Waller v Freehills

GLEESON J: 1 On 5 March 2020, on the application of the plaintiffs, the liquidators of Lempriere Grain Pty Ltd (in liquidation) (company), I ordered that summonses for examination about the examinable affairs of the company be issued pursuant to s 596A of the Corporations Act 2001 (Cth) (Act) to three individuals: William Lempriere, Ajay Aggarwal and Jonathan Holdsworth. 2 I also ordered that a summons for examination about the examinable affairs of the company be issued pursuant to s 596B of the Act to Soo Kiam Leng. 3 I also made orders pursuant to s 597(9) of the Act for production of documents to those four individuals and to Starcom Resources Pte Ltd (Starcom). 4 Finally, I granted leave pursuant to r 10.44 of the Federal Court Rules 2011 to serve the orders for production on Soo Kiam Leng and Starcom in Singapore in accordance with the law of Singapore. 5 The application was referred to a judge by the Registrar because of the location of Soo Kiam Leng and Starcom in Singapore and the consequent requirement for leave for service out of the jurisdiction of the orders for production. Although the evidence was that Mr Aggarwal is located in Singapore, the liquidators did not ultimately seek an order for service upon him out of the jurisdiction. 6 The application was supported by an affidavit of the second named plaintiff, Andrew John Spring, sworn on 23 October 2019, and an affidavit of Amy Mary Barwick, solicitor, sworn on 5 March 2020.

Background 7 The company was registered as a company on 15 August 2003, and operated a grain trading business. 8 On 21 March 2019, the liquidators were appointed as joint and several administrators of the company pursuant to s 436A of the Act. After an extension of the time for convening the second meeting of creditors, the liquidators were appointed as liquidators pursuant to a resolution passed at the second meeting of creditors on 8 July 2019. 9 Debts to creditors are said to total over $18 million. 10 The administrators' report to creditors pursuant to s 439A(4) of the Act, issued on 1 July 2019, concluded that the reasons for the company's failure included first, a group-based strategy developed by Starcom that was not financially sustainable; second, inadequate access to working capital; third, regular trading losses; fourth, poor and inappropriate costing of operations and, fifth, potential conflicts of interest by the company's directors in light of their relationship with Starcom.

Starcom 11 Starcom is a company registered in Singapore. A company search shows that Mr Aggarwal has been the managing director of Starcom since 1 January 2001 and he is the director owner of 65.74% of the shares in that company. The search also shows that Starcom has a contact address in Singapore.

Potential examinees 12 Mr Lempriere was a director of the company from registration until 22 January 2018. He resides in Toorak, Victoria. 13 On 24 February 2010, Mr Holdsworth was appointed as a director of the company. He resides in Hampton, Victoria. 14 Mr Aggarwal has been a director of the company since its registration. It is the liquidator's understanding that Mr Aggarwal, while not involved in the day to day management of the company, was the primary decision-maker regarding the financial affairs of the company. 15 Mr Aggarwal's residential address is in Singapore. 16 There is evidence that Soo Kiam Leng is the financial controller of Starcom and was an officer or employee of Starcom in December 2017. 17 On the evidence, Mr Soo's current place of employment is in Singapore.

Mandatory and discretionary examinations 18 Sections 596A and 596B operate extraterritorially and also apply to persons whether or not they are Australian residents or citizens: Waller v Freehills [2009] FCAFC 89; (2009) 177 FCR 507 at [53]-[54], [58].

Orders for production of documents 19 Section 597(9) of the Act provides: 597 Conduct of examination (9) The Court may direct a person to produce, at an 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. 20 Rule 30.34 of Federal Court Rules 2011, referred to in the draft orders for production, provides: 30.34 Attendance and production (1) At any hearing of a proceeding, including the trial of the proceeding, a party may apply to the Court for an order for the attendance of any person before the Court, a Registrar, an examiner, a referee, or other person authorised to take evidence: (a) for examination; or (b) for production by that person of any document or thing specified in the order. (2) An order may be made under subrule (1) even if the person whose attendance is required by the order has also been required to attend by subpoena.

Leave to serve summonses and orders for production in Singapore 21 Rule 11.4 of the Federal Court (Corporations) Rules 2000 provides: 11.4 Service of examination summons An examination summons issued by the Court must be personally served, or served in any other manner as the Court may direct, on the person who is to be examined at least 8 days before the date fixed for the examination. 22 Rule 10.44 of the Federal Court Rules 2011 provides relevantly: 10.44 Service of other documents (1) A party may apply to the Court for leave to serve a document filed in or issued by the Court, other than an originating application, on a person in a foreign country in accordance with a convention, the Hague Convention or the law of the foreign country. Note 1: The law of a foreign country may permit service through the diplomatic channel or service by a private agent--see Division 10.5. Note 2: Rules 10.63 to 10.68 deal with service of local judicial documents in a country, other than Australia, that is a party to the Hague Convention. Note 3: The Court may give permission under subrule (4) on conditions - see rule 1.33. (2) An application under subrule (1) must be accompanied by an affidavit that includes the information mentioned in paragraphs 10.43(3)(a) to (c). 23 The information mentioned in rr 10.43(3)(a) to (c) comprises: 10. 43 Application for leave to serve origination application outside Australia (3) The application under subrule (2) must be accompanied by an affidavit stating: (a) the name of the foreign country where the person to be served is or is likely to be; and (b) the proposed method of service; and (c) that the proposed method of service is permitted by: (i) if a convention applies--the convention; or (ii) if the Hague Convention applies--the Hague Convention; or (iii) in any other case--the law of the foreign country.

Consideration and conclusions 24 There is nothing controversial about orders being made for examination of Mr Lempriere and Mr Holdsworth and for production of documents by each of them. 25 I accepted that, on what is presently known to the liquidators, Mr Aggarwal was centrally involved in the affairs of the company. In any event, having been satisfied as to his position as a director of the company, s 596A makes an order for his examination mandatory. It is also appropriate that he be ordered to produce relevant documents. 26 I also accepted that, on the available material, the relationship between the company and Starcom is key to understanding the affairs of the company, why it failed and the avenues that may be open to the liquidators. I accepted that Mr Soo, as financial controller of Starcom is likely to be able to assist in this regard especially noting that there is evidence of communications between him and Mr Holdsworth in December 2017 concerning the relationship between Starcom and the company. 27 On that basis, I was satisfied that Mr Soo is a person who may be able to give information about the examinable affairs of the company and that the Court should exercise its discretion to summon him for examination pursuant to s 596B, and also order him to produce relevant documents. 28 On the same basis, I was also satisfied that an order should be made for the production of documents by Starcom. 29 As to leave to serve the orders for production of documents in Singapore on Mr Soo and Starcom, Ms Barwick's affidavit: (1) identifies Singapore as the foreign country where each of them is or is likely to be; (2) states that the proposed method of service is by causing a Singaporean process servicer to serve the documents personally; and (3) indicates that this method of service is authorised by Orders 65 rule 2A (Alternative mode of service of foreign legal process) and Order 62 (Service of documents) of the Rules of Court (Singapore). 30 On that basis, I was satisfied that the liquidator's application met the requirement of r 10.44(2) and that it was appropriate to grant leave under r 10.44(1) to facilitate the liquidation. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson.