Robert Michael Kirman and William James Harris Joint and Several Liquidators of GH1 Pty Ltd (Receivers and Managers Appointed) (in Liq) v Bazzo
[2019] WASC 45
•1 MARCH 2019
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: ROBERT MICHAEL KIRMAN AND WILLIAM JAMES HARRIS JOINT AND SEVERAL LIQUIDATORS OF GH1 PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (IN LIQ) -v- BAZZO [2019] WASC 45
CORAM: KENNETH MARTIN J
HEARD: 30 JANUARY 2019 AND BY SUBSEQUENT WRITTEN SUBMISSIONS OF 6 AND 13 FEBRUARY 2019
DELIVERED : 1 MARCH 2019
FILE NO/S: COR 104 of 2018
MATTER: GH1 PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (IN LIQ)
BETWEEN: ROBERT MICHAEL KIRMAN AND WILLIAM JAMES HARRIS JOINT AND SEVERAL LIQUIDATORS OF GH1 PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (IN LIQ)
Plaintiff
AND
TINA MICHELLE BAZZO
Examinee
FILE NO/S: COR 111 of 2018
MATTER: ACN 142 745 337 PTY LTD (IN LIQ)
BETWEEN: ROBERT MICHAEL KIRMAN AS LIQUIDATOR OF ACN 142 745 337 PTY LTD (IN LIQ)
Plaintiff
AND
ALLENCARATTI
Examinee
Catchwords:
Companies - Corporations Act 2001 s 596A - Liquidator's examination - Application for private examination - Asserted risks arising out of abrogation of privilege against self-incrimination - Discretionary power of presiding judicial officer protects privilege against self-incrimination - No pending criminal charges against examinees - No special circumstances - Appeal dismissed
Legislation:
Companies (New South Wales) Code 1982 (NSW)
Corporations Act 2001 (Cth)
Crimes Act 1914 (Cth)
Crimes Act 1958 (Vic)
Result:
Appeal dismissed
Category: B
Representation:
COR 104 of 2018
Counsel:
| Plaintiff | : | Mr S Vandongen SC & Mr J E Scovell |
| Examinee | : | Mr P Bruckner |
Solicitors:
| Plaintiff | : | HWL Ebsworth Lawyers |
| Examinee | : | Alan Rumsley Commercial Disputes Lawyer |
COR 111 of 2018
Counsel:
| Plaintiff | : | Mr J E Scovell |
| Examinee | : | Mr P Bruckner |
Solicitors:
| Plaintiff | : | HWL Ebsworth Lawyers |
| Examinee | : | Alan Rumsley Commercial Disputes Lawyer |
Case(s) referred to in decision(s):
Albarran (Liquidator) v Rankin, in the matter of Hartford Investments Pty Ltd [2018] FCA 2111
Barton v Official Receiver [1986] HCA 44; (1977) 13 ALR 293
Caratti v Commissioner of the Australian Federal Police (No 2) [2016] FCA 1132
Caratti v Commissioner of the Australian Federal Police [2017] FCAFC 177
Caratti v Commissioner of the Australian Federal Police [2018] HCATrans 2017
Clarecastle Pty Ltd (in liq) [2011] NSWSC 490
Courtenay House Capital Trading Group Pty Ltd (in liq) [2018] NSWSC 604
Friedrich v Herald and Weekly Times Ltd [1990] VR 995
Hamilton v Oades [1989] HCA 21; (1989) 166 CLR 486
Kimberley Diamond Company Ltd [2016] NSWSC 1963
Lee v New South Wales Crime Commission [2013] HCA 39; (2013) 251 CLR 196
Lee v The Queen [2014] HCA 20; (2014) 253 CLR 455
Mortimer v Brown (1970) 122 CLR 493
R v Seller [2013] NSWCCA 42; (2013) 273 FLR 155
R v Seller; R v McCarthy [2015] NSWCCA 76; (2015) 89 NSWLR 155
Rees v Kratzmann [1965] HCA 49; (1965) 114 CLR 63
X7 v Australian Crime Commission [2013] HCA 29; (2013) 248 CLR 92
KENNETH MARTIN J:
The appeal in COR 104 of 2018 and the application in COR 111 of 2018 pursue similar relief in respect of two persons (Ms Tina Michelle Bazzo in COR 104 of 2018 and Mr Allen Bruce Caratti in COR 111 of 2018 - together 'the examinees') who are the subject of applications by the respective plaintiffs (the liquidators) for the examinees to be examined pursuant to s 596A of the Corporations Act 2001 (Cth).
COR 104 of 2018 - Ms Bazzo's appeal
The relevant examinee in COR 104 of 2018 is Ms Bazzo. Ms Bazzo was the sole director and sole company secretary of GH1 Pty Ltd, which was formerly known an Gucce Holdings Pty Ltd.
Orders were made for Ms Bazzo's examination by an Acting Registrar of this court.
Pursuant to s 597(4) of the Corporations Act, Ms Bazzo's examination, absent special circumstances, is to be conducted in public.
The present appeal, which is a rehearing de novo against the Acting Registrar's orders (made concerning a public examination of Ms Bazzo) does not seek to inhibit her examination. Rather, the appeal seeks to obtain orders analogous to those made by Ward J (as her Honour then was) in Clarecastle Pty Ltd (in liq) [2011] NSWSC 490 [87] seeking essentially for Ms Bazzo's examination to be conducted in private. Additionally, orders are further sought for the transcript of Ms Bazzo's examination to be kept confidential and not disclosed or published to any person without the leave of the court and for orders that the transcript of Ms Bazzo's examination not be required to be authenticated by being signed by her by the requirements of s 597(13) of the Corporations Act.
Under the notice of appeal filed on behalf of Ms Bazzo seeking that relief it is said that the orders are sought on the basis of preventing a real risk to 'the integrity and fairness of a trial in light of the accusatorial process'.
Ms Bazzo's appeal is supported by two affidavits sworn by her lawyer on record, Mr Alan Phillip Rumsley. The first affidavit of 7 November 2018 is of some 306 pages, followed by his subsequent affidavit of 29 November 2018 of some 96 pages. They were both uncontroversially read as the only evidence relied upon in the appeal.
The relief sought by Ms Bazzo is opposed by the liquidators.
COR 111 of 2018 - Mr Caratti's application
The appeal in COR 104 of 2018 was heard at the same time as the application made on behalf of Mr Caratti (Ms Bazzo's long-term de facto partner) in COR 111 of 2018. Within this further action the liquidator of ACN 142 745 337 Pty Ltd seeks to examine Mr Caratti pursuant to s 596A of the Corporations Act.
In contradistinction to the appeal proceeding concerning Ms Bazzo, no orders have yet been made concerning Mr Caratti's examination given the pendency of a cross‑application made on his behalf seeking that Mr Caratti's examination be conducted in private upon the basis of similar correlative orders to those as are pursued by Ms Bazzo on her appeal.
The same evidence as in COR 104 of 2018 was relied upon as the evidence in COR 111 of 2018, namely, the two affidavits of Mr Rumsley. I should add that there was no challenge to any of that evidence raised by the liquidators in either matter.
On 4 October 2018, Vaughan J issued orders that Ms Bazzo's appeal and Mr Caratti's application be heard together. Consequential orders were made for the exchanges of materials on all sides for the purposes of the joint hearing of both matters before me on 30 January 2019.
Some uncontroversial matters.
There are a number of matters I should make clear at the outset. First, neither Ms Bazzo nor Mr Caratti seek to resist their examinations under s 596A of the Corporations Act as sought by the liquidators. Rather, the limited relief sought both on the appeal and on Mr Caratti's application is for their examinations to be conducted privately rather than in public (and with the accompanying confidentiality related orders I have related).
Second, there is no dispute that pursuant to the text of s 597(4) of the Corporations Act it is necessary for Ms Bazzo and Mr Caratti to show 'special circumstances' for the court to be satisfied that their examinations should not be conducted publicly.
Third, in order to obtain a private examination, the terms of s 597(4) render it explicit that 'special circumstances' first need to be demonstrated. That term is not defined in the legislation but there is a suggestion in some cases that a pendency of related criminal charges, depending upon the circumstances, can constitute special circumstances - albeit it is also clear that the term 'special circumstances' is not confined to the realm of potential intersections with the criminal law.
Fourth, the fact that Ms Bazzo and Mr Caratti do not contest orders that they be examined pursuant to s 596A distinguishes their positions from numerous prior decided cases where putative examinees have sought a stay, deferral or adjournment of their examination - for reasons such as a pendency of criminal proceedings against them said to give rise to intersecting or overlapping issues with the subject matter of the proposed liquidators' examination. Many of the leading cases concern applications by accused persons contemporaneously facing pending criminal charges and seeking relief in the nature of a stay or deferral of the liquidators' examination. This is not such a case.
Fifth, there are no relevantly pending criminal charges against Ms Bazzo or Mr Caratti. In terms of a case precedent, I was not referred to, and my independent research has not unearthed, any prior decision concerning a liquidator's examination of a director where a proposed examinee who was not facing criminal charges has been successful in obtaining a curial order for their liquidator's examination to be conducted privately, rather than in public.
Sixth, the present applications are both advanced on the basis it is not put or contended on behalf of Ms Bazzo or Mr Caratti that in seeking to proceed and conduct a public liquidators' examination that the liquidators are seeking to act for an improper purpose. No extraneous or sinister purpose is suggested as motivating the forthcoming liquidators' examinations. Furthermore, as clarified at the hearing of the application, nothing at all is sought to be made of the fact that the liquidators are funded by the Australian Taxation Office. Nothing is said to turn upon that creditor funding issue whatsoever.
Some pertinent case authority concerning liquidator's examinations
A great number of cases were discussed and canvassed on the present application. But only two addressed the factual circumstance of where a s 596A examinee (or an examinee under the equivalent prior provisions of the former Corporations Law or State Companies Codes) was not a person who was also then facing pending criminal charges related to or connected with the subject matter of the liquidator's examination. I turn to examine both.
The first case is a decision of Brereton J in Kimberley Diamond Company Ltd [2016] NSWSC 1963, where there were two applicants then seeking that their examinations be held in private, a Mr Alexandre Alexander, who was facing criminal charges, and another director of the corporation in liquidation, a Mr Rodney Sainty, who was not. A substantial component of Brereton J's reasons address the position of Mr Alexander. Ultimately, an order was made for his examination to be conducted in private.
However, as regards the other director not facing criminal charges, Mr Sainty, Brereton J said only at [22]:
So far as Mr Sainty is concerned, however, there is simply no evidence to establish special circumstances. The fact that he is a director of a company, about which there has been an investigation, is not special in any way.
The application for Mr Sainty's examination to be held in private was dismissed: see [23].
The other decision was delivered in the equity division of the New South Wales Supreme Court: see Courtenay House Capital Trading Group Pty Ltd (in liq) [2018] NSWSC 604. This is a decision of Leeming JA, made whilst sitting in that division, delivered on 4 May 2018. The proposed examinee, a Mr Tony Iervasi, was seeking orders that his liquidator's examination be conducted in private, plus further orders concerning the non-publication and suppression of the transcript - akin again, to the type of orders made by Ward J in Clarecastle Pty Ltd (in liq).
Although there was no evidence before Leeming JA to the effect that criminal charges were imminent against Mr Iervasi, his Honour was prepared to proceed upon the basis that it was inevitable that Mr Iervasi would likely be charged (see [10] and [28]). His Honour noted, however, that to date Mr Iervasi had not then been charged and that any prosecution was likely to be months, if not years, in the future: see [28].
In the course of Leeming JA's reasons, his Honour assessed and explained earlier reasons of the Full Court of Victoria in Friedrich v Herald and Weekly TimesLtd [1990] VR 995. In that case, Mr Friedrich had been facing charges under the Crimes Act 1958 (Vic) including obtaining financial advantage by deception and later, a further 91 counts against s 81(1) of the Crimes Act of obtaining property by deception - all serious charges carrying either five or ten year terms of imprisonment and involving amounts of money totalling about $244 million.
Even so, Mr Friedrich was unsuccessful in obtaining an order that his liquidator's examination be held in private, leading Leeming JA to observe that Mr Friedrich's unsuccessful attempt to obtain a private examination was a far stronger case than that of Mr Iervasi. He observed that by contrast, Mr Iervasi (at [19]):
(a)had not been charged;
(b)might not face charges for some substantial period of time; and
(c)if charged, and in the event of the need for a trial, would face a period of further delay before any trial could take place.
Consequently, the application for Mr Iervasi's examination to be conducted in private was dismissed by Leeming JA.
'Operation Callabus'
Ms Bazzo and Mr Caratti point me here to a large scale joint investigation being conducted against them by the Australian Federal Police with the Australian Tax Office, which has been running since 2008. The investigation has seen a number of search warrants issued. But their execution has given rise to significant litigation already, in particular, see Caratti v Commissioner of the Australian Federal Police (No 2) [2016] FCA 1132 (the first instance decision concerning a challenge to the search warrants by Mr Caratti by Wigney J), Caratti v Commissioner of the Australian Federal Police [2017] FCAFC 177 (the subsequent decision by the Full Federal Court), an unsuccessful leave application with the High Court of Australia and Caratti v Commissioner of the Australian Federal Police [2018] HCATrans 2017 (a show cause application made in the original jurisdiction of the High Court of Australia which was dismissed by Gordon J on 10 October 2018).
The sheer scale and duration of this ongoing investigation undertaken by the Australian Federal Police, assisted by the Australian Taxation Office, is the subject matter of the materials within Mr Rumsley's affidavits - all of which may be uncontroversially accepted.
Like Leeming JA in Courtenay House Capital Trading Group Pty Ltd (in liq), I am prepared to evaluate both these matters on the basis that there is a strong likelihood, at some presently uncertain future time, that both Ms Bazzo and Mr Caratti will face significant criminal charges arising out of the financial and trading affairs of the many corporations with which they are associated - including the financial affairs of the two corporations whose liquidators make the present examination applications.
I also accept there is potential for some intersection as between the subject areas of the proposed examinations by the liquidators with whatever future serious criminal charges might eventually be preferred against Ms Bazzo and Mr Caratti (for the purpose of evaluating the present private examination applications).
Adverse publicity not a consideration
In a major contradistinction to many of the case authorities which are abundant in this area (such as the application of Mr Friedrich in Friedrich v Herald and Weekly Times Ltd, or by Mr Iervasi in Courtenay House Capital Trading Group Pty Ltd), both Ms Bazzo and Mr Caratti fully eschew any reliance on the phenomenon of perceived widespread adverse pre‑trial criminal publicity as a factor constituting a special circumstance to meet the threshold requirement for obtaining a private examination order pursuant to s 597(4). To that extent, they rely on different features to distinguish the prior case authority.
Here, and as clarified in counsel's reply submissions, the examinees only seek to show special circumstances by reference to the asserted 'risk of prejudice to a future prosecution brought against these examinees'. That submission of their counsel, Mr Bruckner, is made effectively, by analogy, to a position said to exist as if serious related criminal charges were pending against these examinees with the present situation said to be directly analogous - albeit there are, in fact, presently no criminal charges pending against Ms Bazzo and Mr Caratti.
Support for the present position for Ms Bazzo and Mr Caratti to be accepted as special circumstances under s 597(4) is sought to be derived from a series of recent cases in the High Court of Australia (and in intermediate courts) concerning what is referred to as the 'accusatorial process' in the criminal justice system. It is said that this court, either by issuing directions under s 596F, s 597(5B), or even if necessary using the court's inherent powers to regulate the conduct of its processes to avoid injustices - should order that private examinations are necessary here. To that end, it is also put for the examinees that what is the express abrogation by the legislature of the so-called 'right to silence' for an examinee by s 597(12) and the only limited (direct use) protection then provided following the removal of the privilege against self‑incrimination by s 597(12A), are highly relevant factors supporting the required protection that would be afforded by a private, rather than a public, liquidators' examination.
To assist an understanding of the present appeal and application arguments, I will need to collect the relevant contemporary provisions of the Corporations Act.
I should also record that both the appeal and the application were argued on the basis that the text of these contemporary statutory provisions is not materially different to the legislative provisions discussed in the earlier cases, particularly, say, the provisions of the Companies (New South Wales) Code 1982 (NSW), as were considered by the High Court of Australia in what is still the leading authority in this field, Hamilton v Oades [1989] HCA 21; (1989) 166 CLR 486.
Relevant provisions of the Corporations Act
Power to order an examination of a director is found in the following relevant provisions of the Corporations Act. Section 596A states:
The Court is to summon a person for examination about a corporation's examinable affairs if:
(a)an eligible applicant applies for the summons; and
(b)...
By reference to s 9 of the Corporations Act the respective liquidators upon the present matters, meet subpar (b) of the definition of an 'eligible applicant'.
Section 596B states:
(1)The Court may summon a person for examination about a corporation's examinable affairs if:
(a)an eligible applicant applies for the summons; and
(b)the Court is satisfied that the person:
(i)has taken part or been concerned in examinable affairs of the corporation and has been, or may have been, guilty of misconduct in relation to the corporation; or
(ii)may be able to give information about examinable affairs of the corporation.
Next, I refer to s 596F, which provides that the court may give directions about examination. Relevantly, s 596F(1) states:
Subject to section 597, the Court may at any time give one or more of the following:
(a)a direction about the matters to be inquired into at an examination;
(b)...
(c)a direction about who may be present at an examination while it is being held in private;
(d)a direction that a person be excluded from an examination, even while it is being held in public;
(e)a direction about access to records of the examination;
(f)a direction prohibiting publication or communication of information about the examination (including questions asked, and answers given, at the examination);
(g)...
Section 596F(2) states:
The Court may give a direction under paragraph 1(e), (f) or (g) in relation to all or part of an examination even if the examination, or that part, was held in public.
Section 597(4) states:
An examination is to be held in public except to such extent (if any) as the Court considers that, by reason of special circumstances, it is desirable to hold the examination in private.
Section 597(5A) states:
Any of the following may take part in an examination:
(a)ASIC;
(b)any other eligible applicant in relation to the corporation;
and for that purpose may be represented by a lawyer or by an agent authorised in writing for the purpose.
Section 597(5B) states:
The Court may put, or allow to be put, to a person being examined such questions as the corporation or any of its examinable affairs as the court thinks appropriate.
Section 597(7) states:
A person who attends before the Court for examination must not:
(a)...
(b)without reasonable excuse, refuse or fail to answer a question that the Court directs him or her to answer; or
(c)...
(d)...
Section 597(12) states:
A person is not excused from answering a question put to the person at an examination on the ground that the answer might tend to incriminate the person or make the person liable to a penalty.
Section 597(12A) states:
Where:
(a)before answering a question put to a person (other than a body corporate) at an examination, the person claims that the answer might tend to incriminate the person or make the person liable to a penalty; and
(b)the answer might in fact tend to incriminate the person or make the person so liable;
the answer is not admissible in evidence against the person in:
(c)a criminal proceeding; or
(d)a proceeding for the imposition of a penalty;
other than a proceeding under this section, or any other proceeding in respect of the falsity of the answer.
Section 597(13) states:
The Court may order the questions put to a person and the answers given by him or her at an examination to be recorded in writing and may require him or her to sign that written record.
Section 597(14) states:
Subject to subsection (12A), any written record of an examination so signed by a person, or any transcript of an examination of a person that is authenticated as provided by the rules, may be used in evidence in any legal proceedings against the person.
Section 597(14A) states:
A written record made under subsection (13):
(a)is to be open for inspection, without fee, by:
(i)the person who applied for the examination; or
(ii)an officer of the corporation; or
(iii)a creditor of the corporation; and
(b)is open for inspection by anyone else on paying the prescribed fee.
Section 597(17) states:
The Court or another court before which an examination under this Division takes place may, if it thinks fit, adjourn the examination from time to time.
The s 597(4) 'special circumstances' submissions of Ms Bazzo and Mr Caratti seeking their private, rather than public, examinations
From both examinees, I received common written submissions and reply written submissions of 7 November 2018 and 22 January 2019, respectively. These are comprehensive documents. As I have indicated, heavy reference is made therein to the pending joint investigation by the Australian Federal Police and the Australian Tax Office, as was explained in the search warrant challenged reasons at first instance by Wigney J in Caratti v Commissioner of the Australian Federal Police (No 2).
Paragraph 17 of his Honour's reasons read:
The 'mission' of Operation Caballus was said to include the investigation and prosecution of offences alleged to have been committed by members of the so-called 'Caratti Group', including Mr Caratti, Ms Bazzo and companies allegedly associated with them. Those offences were said to include forgery, contrary to s 145.1 of the Criminal Code Act 1995 (Cth), and fraud upon the ATO, contrary to various provisions in Part 7.3 of the Criminal Code. The AFP's 'primary focus' was to lead the investigation and prosecution of any Criminal Code offences. The ATO's primary focus was to support the investigation and prosecution of those offences. It was specifically envisaged that the AFP would apply for and execute search warrants with 'support' from the ATO ...
A significant component of the examinees' written submissions of 7 November 2018 explains, by way of background, the progression of litigation surrounding challenges to the search warrants obtained in January 2015 by a member of the Australian Federal Police pursuant to s 3E of the Crimes Act 1914 (Cth) in respect of five premises and two motor vehicles located in Western Australia: see par 12 of the examinees' written submissions. The submissions also explain the effective non-inspection period of the seized documents as a hiatus, as regards accessing the seized documents produced under the challenged search warrants - which prevailed until 10 October 2018 - when Gordon J finally dismissed the show cause application brought in the original jurisdiction of the High Court - challenging further, but ultimately unsuccessfully, the decision of the Full Court of the Federal Court of Australia: see pars 16 - 22 of the examinees' written submissions.
The first tranche of written submissions of the examinees puts a heavy reliance upon a series of recent decisions in the High Court of Australia and by the Court of Appeal of New South Wales, namely, Lee v New South Wales Crime Commission [2013] HCA 39; (2013) 251 CLR 196, R v Seller [2013] NSWCCA 42; (2013) 273 FLR 155, Lee v The Queen [2014] HCA 20; (2014) 253 CLR 455, X7 v Australian Crime Commission [2013] HCA 29; (2013) 248 CLR 92 and R v Seller; R v McCarthy [2015] NSWCCA 76; (2015) 89 NSWLR 155. These recent decisions support the primacy of the Australian criminal justice process and rights under a so-called accusatorial process. It was submitted that a risk of prejudice requiring protection included an assisted understanding of background, referring to R v Seller; R v McCarthy at [119] - [120] and [122] - 123] (Bathurst CJ, Fullerton & Bellew JJ agreeing).
As regards Operation Caballus, these submissions say that Ms Bazzo and Mr Caratti have been specifically named as the targets of that operation. Operation Caballus has included around 100 officers in execution of search warrants. Further, association as between entities, including who controls or makes decisions, is potentially relevant to the criminal investigation, and the dealings the subject of part of the investigation which led to the search warrants traverse a period of more than a decade.
The written submissions do not explicitly identify the special circumstances said to prevail for the purposes of meeting s 597(4).
The liquidators' submissions contending for the public examinations of Ms Bazzo and Mr Caratti
Given the examinees' first tranche written submissions did not expressly nominate the special circumstances relied upon to potentially meet the threshold of s 597(4), that led the liquidators at par 18 of their written submissions to attempt to distil the essence of the examinees' arguments to five propositions - which they then attacked. The five extracted propositions were:
(a)the court has the power to control and supervise an examination and that in accordance with Hamilton v Oades, those supervision powers include giving protections to the witness against self‑incrimination;
(b)the court, when making directions pursuant to the legislation, must consider the purpose and object of the legislation and balance them with the private interests of the examinee;
(c)pursuant to Hamilton v Oades the pendency of a charge may prejudice a criminal trial and may satisfy the requirements of special circumstances and warrant a private examination;
(d)by virtue of executed search warrants and a joint agency criminal investigation between the Australian Tax Office and the Australian Federal Police there are 'special circumstances' such that they should be examined in private; and
(e)it would be prejudicial to require charges to have been laid where there is the potential for charges to be laid following an examination.
Against the suggested force of these propositions, the liquidators' written submissions first pointed out that the liquidators did not need to establish any prejudice. It was said the position requiring public examinations, prima facie, via the clear text of s 597(4), ought to prevail. If an examination were to be conducted in private, evidence by the examinees which might lead to a train of inquiry for the production of further documents from third parties would not be able to be used in support of an application for such orders. This would, it was said, thwart one of the primary policy aims of a liquidator's examination, namely, to provide the liquidators with information regarding the affairs of an insolvent corporation.
Second, the liquidators point out that, under a confidentiality regime as is proposed by the examinees, the evidence given by the examinees could not be used for the purposes of seeking and obtaining funding for recovery actions ultimately for the benefit of creditors. In the context of a liquidation where there is no or little cash otherwise available, this position would inhibit recourse to third party funders, thereby affecting the ability to conduct further investigations and ultimately to recover funds and so, to provide a return to creditors.
Third, it was pointed out by the liquidators that evidence given by the examinees may itself indicate that there are other persons who should be examined. If the examinations were to be conducted in private under the proposed regime, the liquidators could not utilise the transcript in order to seek orders against persons pursuant to s 596B of the Corporations Act, thereby thwarting what is another primary purpose of the examination process.
Reply submissions by Ms Bazzo and Mr Caratti
In their written reply submissions of 22 January 2019, Ms Bazzo and Mr Caratti reiterate again the paramount importance of the accusatorial process in the context of the criminal justice system -pointing out that the accusatorial process commences pre‑charge. To that end, reference was made to observations in X7 v Australian Crime Commission at [54] by French CJ and Crennan J to the effect that it is not possible to reconcile a fair trial with reliance on evidence derived from compulsorily acquired material establishing the accused person's guilt, or by disclosing their defences.
Further it was submitted that prejudice may result from an indirect or derivative use of information obtained from a liquidator's examination. The examinees draw my attention to a recent decision of a judicial Registrar of the Federal Court, namely, Registrar Chuan Ng (see file number NSD2192/2017) and to the further orders on appeal from that decision to Jagot J on the appeal in the matter of Albarran (Liquidator) v Rankin, in the matter of Hartford Investments Pty Ltd [2018] FCA 2111.
In that matter, however, there were obviously some pending criminal proceedings as regards that examinee, a Mr Dev Menon. In the end, the Federal Court ordered that Mr Menon sign a copy of a redacted transcript of his examination, with the transcript (as redacted) made available to members of the public. Further consequential orders were issued by Jagot J.
The unique position of bankruptcy and liquidator's examinations
The discrete jurisprudence associated with the examination of bankrupts by their trustee of a liquidator's examination constitutes a unique sui generis area in the law. This was explained by Kiefel J (as her Honour then was) in Lee v New South Wales Crime Commission [2013] HCA 39; (2013) 251 CLR 196: see [241] - [252].
At [249] her Honour referred to a trilogy of decisions in this area that cannot be readily reconciled with the position of the High Court taken towards fundamental principle operating within the system of criminal justice. Her Honour referred to this as an 'historical anomaly, as the majority in X7 held', referring to X7 v Australian Crime Commission at [140] and [161].
In X7 v Australian Crime Commission Hayne and Bell JJ at [140], had said:
Each of Hamilton v Oades and the earlier decisions in Rees v Kratzmann and Mortimer v Brown emphasised the fact that the compulsory examinations would be conducted in court and that, accordingly, the court would retain the power to prevent abuse of its process. In each decision, however, this Court rejected the submission that examination on matters which otherwise might attract privilege against self‑incrimination would, without more, amount to an abuse of process. But all three decisions, including, in particular, Hamilton v Oades, necessarily depended on the historical pedigree of the legislation being constructed. That is, each of those decisions answered particular questions about the construction of the relevant statute in light of the fact that the legislature had, for very many years, made special exceptions to the otherwise accusatorial process of the criminal law in respect of bankruptcy and companies examinations.
Kiefel J's observations at [161] in X7 v Australian Crime Commission then contrast that trilogy of cases as being:
... understood as the result of an historical anomaly, commencing with the divergent view taken by the Chancery Court from that of the common law and continuing through the series of legislation which preceded that dealt with in those cases.
Hamilton v Oades: some further aspects
Towards my end conclusions, I would first draw attention to observations of Mason CJ in Hamilton v Oades, where the Chief Justice in turn considered earlier observations by Windeyer J in Rees v Kratzmann [1965] HCA 49; (1965) 114 CLR 63, 80, in terms:
The honest conduct of the affairs of companies is a matter of great public concern today. If the legislature thinks that in this field the public interest overcomes some of the common law's traditional consideration for the individual, then effect must be given to the statute which embodies this policy.
Appropriate as those words were, first, in 1965 and then again in 1989, they have lost none of their force and relevance in 2019.
After referring to Mortimer v Brown (1970) 122 CLR 493, where the court identified what was an illustration of a statutory abrogation of privilege by necessary implication, Mason CJ then observed upon what was (then) the express abrogation of the privilege against self-incrimination by s 541 of the Companies (New South Wales) Code. Mason CJ noted the statutory provision explicitly empowered a court to give directions concerning the examination and that such powers were designed to reduce any element of unfairness to the witness that may result from the abrogation of the privilege against self‑incrimination: see page 496.
As to the importance of an examination itself being conducted in public, Mason CJ said that Parliament had made its legislative judgment that immunity from derivative use was not required and the legislature had given only a limited specific protection against the possible consequences of direct use in evidence of the answers of the witness, thereby guarding against the possibility that the witness would convict himself out of his own mouth - the principal matter to which the privilege was directed. Mason CJ then said at page 496:
Thus the legislative resolution of the competition between public and private interest is to provide for a compulsory examination and to give specific protection in relation to the principal matter covered by the privilege but not otherwise, except in so far as a judge, in the exercise of a wide statutory discretion, may see fit in the particular circumstances of a case to give directions as to the matters to be inquired into.
Evaluations and conclusions
For the reasons which follow, I am, in the end, of the view that the prima facie position for a public examination as is provided for by s 597(4), should not be disturbed. Specifically, I have not been persuaded by these examinees that it is 'desirable by reason of special circumstances' for the examinations of Ms Bazzo and Mr Caratti to be held in private. Consequently, Ms Bazzo's appeal from the decision of the Acting Registrar must be dismissed, and the orders sought by Mr Caratti upon his application in COR 111 of 2018 for a private examination and consequential orders should be refused as well.
The present examinees have not demonstrated for the purposes of meeting s 597(4), special circumstances to deviate from what was described by Leeming JA in Courtenay House Trading Capital Group Pty Ltd (in liq) as the 'default' position, ie, a public examination: see [15] and [26]. As his Honour said at [26], it is necessary to pay regard in the evaluation to not merely the asserted risks of prejudice articulated by the examinees, but also to 'ameliorative steps' that could, in the ordinary course of things, be adopted to address any risks as might in due course emerge. The following considerations led me to this conclusion.
First, on my assessment of the law concerning liquidator's examinations under pt 5.9 div 1 of the Corporations Act, the position as stated by plurality justices Mason CJ, Dawson and Toohey JJ in Hamilton v Oades (Deane & Gaudron JJ in dissent) still manifests the High Court's position concerning the law in this rather unique area of liquidator's examinations and must be fully respected. I render that observation particularly as regards the 'risk of prejudice' submission made by the examinees - as regards the so-called accusatorial process under the criminal law. In particular, the examinees' reference to asserted risks arising out of this legislation's express abrogation of the privilege against self‑incrimination in all respects by the effect of s 597(12) and s 597(12A), namely that this abrogation consideration is now said to support a private, rather than a public examination.
However, towards liquidator's examinations, I take the law on this issue to still be as was expressed by Mason CJ in Hamilton v Oades at page 496, namely:
Of course the section gives no protection to the witness against the use in criminal proceedings of derivative evidence, that is evidence which is obtained from other sources in consequence of answers given by the witness in his examination ... but in any case, by enacting s 541 without providing such specific protection, Parliament has made its legislative judgment that such action is not required and has limited specific protection to the possible consequences of direct use in evidence of the answers of the witness, thereby guarding against the possibility that the witness will convict himself out of his own mouth - the principal matter to which the privilege is directed. Thus the legislative resolution of the competition between public and private interest is to provide for a compulsory examination and to give specific protection in relation to the principal matter covered by the privilege but not otherwise, except in so far as a judge, in the exercise of a wide statutory discretion, may see fit in the particular circumstances of a case to give directions as to the matters to be enquired into.
See also Dawson J at page 510 and Toohey J at page 515.
Of course, the examinees' submissions, as I appreciate, contend that they do accept those observations, but rely upon the last sentence as cited above for seeking private examination orders - which they seek predicated upon special circumstances they contend exist.
Second, nothing which I say in the present context should be interpreted in any way as deprecating against an accused's right in criminal proceedings to a fair trial, or to receive 'due process'. However, as Dawson J observed in his reasons in Hamilton v Oades, due process for the purposes of Australian law needs to be properly understood - in contradistinction to the position in the United States of America: see the observations at page 509.
Third, a number of the High Court authorities relied upon by the examinees address legislative regimes such as criminal confiscation of profits legislation or national crime authority legislation. Such other laws provide a wholly different legislative context to what are the unique liquidator's examination provisions of the Corporations Act and its statutory predecessors. Those wholly different legislative regimes commonly provide for a private compulsory examination of the persons under investigation. They do not display an express legislative articulation of the Corporations Act's specific requirement for a public examination of an examinee as a default starting position.
Fourth, what is acknowledged widely as a sui generis legislative history associated with insolvency laws concerning the public examination of bankrupts and the uniquely important policy implications underlying those particular laws as regards creditors and the general public interest, is not to be overlooked.
Clearly, that unique historic context has influenced the preferred public examination provisions adopted by the legislature towards insolvent corporations under various legislative corporate insolvency law regimes both in the United Kingdom and in Australia. The unique historic position is explained in the reasons of Windeyer J in Rees v Kratzmann (especially at page 80), by Kitto and Walsh JJ in Mortimer v Brown and by Mason CJ in Hamilton v Oades (see also Dawson J at page 510 and Toohey J at page 514).
Hence, what is a unique and different taken position from that of the common law as regards the force of an individual's truncated rights to invoke a privilege against self-incrimination (in not only direct but also in derivative respects) needs to be properly appreciated and respected in terms of its significant policy influence within this discrete area of liquidators' examination.
Fifth, the examinees' major argument concerns an asserted 'risk' of prejudice 'to the accusatorial process'. For me, that argument carries strong echoes to the asserted prejudice to 'due process' argument as was considered by but, in the end, ultimately rejected by the majority justices in Hamilton v Oades (particularly by Dawson J's reasons to which I have earlier referred).
Sixth, the examinees' arguments predicated upon asserted risks to the accusatorial process (in present circumstances where they currently face no criminal charges albeit the likelihood that they will at some uncertain future time) are not sufficient, pitched only at that theoretical and plenary level, to constitute special circumstances for the purposes of s 597(4). More is necessary, by my assessment, to constitute a sufficient basis to depart from the default position as it is textually set down under the Corporations Act. Clearly, the legislature enacted the regime now seen under s 597 within pt 5.9 div 1, with full cognisance of the significance of the fact that such a regime, as Mason CJ observed in Hamilton v Oades, gave no further protections to an examinee against the use of their evidence in criminal proceedings on a derivative basis.
In terms of the protective exercise of a curial discretion, Mason CJ's observations in Hamilton v Oades (which follow at the foot of pages 496 - 497) are of a present assistance in terms of applying that abiding curial discretion as exercised by a presiding judicial officer at an examination. Referring to the two important public policy purposes that an examination is designed to serve - first, the gathering of information to assist the liquidator in winding up; involving the protection of the interests of creditors and second, enabling the gathered evidence and information to be obtained in support of bringing of criminal charges in connection with the corporation's affairs - Mason CJ continued at pages 496 - 497:
The examination is designed to elicit, amongst other things, evidence and information relating to the question whether the witness 'has been, or may have been, guilty of fraud, negligence, default, breach of trust, breach of duty or other misconduct in relation to' the corporation.
As regards counterbalancing discretionary considerations towards an examinee, Mason CJ then observed at page 497 (after referring to the observations of Kitto J in Mortimer v Brown), that:
In the light of the statutory provisions and the public purposes which I have outlined it would be going too far altogether to view the existence of the discretion as requiring ordinarily the giving of directions which will protect the witness from the consequences of abrogation of the privilege in so far as they include the derivative use of the answers of the witness. To give such directions as a matter of course would be to frustrate the statutory purpose.(my emphasis added)
In my view, such cited observations above are fully apposite to the present circumstances. They support a rejection of the examinees' plenary arguments of prejudice towards their public examinations. However, further ameliorative aspects from a more ad hoc protection, where appropriate, are not removed. They remain to be excised by the presiding judicial officer as appropriate concerning any particular question, or line of questioning, during the public examination that might need, then, to be addressed. That process remains unaffected by this decision.
Seventh, the judicial officer presiding over a s 596A liquidator's examination holds wide discretionary power to issue directions under s 596F(1). This provision would appear to be an evolution beyond, but statutory successor to the former s 541(4) of the Companies (New South Wales) Code, the subject of consideration in Hamilton v Oades (see pages 492 - 493). That former provision was viewed as providing a significant scope, as indeed would now, s 596F, for a presiding judicial officer to issue appropriate directions to ameliorate against a line of particular questioning that might stray too far from the purpose of a liquidator's public examination once commenced: see observations about the use of that power by Mason CJ in Hamilton v Oades in the face of an examination hypothesised as being conducted for an improper purpose, or amounting to an abuse of process at page 498. Here there is, of course, no suggestion at all of any such improper purpose or abuse of process in present circumstances now under consideration. There are also the inherent protective powers of the court over its processes, as was subsequently discussed by Mason CJ: see pages 498 - 499. Referring to Barton v Official Receiver [1986] HCA 44; (1977) 13 ALR 293, 289 - 290, Mason CJ then also said, at page 499:
But the types of questions which may warrant such a course should not be predicted by a court in advance of their being asked.
Mason CJ had also observed in terms of any exercise of the statutory discretion, by contrast to the subsisting inherent power of the court to ensure the proper administration of justice, at page 499, that:
The inherent power is not a charter which enables a court to turn its back on the statute.
See as well his Honour's observations concerning s 541 of the Companies (New South Wales) Code, towards the potential disclosure of a defence to a criminal charge by an examinee as not ordinarily being a matter in respect of which a witness would need to be protected 'except perhaps in the most exceptional circumstances'.
More recently, the same sentiments towards an ad hoc capacity to intervene by providing a protective direction in the context of a specific question or line of questioning was the subject of Leeming JA's observations in Courtenay House Trading Group Pty Ltd (in liq). I also record the observations of Toohey J in Hamilton v Oades at page 515, concerning the power vested in the court to give directions as to matters to be enquired into being used to ensure that the matters enquired about are relevant to the object of the examination.
Conclusions
In all the circumstances then, Ms Bazzo's appeal must be dismissed and the application by Mr Caratti seeking private examination and correlative orders must be dismissed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DW
Associate to the Honourable Justice Martin
1 MARCH 2019
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: ROBERT MICHAEL KIRMAN AND WILLIAM JAMES HARRIS JOINT AND SEVERAL LIQUIDATORS OF GH1 PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (IN LIQ) -v- BAZZO [2019] WASC 45 (S)
CORAM: KENNETH MARTIN J
HEARD: ON THE PAPERS
DELIVERED : 24 APRIL 2020
FILE NO/S: COR 104 of 2018
BETWEEN: ROBERT MICHAEL KIRMAN AND WILLIAM JAMES HARRIS JOINT AND SEVERAL LIQUIDATORS OF GH1 PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (IN LIQ)
Plaintiff
AND
TINA MICHELLE BAZZO
Examinee
FILE NO/S: COR 111 of 2018
BETWEEN: ROBERT MICHAEL KIRMAN AS LIQUIDATOR OF ACN 142 745 337 PTY LTD (IN LIQ)
Plaintiff
AND
ALLENCARATTI
Examinee
Catchwords:
Costs - Special orders sought by successful liquidators seeking to examine examinees - Special orders granted - Turns on own facts
Legislation:
Legal Practitioners (Supreme and District Courts) (Contentious Business) Determination 2018 (WA)
Legal Profession Act 2008 (WA), s 280(2)
Rules of the Supreme Court 1971 (WA)
Result:
Application for special costs orders granted
Category: B
Representation:
COR 104 of 2018
Counsel:
| Plaintiff | : | No appearance |
| Examinee | : | No appearance |
Solicitors:
| Plaintiff | : | HWL Ebsworth Lawyers |
| Examinee | : | Alan Rumsley Commercial Disputes Lawyer |
COR 111 of 2018
Counsel:
| Plaintiff | : | No appearance |
| Examinee | : | No appearance |
Solicitors:
| Plaintiff | : | HWL Ebsworth Lawyers |
| Examinee | : | Alan Rumsley Commercial Disputes Lawyer |
Case(s) referred to in decision(s):
Bazzo v Kirman [2020] WASCA 43
Crawley Investments Pty Ltd v Elman [2014] WASC 233 (S)
Robert Michael Kirman and William James Harris joint and several liquidators of GH1 Pty Ltd (Receivers and Managers appointed) (in liq) v Bazzo [2019] WASC 45
Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76 (S)
KENNETH MARTIN J:
Overview
In COR 104 of 2018 (Ms Bazzo's appeal) and COR 111 of 2018 (Mr Caratti's application) I was dealing with two matters, heard together, essentially concerning the positions advocated by Ms Bazzo and Mr Caratti seeking that both their s 596A Corporations Act 2001 (Cth) liquidators' examinations be conducted privately. Under my reasons Robert Michael Kirman and William James Harris joint and several liquidators of GH1 Pty Ltd (Receivers and Managers appointed) (in liq) v Bazzo [2019] WASC 45, delivered 1 March 2019, I ultimately concluded against Ms Bazzo's and Mr Caratti's advocated positions seeking their private examinations.
In Ms Bazzo's case, she had pursued an appeal de novo against the refusal of an acting registrar of this court to order a private examination. In Mr Caratti's case, there was no appeal - but he had made application effectively seeking such orders, and certain correlative orders relating to obtaining a private examination. In each case it may be seen that the positions as advocated for by Ms Bazzo's appeal and by Mr Caratti's application (which I heard jointly), were ultimately unsuccessful before me.
Under orders of 15 March 2019, made in each matter, I ordered that further issues, including as to costs, be reserved.
Subsequently, the parties exchanged written outlines of submissions as to costs, on the basis that the costs be determined on the papers.
In the wake of an appeal taken to the Court of Appeal against my primary rejection decision on both corporation's matters, the issue as to costs has been held over. However, upon the publication of the recent decision of the Court of Appeal (Buss P, Mitchell and Beech JJA) in Bazzo v Kirman [2020] WASCA 43, delivered 7 April 2020, dismissing in each case Ms Bazzo's and Mr Caratti's appeals to that court against my decision, there remains to resolve the disputed issues over costs in respect of each proceeding before me.
The costs issue dividing the parties is whether or not there should be special orders upon costs as are sought by the successful liquidators, who pressed for, and were ultimately successful in, obtaining orders for the public examination of Ms Bazzo and Mr Caratti.
There is no real dispute that as the successful parties, the liquidators are entitled, on the orthodox basis of costs following the event of the trial outcome, to their taxed costs in respect of each matter. This core dispute is over whether by reference to the terms of s 280(2) of the Legal Profession Act 2008 (WA), the liquidators can, in effect, persuade the court that the scale limits otherwise applicable to a taxation of their costs should be removed or adjusted upwards - a position that is opposed by Ms Bazzo and Mr Caratti.
The parties' submissions
The plaintiff liquidators' submissions in support of special costs orders
By the plaintiff's written costs submissions of 8 March 2019, the successful liquidators essentially seek a special order pursuant to s 280(2)(c) of the Legal Profession Act, to the effect that 'any limits fixed by the relevant costs scale are removed' (both in hours and rate of charge), in relation to the costs payable in respect of Ms Bazzo's unsuccessful appeal. A like special order is sought as regards Mr Caratti's unsuccessful application, for the taxation of the liquidators' costs.
In the case of Ms Bazzo's appeal against the decision of the acting registrar, the relevant scale item in respect of which a special order was sought presents as item 13,[1] being 'an appeal from a registrar'. In respect of that item, the scale allowance under the Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2018 (WA) (the 2018 Determination) for such an appeal is a maximum amount of $10,450.
[1] At par 3.2 of the written submissions the plaintiff liquidators had identified the relevant scale item as item 12, however this pertains only to Legal Profession (Supreme and District Court) (Contentious Business) Determination 2016 (WA). Item 13 is the relevant scale item for an 'appeal from a registrar' for the 2018 Determination.
As regards Mr Caratti, the most relevant scale item under the 2018 Determination is item 10, which allows the maximum amount of $20,460.
According to the liquidators' written costs submissions seeking special costs orders, reliance is placed upon the usual principles in this sphere, helpfully articulated towards s 280(2) of the Legal Profession Act in the reasons of Edelman J in Crawley Investments Pty Ltd v Elman [2014] WASC 233 (S).
The liquidators point out that at the joint hearing of Ms Bazzo's appeal and Mr Caratti's application the plaintiff liquidators were represented by both senior and junior counsel, as well as an attending instructing solicitor. Their respective rates are identified at par 5 of the written submissions and it is unnecessary to repeat them here. I do point out, however, that no affidavit evidence upon costs was submitted on behalf of the plaintiff liquidators in respect of the present costs application. Nor was any draft bill of costs submitted to the court. Rather, the position as articulated by the successful plaintiff liquidators by par 6 of their written submissions is simply to the broad effect that:
6.The rates of charge imposed by the relevant scale are wholly inadequate in the circumstances.
Reference is further made to fees said to be incurred at par 7 (and there appears to be no dispute about this to be found in the opposing written submissions upon costs filed on behalf of Ms Bazzo and Mr Caratti on 18 March 2019) for:
(a)approximately $1,000 ‑ miscellaneous conferrals and consent orders prior to and after the hearing and delivery of his Honour's decision;
(b)approximately $11,000 - preparing the written submissions in opposition to the appeal;
(c)approximately $2,000 ‑ considering the examinee's written submissions in support; and
(d)approximately $15,000 ‑ preparing for and appearing at the appeal.
As regards engaging with s 280(2) of the Legal Profession Act, reliance is directed by the plaintiff liquidator's written submissions at par 8 to a number of matters, including:
(a)that there had been no direct case authority on the legal points raised under the respective appeal and application, as regards thereby engaging with the terminology of 'special circumstances' for the purposes of an examination conducted by reference to s 597(4) of the Corporations Act;
(b)effectively, that the significant issue raised under the appeal and application argued before me was a significant matter of policy as regards the efficacy of the public examination process as conducted by liquidators;
(c)the examinees, Ms Bazzo and Mr Caratti, in pressing for private examinations had invoked a broad and significant number of high level case authorities to support their contentions as regards private examination;
(d)some of the case authorities relied upon were complex and required a careful distillation in order to focus upon extracting the relevant legal principle bearing upon the appeal and application; and
(e)there was a potential prejudice to creditors under circumstances where a private examination were to be conducted, rather than a public examination.
Concluding their submissions, at par 9, the plaintiff liquidators contend that the scale limits seen set in the 2018 Determination for an application determined in chambers (in the case of Mr Caratti) or an appeal from a registrar (in the case of Ms Bazzo) were demonstrably inadequate, based upon:
(a)the likely number of preparatory hours involved; and
(b)the hourly rates of charge for the relevant lawyer advocates.
The end contention was that the scale limits were wholly inadequate to appropriately cater for the range of legal issues as canvassed, the complexity of those issues and, further, the importance of those issues not only for the plaintiff liquidators, but also to creditors of the corporations in liquidation.
The resistance to special costs orders by Ms Bazzo and Mr Caratti
In short, Ms Bazzo and Mr Caratti submit there should be no departure from the usual costs orders as seen reflected by O 66 r 1(1) of the Rules of the Supreme Court 1971 (WA). Their submissions make reference to the amendments made under the Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2016 (WA) (the 2016 Determination) as regards items 10 and 11, to then provide for scale increases for matters requiring senior counsel. It was then highlighted that the subsequent 2018 Determination includes the same amendments. Reference was made to par 8 of the 2016 Determination, as regards allowances for only one counsel (unless the court is of opinion that it was reasonable to brief two counsel).
Essentially, Ms Bazzo and Mr Caratti submit, bearing in mind two proceedings heard together, that the allowances under the 2018 Determination are sufficient, being:
(a)item 10 as regards the application in chambers ($20,460); and
(b)item 13 as regards Ms Bazzo's appeal from the decision of the acting registrar ($10,450).
So, viewed in aggregate, with there being two matters determined, Ms Bazzo and Mr Caratti both submit that an upper limit amount of, in effect, $30,910 (bearing in mind that Ms Bazzo's appeal and Mr Caratti's application were argued and then determined together) deliver a scale allowance range which, on its face, could not be characterised as inadequate. That submission is advanced particularly in light of the history underlying respective item allowances under the costs determinations prior to the 2018 Determination. Hence, the contention of inadequacy is rejected.
Next, it is put at par 7 of the resisting submissions, that as regard the legislative touchstone of 'unusual complexity', that:
... the matter involved the statutory construction of one provision in the Corporations Act 2001 although there was no authority directly there was no contest on the applicable principles, nor were there any contested factual issues.
Again, the costs observations of Edelman J made in Crawley Investments at [23] are said to be apposite in terms of the contention that the importance, difficulty and complexity of the issues in the present proceedings were such that a founding basis for special costs orders is not established.
Finally, at par 9, Ms Bazzo and Mr Caratti contend:
The parties here conferred, as they were required, to conduct the application and the appeal in a single hearing with a single set of papers, so both applications were conducted efficiently, in those circumstances the usual order as to costs is appropriate.
Evaluation
As regards the application of principles concerning the making of special costs orders pursuant to s 280 of the Legal Profession Act 2008, I refer to the supplementary decision of the Court of Appeal in Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76 (S) at [11] ‑ [16]. Those special costs order principles are not in present dispute and so there is no need to elaborate further upon them.
I am of the view that unusual difficulty, complexity and importance has been established here, underlying both Ms Bazzo's appeal and Mr Caratti's application.
In the primary reasons delivered 1 March 2019, after canvassing a significant amount of applicable case authority, including High Court authority, and a significant amount of underlying evidentiary material in Mr Rumsley's (Ms Bazzo and Mr Caratti's practitioner of record) affidavit, I rendered an early observation to the effect that the issues that I was confronted with, were unique. At [16] and [17] of those primary reasons I said:
16Fourth, the fact that Ms Bazzo and Mr Caratti do not contest orders that they be examined pursuant to s 596A distinguishes their positions from numerous prior decided cases where putative examinees have sought a stay, deferral or adjournment of their examination - for reasons such as a pendency of criminal proceedings against them said to give rise to intersecting or overlapping issues with the subject matter of the proposed liquidators' examination. Many of the leading cases concern applications by accused persons contemporaneously facing pending criminal charges and seeking relief in the nature of a stay or deferral of the liquidator's examination. This is not such a case.
17Fifth, there are no relevantly pending criminal charges against Ms Bazzo or Mr Caratti. In terms of a case precedent, I was not referred to, and my independent research has not unearthed, any prior decision concerning a liquidator's examination of a director where a proposed examinee who was not facing criminal charges has been successful in obtaining a curial order for their liquidator's examination to be conducted privately, rather than in public.
In short, I conclude that all the tripartite touchstones available under s 280(2) of the Legal Profession Act are met here, as regards unusual difficulty, complexity and importance. Indeed, by my assessment, such matters are essentially self evident. Correlatively to that, I am also of the view that the engagement of senior counsel and junior counsel by the plaintiff liquidators for each application was, under the prevailing circumstances, an entirely sensible, appropriate and reasonable course.
Evaluating both proceedings that I determined, on the basis that they were conducted and argued very effectively as one application and at one hearing, given the commonality of legal issues involved, the costs question still arises as to whether, even so, the first touchstone (by reference to s 280(2) in relation to the showing prospect of an inadequacy of recovery on a taxation by reference to unadjusted scale limits) is met. Frequently, that issue is addressed by a submission of a draft bill of costs demonstrating the level of the quantitative costs sought to be claimed measured against the scale allowance itself will be economically problematic for the ultimately successful litigating party. However, there is no hard and fast rule to that end. Each case is different and requires a bespoken evaluation. A commercial court will also deploy its expertise and experience in this costs realm. Having personally prepared for the respective hearings, waded through all the submitted materials by way of evidence, evaluated the parties' respective written submissions and then heard the arguments by senior counsel in the case of the plaintiff liquidators and by Mr Bruckner for the examinees, here I am left in no doubt that the amount of preparatory work involved on each side would have been considerable and essentially unavoidable as a matter of proper preparation for such complex and important hearings.
Conclusion
In all circumstances, I reach the view it is more than likely that the scale limits under the 2018 Determination, by reference to items 10 and 13 taken together, are still likely to prove inadequate measured against the amount of work required by the plaintiff liquidators' legal representatives, including senior and junior counsel. Consequently, for such circumstances, a special costs order, I assess, is warranted in both Ms Bazzo's appeal and Mr Caratti's application.
Furthermore, I am of the view that it is appropriate that the particular costs orders sought, concerning Ms Bazzo and Mr Caratti, as regards the limits fixed by the relevant costs scale (both in terms of hours and rate of charge), be removed. The consequence, however, is not to deliver any open horizon as to costs. The making of these special orders simply permits the relevant taxing officer to approach a taxation exercise without that process being constrained by some outer boundary limit in terms of reasonable costs allowances being made.
Orders
In the circumstances then, the following orders will issue upon the publication of these costs reasons:
Orders in COR 104 of 2018 (Ms Bazzo's appeal)
The following orders should issue:
1.The Examinee, Tina Michelle Bazzo, do pay the plaintiff's costs of the appeal to be taxed, if not agreed.
2.Pursuant to s 280(2)(c) of the Legal Profession Act 2008 (WA), any limits fixed by the relevant costs scale are removed (both in hours and rate of charge) in relation to the costs payable under order 1.
3.The Examinee, Tina Michelle Bazzo, do pay the plaintiff's costs of the application in relation to costs.
Costs orders in COR 111 of 2018 (Mr Caratti's application)
The following orders should issue:
1.The Examinee, Allen Bruce Caratti, do pay the plaintiff's costs of the application to be taxed, if not agreed.
2.Pursuant to s 280(2)(c) of the Legal Profession Act 2008 (WA), any limits fixed by the relevant costs scale are removed (both in hours and rate of charge) in relation to the costs payable under order 1.
3.The Examinee, Allen Bruce Caratti, do pay the plaintiff's costs of the application in relation to costs.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
IH
Research Orderly to Justice Kenneth Martin
24 APRIL 2020
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