Case: Evans v Wainter Pty Ltd [2005] FCAFC 114 ; (2005) 145 FCR 176
Outcome: cited
The operation of the examination powers was given comprehensive consideration by Lander J who wrote the principal judgment in the Full Court of the Federal Court in Evans v Wainter Pty Ltd [2005] FCAFC 114 ; (2005) 145 FCR 176. The case involved the issue of summonses under ss 596A and 596B for the examination of persons in relation to the examinable affairs of New Tel Ltd (in liq). An interlocutory application to discharge the summonses was refused and an appeal by leave taken to the Full Court, which appeal was ultimately dismissed. The appellants contended that the sole purpose of the examinations was to elicit evidence in relation to causes of action said to have arisen out of representations made by them to the company Wainter Pty Ltd in relation to New Tel. The Full Court held that New Tel stood to benefit from any action brought by Wainter against the appellants as recovery by Wainter against the appellants would reduce its claim against New Tel. 74 Lander J reviewed the history and authorities relevant to the examination powers and identified their legislative purposes in terms which may be paraphrased as follows (at [252]): 3.1 To enable an eligible applicant to gather information to assist the eligible applicant in the administration of the corporation. 3.2 To assist the corporation's administrators to identify the corporation's assets, both tangible and intangible, and to allow its liabilities to be identified. 3.3 To protect the interests of the corporation's creditors. 3.4 To enable evidence and information to be obtained to support the bringing of proceedings against examinable officers and other persons in connection with the examinable affairs of the corporation. 3.5 To assist in the regulation of corporations by providing a public forum for the examination of examinable officers of corporations. With respect, the last mentioned purpose must be regarded with some reserve in terms of its compatibility with the exercise of judicial power. This is, however, subsumed in the discussion that follows about the characterisation of the examination power, for purposes of assessing constitutional validity, as judicial or administrative. 75 His Honour also advanced the following propositions about the exercise of the examinations power which he said emerged from the legislation and the authorities (at [252]): '4. If an eligible applicant applies for an order for examination of a person for a purpose unconnected with the purposes authorised by the legislation that will be an abuse of process and the order, if obtained, will be set aside. 5. The procedure may not be used to allow a party to obtain a forensic advantage and, if it is, any order obtained will be set aside. 6. The procedure may not be used as a dress rehearsal for the cross- examination of a person in a pending or subsequent action. However, it is not improper to seek an order of the Court to summon a person for examination whilst litigation is pending against that person or entities connected with that person. 7. The question whether in any particular case the applicant has used the procedure abusively will depend upon the applicant's purpose in seeking the order and all of the surrounding circumstances. It will not be an abuse unless an offensive purpose is at least the predominant purpose. 8. It will be an offensive purpose if the application cannot be characterised as being for the benefit of the corporation, its contributories or creditors. 9. A creditor may, if first authorised by ASIC, apply to the Court for an order to summon for examination a person for the purpose of obtaining information in relation to a debt owed to the creditor if such an examination would be in the interests of the corporation or its creditors as a whole. 10. A creditor may not use the procedure for the purpose of obtaining a forensic advantage which would not have been available to the creditor if the corporation had not gone into administration.' 76 Ryan and Crennan JJ generally agreed with Lander J subject to certain expressed qualifications. Lander J did not accept the correctness of the opinions of the Full Court of the Supreme Court of Victoria in Flanders v Beatty (1995) 16 ACSR 324 and the Full Court of the Supreme Court of South Australia in Sandhurst Trustees Ltd v Harvey (2004) 88 SASR 519, that the scope of the examination process had been greatly expanded by the 1992 amendments ([187] and [206]). Ryan and Crennan JJ both held it unnecessary to reflect upon those views for the purpose of dealing with the appeal before them. 78 In Meteyard v Love [2005] NSWCA 444 ; (2005) 224 ALR 588 summonses for examination had issued to the insurer of a company in receivership on the application of its creditors. Basten JA, who wrote the principal judgment, dealt with questions of oppression, abuse of process and the effect of the examination power on legal professional privilege. Santow JA, who agreed with Basten JA, noted that the particular purpose of the examinations in that case was not to expose misconduct but to provide information that would advance the external administration of the company under receivership. His Honour considered that the limitations upon the examination power, in that context, were as articulated by Lander J in Wainter in [245] [251] (at [7]). There is nothing in that judgment supportive of the application of the power in respect of examinable affairs of companies not under external administration. 79 This case concerns in part the scope of the following statutory powers and obligations: (i) The power of ASIC to authorise a person to make an application under Pt 5.9. (ii) The obligation and associated power of the Court, under s 596A, to summon a person for examination about a corporation's examinable affairs and the power under s 597 to examine a person so summoned. 89 In my respectful opinion, the weight of authority, to the extent that it has considered the matter tends to support the proposition that ss 596A and 596B and their predecessors have been seen as provisions applicable to companies in one or other form of administration and not as applicable to companies at large. So much appears from the judgment of the Full Court in Re Compass Airlines and the Court of Appeal of New South Wales in HongKong Bank. New Zealand Steel also appears to be consistent with the views expressed by Gleeson J that the statutory context of s 597 was that of "external administration". It follows, that I would not, with respect, agree with the obiter observations at [84] of the Wainter judgment which would see the application of ss 596A and 596B extended to solvent corporations not under any form of external administration.