In the matter of Newheadspace Pty Limited (in liq) [2020] NSWSC 173 - NSWSC 2019 case summary — Zoe

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In the matter of Newheadspace Pty Limited (in liq) [2020] NSWSC 173

[2020] NSWSC 173

Supreme Court of NSW|2019-06-27|Before: Rees J, Spender J

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2019-06-27

Before

Rees J, Spender J

Source

Original judgment source is linked above.

Judgment (36 paragraphs)

[1]

Collier v Country Women's Association of New South Wales [2018] NSWCA 36 Cousins & Ors v Clout (unreported, Federal Court of Australia, Spender J, 16 October 1998) Dae Boong International Co Pty Ltd v Gray [2009] NSWCA 11 Dowling v Colonial Mutual Life Assurance Society Ltd (1915) 20 CLR 509; (1915) 21 ALR 425; [1915] HCA 56 Edelsten v Deputy Commissioner of Taxation (NSW) (1989) 86 ALR 257 Ex parte Painter; In re Painter [1895] 1 QB 85; King v Henderson [1898] AC 720 Ex parte Sir William Russell (1875) LR 10 Ch App 255 Ex parte Staff, In re Staff (1875) LR 20 Eq 775 Godfrey as liquidator of Pobjie Agencies Pty Ltd (in Liquidation) (2007) 61 ACSR 54; [2007] NSWSC 138 Grosvenor Hill (Qld) Pty Ltd v Barber (1994) 48 FCR 301; (1994) 120 ALR 262 Gusdote Pty Ltd v Ashley (2011) 193 FCR 227; (2011) 277 ALR 579; [2011] FCA 250 Highstoke Pty Ltd v Hayes Knight GTO Pty Ltd (2007) 156 FCR 501; (2007) 237 ALR 753; [2007] FCA 13; (2007) 156 FCR 501 Hong Kong Bank of Australia v Murphy (1992) 8 ACSR 736; (1992) 28 NSWLR 512 In Re A Debtor [1967] Ch 590 In re Davies; ex parte King (1876) 3 Ch D 461; Ex parte Griffin; in re Adams (1879) 12 Ch D 480 In the matter of ACN 004 410 833 Limited (formerly Arrium Limited) (subject to a deed of company arrangement) [2019] NSWSC 1606 In the matter of Affinity Capital Pty Ltd - Indrasith v Ku [2011] NSWSC 1158 In the matter of DW Marketing Pty Ltd (in liquidation) [2009] VSC 663 In the matter of Idoport Pty Ltd (in liq) (recs apptd) (2011) 82 ACSR 164; [2011] NSWSC 322 In the matter of Parkway One Pty Limited (in liquidation) [2019] NSWSC 1495 Ji Woo International Education Centre Pty Ltd (2019) 134 ACSR 448; [2019] NSWSC 93 Kimberley Diamonds Limited v Arnautovic (2017) 252 FCR 244; [2017] FCAFC 91 Krejci (liquidator), in the matter of Community Work Pty Ltd (in liq) [2018] FCA 425 Liverpool City Council v Estephen [2008] NSWCA 245 Masterton Homes Pty Ltd v Palm Assets Pty Ltd [2009] NSWCA 234; (2009) 261 ALR 382 Meteyard v Love (2006) 56 ACSR 487; [2005] NSWCA 444 Mohareb v Kelso [2018] NSWCA 164 National Australia Bank Ltd v Market Holdings Pty Ltd (in liq) (2001) 161 FLR 1; (2001) 37 ACSR 629; [2001] NSWSC 253 NSW Bar Association v Stevens [2003] NSWCA 261 NU v NSW Secretary of Family and Community Services (2017) 95 NSWLR 577; [2017] NSWCA 221 Onefone Australia Pty Ltd v Onetel Ltd [2007] NSWSC 69; (2007) 61 ACSR 246 Palmer v Ayres (in their capacities as liquidators of Queensland Nickel Pty Ltd) (in liq) (2017) 259 CLR 478; [2017] HCA 5 Park (liquidator) In the matter of Queensland Nickel Pty Limited (in liq) (2019) 369 ALR 284; [2019] FCA 340 Pleash, Re Equititrust Limited (in liq) (receivers and managers appointed) (No 2) (2017) 122 ACSR 299; [2017] FCA 758 Pockett v Dean-Willcocks [2004] NSWCA 192 R v Toohey; ex parte Northern Land Council [1981] HCA 74; (1981) 151 CLR 170 Re Akai Australia Pty Ltd (1978) 3 ACLR 353 Re Cornish; Ex parte English (1984) 6 FCR 257 Re Crowl, DM v Ex parte Kleinwort Benson Australia Ltd [1988] FCA 57 Re Crust 'n' Crumb Bakers (Wholesale) Pty Ltd (1991) 5 ACSR 70; (1991) 9 ACLC 912; [1992] 2 Qd R 76 Re Dalstonville Pty Ltd (in liq) and Don Leunig Pty Ltd (in liq) (2018) 133 ACSR 473; [2018] VSC 774 Re Excel Finance Corporation Limited (receiver and manager appointed); Worthley v England (1994) 52 FCR 69 Re Hugh J Roberts Pty Ltd (in liq) (1969) 91 WN (NSW) 537 Re Kassem (as liquidators of Clarecastle Pty Ltd) [2011] NSWSC 490 Re Kimberley Carpet Mills (Aust) Pty Ltd (In Liq.) (1979) CLC 40-532; (1979) 4 ACLR 50 Re Laurie Cottier Productions Pty Limited (in liquidation) (1992-1993) 9 ACSR 513 Re Majory [1955] Ch 600 Re Manband Pty Ltd (in liq) (Subject to Deed of Company Arrangement [2018] NSWSC 1282 Re Mecirt Holdings Pty Ltd (1998) 16 ACLC 1148 Re Mendarma Pty Limited (in liq) (2006) 24 ACLC 1611; [2006] NSWSC 1306 Re Moncada (1986) 11 FCR 205 Re New Tel (in liq); Evans v Wainter Pty Ltd (2005) 145 FCR 176; [2005] FCAFC 114 Re New Tel. In New Zealand Steel (Australia) Pty Ltd v Burton (1994) 13 ACSR 610 Re Norman Baker Pty Ltd (in liq); Ex parte Hillman [1982] WAR 349; (1981) 6 ACLR 257; (1982) 1 ACLC 79 Re Owston Nominees No 2 Pty Ltd (in liq) (Receivers and Managers Appointed) (2013) 94 ACSR 500; [2013] NSWSC 538 Re Qintex Group Management Services Pty Ltd (in liq) [1997] 2 Qd R 91 Re Southern Equities Corporation Ltd (in liq); Bond and anor v England (1997) 15 ACLC 1582; (1997) 25 ACSR 394 Re Southland Coal Pty Limited (2005) 189 FLR 297; [2005] NSWSC 259 Re Valofo, Sheahan & Lock as liquidator of Valofo Pty Limited (in liq) [2010] NSWSC 1255 Rees v Bailey Aluminium Products Pty Ltd (2008) VR 478; [2009] VSCA 96 SAMM Property Holdings Pty Ltd v Shaye Properties Pty Ltd (2017) 345 ALR 633; [2017] NSWCA 132 Sandhurst Trustees Limited v Harvey (2004) 49 ACSR 422; [2004] SASC 157 Sent v Andrews [2002] VSCA 209 Southern Cross Petroleum Sales (SA) Pty Ltd (in liq) v Hirsch (1998) 70 SASR 527; (1998) 144 FLR 356 Sutherland v Pascoe (No 2) (2012) 297 ALR 328; (2012) 92 ACSR 174; [2012] FCA 1361 Sutherland v Pascoe; in the matter of Matrix Group Ltd as Trustee for the Matrix Group Unit Trust (in liq) ACN 061 549 371 (2013) 297 ALR 44; [2013] FCAFC 15 Terrence Parsons (a pseudonym) v R [2016] VSCA 17 Thomas, In the matter of La La Land Byron Bay Pty Ltd (in liq) (No 2) [2019] FCA 1559 Tomko v Palasty (No 2) (2007) 71 NSWLR 61; [2007] NSWCA 369 Trevor, in the matter of Bell Group NV (in liq) (No 2) (2017) 122 ACSR 418; [2017] FCA 927 Walter Rau Neusser Oel Und Fett AG v Cross Pacific Trading Ltd [2005] FCA 955 White Industries (Qld) Pty Limited v Flower & Hart (1998) 156 ALR 169 Williams v Spautz (1992) 174 CLR 509; (1992) 107 ALR 635; [1992] HCA 34 Wily re LED (South Coast) Pty Ltd (2009) 76 NSWLR 428; (2009) 74 ACSR 145; [2009] NSWSC 946 Texts Cited: Butterworths, Ford, Austin & Ramsay's Principles of Corporations Law (online, 2019) Category: Principal judgment Parties: National Rugby League Limited (First Applicant) Todd Greenberg (Second Applicant) Paul Heptonstall (Third Applicant)

[4]

Judgment

HER HONOUR: This is an application by National Rugby League Limited (NRL) to set aside examination summonses issued by Andrew Needham, the liquidator of Newheadspace Pty Limited, to Paul Heptonstall, Senior NRL Welfare and Education Manager, and Todd Greenberg, Chief Executive Officer, on the basis that the voluntary liquidation of Newheadspace was a contrivance by those standing behind the company to enable a liquidator to request the issue of summons for public examinations and thereby exert commercial pressure on the NRL to pay various claims being asserted by the company. The NRL's complaints about those standing behind Newheadspace are well-founded; the question is whether Mr Needham, as liquidator of Newheadspace, is nonetheless entitled to proceed to conduct public examinations if he considers it necessary to do so, which he says he does.
For the reasons which follow, the examination summonses will be set aside. Whilst there is ample authority that a liquidator may conduct public examinations to investigate whether a company has a viable claim, including for the purposes of enabling a litigation funder to decide whether to provide funding to pursue the claim, the troubling and hopefully unique facts of this case have led me to conclude that, not only was the sole purpose of those standing behind the company to place it in liquidation in order to conduct, or threaten to conduct, public examinations of senior NRL officers and thereby to enhance the company's ability to prevail upon the NRL to pay a claim, but Mr Needham does not appear to have independently turned his mind to whether the elements of section 596B of the Corporations Act 2001 (Cth) were satisfied or whether the summonses were issued for a proper purpose. Rather, Mr Needham has left it to those interested in conducting public examinations, being Ms Culver, the funder and legal representatives engaged before his appointment. He has not put his 'stamp' on this process but has effectively inherited the improper purpose of those who placed Newheadspace into liquidation, which has remained the predominant purpose of the processes which have continued under his name.
I am troubled that examinations have already been completed of other persons who did not apply to set aside the summonses addressed to them. One was the sole director and shareholder of Newheadspace and another was a long-standing supporter, who answered a series of "Dorothy Dixers" from counsel engaged by the company months before Mr Needham was appointed. More concerning, one was a third party who presumably did not have access to the same legal resources as the NRL and did not apply to set the summons aside. As a consequence, a member of the public was subjected to the invasive process that is a liquidator's examination. Further, these three examinations wasted valuable court hearing time which could have been used by other liquidators of other companies.

[6]

Program provided to NRL clubs

In 2010, Newheadspace developed a program called "Extend the Dream" to prepare professional sportspeople for life after sport and ran a pilot program for players from an NRL club, the New Zealand Warriors. According to Ms Culver, the opportunity to provide such a program to the NRL arose through her friendship with the wife of the then chief executive officer of the NRL, David Gallop. Mr Heptonstall signed a letter of engagement confirming that Newheadspace would deliver the programme for one week in January 2011 for $11,205. Following the pilot program, Newheadspace began to provide the program to the remaining 15 NRL clubs but, in late 2012 or early 2013, the program was not continued.
In September 2014, the program was again offered to NRL clubs Newcastle and North Queensland Cowboys. Although Newheadspace's invoices are confusing, it appears that in September 2014, Newheadspace provided the program to four players in the NRL club North Queensland Cowboys and rendered invoices to those players totalling $11,516. In November 2014, Newheadspace rendered further invoices for these players and also to three players from the Newcastle Knights totalling some $13,962.
On 23 November 2014, Ms Culver sent an email to Mr Heptonstall requesting payment of the invoices, although it is not immediately obvious why payment was sought from the NRL as the invoices were addressed to individual players of particular NRL clubs. The reason became clearer from an email from Dr Tilda Khoshaba, General Manager - Player Engagement and Development, of the Rugby League Players Association Limited to Mr Heptonstall on 25 November 2014 suggesting that he was "withholding funding" for players who wished to engage in the program notwithstanding that they were entitled to $2,000 for educational programs. Dr Khoshaba suggested that Mr Heptonstall either had a problem with Ms Culver or a problem with the Rugby League Players Association supporting her program. The reason I say this is, is that you seem to like the 'concept' of the program as you are ok to fund the MOL in developing a 'copycat' program as well as fund the development of this program by someone else (namely by the individual based in Canberra). It would appear that there was a tension between the Rugby League Players Association, which supported various programs being provided to players, and the NRL, which was called upon from time to time to pay for the programs. Michael Crocker, also of the Rugby League Players Association, was copied on this email and has also been the subject of an examination summons with which he has complied.
Mr Heptonstall responded in detail, explaining that personal development programs such as that offered by Newheadspace did not fit within the requirements for education grants but, "[a]s personal development programs such as 'New Headspace' does not fit into this category, I have allocated a separate amount of money ($2k per Club) in which the Clubs can choose how to spend. It is up to the Clubs Welfare and Education Manager to determine the use of this money". Further: I have also asked all Clubs to conduct a player/partner session in 2015 and have suggested that Jhanna is one of the programs that can be delivered. I have even said to Jhanna that I can assist in paying for the group workshop and then let the Clubs or players fund the individual sessions themselves. Dr Khoshaba forwarded Mr Heptonstall's response to Ms Culver. Jane Lowder of Max Coaching was copied in on this email as she liaised with all the Club Career Coaches. Ms Lowder has also been the subject of an examination summons, with which she has complied.
According to NRL's solicitor, Anthony O'Reilly, Newheadspace ceased to offer the program to NRL players in December 2014. On 2 February 2015, Ms Culver again emailed Mr Heptonstall and sought payment of invoices rendered to the Newcastle Knights in November 2014 although it is not entirely clear why she looked to the NRL for payment. In any event, Mr Heptonstall paid $6,000 of the invoice and, on 31 March 2015, Ms Culver sought payment of the balance of the invoice from the Newcastle Knights, noting that "Paul has paid his part of it".

[7]

Efforts to provide program again

On 1 April 2015, apparently after a meeting between Ms Culver and Mr Heptonstall, Mr Heptonstall sent a text message confirming the NRL's commitment to her conducting player and partner sessions at $2,500 per workshop, and that he was aiming for these workshops to be conducted for four clubs. Ms Culver replied, suggesting that his wording was not what they had agreed, although did not say what they had agreed.
In about May 2015, Ms Culver submitted a proposal to the NRL to implement the program across all NRL clubs, to be funded by the NRL. From May to September 2015, Ms Culver had various meetings and telephone discussions with Suzanne Young, the chief operating officer of the NRL, in relation to her proposal. On 27 October 2015, Ms Young informed Ms Culver that the NRL was commencing a review with the Rugby League Players Association of programs and funding, and proposed to include Ms Culver's proposal in that review. Further, "[w]e are reviewing your allegation regarding potential breach of IP and will respond in due course". The allegation concerning intellectual property is clarified by an email from Ms Culver to Ms Young of 4 November 2015 expressing herself to be "completely astounded" at how negotiations had unfolded from initial enthusiasm for Newheadspace's program said to have been expressed in May 2015, to an inability to get funding for the program, to the proposal being included in a review with no funding to be approved until the completion of the review. A new program was said to have been developed by "Jane and Judy" of Max Coaching called "Play On!" based on Newheadspace's program.
On 6 November 2015, Ms Young replied in no uncertain terms that, until the review was finalised, the NRL would not be approving nor funding players' participation in the program unless the Rugby League Players Association confirmed in writing that the association would support the program being delivered. Ms Young advised that the NRL was under no obligation to fund the program and reserved its right to provide programs internally or through external providers as it saw fit. In respect of the alleged breach of intellectual property, Ms Young made plain that the allegation was taken very seriously but, on the information provided by Ms Culver, "it is not clear to us what exactly your claim is". Further information was sought from Ms Culver being: (a) the specific intellectual property you say you own; (b) copies of the intellectual property and any documents and information that you say contains or comprises the intellectual property; (c) how and when the intellectual property was developed, and by whom; (d) what part of your intellectual property you say has been breached (if any); and (e) who committed the breach and particulars on when the breach occurred. Until this information is provided, we are not in a position to respond to your assertions in any meaningful way.
Ms Culver never provided the information or documents sought but, instead, approached Todd Greenberg, then Head of Football. Mr Greenberg had met Ms Culver when he was chief executive officer of the NRL club known as the Canterbury-Bankstown Bulldogs and some of the club's players had participated in the program. Ms Culver asked Mr Greenberg whether there was something he would be able to do to get the NRL to fund the program and, although it was not an area for which he had management responsibility, Mr Greenberg spoke with Ms Young in support of the program and was told that the question as to whether the program would be funded was a matter to be considered as part of the NRL's review.
In December 2015, the business name "Newheadspace" lapsed and the company ceased to trade.

[8]

Further efforts and NRL offers to pay old invoices

In March 2016, Mr Greenberg became the chief executive officer of the NRL. On 14 June 2016, Mr Greenberg met with Ms Culver at her request. Ms Culver again sought his support to get the NRL and the Rugby League Players Association to support the program. Ms Culver also asked that he arrange for payment by the NRL of invoices for which she said the NRL was liable. The suggestion that the NRL was liable to pay the invoices is not obviously consistent with emails already referred to, in particular, at [9].
On 15 June 2016, Ms Culver followed up her meeting with Mr Greenberg by attaching the proposal which she had previously submitted to Ms Young in June 2015. On 4 July 2016, Ms Culver submitted the unpaid invoices to Mr Greenberg suggesting that the invoices had not been paid because she "got caught in the crossfire" between the NRL's Welfare and Education program and the Rugby League Players Association. Ms Culver also forwarded by separate email further invoices for travel reimbursement, stating that she had a standing agreement with Mr Heptonstall that she was reimbursed for airfares and accommodation when she travelled outside of Sydney.
On 5 July 2016, Mr Greenberg spoke to Mr Heptonstall about the invoices and was told that the work the subject of the invoices had been undertaken by the relevant players and NRL clubs at their own volition and without the approval of the NRL. Mr Greenberg sought legal advice from an internal lawyer at the NRL and formed the view, based on that advice, that the NRL was not legally liable to Newheadspace for the invoices or on any other basis. Mr Greenberg considered that, as the services had been provided to the players by Newheadspace and the NRL club had not paid the invoice, he would agree to the NRL paying the invoices even though it was not responsible for them on the basis that this settled all claims that Newheadspace may have.
On 26 July 2016, Mr Greenberg sent an email to Ms Culver offering, "in good faith and in the interests of moving on" to pay the outstanding invoices without any admission that the NRL was in fact obliged to pay the outstanding amounts, and in settlement of all outstanding amounts and claims that Ms Culver may have in relation to Newheadspace's program. Ms Culver replied unhappily on 27 July 2016 suggesting that Mr Greenberg's written offer departed from an oral acceptance by him in which he apparently said he was fine to pay the invoices because it was for work that she had performed. Mr Greenberg stood firm, noting that he had looked into the matter as requested by her, considered the information objectively, explained the outcome to her over the phone and confirmed it in writing. "I have agreed to pay you a significant amount of money that ultimately we are not obliged to do, but I have chosen to do so for the simple fact that it is the right thing to do & to demonstrate my respect for you". Mr Greenberg again sought confirmation of her acceptance of his offer following which he would arrange for immediate payment. Ms Culver did not reply.

[10]

A media adviser

The very next day, on 24 May 2017, Mr Whelan contacted Mark Westfield of Westfield Wright, a media advisor who "offers our clients access to high level contacts in all media across all sectors … We specialise in dealing with commentators and columnists - the so-called 'pack leaders' - to most effectively influence coverage and perceptions while giving clients unique insights into how the media operates, and what drives it". The fact that the litigation funder, at such an early stage of considering a potential claim, made contact with a media adviser suggests that it was envisaged to use the media as part of the funder's strategy to progress the claim to a beneficial resolution. As much is confirmed by an email from Ms Culver to a colleague on 30 May 2017 saying, "meeting with media tomorrow for strategy".
On 31 May 2017, Ms Culver met with Mr Westfield who kindly offered to help draft her letter to the NRL. Mr Westfield suggested that she take out "the direct threats to sue using litigation fund money, the letter needs to be cool, calm with threatening overtones rather than direct threats." Ms Culver offered to provide a chronology but "I want to beef it up more" and, as she had been invited to a State of Origin event that evening, would defer completing it as the evening "may yield a nugget". On 1 June 2017, Ms Culver gave Mr Westfield and Mr Whelan a chronology together with some additional ideas on strategy derived with the benefit of the previous night's function. Ms Culver had hit upon a 'divide and conquer' strategy through her friendship with the wife of a senior officer of the Australian Rugby League Commission (ARL).
On 7 July 2017, after many amendments by Mr Westfield and Mr Whelan, Ms Culver sent a letter of demand to the NRL asserting a claim to damages of some $2.5 to $3 million dollars. The letter remained remarkable notwithstanding the ministrations of Mr Westfield and Mr Whelan. Ms Culver suggested that, since her last correspondence with Mr Greenberg a year before, legal advice had been sought (Ms Culver did not assert that legal advice had actually been obtained). After setting out Newheadspace's claims, Ms Culver continued: You are of course very aware that this matter will be of great interest to the public. It's known that you have spent considerable time trying to improve both the Bulldogs and the NRL's image; most notably with women and Player welfare. The evidence that will need to be led to prove any legal action, will confirm the existing pre-conception that the NRL lacks integrity and does not care for its players. All the money the NRL has spent to try and change its public persona could be seriously compromised. An example of what could be revealed to demonstrate that the NRL lacked integrity was given. It was suggested that, if the matter became public, others would come forward to speak about their experiences with the NRL's integrity over the years. Whilst it was somewhat disingenuously suggested that there was no desire to enter into the public or legal domain, it was said that, for reasons unclear, Newheadspace had no other choice but to move forward in that way.
Mr Westfield described the letter as "fairly threatening and a bit scary!", an assessment with which I can only concur. Mr Westfield's assessment led Ms Culver to question whether Mr Westfield was "our best guy??", but Mr Whelan assured her that Mr Westfield was "the best". Ms Culver pondered, "if he is a little scared maybe he will be the same with media - anwyay [sic] fingers crossed WE WON'T NEED TO USE HIM!!!! :)))".
On 13 September 2017, the NRL replied, taking objection, unsurprisingly, to "veiled threats", expressing doubt about the legal basis of Newheadspace's claims and repeating its earlier offer in respect of unpaid invoices. A meeting was also suggested.

[11]

A former barrister

Mr Westfield had no further involvement in the matter. On 14 September 2017, Mr Whelan approached Clarence Stevens, a barrister who had been removed from the roll of legal practitioners for professional misconduct (NSW Bar Association v Stevens [2003] NSWCA 261), asking him to meet Ms Culver and represent her at the meeting with the NRL. As Ms Culver was not in funds, Mr Stevens was asked to do so on a contingent fee basis: "For the record I am also working on a contingent basis". Mr Whelan explained that the legal questions involved in Ms Culver's claim were complicated and therefore it was not a simple issue to provide litigation funding, Fortunately, the NRL also plays in the arena of public opinion and we have been able to put enough pressure on them for them [to] agree to a meeting to discuss settlement of the matter. That is, from Mr Whelan's perspective, Ms Culver's claim against the NRL was not so straightforward as to agree to fund her claim but the NRL's sensitivity was identified as being a wish to avoid bad publicity.
Mr Stevens agreed to meet with Ms Culver. Apparently after the meeting, Ms Culver began to review her emails to provide to Mr Stevens. Ms Culver professed that she was "finding DIAMONDS" which she would forward on in due course. On 23 September 2017, Ms Culver provided Mr Stevens and Mr Whelan with a chronology from December 2009 to July 2016 which, as the NRL points out, rarely mentions Mr Greenberg and Mr Heptonstall over its 20 pages.
On 29 September 2017, Ms Culver sent an email to the NRL to arrange the meeting, suggesting that it make sure that whoever was at the meeting had authority to settle her claim "in excess of $1 million". The NRL responded that, although it was amenable to meeting with Ms Culver, "we are not coming to a meeting with a view to settling a claim in excess of $1 million". Ms Culver promptly met with Mr Stevens and, in a series of emotive emails, provided further "instructions" listing people who had "betrayed" her including, apparently, Mr Greenberg, and details of "WHAT THEY STOLE FROM ME". Ms Culver also enlisted support from Mr Crocker of the Rugby League Players Association who, on 21 October 2017, emailed the new chief executive officer of Rugby League Players Association introducing Ms Culver and suggesting that Newheadspace's program had been "subsequently copied and renamed as the Play On program".

[13]

A liquidator

The next day, 15 November 2017, Mr Whelan sent an email to Mr Needham arranging to meet on 17 November 2017 to discuss placing Newheadspace into voluntary liquidation. Mr Needham's file note of the meeting with Ms Culver and Mr Whelan records that he was told that the NRL owed money to Newheadspace for its program which the NRL had "stolen" and Mr Whelan had been helping to try and negotiate an outcome. The company was said to have no assets other than its intellectual property and was only solvent if it could prove that damage was caused by the NRL. The company could not afford to litigate and it appears that Mr Needham enquired whether Mr Whelan was looking to fund litigation, to which Mr Whelan replied, "Possibly but needs to see more". Creditors of Newheadspace were said to be Ms Culver, Mr Whelan and possibly the Australian Tax Office.
On 21 November 2017, having not heard further from the NRL, Mr Whelan suggested that Mr Stevens and Ms Culver have a discussion as to how to take the matter forward. Mr Needham sent Ms Culver some basic information on placing Newheadspace into voluntary liquidation, which Ms Culver forwarded to Mr Whelan and Mr Stevens. Ms Culver arranged to meet with Mr Needham again.
On 27 November 2017, Ms Culver attended a second meeting with Mr Needham. According to Mr Needham's file note, they discussed what would happen to the intellectual property of Newheadspace in a liquidation and that the company's tax returns were not up to date. The claim against the NRL was now said to be worth some $5 million with the creditors of the company said to be $500,000. Mr Needham's file note records: What about NRL - Up to you and Doug [Whelan] whether you try & push further - I'll make up own mind if & when appointed. May need examinations. Lawyer to spec. Fees? I'll give it some thought but was thinking a % of any assets realised that way no cost unless there's recovery.
As to the records of the company, Mr Needham's file note further records: What about records? You can keep - I'll ask for what I need - given you are major creditor / beneficiary don't see an issue having to take everything to go through it given no funds. Mr Needham said he was going to be overseas until March 2018 and asked her to "get things done and tax sorted by then".
On 29 November 2017, Ms Culver forwarded her notes of the second meeting to Mr Whelan, which notes simply and solely concerned options for public examinations.
Also on 29 November 2017, the NRL wrote to Ms Culver assuring her that they were treating her allegations with due respect but, unless she could provide the NRL with actual material, be it correspondence, documents or terms and conditions, as opposed to her summary of the material to support her allegations, the NRL did not see any merit continuing to correspond. For reasons not readily apparent, Mr Stevens regarded the NRL's letter as comforting, and prepared a draft response. Mr Stevens wished to ascertain whether the NRL still retained the documents on which Ms Culver suggested her claim rested. Such a letter was duly sent on 15 December 2017 by Ms Culver, again declining to provide material until she saw some manifestation that the NRL was taking the claim seriously.
On 20 December 2017, unremarkably, the NRL expressed difficulty understanding why Ms Culver would not simply provide the emails, correspondence, texts and other documentation to which she referred in her letters, particularly if they were said to substantiate her serious allegations. In the absence of supporting evidence, the NRL reiterated its rejection of her claims and declined to correspond further. Mr Stevens prepared a reply suggesting: We feel the NRL conduct of dealing with us will backfire. Because of all the other events which continue to excite the media, damage to the NRL reputation from us may not be in the forefront of your thinking. Even so, we are prepared to give you one last opportunity to answer our letter, so we know how to move forward.
Mr Whelan commented that, having spoken with Ms Culver about the draft reply, they felt that the letter "could be more forceful" and would like to "set the platform on fire" by adding a further paragraph. On 11 January 2018, Ms Culver wrote to the NRL incorporating the further passage: If a meaningful response is not received from you by 31st January 2018, then the director will most likely be forced to put the company into liquidation. Without prejudicing the liquidator, it is expected that he or she would be interested in the potential action against the NRL and would be likely to seek orders for production of the correspondence including emails and undertake public examinations of relevant parties (including Todd Greenberg, John Grant, Helen Grant and the other people referred to in our letter November 14th 2017). The letter as sent was threatening: if Ms Culver's demands - being apparently baseless in the absence of any contemporaneous material which Ms Culver would not provide - were not met then adverse media may ensue potentially followed by liquidator's public examinations of senior executives of the NRL and ARL. The letter and its underlying strategy was distasteful.
On 19 February 2018, Ms Culver sent Mr Whelan an "Action Plan" for the liquidation of Newheadspace. Counsel who later appeared for the liquidator at the examinations was referred to repeatedly in the Action Plan and thus, it would appear, had been engaged by Newheadspace or its advisors, likely also on a contingency fee basis. The sole focus of the Action Plan was directed to liquidator's public examinations of NRL's officers. The first task was to arrange available dates for examinations, then to appoint a liquidator who would interview Ms Culver, then to file a summons with the Court in April 2018 and serve the NRL with examination summonses in the third week of April. The Action Plan concluded with the following two items: Doug needs to invoice Jhanna … WHEN?? Jhanna needs to invoice newheadspace … When??
There is no evidence of any financial circumstances which arose or changed at this time which would otherwise have warranted the appointment of a liquidator to Newheadspace. As the NRL correctly points out, the tax returns for the Culver Family Trust had consistently reported small negative assets for the preceding seven financial years and nothing had changed. Year Net income Net assets Current liabilities 2011 ($7,836) ($7,649) $0 2012 ($70,626) ($78,275) $0 2013 ($12,736) ($90,911) $0 2014 ($2,035) ($92,945) $0 2015 $10,085 ($82,861) $0 2016 ($4,693) ($87,554) $0 2017 ($3,288) ($90,842) $0

[15]

Invoices and a board paper

On 14 April 2018, Litigation Funding Solutions rendered an invoice dated 13 April 2018 to Newheadspace for $55,000 said to be an "[i]nterim invoice for provision of advice regarding obtaining litigation funding against NRL". In these proceedings, subpoenas were issued to Litigation Funding Solutions and Ms Culver seeking documents to support this invoice and none were produced, in particular, no litigation funding agreement was produced. Thus, there was no written contract between Litigation Funding Solutions and Newheadspace, at least, nor is there any reference in the contemporaneous documents to any agreement to pay for advice regarding obtaining litigation funding nor any reference to such advice being given. It will be recalled that Mr Whelan had informed Mr Stevens that Litigation Funding Solutions was proceeding on a contingency basis. On the evidence before me, this invoice did not have a proper basis.
On 15 April 2018, Ms Culver forwarded Mr Whelan a draft board paper. The draft, which was replete with questions for Mr Whelan, included: The company has received 2 invoices dated 15th and 16th April totalling - $700K. Whilst demands have not been made to be paid, - it must be paid in due course. Thus it is prudent for the company to consider how the invoices will be paid - short / medium term newheadspace has no cash, no real property or any other assets that can be readily converted to cash. The company has valuable IP which collectively can be called the Extend the Dream program (Doug - but I have other programs from the IP to it's not limited to Extend the Dream?). This IP has been used to create this program. Unfortunately the NRL and associated entities stole it and thus killed the ability of the company to generate substantial revenue that would have otherwise been achieved. Preliminary advice has indicated there are multiple claims against the NRL and associated entities, with substantial damages. It might be thought curious for Ms Culver to have sought input from a creditor as to the contents of such a board paper. But that is the point: Litigation Funding Solutions was not a creditor but was holding itself out as one. The second invoice referred to in the draft board paper was one which Ms Culver rendered to Newheadspace - in its final form - on 18 April 2018.
On 16 April 2018, Ms Culver sent Mr Needham an email, copied to Mr Whelan, asking him to give her a call. I may have a company that is requiring liquidation and you have been recommended as a liquidator. This was an odd email for Ms Culver to have sent in circumstances where she had already met Mr Needham three times to discuss the liquidation of Newheadspace. Mr Needham provided pro forma documents for her to complete in order to appoint him as a liquidator. Mr Needham noted that, as Ms Culver was heading overseas "and having double checked the timeline", Ms Culver needed to complete the Australian Securities and Investments Commission (ASIC) form, Report as to Affairs (RATA) "if we are going to do this tomorrow". It is likely that the "timeline" referred to by Mr Needham was a reference to the Action Plan, there being no other document in evidence which would answer that description. Mr Needham had attended a conference four days earlier at which he could readily have been furnished with a copy, and I consider it likely that he was, noting that the Action Plan also required him to attend to specific tasks by specific times.
On 17 April 2018, Ms Culver forwarded Mr Whelan a further version of the board paper for his review. Newheadspace's claim against the NRL was now valued by Ms Culver as worth more than $5 million and the supporting attachments largely calculated what the company would have earned if the NRL had rolled out its program as proposed in 2015. It was heady stuff. Ms Culver sent further versions of the board paper to Mr Whelan with further questions including: Question 1 - Do I charge GST on my amount??? If YES then NEWLY attached Board Paper reflects this in it's [sic] total amount of yours and mine combined equals - $591,250.00 IF NO GST for me then above combined amount is $542,5000 [sic] If easier please can you change it - it's in the first sentence if you can't no worries lemme know asap and I will reforward you to print - THANKS SOOOOO MUCH!!!!!!!! Question 2 - On my invoice for myself - do I put my personal bank account details to pay into? cause I no longer have business account.
On 18 April 2018, Ms Culver forwarded Mr Whelan a tweet from Mr Greenberg, asking "please doug please can we bring him down … vomit attached" and Mr Whelan placated her, "No - we are out to recover monies".

[16]

Appointment of voluntary liquidator

On 18 April 2018, Ms Culver attended a meeting of members of Newheadspace and passed a special resolution to wind up the company. According to the minutes of meeting: The chairperson informed the meeting that there were concerns about the company's solvency which required immediate discussion and resolution by the members. A verbal report on the company's financial position was given to the meeting by the chairperson. Discussion of the chairperson's report followed at the end of which the members present expressed their opinion that the company could not by reason of its liabilities continue its business or to trade and that it was appropriate to wind up the company. The board paper referred to two invoices received by the company totalling $542,500 and the company's inability to pay the invoices as the only asset of the company, its intellectual property in the program, was said to have been stolen by the NRL which had thus killed the ability of the company to generate substantial revenue that would otherwise have been achieved.
The second invoice, also dated 13 April 2018, had been issued by Ms Culver to Newheadspace, on Newheadspace letterhead, for $487,500 said to be for work conducted by her on behalf of Newheadspace from 1 January 2015 to 31 March 2018. In these proceedings, a notice to produce and subpoena were issued to the liquidator on behalf of Newheadspace and to Ms Culver. Neither produced any documents to corroborate the work said to have been performed by Ms Culver. The basis on which this invoice was issued is unclear. As the NRL points out, during the years when Ms Culver is said to have conducted work for the company, the company declared no business income and had ceased to trade. On the evidence before me, this invoice had no proper basis. Both invoices which were said in the board paper to be the reason to appoint a liquidator were a contrivance.
The RATA completed by Ms Culver listed Litigation Funding Solutions and herself as the two unsecured creditors of the company, totalling $542,500, together with contingent assets in the form of a damages claim against the NRL of over $5 million together with a damages claim against Max Coaching of unknown value. Ms Culver declared that the particulars contained in the report were true to the best of her knowledge and belief. Given the circumstances in which the invoices were rendered by herself and Litigation Funding Solutions, it is unclear to me how Ms Culver could have signed such a declaration.
On 3 May 2018, Mr Needham sent a letter to creditors notifying them of his appointment and proposing that his remuneration be the maximum default amount given by section 60-15 of the Insolvency Practice Schedule (Corporations), Schedule 2 of the Corporations Act plus 5% of the gross dollar value of assets realised. On receipt, Ms Culver promptly inquired whether the letter had also been sent to NRL and Max Coaching. Mr Needham requested copies of the invoices which Newheadspace had rendered to NRL before he sent a letter demanding payment and Ms Culver provided Mr Needham with copies of her correspondence with the NRL referred to at [22], [24], [28], [35], [36] and [37].
On 10 May 2018, Mr Needham sent a letter to the NRL requesting payment of $7,598 said to be owing to Newheadspace and delivery of all books and records belonging to the company. The letter was addressed to "The Proper Officer" of the NRL. General counsel of the NRL has been unable to locate the letter, which did not come to the attention of any person in the legal department or senior management. On 13 June 2018, Mr Needham sent a follow-up letter to "The Proper Officer" of NRL but, again, it does not appear to have come to the attention of anyone in the legal department or senior management. A similar letter was sent by the liquidator to Max Coaching, which replied that it was not in possession of any books or records belonging to Newheadspace.
On 17 July 2018, Mr Needham issued a report to creditors. According to the report, Newheadspace was expecting to be awarded a three year contract commencing in 2015 to run its program mandatorily for all NRL clubs but "[u]nfortunately, it appears that the NRL used the information obtained from the pilot programme and roll out to bring the training 'in-house' to the detriment of the company …". The basis of the instructions given to Mr Needham is, having regard to the contemporaneous documents on this application at least, unclear. Mr Needham noted that, "[g]iven the lack of response received from the NRL", he had engaged solicitors to assist him to apply for examination summonses and for production from the Court. I am unable to advise on the likelihood of receiving a dividend until I have been able to obtain further information regarding the company's claim for damages against the NRL. Unfortunately, due to the nature of the claim it is unlikely to be brought without the aid of publicly examining those persons who were involved in negotiations regarding the Extend the Dream programme. I have engaged solicitors to assist me in this regard and who were prepared to speculate on the outcome of the claim. I also understand that funding should be forthcoming from Litigation Funding Solutions to pay the Court's fees for applying for the examination summonses; however, I have not yet entered into any formal funding agreement the terms of which will necessarily affect any dividend.
By now, Mr Whelan and Litigation Funding Solutions had been considering Newheadspace's claim against the NRL for 14 months but was still not prepared to commit to fund any legal proceedings against the NRL but perhaps only to fund the filing fee to apply for examination summonses. This is consistent with Mr Whelan's strategy of using the prospect of public examinations as a way of motivating the NRL to accede to the company's demands. Indeed, whilst I refer to Mr Whelan in this judgment as a litigation funder, strictly speaking, he is not as he has never entered into a litigation funding agreement with Newheadspace nor, it would appear, provided any funding beyond, perhaps, court filing fees.
On 30 August 2018, Ms Culver signed a lengthy witness statement setting out the history of her company and its dealings with the NRL. Annexed were a bundle of documents including the 2010 letter of engagement and Mr Greenberg's July 2016 email to which I have already referred. Ms Culver's statement added little to the suggestion that Newheadspace's intellectual property in the program had been 'stolen' by the NRL and, further, was not particularly accurate in her description of her dealings with Mr Greenberg when compared with the contemporaneous documents. Ms Culver stated: In an attempt to get [Newheadspace's proposal submitted to Ms Young in 2015] resolved I contacted the CEO of the NRL on 13th May 2016. On 26th July 2016, he provided me with an offer that was completely unacceptable. … The negotiations between the Company and the NRL broke down in July 2016. Ms Culver's emails with Mr Greenberg in July 2016 concerned Ms Culver's request for outstanding invoices to be paid only. It is readily apparent from Mr Greenberg's emails that he had no personal knowledge of the invoices but had agreed to look into it at Ms Culver's request.

[17]

Examination summonses

On 20 September 2018, Mr Needham filed an Originating Process seeking the issue of summonses for examination and orders for production under section 596A and 596B of the Corporations Act. Mr Needham swore an affidavit deposing that he had had regard to his review of the books and records of Newheadspace available to him and discussions with and a statement provided by Ms Culver. A copy of Ms Culver's witness statement and supporting documents was exhibited to his affidavit. Mr Needham also annexed the RATA; the minutes of meeting appointing a liquidator; the outstanding invoices rendered to NRL clubs already described; his correspondence with the NRL which, as mentioned, had not been answered; and an extract from the NRL Annual Report 2017 reporting on the efforts of the NRL's Wellbeing staff to prepare older players for life after sport. More than 100 players were reported as having been provided with specialised career and personal coaching support from the NRL's Wellbeing managers that year. The connection between the extract and Newheadspace's program was neither stated nor obvious.
Mr Needham deposed that, as liquidator, he wished to investigate whether a contract was entered into with Newheadspace for the provision of its program to the NRL and its clubs, whether the NRL had breached the contract, and whether the NRL or Max Coaching had retained or used Newheadspace's intellectual property. So far as the correspondence reveals, Ms Culver effectively conceded in November 2017 that there was no contract with the NRL hence the first part of Mr Needham's investigations seems to have been unnecessary.
Mr Needham deposed that Mr Greenberg was the current chief executive officer of the NRL "and was involved [in] ongoing negotiations with Newheadspace". Based upon this, Mr Needham expressed a belief that Mr Greenberg had information relevant to the examinable affairs of Newheadspace and he wished to examine him. The basis for the description of Mr Greenberg's role is not apparent in the contemporaneous documents which were available to Mr Needham at the time he swore his affidavit, as mentioned at [54].
Mr Needham deposed that Mr Heptonstall is a Senior NRL Welfare & Education Manager, involved in the negotiations with Newheadspace and has responsibility for programs of the kind offered by Newheadspace. That appears to have been generally correct, as far as it goes given the high level of generality with which Mr Heptonstall's role was expressed. Based on this fact, Mr Needham deposed that he believed that Mr Heptonstall had information relevant to the examinable affairs of Newheadspace and he wished to examine him.
On 3 October 2018, a Registrar issued Summons for Examination as requested by the liquidator together with Orders for Production. In addition to the summonses now sought to be set aside, a further summons was sought and issued to David Gallop, former chief executive officer of the NRL from 2002 to 2012, but the summons was not served. Whilst complying with the order for production, the NRL complained to Mr Needham's solicitor that Newheadspace had been placed into liquidation for the purpose of seeking examination summonses and orders for production. The affidavit in support of the application for the issue of the summonses was requested together with financial statements for Newheadspace, any litigation funding agreements and documents evidencing the decision to go into liquidation. This prompted Mr Needham to request Mr Whelan to provide him with the invoices referred to in the board paper, "[n]ot concerned just covering my bases". Mr Needham's solicitor strenuously denied any assertion that Mr Needham had embarked upon an improper course of action and declined to provide the documents sought.
The NRL filed an Interlocutory Process seeking to set aside the examination summonses and, by consent, the NRL was given access to Mr Needham's confidential affidavit. The examinations of Mr Greenberg and Mr Heptonstall were adjourned but, on 3 and 4 December 2018, Ms Culver, Ms Lowder and Mr Crocker were examined by the liquidator.
In support of its application, the NRL relied on affidavits sworn by its solicitor, Mr O'Reilly, who deposed that Mr Greenberg commenced with the NRL in 2013 as Head of Football and had no responsibility for the development or provision of player welfare programs such as "Extend the Dream". The first occasion when he had any involvement in relation to the program was in late 2015 when he was asked by Ms Culver to support her request for funding of the program. Other than meeting her again in June 2016 and receiving a letter of demand on 7 July 2017, which he delegated to others to respond, Mr Greenberg had no involvement with the program or negotiations that may have been conducted with Ms Culver for Newheadspace to be contracted by the NRL to provide the program.
Mr O'Reilly criticised Mr Needham's affidavit for failing to disclose the three meetings he had with Ms Culver before his appointment. Mr Needham deposed in a further affidavit that there was no deliberate decision by him or his lawyers that these meetings should not be disclosed. Mr Needham also deposed that, when he was appointed liquidator, he had not made any decision as to whether the claim against the NRL had any merit or that he would proceed with examinations although preliminary discussion about litigation against the NRL had occurred. In these circumstances, he did not consider it necessary to summarise his discussions with Ms Culver in his affidavit of 20 September 2018. Further: I relied upon my legal advisers in respect of the content of the documents seeking the examination summonses filed with this Court, including my 20 September affidavit.
Neither Mr Needham nor Mr O'Reilly were cross-examined. Thus, whilst I am not obliged to accept their evidence, I would ordinarily do so unless there is persuasive evidence which suggests that their evidence, or some part of it, should not be accepted: Masterton Homes Pty Ltd v Palm Assets Pty Ltd [2009] NSWCA 234; (2009) 261 ALR 382 at [105] per Campbell JA with whom Allsop P and Basten JA agreed; followed by NU v NSW Secretary of Family and Community Services (2017) 95 NSWLR 577; [2017] NSWCA 221 at [59] per Beazley P with whom McColl JA and Schmidt J agreed.
Also in evidence was a chronological bundle of documents collated from exhibits to affidavits and supplemented by documents produced in answer to notices to produce and subpoenas issued to the NRL, Litigation Funding Solutions, Ms Culver, Westfield Wright, Mr Stevens and Mr Needham.

[18]

WHY should the Registrar's decision be reviewed?

Where the issue of an examination summons has been ordered by a Registrar, an application to set aside the summons for examination is governed by rule 49.19 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), pursuant to which the Court may review a Registrar's decision "and make such order, by way of confirmation, variation, discharge or otherwise, as the court thinks fit". A review is not an appeal but a hearing de novo and, on such a review, the Court must exercise its own discretion as described by Hodgson JA (with whom Ipp JA agreed) in Tomko v Palasty (No 2) (2007) 71 NSWLR 61; [2007] NSWCA 369. At [7] and [9]: 7 In my opinion, this discretion extends to a discretion as to whether, and if so how, to intervene; and in my opinion, there is an onus on a person seeking to have a court set aside or vary a registrar's decision to make out a case that the court, in the interests of justice, should exercise its discretion to do so. … 9 In the case of a decision which finally determines a party's rights, or which (albeit one of practice or procedure) has a decisive impact on those rights, a court may be more willing to intervene. It may permit further evidence to be led which does not satisfy the strict requirements for fresh evidence, if it is satisfied that the interests of justice require this. It may decide to substitute its own discretionary decision for that of the registrar, even though no House v. The King error is shown, again if it is satisfied that the interests of justice require this. To that extent, the review may be considered a de novo hearing. See also Basten JA in Tomko (with whom Hodgson JA agreed, subject to his Honour's own reasons, and with whom Ipp JA also agreed) at [46]. These principles are undoubtedly correct and have been cited in the Court of Appeal on a number of occasions: Dae Boong International Co Pty Ltd v Gray [2009] NSWCA 11 at [17]; Liverpool City Council v Estephen [2008] NSWCA 245 at [17] (per McColl JA); Collier v Country Women's Association of New South Wales [2018] NSWCA 36 at [47] (per Gleeson JA); Mohareb v Kelso [2018] NSWCA 164 at [26] (per Basten JA and Sackville AJA citing the judgment of Basten JA). In the context of an application to set aside an examination summons, Barrett J applied these principles in Wily re LED (South Coast) Pty Ltd (2009) 76 NSWLR 428; (2009) 74 ACSR 145; [2009] NSWSC 946 at [22]-[26].
The NRL submitted that the Registrar's decision should be reviewed and the summons for examination set aside on three bases: 1. That the voluntary liquidation of Newheadspace was an abuse of process, rendering the summons for examination oppressive and unfair by reason of the underlying abuse of process. 2. The summons for examination were also oppressive and unfair as the predominant purpose was to conduct a dress rehearsal of cross-examination of the examinees. 3. Mr Needham had failed to disclose material matters to the Registrar in support of the application for the issue of the summonses.
The liquidator submitted that the NRL's application proceeded on the basis of a misconception that he, as liquidator, and the winding up process over which he has control, are both an abuse because of conduct by the director and others prior to the winding up. Rather, it was the liquidator's purpose in conducting the examinations that was pertinent and the Court would be satisfied that the investigation being undertaken by him, and of which the examination summonses form part, are appropriate.
The issues thus appear to be: was the appointment of a voluntary liquidator to Newheadspace an abuse of process; can and does that render the summons for examination issued at the request of the voluntary liquidator also an abuse of process? If not, was the application for summons for examination otherwise an abuse of process by the liquidator or otherwise oppressive and unfair or ought be set aside for failure to disclose all relevant matters to the Registrar?

[19]

ABUSE OF PROCESS in appointing liquidator

The NRL submitted that the purposes of winding up a company are essentially threefold. First, to deal with the assets of the company in an equitable and fair manner amongst its creditors (Re Crust 'n' Crumb Bakers (Wholesale) Pty Ltd (1991) 5 ACSR 70; (1991) 9 ACLC 912; [1992] 2 Qd R 76 at 78 (per McPherson SPJ). Second, to allow for an investigation of the company's affairs by an independent and appropriately qualified person, in particular, as to the circumstances which precipitated the winding up and whether there was any improper or dishonest conduct by officers of the company or unfair dispositions of property which warrant further action. And, third, to prevent insolvent companies from trading. Here, the NRL submitted that the predominant purpose of the winding up was to exert pressure upon the NRL to settle its commercial dispute on terms favourable to the company and was an abuse of process similar to that in Williams v Spautz (1992) 174 CLR 509; (1992) 107 ALR 635; [1992] HCA 34.
The NRL submitted that the concept of abuse of process has been applied to the issuing of a statutory demand (Gusdote Pty Ltd v Ashley (2011) 193 FCR 227; (2011) 277 ALR 579; [2011] FCA 250 (per Foster J), voluntary administration (Blacktown City Council v Macarthur Telecommunications Pty Ltd (2003) 47 ACSR 391; [2003] NSWSC 883 (per Barrett J), compulsory winding up (Australian Beverage Distributors Pty Ltd v Evans & Tate Premium Wines Pty Ltd (2007) 69 NSWLR 374; (2007) 61 ACSR 441; [2007] NSWCA 57 at [47]) and voluntary winding up (National Australia Bank Ltd v Market Holdings Pty Ltd (in liq) (2001) 161 FLR 1; (2001) 37 ACSR 629; [2001] NSWSC 253 per Young J and Butterworths, Ford, Austin & Ramsay's Principles of Corporations Law, (online at June 2019) [27.550.3]). Examples where abuse of process had been considered in the context of insolvency proceedings include Ex parte Staff, In re Staff (1875) LR 20 Eq 775 (per Sir James Bacon CJ); Ex parte Sir William Russell (1875) LR 10 Ch App 255 at 263-264 (per Mellish LJ); In re Davies; ex parte King (1876) 3 Ch D 461; Ex parte Griffin; In re Adams (1879) 12 Ch D 480; Ex parte Painter; In re Painter [1895] 1 QB 85; King v Henderson [1898] AC 720 at 731-2 (Privy Council on appeal from the Supreme Court of New South Wales); Dowling v Colonial Mutual Life Assurance Society Ltd (1915) 20 CLR 509; (1915) 21 ALR 425; [1915] HCA 56 at 521-523; Re Majory [1955] Ch 600 at 626 (per Evershed MR, Jenkins and Romer LJJ); Re Moncada (1986) 11 FCR 205; Clyne v Deputy Commissioner of Taxation [1984] HCA 44; (1984) 55 ALR 143; (1984) 154 CLR 589 at 598-9; Re Cornish; Ex parte English (1984) 6 FCR 257 (per Morling J); Re Crowl, DM v Ex parte Kleinwort Benson Australia Ltd [1988] FCA 57 (per Beaumont J); BWK Elders (Australia) Pty Ltd v White [2004] FCA 1611 and Edelsten v Deputy Commissioner of Taxation (NSW) (1989) 86 ALR 257. It was submitted that these cases indicate that the Court will not countenance the use of an insolvency process where the predominant purpose of such a process is not within the scope of the process so instituted. It will also not countenance the use of an insolvency process where threats have been made in respect of that process.
It was submitted by the NRL that there was no other reason to utilise the creditors' winding up process. The company ceased trading in December 2015. Prior to that, the company had no current liabilities. The two invoices issued shortly before the resolution for winding up the company did not stipulate payment terms. Further, Ms Culver stated in the board paper that the alleged debts "must be paid in due course", which didn't suggest that the debts were due and payable. Further, the company was not insolvent nor was there evidence of the company having solvency concerns.
The liquidator made almost no submission in respect of Ms Culver's purpose in liquidating the company beyond submitting that her purpose was irrelevant and, in any event, there was nothing inappropriate in her purpose as Ms Culver was merely attempting to progress the company's claims against the NRL. What Ms Culver's threats were said to demonstrate was simply her belief in the company's claims and a desire for some negotiated settlement.

[20]

Consideration

So far as the conduct of those standing behind Newheadspace are concerned, the case does bear strong similarities to Williams v Spautz where a university lecturer laid criminal charges against university staff to encourage the university to settle his claim for wrongful dismissal on favourable terms. Mason CJ, Dawson, Toohey and McHugh JJ considered that Evershed MR correctly stated the principle in Re Majory at 623-4: …court proceedings may not be used or threatened for the purpose of obtaining for the person so using or threatening them some collateral advantage to himself, and not for the purpose for which such proceedings are properly designed and exist; and a party so using or threatening proceedings will be liable to be held guilty of abusing the process of the court and therefore disqualified from invoking the powers of the court by proceedings he has abused. Their Honours in Williams v Spautz held that the criterion for abuse of process is whether the improper purpose sought to be effected by the litigant in bringing the proceedings was their predominant purpose: at 529. Further, inquiry into the motivation of the litigant was considered to provide a fragile foundation on which to stay proceedings for an abuse of power; basing an exercise of the Court's discretion in such cases on the use or threatened use of proceedings for an improper purpose was likely to lead to a conclusion "more likely to be founded upon objective evidence rather than subjective evidence of intention": at 529. Mason CJ, Dawson, Toohey and McHugh JJ also noted that the Court's power to stay proceedings to prevent an abuse of process is available "even if the moving party has a prima facie case or must be assumed to have a prima facie case": at 522.
An early example of an abuse of process in the context of bankruptcy is Ex parte Griffin, In Re Adams, where a creditor presented a bankruptcy petition for a collateral purpose and with the view to putting pressure on the debtor to persuade him to give up a just debt which was due to him and to save a solicitor "from a most proper and just application to strike him off the roll": at 483 (per Brett LJ). The Court of Appeal refused the petition even though there was a good petitioning creditor's debt and an act of bankruptcy had been committed. Similarly, it has been held to be an abuse of process to petition for one's own bankruptcy where the debtor had funds to pay a judgment debt but wished to avoid doing so (In Re A Debtor [1967] Ch 590) or to frustrate a former spouse from recovering money ordered in a family law property settlement (Re Moncada (per Jackson J)); see likewise Clyne v Deputy Commissioner of Taxation at 598 (per Gibbs CJ, Murphy, Brennan and Dawson JJ). Similar examples in the context of the external administration of corporations are helpfully collated in the NRL's submissions.
As to what is meant by "improper purpose", Aickin J noted in R v Toohey; ex parte Northern Land Council [1981] HCA 74; (1981) 151 CLR 170 at 233: I use the term "improper purpose" to mean one for which the relevant power or authority was not conferred. It makes no difference whether or not that purpose was known to, or believed or suspected to be necessary by, the person exercising the power. ... A belief that the act done is being done for an authorised purpose will be irrelevant if the purpose for which the power is in fact exercised is not such a purpose, whether the belief is as to a matter of fact or law. This statement was followed by Basten JA in Meteyard v Love (2006) 56 ACSR 487; [2005] NSWCA 444 when considering whether an examination summons was issued for an improper purpose: at [46].
As far as my research has revealed, the purposes for which the power to voluntarily wind up a company are conferred are the same as for a court-ordered liquidation. Whilst a voluntary winding up may provide greater flexibility to the liquidator than a court-appointed liquidator (Re Akai Australia Pty Ltd (1978) 3 ACLR 353 at 356-7, per Powell J), the powers and duties of the liquidator are very similar (Re Mecirt Holdings Pty Ltd (1998) 16 ACLC 1148 at 1151 per Sanderson M) and the objects are the same: to realise the company's assets, to investigate and determine the claims against the company and to apply the assets to the satisfaction of those claims in accordance with the statutory scheme of priority, distribute any surplus to members and dissolve the company (Australian Securities and Investments Commission v Edge (2007) 211 FLR 137; [2007] VSC 170 at [40]-[41] per Dodds-Streeton J).
As to whether there was an abuse of process in appointing a liquidator here, the early history of Newheadspace's dealings with the NRL is uncontroversial and described in like terms by Mr Needham and Mr O'Reilly: Newheadspace provided the program to some NRL players and clubs from 2011 to 2014 but, despite Ms Culver's efforts to persuade the NRL to continue to provide the program, her proposal was not accepted and Newheadspace ceased to trade. Whether Newheadspace is entitled to look to the NRL to pay its outstanding invoices of some $7,500 is not difficult to divine from the contemporaneous documents.
There is no doubt that Ms Culver had been making an allegation for some time - since October 2015 - that the intellectual property rights of Newheadspace were breached by the NRL and/or Max Coaching. Support for this suggestion was forthcoming from representatives of the Rugby League Players Association including Mr Crocker who, as is apparent from Ms Culver's statement and the contemporaneous records, was a supporter of Ms Culver in this regard. It is also clear that the NRL had been seeking information from Ms Culver - since November 2015 - as to the basis of this allegation and, apart from lengthy letters crafted with the assistance of quasi-legal advisers - the first such letter being sent more than 20 months after NRL's request for specifics - Ms Culver did not provide any documents to support the allegation. That does not mean that Newheadspace may not have a claim for breach of intellectual property rights by the NRL, but asserting a substantial claim said to be worth millions of dollars in damages but withholding any supporting documents is an unusual negotiating strategy, to say the least.
Rather, the strategy pursued by Newheadspace was to write letters aptly described as "fairly threatening and a little bit scary!" where the threat was negative media attention causing damage to the NRL's reputation. The strategy is apparent from the immediate retention by the litigation funder of a media adviser, communications between Ms Culver and her advisers and the terms of the letters sent to the NRL already described. After two such letters and a meeting with the NRL, the funder contacted Mr Needham. The only topic of Ms Culver's meetings with the liquidator for which she provided notes to Mr Whelan were the options for public examinations. The Action Plan circulated by Ms Culver in February 2018 was solely directed towards public examinations of NRL officers.
In April 2018, Ms Culver and Mr Whelan created invoices which did not have a proper basis and drafted a board paper which suggested that a liquidator needed to be appointed given the insolvency expected to arise by reason of these invoices. Ms Culver signed a declaration in the RATA confirming that the funder and herself were unsecured creditors of Newheadspace in amounts recorded in those invoices. As an ordinary litigant wishing to sue the NRL, Newheadspace would not have been entitled to examine NRL officers before the commencement of any legal proceedings, nor was Mr Whelan prepared to fund such proceedings himself. Contriving an apparent insolvency by the creation of invoices, drafting a board paper with the assistance of a funder to feign concern about the company's inability to pay these invoices, and appointing a voluntary liquidator was done to access a liquidator's ability to request that examination summons be issued by the Court.
The predominant purpose of Ms Culver in placing her company into voluntary liquidation was so that the liquidator could request the Court to issue examination summons to senior officers of the NRL as a means of persuading the NRL to pay a substantial sum in order to avoid adverse media or public attention. The fact that an examination summons was sought against the former and current Chief Executive Officers of the NRL, in circumstances where there was little basis to suggest that either had any substantive involvement with the program, is consistent with such a purpose.
The power to appoint a liquidator is not conferred to use the threat of public examinations as a way to persuade someone to pay you money. Nor it is a proper purpose for a company to be placed into external administration so that the company or a litigation funder can avail itself of the forensic advantage conferred by public examinations which are not available to a company wishing to sue in the ordinary manner. It has been consistently held that it is an abuse of process to use examinations solely for the purpose of obtaining a forensic advantage not available from ordinary pre-trial procedures: Hong Kong Bank of Australia Limited v Murphy (1992) 8 ACSR 736; (1992) 28 NSWLR 512 at 519 per Gleeson CJ; Sandhurst Trustees Limited v Harvey (2004) 49 ACSR 422; [2004] SASC 157 at [51] (per Doyle CJ with whom Perry and Bleby JJ agreed); Re Excel Finance Corporation Limited (receiver and manager appointed); Worthley v England (1994) 52 FCR 69 at 90 per Gummow, Hill and Cooper JJ; Re New Tel (in liq); Evans v Wainter Pty Ltd (2005) 145 FCR 176; [2005] FCAFC 114 at [252] per Lander J with whom Ryan and Crennan JJ agreed. In the same way, it is an abuse of process to appoint a liquidator solely for the purpose of utilising his or her standing to seek such coercive orders.
Thus, the appointment of a liquidator was an abuse of process. The liquidator does not strongly contend otherwise. It follows from Williams v Spautz that Ms Culver may be disqualified from invoking the powers inherent in the process which she has abused being, in this case, the statutory process of voluntarily winding up her company. But how can this remedy be effected in such a context? The Court could terminate the winding up, but as considered at [161] to [162], I am not prepared to do so on this application. But even if I was inclined to terminate the winding up, should the Court do so in circumstances where, ordinarily, one would expect that the liquidator now appointed would bring an independent mind to bear on the company's affairs with the result that Ms Culver's abuse of process is redundant. This brings us to the question whether an abuse of process in appointing a voluntary liquidator means, without more, that the examination summonses must be set aside.

[21]

ABUSE OF PROCESS by liquidator

The NRL made no submission in respect of the liquidator's purpose but simply contended that, as the winding up was an abuse of process, then the examinations summons should be set aside. NRL submitted that the examination summonses are oppressive and unfair because the summonses were issued in the context of a winding up which is an abuse of process. To permit the examinations to go ahead would give effect to Ms Culver's threats of media attention; the examinees would be subjected to cross-examination on matters of which they have little knowledge; and the examinations would perpetuate and compound the abuse of the winding up process and in effect be seen as the Court giving its imprimatur to an abuse of process.
The liquidator disagreed, submitting that the impugned purpose must be that of the liquidator not the creditor (or funder) who may have financed the exercise in pursuit of their own interests or even a director who seeks vindication for a wrong which he or she believes has brought about the company's demise: Accord Pacific Holdings Pty Limited v Accord Pacific Land Pty Ltd [2011] NSWSC 707 at [116] (per Ward J). That an examination might ultimately produce benefits for contributories (in this case, Ms Culver) does not make it an abuse: Ji Woo International Education Centre Pty Ltd (2019) 134 ACSR 448; [2019] NSWSC 93 at [31] (per Black J). A common purpose for the conduct of a public examination is to investigate and assess a potential claim which the company may have against directors, or others: Bosun Pty Limited (in liq) (2000) 34 ACSR 597; [2000] SASC 180 at [8] (per Debelle J). It is legitimate for a liquidator to obtain information which might assist in the conduct of litigation: Hong Kong Bank of Australia Limited v Murphy at 518-9 (per Gleeson CJ with Mahoney and Priestley JJA agreeing); Wily re LED at [37]-[38] (per Barrett J); Re Southern Equities Corporation Ltd (in liq); Bond and anor v England (1997) 15 ACLC 1582; (1997) 25 ACSR 394 at 431-433 (per Lander J with Cox and Bleby JJ agreeing).
The hearsay evidence from Mr O'Reilly that Mr Greenberg can give no relevant evidence cannot preclude the liquidator wanting to undertake his own examinations: Accord at [135]; Godfrey as liquidator of Pobjie Agencies Pty Ltd (in Liquidation) (2007) 61 ACSR 54; [2007] NSWSC 138 at [56] and [76] per White J. The fact that the NRL denies the claim was said to be neither here nor there. The liquidator's opinion that both Mr Greenberg and Mr Heptonstall may have information relevant to the matters which he wishes to investigate should be given appropriate weight. For the application to succeed, it was submitted that the Court would need to be satisfied that this was not, in fact, the predominant reason why the liquidator wishes to examine those persons. If it turns out that the liquidator has obtained the examination orders without reasonable cause, then the examinees can obtain an order for the costs the examinees have incurred to be paid by Mr Needham: section 597B of the Corporations Act.
The NRL's evidence was said to show that Mr Heptonstall was involved, directly, with the NRL's dealings with the company including speaking with Mr Greenberg about the company's invoices to the NRL and having knowledge of the company's program and the recipients of the program. It was also submitted that the NRL's evidence demonstrated that Mr Greenberg was heavily involved in the NRL's handling of the claims made by the company: this, with respect, was a significant overstatement. Mr Greenberg's evidence as to the basis on which the NRL rejects the claim was said to be helpful to the liquidator's investigations: Meteyard v Love at [36] (per Basten JA).
The utility of the proposed examinations was said to be established by reference to the fact that three examinations have been completed, and there was significant history to the claims which must be investigated. As to the former, I do not think much can be gained from the fact that only the NRL has sought to set aside the examinations summonses issued to its officers but no-one has sought to set aside summonses issued to Ms Culver, Mr Crocker or Ms Lowder. Nor did the latter submission advance matters. It was said to be significant that the liquidator had obtained orders for the examination of Ms Culver herself and has conducted that examination whilst the dispute with the NRL was ongoing. I did not find the submission persuasive: Ms Culver has made herself available to assist the liquidator, both before and after his appointment. A liquidator's examination conducted by the counsel referred to in the Action Plan circulated in January and February 2018 and who attended the third meeting with Ms Culver and the liquidator could equally be characterised as unnecessary and little more than 'window dressing'.

[22]

Power to issue examination summons

The power to issue examination summonses is not at large; the provisions are only applicable to companies in some form of external administration: Highstoke Pty Ltd v Hayes Knight GTO Pty Ltd (2007) 156 FCR 501; (2007) 237 ALR 753; [2007] FCA 13; (2007) 156 FCR 501 [87], [89] (French J). The power to issue summonses is conferred by sections 596A and 596B of the Corporations Act, which provide: 596A Mandatory examination The Court is to summon a person for examination about a corporation's examinable affairs if: (a) an eligible applicant applies for the summons; and (b) the Court is satisfied that the person is an officer or provisional liquidator of the corporation … 596B Discretionary examination (1) The Court may summon a person for examination about a corporation's examinable affairs if: (a) an eligible applicant applies for the summons; and (b) the Court is satisfied that the person: (i) has taken part or been concerned in examinable affairs of the corporation and has been, or may have been, guilty of misconduct in relation to the corporation; or (ii) may be able to give information about examinable affairs of the corporation. (2) This section has effect subject to section 596A. Specifically, the power to issue the summonses which are sought to be set aside on this application is conferred by section 596B(1)(b)(ii).
An "eligible applicant" includes ASIC, a liquidator or a person authorised by ASIC to make such an application in relation to the corporation: section 9 of the Corporations Act. Mr Needham is an eligible applicant. It is noteworthy that, where an applicant does not otherwise fit within the definition of "eligible applicant, for example, a creditor or shareholder of the company, then ASIC provides an important safeguard to ensure that the powers of examination are not abused. ASIC is not a rubber stamp in this regard but may ask searching questions, including as to why the proposed examinations are not an abuse of process: see, for example, In the matter of ACN 004 410 833 Limited (formerly Arrium Limited) (subject to a deed of company arrangement) [2019] NSWSC 1606 at [17].
Sections 9 and 53 of the Corporations Act give a very wide definition of "examinable affairs" which includes the business, trading, transactions, dealings and property of the company: section 53(a). The NRL did not suggest that the topics which the liquidator wishes to traverse in the examinations do not fall within this definition, in theory at least.
Section 596A is mandatory in its terms. If the eligible applicant can satisfy the criteria in section 596A, then the Court has no discretion to refuse to issue the examination summons: Re New Tel (in liq) at [83]. The essential criterion is that the summons is sought in respect of an "officer", which includes a director, a defacto director and a person who makes decisions that affect the whole or a substantial part of the business of the corporation: section 9.
In contrast, the Court has a discretion whether to issue an examination summons under section 596B: Sandhurst Trustees Limited v Harvey at [31] (per Doyle CJ with whom Perry and Bleby JJ agreed). As Lander J explained in Re New Tel (in liq) at [89]: It is not difficult to understand why the power given in s 596B is discretionary rather than mandatory as in s 596A. The class of persons who may be examined under s 596B is much wider than under s 596A which only applies to examinable officers. Because the court is given a discretion, the court needs to be aware of the purpose and subject matter of the examination. In that way, the court can ensure that only those persons who qualify under s 596B(1)(b) are summoned for examination.
In Southern Cross Petroleum Sales (SA) Pty Ltd (in liq) v Hirsch (1998) 70 SASR 527; (1998) 144 FLR 356, Lander J considered how the discretion ought be exercised at 536: The discretion is unfettered but must be exercised judicially. In exercising that discretion the court might have regard to the expressed purpose of the examination; the importance of the information to the eligible applicant; the seriousness of the matters to be inquired into; the use to which the information obtained on the examination might be put; the possibility of an advantage to the eligible applicant which he or she would not otherwise enjoy and the concomitant disadvantage to the prospective examinee; the availability of the information from other sources; the cost to the prospective examinee in attending for examination; whether the information sought is so peripheral to make the attendance of the prospective examinees oppressive; and the wider public interest in investigating the affairs of the corporation. More recently, in Kimberley Diamonds Limited v Arnautovic (2017) 252 FCR 244; [2017] FCAFC 91, Foster, Wigney and Markovic JJ noted that the Court can decline to issue a summons under section 596B in the exercise of its discretion if it is not satisfied that the proposed examination is sufficiently justified or would have any practical utility: at [24].
In Meteyard v Love, Basten JA noted that the issue of a summons under section 596B(1) involves an exercise of discretionary power and questions of vexation and oppression are undoubtedly relevant considerations: at [135]. However, at [136]: … the scope and operation of s 596B is such that it will inevitably intrude on private and commercial interests of third parties and require the disclosure of information which would, absent such a provision, be confidential. Despite those consequences, the provision must be given full effect, in accordance with its terms, reflecting a choice made by the Parliament as to the necessary balance between such private and commercial interests and the public interest in the orderly administration of companies under the control of external managers.
Basten JA also noted that the scope of the power to grant a summons under section 596B is delimited by four considerations: that the proposed examinee may have "information" to give; which must be relevant in the sense that the information is about "examinable affairs of the corporation"; the information should be information not within the knowledge of the eligible applicant; and "there must be a factual basis for the Court to form a reasonable state of satisfaction that a proposed examinee may have relevant information": at [39]. Reservations were expressed as to the third-mentioned consideration by Santow J in Meteyard v Love at [11], and shared by White J in Godfrey as liquidator of Pobjie Agencies at [68]: Moreover, in terms of the principle enunciated by Basten JA, it will be difficult to know when the liquidator has "knowledge" of various matters. The liquidator may have reason to believe certain matters about which he has been given information by a proposed examinee. But a liquidator is entitled to investigate whether the same information would be given on oath. White J also noted in Godfrey as liquidator of Pobjie Agencies that the liquidator is not bound to accept an examinee's assertions that they lack any first hand involvement in the matter: at [56].

[23]

Abuse of process in issue of examinations summons

The Court can set aside an examination summons if it thinks that it should not have been made on the grounds that it was an abuse of process or for other reasons: Palmer v Ayres (in their capacities as liquidators of Queensland Nickel Pty Ltd) (in liq) (2017) 259 CLR 478; [2017] HCA 5 at [35] citing Re New Tel. In New Zealand Steel (Australia) Pty Ltd v Burton (1994) 13 ACSR 610, Hayne J said at 616: There would be an abuse of process if the coercive powers of s596B were to be invoked for a purpose foreign to the purposes for which those powers are conferred. … the conclusion that there has been an abuse of process does not depend upon the application of what was there described as 'some vague notion of fairness in civil litigation'. Thus, it is not to the point to determine whether the creditor that has applied for an order for examination may (in its capacity as Plaintiff in the pending action) obtain some advantage in the prosecution of its action which is an advantage not otherwise obtainable from the interlocutory processes available to it in the action. Nor am I called on to say whether obtaining any such advantage is 'fair' or 'unfair'. Such an approach would obscure the fundamental question which is whether the power is being used for a purpose foreign to the purpose for which it was given. If it is, then there is an abuse for that reason. If it is not, then no question of fairness arises; the legislature has permitted the step to be taken in such a case. This statement was approved in Meteyard v Love at [47] and Kimberley Diamonds at [84].
The oft-cited statement of the legitimate purposes for which the coercive power to summons a person for examination is to be used is that of Lander J (with whom Ryan and Crennan JJ agreed) in Re New Tel Ltd (in liq) at [252]: … 3. The following legitimate purposes emerge: 3.1 First, an examination is designed to serve the purpose of enabling an eligible applicant to gather information to assist the eligible applicant in the administration of the corporation. 3.2 Secondly, it assists the corporation's administrators to identify the corporation's assets, both tangible and intangible. It also allows the corporations liabilities to be identified. 3.3 Thirdly, the purpose is to protect the interests of the corporation's creditors. 3.4 Fourthly, it serves the purpose of enabling evidence and information to be obtained to support the bringing of proceedings against examinable officers and other persons in connection with the examinable affairs of the corporation. 3.5 Fifthly, it assists in the regulation of corporations by providing a public forum for the examination of examinable officers of corporations. 4. If an eligible applicant applies for an order for the examination of a person for a purpose unconnected with the purposes authorised by the legislation that will be an abuse of process and the order, if obtained, will be set aside. 5. The procedure may not be used to allow a party to obtain a forensic advantage and, if it is, any order obtained will be set aside. 6. The procedure may not be used as a dress rehearsal for the cross-examination of a person in a pending or subsequent action. However, it is not improper to seek an order of the court to summon a person for examination whilst litigation is pending against that person or entities connected with that person. 7. The question whether in any particular case the applicant has used the procedure abusively will depend upon the applicant's purpose in seeking the order and all of the surrounding circumstances. It will not be an abuse unless an offensive purpose is at least the predominant purpose. 8. It will be an offensive purpose if the application cannot be characterised as being for the benefit of the corporation, its contributories or creditors. 9. A creditor may, if first authorised by ASIC, apply to the court for an order to summon for examination a person for the purpose of obtaining information in relation to a debt owed to the creditor if such an examination would be in the interests of the corporation or its creditors as a whole. 10. A creditor may not use the procedure for the purpose of obtaining a forensic advantage which would not have been available to the creditor if the corporation had not gone into administration.
In arriving at this summation, Lander J approved (at [220]) the following statement by Doyle CJ in Sandhurst Trustees Limited v Harvey, at [51]: (emphasis added) The fact that a consequence of an examination order may be a forensic advantage to a particular class of creditors, or to a particular creditor, of the corporation, or to a particular person, does not of itself lead to the conclusion that the order was not made for a proper purpose. Nor does the fact that the order was made at the instance of that person or creditor. On the other hand, the power is not conferred with a view to its exercise solely to benefit an individual with a claim of some kind against the corporation in question, or with a claim arising out of its affairs. Nor, I consider, is it conferred to enable an applicant for an order to pursue an enquiry into a matter in relation to which the applicant has no legitimate interest.
In this respect, Ward J considered in In the matter of Affinity Capital Pty Limited - Indrasith v Ku [2011] NSWSC 1158 at [47]-[48]: (emphasis added) 47 Pausing there, the same might of course be said of any creditor invoking the examination process - since, in the absence of the liquidation of the company in question, any litigant in a personal capacity is not able to make use of the compulsory processes available to liquidators under s 596A of the Corporations Act and would thus be restricted to the avenues otherwise available by use of the preliminary discovery process or the like. If the import of proposition 10 is to limit a creditor to processes that would in any event be available to the creditor by way of preliminary discovery or the like, then there seems little purpose in the recognition that a creditor may seek to avail itself of the statutory examination process. 48 It seems to me that what is contemplated in this regard is that the creditor cannot use the procedure in order to obtain a forensic advantage in private or personal litigation that the creditor might seek to bring outside of the liquidation (as opposed to seeking to use the procedure in order to obtain evidence or information of the kind that the liquidator, in whose shoes the creditor might be said in effect to be standing at least for the purposes of the present examinations, might use to consider what causes of action would be available to the company in liquidation). If so understood, then it would follow on naturally from proposition 9, being the requirement that such examination be in the interests of the corporation or its creditors as a whole. In that case, a creditor obtained approval from ASIC to conduct public examinations, with the consent of the liquidator. Her Honour was not persuaded that the predominant purpose of the examinations was to gather evidence for proceedings which the creditor may have brought in his personal capacity rather than gathering information to enable a claim to be brought in the name of the company or its liquidator in an attempt to pursue recovery for all creditors.
Perhaps at odds with this, in Arrium, a decision handed down after the hearing in this matter, two shareholders in Arrium Limited obtained approval from ASIC to apply under section 596A to examine a director of Arrium. The plaintiffs had in mind to become lead applicants in a shareholder class action and litigation funders had been advertising the class seeking shareholders to join it. ASIC had initially expressed concern that the proposed examinations may be an abuse of process but had been assured by the plaintiffs that the proposed examinee was a director and, further, the application was made "expressly for the benefit of shareholders and creditors of the company": at [17]. That latter assurance proved partially misplaced, at least, as the plaintiffs conceded in the hearing that the proposed class action would not benefit creditors of Arrium.
The deed administrators, now the liquidators of Arrium, had already conducted numerous public examinations. The shareholders had foreshadowed the possibility of participating in the public examinations but had not done so. The director had not been part of those public examinations but had been informally interviewed by the deed administrators. The topic which the shareholders wished to ventilate had not been the subject of detailed examination as the deed administrators considered it unlikely that it would give rise to any cause of action which would potentially benefit Arrium or its creditors. The liquidators of Arrium did not consider there was any benefit in further investigating the matters proposed to be subject of a class action as there was nothing to indicate that Arrium or its creditors had suffered loss as a result of the matters proposed to be agitated in that action.
The evidence indicated that the predominant purpose of the shareholders was to investigate and pursue personal claims in their capacity as shareholders against directors of Arrium or its auditors: at [49]. Notwithstanding this, Black J held, "with considerable hesitation", that he was not satisfied that Arrium had discharged the heavy onus of establishing that examining the director would be an abuse of process. At [50]: … on the face of it, the Plaintiffs seek to examine Mr Galbraith as to matters as to which the liquidators could properly have examined him, although the liquidators have made a reasoned decision that their resources are better directed to the insolvent trading claim. The information likely to be produced by the Plaintiffs' examination of Mr Galbraith would also likely advance the interests of Arrium and its creditors, so far as it either produces additional relevant information that supports further causes of action by Arrium, or does not do so and therefore supports the liquidators' present assessment that their insolvent trading claims are more likely to benefit Arrium and its creditors than the claims which the Plaintiffs seek to investigate. Although I recognise that Ms Banton's evidence focussed on the use of that information to advance the Plaintiffs' prospective claims as shareholders, it seems to me that a proper purpose of first obtaining that information was necessarily implicit in that approach.
His Honour immediately cautioned that it did not follow that examination summonses would be issued on the application of the shareholders under section 596B: at [51]. Two considerations to Black J were that the proposed examinee was an "officer" and thus a mandatory examination order may issue under section 596A; and, that the shareholders were one of many who had suffered loss in a major corporate collapse. Both considerations are absent here. This application concerns discretionary examinations under section 596B and is a world away from the collapse of Arrium. It is not necessary on the disposition of this case to express a view on the approach taken by Black J, particularly given that Arrium is on appeal.
The onus of establishing whether there has been an abuse of process or oppression is on the applicant and may be a heavy one: Re Southland Coal Pty Limited (2005) 189 FLR 297; [2005] NSWSC 259 at [16]-[17] per Young CJ in Eq. However, Young CJ in Eq also noted that he considered these matters "with more searching eyes" where summons had been issued at the behest of a liquidator appointed in a voluntary winding up (at [46]), noting that where the person applying for a summons is not a court-appointed liquidator, "the Court looks more deeply into the motives and purpose of the examination": at [49]. The facts of this case highlight why such an approach is sensible.
The question whether an examination is improper will depend upon what is stated or should be inferred from the known facts as to the liquidator's purpose in conducting the examination: White J in Godfrey as liquidator of Pobjie Agencies at [70]; Sent v Andrews [2002] VSCA 209 at [24]-[26] per Buchanan JA.
Where an abuse of process has been established then, as Street J made plain in Re Hugh J Roberts Pty Ltd (in liq) (1969) 91 WN (NSW) 537 at 539: … the procedure would be withheld by the court from the party seeking to invoke it. The position will be the same whether the vexation or oppression appears at the time the application is first made for the holding of a private examination or at any subsequent point of time. The court will find no difficulty in moulding an order appropriate to prevent any abuse of its process. Likewise in Kimberley Diamonds, Foster, Wigney and Markovic JJ expressed no doubt that an examination process can be discharged or permanently stayed if the invocation of the examination process is for an improper or illegitimate purpose: at [84].

[24]

Whose purpose?

One then comes to the question as to whose predominant purpose is to be considered and what relevance, if any, is the predominant purpose of Ms Culver or Newheadspace before it went into voluntary liquidation. The predominant purpose is that of the applicant seeking the order of the Court to issue an examination summons being, in this case, the liquidator: Re Laurie Cottier Productions Pty Limited (in liquidation) (1992-1993) 9 ACSR 513 at 517 per Wardell CJ in Eq at 517; Re Excel at 89 per Gummow, Hill and Cooper JJ; Affinity Capital at [41] per Ward J. In Re Excel, the Court confirmed that it is necessary to distinguish, on the one hand, between the purpose of, say, a creditor funding a liquidator's examination and its motives to advance its own interests, and the purpose of the liquidator conducting the examination, on the other: at 92. At 93: This notwithstanding, we are of the view that the use of the power to obtain an examination summons for the principal purpose of furthering the cause of the applicant for the summons or, as in this case, appointor of the applicant in litigation against third parties, not for the benefit of the corporation, its contributories or creditors (other than in the most indirect way) is a use of the power for a purpose foreign to that power and thus an abuse of the power. Such a purpose would provide to the examiner the opportunity for pre-trial depositions which would not be available in the litigation.
For example, in Accord one of only two creditors of the company in liquidation funded the liquidator to conduct examinations in respect of a claim against the non-funding creditor and its officers. The examinees sought to set aside the examination summonses on the basis that the procedure had been invoked for an improper purpose, being to provide the funding creditor with an advantage by placing pressure on the non-funding creditor to reach a commercial settlement with it. Her Honour noted that the funding creditor's concerns did not necessarily indicate the purposes of the liquidator in pursuing the investigations: at [62]. Whilst email communications with the liquidator gave rise to concerns as to whether the examination process may have been pursued to force a commercial settlement of the funding creditor's claim (at [94]), ultimately Ward J (as her Honour then was) was not convinced on the evidence that the motivation or predominant purpose of the liquidator was to enable the funding creditor to recover its losses: at [116]. Further, at [124]: The aspects of the matter that have caused me concern are the reference in the liquidator's email … to "leverage points" and the fact that the liquidator is represented by the same solicitor as the funding creditor (who has seemingly advised the funding creditor from the outset of the administration as to the claims it seeks to make for recovery of its losses) in circumstances where this is a liquidation in which there are only two creditors and the proposed lines of enquiry can only ultimately be for the benefit of one of those creditors to the disadvantage of the other. However, her Honour considered that the email represented the 'high point' of the case for improper purpose and required enormous weight to be placed on the choice of language in a short expression, "leverage points", for an inference to be drawn that the predominant purpose of the liquidator in seeking the issue of further examination summonses was an improper purpose: at [126]. Accord has been followed in Sutherland v Pascoe (No 2) (2012) 297 ALR 328; (2012) 92 ACSR 174; [2012] FCA 1361 per Jacobson J at [64]; Re Dalstonville Pty Ltd (in liq) and Don Leunig Pty Ltd (in liq) (2018) 133 ACSR 473; [2018] VSC 774 at [89] per Hetyey JR.
Thus it is clear that the correct focus here is on the predominant purpose of the liquidator. Evidence of the liquidator's communications and dealings with others may enable the Court to conclude by direct evidence or available inference that the liquidator's predominant purpose was improper. It will depend on the evidence in each case.

[26]

Litigation funding

Second, the fact that examinations are being conducted to assist obtaining litigation funding or to assist litigation funders to pursue a claim on behalf of the company is not necessarily an abuse of process: Pockett v Dean-Willcocks [2004] NSWCA 192, Hodgson JA (with whom Tobias and Bryson JJA agreed) at [27]. Some examples are helpful as the evidence suggested to the Court in each case that the liquidator was embarked upon legitimate endeavours to realise a company's assets in the form of choses in actions by engaging in negotiations with litigation funders and endeavouring to form a considered view on the value and recoverability of such assets. In Pleash, Re Equititrust Limited (in liq) (receivers and managers appointed) (No 2) (2017) 122 ACSR 299; [2017] FCA 758, the liquidator's solicitor gave evidence that, some time before his firm was retained by the liquidators, he arranged for a draft pleading to be prepared to ascertain whether litigation funding could be obtained to pursue the examination to investigate whether it was worth bringing legal proceedings. The draft pleading and written opinions of counsel on prospects of success were submitted to a number of litigation funders, funding was obtained and his firm was then retained by the liquidators. The litigation funding agreement was approved by the Court. Examination summonses were issued whilst the contemplated proceedings remained in the "investigation stage". Whilst Reeves J accepted that, if it was shown that the solicitors had persuaded the liquidators to pursue the examination for the purpose of securing a private benefit or advantage, or for the advantage of an unrelated third party, then the pursuit of those purposes would constitute an abuse of process: at [44]. However, the evidence did not establish these matters and the application to set aside the summonses was dismissed.
In Wily Re LED, proceedings had been commenced by the company before a liquidator was appointed. On appointment, the liquidators formed a preliminary view that there were good prospects of success, although the liquidator considered that some aspects of the claims were less promising than others. The liquidators were without funds and could not pursue the proceedings without litigation funding but had been unable to secure funding although discussions with funders were ongoing. The liquidators wished to conduct examinations to test their preliminary view that the proceedings had good prospects of success and to obtain more information about those parts of the claim which the liquidator considered to be less promising. Further, demonstration of a sufficiently viable case through material obtained from the examinations was essential to obtaining litigation funding. These purposes were unobjectionable, according to Barrett J. At [41]: … a purpose of gathering information properly required by a party deciding whether to fund litigation to be pursued by a liquidator for the benefit of creditors is not of itself an improper purpose. It is a purpose clearly and sufficiently related to the due performance of the liquidator's functions. His Honour concluded that the situation was "one in which the desire of the liquidators and the potential funder to obtain further information about prospects of success has an objectively valid basis to it": at [43]. The predominant purpose of the liquidators was to put themselves into a position from which they could make a final decision whether to pursue the litigation they had recently inherited, coupled with the purpose of putting a potential funder into an informed position from which it could make a decision whether to make finance available, both being legitimate purposes: at [45].
In Ji Woo, the Federal Court reinstated a company as there was prima facie evidence that a former shareholder was deprived of the value of her 30% shareholdings by its deregistration without her consent. A liquidator funded by the minority shareholder sought to conduct examinations to investigate whether the company forfeited its valuable business to a competitor for no consideration. The examinees sought to set aside the examination summons on the basis of abuse of process, including that the minority shareholder had expressed no interest in the matter until a litigation funder became involved. Black J was not persuaded that there was an abuse of process as there was no reason to question the liquidator's independence or to doubt that he had appropriately considered the Federal Court judgment or would not give proper consideration, at an appropriate time, to the factual matters raised by the examinees or whether the company also had a claim against the minority shareholder. At [32]: The fact that the Liquidator has retained a solicitor who has previously acted for [the minority shareholder], and the funder, can be addressed by appropriate steps taken by the Liquidator, or the Court, to ensure that the Liquidator takes independent advice as necessary …

[27]

Plausible claim?

Third, the Court does not have to be satisfied, before issuing an examination summons, that there is a plausible claim against the examinee or the persons with whom they are connected. As White J stated in Godfrey as liquidator of Pobjie Agencies at [76]: … It is no part of the Court's task on an application for the issue of an examination summons to discern whether or not the company has a good cause of action against the examinees or a person with whom the examinees are connected. The investigation of facts to ascertain whether or not a cause of action might exist either against such persons, or against other persons, (such as officers of the company), is a proper purpose of an examination. Such an examination is not to be pre-empted by the examinees adducing evidence directed towards demonstrating that they, or persons connected with them, could have no liability to the company. His Honour repeated at [84] that, "[i]t would be a wrong exercise of the discretion under section 596B to … confine the grounds for the issuing of an examination summons" to those against whom it was thought there was a plausible claim.
In Kimberley Diamonds, the Full Court of the Federal Court endorsed a similar sentiment at [100] and [102], but continued at [104]: The position may be different if the examinee is able to demonstrate that the controversy, or the perceived controversy, or the unanswered questions, do not genuinely relate to or arise from the examinable affairs of the company, or are otherwise speculative, far-fetched or misconceived. In such circumstances, it could well be concluded that the examination was an abuse of process. The use of the examination process for such a purpose could rightly be found to be vexatious or oppressive and to bring the administration of justice into disrepute. … In that case, the sole shareholder of Kimberley Diamonds was authorised by ASIC to examine the liquidator about the sale of the company's mine. The liquidator sought to set aside the examination summons on the basis of abuse of process but the Court declined to do so noting inter alia that there was nothing to suggest that the questions which the shareholder intended to pose at the examination were speculative, far-fetched, misconceived or vexatious: at [107].

[28]

Negotiating pressure

Fourth, it may be an abuse of process for a liquidator to conduct examinations if the predominant purpose is to exert pressure on the examinees to enter into a settlement. Accord is one example where such an abuse of process was alleged and Ward J noted at [53]: There is general authority that the use of court process to secure a collateral advantage by way of a commercial settlement or compromise of a claim before trial, where it can be said that the proceedings are not instituted to vindicate a genuinely asserted right, may be an abuse of process (White Industries (Qld) Pty Limited v Flower & Hart (1998) 156 ALR 169). A distinction must be drawn, however, between the motivation or purpose of [the funding creditor] in this regard and that of the liquidator.
In Re Qintex Group Management Services Pty Ltd (in liq) [1997] 2 Qd R 91, examinations were noted as capable of being oppressive if their real purpose was simply to exert pressure by inflicting costs, or causing undue inconvenience or embarrassment to the defendant: at 95 (per McPherson JA, Pincus JA and Derrington J). Likewise, in Re Valofo, Sheahan & Lock as liquidator of Valofo Pty Limited (in liq) [2010] NSWSC 1255, Palmer J accepted that, if an examination summons was issued for the predominant purpose of the liquidators pressuring the examinee to agree to terms of settlement which the liquidators sought to impose upon the examinee, the purpose for which the liquidators' power was exercised would be so improper as to amount to an abuse of process: at [29]. Further, at [34]-[35]: 34 I do not accept that liquidators are under any special constraints in the way they conduct their litigation in terms of use of the examination process. It is certainly true that the examination process is a benefit accorded to liquidators which is not enjoyed by other litigants, but that benefit is conferred by statute because of the special difficulty in which liquidators are placed in investigating a company's affairs and deciding whether claims against third parties should be brought. Liquidators have no direct knowledge of a company's affairs by reason of their own involvement as officers of the company. They are given the examination process as a means of finding out information, particularly information which may assist in prosecuting claims against third parties. 35 It seems to me that whether or not liquidators have abused the process of an Examination Summons depends upon the same considerations as to whether they have abused any other litigious process which they might have commenced in the course of a liquidation: is the liquidator using the process, whatever it is, for a purpose for which it was not intended or designed or does the liquidator propose not to carry that process to its conclusion, but simply to use it as a means of coercion or to achieve a collateral purpose?
As Hetyey JR noted in Re Dalstonville at [22], use of the Court's processes to inflict financial or other collateral harm will always be improper, citing Meteyard v Love at [45] and Williams v Spautz. At [23]: It will also be improper to use a summons for examination and the inconvenience and costs caused by the process to extract a higher offer in settlement of a claim [citing Cousins & Ors v Clout (unreported, Federal Court of Australia, Spender J, 16 October 1998)]. An extreme example of this type of abuse of process was found in the case of In the matter of DW Marketing Pty Ltd (in liquidation) [2009] VSC 663 where there was an unjustifiable demand for payment of an amount (comprising a specified sum, together with interest, costs and the expenses of the liquidation), coupled with "the threat that if such demand was not met … examinations would be resumed and … directors would be examined about various matters including those going to possible criminal liability" (at [46]).

[29]

Conclusion

Applying these principles, the following features are apparent from the evidence on this application. The initial approach to Mr Needham was by a litigation funder who needed to "see more" before deciding whether to fund. The only asset of the company was said to be a claim against the NRL. The obvious issue for Mr Needham to address if he took the appointment was whether it was necessary or appropriate to ask the Court to issue examinations summons in respect of this claim, either to satisfy himself that it was an asset worth pursuing or potentially to enable a funder to make a similar assessment. Appropriately, Mr Needham said he would make up his own mind about the claim against the NRL once appointed, and examinations may be needed with lawyers retained on a contingency fee basis. Mr Needham was open to being appointed as a liquidator on a contingency fee basis, with his fees to be paid from any recovery against the NRL.
Mr Needham largely tied his remuneration to any recovery on the NRL claim. Mr Needham was otherwise unfunded and left the records of the company with Ms Culver and did not propose to review those records himself. Mr Needham said at the outset that he would ask for the records which he needed, and it is clear that he sought records on a 'need to know' basis: he did not seek a copy of the outstanding invoices said to be payable by the NRL until after his appointment and in order to send a letter of demand; he did not seek copies of the two invoices said to create a situation of insolvency until after the NRL challenged the veracity of his appointment; he did not have the company's recently filed tax returns by the time he circulated a report to creditors.
It is also apparent that the documents which Mr Needham had in respect of the NRL claim were a sub-set of the documents in the possession of Ms Culver and her advisers. The documents in the chronological bundle are more comprehensive than those attached to Mr Needham's affidavits (including Ms Culver's statement and its annexures) or sent to him by Ms Culver. This is consistent with Mr Needham leaving the task of reviewing the documents and preparing the application for examination summons to those who had been undertaking such preparations before his appointment, being Ms Culver, her advisers and counsel who, according the Action Plan, had been engaged some months before his appointment. This is confirmed by Mr Needham's evidence that he relied on his legal advisers in respect of the content of documents seeking the examination summonses filed with the Court, including his affidavit in support of the issue of the summonses.
I accept Mr Needham's evidence that, at the time of his appointment, he had not made any decision as to whether the claim against the NRL had any merit. Nor did he depose in his affidavit submitted to the Registrar that he required further information to decide whether or not to commence proceedings. Nor do I think that the evidence supports a conclusion that Mr Needham was seeking to conduct examinations to assist legitimate endeavours to obtain litigation funding. There was no litigation funding agreement. Mr Whelan, after many months of working with Ms Culver, was only prepared to pay the filing fees for the examination summons consistent with his strategy of presenting the portent of examinations to the NRL to encourage a payment of the company's claim. There is no suggestion that there were draft pleadings or written opinions of counsel, nor efforts to submit the claim to other funders who might be prepared to commit to fund the claim. There was no 'objectively valid basis' for the need to conduct the examinations for this purpose, which is consistent with the fact that Mr Needham did not refer to a litigation funder in his affidavit submitted to the Registrar.
Mr Needham also deposed, and was not cross-examined, that at the time of his appointment he had not made any decision as to whether he would proceed with the examinations. His affidavit, sworn more than a year after his appointment, does not align with the contemporaneous documents and events described at [38]-[44]. I do not mean to suggest that Mr Needham's affidavit evidence was anything other than honestly given, but, with the passage of time, his evidence appears to me to be inaccurate. True it is that, on 27 November 2017, Mr Needham's file note records that he said that he would make up his own mind about the claim against the NRL if and when he was appointed. But by the time Mr Needham met Ms Culver again some five months later in April 2018, Ms Culver, the funder and counsel were proceeding on the basis of the Action Plan which was directed to the conduct of public examinations. It is likely that Mr Needham had a copy of the Action Plan: see [44]. By the time Mr Needham was appointed, the pursuit of public examinations in accordance with the Action Plan appears to have been a fait accompli. Indeed, strictly speaking, Mr Needham's affidavit is correct: when appointed he had not made any decision as to whether he would proceed with the examinations; he had left those decisions to others.
In summary, Mr Needham does not appear to me to have turned his own mind to whether the elements of section 596B of the Corporations Act were satisfied or whether the summonses were issued for a proper purpose. Rather, Mr Needham has left it to those interested in conducting public examinations, being Ms Culver, the funder and legal representatives engaged before his appointment. He has not put his 'stamp' on this process but has effectively inherited the improper purpose of those who placed Newheadspace into liquidation, which has remained the predominant purpose of the processes which have continued under his name.
As already mentioned, the NRL chose not to cross-examine Mr Needham on his affidavits and thus it was not put to him by the NRL's senior counsel that his predominant purpose in seeking the issue of examination summonses was an improper purpose. No doubt, this was because the NRL's 'case theory' was that an abuse of process arose by reason of Ms Culver's predominant purpose and it followed without more that the examination summonses should be set aside. In light of the authorities canvassed at [110] to [113], that approach was, with respect, incorrect. That said, the affidavits of Mr O'Reilly squarely put the NRL's position that Newheadspace had been placed in voluntary liquidation for the primary purpose of seeking the issue of orders for production and summonses to Mr Greenberg and Mr Heptonstall following a series of threats made by Ms Culver to the NRL. Correspondence was exchanged between the NRL's solicitors and the liquidator's solicitors setting out the NRL's allegations at length and more broadly than finally put by NRL's senior counsel at the hearing. Mr Needham replied in two affidavits to these allegations.
Where witnesses have responded to allegations in affidavits, it is not always necessary to put the same allegation to a witness in cross-examination to accord with the principles in Browne v Dunn (1893) 6 R 67; NU v NSW Secretary of Family and Community Services at [58] per Beazley P with whom McColl JA and Schmidt J agreed; followed in Cellarit Pty Ltd v Cawarrah Holdings Pty Ltd [2018] NSWCA 213 at [288] per McColl AP with whom Macfarlan and Leeming JJA agreed.
Where a party seeks to impugn a witness' credibility, counsel is still required to put to a witness the matters which they intend to submit are of significance so that the Court can assess the witness in relation to those matters: Advanced Wire & Cable Pty Ltd v Abdulle [2009] VSCA 170 at [13] per Redlich JA and Beach AJA; followed in SAMM Property Holdings Pty Ltd v Shaye Properties Pty Ltd (2017) 345 ALR 633; [2017] NSWCA 132 at [137] per McColl JA with whom Gleeson JA and Sackville AJA agreed, her Honour also citing Rees v Bailey Aluminium Products Pty Ltd (2008) VR 478; [2009] VSCA 96 at [21] and Terrence Parsons (a pseudonym) v R [2016] VSCA 17 at [42] per Maxwell P, Redlich and Priest JJA. There was no suggestion by the NRL, nor need there be to establish an abuse of process, that Mr Needham's credibility was or is in doubt. Thus, the fact that Mr Needham was not cross-examined does not preclude me from making the findings I have made.
Further, as already noted, a conclusion that there has been an abuse of process should be based upon objective evidence rather than a litigant's subjective motivation: Williams v Spautz at 529. Nor does whether a purpose is "improper" depend upon the belief of the person as to whether they invoked a power for a purpose foreign to the purposes for which it was conferred: Toohey; Ex parte Northern Land Council at 233.
For the reasons given, I would exercise my discretion to refuse the application to issue examinations summons to Mr Greenberg and Mr Heptonstall. If I am wrong about this, then there does not appear to be any real controversy about Mr Greenberg's role. He first appeared in this story after Newheadspace had ceased to provide the program to the NRL and had already made an allegation of breach of intellectual property rights. Ms Culver prevailed upon Mr Greenberg in late 2015 to put in a good word for the program to the NRL and, in mid-2016, to again consider her proposal to provide the program and to attend to unpaid invoices. His role was peripheral at best. While the liquidator presses to test these matters by publicly examining Mr Greenberg, I am not satisfied that a summons should be issued to Mr Greenberg having regard to the four considerations set out by Basten JA in Meteyard v Love: see [93]. The evidence has not enabled me to form a reasonable state of satisfaction that he may have relevant information. Nor am I satisfied that the proposed examination is sufficiently justified or would have any practical utility: Kimberley Diamonds at [24]. I am not satisfied that the nature of his position is such that Mr Greenberg is likely to have information as to the matters the subject of the examinations: Affinity Capital at [100]. For that reason alone, in exercising my discretion on this review I would set aside the examination summons addressed to Mr Greenberg.

[30]

Dress rehearsal for cross-examination

It is not strictly necessary to consider the other bases on which the NRL says the examination summonses should be set aside. Given the detailed submissions made by senior counsel on both sides to these issues, however, I will deal with these grounds briefly.
Further and alternatively, the NRL submitted that the predominant purpose of the liquidator in respect of the proposed examinations was to conduct a dress rehearsal of the examinees which is impermissible and, itself, constitutes an abuse or alternatively, oppression and unfairness and the examination summonses should be set aside under rule 49.19 of the UCPR. Orders for the issue of summonses for examination will be set aside if they are oppressive, unfair or an abuse of process: Sent v Andrews at [11]; followed by Barrett J in Onefone Australia Pty Ltd v Onetel Ltd [2007] NSWSC 69; (2007) 61 ACSR 246 and Ward J in Re Kassem (as liquidators of Clarecastle Pty Ltd) [2011] NSWSC 490 at [37] and [54]. See likewise Re Hugh J Roberts Pty Ltd (in liq) at 540-1 per Street J, Needham J in Re Kimberley Carpet Mills (Aust) Pty Ltd (In Liq.) (1979) CLC 40-532; (1979) 4 ACLR 50; Re Norman Baker Pty Ltd (in liq); Ex parte Hillman [1982] WAR 349; (1981) 6 ACLR 257; (1982) 1 ACLC 79; Grosvenor Hill (Qld) Pty Ltd v Barber (1994) 48 FCR 301; (1994) 120 ALR 262.
The bulk of the alleged claims of Newheadspace against the NRL are based upon alleged oral representations and the liquidator already has the benefit of a detailed sworn statement from Ms Culver in support of those allegations. In those circumstances, any examination of Messrs Greenberg or Heptonstall would not assist the liquidator in forming an assessment of the case but rather could only be used as a dress rehearsal for cross-examination. Any information that the liquidator may require can be readily obtained by means of the order for production. The NRL submitted that the comments made by Buchanan JA in Sent v Andrews at [26] applied mutatis mutandis. The evidence of Ms Culver lies at the heart of the proceedings - either there was an oral contract or oral representations made or there were not. Examination of Messrs Greenberg or Heptonstall would not advance the liquidator's knowledge of that claim other than revealing whether Messrs Greenberg or Heptonstall are convincing in their evidence and whether there are any matters which will be relied upon by the NRL in the proceeding which the company may wish to counter. The affidavit sworn in support of the application of the examination orders did not disclose that the liquidator cannot obtain sufficient information as to any of the issues in the proceeding from the sources already available to him. The liquidator has access to all the information that the company could have obtained.
The liquidator submitted that the examinations cannot be said to be a dress rehearsal for cross-examination in light of the completed examinations, the absence of any concurrent litigation or any evidence that the liquidator has made any decision that litigation will be commenced at all.

[31]

Consideration

The principles are set out in Sent v Andrews by Buchanan JA (with whom Vincent JA agreed) at [11]: (citations omitted) Orders for the issue of summonses for examinations will be set aside if they are oppressive, unfair or an abuse of the process of the court. Where an examination relates to proposed or current litigation, in general terms the question is "whether the examination is genuinely for the information of the liquidator to aid him in considering whether there is a cause of action upon which he will proceed; and the court will be alive to the possibility of oppression where the application is merely to advance the action, whether actual or proposed." The strength or weakness of the claim of a company in liquidation against a third party concerns the examinable affairs of the company. Gathering information may involve testing and assessing the credibility of the witnesses who provide the information. The liquidator is not entitled, however, to conduct a dress rehearsal of the cross-examination in an action or to seek to damage the opposing party's case by attacking the credibility of that party's witnesses.
In that case, unlike the ordinary position where the liquidator comes to the company with limited or no knowledge of the company, the liquidator had a wealth of information as to the company's case in litigation on foot against the proposed examinees. Those proceedings turned upon whether the Court accepted the oral evidence of one side's witnesses or the other. The company directors had sworn affidavits in support of the company's claim setting out their version of events, and the liquidator's solicitors had conducted interviews with the company's directors to obtain outlines of their evidence. Per Buchanan JA at [24]: Accordingly, the respondent needs no further information to mount the company's case, and the battle lines between the parties have been clearly drawn. While the issue is the respondent's purpose and not the result which will ensue from the examination, the result may found an inference as to the respondent's purpose. I would infer from the known facts that the principal benefit, which the respondent intends to gain from the examinations, is to conduct a rehearsal of the cross-examination of the appellants so as to be in a better position to meet Primelife's case. … The inference draw by Buchanan JA from the known facts was that the liquidator's predominant purpose was to conduct a dress rehearsal of the cross-examination of the examinees in the proceedings already on foot: at [26]. See likewise White J in Godfrey as liquidator of Pobjie Agencies at [70]; Wily re LED per Barrett J at [42]. More recent examples include Park (liquidator) In the matter of Queensland Nickel Pty Limited (in liq) (2019) 369 ALR 284; [2019] FCA 340 at [45] per Greenwood J and Thomas, In the matter of La La Land Byron Bay Pty Ltd (in liq) (No 2) [2019] FCA 1559 at Reeves J at [19].
If I am wrong about the liquidator's abuse of process and what I have said at [135] then, given that the company has not commenced proceedings against the NRL and it is clear that Mr Needham has not made a decision whether to bring such proceedings, I do not think it can be said that the proposed examinations are a dress rehearsal of cross-examination in future litigation. Any claim by the company against the NRL is unformulated and may never materialise. There are no proceedings on foot, no joinder of issues by pleadings nor any exchange of affidavits in preparation for a hearing. Nor does Newheadspace's suggested claim against the NRL turn largely on oral representations. Whilst the correspondence did refer to oral representations, the claim for loss of intellectual property would likely turn on other matters.

[32]

Lack of disclosure to registrar

Further and alternatively, the NRL submitted that Mr Needham failed to disclose material matters when the application for the issue of the summonses was before the Registrar, which requires the examination summonses to be set aside. The liquidator had an obligation to make full and frank disclosure to the registrar of all matters that may impact on the decision to issue the examination summons including that which might lead the court to refuse the application, and in the absence of full disclosure the Court may set the summons aside: Re Southern Equities Corporation Ltd per Lander J (with whom Cox and Bleby JJ agreed) at 422-423; Sutherland v Pascoe; in the matter of Matrix Group Ltd as Trustee for the Matrix Group Unit Trust (in liq) ACN 061 549 371 (2013) 297 ALR 44; [2013] FCAFC 15 at [50]; In the matter of Idoport Pty Ltd (in liq) (recs apptd) (2011) 82 ACSR 164; [2011] NSWSC 322 at [147]; Trevor, in the matter of Bell Group NV (in liq) (No 2) (2017) 122 ACSR 418; [2017] FCA 927 per Jagot J at [22]; Re Owston Nominees No 2 Pty Ltd (in liq) (Receivers and Managers Appointed) (2013) 94 ACSR 500; [2013] NSWSC 538 at [51]-[52].
The material matters omitted were said to be: Ms Culver's various threats made to the NRL; the circumstances surrounding the company's asserted insolvency; the involvement or lack thereof of Mr Greenberg in the ongoing negotiations; the 'legal' advice obtained by the company and the fact that Ms Culver and the liquidator met with the litigation funder at least three times before the appointment of the liquidator; contrary to the suggestion in Ms Culver's statement that she had no more contact with the NRL after negotiations had broken down in July 2016, Ms Culver had had multiple communications with the NRL since and also met with the NRL; the NRL had asked multiple times for clarification and particulars of the claims alleged against it and Ms Culver declined to provide this material in any meaningful way. These matters were significant and should have been disclosed. As Justice Allsop J (as he then was) said in Walter Rau Neusser Oel Und Fett AG v Cross Pacific Trading Ltd [2005] FCA 955, it was not for the Registrar to "search out, organise and bring together what can be said on the respondents' behalf. That is the responsibility of the applicant, through its representatives": at [38].
The liquidator submitted that it is not incumbent on the liquidator to include in the affidavit every possible thing which might be said about the dealings between the company and the examinees or companies and entities associated with them or every possible issue that might be raised during the examination hearings: Godfrey as liquidator of Pobjie Agencies at [81] (per White J). The liquidator denied that there was any failure to disclose the extent of the liquidator's dealings with Ms Culver and a potential litigation funder prior to his appointment. Ms Culver's threats could not materially affect the decision of the Registrar to grant the examination orders. All that needed to be disclosed was that the company's claims against the NRL, whatever their substance, had not been settled. The fact that the NRL had denied the claims was not a material fact that ought be disclosed, nor the particulars of convoluted letters between Ms Culver and the NRL's solicitor. The solvency or otherwise of the company was said to be an irrelevant consideration on the issue of the examinations summonses.
The fact of Mr Greenberg's involvement in the negotiations was said to be the relevant consideration as it led to a credible conclusion that he has information relevant to the claims, being the examinable affair. It was not material that Mr Greenberg might have (a matter not known by the liquidator) ceased to have any involvement in the matter. It was his involvement (said to be demonstrated by the evidence) that was the matter conclusive of the basis for issuing the summonses. The NRL's requests for information from Ms Culver were also said to be irrelevant to the issue of the summonses. The NRL's attitude to providing documents voluntarily was not something the liquidator was required to disclose even if he knew that position: Hong Kong Bank of Australia Limited v Murphy at 520.
Alternatively, the liquidator submitted that it is a matter for the discretion of the Court as to whether the summons ought be set aside: Southern Equities Corporations Ltd at 422; Re Owston Nominees No 2 at [51] per White J. The matters which the NRL says should have been brought to the Registrar's attention are now before the Court and, it was submitted, did not establish that the conduct of the examinations is an abuse. As such, setting aside the summonses would serve no useful purpose as immediate application may be made by the liquidator for new orders to the same effect: Re Owston Nominees at [54]; Re Mendarma Pty Limited (in liq) (2006) 24 ACLC 1611; [2006] NSWSC 1306 at [49]; Southern Equities Corporations Ltd at 424.

[33]

Consideration

The principles in respect of disclosure are stated in Re Southern Equities Corporation Ltd by Lander J at 422-423: An application for an examination summons is made ex parte. Consequently there is a heavy obligation upon the person applying for the examination summons to make full and frank disclosure of all matters which may impact upon the decision to summon a person for examination about a corporations examinable affairs. There can be no doubt, in my opinion, that a person who makes an application of this kind is under an obligation to bring all facts and material to the court's attention which might bear upon the order to be made. The applicant has no lesser obligation than that imposed upon a party seeking an injunction ex parte. Indeed, in my opinion, the obligation for frankness and candour is even greater in an application of this kind. That is because, unlike on the return of an interlocutory injunction obtained ex parte, on the return of an examination summons the material supporting the application is not ordinarily made available to the proposed examinee. … The obligation is to provide to the court all material which might impact upon the order sought, including all material which might lead the court to refuse the application. The applicant must act in the place of the proposed examinee and therefore draw to the attention of the court anything which might lead the court to refuse the application. Failure to disclose material facts does not necessarily mean that the examination summons should be set aside. Much turns upon the facts not disclosed and the circumstances in which non-disclosure occurred; an error of judgment or an innocent non-disclosure may not necessarily require the summons to be set aside. Nor is setting aside the summons a bar to an application for a further order: at 424. The statements of Lander J were approved by the Full Court of the Federal Court in Sutherland v Pascoe; Re Matrix Group Limited at [50].
In Affinity Capital, Ward J emphasised that, whilst the non-disclosure must be material, "it does not follow that this should be tested by asking whether the disclosure of the information would have made a difference to the Registrar's decision": at [79] citing Re Mendarma at [58] per White J.
For example, in Re Owston Nominees No 2, Black J set aside a summons for examination as the liquidator did not disclose that his solicitor and counsel were also acting for a director of the company in family law proceedings. An examinee was a secured creditor of the company whose receiver and manager was appearing in the Family Court proceedings and contending for a different outcome than the director. The affidavit did not disclose the issues in the Family Court proceedings, the overlap between those proceedings and the issues sought to be investigated in the examinations, nor that the documents sought in orders for production were relevant to the Family Court proceedings, nor that the director may have a forensic advantage in the Family Court proceedings by reason of the examination summons and orders for production. Nor was it sufficient to attach correspondence which referred to the Family Court proceedings as reference to the proceedings in an annexure to the affidavit did not sufficiently draw the Registrar's attention to the relevant issues; the matters relevant to the Registrar's decision should have been expressly addressed in the affidavit: at [47].
In Godfrey as liquidator of Pobjie Agencies, White J rejected the submission that the liquidator failed to disclose relevant matters to the Registrar by failing to disclose that the allegations against the examinee were fanciful and a wide range of other matters, noting that if each of these matters had been addressed then the liquidator's affidavit would have run into hundreds of pages and anticipated the arguments advanced by the applicants on the application to set aside the examination summonses: at [81]. However, his Honour accepted one material non-disclosure: the affidavit did not disclose what information the examinees had already voluntarily provided to the liquidator and it was conceivable that such information may have been material to the Registrar's decision to issue the summonses: at [82].
Finally, in Pockett v Dean-Willcocks, the company had been in negotiation with Woolworths for some time in relation to providing a product. The negotiations ended and the company was placed into voluntary administration. The administrators applied to issue examination summonses, including to Woolworths, and an application to set aside the summonses was based inter alia on the submission that the material put to the Registrar did not show what information the administrators lacked, particularly where they had written records concerning alleged representations, the co-operation of directors, and in general terms all the information that the company would have had if it was not in administration. Hodgson JA (with whom Tobias and Bryson JJA agreed) did not agree. The affidavit relied on before the Registrar sufficiently showed that the administrators considered that information was lacking as to a number of relevant matters, including the reasons why Woolworths withdrew from the negotiations, the extent to which Woolworths disputed the making of representations, and the potential quantum of damages: at [30].
If I am wrong about the liquidator's abuse of process then it is fair to say that Mr Needham's affidavit in support of the application for the issue of examination summonses was brief and, in light of the evidence before the Court, inaccurate in places. However, many of the matters which the NRL says that Mr Needham should have disclosed to the Registrar do not appear to me to have been known to him at the time he swore the affidavit as the documents in his possession appear to have been a sub-set of the documents held by Ms Culver, although nor did he call for the books and records from Ms Culver, usually a first step in any liquidation.
I can only safely conclude that Mr Needham had the documents referred to at [50], [54] and [55]. Assuming this to be the position, Mr Needham deposed that he wished to investigate whether a contract was entered into between Newheadspace and whether the NRL had breached the contract. Mr Needham had Ms Culver's November 2017 letter to the NRL in which she effectively conceded that there was no contract. I consider that the Registrar would have been interested to know that the director of Newheadspace largely accepted that there was no contract. This may have indicated to the Registrar that it was not necessary to investigate that matter by issuing the examination summonses sought.
Mr Needham also deposed that he wished to investigate whether the NRL had retained and made use of Newheadspace's intellectual property. I consider that the Registrar may have been interested to know that such an allegation had been made by Newheadspace three years earlier and - also for three years - the NRL had been asking Newheadspace to provide a single piece of paper to corroborate that allegation and Newheadspace had steadfastly refused to provide any. This piece of information may have indicated to the Registrar that invoking the coercive powers of the Court to bring the NRL's officers to be examined on that subject should not, in their discretion, be ordered in circumstances where the primary source of that information - the company and director - had failed to provide such information to the NRL over a prolonged period of time and that source should be exhausted by the liquidator before troubling the NRL.
I do not think that Mr Needham's description of Mr Greenberg's role was accurate in circumstances where Mr Needham had Mr Greenberg's emails from July 2016 which, fairly read, indicated that Mr Greenberg's role was peripheral at best. I consider that the Registrar would have been interested to know this fact when deciding whether to compel Mr Greenberg to attend court to be examined. Whilst the July 2016 email was attached to Ms Culver's statement which was exhibited to Mr Needham's affidavit, it should have been expressly addressed in his affidavit.
Nor did Mr Needham disclose that Ms Culver had been co-operating with him for months and had been doing most of the 'leg work' in respect of the suggested claim against the NRL. I consider it would have been relevant to the Registrar to know that, not only had Ms Culver given a statement to the liquidator, but Ms Culver stood ready to assist the liquidator wherever possible. This may have suggested to the Registrar that it was not necessary to issue an examination summons to Ms Culver and use court time to conduct such an examination.
Nor did Mr Needham disclose that Newheadspace had been threatening the NRL with adverse public attention including foreshadowing the appointment of a liquidator who may conduct public examinations. Mr Needham had this correspondence but it was not annexed to his affidavit nor Ms Culver's statement. Nor did Mr Needham disclose that the primary focus of appointing him was to conduct just such examinations. Whilst Mr Needham was largely not privy to the email traffic between Ms Culver, Mr Whelan, Mr Westfield and Mr Stevens referred to in this judgment, I consider it was reasonably apparent to him - from the initial approach by a funder, the pre-appointment meetings thereafter and the Action Plan - what he was being asked to do. I consider that a Registrar of this Court would have been most interested in such information as it may have suggested that the processes of the Court would be abused if the summons were issued as requested.
As to why such matters were not disclosed, it seems to me that it was because Mr Needham left the preparation of his affidavit to others and did not actively review the documents or the suggested claim against the NRL himself. That is not a reason, it seems to me, to refrain from setting aside the examination summonses. Accordingly, I would also set aside the examinations on this basis.

[34]

Should the liquidation be terminated?

By prayer 9 of the Interlocutory Process, innocuously seeking "[a]ny further or other order that the Court sees fit", the NRL seeks that the Court, of its own motion, terminate the liquidation of Newheadspace under section 90-15 of the Insolvency Practice Schedule (Corporations). It was submitted that, in Re Hugh J Roberts Pty Ltd (in liq), Street J opined in respect of an examination summons that the court will find no difficulty in moulding an order appropriate to prevent an abuse of its process. Following the introduction of the Insolvency Practice Schedule, section 90-15 allows the Court to terminate a voluntary winding up: Re Manband Pty Ltd (in liq) (Subject to Deed of Company Arrangement [2018] NSWSC 1282 at [19] (Black J), citing Krejci (liquidator), in the matter of Community Work Pty Ltd (in liq) [2018] FCA 425 (Gleeson J). Whilst the NRL accepts that it does not have standing under the Insolvency Practice Schedule to seek the termination of the winding up, it invited the Court to do so on its own initiative by making an order under section 90-15(1).
The liquidator submitted that the company is insolvent and, thus, ought be in liquidation. Even if not insolvent, the company had been dormant for a number of years prior to the winding up and had ceased to carry on any business beyond the pursuit of a potential claim against the NRL. Such a company ought be wound up and deregistered once its assets have been realised, debts paid and any surplus distributed to members.
Whilst the Court has power to terminate a voluntary winding up under section 90-15 of the Insolvency Practice Schedule, I am not minded to terminate the liquidation on the Court's own initiative. The Interlocutory Process did not, by prayer 9, give adequate notice that such an order would be sought. Ms Culver has not been joined to these proceedings and is an interested person in any such application as she initiated the appointment of a liquidator, is the sole shareholder of Newheadspace and would, on termination of the winding up, become its sole director again. ASIC should also have been notified that an order was being sought under section 90-15.
Further, ordinarily on applications to terminate a winding up the Court will have regard to inter alia matters of 'commercial morality': see In the matter of Parkway One Pty Limited (in liquidation) [2019] NSWSC 1495 at [78] and [85]. I am concerned that Ms Culver has rendered an invoice to her company without a proper basis and obtained a second invoice from a litigation funder suffering from the same defect. On the basis of these invoices, Ms Culver has resolved to appoint a liquidator to her company on the basis that it is unable to pay these invoices. This, together with signing a declaration that the information in the RATA as to unsecured creditors was true and correct, gives pause for thought as to whether Mr Needham should cease to wind up the company and Ms Culver should return to its helm. I would not be minded in these proceedings to terminate the liquidation for this reason alone. Of course, on an application to terminate the liquidation configured in a more traditional format, I would expect to hear from Ms Culver as to each of these matters and, it goes without saying, that I have not had the benefit of any evidence from Ms Culver on this application.
I am, however, concerned about leaving Mr Needham as the liquidator of Newheadspace given the findings I have made. I wish to hear from Mr Needham as to whether he wishes to continue to be the liquidator and, if so, why he should not be removed under sections 90-15(3)(b) and (c) of the Insolvency Practice Schedule.

In the matter of Newheadspace Pty Limited (in liq) [2020] NSWSC 173

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