D. Consideration
35 Mr Summers submits that he ceased to be a director of Dundas some five years ago and provided all documents in his possession in respect of Dundas and other related entities over four years ago.
36 He submits that there is an inadequate explanation for his examination by the Liquidators. He submits that the limited material before the Court today as to the reason for his examination, has to be balanced against the prejudice to him of having to be the subject of examinations in respect of events that occurred many years ago, and in circumstances where he has otherwise provided relevant documents to the Liquidators.
37 The Court accepts that any examination, particularly with respect to events that have occurred many years ago, is likely to cause considerable inconvenience to an examinee and is a serious imposition on their time and broader wellbeing. Having said that, a liquidator has a right to examine former directors of insolvent companies. There are powerful public policy reasons why that is so, particularly in circumstances where companies go into insolvency owing substantial sums of money to creditors.
38 I am satisfied that, in the circumstances, it is appropriate to make the orders substantially in the form of the orders sought by the Liquidators.
39 The reasons for the need to examine Mr Summers were addressed in the confidential affidavit that was relied upon by the Liquidators in support of the original issue of the summonses for examination, including the examination of Mr Summers. In any event, the summons for examination was issued as of right to Mr Summers, as a former director.
40 The two critical issues in determining whether there is utility in making the orders today are first, whether the Liquidators have provided an adequate explanation for their delay in progressing the summons for examination and production of documents and second, whether there is a reasonable prospect that the Liquidators will be in a position to, in fact, conduct the proposed examinations and to advance the summonses for the production of documents.
41 I am satisfied that both those matters have been addressed by the Liquidators in the evidence on which they rely.
42 I have concluded that it is appropriate to make the orders for the following reasons.
43 First, the orders are necessary to give effect to the orders that the Liquidators had previously obtained for the examination of some 15 witnesses and production of documents from 14 entities. It is not the task of the Court today to determine whether or not the Liquidators have a sufficient basis to have obtained those orders for summonses for examination and production of documents. That exercise has been done already, and there is nothing to suggest that any relevant events have occurred which would render the earlier consideration by the Registrar irrelevant. In any event, the Liquidators, as of right, are entitled, pursuant to s 596A of the Corporations Act 2001 (Cth) (Corporations Act), to obtain a summons for the examination of Mr Summers, as he was a director of Dundas during at least some of the period of two years prior to the appointment of the Liquidators as administrators of Dundas.
44 Second, I am satisfied that the Liquidators had good reason to hold off pressing ahead with the proposed summons for examination and production of documents. First, by reason of the possibility of a scheme of arrangement and, second, the difficulty that the Liquidators encountered when the available sources of funding did not materialise, in particular, the delisting and subsequent voluntary administration of Mallee, together with unsuccessful attempts to obtain funding from alternative sources. A liquidator is under no obligation to continue to progress steps in a liquidation in the absence of any available funds: s 545 of the Corporations Act.
45 Third, on realising that the steps that had been anticipated might lead to obtaining funding, the Liquidators moved swiftly to relist the proceeding to seek an extension of the sunset clauses.
46 Fourth, there is now no reason to believe that the examinations will not succeed. Arrangements have been entered into between the Liquidators and their solicitors, Lavan, whereby the solicitors have agreed to proceed with the examinations and request for production of documents on a "no win no pay" basis. In addition, the solicitors have confirmed that, to the extent that they are unable to arrange appropriate fee arrangements with counsel, the solicitors are in a position to undertake the examinations themselves.
47 Fifth, on any view, this is a significant administration in which creditors' claims exceed $145 million, and the extent and scope of the complexity of the circumstances in which Dundas went into liquidation is underlined by the number of summonses for examination and orders for production of documents.
48 Sixth, on the limited evidence before me, it would appear that the affairs of Dundas and its books and records are in disarray, and there is a pressing need to conduct further investigations to understand the circumstances in which Dundas has collapsed.
49 Further, it is necessary to note that, other than the understandable, but inevitable, prejudice to Mr Summers of being the subject of an examination with respect to events that occurred some time ago, Mr Summers is not able to point to any specific prejudice, particularly in circumstances where the Liquidators have, as of right, the ability, if these orders were not otherwise made, to issue, or to request the Court issue, a fresh examination summons on Mr Summers, which he would not be able to resist.
50 Finally, it is necessary to address the issue of the need for an extension of time within which to make the application for review of the Registrar's decision.
51 Ultimately, the evidence establishes that, by reference to the factors identified by Stewart J in Coshott v Official Trustee in Bankruptcy, in the matter of the Bankrupt Estate of Michael Petrovic Lenin (deceased) [2019] FCA 913 at [24], the length of the delay was minor, the material was attempted to be filed four hours late and Mr Summers was served three business days after the date by which he was otherwise required to have been served.
52 The explanation provided for the delay, while unfortunate in that a solicitor had simply assumed that the Federal Court Registry would have a similar approach to deadlines for filing documents to the Western Australian Supreme Court Registry, that is, at any time up to midnight on the relevant day, is understandable. Lawyers, unfortunately, from time to time, make assumptions that different courts have similar practices.
53 Relevant to prejudice, it is difficult to understand how the short delay could lead to any specific prejudice to Mr Summers, other than the general prejudice with respect to having to be the subject of an examination.
54 Finally, as to the merits, given the significance of the collapse of Dundas and the amount of creditors outstanding, there does appear to be compelling reasons for examinations of former directors to assist the Liquidators in understanding the context in which Dundas ultimately went into liquidation.
55 I am satisfied in the circumstances that it is therefore appropriate to extend the time within which the Liquidators may apply to seek a review of the Registrar's decision.