FEDERAL COURT OF AUSTRALIA Southwell v Maladina [2002] FCA 1094 ROBERT SOUTHWELL v JAMES MUSTATA MALADINA (aka JIMMY MALADINA), JANET MALADINA, FERRAGAMO LIMITED (FORMERLY KNOWN AS FERRAGAMO PTY LIMITED), FERRAGAMO (AUST) PTY LIMITED ACN 084 743 144, ORD MINNETT MANAGEMENT LIMITED ACN 002 262 240 AND NATIONAL PROVIDENT FUND BOARD OF TRUSTEES Q 7027 OF 2002 DOWSETT J 1 AUGUST 2002 BRISBANE IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY Q 7027 OF 2001 BETWEEN: ROBERT SOUTHWELL APPLICANT AND: JAMES MUSTATA MALADINA (aka JIMMY MALADINA) FIRST RESPONDENT JANET MALADINA SECOND RESPONDENT FERRAGAMO LIMITED (FORMERLY KNOWN AS FERRAGAMO PTY LIMITED) THIRD RESPONDENT FERRAGAMO (AUST) PTY LIMITED ACN 084 743 144 FOURTH RESPONDENT ORD MINNETT MANAGEMENT LIMITED ACN 002 262 240 FIFTH RESPONDENT NATIONAL PROVIDENT FUND BOARD OF TRUSTEES SIXTH RESPONDENT JUDGE: DOWSETT J DATE OF ORDER: 1 AUGUST 2002 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. The summonses issued in these proceedings to Maurice Sullivan and Dale Treanor on 28 February 2002 and 22 April 2002 respectively be set aside. 2. Summonses issue in accordance with exhibits 1 and 2 in these proceedings. 3. The applicant in the principal proceedings, Robert Southwell, pay the costs of Dale Treanor and Maurice Sullivan of and incidental to the notices of motion to set aside the summonses issued to them, including the costs of the appearances on Monday, 29 July, and Thursday, 1 August 2002 Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY Q 7027 OF 2001 BETWEEN: ROBERT SOUTHWELL APPLICANT AND: JAMES MUSTATA MALADINA (aka JIMMY MALADINA) FIRST RESPONDENT JANET MALADINA SECOND RESPONDENT FERRAGAMO LIMITED (FORMERLY KNOWN AS FERRAGAMO PTY LIMITED) THIRD RESPONDENT FERRAGAMO (AUST) PTY LIMITED ACN 084 743 144 FOURTH RESPONDENT ORD MINNETT MANAGEMENT LIMITED ACN 002 262 240 FIFTH RESPONDENT NATIONAL PROVIDENT FUND BOARD OF TRUSTEES SIXTH RESPONDENT JUDGE: DOWSETT J DATE: 1 AUGUST 2002 PLACE: BRISBANE REASONS FOR JUDGMENT 1 This Court is presently seized of proceedings in bankruptcy in which the bankrupt is Jimmy Maladina, formerly a resident of Papua New Guinea. The sequestration order was made in the High Court of Papua New Guinea but has been the subject of a letter of request to this Court seeking the Court's assistance in that bankruptcy. This was brought about by the fact that Mr and Mrs Maladina had come to Australia and were residing here. 2 The examination of the bankrupt has proceeded, and at the present time I am considering applications to review orders made by a deputy registrar pursuant to s 81 of the Bankruptcy Act 1966 (Cth) (the "Act") for the examination of Maurice Sullivan and for an order that he attend for such examination and produce certain documents. It is, as I understand it, accepted by the Trustee in Bankruptcy that the order obtained in its present form is defective. The Trustee has today tendered an order which he seeks in lieu of that order. To that extent, then, it is clearly necessary that the order for the issue of the summons be reviewed pursuant to s 35A(6) of the Federal Court Act 1976 (Cth). 3 Section 81 of the Act provides for the issue of a summons to a relevant person or an examinable person in relation to that relevant person for examination in relation to the bankruptcy. The relevant person is the bankrupt. The examinable person is to be identified in accordance with the definition which is contained in s 5 of the Act. Pursuant to s 81(1B), a person summoned pursuant to subs 81(1), may also be ordered to produce at the examination, books in his or her possession which relate to the bankrupt or to any of the bankrupt's examinable affairs. 4 Mr Sullivan is said to be an examinable person. Pursuant to par (d) of the definition in s 5 of the Act, it is said that he is a person with whom "an associated entity of the bankrupt is or has been associated" and that he may be able to give information about the bankrupt or the bankrupt's examinable affairs. It is, as I understand it, conceded that if Mr Sullivan is a person with whom an associated entity of the bankrupt is associated, then he is a person who is able to give such information. 5 Mr Sullivan is said to be an examinable person because of his association with Property Investment Consultants Limited ("PIC"). This is a company to which the bankrupt claims to have lent the sum of 10,000 kina. It is also said that the company acquired property from the bankrupt and his wife. Mr Sullivan is a director of that company. Pursuant to s 5B, he is therefore associated with it by virtue of par 5B(1)(a). The bankrupt is an associate of the company by virtue of the fact that he is owed a debt by it pursuant to par 5B(1)(g). In those circumstances, it is clear to me that Mr Sullivan is an examinable person. 6 However questions arise as to the ambit of the orders for production of documents presently sought by the trustee. I have come to the conclusion that the orders as sought are, in the circumstances, appropriate. I will briefly state my reasons for that conclusion. 7 The authorities establish that it is not appropriate for a trustee to use the examination process prescribed by s 81 as a fishing expedition. It would not, for example, be appropriate simply to require an examinable person to produce all documents which might be relevant to the affairs of the bankrupt. One could not be sure that the examinee could reasonably, and without undue effort identify such documents. It is, I think, necessary that they be more specifically identified. It is also important that the section not be used as an instrument of oppression. It would be oppressive to require a person, not a party, to spend substantial amounts of time and/or money in sorting through large amounts of material in order to comply with the order. It would also be inappropriate to make an order that required the recipient to seek legal advice to resolve what might be difficult and complex questions of relevance. 8 However, as was made clear by the Full Court in Lucas Industries Limited v Hewitt (1977) 18 ALR 555 and by Clarke J in Southern Pacific Hotel Services Inc v Southern Pacific Hotel Corporation Ltd [1984] 1 NSWLR 710, that does not mean that expressions such as "relating to" cannot be used in order to describe the relationship between documents sought and a relevant transaction. Firstly, the trustee seeks documents relating to the financial affairs of PIC, insofar as they are or appear to be relevant to the acquisition of property by that company from the bankrupt. This is said to include one identified transaction, the transfer of any property in Papua New Guinea to that company by another company, Ferragamo. The application also seeks documents concerning a loan transaction by the bankrupt's father involving those two companies, that is PIC and Ferragamo. The applicant also seeks production of documents relating to money lent or otherwise paid to PIC by or on behalf of the bankrupt or Ferragamo. Ferragamo is a company of which the bankrupt and his wife are shareholders. In the circumstances, I do not see that Mr Sullivan will be exposed to any great difficulty or expense in identifying documents in his possession relating to those matters. He is a director of PIC and presumably knows where his documents relating to the company are kept. There is no suggestion that the company has a substantial trading history, or that its history stretches back over a lengthy period of time. As I understand it, it was incorporated in early 1999. In the circumstances, there is good reason to infer that Mr Sullivan would be familiar with the business transactions of PIC to the extent that they involve the bankrupt, Ferragamo or the bankrupt's father. I can see no reasonable objection to an order in the form sought. 9 There is reason to believe that funds passed from the bankrupt to a third company, (Perimist) following a rather involved route. Mr Sullivan was a director of that company at the relevant time, although he no longer is a director. I hesitated over the expression in subpar (2)(a) which describes the relevant documents as those concerning "the acquisition by Perimist" of any property, including certain identified properties. However I am satisfied to make an order in that form. There is no reason to believe that the affairs of the company are particularly involved or that they have been carried out over a lengthy period of time. If Mr Sullivan has such documents, it seems probable that he will know where they are. 10 Similar comments apply to orders sought pursuant to par 3 of the draft amended summons to which I have been referring and which I will make exhibit 1 in these proceedings, concerning the affairs of the company Bethgold. As I understand it, Mr Sullivan continues to be a director of that company, as far as the evidence goes. 11 Paragraph 4 relates to the affairs of Port Moresby First National Real Estate Limited. It is a company which appears to have either received money from the bankrupt or sent money to him through the involved route to which I previously referred. Again, Mr Sullivan either has documents of the sort described, in which case it seems reasonable to infer that he will be aware of them and know where they are, or he has not. He need only respond accordingly. 12 Finally, par 5 in effect requires the production of any books in Mr Sullivan's possession relating to any transfer in the period since 1 July 1998 of property of any kind to him or to any company of which he was a member, officer, servant or agent by the bankrupt or either of two Ferragamo companies of which the bankrupt is a shareholder. Although counsel for Mr Sullivan sought to assert some difficulty in complying with this, I really cannot see why that should be so. Given that Mr Sullivan has been associated with numerous companies which, it is reasonable to infer, have been used by the bankrupt for the purpose of salting away assets, it is reasonable to ask him whether he has been involved in any other transactions of a similar kind with those identified parties in the period which has been specified. I will make an order in terms of exhibit 1 as I have amended it. 13 Now, we go to Mr Treanor. 14 In the circumstances, there will be an order in terms of exhibit 2 as amended by me. 15 I consider that the need for the proceedings on Monday last and today resulted from the form of order made by the deputy registrar, which was clearly objectionable and has been conceded to be so. It is true that there has been additional argument as to the status of the various respondents, Mr Treanor and Mr Sullivan, as examinable persons. That argument was inevitably incidental to the question of the ambit of the summonses. Had appropriate orders been obtained before the deputy registrar, it seems to me to be most unlikely that we would have been here now. 16 In the circumstances, I think that the applicant in the principal proceedings, Robert Southwell, should pay the costs incurred in connection with the hearings on Monday and today, including the reserved costs of the hearing on Monday. Any other costs incidental to the motion to set aside the summonses should also follow the event. The order will be that the applicant, Robert Southwell, pay the costs of Dale Treanor and Maurice Sullivan of and incidental to the notices of motion to set aside the summonses issued to them, including the costs of the appearances on Monday, 29 July, and today, 1 August 2002. 17 Since making the above orders, it has occurred to me that any documents in the possession of a director of a company may really be in the company's possession or that the company should at least be heard before making an order for disclosure. I have therefore notified the parties that they should address that matter before taking out the above orders. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett. Associate: Dated: 4 September 2002 Counsel for the Applicant: Mr P Hack SC Solicitor for the Applicant: Gilshenan & Luton Counsel for the Respondent: Mr A Lyons Solicitor for the Respondent: Blake Dawson Waldron Date of Hearing: 29 July & 1 August 2002 Date of Judgment: 1 August 2002