MATTER : Sons of Gwalia Ltd ACN 008 994 287 (Administrators Appointed) and certain of its subsidiaries as set out in the Schedule annexed to the Originating Process and marked 'A'

ANDREW JOHN LOVE AS ADMINISTRATOR OF SONS OF GWALIA LTD (ADMINISTRATORS APPOINTED) (ACN 008 994 287)

GARRY JOHN TREVOR AS ADMINISTRATOR OF SONS OF GWALIA LTD (ADMINISTRATORS APPOINTED) (ACN 008 994 287)

DARREN GORDON WEAVER AS ADMINISTRATOR OF SONS OF GWALIA LTD (ADMINISTRATORS APPOINTED) (ACN 008 994 287)

Corporations law - External administration - Examinable affairs - Examining a person about a corporation - Production of documents in a person's possession - Application for leave to issue summons to examine a person about the examinable affairs of a company - Whether the proposed examination is oppressive, unfair or an abuse of process - Whether the production of documents is sought for the purpose of obtaining information independently of the examination - Corporations Act 2001 (Cth) s 596B, s 597D(2), s 597(9) - Turns on own facts

Constitutional law - Courts' jurisdiction - Examinable affairs - Examining a person about a corporation - Whether the power conferred by s 596B Corporations Act 2001 (Cth) is a judicial power or is ancillary or incidental to the exercise of judicial power - Corporations Act 2001 (Cth) s 596B - Turns on own facts

Commonwealth of Australia Constitution Act 1900 (Imp), s 76(ii), s 77(i), s 77(ii)

Corporations Act 2001 (Cth), s 9, s 53, s 58AA, s 1337B, s 596B, s 596D(2)

(Commonwealth Attorney-General) : Mr D M J Bennett QC &

(Commonwealth Attorney-General) : Australian Government Solicitor

1 LE MIERE J: The plaintiffs are the deed administrators of the Sons of Gwalia (subject to deed of company arrangement) (SOG) and certain of its subsidiaries (together the SOG group). They have applied by interlocutory application for the issue of an examination summons to Mr Duncan Price pursuant to s 596B of the Corporations Act 2001 (Cth) (the Act). Mr Price is the Chief Operating Officer of Portman Ltd (Portman). By their interlocutory application the plaintiffs initially sought, in addition to the issue of the examination summons to Mr Price, that Mr Price produce to the court, within seven days of service of the examination summons, documents which are in the possession, custody and control of Mr Price, Portman, or Portman Iron Ore Ltd (Portman Iron Ore), relating to specified matters. Portman Iron Ore is a subsidiary of Portman.

2 On the hearing of the plaintiffs' interlocutory application, the plaintiffs amended their application to seek, in addition to the issue of an examination summons to Mr Price, that Mr Price produce to the court at the examination any of the documents which are in his possession relating to the specified matters, pursuant to s 596D(2) of the Act. The plaintiffs further amended their interlocutory application to seek a direction to Portman and to Portman Iron Ore to produce at the examination of Mr Price documents that are in their possession, custody or control which relate to the specified matters, pursuant to s 597(9) of the Act.

3 Mr Price, Portman and Portman Iron Ore, who their counsel referred to as the respondents, resist the application. The respondents contend that s 596B of the Act is invalid to the extent that it empowers the court to issue an examination summons, and conduct an examination, on the application of the administrator of a deed of company arrangement. The respondents issued notices pursuant to s 78B of the Judiciary Act (Cth). The Attorney-General of the Commonwealth, on behalf of the Commonwealth, intervened in the proceedings pursuant to s 78A of the Judiciary Act.

4 The Constitutional issue that arises is whether, in so far as s 596B of the Act confers on the Federal Court and State Supreme Courts power to summon a person for examination in aid of a process of external administration of a corporation, such as under a deed of company arrangement, s 596B invalidly confers non-judicial power on such a court exercising Federal jurisdiction.

5 Before considering the Constitutional issue I will set out the background to the application.

6 On 29 August 2004 the administrators were appointed joint and several voluntary administrators of the SOG group. On 30 August 2005 the SOG group executed deeds of company arrangement (DOCAs) and the administrators became the deed administrators of the SOG group. The DOCAs were due to expire on 30 April 2006, but pursuant to various extension orders made by this court they have been extended and remain in force.

7 SOG was a large Perth based publicly listed Australian mining company. It had a market capitalisation of approximately $244 million on 29 August 2004, prior to the ASX suspending trading of SOG's shares. SOG holds, directly or indirectly, all of the shares in the 24 other companies which comprise the SOG group, including Burmine Ltd (Burmine) and Burmine Exploration NL (Burmine Exploration).

8 The application by the administrators for the issue of an examination summons to Mr Price is brought to obtain further information to assist the administrators with their investigations into the affairs of the SOG group. The administrators consider that Burmine and/or Burmine Exploration are entitled to a 2% gross overriding royalty payable on iron or iron ore produced from certain mining leases (iron ore royalty) which form what is known as the Mount Jackson mining area (Mount Jackson tenements) and which are mining tenements converted from parts of a former underlying exploration licence (substituted tenement). The Mount Jackson tenements are owned by Portman Iron Ore which, as I have said, is a subsidiary of Portman, a publicly listed company. Portman Iron Ore and Portman dispute that an iron ore royalty is payable to Burmine or Burmine Exploration with respect to iron or iron ore produced from the Mount Jackson tenements. There were negotiations between the administrators and Portman and Portman Iron Ore regarding the entitlement of Burmine and Burmine Exploration to be paid the iron ore royalty. However, negotiations failed to resolve the dispute. The administrators say that they need certain mining data concerning the Mount Jackson tenements from Portman Iron Ore and Portman to attempt to overcome the settlement discussion impasse and also to provide greater certainty about the value and nature of this asset of the SOG group.

9 In essence, the iron ore royalty dispute concerns the interpretation of the royalty clause in the relevant agreement. The royalty clause refers to a 2% gross overriding royalty on all gold, silver and metals produced from the substituted tenement. The issue is whether that royalty clause requires the holder of the Mount Jackson tenements, Portman Iron Ore, to pay the royalty on iron or iron ore produced from those mining tenements. The administrators allege that the reference to metals produced from the tenements extends to iron and iron ore which Portman Iron Ore is currently extracting from the Mount Jackson tenements. Portman and Portman Iron Ore argue that iron ore is not a metal for the purposes of the relevant clause.

10 Under the DOCAs the administrators have the power to compromise any claim brought by SOG or one of its subsidiaries, but that power is only exercisable subject to the power of the SOG Consultative Creditors Committee to disapprove of a step to settle a claim. The administrators say that in order for them to make a recommendation that a SOG group entity should accept a settlement proposal they need to be in possession of the best possible information concerning a claim, including its possible quantum. The administrators say that in order for them to properly understand the potential value of the iron ore royalty and properly investigate the possibility of settling the dispute with Portman and Portman Iron Ore regarding the question of whether the iron ore royalty is payable and if so, on what terms, and thereby achieve the best possible return for the SOG group and its creditors, they require certain specific mining data from Portman and Portman Iron Ore so that the value of the iron ore royalty claim can be determined. The mining information they seek relates to the total ore tonnage reserves for the Mount Jackson tenements.

11 The administrators have previously requested Portman and Portman Iron Ore to provide the information they seek concerning the ore tonnage reserves for the Mount Jackson tenements but they have refused to provide it. The administrators now seek to examine Mr Price to obtain that information. The administrators say that the mining information which they seek to obtain upon the examination of Mr Price is fundamental to the administration of the SOG group of companies and is sought for the following purposes:

(a) to understand the value of the iron ore royalty (being a substantial asset of the SOG group) in the event that any litigation, which might have to be instigated to determine conclusively that the iron ore royalty is payable on iron/iron ore produced from the Mount Jackson tenements, is resolved in favour of the SOG group; and

(b) so the administrators can assess the reasonableness of any negotiated settlement sum which may be offered to settle the dispute and to consequently make informed recommendations to the SOG Consultative Creditors Committee.

12 It is common ground, and beyond dispute, that a court exercising powers under the Act is, by virtue of s 76(ii) and s 77(i) or (iii) of the Commonwealth Constitution and s 58AA and s 1337B of the Act, exercising Federal jurisdiction. Chapter III of the Commonwealth Constitution prevents the Commonwealth Parliament from conferring on a court powers that are not either judicial or ancillary to the exercise of judicial power. In this case, the issue is whether the power conferred by s 596B of the Act is a judicial power, or is ancillary or incidental to the exercise of judicial power.

13 The Commonwealth Attorney General submitted that s 596B of the Act in empowering an examination on the application of an administrator of a deed of company arrangement is constitutionally valid on two bases. First, the examination power is properly to be characterised as judicial by reason of it being ancillary to the conferral upon courts exercising jurisdiction under pt 5.3A of the Act of a general supervisory jurisdiction with regard to a corporation subject to a deed of company arrangement. Secondly, the power to summons witnesses on application and, in turn, to conduct or oversee resulting examinations is an established exercise of judicial power in and of itself. The mere fact that such a function may be, on one view, characterised as 'investigative' does not, in and of itself, preclude a further characterisation of the applicable power as being judicial.

14 The plaintiffs submit that s 596B of the Act validly empowers the court to order an examination on the application of an administrator of a deed of company arrangement on the same bases.

15 The respondents contend that s 596B is invalid as conferring a non-judicial power on a ch III court to the extent that it empowers the court to issue an examination summons, and conduct an examination, on the application of the administrator of a deed of company arrangement.

16 Section 596B is in pt 5.9 div 1 of the Act which is entitled and provides for examining a person about a corporation. Part 5.9 is in ch 5 which is entitled and deals with external administration and includes the following parts:

• arrangements and reconstructions (pt 5.1);
• receivers and other controllers of property of corporations (pt 5.2);
• administration of a company's affairs with a view to executing a deed of company arrangement (pt 5.3A);
• winding up in insolvency (pt 5.4);
• winding up by the court on other grounds (pt 5.4A);
• winding up in insolvency or by the court (pt 5.4B);
• voluntary winding up (pt 5.5);
• winding up generally (pt 5.6);
• winding up bodies other than companies (pt 5.7);
• recovering property or compensation for the benefit of creditors of insolvent company (pt 5.7B);
• offences (pt 5.8); and
• employee entitlements (pt 5.8A).

Part 5.9 is entitled 'Miscellaneous' and, as well as div 1 dealing with examining a person about a corporation, includes div 2 - orders against a person in relation to a corporation and div 3 - provisions applying to various kinds of external administration.

17 Part 5.9 div 1 provides for two types of examination. Mandatory examinations are provided for in s 596A. 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 two years ending on the date specified in s 596A(b)(i) - (iv).

18 Discretionary examinations are provided for in s 596B. Section 596B provides that a court may summon a person for examination about a corporations examinable affairs if:

(a) an eligible applicant applies for the summons; and

(b) the Court is satisfied that the person:

(i) has taken part or been concerned in examinable affairs of the corporation and has been, or may have been, guilty of misconduct in relation to the corporations; or

(ii) may be able to give information about examinable affairs of the corporation.

19 An eligible applicant in relation to a corporation is defined in s 9 to mean:

(a) ASIC; or

(b) a liquidator or provisional liquidator of the corporation; or

(c) an administrator of the corporation; or

(d) an administrator of the deed of company arrangement executed by the corporation; or

(e) a person authorised in writing by ASIC to make:

(i) applications under the division of part 5.9 in which the expression occurs; or

(ii) such an application in relation to the corporation.

20 A corporation's examinable affairs in relation to a corporation is defined in s 9 to mean:

(a) the promotion, formation, management, administration or winding up of the corporation;

(b) any other affairs of the corporation (including anything that is included in the corporation's affairs because of s 53); or

(c) the business affairs of a connected entity of the corporation in so far as they are, or appear to be, relevant to the corporation or to anything that is included in the corporation's examinable affairs because of (a) or (b);

21 Section 53 sets out what are the affairs of a body corporate. These include:

(a) the promotion, formation, membership, control, business, trading, transactions and dealings, property, liabilities, profits and other income, receipts, losses, outgoings and expenditure of the body; and

(b) the internal management and proceedings of the body.

22 The operation of s 596B is not confined to liquidators. Nevertheless, the power to issue examination summonses is not at large; the provisions are only applicable to companies in some form of external administration and cannot be used in relation to solvent companies: Highstoke Pty Ltd v Hayes Knight GTO Pty Ltd [2007] FCA 13; (2007) 156 FCR 501 [87], [89] (French J).

23 In Precision Data Holdings Ltd v Wills (1991) 173 CLR 167 the High Court highlighted the acknowledged difficulty of framing a definition of judicial power that is at once exclusive and exhaustive. The difficulty is said to arise from the circumstance that many of the essential characteristics of judicial power are not conclusive of its characterisation: Precision Data (188 - 189). It has also been said that the content of judicial power defies abstract conceptual analysis and requires consideration of predominant characteristics, and comparison with the historical functions and processes of courts of law: R v Trade Practices Tribunal; Ex Parte Tasmanian Breweries Pty Ltd [1970] HCA 8; (1970) 123 CLR 361, 394 (Windeyer J).

24 The characterisation of a particular power is to be approached by reference to a range of factors that, in combination, will provide guidance on that characterisation. However, no single combination of necessary or sufficient factors identifies what is judicial power: Attorney-General (Cth) v Alinta Ltd [2008] HCA 2; (2008) 242 ALR 1 [93] (Hayne J).

25 In Huddart Parker & Co Ltd v Moorehead [1909] HCA 36; (1909) 8 CLR 330, 357 Griffiths CJ said that judicial power is

the power which every sovereign authority must of necessity have to decide controversies between its subjects, or between itself and its subjects ... The exercise of this power does not begin until some tribunal which has power to give a binding and authoritative decision (whether subject to appeal or not) is called upon to take action.

26 Central to this description of judicial power is the making of a conclusive decision that settles a controversy about existing rights. Judicial power includes the power to carry the judgment into effect between the contending parties.

27 The historical treatment of a function or power is a significant factor in determining whether or not the power is judicial, but not determinative of the issue: Chu Kheng Lim v Minister for Immigration Local Government and Ethnic Affairs (1992) 176 CLR 1, 27 (Brennan, Deane and Dawson JJ); R v Hegarty; Ex Parte Salisbury City Corp [1981] HCA 51; (1981) 147 CLR 617, 627 (Mason J, Gibbs CJ, Stephen and Wilson JJ concurring); Cominos v Cominos [1972] HCA 54; (1972) 127 CLR 588, 605 (Stephen J) 608, (Mason J); R v Kirby; Ex Parte Boilermakers Society of Australia [1956] HCA 10; (1956) 94 CLR 254, 278 (Dixon CJ McTiernan, Fullagar and Kitto JJ); R v Davison [1954] HCA 46; (1954) 90 CLR 353, 382 (Kitto J) (Davison's case) .

28 Another factor in the characterisation of a power is the nature of the body exercising it. It has been recognised that there are functions which, when performed by a court, constitute the exercise of judicial power but, when performed by some other body, do not: Brandy v Human Rights and Equal Opportunity Commission [1995] HCA 10; (1995) 183 CLR 245, 267 (Deane, Dawson, Gaudron and McHugh JJ). Accordingly, some functions may, chameleon like, take their colour from the legislative surroundings or their recipient: R v Quinn; Ex Parte Consolidated Foods Corporation [1977] HCA 62; (1977) 138 CLR 1, 18 (Aickin J); Pasini v United Mexican States [2002] HCA 3; (2002) 209 CLR 246, 267 (Kirby J); Luton v Lessels [2002] HCA 13; (2002) 210 CLR 333, 387 - 388 (Callinan J); Albarran v Members of the Companies, Auditors and Liquidators Disciplinary Board; Gould v Magarey [2007] HCA 23; (2007) 81 ALJR 1155 (Gleeson CJ, Gummow, Hayne, Callinan, Heydon and Crennan JJ).

29 The Commonwealth Attorney General relies upon the 'chameleon principle'. In its written submissions the Attorney stated:

The chameleon principle takes as its starting point the position that a definition of judicial power that is both exclusive and exhaustive has proved illusive. The judicial function generally involves the binding and authoritative determination of existing rights or liabilities by an immediately enforceable decision reached by applying relevant principles of law to the facts as found and put in issue in justiciable controversies. However, that is not to say that there can be no overlap between those powers and functions which may be entrusted to a court exercising Federal jurisdiction and those which may be vested in the executive. Rather, the character of powers and functions may ' ... chameleon like, take their colour from their legislative surroundings or their recipients', or from the primary character of the functionary: R v Quinn, Ex parte Consolidated Foods Corporation [1977] HCA 62; (1977) 138 CLR 1 at 18 per Aickin J quoted with approval in Pasini v United Mexican States [2002] HCA 3; (2002) 209 CLR 246 at 267 [59] (Kirby J) and in Luton v Lessels [2002] HCA 13; (2002) 210 CLR 333 at 387-8 [188] (Callinan J); see also Albarran [2007] HCA 23; (2007) 81 ALJR 1155 at 1163 [35] (Gleeson CJ, Gummow, Hayne, Callinan, Heydon and Crennan JJ), cf 1168-9 [69]-[71] (Kirby J) and cf Visnic v ASIC [2007] HCA 24; (2007) 81 ALJR 1175 at 1183 [41] and 1184 [47] (Kirby J).

30 However, the mere fact that the Parliament has elected to assign a function or power to a judicial body is not conclusive of the Constitutional character of the power. The 'chameleon doctrine' does not go so far: Attorney-General (Cth) v Alinta Ltd [37] (Kirby J).

31 Functions that stand outside the common understanding of judicial power will be regarded as part of that power if they are incidental to the exercise of judicial power. In Queen Victoria Memorial Hospital v Thornton [1953] HCA 11; (1953) 87 CLR 144, 151 the court said:

Many functions perhaps may be committed to a court which are not themselves exclusively judicial, that is to say which considered independently might belong to an administrator. But that is because they are not independent functions but form incidents in the exercise of strictly judicial powers.

32 In Davison's case (369) Dixon CJ and McTiernan J referred to 'this double aspect which some acts or functions may bear' and referred to making procedural rules of court as an extreme example of a function that may be given to courts as an incident of judicial power or dealt with directly as an exercise of legislative power. Their Honours said:

But there are many functions or duties that are not necessarily of a judicial character but may be performed judicially, whether because they are incidental to the exercise of judicial power or because they are proper subjects of its exercise (369 - 370).

33 The historical evolution of the examination power was considered by French J in Highstoke. French J wrote that the statutory powers of examination of persons in connection with the affairs of bankrupts predated the creation of such powers with respect to the affairs of companies [46]. The earliest such provision in the companies' laws of the United Kingdom was s 15 of the Joint Stock Companies Winding Up Act 1844 (UK) (7 and 8 VICT 111). That provision empowered the court to summon and examine persons who were thought to be capable of giving information about the property and past transactions of the company. Its primary purpose was to assist the liquidator in locating the assets. Similar powers were conferred by s 115 of the Companies Act 1862 (UK) (25 and 26 VICT c 89). By that section the court was given power to summon before it any person whom it might deem capable of giving information concerning the trade and dealings, estate, or effects of the company. Sir George Jessell MR in Re Gold Company (1879) 12 Ch D 77, 85 said of the provision:

In fact the whole object of the section is to assimilate the practice in winding-up to the practice in bankruptcy, which was established in order to enable assignees, who are now called trustees, in bankruptcy to find out facts before they brought an action, so as to avoid incurring the expense of some hundreds of pounds in bringing an unsuccessful action, when they might, by examining a witness or two, have discovered at a trifling expense that an action could not succeed.

34 The Australian colonies prior to Federation enacted companies statutes based on the Companies Act 1862 (UK). The inconveniences caused by differences in the companies acts of the Australian States led to the development, by agreement between the States and the Commonwealth, of a Uniform Companies Bill based on the Companies Act 1958 (Vic). In 1961 and 1962 the States each passed a Companies Act based on the Bill. The powers of examination of persons in connection with the court ordered winding up of companies were found in s 249 and s 250 of the Companies Act 1961 (Cth). The two sections were located in div 2 of pt 10 entitled 'Winding Up by the Court'. Section 249 conferred power on the court to

summon before it any officer of the company or person known or suspected to have in his possession any property of the company or supposed to be indebted to the company, or any person whom the court deems capable of giving information concerning the promotion, formation, trade dealings, affairs or property of the company.

Section 250 conferred power on the court to order a public examination of persons or officers of the company where the liquidator had made a report to the court alleging the commission of a fraud or the concealment of any material fact by a promoter or officer of the company.

35 A broader power of examination was introduced into the Companies Act 1961 by the Companies Act Amendment Act 1969 (WA) which enacted s 367A. That section provided in subsection 1:

Where it appears to the Attorney General that any officer or former officer of a company to which this section applies has conducted himself in such a way that the officer or former officer has rendered himself liable to action by the company in relation to the performance of his duties as an officer of the company, the Attorney General, or any person who is authorised in that behalf by the Attorney General, may apply ex parte to the court for an order that the officer or former officer shall attend before the court on a day to be appointed by the court to be examined as to his conduct and dealings as an officer of the company.

36 The uniform company scheme was replaced in 1981 by a co-operative scheme based upon the Companies Act 1981 (ACT). Each State passed a Companies Code reflecting the provisions of the Commonwealth Act. A power of examination was conferred on the court by s 541 of the Companies Act 1981 (ACT) and of the Companies Code of the various States. Section 541(2) provided that:

Where it appears to the Commission or to a prescribed person that:

(a) ...

(b) a person may be capable of giving information in relation to the promotion, formation, management, administration or winding-up of, or otherwise in relation to affairs of, a corporation,

the Commission or prescribed person may apply to the court for an order under this section in relation to the person.

37 Section 541(3) provided that where such an application is made the court may order that the person attend before the court to be examined on any matters relating to the promotion, formation, management, administration or winding up of, or otherwise relating to affairs of, the corporation concerned.

38 A prescribed person was defined to be an official manager, liquidator or provisional liquidator of the corporation or any other person authorised by the Commission to make applications under the section. Thus, the examination power extended to companies under external administration and was not limited to winding up.

39 In 1989 the Commonwealth, in reliance upon the corporations power in s 51(xx) of the Commonwealth Constitution, passed the Corporations Act 1989 (Cth) imposing a national scheme of corporation regulation. However, in New South Wales v Commonwealth [1990] HCA 2; (1990) 169 CLR 482 the High Court held that the Commonwealth did not have power to make laws about the incorporation of companies. This led to the introduction of the 1991 co-operative scheme. The Commonwealth enacted the Corporations Act 1989 as a law of the Government of the Australian Capital Territory. Each of the States then passed its own Corporations Act for applying the corporation law as set out in the Corporations Act 1989.

40 Section 597 of the Corporations Act 1989 and the Corporations Law of each State reflected s 541 of the former Companies Code. It was judicially noticed that s 597 of the Corporations Act 1989 extended to companies under external administration and was not limited to winding up: Re Compass Airlines Pty Ltd (1992) 35 FCR 447, 452 - 453, (Lockhart J, Beaumont and Gummow JJ concurring); Hong Kong Bank of Australia Ltd v Murphy (1992) 28 NSWLR 512, 521 (Gleeson CJ, Mahoney and Priestly JJA concurring).

41 The Corporations Law was amended by the Corporate Law Reform Act 1992 (Cth) which introduced the new div 1 in pt 5.9 entitled 'Examining a Person about a Corporation'. It comprised s 596A - s 596F.

42 In 1999 and 2000 the High Court handed down two decisions which, although falling short of finding the Corporations Law invalid, seriously undermined the constitutional basis for the national scheme of laws: Re Wakim; Ex Parte McNally [1999] HCA 27; (1999) 198 CLR 511; R v Hughes [2000] HCA 22; (2000) 202 CLR 535. The Federal, State and Territory Governments subsequently agreed to replace the national scheme. In 2001 the State Parliaments passed legislation to refer to the Commonwealth the power to enact the Corporations Law as one seamless law applying throughout Australia. The enactment of the Act and the Australian Securities Investments Commission Act 2001 (Cth) are the results of that referral. The Act, which replaces the Corporations Law, largely reproduces the provisions of the Corporations Law. Division 1 in pt 5.9 of the Act reproduced the examination power provisions of the Corporations Law.

Judicial consideration of the examination power

43 In Re Monadelphous Engineering Associates (NZ) Ltd (in liq); Ex Parte McDonald (1989) 7 ACLC 220 the liquidators of Monadelphous Engineering Associates applied for orders pursuant to s 541 of the Companies (Victoria) Code that certain persons attend before the Federal Court for examination on any matter relating to the affairs of Monadelphous Engineering Associates (NZ) Ltd (in liq). The question for consideration was whether the Federal Court had jurisdiction to hear the application because 'Court' as used in s 541 of the Companies (Victoria) Code was defined to mean the relevant State Supreme Court. If the Federal Court did have jurisdiction then the question arose whether the Federal Court should exercise that jurisdiction. Northrop J held that the Federal Court had jurisdiction to hear and determine the application pursuant to the cross-vesting legislation. His Honour held that it was more appropriate that the application be transferred to the Supreme Court of Victoria for determination. Northrop J said:

A consideration of the whole of s 541 illustrates the investigative nature of the proceedings that follow where an order is made under subsection (3). Those proceedings are not in the nature of legal proceedings before a court; they are more in the nature of investigative procedures where the court has a presence for the purpose, basically, of seeing fair play between the persons interrogating and the persons being interrogated (223).

...

Having regard to the investigative nature of proceedings under s 541, it seems, on the face of it, that it is inappropriate for a Judge of the Federal Court to sit to conduct the processes of the examination. As I said before, the examination is not a court hearing in the true sense. It is not the exercise of judicial power. It is part of an investigative procedure (225).

44 Friedrich v Herald & Weekly Times Ltd [1990] VicRp 87; [1990] VR 995 concerned an order made pursuant to s 541 of the Companies (Victoria) Code for the public examination of the appellant and other persons in relation to the affairs of the National Safety Council of Australia (in liquidation). The appellant had applied to the master for an order that, amongst other things, the examination be in private. The master did not order the examination be in private but ordered that no person publish or cause to be published any report or any part of the examination. An appeal to Cummins J was successful. An appeal to the Full Court of the Supreme Court of Victoria was dismissed. Kaye, Fullagar and Ormiston JJ said that the decisions of the courts which have emphasised the desirability of holding trials in public were not really germane to the resolution of the appeal because

(e)ssentially this procedure is administrative and does not result in judicial decisions as to any party's rights, except decisions as to the manner in which the examination itself should be conducted (1003).

45 In Gould v Brown (1998) 193 CLR 346 the appellants moved the court for declarations and orders that, even with the consent of the Commonwealth, State legislatures had no power to invest the Federal court with State jurisdiction. The Federal Court had ordered a company incorporated in New South Wales under the Companies Act 1961 (NSW) be wound up under the Corporations Law and that the respondent be appointed liquidator of its affairs. Subsequently the Federal Court made orders upon the liquidator's application for the issue of summonses directed to named persons to attend for examination about the affairs of the company pursuant to s 596A and s 596B of the Corporations Law, which are materially in the same terms as s 569A and s 569B of the Act. After the summonses were issued some of the examinees filed a notice of motion seeking declarations that the Federal Court had no jurisdiction to order or conduct the examinations and seeking an order setting aside the summonses. It was argued that the legislature of New South Wales had no jurisdiction to confer State jurisdiction upon the Federal Court pursuant to the Corporations (New South Wales) Act 1990 (NSW) s 42.

46 Brennan CJ, Toohey and Kirby JJ, who upheld the validity of the cross-vesting provisions, considered whether the examination power conferred on the Federal Court by the State laws involved the exercise of judicial power. They held that the examination power was incidental to the court-ordered winding up of the company and on that basis had judicial character. In their joint judgment Brennan CJ and Toohey J said that the power to order the examination of witnesses in the cause and for the purposes of winding up and to conduct and hear such an examination had long been conferred on and exercised by courts exercising jurisdiction in the winding up of corporations (387). Their Honours stated that it is the part which an examination plays in a winding up and the court's function in conducting the examination that determines whether the court is exercising judicial power. Their Honours adopted the description given by Lockhart J in the Full Court in BP Australia Ltd v Amann Aviation Pty Ltd (1996) 62 FCR 451, 475:

Examination orders, summonses and proposed examinations which are the subject of this challenge are in truth but part of the processes that follow from making of the winding-up order, and which ultimately protect and adjust the rights of companies, their creditors and in some cases contributories. The court's supervisory role in the course of a winding-up is to ensure that the winding up laws are properly interpreted and applied to correct mistakes, and to supervise the exercise of compulsory processes in relation to the examination of persons and the obtaining of documents for the purposes of the conduct of those examinations.

47 Their Honours observed that although the function of the court in conducting an examination is not the determination of the rights and liabilities of adversaries it is incidental to the winding up (388). The incidental character of the function and the traditional supervision exercised by the court in performing it are sufficient to stamp it with a judicial character. Their Honours' characterisation of the power to order examinations as judicial was dependant upon its connection with the administration of the winding up of a company pursuant to an order made by the court. Their Honours said:

To the extent that the power to order and conduct examinations is available for exercise in the course and for the purposes of a winding up, it is an incident of the judicial power of winding up and has a judicial character (389).

48 Their Honours considered the powers available under s 596A and 596B when exercised to order and conduct examinations otherwise than in the course and for the purposes of a winding up. Their Honours said:

For example, if the Australian Securities Commission ... were to apply for a summons for the examination of a chief executive officer ... of a corporation about a takeover being made by the corporation the issuing of the summons to the chief executive officer and the conduct of his or her examination about the takeover offer would not be an exercise of judicial power (390).

49 Kirby J held that the conferral of jurisdiction to conduct an examination on the application of a liquidator relevant to the winding up of a company was incidental to the exercise of judicial power. His Honour noted that a more difficult question is whether the inclusion of a power in eligible applicants other than a liquidator and other inquisitorial powers fell outside of judicial power but found it was unnecessary to decide that issue.

50 In the course of her Honour's judgment, Gaudron J discussed the nature of the power to examine witnesses as to the examinable affairs of a corporation. Her Honour said:

It is notoriously difficult to provide a 'definition of judicial power that is at once exclusive and exhaustive'. The difficulty is compounded by the consideration that some powers have a 'double aspect' so that they are properly characterised as judicial if conferred on a court and non-judicial if conferred on another body. The examination of witnesses is a feature of the conduct of judicial proceedings. It is also a feature of the conduct of non-judicial proceedings. But the power in question in this case is not properly characterised as one with a 'double aspect'. Rather, it is an investigative power that courts have to carry out their judicial duties and which other bodies may also have to carry out their functions.

The power to examine witnesses conferred by Ch 5, Pt 5.9 of the Corporations Law is not a power to be exercised in the discharge of judicial duties. It is a power divorced from the determination of any justiciable controversy. It is not directed to the determination of existing rights or liabilities. Nor is it directed to the determination of guilt or innocence or the imposition of punishment for breach of the law. It is unrelated to the making of any binding decision as to existing powers, duties or status. And it is not associated with the conferral or adjustment of rights or interests in accordance with legal standards. It is simply a power to obtain information. As such, it is not judicial power. However, that is not to say that the power to examine witnesses in relation to the affairs of a corporation can never be conferred on a federal court.

Courts have long exercised jurisdiction with respect to the bankruptcy of individuals and the insolvency of companies, their procedures in that regard being essentially judicial in the sense that they usually involve parties - the petitioner and creditor - and invariably require proof of factual matters by application of the rules of evidence in proceedings conducted in accordance with judicial procedures. Moreover, the power to order the winding up of a company or the sequestration of a bankrupt's estate is exercised by 'the application of legal principles to proved states of fact and not upon considerations of policy or expediency.' It may be that those powers need not be conferred on courts, but, being so conferred, they are readily characterised as judicial in character.

The curial examination of witnesses in relation to the affairs of persons who have been declared bankrupt and companies that have been wound up is a familiar feature of bankruptcy and insolvency law. And a power to examine witnesses with respect to matters relevant to the proper administration of the bankrupt's estate or the winding up of the company is readily seen as a power 'attendant upon or incidental to the fulfilment of [the powers to make sequestration and winding up orders]'. Accordingly, if jurisdiction is conferred upon a federal court with respect to bankruptcy matters or matters involving the winding up of corporations, a power of examination may also be conferred as incidental or ancillary to the exercise of judicial power in that regard. As has already been noted, however, the power conferred on a court by Ch 5, Pt 5.9 of the Corporations Law is not confined to examinations with respect to the affairs of a corporation wound up by that court or, even, a corporation in respect of which a winding up application has been made to that court. And, as earlier indicated, it is by no means obvious that all matters falling within the definition of 'examinable affairs' are necessarily relevant to the winding up of a corporation.

It is convenient to proceed on the assumption that the power to examine witnesses in relation to the examinable affairs of a corporation may validly be conferred on a federal court if it has ordered that that corporation be wound up or if proceedings have been instituted in that court for its winding up. Even on that assumption, however, it must be concluded that, to the extent that the power conferred by Ch 5, Pt 5.9 is not confined to examination by a court which has exercised or is exercising jurisdiction to make an order for the winding up of the corporation, it is not properly characterised as judicial power. And to that extent, Ch III precludes the conferral of that power on the Federal Court, whether by the States or by the Commonwealth. However, there is nothing in Ch III to prevent the Commonwealth from conferring power of that kind on the Supreme Court of the Australian Capital Territory [66] - [70]. (citations omitted)

51 In Spinks v Prentice (1998) 87 FCR 89 one of the Constitutional issues that arose was whether the Federal Court has power to make orders pursuant to s 596B (for examination) or s 597(9) (for the production of documents) of the Corporations Law (ACT). In a joint judgment Beaumont, Burchett and Lehane JJ said at (96):

It is true, although there is no challenge to the winding-up order made here, s 596A would permit an examination where there has been no winding up. But, given the long history of courts exercising such powers, we can see nothing foreign to the exercise of judicial power in this aspect of s 596A: see Re Compass Airlines Pty Ltd (1992) 35 FCR 447 at 452 - 453; Grosvenor Hill (Qld) Pty Ltd v Barber [1994] FCA 921; (1994) 48 FCR 301 at 307 - 308; Re Excel Finance Corporation Ltd; Worthley v England (1994) 52 FCR 69 at 79 - 81.

52 On appeal in Spinks v Prentice [1999] HCA 27; (1999) 198 CLR 511 the High Court dismissed the appeal. Gummow and Hayne JJ noted that it had not been contended that the power to order the examination of witnesses and to produce documents for the purposes of a winding up and to supervise the conduct of the examination was otherwise than the exercise of a function incidental to the exercise of judicial power [176].

53 In Highstoke the trustee for the debenture holders of a company brought proceedings against the former trustee company, claiming damages for breach of its duties. The trustee then obtained authorisation from the Australian Securities and Investments Commission (ASIC) to apply to the court for the issue of a summons for the examination of a director of the former trustee company in respect of its professional indemnity insurance cover, to determine whether any judgment on the damages claim was likely to be satisfied. The summons was subsequently issued by the court pursuant to s 596A of the Act. The former trustee and its director challenged the issue of the summons on the basis that the power to issue a summons under s 596A was to be exercised only in relation to a corporation in some form of external administration. French J held that the proper construction of s 596A and s 596B of the Act does not confer a general power on the court to issue summonses for the examination of persons about the examinable affairs of any corporation not in external administration or otherwise subject to any of the processes for which ch 5 of the Act provides.

54 French J went on to consider a Constitutional question raised by the respondent in the event that s 596A extended to the examinable affairs of a corporation which is not under any form of external administration nor subject to any other judicial or administrative process for which ch 5 provides. His Honour identified that the Constitutional question required a consideration of whether the power conferred upon the court by s 596A is judicial power when applied to the corporation which is not under any form of external administration or judicial process under ch 5 [93].

55 After referring to the nature of judicial power and High Court authorities his Honour said at [96]:

Taken alone, a power to require a person to answer questions or produce documents in aid of an investigation is administrative in character. Taken alone, it neither leads to, nor is incidental to, a binding determination of rights or liabilities. As Professor W Harrison Moore wrote in the second (1910) edition of 'The Constitution of the Commonwealth of Australia' (Legal Books, 1997 reprint) (308 - 309):

The mere power to enquire, and to require testimony upon an enquiry, is not judicial power. Inquiry is incidental to the judicial power, but it is equally incidental to other powers of government. The Executive and the Legislature alike are entitled to seek information to guide them in the exercise of their powers; and that which is non-judicial when exercised without coercive power does not change its nature when information can be required.

56 After referring to the nature of a power to examine when conferred upon a regulatory body authority, such as ASIC, French J continued at [97]:

Mason J [in Pioneer Concrete (Vic) Pty Ltd v Trade Practices Commission [1982] HCA 65; (1982) 152 CLR 460] made some observations relevant to the distinction between the exercise of an investigative power which may lead to subsequent judicial proceedings but nevertheless remains administrative and the exercise of an administrative power as an incident of judicial power. He said (471 - 472):

'The absence in s 155 of any power to decide or determine the dispute between parties - the central element in the exercise of judicial power - might be thought to be an overwhelming answer to the argument that there is an attempt to confer judicial power on the Commission. However, it is suggested that if the Commission requires information to be given for the purpose of obtaining evidence in a matter before the court then it is exercising judicial power. According to Holmes J in Prentis v Atlantic Coastline [(1908)] [1908] USSC 160; 211 US 210 227], "the nature of the final act determines the nature of the previous enquiry". But this does not mean that because the determination ultimately made by the Federal Court in proceedings in respect of a contravention of the Act is an exercise of judicial power the issue and service of the notices is itself such an exercise. Holmes J was merely saying that the character of the order or final decision made by a Tribunal will determine the character of the enquiry which precedes its decision, so that if its determination is a judicial order then its enquiry will constitute an exercise of judicial power. R v Davison [(1954) [1954] HCA 46; 90 CLR 353] was just such a case. This is not to say that it is legitimate to characterise the nature of the power exercised by the Commission under s 155 by reference to the judicial power which the court exercises when it hears proceedings for a penalty under the Act. What the Commission does will produce information which may be presented in evidence by a party in proceedings in respect of the contravention under the Act, but this is no basis for saying that there is an exercise of judicial power on the part of a Commission. The exercise of a power to compel the provision of information is not inherently such an exercise. It may constitute an element in the exercise of judicial power when the power is part of the proceedings of the court, its object being to aid the purpose of enabling the court to hear and determine the lis and is, accordingly, incidental to, if not an element in the exercise of judicial power.'

See also Kluver J B and Woellner R H, Powers of Investigation in Revenue, Companies and Trade Practices Law (Butterworths, 1983) at [102] - [103].

57 French J then referred to Re Monadelphous Engineering Associates (NZ) Ltd (in liq); Ex Parte McDonald (1989) 7 ACLC 220, 225 - 226 where Northrop J referred to the investigative character of the examination procedure under s 541 of the Companies (Victoria) Code and said it was not the exercise of judicial power but part of an investigative procedure. French J then observed that the same characterisation of the examination process was made by the Full Court of the Supreme Court of Victoria in Friedrich v Herald & Weekly Times Ltd (1003). His Honour then discussed Gould v Brown and referred to the statements of Brennan CJ and Toohey J and of Gaudron J to which I have referred.

Divorced from association with a judicial proceeding nothing about the examination power under the Corporations Act marks it as judicial in character. It lacks the core elements of the judicial process such as the finding of facts, the making of value judgments and binding determinations as to legal rights and obligations [106].

59 His Honour then referred to the chameleon doctrine and stated:

The examination power taken alone, in the sense used above, is not an exercise of judicial power nor, taken alone, is it judicial when exercised by a court. It can only be accommodated within the exercise of judicial power if incidental to it or justified by historical usage. An examination ordered in aid of the implementation of a winding-up order made by a court can be seen as incidental to the exercise of judicial power and has long been accepted as such, at least implicitly if not explicitly, on that basis. On the other hand an examination which is 'free standing' in the sense that it is exercise without reference to any pending proceeding does not fall within the scope of the usual power unless it can be characterised as judicial on the basis that it is a function which courts have long carried out. The historical incidence of investigative functions exercised by courts was referred to in Dalton v New South Wales Crime Commission [2006] HCA 17; (2006) 80 ALJR 860; 226 ALR 570. That case concerned the validity of s 76 of the Service and Execution of Process Act 1992 (Cth). The section empowers the Supreme Court of a State, in which a subpoena is issued by a tribunal for a person to give evidence before the tribunal, to give leave to serve the subpoena out of the State. It was submitted in the High Court that the exercise by the courts of investigative functions did not occasion or support the issue and service of process under s 51(xxiv) of the Constitution. There was therefore said to be no foundation for an analogical extension in respect of the investigative functions of tribunals. To the extent that this argument involved the denial of the investigative function of courts it was rejected in the joint judgment of Gleeson CJ, Gummow, Hayne, Callinan, Heydon and Crennan JJ. Their Honours said [2006] HCA 17; (80 ALJR 860; 226 ALR 570 at [45]:

From a time well before Federation, the courts of the Australian colonies, like those in England and elsewhere in the Empire, exercised a range of administrative and investigative functions. Provisions for the examination of judgment debtors, bankrupts, and officers of failed corporations are in point. In Chaney v Spooner [1929] HCA 12; (1929) 41 CLR 532 this court upheld the application of the 1901 Act to an order by the Supreme Court of New South Wales under ss 123 and 124 of the Companies Act 1899 (NSW) which gave leave to a liquidator of a company in voluntary liquidation to summons a number of persons to attend for examination by the Master in Equity. The Equity jurisdiction of the Supreme Courts with respect to bills of discovery (or preliminary discovery in more recent parlance) provides another instance of an investigative procedure. So also the courts of Marine Enquiry established in the Australian colonies. Likewise the next of kin enquiry in an administration suit, conducted in New South Wales by the Master in Equity. Further, the 1901 Act, as King CJ pointed out in [Alliance Petroleum Australia NL v Australian Gas Light Co (1983) 34 SASR 215 at 236] applied to subpoenas and summonses issued by coroners.

The above passage states no new principle and indeed refers generally in a footnote to the discussion by Dixon CJ and McTiernan J in R v Davison [1954] HCA 46; 90 CLR 353. But to say that the courts have historically exercised investigative functions does not mean that all investigative functions conferred on a court, absent relevant historical antecedents or analogues, are to be regarded as judicial if not otherwise incidental to the exercise of judicial power. Without some limitation of that kind investigative obligations may be imposed by statute upon courts exercising Federal jurisdiction on any subject within the legislative competence of the Commonwealth Parliament.

The question in this case is whether there is any historical basis for characterising the examination power as now propounded as judicial in character. Its purported extension to corporations which are not being wound up or otherwise subject to judicial processes is an event of recent and certainly post-federation history. Nor can its characterisation as judicial be treated as analogous to such processes as preliminary discovery or bills of discovery in equity which have, in any event, a narrower field of operation than that which is proposed for s 596A [107] - [109].

In my opinion if the construction of s 596A for which Highstoke contends is the correct construction, then s 596A purports to confer on the Court a power which is not capable of characterisation as judicial and which, in its present application, is not incidental to the exercise of judicial power [110].

60 As I have already noted, the characterisation of a particular power is to be approached by reference to a range of factors that, in combination, will provide guidance on that characterisation.

61 I conclude that taken on its own, and not as an incident of the judicial supervision of external administration, the powers conferred by s 596A and s 596B of the Act are not judicial in character. A key factor considered by the High Court is whether the exercise of the power resolves controversies relating to existing rights: although, as with other factors, it has been noted that this issue is not conclusive in determining whether judicial power has been exercised. It was elaborated upon by Kitto J in R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd:

[A] judicial power involves, as a general rule, a decision settling for the future, as between defined persons or classes of persons, a question as to the existence of a right or obligation, so that an exercise of the power creates a new charter by reference to which that question is in future to be decided as between those persons or classes of persons. In other words, the process to be followed must generally be an inquiry concerning the law as it is and the facts as they are, followed by an application of the law as determined to the facts as determined; and the end to be reached must be an act which, so long as it stands, entitles and obliges the persons between whom it intervenes, to observance of the rights and obligations that the application of law to facts as shown to exist (374).

62 As French J observed in Highstoke the power to order and conduct an examination, divorced from association with a judicial proceeding, lacks the core elements of the judicial process such as the finding of facts, the making of value judgments and binding determinations as to legal rights and obligations.

63 Secondly, there is no historical basis for characterising the examination power as judicial in character other than as an incident of the judicial supervision of the winding up or other external administration of a company.

64 In my opinion the examination power conferred by s 596A and s 596B when divorced from the exercise of any other judicial function, is not capable of characterisation as judicial and hence, is not a judicial power even when conferred upon a court.

The examination powers are incidental to the exercise of judicial power

65 The Commonwealth Attorney General and the plaintiffs argue that the examination power is properly to be characterised as judicial by reason of it being ancillary to the conferral upon courts exercising jurisdiction under pt 5.3A of the Act of a general supervisory jurisdiction with regard to a corporation subject to a deed of company arrangement.

66 Courts in Australia and in the United Kingdom have long exercised jurisdiction with respect to the bankruptcy of individuals and insolvency of companies. Their procedures in relation to those matters have been recognised as being judicial and the exercise of powers in relation to those matters have been recognised to be an exercise of judicial power: Gould v Brown [32] - [33] (Brennan CJ and Toohey J), [68] (Gaudron J). The exercise of the power to summon and conduct the examination of persons about the examinable affairs of a corporation in liquidation is incidental to the exercise of judicial power: Gould v Brown (Brennan CJ and Toohey J, Gaudron J and Kirby J).

67 The examination power conferred by s 596A and s 596B of the Act has a long history in companies legislation. The power has not been confined to companies in the course of being wound up, although its extension to companies in forms of external administration other than winding up is comparatively recent.

68 The Act does not confer on the court a necessary role in the initiation of a voluntary administration, the convening of meetings to consider a deed of company arrangement or the approval of that deed. However, in addition to the specific powers which are conferred upon the court such as the regulation of creditor's rights (eg s 441H, s 444F); the supervision of administrators (s 447E); and fixing or reviewing the administrator's remuneration (s 449E), the court has a general supervisory jurisdiction (s 447A). That jurisdiction may be invoked by any interested person, including the company, a creditor, the administrator or ASIC: s 447A(4).

69 The object of pt 5.3A is to provide for the administration of the business, property and affairs of an insolvent company. The administration begins when an administrator is appointed under s 436A, s 436B or s 436C. Those sections provide for appointment by persons other than the court. The administration may end in a variety of ways. One way is that the court orders that the administration is to end: s 447A(2).

70 Division 13 of pt 5.3A deals with powers of the court. Section 447A(1) provides that the court may make such orders as it thinks appropriate about how pt 5.3A is to operate in relation to a particular company. In addition to the general power conferred by s 447A, the other sections of div 13 confer further powers on the court to supervise or control the administration. Section 447B provides that the court may make such orders as it thinks necessary to protect the interests of the company's creditors while the company is under administration. Section 447C empowers the court to declare whether a purported appointment of a person as administrator of a company is valid. Under s 447D the administrator of a company under administration, or of a deed of company arrangement, may apply to the court for directions about a matter arising in connection with the performance or exercise of any of the administrator's functions and powers. Section 447E empowers the court to make such order as it thinks just if it is satisfied that the administrator's actions are prejudicial to creditors or members. Section 447E(2) empowers the court to make such order as it thinks just where there is a vacancy in the office of administrator.

71 There are other specific powers conferred upon the court to regulate or supervise the administration of the affairs of a company under administration or that has executed a deed of company arrangement. Those powers, and particularly the power conferred by s 447A, when exercised by the court are judicial powers. Orders made under s 447A determine how the legal rights and obligations arising under pt 5.3A operate in relation to a particular company. Section 447A orders are issued and enforceable by the court. Furthermore, the power conferred by s 447A is limited by the objects of pt 5.3A set out in s 435A: see Harris J, 'The Constitutional Basis of Section 447A: Is it a Power without Limit?' (2006) 14 Insolv LJ 135, 143 and following.

72 The procedure of summoning a witness for examination about the affairs of a company in liquidation has long been an element of the law of winding up: see Parker G 'Liquidator's Examinations' (1993) Australian Bar Review 25. In 1992 the Corporations Law was amended to introduce the predecessor to pt 5.3A of the Act. That is another form of administration of insolvent companies subject to the control or supervision of the court.

73 Having regard to all of the factors I have discussed, I conclude that the power of the court under s 596B to summon a person for examination in aid of a process of external administration of a corporation under a deed of company arrangement, is incidental to the exercise of judicial power conferred on the court by pt 5.3A of the Act. Hence, the court may validly exercise the power under s 596B.

Respondents oppose issue of summons on non-Constitutional grounds

74 The respondents submit that if, as I have found, s 596B validly confers power on the court to issue a summons to the respondents for their examination, the court should not issue the summonses.

75 The power of the court to issue a summons under s 596B is conditioned upon the following matters:

(b) the court is satisfied that the person, amongst other things, may be able to give information about examinable affairs of the corporation.

76 The plaintiffs are the administrators of the deed of company arrangement executed by the corporations in relation to whose examinable affairs the plaintiffs apply for the summons to be issued. Hence, the plaintiffs are eligible applicants.

77 At the outset of this hearing the respondents submitted that the court should not issue the summons for the following reasons. First, the plaintiffs have not established that Mr Price may be able to give information about the examinable affairs of SOG and the companies in sch A of the application, as required by s 596B(1)(b)(ii). Secondly, the plaintiffs seek the issue of the summons to Mr Price for the purpose of obtaining production of specified documents which is an impermissible use of the examination power. Thirdly, the summons should not be issued because it is premature and oppressive to the respondents to allow examination of Mr Price prior to a resolution of the royalty clause litigation in favour of the SOG group.

78 Before the court may summons a person for examination about a corporation's examinable affairs under s 596B, the court must be satisfied relevantly that the person may be able to give information about examinable affairs of the corporation.

79 In Ex Parte Merrett, Re ACN 072 081 111 Pty Ltd (1997) 25 ACSR 146, 150 Young J held that the words 'may be able to give information' connote the court being satisfied that objectively there are facts before it which show that it is so likely that the proposed examinee can give information that it warrants the court in calling upon the person named to give the applicant the information he may well have.

80 The information which is sought by the plaintiffs is mining information that relates to the total ore tonnage reserves for the Mount Jackson tenements. Mr Price is the Chief Operating Officer of Portman. It may be open to infer that it is likely that Mr Price can give information about the Mount Jackson tenements and in particular the ore reserves on the tenements. It may be open to infer that the companies have books and records that relate to the total ore tonnage reserves for the tenements.

81 The evidence before the court concerning Mr Price's role with Portman and Portman Iron Ore goes no further than that he is the company Chief Operating Officer. That may have been insufficient to enable the inferences to which I have referred to be drawn. However, in the course of the hearing counsel for the respondents withdrew the objection and conceded that Mr Price may be able to give information about the examinable affairs of SOG, Burmine and Burmine Exploration. The draft summons for examination summonsed Mr Price for examination about the examinable affairs of SOG and the companies in sch A. Counsel for the respondents accepted that the mining information is relevant to the examinable affairs of SOG, Burmine and Burmine Exploration but not the other companies listed in the schedule. The evidence does not establish that Mr Price may be able to give information about the examinable affairs of the corporations listed in sch A other than SOG, Burmine and Burmine Exploration.

Examination for purpose of production of documents

82 The respondents submit that the plaintiffs seek the issue of an examination summons to Mr Price for the purpose of obtaining the production of specified documents, namely the 'Mining Information' as that term is defined in [4(b)] of the plaintiff's written submissions, by Portman and Portman Iron Ore.

83 The respondents submit that obtaining the production of documents simpliciter is an impermissible use of the examination power. In Re BPTC Ltd (No 5) (1993) 10 ACSR 756 the Registrar made an order pursuant to the New South Wales Supreme Court Rules that the applicant, the managing director of a firm of solicitors, produce documents to the court. The order was ancillary to proceedings which had been commenced by the new trustees of the Estate Mortgage Trusts in relation to the affairs of the former trustee, BPTC Ltd (in liq) (BPTC). The trustees had sought and obtained orders under s 597 of the Corporations Law that Mr Short, a former director of BPTC, and another person, to be examined in relation to the affairs of BPTC and produce documents. Mr Short was a partner of the firm from February 1987 until September 1990. No member of the firm had been ordered to attend to be examined. The trustees had commenced actions for compensation and damages against a variety of persons connected with the affairs of BPTC when it was trustee, including Mr Short and the members of the firm who, it was claimed, authorised Mr Short to accept appointment and act as a director of BPTC so that they were liable to the same extent as Mr Short pursuant to the Partnership Act 1892 (NSW). The order for production was very extensive and included the requirement that the firm produce any document brought into existence between 1 January 1960 and 3 December 1990 recording any resolution, agreement, practice or policy of the firm in relation to partners, consultants or employed solicitors acting as directors of companies and other matters. The applicant sought to have the order set aside on the basis that it did not conform to a fundamental principle in respect of subpoenas, that it must specify with reasonable particularity the documents which are required to be produced.

84 At (763) Bryson J referred to Re BPTC Ltd (in liq) (No 2) (1992) 8 ACSR 533 where McLelland J had referred to the width of the power to compel production of documents and to the need for wide powers but at the same time referred to the need to avoid oppressive operation. McLelland J had recognised the need for a relation between the order for production of documents and the purposes of examining persons under s 597; if information is to be obtained, it is obtained from that examination, and the production of documents is ancillary to the process of examination. Bryson J's opinion was than an order for the production of documents which had the effect of compelling the production of documents which were not required for the examination would be oppressive, an order for production which had that purpose would be made in excess of power to make such an order. At (766) Bryson J referred to Re BPTC Ltd (in liq) (No 3) (1993) 11 ACLC 365 where McLelland J emphasised, correctly in the opinion of Bryson J, the ancillary nature of the exercise of compelling production of documents, and the limitation of the exercise though that it cannot be undertaken for the purpose of obtaining information independently of the examination of particular individuals.

85 The principle referred to by the respondents does not apply to this application. The plaintiffs do not seek the production of documents for the purpose of obtaining information independently of the examination of Mr Price. To the contrary, the plaintiffs wish to examine Mr Price about mining data of Portman and Portman Iron Ore that goes to the value of the iron ore royalty claimed by the plaintiffs. As I have said, during the course of the hearing counsel for the respondents conceded that Mr Price may be able to give information about the examinable affairs of SOG and the Burmine companies. The plaintiffs wish to examine Mr Price to obtain mining information that relates to the total ore tonnage reserves for the Mount Jackson tenements. The plaintiffs seek the production of documents that will disclose those same things. The plaintiffs do not seek the production of documents which are not required for the examination of Mr Price. They seek the production of documents which go to the very things about which Mr Price is to be examined. The production of the documents is ancillary to the process of the examination.

86 The respondents submit that the plaintiffs seek to examine Mr Price and seek the production of documents for a two fold purpose:

1. To understand the value of the royalty in the event that litigation is resolved in favour of the SOG group; and
2. To assess the reasonableness of any negotiated settlement sum which may be offered so as to make an informal recommendation to the SOG Consultative Creditors Committee.

87 The respondents submit that there is no settlement offer on foot and any settlement offer has been withdrawn. Accordingly, it is submitted that the second purpose fails and cannot justify the proposed examination. The utility of the proposed examination for the first purpose, it is submitted, is dependant on a contingency - the resolution of litigation as to the proper construction of the disputed royalty clause in favour of the SOG group.

88 The respondents refer to Sent v Andrews [2002] VSCA 209; (2002) 6 VR 317 where a liquidator obtained orders requiring three persons connected with the company to attend before the court for examination. Two of the persons were defendants in a proceeding which had been commenced by the company before it went into voluntary liquidation. The liquidator, who already possessed a large amount of information concerning the company's case, proposed to examine each of the three persons about issues the subject of the pending proceedings. They applied for orders discharging the summonses issued against them or, alternatively, for a direction restricting the scope of the examination to issues that were not the subject of the pending proceeding.

89 Buchanan JA, with whom Vincent JA agreed, said that orders for the issue of summonses for examinations will be set aside if they are oppressive, unfair or an abuse of the process of the court [11]. Buchanan JA said that where an examination relates to proposed or current litigation, in general terms the question is 'whether the examination is genuinely for the information of the liquidator to aid him in considering whether there is a cause of action upon which he will proceed; and the court will be alive to the possibility of oppression where the application is merely to advance the action, whether actual or proposed'. His Honour said that the liquidator is not entitled to conduct a dress rehearsal of the cross-examination in an action or to seek to damage the opposing party's case by attacking the credibility of that party's witnesses.

90 The material before the court does not establish that the plaintiffs seek the issue of the summons for an improper purpose or a purpose beyond the scope of s 596B or is otherwise unfair.

91 The iron ore royalty claim is an asset of the companies Burmine and Burmine Exploration. The plaintiffs seek the Mining Information for the purpose of assessing the value of the iron ore royalty and hence, the iron ore royalty claim. The value of the claim or the iron ore royalty, if the plaintiffs' action is successful, is relevant to decisions to be made whether or not to commence litigation, whether to seek a compromise settlement of the action and whether or not to agree to any settlements that might be proposed by the respondents. The fact that there is no settlement offer presently on foot does not affect those matters.

92 In my opinion the issue of the summonses is for a proper purpose and is not oppressive or unfair.

Order for production of documents by Mr Price

93 The plaintiffs also seek an order that Mr Price produce to the court at the examination any of the documents which are in his possession relating to specified matters, pursuant to s 596D(2) of the Act.

94 If an examination has been ordered the court may direct the examinee to produce any books relevant to the examination: s 596D(2). The power is ancillary to an examination under s 596B. It is appropriate that the summons to Mr Price under s 596B should require Mr Price to produce at the examination documents which are in his possession relating to the specified matters.

95 The plaintiffs further seek a direction to Portman and to Portman Iron Ore to produce at the examination of Mr Price documents that are in their possession, custody or power which relate to the specified matters, pursuant to s 597(9) of the Act. Section 597(9) provides that the court may direct a person to produce, at the 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.

96 The documents sought by the plaintiffs to be produced by Portman and Portman Iron Ore are relevant to the matters to which the examination will relate: that is, the mining information identified by the plaintiffs and in particular the information relating to the total ore tonnage reserves for the Mount Jackson tenements. The production of those documents is ancillary to the examination of Mr Price in relation to those matters. Furthermore, the production of those documents is likely to facilitate the examination of Mr Price and assist in obtaining from Mr Price the information which the plaintiffs seek in relation to the total ore tonnage reserves for the Mount Jackson tenements.

97 Having regard to the evidence before the court it is an appropriate exercise of the court's discretion to order the issue of a summons to Mr Price under s 596B of the Act.

98 An examination summons should issue under s 596B to Mr Duncan Price, Chief Operating Officer, of Portman Ltd that he attend for examination about the examinable affairs of SOG, Burmine and Burmine Exploration. The summons may require Mr Price to produce at the examination any of the documents specified by the plaintiffs in their application. The court will direct Portman and Portman Iron Ore to produce at the examination of Mr Price documents that are in their possession, custody or power which relate to the matters specified by the plaintiffs. I will hear counsel as to the form of the orders which should be made to give effect to these reasons.