Re Shields, Geoffrey Neil Keith & Anor Ex Parte Esanda Finance Corp Ltd

[1996] FCA 307

IN THE FEDERAL COURT OF AUSTRALIA     )
GENERAL DIVISION  )

BANKRUPTCY DISTRICT OF THE           )  No. NB 209 of 1992
STATE OF NEW SOUTH WALES                  )

RE:GEOFFREY NEIL KEITH SHIELDS and NORMA ROSE SHIELDS

Respondent

EX PARTE:ESANDA FINANCE CORP LIMITED

Applicant

CORAM:    HILL J
PLACE:    SYDNEY
DATED:    2 APRIL 1996

REASONS FOR JUDGMENT

On 6 March 1996 a Registrar of the Court issued a summons directed to the Public Officer of Esanda Finance Corporation Limited ("Esanda") requiring the production of various documents.  Esanda moves the Court to set aside the summons on the basis that it has been issued for an improper purpose.  Alternatively, it is said that the summons is in various respects too wide.

In support of this motion Esanda caused there to be read an affidavit of a Mr Baird, the solicitor for Esanda, in which Mr Baird reveals that Mr Isaac Shields, Mr Geoffrey Shields and Norma Rose Shields have objected to the Commercial Tribunal of New South Wales in respect of a renewal of Esanda's Credit Provider Licence No.1222.

The Notice of Objection refers, in para12, to the need to subpoena or cause the production of various documents numbered 1 to 11.  The documents 1 to 11 are the same documents as are referred to in paras1 to 11 of the summons, although it must be said that in addition the summons covers all documents in the custody or control of Esanda:

"... connected with Geoffrey Neil Keith Shields and Norma Rose Shields, one Allis Charmers Combine Harvester and one John Deere Loader (Tractor) and, in particular:

Hire Purchase Contract No 211879684

Hire Purchase Contract No 211350828

Credit Contract No 250150239".

I am asked to infer that the summons, which was issued at the instance of Mr Shields, has thus been issued for an improper purpose, namely, to provide material for use in the objection proceedings in the Commercial Tribunal of New South Wales.  In response, Mr Shields says that he does not want the material for that purpose at all.  Indeed, he is happy for documents to be produced to him on the basis that they are not to be used for the purposes of those proceedings.  He says that he wishes to obtain the documents and/or information in aid of the case he seeks to make in this Court, in proceedings brought against him by the Official Trustee in Bankruptcy.  In those proceedings it is sought, in effect, to set aside a bill of sale dated 29 May 1990 and a mortgage dated 19 October 1990, entered into between Isaac John McKay Shields and Dorothy Isobel Shields as mortgagees and Geoffrey Neil Keith Shields and Norma Rose Shields as mortgagors.  It is not, on the material before me, clear what issues will arise in these proceedings to set aside the respective securities.  Prima facie, those proceedings would be based upon ss120 or 121 of the Bankruptcy Act 1966 (Cth).

They are likely to raise the question of the good faith of Mr Isaac Shields and perhaps his brother in respect of the transaction and in particular whether, at the time each of the transactions was entered into, Mr Geoffrey Shields and Norma Rose Shields were insolvent.  It seems to me that, at least potentially, the documents sought or at least most of them could have some adjectival relevance to the proceedings brought by the trustee.

Whether the documents ultimately are relevant will of course need to be a matter decided by a judge at the time of proceedings if there is any attempt made to tender them.  It is clear to me that the summons in its present form is far too wide.  In particular, it must be limited to matters as at the date of the bill of sale or mortgage, as the case may be.  Certainly it cannot extend to matters thereafter.

In answer to a submission that Mr Shields could not challenge the existence of a debt or debts owing to Esanda by Geoffrey Neil Shields and Norma Rose Shields as at the time of a bankruptcy notice or subsequent petition, having regard to
the sequestration order, that may be right, but it does not prevent Mr Shields from looking at the position of a creditor/debtor relationship between Esanda and the Shields as at the time the transaction sought to be impugned was entered into.

I would accordingly not set aside the summons but direct that it be complied with subject to the following amendments which I would make to reduce the ambit of matters referred to in it:

(1)The policies in question should be limited to those insuring items of equipment, the subject of the hire purchase or credit contracts referred to in the summons effected by Esanda up to and including 19 October 1990;

(2)the liens required to be produced (not the Act as one reading of the item may suggest) should be limited to those extant or claimed to be extant as at either 29 May 1990 or 19 October 1990;

(3)items 3 and 4, which are concerned with mode of computation of interest, are to be limited to those rates and/or methods in use from the time the hire purchase or credit contracts commenced until 19 October 1990.

I certify that this and the
preceding three (3) pages
are a true copy of the Reasons
for Judgment herein of his Honour
Justice Hill.

Associate:

Date:  30 April 1996

Counsel and Solicitors      R C McDougall QC instructed by

for Applicant:              Sally Nash & Co

Mr Isaac Shields appeared with leave of the Court to represent the respondents.

Date of Hearing:            2 April 1996

Date Judgment Delivered:         2 April 1996