THE DIRECTIONS UNDER SECTION 597(9)
18 Relying on s 597(9) of the Act, the Liquidators seek a range of documents from Bestjet Singapore and OCBC relating to the period from 30 June 2015 to the date of the direction to produce and to the dealings between Bestjet Singapore, Sabre and OCBC concerning, in particular, the receipt and disbursement of the 13 December 2018 rebate and incentive payment.
19 The documents sought from Bestjet Singapore are as follows:
1. Any bank statements, transaction history or any other document issued by the Oversea-Chinese Banking Corporation Limited (OCBC) which lists any transactions in respect of any bank account held by Bestjet Singapore with OCBC or any other bank, during the period from 11 October 2015 to the date of this Direction to Produce.
2. All books, records, correspondence or documents that relate to the sum, or approximate sum, of USD$2,317,984.82 (the Payment) paid to Bestjet Singapore by Sabre Asia Pacific Pte Ltd (Sabre) on or about 13 December 2018, including but not limited to:
(a) the receipt by Bestjet Singapore of the Payment;
(b) the withdrawal, transfer or disbursement of the Payment, or any part of the Payment, by Bestjet Singapore, including:
(i) the name of the person who, as agent or otherwise for Bestjet Singapore, made any such withdrawal, transfer or disbursement;
(ii) the bank account(s) or other account(s) from which any such withdrawal, transfer or disbursement was made, including the name of the person holding any such bank account(s) or other account(s) and the name of the banking or other institution(s) in which such account(s) was held;
(iii) the bank account(s) or other account(s) into which any such withdrawal, transfer or disbursement was made or paid, including the name of the person holding any such bank account(s) or other account(s) and the name of the banking or other institution(s) in which such account(s) was held.
3. Any management accounts, or any other record of income and expenditure, of Bestjet Singapore in respect of any period falling between 30 June 2015 and the date of this Notice to Produce.
4. Any financial statements of Bestjet Singapore prepared in respect of any period falling between 30 June 2015 and the date of this Notice to Produce.
20 The documents sought from OCBC are as follows:
Each and every bank statement, transaction statement or any other document issued by or held by OCBC, which lists any transactions upon or in respect of any bank account held by Bestjet Travel Pte. Ltd. (Singapore Unique Entity No. 201534316D) with OCBC, including but not limited to OCBC account numbers 503294985301 and 503183303201, for any of the period between 11 October 2015 and the date of this Notice to Produce.
21 Section 597(9) provides:
The Court may direct a person to produce, at an examination of that or any other person, books that are in the first‑mentioned person's possession and are relevant to matters to which the examination relates or will relate.
22 This section provides a discretionary power to require the production of "books", as that expression is defined in s 9 of the Act, that:
(a) relate to an examination of the person directed to produce them, or any other person;
(b) are in the possession of the person directed to produce them; and
(c) are relevant to matters to which the examination relates.
23 Section 9 defines "books" to mean:
(a) a register; and
(b) any other record of information; and
(c) financial reports or financial records, however compiled, recorded or stored; and
(d) a document;
but does not include an index or recording made under Subdivision D of Division 5 of Part 6.5.
24 In respect of [22(a)] above, it has been held that, unlike ss 596A and 596B, a direction to produce under s 597(9) may be issued to a corporate person (see Re Interchase Corporation Limited (In Liquidation) (No 2) (1993) 47 FCR 253 at 261). Otherwise, the range of persons, natural and corporate, who may be required to produce documents under this provision is limited only by the criteria of relevance and possession described above. Conversely, the provision is not limited to a person who is an examinee. In this respect I should record that I agree with the supplementary submissions of the Liquidators.
25 In respect of [22(b)] above, s 86 provides:
A thing that is in a person's custody or under a person's control is in the person's possession.
26 The principles bearing on the question of relevance raised in [22(c)] above were conveniently summarised by Middleton J in Yeo and Rambaldi (as liquidators), in the matter of Rennie Produce (Aust) Pty Ltd (in liquidation) [2015] FCA 849 (Yeo) in the following terms (at [9]-[10]):
9 The "books" will be "relevant to matters to which the examination relates or will relate" if they are relevant to the "examinable affairs" of the company and will assist or facilitate the examination: see Onefone Australia Pty Ltd v One.Tel Ltd [2007] NSWSC 1188 at [22].
10 The "examinable affairs" criterion has been interpreted widely to include any of the affairs of the corporation prior to and during the external administration (see Gerah Imports Pty Limited v Duke Group Ltd (in liq) (1993) 61 SASR 557), as well as matters relating to the existence of circumstances that may give rise to a claim being made by the company: see Re BPTC at 764. The use of liquidators' examinations as a means of gathering evidence for current or contemplated litigation is an ordinary and legitimate use of that procedure: see Re Hugh J Roberts Pty Ltd (in liq) [1970] 2 NSWR 582 at 585.
27 On this aspect, I also agree with the submissions of the Liquidators that investigating the value of undertaking a tracing exercise and the steps that might be involved with such an exercise "may well fall into the examinable affairs of a company, depending on the circumstances" (see Pleash (liquidator) v Tucker (2018) 264 FCR 374; [2018] FCAFC 144 at [73]).
28 With respect to the documents the subject of the proposed directions to produce (see at [19] and [20] above), the Liquidators' submitted they:
(a) are "books" within the meaning of that term in section 597(9) of the Act because they are one or all of "any other record of information", a "financial record" and/or "a document";
(b) are in Bestjet Singapore's [and OCBC's] possession because Bestjet Singapore [and OCBC have] custody and/or control of the Bestjet Singapore [and OCBC] Documents. To the extent to which the Bestjet Singapore [and OCBC] Documents are books of the [companies], these documents are controlled by Bestjet Singapore [and OCBC (which administers and maintains the transaction records of the OCBC Account (and indeed accounts operated by all of its other customers))]. The remainder of the Bestjet Singapore [and OCBC] documents, such as the statements of the OCBC Account, are in Bestjet Singapore's control because Bestjet Singapore can obtain those documents from OCBC; and
(c) are relevant to the examinable affairs of the Bestjet Companies because:
(1) they will assist the [Liquidators] in establishing whether there was a course of conduct between Bestjet and Bestjet Singapore consistent with an agency relationship and/or implied contractual arrangement by illustrating:
(A) whether and to what extent, during the course of the Subscriber Agreement, Bestjet Singapore would from time to time transfer to Bestjet some or all of Rebates and Incentives it received from Sabre; and
(B) the way in which Bestjet Singapore treated the Rebates and Incentives it received from Sabre in its own financial statements/documents,
(2) they will assist the [Liquidators] in identifying whether, to what extent, when and to whom the December Rebates and Incentives may have been disbursed from the OCBC Account;
(3) they will assist the [Liquidators] in locating the December Rebates and Incentives because they will reveal the accounts to which they were disbursed;
(4) they will assist the [Liquidators] in determining the recoverability of the December Rebates and Incentives by Bestjet with reference to:
(A) the location of the December Rebates and Incentives;
(B) the costs associated with recovering the December Rebates and Incentives from that location, and
(d) will assist the [Liquidators] in conducting the ongoing examinations of the Examinees, in particular Mr James and Ms James.
(Footnotes omitted)
In respect of (d) above, it should be noted that, as a result of orders made by Registrar Lynch on 2 and 9 August 2019, those examinations are deemed to have concluded on 2 and 6 February 2020 respectively. However, I do not consider this affects the general import of the Liquidators' submissions above.
29 Further to [28(c)] and [28(d)] above, the Liquidators submitted that the documents sought were relevant because they will assist them in their investigations into the Bestjet Companies and in potentially recovering funds for the benefit of the creditors of those companies. They outlined what it was, in particular, that they expected to ascertain from Bestjet Singapore's direction as follows:
(a) the precise dates when Bestjet Singapore transferred to Bestjet the various Rebates and Incentives it had received from Sabre (and the amount transferred on each occasion);
(b) whether, when and to whom the December Rebates and Incentives were dissipated from the OCBC Account;
(c) the account(s) to which the December Rebates and Incentives were transferred;
(d) how Bestjet Singapore treated, recorded, or otherwise categorised, the Rebates and Incentives (including the December Rebates and Incentives) in its own:
(1) financial statements;
(2) management accounts; or
(3) other records of its income and expenditure; and
(e) whether the December Rebates and Incentives currently form part of the assets of Bestjet Singapore.
30 As for the direction to OCBC, they submitted it was expected to ascertain:
(a) the precise dates upon which Bestjet Singapore received from Sabre various Rebates and Incentives (and the amount of each payment) over the period of time specified therein;
(b) the precise dates upon which Bestjet Singapore transferred to Bestjet monies on account of the Rebates and Incentives it had received from Sabre (and amounts transferred on each occasion) over the period of time specified therein;
(c) whether, when and to whom the December Rebates and Incentives were dissipated from the OCBC Account; and
(d) the account(s) to which the December Rebates and Incentives were transferred.
31 Having regard to the history of this matter set out earlier in these reasons, in particular to the impasse reached in Mr James' examination insofar as these documents are concerned and the affidavit materials before me, I am satisfied that the Liquidators have established the necessary criteria for the issue of the directions to produce under s 597(9) to Bestjet Singapore and OCBC. That is to say, in very brief summary, I am satisfied that the documents are books as defined, that they are variously in the possession of Bestjet Singapore and OCBC and that they are relevant to the examinable affairs of the Bestjet Companies as outlined in the Liquidators' submissions above.