In the matter of Bavila Pty Ltd (in liquidation): Borg v Kazar in his capacity as official liquidator of Bavila Pty Ltd (in liquidation) [2006] ACTSC 60 (2 June 2006)

Last Updated: 12 February 2007

In the matter of BAVILA PTY LIMITED (In Liquidation) ACN 077 860 578: MARK BORG and TAMMY BORG v HENRY KAZAR in his capacity as Official Liquidator of BAVILA PTY LIMITED (In Liquidation) ACN 077 860 578

[2006] ACTSC 60 (2 June 2006)

EX TEMPORE JUDGMENT

No. SC 271 of 2006

Judge: Ryan J

Supreme Court of the ACT

Date: 2 June 2006

IN THE SUPREME COURT OF THE )

) No. SC 271 of 2006

AUSTRALIAN CAPITAL TERRITORY )

	IN THE MATTER of Bavila Pty Ltd (In Liquidation) ACN 077 860 578
BETWEEN:	MARK BORG and TAMMY BORG
	Applicants
AND	HENRY KAZAR in his capacity as Official Liquidator of Bavila Pty Limited (In Liquidation) ACN 077 860 578
	Respondent

ORDER

Judge: Ryan J

Date: 2 June 2006

Place: Canberra

THE COURT ORDERS THAT:

1. The application be dismissed.

2. The applicants pay the Liquidator's costs of the application, to be taxed in default of agreement.

IN THE SUPREME COURT OF THE )

) No. SC 271 of 2006

AUSTRALIAN CAPITAL TERRITORY )

	IN THE MATTER of Bavila Pty Ltd (In Liquidation) ACN 077 860 578
BETWEEN:	MARK BORG and TAMMY BORG
	Applicants
AND	HENRY KAZAR in his capacity as Official Liquidator of Bavila Pty Limited (In Liquidation) ACN 077 860 578
	Respondent

Judge: Ryan J

Date: 2 June 2006

Place: Canberra

REASONS FOR JUDGMENT

1 There is before the Court an interlocutory application in respect of summonses which have been issued to the applicants, Mark Borg and Tammy Borg, ("the Borgs") requiring them to attend before a Registrar of the Court on 14 June 2006 to be examined about the examinable affairs of Bavila Pty Limited (In Liquidation) ("the company"). Those summonses have been issued under s 596B of the Corporations Act, which provides:

`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

(1) 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

(2) may be able to give information about examinable affairs of the corporation.'

2 An affidavit has been filed in support of an application to discharge those summonses or to require, pursuant to r 11.7(3) of the Supreme Court Corporations Rules, service on the Borgs of the affidavit which formed the basis for the issue of the summonses.

3 The affidavit in support of the application has been sworn by the applicants' solicitor, Matthew Bridger, who deposed to the service of the summonses and to the fact that the Borgs had ceased to be office holders of the company as of 22 June 2001. I have been informed from the Bar table that on the same date the Borgs ceased to hold any shares in the company.

4 In my view, there is an evidentiary onus on an applicant under r 11.5 to demonstrate, at least prima facie, that the issue of the summons has been procured for an improper purpose or otherwise has been an abuse of the process of the Court. A detailed exposition of those concepts has been undertaken by Lander J as a member of a Full Court of the Federal Court in Re New Tel Ltd (in liq) (ACN 009 068 955); Evans & Anor v Wainter Pty Ltd [2005] FCAFC 114; (2005) 54 ACSR 284 [145 FCR 176, [2005] FCAFC 114; 221 ALR 331].

5 In my view, the mere fact that a recipient of a summons has ceased more than 4 years ago to be a director of the subject company, does not discharge the evidentiary onus which an applicant under r 11.5 sustains. There are many circumstances in which such an applicant, notwithstanding his or her retirement as a director, may be able to provide information about the examinable affairs of the company before or after he or she ceased to be a director.

6 The affidavit of Mr Bridger, I consider, clearly does not discharge that onus. I have, in accordance with what seems to be a practice which has been followed in this Court, examined for myself the affidavit on which the liquidator relied in obtaining the issue of the summonses. I regard that affidavit as supporting, first what would, in any event, be the ordinary inference that the summonses have been obtained in the bona fide belief that the examination will assist the liquidator in the discharge of his functions under the Corporations Act.

7 It also appears from my cursory examination of the liquidator's affidavit, that the proposed examination of the respondents will not be wide-ranging or in the nature of a fishing expedition. Of course, the conduct of the examination with appropriate fairness is entrusted in the first instance to the Registrar conducting the examination.

8 My examination of the same affidavit has also left me with the impression that it would be undesirable to order, pursuant to r 11.7 of the Supreme Court Corporations Rules that it be made available for inspection by the applicants before the proposed examination.

9 For these reasons, the application will be refused in each of its aspects. In my view, this is an appropriate occasion on which to order that the applicants pay the liquidator's costs. In other circumstances, I might have been persuaded to reserve those costs until after the conduct of the examination but I am not persuaded that it is warranted to do so in the present case. The application will be dismissed with costs.

I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Ryan.

Associate:

Date: 14^th June 2006.

Counsel for the Applicants: Mr R J Arthur

Solicitor for the Applicants: Elrington Boardman & Allport

Counsel for the Respondent: Mr I Nicol

Solicitor for the Respondent: Williams Love & Nicol

Date of hearing: 2 June 2006

Date of judgment: 2 June 2006