S & V Nominees Pty Ltd (in liquidation) v Rabobank Australia Limited (Formerly known as Primary Industry Bank of Australia Limited) [2010] FCA 429 (7 May 2010)

Last Updated: 7 May 2010

FEDERAL COURT OF AUSTRALIA

S & V Nominees Pty Ltd (in liquidation) v Rabobank Australia Limited (Formerly known as Primary Industry Bank of Australia Limited)

[2010] FCA 429

Citation:		S & V Nominees Pty Ltd (in liquidation) v Rabobank Australia Limited (formerly known as Primary Industry Bank of Australia Limited) [2010] FCA 429
Parties:		S & V NOMINEES PTY LTD (IN LIQUIDATION) ACN 060 323 033 and VIRGINIA PACKING SHED PTY LTD (IN LIQUIDATION) ACN 062 072 557 v RABOBANK AUSTRALIA LIMITED (FORMERLY KNOWN AS PRIMARY INDUSTRY BANK OF AUSTRALIA LIMITED) ACN 001 621 129
File number:		SAD 169 of 2009
Judge:		BESANKO J
Date of judgment:		7 May 2010
Catchwords:		CORPORATIONS – application to discharge examination summons – where one of two liquidators sought examination of company secretary of defendant and production of documents – where correspondence between liquidator’s solicitors and defendant’s solicitors suggested that liquidator’s purpose was only to obtain documents – whether application amounted to an abuse of process because production of documents was not sought in aid of examination – whether categories of documents sought under summons were too wide and oppressive – whether application for examination summons had sufficient connection with proceeding to be brought in proceeding – whether one of two liquidators had standing Held: application dismissed – liquidator did not have sole purpose of obtaining documents – summons amended to limit documents to be produced – examination and production assisted liquidator’s understanding of merits of proceeding – one of two liquidators appointed jointly and severally has standing to make application
Legislation:		Corporations Act 2001 (Cth) ss 53, 427, 432, 530B, 596B, 596C, 596D, 597 Corporate Law Reform Act 1992 (Cth) Federal Court (Corporations) Rules 2000 (Cth) r 11.5 Federal Court Rules O 35 r 7
Cases cited:		Flanders v Beatty [1995] VICSC 73; (1995) 16 ACSR 324 cited Gerah Imports Pty Ltd v The Duke Group Ltd (In Liquidation) (No 2) [1993] SASC 3902; (1993) 62 SASR 158 discussed Harvey v Burfield (2002) 84 SASR 11 referred to In the matter of Bernsteen Pty Ltd & Anor (No 2) (2007) 25 ACLC 129 referred to Meteyard v Love (in their capacity as recs and mgrs of Southland Coal Pty Ltd (in liq)) [2005] NSWCA 444; (2005) 224 ALR 588 discussed New Zealand Steel (Australia) Pty Ltd v Burton (1994) 13 ACSR 610 referred to Re BPTC (in liquidation) (1992) 10 ACSR 756 discussed Re Excel; Worthley v England (1994) 52 FCR 69 cited Re Interchase Corporation Limited (In Liquidation) (No 2) (1993) 47 FCR 253 referred to Re Jay-O-Bees Pty Ltd (in liq); Rosseau Pty Ltd (in liq) v Jay-O-Bees Pty Ltd (in liq) [2004] NSWSC 818; (2004) 50 ACSR 565 discussed Re New Cap Reinsurance Corp Holdings Ltd; Gibbons (Plaintiff) [2001] NSWSC 835 cited Re Normans Wines Ltd (Receivers and Managers Appointed) (in liq); Harvey v Burfield [2004] SASC 171; (2004) 88 SASR 541 referred to Sandhurst Trustees Ltd v Harvey (2004) 88 SASR 519 cited Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509 cited
Date of hearing:	10 February 2010
Place:	Adelaide
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	50
Counsel for the Plaintiffs:	Mr T Duggan
Solicitor for the Plaintiffs:	Thomson Playford Cutlers
Counsel for the Defendant:	Mr B Roberts
Solicitor for the Defendant:	Finlaysons

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION	SAD 169 of 2009

BETWEEN:	S & V NOMINEES PTY LTD (IN LIQUIDATION) ACN 060 323 033 First Plaintiff VIRGINIA PACKING SHED PTY LTD (IN LIQUIDATION) ACN 062 072 557 Second Plaintiff
AND:	RABOBANK AUSTRALIA LIMITED (FORMERLY KNOWN AS PRIMARY INDUSTRY BANK OF AUSTRALIA LIMITED) ACN 001 621 129 Defendant

JUDGE:	BESANKO J
DATE OF ORDER:	7 MAY 2010
WHERE MADE:	ADELAIDE

THE COURT ORDERS THAT:

1. The summons be amended so that paragraph (b) reads as follows:

“(b) to produce at the examination such books and records in your possession relating to the examinable affairs of the companies and limited to those books and records specified in terms of Schedule A.”

2. The application by interlocutory process dated 18 January 2010 for an order discharging the examination summons be dismissed.
   

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION	SAD 169 of 2009

BETWEEN:	S & V NOMINEES PTY LTD (IN LIQUIDATION) ACN 060 323 033 First Plaintiff VIRGINIA PACKING SHED PTY LTD (IN LIQUIDATION) ACN 062 072 557 Second Plaintiff
AND:	RABOBANK AUSTRALIA LIMITED (FORMERLY KNOWN AS PRIMARY INDUSTRY BANK OF AUSTRALIA LIMITED) ACN 001 621 129 Defendant

JUDGE:	BESANKO J
DATE:	7 MAY 2010
PLACE:	ADELAIDE

REASONS FOR JUDGMENT

Introduction

1. This is an application by Mr Jeffrey Davis under r 11.5 of the Federal Court (Corporations) Rules 2000 (Cth) (“the Corporations Rules”) for an order discharging an examination summons. The examinee is the company secretary of Rabobank Australia Limited (formerly known as Primary Industry Bank of Australia Limited) (“Rabobank”) and he is employed by its ultimate holding company as Head Counsel, Group Legal.
2. The order that an examination summons issue was made by a registrar of this Court under s 596B of the Corporations Act 2001 (Cth) (“the Act”) on 23 December 2009. The applicant for the summons was one of two joint and several liquidators of S & V Nominees Pty Ltd (In Liquidation) and Virginia Packing Shed Pty Ltd (In Liquidation) (“the companies”).
3. In October 2002, Mr Andre Strazdins and Mr Desmond Munro were appointed, on a joint and several basis, as voluntary administrators of the companies. On 13 December 2002, they were appointed as joint and several liquidators of the companies.
4. Prior to November 2003, the companies owned property, comprising two certificates of title, in Virginia upon which they operated a substantial market garden business. The companies were financed by Rabobank.
5. In about August 2002, the companies defaulted on their loan from Rabobank and Rabobank, which held a registered mortgage over the property, took control of the property. On 5 November 2003 it exercised a power of sale over the property and sold the property to a company called Hydroponics Farm Pty Ltd.
6. The companies allege that Rabobank, in taking and maintaining control of the property between about August 2002 and November 2003 and in selling it in November 2003, breached various duties it owed to them. On 28 October 2009, they instituted a proceeding in this Court (SAD 169 of 2009) in which they claimed substantial damages and other forms of relief from Rabobank.
7. On 15 December 2009, Mr Strazdins, as one of the liquidators of the companies, issued an interlocutory process in the proceeding claiming an order under s 596B of the Act that an examination summons issue against the proper officer of Rabobank. The application was supported by an affidavit of Mr Strazdins sworn on 14 December 2009 (“Mr Strazdins’ affidavit”).
8. As I have said, a registrar of this Court made an order that an examination summons issue to Mr Jeffrey Davis. The summons also required the production of documents and a number of categories of documents were identified in a schedule (referred to as Schedule A) to the summons.
9. When the examinee’s interlocutory process under r 11.5 of the Corporations Rules came before me, a question also arose as to whether the examinee should be given access to Mr Strazdins’ affidavit.
10. After hearing argument from both parties, I ruled that, as to a number of matters raised by the examinee, there was no substance in the argument. However, I ruled that there was sufficient substance in other matters raised by the examinee to justify an order that he be given access to Mr Strazdins’ affidavit (Re Excel; Worthley v England (1994) 52 FCR 69 (“Re Excel”) at 93-94). The arguments I rejected and my reasons for doing so were as follows:

(1) The examinee submitted that in terms of the documents it sought, the examination summons was too wide and was oppressive. Not only did it seek production of the documents listed in Schedule A, but it also sought, more generally, books and records in the examinee’s possession relating to the examinable affairs of the companies.

Counsel for Mr Strazdins accepted that this requirement for the production of documents was too wide. He said that there had been a mistake both in the body of the draft summons and in Schedule A. The mistake had been identified during the hearing before the Registrar and it was intended that the order for the production of documents be restricted to the categories of documents identified in Schedule A. The mistake in Schedule A had been corrected, but the mistake in the body of the summons had been overlooked. Counsel for Mr Strazdins asked me to make an order amending the summons.

I indicated that I would allow Mr Strazdins to amend the summons. It seemed to me that I had the power to amend the summons (see, for example, the approach taken by Mansfield J in In the matter of Bernsteen Pty Ltd & Anor (No 2) (2007) 25 ACLC 129; see also O 35 r 7 of the Federal Court Rules) and that it was an appropriate case in which to exercise the power. I will make an order that the body of the summons be amended so that it reads, relevantly:

“(b) to produce at the examination such books and records in your possession relating to the examinable affairs of the companies and limited to those books and records specified in terms of Schedule A.”

(2) The examinee submitted that the only interlocutory process which may be issued in the proceeding (SAD 169 of 2009) is a process seeking relief which is sought for the purpose of advancing a claim made in the proceeding. He submitted that the interlocutory process brought by Mr Strazdins and which led to the issuing of the summons did not have such a connection with the proceeding.

Counsel for the examinee referred to the decision of Campbell J in Re Jay-O-Bees Pty Ltd (in liq); Rosseau Pty Ltd (in liq) v Jay-O-Bees Pty Ltd (in liq) [2004] NSWSC 818; (2004) 50 ACSR 565 (“Re Jay-O-Bees”) at 579-581 [63]-[72]. Campbell J said (at 579 [64]):

“[64] An interlocutory application can involve a subject matter which will not arise in the principal proceedings — for example, whether a claim made against an overseas defendant is one which can properly be served outside Australia under Pt 10 Supreme Court Rules 1970, whether a particular document need not be produced on the ground of privilege, or whether a particular interrogatory should be answered. Further, an interlocutory application can involve parties who are not parties to the principal proceedings — for example, a stranger to the litigation served with a subpoena applies on notice of motion in the proceedings to have that subpoena set aside. But relief which is sought in an interlocutory application must always be relief which is sought for the purpose of advancing claims which either a plaintiff or a defendant makes in the principal proceedings.”

Re Jay-O-Bees was quite a different case to the case before me. It concerned a claim for rectification of a contract brought by interlocutory process in a winding up. In the case before me, the winding up of the companies occurred by reason of creditors’ resolutions under s 439C of the Act and the options for Mr Strazdins were an originating process or an interlocutory process in the existing action. I considered that, on the facts of this case, the examination summons was closely related to the principal proceeding. The examination and production of documents will assist the liquidator in his understanding of the legal and commercial merits of the proceeding. To my mind, that was a sufficient connection and, in those circumstances, I rejected the examinee’s submission.

(3) The examinee submitted that the application for the examination summons was brought by the companies and they had no standing to do so. They were not “eligible applicants” within s 596B(1)(a) (see s 9). In the alternative, the application was brought by only one of two liquidators and one of two liquidators is not entitled to bring such an application. In that regard, the examinee relied on Harvey v Burfield (2002) 84 SASR 11.

I rejected both these arguments. It was clear from the interlocutory process that the applicant was Mr Strazdins. It is clear from the evidence that Mr Strazdins was one of two liquidators appointed to act jointly and severally. Mr Strazdins had standing to bring the application for the examination summons.

11. The argument which I considered had substance was that the order for production of documents in the summons was bad because it was not sought in aid of an oral examination. There was a related point made by the examinee, namely, that he was not a person who fell within the terms of s 596B(1)(b)(ii) of the Act.

Further factual matters

12. I start with the information contained in Mr Strazdins’ affidavit. Mr Strazdins deposes to the fact that the property was valued by Colliers Jardine as at 1 January 2008 and that that firm expressed the opinion that the market value of the property for the existing use, assuming completion of Greenhouse 3, was $8 million and that the market value of the property on a vacant possession basis, exclusive of GST, assuming completion of Greenhouse 3, was $6.1 million. Rabobank took a Memorandum of Mortgage over the property in February 2001 and that Memorandum of Mortgage was stamped with a note, “total security” ($2,800,000). Rabobank also took charges over the assets of the companies.
13. Mr Strazdins states that the companies had a management agreement with a company called P’petual Holdings Pty Limited (“P’petual”) which was a Sydney-based company directed by Mr Zhong Lai “Michael” Gao. As I have previously said, the companies defaulted on the loan to Rabobank in August 2002. Mr Strazdins states that he believes that Mr Gao had discussions with an officer of Rabobank, Mr Peter Caves, in August 2002. Mr Strazdins states that he believes that these discussions culminated in an agreement, as at early December 2002, that Mr Gao or his nominee would have possession of the property, become Rabobank’s customer and buy the property from Rabobank for the amount the companies owed Rabobank. Mr Strazdins states that he believes that Rabobank took control of the property in 2002 and that at that time they were owed approximately $2.9 million by the companies. Mr Strazdins states that P’petual remained in possession of the property for more than a year.
14. In late December 2002 or early January 2003, Rabobank obtained a valuation from a valuation firm called McGees. The property was valued by McGees as at 13 December 2002 on a completed basis as a going concern at $5 million GST exclusive, on an “as is” basis as a going concern at $1.5 million GST exclusive, and on a forced sale basis at $500,000 GST exclusive. Mr Strazdins states that, in October and November 2003, Rabobank sold the property to Hydroponics Farm Pty Ltd (“Hydroponics”) (a company controlled by Mr Gao) for approximately $2.72 million. Rabobank approved finance in favour of Hydroponics in the sum of $4.08 million.
15. Mr Strazdins states that Rabobank has not lodged with the Australian Securities and Investments Commission the forms required to be lodged by a controller of property under ss 427(1(b)), 427(2), 427(4) and 432 of the Act.
16. It seems that, between March 2003 and August 2005, the liquidators conducted some investigations into the transactions involving the control and sale of the companies’ property. The liquidators also took action against the directors of the companies and that action consumed a good deal of their time and resources between 2005 and 2008. Mr Strazdins states that while the action against the directors was “legally successful”, it did not yield funds net of the costs involved.
17. Mr Strazdins states that the proceeding by the companies against Rabobank was issued on 28 October 2009 which was the last day before the causes of action pleaded “might have become statute barred”.
18. In his affidavit, Mr Strazdins states:

“21. The proposed Examination Summonses are as follows:
(a) The defendant, the documents being all documents including but not limited to:
(i) the property;
(i) its files in connection with:
(A) the plaintiffs; and
(B) Mr Gao, P’petual, Hydroponics and entities associated with them.
(ii) those of its employees and agents; and
(iii) those of its agent and solicitor, Mr Obst (while acknowledging that parts of this file may attract legal professional privilege).
(b) (Deferred to be considered after documents have been disclosed), possible examination of:
[4 persons are named; Mr Davis is not one of them]

22. I respectfully submit that within the meaning of section 596B of the Act:

(a) I am eligible applicant applying for the summonses;
(b) For the reasons that follow, each of the proposed examinees may be able to give information about the examinable affairs.

The Defendant (documents)

23. Access to the defendant’s files in connection with its dealings with the property, the plaintiffs and the purchaser and related parties are needed to:

(a) identify answers or further information in connection with the examinable affairs;
(b) ensure the correctness of the facts relied upon by the plaintiffs and to ensure that there are no facts or circumstances that might amount to a plausible defence in connection with the matters set out in the statement of claim generally; and
(c) make a decision as to what further examinations (if any) are necessary or convenient and in connection with which particular topics.”

19. I turn now to evidence put before me concerning correspondence which passed between the parties between May 2009 and the issue of the examination summons. On 11 May 2009, the solicitors acting for the liquidators wrote to Rabobank asking the bank if it would permit them to inspect all files relating to the sale of the property. The solicitors said that if Rabobank did not agree then they were instructed to make an application for production in anticipation of action in accordance with Rule 32 of the South Australian Supreme Court Civil Rules 2006. In addition, the solicitors for the liquidators enclosed a notice of demand for books of the companies under s 530B(4) of the Act.
20. On 1 June 2009, the examinee, on behalf of Rabobank, wrote to the solicitors for the liquidators and advised them that Rabobank had had time to retrieve and review the relevant files, and that the bank was responding to the notice under s 530B(4).
21. On 10 June 2009, the solicitors for the liquidators wrote to the examinee (in his capacity as a representative of Rabobank) calling for a response to the notice issued under s 530B of the Act. On 12 June 2009, the solicitors for the liquidators wrote to the examinee asking for documents and requesting the cooperation of the bank. They again referred to Rule 32 of the South Australian Supreme Court Civil Rules 2006.
22. On 12 June 2009, the examinee, on behalf of Rabobank, responded to the letter dated 10 June 2009 and asserted that Rabobank had complied with its obligations under s 530B(4).
23. It appears that, at about this time, Rabobank engaged the services of solicitors. On 25 June 2009, solicitors acting for Rabobank wrote to the solicitors for the liquidators. On the same day, the solicitors for the liquidators wrote back to the solicitors for Rabobank identifying six categories of documents that they were seeking from Rabobank. Further correspondence followed, the details of which it is unnecessary to relate.
24. On 24 September 2009, solicitors for Rabobank wrote to the solicitors for the liquidators and advised that Rabobank had omitted to lodge accounts as required by s 432 of the Act, that the omission was advertent, and that Rabobank would attend to lodgment as soon as possible. Further correspondence followed. On the day the examination summons was issued (that is, 23 December 2009), the solicitors for the liquidators wrote to the solicitors for Rabobank and said, among other things:

“Our client is requiring production of the documents only on 4 February 2010. Mr Davis is not required to attend in Adelaide to be examined as to completeness of the documents produced on that date, however, our client reserves rights to require him to be present for examination later. We will let you know if/when Mr Davis is required to attend to be examined after inspection of the documents produced.”

25. On 24 September 2009, the solicitors for the liquidators wrote again in similar terms to the solicitors for Rabobank.
26. The examinee put evidence before me by way of affidavit. He deposes to the fact that he has not had any dealings with the companies or with Hydroponics Farm Pty Ltd, P’petual Holdings Pty Ltd or Mr Michael Gao in relation to the property, or in relation to the provision of credit by Rabobank in connection with the acquisition or potential acquisition of the property by any such entities. He deposes to the fact that he has not had any involvement in any of the principal dealings or transactions referred to in the Statement of Claim in the proceeding. He deposes to the fact that he does not have any personal knowledge of such matters other than knowledge which he has obtained from Rabobank’s files after such transactions and other dealings occurred. He deposes to the fact that his first dealings with the companies occurred in May 2009 when Rabobank received the letter from the liquidators’ solicitors dated 11 May 2009. The examinee provides additional details in a later affidavit. He deposes to the fact that he has not undertaken any review of Rabobank’s files relating to the sale of the property which was formerly owned by the companies. He deposes to the fact that upon receiving the letter from the liquidators’ solicitors dated 11 May 2009, he instructed a lawyer “who was then on secondment with the defendant from an external firm of lawyers to locate the defendant’s files and extract certain documents which were described in the notice of demand for books and records”. The examinee deposes to the fact that he examined several of such documents for the purpose of responding to questions which the lawyer asked of him in the course of extracting the documents. He deposes to the fact that he did not review all of the documents which were provided in response to the notice of demand. The examinee deposes to the fact that the questions asked of him by the lawyer in connection with the examination of such documents related to issues relevant to the demand for production of the documents, and “were not for any purpose associated with me gaining an understanding of the underlying matters which were the subject of the documents”. Finally, the examinee deposes to the fact that he does not have any responsibility on behalf of Rabobank for compliance with the lodgment and notification requirements of Chapter 5 of the Act.
27. The last item of evidence put before me was an affidavit of a solicitor from the firm of solicitors acting for the liquidators. He deposes to the fact that it is intended to examine the examinee as to the following matters:

“4.1 His involvement in the review of the defendant’s files in so far as they relate to Park Road, Virginia property and the sale of that property;
4.2 The completeness of the documents to be provided pursuant to section 596C(2), Corporations Act;
4.3 Whether he has in his possession and/or custody any documents as referred to in the examination summons and if not the person that has;
4.4 The branch or branches at which the documents were located;
4.5 An explanation of the documents produced pursuant to section 596D(2) where required and any other matters relating to the examinable affairs that arise from a consideration of the documents following inspection;
4.6 The role of Mr Obst in the marketing and sale of the Park Road, Virginia property;
4.7 The position of Mr Caves and Mr Sundberg of Rabobank at the relevant time;
4.8 Their responsibilities in relation to the marketing and sale of Park Road, Virginia;
4.9 When the defendant considers that it commenced and concluded (if it has concluded) its role as controller of the Park Road, Virginia property;
4.10 Any benefits received by the defendant, as controller, in the form of rent, given that the property was occupied for a period of approximately one year before it was sold; and
4.11 Why the defendant did not give notification that a controller had been appointed, or lodge any reports, and what information would have been contained in those reports had they been lodged.”

Issues on the application

28. The examinee put three arguments. First, he submitted that he was not a person who may be able to give information about the companies’ examinable affairs within s 596B(1)(b)(ii). It is not suggested that he is a person who falls within s 596B(1)(b)(i). Secondly, he submitted that the liquidator had an ulterior purpose in seeking the examination summons, namely, the production of documents and that he did not, in truth, seek to examine the examinee. Thirdly, he submitted that the legislative provisions only allowed for the production of documents which were relevant to the examinee’s examination and the documents in Schedule A went well beyond documents which could be considered relevant to the examination of the examinee.
29. In my opinion, each of these arguments must be rejected.
30. Section 596B of the Act is in the following terms:

“596B Discretionary examination
(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.
(2) This section has effect subject to section 596A.”

31. The term examinable affairs is defined in s 9 as follows:

“examinable affairs, in relation to a corporation means:
(a) the promotion, formation, management, administration or winding up of the corporation; or
(b) any other affairs of the corporation (including anything that is included in the corporation’s affairs because of section 53); or
(c) the business affairs of a connected entity of the corporation, in so far as they are, or appear to be, relevant to the corporation or to anything that is included in the corporation’s examinable affairs because of paragraph (a) or (b).”

32. Section 53 provides, relevantly:

53 Affairs of a body corporate
For the purposes of the definition of examinable affairs in section 9, section 53AA, 232, 233 or 234, paragraph 461(1)(e), section 487, subsection 1307(1) or section 1309, or of a prescribed provision of this Act, the affairs of a body corporate include:
(a) the promotion, formation, membership, control, business, trading, transactions and dealings (whether alone or jointly with any other person or persons and including transactions and dealings as agent, bailee or trustee), property (whether held alone or jointly with any other person or persons and including property held as agent, bailee or trustee), liabilities (including liabilities owed jointly with any other person or persons and liabilities as trustee), profits and other income, receipts, losses, outgoings and expenditure of the body; and
...
(d) any act or thing done (including any contract made and any transaction entered into) by or on behalf of the body, or to or in relation to the body or its business or property, at a time when:
(i) a receiver, or a receiver and manager, is in possession of, or has control over, property of the body; or
(ii) the body is under administration; or
(iia) a deed of company arrangement executed by the body has not yet terminated; or
(iii) a compromise or arrangement made between the body and any other person or persons is being administered; or
(iv) the body is being wound up;
and, without limiting the generality of the foregoing, any conduct of such a receiver or such a receiver and manager, of an administrator of the body, of an administrator of such a deed of company arrangement, of a person administering such a compromise or arrangement or of a liquidator or provisional liquidator of the body; and ...”

33. Sections which are related to s 596B and which are relevant are as follows:

“596C Affidavit in support of application under section 596B
(1) A person who applies under section 596B must file an affidavit that supports the application and complies with the rules.
(2) The affidavit is not available for inspection except so far as the Court orders.

596D Content of summons
(1) A summons to a person under section 596A or 596B is to require the person to attend before the Court:
(a) at a specified place and at a specified time on a specified day, being a place, time and day that are reasonable in the circumstances; and
(b) to be examined on oath about the corporation’s examinable affairs.
(2) A summons to a person under section 596A or 596B may require the person to produce at the examination specified books that:
(a) are in the person’s possession; and
(b) relate to the corporation or to any of its examinable affairs.
(3) A summons under section 596A is to require under subsection (2) of this section the production of such of the books requested in the application for the summons as the summons may so require.”

34. Finally, s 597(9) provides as follows:

“(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.”

35. In relation to the examinee’s first argument, a number of points about s 596B(1)(b)(ii) should be noted. First, the paragraph only requires the Court to be satisfied that the person may be able to give information. It is not necessary for the Court to be satisfied that the person is able to give information. Secondly, the Court must be satisfied that the person may be able to give information about examinable affairs. Information is broader than direct evidence. As I understand it, the person to be summonsed need not have direct knowledge of the examinable affairs of the corporation. In Meteyard v Love (in their capacity as recs and mgrs of Southland Coal Pty Ltd (in liq)) [2005] NSWCA 444; (2005) 224 ALR 588 (“Meteyard”), Basten JA (with whom Beazley JA agreed) said (at 596 [38]):

“The concept of “information” may also need to be considered in context but appears not to have been the subject of detailed consideration in relation to this provision of the Act. The primary meaning given in The Australian Concise Oxford Dictionary is “something told; knowledge” and “items of knowledge; news”. No doubt information can include matters of fact, belief and opinion; nevertheless, there will be a point at which opinions are better described as speculation rather than information.”

Thirdly, the Court must be satisfied that the person may be able to give information about examinable affairs of the corporation. As can be seen from s 53, there is a broad definition of examinable affairs. A person who is able to say that a company had a document which recorded a transaction between that company and the corporation referred to in s 596B is a person who may be able to give information about examinable affairs of the corporation.

36. The examinee is the secretary of Rabobank. Rabobank entered into transactions with the company including transactions involving property owned by the company. The examinee has considered certain documents. In my opinion, whether he has conducted a review or not is beside the point. He is a person who may be able to give information about examinable affairs of the corporation. The first argument must be rejected.
37. The applicant’s second argument is somewhat unusual because, even on the examinee’s argument, the alleged ulterior purpose, namely, to obtain specified books that relate to the corporation or any of its examinable affairs is a proper purpose of an eligible applicant in seeking an examination summons under s 596B of the Act providing it is combined with the purpose of examining the person named in the summons. On the examinee’s argument, it becomes an ulterior purpose where it is the only purpose of the eligible applicant.
38. The law reports contain many examples of cases where it has been argued that the compulsory examination process is being abused because it is being used to further existing litigation or not for the benefit of the company as a whole: see, for example, Re Interchase Corporation Limited (In Liquidation) (No 2) (1993) 47 FCR 253; Sandhurst Trustees Ltd v Harvey (2004) 88 SASR 519; Re Normans Wines Ltd (Receivers and Managers Appointed) (in liq); Harvey v Burfield [2004] SASC 171; (2004) 88 SASR 541. There have also been cases where it has been argued that the compulsory examination procedure is being abused because it has been invoked only after the applicant has failed in some other procedure: see, for example, the cases referred to by Hayne J in New Zealand Steel (Australia) Pty Ltd v Burton (1994) 13 ACSR 610.
39. I have not been able to find a case in which the precise argument raised by the examinee has been considered. There are some observations by Mullighan J in Gerah Imports Pty Ltd v The Duke Group Ltd (In Liquidation) (No 2) [1993] SASC 3902; (1993) 62 SASR 158 (“Gerah Imports”) which suggest that the compulsory examination process should not be used where the sole purpose is to obtain documents. I will proceed on the basis that one of the eligible applicant’s purposes in seeking an examination summons must be the examination of the person to be summoned. If that purpose is absent then the eligible applicant’s purposes are ulterior purposes.
40. The examinee’s argument is to be assessed in a context which has the following features.
41. First, in rejecting the examinee’s first argument, I have concluded that, as a matter of objective fact, the examinee is a person who may be able to give information about examinable affairs of the companies. As I have said, it is not necessary that the examinee have direct knowledge of any events or transactions and it may be that the examinee is not able to give a great deal of information and that his examination is a relatively short one. However, these matters do not gainsay the proposition that he is a person who may be able to give information about examinable affairs of the corporation.
42. Secondly, the specified books which may be a subject of the summons by reason of s 596D(2) are not limited to books relating to, or relevant for the purposes of, the examination of the person named in the summons. That is not the effect of the words used in s 596D(2) which are that the specified books, “relate to the corporation or any of its examinable affairs”. These are words of broad import and are to be contrasted with the words used in s 597(9), namely, “and are relevant to matters to which the examination relates or will relate”. I do not think the reasoning in the case heavily relied on by the examinee – Re BPTC (in liquidation) (1992) 10 ACSR 756 (“Re BPTC Ltd (in liq)”) – has any application having regard to the terms of s 596D(2). The decision in Re BPTC Ltd (in liq) was made under a quite different legislative regime (s 597 Corporations Law; Part 36 r 12 of the Supreme Court Rules (NSW)) than that which applies in this case. The Corporate Law Reform Act 1992 (Cth) effected substantial changes to the regime and it certainly expanded the scope of the compulsory examination procedure: Flanders v Beatty [1995] VICSC 73; (1995) 16 ACSR 324 at 333 per Ormiston J (with whom Tadgell and Harper JJ agreed); Re New Cap Reinsurance Corp Holdings Ltd; Gibbons (Plaintiff) [2001] NSWSC 835 at [27] et seq per Santow J; Meteyard at 591-592 [12].
43. The fact is that an eligible applicant may apply for an examination summons with the purpose of carrying out only a brief examination of the person named in the summons and with the purpose of seeking a large number of specified books relating to the corporation or to any of its examinable affairs. As a matter of practice, the documents are sometimes produced first and then, at a later date, an examination is conducted. As a matter of practice, the subsequent examination is often effected by what is contained in the documents.
44. As I understand the authorities, an abuse of process is made out if the improper purpose is the predominant purpose: Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509 at 529; Re Excel at 89. That cannot be the case here because, even on the examinee’s argument, seeking the production of documents can be a proper purpose. The examinee accepts that in this case in order to succeed he must show that the purpose of obtaining production of documents was the sole purpose and that Mr Strazdins’ purpose or purposes did not involve examining the examinee.
45. These matters suggest that the examinee must show quite clearly that the liquidator never intended to examine the examinee.
46. I think that the evidence establishes that Mr Strazdins’ principal purpose in applying for the examination summon was to obtain production of what he considered to be relevant documents. That seems to me to follow from the matters set out below:
    1. The correspondence commencing on 11 May 2009 which passed between the solicitors for the liquidators and the solicitors for Rabobank;
    2. The “if/when” correspondence from the liquidators’ solicitors in December 2009;
    3. The fact that the draft examination summons was directed to the proper officer of Rabobank;
    4. The fact that Mr Strazdins did not mention Mr Davis in his confidential affidavit. He did mention previous officers of Rabobank.
    5. The fact that in his affidavit in support of his application Mr Strazdins said what I have set out in [18] above.
47. Despite these matters, I am not satisfied that the evidence establishes that Mr Strazdins never intended to examine the examinee. No doubt he would take advice at the appropriate time from his solicitors and that might have affected his approach to the examination of the examinee.
48. In any event, I am satisfied that Mr Strazdins now intends to conduct an examination of the examinee. On the material now before me, Mr Strazdins’ purposes in seeking an examination summons are proper purposes. That is sufficient because as I understand it, the hearing before me is a rehearing based on the material put before me and I am to assess the question of purpose at the time of the hearing before me (see Gerah Imports at 161). Alternatively, the fact that I am satisfied Mr Strazdins intends to conduct an examination is a sufficient discretionary reason not to grant relief based on the ulterior purpose argument.
49. The examinee’s third argument must be rejected for reasons I have already given (see [42] above). The specified books referred to in the examination summons must relate to the companies or any of the examinable affairs; there is no requirement that they be relevant to matters to which the examination relates or will relate.

Conclusion

50. The application by interlocutory process dated 18 January 2010 for an order discharging the examination summons must be dismissed.
    

I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko.

Associate:

Dated: 7 May 2010