Application for extension of time for review of Registrar's decision to issue orders for production
By Interlocutory Process filed on 15 December 2021, the Applicants, McMillan Investment Holdings Pty Ltd ("MIH"), Ms McMillan, Mr McMillan and Mr Barnsley apply for interlocutory relief including setting aside certain orders for production directed to them. They seek an order under rules 49.20(3)-(4) of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") that they be granted an extension of time for filing an interlocutory process seeking to review the decision of the Registrar to issue those orders for production.
I pause to note that there is here no application to set aside the examinations, to which the orders for production are directed, and in those circumstances it appears that no issue arises as to the operation of r 11.5 of the Supreme Court (Corporations) Rules 1999 (NSW) in limiting the time in which such an application could have been brought, of the kind considered in Re Ji Woo International Education Centre Pty Ltd [2019] NSWSC 93 arises. The position is instead to be dealt with in respect of the general rules applicable to a review of the Registrar's decision, although the Court's decision should be made in the context that this involves a liquidator's examinations, and orders for production in connection with a liquidator's examinations, and the public interest considerations which attach to such examinations are relevant.
Mr Rose, who appears for the liquidator, initially pointed to the scope of UCPR r 49.20 which provides that the time limit for a 28-day period applies from the material date, defined as the date on which the order to be reviewed is made. It seems to me that, while that is the starting point for the Court's jurisdiction to extend time under r 49.20(4), that discretion would be exercised in the particular context by reference to when the recipient of an order for production would know of the relevant decision, so as to move to set it aside, and that will not be until that order is served.
It appears relevant orders were served on MIH on 15 November and on Mr Barnsley on 16 November 2021 and, calculating the period from that time, the application was only slightly out of time in respect of those applications but not Mr McMillan or Ms McMillan. I also bear in mind that, as Mr Rose fairly conceded, the liquidator cannot point to any actual prejudice from any delay in serving the application, where it has been possible for the Court to list this matter today and, as is appearing increasingly likely, continuing it tomorrow if it is necessary to do so. In those circumstances, the liquidator will not face the invidious position which would otherwise potentially arise from service of an application shortly before the end of the Court term, namely that the production of documents in respect of the examination was frustrated, if the persons to whom the orders for production were directed took the unacceptable view that they were not required to comply with them, merely because there was an undetermined application to set them aside. That will not arise, because there will here be no such undetermined application to set them aside, and they will be required to comply with them because they remain in force, or not required to comply with them if they are set aside.
In these circumstances, where there is no prejudice to the liquidator from any lateness of the application, I am satisfied that I should make an order under r 49.20 extending the time for filing an Interlocutory Process to review the relevant decision to 15 December 2021, the date on which the application is filed.
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Application for access to liquidator's affidavit
The Applicants also seek an order under r 11.3(7) of the Supreme Court (Corporations) Rules that they be granted leave to inspect the affidavit filed by the liquidator on 27 October 2021 in support of an Interlocutory Process for the issue of examination summonses filed on 27 October 2021. Rule 11.3(7) of the Corporations Rules relevantly provides that an affidavit in support of an application for an examination summons is not available for inspection by any person, unless the Court otherwise orders. That rule in turn reflects the structure of ss 596B and 596C of the Corporations Act 2001 (Cth). Section 596B deals with the issue of a summons to a person for examination about a corporation's examinable affairs and s 596C provides that a person who applies under that section must file an affidavit that supports the application and complies with the rules. Subsection 596C(2) similarly provides that the affidavit is not available for inspection except so far as the Court orders.
There are, of course, many decisions which deal with the circumstances in which a liquidator's affidavit in support of an examination summons should be made available for inspection. Mr Svehla, who appears for the Applicants, fairly concedes that none of those decisions deals with an application for access to an examination summons by an examinee who does not seek to set aside the examination or third parties against whom orders to produce documents have been made. The case law indicates that an affidavit will generally not be made available for inspection unless the Court finds there is some evidence that an examinee has an arguable case to set aside the examination, and the Court would not be able to fairly and properly determine that case if part of the relevant evidence was not available: see the many cases cited in Austin & Black's Annotations to the Corporations Act [5.596C]. That principle is formulated by reference to the relevance of the liquidator's affidavit to whether there is an arguable case to set aside the examination, and that is not surprising, where the reason for the affidavit, as required by s 596C of the Act, is to support the issue of the examination summons.
Here, none of the persons to whom examination summonses have been issued have sought to set them aside, or challenge their propriety. One of the Applicants who has received an order for the production of documents, Mr Barnsley, seeks to set aside that order to produce those documents but does not seek to set aside the examination summons to which it is directed. The others did not receive examination summonses, and do not seek to set aside examination summonses of the persons to whom they were issued, nor do the persons to whom they were issued seek to set aside their summonses.
It appears to me that, in that circumstance, no principle is engaged which warrants making available the liquidator's affidavit in support of the examination summonses. I recognise that the Applicants' solicitor, Mr Ryckmans, in his affidavit dated 22 December 2021, hypothesises various improper purposes which might exist in respect of the orders for production, and then indicates that he does not know whether they have been disclosed to the Registrar. The difficulty with that approach is, however, that it is directed to an application which has not been made, namely an application by Mr Barnsley or the other recipients for examination summonses to set aside the examination summonses.
Where an examination summons exists, and has compulsive force, and the persons to whom it was directed do not suggest that it was sought for an improper purpose and it has not been set aside, the orders for production are properly directed to production of documents for the purposes of the examinations. No doubt, the Applicants can contend, as they do contend, that the orders for production are too wide, or are not properly directed at the relevant examinations. However, it seems to me that they cannot, in dealing with orders for production, advance a collateral attack on an examination summons issued to a third party, which that third party has not sought to set aside, still less in Mr Barnsley's case advance an attack on an examination summons which Mr Barnsley himself has not sought to set aside.
Mr Svehla submits that there must be a nexus between the examination summons and the orders for production of documents, and, implicitly, the orders for production of documents must be supported as proper in the context of the relevant examinations. I accept that proposition, but it seems to me that to be determined objectively, by reference to the form of the orders for production, in the context of the examinations which are to be held, rather than by any examination of the liquidator's affidavit in support of the examination summonses. I am reinforced in that view because it seems to me that there is good reason for the Court not to exercise a discretion under s 596C of the Act or r 11.3 (7) of the Corporations Rules, to make available a liquidator's confidential affidavit in support of an examination to third parties who have received orders for production, and who may wish to inquire as to whether they can challenge the orders for production by challenging the underlying examination that the examinee itself accepts is a proper one. While Mr Svehla submitted that he did not need to go so far as to submit that every third party recipient of an order for production could seek access to the liquidator's affidavit, on the basis that the applicants here seek it, the argument which he puts has that effect. If that position is available to the Applicants here, it is available to the recipients of orders for production generally.
The latter part of Mr Svehla's submissions identified the reasons that there may be difficulties in respect of the orders for production, including the fact that the period for which they seek documents may be too wide, and that their structure, in seeking all documents or communications concerning the relevant companies, over an extended period, then adding several categories which do not limit that wide request, may have the consequence that the orders for production go beyond what would be justified by the examinations. There may be real force in those submissions. However, the fact that they are made demonstrates that it is not necessary for the Applicants to obtain access to the liquidator's affidavit in order to seek to set aside the orders for production. That can be done by an objective examination of their basis, and their terms, advancing the arguments that Mr Svehla has put in supporting the application for access to the liquidator's affidavit.
For these reasons, the application for access to the liquidator's affidavit filed on 27 October 2021 in support of the examination summons is dismissed.
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Variation of orders of production
When the application to set aside the orders for production was next listed before me on 23 December 2021, the parties reached a consent position by which those orders for production will be narrowed. They agree, in those circumstances, it is not necessary to set those orders aside and issue new and narrower orders for production, and it is sufficient that the Court orders that each order for production be varied to the form of narrower orders for production that are now agreed between them. I welcome the parties', and the legal representatives', constructive approach to narrowing the scope of the documents for production, and the issues in dispute, in that manner.
A question arose as to the dates of production, with the liquidator seeking production on a staged basis by 7, 14 and 21 January 2022, with all documents to be produced by 21 January 2022. The McMillan parties, represented by Mr Svehla, accepted that documents should be produced on a staged basis, but submitted that the first stage of document production should be due on due on 14 January 2022 and the last of the documents should be produced on 28 January 2022, where the examinations are presently scheduled to take place on 7 and 8 February 2022.
Mr Svehla refers, first, to the difficult personal circumstances of the McMillans, which are addressed in paragraphs 78 and 79 of Mr Ryckmans' affidavit dated 22 December 2021. I have regard to those matters, although I also bear in mind that liquidator's examinations and the production of documents in respect of them have an important public function, and the recipients of such orders for production will not always be persons in good health or without other demands on their time. Second, the difficult personal circumstances to which the McMillans refer have not prevented them pursuing other proceedings in this Court, and other proceedings in the Federal Court of Australia, including current proceedings in the Federal Court of Australia, and there is no reason to accept a position where those difficult personal circumstances prevent their complying with compulsory orders issued by this Court in a timely way, while nonetheless permitting them to invoke proceedings in this and other Courts where they consider it to be to their advantage to do so.
Having said that, I accept that a degree of work will be involved, both on the part of the McMillans and on the part of their legal advisers, in complying with the orders for production, as narrowed. I also bear in mind that the McMillans have already had some time to comply with the orders for production, since they were first issued, and that the application to set those orders aside was brought late, and any intention to bring that application did not suspend the operation of those orders. On the other hand, I also recognise that the orders for production that were originally issued were plainly too wide, and the application to set them aside, or at least to narrow them to a proper scope, had substantial merit. I bear in mind the fact that, as Mr Svehla points out, the McMillans have other obligations in the current proceedings in the Federal Court of Australia, and those are pressing, so far as a guillotine order has been made in that Court in respect of the filing of certain evidence in that court.
I also bear in mind that the extension of time sought by the McMillans is a modest one, of another week, and that the deferral of the first tranche of production occurs in a period in which many solicitors will take some leave. Any prospective dispute as to claims for legal professional privilege and the privilege against self-incrimination can be managed by requiring affidavit evidence supporting those claims to be served, shortly after the documents are produced, which will allow any dispute as to those claims to be determined before a Corporations Duty Judge in the week between the production of the last tranche of the documents on 28 January and the examinations on 7 and 8 February 2022.
On that basis, I will substantially accede to the position advanced by the McMillan parties, extending the time for production in the manner which they propose, on terms that they must also serve any affidavit supporting any claims for legal professional privilege or the privilege against self-incrimination by 4pm on 31 January 2022. I should note that, where I have acceded to the McMillans' claims for an extension of the time for production in that manner, the times now set for production need to be taken seriously. The McMillan parties are plainly at significant risk that, if they do not comply, in full, with the orders for production by that time, they may either be exposed, at worst, to proceedings for contempt or, at best, to a risk that the examinations will be deferred, and that they will be ordered to pay the costs thrown away by such a deferral on a gross sum and indemnity basis, with those costs to be payable forthwith. It seems to me that non-compliance with the orders, after the time that has elapsed since the earlier orders for production were issued, and after the McMillan parties have been substantially successful in obtaining the additional time they have sought, would be a serious matter. I do not, of course, express any final view in that regard.
For these reasons, I make the following orders:
By consent, vary the orders for production issued to McMillan Investment Holdings Pty Ltd on 5 November 2021, Ms Julie-Anne McMillan on 5 November 2021, Mr Robert Ian McMillan on 5 November 2021 and Mr Lee Barnsley on 5 November 2021 to take the form annexed and marked "A"-"D" respectively.
The documents to be produced by each of McMillan Investment Holdings Pty Ltd, Ms McMillan, Mr McMillan and Mr Barnsley be produced in tranches, with the first tranche to be produced by 14 January 2022, the second tranche by 21 January 2022 and the final tranche by 28 January 2022, and direct the McMillan Parties to use their best efforts to produce as many documents as possible in the earlier of those tranches.
Direct any of the McMillan parties who seek to claim legal professional privilege or the privilege against self-incrimination in respect of any document to be produced to serve an affidavit, identifying with particularity the facts supporting and the basis of that claim, in respect of each such document, by 4pm on 31 January 2022.
There be no order as to the costs of and incidental to the interlocutory process filed on 15 December 2021.
Vacate the listing of the orders for production before the Registrar on 14 January 2022 and relist the orders for production of the final tranche of the documents before the Registrar on 28 January 2022, with earlier tranches of documents to be produced informally between the parties.
Liberty to apply on one business days' notice, given to the Associate to Black J, in the event of any default in compliance with the orders.
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Decision last updated: 31 December 2021