CK Nominees Australia Pty Ltd v Official Receiver (WA) [2007] FCAFC 118 (6 August 2007)

BANKRUPTCY – appeal from single judge – where challenge to notices issued by official receiver under s 77C of the Bankruptcy Act 1966 (Cth) – representative proceedings - consideration of jurisdiction to review s 77C notices – whether notices were oppressive - nature of Court's power to review notice on ground of oppression

Bankruptcy Act 1966 (Cth) ss 15(5), 77C, 178

Re Bayliss; Ex parte Official Trustee (1987) 15 FCR 167 referred to
Re Bond; Ex parte Bond v Caddy (No 2) (1994) WAR 345 referred to
Bond v Tuohy (1995) 128 ALR 595 cited
Brandy v Human Rights and Equal Opportunity Commission [1995] HCA 10; (1995) 183 CLR 245 referred to
CK Nominees Australia Pty Ltd v Official Receiver (WA) [2006] FCA 967 varied
Re Dingle; Westpac Banking Corporation v Worrel (1993) 47 FCR 478 cited
Gerah Imports Pty Ltd v The Duke Group Ltd [1993] SASC 3902; (1993) 62 SASR 158 cited
Cummings v Claremont Petroleum NL [1996] HCA 19; (1995) 185 CLR 124 referred to
Forshaw v Thompson (1992) 35 FCR 329 referred to
Re Jonson; Ex parte Prentice (unreported, 1 September 1997) followed
Re Lamb; Ex parte Melsom (1980) 42 FLR 399 referred to
New England Biolabs Inc v F Hoffman-La Roche AG [2004] FCAFC 213; (2004) 141 FCR 1 cited
Macchia v Nilant [2001] FCA 7; (2001) 110 FCR 101 referred to
In re Thurlow; Ex parte Official Receiver (1895) 2 Mans 158 cited
Re Tyndall [1977] FCA 15; (1977) 30 FLR 6 followed
O'Meara v Hitwise Pty Ltd [2007] FCAFC 114 cited
Smorgon v Australia and New Zealand Banking Group Ltd [1976] HCA 53; (1976) 134 CLR 475 cited

CK NOMINEES AUSTRALIA PTY LTD ACN 092 302 399 v THE OFFICIAL RECEIVER FOR THE BANKRUPTCY DISTRICT OF THE STATE OF WESTERN AUSTRALIA AND GEOFFREY FRANK TOTTERDELL IN HIS CAPACITY AS TRUSTEE OF THE BANKRUPT ESTATE OF KEVIN TREVOR POLLOCK
WAD 231 OF 2006

MOORE, TAMBERLIN AND GYLES JJ
6 AUGUST 2007
SYDNEY (VIA VIDEOLINK TO PERTH)(HEARD IN PERTH)

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	WAD 231 OF 2006

BETWEEN:	CK NOMINEES AUSTRALIA PTY LTD ACN 092 302 399 Appellant
AND:	THE OFFICIAL RECEIVER FOR THE BANKRUTCY DISTRICT OF THE STATE OF WESTERN AUSTRALIA First Respondent GEOFFREY FRANK TOTTERDELL in his capacity as Trustee of the bankrupt estate of Kevin Trevor Pollock Second Respondent

JUDGES:	MOORE, TAMBERLIN AND GYLES JJ
DATE OF ORDER:	6 AUGUST 2007
WHERE MADE:	SYDNEY (VIA VIDEOLINK TO PERTH)(HEARD IN PERTH)

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	WAD 231 OF 2006

BETWEEN:	CK NOMINEES AUSTRALIA PTY LTD ACN 092 302 399 Appellant
AND:	THE OFFICIAL RECEIVER FOR THE BANKRUTCY DISTRICT OF THE STATE OF WESTERN AUSTRALIA First Respondent GEOFFREY FRANK TOTTERDELL in his capacity as Trustee of the bankrupt estate of Kevin Trevor Pollock Second Respondent

JUDGES:	MOORE, TAMBERLIN AND GYLES JJ
DATE:	6 AUGUST 2007
PLACE:	SYDNEY (VIA VIDEOLINK TO PERTH)(HEARD IN PERTH)

1 This is an appeal from a judgment of a single judge given on 31 July 2006 concerning notices issued under s 77C of the Bankruptcy Act 1966 (Cth) ("the Act"). The appellant had challenged the notices on the grounds that they were not authorised by the Act or that they were oppressive. That challenge was unsuccessful, save in a limited respect. The notices were issued by the first respondent, the Official Receiver for the Bankruptcy District of Western Australia. The second respondent is the trustee in bankruptcy administering the estate of Kevin Trevor Pollock ("the bankrupt"). The notices required the recipients, of which the appellant was one, to produce books and information under oath. The application determined by the primary judge was brought by the appellant as a representative party for a number of persons who received a notice in the same or similar terms to the notice dated 12 August 2005 received by the appellant. No issue was raised about the proceedings being maintained as representative proceedings.

2 The amended application before the primary judge contained two grounds. The first was that the notices required the production of documents and information not authorised by the Act. The second was that compliance with the notices was oppressive. The orders sought by the appellant were that the notices be set aside, an injunction be granted restraining the first respondent from retaining or recording any document or information obtained by the first respondent by reason of the issue of the notices, and an injunction restraining the first respondent from allowing any person access to any such document or information.

3 Section 77C of the Act, at the relevant date (the provision has since been amended) provided:

(1) The Official Receiver, by written notice given to any person, whether a bankrupt or not, including any person employed by or in connection with a Department, or an authority, of the Commonwealth, of a State or of a Territory, may require the person:

(a) to give the Official Receiver such information as the Official Receiver requires for the purposes of the performance of the functions of the Official Receiver or a trustee under this Act; and

(b) to attend before the Official Receiver, or before an officer authorised in writing by the Official Receiver to exercise powers under this paragraph, and:

(2) The Official Receiver or authorised officer may require the information or evidence to be given on oath, and either orally or in writing, and for that purpose may administer an oath.

4 In evidence before his Honour was the notice issued to the appellant. The first part of the notice was two pages and attached to that was a one page document containing extracts from ss 5, 77C and 267B of the Act, and two schedules, each of two pages. Schedule 1 was entitled "Records Required to be Produced" and schedule 2 was a list of fifty four individuals and entities.

WHEREAS: GEOFFREY FRANK TOTTERDELL, Registered Trustee in Bankruptcy, as trustee of the property of KEVIN TREVOR POLLOCK, a bankrupt, is presently performing the function of investigating pursuant to Section 19AA of the Bankruptcy Act 1966, so much of the bankrupt’s conduct and examinable affairs and the books, accounts and records kept by the bankrupt, as is relevant to the bankruptcy.

1. The documents listed in Schedule 1 to this Notice which are in your possession, custody, or under your control, either:

d. in any other capacity on behalf of any other natural person or legal entity.

2. A list of those documents within the categories specified in Schedule 1 to this Notice which you deliver to me pursuant to this Notice, together with an affidavit sworn or affirmed by you verifying that the said list is true and complete and contains all of the documents within the categories specified in Schedule 1 to this Notice which are within your possession, custody or under your control.

3. If you have previously had, but no longer have, in your possession, custody or control other documents within the categories specified in Schedule 1 to this Notice, you must also provide:

b. the full name and address of the natural person or legal entity to whom you sent or delivered, or caused to be sent or delivered, those documents, and the date upon which they were sent or delivered, or caused to be sent or delivered,

which list is to be verified in the same affidavit referred to in point 2 above as being true and complete and containing all of the documents within the categories specified in Schedule 1 which you had, but no longer have, within your possession, custody or control.

4. Originals of books and documents within the categories specified in Schedule 1 to this Notice are required to be produced where the original is in your possession, custody or control. Where you do not have the original then any copy of the relevant book or document in your possession, custody or control should be produced.

1. Failure by you, without reasonable excuse to comply with this notice may render you liable to imprisonment for 12 months pursuant to section 267B of the Bankruptcy Act 1966. Failure by a body corporate, without reasonable excuse, to comply with this notice may incur a maximum pecuniary penalty of $33,000.

2. The "examinable affairs" of the Bankrupt are defined by the Bankruptcy Act 1966 to mean:

(b) the financial affairs of an associated entity of the person, in so far as they are, or appear to be, relevant to the person or to any of his or her conduct, dealings, transactions, property and affairs;

3. Section 81G of the Bankruptcy Act 1966, provides that failure to comply with this notice, will render the information/documents/books, inadmissible in certain proceedings to recover income contributions or property disposed of by the bankrupt. This Section does not apply if it can be proved that the information or books are not in the possession of the person served with this notice, or the information or books could not be readily obtained by that person.

I. All original and/or copy documents signed by Kevin Trevor Pollock, whether in his own right, or on behalf, formally or informally, of any other natural person or legal entity.

II. All original and/or copy documents received from Kevin Trevor Pollock, whether in his own right, or on behalf, formally or informally, of any other natural person or legal entity.

III. All original and/or copy documents sent to Kevin Trevor Pollock, whether in his own right, or on behalf, formally or informally, of any other natural person or legal entity.

VI. All original and/or copy documents including, but not limited to, Agency Agreements and Powers of Attorney which purport to confer the ability or right for Kevin Trevor Pollock to act for or on behalf of another natural person or legal entity.

VII. All original and/or copy documents including, but not limited to, Agency Agreements and Powers of Attorney, which purport to confer the ability or right for another natural person or legal entity to act for or on behalf of Kevin Trevor Pollock.

VIII. All original and/or copy documents which evidence or purport to evidence that Kevin Trevor Pollock holds property (as defined in Section 5 of the Bankruptcy Act 1966) in trust for another person or legal entity.

IX. All original and/or copy documents which evidence or purport to evidence that another person or legal entity holds property (as defined in Section 5 of the Bankruptcy Act 1966) in trust for Kevin Trevor Pollock.

X. All original and/or copy documents which evidence or purport to evidence that any of the natural persons or legal entities listed in Schedule 2 to this Notice are controlled by Kevin Trevor Pollock or any person acting on his behalf or for his interest.

XI. All original and/or copy documents which evidence or purport to evidence any involvement of Kevin Trevor Pollock in making decisions for and on behalf of any of the natural persons or legal entities listed in Schedule 2 to this Notice.

XII. All original and/or copy documents which evidence or purport to evidence the provision of personal services by or on behalf of Kevin Trevor Pollock to or on behalf of any of the natural persons or legal entities listed in Schedule 2 to this Notice, and/or the provision of remuneration in respect of those services.

XIII. All original and/or copy documents which evidence or purport to evidence any payment by or on behalf of any of the natural persons or legal entities listed in Schedule 2 to this Notice to Kevin Trevor Pollock or any person or entity acting on his behalf or for his benefit.

XIV. All original and/or copy documents relating to the transfer(s) of property (as defined in Section 5 of the Bankruptcy Act 1966) to or from Kevin Trevor Pollock.

XV. All original and/or copy documents relating to the transfer(s) of property (as defined in Section 5 of the Bankruptcy Act 1966) to or from any of the natural persons or legal entities listed in Schedule 2 to this Notice as a result of dealings with Kevin Trevor Pollock whether in his own right, or on behalf, formally or informally, of any other natural person or legal entity.

6 In evidence before the primary judge was an affidavit of Ms Carina Healey sworn 2 September 2005. Ms Healey was the director of the appellant and the daughter of the bankrupt. She deposed that she did not have any legal training, did not keep a record of correspondence sent by her to other persons or, ordinarily, copies of correspondence sent by her to others, and had not received an advance from the first respondent for costs of coming to Perth to comply with the notice. Her address was in the State of Victoria.

7 The first ground upon which the notices were challenged was that the issue of the notices was not authorised by s 77C. The central proposition was that the notices did not demonstrate that the first respondent was entitled to require production of the documents which the notice required to be produced. The appellant submitted that the expression "which relate to the examinable affairs of Kevin Trevor Pollock" which appear in an introductory paragraph of the notice did not save the notice by limiting the scope of the documents required to be produced (to those concerning the examinable affairs of the bankrupt). That was because the notice properly construed, having regard to ordinary meaning of the expression, required the recipient to produce all the documents listed in schedule 1. However, his Honour found that on a fair reading of the notice and schedule 1, it was apparent that the drafter's intention was to limit the scope of the classes of documents set out in the schedule. His Honour found that the classes of documents had to be read as being qualified by reference to the examinable affairs of the bankrupt and to the prescribed time period, that is, documents "which are dated, or relate to matters arising, between 1 January 2000 and the date of this Notice".

8 The second ground was that compliance with the notices was oppressive. His Honour considered this ground in relation to five aspects of schedule 1. First, his Honour considered whether paragraphs I to V and XVI of schedule 1 were oppressive. The appellant's submission was that the paragraphs were in such wide terms that the only reasonable inference was that the documents sought did not have any relation to the bankrupt's examinable affairs and that in requiring such documents to be produced, the first respondent had acted beyond power. Alternatively, the appellant argued that if the paragraphs were to be construed as only requiring the production of documents relating to the examinable affairs of the bankrupt, a recipient would be required to determine what was meant by "examinable affairs", and that in imposing such a burdensome requirement, the first respondent had acted beyond power. His Honour held that the first respondent did not act beyond power in requiring the production of categories of documents in the paragraphs because the documents required to be produced were subject to the limitations noted earlier. In relation to the alternative argument, his Honour found that although recipients would be required to determine whether a particular document related to the examinable affairs of the bankrupt and also to determine the meaning of terms such as "associated entity", the notice was not rendered invalid because the terms were not so confusing or devoid of meaning that the recipients would not know which documents to produce. His Honour referred to Federal Commissioner of Taxation v ANZ Banking Group Limited [1977] HCA 57; (1979) 143 CLR 499 as authority for the proposition that difficulty in identifying the documents required to be provided by a notice was not sufficient basis for concluding that a notice was invalid, which was a principle emphasised by his Honour in respect to a number of the appellant's submissions.

9 Secondly, the primary judge considered paragraphs X, XI, XII and XIII of schedule 1. The appellant submitted that by purporting to require production of documents covering more than five and a half years concerning the bankrupt's dealings with fifty four entities listed in schedule 2, the first respondent had acted beyond power by imposing requirements without regard to the burden imposed on the recipient to comply, referring to Pyneboard Pty Ltd v Trade Practices Commission (1982) 39 ALR 565. His Honour held that imposition of the two requirements was explicable on the basis of the first respondent acting within power and for a proper purpose. The requirements regarding the number of entities reflected the extent and complexity of the bankrupt's examinable affairs, whereas the time requirement was explicable on the basis that the scope of the investigation was limited to a limitation period of six years. His Honour indicated that there was an absence of evidence of a significantly onerous burden upon which to found a conclusion that the first respondent could only have imposed the requirements in excess of the implied limitation as to oppression.

10 Thirdly, the primary judge considered paragraphs VI to XIII of schedule 1 in relation to the words "purport to evidence" and "purport to confer" which appear in a number of descriptions of the records required to be produced. His Honour did not accept the appellant's submission that expressed this way, this part of the notice imposed a burdensome task on the recipients by requiring them to determine not only whether a document related to a particular matter but also whether it is or might be a sham. His Honour found that the expressions made the recipient's task easier by relieving the recipient of the task of having to determine whether a document was a sham or was effective in its purpose.

11 Fourthly, the primary judge considered paragraph XV of schedule 1. The appellant sought to impugn this paragraph on the basis that it imposed an obligation which was almost impossible to comply with, by requiring the recipient to determine whether a transfer of property from a third party had occurred as a result of dealings with the bankrupt in his own right or on behalf of some other person. His Honour accepted it was possible that some documents in this category would not contain a direct reference to the bankrupt and would require the recipient to make inquiries as to the bankrupt's involvement with any transfer of property. However, no evidence had been given that there were in fact such documents nor in relation to other relevant matters, which would demonstrate that the requirement imposed a burdensome task on the recipients or that the first respondent could only have imposed the requirement if he had exceeded his powers.

12 Finally, the primary judge considered paragraphs 2 and 3 of the notice. Paragraph 2 required the recipient to provide a list of documents provided in response to the notice, together with an affidavit verifying the truth and completeness of the list and deposing that it contained all the documents specified in schedule 1 which were within the recipient's possession, custody or control. The appellant took issue with the requirement to depose in absolute terms, rather than in terms limited to the recipient's knowledge, information and belief, which was said to be unreasonable and oppressive. The first respondent's position was that the requirement for affidavit evidence permitted the recipient to respond by deposing in terms of his or her information and belief. His Honour noted that although a similar obligation is imposed on the deponent to an affidavit of discovery, such a deponent was only required to depose to the best of his or her information and belief and was not subject to a statutory penal sanction, unlike the recipients in the present case. His Honour concluded that it was not possible to read the requirement as only requiring the recipient to depose to the best of his or her information and belief and that the imposition of the requirement to make the affidavit in the terms referred to was invalid. His Honour noted that s 267B(1) of the Act provided a statutory penalty for failure to comply with the terms of a notice and that s 267B(2) of the Act provided a defence for failure to comply based on reasonable excuse. The Act therefore provided the standard for compliance. The first respondent had imposed a requirement exceeding the standard recognised in the Act and had therefore acted beyond power.

13 As to the requirement in paragraph 3 of the notice, the appellant sought to impugn both the requirement to provide the list and the requirement that the list be verified by affidavit, as being oppressive and unreasonable. The list required was a list of documents identified in schedule 1 which the recipient once had, but no longer had, in his or her possession, custody or control, and the persons to whom those documents had been sent and when, which the appellant contended was oppressive in the circumstances. The requirement to provide affidavit evidence was in similar terms to that contained in paragraph 2 and the appellant sought to impugn it on the same basis. His Honour held that the requirement to provide the affidavit in paragraph 3 was beyond power for the reasons given in relation to the similar requirement in paragraph 2. However, his Honour did not accept that the requirement to compile the list itself had been invalidly imposed. It was not self evident that such a requirement was oppressive and whether it was so would depend on a number of factors, of which no evidence had been given. The affidavit evidence of Ms Healey, who deposed that she did not keep a record or copies of documents she had sent, was viewed as insufficient in this respect. His Honour made severance orders in accordance with his findings in relation to the requirements for affidavit evidence, relying on Re McKee; Ex parte Laroar Holdings v Ross (1996) 71 FCR 156 at 170, and found that subject to that severance, the notice was not invalid.

14 The notice of appeal filed 15 August 2006 raised four grounds which can be stated as follows:

1. The trial judge erred in law in failing to find that the notices were invalid on the ground that the first respondent was not authorised by the Act to require the production of the documents and information sought in the notice ;

2. The trial judge erred in law and in fact in failing to find that the obligations imposed by the notices were oppressive, having regard to the nature and number of enquiries the noticed required the recipients to undertake, the period over which those enquiries had to be made and the consequences of non-compliance;

3. the trial judge erred in law in finding that the phrase "associated entity" in the context of the notices had a commonsense, self evident meaning such that the notices were not oppressive;

4. the trial judge erred in law in holding, in relation to paragraph XV of schedule 1 of the notices, that it was necessary for the applicant to adduce evidence that documents existed within the scope of that paragraph before a finding could be made that the paragraph was oppressive.

15 The third ground was later amended to read instead "were not reasonably clear and were oppressive" in place of "were not oppressive", which amendment was not opposed. At the hearing of the appeal, the appellant sought to amend the notice of appeal to add a fifth ground concerning the power to issue notices to companies. It was an issue which had been raised with the parties by the Court shortly before the hearing. It had not been raised before the primary judge. In summary, what had been raised with the parties was that the notice to the appellant was, in terms, addressed to the directors of the appellant, yet the proceedings had been brought, on a representative basis, by the company itself. Possibly the proceedings should have been brought by the directors. The notice was also, at least potentially, directed to more than one person, "the directors". On the other hand, if the notice should have been treated as being addressed to the company, it would not have been addressed to a natural person, which may also raise an issue about its validity: see: Smorgon v Australia and New Zealand Banking Group Ltd [1976] HCA 53; (1976) 134 CLR 475 at 481, Gerah Imports Pty Ltd v The Duke Group Ltd (1993) [1993] SASC 3902; 62 SASR 158 at 160-161 and Bond v Tuohy (1995) 56 FCR 92.

16 In my opinion, leave to amend the notice of appeal to raise this fresh point should not be granted notwithstanding that it had its origins in a communication from the Court. In particular, whether a notice under s 77C can be directed to a company is potentially an important issue. However, we do not have the benefit of a considered judgment by a single judge on this point and, in so far as the parties have addressed the matter, they only had a limited opportunity to do so. In addition, s 77C has been amended since the notices in question were issued, and the amendment may well be of significance in resolving the issue. Were this Full Court to resolve this issue by reference to the unamended s 77C, any conclusion of ours would be of limited utility in the future. In addition, any such conclusion by reference to the unamended section could well mislead those who either issue or receive notices under the section in its amended form.

17 During the hearing of the appeal, a question arose about the nature of the jurisdiction exercised by this Court in an application such as the present. The parties addressed this question in detailed and helpful written submissions filed after the hearing. On the approach I have taken to the primary issues raised in the appeal, it is not necessary to consider what might be the outer reaches of and limits on the Court's jurisdiction. However as the question was addressed by the parties, it is convenient to say something about the Court's jurisdiction at the outset.

18 There are two sections of the Act of central relevance, s 15 and s 27. Section 15(5) provides that the Court may review an act done by an Official Receiver. In its present form, s 15(5) was enacted by the Bankruptcy Legislation Amendment Act 1996 (Cth) ("the amending Act"). Section 27 confers jurisdiction on this Court as a court of bankruptcy and, together with s 30 which confers broad powers in furtherance of the jurisdiction, creates a jurisdiction of great width.

19 The power of the courts exercising bankruptcy jurisdiction has long been regarded as substantial. In McIntosh v Shashoua [1931] HCA 56; (1931) 46 CLR 494 at 520, the High Court quoted from In re Thurlow; Ex parte Official Receiver (1895) 2 Mans 158 at 160:

20 An Official Receiver’s functions under the Act are administrative in nature: see, for example, the discussion in Hayter M, "Notices and Investigative Powers", 4 Insolvency Law Journal 116 at 116, and can be subject to review by the Court under the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the ADJR Act").

21 There are a large number of provisions in the Act conferring power on the Court in exercise of its bankruptcy jurisdiction: see the discussion in Forshaw v Thompson (1992) 35 FCR 329 at 334. For example, s 178 of the Act allows a bankrupt or any other person affected by an act or decision of a trustee to apply to the Court, and assigns to the Court the power to make "such order in the matter as it thinks just and equitable". As a further example, s 139ZM confers on the Court the power to set aside a notice issued by an Official Receiver requiring the recipient to make payments to the trustee to discharge the liability of the bankrupt to make a contribution. Section 139ZS confers on the Court the power to set aside a notice issued by an Official Receiver to collect money or property from a party to a transaction that is void against the trustee.

22 There is no provision expressly conferring on the Court the power to review and, if appropriate, set aside a notice issued by an Official Receiver under s 77C. However, the appellant submitted the Court had a "wide power" of review of the conduct of the Official Receiver deriving from s 30(1) and s 15(5) of the Act. The second respondent contended firstly that neither ss 15(5) nor 30(1) are the sources of power to review. It was said that the power to review s 77C notices is conferred by the ADJR Act and confined to the grounds of review in that Act. A submission made in the alternative was that even if the source of the power to review is the Act, the grounds are those which reflect more general principles of judicial review or at least limited to the grounds discussed in Pyneboard.

(a) has full power to decide all questions, whether of law or of fact, in any case of bankruptcy or any matter under Part IX, X or XI coming within the cognizance of the Court; and

(b) may make such orders (including declaratory orders and orders granting injunctions or other equitable remedies) as the Court considers necessary for the purposes of carrying out or giving effect to this Act in any such case or matter.

24 As noted earlier s 27, confers jurisdiction on the Court: see Forshaw at 334; Re Dingle; Westpac Banking Corporation v Worrell (1993) 47 FCR 478 at 485; Morris v Maroudas (1986) 12 FCR 346 at 350. Section 30 has been liberally construed: Forshaw at 341 citing Beaumont J in Zantiotis v Andrew (1987) 80 ALR 23 at 26. The section is regarded as conferring a wide power. In Re Lamb; Ex parte Melsom (1980) 42 FLR 399, the Court was asked to order the consolidation of the estate of the bankrupt and the debtor when the Act did not explicitly provide for such power. The Court (at 402) noted English authority concerning a cognate provision, concluding that "the court has the widest powers under the section as regards matters arising out of the bankruptcy". Section 30 has been relied upon in the absence of or in addition to more specific provisions conferring power to review: see Re Hedge; Ex parte Goddard (1994) 50 FCR 421 at 424 in the context of setting aside a bankruptcy notice and in Re Lucera; Ex parte Official Trustee in Bankruptcy v Lucera [1994] FCA 1380; (1994) 53 FCR 329 at 338 in the context of an application under s 139ZS to set aside a notice issued under s 139ZQ.

25 The existence of more specific provisions conferring power upon the Court in particular instances is not to be regarded as diminishing the width of review available under s 30: see Re Bond; Ex parte Bond v Caddy (No 2) (1994) 11 WAR 345 at 346-347. Nonetheless in Tyler v Thomas [2006] FCAFC 6; (2006) 150 FCR 357 the members of the Full Court observed in separate judgements (at [13], [78] and [208]) that s 30(1) is not a source of power that can be exercised to override express provisions of the Act. Similarly, in Re Bayliss; Ex parte Official Trustee (1987) 15 FLR 167 at 169, the Court said that "[i]t must be a matter of construction in each case whether a particular provision of the Act negates the possibility of the court’s making an order under the general power". The power conferred by s 30 is a discretionary power: Re Dingle at 484 - 485.

27 Before the introduction of s 15(5), s 15 contained the following subsection which has since been repealed:

28 There are no authorities of which I am aware in which the scope of s 15(5) has been considered though in Bond v Tuohy at 102 (a case predating the 1996 amendment and concerning, amongst other things, legal professional privilege claimed in relation to documents sought by notices issued under s 77C), Ryan J noted in brief that "the applicants could obtain similar protection by an application to this Court in the exercise of its general control over Official Receivers pursuant to s 15(2) of the Bankruptcy Act". What is comprehended by a "review" is not made explicit in the legislation. As Black CJ noted in Brock v United States [2007] FCAFC 3 at [26], Mason CJ, Brennan and Toohey JJ said in Brandy v Human Rights and Equal Opportunity Commission [1995] HCA 10; (1995) 183 CLR 245 at 261:

30 The appellant noted the use of the term "specific power of general review" to apply to functions carried out by an Official Receiver. The second respondent, however, noted the focus of the paragraph on filling an existing gap, and suggested that Parliament, in introducing s 15(5), merely sought to extend judicial review to decisions of the Official Receiver that were not administrative in nature and were not made as a trustee (the former being outside the scope of the ADJR Act and the latter outside the scope of ss 178 and 179 of the Act).

31 In relation to ss 178 and 179 of the Act, the explanatory memorandum, at 28 at [91], suggests the Court’s review power under these provisions is "review on the merits, and the Court can order the trustee to reconsider an act, omission or decision in accordance with its reasons for judgment". The applicability of ss 178 and 179 to review of acts by an Official Receiver, or to proper construction of the scope of review under s 30 or s 15(5), may therefore be relevant.

32 Even if it is accepted that ss 30 and 15 provide a broader scope of review than that available under the ADJR Act, the second respondent submitted that the Court’s power to review a s 77C(1) notice stems from neither provision, but solely from the ADJR Act. Decisions under the Bankruptcy Act do not fall within the "Classes of decisions that are not decisions to which [the ADJR Act] applies": see schedule 1 of the ADJR Act.

33 The basis for this submission was first, that there have been no challenges to s 77C notices brought pursuant to ss 30 and 15. This is true. Of the cases concerning notices under s 77C decided to date, the two that make explicit the source of power for the review point to the ADJR Act: Re McKee and Bond v Tuohy. However, those cases were decided before the introduction of s 15(5) in its present form.

34 The second basis for the submission was said to be a constitutional limitation. Noting that it was essentially the same question as that raised in Gould v Brown [1998] HCA 6; (1998) 193 CLR 346, the second respondent contended:

35 The respondents suggested that the limited nature of the review allowable to the Court when reviewing a s 77C notice (namely judicial review) limits the extent to which the Court can look to the substance of the notice, as opposed to any illegality (such as improper purpose or failing to have regard to the burden imposed) by the Official Receiver.

36 I am inclined to the view that because of the Court’s role in bankruptcy historically, the width of the powers conferred by s 30 - "full power to decide questions of law and fact", (emphasis added) - together with the explicit, and in terms unconstrained, conferral of power by s 15(5) to review an act done by an Official Receiver, the powers exercised by this Court in such a review is not constrained by limits ordinarily attending judicial review. That is not to say that the Court can place itself in the same position as the Official Receiver and decide what terms an impugned notice should be in as a matter of mere preference. But that is not the case we are presently considering.

37 I now turn to consider the issues raised in the appeal. It appeared to be common ground that for a s 77C notice to be valid it must, at the very least, satisfy two conditions. The first is that the notice should convey to the recipient with reasonable clarity what information or documents are sought. The second is that it should be apparent from the face of the notice that it was issued for a purpose authorised by the Act: Pyneboard at 570-571 and Re McKee at 169.

38 In the present case, the appellant contended that the notice satisfied neither condition. The first condition, and indirectly the second, was not satisfied because the class of documents sought by the notice was unconstrained. This in turn raised the question whether the expression "which relate to the examination of the affairs of [the bankrupt]" qualifies the documents identified in schedule 1. For the reasons given by the primary judge, they do. The notice must be construed as a whole. One could reasonably expect a recipient to commence reading the notice from the beginning. The recipient would read, in the paragraph immediately above the heading "Documents Required", that certain documents were required to be produced with the qualification that they were documents which related to the examinable affairs of the bankrupt. With the knowledge gained from these prefatory remarks, the recipient would then read what documents were required which would in due course take the recipient to schedule 1 and schedule 2. In my view, the notice identifies with sufficient clarity what documents are sought and discloses that the Official Receiver was authorised to require their production.

39 The appellant made a subsidiary submission that the notice was not reasonably clear about what documents were required. The submission centred on the expression "associated entities" which is used in the definition of "examinable affairs" set out on the third page of the notice (containing extracts from the Act). The expression "associated entities" is defined in the Act (though that definition was not sent with the extracts) and the expression "private company" which is found in the definition of "associated entities" is a defined expression. In my opinion, the primary judge was correct in concluding that the Court should, when construing a notice of the type under consideration, take a "broad common sense approach", an expression which fairly synthesises the more detailed discussion of the Full Court in Pyneboard at 570-571. In construing the reference to "examinable affairs" and looking at the definition, including the expression "associated entities", a recipient could reasonably be expected to understand that the notice was seeking documents concerning the direct dealings of the bankrupt as well as documents concerning the financial affairs of associated entities. That term described with sufficient clarity and as an ordinary English expression what was comprehended by the more precise definition including the reference to private company.

40 The next question is whether the notices were oppressive. The appellant submitted in its written submissions that the notices were oppressive on their face having regard to the period of time covered and the many combinations and permutations of documents required, and thus the enquiries to be made and searches undertaken, arising from the list in schedule 1 and in particular, the vastly expanded number of documents arising from the interaction between schedule 1 and schedule 2. It was said that because the notice was oppressive on its face, it could be inferred that the notice had not been issued responsibly by the Official Receiver with proper consideration having been given to the burden it imposed. Put this way, a finding of oppression in the way the appellant contended is a step towards a conclusion that the notice was not authorised by the Act. In essence, it is an argument concerning the power of the Official Receiver. However during oral argument, the appellant appeared to submit that the Court had power to set aside a notice if it was oppressive on its face quite apart from whether, if oppressive, it was not authorised. The appellant also submitted that the application before the primary judge raised oppression alone (not linked to power) as a ground of setting aside the notice. For my part, I am somewhat sceptical that this argument was put below, even in the alternative. It is true the amended application could be read so as to raise this point but the written submissions of the appellant to the primary judge linked oppression with power. Having regard to his reasons, the primary judge appears to have understood the submission to be limited this way. With respect, he was entitled do so.

41 However given the broad nature of the jurisdiction of the Court (as discussed in [19] to [36] above), it would be open to the Court to set aside a notice if it was oppressive on its face without moving to consider the question of power. I should add that in one sense this is probably a false dichotomy because if a notice was oppressive on its face then one could readily infer that its issue involved an excess of power. It may also be possible to set aside a notice if it was oppressive having regard to evidence led by a recipient about the burden the notice imposed on that recipient. However, on any view, the appellant's case was not put on this basis before the primary judge or on appeal even though there was some limited evidence concerning the capacity of Ms Healy to gather the documents. Accordingly it is unnecessary to explore whether oppression on a particular recipient having regard to evidence of that recipient is a basis for setting aside a notice under s 77C.

42 The question then is whether the notice or any part of it is oppressive on its face. In my opinion it is in one respect. Fairly clearly the notice was drafted as a formulaic template of sorts. An extensive range of documents was identified and embodied in schedule 1. However the way several of the classes of documents have been described (X to XIII and XV) invokes schedule 2. Schedule 2 contains the names or identities of fifty four persons. The result is that each of the five classes in X to XIII and XV have fifty four subclasses. It can be inferred, in my opinion, that the template has been used without regard to whether a particular recipient has or is likely to have documents concerning all the individuals and entities in schedule 2. It is a manifestation of a drafting technique which will indiscriminately catch any conceivable document which any recipient might have in their possession without consideration of whether each recipient may have a particular document of the type referred to in schedule 1 concerning each and every individual or entity in schedule 2. It may be that some of the recipients could be expected to have documents in each of the subclasses in X to XIII and XV created by the invocation of schedule 2. However the notices, on their face, had not been drafted to accommodate the possibility that some of the recipients do not. The notice is, in this respect, oppressive. I am not satisfied that in other respects the notice is defective and should be set aside.

43 Accordingly I would allow the appeal in part and vary the orders of the primary judge to sever paragraphs X, XI, XII, XIII and XV as well as scheduled 2 from the notice. I would otherwise dismiss the appeal. As both the appellant and the respondents had some but not complete success in the appeal, I would make no order as to costs.

I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WAD 231 OF 2006

BETWEEN:	CK NOMINEES AUSTRALIA PTY LTD (ACN 092 302 399) Appellant
AND:	THE OFFICIAL RECEIVER FOR THE BANKRUPTCY DISTRICT OF THE STATE OF WESTERN AUSTRALIA First Respondent GEOFFREY FRANK TOTTERDELL Second Respondent

JUDGES:	MOORE, TAMBERLIN AND GYLES JJ
DATE:	6 AUGUST 2007
PLACE:	SYDNEY (VIA VIDEO LINK TO PERTH) (HEARD IN PERTH)

I certify that the preceding one (1) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WAD 231 OF 2006

BETWEEN:	CK NOMINEES AUSTRALIA PTY LTD (ACN 092 302 399) Appellant
AND:	THE OFFICIAL RECEIVER FOR THE BANKRUPTCY DISTRICT OF THE STATE OF WESTERN AUSTRALIA First Respondent GEOFFREY FRANK TOTTERDELL Second Respondent

JUDGES:	MOORE, TAMBERLIN AND GYLES JJ
DATE:	6 AUGUST 2007
PLACE:	SYDNEY (VIA VIDEO LINK TO PERTH) (HEARD IN PERTH)

45 Moore J (whose judgment I have had the advantage of reading in draft) has explained how the issue arises. I will not repeat that background except and insofar as it is necessary to do so to explain my own reasons. I agree with Moore J that leave should not be given to further amend the grounds of appeal. In my opinion, the appeal must be allowed, as the primary judge approached the case as if it were a review of a decision of the Official Receiver on administrative law grounds rather than a de novo review.

46 There were no pleadings apart from the amended application. The grounds set out in the amended application were:

47 The basic submission in relation to the second ground made to the primary judge was that the Official Receiver was obliged to exercise the power conferred by s 77C "responsibly" citing Re Jonson; Ex parte Prentice, unreported, Lockhart J, 1 September 1997. In my respectful opinion, that submission was not dealt with in the judgment below which was framed in terms of validity.

48 The respondents contend that the primary judge was correct in confining his consideration in that way. It was submitted that the proceeding was, or should be regarded as, a challenge to the validity of the issue of the notices pursuant to the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the ADJR Act) as had been the case in Bond v Tuohy (1995) 56 FCR 92 and Re McKee; Ex parte Laroar Holdings Pty Ltd v Ross (1996) 71 FCR 156. However, the proceeding is not framed as such an action and there is no reference to the ADJR Act in the amended application or in the judgment.

49 As submitted for the appellant, s 15(5) of the Act provides a clear basis for the challenge to the giving of the notices in question by the Official Receiver. There is no warrant for reading s 15(5) down to exclude those acts that are subject to the ADJR Act. There is no need to decide whether the appellant is correct in submitting that s 30 would also provide an independent basis for the proceeding. The courts have long had a general supervisory role in bankruptcy. Section 178 of the Act in relation to trustees provides a procedure comparable with s 15(5), of which Brennan CJ, Gaudron and McHugh JJ said in Cummings v Claremont Petroleum NL [1996] HCA 19; (1995) 185 CLR 124 (at 138):

That history was traced by French J in Macchia v Nilant [2001] FCA 7; (2001) 110 FCR 101 at [30]–[46].

50 A well known passage from the judgment of Deane J in Re Tyndall; Ex parte Official Receiver [1977] FCA 15; (1977) 30 FLR 6 at 9–10; 17 ALR 182 at 186 as to s 178 is apposite to s 15(5):

(cited with approval by the Full Court in McGoldrick v Official Trustee in Bankruptcy [1993] FCA 636; (1993) 47 FCR 547). As Lockhart J said in Re Jonson; Ex parte Prentice (unreported, 1 September 1997):

51 There are many examples of the existence of a power of review by the Court of the kind provided for by s 15(5). Some of the authorities were recently discussed by the Full Court in O’Meara v Hitwise Pty Ltd [2007] FCAFC 114 – see also New England Biolabs Inc v F Hoffmann-La Roche AG [2004] FCAFC 213; (2004) 141 FCR 1 at [44] and [49].

52 The appeal should be allowed. The next question is whether the matter should be remitted to the primary judge or dealt with by this Court. It would be remitted in the usual course. The primary judge only considered the issue of oppression from the standpoint of validity. He did not consider, for example, whether the notices should have been framed with more particularity and attention to individual circumstances in order to lessen the burden on the recipients. This would normally involve a weighing exercise of judgment best done at primary level. However, as Moore J points out, the issue essentially arises on the face of the documents. I have formed a clear view that the Official Receiver should not have given notices in this form.

53 In my opinion, the giving of notices in this form was oppressive and cannot be justified. Giving the same notice to more than one person is indicative of a "template" or "catch all" approach. The form of the notice confirms that approach. It covered a period of five and a half years. It casts the widest conceivable net. It includes documents under the control of the party as well as in the possession and custody of the party and purports to cover all capacities in which a document is connected with the recipient. Thus, it purports to catch all documents under the control of a person in his or her capacity as an officer of a company. Sixteen categories of documents are listed, many of which require judgment calls as to the nature of the document and connection with the subject matter. These categories are akin to topics for discovery by a party to litigation. The entities referred to comprised 15 individuals and 39 companies. The permutations and combinations are staggering. As pointed out by Lockhart J in Re Jonson; Ex parte Prentice (unreported, 1 September 1997), the power to give a notice pursuant to s 77C(1)(a) has far reaching consequences. This includes potential imprisonment for 12 months if a person fails to comply with a notice given to that person. These notices are far too uncertain in effect. Compliance with notices in this form would inevitably impose an unnecessary burden of time and expense upon the recipients.

54 I would set aside all such notices and remit the matter to the primary judge to consider what other orders should follow, including the issue of redrafted notices. The nature of the review is such that, in my opinion, the Court is not restricted to setting aside the act done or limited to "blue pencil" severability. It may (if it chooses) do that which ought to have been done by the Official Receiver. In that connection, attention will need to be given to the consequences of the proceeding being conducted as what was described as a representative action.

55 In summary, I would allow the appeal; set aside the orders below; set aside the notices; remit the matter to the primary judge for further hearing; and order that the respondents pay the appellant’s costs of the appeal and of the proceedings at first instance up to date.

I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles.

Counsel for the Appellant:	Mr D R Williams QC

Solicitor for the Appellant:	Christensen Vaughan

Counsel for the First Respondent:	Ms L B Price

Solicitor for the First Respondent: Counsel for the Second Respondent: Solicitor for the Second Respondent:	Carles Solicitors Mr D M Stone Williams & Hughes

Date of Hearing:	12 February 2007
Last Date for Submissions:	14 February 2007
Date of Judgment:	6 August 2007

Federal Court of Australia - Full Court Decisions

CK Nominees Australia Pty Ltd v Official Receiver (WA) [2007] FCAFC 118 (6 August 2007)