BUDGET if, A CATCHWORODS — io BANKRUPTCY - Public examination - application to set aside summonses to attend for public examination - whether summonses in circumstances were vexatious or oppressive - sufficiency of material before Registrar to justify issue of the summonses - ;— whether summonses were in terms too wide. Bankruptcy Act 1966 5.81 e: ROSS DANIEL HODBY Ex parte: OFFICIAL TRUSTEE SOPHIA KAROUNOS, ELIAS KAROUNOS, HUNT FISHER J. ADELAIDE 11 MARCH 1988 KATINA KAROUNOS and BARBARA JOY Applicants * oe ne fpcer IN THE SOUTH AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION FEDERAL COURT OF AUSTRALIA No. 910 of 1986 BANKRUPTCY DISTRICT OF THE STATE OF SOUTH AUSTRALIA JUDGE MAKING ORDER Re: ROSS DANIEL HODBY Ex Parte: OFFICIAL TRUSTEE SOPHIA KAROUNOS, ELIAS KAROUNOS, KATINA KAROUNOS and BARBARA JOY HUNT Applicants FISHER J. WHERE MADE DATE OF ORDERS ADELAIDE 1 MARCH 1988 THE COURT ORDERS THAT: 1. 6. The applications to discharge the summonses other than the summons directed to Barbara Joy Hunt relating to Domitix Pty. Ltd. be dismissed. The application in respect of the summons directed to Barbara Joy Hunt as aforesaid be adjourned for further consideration. The time for filing and serving any notice of appeal commence from the delivery of reasons for these orders. The examinations of the applicants be stayed prior to 5.00 p.m. on Tuesday 22 March 1988. The applicants do pay to the Official Receiver in any event his costs thrown away by the adjournment of the examinations of the applicants. Further consideration of the question of costs of the applications be adjourned to a date to be fixed. Note: Settlement and entry of order is dealt with in Bankruptcy Rule 124. IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY BANKRUPTCY DISTRICT OF THE STATE ) ) GENERAL DIVISION ) No.910 of 1986 ) ) ) ) OF SOUTH AUSTRALIA Re: ROSS DANIEL HODBY Ex Parte: OFFICIAL TRUSTEE, SOPHIA _KAROUNOS, ELIAS KAROUNOS, KATINA KAROUNOS, and BARBARA JOY HUNT Applicants CORUM: Fisher J. 11 MARCH 1988 REASONS FOR JUDGMENT On 1 March 1988 I made certain orders in this matter and undertook to publish my reasons in due course. These are my reasons for making the orders. The Official Trustee is trustee of the bankrupt estate of Ross Daniel Hodby ("the bankrupt") who filed his own petition on 15 October 1986. Since that date the Official Receiver for the Bankruptcy District of South Australia ("the Official Receiver") and other persons interested in the administration of the bankrupt estate have made many applications to the Court for decisions and directions in respect of relevant matters. To date there have been at least 45 such applications and five sets of reasons for judgment of this Court have illustrated the difficulties encountered in the administration of the bankrupt's estate. In respect of this particular matter my reasons for —— " ee eee EET 2. judgment delivered on 16 April 1987 in matter 910/11 of 1986 recite in some detail the nature of these difficulties. This particular matter arises out of four summonses issued by the Registrar in Bankruptcy, one to each of the applicants, directing their attendance for examination under s.81 of the Bankruptcy Act 1966 ("the Act"). There was an additional summons directed to the applicant Barbara Joy Hunt in relation to the acquisition by Domitix Pty. Ltd. of the business of the bankrupt. An application has been made by the applicants seeking orders that the Court discharge or otherwise set aside the summonses issued to them. Consideration of this summons has been adjourned for subsequent hearing. Sub-section 14(5) of the Act empowers this Court to review any act done by the Registrar or Deputy Registrar under the Act. The summonses are all in similar form with the exception of the dates fixed for the particular examinations and it is only necessary to set out in full that directed to the applicant Sophia Karounos. It is as follows: "TO: SOPHIA KAROUNOS of 55 Marion Road, Plympton Park in the State of South Australia In pursuance of the power confered on the Registrar by Section 81 of the Bankruptcy Act 1966 the Registrar hereby summonses you to attend before the Registrar at 9th Floor, Grenfell Centre, 25 Grenfell Street, Adelaide in the State of South Australia on the 4th day of November 1987 at the hour of 10.30 o'clock in the forenoon to give evidence and to produce books and documents in connection with:- i. the receipt of funds by Krakat Pty. Ltd. from Ross D Hodby & Associates and Archer Finance Brokers between the lst day of January, 1980 and the 17th day of October, 1986; <a — . an oz ae 2. the granting and discharge of Mortgages numbered:~- (a) 4775635; (b) 4845666; (c) 6022133; (d) 6153497; 3. the granting of a mortgage dated the 29th day of August, 1986 over the land comprised and described in Certificates opf Title Register Book Volume 4213 Folio 460, Volume 4189 Folio 336, Volume 4182 Folio 49 and Volume 4228 Folio 218 for the sum of $586,000.00, and to produce all documents in your possession, custody or power pertaining to the above matters and without limiting the generality thereof the following documents :-— 1. Bank account statements in respect to bank accounts conducted by Krakat Pty. Ltd.:- (a) at the State Bank branch at Pirie Street, Adelaide in the State of South Australia No. 924396 6 40; (b) at the State Bank branch at South Plympton No. 923 932 940; 2. Bank deposit books pertaining to the said accounts. 3. Cheque butts pertaining to the said accounts. 4. Minutes of the meeting of directors of Krakat Pty. Ltd. for the period from the Ist day of January, 1980 until the 17th day of October, 1986. 5. Any other documents relevant and pertaining to the above transactions. DATED this 18th day of September 1987." These summonses were issued upon applications made by the Official Receiver which applications were in accordance with accepted practice thereupon sealed up and retained in the Registry. ree ow wee 1, ea G ' + oS ape re ne set? "e Isso oa , oa t. yn see ue On 30 October 1987 an application was filed in the Court on behalf of each of the four applicants seeking to have the summonses discharged or otherwise set aside. The grounds for seeking a discharge were at that time stated as follows: "Grounds for Discharge (i) That the documents are not documents in the custody or power of the applicants. (ii) The order is oppressive and is one that ought not to have been made in the exercise of the discretion of the Court. (iii) That the summonses are an abuse of process of the Court and are oppressive and/or vexatious in that they cover or intend to cover matters which are the subject of an action 910/11 of 1986 in which Krakat Pty. Ltd. is one respondent." In an affidavit filed in support of the application the applicants' solicitor set out in paragraphs 5 and 6 thereof the reasons why it was said the summonses should be discharged or set aside. These paragraphs state: "S. I am instructed that on the 9th of November 1987 in this action an action has been listed in this Honourable Court being number 910/11 of 1986 wherein Krakat Pty Ltd (inter alia) is respondent and the Official Receiver for and on behalf of the Official Trustee in Bankruptcy is applicant. That application relates amongst other things to financial dealings between Ross Daniel Hodby and Krakat Pty. Ltd. Now produced and shown to me and marked with the letters "GGP1" is a copy of the points of claim and points of Defence and Counter Claim filed herein to the within action. I am instructed that that application is resisted. 6. I am instructed by my client that he considers the issue and the service of the said Summons is vexatious and/or oppressive in the circumstances. The matters in issue in the hearing of the application referred to in paragraph 5 hereof appear to relate to substantially the same matters as those in respect of which the said Summons apparently relates. My client fears that the proposed examination will be harrassing and will en ae cry, cee ne pee me gore ones ce 5. be a rehearsal of the cross examination which may be directed against him in those proceedings which will be and are current at the time of the proposed examination." As some reliance was placed during the hearing on 2 November 1987 upon the claim of the Official Receiver referred to in paragraph 5 of the affidavit it is appropriate to identify some portions of these claims. "1, Between the 9th day of April, 1985 and the 2nd day of July, 1986 the abovenamed bankrupt Ross Daniel Hodby (hereinafter referred to as "the bankrupt") caused advances to be made to Krakat Pty. Ltd. ("Krakat") from funds in his control as follows: (a) From the trust account operated by him in the course of his business as a land broker $342,091.40 (b) From accounts conducted under the name "Archer Finance Brokers" $551,000.00 Total $903,091.40 On or about the 29th day of August, 1986 Krakat purported to execute a Memorandum of Mortgage (hereinafter referred to as "the Mortgage") securing repayment of the sum of $586,000.00 in favour of unspecified and unnamed mortgagees ("the mortgagees") over the land comprised and described in Certificates of Title Register Books Volume 4213 Folio 460, Volume 4189 Folio 336, Volume 4189 Folio 49 and Volume 4238 Folio 218 (hereinafter referred to as "the said land"). On the 16th day of April, 1987 following the hearing and determination of an application by Notice of Motion filed herein by the abovenamed applicant The Official Receiver (of which Notice of Motion the mortgagees had received notice) this Court:— (a) ordered and declared that subject to any application which might be made by any party — Veer er ae tte, pe ee 6. who had inter alia not received notice of the said application, the said applicant The Official Receiver was entitled to the sum of $586,000.00 (being the sum referred to in paragraph 3 hereof) being portion of the said sum of $800,603.45 standing to the credit of the account referred to in paragraph 6 hereof; (b) adjourned for further consideration the question 'whether the Applicant the Official Receiver or Krakat or any other and if so which other, person or persons is entitled to the balance of the said sum of $800,603.45 in excess of the said sum of $586,000.00 and the question of any other consequential directions under sub-section 134(4) of the said Bankruptcy Act'. The balance of the said sum of $800,603.45 standing in Court to the credit of the said account after allowing for the said amount of $586,000.00 together with accrued interest thereon is the sum of $214,603.45. The official Receiver for and on behalf of the Official Trustee in Bankruptcy claims: (a) a declaration that he is entitled to the said sum of $214,603.45 together with accrued interest thereon as against Krakat, the mortgagees and any other person who may claim any entitlement thereto, to hold the same for the benefit of: (i) the unsecured creditors of the bankrupt who have proven or prove in the bankruptcy; or (ii) the unsecured creditors who contributed to the monies in the control of the bankrupt from which the said advances were made to Krakat Pty. Ltd. (b) Such further or other order, direction or other relief as to the sazrd monies or otherwise in the premises as to the Court may seem fit." Z re oe aan eee whe On 2 November 1987 the examinations were adjourned for hearing on later dates to be arranged with the Deputy Registrar in Bankruptcy, which dates were to be after the trial set for the following week of the Official Receiver's claims. The 7. application to set aside the summonses was adjourned with liberty to the applicants to bring it before the Court on 4 days' notice. It was suggested to the applicants that they should apply to the Court to arrange for a hearing date. When the matter of the Official Receiver's claims were called on for hearing in the subsequent week orders were made by consent as sought in those claims by the Official Receiver. I was informed by counsel that late in January 1988 arrangements were made, after two intervening adjournments, with the applicants' solicitors for the examinations to take place on 2, 3 & 4 March 1988. On 12 February 1988 a letter was written on behalf of official Receiver to Krakat's solicitors, a copy of which was as hereunder: "12 February 1988 Krakat Pty. Ltd. C/- Messrs O'Loughlin Robertson Solicitors FAX 232 0585 Dear Sir, OFFICIAL RECEIVER — KRAKAT AND HODBY We are writing to demand of you repayment of the difference between -the principal amount advanced to your client Krakat Pty. Ltd. and the amount paid into the Federal Court in February last year. We are instructed this difference, without taking into account interest, totais an amount of $132,487.95. Our client is currently performing calculations as to default interest rates. You may care to take instructions from your client about its intentions to repaying this amount. If your client is not prepared to repay the amount outstanding we are instructed to apply to the Federal Court for an order determining that your client (and we should add oo — oe wate 8. its co-horrowers) are indebted to the Official Receiver in the appropriate amount and also for an order that the debt be paid forthwith. Yours faithfully KELLY & CO (Signed)" On the same day a letter was written to the solicitors for two of the applicants in the present matter, Barbara Joy Hunt and Sophia Karounos. This letter was as follows: "12 February 1988 Messrs Andersons Solicitors FAX 231 3958 ATTENTION MR PALASSIS Dear Sir OFFICIAL RECEIVER ~ HODBY — KRAKAT PTY. LTD. We are writing to you in your capacity as solicitors for B J Hunt and S$ Karounos. They are of course jointly and severally liable with Krakat Pty. Ltd. in respect of the registered mortgage over the property at Plympton Park. We note that in February of last year an amount of approximately $800,000 was paid into the Court. It is clear that the total amount advanced to Krakat Pty. Ltd. and the co-borrowers was some $933,000.00. On our calculations there is currently a shortfall of $132,487.95. We are instructed to seek repayment of the amount outstanding by your clients. The exact calculation including default interest is currently being performed by Official Receiver but we are instructed to seek an intimation from you as to your intentions to reimbursement of this amount. I£f we do not hear from you we have no alternative other than to issue proceedings in the Federal Court seeking a declaration that your clients are indebted to the Official Receiver in these amounts, and further an order that the monies be paid forthwith. Yours faithfully KELLY & CO. (signed)" Se ee On 26 February 1988 the solicitors for the applicants sought an order that the Registrar provide to the applicants copies of the applications by the Official Receiver for the issue of the summonses. An affidavit by the applicant Barbara Joy Hunt, on behalf of all the applicants, was also filed on that day in which she deposed to matters relevant to each of the two applications. She did not deny that the applicants could supply information or produce documents on the matters referred to in the summonses. She contended that the Official Receiver had sufficient information to enable him to pursue his claim against Krakat, herself and Sophia Karounos and that it was oppressive that they be examined under s.81. With the consent of the Official Receiver the application for provision to the applicants of the Official Receiver's applications for the summonses was heard on two occasions during the morning of Monday 29 February 1988. The Official Receiver initially opposed the provision of these applications which remained at that stage sealed up. Argument centred around decisions of this Court by Lockhart J. in Re Abrahams Ex parte Thomas (1985) 9 FCR 234, Evatt J. in Re Adamson an unreported decision of 30 January 1987 and Einfield J. in Re Aitken Ex parte Aitken an unreported decision of 16 March 1987. Eventually however the Official Receiver withdrew his opposition in respect of the applications arising out of the Krakat dealings and copies of these applications were made available to counsel for the applicants. However the Official Receiver continued his opposition in respect of the summons ener caalid we ce oor ee Spent ene, Aili tobe osedees 10. against Barbara Joy Hunt in relation to Domitix Pty. Limited. The hearing was then adjourned to 9.00 a.m. of the following day as the Official Receiver wished to retain if possible the dates and times fixed for the examinations. The applications made available by the Official Receiver for orders pursuant to s.81 directing issue of summonses against the applicants were in common form and it is only necessary to set out that filed in relation to the applicant Barbara Joy Hunt. Submissions were made that the information therein was inadequate. " BANKRUPTCY ACT 1966 APPLICATION TO REGISTRAR FOR EXAMINATION OF WITNESSES UNDER SECTION 81 OF THE BANKRUPTCY ACT BANKRUPTCY DISTRICT OF THE STATE OF SOUTH AUSTRALIA NO.910 of 1986 RE: ROSS DANIEL HODBY EX PARTE: OFFICIAL TRUSTEE PATRICK JOSEPH CASEY, Official Receiver for the Bankruptcy District of the State of South Australia for and on behalf of the Official Trustee, the Trustee of the property of the abovenamed Ross Daniel Hodby (hereinafter called "the bankrupt") HEREBY APPLIES to the Registrar for an order pursuant to Section 81 of the said Act directing the issue of a summons to BARBARA JOY HUNT of 550 Marion Road, Plympton Park in the State of South Australia to attend before the Registrar on the 4th day of November 1987 at 2.30 o'clock in the afternoon and so from day to day until excused from further attendance to give evidence in the above matter and to produce documents in the above Matter concerning the receipt of funds by KRAKAT PTY. LTD. from the bankrupt and ARCHER FINANCE BROKERS (REG.) between the lst day of January, 1980 and the 17th day of October, 1986 and to produce documents in the above matter concerning the registration and discharge of mortgages over the land comprised and described in Certificates of Title Register Books:-— (a) Volume 4213 Folio 460 (b) Volume 4228 Folio 218 - oo ee ee ng pr oe (c) (d) (e) 11. Volume 4276 Folio 899 Volume 4251 Folio 40 Volume 4189 Folio 337 and Mortgage No.:- (a) (b) (c) (d) (e) 4775635 4845666 6022133 6153497 A certain unregistered mortgage dated the 29th day of October, 1986 over the land comprised and described in Certificates of Title Register Book Volume 4213 Folio 466, Volume 4189 Folio 336, Volume 4189 Folio 43 and Volume 4228 Folio 218. The grounds upon which this application is made are:-— 1. That up to the i7th day of October, 1986 the bankrupt conducted a business of a land broker and finance broker. The bankrupt was a director of Hodby Nominees Pty. Ltd. a business which traded under the name of Archer Finance Brokers (hereinafter called "the business"). That the said Barbara Joy Hunt was the secretary of Krakat Pty. Ltd. for various periods between the lst day of January, 1980 and the 17th day of October, 1986 according to the records of the Commissioner for Corporate Affairs. Between January, 1980 and the date of the bankruptcy Krakat Pty. Ltd. received advances of funds from the bankrupt's businesses. The funds advanced from the bankrupt's businesses were on occasions deposited into banking accounts conducted in the name of Krakat Pty. Ltd. at:-— (a) The State Bank, Pirie Street, Adelaide No. 924696 6 40. (b) The State Bank, South Plympton Branch, No. 923 932 9 40. The funds advanced to Krakat Pty. Ltd. were funds held by the bankrupt on trust to the persons who are creditors of the bankruptcy estate. The amounts advanced to Krakat Pty. Ltd. have been secured by various mortgages over various properties including the aforesaid titled. In respect of a mortgage dated the 29th day of August, 1986 over the land comprised and described in Certificates of Title Register Books Volume 4213 Folio 460, Volume 4189 Folio 336, Volume 4183 Folio 49 and Volume 4228 Folio 218. The said mortgage records an advance from clients of the bankrupt to Krakat Pty. Ltd. for a total sum of $586,000.00. Official Receiver maintains the true Fy tre 9 orien ee en ee ne ree . ' (ey Hl ren) > 7 _ . : + ran Pn eo ke : - ' ee eee ~ ae oet con 10. 12. amount advanced from the funds of the bankrupt's clients being creditors of the bankrupt estate was $903,000.00. A Mortgage No. 6153497 over the land comprised and described in Certificate of Title Register Book Volume 4189 Folio 337 was discharged on the 17th day of February, 1986. The amount recorded on the mortgage as having been advanced from clients of the bankrupt to Krakat Pty. Ltd. was $479,000.00. The mortgage was discharged without any funds being paid in respect thereof. The sum of $800,603.45 has been paid into this Honourable Court pursuant to an order of Mr Justice Fisher dated the 22nd day of December, 1986 and the 26th day of February, 1987. The sum of $586,000.00 representing the amount purportedly advanced to Krakat Pty. Ltd. pursuant to the aforesaid unregistered mortgage has been determined by this Court to vest in the Official Receiver for the benefit of creditors of the bankrupt estate. The Official Receiver seeks production of the records of Krakat Pty. Ltd. pertaining to the within advance and within transactions in order to assist him in determining his rights to recover monies due by Krakat Pty. Ltd. for the benefit of the creditors of the bankrupt estate." When the hearing resumed the following morning counsel for the applicants was granted leave to make the following amendments to his clients' application to discharge the summonses. "(iv) (v) That the summonses are an abuse of process and are oppressive and/or vexatious in that they cover or attempt to cover matters which are the subject of a proposed action by Official Receiver against Krakat Pty. Limited, Sophia Karounos and Barbara Joy Hunt. The Registrar erred in the exercise of his discretion in causing or allowing the issue of s.81 summonses against the applicants in that he had insufficient material before him to properly exercise his discretion. - TIS a beets fe ne Per er ne ore 13. (iv) The terms of the said s.81 summonses are too wide and should be set aside as oppressive." Two further affidavits were during the hearing filed in Court. The solicitor for the applicants deposed to information contained in the records of the Corporate Affairs Commission concerning Krakat Pty. Limited. These records disclosed that the company was incorporated on 9 July 1980 and that on 4 August 1980 the applicants Elias Karounos and Katrina Karounos were appointed directors of that company. Katrina Karounos was also on that date appointed Secretary. On 9 July 1984 each of them resigned from these offices. On 18 November 1981 the applicant Barbara Joy Hunt was appointed a director and on 9 July 1984 she also became secretary of the company. On 22 October 1984 Sophia Karounos was appointed as a director of the company. An affidavit of Dean Richard Govan, the Senior Assistant Official Receiver, deposed to the fact that the affidavits sworn by him in this bankruptcy (of which there were many) summarised the nature of the transactions between the bankrupt and Krakat Pty. Ltd. He deposed to the fact that the Official Receiver was not in a position to decide what action to take in respect of the two mortgages the subject of the applications for issue of summonses until the examinations were concluded. There was no cross-examination on, nor any objection to the reception of, these affidavits. Counsel for the applicants based his attack on the summonses on four grounds. He contended in the first instance that they should be set aside on the ground that the Official ¥ ed 14. Receiver was engaging ina fishing inquiry, which the Court should not permit. He referred to Re H.J. Price (No.3); Ex parte The Commerical Banking Company of Sydney Limited (1948) 14 A.B.Cc. 137. In that matter Clyne J. said on page 140: "Again, in the exercise of its discretion, the Court ought not to permit a fishing inquiry based upon the official receiver's hope to build up a case as to which there was before the Court no information showing that the witness summonsed was implicated (in re Maundy Gregory; Ex parte Norton [1935] Ch. 65." At p.73 of the latter authority the Master of the Rolls referred to what was a slightly different statutory provision and said: ",.. it would not be right to compel an answer from a witness in respect of a matter to which he is not prima facie shown to have been a party or privy. The Court must deem the witness capable of giving information upon some grounds that appear to have a foundation. It ought not to lend itself to a fishing inquiry based upon the trustee's hope to build up some case as to which there is before the Court no information showing that the witness was implicated." In the present matter there was much information before the Registrar to the effect that Krakat had been in receipt of substantial funds from the bankrupt. The Official Receiver sought to determine his rights to recover monies from that company for the benefit of creditors. The applicants were at the various times already indicated directors and in two instances also the secretary of Krakat and are without doubt the appropriate persons to be examined on the question of the various sums from time to time received by Krakat from the bankrupt. Two of the applicants still hold their respective positions. There is therefore information prima facie showing that the persons a a a 15. summonsed were implicated in the dealings by the bankrupt with Krakat and I reject this ground. The next ground was to the effect that there was insufficient information before the Registrar in the Official Receiver's applications on the basis of which he exercised his discretion to issue the summonses. Counsel relied upon Re Robert Henry Andrews (1958) 18 A.B.C. 181. On page 186 Clyne J. said in relation to one of the contentions raised in the notice of motion before him: "(3) The summons was issued without proper or any evidence or enquiry into the facts necessary to warrant the issue of a summons under s.80(1)(b) of the Bankruptcy Act. It is difficult to say what grounds are necessary to obtain the issue of a summons under s.80(1)(b) upon the application of a trustee or official receiver. Where a creditor makes such an application he should show a prima facie probability that some benefit will result to the creditors of the bankrupt. This requirement, I think, is not imposed upon a trustee or official receiver. The grounds for the application in this case are not sufficient. The applicant apparently received information that the bankrupt received a sum of £6,426.13s.3d. from a company which had not been accounted for, but the applicant did not state how it came about that Patterson could give information about the receipt of this money by the bankrupt. I do not think it can be said upon the grounds stated that Patterson answers the description of a person supposed to be able to give information respecting the bankrupt, his dealings or property. (See In re A Debtor (No. 3 of 1909); Ex parte Goldstein, [1917] 1 K.B. 558, at p.564.)" In that matter the only ground upon which the issue of a summons was sought was as follows: "(a) I am informed and truly believe that the Bankrupt has received the sum of £6,426.13s.3d from A.D. Walsh Sawmilling Pty. Limited which has not been a ar a 16. accounted for. (b) The said... and William Patterson are able to give information respecting the Bankrupt, his dealings or property and in particular respect, the receipt by the Bankrupt of the said sum of £6,426.13s.3d." In the present matter a great deal more information was placed before the Registrar particularly on the question whether the applicants are persons able to give information concerning the dealings of the bankrupt with Krakat. Without taking into account the fact that the Registrar has had substantial involvement in and much common knowledge of the happenings in this bankruptcy, there was sufficient information before him in the applications. Counsel also referred to the judgment of Neaves J. in Re Weiss; Ex parte The Official Trustee Clyne v The Official Trustee (1983) 74 FLR 259. In that matter that Judge held that the application did not, in terms, set out the grounds on which it was made and therefore there was insufficient material to justify the issue of the summons. Neaves J. cited the above passage from the reasons of Clyne J. in Re Andrews. He had earlier said that in his opinion the application did not set out the grounds upon which it was made but only the matters upon which it was desired to examine the person summonsed. He then said on page 266: "Counsel for the Official Trustee submitted that, although the only information relevant to the exercise by the Deputy Registrar of the discretion whether to issue the summonses was. that contained in the applications and was in the form of particulars of the subject matters upon which it was desired to examine the person to whom the summons was to be directed, the applications should be read as if they contained assertions by the Official Receiver of facts which must have been implicit in the applications. For example, cy i 17. it was submitted that the matter stated in the fourth particular should be read,as if it contained a specific statement that the applicant did avail himself of the bankrupt's services and that fees were paid or were payable in respect thereof. Similarly with the matter stated in the third particular. But even if one accepts this approach, the matters stated in the first and second particulars provide no basis at__all upon which the Deputy Registrar could roperly suppose that the applicant might be able to give information concerning the bankrupt's dealings with Mrs. Roche or the transfer of the home unit from Metropolitan Mortgage Investment Corporation Pty. Ltd. to the bankrupt's mother or as to the bankrupt's beneficial interest in that unit." My emphasis. In this matter there was information in the application before the Registrar upon which the Registrar was "entitled to suppose that the applicant might be able to give information concerning the bankrupts' dealings with" Krakat in relation to provision of loan moneys and the specified securities. This ground must be rejected. Counsel then contended that the terms of the summons were too widely drawn and in particular because there was a reference therein to Archer Finance Brokers a registered business Mame under which Hodby Nominees Pty. Ltd. carried on business. The bankrupt had been a director of that company. The submission was that there was no evidence upon which the creditors of the bankrupt estate could derive any benefit from enquiries into funds provided by that company to Krakat. In this regard I refer again to Re Andrews supra at p.186 where Clyne J. said: "It is difficult to say what grounds are necessary to obtain the 1ssue of a summons under s.80(1)(b) upon the application of a trustee or official receiver. Where a anor wane eee eos ey a os 18. creditor makes such an application he should show a prima facie probability that some benefit will result to the creditors of the bankrupt. This requirement, TI think, is not imposed upon _a_trustee or official =e receiver." It 1s my opinion that the summonses are not too widely drawn and furthermore in respect of the involvement of Archer Finance Brokers it is a matter of common knowledge that the bankrupt deposited funds received from his investor clients into whichever bank account was at the time most in need. The summons itself was limited to the receipt of funds by Krakat during a specified period and evidence and documents were required from the persons summonsed so as to inform the Official Receiver what future action he was to take. The summons also sought evidence concerning the discharge of a certain mortgage, the culmination of earlier securities, which he understood to have been discharged without any consideration therefor as well as _ the amount which was owing at the time of the execution on 29 August 1986 of an unregistered mortgage. In my opinion the summonses are not too widely drawn and are directed towards obtaining information from the obvious persons who can supply, from the borrower's side, that information, I turn to the final ground, namely that it was vexatious and oppressive to examine the applicants, in particular, Barbara Joy Hunt and Sophia Karounos. In this regard he emphasised that they were likely to be joined with Krakat as co-borrowers under a mortgage dated 29 August 1986 as proposed in the letters of 12 February 1988. 19. Counsel contended that the Court should be loath to examine under s.81 persons who were likely to have claims made against them or to be witnesses in claims against Krakat. In this regard he cited dicta from the decision of Brightman 3. in Re Bletchley Boat Co Ltd [1974] 1 All E.R. 1225 at p.1231 and from the decision of Slade J. in Re Castle New Homes Ltd [1979] 2 ALL E.R. 775 @ 787. Each of these authorities related to examinations under the relevant Companies Act in England. Both Lockhart J. and Riley J. have considered the scope of examinations under s.81 of the Act. I refer to Re Csidei (1979) 39 FLR 387 at 391 and Re Alafaci (1976) 9 AUR 262 @ 270-1. Street J. as he then was referred in an application to examine directors in Re Hugh J. Roberts Pty. Ltd. (In Lig.) (1969) 91 WN 537 at p.541 to the position in this country. He, having acknowledged that a Court must consider how far it should go to allow "a particular examination to proceed before it becomes oppressive or vexatious", said: "The similarity of approach in the bankruptcy jurisdiction is exemplified in Re Price (No.3) 14 ABC 137. At p.140 Clyne J. quoted from an earlier decision of Cave J. In Re Eastan; Ex parte Davis (1891) 8 Morr 168 at p.17i, namely 'I admit that when the person seeking to interrogate is the official receiver or the trustee, it is no answer to say that an action is pending by the official receiver or trustee against the witnesses he proposed to examine'." It follows that in my opinion it is neither vexatious or oppressive to examine the applicants in respect of their involvement as officers of Krakat in dealings with the bankrupt and on this ground also I dismiss the applications. However in respect of the matters set out in the letter of 12 February 1988. 20. I expressed concern during the hearing that on these summonses the Official Receiver should examine those applicants as co-borrowers in the circumstances there set out. My concern was based not so much on the fact that the Official Receiver had initiated, or might contemplate initiating, an action against them but because the topic went beyond the ambit both of the application and the summonses. There was no reference in the applications for issue of summonses to the fact that these two applicants were personally involved in guaranteeing a borrowing and no mention of the topic of co-borrowers. The whole basis of the application was an examination of them as directors and in two instances also as secretary of Krakat. The matter of personal involvement and the circumstances in relation thereto go beyond the topics specifically referred to in the summons. Having drawn the attention of Official Receiver to these matters he obtained an undertaking from his client that he would not examine either of those applicants concerning the circumstances in which they became co-borrowers with Krakat under the mortgage of 29 August 1986. I made my orders in reliance upon that undertaking. In the circumstances I dismiss the applications to set aside the four s.81 summonses in relation to dealings between the bankrupt and Krakat. I adjourn for further consideration the application to set aside the summons directed to Barbara Joy Hunt in relation to dealings with Domitix Pty. Ltd. I reserve all questions of costs. — 21. At the conclusion of the hearing counsel for the applicants indicated that he had instructions to appeal and sought a stay of the examinations. I indicated that the time for appeal would run from the delivery of my reasons and that I stayed the examinations until 5.00 p.m. on Tuesday March 22nd 1988. I ordered that the applicants pay to Official Receiver in any event his costs thrown away by the adjournment of the examinations, which were due to take place on the succeeding three days. I certify that this and theZ? preceding pages are a true copy of the Reasons for Judgment of Mr.Justice Fisher. ' Associate Lbfille — Dated: //-*%- 83° Counsel for the Applicants: Mr. D. Lovell Solicitors for the Applicants: Nr. G. Palassis Andersons. Official Trustee: Mr. M. Barrett Kelly & Co. Hearing Date: ist March 1988