to him or it. This was not opposed by counsel for the Official Receiver and leave was granted to amend the application to this end.
Application was then made on behalf of the two new applicants for them to view the applications of the Official Receiver made under s.81 of the Act and r.129 of the Rules under the Act. After discussion counsel for the Official Receiver withdrew his opposition to this course on the undertaking of counsel for the applicants that the contents of the applications would not be made disclosed to any of his original clients. Subsequently counsel was permitted by the Official Receiver to withdraw this undertaking on the ground that little was achieved thereby and that the contents of the applications would be referred to in the transcript and would doubtless appear in full in these reasons.
The application by Official Receiver for an order directing the issue of a summons to Mr. Teisseire was as follows:
"APPLICATION TO REGISTRAR FOR EXAMINATION OF WITNESS UNDER SECTION 81
BANKRUPTCY ACT, 1966
Bankruptcy District of the
State of South Australia No. 665 of 1987
Re: KLAUS FELIX MUELLER
Ex Parte: The Official Receiver as trustee
I, JAMES ALBERT HUPPATZ, Official Receiver for the Bankruptcy District of the State of South Australia, for and on behalf of the Official Trustee, the trustee of the property of the abovenamed bankrupt, hereby apply to the Registrar for an Order pursuant to Section 81 of the said Act, directing the issue of a summons to:-
PAUL DESMOND TEISSEIRE of 47 Waymouth Street, Adelaide in the State of South Australia
to attend before the Registrar at 10.30 a.m. on the 18th day of February, 1988 and so from day to day until excused from further attendance to give evidence in the above matter concerning:
(1) The formation of a group of companies known as the Maxwell Group of Companies.
(2) The transfer of assets valued at $10 million from the group of companies known as the Maxwell Group to a charity trust. The full details of the reasons why that trust was formed and the beneficiaries of that or those specific trusts.
(3) The conditions under which the assets of those trusts were to be held and the benefits to be derived from those trusts by the bankrupt.
(4) The purchase of a house property at 18 St. Tropez Terrace, Sorrento, Queensland, the provision of funds for the purchase of that house and reasons why it was to be bought by the bankrupt or by him as the trustee for some other entity.
(5) The details and circumstances of his appointment as alternate director of the bankrupt in a number of companies within the Maxwell Group of Companies.
(6) The creation of a trust to purchase the house property at 18 St. Tropez, Sorrento, Queensland.
(7) details and the reasons for the number of trusts that are within the Maxwell Group of companies or are controlled by companies in that group or as part of that group
and that he then and there have and produce the files kept by the said Paul Desmond Teisseire and or the firm of Thomson Simmons and Co. in relation to the bankrupt Klaus Felix Mueller, the Atlas Group and the Maxwell Group of Companies.
The files listed below relating to the bankrupt Klaus Felix Mueller and the Maxwell Group of Companies and or the Atlas Group of Companies which were in the possession of Olssons and are now in the possession, care or custody of Thomson Simmons and Co. or the said Paul Desmond Teisseire.
Mueller-Fullarton House Pty Ltd 65524 Mueller Holding Company 65786 Mueller Purchase of Company No Number Known Re Muellers Company No Number Known Maxwell Road Investments 61470 Tax Planning 62044 Matrimonial Affair G1828 65106 Klemzig Nursing Home J657 67540 Maxwell Group of Companies 61809 Mueller-Assignment of Debenture 65537 Atlas Group Super 66107 Johns Perry Industries and Atlas Housing 66108
The ground upon which this application is made are:-
1. The abovenamed Klaus Felix Mueller became bankrupt on the 22nd day of June, 1987.
2. Pursuant to the Public Examination of the bankrupt under Section 69 of the Act held on the 18th day of December, 1987, the bankrupt in answer to a variety of questions relating to information and documents in respect of the matters outlined above stated that the said Paul Desmond Teisseire was his solicitor and had been his advisor in all of the transactions mentioned above and that he would be able to provide information to the Registrar and the reasons for those transactions and the advice given to the bankrupt regarding why he should enter into those transactions and execute the documents involving those transactions.
These depositions are contained at pages 28a, 29, 34, 35, 37, 39, 40, 54, 55, 55a, 56, 57, 58, 61, 65, 67, 68, 69, 69a of the transcript of the said examination.
3. That the said Paul Desmond Teisseire was examined before the Registrar pursuant to the provisions of Section 81 of the Bankruptcy Act, 1966 on the 16th and 17th days of February, 1988.
4. The said Paul Desmond Teisseire was requested to produce the files listed above but declined to do so without a summons. I desire the production of those files to enable me to continue with the examination and my investigations into the bankrupts affairs.
5. That in the course of my investigations into the bankrupts affairs I have been provided with information by the Deputy Commissioner of Taxation who is the petitioning creditor in this bankruptcy. That information discloses that the specific files listed above do exist and were removed from the care and custody of Olco Pty. Ltd. an incorporated legal practice known as Olssons and delivered into the care and custody of the said Paul Desmond Teisseire.
I require the production of the files listed above to enable me to continue with my investigations into the affairs of the bankrupt Klaus Felix Mueller to ascertain whether there are any assets that can be recovered for the benefit of the creditors pursuant to the provisions of the Bankruptcy Act, 1966.
DATED this 17th day of February, 1988.
Signed OFFICIAL RECEIVER
LET a Summons issue in terms of the application herein
DATED this 17th day of February 1988
Signed Peter Carey
REGISTRAR"
In the case of the summons directed to Olco the Official
Receiver's application was as follows:
"APPLICATION TO REGISTRAR FOR EXAMINATION OF WITNESS UNDER SECTION 81
BANKRUPTCY ACT, 1966
Bankruptcy District of the
State of South Australia No. 665 of 1987
Re: KLAUS FELIX MUELLER
Ex Parte - The Official Trustee
I, JAMES ALBERT HUPPATZ, Official Receiver for the Bankruptcy District of the State of South Australia, for and on behalf of the Official Trustee, the Trustee of the property of the abovenamed bankrupt, hereby apply to the Registrar for an Order pursuant to Section 81 of the said Act, directing the issue of a summons to:-
The Public Officer of Olco Pty. Ltd, 135 Currie Street, Adelaide to attend before the Registrar on the 18th day of February 1988 at 10.30 o'clock in the forenoon, and so from day to day until excused from further attendance to have and produce in the above matter the files kept by Olco Pty. Ltd. in relation to the affairs of the bankrupt Klaus Felix Mueller and the Maxwell Group of Companies.
The specific files required to be produced are as follows:-
In relation to the bankrupt Klaus Felix Mueller
Pioneer Homes H832 68146 Will G1297 68811
In relation to Electrical Connection Pty. Ltd.
Harrison-Industrial Court Application J1005 67768 Video Copyright Opinion J1418 68652
In relation to Maxwell Group of Companies
Heritage Classification G659 64287 Workers Comp. Claim - Calides H497 66302 San Michelle Travel Pty. Ltd. H1275 67538 The Stable Restaurant J303 67539 Claim by Clarksons G1965 68140 One Tree Hill Water Agreement J131 68141 Lot 43 One Tree Hill - Easement J210 68142 The Electrical Connection Pty. Ltd. J540 68143 K. & P. Fund Pty. Ltd. Eject. Proceed J1027 68144 W.M. Beveridge G1438 68673 Kaye Electronics G1439 68674 The Electrical Connection - Criminal K194 69777 Purchase of Rocca Bros J432 70473 Construction Services & Mueller H1362 71784 Service Agreement - J.W. Alfred K21 71785 Electrical Connection Pty Ltd. Rental Agreement J1072 72332 J1431 72333 Video Hire Advice J1099 72334
In relation to Maxwell Road Investments Pty. Ltd.
Sale of Land to Faulkner F2019 64446 Sale of Land to Callahan F2006 64433 Sale of Lot 34 McGulp Road One Tree Hill J293 67317 Sale of Lot 38 " J17 67331 Sale of Lot 40 " J833 67541
These other files recorded on an index card heading "Robins"
Maxwell Road Investment Sale Lot 38 One Tree Hill 67331 Lot 39 One Tree Hill 66904 Mrs C.G. Mueller - Business Name 66967 K. & F. Land Services Pty. Ltd. - Change of Name 68157 Heiduk and Kryston Management Trust 68824 Heiduk and Robins - Amendment to Trust 68827 A. Heiduk - Deed Poll 61468 Maxwell Road Investment Pty. Ltd - Purchase of Land from Stain
Atlas Housing Group - Appointment New Trustees 62482 - Fire Control Pty. Ltd. 62483 Maxwell Road Investment - Purchase of further property 62487 Mueller - Morphett Street property 63286 Stable Restaurant 63291 Mueller - Purchase Morphett Street property 64414 Mueller - Rose Park property 64415 Kryston Nominees - Purchase of property 65074 Kryston Nominees - Sale of Property 65075 Kryston - Sale of unit (Gawler) 65443 Maxwell Investment - subdivision 65449 Mueller - Silver Lake Pools 65518 Mueller - Purchase of Fullarton Road, buildings 65522 Kryston Nominees - sale of units 66109
In addition to the files listed above you are required to produce all and any other files in your care and custody which relate to the affairs of the bankrupt Klaus Felix Mueller and or the Maxwell Group of Companies.
The grounds upon which this application is made are that:-
1. The abovenamed Klaus Felix Mueller became bankrupt on the 22nd day of June, 1987 on the petition of the Deputy Commissioner of Taxation. The Deputy Commissioner of Taxation has lodged proofs of debt in the estate for debts in excess of $3.1 million.
2. That in the course of my investigations into the bankrupt's affairs one Paul Desmond Tiesseire a solicitor was examined pursuant to the provisions of Section 81 of the Bankruptcy Act on 16th and 17th February, 1988. He deposed that he had formerly been a partner in the legal firm of Olssons and when he had left that firm in 1984 he had left a number of files relating to the bankrupt and the Maxwell Group of Companies in the care of custody of Olssons.
3. The Deputy Commissioner of Taxation has provided information to me that the files listed above relating to the bankrupt Klaus Felix Mueller and the Maxwell Group of Companies are in the custody of Olssons.
4. That Dean Richard Govan one of my officers has been informed by Ralph Barouch a solicitor employed at Olssons that the legal practice known as Olssons is an incorporated legal practice Olco Pty. Ltd.
5. On behalf of the Trustee of the estate I desire possession of those files to enable me to continue with my examination of the said Paul Desmond Tiesseire and to continue my investigations into the bankrupt's affairs to ascertain whether there are any assets which can be recovered for the benefit of the creditors pursuant to the provisions of the Bankruptcy Act, 1966.
DATED this 17th day of February 1988
Signed OFFICIAL RECEIVER
LET a Summons issue in terms of the application herein. DATED this 17 day of February 1988
Signed Peter Carey
REGISTRAR"
As the form of each of the summonses under consideration
and the circumstances in which each came to be issued are very different it is necessary to deal separately with the two applications and summonses.Dealing first with the provisions of the Act, s.81 is the relevant section and provides to the extent relevant -
"81(1). The Court or the Registrar may, on the application of a creditor who has proved his debt and on such terms as to costs as the Court or the Registrar thinks fit to impose, or on the application of the Official Receiver or the trustee, at any time summon -
(a) the bankrupt or the spouse of the bankrupt; or
(b) a person who is known or suspected to have in his possession any of the property of the bankrupt, or is supposed to be indebted to the bankrupt or to be able to give information concerning the bankrupt or his trade dealings, property or affairs,
to attend, on a date and at a time and place fixed in the summons, before the Court or the Registrar or, if the Court or the Registrar thinks fit, before a magistrate, to give evidence concerning, and produce any books (whether or not in existence at the time the bankrupt became a bankrupt) in his custody or power relating to, the bankrupt or his trade dealings, property or affairs.
81(2). An examination under this section shall be held in public.
81(3). The Court, the Registrar or a magistrate may at any time adjourn the examination of a person under this section either to a fixed date or generally, or conclude the examination.
81(4) to (17) ..."
Rule 129 sets out the procedure for obtaining the issue
of a summons. It provides -
"129(1) An application to the Court or to the Registrar for a summons under sub-section 50(2) or 81(1) of the Act shall set out the grounds on which the application is made and, except where the application is made by the trustee of the bankrupt to whom the application relates, shall be accompanied by an affidavit setting out the facts relied on by the applicant in support of his application.
129(2) A summons under sub-section 50(2) or 81(1) of the Act shall be in accordance with Form 49.
129(3) ..."
In the case of Mr. Teisseire he had earlier been
summonsed under s.81 to give evidence and produce certain correspondence. He did not seek to set aside this summons but attended and gave certain evidence over a period of 2 days. This summons was as follows:
"Bankruptcy Act, 1966
SUMMONS UNDER SECTION 81 OF THE BANKRUPTCY ACT
Bankruptcy District of the
State of South Australia No. 665 of 1987
Re: KLAUS FELIX MUELLER
The bankrupt
Ex Parte: The Official Receiver as trustee
To: PAUL DESMOND TEISSEIRE
of: 47 Waymouth Street, Adelaide, S.A. 5000
In pursuance of the power conferred on the Registrar by Section 81 of the Bankruptcy Act, 1966, the Registrar hereby summons you to appear before the Registrar at the Bankruptcy Courtroom, 9th Floor, Grenfell Centre, 25 Grenfell Street, Adelaide on the 10th day of FEBRUARY 1988 at 10.30 o'clock in the forenoon to give evidence concerning:-
(1) The formation of a group of companies known as the Maxwell Group of Companies.
(2) The transfer of assets valued at $10 million from the group of companies known as the Maxwell Group to a charity trust. The full details of the reasons why that trust was formed and the beneficiaries of that or those specific trusts.
(3) The conditions under which the assets of those trusts were to be held and the benefits to be derived from those trusts by the bankrupt.
(4) The purchase of a house property at 18 St. Tropez Terrace, Sorrento, Queensland, the provision of funds for the purchase of that house and reasons why it was to be bought by the bankrupt or by him as the trustee for some other entity.
(5) The details and circumstances of his appointment as alternate director of the bankrupt in a number of companies within the Maxwell Group of Companies.
(6) The creation of a trust to purchase the house property at 18 St. Tropez, Sorrento, Queensland.
(7) details and the reasons for the number of trusts that are within the Maxwell Group of companies or are controlled by companies in that group or as part of that group
and that you then and there have and produce copies of all correspondence sent by you to the bankrupt since the first day of January, 1977 concerning the matters referred to above.
DATED this 18th day of January, 1988.
Signed Peter Carey
REGISTRAR"
During the examination under this summons Mr. Teisseire was asked to produce certain documents or files which he had earlier collected from Messrs Olssons or Olco. These were the files upon which he had worked whilst a member of that firm. When questioned during his examination he stated, quite correctly, that he was only required under the summons to produce correspondence. He indicated, or alternatively his counsel indicated on his behalf, that he required a summons to produce the documents, upon receipt of which he would approach his clients for consent. There was also a possibility that a claim of privilege might be made. Each document was identified during his examination and he was asked whom he considered to be the client. The examination finished on the basis that a fresh summons would be issued requiring the production of the specified documents, and, it appears, on the basis that any further examination would be limited to that arising out of the documents. Whether the examination on the first summons was "concluded" in the terms of sub.s 81(3) by the Registrar is uncertain. Counsel for the applicants contended that it had been, and that no further summonses could be issued, at least for an oral examination. He could not however identify any authority or provision of the Act in support of this proposition, and I reject the submission.
In my opinion, the Registrar is entitled to take into account these surrounding circumstances when exercising his discretion whether to issue a fresh summons. It seems to me to be unreal to approach it otherwise. However it is essential in my view that the Official Receiver's application for the issue of the second summons should comply with the requirements of r.129. The application must in particular specify "the grounds upon which the application is made" and these grounds must be stated in the application. This statement must indicate that the person summonsed is likely to be able to give evidence or produce documents relating to the bankrupt his trade dealings property or affairs. In this regard I refer to Re Andrews (1958) 18 ABC 181, Re Csidei Ex parte Andrews (1979) 39 FLR 387 and Re Weiss Ex parte The Official Trustee (1983) 74 FLR 259. I referred in greater detail to these matters in my reasons for judgment in Re Ross Daniel Hodby Ex parte The Official Trustee an unreported decision the reasons for which were delivered on 11 March 1988.
In my opinion there has in the application for the summons directed to Mr. Teisseire been adequate compliance with r.129. Paragraph 2 of the application stated that in respect of matters which were particularly specified in the application the bankrupt had said during his examination under s.69 of the Act that Mr. Teisseire had been his solicitor and advisor in all of those matters and that he, Mr. Teisseire, would be able to provide information concerning and the reasons for the transactions and the advice given concerning the same. There were then set out the pages of the transcript of examination of the bankrupt wherein this evidence is to be found. In my opinion the requisite ground under para.81(1)(b) of the Act had been established, namely that it was open, to say the least, to "suspect" that Mr. Teisseire would "be able to give information concerning the bankrupt or his trade dealings, property or affairs". In my opinion this summons should not be set aside on the ground that the application therefor does not comply with the provisions of r.129.
There were a number of additional grounds on which it was contended that the summons directed to Mr. Teisseire should be set aside. There was, it was said, insufficient information before the Registrar to justify him exercising his discretion to issue the summons. This contention must be dismissed because in my view there was sufficient information in the application and, furthermore, the Registrar was entitled to take into account the matters of which he had gained knowledge in the course of Mr. Teisseire's earlier examination. It was also submitted that the summons was oppressive in that it was too widely drawn and was issued in circumstances where there were proceedings pending. Mr. Teisseire was named as a respondent in these proceedings as were the remaining applicants other than Olco Pty. Limited.
In my opinion the summons is not too widely drawn and the documents to be produced are specified with sufficient particularity. On this aspect I refer to and rely upon the judgments of the Court of Appeal in Re Westinghouse Electric Corporation (1977) 3 WLR 430 and the judgment of Smithers J. in Lucas Industries Ltd. v Hewitt and Others (1978) 18 ALR 556 and in particular 572 and thereafter. The principles upon which the Courts have acted in reviewing subpoenas are, in my opinion, equally applicable on this aspect to summonses under s.81 of the Act. I refer to the decision of Clyne J. in Re Robert Henry Andrews (1958) 18 ABC 181 and in particular the passages on page 188 and 189 when he adopted the words of Jordan C.J. in The Commissioner of Railways v Small (1938) 38 S.R. (N.S.W.) 564 at 573 in reference to the issue of a subpoena duces tecum.
The fact that there are proceedings pending is a matter to be taken into account in order to ensure that the issue of a summons is not in the circumstances both vexatious and oppressive. However the existence of such proceedings is not a bar to the issue of a summons and I refer to Re Hugh J. Roberts Pty. Ltd. (1970) 91 WN (N.S.W.) 537 at page 541 when Street J, as he then was, said:
"A similarity of approach in the bankruptcy jurisdiction is exemplified in Re Price (No.3) (1948) 14 ABC 137. At page 140 Clyne J. quoted from an earlier decision of Cave J. in Re Easton; Ex parte Davis (1891) 8 MORR. 168 at p 171, namely 'I admit that when the person seeking to interrogate is the official receiver or the trustee, it is no answer to say that an action is pending by the official receiver or trustee against the witness he is seeking to examine'."
In my opinion the original applicants have no standing to object to the examination of Mr. Teisseire on the ground that they are also respondents to the proceedings in which Mr. Teisseire is involved. I reject the contentions of their counsel on this score. Furthermore the relevant proceedings which name some 28 respondents in all, including Mr. Teisseire in his capacity as a director of one of the respondent companies have to date only proceeded to the stage of an application to the Official Receiver. Points of claim have been directed but as yet have not been filed. In my opinion, it is proper to allow the examination of Mr. Teisseire under this summons to proceed to enable the Official Receiver to gather information. It is not suggested that Mr. Teisseire is to be examined "simply for the purpose of destroying (his) credit" (See per Street J. in Re Hugh J. Roberts Pty. Ltd. supra at p 542).
I therefore dismiss the application to set aside the summons addressed to Mr. Teisseire.
I have more difficulty with the summons addressed to Olco. Counsel relied upon a number of grounds to support his contention that this summons should be set aside. I should mentioned that all of the specified documents have been lodged by Olco with the Court without prejudice to any application that the summons should be set aside. I will only mention some of counsel's contentions because in my view the application in this matter fails to comply with the requirements of r.129. Counsel for the Official Receiver sought leave to amend the application which I rejected. Whilst it may be permissible for me to amend, for the purpose of restricting, some of the requirements of a summons (See Lucas Industries Ltd. v Hewitt supra at page 575 to 577 and in particular the orders on the latter page) there is no ground upon which the Court can amend the application to the Registrar.
The application for issue of a summons directed to Olco which is set out above seeks the production of "the files kept by Olco Pty. Ltd. in relation to the affairs of the bankrupt Klaus Felix Mueller and the Maxwell Group of Companies". There follows a list of specific files required to be produced, only two of which appear on the face of the application to have reference to the bankrupt. A substantial number of additional files are specified which are stated to relate to Electrical Construction Pty. Ltd., Maxwell Group of Companies, Maxwell Road Investments Pty. Ltd., and other clients. The grounds upon which the issue of a summons is sought make no reference to any link or association between the bankrupt and the Maxwell Group of Companies and in particular, as required under the Act and Rules, how these files will or might assist in the gathering of information concerning "the bankrupt, his trade dealings, property, or affairs". As Neaves J. said in Re Weiss supra at p 266.
"But even if one accepts this approach, the matters stated in the first and second particulars provide no basis at all upon which the Deputy Registrar could properly suppose that the application might be able to give information concerning the bankrupt's dealings..."
In my opinion, the matters stated as the grounds of this
application "provide no basis at all" upon which the Registrar could "properly suppose" that the files, other than those which specify the bankrupt's name, relate to the bankrupt or his trade dealings, property or affairs as required by sub.s 81(1). As this amounts to a finding that there was insufficient material in the application to justify the issue of the summons I can not accede to the request of counsel for the Official Receiver to exercise my powers under s.306 or s.33 of the Act or r.195. On this ground the summons must be set aside.I mention only three other grounds of attack upon the summons issued to Olco. It was contended that the summons being directed to "The Public Officer of Olco Pty. Ltd." was directed to the wrong person, the Public Officer being a person whose appointment is prescribed only under the provisions of the Income Tax Assessment Act 1936, namely s.252 thereof. Certainly it can be said that such a person is unlikely to have in his custody the files on behalf of Olco. This is a matter in which I would consider it appropriate to amend the summons as Smithers J. amended the subpoena before him in Lucas Industries Ltd. case supra. In this regard I refer to the discussions of the topic by Lord Denning M.R. in Penn-Texas Corporation v Musat Austalt (No. 2) (1964) 2 QB 647 on p663. Adopting his approach the summons should be directed to the company requiring it by its proper officer to produce the documents.
It was also said that, even if the application was in order, the requirement for the production generally of files "kept by Olco Pty. Ltd. in relation to the affairs of the bankrupt Klaus Felix Mueller and the Maxwell Group of Companies" was oppressive as being too wide. I agree. A summons in this form would require production of files of the Maxwell Group of Companies whether or not such files relate to the bankrupt, his trade dealings or property. Should it have been necessary I would also have directed that the summons be amended to restrict its ambit in this regard.
A final matter upon which I would comment is the contention that because information concerning the existence of these files was obtained illegally by officers of the Taxation Department, it was vexatious and an abuse of process for a summons to be issued based on that information. There was evidence that the Commissioner's officers had attended at the office of Olco and the firm of Olssons and inspected the files. The question arises whether such an inspection was authorised under s.263 of the Income Tax Assessment Act 1936 as being for a purpose which was a purpose of the Act. Because this aspect was not argued in any depth and there was little evidence before me I am not prepared to express a concluded view. However as the Official Receiver's proceedings against the respondents are in part "prescribed proceedings" for the benefit of the Commissioner under s.22 of the Taxation (Unpaid Company Tax) Assessment Act 1982, ("the T.U.C.T. Act"), I am not at this stage persuaded that the action of the Commissioner was not for the purposes of the Income Tax Assessment Act. Sub-section 4(1) of the T.U.C.T. Act provides that Part VIII of the Income Tax Act applies for the purposes of collection of recoupment tax under the T.U.C.T. Act. Section 263 is in Part VIII. It may well be that the actions of the Commissioner's officers were authorised by s.263, the particular purpose thereof being the purposes of s.22 of the T.U.C.T. Act. It is not necessary for me to make any finding on this aspect.
On the ground that the application for issue of a summons to Olco does not in terms set out the grounds upon which it is made as required by r.129 I am of the opinion that it should be set aside and I so order. I order that the application to set aside the summons addressed to Mr. Teisseire be dismissed.
In all the circumstances it is appropriate that i make no order as to costs, each side having been in part successful.
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