Deputy Commissioner of Taxation v Australia Securities and Investments Commission; in the matter of Civic Finance Pty Limited

Federal Court of Australia|2013-05-28|Before: Mr J, Farrell J

An order to produce documents, in the terms of the draft order to produce documents which is Annexure "A" hereto, be issued against Mercantile Discount Bank Limited of 125 Menachem Begin Road, Tel Aviv 67012, Israel returnable on Wednesday 12 June 2013 at 9.30am before the Registrar. 2. Leave be granted to the Applicant, pursuant to r. 10.44 of the Federal Court Rules 2011, to serve the order to produce documents on Mercantile Discount Bank Limited at 125 Menachem Begin Road, Tel Aviv, 67012, Israel. 3. An order to produce documents, in the terms of the draft order to produce documents which is Annexure "B" hereto, be issued against Israel Discount Bank Limited of 23 Yehuda Halevi Street, Tel Aviv 65136, Israel returnable on Wednesday 12 June 2013 at 9.30am before the Registrar. 4. Leave be granted to the Applicant, pursuant to r. 10.44 of the Federal Court Rules 2011, to serve the order to produce documents on Israel Discount Bank Limited at 23 Yehuda Halevi Street, Tel Aviv 65136, Israel. 5. A letter of request, in the terms of the draft letter which is Annexure "C" hereto, be issued by the Court pursuant to s.581 of the Corporations Act, 2001 (Cth) to The Honourable Judge Eitan Orenstein of the District Court in Tel Aviv - Jaffa, 1 Weizmann Street, Tel Aviv 64239, Israel. 6. Mercantile Discount Bank Limited is excused from compliance with the order to produce documents addressed to it where it complies with orders made by the District Court in Tel Aviv - Jaffa pursuant to the letter of request referred to in Order 5. 7. Israel Discount Bank Limited is excused from compliance with the order to produce documents addressed to it where it complies with orders made by the District Court in Tel Aviv - Jaffa pursuant to the letter of request referred to in Order 5. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Annexure a Rule 30.03 Order to produce documents Federal Court of Australia No. of 2013 District Registry: New South Wales Division: General

IN THE MATTER OF ACN 078 272 867 PTY LIMITED (IN LIQUIDATION) (formerly ADVANCE FINANCES PTY LIMITED) AND ACN 087 623 641 PTY LIMITED (formerly CIVIC FINANCE PTY LIMITED)

MAX CHRISTOPHER DONNELLY IN HIS CAPACITY AS LIQUIDATOR OF EACH OF ACN 078 272 867 PTY LIMITED (IN LIQUIDATION) (formerly ADVANCE FINANCE PTY LIMITED) and ACN 087 623 641 PTY LIMITED (IN LIQUIDATION) (formerly CIVIC FINANCE PTY LIMITED) Applicant To: Mercantile Discount Bank Limited, 125 Menachem Begin Road Tel Aviv 67012 ISRAEL You are ordered to produce this order or a copy of it and the documents or things specified in the Schedule. See next page for details. Failure to comply with this order without lawful excuse is a contempt of court and may result in your arrest and punishment. Please read Notes 1 to 13 at the end of this order. The last date for service of this order is Date: ……………………………………………… Signed by an officer acting with the authority of the District Registrar Issued at the request of Max Christopher Donnelly, whose address for service is: Place: Church & Grace Email: pduggan@churchgrace.com.au

You must comply with this Order: (a) by attending to produce this Order or a copy of it and the documents or things specified in the Schedule below at the date, time and place specified for attendance and production; or (b) by delivering or sending this Order or a copy of it and the documents or things specified in the Schedule below to the Registrar at the address below, or if there is more than one address below, at any one of those addresses, so that they are received not less than 2 clear business days before the date specified for attendance and production. (See Notes 5-9) Date, time and place at which you must attend to produce the Order or a copy of it and documents or things, unless you receive a notice of a later date or time from the issuing party, in which case the later date or time is substituted: Date: Time: Place: Address, or any address, to which the Order (or copy) and documents or things may be delivered or posted: The Registrar Federal Court of Australia New South Wales District Registry Law Courts Building Queens Square SYDNEY NSW 2000

Schedule The documents and things you must produce are as follows: 1. A list of all of the accounts ("the Accounts") of ACN 078 272 867 Pty Limited (formerly Advance Finances Pty Limited) (in Liquidation) and ACN 087 623 541 Pty Limited (formerly Civic Finance Pty Limited) (in Liquidation) ("the Companies") with Mercantile Discount Bank Limited ("the Bank"). 2. The Accounts' opening documents. 3. Copies of the minutes and resolutions of the Companies held by the Bank. 4. Loan agreements and/or credit facilities in both Israeli new shekels and foreign currencies. 5. A detailed list of the Accounts' authorised signatories and a specification of the signatures' composition. 6. A detailed list of money transfers, both in Israeli new shekels and foreign currencies, exceeding a value of US$10,000.00, including SWIFT transcripts. 7. A detailed list of collaterals, including guarantee documents and/or documentary credit and/or liens granted by a third party (including monetary deposits and/or bank guarantees and/or credit letters provided for securing the loans and/or credits). 8. A detailed list of money transfers from the Companies' accounts to payees and/or provision of collaterals and/or guarantees from the aforementioned accounts in favour of any member of the Binetter family members, including to accounts in which such payees are beneficiaries and/or that belong to the companies under their control. 9. A concentrated balances sheet of the bank accounts' balances at the end of each year from 1997 to 2010.

Last day for service 1. You need not comply with the Order unless it is served on you on or before the date specified in the Order as the last date for service of the Order.

Informal service 2. Even if this Order has not been served personally on you, you must, nevertheless, comply with its requirements, if you have, by the last date for service of the Order, actual knowledge of the Order and of its requirements.

Addressee a corporation 3. If the Order is addressed to a corporation, the corporation must comply with the Order by its appropriate or proper officer.

Conduct money 4. You need not comply with the Order in so far as it requires you to attend to give evidence unless conduct money sufficient to meet your reasonable expenses of attending as required by the Order is handed or tendered to you a reasonable time before the date your attendance is required.

Production of Order or copy of it and documents or things by delivery or post 5. If this Order requires production of the Order (or a copy of it) and a document or thing, instead of attending to produce the Order (or a copy of it) and the document or thing, you may comply with the Order by delivering or sending the Order (or a copy of it) and the document or thing to the Registrar: (a) at the address specified in the Order for the purpose; or (b) if more than one address is specified - at any of those addresses; so that they are received not less than 2 clear business days before the date specified in the Order for attendance and production, or if you receive notice of a later date from the issuing party, before the later date or time. 6. If you object to a document or thing produced in response to this Order being inspected by a party to the proceeding or any other person, you must, at the time of production, notify the Registrar in writing of your objection and of the grounds of your objection. 7. Unless the Court otherwise orders, if you do not object to a document or thing produced by you in response to the Order being inspected by any party to the proceeding, the Registrar may permit the parties to the proceeding to inspect the document or thing.

Production of a number of documents or things 8. If you produce more than one document or thing, you must, if requested by the Registrar, produce a list of the documents or things produced.

Production of copy instead of original 9. You may, with the consent of the issuing party, produce a copy, instead of the original, of any document that the Order requires you to produce. 9A. The copy of a document may be: (a) a photocopy; or (b) in an electronic form that the issuing party has indicated will be acceptable.

Applications in relation to Order 10. You have the right to apply to the Court: (a) for an order setting aside the Order (or a part of it) or for relief in respect of the Order; and (b) for an order with respect to your claim for privilege, public interest immunity or confidentiality in relation to any document or thing the subject of the Order.

Loss or expense of compliance 11. If you are not a party to the proceeding, you may apply to the Court for an order that the issuing party pay an amount (in addition to conduct money and any witness's expenses) in respect of the loss or expense, including legal costs, reasonably incurred in complying with the Order.

Contempt of court - arrest 12. Failure to comply with a Order without lawful excuse is a contempt of court and may be dealt with accordingly. 13. Note 12 is without prejudice to any power of the Court under any rules of the Court (including any rules of the Court providing for the arrest of an addressee who defaults in attendance in accordance with a Order) or otherwise, to enforce compliance with a Order.

Order to produce documents No. of 2013 Federal Court of Australia District Registry: New South Wales Division: General

IN THE MATTER OF ACN 078 272 867 PTY LIMITED (IN LIQUIDATION) (formerly ADVANCE FINANCES PTY LIMITED) AND ACN 087 623 641 PTY LIMITED (formerly CIVIC FINANCE PTY LIMITED)

MAX CHRISTOPHER DONNELLY IN HIS CAPACITY AS LIQUIDATOR OF EACH OF ACN 078 272 867 PTY LIMITED (IN LIQUIDATION) (formerly ADVANCE FINANCE PTY LIMITED) and ACN 087 623 641 PTY LIMITED (IN LIQUIDATION) (formerly CIVIC FINANCE PTY LIMITED) Applicant To: Israel Discount Bank Limited, 23 Yehuda Halevi Street Tel Aviv 65136 ISRAEL You are ordered to produce this order or a copy of it and the documents or things specified in the Schedule. See next page for details. Failure to comply with this order without lawful excuse is a contempt of court and may result in your arrest and punishment. Please read Notes 1 to 13 at the end of this order. The last date for service of this order is Date: …………………………………………. Signed by an officer acting with the authority of the District Registrar Issued at the request of Max Christopher Donnelly, whose address for service is: Place: Church & Grace Email: pduggan@churchgrace.com.au

Details of Order You must comply with this Order: (a) by attending to produce this Order or a copy of it and the documents or things specified in the Schedule below at the date, time and place specified for attendance and production; or (b) by delivering or sending this Order or a copy of it and the documents or things specified in the Schedule below to the Registrar at the address below, or if there is more than one address below, at any one of those addresses, so that they are received not less than 2 clear business days before the date specified for attendance and production. (See Notes 5-9) Date, time and place at which you must attend to produce the Order or a copy of it and documents or things, unless you receive a notice of a later date or time from the issuing party, in which case the later date or time is substituted: Date: Time: Place: Address, or any address, to which the Order (or copy) and documents or things may be delivered or posted: The Registrar Federal Court of Australia New South Wales District Registry Law Courts Building Queens Square SYDNEY NSW 2000

Schedule The documents and things you must produce are as follows: 1. A list of all of the accounts ("the Accounts") of ACN 078 272 867 Pty Limited (formerly Advance Finances Pty Limited) (in Liquidation) and ACN 087 623 541 Pty Limited (formerly Civic Finance Pty Limited) (in Liquidation) ("the Companies") with Israel Discount Bank Limited ("the Bank"). 2. The Accounts' opening documents. 3. Copies of the minutes and resolutions of the Companies held by the Bank. 4. Loan agreements and/or credit facilities in both Israeli new shekels and foreign currencies. 5. A detailed list of the Accounts' authorised signatories and a specification of the signatures' composition. 6. A detailed list of money transfers, both in Israeli new shekels and foreign currencies, exceeding a value of US$10,000.00, including SWIFT transcripts. 7. A detailed list of collaterals, including guarantee documents and/or documentary credit and/or liens granted by a third party (including monetary deposits and/or bank guarantees and/or credit letters provided for securing the loans and/or credits). 8. A detailed list of money transfers from the Companies' accounts to payees and/or provision of collaterals and/or guarantees from the aforementioned accounts in favour of any member of the Binetter family members, including to accounts in which such payees are beneficiaries and/or that belong to the companies under their control. 9. A concentrated balances sheet of the bank accounts' balances at the end of each year from 1997 to 2010.

Last day for service 1. You need not comply with the Order unless it is served on you on or before the date specified in the Order as the last date for service of the Order.

Addressee a corporation 3. If the Order is addressed to a corporation, the corporation must comply with the Order by its appropriate or proper officer.

Production of a number of documents or things 8. If you produce more than one document or thing, you must, if requested by the Registrar, produce a list of the documents or things produced.

LETTER OF REQUEST The Honourable Judge Eitan Orenstein District Court in Tel Aviv-Jaffa 1 Weizmann Street TEL AVIV 64239 ISRAEL Dear Judge

Re: ACN 078 272 867 Pty Limited (in Liquidation) (formerly Advance Finances Pty Limited) and ACN 087 623 641 Pty Limited (formerly Civic Finance Pty Limited)

Case Number C.A 42533-05-12 The Federal Court of Australia hereby requests the District Court in Tel Aviv-Jaffa, Israel to assist this Court and to act in aid of and to be auxiliary to this Court in respect of the winding up of ACN 078 272 867 Pty Limited (formerly Advance Finances Pty Ltd)(in liquidation) and ACN 087 623 541 Pty Limited (formerly Civic Finance Pty Ltd)(in liquidation) (hereinafter collectively "the Companies") by making orders, to the extent it has jurisdiction to do so, as follows: 1. Orders recognising and giving effect to the attached Orders made by the Federal Court of Australia pursuant to s.459A of the Corporations Act, 2001 (Cth) on 16 December 2010: (1) That ACN 078 272 867 Pty Limited (formerly Advance Finances Pty Ltd)(in liquidation) be wound up. (2) That Max Christopher Donnelly of Ferrier Hodgson, an Official Liquidator, be appointed Liquidator of ACN 078 272 867 Pty Limited (formerly Advance Finances Pty Ltd)(in liquidation). (3) That ACN 087 623 541 Pty Limited (formerly Civic Finance Pty Ltd)(in liquidation) be wound up. (4) That Max Christopher Donnelly of Ferrier Hodgson, an Official Liquidator ("the Liquidator") be appointed Liquidator of ACN 087 623 541 Pty Limited (formerly Civic Finance Pty Ltd)(in liquidation). 2. Subject to Order 5 below, Orders recognising and giving effect to the attached orders to produce documents made by the Federal Court of Australia pursuant to r.30.03 of the Federal Court Rules 2011 on 9 May 2013: (1) That Mercantile Discount Bank Ltd produce the documents specified in the order to produce documents addressed to it. (2) That Israel Discount Bank Ltd produce the documents specified in the order to produce documents addressed to it. 3. Such Orders as it would be open to: (a) the Federal Court of Australia to make if the persons referred to in paragraph 2 above had been within the territorial jurisdiction of the Federal Court of Australia; and (b) the District Court in Tel Aviv-Jaffa, Israel to make if each of the aforesaid companies had been a company formed and incorporated in Israel and was being wound up in Israel, by way of assisting the Liquidator in the exercise of his powers and the discharge of his duties and functions as Liquidator of the Companies. 4. Without limiting the generality of the above, orders for the production before the District Court in Tel Aviv-Jaffa by each of Mercantile Discount Bank Ltd and Israel Discount Bank Ltd of the documents sought in the Motion for Provisions and Recognition of Liquidation Orders issued outside of Israel filed by Max Donnelly ("the Applicant") at the District Court in Tel Aviv-Jaffa in Civil Case 42533-05-12. 5. Each of Mercantile Discount Bank Ltd and Israel Discount Bank Ltd be excused from complying with the order to produce documents addressed to it referred to in paragraph 2 above if it complies with any orders made by the District Court of Tel Aviv - Jaffa under paragraph 4 above. 6. Such further Orders as the District Court in Tel Aviv-Jaffa may consider just and appropriate. DATED: 9 MAY 2013 Justice Lucy Kathleen Farrell A Judge of the Federal Court of Australia IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 707 of 2013

IN THE MATTER OF ADVANCE FINANCES PTY LTD ACN 078 272 867 (IN LIQ) BETWEEN: MAX CHRISTOPHER DONNELLY IN HIS CAPACITY AS LIQUIDATOR OF EACH OF ACN 078 272 867 PTY LTD (IN LIQUIDATION) (FORMERLY ADVANCE FINANCES PTY LTD) AND ACN 087 623 641 PTY LTD (FORMERLY CIVIC FINANCE PTY LTD)

JUDGE: FARRELL J DATE: 28 MAY 2013 PLACE: SYDNEY

REASONS FOR JUDGMENT 1 Mr Donnelly is the liquidator of ACN 078 272 867 Pty Limited (Advance Finances) and ACN 087 623 641 Pty Limited (Civic Finance) (the Companies). 2 On 24 April 2013, Mr Donnelly filed with the Court originating process relating to: (a) an application under s 596A of the Corporations Act 2001 (Cth) (Corporations Act) for summonses to Mr Emil Binetter and Mr Gary Robert Binetter, who were each directors of the Companies (Directors). The summonses, which were issued on 2 May 2013, require the Directors to attend at the Court on 28 August 2013 to be examined about the affairs of the Companies and to produce for examination a range of books and records of the Companies; (b) an application under r. 30.03 of the Federal Court Rules 2011 (Cth) (Rules) requiring Milgerd Nominees Pty Limited, Ligon Pty Limited and BCI Finances Pty Limited (together called Counterparties) and Israel Discount Bank Limited (IDB) and Mercantile Discount Bank Ltd (MDB) (together Banks) to produce books and records. On 2 May 2013, the Registrar of this Court authorised orders for the Counterparties to produce documents. However, as the Banks do not conduct business in Australia but in Tel Aviv, Israel, leave of the Court is required to serve the Banks under r 10.44. The Registrar referred that decision to this Court; and (c) an application requesting the Court to issue a Letter of Request pursuant to s 581(4) of the Corporations Act addressed to the Honourable Judge Eitan Orenstein of the Tel Aviv-Jaffa District Court, Israel, requesting that Court to act in aid of, and be ancillary to, the Federal Court of Australia in respect of the winding up of each of Advance Finances and Civic Finance. 3 The applications were heard on 8 May 2013 and the orders were made on 9 May 2013. These are my reasons for making the orders. 4 Two affidavits of Mr Donnelly dated 23 April 2013 were read and exhibit MCD-1 was tendered. Exhibit MCD-1 contained: Historical extracts derived from the records of the Australian Securities & Investments Commission in respect of Advance, Civic, Milgerd Nominees Pty Limited (Milgerd), Ligon 159 Pty Limited (Ligon) and BCI Finances Pty Limited (BCI); Records from the Australian Transaction Reports and Analysis Centre (AUSTRAC) in relation to Civic and Advance. These extracts described transfers of money to which Civic or Advance were parties; Statutory declaration dated 10 December 2009 made by Mr Zamir, formerly an employee of MDB, made at the request of Advance. It describes the loans made by MDB to Advance and the process of documenting the loans by letter; Statutory declaration dated 3 December 2009 of Mr Loewbeer, a former employee of IDB describing the circumstances of his introduction to Mesrrs Emil Binetter and Mr Gary Binetter and his personal assessment of them and their relationship with IDB; Certain computer-generated records relating to Civic prepared by IDB in 2009; A motion (prepared by Mr Donnelly's attorneys) before the District Court of Tel Aviv in relation to recognition in Israel of liquidation orders that were granted in Australia; The response of the Banks to the motion and Mr Donnelly's reply; Decisions of Judge Eitan Orenstein dated 21 October 2012 and 18 November 2012; Motions of Milgerd, and Messrs Emil Binetter and Gary Binetter; and An affidavit by Mr Gary Binetter dated 21 February 2013 provided to the District Court of Tel Aviv. 5 Counsel for Mr Donnelly tendered a letter from lawyers in Israel establishing the addresses of the Banks for the purpose of the notices to produce books and records in respect of which leave is sought under r 10. 44 for service outside the jurisdiction.

BACKGROUND 6 On 16 December 2010, in Deputy Commissioner of Taxation v Australian Securities and Investments Commission; in the matter of Civic Finance Pty Limited (Deregistered) [2010] FCA 1411, on the application of the Deputy Commissioner of Taxation, Jagot J made orders reinstating the Companies, which had been deregistered in 2007. Jagot J also made orders that both Companies be wound up, and Mr Donnelly was appointed liquidator of the Companies at that time. 7 Mr Donnelly deposes that his investigations reveal that Mr Emil Binetter controlled both of the Companies from the time of their registration (Advance in 1997 and Civic in 1999) until their deregistration in 2007. He says that Mr Gary Binetter was involved in the management of the Companies in a limited way. 8 Mr Donnelly has been investigating a number of transactions which were disclosed through AUSTRAC transaction reports, which are summarised in Mr Donnelly's affidavit. Mr Donnelly has sought explanations from Mr Emil Binetter about them in relation to both Advance and Civic. 9 Mr Donnelly summarises Mr Emil Binetter's claims as: (a) In 1997 Advance borrowed $4 million from Mercantile Discount Bank Limited (MDB). He says that Advance on-lent $2 million to each of Milgerd Nominees Pty Limited (as trustee of the family trust) and Ligon 159 (as trustee of another trust) in 1997; Advance remitted interest to MDB for several years; and in 2000 Advance reduced the principal of the loan from MDB to $1 million after receiving $3 million from Ligon 159 from the proceeds of sale of an investment. Mr Binetter produced the statutory declaration of Mr Zamir in support of his claims. (b) In 2004, Advance borrowed $2.5 million from MDB and on lent it to another company controlled by him (BCI Finances Pty Ltd (BCI)) so that BCI could repay a loan to it from another Israeli bank. In June 2005, Advance repaid its total indebtedness of $3.5 million to MDB from monies received by Ligon 159 from the sale of investments. Mr Binetter produced in support of his claims the statutory declaration of Mr Loewbeer and the IDB computer printouts exhibited to Mr Donnelly's affidavit. 10 In summary, Mr Donnelly says that he is not satisfied with Mr Emil Binetter's claims or the documentary evidence of loans which he has produced because: (a) no bank statements have been produced in relation to the loans from the Banks to either of the Companies setting up the movement of funds into and out of the loan accounts; (b) no loan agreements between the Companies and the Banks have been provided; (c) no evidence has been provided of the Banks taking any security over the assets of Advance or Civic or third parties; and (d) there is no documentary evidence of loans from Advance or Civic to any related entities. 11 Mr Donnelly therefore wishes to see copies of all loan agreements, bank statements and other bank records between Advance and MDB in order to verify that the transactions referred to by Mr Emil Binetter do in fact relate to loans by Banks to the Companies and are not transfers of either Company's own funds to the Banks. 12 Mr Donnelly commenced proceedings in the District Court of Tel Aviv-Jaffa for recognition of the orders made by this Court in 2010 to wind up Advance and Civic. He also sought production of documents and information by MDB, IDB and another Israeli bank relating to the alleged loans to Advance and Civic and any accounts held by either of the Companies with the Banks. (Mr Donnelly discontinued proceedings against the other Israeli bank). Mr Donnelly had brought the proceedings under s 11 of the Enforcement of Foreign Judgements 1958 law of Israel (Law). Mr Donnelly provided evidence of the proceedings before the District Court of Tel Aviv-Jaffa by way of translation of documents by his Israeli attorney. 13 The proceedings in the District Court of Tel Aviv-Jaffa were heard on 21 October 2012 before Judge Eitan Orenstein. Judge Orenstein said: After reviewing the judicial documents and hearing attorneys arguments, I concluded that it is appropriate that the Court will initially review the documents that, according to the banks, may harm third parties, so the Court could have a direct impression of those documents, and thereafter will give its orders. Regardless, and in order to overcome obstacles in granting the claim, considering provisions 11 (a) and (b) of The Law, the applicants advised to convert the application to an enforcement motion in accordance with provision 3 of the law. In order to achieve this, the applicant should receive an enforcement order of the authorized Australian court and it may be assumed that this will pave the road to grant the motion. 14 The Banks were required to provide documents sought by Mr Donnelly within 30 days in a sealed envelope for Judge Orenstein to review. The attorneys for Mr Donnelly were required to notify the District Court within 60 days of the receipt of an enforcement order by the Australian court. 15 In the absence of the parties, Judge Orenstein made further orders on 18 November 2012 allowing Mr Donnelly access to some pages of the documents and requiring steps to be taken to get the consent of third parties to the disclosure of other documents. 16 On 24 February 2013, Milgerd and Messrs Emil Binetter and Gary Binetter filed a motion in proceedings in the District Court of Tel Aviv-Jaffa seeking a stay of execution of Judge Orenstein's orders and for them to be revoked. Mr Gary Binetter's affidavit was filed in support of that motion. There are a number of grounds on which the motion is made. Most notably in this context is an argument which suggests that the Foreign Judgements Enforcement Law was designed to enforce judgements in civil matters and not "for the conduction of investigations by foreign tax authorities within Israeli territory, while severely infringing its sovereign territory." The motion went on to say: The documents, which were enclosed to his Motion to receive the documents, include many characteristics indicating that Mr. Donnelly's petition to the honourable Court is in fact concealment an investigation that is being conducted by the Australian Taxation Office. And The above stated is sufficient in order to conclude that we do not stand before a "civil matter" regarding the enforcement of a judgment but rather an investigation by the Australian Taxation Office, which in lieu of respecting the sovereignty of the State of Israel, wishes to conduct an investigation in regard to taxation matters within the boundaries of the State of Israel, while hiding behind the Companies' liquidator and without receiving any permission to do so. 17 The motion then suggests that the appropriate procedure to be followed lies in the Legal Assistance between States law of Israel which is designed to deal with investigations by an authority such as the Australian Taxation Office. 18 Mr Donnelly wishes to examine Mr Emil Binetter and Mr Gary Binetter under s 596A of the Corporations Act in their capacity as officers of Advance and Civic and summonses had been issued by the Federal Court for their examination on 28 August 2013.

RELEVANT PROVISIONS OF THE CORPORATIONS ACT 19 Section 581 of the Corporations Act provides as follows: Courts to act in aid of each other (1) All courts having jurisdiction in matters arising under this Act, the Judges of those courts and the officers of, or under the control of, those courts must severally act in aid of, and be auxiliary to, each other in all external administration matters. (2) In all external administration matters, the Court: (a) must act in aid of, and be auxiliary to, the courts of: (i) external Territories; and (ii) States that are not in this jurisdiction; and (iii) prescribed countries; that have jurisdiction in external administration matters; and (b) may act in aid of, and be auxiliary to, the courts of other countries that have jurisdiction in external administration matters. (3) Where a letter of request from a court of an external Territory, or of a country other than Australia, requesting aid in an external administration matter is filed in the Court, the Court may exercise such powers with respect to the matter as it could exercise if the matter had arisen in its own jurisdiction. (4) The Court may request a court of an external Territory, or of a country other than Australia, that has jurisdiction in external administration matters to act in aid of, and be auxillary to, it in an external administration matter. 20 Section 580 of the Corporations Act relevantly defines the term "external administration matter" as follows: external administration matter means a matter relating to: (a) winding up, under this Chapter, a company or a Part 5.7 body; or (b) winding up, outside Australia, a body corporate or a Part 5.7 body; or (c) the insolvency of a body corporate or of a Part 5.7 body. 21 The Companies are each a "company" in the course of winding up so that matters relating to their winding up are "external administration matters". The Federal Court is a court which is directed to extend cooperation under s 581(1). Israel is not a prescribed country but s 581(2)(b) would permit the Federal Court to act in aid of requests from Israel under s 581(3). Reciprocally, this Court may request a court of Israel to act in aid of, and be auxiliary to this Court in an external administration matter.

CONSIDERATION 22 While it remains relatively uncommon for the Court to seek the aid of foreign courts to assist liquidators in their task, it has occurred on a number of occasions and the cases mentioned here do not compromise all such instances. In McGrath & Anor as Liquidators of HIH Insurance Limited [2008] NSWSC 780 (which for convenience I will call the first HIH Insurance case), Barrett J of the Supreme Court of New South Wales issued a Letter of Request to the High Court of Hong Kong in relation to summoning specified people for examination under s 596B of the Corporations Act. In fact, Barrett J made similar orders in the earlier case of HIH Insurance Limited (in Liquidation) & Ors [2004] NSWSC 454 and in the later case of McGrath & Anor as liquidators of HIH Insurance Limited (2008) 26 ACLC 921 (the later HIH Insurance case). See also New Cap Reinsurance Corporation Ltd v Grant [2009] NSWSC 662. Similarly, Lindgren J of this Court issued a Letter of Request to the High Court of Malaysia in Elderslie Finance Corporation v Newpage Pty Ltd (No.5) [2007] FCA 961. In that case, Lindgren J requested that an examination be conducted in Malaysia under 249 of the Companies Act 1965 (Malaysia), and equivalent provisions to s 459A of the Corporations Act. 23 In the first HIH Insurance case at [19], Barrett J accepted a submission that the appropriate principles for the issuing of a Letter of Request to a foreign court are: first, that the requirements of s 581(4) are met; second that there is a good substantive reason for the request; and third, that there is utility in the request in the sense that the foreign court is likely to accept and act upon the request if it is made.

Is this an external administration matter? 24 I am satisfied that the first requirement is met. The Companies are each a "company" in the course of being wound up. It is part of the liquidator's role under the Corporations Act to get in all available property of the company which it is administering for the benefit of creditors and to determine the liabilities of the company, and for this purpose to examine the affairs of the company, both currently and historically. For these purposes, it is common for a liquidator to seek to examine company officers and to seek the production of documents with people or entities who have been counterparties to the business of the company.

Is there a substantive reason for the request? 25 As to the second requirement, the amounts referenced in Mr Donnelly's affidavit based on AUSTRAC reports are substantial and Mr Donnelly is entitled to be satisfied that the claims made by Mr Binetter are accurate. Accordingly I am satisfied that this requirement is met.

Is there utility in making the request? 26 For this purpose, it would be usual for Mr Donnelly to have provided to the Court an opinion of a foreign lawyer that the foreign court has jurisdiction to receive and act upon the proposed Letter of Request and that absent some compelling reason, the foreign court would act upon that request: see [12] of the second HIH Insurance case. However, in this case the need for the request to be made, and prima facie its utility, is established because of Judge Orenstein's comments in the proceedings in Israel on 21 October 2012 which are quoted at [13] above. 27 In light of the submissions made by Milgerd and Messrs Binetter to the District Court of Tel Aviv-Jaffa, I queried Counsel for Mr Donnelly about who the creditors of the Companies are. Counsel said that to the best of his knowledge the creditors are the Australian Taxation Office (which was the moving creditor in having the companies reregistered and wound-up) and possibly the Australian Securities & Investments Commission in relation to unpaid annual fees, though there may be others. I questioned Counsel as to whether there were issues of comity in issuing a Letter of Request in the circumstances identified by the Milgerd and Binetter submission. 28 Counsel submitted that this is not an unusual administration and the identity of the major creditor does not change how the liquidator is required to act under the Corporations Act, and he carries no investigative authority of the Australian Taxation Office. 29 Counsel also drew to my attention paragraph [3] of the proposed Letter of Request which is based on concerns held by Lindgren J in Elderslie. This paragraph is designed to ensure that the court in Israel is being asked to do no more than the Federal Court could do within the territorial jurisdiction of Australia and the court in Israel could do if the Companies had been incorporated in Israel. 30 On this basis, I am satisfied that there is utility in this Court making the orders.

Leave to issue notices to produce outside Australia The notices to produce are in a common form and would be unremarkable in the context of the conduct of appropriate enquiries by a liquidator in Australia. In all of the circumstances I am satisfied that leave should be granted pursuant to r 10.44 of the Rules. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Farrell.

Corporations Act 2001(Cth)ss 459A, 580, 581, 596A, 596B

Federal Court Rules 2011(Cth)rr 30.03, 10.44

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