RE FORGE GROUP LTD (IN LIQUIDATION) (RECEIVERS & MANAGERS APPOINTED); GALLAGHER & SIFORD -v- JONES [2025] WASC 93 (19 March 2025)

1. The factual background to the application can be briefly summarised as follows.
2. The applicants are defendants in Supreme Court proceedings COR 52 of 2019 (Primary Proceedings). The Primary Proceedings were commenced by Forge Group in March 2019 against four defendants, including the applicants.
3. Prior to the commencement of the Primary Proceedings, in COR 21 of 2018, the Liquidator obtained orders from this court for the issue of examination summonses, including in relation to the applicants. The applicants were publicly examined in July 2018, although not in relation to their respective financial positions.
4. The Primary Proceedings are being case managed by Howard J and have been provisionally listed for trial commencing on 1 May 2025 for eight weeks. The Primary Proceedings have now been entered for trial and witness outlines of each of the applicants have been served. At the hearing yesterday, I was informed that at a directions hearing before Howard J on 17 February 2025, discussions took place as to whether the trial will proceed (at least in part) on or within these provisional dates, or whether these dates should be vacated and the trial in its entirety listed some time in 2026. I was informed that at that stage no decision had yet been made, although I note that that matter is listed before Howard J at 4 pm today.
5. The summonses that were issued to the applicants were originally returnable on 29 June 2023. Since that date, various orders have been made by the court amending the dates of the examinations, and on 16 August 2023, the examinations were adjourned to a date to be fixed.
6. Amended examination summonses were issued by the court on 21 August 2023, pursuant to the orders of Acting Master McDonald made 18 August 2023.
7. From about March 2023 to September 2024, various documents have been produced by the applicants to the Liquidator in relation to their respective financial positions.
8. On 5 December 2024, the Liquidator's solicitors advised the applicant's solicitors of their intention to seek to relist the examination summonses for no more than half a day in respect of Mr Gallagher and no more than 1.5 hours in respect of Mr Siford. The applicants oppose the proposed re-listing and seek to have the summonses discharged. Before that application is heard and determined, the applicants have sought access to the affidavit of Mr Jones.

1. Div 1 of pt 5.9 of the Act sets out the provisions which enable a person to be examined about a corporation.
2. Section 596A of the Act provides for mandatory examinations and s 596B sets out the power of the court to order a discretionary examination.
3. Relevantly, in this case, s 596A of the Act requires the court to summons a person for examination about a corporation's examinable affairs if an eligible applicant applies for the summons and if the court is satisfied that the person is, or was an officer or provisional liquidator of the corporation at specified times.
4. Section 9 of the Act defines both 'eligible applicant' and 'examinable affairs' in the following terms:

(a) 'eligible applicant', in relation to a corporation, is defined to include, relevantly, a liquidator of the corporation; and

(b) 'examinable affairs', in relation to a corporation, is defined to include 'any other affairs of the corporation (including anything that is included in the corporation's affairs because of s 53)'.

1. It is accepted on the authorities that the examinable affairs of a company may include information as to the capacity of a person who is, or may be, liable to the company in the event of successful proceedings against that person. This is because these matters are relevant to the liquidator's assessment in the winding up as to what steps are proper and desirable to take in the winding up.[2]
2. In Walton v ACN 004 410 833 Limited (formerly Arrium Limited) (in liq)[3], the High Court considered the purpose and scope of the examination powers under the Act. Kiefel CJ and Keane J stated that:[4]

There can be no doubt that if the predominant purpose of the examination for which an application is made under s 596A, or s 596B, is collateral or foreign to the statutory purpose of such an examination, the application will amount to an abuse of process.

Abuses of process in connection with application for an examination summons may take many forms. An application brought by a liquidator for an examination for the purpose of rehearsing the cross-examination of a potentially hostile witness in pending litigation would likely be an abuse of process. Other examples may include the cross-examination of a person to destroy their credit and to obtain de facto discovery when an order for discovery has been refused. In these examples, the applicant is seeking a forensic advantage not otherwise available by ordinary pre-trial processes where the legislative purpose is not advanced. They have in common that they are purposes foreign to the statutory purpose and do not permit the exercise of the statutory purpose. To do so would be an abuse of that power. In those circumstances it would be an abuse of the processes of the court to seek the exercise of the power.

1. The court confirmed that the scope of the examination powers is confined to the 'examinable affairs' of the company. That is, the purpose of the powers do not authorise an examination to facilitate the investigation or prosecution of a claim that has nothing to do with the external administration of the company and which has been pursued exclusively for the benefit of persons other than the company, or its creditors, or contributories considered as a whole.[6]
2. Gageler J, in a separate judgment, observed that 'the possible varieties of abuse of process are limited only by human ingenuity and the categories are not closed'. His Honour also observed 'that the abuses of power ordinarily fall into one of three categories: first, that the court's procedures are invoked for an illegitimate purpose; second, the use of the court's procedures is unjustifiably oppressive to one of the parties; or three, the use of the court's procedures would bring the administration of justice into disrepute'.[7]

Should the applicants be permitted to inspect the affidavit?

1. Turning then to the application that is before me as to whether the applicant should be permitted to inspect the affidavit, the relevant test to be applied was summarised by Buss P and Tottle J in Bazzo v Kirman as joint and several liquidators of Whitby Land Company Proprietary Limited (in liq).[8] Their Honours held that:

Where a person to whom an examination summons has been issued applies to the court for an order discharging the summons and in the context of that application seeks to inspect the affidavit relied upon by the eligible applicant to apply for the summons, the court must be satisfied that the person who seeks to inspect the affidavit has an arguable case that the examination summons has been issued for improper purpose or involves an abuse of the court's process. Ordinarily, if the person establishes an arguable case, it can be accepted that there are persuasive grounds for permitting the person, or his or her legal representatives, to have access to the affidavit.

1. An order will be made for inspection of the affidavit where the justice of the case so requires. However, it is accepted on the authorities that an order will not be made where it is simply to enable the applicant to 'fish' for a case.[9]
2. The degree of satisfaction which the applicant needs to satisfy 'involves no more than that the court requires to be satisfied to an appropriate level of satisfaction that the applicant is not pursuing the application without good cause or without good reason'. [10]

Have the applicants established an arguable case for the setting aside of the summonses?

1. Senior counsel for the applicants submitted that the applicants have three arguable grounds on which to set aside the summonses. First, the liquidator's pursuit of the summons at this stage is for an illegitimate purpose. Second, it would be oppressive to allow an oral examination at this stage. Third, the orders for an examination of Mr Gallagher were procured by an affidavit with a material defect. Senior counsel accepted that the second of these grounds would not require inspection of the affidavit.

Is there an arguable case that the application to re-list the summonses is for an illegitimate purpose?

1. The applicants say that they have credible concerns as to the purpose of the proposed oral examination. They say that in circumstances where any examination must be relevant to the Liquidator's assessment of whether, and how, to pursue legal proceedings in such close proximity to the trial of the Primary Proceedings, there is at least an arguable case that the examinations are not being sought for a proper purpose.
2. Senior counsel for the applicants emphasised that the Liquidator had previously stated that the purpose of the examination summonses was to consider the applicants' ability to meet any judgment debt in the event that Forge Group is successful in the Primary Proceedings. It was accepted that this was a relevant purpose of an examination summons in circumstances where it was relevant to the decision of the Liquidator as to whether to commence or continue proceedings that are likely to be lengthy or costly. However, in this case, it was submitted that it was clear these decisions had already been made before the Liquidator's request to re-list the examination summonses, given that the Primary Proceedings have been entered for trial and its provisional listing is less than three months away.
3. The applicants submitted that, given these matters, there was an arguable case that the court could infer there was an illegitimate purpose for the pursuit of the examination summonses at this stage.
4. The Liquidator rejected the submission that there is any arguable case that the summonses were issued or are sought to be listed for an improper purpose. Senior counsel for the Liquidator emphasised that while significant numbers of documents have been produced by the applicants, no oral examination has occurred to date. In addition, senior counsel for the Liquidator noted that the authorities accept that it is a legitimate purpose for a liquidator to issue summonses to assist in the determination as to whether to continue or settle proceedings,[11] and that this was an ongoing decision-making process.[12]
5. It is important to emphasise in reaching my decision that the examination summonses were issued almost two years ago, and that they were issued under s 596A of the Act. Since that time, the applicants have produced significant numbers of documents in answer to the summons. This conduct suggests that the applicants at least initially accepted that the summonses were issued for a proper purpose, and that their primary complaint is the attempt at this stage to re-list the summons for an oral hearing.
6. I do not accept that there is an arguable case that the summons were issued for an illegitimate purpose, or that they are sought to be relisted for an illegitimate purpose. This is for two primary reasons. First, the Liquidator has not had the opportunity to orally examine the applicants on the material that has been produced by them. Second, I accept that the financial capacity of the applicants to meet any judgment may be relevant to any decision as to the continuation of the proceedings, and if there were to be discussions of a commercial resolution, the terms of which any resolution might be appropriate. In my view, both of these would be legitimate purposes.
7. In my view, the complaint that the applicants have in relation to the relisting of the examination summonses, and whether this is for an illegitimate purpose, primarily raises the same arguments as to whether the relisting of the summons is oppressive. In my view, these matters do not require access to the original affidavit in order for the applicants to press these matters at the final hearing of their application.

Is there an arguable case that the application to re-list the summonses is oppressive?

1. The applicants say that allowing the oral examinations to occur at this stage would be oppressive and prejudicial to the applicants' preparation for the trial.
2. In circumstances where the Primary Proceedings are currently listed for a trial of eight weeks duration, commencing in less than three months, and where witness outlines have been served by each of the applicants, I accept that there is an arguable case that it would be oppressive to relist the examination summonses at this stage.
3. However, as accepted by senior counsel for the applicants at the hearing, the acceptance that there is an arguable case in this regard does not entitle the applicants to inspect the affidavit of Mr Jones.

Is there an arguable case that there has been material non-disclosure in the affidavit?

1. Finally, the applicants say there is an arguable case that the orders for the issue of the examination summonses were procured by a material defect in the supporting affidavit. This alleged defect is limited to the summons issued to Mr Gallagher and concerns a transfer of property from Mr Gallagher to his wife and whether Mr Gallagher had been served with or was aware of the Primary Proceedings at the time the transfer occurred.
2. This allegation arises from a letter sent by the liquidator's solicitors on 5 December 2024 which states that the Primary Proceedings were served on Mr Gallagher on 20 March 2019. This contention is inconsistent with the affidavit of Mr Matthews filed in the Primary Proceedings, which states that 'since 20 March 2019' the solicitors for Forge Group have been communicating with Mr Gallagher's solicitors about whether or not they would accept service on his behalf. The solicitors for Mr Gallagher in their letter dated 11 December 2024 requested advice as to whether this incorrect allegation was included in the affidavit filed in support of the originating process in these proceedings. On 13 December 2024, the liquidator's solicitors advised that 'nothing in the affidavit required correction'.
3. I do not accept that the correspondence that has passed between the solicitors for the parties, nor from my review of the affidavit in question, that there is any arguable case that there has been material non-disclosure in the affidavit. The liquidator's solicitors have provided the confirmation that was sought by the applicants' solicitors. Given this, in my view the request for inspection of the documents is 'fishing' to see whether there is a basis for the case that there has been material non-disclosure.

Should the court exercise its discretion to order the inspection of the affidavit?

1. At the hearing, senior counsel for the applicants accepted that it was not necessary for inspection of the affidavit to be granted in relation to their arguable case of oppression. Given this concession and the fact that this is the only ground on which I consider the applicants have established that they have an arguable case, it is strictly unnecessary for me to separately consider the question as to whether the court should exercise its discretion to order inspection of the affidavit.
2. However, for completeness, I will briefly address the five reasons that are set out in the applicants' written submissions. These reasons were as follows. First, to determine what was stated to be the purpose of the proposed examinations. Second, given the time that has passed since the summonses were issued, there was a concern as to the adequacy of disclosure that had been made to the court. Third, if the applicants were not granted access to the affidavit, they will be required to make submissions without having seen all material before the court. Fourth, given the stated purpose for the re-listing of the application, their inspection of the affidavit would not result in the frustration of the examinations. Fifth, the applicants wish to consider the affidavit to confirm whether there is any error in the information and whether it complies with the plaintiff's ex parte obligations.
3. For the following reasons I do not consider that any of these matters would support the court exercising its discretion to allow inspection of the documents.
4. First, as a general rule, a confidential affidavit filed in support of an application for an examination summons is not made available to a prospective examinee. Given this, it is the applicants who bear the onus of satisfying the court that the justice of the case requires that they be given access to the affidavit. In my view, it is insufficient in that respect for the applicants to contend that the affidavit merely may contain information that could support their application to discharge that onus. In my view, this submission is akin to fishing. In the circumstances of this case, I am not satisfied that the justice of the case requires access to the affidavit to be granted.
5. Second, the matters raised by the applicants as to why they say the re‑listing of the sums would be an oppressive or an abuse of process do not require access to the affidavit of Mr Jones, which was filed almost two years ago. This affidavit is irrelevant to the matters relied upon by the applicants, which emphasise the short time between any relisting of the summonses and the scheduled trial dates, and whether any update has been provided to the court as to the purpose of the examination. Refusing the applicants access to the affidavit will not and does not prevent the applicants from pressing these arguments at any final hearing.
6. Third, the matters advanced by the applicants make it clear, in my view, that they seek access to the affidavit to determine whether the affidavit will assist them in the application. In my view, that is not a proper basis on which an order for inspection should be made. Ultimately, in my view, the question as to whether the summonses should be discharged or set aside does not require the applicants to explore what was said in Mr Jones' affidavit in order to press their application, and the justice of the case does not require access to be granted.
7. Finally, even if I was satisfied that the applicants had an arguable case that the re-listing of the examination summonses was for an illegitimate purpose, I still would not have exercised my discretion to order inspection of the affidavit. This is because all of the matters relied upon by the applicants in support of this aspect of the claim concern matters that have arisen since the orders were first made in May 2023. The only affidavit that has been filed by the liquidator was an affidavit filed in support of the initial orders. In my view, access to this affidavit is not necessary to fairly and properly dispose of the argument.

1. For these reasons, it is my view that the application for inspection of the affidavit should be dismissed and that costs should follow the event.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[2] Gerah Imports Pty Ltd v The Duke Group Ltd (in liq) [1993] SASC 4359; (1993) 61 SASR 557, 564.

[3] Walton v ACN 004 410 833 Ltd (formerly Arrium Limited) (in liq) [2022] HCA 3 (Walton).

[8] Bazzo v Kirman as joint and several liquidators of Whitby Land Company Proprietary Limited (in liq) [2021] WASCA 170 [85].

[9] Re Excel Finance Corporation Ltd (Receiver and Manager Appointed); Worthley v England (1994) 52 FCR 69, 94.

[10] Re Moage Ltd (in liq); Sheahan v Pitterino [1997] FCA 719; (1997) 77 FCR 81, 95.

[11] Re Moage Ltd (in liq); Sheahan v Pitterino 93.