Analysis
15 The first order sought by the applicants is that to the extent necessary, time be extended for the applicants to bring their Interlocutory application pursuant to r 1.39 of the Federal Court Rules 2011 (Cth). The applicants accept that an extension of time is necessary. The registrar's orders made on 25 June 2020 require that any application by persons to whom the orders are directed to have the orders set aside or varied be made by interlocutory application together with supporting affidavits within three days of service of the orders. The respondent served the orders made on 25 June 2020 on the applicants on that day. The applicants filed their Interlocutory application on 23 July 2020.
16 The respondent submits that an extension of time should not be granted. He identifies r 11.5(2) of the Federal (Corporations Rules) 2000 (Cth) as an additional source of the requirement that a person served with an examination summons may apply to the Court for an order discharging the summons and if he or she chooses to do so, then that must be done within three days after service. I do not need to examine the correctness of this proposition, having regard to the nature of the applicants' application because, on any view, there was a time limit in this case of three days after the service of the orders. Nor do I need to examine the correctness of the respondent's proposition that r 1.10 of the Corporations Rules is an additional source of the power to extend time.
17 The three key considerations in determining whether an extension of time should be granted are as follows:
(1) the explanation for the delay provided by the applicants'
(2) whether, and the extent to which, the applicants have an arguable case; and
(3) the prejudice, if any, to the respondent if an extension of time is granted.
(See, for example, Re Bell Group NV (in liq) [2016] FCA 851; (2016) 116 ACSR 294 at [22]-[24] per Yates J.)
18 The explanation for the delay is provided by Ms Gerber in her affidavit. The applicants' response to being served with the orders made on 25 June 2020 was to engage in correspondence with the respondent's solicitors. The key points to emerge from this correspondence are as follows:
(1) Initially, the orders in dispute were those in paragraphs 4(b), (c), (d) and 5(b), (c) and (d) of the orders made on 25 June 2020. By 30 June 2020, the orders in dispute were those in paragraphs 4(b) and (c) and 5(b) and (c). The documents referred to in these orders may be referred to as the insurance documents. Further evidence from Ms Gerber and the applicants' Interlocutory application itself indicates that what is in dispute are the insurance documents in relation to Sophie Grace Pty Ltd (i.e., paragraphs 4(b) and (c) of the orders made on 25 June 2020).
(2) The applicants sought from the respondent a copy of the Interlocutory application for the orders made on 25 June 2020 and "all evidence that was put before the Court on the application". The respondent refused to provide such documents.
(3) Various matters were unresolved as at 30 June 2020. The applicants were aware that they needed to exercise the liberty to apply to set aside or vary the orders made on 25 June 2020 by the end of the day on 30 June 2020. The respondent's solicitors wrote to the applicants' solicitors on 30 June 2020 and, in the course of their letter, they said the following:
Without intending to waive confidentiality and privilege in the supporting affidavit filed by our client, we confirm that all correspondence between our firms commencing with our letter dated 10 June 2020 up to and including your letter of 19 June 2020 was put before the Court for the purposes of obtaining the 25 June Orders.
19 The "supporting affidavit" referred to in this passage is an affidavit sworn for the purposes of the respondent's Interlocutory process filed on 23 June 2020. Counsel for the respondent has confirmed that the affidavit is an affidavit of the respondent's solicitor, Mr Renfrey, sworn on 22 June 2020. It should be made clear that it is not the respondent's initial affidavit sworn in support of the initial application for an examination summons under s 596B directed to Ms Gerber.
20 After addressing the matters which I have summarised above, Ms Gerber's affidavit addresses correspondence between Sophie Grace Pty Ltd and its insurer. It is convenient to set out the relevant paragraphs:
19. On 30 June 2020, I provided written notice to my insurance broker, Sean McDermott of Everest Risk Group advising that the Liquidator in this matter may have a potential claim against Sophie Grace Pty Ltd. I have not exhibited this notice as I am opposing the production of same.
20. On 20 July 2020, after not receiving a response, I again followed up the broker confirming that the notice had been received. I have not exhibited this notice as I am opposing the production of same.
21. On 20 July 2020, I received an email from DUAL Australia advising that they oppose production of the documents specifically orders 4(b) and (c) in the 25 June Orders on the basis that it breached the confidentiality of the insurance policies held on behalf of Sophie Grace Pty Ltd. I have not exhibited this notice as I am opposing the production of same.
22. I have sought consent of my insurer to produce the documents contained in orders 4(b) and 4(c) of the 25 June Orders. Consent has not been provided and I am accordingly required to bring the application accompanying this affidavit to set aside orders 4(b) and 4(c) of the 25 June Orders.
23. Sophie Grace Pty Ltd have agreed to provide and provided all requested documents which relate to the Company pursuant to orders 4(a) and (d) of 25 June Orders.
24. Despite repeated requested [sic] from our office, the Liquidator continues to insinuate some wrongdoing on the part of Sophie Grace Pty Ltd and refuses to advise the basis of these claims.
25. Sophie Grace Pty Ltd and Sophie Grace Legal Pty Ltd have complied with all orders for production and assisted the Liquidator with his enquiries throughout the Proceedings.
26. I seek the orders contained in the application to apply to set aside or vary orders 4(b) and (c) as contained in the 25 June Orders.
21 As I have said, the only orders which the applicants by their Interlocutory application seek to have set aside are those in paragraphs 4(b) and (c), that is, the insurance documents of Sophie Grace Pty Ltd. Ms Gerber's evidence as set out above suggests that Sophie Grace Pty Ltd is not prepared to provide those documents because its insurer will not consent to it doing so. The evidence suggests that after initial resistance, Ms Gerber may have been prepared to provide the insurance documents, but was not prepared to do so after she became aware of the insurer's attitude. That that was, in fact, what occurred is confirmed by the correspondence attached to Mr Renfrey's affidavit sworn on 29 July 2020 which correspondence occurred between the making of the orders on 25 June 2020 and the issuing of the present application on 23 July 2020. The correspondence is between the parties and the registrar's chambers and relates to the relisting of the application and the production of documents.
22 With respect to the merits of the applicants' case, the "case" for the purposes of a consideration of this issue relates to the order concerning the production of the affidavit and does not include that part of the application seeking the setting aside of the orders in paragraphs 4(b) and 4(c) of the orders made on 25 June 2020. Clearly if the order for the production of the affidavit is made, the affidavit may throw light on whether the orders in those paragraphs should be set aside. For the reasons set out below, the applicants have not only established an arguable case that the affidavit should be produced to them, but I am satisfied that an order to that effect should be made.
23 With respect to prejudice to the respondent if an extension of time is granted, no specific prejudice has been identified by the respondent. He submits that he wishes to proceed with the liquidation as quickly as possible.
24 I have considered the above matters and I am of the view that they support an extension of time.
25 The second order sought is that the evidence relied on by the respondent on 25 June 2020, namely, the affidavit of Mr Renfrey sworn on 22 June 2020, be made available for inspection by the applicants.
26 The applicants' argument in support of an order in these terms is simple. The affidavit is not protected by s 596C because it was not filed in support of a summons for examination under s 596B. In the case of Ms Gerber, such an order was made on 7 November 2019 and the summons remained extant and not discharged after her examination on 31 January 2020 and until the end of July 2020 as recognised in the order made by the registrar on 31 January 2020. There was no need to summons Ms Gerber again or to establish the matters in s 596B. The effect of the fact that Ms Gerber's examination was only adjourned is that the resumption of her examination on a particular date fixed by order of the Court was purely procedural; she was not served with another summons and she was simply advised of the date upon which her examination would resume. Mr Renfrey's affidavit supported the orders made under s 597(9) and, although that subsection itself contains a link with an examination under Part 5.9 of the Act because it refers to the books being produced, "at an examination of that [person] or any other person", it is not a supporting affidavit for an application under s 596B. It should be considered as an affidavit relied on in support of an interlocutory application which was heard ex parte. The hearing should not have been conducted ex parte, but, in any event, in order to decide whether to challenge an order made ex parte, the party considering a challenge is entitled to be given the material upon which the order was based.
27 The respondent submits that the affidavit is protected by s 596C. The Interlocutory application issued by the respondent which led to the orders made on 25 June 2020 was issued pursuant to s 596B(1) and s 597(9) of the Act. One of the orders made was that the examination of Ms Gerber, who had been summonsed pursuant to s 596B, continue on the date specified in an order and the orders made pursuant to s 597(9) against the applicants were for books to be produced to the Court at Ms Gerber's examination. The respondent submits that on the assumption that the affidavit is protected by s 596C, then the applicants have presented no evidence to support an order under s 596C(2). In other words, having regard to the authorities, there is no evidence of an arguable case that the respondent's application was an abuse of process or was brought for an improper purpose. This last proposition is not disputed by the applicants and it is not necessary for me to refer to the relevant authorities, other than to note Re Excel Finance Corp Ltd; Worthley v England (1994) 52 FCR 69; (1994) 34 ALD 85; Ford HAJ, Austin RP and Ramsay IM, Principles of Corporations Law, (Butterworths, subscription service) at pp 27,734-27,736 (update 141). However, as I have said, this is not the applicants' argument. Their argument is simply that the affidavit is not protected by s 596C of the Act and in order to exercise their right to challenge orders made against them on an ex parte basis, they are entitled as a matter of course to the material relied on for the purpose of obtaining the orders.
28 The registrar did not provide reasons for making the challenged orders. The nature of the application and the orders he made were such that it is not to be expected that he would do so. There is no evidence as to the nature of the submissions made to the registrar. The respondent is the only party who would have been in a position to put forward such evidence.
29 The applicants submit that the respondent was not required to provide evidence relating to the resumption of Ms Gerber's examination and whether he did so or not is irrelevant and I should proceed on the basis that the affidavit did not relate to the resumption of Ms Gerber's examination and related only to the orders made under s 597(9) against the applicants. It seems that the position is not that straightforward. There may be cases where the circumstances are such that the Court requires a fresh affidavit to justify the continuation of an examination (Ford, Austin and Ramsey at pp 27,785-27,786; Re Stoliar; Australian Securities and Investments Commission v Karl Suleman Enterprises Pty Ltd (in liq) [2003] NSWSC 163; (2003) 44 ACSR 694 at [42]-[44] per Austin J). Having said that, there is no indication in this case that a fresh affidavit was required to justify the resumption of Ms Gerber's examination. In fact, the indications are to the contrary. As the evidence and submissions make clear, a substantial volume of information, including voice recordings, was given to the respondent by Ms Gerber after her examination on 31 January 2020. A resumption of Ms Gerber's examination was to be expected in those circumstances. I proceed on the basis, therefore, that the necessary purpose of the affidavit was to support the orders under s 597(9) of the Act.
30 There does not appear to be any authority directly on point. The cases to which the applicants referred, being Re BPTC Ltd (in liq) (No 5) (1993) 10 ACSR 756 (BPTC) and Re South Pacific Energy Trading Pty Ltd (In Liq) (1996) 40 NSWLR 264, go so far as to suggest that the application of the practice of an ex parte hearing and an affidavit not available for inspection by the party against whom the direction is made in the case of an application under s 596B to an application under s 597(9), is not axiomatic even though directions under s 597(9) are ancillary or related to orders under s 596B because a direction is to produce books at a person's examination and those books are to be books that are relevant to matters to which the examination relates, or will relate. In BPTC (at 759), Bryson J outlined circumstances where it would and would not be appropriate to apply the practice on obtaining an examination summons to the obtaining of an order under s 597(b) of the Act.
31 I have reached the conclusion that it is appropriate to characterise the respondent's application of 23 June 2020 as, in essence, an application for directions to third parties (albeit related third parties) under s 597(9). The affidavit of Mr Renfrey sworn on 22 June 2020 supported that application and not an application under s 596B. The affidavit is not protected under s 596C(2). It should be disclosed by the respondent to the applicants to give content and meaning to the applicants' right to apply to set aside the directions. The disclosure of the affidavit is not contingent on the applicants showing a prima facie or arguable case that the directions will be set aside.
32 The order in paragraph 5 of the applicants' Interlocutory application was not the subject of submissions. That may be because a stay is not necessary at this stage. I will grant liberty to apply on two days' notice and the applicants can pursue this order if necessary.