IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY DISTRICT IN THE No. W 935 of 1985 STATE OF NEW SOUTH WALES AND THE we we eS we AUSTRALIAN CAPITAL TERRITORY Re: LINDSAY ROBERT AITKEN Ex parte: MARGARET NOREEN AITKEN CORAM: Einfeld J. PLACE: Sydney DATE: 16 March 1987 EX-TEMPORE JUDGMENT This 1s an application to set aside a summons issued under section 81 of the Bankruptcy Act (hereinafter referred to as "the Act") and, as a preliminary point, the applicant has sought access to the original application for the 1ssue of the summons. My attention has been drawn to two cases which bear upon the question as to whether access should or should not be granted to such fundamental information in relation to an application of this kind: Re Abrahams; Ex parte Thomas (1985) 9 FCR 232 and Re Stirling Henry Limived (in Liq.) and The Companies Act (1972) 1 NSWLR 497. In Re Abrahams at 236, Mr. Justice Lockhart said: "It 1s, I think, timely to comment that whether the document he called an application for the 1ssue of a summons under s 69 or s 81 or a statement of reasons to ground the issue of sucha summons or otherwise, 1t should be sealed in an envelope by the Registrar with a notation that it 1s net to be opened without the order of a judge, the Registrar or a Deputy Registrar." —T Saree a een ott eee I am informed that it was these observations of Mr. Justice Lockhart that led to the Registry adopting the practice of sealing applications of this kind. The application 1n this matter is so sealed, permission to open being limited only to a judge and a registrar. Mr. Justice Lockhart went on to say that this was a practice which has been "followed 1n courts accustomed to deal with matters of insolvency for as long as I can remember" - the "I" in this case being his Honour. His Honour also said that 1t was a practice approved by authority and quoted by way of example Re Stirling Henry Limted (in Liq.) (supra) ~- a decision of Sir Laurence Street (then a Judge in Equity). In Re Abrahams, Mr. Justice Lockhart observed that the rationale underlying the requirement of secrecy was of varied quality. One of the reasens supporting what his Honour described as "the wisdom of this practice" was: ... that prima facie those who are to be examined should not have access to the statement of the liquidator or the trustee ... stating why it is that they are proposed to be examined or on what matters it 1s proposed to examine them." With deepest respect to his Honour, that 1s not a reason for adopting the practice but merely a consequence of the practice being adopted. In the decision of Six Laurence Street to which his Honour referred, there is a quotation at page 501 of Sir George Jessel, the Master of the Rolls, in a case called Re Gold Company (1379) 12 Ch.D. 77 at pages 82 and 83, and again at page 84. Has Lordship recorded this practice in relation to a private examination in a winding up, but did not state anything about its background or, particularly, its rationale, other than to indicate as had Mr. Justice Lockhart, that 1f access was given to such information the examinee might be enabled to defeat some proceeding that might be taken against him. Sir Laurence Street, at ee oe poe page 503, in dealing with a request by counsel to have access to the information in the case then before his Honour, said that so far as his Honour was aware, such a claim had never been made in New South Wales before then, that is before 1972. His Honour went on: "It is, it must be conceded, an unusual procedure for a court to make an order upon material that is withheld from the person against whom the order is made. But, although unusual in a general sense, it 1s hallowed by long practice within the field of company law both in this country and 1n England, and it 1s based upon sound reasons of public interest." Once again, the reasons appear to escape detailed enunciation other than a general statement in the following paragraph to the effect that if someone knows the basis upon which their examination was obtained they may be put in a position to avoid its effects. The public interest to which their Honours referred 1s one aspect of the matter. There are others. Notwithstanding my profound respect for the eminence and distinction, not to say experience, of the two learned judges whose judgments I have quoted, it seems to me to be unusual, to say the least, that a person would be brought by compulsory process to the court to be examined about his or her affairs by a party who is likely to place before the person in the course of the examination all or most of the material that formed the basis of the application for the issue of the original summons - in circumstances where invariably and as a matter of course that person was entitled to be, as i1t were, potentially ambushed and not be in a position to know to what his or her attention was to be directed. In the majority of cases 1t would be an advantage - and would have been an advantage 1n those cases with which 7 have had previous experience in this area, particularly under the Companies Code - for the questioners to have given notice to the examinees of the material on which they were to be examined, for the Alte, Spectre owemergen my cageres eee nF a iain iit tenia eenener een rs purpose of ensuring that the persons had obtained any necessary documentary material to enable them to answer the questions and also to stretch their recollections and make such other inquiries as may assist their answering questions promptly and accurately. Against this background, I have myself read the document in question in this case, which us the application by the trustee of the estate of Lindsay Robert Aitken for the examination of his wife Margaret Noreen Aitken. Virtually the whole of this document contains requests for information, or a desire to obtain information, from Mrs. Aitken about matters on which the bankrupt himself was examined earlier and to which he either gave no answer, an unsatisfactory answer, or an answer which required a great deal more elucidation and detail. I can see nothing in the document which would provide Mrs Aitken, or her husband, with an opportunity to avoid any prosecution or other action that might be taken by anyone. Nor has the trustee suggested any. To the contrary it would seem to me that if she is made aware of the information which the trustee is anxious to obtain she would he better able to supply the answers. So far as the trustee 1s concerned he would be in a better position to take a much more aggressive line in the examination than would be the case if no notice was given, because Mrs. Aitken could not possibly be expected to have at her fingertips the type of i1nformation which he says he 1s seeking in the course of the section 81 proceeding. In addition, with such notice any prevarication could more easily be detected, albeit that a section 81 examination itself 1s not primarily for this purpose. In those circumstances, 1t 1s my view that I am not constreined by authority from making available the application for the summons in this ed case, and I propose to do so. I note in this connection that counsel appearing for the trustee did not object to my making it available and said that he himself would be likely to use it during the course of the examination of the examinee. Whilst I think the practice suggested by Mr. Justice Lockhart of sealing the envelope and limiting permission to open it should be continued, i1t seems to me that each case should be considered on its merits. If the trustee consents to access to the examinee the Registrar or Deputy Registrar should make it available as no Judge or Officer of the Court will know more about its potential for misuse than the trustee and his/her advisers. If there 1s a dispute, the matter can he determined by a Judge, or by a Registrar/Deputy Registrar if appropriate. The only criterion for refusal of access which I can derive from authority, principle and commonsense is a reasonable and reasonably based belief that the examinee's knowledge of the document's contents would or may lead to effective avoidance of a significant purpose of the examination such as the destruction or disposal of relevant documents, other tampering with evidence or a re-ordering of events or evidence. ne er ee | Leet thot this and the cox (a) prorsci na neeas pre a true cory of tho 4 Pe yran fer dueamient herem of his Henour } ' oe ce E.nicid 3 MGR Cte i } [ be ated; (5 UlLME (FEF f y . awl fu. — SRT MOET eee [tee pee woes wanes ete rres - of a a and Sieeiatentiannt br itnat ere 2 -