Re: Octaviar Administration Pty Ltd

[2010] QSC 486

[2010] QSC 486

SUPREME COURT OF QUEENSLAND

CIVIL JURISDICTION

FRYBERG J

No 12599 of 2010

RE: OCTAVIAR ADMINISTRATION PTY LTD (ACN 101 069 390)

BRISBANE

..DATE 09/12/2010

ORDER

HIS HONOUR:  I order that the summons issued on the 24th of November 2010 to the Proper Officer, Fortress Credit Corporation Australia II Pty Ltd, be discharged.  I order that the respondents other than Fortress Credit Corporation Australia II Pty Ltd be relieved of the obligation to comply with paragraph B of the summonses issued to them respectively on 24 November 2010.

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HIS HONOUR:  I order that Fortress Credit Corporation Australia II Pty Ltd be relieved of the obligation to comply with paragraph 4 of the order of Registrar Samios made herein on 24 November 2010.

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HIS HONOUR:  The application before me is substantially for an order discharging summonses issued to the three human applicants, pursuant to s 596B of the Corporations Act, requiring them to attend before the Magistrates Court at Brisbane on the 15th of December, to be examined about the examinable affairs of Octaviar Administration Pty Ltd in liquidation.  Those applicants live in Sydney. 

There is a fourth applicant - a company which I shall call Fortress for short - and I have already made an order relieving it of any obligation to produce documents in respect of that examination and discharging a summons issued to its proper officer. 

The summonses required the respondents to produce documents in addition to attending for examination and required that to be done not less than five days prior to the examination.  I have already made orders relieving the respondents of the obligation to comply with that part of the summonses.  It is, I think clear, that s 596D(2) permits a summons to require production at the examination, not before it. 

What remains is the question of the three individuals having to attend and answer questions at all.  The application was made one day late and the respondent liquidators’ initial opposition to an extension of time for making it has now been withdrawn.  I think it is appropriate to extend the time in the circumstances of this case. 

The applicants seek a further order that they have access to affidavits filed by the respondents in support of their application for the issue of the summonses.  It is convenient to defer that question until after the principal issue is resolved. 

The company into whose affairs the examination is to take place, was one of a group of companies, the major company of which was Octaviar Limited.  The company, Octaviar Administration Pty Ltd, acted as banker for all of the companies in the group.

At the time that those companies got into financial difficulties, there were over 70 companies in the group, but the evidence discloses that in an earlier time the number of companies in the group exceeded 400. 

The summonses have been issued to three people who were not directly involved in the company, but were involved with Fortress Credit Corporation Australia II Pty Ltd.  The applicants contend that the summonses are not issued in relation to the examinable affairs of Octaviar Administration and therefore are issued for a collateral purpose predominantly and a purpose which is not a purpose for which such summonses may lawfully be issued under the legislation.

They submit that the purpose for which the summonses are issued is to be inferred from the nature of the documents which were originally required to be produced.  Those documents, they submit, all relate - with one minor exception - to the affairs of Octaviar Limited, not the affairs of the company Octaviar Administration Pty Ltd.

They point also to the evidence that it is intended to bring proceedings against Fortress in respect of money identified in a draft statement of claim, which has been prepared on behalf of the respondents.  The applicants submit that the evident predominant purpose of the examination is to garner evidence for those proceedings, to cross-examine in relation to them or to destroy credibility and that this is not a permitted purpose within the meaning of the legislation.
They further submit that the matters to be the subject of cross-examination have already been the subject of cross-examination in other proceedings and that it is not functionally helpful for further cross-examination to be carried out and is oppressive to the applicants.

Finally they submit that oppression can also be inferred from the fact that the examination is to be conducted in Brisbane and the applicants will be required to travel to Brisbane from Sydney.  They point out in this context that there have been many examinations of other people carried out in Sydney, though I am not aware of whether that was by the present respondents.

The onus is on the applicants to demonstrate that the summonses should be discharged.  I am not satisfied that they do not relate to the examinable affairs of the company, nor am I satisfied that the respondents intend to use the occasion of the examination to deal only with matters which are not within the definition of the examinable affairs of the company.  It is unnecessary to set out that definition at length.  It is a very wide definition.  It amply covers the dealings between Octaviar Administration and Octaviar Limited and other parties, having regard to the operation of Administration as a banker for the group. 

There are a number of transactions specifically referred to in the evidence, which satisfy the requirements of the definition and in any event I see no reason to suppose that it is proposed to limit cross-examination to topics which can be inferred from the list of documents attached to the summons.  I would be surprised if in fact it were intended so to limit the cross-examination, for in effect that would mean that the whole of the subject matter of the cross-examination was telegraphed to the applicants.  That seems an unlikely thing for the respondents to have done. 

Nor do I think that the fact that the respondents contemplate bringing proceedings against Fortress supplies a reason for concluding that the predominant purpose which they have in carrying out the oral examination, is an unauthorised one.  There mere fact that there will be collateral proceedings does not invalid the examination and I see no reason to draw a conclusion to the contrary.  One of the liquidators has sworn that the examinations are not for the predominant purpose of conducting a dress rehearsal of cross-examination of the examinees, nor for the purpose of destroying their credibility.

There has been no attack by way of cross-examination of the liquidator on that testimony.  The liquidator has further deposed that a purpose for the examinations is to establish the date of insolvency of Octavia Administration.  That is, of course, a perfectly proper purpose and, indeed, I would have thought, an important one.

The applicants sought comfort from the fact that on Monday this week similar summons were issued to the same people in relation to the affairs of Octavia Limited and made returnable at the same time and place as those presently under challenge.

It is, I think, to be assumed that those summons were issued by way of insurance in case the summonses before me today were to be set aside.  It does not seem to me that I could infer from the existence of those summonses that there is any defect in those before me today.

I do not think the issuing of those summonses constitutes any form of admission by conduct.

It is true, as the applicants submit, that Octaviar Administration, the present Company, is not a party to any of the transactions which are referred to in the documents in the schedule to the summonses and to that extent it cannot be said that the affairs of Administration are involved.  However, it is not essential that Administration be a party to those transactions.

It is sufficient if the subject matter can relate to the affairs of Administration and that seems to me to be a very open possibility.  That is not to say that every question which may be asked at the examination will necessarily be allowed but that is a matter before the Magistrate who conducts the examination.

The authorities have emphasised the need for judges to avoid being pre-emptive in this context.
I do not think that the fact that two of the applicants have been cross-examined previously is a ground for inferring oppression or for inferring of the existence of an improper purpose.  They were not cross-examined by anyone acting on behalf of the liquidators and the proceedings in which they were cross-examined had a different purpose and a different focus.

While there may have been some overlap in the matters considered in those proceedings and the questions which may be asked at the examination I am unable on the evidence to conclude that it is of such an extent as to make the proceedings oppressive.

The transcript of the proceedings is not before me but I have no reason to suppose that the matters which the respondents wish to raise have been completely canvassed already by others.

The other matter which has arisen is the intervention of the liquidators of two other companies in the group, Messrs Moloney Gothard and Colwell.  They have a right as liquidators of those companies to become involved in the present proceedings because they are eligible applicants within the meaning of the Act.

As I have mentioned three days ago similar summonses were issued in relation to oral examinations in relation to Octaviar Limited.  The applicants submitted that this demonstrated the lack of need for the present proceedings. 

The interveners submitted that they would not be able to intervene in any examination conducted in relation to Octaviar Limited because they are not eligible applicants in relation to that company.

It is, I think, common ground that that is true and that they would therefore suffer prejudice unless they were to bring their own applications.  That is what they should do, submitted the applicants, however, it is not an attractive submission to make to urge the expenditure of further money and increasing the complexity of proceedings.

There is, therefore, some weight, although I do not think it is much, in Mr O'Sullivan's submission that this factor favours the allowing of the proceedings to go ahead.

In short, despite the able submissions of counsel on the behalf of the applicants I am not persuaded that this is a situation where the summonses should be set aside.  In my view it is appropriate to allow the examinations to proceed.  The Magistrate conducting the examinations can deal with any questions of irrelevancy or questioning beyond the scope of the hearing on their merits.

It would also be a matter for him to decide whether the hearing of the examinations in relation to Octaviar Limited and Octaviar Administration proceed concurrently.
In those circumstances I do not think I ought to make an order for the disclosure of the affidavit upon which the summonses were obtained.  The Act clearly has the purpose of preserving the affidavit from scrutiny, presumably, particularly, scrutiny by those to be examined.

The presumed intention is that they should not be warned in advance of the subject matter of the examination.  Views might differ about the desirability of such an approach.  It does leave the examinee potentially unable to answer matters which could be answered with a little research and it may lead to increased inaccuracy in the answers, understandable inaccuracy, but that seems to be the statutory policy and that is the approach which is being taken in the present case by the present respondents.

The applicants have not established that the summonses should be set aside and, in my judgment, it follows that they should not have access to the affidavits.

I have made some orders already, as I have said, on the application, to the extent that it remains alive, the balance of the application, save for the extension of time, should be dismissed.

There will be an order in accordance with paragraph 1 of the application, otherwise the balance of the application is dismissed.

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HIS HONOUR:  In my judgment the applicants have had a degree

of success.  They have, however also had a substantial degree

of non-success.  Their level of success is not such as to

persuade me that they should have all of their costs, but in

my judgment the appropriate order is that the respondents pay

half of the applicants' costs of the application to be

assessed.  I have not overlooked the fact that one of the

applicants succeeded completely and the other three partially,

but the applicant's costs have no doubt been unified whole and

justice is I think best served by dealing with the matter in a

holistic way.

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HIS HONOUR:  I order that the respondents pay half the

applicants' costs of the application to be assessed.

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