Re The Estate of Hancock, Langley George (Deceased); Ex Parte

[1998] FCA 547

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 8429  of   1998

RE:

BETWEEN:

THE ESTATE OF LANGLEY GEORGE HANCOCK
(DECEASED)

THE ESTATE OF LANGLEY GEORGE HANCOCK
DEBTOR

EX PARTE:

HANCOCK PROSPECTING PTY LTD
(ACN 008 676 417)
CREDITOR

ROSEMARIE PORTEOUS
APPLICANT ON THE MOTION

HANCOCK PROSPECTING PTY LIMITED
RESPONDENT ON THE MOTION

JUDGE:

DAVIES J

DATE:

12 MAY 1998

PLACE:

SYDNEY

MINUTES OF ORDER

THE COURT ORDERS THAT:

1.        The motion be dismissed.

2.        Costs be reserved.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 8429 of 1997

RE:

BETWEEN:

THE ESTATE OF
LANGLEY GEORGE HANCOCK
(DECEASED)

THE ESTATE OF LANGLEY GEORGE HANCOCK
DEBTOR

EX PARTE:

HANCOCK PROSPECTING PTY LTD
(ACN 008 676 417)
CREDITOR

ROSEMARIE PORTEOUS
APPLICANT ON THE MOTION

HANCOCK PROSPECTING PTY LIMITED
RESPONDENT ON THE MOTION

JUDGE:	DAVIES J
DATE:	12 MAY 1998
PLACE:	SYDNEY

REASONS FOR JUDGMENT

This application seeks orders setting aside three subpoenas issued on 7 May 1998 to the Proper Officer of Hancock Prospecting Pty Limited and to Mrs Gina Rinehart and Mr Gary Richard Schwab, two of  the Executors of the estate of the late Langley George Hancock.

The application is brought on the basis that the subpoenas are an abuse of process.  They were issued on the request of Mrs Rose Porteous who has sought to be joined in a creditor's petition brought by Hancock Prospecting Pty Limited against the estate of the late Mr L.G. Hancock.   That matter is set down for hearing in early June.  I have not ruled upon the point as to whether Mrs Porteous has a sufficient interest to allow her to take any part in that proceeding.

However, Mrs Porteous has an application before the Court and she is a party to that application.  In terms it is, I think, an application for leave to be joined in the petition seeking administration in bankruptcy of the estate.  But it is more than that in substance.  The substance of the matter is that Mrs Porteous alleges that the creditor's petition is an abuse of the process of the Court and is brought in bad faith and for improper purposes and she wishes the petition to be dismissed on that ground.

Mrs Porteous is not in effect entering into a matter which would be discussed in the petition itself if it were a valid petition.  She is seeking to establish improper motive and an abuse of process.  It seems to me that, as a matter of substance, she is a party to that abuse of process proceeding and that the others, Hancock Prospecting Pty Limited and Mrs Rinehart and Mr Schwab are effectively respondents to her application to have the petition dismissed for abuse.

So it seems to me that Mrs Porteous is effectively a party to the proceedings for the purpose of which the subpoenas have been issued.  I therefore do not accept the submissions that were put to me that Mrs Porteous was not entitled to have the subpoenas issued because she was not a party.  

It was said that Mrs Porteous was not a party and she was only seeking to be heard in the petition, not to be joined as a party therein. However, that seems to me not to be the substance of the matter.  At this early stage in the proceedings, I have not given any real attention as to the correct way in which, if Mrs Porteous was successful, any orders ought to be expressed or any real attention as to the nature of her application.  But it does seem to me as a matter of substance that she is the applicant and the other parties are the respondents.

So then it comes down to the issue whether or not the documents now sought are being sought for a proper forensic purpose.  There is not before me any affidavit on the subject either for or against to say whether these documents are relevant or irrelevant.  All I have are the submissions put vigorously from both sides of the bar table, each putting forward a contrary view.  But I have heard counsel for Mrs Porteous and I do have his assurance that the subpoenas have been issued on his advice and that they were issued for the purposes of these proceedings which are coming on for hearing in June and for those proceedings alone.  I think that I should act on his assurance.

It seems to me, looking at these matters, that the subpoenas are directed to matters which are relevant to the proceedings sought to be brought.  The proceedings are being brought at the moment on allegations that the debt which is the subject of the creditor's petition arose from non-compliance with a call on partly paid shares in Hancock Prospecting Pty Limited, which had been originally held by Mr L.G. Hancock and were subsequently held by his estate.  Apparently, the sum of approximately $1 million was unpaid on the shares.  Counsel has informed me that the two directors of Hancock Prospecting Pty Limited, Mrs Rinehart and Mr Schwab - I am not sure whether they were the two directors, or whether they were two of the directors - participated in a decision to make a call and then, it is alleged, together and without the concurrence of the other Executor, they decided not to meet the call and the company then forfeited the shares and some of them were later purchased by Mrs Rinehart.

That is the substance of the matter and it is very vague at this stage, but counsel said that there are indications that there was not a shortage of cash in Hancock Prospecting Pty Limited which would have justified the making of the call and that there are indications that it was not made in good faith.

That is, I think, a general outline of the contentions.  It seems to me that the documents which are sought from the Executors all properly go to that matter, that is the financial statements and returns of Mr L.G. Hancock and the financial statements and returns of the estate for a number of years - 1991 onwards. It seems to me that, in general, the parties will wish to know the general financial position of Mr Hancock and of the estate.  Presently it also seems to me that, as this is a matter in which improper motive is alleged, the minutes of the Executors' meetings would be relevant. 

With respect to the company, the same sort of material is sought and I have no difficulty at all with items such as (b) which seek any issue agreements for the shares in Hancock Prospecting Pty Limited, (c) the register of members, (d) documents relating to calls on shareholders for the periods 1 July 1994 to 30 June 1996,  (e) documents relating to payments of capital on unpaid or partly paid shares, (f) matters concerning the financial position of the Hancock Group and  (g) documents relating to the value of Hancock Prospecting Pty Limited. 

All these matters seem to me to be in general of the nature that would be relevant and ought to be produced.  I think that the parties may look at some of the items that are very wide and seek much more than is actually wanted.  Item (i) seeks all books and documents relating to the cash position.  Obviously one would not want every relevant document relating to the cash position of Hancock Prospecting Pty Limited.  Nor would you want all possible documents relating to calls on shareholders, which is (d).  All that Mrs Porteous requires are documents relevant to these proceedings, whether there was a call, what calls they were and so on.  As to all proceedings minutes, etc, for Hancock Prospecting for the period 1 July 1994 to July 1997, again that seems to me to be very wide and I think what is needed are documents relating to the issues in this particular case. 

That does not seem to me to be at the moment to provide a reason why I should strike out the subpoenas, or try to limit them.  I think that, if the parties have problems with the items they should look at them and discuss the problem between themselves and come to some sensible compromise on the matter.

I will reserve the question of costs.  The motion itself will be dismissed.

I certify that this and the preceding three (3) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Davies

Associate:

Date:               12 May 1998

Counsel for the Creditor:   I.G. Harrison SC

Solicitors for the Creditor:  Corrs Chambers Westgarth

Counsel for the Applicant on the Motion:   J.W.K. Burnside QC      

Solicitors for the Applicant on the Motion:

Slater & Gordon

Counsel for the Executors:

S.J. Archer

Solicitors for the Executors:

Mony De Kerloy

Date of Hearing:

Date of Judgment:

12 May 1998

12 May 1998