Norman, in the matter of The Executors and Trustees of the Deceased Estate of McFarlane v McFarlane (No 2) [2009] FCA 607

FEDERAL COURT OF AUSTRALIA

Norman, in the matter of The Executors and Trustees of the Deceased Estate of McFarlane v McFarlane (No 2) [2009] FCA 607

IN THE MATTER OF THE UNREGISTERED MANAGED INVESTMENT SCHEME OF ALLAN MCFARLANE (DEC'D) TREVOR GILBERT NORMAN v THE EXECUTORS & TRUSTEES OF THE DECEASED ESTATE OF ALLAN MCFARLANE

SAD 135 of 2008

MANSFIELD J

2 JUNE 2009

ADELAIDE

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY SAD 135 of 2008

IN THE MATTER OF THE UNREGISTERED MANAGED INVESTMENT SCHEME OF ALLAN MCFARLANE (DEC'D) BETWEEN: TREVOR GILBERT NORMAN

Plaintiff

AND: THE EXECUTORS & TRUSTEES OF THE DECEASED ESTATE OF ALLAN MCFARLANE

Defendant

JUDGE: MANSFIELD J

DATE OF ORDER: 2 JUNE 2009

WHERE MADE: ADELAIDE

THE COURT ORDERS THAT:

1. The orders made on 28 November 2008 be varied by deleting paragraph 7.3 therefrom and by making consequential enumeration changes so that the Orders are in terms of the amended Order annexed hereto. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using eSearch on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY SAD 135 of 2008

IN THE MATTER OF THE UNREGISTERED MANAGED INVESTMENT SCHEME OF ALLAN MCFARLANE (DEC'D) BETWEEN: TREVOR GILBERT NORMAN

Plaintiff

AND: THE EXECUTORS & TRUSTEES OF THE DECEASED ESTATE OF ALLAN MCFARLANE

Defendant

JUDGE: MANSFIELD J

DATE: 2 JUNE 2009

PLACE: ADELAIDE

REASONS FOR JUDGMENT 1 The Orders made in this matter on 28 November 2008 were made with some urgency and with a limited opportunity to fully consider the issues. Reasons for those Orders were subsequently published: Norman, in the matter of The Executors and Trustees of the Deceased Estate of McFarlane v McFarlane [2009] FCA 14. At the time of making those Orders there was some discussion between counsel and the Court as to how to properly define the "Scheme property" and certain alterations to the proposed orders were made as a result of that discussion. In addition the parties and the liquidators were given liberty to apply on short notice, including specifically in relation to the definition of "Scheme property". 2 An application has now been made to vary the definition of the "Scheme property" by deleting what was previously clause 7.3 of that definition, and for consequential enumeration changes. 3 Matters have moved on. It was understood at the time those Orders were made that one, if not the principal, investigation which the liquidators would pursue on behalf of the Scheme investors would be to determine whether the National Australia Bank Limited (the Bank) in its conduct of an account entitled "McFarlanes Chartered Accountants Trust Account" had in some way acted improperly. Following the making of those Orders, the liquidators secured from the Court Orders for the examination of two officers of the Bank and for the production of certain of its records. The Bank unsuccessfully applied for a stay of those Orders because in the meantime it had sought leave to appeal from the making of the Orders made on 28 November 2008. Its application for a stay was unsuccessful both at first instance and on appeal: National Australia Bank Limited v Norman [2009] FCAFC 13. The practical situation is that it has produced the papers which it was required to produce for inspection pursuant to the examination/production Orders, but the examination of its officers has not taken place. I understand that the examination of its officers is not intended to proceed pending the hearing of its application for leave to appeal and, if leave is granted, the appeal, from the making of those Orders. 4 Counsel for the Bank today has appeared and been heard on the application without opposition. He has opposed the amendment of the Orders made on 28 November 2008, because he contends in effect that it is too late to do so. He submits that the production of documents required in conjunction with the examination Orders was very extensive, and was founded upon clause 7.3 of the Orders as made on 28 November 2008. If that clause of the Orders made on 28 November 2008 was not in place, he submitted that, whilst examination orders could nevertheless have been made, and production of documents directed to facilitate or support those examinations, they would not have been so broad in relation to the production of documents. I have not seen the affidavit in support of the examination Orders. I am aware that the Bank has applied to set aside those examination Orders, and that its application has been stood over pending the hearing and determination of its application for leave to appeal from the Orders made on 28 November 2008 and, if leave is granted, that appeal. 5 Whether or not the production of documents ordered in conjunction with the examination Orders was broader than it might otherwise have been, I do not consider that I should for that reason decline to amend the Orders of 28 November 2008 in the terms sought. That application was foreshadowed at the last directions hearing on 8 May 2009 and has been notified to the other parties, and to the Bank. There is no evidence specifically directed to the Bank's opposition, although I accept in theory the proposition put by counsel for the Bank (although, as I said, I have not seen the material submitted to the Court for the purpose of the examination Orders). In any event, as counsel for the Bank acknowledged, to amend the Orders of 28 November 2008 as sought does not prevent the Bank from asserting that it should be granted leave to appeal from those Orders or from endeavouring to establish what I understand is a contentious proposition – contentious in the sense that the parties wish to argue about it – as to its standing to seek that leave to appeal and to maintain any appeal. 6 I am mindful also that for slightly different reasons, the Full Court upheld the decision to refuse to stay the examination Orders, including the production of documents, albeit that the Bank then complained that if it were right in its application for leave to appeal and on appeal that the Orders of 28 November 2008 should not have been made, it would have been prejudiced by having to produce its records in the meantime. It is still the case that if the Bank succeeds in its application for leave to appeal and on its appeal, the consequence will be that its records will be returned because there should have been no Orders made on 28 November 2008, at least in the terms that they were made. That is largely by way of an additional observation, further to the reasons for ruling which I have made. I certify that the preceding six (6) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield.