NOT CONSIDERED SUITABLE FOR CIRCULATION IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY No. 8 of 1984 GENERAL DIVISION BETWEEN : LINDA MARTIN Applicant LINDA __ MARTIN PTY. LIMITED {FORMERLY KNOWN _ AS HORSELESS CARRIAGES PTY. LIMITED) Respondent MINUTE OF ORDER OF THE COURT Judge Making Order: Burchett J. Date of Order: 14 March 1986 Where Made: Sydney THE COURT ORDERS THAT: (1) No order be made in respect of the examination of Malcgim Nelson Johns. (2) Linda Martin Pty. Limited (formerly known as Horseless Carriages Pty. Limited) pay one-half of the applicant's taxed costs of the application. (3) There be no other order as to the costs of any party. Note: Settlement and entry of orders is dealt with by Order 36 of the Federal Court Rules. : IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY No. 8 of 1984 wee ww GENERAL DIVISION BETWEEN : LINDA MARTIN Applicant LINDA MARTIN PTY. LIMITED (FORMERLY KNOWN AS HORSELESS CARRIAGES PTY. LIMITED) Respondent REASONS FOR JUDGMENT BURCHETT J. This motion arises in circumstances which, fortunately, are unusual. The applicant is the judgment creditor pursuant to a judgment given by Wilcox J. on 28 September 1984 in proceedings brought under s.52 of the Trade Practices Act 1974. A motion was filed on 8 July 1985, on behalf of the applicant, which named, as respondent, Horseless Carriages Pty. Limited, and was headed with the number of the original action and a reference to the Trade Practices Act 1974. This Notice of Motion sought orders for examination of "the Respondent" (sic), and also its directors and Malcolm Nelson Johns, a solicitor who acted for the company in the action and in respect of an appeal which was lodged on its 2. behalf. The Notice of Motion was served upon at least one former director and upon Mr. Johns. However, on the day before the return date, notice was given that the applicant would not be proceeding on that motion, and when the matter was called on before me the applicant's counsel, Mr. Libling, indicated that it was intended to proceed upon a fresh motion. The original motion was accordingly dismissed, and I reserved the costs of it. The applicant then moved upon afresh Notice of Motion, filed in Court. That Notice of Motion named no respondent, and had not been served on anyone. By it, orders were sought that certain persons, including directors and former directors of the company and Malcolm Nelson Johns, attend before the Court for examination. Mr. Einfeld, QC and Mr. Jones sought leave to appear for the company, for Malcolm Nelson Johns and for another person, Eve Hunter, who though not alleged to have been a director of the company, nor referred to in either notice of motion, had been served with the original notice of motion. I granted the leave sought to appear for the company and for Mr. Johns, but as no application was being pressed which could affect the person Eve Hunter, I refused leave to appear for her. The facts which were evidenced may be briefly summarised. Following the delivery of judgment by Wilcox J. on 28 September 1984, a notice of appeal was filed and served by Mr. Johns on behalf of the company on 19 October 1984, and the appeal 3. index was settled on 22 November 1984. Thereafter, a long period of delay ensued. No stay of the judgment was obtained, but, as not uncommonly happens, the solicitors for the plaintiff treated the proceedings as in abeyance pending the decision of the Full Court upon the appeal. However, after the delay had continued for some time, a series of enquiries were directed to Mr. Johns' firm, most of which were simply ignored. On two occasions, a solicitor in Mr. Johns' office gave excuses which, having regard to all of the circumstances, and not having heard from him, I am not prepared to characterise as disingenuous or misleading at the time they were given, but which certainly became so later when left uncorrected (and there is no suggestion they were corrected). What was implicitly suggested was that the appeal was being genuinely pursued. On 1i April 1985 Mr. Johns' firm wrote to the applicant's solicitor a letter claiming that there had been "some delay by the Court", but that the applicant's solicitors had already been advised that the company's solicitors "would... attend to the further preparation of the Appeal Books", a statement plainly having a tendency to lead the recipient of the letter to believe that the appeal was proceeding. The letter concluded: "We are currently awaiting our client to provide sufficient funds to cover the preparation of the Appeal Books, whereupon the Books will be printed and a copy forwarded to you for inspection." There would, in the normal course, be nothing remarkable about such a letter. But the evidence reveals that on 25 March 4. 1985, that is more than two weeks before the letter was written, the company had, by a special resolution, changed its name to Linda Martin Pty. Limited, and that it was Mr. Johns' firm which later lodged, at the Corporate Affairs Commission, the necessary notice of that special resolution. The special resolution is drafted in legal language, and both the drafting and the procedure involved in passing such a resolution would be expected to entail professional assistance. The resolution was required, as the circumstances now make clear, as part of a plan to dispose of the business of the company, enabling the purchaser to carry on business under the company's established name "Horseless Carriages", with the result, as Mr. Johns himself alleged well afterwards in a conversation with the applicant's solicitor, that the company is now entirely without assets. No motive has been suggested, or occurs to me, for the choice of the applicant''s own name, as the new name of the company, but that it was intended as a jeering intimation that she could enforce her judgment in any way she liked against its valueless shell. Mr. Einfeld, in argument, conceded that the adoption of the name was a piece of "misplaced smartness". What is significant is that the decision to change the name must have occurred prior to 25 March 1985, that it is probable the company's solicitors drafted the resolution effecting the change of name, and that in any case the evidence shows that Mr. Johns' firm, which acted on the sale of the business, lodged an application for registration of the business name "Horseless Carriages" in the new company name "Linda Martin Pty. Limited" on 26 March 1985. So that at latest by 26 March 1985, I conclude that Mr. Johns was aware of his client's intention, upon completion of the sale of the business, to abandon both the appeal and the empty shell that would then be the company. If he was not a party to the formation of the intention, it is not credible, as a matter of probability, that he did not appreciate the significance of the change of the company's name. Yet he acted on the sale and on the appeal, and the letter to which I have referred of 11 April 1985 was permitted to be sent to the applicant''s solicitor. In the circumstances, I can only regard that letter as calculated to mislead the applicant's solicitor into taking no action in the belief that the appeal would be proceeding in the normal way, when in fact there was no prospect that it would. At the time the letter was written, there was, I am satisfied on the probabilities, no intention of printing and forwarding appeal books. In the event, the sale of the business was completed on 1 May 1985. On or about the same day, Mr. Johns advised the applicant's solicitor that the appeal would be discontinued, and that the company had no assets. Lodgment of the special resolution changing the name of the company was effected, and effected late, on 6 May 1985. The applicant's solicitor first became aware that the company's business had been sold on 4 July 1985, whereupon, almost immediately, he took out the first notice of motion to which I have referred. 6. During argument, it was suggested that I might consider the institution of contempt of court proceedings, on my own motion, arising out of the circumstances which I have outlined. It did not seem to me that this was an appropriate course to take, upon affidavit evidence revealing a very partial picture, without the benefit of cross-examination. I have considered the probable complexion of the facts, and the inferences that arise, because costs orders have been sought, to which those inferences may be relevant. But, bearing in mind the weightier onus of proof applicable in contempt proceedings, it does not necessarily follow that the same conclusions would be drawn in such proceedings, even assuming an unchanged state of the evidence. Moreover, it seemed to me to be premature to consider this question before the holding of the examinations which were the express object of the motion. On the material before me, there is no evidence that the original 'institution of the appeal was not completely bona fide. Mr. Libling asked me to make orders for the examination of certain directors or former directors of the company and of Mr. Johns. Under s.53 of the Federal Court of Australia Act and Order 37 Rule 7 of the Federal Court Rules, provision is made for the enforcement of a judgment or order of the Court by the making of any order, issuing of any writ, or taking of any other step that would be open, in the Supreme Court of the State or Territory in which the judgment or order is to be enforced, if it had been made by that Supreme Court. It is therefore necessary 7. to turn to Part 43 of the Rules of the Supreme Court of New South Wales, under which provision is made for an order for examination on the motion of a person entitled to enforce a judgment or order. Rule 1 of that part permits an order to be made requiring "a person bound by the judgment or order" to attend for examination and to produce relevant documents. Rule 2 provides as follows: "Where the person bound is a corporation the Court may make orders as mentioned in rule 1 for the examination of, or production by, an officer or former officer of the corporation." ' There is a similar rule in the Rules of the Supreme Court of Victoria (Order 42, Rule 32), and both rules are clearly based upon Order 48 Rule 1 of the Rules of the Supreme Court (contained in the "White Book"). So far as my researches have revealed, none of these rules has been construed as extending to permit, in the case of a judgment against a corporation, examination of anyone who is not strictly to be described as an officer or former officer of the corporation. There is express authority that "there is no power under (such a rule) to make an order for the examination of any person other than the judgment debtor, or in the case of a corporation other than an officer of the defendant corporation" (per A.L. Smith L.J. in Hood Barrs v. Heriot; Ex parte: Blyth (£18961 2 Q.B. 338 at 341-2; and see Irwell_ v. Eden (£18873 18 Q.B.D. 588; Jeffris v. Tomlinson [18871] 3 T.L.R. 193; Societe Generale Du Commerce Et De L'industrie En France v. Johann Maria Farina & Co. £19043 1K.B. 794). In 8. reliance, in particular, on Irwell v. Eden and Hood Barrs v. Heriot, Williams, Supreme Court Practice of Victoria, 2nd Edition, Volume 2, page 2088 states that "only the debtor liable in a judgment or order for the recovery or payment of money or, in the case of a corporation, an officer of the corporation can be examined." It was faintly suggested that Order 37 Rule 8 of the Federal Court Rules might assist the applicant, but in my opinion this rule only authorises directions which are otherwise within power, and cannot provide an independent authority to order the attendance of Mr. Johns. It was then suggested that Order 33 Rule 13 enables the Court to make orders for the attendance of any person. However Order 33 is concerned with evidence, not the enforcement of judgments, and I do not think Rule 13 has any relevance to the present problem. Finally, there was a contention that, under companies legislation, a solicitor may for some purposes be deemed an officer of a company, but it is sufficient to say that the purposes for which he may be deemed an officer are irrelevant to any question arising in this matter. At the conclusion of the hearing I made orders, pursuant to s.53 of the Federal Court Act, Order 37 Rule 7 of the Federal Court Rules, and Part 43 of the Rules of the Supreme Court of New South Wales as applied by those provisions, requiring the attendance for examination of certain officers or former officers of the company and the production of documents by them. But f 9. reserved the question whether any similar order would be made in respect of Mr. Johns, and all questions of costs in respect of the two notices of motion. I now deliver judgment on those matters. In the light of the authorities which I have mentioned, I decline to make any order for the examination of Mr. Johns. I do not think any such order would be within power. I have given careful consideration to the question of costs. As I have pointed out, the original notice of motion named only the company as respondent, and the second notice of motion did not nominate any respondent. Although the original notice of motion was, infact, served on the persons I have mentioned, the procedure under Part 43 of the Rules of the Supreme Court of New South Wales, as Rule 3 makes clear, is essentially an ex parte procedure, and there is much to be said for the view that the proper time for a person to object to being required to attend for an examination is when, if ever, an examination order is served upon hin. Although notified, Mr. Johns did not become a party, except by leave, upon his own application. It is unusual for a witness to have legal representation at a hearing. So far as the company is concerned, the proceedings were partly successful against it, and partly unsuccessful. So far as Mr. Johns is concerned, I have referred to circumstances, not unconnected with the litigation, which ought, in my opinion, ina balanced exercise of judicial discretion, to be taken into 10. account. The fact that those circumstances gave rise to a suggestion by the applicant's counsel that a contempt of court may have been committed does not, in itself, entitle Mr. Johns to an order for his costs of the motion, as is made clear by McLelland J. in Jendell Australia Pty. Ltd. v. Kesby £19833 1 N.S.W.L.R. 127 at 137, and Moffit P. in Killen v. Lane £19833 1 N.S.W.L.R. 171 at 177-8, a judgment with which Hutley and Samuels JJ.A. agreed. It is clear that under s.43 of the Federal Court of Australia Act the award of costs is in my discretion. The principles applicable to that discretion are set out at some length in Trade Practices Commission v. Nicholas Enterprises Pty. Ltd. (1979) 28 A.L.R. 201 at 206 et seq. Having regard to all of the circumstances, I think I should make no order as to costs other than that the applicant should have an order for one-half of her taxed costs against the company. Iocertify that this and the preceding nine (9) pages are a true copy of the Reasons for Judgment herein of his Honour Mr. Justice Burchett. . [4] Associate Dated: 14 March, 1986.