The discretion and its exercise
42 If it were the case that the evidence in relation to the Regulator was sufficient to satisfy the test in s 596B(1)(b)(ii), the next question to arise is whether the discretion in the chapeau of the section ought to be exercised in the applicants' favour?
43 There is surprisingly little authority concerning the manner of the exercise of the discretion in s 596B(1). Whilst it is expressed in the usual untrammelled terms, it necessarily must be exercised in a principled manner which is informed by the nature and the scope of the power. In this respect, the observations of Digby J in Re Carpenter International Pty Ltd (in liq) (No 2) [2015] VSC 681 are helpful. There, his Honour was dealing with an application to discharge summonses which had been issued. In the course of his careful consideration, his Honour made the following useful observation as to the types of matters which might be considered in the exercise of the discretion in s 596B. He said (at [39]):
In my view the discretion to issue the Examination Summonses, and to maintain them, is unimpinged by the Albrechts' arguments, having regard to the purpose of the intended examinations, the importance of the information sought by the Liquidators, the seriousness of the subject of the summonses, and the utility of the sort of information sought, the lack of cooperation from the examinees and the great difficulty to date obtaining the information sought by the Liquidators from other sources.
44 The qualitative assessments which, in his Honour's view, might be considered in exercising the discretion reflect the consideration of such matters as referred to by Young J in Ex parte Merrett (1997) 140 FLR 412, 416, albeit that his Honour was considering them at an earlier stage in the decision making process. His Honour appears to adopt the proposition that the court might justifiably take into account and balance the likely strength of the evidence which the proposed examinee might give on the one hand, and on the other, the burden which might be imposed upon the proposed examinee. In that consideration, the ease at which the information might be otherwise obtained, including from an alternative source, would be relevant. In such an evaluative process, the more likely it is that the proposed examinee may have the relevant information, the easier it will be for the discretion to be exercised in favour of issuing the summons.
45 A not dissimilar approach to that identified in Re Carpenter International Pty Ltd (in liq) (No 2) [2015] VSC 681 was followed by the Full Court of the Federal Court in Re New Tel (2005) 145 FCR 176, which adopted the observations of Lander J in Southern Cross Petroleum Sales (SA) Pty Ltd (in liq) v Hirsch (1998) 70 SASR 527 at 536 - 537 where he said:
The discretion is unfettered but must be exercised judicially. In exercising that discretion the court might have regard to the expressed purpose of the examination; the importance of the information to the eligible applicant; the seriousness of the matters to be inquired into; the use to which the information obtained on the examination might be put; the possibility of an advantage to the eligible applicant which he or she would not otherwise enjoy and the concomitant disadvantage to the prospective examinee; the availability of the information from other sources; the cost to the prospective examinee in attending for examination; whether the information sought is so peripheral to make the attendance of the prospective examinees oppressive; and the wider public interest in investigating the affairs of the corporation.
46 That passage has been cited with approval by Davies J in Re Bill Express Ltd (in liq) (2010) 238 FLR 329 and, in addition, his Honour observed that the "evident purpose for the discretion is to safeguard against abuse of the examination process". See also Accord Pacific Holdings Pty Ltd v Accord Pacific Land Pty Ltd (in liq) [2011] NSWSC 707 [136] per Ward J.
47 Necessarily, the matters which a Court will take into account on any application will vary with the circumstances of the case and, in particular, the stage reached in the administration of the winding up. Where a liquidator seeks to summon persons for the purpose of obtaining information concerning existing or proposed litigation, additional considerations arise (see the observations of Mansfield J in In the matter of Moage Pty Ltd (in liq); Sheahan v Pitterino (1997) 77 FCR 81). However, in all cases it is necessary for the Court to keep in mind that the liquidators are nearly always personally unaware of the transactions engaged in by the company prior to the liquidation and that the inquisitorial procedure prescribed under Part 5.9 Division 1 permits the conducting of public examinations in which questions of a "fishing" nature are expected.
48 In the matter before the Court, even if it were assumed that the Regulator was able to give some evidence about the investigation carried out by the Investigator, it would necessarily be of a limited nature. There is no suggestion that the Regulator had any direct connection with the Company or the Incident. If the Investigator had prepared a report and if the Regulator had read it, the Regulator might be able to give some evidence as to whether any WHSA requirements were breached by reason of the failure of the water tank. Conceivably that may include a consideration of the causes of the Incident. However, it is fairly clear that the predominant interest of the liquidators is in the documents which were produced by the Inspector in the course of his investigation. There does not appear to be any further information which the Regulator might possibly give and that is a significant factor in the exercise of the discretion to issue a summons to require the Regulator to attend for the ostensible purpose of giving evidence.
49 In relation to the exercise of the discretion, the matters referred to in Southern Cross Petroleum Sales above ought to be considered. Unfortunately there was not a substantial amount of material in the affidavits in support of the Application which sought to advance those matters to any great extent. Nevertheless, it is appropriate to consider them to the extent to which they are relevant to the present matter.
50 It can be said that the purpose of the intended examination is to obtain information about how the Incident occurred and what caused it, however, those are not matters of which it is suggested that the Regulator has direct knowledge. Indeed, there is only speculation that he has indirect knowledge. If he did have some relevant information, it could only mirror that contained in the documents produced as a result of the inspection. Whilst it cannot be doubted that information as to the cause of the Incident is relevant to the liquidators' considerations, it is far from clear that any conclusions have been reached by the Inspector who conducted the investigation. It can be accepted, however, that information of that type could be useful for the liquidators to advance claims or consider advancing claims against third parties. On the material before the Court, there is nothing to suggest that the Regulator would suffer any detriment if the summons were issued, although the Regulator has not yet been afforded the opportunity to advance any contentions at this stage.
51 One consideration which attracts substantial weight is whether the information is available to the liquidators through other means. That is particularly relevant in this case where it was conceded that the liquidators' primary concern was to obtain the documents in the power or control of the Regulator, rather than examine him as to what he has learned from reading them. Here it is more than likely that there will be a number of other persons who will be examined about the cause of the failure of the water tank. Those persons are likely to have been directly involved in the construction of the tank or any alterations done to it and would be knowledgeable about the circumstances of its failure. Given that such persons will be examined as to the cause of the failure, the liquidators prima facie are entitled to apply to the Court for an order under s 597(9) of the Act directing the Regulator to produce at the examination of those persons, "books" which are in the possession of the Regulator and which will arise in the examination. Importantly, the word "book" as used in s 597(9) is defined widely in s 9 to include "document". Although the entitlement to an order for the production of such books is discretionary, there appears to be good grounds for the making of such an order in the present case. Indeed, in the circumstances where the Regulator is in no position to give any substantial information about the matter other than that which might appear in reports or documents produced by the Inspector, it is probably preferable that the order for production be made rather than a summons be issued requiring the Regulator to give evidence at a public examination.
52 In the exercise of the discretion under s 596B(1) it is appropriate to consider the significance of the information sought by the liquidators from the proposed examinee. In this matter the information concerns the cause of the Incident or, at least, a WHSA Inspector's view as to the cause of the Incident and any information which that person gathered in reaching any conclusion. However, it is not likely that the documents in the possession or power of the Regulator are the only documents which might reveal any such considerations. In the ordinary course of an engineering failure of this description and magnitude, there is likely to have been a number of investigations by a number of interested parties all concerning the reasons for the mishap. Indeed, it would be most unlikely were the Company itself not have undertaken a complete and thorough investigation of the Incident and its causes such that the Company's own documents would give some indication of the reasons for the collapse of the tank. That is not to say that the conclusions of the Inspectors would be less relevant, but it keeps their relative importance in perspective.
53 It is also pertinent to consider the position of the Regulator and the appropriateness of requiring him to attend to give evidence as well as produce documents. It is apparent from the scheme of the WHSA that the Regulator occupies a senior position and it is not likely that he and his responsibilities might be easily replaced for the time required for the examination to be conducted. In this respect, Counsel for the applicants submitted that if a summons was issued, the usual course would be for discussions to occur between the lawyers for the parties such that an informal inspection of documents might take place and the need for examination of the Regulator would be reconsidered. It was suggested that such a course was likely to occur in this matter. This was submitted in the context of Counsel acknowledging that the interest of the liquidators was focused on the documents produced by the Inspectors rather than the knowledge of the Regulator. Whilst the course proposed by Counsel for the liquidators may be a practice which occurs in the conduct of examinations, it is not something which can carry much weight on an application such as the present where the application is for a summons for examination. However, it is relevant that an order under s 597(9) would permit the Regulator, by his agent, to cause documents to be delivered to the court for the purposes of the public examination when it first occurs such that the liquidators can then inspect them. If necessary the examination can be adjourned to another day whilst further consideration of the documents is undertaken. That is the manner in which such documents would usually be made available to the liquidators so as to allow them to utilise the documents in the most productive manner in the public examinations (see Sheahan (as joint and several liquidators of Blue Ridge WA Pty Ltd) (in liq) [2015] FCA 567; [19]).
54 Although there is always a public interest to be served in identifying the causes of the failure of companies and the existence of any causes of action which might be available to meet the claims of creditors, that is not a significant consideration in the present matter where the creditors appear to be limited and, on the information available on this application, the Company's insolvency did not arise from the defalcations of its officers.
55 It follows that, even if the applicants had been able to identify some information which the Regulator may have been able to provide, it would have been of minimal utility. That being the case, the above considerations do not support the exercise of the discretion in their favour for the issuing of the summons and the relief sought in paragraph 2(c) of the Originating Application should be refused.