SAMUEL CHARLES DAVIES - [2008] SASC 52

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
In the Matter of GARTNER WINES PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION)
SAMUEL CHARLES DAVIES
[2008] SASC 52
Reasons of Judge Withers a Master of the Supreme Court
29 February 2008
CORPORATIONS - EXAMINATIONS RELATING TO INSOLVENCY - PROCEDURAL MATTERS - PRODUCTION OF DOCUMENTS
Scope of examination power.
Corporations Act 2001 ss 596B and 597(9), referred to.
Re New Tel Ltd (In liq) (2005) 54 ACSR 284, applied.
Southern Equities Corporation Limited (In liq); Caboche v England (1998) 72 SASR 186; Law of Company Liquidation McPherson, 5th Ed; Gerah Imports Pty Ltd v The Duke Group Ltd (In Liq) (1993) 61 SASR 557, considered.

SAMUEL CHARLES DAVIES
[2008] SASC 52

JUDGE WITHERS. This matter relates to a public examination being conducted under the auspice of s 596B of the Corporations Act (CA) of Mr Gary Byford as director of Byford Fabrications Pty Ltd. On the application of the liquidator filed on 14 February 2007 an order was made on 22 February 2007 for Mr Byford’s examination. Pursuant to that order a summons for public examination was issued by the Court on 27 February 2007.
The background to the matter is that the liquidator of Gartner Wines Pty Ltd is presently involved in litigation in a District Court action against Murray Valley Tankers Pty Ltd formerly known as Byford Fabrications Pty Ltd. The examination of Mr Byford has at least in part been directed to the capacity of Byford Fabrications Pty Ltd now known as Murray Valley Tankers Pty Ltd (hereinafter called “Byford Fabrications/MVT”) to satisfy a judgment in the District Court action if the liquidator is successful in that claim. The claim issued by the liquidator in the District Court on 8 August 2005 seeks to recover from Byford Fabrications/MVT alleged unfair preference payments totalling $1,811,868.70 allegedly made in March and April 2002.
The summons to Mr Byford (FDN 19) issued 27 February 2007 both required his attendance to be examined and also the production of books and records of Byford Fabrications Pty Ltd. The books and records required were:
1.taxation returns of Byford for the years ending 30 June 2004, 30 June 2005 and 30 June 2006;
2.business activity statements of Byford lodged after 1 July 2004;
3.financial statements and reports of Byford for the years ended 30 June 2004, 30 June 2005 and 30 June 2006;
4.monthly management accounts of Byford for the period commencing 1 July 2006 to present;
5.any declaration of trust, deed of trust or deed of settlement relating to or affecting any asset of Byford which remains operative or in effect;
6.any declaration of trust, deed of trust or deed of settlement in respect of which Byford is a trustee which remains operative or in effect;
7.any mortgage, debenture or other document of security relating to or affecting any asset of Byford;
8.any guarantee or other document evidencing any liability or undertaking of Byford in favour or for the benefit of a third party;
9.any guarantee or indemnity in favour or for the benefit of Byford;
10.any document evidencing the declaration and payment of a dividend by Byford since 30 June 2005;
11.any policy of insurance that may respond to the claim in Action number 1288 of 2005 in the District Court of South Australia; and
12.any policy of insurance granted over the assets of Byford;
13.any document evidencing a sale or disposal of assets or other transaction of Byford outside the ordinary course of business with a value of more than $10,000 entered into after 1 January 2005; and
14.any documents evidencing dealings between Byford and another party (including another member of the same corporate group) after 1 January 2005 with a value of more than $10,000 on other than arm’s length terms or for other than market value.
According to an affidavit of the liquidator filed 31 August 2007 – FDN 24 (see paragraph 9) – the only documents produced pursuant to that summons were:
·MVT’s Business Activity Statements for each month from September 2004 to December 2006 excluding October 2005 and April, July, and August 2006.
·Records indicating the Australian Taxation Office did not require the company to lodge tax returns for the years ended 2005 and 2006.
·A charge granted by the company to the Commonwealth Bank dated 22 May 2006.
The oral examination of Mr Byford commenced on 18 September 2007. It appeared from that examination that Byford Fabrications Pty Ltd had changed its name to Murray Valley Tankers Pty Ltd on or about 16 July 2007. Reference was made in the course of that examination to other companies and organizations associated with Byford Fabrications/MVT, namely Byford Equipment Pty Ltd, Byford Equipment Co Pty Ltd, and Byford No 2 Trust. These organizations would likely fall within the rubric of connected entities as defined by s 64B of the CA.
In giving his evidence Mr Byford was unsure as to the corporate relationship or structure between these various bodies. He gave evidence at pages 13, 14, 15 and 30 of the transcript that there was only ever “one business”. The corporate structure and variations to it were all handled by the accountant of “the firm”. Mr Byford said that he had signed documents that were put before him as to the corporate structure, the creation of entities and the relationship between the entities without ever having a clear understanding or at best only very little understanding of the effect of those documents. On a number of occasions he gave evidence that he was in essence a boilermaker and that the business structures were beyond him. He simply did not understand them.
When being questioned about the relationship between Byford Equipment and Byford Fabrications at pages 13 and 14 of the transcript Mr Byford said that there was but one business involving these various entities. At page 15 he accepted that by 2000/2002 the business was being carried on by way of a trust. In terms of the trust he said, “I wouldn’t be right up with them” – see page 15, line 34. He did not know whether any of the companies of which he was a director were trustees of any of the businesses.
Mr Byford said at page 16 in explanation of his inability to answer many of the questions that were put to him:
I explained it to you before, my position in the company: I am responsible for it, yes. Am I aware fully of some of these issues, no, I am not because, as I said, I just can’t comprehend some of these documents and I am sorry, but that is it. I wish you would ask me how to build a tanker, I could tell you that.
He gave evidence that Byford Fabrications Pty Ltd had changed its name to Murray Valley Tankers Pty Ltd. He thought that change had occurred in mid‑2004 whereas the ASIC record suggests that it was 16 July 2007 – see FDN 24h.
As to the production of documents in compliance with the summons, Mr Byford said that he had requested the accountant to do that on several occasions and had thought that there would be more documents. He said that the accountant had told him that Byford Fabrications Pty Ltd ceased trading on 30 June 2004 and therefore did not require paperwork thereafter.
The outcome of Mr Byford’s oral examination to date is a very confused and incomplete picture of the operations of Byford Fabrications/MVT and its interaction if any with other companies and trusts that might loosely be called the Byford Group. Hence there is a very unclear picture of its assets and whether it would be able to meet a judgment if the liquidator succeeds in his claim. In the course of his examination Mr Byford did not identify the accountant to whom he often referred as the person who organized the corporate structure and manner of financial operations of the “one business”.
Following Mr Byford’s examination the solicitors for the liquidator issued an interlocutory application on 20 September 2007 seeking orders pursuant to s 597(9) of the CA for the production of documents by Byford Equipment Pty Ltd, Byford Equipment Co Pty Ltd, Vicpass Pty Ltd, The Associates Vic Pty Ltd, Solidbuild Pty Ltd, Sentinel Wealth Managers Pty Ltd, Brown Baldwin Melbourne Pty Ltd, Christopher James Baldwin, and Commonwealth Bank of Australia – see FDN 25.
This application was somewhat similar to an application that had been issued by the liquidator on 31 August 2007 – see FDN 23 – but sought production from a wider group of respondents. No orders were made on interlocutory process FDN 23. That application was supported by an affidavit of the liquidator (FDN 24) in which he expressed concern about the paucity of documents produced by Mr Byford pursuant to the summons.
Interlocutory process FDN 25 was supported by an affidavit of the solicitor for the liquidator – FDN 26 – and reliance was also placed on FDN 24. The application – FDN 25 – was issued two days after the initial oral examination of Mr Byford. It sought documents for the purpose of the examination. In my view it was appropriate to take into account the evidence of the examinee to date in the determination of the liquidator’s application and it is appropriate to consider it in the determination of this application – FDN 28. I reject the submission of counsel for the respondents that on this application under s 597(9) of the CA the only evidence that the Court can consider is that contained in the affidavit of the liquidator and that of Mr Beames. To ignore the sworn evidence to date of the examinee in considering whether to order production of books for the purpose of the continuing examination makes no sense. I take it into account.
Section 597(9) of the CA is in the following terms:
597(9) The Court may direct a person to produce, at an examination of that or any other person, books that are in the first-mentioned person’s possession and are relevant to matters to which the examination relates or will relate.
A schedule of the required documents was attached to the interlocutory application (FDN 25). The schedule was in the following form:
In this Schedule, ‘Byford Group’ means any and each of:
a)Murray Valley Tankers Pty Ltd (formerly Byford Fabrications Pty Ltd) (‘MVT’);
b)Byford Equipment Pty Ltd (ACN 109 346 778);
c)Byford Equipment Co Pty Ltd (ACN 062 332 709);
d)the G Byford Family Trust;
e)the Byford No 2 Trust; and
f)any other company or trust involved in the business of fabricating and manufacturing stainless steel equipment conducted by the companies and trusts set out in paragraphs (a) to (e) above.
The books and records relevant to the examinable affairs of Gartner Wines to be produced:
1.taxation returns of the Byford Group for the years ending 30 June 2003, 30 June 2004, 30 June 2005, 30 June 2006 and 30 June 2007;
2.business activity statements of the Byford Group lodged after 1 July 2002;
3.financial statements and reports of the Byford Group for the years ended 30 June 2003, 30 June 2004, 30 June 2005, 30 June 2006 and 30 June 2007;
4.any consolidated financial statements and reports which include information relating to MVT for the years ended 30 June 2003, 30 June 2004, 30 June 2005, 30 June 2006 and 30 June 2007.
5.management accounts or reports of the Byford Group for the period commencing 1 July 2002 to present;
6.any consolidated management accounts or reports which include information relating to MVT for the period commencing 1 July 2002 to present;
7.any list of the current assets of the Byford Group;
8.any declaration of trust, deed of trust or deed of settlement relating to or affecting any asset of the Byford Group which remains operative or in effect;
9.any declaration of trust, deed of trust or deed of settlement in respect of which a member of the Byford Group is a trustee which remains operative or in effect;
10.without limiting paragraph 8 or 9, any declaration of trust, deed of trust or deed of settlement or other document establishing the G Byford Family Trust and any variations, amendments or supplements thereto;
11.without limiting paragraph 8 or 9, any declaration of trust, deed of trust or deed of settlement or other document establishing the Byford No 2 Trust and any variations, amendments or supplements thereto;
12.any document evidencing:
12.1. a change in trustee of;
12.2. the retirement of appointment of a trustee of; or
12.3. the acquisition or disposal of businesses or assets by,
any of the trusts within the Byford Group;
13.any mortgage, debenture or other document of security relating to or affecting any asset of the Byford Group;
14.any details of the property charged under the charge granted by MVT to Bidgee Finance Limited dated 25 August 2004, ASIC Charge Number 1081106 (‘Bidgee Charge’) and the nature, origin and amount of the debt secured by that charge;
15.any documents evidencing the transfer of the property charged by the Bidgee Charge by MVT to another member of the Byford Group;
16.any documents evidencing the repayment of the loan secured by the Bidgee Charge;
17.any details of the property charged under the charge granted by Byford to the Commonwealth Bank of Australia dated 22 May 2006, ASIC Charge Number 1310511 and the nature, origin and amount of the debt secured by that charge;
18.any documents relating to the charge granted by MVT to Gary, Belinda and Irene Byford on 23 July 2007;
19.any application for finance made by the Byford Group since 1 July 2002 and any documents provided in support of such an application;
20.any guarantee or other document evidencing any liability or undertaking of the Byford Group in favour or for the benefit of a third party;
21.any guarantee or indemnity in favour or for the benefit of the Byford Group;
22.any document evidencing the declaration and payment of a dividend, or the declaration and payment of a distribution of income or capital to the beneficiaries of a trust, by the Byford Group since 1 July 2002;
23.any policy of insurance that may respond to the claim in Action number 1288 of 2005 in the District Court of South Australia;
24.any policy of insurance granted over the assets of the Byford Group;
25.any application for insurance over the assets of the Byford Group made since 1 July 2002 and any documents provided in support of such an application;
26.any document evidencing a sale or disposal of assets or other transaction of the Byford Group outside the ordinary course of business with a value of more than $10,000 entered into after 1 July 2002;
27.any documents evidencing dealings between the Byford Group and another party or amongst members of the Byford Group after 1 July 2002 with a value of more than $10,000 on other than arm’s length terms or for other than market value;
28.any documents evidencing any inter-company obligations or indemnities within the Byford Group;
29.any information provided by the Byford Group to the New South Wales Government in support of an application for a grant under the Regional Business Scheme in around 2003 or 2004;
30.bank statements of the Byford Group since 1 July 2002;
31.details of any banking facilities made available to the Byford Group, or loans advanced to the Byford Group, since 1 July 2002;
32.any documents relating to the change in name of MVT from ‘Byford Fabrications Pty Ltd’ to ‘Murray Valley Tankers Pty Ltd’;
33.any documents evidencing the transfer of the business, assets or liabilities of MVT to another member of the Byford Group on or around 30 June 2004;
34.any documents evidencing a transfer of the land located at Lot 16 in Deposited Plan 1045530 at Moama in the State of New South Wales (Folio 16/1045530) by MVT to another person (including another member of the Byford Group);
35.any documents evidencing the outstanding debtors of MVT as at 30 June 2004;
36.any documents evidencing the payment of outstanding debts of MVT after 30 June 2004; and
37.any business plan prepared by or for the Byford Group since, or in respect of the period after, 1 July 2002.
The liquidator’s application was supported by an affidavit of Mr Beames, a solicitor within the firm of solicitors representing the liquidator. He attested that he had requested that the solicitor for Mr Byford advise him as a matter of urgency of the identity of the individual accountant or accountants to whom Mr Byford had referred during his examination. He had not yet received a response to that email request which I note had only been made some two days before the hearing of the application. He had then undertaken various searches resulting in the identification of most of those bodies named in the summons as potentially being involved in the provision of accounting services to the Byford Group. Reliance was also placed on the earlier affidavit of the liquidator – FDN 24.
An order for production was made pursuant to s 597(9) in the terms sought. Paragraph 11 of that order was in the following terms.
11.The corporations and persons referred to in paragraphs 1 to 9 above are at liberty to apply to this Honourable Court for the above orders to be varied or discharged prior to 17 October 2007.
At the next hearing of the matter before me counsel appeared for the examinee Mr Byford. Submissions were made by him on behalf of the respondents to the order for production of documents as a result of which the time for compliance was extended to 5 November 2007.
On 2 November 2007 a Notice for Specific Directions (FDN 28) was issued by the solicitors for those respondents seeking relevantly:
4.that the Production Orders be discharged in respect of the following Respondents to the Production Orders:
4.1     THE ASSOCIATES VIC PTY LTD (ACN 109 428 284);
4.2     SENTINEL WEALTH MANAGERS PTY LTD (ACN 108 328 294); and
4.3     BROWN BALDWIN MELBOURNE PTY LTD (ACN 081 709 042).
5.insofar as the Production Orders relate to the balance of the Respondents to the Production Orders (that is, those corporations and persons identified in paragraphs 1, 2, 3, 5 and 8 of the Production Orders), they be varied so as to confine the order for production of documents to documents relating to or concerning the ability of Murray Valley Tankers Pty Ltd (formerly Byford Fabrications Pty Ltd) to satisfy any judgment obtained by the Applicant in District Court of South Australia Action Number 1288 of 2007.
It is that application that now falls for determination by the Court.
The Commonwealth Bank produced documents to the Court on 2 November 2007 in compliance with the order.
On 13 November 2007 an order was made granting leave to the solicitors for the respondents to inspect the affidavit of Mr Davies of 31 August 2007 (FDN 24) and Mr Beames of 20 September 2007 (FDN 26) filed in support of the respective applications. The respondents’ application for orders limiting the extent of the documents required for production was listed for argument on 29 November 2007. Written submissions were filed by the respondents on 22 November 2007 (FDN 31) and the applicant filed an outline of submissions in reply on 23 November 2007 (FDN 32).
It is apparent from the submissions made, both written and oral, that there is no dispute between the parties as to the relevant principles. But while the underlying principles may not be in dispute the application of those principles is contentious.

The affidavit of Mr Davies filed 31 August 2007 (FDN 24) sets out the material that was produced pursuant to the summons issued to Mr Byford – see paragraph 9. The liquidator records his efforts to obtain further information. He also sets out the results of company searches in relation to Murray Valley Tankers Pty Ltd, Byford Equipment Pty Ltd and Byford Equipment Co Pty Ltd. He notes that invoices issued by Byford Fabrications/MVT to Gartner Wines during 2002 indicate that the company traded under the name “Byford Equipment” and lists an Australian Business Number 98 393 351 579. This is the Australian Business Number for the G Byford Family Trust trading as Byford Equipment. The liquidator concludes at paragraph 25:
25.For the reasons set out above, I believe that the business (previously) conducted by MVT in 2002 is still being carried on, possibly by either Byford Equipment or Byford Equipment Co or by a trust of which MVT, Byford Equipment or Byford Equipment Co is the trustee.
The balance of his affidavit relates to the other bodies from which production is sought. Mr Davies sets out in paragraph 38 of his affidavit his reasons for believing that MVT may not have produced all of the documents in its possession. He asserts in paragraph 39 that by reason of the foregoing matters in his affidavit:
39.… I believe that Vicpass, Associates, Byford Equipment, Byford Equipment Co and the CBA may be in possession of books and records which are relevant to the examinable affairs of Gartner Wines.
Returning to the legal principles I particularly note the words of Lander J in the Full Court of the Federal Court in Re New Tel Ltd (In liq) (2005) 54 ACSR 284 at paragraph 252, where he said:
[252] In my opinion, the following propositions relevant to these appeals emerge from the legislation and the authorities:
1.The power given to the court to summon a person for examination is a coercive power.
2.The purpose of the power is to be gleaned from the legislation.
3.The following legitimate purposes emerge:
3.1     First, an examination is designed to serve the purpose of enabling an eligible applicant to gather information to assist the eligible applicant in the administration of the corporation.
3.2     Second, it assists the corporation’s administrators to identify the corporation’s assets, both tangible and intangible. It also allows the corporation’s liabilities to be identified.
3.3     Third, the purpose is to protect the interests of the corporation’s creditors.
3.4     Fourth, it serves the purpose of enabling evidence and information to be obtained to support the bringing of proceedings against examinable officers and other persons in connection with the examinable affairs of the corporation.
3.5     Fifth, it assists in the regulation of corporations by providing a public forum for the examination of examinable officers of corporations.
4.If an eligible applicant applies for an order for the examination of a person for a purpose unconnected with the purposes authorised by the legislation that will be an abuse of process and the order, if obtained, will be set aside.
5.The procedure may not be used to allow a party to obtain a forensic advantage and, if it is, any order obtained will be set aside.
6.The procedure may not be used as a dress rehearsal for the cross-examination of a person in a pending or subsequent action. However, it is not improper to seek an order of the court to summon a person for examination while litigation is pending against that person or entities connected with that person.
7.The question whether in any particular case the applicant has used the procedure abusively will depend upon the applicant’s purpose in seeking the order and all of the surrounding circumstances. It will not be an abuse unless an offensive purpose is at least the predominant purpose.
8.It will be an offensive purpose if the application cannot be characterised as being for the benefit of the corporation, its contributories or creditors.
9.A creditor may, if first authorised by ASIC, apply to the court for an order to summon for examination a person for the purpose of obtaining information in relation to a debt owed to the creditor if such an examination would be in the interests of the corporation or its creditors as a whole.
10.A creditor may not use the procedure for the purpose of obtaining a forensic advantage which would not have been available to the creditor if the corporation had not gone into administration.
An examination “will not be an abuse unless an offensive purpose is at least the predominant purpose” – Re New Tel Ltd (In liq) (supra).
In Southern Equities Corporation Limited (In liq); Caboche v England (1998) 72 SASR 186 at 194-195, Debelle J said:
… It is well settled that information with respect to the probability or otherwise of success in litigation contemplated by a corporation which is in liquidation is information with respect to the examinable affairs of the corporation, and that an enquiry as to the existence and value of any property that the corporation may possess is a relevant enquiry for the purpose of s 597(9). … It is also well settled that the liquidator may enquire as to the worth of a potential defendant so as to be able to make a practicable assessment as to the likelihood of a return to the corporation of the fruits of any favourable judgment and the costs expended in obtaining it: … The power to obtain information from a defendant or potential defendant as to the ability of that person to satisfy any judgment which may be obtained in litigation instituted by the liquidator is to facilitate the realisation of the chose in action to the best advantage of the company and its creditors and, as such, is an examinable affair: …
Counsel for the liquidator agreed with those principles. It was common ground that the right to have documents produced under s 597(9) of the CA was limited to those documents relevant to the capacity of Byford Fabrications/MVT to meet a judgment. The area of dispute is whether a liquidator seeking to examine pursuant to s 596B of the CA to ascertain whether or not a defendant can meet a judgment is able to inquire more broadly than just the current assets and liabilities of the defendant company. Can the plaintiff liquidator in those circumstances extend his examination to the operations of connected entities where those operations or the arrangements between those entities and the defendant company may impact on the ability of the defendant company to meet a judgment. Such a power would be available to a liquidator of the defendant company were it to be wound up (see definition of “examinable affairs” in s 9 of the CA), but is it available in a proper case to the liquidator of a plaintiff company pursuing an alleged entitlement.
In McPherson’s Law of Company Liquidation at para 15.700 (page 15-2065), the learned author notes:
Section 64B sets out in some detail the situation in which entities, namely corporations, natural persons, partnerships and trusts, can be regarded as “connected” with the corporation that is in liquidation. This provision undoubtedly broadens the width of the examination power. In Simionato v Macks (1996) 19 ACSR 34 it was said that:
So it can be seen that the examinable affairs of a corporation are very wide and when that corporation is connected to other corporations, then the ambit of a corporation’s examinable affairs becomes wider … it is clear that the legislation is designed to allow an eligible applicant the right to inquire into a corporation and its dealings with other corporations in the widest possible circumstances.
Thus a summons for examination can legitimately require production of books relating to the finances of other companies in the group, where they are relevant to an understanding of the affairs of the company in liquidation. “Affairs” and “business affairs” are terms referred to in the definition of “examinable affairs” in s 9 and they are themselves in turn defined by ss 53, 53AA, 53AB, 53AC and 53AD.
Further in his commentary the learned author says at 15-2065:
… Information with respect to whether litigation initiated or contemplated by a liquidator on behalf of a company is likely to be successful is information with respect to the examinable affairs of the company. The same conclusion follows in relation to information about whether a judgment resulting from a liquidator’s action has any worth, ie whether damages awarded under the judgment will be met; such information is about the company’s property and can be the subject of an examination. The right to examine to determine the likelihood of successful recovery of any judgment that might be obtained in a proceeding by the company extends to the financial affairs, assets and ability to satisfy any judgment of defendants or potential defendants. Where it might be relevant, the “examinable affairs” of the company can extend to the affairs and documents of a third party, such as the companys [sic] former solicitors or insurers, or even the insurers of those against whom the company might have a claim. It could thus include an insurer obliged to provide indemnity to former officers … to enable the liquidator to ascertain the extent of indemnity available to the former officers under an insurance policy and make a judgment about whether it is worth pursuing a claim against them.
The object of the examination must be related to the examinable affairs – see Gerah Imports Pty Ltd v The Duke Group Ltd (In Liq) (1993) 61 SASR 557. Similarly the object of the liquidator in seeking the production of documents under s 597(9) of the CA must be related to the examinable affairs and in this case the ability of Byford Fabrications/MVT to satisfy a judgment.
The dispute between the parties is whether or not the order presently in existence is too broad in its terms and too widely directed. Mr Byford has given evidence that whilst there has been changes in corporate structures and that trusts are involved in the operation of the business there is “but one business”. He has not been able to give evidence which satisfactorily identifies property presently or in the past owned by Byford Fabrications/MVT, how and by whom the “one business” is now conducted, whether Byford Fabrications/MVT is the trustee of any trust and, if so, what property may be held within same, whether there is any property or rights of indemnity held by Byford Fabrications/MVT as against other members of the Byford Group, what has happened to any property of Byford Fabrications/MVT, and if dissipated on what basis the same occurred and to which organization(s) or persons it has gone.
It was argued by counsel for the respondents that the limit of the Court’s inquiry about whether or not Byford Fabrications/MVT could satisfy a judgment was the existing assets and liabilities of that defendant company. I respectfully do not accept that submission. In my view the liquidator of the plaintiff company is entitled to examine not only about the existing assets and liabilities of a defendant company but also about what monies or assets it might be entitled to recover or “claw back” if necessary. Such rights of recovery are in a sense existing assets of the company, albeit intangible assets.
In my view the relationship of Byford Fabrications/MVT and any transactions between it and other Byford companies and any Byford related trusts in respect of its assets or business operations are matters about which proper inquiry can be made provided that the inquiry is directed to the capacity of Byford Fabrications/MVT to seek indemnity, recover assets or otherwise enable itself to meet a judgment or, in other words, to realize its intangible assets to meet a judgment obtained by the plaintiff.
For those reasons the order presently made for production of documents insofar as it is directed to Byford Equipment Pty Ltd, Byford Equipment Co Pty Ltd, the G Byford Family Trust and Byford No 2 Trust is not too broadly directed provided that the documents sought for production are limited to those that are relevant to any legal or equitable relationship between those bodies and Byford Fabrications/MVT insofar as there may have been a transfer of assets or debt or operating businesses between them after 30 June 2002, being the end of the financial year during which the alleged unfair preference payments were made.
However having regard to the submissions made, the order insofar as it was directed to any other unidentified company or trust was too broad and there will be an order that paragraph (f) from Schedule B be struck out. Proper production of documents in relation to the bodies set out in (a) to (e) may disclose the existence of other companies or trusts in which event a further order can be sought.
Mr Baldwin has sworn an affidavit of 16 November 2007 to the effect that The Associates Vic Pty Ltd, Sentinel Wealth Managers Pty Ltd, and Brown Baldwin Melbourne Pty Ltd have had no dealings with Byford Fabrications/MVT. I am told that Mr Baldwin is the accountant to whom Mr Byford so often referred in his evidence. That now seems to be agreed by the respondents and the liquidator.
It was initially accepted by counsel for the liquidator that the order should be discharged as against those three respondents. During the course of argument counsel for the liquidator expressed some concern that the affidavit of Mr Baldwin, which is FDN 30, was confined to attesting that those entities had had no dealings with “Byford Fabrications Pty Ltd” but did not go on to assert that they had had no dealings with Murray Valley Tankers Pty Ltd or with the other bodies in the Group in respect of whom documents were sought. Counsel for the respondents suggested that a more comprehensive affidavit could be filed. Subject to Mr Baldwin filing a further affidavit confirming that those three organizations have had no dealings with any of the bodies nominated in the existing order as amended by this decision, I intimate that I will be prepared to make an order that the order be discharged as against The Associates Vic Pty Ltd, Sentinel Wealth Managers Pty Ltd, and Brown Baldwin Melbourne Pty Ltd. The order will remain in place as against the other bodies therein nominated. I direct that any further affidavit of Mr Baldwin be filed and served within 21 days of delivery of these reasons.
It was argued that the timeframe for the production of documents should not go back beyond 30 June 2004 when notice was first given to Byford Fabrications of the liquidator’s claim. To require a search earlier than that would be oppressive. However, Mr Byford has given evidence of a “reorganization” of the company’s “one business” at or about 30 June 2004. The alleged unfair preference transactions occurred between 18 March 2002 and 2 April 2002. The ordinary business of Byford Fabrications/MVT prior to the reorganization and how that was affected by that reorganization may not be apparent except by examining its records for a period before that time. In my view it is appropriate for the documents sought to cover the period from 1 July 2002 to provide information as to the various assets and liabilities and business operations of and relevant to Byford Fabrications/MVT prior to the apparent 30 June 2004 reorganization and thereafter. That effectively gives a timeframe of five years which in my view is not an oppressive period in these circumstances.
Documents in respect of which production is sought under s 597(9) of the CA must relate to the capacity or otherwise of Byford Fabrications/MVT to meet any judgment the liquidator may obtain in the District Court.
Such a capacity will include an ability or otherwise of Byford Fabrications/MVT or an external administrator or liquidator of that company to call on other participants in its “one business” to provide funds to meet that liability. It is a legitimate purpose to seek to identify the assets of Byford Fabrications/MVT both tangible and intangible. It is little different from the accepted right of a liquidator to seek documents from an insurer of a defendant and to inquire about the extent and enforceability of any apparent right to indemnity.
In this case in light of the inability of the sole director of Byford Fabrications/MVT to give any coherent explanation of its business and its relationship with other connected entities as part of that business, and in light of the paucity of documents produced pursuant to the examination summons to Mr Byford, the liquidator is left with the task of attempting to obtain from other sources and other members of the “one business” documents relevant to the assets of Byford Fabrications/MVT both tangible and intangible. Such a course is consistent with the principles enunciated by Lander J in Re New Tel Ltd (In liq) (supra).
I turn now to the schedule of documents attached to the present order which schedule is set out earlier in these reasons. I note that the individual items are prefaced by the words “The books and records relevant to the examinable affairs of Gartner Wines to be produced”. I deal with each item separately.
1.Taxation returns of the Byford Group for the years ending 30 June 2003, 30 June 2004, 30 June 2005, 30 June 2006 and 30 June 2007
In my view this requirement is too widely framed. It is appropriate that such returns should be provided for Byford Fabrications/MVT. However, such returns are not to be provided for other members of the Group named in (b) to (e) of the order unless the same disclose the conduct of any business operation by them formerly conducted by Byford Fabrications/MVT or refer to assets or liabilities held by it within that period.
2.Business activity statements of the Byford Group lodged after 1 July 2002
Again in my view this order is too wide. It is appropriate that such statements should be provided for Byford Fabrications/MVT.
3.Financial statements and reports of the Byford Group for the years ended 30 June 2003, 30 June 2004, 30 June 2005, 30 June 2006 and 30 June 2007
Again in my view this order is too wide. It is appropriate that such statements should be provided for Byford Fabrications/MVT and, further, that any financial statements and reports for the Byford Group described in (a) to (e), which includes information relating to the assets or liabilities or operations of Byford Fabrications/MVT during that period should also be provided.
4.Any consolidated financial statements and reports which include information relating to MVT for the years ended 30 June 2003, 30 June 2004, 30 June 2005, 30 June 2006 and 30 June 2007
In my view this is a legitimate inquiry relevant to the examinable affairs of the plaintiff.
5.Management accounts or reports of the Byford Group for the period commencing 1 July 2002 to present
In my view this order is too wide. To the extent that such management accounts or reports includes information relating to the assets or liabilities of Byford Fabrications/MVT the same should be produced. Otherwise it is beyond the scope of proper production.
6.Any consolidated management accounts or reports which include information relating to MVT for the period commencing 1 July 2002 to present
Save that in my view this should be described as relating to Byford Fabrications/MVT, in my view those documents should be produced.
7.Any list of the current assets of the Byford Group
In my view this order is too wide. It should be confined to any list of current assets which includes assets owned by Byford Fabrications/MVT during the period since 1 July 2002.
8.Any declaration of trust, deed of trust or deed of settlement relating to or affecting any asset of the Byford Group which remains operative or in effect
This order is too wide. It should be confined by requiring the documents sought to be relevant to any asset or liability of Byford Fabrications/MVT since 1 July 2002.
9.Any declaration of trust, deed of trust or deed of settlement in respect of which a member of the Byford Group is a trustee which remains operative or in effect
Again, in my view, this is too wide. It should be confined to any such document which directly affects the assets and liabilities past or present of Byford Fabrications/MVT since 1 July 2002.
10.Without limiting paragraphs 8 or 9, any declaration of trust, deed of trust or deed of settlement or other document establishing the G Byford Family Trust and any variations, amendments or supplements thereto
In my view this is too remote from the examinable affairs of the plaintiff and will be struck out.
11.Without limiting paragraphs 8 or 9, any declaration of trust, deed of trust or deed of settlement or other document establishing the Byford No 2 Trust and any variations, amendments or supplements thereto
Again, in my view, this is too wide and too remote from the examinable affairs of the plaintiff and will be struck out.
12.Any document evidencing:
12.1a change in trustee of;
12.2the retirement of appointment of a trustee of; or
12.3the acquisition or disposal of businesses or assets by,
any of the trusts within the Byford Group
In my view this is too wide but is appropriate if limited by the words being added to it “that affects the assets and liabilities past or present of Byford Fabrications/MVT since 1 July 2002”.
13.Any mortgage, debenture or other document of security relating to or affecting any asset of the Byford Group
In my view this is too wide and should be confined to relating to or affecting any asset or liability past or present of Byford Fabrications/MVT since 1 July 2002.
14.Any details of the property charged under the charge granted by MVT to Bidgee Finance Limited dated 25 August 2004, ASIC Charge Number 1081106 (‘Bidgee Charge’) and the nature, origin and amount of the debt secured by that charge
15.Any documents evidencing the transfer of the property charged by the Bidgee Charge by MVT to another member of the Byford Group

16.Any documents evidencing the repayment of the loan secured by the Bidgee Charge
17.Any details of the property charged under the charge granted by Byford to the Commonwealth Bank of Australia dated 22 May 2006, ASIC Charge Number 1310511 and the nature, origin and amount of the debt secured by that charge
18.Any documents relating to the charge granted by MVT to Gary, Belinda and Irene Byford on 23 July 2007
I note that these orders 14 to 18 are not challenged.
19.Any application for finance made by the Byford Group since 1 July 2002 and any documents provided in support of such an application
In my view this is too wide as presently expressed and should be confined to any application for finance relating to or affecting or describing the assets or liabilities of Byford Fabrications/MVT since 1 July 2002.
20.Any guarantee or other document evidencing any liability or undertaking of the Byford Group in favour or for the benefit of a third party
Again, in my view, this is too wide. It should be confined to any such guarantee or other document evidencing any liability or undertaking of Byford Fabrications/MVT rather than of the Byford Group since 1 July 2002.
21.Any guarantee or indemnity in favour or for the benefit of the Byford Group
Again, in my view, this is too wide. It should be confined to any guarantee or indemnity in favour of or for the benefit of or affecting the assets or liabilities of Byford Fabrications/MVT since 1 July 2002.
22.Any document evidencing the declaration and payment of a dividend, or the declaration and payment of a distribution of income or capital to the beneficiaries of a trust, by the Byford Group since 1 July 2002
Again, in my view, this is too wide. It should be confined to documents evidencing those declarations and payments of a dividend or declarations and payments of distribution income or capital to the beneficiaries of a trust where that income or capital emanates from Byford Fabrications/MVT during that period.
23.Any policy of insurance that may respond to the claim in Action Number 1288 of 2005 in the District Court of South Australia
This order is not challenged.
24.Any policy of insurance granted over the assets of the Byford Group
In my view this is too remote and will be struck out.
25.Any application for insurance over the assets of the Byford Group made since 1 July 2002 and any documents provided in support of such an application
In my view this is presently too remote but will be allowed if confined to such a document including within it a reference to the assets or liabilities or operating business of Byford Fabrications/MVT.
26.Any document evidencing a sale or disposal of assets or other transaction of the Byford Group outside the ordinary course of business with a value of more than $10,000 entered into after 1 July 2002
This is too wide. It should be confined to a sale or disposal of assets or other transaction of Byford Fabrications/MVT rather than of the Byford Group.
27.Any documents evidencing dealings between the Byford Group and another party or amongst members of the Byford Group after 1 July 2002 with a value of more than $10,000 on other than arm’s length terms or for other than market value
Again, in my view, this is too wide and should be confined to any such dealings involving the assets or liabilities or operating business of Byford Fabrications/MVT.
28.Any documents evidencing any inter-company obligations or indemnities within the Byford Group
This is too wide. It is also unlimited as to time. The same should be limited for the period from 1 July 2002 to 30 June 2007 and to such documents affecting and involving Byford Fabrications/MVT.
29.Any information provided by the Byford Group to the New South Wales Government in support of an application for a grant under the Regional Business Scheme in around 2003 or 2004
This is presently too widely expressed. It will only be relevant insofar as the documents provide information as to the assets and liabilities or operating business at that time of Byford Fabrications/MVT. Accordingly, it should be confined to that extent.
30.Bank statements of the Byford Group since 1 July 2002
In my view this is too remote and too widely expressed and will be struck out.
31.Details of any banking facilities made available to the Byford Group, or loans advanced to the Byford Group, since 1 July 2002
This is too wide. However, if confined to banking facilities and loans made available to Byford Fabrications/MVT where a current continuing liability persists then that is acceptable.
32.Any documents relating to the change in name of MVT from ‘Byford Fabrications Pty Ltd’ to ‘Murray Valley Tankers Pty Ltd’
In my view this is too remote. I cannot see how this will affect the assets either tangible or intangible of Byford Fabrications/MVT and therefore it is struck out.
33.Any documents evidencing the transfer of the business, assets or liabilities of MVT to another member of the Byford Group on or around 30 June 2004
In my view this is an acceptable enquiry relating to the potential intangible assets of Byford Fabrications/MVT.
34.Any documents evidencing a transfer of the land located at Lot 16 in Deposited Plan 1045530 at Moama in the State of New South Wales (Folio 16/1045530) by MVT to another person (including another member of the Byford Group)
Providing that it is confined to any documents evidencing the transfer of land after 1 July 2002, in my view that it is acceptable.
35.Any documents evidencing the outstanding debtors of MVT as at 30 June 2004
As evidence has been given that the company underwent a reorganization at that time and that Byford Fabrications ceased to trade thereafter that is a relevant enquiry as to the assets of Byford Fabrications/MVT and will be allowed.
36.Any documents evidencing the payment of outstanding debts of MVT after 30 June 2004
For the reasons given in paragraph 35 this will be allowed.
37.Any business plan prepared by or for the Byford Group since, or in respect of the period after, 1 July 2002
In my view that is too broad and too remote from the assets, tangible and intangible, of Byford Fabrications/MVT to be allowed and will be struck out.

The solicitors for the liquidator are to prepare a fresh amended schedule for the order for production in accordance with these reasons and Minutes of Order. I reserve the question of costs. I certify fit for counsel.