In the matter of Newheadspace Pty Limited (in liq) [2020] NSWSC 173

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Newheadspace Pty Limited (in liq) [2020] NSWSC 173 Hearing dates: 27 June 2019 Date of orders: 04 March 2020 Decision date: 04 March 2020 Jurisdiction: Equity - Corporations List Before: Rees J Decision: The summonses for examination set aside as an abuse of process. Liquidator to pay costs of application to set aside the summonses. Further directions made to consider replacement of liquidator. Catchwords: CORPORATIONS – creditors voluntary winding up – threats of bad publicity including liquidator's examinations as pressure to pay claim – appointment of voluntary liquidator for sole purpose of conducting such examinations – confected insolvency – not proper purpose to place corporation into external administration so that liquidator or litigation funder can avail themselves of forensic advantage conferred by public examinations – abuse of process

CORPORATIONS – examinations – power to issue examination summons – eligible applicants – role of ASIC – onus – relevant purpose to consider is that of applicant for summons – use of examinations to obtain forensic advantage not available in ordinary pre-trial procedures – proceedings contemplated – litigation funding – plausible claim – negotiating pressure – need for liquidators to independently consider whether examination summons appropriate and for a proper purpose – importance of getting in books and records – left decisions and review of records to those who appointed the liquidator – inherited improper purpose of appointors – predominant purpose to exert pressure to enter into settlement – abuse of process

CORPORATIONS – examinations – whether satisfied examinees may be able to give information