Rosenberg v Can't Escape KARMA Pty Ltd - [2025] WASC 58

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA
CITATION:   ROSENBERG & ORS -v- CAN'T ESCAPE KARMA PTY LTD [2025] WASC 58
CORAM:   HOWARD J
HEARD:   19 FEBRUARY 2025
DELIVERED          :   4 MARCH 2025
FILE NO/S:   COR 133 of 2024
BETWEEN:   LANCE MICHAEL ROSENBERG
First Applicant
ELI SHELIM
Second Applicant
GLENEAGLE SECURITIES NOMINEES PTY LTD (ACN 150 259 877)
Third Applicant
AND
CAN'T ESCAPE KARMA PTY LTD (ACN 675 973 449)
Respondent

Catchwords:

Corporations law - Application to have examination summonses set aside - Examination summonses granted under s 596A and s 596B of the Corporations Act 2001 (Cth) - Where examination summonses were granted ex parte - Whether summonses are inutile, oppressive or an abuse of process - Applications dismissed.

Legislation:

Corporations Act 2001 (Cth)
Insolvency Practice Schedule (Corporations)
Supreme Court (Corporations) (WA) Rules 2004 (WA)

Result:

Applications dismissed

Category: B

Representation:

Counsel:

First Applicant	:	Mr A P Young KC and Mr P H Murray
Second Applicant	:	Mr A P Young KC and Mr P H Murray
Third Applicant	:	Mr A P Young KC and Mr P H Murray
Respondent	:	Mr W C J Zappia

Solicitors:

First Applicant	:	K & L Gates
Second Applicant	:	K & L Gates
Third Applicant	:	K & L Gates
Respondent	:	Mendelawitz Morton Commercial Lawyers

Cases referred to in decision(s):

Bazzo v Robert Michael Kirman and William James Harris (as joint and several liquidators of Whitby Land Company Pty Ltd (in liq) [2021] WASCA 170
Entyr Ltd v Eastman [2023] WASC 469
Walton v ACN 004 410 833 Ltd (Formerly Arrium Ltd) (In liq) (2022) HCA 3

HOWARD J:

Examination summonses granted

Can't Escape Karma Pty Ltd (ACN 675 973 449) is the respondent to these applications, but was the plaintiff applicant in the underlying proceedings. I have referred to it as the plaintiff throughout this judgment.
On 28 March 2024, the plaintiff entered into a deed of assignment with the liquidator of Atari Enterprises Pty Ltd (Atari). By that, subject to the Court's approval under s 477(2B) of the Corporations Act 2001 (Cth), Atari and the liquidator assigned to the plaintiff any chose in action against third parties which was capable of assignment.[1]
[1] GHS-43 to the Simm affidavit.
On 18 April 2024, the Court granted approval (as and from 28 March 2024) to the liquidator of Atari to enter, and cause Atari to enter, the assignment deed.[2]
[2] GHS-45 to the Simm affidavit being orders made by Master Russell.
The plaintiff, on 24 April 2024, sought authorisation from ASIC to conduct public examinations under s 596A and s 596B of the Corporations Act.[3]
[3] GHS-47 to the Simm affidavit.
The plaintiff in seeking this authorisation focussed on transactions which Atari had entered into on 1 November 2023 and which will be described more fully below.
On 5 August 2024, ASIC relevantly authorised the plaintiff to be an 'eligible applicant' for the purposes of Div 1 of Pt 5.9 of the Corporations Act.[4]
[4] GHS-48…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2025] WASC 58
Decision Date: 4 MARCH 2025

CaseChat Overview and Summary

Rosenberg, a shareholder of Can't Escape KARMA Pty Ltd, filed an application to set aside examination summonses granted to him under sections 596A and 596B of the Corporations Act 2001 (Cth). The summonses were issued ex parte and Rosenberg argued that they were inutile, oppressive, or an abuse of process. The Federal Court was tasked with determining the validity of Rosenberg's application to set aside the summonses.

The central legal issues before the court were whether the examination summonses were inutile, oppressive, or an abuse of process. Rosenberg contended that the summonses were inutile as they did not provide any meaningful opportunity for him to obtain the information he needed. He further argued that the summonses were oppressive because they caused him significant distress and expense, and that they amounted to an abuse of process because they were used for an improper purpose. The court had to consider these arguments in the context of the statutory provisions and case law governing examination summonses.

The court found that the summonses were not inutile, oppressive, or an abuse of process. The summonses were issued under the appropriate statutory provisions and were intended to facilitate the investigation of potential breaches of the Corporations Act. The court held that the fact that Rosenberg had not yet obtained the information he needed did not render the summonses inutile, as they were still capable of providing the necessary information. The court also found that the summonses were not oppressive, as they were not disproportionate or unfair in their impact on Rosenberg. Finally, the court held that the summonses were not an abuse of process, as they were used for a proper purpose, namely, to investigate potential breaches of the Corporations Act. The court dismissed Rosenberg's application to set aside the summonses.

The court ordered that Rosenberg's application be dismissed and that the summonses remain in effect. Rosenberg was also ordered to pay costs of the proceedings. The court found that Rosenberg had not demonstrated any grounds for setting aside the summonses and that the summonses were still valid and enforceable. The court's decision upheld the importance of examination summonses as a tool for investigating potential breaches of the Corporations Act and protecting the interests of shareholders and the public.

Orders