New South Wales Supreme Court CITATION : ASIC v Karl Suleman Enterprizes [2002] NSWSC 1039 CURRENT JURISDICTION: Equity FILE NUMBER(S) : SC 5414/01 HEARING DATE(S) : 30 October 2002 JUDGMENT DATE : 30 October 2002 Australian Securities & Investment Commission (P) Karl Suleman Enterprizes Pty Limited (in liq) (D1) Suleman Investments Limited (D2) Karl Suleman (D3) Vivian Suleman (D4) Paul G Weston & Neil R Cussen (as liquidators of First Defendant) (D5) PARTIES : Pal Holdings Pty Ltd (in liq) (D6) Froggy Holdings Pty Ltd (in liq) (D7) Froggy Music Pty Ltd (in liq) (D8) Froggy Mobiles Pty Ltd (in liq) (D9) Froggy Mobiles (Western Sydney) Pty Ltd (in liq) (D10) Froggy Mobiles (Eastern Sydney) Pty Ltd (in liq) (D11) Capital Finance Australia Ltd (D12) Jessie George (D13) JUDGMENT OF : Campbell J COUNSEL : J Thomson (D5) SOLICITORS : Coudert Brothers (D5) CATCHWORDS : CORPORATIONS - winding up - summons for examination of witnesses - whether summons should issue to minors - INFANTS AND CHILDREN - whether order for examination of a minor by a liquidator should be made LEGISLATION CITED : Corportions Act 2001 Evidence Act 1995 Doran Constructions Pty Limited (in liquidation) [2002] NSWSC 215 Re BPTC Ltd (In Liq) (1992) 29 NSWLR 713 CASES CITED : Re Hugh J Roberts Pty Ltd (1969) 91 WN (NSW) 537 Re Rothwells Ltd (Prov Liq Apptd) (1989) 15 ACLR 168 Spedley Securities Ltd (In Liquidation) v Bond Corporation Holdings Ltd (1990) 19 NSWLR 729 DECISION : Orders for examination made IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EQUITY LIST CAMPBELL J WEDNESDAY 30 OCTOBER 2002 5415/01 ASIC v KARL SULEMAN ENTERPRIZES PTY LIMITED JUDGMENT 1 HIS HONOUR: This is an application by the liquidators of Karl Suleman Enterprizes Pty Limited (in liquidation). They seek orders for the examination, under section 596B of the Corporations Act 2001 of Wayne George and Steven George. This case is out of the ordinary in that the people it is sought to examine are minors. Wayne is aged thirteen or fourteen, while Steven is aged seventeen or eighteen. They are the children of Jessie George, who appears to have been centrally involved in the operation of the unregistered managed investment scheme, formerly operated by Karl Suleman Enterprizes Pty Limited. 2 There is evidence which suggests that an amount of the order of US$240,000 was placed into an account in the name of Wayne George, with a United States bank over a period apparently beginning on 16 July 2001 through to 30 September 2001. There is also some evidence that Steven George has funds in his name in the United States. 3 The liquidator seeks to examine the two boys to discover the extent of their knowledge of the transactions surrounding moneys being placed into their names. As well, some of the money which was placed into the account in the name of Wayne, of the order of US$68,000, has been withdrawn. The liquidator is interested in finding out what has become of that sum. 4 The court is always concerned that the powers of examination be used for proper purposes. It seems to me that investigating what has become of the money received by Mr Jessie George from the investment scheme is such a proper purpose, and that that purpose would be advanced by examining the two boys. 5 The order that is made under section 596B is one which enables the court to summon a person for examination about a corporation's examinable affairs. That examination is ordinarily on oath. 6 The Evidence Act 1995 governs the conduct of examinations under section 596B: Doran Constructions Pty Limited (in liquidation) [2002] NSWSC 215 at [87]–[112]. That Act places no obstacles in the way of minors giving evidence, simply because they are minors. Nor do children have any lack of capacity under the general law to give evidence, simply on the ground that they are children. Section 12 of the Evidence Act provides that, except as otherwise provided by the Act, every person is competent to give evidence and a person who is competent to give evidence about a fact is compellable to give that evidence. 7 Section 13 provides that a person who is incapable of understanding that, in giving evidence, he or she is under an obligation to give truthful evidence, is not competent to give sworn evidence. Section 13 goes on to provide circumstances in which the court can receive unsworn evidence from someone who is not competent to give sworn evidence. 8 While ordinarily one would expect that people aged thirteen or fourteen, and seventeen or eighteen would be competent to give sworn evidence, it would be a matter which a Registrar conducting an examination would need to satisfy himself or herself about before allowing an examination to proceed. It seems to me that it is appropriate to decide whether to issue a summons for examination of these minors on the assumption, usually made about people when there is no evidence to the contrary, that they are competent to give evidence one way or another. Any questions about the precise mode in which evidence should be given, or indeed whether the assumption I have just referred to is misplaced in relation to one or both of the minors, so that no questions should be permitted to be asked of them, should be decided by a Registrar, once the boys have actually appeared in answer to the summons. 9 The court has often taken into account, in deciding whether it is appropriate to make an order for examination, the fact that an examination will itself be conducted under the supervision of the court, and that the presiding judicial officer will be able to control the proceedings, to ensure that the proceedings are not used oppressively, (eg Re Hugh J Roberts Pty Ltd (1969) 91 WN (NSW) 537 at 542, Re Rothwells Ltd (Prov Liq Apptd) (1989) 15 ACLR 168 at 180-182; Spedley Securities Ltd (In Liquidation) v Bond Corporation Holdings Ltd (1990) 19 NSWLR 729 at 740-741; Re BPTC Ltd (In Liq) (1992) 29 NSWLR 713 at 721). There is a particular need to exercise caution that a power of examination is not being used oppressively when minors are being examined. However, it seems to me that that need for caution is adequately met by the Registrar exercising such control that seems appropriate to him or her at the time. 10 I do not see anything in the fact that the potential examinees are minors which, on the material before me, leads me to doubt the propriety of them being summoned for examination. 11 I make orders in accordance with the short minutes, initialled by me and placed with the papers. These orders may be entered forthwith. ********** Last Modified: 11/07/2002 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. 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