Strarch International Limited (In Liquidation) v Loh & Ors

DECISION : Declaration that transcripts of examinations are written records made under s.597(13)

CATCHWORDS : CORPORATIONS - winding up - examination of officers - statutory right under s.597(14) to inspect "written record made under subsection (13)" - s.597(13) contemplates order for making of written record and requirement that examinee sign it - where latter imposed but former not explicitly made - whether, having regard to actual course of events, words spoken included or implied order for making of written record - meaning of "order" in the particular context

Corporations Act 2001 (Cth), s.597 LEGISLATION CITED : Supreme Court (Corporations) Rules 1999, rule 2.13(3) Supreme Court Rules 1970, Schedule E Part 2

R v Auliff [2001] NSWCCA 393 R v Phan [2001] NSWCCA 29 R v Radju (2001) 53 NSWLR 471 CASES CITED : Re Strarch International Limited [2005] NSWSC 583 Southern Cross Airlines Holdings Ltd v Arthur Andersen & Co (1998) 28 ACSR 455 Wu v The Queen (1999) 199 CLR 99

Strarch International Pty Limited (In Liquidation) - Plaintiff PARTIES : Yoon Kwai Loh, Tsi Lip Lai, Hock Keng Tan and Peng Huiah Teo - Defendants

Mr E.T. Finnane - Plaintiff COUNSEL : Mr J.R.J. Lockhart/Mr I.S. Wylie - Defendants

McCabe Terrill - Plaintiff SOLICITORS : Freehills - Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST

5030/04 STRARCH INTERNATIONAL LIMITED (IN LIQUIDATION) v LOH & 3 ORS JUDGMENT 1 After determination by me on 22 June 2005 of the further amended interlocutory process filed by the liquidator of Strarch International Limited (see Re Strarch International Limited [2005] NSWSC 583), the persons who had been granted leave to be heard upon that application without becoming parties purported to file an interlocutory process of their own aimed at establishing the status, for the purposes of s.597 of the Corporations Act 2001 (Cth), of the document recording proceedings at the several concluded examinations conducted under Part 5.9. 2 In order that they might pursue that application, those persons sought and were granted leave to be added as defendants (Supreme Court (Corporations) Rules 1999, rule 2.13(3)). The relief they seek is: "A declaration that the transcripts of examination of 22 and 25 October 2004 are written records under 597(13) of the Corporations Act 2001." 3 For the purposes of the hearing of this application for declaratory relief, the parties co-operated in a process that resulted in copies of relevant parts of the content of the court file in relation to the Part 5.9 examinations being extracted and tendered upon the application, but without the applicants being afforded access to any part recording the questions asked of the examinees and answers given by them. 4 The earlier judgment referred to the fact that s.597 itself expressly contemplates two different forms of document recording proceedings at an examination. They are referred to in s.597(14). The first is a "written record of an examination so signed by a person", that is, pursuant to a requirement imposed under s.597(13)). The second is a "transcript of an examination of a person that is authenticated as provided by the rules". Nothing in the legislation precludes the possibility of a document recording proceedings that falls outside both those descriptions. 5 The question now before me for decision is whether the documents in fact brought into existence in relation to the examinations conducted in this case are within the first of the descriptions. The question is pertinent because of my decision on 22 June 2005 that a document within the first description is, by s.597(14A), available for inspection by any person (subject to payment of a fee if the person is not within s.597(14A)(a)) and that the right of inspection under s.597(14A) cannot be abrogated by a direction under s.596F(1)(e). 6 The answer to the question raised by the present application will emerge from an assessment of the evidence concerning aspects of the proceedings at and in relation to the examinations in the light of s.597(13) which is as follows: "The Court may order the questions put to a person and the answers given by him or her at an examination to be recorded in writing and may require him or her to sign that written record." 7 Three persons were examined before Acting Senior Deputy Registrar Wearne on 22 and 25 October 2004. The tendered material shows that each examination followed the same procedural pattern. The matters requiring attention emerge sufficiently from the documents concerning the first examination, that of Mr Key. Conclusions in relation to Mr Key's examination will apply equally to the two other examinations conducted on those days, being the examinations of Mr Moll and Mr Langbein. 8 The first and last parts of a transcript of each examination are in evidence. The transcript is in the usual form prepared by the Court Reporting Service and printed on paper headed: "COPYRIGHT RESERVED Copyright in this Transcript is reserved to the Crown. The reproduction, except under authority from the Crown, of the contents of this transcript for any purpose other than the conduct of these proceedings is prohibited." 9 The transcript for 22 October 2004 records the appearances of the legal representatives of the liquidator and the examinees (Mr Johnson and Mr Robinson respectively). It then records that Mr Key was sworn and asked by the Deputy Registrar for his name, address and occupation, which he gave. The following then appears: "DEPUTY REGISTRAR: Mr Key, please listen very carefully to what I'm about to tell you. This is something I read out to every examinee in this type of examination. This examination which is held under the Corporations Act 2001 is an unusual court proceeding. You're required to answer questions even if your answer could tend to incriminate you or make you liable for a penalty. However, your answer cannot be used against you in a criminal proceeding or proceedings for imposing a penalty if you clearly state the word Privilege before answering the question and you need to do that for each answer for which you're claiming privilege. In other words, if Mr Johnson asks you a question and you want to take advantage of that right to claim Privilege you state the word Privilege and then go on to give your response and the Court officer has left a card in front of you if you wish to remind yourself of that right. Note that if you give a false answer or if you refuse to answer a question that is put to you in this examination you may be liable for perjury or Contempt of Court. Mr Key do you understand that [sic] I've told you? EXAMINEE KEY: I do. DEPUTY REGISTRAR: The other thing to note is that everything we say in this Court is being taped, it will be later transcribed so it may be necessary for you to spell out something or repeat something if it's not understood what you say and the other thing is that you can't use the every day shrugs and nods that we all do you have to articular a response for the tape. EXAMINEE KEY: Understood." 10 Examination of Mr Key followed. At its conclusion, the following appears: "DEPUTY REGISTRAR: Mr Robinson, under the legislation do you wish to assist Mr Key explain or qualify any of the responses he has given this morning? ROBINSON: No. DEPUTY REGISTRAR: Thank you. I am just going to make some orders, Mr Key, in relation to your examination. It's stood over generally with liberty for the liquidator to restore it on giving you fourteen days notice. If your examination is not restored in the next six months it is deemed to be concluded. Second, I direct that you sign a transcript of the evidence you've given today and when the transcript has been prepared the clerk of the court will send you a letter requesting you to attend this building. The direction is to sign the transcript but it's a good idea to read through it before you sign it.

There were then submissions about directions that the matters examined upon not be discussed with other persons. 11 On 22 October 2004, Acting Senior Deputy Registrar Wearne signed a document headed: "Supreme Court of New South Wales REQUEST FOR TRANSCRIPT"

The document was in a standard printed form addressed to the Transcripts Clerk, Reporting Services Branch. It referred to the proceedings by number and the name of the company, and to the date 22 October 2004. Against "Particulars of Transcript Required", a box marked "Full" was ticked. Acting Senior Deputy Registrar Wearne, as well as signing, was named in a space labelled "Ordered by". 12 A letter dated 10 November 2004 on Supreme Court letterhead and bearing an indecipherable signature above "For the PRINCIPAL REGISTRAR" was subsequently sent to Mr Key. The letter reads as follows: "On 22/10/04 you gave evidence in the matter of: Strarch International Pty Ltd File No.: 5030/04 The Court now requires you to attend the Supreme Court at Queen's Square, to read and sign the transcript of evidence. You are required to attend within fourteen days from the date of this letter, failure to do so may make you liable to for [sic] proceedings to be taken against you in respect of your default. In order to read and sign the transcript, please contact the Examination Clerk on the above phone number to make arrangements to have the transcript available. The office hours are 9.00 a.m. to 4.00 pm. Please enquire with the Enquiries Clerk on Level 5 of the Registry who will refer you to the Section 597 Examination Clerk." 13 The transcript document in the file bears the signature of Mr Key on each page. Attached to the front is a sheet with printed content as follows: " SIGNING OF S.597 EXAMINATION TRANSCRIPTS · You may attend with your solicitor, however they are not entitled to advise you in relation to the content of the transcript. You may consult with them to the extent of refreshing your memory. · PLEASE NOTE: You must sign the foot of each page of the transcript in pen. · Should you dispute any part of the transcript comments or alterations can be made in the margin. Care should be taken to ensure that the original text remains legible. Please ensure that alterations to the transcript are made using pencil only. · Mobile phones are not to be used whilst reading and signing the transcript. · You are not entitled to remove the transcript from the Registry."

This sheet has on it a handwritten notation as follows: "PLEASE SEND COPY TO ME! (Sgd) P. Key" 14 The applicants say that, on these facts, the court must find that the transcript of Mr Key's examination, as signed by him and retained in the court file, is, in terms of s.597(14A), a "written record made under subsection (13)". For the document to have that character, it must be found, having regard to the terms of s.597(13), that the court ordered the making of the written record of questions and answers represented by the transcript and that the court required Mr Key to sign it. 15 In the present context, the reference in s.597(13) to the "Court" (in the upper case "C" sense derived from s.58AA) is a reference to this court. Section 121(1) of the Supreme Court Act 1970 enables a registrar to exercise such powers of the court as are, by that or any other Act, conferred on a registrar. By the Supreme Court Rules 1970 (and therefore under the Supreme Court Act), a registrar may exercise the powers of the court in respect of matters mentioned in Part 2 of Schedule E to those rules. Among those matters are: "28. Orders under the following provisions of the Corporations Act of the Commonwealth - … (k) section 597 (which relates to the examination of persons about corporations), ...

31. Holding an examination under section 596A, 596B or %(& of the Corporations Act of the Commonwealth. …" 16 These provisions (coupled with the definition of "registrar" in s.19 of the Supreme Court Act) make it clear that Acting Senior Deputy Registrar Wearne had, in relation to Mr Key's examination on 22 October 2004, power to make an order and to impose a requirement under s.597(13). Neither party contends to the contrary. The question is whether she did so. 17 Mr Finnane of counsel, who appeared for the liquidator, submitted that the "request for transcript" sent by the Deputy Registrar to the Court Reporting Service cannot be regarded as an "order" for s.597(13) purposes. I agree. In addition, the applicants concede that the Deputy Registrar did not, in terms, pronounce in court an order that the questions put to Mr Key and the answers given by him at his examination be recorded in writing. But the fact that she said at the outset that the proceedings were being tape-recorded and would later be transcribed and that she said at the end that Mr Key was to sign the written record in fact brought into existence is, in company with the remainder of the surrounding circumstances, sufficient, according to the applicants, to require a finding of an implied order for recording of questions and answers in writing. 18 The ordinary concept of an "order" of the court involves an unambiguous command. But the fact that an unambiguous command is not articulated is not fatal to a contention that the command is issued. It is clear that an order of the court may be found to have been made by implication. I refer, in that connection, to the decision of the Court of Criminal Appeal in R v Radju (2001) 53 NSWLR 471. That case concerned provisions of the Jury Act 1977 enabling the court to discharge one juror and stating that, in a case where a juror is discharged, "the jury shall be considered as remaining for all the purposes of that trial or inquest properly constituted" if any one of four conditions was satisfied "and if the court or the coroner, as the case may be, so orders". A juror was allowed to depart in circumstances which satisfied one of the four specified conditions but the judge did not, in explicit terms, make any discharging order or any order that the jury was to be considered to continue properly constituted. 19 Wood CJ at CL (with whom Giles JA and Simpson J agreed) reviewed in detail what the transcript recorded the judge as having said. His conclusion was that "… his Honour's remarks may here be treated as having amounted to implied orders of the kind required by the Act."

Wood CJ at CL also said: "Had the attention of his Honour been brought to the need for an order, framed in express terms, for the discharge of the juror and for the continuation of the trial, there is no doubt whatsoever that the orders would have been made and by consent." 20 These conclusions were reinforced by reference to observations of members of the High Court in Wu v The Queen (1999) 199 CLR 99. In the trial at first instance, one juror was unable through illness to attend on the tenth day. The trial judge, after hearing counsel, decided to continue without her. In the presence of the jury, he said "… We can carry on with eleven. We are sorry to lose her, but it is my decision. I have the power to discharge in these circumstances." 21 The absence of orders under the provisions subsequently considered in Radju was not a ground of appeal before the High Court in Wu. Some of the members of the court nevertheless commented on the matter. Gleeson CJ and Hayne J said (at p.103): "It is plainly desirable that a judge exercising the power to discharge a juror and the power to proceed with a jury of less than twelve members does so in unmistakable terms. Ordinarily that will be done by the trial judge making two separate orders: an order discharging the juror and an order that the trial proceed before the jury constituted by the remaining jurors. It might fairly be said that, in the present case, the judge's orders discharging the juror and directing continuation of the trial before the remaining jurors were not expressed but are to be inferred from what he said and the course that the trial took thereafter ." [emphasis added]

Callinan J said (at p.134): "I need only make this further observation. It is appropriate that a trial judge, confronted with a situation in which he or she has to make a decision about a reduction in the number of jurors not do so hastily, without as full an inquiry as is practicable and reasonable, and without making explicit orders as s 22 requires, as to the reduction in number and the continuation of the trial with the reduced number. Adherence to such a procedure (which the Act demands) has the effect not only of ensuring an unambiguous record of what has taken place but also of focusing the trial judge's attention upon the necessity to weigh up whether a juror's or jurors' absence should require the trial to be aborted or whether it should continue with the reduced number. Here I take what Judge Flannery said and ruled to involve at least implicitly consideration of, and orders covering these matters. This was not therefore a case of the kind considered in Maher v The Queen [125] where what occurred was directly relevant to and affected the constitution and the authority of the jury trying the case contrary to the statutory provisions governing these matters." [emphasis added] 22 The approach taken in Radju was followed in R v Phan [2001] NSWCCA 29 (reported at 53 NSWLR 480 but not on this point). The deficiency there was in relation to an order that the jury be permitted to separate after retiring to consider their verdict. Wood CJ at CL again reviewed precisely what the trial judge had said and concluded: "While for the reasons expressed in Radju , it would have been preferable for an order to have been made in express terms in the present case, his Honour clearly gave consideration to the question whether the jurors should be allowed to separate, and then announced that they could do so. In those circumstances, I am of the view, similarly to that reached in Radju , that his Honour's remarks may be treated as amounting to an implied order under s54 of the Act. This ground has not been made good."

(See also R v Auliff [2001] NSWCCA 393.) 23 In the present case, the court clearly imposed a requirement that Mr Key sign a transcript of his examination. The Deputy Registrar said to him: "I direct that you sign a transcript of the evidence you've given today …"

The reference to "the evidence you've given today" can only be a reference to the questions he was asked and the answers he gave. As regards creation of such a transcript, however, the Deputy Registrar informed Mr Key that "everything we say in this Court is being taped" and would be "later transcribed", pointing out the need for him to "articulate a response for the tape", which he acknowledged. Taken together, the Deputy Registrar's indication at the start of the examination that "everything we say in Court" would be taped and "later transcribed" and her direction at the end that "you sign a transcript of the evidence you've given today" carry within them an unmistakeable message as to the procedure to be followed at and following the examination. The reference to taping for later transcription indicated that, with the Deputy Registrar's concurrence, the questions asked and answers given in the examination over which she was presiding were to be captured in a form capable of being converted into a written record and that such a record was to be made. And the reference to signing a "transcript" of "the evidence you've given today" confirmed that such a written record of the questions and answers was to be made. 24 Having regard to the concepts elucidated in Radju and Phan, I am satisfied that the Deputy Registrar gave consideration to the matters with which s.597(13) is concerned. There was no overt reference to that statutory provision but there was overt reference to the two matters contemplated by it, being creation of a written record of questions and answers and the imposition of a requirement to sign the record. Particularly pertinent, as Mr Lockhart of counsel submitted on behalf of the applicants, is the point that, apart from s.597(13), there is no provision of legislation and no general law principle that could ground the requirement with respect to signing that was imposed by the Deputy Registrar and followed up by the letter requiring Mr Key to attend at the registry to sign. 25 By proceeding as she did, the Deputy Registrar caused the examination to be conducted in the manner contemplated by s.597(13). This, as I say, is borne out particularly by the express direction regarding signing of the transcript. The Deputy Registrar must, in my view, be taken to have intended to proceed, and to cause the examination to be conducted, in an overall manner that warranted the explicit direction actually made as to signing of a written record by the examinee. Part of that overall manner was, by necessary implication, that such a written record be brought into existence. It may thus be inferred that the explicit statement at the beginning as to taping of everything that was said for later transcription, coupled with the reference at the end to signing of the transcript, amounted to a procedural direction that the questions and answers be tape-recorded and later transcribed. 26 That procedural direction was, in my view, an "order" of the kind referred to in s.597(13), at least by necessary implication. In general, orders of a court are directed to a person and require the person to do or refrain from doing something. When s.597(13) says that the court "may order" that the questions and answers "be recorded in writing", it does not necessarily contemplate an order in that sense. It may, but often will not, mean some person is to be commanded by the court to make the written record upon pain of contempt for failing to do so. The concept under s.597(13) (as under the Jury Act provisions considered in the cases I have mentioned) is much more likely to be, in a given case, a concept of the court's specifying that a particular method of proceeding is to be adopted and followed. I am satisfied that, in the present case, the Deputy Registrar turned her mind to the question of the appropriate method of proceeding and specified the method described in s.597(13). 27 As was said in Wu, Radju and Pham, it is obviously preferable that courts make orders in express and explicit terms. That observation applies with equal force in the present context. It appears from the material before me that registrars of the court adopt a standard formula as reflected by what was said at the beginning and end of Mr Key's examination. That formula does not seem to contemplate discussion of the question whether any written record of the examination is to be made by or under the auspices of the court and, if so, whether it is to be made under or separately from s.597(13). I refer again, in that connection, to what was said by Drummond J in a passage in his judgment in Southern Cross Airlines Holdings Ltd v Arthur Andersen & Co (1998) 28 ACSR 455 quoted in my earlier judgment: "It can be seen that Byrne J did not give any direction that a transcript be kept of the examination, although it is apparent that it was the intention of the liquidator, and the understanding of the judge, as reflected in his orders, that a transcript would be made. Pt 5.9 Div 1 the Corporations Law does not contain any general provision that deals with the making of a transcript of the examination. Section 597(13) empowers the court to make an order for the making of a special kind of transcript, ie, one recorded in writing and signed by the examinee, and s 597(14) regulates the admissibility in any legal proceedings against the examinee of that special transcript and also "any transcript of an examination of a person that is authenticated as provided by the rules", ie, by the transcript recorder or by any person present at the examination. See r 81(2) the Corporations (Queensland) Rules 1993. A person over whom the liquidator has no control, eg, the judicial officer before whom the examination is conducted, can therefore authenticate a transcript not specially ordered under s 597(13), with the result that it will be admissible in evidence in any legal proceedings brought by anyone against the examinee. The transcripts here in question were prepared pursuant to a private arrangement between the liquidator and the State Reporting Bureau. In my opinion, Pt 5.9 Div 1 leaves it to the person conducting the examination to determine whether a transcript of the examination is to be kept, in the absence of the court exercising its powers under s 597(13). In deciding whether to have a transcript made, the examiner will no doubt be guided by the wishes of the liquidator or other person at whose behest the examination was ordered." 28 Because of the different rules, as to rights of inspection, applicable to different forms of written records of Part 5.9 examinations and the discretionary nature of s.597(13), it is desirable that the judicial officer presiding at an examination should, at the outset, invite submissions as to appropriate orders and directions on those matters from the examinee, the person upon whose application the examination summons was issued and any person who exercises the s.597(5A) right to take part in the examination. Explicit orders and directions should be made in the light of any such submissions and in a way that leaves no doubt about the status of any transcript or record for the purposes of the relevant statutory provisions. 29 In the present case, however, the matter was as I have described and the applicants have made out their case for the grant of declaratory relief, although it is preferable that the declaration be in a more particular form than that sought. I make the following declaration: Declare that the transcripts of the examinations on 22 and 25 October 2004 in these proceedings of Peter William Keys, Herbert Ralph Moll and Mark Carl Langbein, being transcripts signed by them respectively and held in the court's file, are written records of those examinations made under s.597(13) of the Corporations Act 2001 (Cth). 30 I order that the liquidator pay the applicants' costs of the application, such costs being an expense of the winding up. **********

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