Hughes, in the matter of Firepower Operations Pty Ltd (In Liquidation) (No 2) [2009] FCA 1457

REASONS FOR JUDGMENT 1 This is an application by the liquidator of Firepower Operations Pty Ltd (In Liquidation) for the issue of a warrant of arrest of Timothy Francis Johnston. The application is made pursuant to r 11.10 of the Federal Court (Corporations) Rules 2000 which provides: 11.10(1) This rule applies if a person is summoned or ordered by the Court to attend for examination, and: (a) without reasonable cause, the person: (i) fails to attend at the time and place appointed; or (ii) fails to attend from day to day until the conclusion of the examination; … 11.10(2) The Court may: (a) issue a warrant for the arrest of the person summoned or ordered to attend for examination; and (b) make any other orders that the Court thinks just or necessary. 2 The application arises in the following circumstances. On 5 November 2009, the Court made an order on the application of the liquidator pursuant to s 596A of the Corporations Act 2001 (Cth) that Mr Johnston attend an examination at 10:15 am on 26 November 2009 before a Registrar of this Court. Mr Johnston was served with the order. However, Mr Johnston did not comply with the order and did not attend the Federal Court at Perth on that day. 3 On the morning of 26 November 2009, and prior to the scheduled commencement time of the examination, the Court received an email letter purporting to be from Mr Johnston seeking to excuse his attendance from the Court hearing. There was annexed to that letter, among other items, a copy of a handwritten note signed by Dr Robert Hugo Mackay dated 23 November 2009. The note stated as follows: To Whom It May Concern. Re Tim Johnson [sic]…is being investigated for cardiac irregularity. He is advised not to fly for the next 2 weeks. 4 There was also annexed to the letter a copy of a typed note dated 23 November 2009, also signed by Dr Mackay, which stated: Mr Johnston is currently under my care and management for a medical condition, in addition to being investigated for cardiac irregularity that is interfering with his health and well-being. In my opinion Mr Johnston is advised to avoid all stressful circumstances, or circumstances that may be likely to induce stress, including he must avoid flying of any description for a period of not less than three weeks. 5 Further, there was annexed to the email letter a document headed: "Health Summary Sheet" which reported on a cardiac examination of Mr Johnston by Dr Geoffrey Adsett of Mermaid Beach, Queensland. The report stated that Dr Adsett had prescribed two medications, "Sotalol hydrochloride" and "Stilnox" tablets to Mr Johnston. The report did not refer to any restriction on Mr Johnston's ability to fly. 6 On 26 November 2009, the Registrar of the Court in Perth adjourned the hearing of the examination to 27 November 2009. 7 On 26 November 2009, the liquidator applied for the issue of a warrant. 8 On 27 November 2009, I issued directions in relation to the liquidator's application for the issue of a warrant for the arrest of Mr Johnston and adjourned the hearing of the examination summons to 2 December 2009. 9 In accordance with directions that I made, affidavits were filed and have been relied upon by Mr Johnston and the liquidator. 10 The affidavits relied upon by Mr Johnston were affidavits from Dr Mackay, Mr Johnston and Dr Adsett. Dr Mackay and Mr Johnston were cross-examined. Dr Adsett was not present in Court but was available to be cross‑examined by telephone. However, I excused Dr Adsett from cross-examination as his evidence was of a nature which did not, in my view, warrant the need for cross‑examination. 11 The evidence, relevantly, of Dr Mackay, who carries on a general practice in Chevron Island, Gold Coast, was that on 23 November 2009, Mr Johnston presented at his rooms. Dr Mackay went on to depose in his affidavit that : Mr Johnston explained to me that he had been suffering with his presenting condition since the preceding week-end which he explained that he believed may be related to certain stressors associated with prospective court matters that he did not enlarge upon with me. Mr Johnston explained that he was suffering discomfort in his chest area. 12 Dr Mackay referred Mr Johnston to Dr Adsett for an examination as to his cardiac condition. Dr Mackay went on to say: Mr Johnston explained that there was some prospect of his needing to fly by aeroplane in the immediate future. I advised Mr Johnston against doing so, as it was my experience as a surgeon in the Royal Australian Air Force that flying causes variations to the normal and ordinary pressures that a patient presenting with a condition similar to that experienced by Mr Johnston may experience and was so contra-indicated. Mr Johnston did not explain to me any of the circumstances that may cause him to fly. I made the assessment for any patient presenting with the symptoms experienced by Mr Johnston. 13 Dr Mackay said that he examined Mr Johnston and "prepared a written report" that he handed to Mr Johnston. That is the note referred to at [3] above. Dr Mackay then said at para 11 of his affidavit: After Mr Johnston left my surgery on that day and after reflecting on the matters that he raised during our consultation I prepared a further written report. 14 The "further written report" is the typed document to which I have referred earlier in these reasons. This is the note referred to at [4] above. He said that he handed this second "written report" to Mr Johnston who appeared at his surgery unexpectedly on 25 November 2009. 15 Dr Mackay then said that after he had prepared the second "written report", he received from Dr Adsett the report which he had commissioned from Dr Adsett in relation to the cardiac condition of Mr Johnston. Dr Mackay then went on in his affidavit to make other statements about the views that he currently holds but, in my view, they are not relevant to the matters in issue in this case. 16 Mr Johnston deposed that he started searching for documents and information in relation to Firepower matters during the weekend of Saturday, 19 November 2009. He went on to say: During the searches…I commenced to recall events matters and things not only with respect to the matters the subject of the several sources of litigation, but also certain personal disturbing incidents that had both emotional and psychologically disturbing…during the period 2005-2007. 17 He then said that on Wednesday, 23 November 2009, he became increasingly concerned at the direction his health was going and he resolved to get medical attention. He attended the clinic of Dr Mackay to seek an assessment and treatment. Mr Johnston deposed that he explained the "features" that he was experiencing. Mr Johnston said that he did not explain to Dr Mackay at the time the circumstances concerning the various pieces of litigation in which he was involved. He advised Dr Mackay that there may be a need for him to travel by aeroplane in the near future, and went on to say: …I explained to him how I would usually cope with similar presenting episodes whilst flying. Dr Robert Hugh [sic] Mackay explained to me that flying was contra-indicated in my present condition for a certain period of time and provided me with a written advice to that effect dated 23 November 2009. 18 Mr Johnston then attended Dr Geoffrey Adsett who advised him that he was suffering from atrial fibrillation and prescribed medication referred to earlier, to commence immediately. Dr Adsett advised him to make an appointment for the following week. 19 The affidavit of Dr Adsett annexed the report of the examination which he had undertaken of Mr Johnston. The important aspect of that report for the resolution of this case is that Dr Adsett made no mention at all of any restriction on Mr Johnston's ability to fly. 20 Mr Johnston advanced two grounds which constituted reasonable cause for him not to attend Court in answer to the examination summons. The first ground was that he had medical advice which precluded him from attending the examination. The second ground was that his personal safety was at risk if he complied with the order. 21 In my view, for the following reasons, there was not a reasonable cause excusing Mr Johnston from attending Court in compliance with the demands of the examination summons. 22 I deal first with the question of whether the medical notes that Mr Johnston received constituted a reasonable cause to fail to comply with the summons. I do not regard the documents signed by Dr Mackay as affording a reasonable cause excusing Mr Johnston from attending Court in compliance with the examination summons on any of the three days on which he has not attended. 23 In my view, the visit by Mr Johnston to Dr Mackay was made for the purpose of procuring the issue of a doctor's note so as to avoid attendance at the examination, whether or not his health condition justified his non-attendance. I say that for the following reasons. 24 First, neither Dr Mackay nor Mr Johnston explained how it came about that Dr Mackay issued a note containing a reference to the restriction on Mr Johnston flying at all. It would have been open to Dr Mackay, assuming that such advice was warranted on medical grounds, for him simply to have given Mr Johnston that advice orally. 25 Secondly, Dr Mackay issued the notes notwithstanding that he had not yet received the report from Dr Adsett to whom he had referred Mr Johnston for an examination and assessment of his cardiac condition. Dr Mackay, therefore, lacked the informed basis as to Mr Johnston's actual cardiac condition, which he himself had commissioned. When the report from Dr Adsett did come in, it placed no restriction on Mr Johnston's ability to fly. There was no satisfactory explanation why it was necessary for Dr Mackay to issue the notes at the time that he issued them, rather than await the report from Dr Adsett. 26 Thirdly, the language of the second note is also curious because it expresses the restriction on Mr Johnston's ability to fly in such blanket and emphatic terms, and also restricts Mr Johnston from flying to a specific period, rather than until such time as more information is available as to his cardiac condition. 27 Fourthly, it was Mr Johnston's evidence that, when he received the note from Dr Mackay, he sent it off to his solicitors. 28 As mentioned, it is to be observed that the report of Dr Adsett did not say anything at all about Mr Johnston's inability to fly. All that the report stated was that Mr Johnston should continue to take the medication which was identified in the report and make another appointment. However, before Dr Adsett's report was even received, Dr Mackay had issued two medical notes to Mr Johnston saying he was not to fly in any circumstances for, in one version, two weeks, and in the other version, three weeks. Dr Mackay did not seek to justify that opinion by reference to any circumstance other than that Mr Johnston was undergoing investigation for a cardiac condition and his experience as a surgeon in the Royal Australian Air Force for a long period of time. 29 Further, Dr Mackay's evidence as to how and why it came to be that the second note was produced at all, and why in that note he altered the restriction on flying from two weeks to three weeks and added the reference to avoiding stressful circumstances, was entirely unconvincing. The same is true of his assertion during cross-examination as to the existence within that document of a treatment plan, or a potential treatment plan. Regrettably, I found the evidence of Dr Mackay to be less than satisfactory. 30 I infer from the circumstances referred to above that Mr Johnston asked Dr Mackay to give him a note which said he was not able to fly for either two or three weeks and that Dr Mackay did so; notwithstanding that he was then awaiting a report as to Mr Johnston's actual cardiac condition, and that he, therefore, had no medically sound basis founded on Mr Johnston's actual condition, upon which to make any responsible assessment as to Mr Johnston's ability to fly or the duration of any such restriction. I entirely reject Dr Mackay's evidence that the content of the notes was medically justified by reason of his experience in the Royal Australian Air Force. It was, on the face of it, a non sequitur that because Mr Johnston was under investigation in respect of a cardiac condition, he would not be able to fly for either two or three weeks (depending on which of Dr Mackay's notes is examined) regardless of what may be revealed as to Mr Johnston's actual condition by Dr Adsett's examination. 31 There are other facts which support the inference that Dr Mackay's notes were procured by Mr Johnston for the purpose of avoiding attendance at the examination, whether or not his actual health condition justified his non-attendance. 32 First, Mr Johnston had not made any arrangements to travel to Perth for the Court examination, prior to the visit to Dr Mackay, on 23 November 2009. 33 Secondly, Mr Johnston made no attempt to investigate alternative means of transport to Perth. There was no attempt made to investigate alternative travel by train or to rearrange the hearing date to accommodate such travel. 34 Thirdly, Mr Johnston did not inform the liquidator immediately of the receipt of the medical note on 23 November, nor did Mr Johnston respond to an approach by the liquidator to consider alternative ways of giving evidence, other than by travelling to Perth, after he belatedly did advise the liquidator of the receipt of the notes. 35 I reject Mr Johnston's evidence that he intended to attend the Court in Perth in answer to the examination summons. This is simply contradicted by the objective facts of not having made any plans to travel to Perth before 23 November, not seeking any alternative transport means and not responding to the liquidator's overtures in relation to alternative means of giving evidence, other than by travelling to Perth. 36 In my view, the medical notes do not afford Mr Johnston the basis upon which reasonably to believe that they constituted a sufficient basis for him not to attend the Court examination in Perth in compliance with the examination summons. 37 Further, it is, in my view, possible that the issuing of the medical notes by Dr Mackay in the circumstances outlined above may constitute unprofessional conduct by Dr Mackay. I will ask the Registrar of this Court to forward the papers and these reasons for decision to the body in Queensland responsible for investigating professional misconduct in the medical profession. 38 As to the personal safety ground, Mr Johnston also referred in his affidavit to reports that his wife and daughter had been visited in their villa in Bali by heavily tattooed and threatening people. Further, Mr Johnston deposed that he had been subject in the past to intimidatory conduct by former business associates of his. The persons in respect of whom the allegations had been made are not before the Court and the allegations cannot be tested. However, it is unnecessary for me to make any findings in relation to any of these allegations because there is no causative link between the threats that Mr Johnston has deposed to and his inability to attend the Court in Perth. There is no evidence of any direct threat of harm to Mr Johnston should he attend the examination in Perth. Mr Johnston's evidence on these matters was vague and no weight can be placed on it. However, more importantly, there was no evidence that Mr Johnston would be denied the protection of the police, should it be required, during his stay in Perth, nor that he believed that he would be denied that protection, if he sought such protection. 39 Accordingly, I find that Mr Johnston did not have reasonable cause for failing to attend Court to answer the summons on each of the three days in question. 40 I note that Mr Johnston has said in his affidavit that if I was to come to the view to which I have come, that he would attend Court in answer to further summonses without the need for a warrant to be issued. I have discretion as to whether to issue a warrant. However, in light of the attempts by Mr Johnston to avoid answering the warrant without reasonable cause, I will not exercise my discretion in his favour. 41 It follows that I will order a warrant be issued for the arrest of Mr Johnston. 42 Further, I reject Mr Johnston's application that the whole of the examination proceeding be transferred from the Western Australian District Registry of this Court to the Queensland District Registry. In my view, the expense and inconvenience that would be visited upon the liquidator attendant upon such an order does not justify the making of the order when weighed against the expense and inconvenience to Mr Johnston. 43 However, in my view, it is desirable that Mr Johnston's examination commence as soon as possible. Therefore, I will order that the examination be adjourned to 4 December 2009 and that a video-link be established to Brisbane so that Mr Johnston can be examined by video-link from Brisbane on 4 December. However, the examination will then be resumed on 8 and 9 December 2009 in Perth and I will require that Mr Johnston attend those two hearings in person. 44 I will consider the question of costs after I have heard further submissions. I certify that the preceding forty‑four (44) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis.

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