HIS HONOUR: This is an application brought urgently in the Duty List (in the absence of the immediate availability of the Corporations Judge) for the issue of an arrest warrant in respect of Clinton Sarina (Mr Sarina) pursuant to r 11.10 of the Supreme Court (Corporations) Rules 1999 (NSW) (the Corporations Rules) and s 597(6) of the Corporations Act 2001 (Cth) (the Act) on the basis of Mr Sarina having failed to attend for examination as summoned pursuant to s 596A of the Act.
For the reasons which follow, the Court has determined that is appropriate for a warrant for Mr Sarina's arrest to issue forthwith.
Section 596A includes:
"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 or was such an officer or provisional liquidator during or after the 2 years ending:
(i) if the corporation is under administration - on the section 513C day in relation to the administration; or
(ii) if the corporation has executed a deed of company arrangement that has not yet terminated - on the section 513C day in relation to the administration that ended when the deed was executed; or
(iia) if the corporation is under restructuring - on the section 513CA day in relation to the restructuring; or
(iib) if the corporation has made a restructuring plan that has not yet terminated - on the section 513CA day in relation to the restructuring that ended when the plan was made; or
(iii) if the corporation is being, or has been, wound up - when the winding up began; or
(iv) otherwise - when the application is made."
Section 597(6) states:
"597 Conduct of examination
…
(6) A person who is summoned under section 596A or 596B to attend before the Court must not intentionally or recklessly:
(a) fail to attend as required by the summons; or
(b) fail to attend from day to day until the conclusion of the examination."
Rule 11.10 states:
"11.10 Default in relation to examination
(1) This rule applies if a person is summoned or ordered by the Court to attend for examination, and:
(a) without reasonable cause, the person:
(i) fails to attend at the time and place appointed, or
(ii) fails to attend from day to day until the conclusion of the examination, or
(iii) refuses or fails to take an oath or make an affirmation, or
(iv) refuses or fails to answer a question that the Court directs the person to answer, or
(v) refuses or fails to produce books that the summons requires the person to produce, or
(vi) fails to comply with a requirement by the Court to sign a written record of the examination, or
(b) before the day fixed for the examination, the person who applied for the summons or order satisfies the Court that there is reason to believe that the person summoned or ordered to attend for examination has absconded or is about to abscond.
(2) The Court may:
(a) issue a warrant for the arrest of the person summoned or ordered to attend for examination, and
(b) make any other orders that the Court thinks just or necessary."
The plaintiff, who is the liquidator of Property Asset Consultancy Services Pty Ltd ACN 604 192 583 (in liquidation) (the Company) was represented today by Mr D J Edney of Counsel. The Court acknowledges the considerable assistance it has received from Mr Edney's written submissions as developed during the course of short oral argument this morning.
[2]
Facts
Mr Sarina is and was at all material times, from its incorporation until its liquidation, the sole director of the Company of which the plaintiff is now the liquidator.
On 6 December 2022, a summons was issued for Mr Sarina's examination pursuant to s 596A of the Act requiring his attendance on 3 April 2023. There were apparently some difficulties in serving Mr Sarina because orders for substituted service were made on 16 March 2023.
The formal requirements to engage the Court's jurisdiction to issue an arrest warrant were, with respect, helpfully considered by Brereton J, as his Honour then was, in Ian Lawrence Struthers (in his capacity as liquidator) of P.A.C.I. Pty Ltd [2005] NSWSC 864 (Struthers). I find that Mr Sarina has been duly summoned to attend for examination, initially for yesterday, 3 April 2023. I also find that he has relevantly failed to attend at the time and place appointed, in circumstances which I will further set out in what follows.
As will shortly become apparent, there can be no dispute that Mr Sarina was put on notice of the examination summons by reason of the orders for substituted service. This is because solicitors acting on his behalf have been corresponding with the solicitors for the plaintiff in relation to the examination summons since 24 March 2023.
Insofar as the recent history is concerned, in the face of Mr Sarina by his solicitors having raised various objections and difficulties with his compliance with the examination summons, an informal without prejudice meeting did occur between Mr Sarina, his lawyers and the plaintiff's representatives on 30 March 2023. There was then further correspondence between the parties after that without prejudice meeting in relation to the need for Mr Sarina to comply with the examination summons by attending Court on 3 April 2023.
The history disclosed by that correspondence can be conveniently summarised by reference to a letter from the plaintiff's solicitors to Mr Sarina's solicitors of 31 March 2023 which included:
"2. In relation to paragraphs 3, 4 and 9 of Your Letter, we respond as follows.
(a) Whilst our client was prepared to consider an adjournment, our client has come across financial matters of Property Asset Consultancy Services Pty Ltd (In Liq) (the Company) following the documents sent across by you this morning that need to be dealt with urgently.
(b) Our client is therefore of the view that your client's appearance on Monday, 3 April 2023 is critical, as the director of the Company.
(c) On that basis, we are instructed that Mr Sarina needs to appear on Monday so that urgent questions can be asked of your client relating to the financial affairs of the Company. Our client is prepared to provide your client with an adjournment of part of the examination to a later date, but does need to ask any urgent questions on Monday, 3 April 2023.
(d) Our client is prepared to complete a half-day examination of your client on Monday, 3 April 2023, in compliance with the Summons dated 6 December 2022.
(e) On that basis, we expect that your client will appear in Court on Monday, 3 April 2023, in compliance with the Summons dated 6 December 2022.
(f) For the avoidance of any doubt, should your client make an application for adjournment to a later date, our client will oppose any application on the basis that there are urgent questions our client has regarding the financial affairs of the company. …"
In setting out that paragraph, I note that Mr Edney expressly explained that he did not rely upon, as a reason for urgency, the matter referred to in paragraph 2(a) of that letter. What is apparent from the correspondence which the Court has seen is that there is a degree of urgency, which is an important consideration as to why the Court will order an arrest warrant be issued for Mr Sarina forthwith. The reason for that urgency is that there are some limited matters upon which the plaintiff wishes to examine Mr Sarina in relation to transactions that occurred in April and May of 2017. Those matters are subject to the possibility of an impending limitation period. It is significant for present purposes that the plaintiff (as is apparent from paragraph 2(c) and (d) quoted above) had agreed to limit the examination, in the first instance, to a half-day examination about what were referred to as the "urgent questions".
Mr Sarina's solicitors responded to the letter of 31 March 2023 on the morning of 3 April 2023. That letter sets out a number of matters said to explain why Mr Sarina was "devastated and distressed by the decision to seek to proceed with his public examination today". The letter refers to Mr Sarina's medical condition, a point to which I will return. The letter concluded with:
"9. Further, Mr Sarina does not seek to permanently avoid public examination in Court. He has offered his assistance and requested his examination be adjourned for a short period so that the Liquidator can test whether this assistance is forthcoming.
10. We note that the Court has a lot of availability for public examinations in May 2023. He has offered his assistance and requested his examination be adjourned for a short period so that the Liquidator can test whether his assistance is forthcoming.
11. Mr Sarina is extremely upset about the Liquidator deciding to proceed with the examination today, following the steps Mr Sarina has already taken at little notice to assist the Liquidator's investigations this week (which are set out above). Nevertheless, Mar Sarina remains willing to assist the Liquidator to the best of his ability, including by attempting to obtain any further documents the Liquidator has requested or requests in the future, and by speaking with him to answer any questions he has about the affairs of the Company.
12. In light of the above, Mr Sarina once again requests that the Liquidator agree to adjourn his examination to a date in May 2023 and he invites your client to reconsider his rejection of that request.
13. In the event that your client is not prepared to adjourn the examination today to a date in May 2023, we request that you provide a copy of this letter to the Court, so the Court can be informed of Mr Sarina's position. Please note we are not instructed to attend Court on behalf of Mr Sarina today. …"
I record that, in accordance with paragraph 13 of that letter, the totality of Mr Sarina's solicitor's letter of 3 April 2023 was drawn to my attention on this application and I have taken its contents into account.
At 10.29am on 3 April 2023, the plaintiff's solicitors responded to that letter. That response included:
"5. The proposed immediate examination would include questioning as to some transactions in April 2017 (that is, shortly to be 6 years away and so potentially giving rise to limitation issues if allowed to lie) the potential significance of which has only recently come to light. In circumstances where Mr Sarina and his various representatives were asked several years ago to account for the company's transactions, it is not for Mr Sarina to complain that the liquidator is now pressing for a prompt examination, particularly as to those matters.
6. We note that your letter states that you are not instructed to attend Court today, and presumably Mr Sarina will also not attend Court. If that is the case, and Mr Sarina does not propose to make an application to adjourn his examination summons, then our client will seek the issue of a warrant for Mr Sarina's arrest. An examinee has no entitlement to simply ignore the Court's orders in such a way. This email will be relied upon in support of that application. …"
At 11.10am yesterday (3 April 2023), consequent on Mr Sarina's failure to appear, the Registrar before whom the examination was to be conducted made orders which were included in an email shortly thereafter to Mr Sarina's solicitors from the plaintiff's solicitors:
"… Registrar Milligan has made the following Orders at approximately 11:10am today:
1. The Summons for the public examination against Mr Clinton Sarina made on 6 December 2022 is adjourned to 2pm on 3 April 2023 (today).
2. The solicitors for the liquidator is to provide notification of these Orders to Clinton Sarina forthwith.
Given paragraph 2 of the Order made today, please send this on to your client immediately. In circumstances where you have written on behalf of your client on this matter, unless being advised to the contrary, we believe you will provide these Orders to your client forthwith. …"
That email led to a response on behalf of Mr Sarina from his solicitors at 12.54pm which included:
"… We confirm we will inform Mr Sarina of the orders made.
Due to the urgency of this matter, we are only responding to certain matters raised in your below email at this time and will respond to the balance of the matters raised separately.
It appears that despite the comments raised in our letters dated 24 March 2023, 31 March 2023 and 3 April 2023 as to why your client should agree to adjourn the examination summons to a date in May 2023, your client intends to proceed with the examination today and with applying for an arrest warrant to be issued to our client.
We confirm that our client opposes any application for an arrest warrant. There is no evidence of any real urgency in respect of the public examination, especially in circumstances where our client has agreed to give your client sworn evidence as to any matter which needs to be dealt with before May 2023 and our client has now provided medical evidence confirming he is not fit to attend Court today.
Further, we note that Mr Sarina is presently interstate staying with relatives at a location close to the hospital where he is being treated for his medical condition. Mr Sarina had been in Sydney on Thursday last week, but flew interstate later that day, after meeting with the Liquidator's staff and representatives, as he was under the impression his examination summons would be adjourned to a date in May 2023. Therefore, even if Mr Sarina was medically fit to attend the examination today, which he is not, he is also not in a position to do so today, as he is not in NSW.
If your client does decide to proceed with applying for an arrest warrant, our client once again requests that our letter dated 3 April 2023 be brought to the Court's attention, together with a copy of our:
1. Letters dated 24 March 2023 and 31 March 2023; and
2. Emails dated 27 March 2023 and 3 April 2023, including our email attaching our client's confidential medical certificate. …"
I record that the various correspondence and attachments referred to in the concluding paragraphs of that letter were drawn to my attention and I have taken them into account.
At 1.12pm yesterday, the plaintiff's solicitors, noting that that Mr Sarina was interstate, provided the link to Mr Sarina's solicitors for him to appear via video at 2pm yesterday. Mr Sarina did not appear at that time.
The Registrar then made orders which included:
"… 4. Examination(s) of Clinton Sarina adjourned to 11:00am on 4 April 2023 via AVL or in person. If Mr Sarina is unable to attend the examination in person or via AVL, he must appear (or his legal representative) and make application to be excused.
The Court notes Mr Clinton Sarina failed to appear today when formally called at both 11:00am and 2:00pm.
The Court further notes that if Mr Clinton Sarina fails to appear at 11:00am on 4 April 2023, the Plaintiff Liquidator may ask the Registrar to refer the matter to a duty judge in order to make application for an arrest warrant for Mr Sarina.
5. Matter stood over to 11:00am on 4 April 2023.
6. Solicitors for the Liquidator to provide a copy of these orders to Mr Clinton Sarina and his legal representative. …"
Mr Sarina failed to appear at 11am today. I was informed at approximately noon that the present application would be made to me, owing to the Corporations Judge being engaged in another hearing.
Before going any further, it is appropriate that I say something more about the references that have already been made in these reasons to Mr Sarina's medical condition. The Court has before it a medical certificate from a urological surgeon dated 31 March 2023. I have taken account of the requests in the correspondence from Mr Sarina's solicitors that a confidentiality order be made in relation to that medical certificate. I am not satisfied that any such order should be made.
For the purposes of these reasons, it is sufficient for me to record that while the medical certificate sets out that Mr Sarina had major surgery last year, nothing in it explains why Mr Sarina would have been unable, by reason of any medical condition, to have attended for examination either yesterday or today. The surgeon records that he had a consultation with Mr Sarina "last week", the result of which was that the doctor has ordered some tests, and required Mr Sarina to rest until the test results have been received. The certificate expresses no view about Mr Sarina's fitness to give evidence.
I accept Mr Edney's submission that no real weight should be given to Mr Sarina's reliance on whatever his medical condition may be in the absence of more substantial evidence than that provided by the medical certificate. In particular, I accept Mr Edney's submission that if, as appears to have been the case, Mr Sarina was well enough to attend a without prejudice meeting with the plaintiff's representatives, there is nothing before the Court at the moment that would provide any medical reason sufficient to persuade the Court that Mr Sarina could not have attended for examination either yesterday or today.
[3]
Consideration
I have already set out in [9] above why the Court is satisfied that the first two prerequisites to engage the jurisdiction to issue an arrest warrant under the Rules have been met. The third consideration is that the person has failed to attend without reasonable cause. I respectfully adopt the observation made by Brereton J in Struthers that, because such a matter is almost exclusively within the examinee's knowledge, only relatively "slight" evidence would be required to establish the absence of reasonable cause. The Court is satisfied that Mr Sarina has failed to attend both yesterday and today for examination without reasonable cause.
It is clear from the correspondence that, while he has apparently travelled interstate, Mr Sarina knew that the examination summons had not been set aside and that he was required to attend both yesterday and today. Furthermore, insofar as an issue appears to have arisen because he has travelled interstate, that was accommodated by orders being made for him to give evidence by video link if necessary. I have already explained why I am not satisfied that whatever medical condition Mr Sarina has is not, on the evidence, a sufficient basis to explain his refusal to appear for examination.
Next, while I am satisfied that the requirements for the issue of a warrant have been met, it is also necessary to take into account any relevant discretionary considerations as to whether or not a warrant should issue (see Struthers at [45]). In that regard:
1. I am satisfied that the plaintiff has a prima facie entitlement, having procured the issue of the examination summons, to have it complied with and enforced.
2. There is a public interest in ensuring that such orders are complied with.
3. I am satisfied on the evidence that all reasonable steps have been taken to obtain the cooperation of Mr Sarina to attend including, if necessary, to enable him to attend by video link.
4. There is nothing to suggest that the burden imposed by the summons is prima facie oppressive, especially in circumstances where the plaintiff has agreed, in the first instance, to limit the examination to a half-day about matters that are urgent, having regard to possible limitation issues.
I have also not overlooked that there has been some degree of informal cooperation by Mr Sarina by agreeing to meet on a without prejudice basis with the plaintiff's representatives. However, that is not a sufficient reason to overcome the public interest in ensuring that the Court's order in relation to the examination summons is satisfied.
Finally, I have also taken into account, but am unpersuaded by, the arguments made in the correspondence on behalf of Mr Sarina that there appears to have been some delay in the plaintiff taking steps to examine Mr Sarina, given that the liquidation has now been ongoing for some years. Mr Edney fairly accepted that there had been some delay, but submitted that it was not sufficient in and of itself to disqualify the plaintiff from being able to seek enforcement of the summons that has been issued. I accept that submission. I also note that some months of the most recent delay may be attributed to the need to obtain orders for the substituted service of the examination summons on Mr Sarina.
Nothing else raised in the correspondence to which I have been taken, written by Mr Sarina's legal representatives, persuades me that there is any other discretionary reason why the Court should not issue the warrant for Mr Sarina's arrest forthwith in order to compel his compliance with the Court's orders.
[4]
Conclusion
The Court's orders are:
1. Pursuant to rule 11.10(2) of the Supreme Court (Corporations) Rules 1999, a warrant be issued for the arrest of Clinton Sarina in terms of Annexure "A" attached hereto.
2. Leave be reserved to Clinton Sarina and the plaintiff to apply on short notice by email to the Associate to the Duty Judge.
3. The plaintiff notify Clinton Sarina of these orders by emailing them to Matthews Folbigg Lawyers at xxxxxxxx@matthewsfolbigg.com.au and xxxxxxxx@matthewsfolbigg.com.au.
4. Stand the proceedings over to the Equity Division Duty Judge on 12 April 2023 at 10am.
5. Costs reserved.
6. Direct these orders be entered forthwith.
[5]
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Decision last updated: 11 April 2023