Australian Securities and Investments Commission v Karl Suleman Enterprises Ltd; Application of Stoliar

CATCHWORDS : CORPORATIONS - winding up - examination of officers - rights to inspect written record of question and answers made under s.597(13) - whether s.597(14A) creates rights or is merely concerned with payment of fees - distinction between "records of the examination", "written record made under subsection (13)" and "transcript of an examination" - whether direction under s.596F(1)(e) may deny s.597(14A) right to inspect - WORDS AND PHRASES - "subject to"

Corporate Law Reform Bill (AGPS Cat. No. 92 40906) Corporations Act 2001 (Cth), ss.271, 596A, 596F, 597, 672DA LEGISLATION CITED : Supreme Court (Corporations) Rules, rule 2.13 Supreme Court Rules 1970, Part 65 rule 7(1)

Australian Securities and Investments Commission v Karl Suleman Enterprises Ltd; Application of Stoliar [2003] NSWSC 163 Douglas-Brown v Furzer (1994) 11 WAR 40 Jagelman v Sheahan (as liquidator of Moage Ltd) (2002) 41 ACSR 487 Newcrest Mining (WA) Ltd v The Commonwealth (1997) 190 CLR 513 Re Austral Oil Estates Ltd (1986) 7 NSWLR 440 Re Doran Constructions Pty Ltd (2002) 194 ALR 101 CASES CITED : Re Emanuel Investments Pty Ltd (1996) 19 ACSR 198 Re Eurostar Pty Ltd [2003] NSWSC 633 Re Gartner Wines Pty Ltd; S'Arrigo v Carter (2003) 44 ACSR 162 Re New Cap Reinsurance Corp Holdings Ltd; Gibbons [2001] NSWSC 835 Re Pan Pharmaceuticals Ltd; Selim v McGrath (2004) 48 ACSR 681 Re Robert Sterling Pty Ltd [1979] 2 NSWLR 728 Southern Cross Airlines Holdings Ltd v Arthur Andersen & Co (1998) 28 ACSR 455

Strarch International Pty Limited (In Liquidation) - Plaintiff PARTIES : Yoon Kwai Loh, Tsi Lip Lai, Hock Keng Tan and Peng Huiah Teoh - Persons heard by leave

Mr E.T. Finnane - Plaintiff COUNSEL : Mr J.R.J. Lockhart - Persons heard by leave

McCabe Terrill - Plaintiff SOLICITORS : Freehills - Persons heard by leave

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST

5030/04 - STRARCH INTERNATIONAL LIMITED (IN LIQUIDATION) JUDGMENT 1 Upon the application of the liquidator of Strarch International Limited in these proceedings, examination summonses directed to two directors of that company and its auditor were issued pursuant to s.596A of the Corporations Act 2001 (Cth). Examinations of those three persons have been conducted. Documents have been produced to the court by the examinees. 2 By his further amended interlocutory process, the liquidator claims orders as follows: "2A. An Order pursuant to section 569F(1)(e) of the Corporations Act 2001 that no person or organization may have access to documents produced to this court in these proceedings or the records of the examinations in these proceedings apart from the Liquidator or his legal advisors without first obtaining an order of this Court. 3. Alternatively, until further order, an order pursuant to section 596F(1)(e) of the Corporations Act 2001, that Yoon Kwai Loh, Tsi Lip Lai, Hock Keng Tan, and Peng Huah Teoh ('the foreign directors'), any partner, employee or related entity of any of the foreign directors, or any advisor to or agent of any of the foreign directors, (collectively 'the Excluded Persons') not be entitled to access the documents produced to this Court in these proceedings or the records of the Examinations in the proceedings conducted to date, including but not limited to the transcript of Examinations in these proceedings conducted to date. 4. An order that any application by a person other than the Liquidator or his legal advisors for access to or copy of, the written record of the Examinations in the proceedings conducted to date or for any other document produced in these proceedings, shall be referred to a Judge of a Master of this Court and be made by formal application with Notice to the Plaintiff." 3 The persons named in paragraph 3 of the further amended interlocutory process and designated "the foreign directors" have not been examined. Nor, when the application was before me, had examination summons directed to them been issued under s.596A, although plans of the liquidator in that direction were mentioned. The foreign directors sought and were granted leave to be heard on the further amended interlocutory process without becoming parties to the proceedings (Supreme Court (Corporations) Rules, rule 2.13). They oppose the making of the orders the liquidator seeks. 4 The first question to be addressed is whether, as the form of the first two orders contemplates, the court is empowered by s.596F(1)(e) to make those orders. I begin by quoting s.596F in full: " Court may give directions about examination (1) Subject to section 597, the Court may at any time give one or more of the following: (a) a direction about the matters to be inquired into at an examination; (b) a direction about the procedure to be followed at an examination; (c) a direction about who may be present at an examination while it is being held in private; (d) a direction that a person be excluded from an examination, even while it is being held in public; (e) a direction about access to records of the examination; (f) a direction prohibiting publication or communication of information about the examination (including questions asked, and answers given, at the examination); (g) a direction that a document that relates to the examination and was created at the examination be destroyed.

(2) The Court may give a direction under paragraph (1)(e), (f) or (g) in relation to all or part of an examination even if the examination, or that part, was held in public.

(3) A person must not contravene a direction under subsection (1)." 5 The opening words of s.596F ("Subject to section 597") make it necessary to quote several subsections of 597: "(4) An examination is to be held in public except to such extent (if any) as the Court considers that, by reason of special circumstances, it is desirable to hold the examination in private. … (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. … (10A) A person must not refuse, or intentionally or recklessly fail, to comply with a direction under subsection (9).

… (13) The Court may order the questions put to a person and the answers given by him or her at an examination to be recorded in writing and may require him or her to sign that written record. (14) Subject to subsection (12A), any written record of an examination so signed by a person, or any transcript of an examination of a person that is authenticated as provided by the rules, may be used in evidence in any legal proceedings against the person. (14A) A written record made under subsection (13): (a) is to be open for inspection, without fee, by: (i) the person who applied for the examination; or (ii) an officer of the corporation; or (iii) a creditor of the corporation; and (b) is to be open for inspection by anyone else on paying the prescribed fee." 6 The liquidator contends that the power under s.596F(1)(e) enables the court to make the orders sought. The foreign directors say that the opening words of s.596F(1) ("Subject to section 597") mean that the court does not have power to make, under s.596F(1)(e), a direction that purports to displace the right of a director of the corporation (who is, in light of the s.9 definition of "officer", is within s.597(14A)(a)(ii)) to inspect any "written record made under subsection (13)" in respect of the examination. 7 The liquidator's primary submission is that s.597(14A) is no more than a provision specifying who is and who is not required to pay the prescribed fee for inspection of a written record made under s.597(13) and does not itself create any right to inspect. Written submissions of Mr E.T. Finnane of counsel on behalf of the liquidator refer extensively to law reform and Parliamentary materials published in relation to proposals which were eventually implemented through the Corporate Law Reform Act 1992 (Cth). It is not clear to me that the relevant provisions, as ultimately enacted, were intended to give effect faithfully to recommendations in the Harmer Report to which Mr Finnane refers. It is clear, however, that commentary in the explanatory paper that accompanied a draft of the Corporate Law Reform Bill (AGPS Cat. No. 92 40906) contains apposite information since the terms of the provisions in that draft bill on the relevant matters correspond with those eventually enacted. 8 That explanatory paper, after referring to several recommendations in the Harmer Report and noting that some of the matters were already catered for by s.597 said (at paragraph 1313): "There are, however, no existing express provisions in the Corporations Law to the effect that the Court may: · exclude a person from an examination; · direct that an account of proceedings not be published or that notes taken during an examination be destroyed; or · order that access to the record of the examination be restricted."

It was then said, at paragraphs 1315 and 1316: "1315. Proposed section 596F addresses these deficiencies. 1316. Proposed subsection 596F(1) prescribes the directions that a Court may give about an examination."

Paragraph 1338 reads as follows: "Proposed paragraph 597(14A)(a), to be inserted by paragraph H597(j), sets out the persons to whom a written record of the examination, made under subsection 597(13), will be available without fee. Proposed paragraph 597(14A)(b) provides that other persons must pay the prescribed fee." 9 It is on the basis of these materials that the liquidator says that the central purpose of s.596F(1)(e) is to enable the court to restrict access to examination transcripts and that the purpose of s.597(14A) is to provide for a fee to be payable by some persons but not others. 10 Mr Finnane pointed out that the interaction between ss.596F(1)(e) and 597(14A) was considered by Santow J in Re New Cap Reinsurance Corp Holdings Ltd; Gibbons [2001] NSWSC 835, although in circumstances where the application before the court was an application for a direction under s.596F(1)(e) allowing access to records rather than denying or curtailing it. In what Mr Finnane categorised as obiter dicta, his Honour proceeded on the basis that "records of the examination" referred to in s.596F(1)(e) was not synonymous with the "written record made under subsection (13)" referred to in s.597(14A). The former is, as Santow J noted, wider and more comprehensive than the latter because it includes "all of the documents produced in aid of the examination, whether marked for identification or not and whether specifically put to the examinee or not". His Honour continued: "But when one turns to s596F, I consider that there is nothing in s597, to which it is subject, which precludes the court making, in terms of sub-paragraph (e) thereof, 'a direction about access to records of the examination'. Such a direction would be one which would permit access to all of the documents produced in aid of the examination, whether marked for identification or not and whether specifically put to the examinee or not. It would be entirely artificial to draw a distinction between documents on the basis of some such criterion as that. I consider that the wider expression 'records of the examination' was chosen deliberately to provide a broad discretion in the Court to make a direction permitting access either to be granted or restricted, though so far as restriction is concerned subject to s597 with its mandatory requirement for making 'a written record' open for inspection by anyone on paying the prescribed fee. That interpretation gives sensible meaning to the opening words 'Subject to section 597' in s596F." 11 Mr Finnane also referred to the decision of Selway J in Re Gartner Wines Pty Ltd; S'Arrigo v Carter (2003) 44 ACSR 162 in which the central question was whether evidence given and documents produced in response to an examination summons were confidential. Mr Finanne relied upon the following passage in his Honour's judgment: "Consequently, the provisions of s 597(4) and (14A) of the Act that (subject to any court order under s 596F), the examination should be held in public and the transcript be publicly available at least upon payment of the fee, would strongly suggest to me that no duty of confidentiality attaches to information disclosed in or during the examination."

This, it is said, indicates an interpretation under which s.597(14A) operates "subject to any court order under s.596F", thus confirming that such an order may curtail what would otherwise be the effect of s.597(14A). 12 The decision upon which Mr Finnane placed greatest reliance is Re Emanuel Investments Pty Ltd (1996) 19 ACSR 198, a decision of Master Anderson of the Supreme Court of South Australia. Mr Finnane submitted that "the reasoning on page 201 of the report is compelling and should be followed". At that page, the learned Master considered "the effect of CL s 596F(1) upon the rights given to creditors by CL s 597(14A)". It was held both possible and appropriate to make an order under s.596F(1) restricting inspection of a written record made under s.597(13). After referring to the decision of the Full Court of the Supreme Court of Western Australia in Douglas-Brown v Furzer (1994) 11 WAR 40, Master Anderson said (at p.201): "Whether Furzer correctly went so far in identifying creditor rights has been doubted: Re GPI Leisure Corporation Ltd (in liq) (1994) 53 FCR 365 at 375; 130 ALR 256; 15 ACSR 282. It did not however consider the effect of CL s 596F(1) upon the rights given to creditors by CL s 597(14A). In Furzer at 191 Malcolm CJ (with whom other members of the court agreed) said, after discussing his view of what CL ss 596(14) and CL s 596(14A) meant:

'The intention is that persons who are eligible applicants and any other relevant persons are given a forensic advantage which the Court can prevent being abused by its control over the conduct of the examination.' It cannot be correct that CL s 597 is to be treated as an island when it comes to the rights of interested parties. Were that to be so there would be no work for CL s 596F(1) to do. As much was recognised by Malcolm CJ in Furzer where again at 191, having considered the effect of CL ss 596A, 596B and s 597 he said: 'The Court retains its power to prevent injustice because it retains its power to give directions.'

I take this to be a reference to CL s 596F. See also Re BFTC Ltd (in liq) (1994) 14 ACSR 460 at 463 at 191. Malcolm CJ also said: ' … the patent object (referring to ss (14) and (14A)) is to enable the liquidator or any creditor of the corporation to have access to the written … transcript of an examination and use it in evidence in any proceedings against the person being examined.' (parenthesis added). That is not the situation here. The affidavits in support of the liquidators' applications clearly support an examination of the relevant persons pursuant to CL s 596B and in the context of them having no prior knowledge of earlier examinations. Hence I do not agree with the submissions that it is impossible to go past the words of CL s 597(14A). Accepting the rights which are given therein the work which CL s 596F has to do is to ensure that the proper objects of a public examination may be obtained. I am not of the view that the forensic advantage which is and always has been given to a liquidator was intended to be lost because of the particular circumstances of a case. Here those who are yet to be examined from EFG and Thomsons were in the most intimate contact with the directors of the Emanuel Group at relevant times. What O'Loughlin J said in Re Excel Finance Corp (Rec and Mgr Apptd) (1993) 41 FCR 346 at 355; 113 ALR 543; 10 ACSR 255 remains apposite. He said: 'The purpose of an examination under s 597 is to bring the examinee before the Court without forewarning him of the subjects upon which he will be examined.'

He then said: "I do not agree that it was the intention of Parliament that the test to prevent access as of right can only be if special circumstances are shown by the liquidator. Such a standard undermines CL s 596F(1) and (2). But if that were to be so then I would hold that such circumstances exist in the present factual matrix of these examinations." 13 From that point, Mr Finnane argued (by way of his secondary submission) that the need for integrity of an examination to be maintained - including, for example, by recognising that an examinee has no right to advance notice of questions (Re Robert Sterling Pty Ltd [1979] 2 NSWLR 728; Australian Securities and Investments Commission v Karl Suleman Enterprises Ltd; Application of Stoliar [2003] NSWSC 163) - means that all the s.596F(1) powers must be intended to be available to be used in the furtherance of that need, including, where necessary, by way of curtailment of s.597(14A) rights. 14 As to the words "Subject to" (at the start of s.596F(1)), Mr Finnane points out that the use of those words does not necessarily indicate that there is conflict between the provision qualified by the "subject to" reference and the provision to which it is expressed to be subject. He referred to Newcrest Mining (WA) Ltd v The Commonwealth (1997) 190 CLR 513. One question in that case concerned the relationship between legislative powers under s.51 of the Constitution and the legislative power conferred by s.122. The former are conferred "subject to this Constitution" while the latter is not. Gaudron J dealt with the matter thus (at pp.580-1): "The use of the expression 'subject to this Constitution' does not itself mean that there is always conflict between s 51 and s 122. But it does mean that, where conflict exists, s 122 must prevail. As Megarry J pointed out in C & J Clark Ltd v Inland Revenue Commissioners [1973] 1 WLR 905 at 911; [1973] 2 All ER 513 at 520. '[w]here there is no clash, the phrase does nothing: if there is collision, the phrase shows what is to prevail' (In Maclean Shire Council v Nungera Co-operative Society Ltd (1995) 86 LGERA 430 at 433, Handley JA, with whose judgment Priestley and Sheller JJA agreed, cited C & J Clark Ltd v Inland Revenue Commissioners for the proposition that the expression '"subject to" indicates which of two or more provisions is the dominant one in the event of any conflict'. The remarks of Cooke J in Harding v Coburn [1976] 2 NZLR 577 at 582 are to the same effect. His Honour pointed out that the use of the expression 'subject to' is 'a standard way of making clear which provision is to govern in the event of conflict. It throws no light, however, on whether there would in truth be a conflict without it.) . In S v Marwane (1982 (3) SA 717 (A).), the Appellate Division of the Supreme Court of South Africa had to construe the words '[s]ubject to the provisions of this Constitution'. Miller JA, giving judgment for the majority, said ( S v Marwane 1982 (3) SA 717 (A) at 747-748) : 'The purpose of the phrase "subject to" in such a context is to establish what is dominant and what subordinate or subservient; that to which a provision is subject', is dominant -- in case of conflict it prevails over that which is subject to it. Certainly, in the field of legislation, the phrase has this clear and accepted connotation. When the legislator wishes to convey that that which is now being enacted is not to prevail in circumstances where it conflicts, or is inconsistent or incompatible, with a specified other enactment, it very frequently, if not almost invariably, qualifies such enactment by the method of declaring it to be subject to' the other specified one.'" 15 Mr J. R. J. Lockhart of counsel submitted on behalf of the foreign directors that there is no power to make the direction the liquidator seeks, insofar as its purported effect would be to deny the right of inspection guaranteed by s.597(14A) . Mr Lockhart also submitted that the analysis of Santow J in New Cap Reinsurance (said by Mr Finnane to represent obiter dicta only) reflects a carefully reasoned approach to the interaction of the provisions and should be adopted to the exclusion of the conflicting analysis in Emanuel Investments. According to Mr Lockhart's submission, Emanuel Investments should not be followed for several reasons: "(a) Anderson SCM undertakes virtually no analysis of the critical matters which point to the conclusion that section 597(14A) is mandatory, those matters being the mandatory language of section 597(14A), and the introductory words of section 596F(1) 'subject to section 597'; (b) Instead, Anderson SCM focuses upon the circumstances before the court in that instance ie where no proceedings had issued or were known to be in prospect, and that what was sought to be done was to examine certain persons in the context of them having no prior knowledge of earlier examinations. In other words, the court moved too quickly from what was seen to be a desirable outcome (no prior warning of earlier examinations) to the question of statutory interpretation without actually analysing the language of the statute; (c) furthermore, the analysis which appears on page 201 of Emanuel is not compelling. Firstly, where words from Furzer are first quoted, Anderson SCM does not quote the immediately preceding words which are necessary for a proper understanding. Secondly, Anderson SCM places some reliance upon the fact that there is some relationship between section 597 and section 596F cannot be 'treated as an island' and that were that to be so there would be 'no work for … section 596F(1) to do'. However, there is no doubt section 596F(1) has work to do. It is simply that directions to be made under section 596F are expressed to be 'subject to section 597'. Where not inconsistent, directions can be made." 16 Mr Lockhart also referred to Re Eurostar Pty Ltd [2003] NSWSC 633, where Campbell J had occasion to consider and approve the analysis made by Santow J in dealing with an application by receivers who had conducted examinations for leave to use in particular ways documents produced to the court in the course of the examinations. Campbell J said: "The starting point of an application like the present one is that documents obtained on compulsory process ought not be used for other purposes, except to the extent that a statute says otherwise (eg, s.597(14A)). 17 Campbell J had earlier said: "As Santow J pointed out in New Cap , there is a distinction between the 'written record' referred to in s 597 (14A), and the 'records of the examination' referred to in s 596F(1)(e). The ' written record' in s 597 (14A) can be inspected as of right by any creditor of the corporation. That includes, it is common ground, any documents which were marked for identification and shown to a witness in the course of the examination. Thus, there is no basis upon which the receiver could resist, even if he wanted to, a request by a creditor of the corporation to inspect that material.

Section 596F(1)(e) confers on the Court a discretionary power, which enables it to give access to, amongst other things, documents which were produced under compulsory process for the purpose of the examination, but were not actually used in the course of the examination. In the New Cap decision, at para [39], Santow J said: 'I am satisfied that there are a number of sources of power available to the liquidator to do that which he does not oppose doing, namely to make available the documents which were utilised in the examination either by directly being marked for identification or as other ways being produced for the examination. I see no sensible distinction between the two categories of documents. The documents not marked for identification were still capable of informing the examination and influencing the questions asked. Indeed the liquidator's submissions appear to favour that access. Thus I would include in any access all documents produced, in the absence of any evidence from those opposing access that a document was produced which was entirely extraneous to any possible purpose of the original examination.' It will be observed that His Honour there was dealing with the facts of the particular case before him. He was not purporting to say, and did not say, that in all cases there will never be a distinction between documents which were directly marked for identification, and documents which were otherwise produced for the purpose of the examination." 18 Having considered the submissions made by Mr Finnane and Mr Lockhart, I am of the opinion that the matter before me involves no more than a simple question of statutory construction. It turns upon the meaning and effect of the words "subject to" which, as is made clear by Gaudron J in the passage from Newcrest Mining quoted above, indicate which of two provisions is to prevail and be paramount in case of conflict between them. This means, in the present context, that s.597 is to prevail over s.596F. Santow J was clearly right when he pointed out that "records of the examination" referred to in s.596F(1)(e) include but are wider than a "written record made under subsection (13)" referred to in s.597(14A). Such a "written record" contains "the questions put to a person and the answers given by him or her" (I leave to one side as unnecessary to answer here the question whether, as both parties seemed to accept in Eurostar, this "written record" includes documents marked for identification and shown to the examinee in the course of the examination). Bearing in mind ss.597(7)(d), 597(9), 597(9A) and, in particular, s.597(14) (to be mentioned in greater detail presently), the "records" referred to in s.596F(1)(e) may include things additional to any record of the questions and answers made in conformity with a s.597(13) order. That being so, the "subject to" specification with which s.596F(1) begins is to be read as indicating that the right to inspect given by s.597(14A) in relation to a "written record made under subsection (13)" may not be curtailed by a s.596F(1)(e) direction, even though such a direction might operate to deny, allow or otherwise regulate access to some other part of the wider subject matter comprehended by the description "records of the examination" in s.596F(1)(e). 19 Resort to Parliamentary and law reform materials is permissible for limited purposes only under s.15AB of the Act Interpretation Act 1901 (Cth) which, in its present form corresponding with the form it had on 1 November 2000, is made applicable here by s.5C of the Corporations Act 2001 (Cth). Those documents may be used to assist in resolving ambiguity, obscurity, absurdity or unreasonableness. No need for such resolution arises here. The plain words speak for themselves. I would add, however, that I do not read the explanatory paper from which I have quoted as indicating in any clear way an intention to make provision in the way for which Mr Finnane contended. I would also add that the idea that s.597(14A) does no more than identify who is to pay to inspect the written record does not withstand scrutiny when that section is compared with other sections of the Corporations Act clearly having a similar purpose. 20 Section 271(3) is such a section. Section 271(2) requires a company to keep a register of charges and specifies the entries that must be made in it. Section 271(3) then provides: "(3) A register kept by a company pursuant to subsection (2) must be open for inspection: (a) by any creditor or member of the company - without charge; and (b) by any other person - on payment for each inspection of such amount, not exceeding the prescribed amount, as the company requires or, where the company does not require the payment of an amount, without charge."

Section 271(4) makes provision for a person to request a copy of the register or any part of it. Where such a request is made, the company must comply with it, subject to the applicant's making payment where the company requires payment. 21 Section 672DA(1) requires a company or the responsible entity of a managed investment scheme to keep a register of certain information it receives about relevant interests in voting shares in the company or interests in the scheme. Section 672DA(7) provides: "(7) The register must be open for inspection: (a) by any member of the company or scheme - without charge; and (b) by any other person: (i) if the company, or the responsible entity, requires the payment of a fee for the inspection - on payment of the fee; or (ii) if the company, or the responsible entity, does not require the payment of a fee for the inspection - without charge. The amount of the fee required by the company, or the responsible entity, under subparagraph (b)(i) must not exceed the amount prescribed by the regulations for the purposes of this subsection."

Section 672DA(8) makes provision for the giving of a copy of the register or any part of it to a person on request. 22 Both s.271(3) and s.672DA(7) obviously confer rights of inspection, as distinct from merely saying who is to pay to inspect and who may inspect free of charge. Sections 271(4) and 672DA(8) create a different kind of right, namely, a right to be given a copy. There is no corresponding right in relation to the record with which s.587(14A) is concerned. But a comparison of s.597(14A) with ss.271(3) and 672DA(7) leaves no doubt in my mind that it, like them, creates rights of inspection. 23 With one exception, none of the cases to which I have been referred supports the construction for which the liquidator contends. Rather, all, to my mind, tend against the correctness of that construction. The exception is the Emanuel Investments case but I am bound to say in relation to it that I consider the submissions made by Mr Lockhart to be compelling. The reference in Emanuel Investments to the power to give directions under s.596F as an instrument in the hands of the court for the prevention of injustice is no doubt apposite. But that, to my mind, says nothing about the interaction between s.596F(1)(e) and s.597(14A). That interaction is entirely a matter of statutory construction. To regard the s.596F(1)(e) power as not available to preclude or curtail the right to inspect given by s.597(14A) is not to treat s.597 "as an island when it comes to the rights of interested parties" or to say that there is "no work for … s.596F(1) to do". Once the distinction emphasised by Santow J is accepted, there is ample work for s.596F(1) to do in relation to "records of the examination" even allowing for the fullest operation of s.597(14A). 24 Nor can it be accepted that there is a legislative intention that examinations of examinable persons are to take place "in the context of them having no prior knowledge of earlier examinations". On the contrary, the clear legislative intention is that any examination is to take place in public unless "special circumstances" produce a need, recognised by the court, for it to be in private: see s.597(4). The circumstances that several persons might be examined in relation to the affairs of a single company and that the examinations will, of necessity, occur in sequence is an obvious and expected by-product of the statutory scheme. That, of itself, could not possibly represent "special circumstances" indicative of a need for any of the examinations to be in private, any more than the possibility of attendance by representations of the press for the purposes of news reporting in the ordinary course could be seen to be a "special circumstance": see Jagelman v Sheahan (as liquidator of Moage Ltd) (2002) 41 ACSR 487. 25 In my opinion, the provisions in question must, despite what is said in the Emanual Investments case, be approached on the basis that s.597(14A) is a legislative directive that every person who wishes it is to have the ability to inspect any written record of question and answers made pursuant to s.597(13). A fee must be paid where the person desiring to inspect is not within s.597(14A)(a); otherwise, inspection is free of charge. There is also, in my view, a manifested legislative intention that the ability to inspect is not to be curtailed through an order under s.596F(1)(e), even though such an order may preclude access to the whole or any part of the remainder of the "records of the examination" in the wider sense referred to by Santow J; and this is so whether or not the examination is conducted in private or in public. 26 It may be said that this approach produces the anomalous or undesirable consequence that, if, for reasons judged sufficient for the purposes of s.597(4), the court orders that the whole or some part of the examination be held in private, the unavailability of s.596F(1)(e) as a means of denying the right to inspect a s.597(13) record of questions and answers means that the decision that the examination be in public is undermined. It is to be remembered, however, that the court is not compelled to make an order under s.597(13) that questions and answers be recorded in writing. Its power to make such an order is discretionary. This leads on to another point I consider to be of particular importance. 27 In drawing the valid distinction between a written record made under s.597(13) and the "records of the examination" referred to in s.596F(1)(e) and observing correctly that the latter comprehends the former, Santow J had no need, in the New Cap Reinsurance case, to mention another species of documentary recording expressly contemplated by s.597. I refer to "any transcript of an examination of a person that is authenticated as provided by the rules". Section 597(14) refers to such a transcript as well as to "any written record of an examination so signed by a person". It is thus clear that there may be either a written record made under s.597(13) or a "transcript" of the kind mentioned in s.597(14) - or, indeed, there may be both. The reference to a "transcript", it seems to me, acknowledges that, as was recognised by Campbell J in Re Doran Constructions Pty Ltd (2002) 194 ALR 101, an examination under s.596A is a proceeding in the court. 28 Where a transcript of an examination is made and authenticated as contemplated by s.597(14) but there is no order under s.597(13) (and accordingly no written record of questions and answers made pursuant to an order under s.597(13)), s.597(14A) does not create any right to inspect the particular form of record of the examination, being the transcript. A transcript of the kind mentioned in s.597(14) is therefore amenable to directions under s.596F(1)(e) in a way that a record made pursuant to an order under s.597(13) is not. That is a circumstance that would no doubt be relevant to a decision as to the more appropriate way of proceeding in a particular case in which the existence of the statutory rights of inspection created by s.597(14A) gave cause for concern. 29 The distinction between a written record made under s.597(13) and a transcript of an examination referred to in s.597(14) was noted by Drummond J in Southern Cross Airlines Holdings Ltd v Arthur Andersen & Co (1998) 28 ACSR 455. After referring to orders made by the Supreme Court of Queensland in connection with an examination, Drummond J said: "It can be seen that Byrne J did not give any direction that a transcript be kept of the examination, although it is apparent that it was the intention of the liquidator, and the understanding of the judge, as reflected in his orders, that a transcript would be made. Pt 5.9 Div 1 the Corporations Law does not contain any general provision that deals with the making of a transcript of the examination. Section 597(13) empowers the court to make an order for the making of a special kind of transcript, ie, one recorded in writing and signed by the examinee, and s 597(14) regulates the admissibility in any legal proceedings against the examinee of that special transcript and also "any transcript of an examination of a person that is authenticated as provided by the rules", ie, by the transcript recorder or by any person present at the examination. See r 81(2) the Corporations (Queensland) Rules 1993. A person over whom the liquidator has no control, eg, the judicial officer before whom the examination is conducted, can therefore authenticate a transcript not specially ordered under s 597(13), with the result that it will be admissible in evidence in any legal proceedings brought by anyone against the examinee. The transcripts here in question were prepared pursuant to a private arrangement between the liquidator and the State Reporting Bureau. In my opinion, Pt 5.9 Div 1 leaves it to the person conducting the examination to determine whether a transcript of the examination is to be kept, in the absence of the court exercising its powers under s 597(13). In deciding whether to have a transcript made, the examiner will no doubt be guided by the wishes of the liquidator or other person at whose behest the examination was ordered." 30 Drummond J then referred to the scope and effect of s.597(14A): "Section 597(14A) provides for the inspection, including public inspection, of any special transcript directed to be made by the court under s 597(13). But there is no provision that deals with whether an ordinary transcript is to be open to inspection by the public or by any particular person or whether it can, in particular circumstances, be kept confidential by the liquidator or other person who invokes the power of compulsory examination. Byrne J exercised the power conferred by s 596F(1)(e) to give directions about access to the transcripts: he gave a direction for the release by the liquidator of a copy of the transcripts of the examination to the ASC and a direction that the ASC should itself be permitted to disseminate the transcript to the Commonwealth Director of Public Prosecutions, on certain terms." 31 His Honour thus accepted without comment or question the proposition that the court may make s.596F(1)(e) directions in order to allow and regulate access to transcripts of the kind referred to in s.597(14), whereas a record of questions and answers made in conformity with a s.597(13) order attracts a right of "inspection, including public inspection". That analysis is consistent with the construction of the provisions I consider to be correct. 32 Because of the view I take about the scope and operation of the provisions in question, I will not make any order under s.596F(1)(e) that purports to restrict access to any written record of questions and answers made pursuant to an order of the court under s.597(13). I therefore approach paragraphs 2A and 3 of the amended interlocutory process as if they omitted references to all such s.597(13) records as may actually exist in the particular cases at hand, but extend to such transcripts of the kind referred to in s.597(14) as may exist as part of the "records of the examination" referred to in s.596F(1)(e). The question then becomes whether the court should, in its discretion, make an order that denies the world at large access to the records of the examinations that have already been completed (except for the part of each to which s.597(14A) applies), otherwise than in accordance with some future order of the court; or, in the alternative, an order that denies such access to the particular persons identified as the "foreign directors". 33 There is, in reality, no basis for either such order, in the sense that it is not an order that could usefully be made. The only relevant right the foreign directors or anyone else can assert is the s.597(14A) right to inspect such written records of questions and answers as may have been made pursuant to s.597(13) orders. No right of inspection or access is conferred upon the foreign directors or any other person in relation to such other documents (if any) as constitute the balance of the records of the examination referred to in s.596F(1)(e), including any "transcripts" of the kind referred to in s.597(14). I am of the opinion that all such records held by the court are within Part 65 rule 7(1) of the Supreme Court Rules 1970: "A person may not search in a registry for or inspect any document or thing in any proceedings except with the leave of the Court." 34 While an examination summons, as such, may not be an originating process (Re Austral Oil Estates Ltd (1986) 7 NSWLR 440), the examination itself is, in accordance with the decision of Campbell J in Re Doran Constructions Pty Ltd (above), within the concept of "proceedings". I quote his Honour's summary of submissions on behalf of the examinee in that case, which submissions he ultimately accepted: "The examinee says that 'proceedings' , while not defined in the Evidence Act 1995 , nor in the Supreme Court Act 1970 , or in the Supreme Court Rules, is a word applicable to a liquidator's examination. In Proust v Blake (1989) 17 NSWLR 267 Samuels JA (with whom Mathews J agreed) said that, though the word 'proceeding' is not defined in the Supreme Court Act 1970 , '…it is used very generally in the latter Act to cover the whole variety of forensic exercises which may occur in the Court…it may well be that the word "proceedings" is a protean one which will take its meaning from its context.' He points out that in Cheney v Spooner (1929) 41 CLR 532 at 537 Isaacs J and Gavan Duffy J held that a liquidator's examination took place in a 'proceeding' , namely the winding up. Starke J approached the matter differently, saying at 538-539: 'A civil proceeding, I apprehend, includes any application by a suitor to a court in its civil jurisdiction for its intervention or an action. The application for the issue of a summons in this case was such a proceedings.' (see also Blake v Norris (1990) 20 NSWLR 300 at 306 per Smart J, Fiorentino v Irons (1997) 79 FCR 327 at 331) Most relevantly, the examinee says, in In Re: Interchase Corporation Limited (1996) 68 FCR 481 at 487, Kifel J held that an examination under section 596B of the Corporations Law was a 'proceeding' in a Federal Court, within the meaning of section 4(1) of the Evidence Act 1995 (Cth)." 35 It follows that the whole of the records of an examination held by the court are documents "in any proceedings" and that, except to the extent that a right of inspection arises under s.597F(14A) as already discussed (being a right created by Commonwealth law), neither the foreign directors nor anyone else may have access to any part of those records without the leave of the court given under Part 65 rule 7(1). There is accordingly no need for that position to be re-stated in any further direction or order. 36 There is, however, one minor consequential respect in which I consider a direction to be appropriate. In order to accommodate in an unambiguous way the legitimate interest of the liquidator in knowing of and, if thought fit, opposing any such application for leave under Part 65 rule 7(1), there could be a direction to the effect that, if by any such application, inspection is sought of any document in any of the relevant examination proceedings, not being a written record of questions and answers made pursuant to an order under s.597(13), the application shall not be determined unless the person by whom the application is made satisfies the court that the person gave to the liquidator seven days prior written notice of the person's intention to make the application. Such a direction does not encroach upon the s.597(14A) right and is therefore permitted by s.596F(1)(e). 37 Whether, in the particular circumstances, such a direction will serve any useful purpose from the liquidator's point of view (in that it will do nothing to prevent inspection by the foreign directors of such records of questions and answers made pursuant to s.597(13) orders as actually exist) is a matter for the liquidator. He may, if he wishes, approach my Associate (with notice to the foreign directors) within the next fourteen days with a view to having the matter restored to the list for the purpose of formulating a direction of the kind I have outlined. The particular orders sought in the further amended interlocutory process (see paragraph [2] above) are, however, refused. 38 As for costs, I am satisfied that the liquidator has acted appropriately and responsibly in making this application. He should therefore have his costs out of the assets of the company as an expense of the winding up. For reasons discussed in Re Pan Pharmaceuticals Ltd; Selim v McGrath (2004) 48 ACSR 681, I am of the opinion that costs may not be awarded in favour of persons granted leave under rule 2.13 to be heard without becoming parties - or, at all events, that they should not be awarded costs in the absence of extraordinary circumstances. There being no extraordinary circumstances here, there will be no order as to the costs of the foreign directors. **********

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.