FEDERAL COURT OF AUSTRALIA Goyal, in the matter of Biotech Energy Pty Ltd (Receivers and Managers appointed) [2023] FCA 653 File number(s): NSD 1037 of 2022 Judgment of: HALLEY J Date of judgment: 15 June 2023 Catchwords: CORPORATIONS – examination summons – service – arrest warrant in aid of examination summons – failure to attend without reasonable cause – Federal Court Corporations Rules 2000 (Cth) r 11.10 Legislation: Corporations Act 2001 (Cth) s 596B Federal Court (Corporations) Rules 2000 (Cth) r 11.10 Federal Court Rules 2011 (Cth) rr 10.23, 10.24 Supreme Court (Corporations) Rules 1999 (NSW) r 11.10 Cases cited: Australasian Meat Industry Employees Employers Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98; [1986] HCA 46 Mensink v Parbery (2018) 264 FCR 265; [2018] FCAFC 101 Ian Lawrence Struthers (in his capacity as liquidator) of P.A.C.I. Pty Ltd [2005] NSWSC 864 In the matter of Brentwood Village Limited [2015] NSWSC 1342 Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 52 Date of hearing: 15 June 2023 Counsel for the Plaintiffs: Mr D Stack Solicitor for the Plaintiffs: Baker McKenzie ORDERS NSD 1037 of 2022 IN THE MATTER OF BIOTECH ENERGY PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ACN 653 465 644) RAHUL GOYAL AND CATHERINE MARGARET CONNEELY IN THEIR CAPACITIES AS JOINT AND SEVERAL RECEIVERS AND MANAGERS OF CERTAIN ASSETS OF BIOTECH ENERGY PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ACN 653 465 644) First Plaintiff RAHUL GOYAL AND CATHERINE MARGARET CONNEELY IN THEIR CAPACITIES AS JOINT AND SEVERAL RECEIVERS AND MANAGERS OF CERTAIN ASSETS OF KCK INVESTMENTS PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ACN 630 858 034) Second Plaintiff order made by: HALLEY J DATE OF ORDER: 15 JUNE 2023 THE COURT ORDERS THAT: 1. Subject to Order 7, a warrant be issued and addressed to the Sheriff to arrest Mr Lyndon Keane (Mr Keane) and to bring that person before a Registrar of the Court to be examined under section 596B of the Corporations Act 2001 (Cth) on oath or affirmation about the examinable affairs of Biotech Energy Pty Ltd and KCK Investments Pty Ltd (Receivers and Managers appointed), detaining Mr Keane in custody in the meantime. 2. Subject to Order 7, the issue of the warrant referred to in Order 1 be communicated by the plaintiffs to the Commissioner of the Australian Federal Police for the purpose of the warrant's enforcement. 3. The examination of Mr Keane is to be adjourned to a date to be fixed. 4. Mr Keane is to pay: (a) the wasted costs of the plaintiffs in respect of his failure to appear at his examination before this Court on 25 May 2023; and (b) the plaintiffs' costs in respect of their interlocutory application filed on 26 May 2023. 5. The costs referred to in Order 4 above are to be paid by Mr Keane on an indemnity basis. 6. The costs referred to in Order 4 are to be paid forthwith. 7. Orders 1 and 2 are stayed until 9.30 am on Thursday, 22 June 2023. 8. The plaintiffs are to serve a sealed copy of these orders on Mr Keane by emailing them to lyndon.keane@gmail.com, by no later than 2.00 pm on Friday, 16 June 2023. 9. The plaintiffs are to serve a copy of the reasons for judgment delivered on an ex-parte basis today, 15 June 2023, by emailing them to lyndon.keane@gmail.com as soon as practicable. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT (REVISED FROM THE TRANSCRIPT) HALLEY J: INTRODUCTION 1 By an interlocutory process filed on 26 May 2023 (interlocutory process) the Plaintiffs seek an order pursuant to Rule 11.10 of the Federal Court (Corporations) Rules 2000 (Cth) (Rules) for the issue of a warrant for the arrest of Mr Lyndon Keane (Mr Keane) for his failure to attend his examination in accordance with a summons issued pursuant to s 596B of the Corporations Act 2001 (Cth) (Corporations Act). 2 The Plaintiffs rely upon the following affidavits in support of the relief they seek in the interlocutory process: (a) an affidavit sworn by James Robert Hodge on 17 April 2033; (b) four affidavits affirmed by Cal Anthony Diolúin on 29 April 2023, 3 May 2023, 23 May 23 and 29 May 2023 and the four exhibits to those affidavits; and (c) an affidavit affirmed by Maria Coffill O'Brien on 14 June 2023 and an affidavit to be affirmed by her on 15 June 2023. 3 Mr Stack, for the Plaintiffs, has prepared detailed written submissions in support of the interlocutory process and addressed me orally today at the hearing of the interlocutory process. I found his written and oral submissions to be of significant assistance. 4 When the matter was called for hearing today, there was no appearance from Mr Keane. I address later in these reasons a purported explanation provided by Mr Keane for his non-attendance. 5 For the reasons that follow, I am satisfied that an order should be made for the issue of a warrant for the arrest of Mr Keane. Given the matters to which I will refer to later concerning Mr Keane's purported explanation for his failure to attend today, I propose to stay the execution of those orders until 9.30 am on Thursday, 22 June 2023. BACKGROUND 6 On or about 15 February 2023, Judicial Registrar Luxton, on the application of the Plaintiffs, issued a Summons for examination (Summons) to Mr Keane. The Summons was made returnable on 24 March 2023. 7 In the period between 23 February 2023 and 29 March 2023, Mr Hodge, the Plaintiffs' process server, unsuccessfully attempted to personally serve the Summons (and related documents) at Mr Keane's business address, being level 38, 71 Eagle Street, Brisbane. Mr Hodge also sought to attempt personal service at what was understood to be Mr Kean's residential address, being 6/93 Beatrice Terrace, Ascot (Residential Address). 8 On 24 February 2023, the Plaintiffs' lawyers emailed a copy of the Summons to Mr Keane at lyndon.keane@gmail.com (Email Address). 9 On 28 February 2023, the Plaintiffs' lawyers sent an email to ERA Legal. ERA Legal are the lawyers for Mr Keane's brother, Cameron Keane. The email to ERA Legal asked whether they had instructions to accept service of the Summons on behalf of Mr Keane. ERA Legal responded by email later that day indicating that they did not have instructions to accept service on behalf of Mr Keane. 10 On 23 March 2023, the Plaintiffs' lawyers emailed a further copy of the Summons to Mr Keane at the Email Address. 11 Mr Keane did not attend at the return date of the Summons on 24 March 2023. 12 On 24 March 2023, Judicial Registrar Luxton made orders adjourning the Summons to 14 April 2023 (24 March 2023 Orders). 13 Later that day, the Plaintiffs' lawyers emailed a copy of the 24 March 2023 Orders to Mr Keane at the Email Address. 14 On 29 March 2023, Mr Hodge received a telephone call from Mr Keane in which Mr Keane confirmed (a) his residential address was the Residential Address to which Mr Hodge had attempted to effect service, (b) that he was away in remote Queensland until August/September 2023, (c) that he was aware of the matter, and (d) that the documents could be emailed to him at the Email Address. 15 On 3 April 2023 and 12 April 2023, the Plaintiffs' lawyers emailed a further copy of the 24 March 2023 Orders to Mr Keane at the Email Address. 16 On 14 April 2023, Judicial Registrar Luxton made orders adjourning the Summons to 2 May 2023 (14 April 2023 Orders). 17 On 17 April 2023, the Plaintiffs' lawyers emailed a copy of the 14 April 2023 Orders to Mr Keane at the Email Address. 18 On 20 April 2023, the Plaintiffs filed an interlocutory process seeking orders under r 10.23 and r 10.24 of the Federal Court Rules 2011 (Cth) for orders that personal service of the Summons be dispensed with and that the Summons (and related documents) be deemed to be served by sending them to the Email Address and to the Residential Address. The interlocutory process was supported by Mr Hodge's affidavit of 20 April 2023 and Mr Dioluin's affidavit of 20 April 2023. 19 On 21 April 2023, Judicial Registrar Luxton made orders dispensing with personal service and ordered that the Summons and related documents be deemed to be served on Mr Keane by sending those documents to the Email Address and posting them to the Residential Address. 20 Later that day, the Plaintiffs sent the Summons and related documents to Mr Keane at his Email Address. 21 On 24 April 2023, the Plaintiffs sent the Summons and related documents to Mr Keane, by post, to his Residential Address. 22 Since 24 April 2023, the Plaintiffs lawyers have unsuccessfully attempted to contact Mr Keane about the Summons (a) by telephone on 28 April 2023 and 1 May 2023; (b) by email on 1 May 2023, 3 May 2023, 10 May 2023, 12 May 2023, 19 May 2023 and 24 May 2023; (c) by text to Mr Keane's phone on 12 May 2023, 18 May 2023 and 21 May 2023; and (d) by contacting ERA Legal, as the lawyers for Mr Keane's brother, Cameron Keane, on 12 May 2023. 23 On 2 May 2023, Judicial Registrar Luxton further adjourned the Summons to 23 May 2023 for the conduct of the examination hearing for four days. He further ordered that if Mr Keane failed to appear on 23 May 2023, the matter would be referred to a Judge for the issue of a warrant for Mr Keane's arrest. 24 Mr Keane did not appear at the examination hearing conducted between 23 and 26 May 2023. 25 On 25 May 2023, Registrar Hammerton-Cole ordered that the Plaintiffs file and serve the interlocutory process on Mr Keane at the Email Address (25 May 2023 Orders). 26 On 29 May 2023, the Plaintiffs sent a copy of the interlocutory process and the 25 May 2023 Orders to Mr Keane at the Email Address. 27 The interlocutory process was made returnable in the Corporations List on 8 June 2023. 28 Mr Keane failed to appear on 8 June 2023 when the proceedings were called for case management before me in the Corporations List. 29 On 8 June 2023, I made orders setting the interlocutory process down for hearing at 4.30 pm on 15 June 2023 and requiring the Plaintiffs to serve a copy of the orders and the interlocutory process on Mr Keane at the Email Address by no later than 4.00 pm on 8 June 2023. 30 On or about 2.52 pm on 8 June 2023, Ms O'Brien sent an email to Mr Berry of ERA Legal, attaching a copy of the orders that I made on 8 June 2023. In her covering email, she indicated that she had provided them to Mr Chase Berry in the event that Mr Cameron Keane might be speaking to his brother, Mr Keane, prior to Thursday 15 June 2023, and "he feels it might be appropriate to bring them to his attention". 31 At approximately 2.28 pm today, 15 June 2023, Ms O'Brien, the solicitor for the Plaintiffs received a call on her mobile from Mr Keane. Mr Keane said to Ms O'Brien words to the effect: I have received a message from my brother that I should contact you. Mr Keane then said words to the following effect: I spoke with a bailiff on 29 March 2023 and I told him that I was up north and he should send any documents to my email address. I have received no emails from him. I was involved in a data breach with Optus and Latitude Financial and have been receiving a lot of spam. I have had nothing. Ms O'Brien then said words to the following effect: Is your email address lyndon.keane@gmail.com? Mr Keane responded: Yes. Mr Keane then said words to the effect: I have maybe, 40, 50, 60 unheard voicemails on my voicemail, due to the spam after the data breach. I am a busy executive, busy during the day, and I don't have time to listen to them all. Ms O'Brien then said words to the effect: Do you say that you have received no email from Baker McKenzie to your email address, as we have received no bounce backs? Mr Keane responded in words to the effect: Not to my knowledge, no. Ms O'Brien then said words to the effect: What is your physical address. Mr Keane responded in words to the effect: 411 Kor Street Aurukun 4892. Ms O'Brien then said to him words to the effect: And you have received no voicemails left on mobile number 0419 891 666? Mr Keane responded in words to the effect: No, due to the spam from the data breach. Ms O'Brien then said words to the effect: Are you able to attend electronically at the hearing of this matter at 4.30 pm and be examined? Mr Keane responded in words to the effect: No, I am about to go into a 3 hours meeting, so I can't be examined. LEGAL PRINCIPLES 32 Rule 11.10 of the Rules relevantly provides: Default in relation to examination (1) This rule applies if a person is summoned or ordered by the Court to attend for examination, and: a. without reasonable cause, the person: i. fails to attend at the time and place appointed; or ii. fails to attend from day to day until the conclusion of the examination; or … (2) The Court may: a. issue a warrant for the arrest of the person summoned or ordered to attend for examination; and b. make any other orders that the Court thinks just or necessary. 33 In Ian Lawrence Struthers (in his capacity as liquidator) of P.A.C.I. Pty Ltd [2005] NSWSC 864, Brereton J (as his Honour then was) considered a similar application under the equivalent rule in the Supreme Court, being r 11.10 of the Supreme Court (Corporations) Rules 1999 (NSW). His Honour stated at [37] that r 11.10 "is an independent source of power to issue a warrant," and stated at [47] that "the power to issue an arrest warrant can be exercised ex parte". 34 The authority to issue a warrant pursuant to r 11.10 of the Rules depends on proof of the following matters. First, a person has been summoned or ordered by the Court to attend for examination. Second, a person has failed to attend at the time or place appointed or has failed to attend from day to day until the conclusion of the examination. Third, the person has failed to attend without reasonable cause. 35 In Mensink v Parbery (2018) 264 FCR 265; [2018] FCAFC 101 at [44], Wigney J stated: Rule 11.10 does not expressly provide that it is necessary to prove that the summons order was served before a warrant can issue. Nor is that requirement necessarily implicit in the concept of a person "summoned or ordered by the Court to attend for examination". A summons can be issued, and a person can be ordered to attend for examination, without the summons or notice being served. The better view is that proof that the summons order was brought to the attention of the proposed examinee is relevant to the element relating to reasonable cause. A person who had not been served, or who had not had the summons or order brought to their attention, would no doubt most likely have a reasonable excuse for not attending. That, however, is a different issue. 36 In relation to the requirement to establish that the person summoned for examination had failed to attend without reasonable cause, on one view it may be arguable that an applicant for an arrest warrant does not carry an onus to negative the reasonable cause requirement. In Struthers, Brereton J (as his Honour then was) stated at [44]: As to the absence of reasonable cause, I proceed on the basis that the liquidator bears the onus of negativing reasonable cause. However, since knowledge of the cause is in the possession almost exclusively of the examinees, relatively slight evidence would be required to discharge that onus. 37 In Mensink, Wigney J stated at [58]: First, in Struthers, Brereton J said (at [44]), in relation to the onus of negativing reasonable cause, that "since knowledge of the cause is in the possession almost exclusively of the Examinees, relatively slight evidence would be required to discharge that onus". Thus, it was open to the primary judge to be satisfied that Mr Mensink did not have reasonable cause on the basis of only "slight evidence". 38 Similar observations were made by Bromwich J in Mensink at [172] (Besanko J agreeing at [1]): Even if the respondents did have a onus to negative reasonable cause, which is not a question that presently requires consideration given the lack of dispute on this legal point following Struthers, that case makes it clear that any such onus is a slight one and is easily met. CONSIDERATION 39 I am satisfied that the evidence establishes the jurisdictional requirements. 40 With respect to the first two requirements, the Summons was issued to Mr Keane and he did not attend the Court at the commencement of the examination hearing on 23 May 2023 or at any time thereafter until the conclusion of the examination on 26 May 2023. 41 In relation to the third requirement, while Mr Keane initially informed Mr Hodge that he was away in remote Queensland until August/September 2023, the evidence shows that since then, Mr Keane has been served with a Summons and the Court's orders and the Plaintiffs have attempted, repeatedly, to contact Mr Keane through his residential address, his email address and by his telephone. 42 They have also communicated with the lawyers for Mr Keane's brother. In these circumstances, Mr Keane, prior to today, had been given every opportunity to offer an excuse for his non-attendance. Today, he has purported to provide an excuse for his non-attendance. I am not satisfied that the contents of the conversation that he had with Ms O'Brien provides a reasonable excuse for his non-attendance. He has been on notice of the Summons for many months. He has been served at the Email Address that he confirmed was the appropriate means by which he should be contacted and provided with material. 43 Substituted service orders have been made for service at that address. The explanation that he has not been able to access emails or telephone messages by reason of an alleged data breach with Optus and Latitude Financial is not compelling in the absence of more specific information. More particularly, there is no dispute now that he has was on notice of the hearing this afternoon, but he has made no attempt to contact the Court or arrange for any representation to provide any explanation for his failure to attend either today or on any previous occasion at which he has been the subject of Court orders, in particular for his attendance at the examinations between 23 and 26 May 2023. The explanation that he was not able to make any arrangements to attend electronically because he was about to go into a three hour meeting perhaps best summarises the approach that Mr Keane appears to be taking to the orders that this Court has made on numerous occasions seeking to ensure his attendance for examination. It is a most inappropriate and insufficient explanation. Mr Keane would appear to have taken the view that his business commitments are more significant than any obligation that he might have to comply with orders of this Court. 44 The Court retains a discretion as to whether or not a warrant should be issued for the arrest of Mr Keane, pursuant to r 11.10 of the Rules. In Struthers, Brereton J (as his Honour then was) identified four matters as being relevant considerations for the exercise of that discretion at [45]: (1) the prima facie entitlement of a person who has procured the issue of a subpoena or examination summons which has not been set aside to have it complied with and, if not, enforced; (2) the importance of securing compliance with orders of the Court intended to enable to relevant evidence or information to be obtained in the interests of justice; (3) the reasonableness of steps already taken to obtain the cooperative attendance of the examinee or witness and the possibility of securing attendance by less extreme means; and (4) whether the burden imposed by the subpoena or summons is prima facie oppressive. 45 The first two considerations identified by Brereton J (as his Honour then was) in Struthers strongly support the issue of the arrest warrant. The examination regime provided by Pt 5.9 of the Corporations Act is of fundamental importance. It allows external controllers to obtain information about the company to which they have been appointed. It is essential to the performance of their duties and enables them to obtain information that would not, otherwise, be available to them: see In the matter of Brentwood Village Limited [2015] NSWSC 1342 at [8] (Brereton J, as his Honour then was). 46 Further, and more importantly, particularly in the current context, non-compliance with the Court's orders to attend an examination undermines the effective administration of justice and I am satisfied that it is necessary to take action which demonstrates "that the Court's orders will be enforced": see Australasian Meat Industry Employees Employers Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98; [1986] HCA 46 at 107 (Gibbs CJ, Mason, Wilson and Deane JJ). 47 In relation to the third consideration, as I have noted above, the Plaintiffs have attempted to contact Mr Keane about his examination on many occasions using various methods of communication. Further, the orders made by the Court on 2 May 2023, which were first emailed to Mr Keane on 3 May 2023, expressly noted that if Mr Keane failed to appear on 23 May 2023, the matter would be referred to a Judge for the issue of a warrant for his arrest. 48 Further, the orders made by the Court on 8 June 2023, together with the interlocutory process seeking the issue of a warrant for the issue of Mr Keane, were sent to Mr Keane by email at the Email Address at or about 3.08 pm on 8 June 2023. It was only this afternoon, as I have explained above, that Mr Keane made any response, a response which for the reasons I have explained above, was entirely unsatisfactory. 49 In relation to the fourth consideration, as Brereton J (as his Honour then was) observed in Struthers at [46], there is no reason for supposing that the burden to attend is any greater than in any case of an examination summons, let alone that it is oppressive. 50 In this case, the Summons was first sent to the Email Address on 24 February 2023, more than three months before the commencement of the examination hearing and the orders listing the Summons for hearing were sent to the Email Address on 3 May 2023, more than three weeks prior to the commencement of the examination hearing. 51 I am satisfied that in all the circumstances, this is a case which justifies the issue of an arrest warrant to Mr Keane. Having said that, as I have stated above, given an explanation, albeit entirely unsatisfactory, has now been provided by Mr Keane and that, he is now on notice of the seriousness of his failure to comply with orders of the Court, I consider it is appropriate that the orders for the issue of an arrest warrant be stayed for a short period. DISPOSITION 52 An order is to be made for the issue of an arrest warrant addressed to Mr Keane but those orders will be stayed until 9.30 am on Thursday, 22 June 2023. I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Halley. Associate: Dated: 15 June 2023