SX Projects Pty Limited v Samadi Developments Pty Limited

[2015] NSWSC 1512

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	SX Projects Pty Limited v Samadi Developments Pty Limited [2015] NSWSC 1512
Hearing dates:	8 October 2015
Date of orders:	08 October 2015
Decision date:	08 October 2015
Jurisdiction:	Equity - Duty List
Before:	Kunc J
Decision:	Notice of Motion dismissed with costs
Catchwords:	PRACTICE AND PROCEDURE – Subpoenas – Whether abuse of process to issue subpoena to obtain documents in advance of examination of judgment debtor – Application to postpone examination – UCPR Part 38 rr 38.1 and 38.3
Legislation Cited:	Building and Construction Industry Security of Payment Act 1999 (NSW) UCPR Part 38 r 38.1 and 38.3
Cases Cited:	Rex v Hurle-Hobbs; Ex Parte Simmons [1945] 1 KB 165
Category:	Procedural and other rulings
Parties:	SX Projects Pty Limited (Plaintiff) Samadi Developments Pty Limited (Defendant)
Representation:	Counsel: C. Harris SC (Plaintiff) J.J. Hyde (Defendant)   Solicitors: Colin Biggers & Paisley (Plaintiff)  Mills Oakley Lawyers (Defendant)
File Number(s):	2015/176587
Publication restriction:	No

EX TEMPORE Judgment

1. By Notice of Motion filed on 29 September 2015 Samadi Developments Pty Ltd ("Samadi Developments") seeks the following orders against SX Projects Pty Ltd ("SX Projects"):

1.   An order pursuant to rule 33.4 of the Uniform Civil Procedure Rules 2005 (Rules), that the subpoena to produce filed 22 September 2015 by or on behalf of the Plaintiff (Subpoena), be set aside.

2.   In the alternative, that the Subpoena be varied pursuant to rule 33.4 of the Rules.

3.   An order pursuant to rule 38.3 of the Rules, or pursuant to the inherent jurisdiction of the Court conferred by sections 23 and 60 of the Supreme Court Act 1970, that the time for examination of Mr Afshin Samadi, as ordered by the examination order issued on 10 September 2015 (Examination Order), be deferred to a date to be determined by the Court but being no earlier than 30 October 2015.

4.   An order pursuant to rule 38.3 of the Rules that Mr Afshin Samadi is not required to produce the documents or things required by the Examination order.

5.   Costs.

6.   Any other or such other order as the Court sees fit.

2. Mr J Hyde of Counsel appeared for Samadi Developments. Mr C Harris of Senior Counsel appeared for SX Projects.

3. The facts are as follows.

4. In September 2013 SX Projects entered into a contract to build apartments with Samadi Developments in Surry Hills. The construction has either been completed or is very nearly completed. Off the plan purchases of apartments which have been built by SX Projects are currently being settled.

5. Mr Afshin Samadi ("Mr Samadi") is the sole director and shareholder of Samadi Developments. Samadi Developments, it might be thought somewhat unusually, does not own the land at Surry Hills on which the apartments were built. The land is owned by Rostam No 3 Pty Ltd (as to 9,535 out of 10,000 shares) and Rostam No 4 Pty Ltd (as to 465 out of 10,000 shares). The former company is owned and controlled by Mr Samadi's father and sister, the latter company by Mr Samadi.

6. On 20 April 2015 SX Projects issued an application for an adjudication determination against Samadi Developments under the Building and Construction Industry Security of Payment Act 1999 (NSW).

7. On 8 May 2015 Samadi Developments gave a general security interest over all of its assets to Mr Samadi's sister. This was after the adjudication determination application had been issued but before it was decided.

8. Pursuant to its application for an adjudication determination, on 15 June 2015 SX Projects obtained a judgment against Samadi Developments (the "Judgment") for $1,402,591.63.

9. On 25 June 2015 SX Projects obtained a garnishee order against Samadi Developments' bank account at the Commonwealth Bank of Australia. The result of that order was to disclose that Samadi Developments had only $83.41 in its bank account.

10. On 24 July 2015 SX Projects issued an Examination Notice - Corporation against Samadi Developments pursuant to UCPR Part 38 r 38.1 (the “Notice”). That Notice, among other things, called for the completion of a financial statement by Samadi Developments and the production of specified documents to be provided to SX Projects' nominated address for service by 23 August 2015.

11. On 24 August 2015 (being the day after production was required under the Notice) solicitors acting for Samadi Developments wrote to SX Projects' solicitors objecting to various aspects of the Notice. However, that same letter also included a concession that some of the categories of documents sought in the Notice should be provided (the “Concession”) and said:

In the event that your client withdraws the Notice as it is presently cast, our client is agreeable to providing the following documents.

12. On 27 August 2015, SX Projects' solicitors responded to the letter referred to in the previous paragraph by noting the Concession and going on to say:

Notwithstanding your concession we note that nothing has been produced and we put you on notice that we now intend to apply for an Examination Order for those documents. We refer you to r 38.3 of the Uniform Civil Procedure Rules which provides that an Examination Order can be sought if a judgment debtor has failed 'to produce any or sufficient documents for inspection by the judgment creditor'.”

13. The letter goes on to suggest that several additional categories of the documents specified in the Notice (over and above those which had been the subject of the Concession) were also properly to be produced and said that they had instructions "to press for orders that Samadi produce the documents conceded to be relevant and" the additional documents which SX Projects contended were relevant. The letter concluded with an enquiry as to whether Samadi Developments' solicitors had instructions to accept service of the examination order.

14. On 4 September 2015 the solicitors for SX Projects served copies of a motion and draft examination order with an affidavit in support on the solicitors for Samadi Developments.

15. On 10 September 2015 the Court issued an examination order addressed to Mr Samadi (the “Order”) under UCPR Part 38 r 38.3 requiring him to attend at the Supreme Court at 11.00 am next Monday 12 October 2015 to do the following things:

You are ordered to:

1.   Attend court to be examined as to whether any and, if so, what debts are owing to the judgment creditor and whether the judgment debtor has any and, if so, what other property or other means of satisfying the judgment.

2.   Produce to the court the following documents or things that are in the judgment debtors possession or control:

(a)   Current Statement of Assets and Liabilities.

(b)   All documents relating to any contract, agreement, arrangement or understanding between the judgment debtor and Rostam Pty Ltd, Rostam No. 3 Pty Ltd, Rostam (NSW) Pty Ltd and/or Rostam No. 4 Pty Ltd in respect of the construction of the East Central Apartments located at 517 Elizabeth Street, Surry Hills NSW (the Project).

(c)   Copies of any outstanding bonds relating to the Project given by the judgment debtor or another entity on its behalf.

(d)   All documents relating to the security interest held by Fatemeh Shahin Doust over all present and after acquired property or the judgment debtor and registered on the Personal Properties Security Register as Registration No. 20150508001969.

(e)   The judgment debtor’s Australian Taxation Office (ATO) Client Integrated account and income tax account statements, ATO correspondence, Business Activity Statements, and Superannuation Guarantee assessment from 5 September 2013 to the date.

(f)   All management accounts and financial statements from 15 April 2015 to the date.

(g)   Current detailed General Ledger.

(h)   Current detailed General Journal.

(i)   Current Asset and Depreciation Schedule.

(j)   All invoices issues by the judgment debtor and evidence of payment of such invoices from 15 April 2015 to the date.

(k)   Bank Account Statements and Bank Reconciliations for all bank accounts in the name of the judgment debtor (jointly or individually) from 15 April 2015 to the date.

(l)   All documents evidencing any contingent liability of the judgment debtor.

16. It is important to note two things at this point. First, the documents which the Order required Mr Samadi to produce are a combination of the documents which had been the subject of the Concession and those which SX Projects continued to maintain were relevant to the proposed examination (together the “Requested Documents"). Second, the Requested Documents were required to be produced simultaneously with Mr Samadi attending for examination.

17. On 11 September 2015 the solicitor for SX Projects wrote to the Court. While that letter is not in evidence, I infer that it raised with the Court the potential difficulty or inconvenience of the Requested Documents only being made available at the time of the proposed examination. That letter elicited an email from a Deputy Registrar of the Court which included:

Part 38 of the UCPR under which the examination orders are issued do not provide for an early production of documents. It is also not the Court's practice to order early production when making examination orders under Part 38. Documents are produced on the day of the examination.

You may wish to consider issuing a subpoena if the documents are required prior to the examination.

18. Acting on that suggestion, the solicitor for SX Projects sought, and was granted, leave on 22 September 2015 to issue a subpoena to Samadi Developments which was returnable on 6 October 2015 (the “Subpoena"). The Subpoena sought the Requested Documents.

19. On 29 September 2015 Samadi Developments filed the notice of motion upon which it moves today before me in the Duty List. It did so without any further warning to or discussion with the solicitors for SX Projects. That motion had its first return date this morning. The Subpoena had been stood over from 6 October to today to enable the notice of motion to be heard.

20. Mr Samadi is a racing driver for a team known as Garth Walden Racing. This weekend, from 8 to 10 October 2015, he is racing with his team in the Bathurst 1000 races. The races in which he is participating conclude this Sunday morning, 10 October 2015. His team is then proceeding either that night or more probably the next morning with their vehicles to Surfers Paradise to take part in the Gold Coast 600 event from 22 to 26 October 2015.

21. Mr Samadi's evidence is that when he became aware of the Order, he realised that it conflicted with his racing commitments and sought to be released from those commitments. He was unsuccessful. I will say a little more about the evidence which he gave later in these reasons.

22. There are two questions before me. The first is whether the Subpoena should be set aside as an abuse of process. The second is whether the examination scheduled to take place next Monday 12 October 2015 at 11.00 am should be deferred to a date after 26 October 2015. I will consider each of these questions in turn.

23. Mr Hyde's fundamental submission in relation to the Subpoena was that it was an abuse of process because it was merely duplicative of what was required under the Order. Without any disrespect to the careful way in which the argument was developed, it may be summarised as being that the regime in relation to the Order provided its own mechanism for the production of documents and, incidentally, enforcement. That was something different from the Subpoena regime. It was an abuse to invoke the Subpoena regime to do something that was already covered by the Order. In support of this submission he relied on the decision of the English Court of Appeal in Rex v Hurle-Hobbs; Ex Parte Simmons [1945] 1 KB 165.

24. Because of the view to which I have come, it is not necessary for me to engage with the authority to which Mr Hyde referred. That view is that, contrary to Mr Hyde’s submissions, there is no abuse of process because the Order and Subpoena regimes are not completely identical. Now is not the occasion to explore the basis for the Court's practice in relation to not issuing examination orders which provide for the production of documents to precede the actual examination. The fact is, as the Deputy Registrar indicated to the solicitor for SX Projects, that is the Court's practice.

25. In those circumstances, if a party for entirely understandable and legitimate forensic reasons wishes to have access before the time of the examination to documents which it has sought to be produced under an examination order, then in the absence of agreement on the part of the respondent to the order the only means open to a party in the position of SX Projects to obtain those documents in advance is to issue a subpoena. That is what it did. Given the Court's practice in such matters, there is no abuse of process in the course which SX Projects has followed.

26. The Court declines to set aside the Subpoena and will make further orders in relation to it in order to facilitate the purpose for which it was issued, namely the production of the documents before any examination of Mr Samadi.

27. The second question for determination is the postponement of the examination from next Monday. It is necessary for me to say a little bit more about the evidence which Mr Samadi gave under cross-examination by telephone from Bathurst where he is currently engaged in preparation for the Bathurst 1,000.

28. The race in which he is involved will finish on Sunday morning. He told me that he was "obliged" to stay with his team, which would not be able to leave Bathurst until that evening. In the evening, he said, he would need to assist with loading the vehicles onto a transporter and the next morning (being next Monday, the day of the proposed examination) he was to travel in the transporter with the rest of his team to the Gold Coast.

29. Mr Samadi explained that there was important preparation for the next race that would be undertaken by the team as they travelled with the cars to the Gold Coast. The transporter which carries the cars also has a lounge area in which team members sit and discuss technical and other matters in relation to what they have learned from a preceding event and what can be done to improve the cars' performance for the next event. Mr Samadi sought to persuade me that he was absolutely critical to that process as the driver of one of the cars. He accepted that some of that preparation could be undertaken during the day on the Sunday. However, he said that it was necessary for him to be a participant to the extent that further preparation was undertaken by the team in transit to Surfers Paradise.

30. Mr Hyde did not wish to put anything to the Court over and above the evidence which Mr Samadi had given. The precise terms of Mr Samadi's involvement in and remuneration from his membership of the Garth Walden Racing team were not before the Court. Mr Samadi's evidence, however, was that it was contained in various correspondence and perhaps oral agreements. Nevertheless, it did emerge that his payment depended upon his performance in particular races. I infer that he is not in receipt of any other wage or payment that would depend upon him being present in the transport vehicle as the cars are being moved from Bathurst to the Gold Coast. While undoubtedly his participation in those discussions is important, in so far as any question of payment is concerned the Court finds that turns upon his participation and ultimate result in any particular race.

31. The Court is satisfied that requiring Mr Samadi to give evidence next Monday will undoubtedly cause him, and perhaps his team, some inconvenience and perhaps even delay in their preparation. Nevertheless, there are a number of days between when they will arrive at Surfers Paradise and the race in which they will be participating. Mr Samadi will learn today that the Court will require him to give evidence next Monday in accordance with the Order. With that knowledge, he should be able, with the co-operation of his colleagues, to take steps to ameliorate the inconvenience that will be caused by his absence from the team. At its highest, his physical absence will probably be for most of the day while his team are in transit to Surfers Paradise.

32. Against that inconvenience to him and his team must be weighed the importance of compliance with the orders of the Court. Orders for matters such as examinations are serious. Parties will not be relieved of an obligation to comply with them lightly. Personal inconvenience, even perhaps serious personal inconvenience, will not generally be sufficient to relieve a party from complying with an obligation to attend to give evidence imposed upon them by an order of the Court. That being said, each case must turn on its facts.

33. The importance of complying with the Court's order is one thing. Nevertheless, if the postponement will not cause prejudice to the other party, the Court may be more inclined to grant an indulgence notwithstanding the importance of compliance with the Court’s orders. What prejudice would be suffered by SX Projects if the Order was stood over for two or three weeks?

34. I accept Mr Harris SC’s submission that there is sufficient evidence before the Court in relation to what, at face value and in the absence of full explanation, might be thought to be some odd features that suggest that the urgency which SX Projects attaches to the timely conduct of the examination is justified. Those features include:

1. The bank account of Samadi Developments when subjected to a garnishee order only had $84 in it. That same company had paid millions of dollars to SX Projects during the course of construction.

2. The creation of a security interest in favour of Mr Samadi's sister over the assets of Samadi Developments in the period between the lodging of the application for the adjudication determination under the security for payment legislation and the delivery of judgment in that matter.

3. The Notice included a requirement for Samadi Developments to provide details of its assets and liabilities. It did not comply. That sort of information is plainly relevant to an examination of this kind. Whatever other objections Samadi Developments may have had to completing the Notice, no reason has been offered as to why it failed to comply with that much of the Notice within the specified time.

35. To the matters referred to in the preceding paragraph must be added the fact that, as Mr Samadi confirmed under cross-examination, contracts are presently being settled for apartments in the building built by SX Projects. In the ordinary course, Samadi Developments would be the recipient of those payments. However, because of the severing of ownership between Samadi Developments and the two companies controlled by Samadi family members, there is a question properly to be investigated by SX Projects in the course of the examination as to what arrangements exist between the various companies. It may be that matters will emerge during the course of the examination that will give SX Projects a proper basis to take further action in the Court to preserve assets or to do something else to ensure that it has some prospect of receiving satisfaction of the Judgment.

36. For these reasons the Court declines to postpone next Monday’s examination of Mr Samadi.

37. The orders of the Court are:

1. The defendant's notice of motion filed 29 September 2015 is dismissed.

2. The subpoena to Samadi Developments Pty Ltd issued on 22 September 2015 is returnable before the Duty Judge at 10.00am on 9 October 2015 with the intention that Samadi Developments Pty Ltd give the fullest answer it can to that subpoena and any argument as to the relevance of documents sought by that subpoena will be dealt with in the Duty List tomorrow.

3. The defendant is to pay the plaintiff's costs of and incidental to the defendant’s notice of motion filed 29 September 2015.

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Amendments

14 October 2015 - Catchwords - advice changed to advance

Decision last updated: 14 October 2015