In the matter of Kevin Jacobsen Pty Limited [2011] NSWSC 1539 (14 December 2011)

Last Updated: 19 December 2011

Supreme Court New South Wales

Case Title:	In the matter of Kevin Jacobsen Pty Limited
Medium Neutral Citation:	[2011] NSWSC 1539
Hearing Date(s):	28 November 2011
Decision Date:	14 December 2011
Jurisdiction:	Equity Division - Corporations List
Before:	Barrett J
Decision:	Directions made for privilege claims to be tested
Catchwords:	CORPORATIONS - winding up - examination of officers and others - related order for production - where some documents produced before examination and dealt with at examination - other documents produced after examination had been stood over generally with liberty to resume within six months - producing party (examinee) then seeks order setting aside order for production - whether required connection with examination still exists
Legislation Cited:	Civil Procedure Act 2005, s 68 Corporations Act 2001 (Cth), s 596A
Cases Cited:	Meteyard v Love [2005] NSWCA 444; (2005) 65 NSWLR 36 Re BPTC Ltd (No 2) (1992) 8 ACSR 533 Re BPTC Ltd (No 5) (1993) 10 ACSR 756 Re Leisure Developments (Qld) Pty Ltd; Ell v Palmer [2002] NSWSC 248; (2002) 41 ACSR 276 Re Trio Capital Ltd [2011] NSWSC 1483
Texts Cited:
Category:	Interlocutory applications
Parties:	John Sheahan & Ian Lock as joint and several liquidators of Kevin Jacobsen Pty Limited - Applicants John Frederick Lord - Examinee
Representation
- Counsel:	Mr M Stevens - Applicants Dr C Mantziaris - Examinee
- Solicitors:	O'Neill Partners - Applicants Macpherson & Kelley Lawyers (Sydney) Pty Ltd - Examinee
File number(s):	2011/00245444
Publication Restriction:

JUDGMENT

1. Mr Sheahan and Mr Lock ("the liquidators") are the liquidators of Kevin Jacobsen Pty Ltd.

2. The liquidators procured the issue of an examination summons under s 596A of the Corporations Act 2001 (Cth) directed to Mr John Frederick Lord, a person appointed receiver and manager of the property of KJPL in exercise of a secured creditor's power of appointment.

3. Mr Lord was examined before a registrar of the court on 28 September 2011. At the conclusion of proceedings on that day, the examination was stood over generally and the liquidators were given liberty to resume the examination within six months.

4. An order for production of documents under s 68 of the Civil Procedure Act 2005 was made against Mr Lord on the liquidators' application in conjunction with the examination summons. The order for production was served with the examination summons.

5. Documents were produced to the court in obedience to the order for production on three separate occasions: 26 September 2011 (one packet of documents), 19 October 2011 (three packets of documents) and 2 November 2011 (three packets of documents).

6. The documents produced on 26 September 2011 - that is, in advance of the examination on 28 September 2011 - were before the court at the time of the examination and were the subject of confidentiality claims. These were dealt with by a consensual confidentiality regime adopted at the examination itself.

7. Subsequent production occurred with consequences and qualifications as follows:

19 October 2011 - first packet - claim for legal professional privilege; no order for access made;

19 October 2011 - second packet - claims of confidentiality by third parties - order that third parties have first access until 26 October 2011;

19 October 2011 - third packet - order for general access made without objection;

2 November 2011 - first packet - claim for legal professional privilege - no order for access made;

2 November 2011 - second packet - claim of confidentiality by third parties - order that third parties have first access until 18 November 2011;

2 November 2011 - third packet - order for general access made without objection.

8. It will thus be seen that one packet of documents was produced by Mr Lord before he was examined on 28 September 2011; that six packets were produced by Mr Lord after that date; that, in relation to two of the six packets, he made no objection to the grant of access; that in relation to two other packets he made privilege claims; and that, in relation to two further packets, there were confidentiality claims by third parties.

9. Things stood in that state when, on 17 November 2011, Mr Lord filed an interlocutory process seeking, as principal relief, orders that the order for production be set aside and that the documents produced be returned without further access on the part of the liquidators. There are alternative claims for directions regarding determination of the questions of privilege where privilege has been claimed.

10. It does seem odd that someone subjected to an order for production should, in the conventional way, produce documents to the court (some subject to objections concerning privilege and confidentiality); should produce most of them after the related examination has been stood over generally (with liberty to resume within six months); and should then seek to have the order for production as a whole set aside. It seems particularly odd that such an application should be made after some of the produced documents have been used in an examination.

11. Mr Lord relies on the principle that, in a context such as the present, an order for production may only be used for the purposes of a particular examination. This is made clear in Re BPTC Ltd (No 5) (1993) 10 ACSR 756, a decision of Bryson J cited with approval by Basten JA in Meteyard v Love [2005] NSWCA 444; (2005) 65 NSWLR 36 at [59]. Bryson J said (at 762):

"There is a well established practice, and explicit judicial approval of requiring production of documents under Pt 36 r 12 by persons not the subject of examination orders. The ancillary power can only be exercised where the production of documents is required for the purpose of exercise of the power to conduct an examination."

12. Then, after noting that the orders relating to the examination of the particular individuals contained a limit on the scope of the examinations (and the reference by McLelland J in Re BPTC Ltd (No 2) (1992) 8 ACSR 533 to the need for a connection between an order for production of documents and a particular examination, so that the order is ancillary to that examination), Bryson J said (at p.763):

"An order for production of documents which had the effect of compelling a production of documents which were not required for the examination would in my opinion be oppressive; an order for production which had that purpose would in my opinion be made in excess of the power to make such an order."

13. The same matter was adverted to by Austin J in Re Leisure Developments (Qld) Pty Ltd; Ell v Palmer [2002] NSWSC 248; (2002) 41 ACSR 276, another decision cited with apparent approval by Basten JA in Meteyard v Love . Austin J said at pp.281, 282:

"As to the second ground, the standard of precision to be met by an order for production was considered by Bryson J in Re BPTC Ltd (No 5) (in liq) (1993) 10 ACSR 756. The practice is to require production of documents, by persons other than those who are the subjects of examination orders, under Pt 36 r 12 of the Supreme Court Rules . That power can only be exercised where the production of documents is required for the purpose of exercising the power to conduct an examination: at 762. While the power to compel production of documents is a wide one, it is ancillary to an examination order, and cannot require the production of documents independently of the examination of particular individuals. An order for production which had the effect of compelling production of documents which were not required for the examination would be oppressive and in excess of the power to make such an order: at 763. Where a call for production goes beyond these limits, it may not be possible to sever the call so far as it covers documents ancillary to the examination order from its coverage of other documents, and in such a case the whole order for production or notice to produce may need to be set aside: at 766."

14. Mr Lord was content to produce one packet of documents in response to the order and to deal at his examination with the question of access to those documents. Only after he had done this - and also produced, after the examination, six further packets - did Mr Lord seek to have the order set aside.

15. Mr Lord cannot argue that the documents in the first packet were not properly required for the purposes of his examination. He allowed those documents to be used at the examination on 28 September 2011. He therefore cannot hope to have the order set aside. He has already conducted himself on the basis that it has efficacy.

16. What Mr Lord is really saying is that his examination should be regarded as being at an end and that the necessary connection with the examination cannot now subsist in relation to the documents produced after 28 September 2011, with the result that those documents should be returned.

17. I am not persuaded that this is so. The examination has been stood over generally. The liquidators may continue it at any time in the period of six months after 28 September 2011 in exercise of the liberty granted on that day. That is sufficient to give the examination summons a continuing relevance and utility.

18. Nor am I persuaded that the necessary link between an examination and an order for production required by the case law is such that the order for production is objectionable if its subject matter lies beyond some foreshadowed scope of the examination as outlined by the liquidator or other person in whose hands the power to examine lies - or, putting this another way, that the liquidator or other person must voluntarily mark out the boundaries of the proposed examination and is then precluded from requiring the production of documents that lie outside those boundaries.

19. The only explicit limit upon the permitted territory of an examination is that it must relate to the "examination affairs" of the particular company. An implied limit may come, however, from the role of the examinee and the part he or she has played in the examinable affairs. Thus, for example, an order for production addressed to a company's provisional liquidator in connection with an examination of the provisional liquidator appointed in 2011 could not properly call for the 2009 diary of a former employee who is suing the company for wrongful dismissal.

20. In the present case, the examination summons directed to Mr Lord remains extant. The examination may be continued if the liquidators decide to continue it. The whole of the examinable affairs of the company will properly be the subject of questions at any resumed examination. Any document that might reasonably be expected to be in Mr Lord's possession or under his control and has some logical connection with the company's examinable affairs therefore properly remains the proper subject of an order for production.

21. It has not been shown that the order for production transgresses these limits. It will not be set aside.

22. The privilege claims should, however, be determined. If it is shown that legal professional privilege attaches to a document, there might be an order setting aside the order for production as it relates to that document: see the discussion by White J in Re Trio Capital Ltd [2011] NSWSC 1483 at [29] and following.

23. I make the following directions:

1, Direct that any interlocutory process by which John Frederick Lord or any other person seeks on privilege grounds any order in respect of documents produced in response to an order for production made in these proceedings and directed to the said John Frederick Lord be filed and served within seven days and be returnable before the Corporations Judge at 10am on 30 January 2012.

2. Direct that, until further order, no access may be had to any documents already so produced in respect of which any privilege claim has been made.

24. Given the outcome of the interlocutory process, I order that Mr Lord pay the liquidators' costs of the interlocutory process.

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