Public Examinations: bad for your health?

In Robert Michael Kirman and Robert Conry Brauer as Joint and Several Liquidators of Renbec Pty Ltd (In liq) and of Seawest International Pty Ltd (In liq) [2019] WASC 130 the Supreme Court of Western Australia was required to consider:

  • whether a summons for examination could be discharged on grounds of an examinee’s (Mrs Hawes) ill health;
  • whether Mrs Hawes would have knowledge of the examinable affairs which would justify her being summonsed; and
  • whether there would be any purpose in examining Mrs Hawes before Mr Hawes.

Discharge on health grounds

Mrs Hawes’ application was supported by a letter from her general practitioner stating that she ‘has been seeing a psychologist and making slow progress, however continues to experience significant symptoms that impact upon her ability to function'.1 The general practitioner concluded that Mrs Hawes ‘is currently unfit to attend court due to her illness and I am concerned she may suffer a further deterioration in her mental health if forced to do so'.2

Master Sanderson found that even though being called to attend on an examination of a company’s affairs is a stressful process, Mrs Hawes was still a person who the legislature has determined can be summonsed to be examined.3

Master Sanderson considered the criteria set out in Horizontal Falls Adventure Tours Pty Ltd v Thomas [2009] FCA 639 for determining when a summons could be set aside on health grounds, which includes when an examinee is unable to understand the matters at issue.  The Master found that Mrs Hawes’ affidavit was ‘cogent and lucid and [did] not suggest any inability to understand the matters at issue’ and that the letter from the general practitioner did not ‘really set out a diagnosis'.4

The court found that the material provided by Mrs Hawes was insufficient to justify the summons being set aside on the basis of a threat to her health.5

Examinee’s knowledge of the examinable affairs

The liquidators filed an affidavit containing information about Mrs Hawes’ involvement with the relevant companies.  The affidavit showed that Mrs Hawes was a current director and shareholder of related entities to the companies and demonstrated that she had knowledge of the companies’ examinable affairs.6  Master Sanderson found that the affidavit filed by Mrs Hawes did not suggest or demonstrate otherwise.7

The questions the liquidators intended to put to Mrs Hawes were in relation to the transfer of a number of ships to Mrs Hawes, apparently for no valuable consideration.8  The Court held that it was by no means unreasonable for the liquidators to examine Mrs Hawes about those transactions in the circumstances.

Order of examinations

Master Sanderson found that there was no basis to justify the court dictating the order in which liquidators should examine witnesses, instead stating that such a matter is a matter for the liquidators and their professional judgment.

Lavan comment

This case illustrates that the level of evidence required to discharge a summons on grounds of ill-health is more than a vague note from a general practitioner and that stress is an insufficient ground to discharge a summons.

Further, this case highlights that plaintiffs have discretion in relation to the manner in which a public examination is conducted, including as to the orders of examination.

23 May 2019
Insolvency Updates
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Joseph Abberton
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Dean Hely
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Lawrence Lee
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FOOTNOTES

[1] at paragraph [3].

[2] Ibid.

[3] Ibid.

[4] Ibid [4].

[5] Ibid, [5].

[6] Ibid.

[7] Ibid.

[8] Ibid [6].

[9] Ibid, [7].