Supreme Court New South Wales Medium Neutral Citation: In the matter of Kala Capital Pty Limited [2013] NSWSC 1982 Hearing dates: 22 October 2013 Decision date: 22 October 2013 Jurisdiction: Equity Division - Corporations List Before: Brereton J Decision: Order made against former director for affidavit as to examinable affairs. Order for delivery up of passports refused. Catchwords: CORPORATIONS - Application for order requiring respondent to make affidavit deposing to certain matters and requiring respondent to deliver up passports and restraining him from leaving Australia - where respondent is a former director of corporation. Legislation Cited: (Cth) Corporations Act 2001 s 486, s 486A, s 486B, s 596A, s 597A Category: Interlocutory applications Parties: Kala Capital Pty Limited (in Liq) (applicant) Alfred Kin Chau Lee (respondent) Representation: Counsel: M Hayter (solicitor) (applicant) M Pesman SC (respondent) Solicitors: Gillis Delaney Lawyers (applicant) Carroll & O'Dea Lawyers (respondent) File Number(s): 2011/338044 Judgment - EX TEMPORE 1HIS HONOUR: By interlocutory process filed in court today, the applicant Schon Gregory Condon in his capacity as liquidator of the company Kala Capital Pty Limited seeks an order pursuant to the (Cth) Corporations Act 2001 ("the Act"), s 597A, requiring the respondent Alfred Kin Chau Lee to make an affidavit deposing to certain matters specified in a schedule attached to a letter of 25 September 2011 from Gillies Delaney Lawyers to E A Lawyers, and orders pursuant to s 486(1)(c) and (d) requiring Mr Lee to deliver up his passports and restraining him from leaving Australia without the consent of the Court. 2Section 597A relevantly provides as follows: When Court is to require affidavit about corporation's examinable affairs (1) The Court is to require a person to file an affidavit about a corporation's examinable affairs if: (a) an eligible applicant applies for the requirement to be made; and (b) the Court is satisfied that the person is an officer or provisional liquidator of the corporation or was such an officer or provisional liquidator during or after the 2 years ending: (i) if the corporation is under administration - on the section 513C day in relation to the administration; or (ii) if the corporation has executed a deed of company arrangement that has not yet terminated - on the section 513C day in relation to the administration that ended when the deed was executed; or (iii) if the corporation is being, or has been, wound up - when the winding up began; or (iv) otherwise - when the application is made; even if the person has been summoned under section 596A or 596B for examination about those affairs. (2) The requirement is to: (a) specify such of the information requested in the application as relates to examinable affairs of the corporation; and (b) require the affidavit to set out the specified information; and (c) require the affidavit to be filed on or before a specified day that is reasonable in the circumstances. 3It will be apparent from subsection (1) that where the conditions in subparagraphs (a) and (b) are satisfied, the Court has no discretion and must require the person concerned to file the requisite affidavit. Subsection (2)(c) requires the affidavit to be filed on or before a specified day that is reasonable in the circumstances. 4Mr Condon, as liquidator of Kala Capital, is an eligible applicant for the purposes of s 597A(1)(a). Mr Lee was an officer of Kala Capital, in that he was a director during or after the two year period ending on the date on which the winding up of Kala Capital began for the purposes of s 597A(1)(b)(iii). 5In those circumstances, the Court must make the order sought and specify by the order such of the information requested in the application as relates to the examinable powers of the Corporation. 6It was not submitted that any of the material referred to in the schedule did not relate to the examinable affairs of the Corporation. 7Accordingly, I must make the order sought. 8So far as time that is reasonable in the circumstances, the applicant sought fourteen days and the respondent submitted that six weeks should be allowed. Given some suggestion of ill health on the part of Mr Lee, albeit evidenced by an unsatisfactory certificate of incapacity for work which says nothing of his capacity to attend court or answer questions, nonetheless a period of two weeks to deal with the extensive request may be inadequate. I propose to allow a period of four weeks. Mr Lee should clearly understand that if he is unable to complete the affidavit within that four-week period he should not simply ignore the order but apply to the Court for an extension of time, on evidence which discloses the progress made in the preparation of an answer so far. Such an application is much more likely to attract the Court's sympathy if supported by an affidavit that shows that a substantial part of the request has been met, and sets out so much of the answers as can be provided within time. 9Section 486A relevantly provides as follows that: (1) The Court may make one or more of the following: (a) an order prohibiting, either absolutely or subject to conditions, an officer, employee or related entity of a company from taking or sending out of this jurisdiction, or out of Australia, money or other property of the company or of the officer, employee or related entity; (b) an order appointing: (i) a receiver or trustee, with specified powers, of property of an officer or employee of a company, or of property of a related entity of a company that is a natural person; or (ii) a receiver, or a receiver and manager, with specified powers, of property of a related entity of a company that is not a natural person; (c) an order requiring an officer or employee of a company, or a related entity of a company that is a natural person, to surrender to the Court his or her passport and any other specified documents; (d) an order prohibiting an officer or employee of a company, or a related entity of a company that is a natural person, from leaving this jurisdiction, or Australia, without the Court's consent. ... (4) Before considering an application for an order under subsection (1), the Court may, if in the Court's opinion it is desirable to do so, grant an interim order of the kind applied for that is expressed to have effect until the application is determined. 10The application was made as one for final order under subsection (1), and alternatively for an interim order under subsection (4). 11As this may not be the end of the matter, it is better that I say little about the merits. For present purposes, it can be decided by reference to one issue alone. Section 486A(1) refers to "an officer or employee of a company or a related entity of a company." It does not in terms refer to a former officer or employee and, so far as I (and counsel) have been able to ascertain in the limited time available, no provision of the Act extends its reach to include a former officer or employee. In this respect, s 486A(i) is to be contrasted, for example, with s 486B (which refers to "a person"), and to s 596A (which provides for the mandatory examination of a person "who is an officer or provisional liquidator of the corporation or was such an officer or provisional liquidator during or after the two years ending on the relevant day"). 12Mr Lee ceased to be an officer of Kala Capital, as I understand it, in 2010. The company was wound up in 2011. In those circumstances, it seems to me that he is not within the scope of s 486A(1). It may be that further research or argument will demonstrate this view to be wrong, but as things appear at present the section does not extend to catch him. 13In those circumstances, it is not appropriate to make an order under that section, even on an interim basis. 14I adjourn the interlocutory process to Monday 28 October 2013 at 9.45am in the Corporations List. ********** 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. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 16 April 2014