Roufeil v Fiore, in the matter of the Bankrupt Estate of Peter Andrew Fiore

JACKSON J: 1 Mr Peter Fiore became bankrupt on 23 October 2013 and remains a bankrupt. Mr Mark Roufeil is his trustee in bankruptcy. On 12 December 2018, on Mr Roufeil's application, a registrar of this court issued summonses for examination and summonses for production of documents to a number of individuals as well as Australia and New Zealand Banking Group Ltd. The summonses were issued under s 81 of the Bankruptcy Act 1966 (Cth). They were returnable on 29 April 2019, but on that day the registrar adjourned the summonses to 13 May 2019 at 2.30 pm. 2 On 9 May 2019 Mr Fiore filed an interim application to set all of the summonses aside. An amended application and notices of appearance have since been filed so that as well as Mr Fiore, the following persons are applying to set aside the summonses: (a) his mother, Liliana Fiore; (b) his fiancé, Katherine McKelt; (c) his son, Jonathan Charles Fiore; (d) his daughter, Giorgia Louise Fiore; (e) his ex-wife, Giuseppina Fiore; and (f) his sister, Marina Hogan. 3 Those parties, to whom I shall refer as the respondents, have also applied for access to the application for the summonses. In accordance with the usual practice the application for the summonses was made ex parte and neither it nor the affidavit of the trustee in support are presently available for inspection by the respondents. In oral submissions, counsel for the respondents made it clear that they apply for access to both the application for the issue of the summonses and the affidavit in support. It is that application for access which, with the consent of all parties, I am determining on short notice today. 4 Both that application and what I will describe as the substantive applications to set aside the summonses are supported by an affidavit of Diana Velevski, who is the solicitor for the respondents. Ms Velevski's affidavit indicates that summonses have been served on each of the respondents and other persons and entities. 5 The affidavit raises concerns about some of these summonses. Many of the concerns are in the nature of submissions rather than evidence, and I will treat them accordingly. 6 In relation to the summons issued to Liliana Fiore, the affidavit raises the following concerns. Ms Fiore is 82 years old. The summons is said to be 'so broad and conceptually disorganised as to invite a question as to a [sic] proper basis for it'. For example, one clause of the summons requires Ms Fiore to produce all documents in her possession or control relating to Mr Fiore's affairs. This is said to be an impossible task, given that Ms Fiore is Mr Fiore's mother and has known him all his life. Mr Fiore is 57 years old. 7 The summons requires production of all bank statements in Liliana Fiore's name or for accounts to which she is or was a signatory from 1 October 2008 to August 2018, a period of approximately 10 years, approximately five of which preceded Mr Fiore's bankruptcy. Ms Velevski asserts that it is not easy to understand what relevance that may have. 8 The summons also requires production of the 'will and probate' of Ms Fiore's deceased husband, when, it is said, that is available from the Supreme Court Registry for a fee of $44.50. 9 Ms Velevski is informed by Liliana Fiore that she and Mr Fiore do not co-mingle their financial affairs, which 'causes me wonder what the basis, if any, Trustee has for issuing a summons to Ms Fiore' (grammatical errors in original). 10 The affidavit also raises concerns about other summonses that have been issued. In relation to a summons to a Mr Skinner, Mr Fiore's former solicitor, it asserts that 'much of anything he had to produce would likely have been privileged'. Also, the summons was issued to Mr Skinner personally where Mr Fiore was a client of the incorporated legal practice. At the previous return of the summons counsel representing Mr Skinner informed the court that Mr Skinner 'pointed out to the Trustee that the summons was issued to the wrong person and the Trustee indicated that he would not bother issuing a further (correct) summons'. Ms Velevski submits in her affidavit that this 'invites the inference that the Trustee was not aware of any information likely to assist in the administration of the estate, but issued it anyway'. 11 The affidavit also refers to the summons issued to Giorgia Fiore (who, intending no discourtesy, I will call Giorgia). She is 20 years old and a student. The summons requires production of all bank statements in her name or for which she was a signatory or an authorised user over the same 10 year period as the summons to Liliana Fiore. At the beginning of that period Giorgia was 10 years old. The affidavit says that Giorgia was only served with the summons on Wednesday 8 May 2019, which Ms Velevski says is unreasonable and contrary to the express requirements of s 81 of the Bankruptcy Act. However the trustee has filed an affidavit of service indicating that Giorgia was served on Monday 6 May at 11.00 am. 12 The affidavit also refers to the summons issued to Mr Fiore's son, Jonathan Fiore (who, again meaning no discourtesy, I will call Jonathan). He is 25 years old and works at Fortescue Metals Group as an intern. The summons to him, similarly to the others, requires production of bank statements over the 10 year period, at the beginning of which Jonathan was 15 years old. The affidavit says that Jonathan was served with the summons on Wednesday 8 May 2019, which is said to be unreasonable and contrary to s 81 of the Bankruptcy Act. However an affidavit of service indicates that Jonathan was served on Tuesday 7 May at 11.00 am. 13 In relation to the summons to Ms Giuseppina Fiore, all the affidavit says is that since their separation in 2012, she and Mr Fiore have had little to do with each other beyond arrangements for their children. I note that she was served on Wednesday 8 May 2019 at 2.30 pm. 14 Mr Fiore and his fiancé Ms McKelt have only known each other for five years. But the summons to her requires production of records going back approximately 10 years. Ms McKelt was not served with the summons until the evening of Tuesday 7 May 2019 and has not had time to attempt to collate the documents requested in the summons. Ms Velevski says that is unreasonable. 15 Ms Velevski's affidavit says that the summons to Mr Fiore's sister, Ms Hogan, was served on the evening of Wednesday 8 May 2019. She has had no time to attempt to collate the documents and this is also said to be unreasonable. However there is an affidavit of service indicating that Ms Hogan was served on Saturday 4 May 2019 at 5.00 pm. It is said that Ms Hogan has no co-mingling of financial affairs with Mr Fiore. 16 Ms Velevski concludes by submitting that the number of summonses, their scope, 'the abandonment of Mr Skinner's affidavit', which I take to mean the alleged abandonment of the summons to Mr Skinner (which the trustee disputes), and 'the apparently random selection of summonses is oppressive and invites a question as to whether a proper basis exists for them'.

Parties' submissions 17 The respondents now seek access to the originating application and affidavit in support which was filed and which led to the issue of the summonses for examination and production of documents. 18 The respondents submitted on the basis of Re Aitken, Ex parte Aitken (1987) 15 FCR 114 that I am not constrained by authority from making the affidavit available. The respondents further submit on the basis of that decision that each case needs to be considered on its merits, and they say that the only criterion for refusal of access is a reasonable and reasonably based belief that the examinees' knowledge of the affidavit would or may lead to effective avoidance of a significant purpose of the examination such as the destruction or disposal of the relevant documents, other tampering with evidence or a reordering of events or evidence. 19 Counsel for the respondents also submitted on the basis of the same case that it was appropriate for me to examine the affidavit in order to assist me to form a view as to whether it was in the interests of justice that access to the affidavit be given. Counsel on both sides had no objection to that course of action and confirmed that if I were to read the affidavit, but were to then decline to order that the respondents may have access to it, their clients would not object to my determining the substantive applications. 20 Counsel for the respondents submitted that when one looks at all the summonses with which his clients have been served, it invites questions as to whether there was a proper basis for the application for the issue of the summonses. 21 The trustee opposed the application for access to the trustee's affidavit on the basis that disclosure of the affidavit could forewarn examinees as to potential lines of examination and thus impair the effectiveness of the process. 22 An affidavit of Ming-Jung Hsieh sworn 14 May 2019 was received into evidence, which annexed a notice of objection to the discharge of Mr Fiore's bankruptcy on grounds that included allegations of misstatement of his income and refusal to comply with requirements such as the surrender of his passport. The period of the bankruptcy has been extended on the basis of that notice of objection. Counsel for the trustee submitted that this means that it is not 'a standard bankruptcy'. He explained that what he meant by this was that, in circumstances where the bankruptcy has been extended on the basis of the conduct of the bankrupt, the public policy objective of ensuring thorough scrutiny of the bankrupt's affairs should override the competing imperative of giving the respondents access to the basis of the application for the issue of the summonses. 23 Counsel for the trustee also submitted that in light of the conduct of the bankrupt, the applications to set aside are weak. He said that the respondents' suggestion that the issue of the summonses was based on 'misinformation or bad faith' does not raise their application for access to the affidavit above the level of a fishing expedition.

Principles 24 In Re Excel Finance Corp Ltd; Wortherley v England (1994) 52 FCR 69 at 93-94 the Full Court held as follows: In our view the Court has a discretion to order the disclosure, to a prospective examinee, of material lodged in support of the application for an examination order and should do so where the justice of the case so requires: cf Re British & Commonwealth Holdings Plc (Nos 1 and 2) [1992] Ch 342 at 355 per Nourse LJ and at 367 per Ralph Gibson LJ. It does not follow that the Court would permit every examinee or potential examinee to have access to such material. There are sound reasons why inspection should not be freely granted for so to do could afford to an examinee information which could permit the examination process to be frustrated: cf per Sir George Jessel MR in Re Gold Co (supra) [(1879) 12 Ch D 77]. There could also be confidential information which should properly be withheld. However, we agree with Nourse LJ in Re British and Commonwealth Holdings Plc (at 355): "… inspection of the statement should prima facie be allowed where the court is of the opinion that it will or may be unable fairly and properly to dispose of the application if part of the evidence is withheld from the person against whom the order is sought. It will then be for the officeholder to satisfy the court that confidentiality in whole or in part is nevertheless appropriate." An applicant will not be permitted access to such material to enable him or her to "fish" for a case. There must be material before the Court from which it appears that the applicant has an arguable case, to which the material is relevant, before the discretion should be exercised in favour of that applicant. But once that appears the discretion will normally be exercised in favour of the application. 25 In Re Southern Equities Corporation Ltd (in liq); Bond v England (1997) 140 FLR 202 at 219 Debelle J held, after quoting from Re Excel Finance Corp, that if in the case before him the applicant, Mr Bond, was to be permitted to have access to the materials relied on by the liquidator, Mr Bond must demonstrate that he has an arguable case that the liquidator seeks the examination for an improper purpose and that the affidavit filed in support of the application for the summons is relevant to that case. The question was whether it was possible fairly and properly to dispose of the application without access to the affidavit. 26 It is true that in Re Aitken; Ex parte Aitken Einfeld J expressed a sceptical view about the prevailing practice of sealing applications for the issue of summonses of this kind, and held that he was unconstrained by authority from making the application in that case available to the parties seeking access to it. However Re Aitken was decided before Re Excel Finance Corp, a decision of the Full Court of this Court and, while Re Excel Finance Corp was a case in the companies jurisdiction, I see no reason why the principles there are not also applicable in the bankruptcy jurisdiction. Branson J applied the same principles in the bankruptcy context in Donnelly v Davison [2000] FCA 1396; (2000) 105 FCR 1 where (at 10-11 [23]) her Honour held that the fact that an application has been made for review of the decision will not itself be sufficient to justify production of the documents.

Consideration 27 It will be apparent from the summary of Ms Velevski's affidavit which I have given that the principal bases of the respondents' objections to the summonses are that they are too broadly expressed, and, in a related point, the time provided for compliance with them is unreasonably short. 28 The respondents also point to the breadth and number of the summonses to invite a question as to whether a proper basis exists for them. I agree that there seem to have been a relatively large number of summonses issued, and their scope is tolerably broad. However the number of the summonses does not establish any overreach, much less lack of a proper basis for issuing them. That an official liquidator will issue such summonses for no good reason is not something that a court will lightly infer: Karounos v Official Trustee (1988) 19 FCR 330 at 336 (12). I see no basis to infer it in the present case. 29 I have also taken account of the breadth of each of the summonses for production of documents that have been served on the respondents. However on the state of the evidence at present I see nothing in that beyond, it is open to be argued, careless drafting or an excess of investigatory zeal. I emphasise that I have formed no concluded view as to whether the summonses are in fact too wide and should be set aside for that or any other reason. That is yet to be fully agitated before me. For present purposes, it is enough to say that in my view the respondents have not established an arguable case that the summonses were issued on the basis of misinformation or bad faith or for any improper or collateral purpose. 30 That being so, in my view the arguable case raised by the respondents for the setting aside of the summonses is confined to the concerns about the alleged breadth and unreasonableness of the summonses that have been served on them, which concerns I have already summarised. Those are all arguments that can be made on the face of the summonses that have been served on the respondents. There is no need for the respondents to see the trustee's affidavit in order to advance the arguments they need to advance in order to seek to have the summonses issued to them set aside. 31 Counsel for the respondents confirmed in oral submissions that his clients could proceed with their applications without access to the affidavit. He said that the affidavit may, however 'add some colour to the grounds' and may 'reveal additional bases for the setting aside the summonses'. With respect, the first of these points is not a persuasive reason to provide access to the affidavit, and the second point suggests that the respondents are indeed embarking on a fishing expedition. Counsel also submitted that access to the affidavit may result in the limitation of the issues in dispute or even show that the summonses were justified. That may be so, but on the basis of the evidence in the affidavit of Ms Hsieh as to the parties' attempts at conferral about the scope of the summonses, I am not optimistic. 32 In the case of the summonses that have been served on persons or entities that are not respondents, I have doubts as to whether the respondents, including the bankrupt, have standing to pursue that aspect of their substantive applications. But even if they do, for present purposes I do not consider that that aspect of the substantive applications rises above fishing. 33 Ms Velevski has offered an undertaking that she will not disclose the contents of the trustee's affidavit to her clients. Counsel for the trustee submitted that this is not enough, because, once seen, the contents of the affidavit could not be unseen, and it is difficult to imagine how Ms Velevski can advise her clients about the summonses and examinations without making use of the information. There is force in that submission, although I say that without casting any doubt on Ms Velevski's willingness to comply with any undertaking she gives to the court. Rather, experience shows that with the best intentions in the world, inadvertent or unconscious use of knowledge gained in these circumstances is a real risk. 34 For those reasons I will not make any order giving the respondents access to the application for the issue of the summonses or the affidavit in support. 35 It will be apparent from these reasons that I did not consider it necessary to read that affidavit in order to deal with the application to access and, despite the willingness of the parties for me to do so, I have not read it. I am prepared to entertain further submissions on the point if any party wishes me to, but in keeping with the approach that Debelle J took in Re Southern Equities (see at 218) I presently consider it preferable to determine the substantive applications without access to material which has been withheld from the respondents. I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jackson.

SCHEDULE OF PARTIES WAD 518 of 2018 Respondents Fourth Respondent: JONATHAN CHARLES FIORE Fifth Respondent: KATHERINE MCKELT Sixth Respondent: MARINA HOGAN Seventh Respondent: GIUSEPPINA FIORE