In the matter of Newheadspace Pty Limited (in liq)

1. [1]

   HER HONOUR: This is an application by National Rugby League Limited (NRL) to set aside examination summonses issued by Andrew Needham, the liquidator of Newheadspace Pty Limited, to Paul Heptonstall, Senior NRL Welfare and Education Manager, and Todd Greenberg, Chief Executive Officer, on the basis that the voluntary liquidation of Newheadspace was a contrivance by those standing behind the company to enable a liquidator to request the issue of summons for public examinations and thereby exert commercial pressure on the NRL to pay various claims being asserted by the company. The NRL’s complaints about those standing behind Newheadspace are well-founded; the question is whether Mr Needham, as liquidator of Newheadspace, is nonetheless entitled to proceed to conduct public examinations if he considers it necessary to do so, which he says he does.

2. [2]

   For the reasons which follow, the examination summonses will be set aside. Whilst there is ample authority that a liquidator may conduct public examinations to investigate whether a company has a viable claim, including for the purposes of enabling a litigation funder to decide whether to provide funding to pursue the claim, the troubling and hopefully unique facts of this case have led me to conclude that, not only was the sole purpose of those standing behind the company to place it in liquidation in order to conduct, or threaten to conduct, public examinations of senior NRL officers and thereby to enhance the company’s ability to prevail upon the NRL to pay a claim, but Mr Needham does not appear to have independently turned his mind to whether the elements of section 596B of the Corporations Act 2001 (Cth) were satisfied or whether the summonses were issued for a proper purpose. Rather, Mr Needham has left it to those interested in conducting public examinations, being Ms Culver, the funder and legal representatives engaged before his appointment. He has not put his ‘stamp’ on this process but has effectively inherited the improper purpose of those who placed Newheadspace into liquidation, which has remained the predominant purpose of the processes which have continued under his name.

3. [3]

   I am troubled that examinations have already been completed of other persons who did not apply to set aside the summonses addressed to them. One was the sole director and shareholder of Newheadspace and another was a long-standing supporter, who answered a series of “Dorothy Dixers” from counsel engaged by the company months before Mr Needham was appointed. More concerning, one was a third party who presumably did not have access to the same legal resources as the NRL and did not apply to set the summons aside. As a consequence, a member of the public was subjected to the invasive process that is a liquidator’s examination. Further, these three examinations wasted valuable court hearing time which could have been used by other liquidators of other companies.

4. [4]

   The sole director and shareholder of Newheadspace, Jhanna Culver, describes herself as a life change strategist with qualifications in social work, executive coaching and dance movement therapy. Newheadspace provided consulting services specialising in helping clients manage change. Newheadspace is also trustee of the Culver Family Trust.

Program provided to NRL clubs

1. [5]

   In 2010, Newheadspace developed a program called “Extend the Dream” to prepare professional sportspeople for life after sport and ran a pilot program for players from an NRL club, the New Zealand Warriors. According to Ms Culver, the opportunity to provide such a program to the NRL arose through her friendship with the wife of the then chief executive officer of the NRL, David Gallop. Mr Heptonstall signed a letter of engagement confirming that Newheadspace would deliver the programme for one week in January 2011 for $11,205. Following the pilot program, Newheadspace began to provide the program to the remaining 15 NRL clubs but, in late 2012 or early 2013, the program was not continued.

2. [6]

   In September 2014, the program was again offered to NRL clubs Newcastle and North Queensland Cowboys. Although Newheadspace’s invoices are confusing, it appears that in September 2014, Newheadspace provided the program to four players in the NRL club North Queensland Cowboys and rendered invoices to those players totalling $11,516. In November 2014, Newheadspace rendered further invoices for these players and also to three players from the Newcastle Knights totalling some $13,962.

3. [7]

   On 23 November 2014, Ms Culver sent an email to Mr Heptonstall requesting payment of the invoices, although it is not immediately obvious why payment was sought from the NRL as the invoices were addressed to individual players of particular NRL clubs. The reason became clearer from an email from Dr Tilda Khoshaba, General Manager – Player Engagement and Development, of the Rugby League Players Association Limited to Mr Heptonstall on 25 November 2014 suggesting that he was “withholding funding” for players who wished to engage in the program notwithstanding that they were entitled to $2,000 for educational programs. Dr Khoshaba suggested that Mr Heptonstall either had a problem with Ms Culver or a problem with the Rugby League Players Association supporting her program.

4. [8]

   Mr Heptonstall responded in detail, explaining that personal development programs such as that offered by Newheadspace did not fit within the requirements for education grants but, “[a]s personal development programs such as ‘New Headspace’ does not fit into this category, I have allocated a separate amount of money ($2k per Club) in which the Clubs can choose how to spend. It is up to the Clubs Welfare and Education Manager to determine the use of this money”. Further:

5. [9]

   According to NRL’s solicitor, Anthony O’Reilly, Newheadspace ceased to offer the program to NRL players in December 2014. On 2 February 2015, Ms Culver again emailed Mr Heptonstall and sought payment of invoices rendered to the Newcastle Knights in November 2014 although it is not entirely clear why she looked to the NRL for payment. In any event, Mr Heptonstall paid $6,000 of the invoice and, on 31 March 2015, Ms Culver sought payment of the balance of the invoice from the Newcastle Knights, noting that “Paul has paid his part of it”.

Efforts to provide program again

1. [10]

   On 1 April 2015, apparently after a meeting between Ms Culver and Mr Heptonstall, Mr Heptonstall sent a text message confirming the NRL’s commitment to her conducting player and partner sessions at $2,500 per workshop, and that he was aiming for these workshops to be conducted for four clubs. Ms Culver replied, suggesting that his wording was not what they had agreed, although did not say what they had agreed.

2. [11]

   In about May 2015, Ms Culver submitted a proposal to the NRL to implement the program across all NRL clubs, to be funded by the NRL. From May to September 2015, Ms Culver had various meetings and telephone discussions with Suzanne Young, the chief operating officer of the NRL, in relation to her proposal. On 27 October 2015, Ms Young informed Ms Culver that the NRL was commencing a review with the Rugby League Players Association of programs and funding, and proposed to include Ms Culver’s proposal in that review. Further, “[w]e are reviewing your allegation regarding potential breach of IP and will respond in due course”. The allegation concerning intellectual property is clarified by an email from Ms Culver to Ms Young of 4 November 2015 expressing herself to be “completely astounded” at how negotiations had unfolded from initial enthusiasm for Newheadspace’s program said to have been expressed in May 2015, to an inability to get funding for the program, to the proposal being included in a review with no funding to be approved until the completion of the review. A new program was said to have been developed by “Jane and Judy” of Max Coaching called “Play On!” based on Newheadspace’s program.

3. [12]

   On 6 November 2015, Ms Young replied in no uncertain terms that, until the review was finalised, the NRL would not be approving nor funding players’ participation in the program unless the Rugby League Players Association confirmed in writing that the association would support the program being delivered. Ms Young advised that the NRL was under no obligation to fund the program and reserved its right to provide programs internally or through external providers as it saw fit. In respect of the alleged breach of intellectual property, Ms Young made plain that the allegation was taken very seriously but, on the information provided by Ms Culver, “it is not clear to us what exactly your claim is”. Further information was sought from Ms Culver being:

4. [13]

   Ms Culver never provided the information or documents sought but, instead, approached Todd Greenberg, then Head of Football. Mr Greenberg had met Ms Culver when he was chief executive officer of the NRL club known as the Canterbury-Bankstown Bulldogs and some of the club’s players had participated in the program. Ms Culver asked Mr Greenberg whether there was something he would be able to do to get the NRL to fund the program and, although it was not an area for which he had management responsibility, Mr Greenberg spoke with Ms Young in support of the program and was told that the question as to whether the program would be funded was a matter to be considered as part of the NRL’s review.

5. [14]

   In December 2015, the business name “Newheadspace” lapsed and the company ceased to trade.

Further efforts and NRL offers to pay old invoices

1. [15]

   In March 2016, Mr Greenberg became the chief executive officer of the NRL. On 14 June 2016, Mr Greenberg met with Ms Culver at her request. Ms Culver again sought his support to get the NRL and the Rugby League Players Association to support the program. Ms Culver also asked that he arrange for payment by the NRL of invoices for which she said the NRL was liable. The suggestion that the NRL was liable to pay the invoices is not obviously consistent with emails already referred to, in particular, at [9].

2. [16]

   On 15 June 2016, Ms Culver followed up her meeting with Mr Greenberg by attaching the proposal which she had previously submitted to Ms Young in June 2015. On 4 July 2016, Ms Culver submitted the unpaid invoices to Mr Greenberg suggesting that the invoices had not been paid because she “got caught in the crossfire” between the NRL’s Welfare and Education program and the Rugby League Players Association. Ms Culver also forwarded by separate email further invoices for travel reimbursement, stating that she had a standing agreement with Mr Heptonstall that she was reimbursed for airfares and accommodation when she travelled outside of Sydney.

3. [17]

   On 5 July 2016, Mr Greenberg spoke to Mr Heptonstall about the invoices and was told that the work the subject of the invoices had been undertaken by the relevant players and NRL clubs at their own volition and without the approval of the NRL. Mr Greenberg sought legal advice from an internal lawyer at the NRL and formed the view, based on that advice, that the NRL was not legally liable to Newheadspace for the invoices or on any other basis. Mr Greenberg considered that, as the services had been provided to the players by Newheadspace and the NRL club had not paid the invoice, he would agree to the NRL paying the invoices even though it was not responsible for them on the basis that this settled all claims that Newheadspace may have.

4. [18]

   On 26 July 2016, Mr Greenberg sent an email to Ms Culver offering, “in good faith and in the interests of moving on” to pay the outstanding invoices without any admission that the NRL was in fact obliged to pay the outstanding amounts, and in settlement of all outstanding amounts and claims that Ms Culver may have in relation to Newheadspace’s program. Ms Culver replied unhappily on 27 July 2016 suggesting that Mr Greenberg’s written offer departed from an oral acceptance by him in which he apparently said he was fine to pay the invoices because it was for work that she had performed. Mr Greenberg stood firm, noting that he had looked into the matter as requested by her, considered the information objectively, explained the outcome to her over the phone and confirmed it in writing. “I have agreed to pay you a significant amount of money that ultimately we are not obliged to do, but I have chosen to do so for the simple fact that it is the right thing to do & to demonstrate my respect for you”. Mr Greenberg again sought confirmation of her acceptance of his offer following which he would arrange for immediate payment. Ms Culver did not reply.

A litigation funder

1. [19]

   Six months passed. On 20 February 2017, Ms Culver forwarded her emails with Mr Greenberg to Douglas Whelan, Executive Director of Litigation Funding Solutions. On 23 May 2017, Ms Culver forwarded further emails to Mr Whelan noting, “the fire and power is BUILDING!!! FAST!!!! :)))))” and attaching a draft letter with a file name, “JUSTICE WILL PREVAIL”. The draft letter was one to Mr Greenberg claiming some $3 million for damages for unpaid invoices of $7,500, breaches of fiduciary duty, contract, negligence, loss of opportunity and injuries sustained to Ms Culver’s mental health. The draft letter made some remarkable allegations. Whilst Ms Culver professed that she did not want to enter the public or legal domain, the draft letter included:

A media adviser

1. [20]

   The very next day, on 24 May 2017, Mr Whelan contacted Mark Westfield of Westfield Wright, a media advisor who “offers our clients access to high level contacts in all media across all sectors … We specialise in dealing with commentators and columnists – the so-called ‘pack leaders’ – to most effectively influence coverage and perceptions while giving clients unique insights into how the media operates, and what drives it”. The fact that the litigation funder, at such an early stage of considering a potential claim, made contact with a media adviser suggests that it was envisaged to use the media as part of the funder’s strategy to progress the claim to a beneficial resolution. As much is confirmed by an email from Ms Culver to a colleague on 30 May 2017 saying, “meeting with media tomorrow for strategy”.

2. [21]

   On 31 May 2017, Ms Culver met with Mr Westfield who kindly offered to help draft her letter to the NRL. Mr Westfield suggested that she take out “the direct threats to sue using litigation fund money, the letter needs to be cool, calm with threatening overtones rather than direct threats.” Ms Culver offered to provide a chronology but “I want to beef it up more” and, as she had been invited to a State of Origin event that evening, would defer completing it as the evening “may yield a nugget”. On 1 June 2017, Ms Culver gave Mr Westfield and Mr Whelan a chronology together with some additional ideas on strategy derived with the benefit of the previous night’s function. Ms Culver had hit upon a ‘divide and conquer’ strategy through her friendship with the wife of a senior officer of the Australian Rugby League Commission (ARL).

3. [22]

   On 7 July 2017, after many amendments by Mr Westfield and Mr Whelan, Ms Culver sent a letter of demand to the NRL asserting a claim to damages of some $2.5 to $3 million dollars. The letter remained remarkable notwithstanding the ministrations of Mr Westfield and Mr Whelan. Ms Culver suggested that, since her last correspondence with Mr Greenberg a year before, legal advice had been sought (Ms Culver did not assert that legal advice had actually been obtained). After setting out Newheadspace’s claims, Ms Culver continued:

4. [23]

   Mr Westfield described the letter as “fairly threatening and a bit scary!”, an assessment with which I can only concur. Mr Westfield’s assessment led Ms Culver to question whether Mr Westfield was “our best guy??”, but Mr Whelan assured her that Mr Westfield was “the best”. Ms Culver pondered, “if he is a little scared maybe he will be the same with media – anwyay [sic] fingers crossed WE WON’T NEED TO USE HIM!!!! :)))”.

5. [24]

   On 13 September 2017, the NRL replied, taking objection, unsurprisingly, to “veiled threats”, expressing doubt about the legal basis of Newheadspace’s claims and repeating its earlier offer in respect of unpaid invoices. A meeting was also suggested.

A former barrister

1. [25]

   Mr Westfield had no further involvement in the matter. On 14 September 2017, Mr Whelan approached Clarence Stevens, a barrister who had been removed from the roll of legal practitioners for professional misconduct (NSW Bar Association v Stevens [2003] NSWCA 261), asking him to meet Ms Culver and represent her at the meeting with the NRL. As Ms Culver was not in funds, Mr Stevens was asked to do so on a contingent fee basis: “For the record I am also working on a contingent basis”. Mr Whelan explained that the legal questions involved in Ms Culver’s claim were complicated and therefore it was not a simple issue to provide litigation funding,

2. [26]

   Mr Stevens agreed to meet with Ms Culver. Apparently after the meeting, Ms Culver began to review her emails to provide to Mr Stevens. Ms Culver professed that she was “finding DIAMONDS” which she would forward on in due course. On 23 September 2017, Ms Culver provided Mr Stevens and Mr Whelan with a chronology from December 2009 to July 2016 which, as the NRL points out, rarely mentions Mr Greenberg and Mr Heptonstall over its 20 pages.

3. [27]

   On 29 September 2017, Ms Culver sent an email to the NRL to arrange the meeting, suggesting that it make sure that whoever was at the meeting had authority to settle her claim “in excess of $1 million”. The NRL responded that, although it was amenable to meeting with Ms Culver, “we are not coming to a meeting with a view to settling a claim in excess of $1 million”. Ms Culver promptly met with Mr Stevens and, in a series of emotive emails, provided further “instructions” listing people who had “betrayed” her including, apparently, Mr Greenberg, and details of “WHAT THEY STOLE FROM ME”. Ms Culver also enlisted support from Mr Crocker of the Rugby League Players Association who, on 21 October 2017, emailed the new chief executive officer of Rugby League Players Association introducing Ms Culver and suggesting that Newheadspace’s program had been “subsequently copied and renamed as the Play On program”.

Meeting with NRL

1. [28]

   On 27 October 2017, the NRL, represented by its chief operating officer and in-house counsel, met with Ms Culver, Mr Stevens and Mr Whelan. The NRL stated that its position remained that, on the information which it had, the NRL considered it had no legal obligations to Newheadspace. The NRL again requested that, in order to consider the claim further, Newheadspace should provide documentary and other materials that supported its allegations. On 2 November 2017, Mr Stevens sent Ms Culver and Mr Whelan a suggested outline of Newheadspace’s response following the meeting; draft emails and letters followed; Mr Whelan added his suggestions.

2. [29]

   On 14 November 2017, a further letter was sent by Newheadspace to the NRL in support of its claims. Ms Culver advised that she could not provide all of her documents “until we can see some manifestation of NRL taking claims seriously”. Sample documents were extracted instead. In respect of a suggested contract between the NRL and Newheadspace, Ms Culver stated:

A liquidator

1. [30]

   The next day, 15 November 2017, Mr Whelan sent an email to Mr Needham arranging to meet on 17 November 2017 to discuss placing Newheadspace into voluntary liquidation. Mr Needham’s file note of the meeting with Ms Culver and Mr Whelan records that he was told that the NRL owed money to Newheadspace for its program which the NRL had “stolen” and Mr Whelan had been helping to try and negotiate an outcome. The company was said to have no assets other than its intellectual property and was only solvent if it could prove that damage was caused by the NRL. The company could not afford to litigate and it appears that Mr Needham enquired whether Mr Whelan was looking to fund litigation, to which Mr Whelan replied, “Possibly but needs to see more”. Creditors of Newheadspace were said to be Ms Culver, Mr Whelan and possibly the Australian Tax Office.

2. [31]

   On 21 November 2017, having not heard further from the NRL, Mr Whelan suggested that Mr Stevens and Ms Culver have a discussion as to how to take the matter forward. Mr Needham sent Ms Culver some basic information on placing Newheadspace into voluntary liquidation, which Ms Culver forwarded to Mr Whelan and Mr Stevens. Ms Culver arranged to meet with Mr Needham again.

3. [32]

   On 27 November 2017, Ms Culver attended a second meeting with Mr Needham. According to Mr Needham’s file note, they discussed what would happen to the intellectual property of Newheadspace in a liquidation and that the company’s tax returns were not up to date. The claim against the NRL was now said to be worth some $5 million with the creditors of the company said to be $500,000. Mr Needham’s file note records:

4. [33]

   As to the records of the company, Mr Needham’s file note further records:

5. [34]

   On 29 November 2017, Ms Culver forwarded her notes of the second meeting to Mr Whelan, which notes simply and solely concerned options for public examinations.

6. [35]

   Also on 29 November 2017, the NRL wrote to Ms Culver assuring her that they were treating her allegations with due respect but, unless she could provide the NRL with actual material, be it correspondence, documents or terms and conditions, as opposed to her summary of the material to support her allegations, the NRL did not see any merit continuing to correspond. For reasons not readily apparent, Mr Stevens regarded the NRL’s letter as comforting, and prepared a draft response. Mr Stevens wished to ascertain whether the NRL still retained the documents on which Ms Culver suggested her claim rested. Such a letter was duly sent on 15 December 2017 by Ms Culver, again declining to provide material until she saw some manifestation that the NRL was taking the claim seriously.

7. [36]

   On 20 December 2017, unremarkably, the NRL expressed difficulty understanding why Ms Culver would not simply provide the emails, correspondence, texts and other documentation to which she referred in her letters, particularly if they were said to substantiate her serious allegations. In the absence of supporting evidence, the NRL reiterated its rejection of her claims and declined to correspond further. Mr Stevens prepared a reply suggesting:

8. [37]

   Mr Whelan commented that, having spoken with Ms Culver about the draft reply, they felt that the letter “could be more forceful” and would like to “set the platform on fire” by adding a further paragraph. On 11 January 2018, Ms Culver wrote to the NRL incorporating the further passage:

9. [38]

   On 19 February 2018, Ms Culver sent Mr Whelan an “Action Plan” for the liquidation of Newheadspace. Counsel who later appeared for the liquidator at the examinations was referred to repeatedly in the Action Plan and thus, it would appear, had been engaged by Newheadspace or its advisors, likely also on a contingency fee basis. The sole focus of the Action Plan was directed to liquidator’s public examinations of NRL’s officers. The first task was to arrange available dates for examinations, then to appoint a liquidator who would interview Ms Culver, then to file a summons with the Court in April 2018 and serve the NRL with examination summonses in the third week of April. The Action Plan concluded with the following two items:

10. [39]

    There is no evidence of any financial circumstances which arose or changed at this time which would otherwise have warranted the appointment of a liquidator to Newheadspace. As the NRL correctly points out, the tax returns for the Culver Family Trust had consistently reported small negative assets for the preceding seven financial years and nothing had changed.

11. [40]

    On 15 March 2018, Mr Whelan suggested to Ms Culver:

12. [41]

    On 12 April 2018, Ms Culver met with Mr Needham for a third time at counsel’s chambers. Mr Whelan was also present. The purpose of the meeting was to reintroduce Mr Needham to Ms Culver following his extended overseas vacation. Discussion took place regarding Newheadspace’s program and what documentation could be provided to Mr Needham in relation to it.

Invoices and a board paper

1. [42]

   On 14 April 2018, Litigation Funding Solutions rendered an invoice dated 13 April 2018 to Newheadspace for $55,000 said to be an “[i]nterim invoice for provision of advice regarding obtaining litigation funding against NRL”. In these proceedings, subpoenas were issued to Litigation Funding Solutions and Ms Culver seeking documents to support this invoice and none were produced, in particular, no litigation funding agreement was produced. Thus, there was no written contract between Litigation Funding Solutions and Newheadspace, at least, nor is there any reference in the contemporaneous documents to any agreement to pay for advice regarding obtaining litigation funding nor any reference to such advice being given. It will be recalled that Mr Whelan had informed Mr Stevens that Litigation Funding Solutions was proceeding on a contingency basis. On the evidence before me, this invoice did not have a proper basis.

2. [43]

   On 15 April 2018, Ms Culver forwarded Mr Whelan a draft board paper. The draft, which was replete with questions for Mr Whelan, included:

3. [44]

   On 16 April 2018, Ms Culver sent Mr Needham an email, copied to Mr Whelan, asking him to give her a call.

4. [45]

   On 17 April 2018, Ms Culver forwarded Mr Whelan a further version of the board paper for his review. Newheadspace’s claim against the NRL was now valued by Ms Culver as worth more than $5 million and the supporting attachments largely calculated what the company would have earned if the NRL had rolled out its program as proposed in 2015. It was heady stuff. Ms Culver sent further versions of the board paper to Mr Whelan with further questions including:

5. [46]

   On 18 April 2018, Ms Culver forwarded Mr Whelan a tweet from Mr Greenberg, asking “please doug please can we bring him down … vomit attached” and Mr Whelan placated her, “No – we are out to recover monies”.

Appointment of voluntary liquidator

1. [47]

   On 18 April 2018, Ms Culver attended a meeting of members of Newheadspace and passed a special resolution to wind up the company. According to the minutes of meeting:

2. [48]

   The second invoice, also dated 13 April 2018, had been issued by Ms Culver to Newheadspace, on Newheadspace letterhead, for $487,500 said to be for work conducted by her on behalf of Newheadspace from 1 January 2015 to 31 March 2018. In these proceedings, a notice to produce and subpoena were issued to the liquidator on behalf of Newheadspace and to Ms Culver. Neither produced any documents to corroborate the work said to have been performed by Ms Culver. The basis on which this invoice was issued is unclear. As the NRL points out, during the years when Ms Culver is said to have conducted work for the company, the company declared no business income and had ceased to trade. On the evidence before me, this invoice had no proper basis. Both invoices which were said in the board paper to be the reason to appoint a liquidator were a contrivance.

3. [49]

   The RATA completed by Ms Culver listed Litigation Funding Solutions and herself as the two unsecured creditors of the company, totalling $542,500, together with contingent assets in the form of a damages claim against the NRL of over $5 million together with a damages claim against Max Coaching of unknown value. Ms Culver declared that the particulars contained in the report were true to the best of her knowledge and belief. Given the circumstances in which the invoices were rendered by herself and Litigation Funding Solutions, it is unclear to me how Ms Culver could have signed such a declaration.

4. [50]

   On 3 May 2018, Mr Needham sent a letter to creditors notifying them of his appointment and proposing that his remuneration be the maximum default amount given by section 60-15 of the Insolvency Practice Schedule (Corporations), Schedule 2 of the Corporations Act plus 5% of the gross dollar value of assets realised. On receipt, Ms Culver promptly inquired whether the letter had also been sent to NRL and Max Coaching. Mr Needham requested copies of the invoices which Newheadspace had rendered to NRL before he sent a letter demanding payment and Ms Culver provided Mr Needham with copies of her correspondence with the NRL referred to at [22], [24], [28], [35], [36] and [37].

5. [51]

   On 10 May 2018, Mr Needham sent a letter to the NRL requesting payment of $7,598 said to be owing to Newheadspace and delivery of all books and records belonging to the company. The letter was addressed to “The Proper Officer” of the NRL. General counsel of the NRL has been unable to locate the letter, which did not come to the attention of any person in the legal department or senior management. On 13 June 2018, Mr Needham sent a follow-up letter to “The Proper Officer” of NRL but, again, it does not appear to have come to the attention of anyone in the legal department or senior management. A similar letter was sent by the liquidator to Max Coaching, which replied that it was not in possession of any books or records belonging to Newheadspace.

6. [52]

   On 17 July 2018, Mr Needham issued a report to creditors. According to the report, Newheadspace was expecting to be awarded a three year contract commencing in 2015 to run its program mandatorily for all NRL clubs but “[u]nfortunately, it appears that the NRL used the information obtained from the pilot programme and roll out to bring the training ‘in-house’ to the detriment of the company …”. The basis of the instructions given to Mr Needham is, having regard to the contemporaneous documents on this application at least, unclear. Mr Needham noted that, “[g]iven the lack of response received from the NRL”, he had engaged solicitors to assist him to apply for examination summonses and for production from the Court.

7. [53]

   By now, Mr Whelan and Litigation Funding Solutions had been considering Newheadspace’s claim against the NRL for 14 months but was still not prepared to commit to fund any legal proceedings against the NRL but perhaps only to fund the filing fee to apply for examination summonses. This is consistent with Mr Whelan’s strategy of using the prospect of public examinations as a way of motivating the NRL to accede to the company’s demands. Indeed, whilst I refer to Mr Whelan in this judgment as a litigation funder, strictly speaking, he is not as he has never entered into a litigation funding agreement with Newheadspace nor, it would appear, provided any funding beyond, perhaps, court filing fees.

8. [54]

   On 30 August 2018, Ms Culver signed a lengthy witness statement setting out the history of her company and its dealings with the NRL. Annexed were a bundle of documents including the 2010 letter of engagement and Mr Greenberg’s July 2016 email to which I have already referred. Ms Culver’s statement added little to the suggestion that Newheadspace’s intellectual property in the program had been ‘stolen’ by the NRL and, further, was not particularly accurate in her description of her dealings with Mr Greenberg when compared with the contemporaneous documents. Ms Culver stated:

Examination summonses

1. [55]

   On 20 September 2018, Mr Needham filed an Originating Process seeking the issue of summonses for examination and orders for production under section 596A and 596B of the Corporations Act. Mr Needham swore an affidavit deposing that he had had regard to his review of the books and records of Newheadspace available to him and discussions with and a statement provided by Ms Culver. A copy of Ms Culver’s witness statement and supporting documents was exhibited to his affidavit. Mr Needham also annexed the RATA; the minutes of meeting appointing a liquidator; the outstanding invoices rendered to NRL clubs already described; his correspondence with the NRL which, as mentioned, had not been answered; and an extract from the NRL Annual Report 2017 reporting on the efforts of the NRL’s Wellbeing staff to prepare older players for life after sport. More than 100 players were reported as having been provided with specialised career and personal coaching support from the NRL’s Wellbeing managers that year. The connection between the extract and Newheadspace’s program was neither stated nor obvious.

2. [56]

   Mr Needham deposed that, as liquidator, he wished to investigate whether a contract was entered into with Newheadspace for the provision of its program to the NRL and its clubs, whether the NRL had breached the contract, and whether the NRL or Max Coaching had retained or used Newheadspace’s intellectual property. So far as the correspondence reveals, Ms Culver effectively conceded in November 2017 that there was no contract with the NRL hence the first part of Mr Needham’s investigations seems to have been unnecessary.

3. [57]

   Mr Needham deposed that Mr Greenberg was the current chief executive officer of the NRL “and was involved [in] ongoing negotiations with Newheadspace”. Based upon this, Mr Needham expressed a belief that Mr Greenberg had information relevant to the examinable affairs of Newheadspace and he wished to examine him. The basis for the description of Mr Greenberg’s role is not apparent in the contemporaneous documents which were available to Mr Needham at the time he swore his affidavit, as mentioned at [54].

4. [58]

   Mr Needham deposed that Mr Heptonstall is a Senior NRL Welfare & Education Manager, involved in the negotiations with Newheadspace and has responsibility for programs of the kind offered by Newheadspace. That appears to have been generally correct, as far as it goes given the high level of generality with which Mr Heptonstall’s role was expressed. Based on this fact, Mr Needham deposed that he believed that Mr Heptonstall had information relevant to the examinable affairs of Newheadspace and he wished to examine him.

5. [59]

   On 3 October 2018, a Registrar issued Summons for Examination as requested by the liquidator together with Orders for Production. In addition to the summonses now sought to be set aside, a further summons was sought and issued to David Gallop, former chief executive officer of the NRL from 2002 to 2012, but the summons was not served. Whilst complying with the order for production, the NRL complained to Mr Needham’s solicitor that Newheadspace had been placed into liquidation for the purpose of seeking examination summonses and orders for production. The affidavit in support of the application for the issue of the summonses was requested together with financial statements for Newheadspace, any litigation funding agreements and documents evidencing the decision to go into liquidation. This prompted Mr Needham to request Mr Whelan to provide him with the invoices referred to in the board paper, “[n]ot concerned just covering my bases”. Mr Needham’s solicitor strenuously denied any assertion that Mr Needham had embarked upon an improper course of action and declined to provide the documents sought.

6. [60]

   The NRL filed an Interlocutory Process seeking to set aside the examination summonses and, by consent, the NRL was given access to Mr Needham’s confidential affidavit. The examinations of Mr Greenberg and Mr Heptonstall were adjourned but, on 3 and 4 December 2018, Ms Culver, Ms Lowder and Mr Crocker were examined by the liquidator.

7. [61]

   In support of its application, the NRL relied on affidavits sworn by its solicitor, Mr O’Reilly, who deposed that Mr Greenberg commenced with the NRL in 2013 as Head of Football and had no responsibility for the development or provision of player welfare programs such as “Extend the Dream”. The first occasion when he had any involvement in relation to the program was in late 2015 when he was asked by Ms Culver to support her request for funding of the program. Other than meeting her again in June 2016 and receiving a letter of demand on 7 July 2017, which he delegated to others to respond, Mr Greenberg had no involvement with the program or negotiations that may have been conducted with Ms Culver for Newheadspace to be contracted by the NRL to provide the program.

8. [62]

   Mr O’Reilly criticised Mr Needham’s affidavit for failing to disclose the three meetings he had with Ms Culver before his appointment. Mr Needham deposed in a further affidavit that there was no deliberate decision by him or his lawyers that these meetings should not be disclosed. Mr Needham also deposed that, when he was appointed liquidator, he had not made any decision as to whether the claim against the NRL had any merit or that he would proceed with examinations although preliminary discussion about litigation against the NRL had occurred. In these circumstances, he did not consider it necessary to summarise his discussions with Ms Culver in his affidavit of 20 September 2018. Further:

9. [63]

   Neither Mr Needham nor Mr O’Reilly were cross-examined. Thus, whilst I am not obliged to accept their evidence, I would ordinarily do so unless there is persuasive evidence which suggests that their evidence, or some part of it, should not be accepted: Masterton Homes Pty Ltd v Palm Assets Pty Ltd [2009] NSWCA 234; (2009) 261 ALR 382 at [105] per Campbell JA with whom Allsop P and Basten JA agreed; followed by NU v NSW Secretary of Family and Community Services (2017) 95 NSWLR 577; [2017] NSWCA 221 at [59] per Beazley P with whom McColl JA and Schmidt J agreed.

10. [64]

    Also in evidence was a chronological bundle of documents collated from exhibits to affidavits and supplemented by documents produced in answer to notices to produce and subpoenas issued to the NRL, Litigation Funding Solutions, Ms Culver, Westfield Wright, Mr Stevens and Mr Needham.

11. [65]

    Where the issue of an examination summons has been ordered by a Registrar, an application to set aside the summons for examination is governed by rule 49.19 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), pursuant to which the Court may review a Registrar’s decision “and make such order, by way of confirmation, variation, discharge or otherwise, as the court thinks fit”. A review is not an appeal but a hearing de novo and, on such a review, the Court must exercise its own discretion as described by Hodgson JA (with whom Ipp JA agreed) in Tomko v Palasty (No 2) (2007) 71 NSWLR 61; [2007] NSWCA 369. At [7] and [9]:

12. [66]

    The NRL submitted that the Registrar’s decision should be reviewed and the summons for examination set aside on three bases:

13. [67]

    The liquidator submitted that the NRL’s application proceeded on the basis of a misconception that he, as liquidator, and the winding up process over which he has control, are both an abuse because of conduct by the director and others prior to the winding up. Rather, it was the liquidator's purpose in conducting the examinations that was pertinent and the Court would be satisfied that the investigation being undertaken by him, and of which the examination summonses form part, are appropriate.

14. [68]

    The issues thus appear to be: was the appointment of a voluntary liquidator to Newheadspace an abuse of process; can and does that render the summons for examination issued at the request of the voluntary liquidator also an abuse of process? If not, was the application for summons for examination otherwise an abuse of process by the liquidator or otherwise oppressive and unfair or ought be set aside for failure to disclose all relevant matters to the Registrar?

15. [69]

    The NRL submitted that the purposes of winding up a company are essentially threefold. First, to deal with the assets of the company in an equitable and fair manner amongst its creditors (Re Crust ‘n’ Crumb Bakers (Wholesale) Pty Ltd (1991) 5 ACSR 70; (1991) 9 ACLC 912; [1992] 2 Qd R 76 at 78 (per McPherson SPJ). Second, to allow for an investigation of the company's affairs by an independent and appropriately qualified person, in particular, as to the circumstances which precipitated the winding up and whether there was any improper or dishonest conduct by officers of the company or unfair dispositions of property which warrant further action. And, third, to prevent insolvent companies from trading. Here, the NRL submitted that the predominant purpose of the winding up was to exert pressure upon the NRL to settle its commercial dispute on terms favourable to the company and was an abuse of process similar to that in Williams v Spautz (1992) 174 CLR 509; (1992) 107 ALR 635; [1992] HCA 34.

16. [70]

    The NRL submitted that the concept of abuse of process has been applied to the issuing of a statutory demand (Gusdote Pty Ltd v Ashley (2011) 193 FCR 227; (2011) 277 ALR 579; [2011] FCA 250 (per Foster J), voluntary administration (Blacktown City Council v Macarthur Telecommunications Pty Ltd (2003) 47 ACSR 391; [2003] NSWSC 883 (per Barrett J), compulsory winding up (Australian Beverage Distributors Pty Ltd v Evans & Tate Premium Wines Pty Ltd (2007) 69 NSWLR 374; (2007) 61 ACSR 441; [2007] NSWCA 57 at [47]) and voluntary winding up (National Australia Bank Ltd v Market Holdings Pty Ltd (in liq) (2001) 161 FLR 1; (2001) 37 ACSR 629; [2001] NSWSC 253 per Young J and Butterworths, Ford, Austin & Ramsay’s Principles of Corporations Law, (online at June 2019) [27.550.3]). Examples where abuse of process had been considered in the context of insolvency proceedings include Ex parte Staff, In re Staff (1875) LR 20 Eq 775 (per Sir James Bacon CJ); Ex parte Sir William Russell (1875) LR 10 Ch App 255 at 263-264 (per Mellish LJ); In re Davies; ex parte King (1876) 3 Ch D 461; Ex parte Griffin; In re Adams (1879) 12 Ch D 480; Ex parte Painter; In re Painter [1895] 1 QB 85; King v Henderson [1898] AC 720 at 731-2 (Privy Council on appeal from the Supreme Court of New South Wales); Dowling v Colonial Mutual Life Assurance Society Ltd (1915) 20 CLR 509; (1915) 21 ALR 425; [1915] HCA 56 at 521-523; Re Majory [1955] Ch 600 at 626 (per Evershed MR, Jenkins and Romer LJJ); Re Moncada (1986) 11 FCR 205; Clyne v Deputy Commissioner of Taxation [1984] HCA 44; (1984) 55 ALR 143; (1984) 154 CLR 589 at 598-9; Re Cornish; Ex parte English (1984) 6 FCR 257 (per Morling J); Re Crowl, DM v Ex parte Kleinwort Benson Australia Ltd [1988] FCA 57 (per Beaumont J); BWK Elders (Australia) Pty Ltd v White [2004] FCA 1611 and Edelsten v Deputy Commissioner of Taxation (NSW) (1989) 86 ALR 257. It was submitted that these cases indicate that the Court will not countenance the use of an insolvency process where the predominant purpose of such a process is not within the scope of the process so instituted. It will also not countenance the use of an insolvency process where threats have been made in respect of that process.

17. [71]

    It was submitted by the NRL that there was no other reason to utilise the creditors’ winding up process. The company ceased trading in December 2015. Prior to that, the company had no current liabilities. The two invoices issued shortly before the resolution for winding up the company did not stipulate payment terms. Further, Ms Culver stated in the board paper that the alleged debts “must be paid in due course”, which didn’t suggest that the debts were due and payable. Further, the company was not insolvent nor was there evidence of the company having solvency concerns.

18. [72]

    The liquidator made almost no submission in respect of Ms Culver’s purpose in liquidating the company beyond submitting that her purpose was irrelevant and, in any event, there was nothing inappropriate in her purpose as Ms Culver was merely attempting to progress the company’s claims against the NRL. What Ms Culver’s threats were said to demonstrate was simply her belief in the company’s claims and a desire for some negotiated settlement.

Consideration

1. [73]

   So far as the conduct of those standing behind Newheadspace are concerned, the case does bear strong similarities to Williams v Spautz where a university lecturer laid criminal charges against university staff to encourage the university to settle his claim for wrongful dismissal on favourable terms. Mason CJ, Dawson, Toohey and McHugh JJ considered that Evershed MR correctly stated the principle in Re Majory at 623-4:

2. [74]

   An early example of an abuse of process in the context of bankruptcy is Ex parte Griffin, In Re Adams, where a creditor presented a bankruptcy petition for a collateral purpose and with the view to putting pressure on the debtor to persuade him to give up a just debt which was due to him and to save a solicitor “from a most proper and just application to strike him off the roll”: at 483 (per Brett LJ). The Court of Appeal refused the petition even though there was a good petitioning creditor’s debt and an act of bankruptcy had been committed. Similarly, it has been held to be an abuse of process to petition for one’s own bankruptcy where the debtor had funds to pay a judgment debt but wished to avoid doing so (In Re A Debtor [1967] Ch 590) or to frustrate a former spouse from recovering money ordered in a family law property settlement (Re Moncada (per Jackson J)); see likewise Clyne v Deputy Commissioner of Taxation at 598 (per Gibbs CJ, Murphy, Brennan and Dawson JJ). Similar examples in the context of the external administration of corporations are helpfully collated in the NRL’s submissions.

3. [75]

   As to what is meant by “improper purpose”, Aickin J noted in R v Toohey; ex parte Northern Land Council [1981] HCA 74; (1981) 151 CLR 170 at 233:

4. [76]

   As far as my research has revealed, the purposes for which the power to voluntarily wind up a company are conferred are the same as for a court-ordered liquidation. Whilst a voluntary winding up may provide greater flexibility to the liquidator than a court-appointed liquidator (Re Akai Australia Pty Ltd (1978) 3 ACLR 353 at 356-7, per Powell J), the powers and duties of the liquidator are very similar (Re Mecirt Holdings Pty Ltd (1998) 16 ACLC 1148 at 1151 per Sanderson M) and the objects are the same: to realise the company’s assets, to investigate and determine the claims against the company and to apply the assets to the satisfaction of those claims in accordance with the statutory scheme of priority, distribute any surplus to members and dissolve the company (Australian Securities and Investments Commission v Edge (2007) 211 FLR 137; [2007] VSC 170 at [40]-[41] per Dodds-Streeton J).

5. [77]

   As to whether there was an abuse of process in appointing a liquidator here, the early history of Newheadspace’s dealings with the NRL is uncontroversial and described in like terms by Mr Needham and Mr O’Reilly: Newheadspace provided the program to some NRL players and clubs from 2011 to 2014 but, despite Ms Culver’s efforts to persuade the NRL to continue to provide the program, her proposal was not accepted and Newheadspace ceased to trade. Whether Newheadspace is entitled to look to the NRL to pay its outstanding invoices of some $7,500 is not difficult to divine from the contemporaneous documents.

6. [78]

   There is no doubt that Ms Culver had been making an allegation for some time – since October 2015 – that the intellectual property rights of Newheadspace were breached by the NRL and/or Max Coaching. Support for this suggestion was forthcoming from representatives of the Rugby League Players Association including Mr Crocker who, as is apparent from Ms Culver’s statement and the contemporaneous records, was a supporter of Ms Culver in this regard. It is also clear that the NRL had been seeking information from Ms Culver – since November 2015 – as to the basis of this allegation and, apart from lengthy letters crafted with the assistance of quasi-legal advisers – the first such letter being sent more than 20 months after NRL’s request for specifics – Ms Culver did not provide any documents to support the allegation. That does not mean that Newheadspace may not have a claim for breach of intellectual property rights by the NRL, but asserting a substantial claim said to be worth millions of dollars in damages but withholding any supporting documents is an unusual negotiating strategy, to say the least.

7. [79]

   Rather, the strategy pursued by Newheadspace was to write letters aptly described as “fairly threatening and a little bit scary!” where the threat was negative media attention causing damage to the NRL’s reputation. The strategy is apparent from the immediate retention by the litigation funder of a media adviser, communications between Ms Culver and her advisers and the terms of the letters sent to the NRL already described. After two such letters and a meeting with the NRL, the funder contacted Mr Needham. The only topic of Ms Culver’s meetings with the liquidator for which she provided notes to Mr Whelan were the options for public examinations. The Action Plan circulated by Ms Culver in February 2018 was solely directed towards public examinations of NRL officers.

8. [80]

   In April 2018, Ms Culver and Mr Whelan created invoices which did not have a proper basis and drafted a board paper which suggested that a liquidator needed to be appointed given the insolvency expected to arise by reason of these invoices. Ms Culver signed a declaration in the RATA confirming that the funder and herself were unsecured creditors of Newheadspace in amounts recorded in those invoices. As an ordinary litigant wishing to sue the NRL, Newheadspace would not have been entitled to examine NRL officers before the commencement of any legal proceedings, nor was Mr Whelan prepared to fund such proceedings himself. Contriving an apparent insolvency by the creation of invoices, drafting a board paper with the assistance of a funder to feign concern about the company’s inability to pay these invoices, and appointing a voluntary liquidator was done to access a liquidator’s ability to request that examination summons be issued by the Court.

9. [81]

   The predominant purpose of Ms Culver in placing her company into voluntary liquidation was so that the liquidator could request the Court to issue examination summons to senior officers of the NRL as a means of persuading the NRL to pay a substantial sum in order to avoid adverse media or public attention. The fact that an examination summons was sought against the former and current Chief Executive Officers of the NRL, in circumstances where there was little basis to suggest that either had any substantive involvement with the program, is consistent with such a purpose.

10. [82]

    The power to appoint a liquidator is not conferred to use the threat of public examinations as a way to persuade someone to pay you money. Nor it is a proper purpose for a company to be placed into external administration so that the company or a litigation funder can avail itself of the forensic advantage conferred by public examinations which are not available to a company wishing to sue in the ordinary manner. It has been consistently held that it is an abuse of process to use examinations solely for the purpose of obtaining a forensic advantage not available from ordinary pre-trial procedures: Hong Kong Bank of Australia Limited v Murphy (1992) 8 ACSR 736; (1992) 28 NSWLR 512 at 519 per Gleeson CJ; Sandhurst Trustees Limited v Harvey (2004) 49 ACSR 422; [2004] SASC 157 at [51] (per Doyle CJ with whom Perry and Bleby JJ agreed); Re Excel Finance Corporation Limited (receiver and manager appointed); Worthley v England (1994) 52 FCR 69 at 90 per Gummow, Hill and Cooper JJ; Re New Tel (in liq); Evans v Wainter Pty Ltd (2005) 145 FCR 176; [2005] FCAFC 114 at [252] per Lander J with whom Ryan and Crennan JJ agreed. In the same way, it is an abuse of process to appoint a liquidator solely for the purpose of utilising his or her standing to seek such coercive orders.

11. [83]

    Thus, the appointment of a liquidator was an abuse of process. The liquidator does not strongly contend otherwise. It follows from Williams v Spautz that Ms Culver may be disqualified from invoking the powers inherent in the process which she has abused being, in this case, the statutory process of voluntarily winding up her company. But how can this remedy be effected in such a context? The Court could terminate the winding up, but as considered at [161] to [162], I am not prepared to do so on this application. But even if I was inclined to terminate the winding up, should the Court do so in circumstances where, ordinarily, one would expect that the liquidator now appointed would bring an independent mind to bear on the company’s affairs with the result that Ms Culver’s abuse of process is redundant. This brings us to the question whether an abuse of process in appointing a voluntary liquidator means, without more, that the examination summonses must be set aside.

12. [84]

    The NRL made no submission in respect of the liquidator’s purpose but simply contended that, as the winding up was an abuse of process, then the examinations summons should be set aside. NRL submitted that the examination summonses are oppressive and unfair because the summonses were issued in the context of a winding up which is an abuse of process. To permit the examinations to go ahead would give effect to Ms Culver’s threats of media attention; the examinees would be subjected to cross-examination on matters of which they have little knowledge; and the examinations would perpetuate and compound the abuse of the winding up process and in effect be seen as the Court giving its imprimatur to an abuse of process.

13. [85]

    The liquidator disagreed, submitting that the impugned purpose must be that of the liquidator not the creditor (or funder) who may have financed the exercise in pursuit of their own interests or even a director who seeks vindication for a wrong which he or she believes has brought about the company's demise: Accord Pacific Holdings Pty Limited v Accord Pacific Land Pty Ltd [2011] NSWSC 707 at [116] (per Ward J). That an examination might ultimately produce benefits for contributories (in this case, Ms Culver) does not make it an abuse: Ji Woo International Education Centre Pty Ltd (2019) 134 ACSR 448; [2019] NSWSC 93 at [31] (per Black J). A common purpose for the conduct of a public examination is to investigate and assess a potential claim which the company may have against directors, or others: Bosun Pty Limited (in liq) (2000) 34 ACSR 597; [2000] SASC 180 at [8] (per Debelle J). It is legitimate for a liquidator to obtain information which might assist in the conduct of litigation: Hong Kong Bank of Australia Limited v Murphy at 518-9 (per Gleeson CJ with Mahoney and Priestley JJA agreeing); Wily re LED at [37]-[38] (per Barrett J); Re Southern Equities Corporation Ltd (in liq); Bond and anor v England (1997) 15 ACLC 1582; (1997) 25 ACSR 394 at 431-433 (per Lander J with Cox and Bleby JJ agreeing).

14. [86]

    The hearsay evidence from Mr O'Reilly that Mr Greenberg can give no relevant evidence cannot preclude the liquidator wanting to undertake his own examinations: Accord at [135]; Godfrey as liquidator of Pobjie Agencies Pty Ltd (in Liquidation) (2007) 61 ACSR 54; [2007] NSWSC 138 at [56] and [76] per White J. The fact that the NRL denies the claim was said to be neither here nor there. The liquidator’s opinion that both Mr Greenberg and Mr Heptonstall may have information relevant to the matters which he wishes to investigate should be given appropriate weight. For the application to succeed, it was submitted that the Court would need to be satisfied that this was not, in fact, the predominant reason why the liquidator wishes to examine those persons. If it turns out that the liquidator has obtained the examination orders without reasonable cause, then the examinees can obtain an order for the costs the examinees have incurred to be paid by Mr Needham: section 597B of the Corporations Act.

15. [87]

    The NRL's evidence was said to show that Mr Heptonstall was involved, directly, with the NRL's dealings with the company including speaking with Mr Greenberg about the company's invoices to the NRL and having knowledge of the company's program and the recipients of the program. It was also submitted that the NRL's evidence demonstrated that Mr Greenberg was heavily involved in the NRL's handling of the claims made by the company: this, with respect, was a significant overstatement. Mr Greenberg's evidence as to the basis on which the NRL rejects the claim was said to be helpful to the liquidator's investigations: Meteyard v Love at [36] (per Basten JA).

16. [88]

    The utility of the proposed examinations was said to be established by reference to the fact that three examinations have been completed, and there was significant history to the claims which must be investigated. As to the former, I do not think much can be gained from the fact that only the NRL has sought to set aside the examinations summonses issued to its officers but no-one has sought to set aside summonses issued to Ms Culver, Mr Crocker or Ms Lowder. Nor did the latter submission advance matters. It was said to be significant that the liquidator had obtained orders for the examination of Ms Culver herself and has conducted that examination whilst the dispute with the NRL was ongoing. I did not find the submission persuasive: Ms Culver has made herself available to assist the liquidator, both before and after his appointment. A liquidator's examination conducted by the counsel referred to in the Action Plan circulated in January and February 2018 and who attended the third meeting with Ms Culver and the liquidator could equally be characterised as unnecessary and little more than 'window dressing'.

Power to issue examination summons

1. [89]

   The power to issue examination summonses is not at large; the provisions are only applicable to companies in some form of external administration: Highstoke Pty Ltd v Hayes Knight GTO Pty Ltd (2007) 156 FCR 501; (2007) 237 ALR 753; [2007] FCA 13; (2007) 156 FCR 501 [87], [89] (French J). The power to issue summonses is conferred by sections 596A and 596B of the Corporations Act, which provide:

2. [90]

   An “eligible applicant” includes ASIC, a liquidator or a person authorised by ASIC to make such an application in relation to the corporation: section 9 of the Corporations Act. Mr Needham is an eligible applicant. It is noteworthy that, where an applicant does not otherwise fit within the definition of “eligible applicant, for example, a creditor or shareholder of the company, then ASIC provides an important safeguard to ensure that the powers of examination are not abused. ASIC is not a rubber stamp in this regard but may ask searching questions, including as to why the proposed examinations are not an abuse of process: see, for example, In the matter of ACN 004 410 833 Limited (formerly Arrium Limited) (subject to a deed of company arrangement) [2019] NSWSC 1606 at [17].

3. [91]

   Sections 9 and 53 of the Corporations Act give a very wide definition of “examinable affairs” which includes the business, trading, transactions, dealings and property of the company: section 53(a). The NRL did not suggest that the topics which the liquidator wishes to traverse in the examinations do not fall within this definition, in theory at least.

4. [92]

   Section 596A is mandatory in its terms. If the eligible applicant can satisfy the criteria in section 596A, then the Court has no discretion to refuse to issue the examination summons: Re New Tel (in liq) at [83]. The essential criterion is that the summons is sought in respect of an “officer”, which includes a director, a defacto director and a person who makes decisions that affect the whole or a substantial part of the business of the corporation: section 9.

5. [93]

   In contrast, the Court has a discretion whether to issue an examination summons under section 596B: Sandhurst Trustees Limited v Harvey at [31] (per Doyle CJ with whom Perry and Bleby JJ agreed). As Lander J explained in Re New Tel (in liq) at [89]:

6. [94]

   In Southern Cross Petroleum Sales (SA) Pty Ltd (in liq) v Hirsch (1998) 70 SASR 527; (1998) 144 FLR 356, Lander J considered how the discretion ought be exercised at 536:

7. [95]

   In Meteyard v Love, Basten JA noted that the issue of a summons under section 596B(1) involves an exercise of discretionary power and questions of vexation and oppression are undoubtedly relevant considerations: at [135]. However, at [136]:

8. [96]

   Basten JA also noted that the scope of the power to grant a summons under section 596B is delimited by four considerations: that the proposed examinee may have “information” to give; which must be relevant in the sense that the information is about “examinable affairs of the corporation”; the information should be information not within the knowledge of the eligible applicant; and “there must be a factual basis for the Court to form a reasonable state of satisfaction that a proposed examinee may have relevant information”: at [39]. Reservations were expressed as to the third-mentioned consideration by Santow J in Meteyard v Love at [11], and shared by White J in Godfrey as liquidator of Pobjie Agencies at [68]:

Abuse of process in issue of examinations summons

1. [97]

   The Court can set aside an examination summons if it thinks that it should not have been made on the grounds that it was an abuse of process or for other reasons: Palmer v Ayres (in their capacities as liquidators of Queensland Nickel Pty Ltd) (in liq) (2017) 259 CLR 478; [2017] HCA 5 at [35] citing Re New Tel. In New Zealand Steel (Australia) Pty Ltd v Burton (1994) 13 ACSR 610, Hayne J said at 616:

2. [98]

   The oft-cited statement of the legitimate purposes for which the coercive power to summons a person for examination is to be used is that of Lander J (with whom Ryan and Crennan JJ agreed) in Re New Tel Ltd (in liq) at [252]:

3. [99]

   In arriving at this summation, Lander J approved (at [220]) the following statement by Doyle CJ in Sandhurst Trustees Limited v Harvey, at [51]: (emphasis added)

4. [100]

   In this respect, Ward J considered in In the matter of Affinity Capital Pty Limited – Indrasith v Ku [2011] NSWSC 1158 at [47]-[48]: (emphasis added)

5. [101]

   Perhaps at odds with this, in Arrium, a decision handed down after the hearing in this matter, two shareholders in Arrium Limited obtained approval from ASIC to apply under section 596A to examine a director of Arrium. The plaintiffs had in mind to become lead applicants in a shareholder class action and litigation funders had been advertising the class seeking shareholders to join it. ASIC had initially expressed concern that the proposed examinations may be an abuse of process but had been assured by the plaintiffs that the proposed examinee was a director and, further, the application was made “expressly for the benefit of shareholders and creditors of the company”: at [17]. That latter assurance proved partially misplaced, at least, as the plaintiffs conceded in the hearing that the proposed class action would not benefit creditors of Arrium.

6. [102]

   The deed administrators, now the liquidators of Arrium, had already conducted numerous public examinations. The shareholders had foreshadowed the possibility of participating in the public examinations but had not done so. The director had not been part of those public examinations but had been informally interviewed by the deed administrators. The topic which the shareholders wished to ventilate had not been the subject of detailed examination as the deed administrators considered it unlikely that it would give rise to any cause of action which would potentially benefit Arrium or its creditors. The liquidators of Arrium did not consider there was any benefit in further investigating the matters proposed to be subject of a class action as there was nothing to indicate that Arrium or its creditors had suffered loss as a result of the matters proposed to be agitated in that action.

7. [103]

   The evidence indicated that the predominant purpose of the shareholders was to investigate and pursue personal claims in their capacity as shareholders against directors of Arrium or its auditors: at [49]. Notwithstanding this, Black J held, “with considerable hesitation”, that he was not satisfied that Arrium had discharged the heavy onus of establishing that examining the director would be an abuse of process. At [50]:

8. [104]

   His Honour immediately cautioned that it did not follow that examination summonses would be issued on the application of the shareholders under section 596B: at [51]. Two considerations to Black J were that the proposed examinee was an “officer” and thus a mandatory examination order may issue under section 596A; and, that the shareholders were one of many who had suffered loss in a major corporate collapse. Both considerations are absent here. This application concerns discretionary examinations under section 596B and is a world away from the collapse of Arrium. It is not necessary on the disposition of this case to express a view on the approach taken by Black J, particularly given that Arrium is on appeal.

9. [105]

   The onus of establishing whether there has been an abuse of process or oppression is on the applicant and may be a heavy one: Re Southland Coal Pty Limited (2005) 189 FLR 297; [2005] NSWSC 259 at [16]-[17] per Young CJ in Eq. However, Young CJ in Eq also noted that he considered these matters “with more searching eyes” where summons had been issued at the behest of a liquidator appointed in a voluntary winding up (at [46]), noting that where the person applying for a summons is not a court-appointed liquidator, “the Court looks more deeply into the motives and purpose of the examination”: at [49]. The facts of this case highlight why such an approach is sensible.

10. [106]

    The question whether an examination is improper will depend upon what is stated or should be inferred from the known facts as to the liquidator’s purpose in conducting the examination: White J in Godfrey as liquidator of Pobjie Agencies at [70]; Sent v Andrews [2002] VSCA 209 at [24]-[26] per Buchanan JA.

11. [107]

    Where an abuse of process has been established then, as Street J made plain in Re Hugh J Roberts Pty Ltd (in liq) (1969) 91 WN (NSW) 537 at 539:

Whose purpose?

1. [108]

   One then comes to the question as to whose predominant purpose is to be considered and what relevance, if any, is the predominant purpose of Ms Culver or Newheadspace before it went into voluntary liquidation. The predominant purpose is that of the applicant seeking the order of the Court to issue an examination summons being, in this case, the liquidator: Re Laurie Cottier Productions Pty Limited (in liquidation) (1992-1993) 9 ACSR 513 at 517 per Wardell CJ in Eq at 517; Re Excel at 89 per Gummow, Hill and Cooper JJ; Affinity Capital at [41] per Ward J. In Re Excel, the Court confirmed that it is necessary to distinguish, on the one hand, between the purpose of, say, a creditor funding a liquidator’s examination and its motives to advance its own interests, and the purpose of the liquidator conducting the examination, on the other: at 92. At 93:

2. [109]

   For example, in Accord one of only two creditors of the company in liquidation funded the liquidator to conduct examinations in respect of a claim against the non-funding creditor and its officers. The examinees sought to set aside the examination summonses on the basis that the procedure had been invoked for an improper purpose, being to provide the funding creditor with an advantage by placing pressure on the non-funding creditor to reach a commercial settlement with it. Her Honour noted that the funding creditor’s concerns did not necessarily indicate the purposes of the liquidator in pursuing the investigations: at [62]. Whilst email communications with the liquidator gave rise to concerns as to whether the examination process may have been pursued to force a commercial settlement of the funding creditor’s claim (at [94]), ultimately Ward J (as her Honour then was) was not convinced on the evidence that the motivation or predominant purpose of the liquidator was to enable the funding creditor to recover its losses: at [116]. Further, at [124]:

3. [110]

   Thus it is clear that the correct focus here is on the predominant purpose of the liquidator. Evidence of the liquidator’s communications and dealings with others may enable the Court to conclude by direct evidence or available inference that the liquidator’s predominant purpose was improper. It will depend on the evidence in each case.

Proceedings contemplated

1. [111]

   As to authorities concerning abuse of process in the context of examination summonses, the case law is voluminous but four principles are relevant to this case. First, the fact that litigation against the examinees or their interests is contemplated or on foot does not mean that the examination summonses are for an improper purpose: Re Southland Coal at [36]-[39]. As Gleeson CJ explained in Hong Kong Bank of Australia Limited v Murphy at 519:

Litigation funding

1. [112]

   Second, the fact that examinations are being conducted to assist obtaining litigation funding or to assist litigation funders to pursue a claim on behalf of the company is not necessarily an abuse of process: Pockett v Dean-Willcocks [2004] NSWCA 192, Hodgson JA (with whom Tobias and Bryson JJA agreed) at [27]. Some examples are helpful as the evidence suggested to the Court in each case that the liquidator was embarked upon legitimate endeavours to realise a company’s assets in the form of choses in actions by engaging in negotiations with litigation funders and endeavouring to form a considered view on the value and recoverability of such assets. In Pleash, Re Equititrust Limited (in liq) (receivers and managers appointed) (No 2) (2017) 122 ACSR 299; [2017] FCA 758, the liquidator’s solicitor gave evidence that, some time before his firm was retained by the liquidators, he arranged for a draft pleading to be prepared to ascertain whether litigation funding could be obtained to pursue the examination to investigate whether it was worth bringing legal proceedings. The draft pleading and written opinions of counsel on prospects of success were submitted to a number of litigation funders, funding was obtained and his firm was then retained by the liquidators. The litigation funding agreement was approved by the Court. Examination summonses were issued whilst the contemplated proceedings remained in the “investigation stage”. Whilst Reeves J accepted that, if it was shown that the solicitors had persuaded the liquidators to pursue the examination for the purpose of securing a private benefit or advantage, or for the advantage of an unrelated third party, then the pursuit of those purposes would constitute an abuse of process: at [44]. However, the evidence did not establish these matters and the application to set aside the summonses was dismissed.

2. [113]

   In Wily Re LED, proceedings had been commenced by the company before a liquidator was appointed. On appointment, the liquidators formed a preliminary view that there were good prospects of success, although the liquidator considered that some aspects of the claims were less promising than others. The liquidators were without funds and could not pursue the proceedings without litigation funding but had been unable to secure funding although discussions with funders were ongoing. The liquidators wished to conduct examinations to test their preliminary view that the proceedings had good prospects of success and to obtain more information about those parts of the claim which the liquidator considered to be less promising. Further, demonstration of a sufficiently viable case through material obtained from the examinations was essential to obtaining litigation funding. These purposes were unobjectionable, according to Barrett J. At [41]:

3. [114]

   In Ji Woo, the Federal Court reinstated a company as there was prima facie evidence that a former shareholder was deprived of the value of her 30% shareholdings by its deregistration without her consent. A liquidator funded by the minority shareholder sought to conduct examinations to investigate whether the company forfeited its valuable business to a competitor for no consideration. The examinees sought to set aside the examination summons on the basis of abuse of process, including that the minority shareholder had expressed no interest in the matter until a litigation funder became involved. Black J was not persuaded that there was an abuse of process as there was no reason to question the liquidator’s independence or to doubt that he had appropriately considered the Federal Court judgment or would not give proper consideration, at an appropriate time, to the factual matters raised by the examinees or whether the company also had a claim against the minority shareholder. At [32]:

Plausible claim?

1. [115]

   Third, the Court does not have to be satisfied, before issuing an examination summons, that there is a plausible claim against the examinee or the persons with whom they are connected. As White J stated in Godfrey as liquidator of Pobjie Agencies at [76]:

2. [116]

   In Kimberley Diamonds, the Full Court of the Federal Court endorsed a similar sentiment at [100] and [102], but continued at [104]:

Negotiating pressure

1. [117]

   Fourth, it may be an abuse of process for a liquidator to conduct examinations if the predominant purpose is to exert pressure on the examinees to enter into a settlement. Accord is one example where such an abuse of process was alleged and Ward J noted at [53]:

2. [118]

   In Re Qintex Group Management Services Pty Ltd (in liq) [1997] 2 Qd R 91, examinations were noted as capable of being oppressive if their real purpose was simply to exert pressure by inflicting costs, or causing undue inconvenience or embarrassment to the defendant: at 95 (per McPherson JA, Pincus JA and Derrington J). Likewise, in Re Valofo, Sheahan & Lock as liquidator of Valofo Pty Limited (in liq) [2010] NSWSC 1255, Palmer J accepted that, if an examination summons was issued for the predominant purpose of the liquidators pressuring the examinee to agree to terms of settlement which the liquidators sought to impose upon the examinee, the purpose for which the liquidators’ power was exercised would be so improper as to amount to an abuse of process: at [29]. Further, at [34]-[35]:

3. [119]

   As Hetyey JR noted in Re Dalstonville at [22], use of the Court's processes to inflict financial or other collateral harm will always be improper, citing Meteyard v Love at [45] and Williams v Spautz. At [23]:

Conclusion

1. [120]

   Applying these principles, the following features are apparent from the evidence on this application. The initial approach to Mr Needham was by a litigation funder who needed to “see more” before deciding whether to fund. The only asset of the company was said to be a claim against the NRL. The obvious issue for Mr Needham to address if he took the appointment was whether it was necessary or appropriate to ask the Court to issue examinations summons in respect of this claim, either to satisfy himself that it was an asset worth pursuing or potentially to enable a funder to make a similar assessment. Appropriately, Mr Needham said he would make up his own mind about the claim against the NRL once appointed, and examinations may be needed with lawyers retained on a contingency fee basis. Mr Needham was open to being appointed as a liquidator on a contingency fee basis, with his fees to be paid from any recovery against the NRL.

2. [121]

   Mr Needham largely tied his remuneration to any recovery on the NRL claim. Mr Needham was otherwise unfunded and left the records of the company with Ms Culver and did not propose to review those records himself. Mr Needham said at the outset that he would ask for the records which he needed, and it is clear that he sought records on a ‘need to know’ basis: he did not seek a copy of the outstanding invoices said to be payable by the NRL until after his appointment and in order to send a letter of demand; he did not seek copies of the two invoices said to create a situation of insolvency until after the NRL challenged the veracity of his appointment; he did not have the company’s recently filed tax returns by the time he circulated a report to creditors.

3. [122]

   It is also apparent that the documents which Mr Needham had in respect of the NRL claim were a sub-set of the documents in the possession of Ms Culver and her advisers. The documents in the chronological bundle are more comprehensive than those attached to Mr Needham’s affidavits (including Ms Culver’s statement and its annexures) or sent to him by Ms Culver. This is consistent with Mr Needham leaving the task of reviewing the documents and preparing the application for examination summons to those who had been undertaking such preparations before his appointment, being Ms Culver, her advisers and counsel who, according the Action Plan, had been engaged some months before his appointment. This is confirmed by Mr Needham’s evidence that he relied on his legal advisers in respect of the content of documents seeking the examination summonses filed with the Court, including his affidavit in support of the issue of the summonses.

4. [123]

   I accept Mr Needham’s evidence that, at the time of his appointment, he had not made any decision as to whether the claim against the NRL had any merit. Nor did he depose in his affidavit submitted to the Registrar that he required further information to decide whether or not to commence proceedings. Nor do I think that the evidence supports a conclusion that Mr Needham was seeking to conduct examinations to assist legitimate endeavours to obtain litigation funding. There was no litigation funding agreement. Mr Whelan, after many months of working with Ms Culver, was only prepared to pay the filing fees for the examination summons consistent with his strategy of presenting the portent of examinations to the NRL to encourage a payment of the company’s claim. There is no suggestion that there were draft pleadings or written opinions of counsel, nor efforts to submit the claim to other funders who might be prepared to commit to fund the claim. There was no ‘objectively valid basis’ for the need to conduct the examinations for this purpose, which is consistent with the fact that Mr Needham did not refer to a litigation funder in his affidavit submitted to the Registrar.

5. [124]

   Mr Needham also deposed, and was not cross-examined, that at the time of his appointment he had not made any decision as to whether he would proceed with the examinations. His affidavit, sworn more than a year after his appointment, does not align with the contemporaneous documents and events described at [38]-[44]. I do not mean to suggest that Mr Needham’s affidavit evidence was anything other than honestly given, but, with the passage of time, his evidence appears to me to be inaccurate. True it is that, on 27 November 2017, Mr Needham’s file note records that he said that he would make up his own mind about the claim against the NRL if and when he was appointed. But by the time Mr Needham met Ms Culver again some five months later in April 2018, Ms Culver, the funder and counsel were proceeding on the basis of the Action Plan which was directed to the conduct of public examinations. It is likely that Mr Needham had a copy of the Action Plan: see [44]. By the time Mr Needham was appointed, the pursuit of public examinations in accordance with the Action Plan appears to have been a fait accompli. Indeed, strictly speaking, Mr Needham’s affidavit is correct: when appointed he had not made any decision as to whether he would proceed with the examinations; he had left those decisions to others.

6. [125]

   In summary, Mr Needham does not appear to me to have turned his own mind to whether the elements of section 596B of the Corporations Act were satisfied or whether the summonses were issued for a proper purpose. Rather, Mr Needham has left it to those interested in conducting public examinations, being Ms Culver, the funder and legal representatives engaged before his appointment. He has not put his ‘stamp’ on this process but has effectively inherited the improper purpose of those who placed Newheadspace into liquidation, which has remained the predominant purpose of the processes which have continued under his name.

7. [126]

   As already mentioned, the NRL chose not to cross-examine Mr Needham on his affidavits and thus it was not put to him by the NRL’s senior counsel that his predominant purpose in seeking the issue of examination summonses was an improper purpose. No doubt, this was because the NRL’s ‘case theory’ was that an abuse of process arose by reason of Ms Culver’s predominant purpose and it followed without more that the examination summonses should be set aside. In light of the authorities canvassed at [110] to [113], that approach was, with respect, incorrect. That said, the affidavits of Mr O’Reilly squarely put the NRL’s position that Newheadspace had been placed in voluntary liquidation for the primary purpose of seeking the issue of orders for production and summonses to Mr Greenberg and Mr Heptonstall following a series of threats made by Ms Culver to the NRL. Correspondence was exchanged between the NRL’s solicitors and the liquidator’s solicitors setting out the NRL’s allegations at length and more broadly than finally put by NRL’s senior counsel at the hearing. Mr Needham replied in two affidavits to these allegations.

8. [127]

   Where witnesses have responded to allegations in affidavits, it is not always necessary to put the same allegation to a witness in cross-examination to accord with the principles in Browne v Dunn (1893) 6 R 67; NU v NSW Secretary of Family and Community Services at [58] per Beazley P with whom McColl JA and Schmidt J agreed; followed in Cellarit Pty Ltd v Cawarrah Holdings Pty Ltd [2018] NSWCA 213 at [288] per McColl AP with whom Macfarlan and Leeming JJA agreed.

9. [128]

   Where a party seeks to impugn a witness’ credibility, counsel is still required to put to a witness the matters which they intend to submit are of significance so that the Court can assess the witness in relation to those matters: Advanced Wire & Cable Pty Ltd v Abdulle [2009] VSCA 170 at [13] per Redlich JA and Beach AJA; followed in SAMM Property Holdings Pty Ltd v Shaye Properties Pty Ltd (2017) 345 ALR 633; [2017] NSWCA 132 at [137] per McColl JA with whom Gleeson JA and Sackville AJA agreed, her Honour also citing Rees v Bailey Aluminium Products Pty Ltd (2008) VR 478; [2009] VSCA 96 at [21] and Terrence Parsons (a pseudonym) v R [2016] VSCA 17 at [42] per Maxwell P, Redlich and Priest JJA. There was no suggestion by the NRL, nor need there be to establish an abuse of process, that Mr Needham’s credibility was or is in doubt. Thus, the fact that Mr Needham was not cross-examined does not preclude me from making the findings I have made.

10. [129]

    Further, as already noted, a conclusion that there has been an abuse of process should be based upon objective evidence rather than a litigant’s subjective motivation: Williams v Spautz at 529. Nor does whether a purpose is “improper” depend upon the belief of the person as to whether they invoked a power for a purpose foreign to the purposes for which it was conferred: Toohey; Ex parte Northern Land Council at 233.

11. [130]

    For the reasons given, I would exercise my discretion to refuse the application to issue examinations summons to Mr Greenberg and Mr Heptonstall. If I am wrong about this, then there does not appear to be any real controversy about Mr Greenberg’s role. He first appeared in this story after Newheadspace had ceased to provide the program to the NRL and had already made an allegation of breach of intellectual property rights. Ms Culver prevailed upon Mr Greenberg in late 2015 to put in a good word for the program to the NRL and, in mid-2016, to again consider her proposal to provide the program and to attend to unpaid invoices. His role was peripheral at best. While the liquidator presses to test these matters by publicly examining Mr Greenberg, I am not satisfied that a summons should be issued to Mr Greenberg having regard to the four considerations set out by Basten JA in Meteyard v Love: see [93]. The evidence has not enabled me to form a reasonable state of satisfaction that he may have relevant information. Nor am I satisfied that the proposed examination is sufficiently justified or would have any practical utility: Kimberley Diamonds at [24]. I am not satisfied that the nature of his position is such that Mr Greenberg is likely to have information as to the matters the subject of the examinations: Affinity Capital at [100]. For that reason alone, in exercising my discretion on this review I would set aside the examination summons addressed to Mr Greenberg.

12. [131]

    It is not strictly necessary to consider the other bases on which the NRL says the examination summonses should be set aside. Given the detailed submissions made by senior counsel on both sides to these issues, however, I will deal with these grounds briefly.

13. [132]

    Further and alternatively, the NRL submitted that the predominant purpose of the liquidator in respect of the proposed examinations was to conduct a dress rehearsal of the examinees which is impermissible and, itself, constitutes an abuse or alternatively, oppression and unfairness and the examination summonses should be set aside under rule 49.19 of the UCPR. Orders for the issue of summonses for examination will be set aside if they are oppressive, unfair or an abuse of process: Sent v Andrews at [11]; followed by Barrett J in Onefone Australia Pty Ltd v Onetel Ltd [2007] NSWSC 69; (2007) 61 ACSR 246 and Ward J in Re Kassem (as liquidators of Clarecastle Pty Ltd) [2011] NSWSC 490 at [37] and [54]. See likewise Re Hugh J Roberts Pty Ltd (in liq) at 540-1 per Street J, Needham J in Re Kimberley Carpet Mills (Aust) Pty Ltd (In Liq.) (1979) CLC 40–532; (1979) 4 ACLR 50; Re Norman Baker Pty Ltd (in liq); Ex parte Hillman [1982] WAR 349; (1981) 6 ACLR 257; (1982) 1 ACLC 79; Grosvenor Hill (Qld) Pty Ltd v Barber (1994) 48 FCR 301; (1994) 120 ALR 262.

14. [133]

    The bulk of the alleged claims of Newheadspace against the NRL are based upon alleged oral representations and the liquidator already has the benefit of a detailed sworn statement from Ms Culver in support of those allegations. In those circumstances, any examination of Messrs Greenberg or Heptonstall would not assist the liquidator in forming an assessment of the case but rather could only be used as a dress rehearsal for cross-examination. Any information that the liquidator may require can be readily obtained by means of the order for production. The NRL submitted that the comments made by Buchanan JA in Sent v Andrews at [26] applied mutatis mutandis. The evidence of Ms Culver lies at the heart of the proceedings – either there was an oral contract or oral representations made or there were not. Examination of Messrs Greenberg or Heptonstall would not advance the liquidator’s knowledge of that claim other than revealing whether Messrs Greenberg or Heptonstall are convincing in their evidence and whether there are any matters which will be relied upon by the NRL in the proceeding which the company may wish to counter. The affidavit sworn in support of the application of the examination orders did not disclose that the liquidator cannot obtain sufficient information as to any of the issues in the proceeding from the sources already available to him. The liquidator has access to all the information that the company could have obtained.

15. [134]

    The liquidator submitted that the examinations cannot be said to be a dress rehearsal for cross-examination in light of the completed examinations, the absence of any concurrent litigation or any evidence that the liquidator has made any decision that litigation will be commenced at all.

Consideration

1. [135]

   The principles are set out in Sent v Andrews by Buchanan JA (with whom Vincent JA agreed) at [11]: (citations omitted)

2. [136]

   In that case, unlike the ordinary position where the liquidator comes to the company with limited or no knowledge of the company, the liquidator had a wealth of information as to the company’s case in litigation on foot against the proposed examinees. Those proceedings turned upon whether the Court accepted the oral evidence of one side’s witnesses or the other. The company directors had sworn affidavits in support of the company’s claim setting out their version of events, and the liquidator’s solicitors had conducted interviews with the company’s directors to obtain outlines of their evidence. Per Buchanan JA at [24]:

3. [137]

   If I am wrong about the liquidator’s abuse of process and what I have said at [135] then, given that the company has not commenced proceedings against the NRL and it is clear that Mr Needham has not made a decision whether to bring such proceedings, I do not think it can be said that the proposed examinations are a dress rehearsal of cross-examination in future litigation. Any claim by the company against the NRL is unformulated and may never materialise. There are no proceedings on foot, no joinder of issues by pleadings nor any exchange of affidavits in preparation for a hearing. Nor does Newheadspace’s suggested claim against the NRL turn largely on oral representations. Whilst the correspondence did refer to oral representations, the claim for loss of intellectual property would likely turn on other matters.

4. [138]

   Further and alternatively, the NRL submitted that Mr Needham failed to disclose material matters when the application for the issue of the summonses was before the Registrar, which requires the examination summonses to be set aside. The liquidator had an obligation to make full and frank disclosure to the registrar of all matters that may impact on the decision to issue the examination summons including that which might lead the court to refuse the application, and in the absence of full disclosure the Court may set the summons aside: Re Southern Equities Corporation Ltd per Lander J (with whom Cox and Bleby JJ agreed) at 422-423; Sutherland v Pascoe; in the matter of Matrix Group Ltd as Trustee for the Matrix Group Unit Trust (in liq) ACN 061 549 371 (2013) 297 ALR 44; [2013] FCAFC 15 at [50]; In the matter of Idoport Pty Ltd (in liq) (recs apptd) (2011) 82 ACSR 164; [2011] NSWSC 322 at [147]; Trevor, in the matter of Bell Group NV (in liq) (No 2) (2017) 122 ACSR 418; [2017] FCA 927 per Jagot J at [22]; Re Owston Nominees No 2 Pty Ltd (in liq) (Receivers and Managers Appointed) (2013) 94 ACSR 500; [2013] NSWSC 538 at [51]-[52].

5. [139]

   The material matters omitted were said to be: Ms Culver’s various threats made to the NRL; the circumstances surrounding the company’s asserted insolvency; the involvement or lack thereof of Mr Greenberg in the ongoing negotiations; the ‘legal’ advice obtained by the company and the fact that Ms Culver and the liquidator met with the litigation funder at least three times before the appointment of the liquidator; contrary to the suggestion in Ms Culver’s statement that she had no more contact with the NRL after negotiations had broken down in July 2016, Ms Culver had had multiple communications with the NRL since and also met with the NRL; the NRL had asked multiple times for clarification and particulars of the claims alleged against it and Ms Culver declined to provide this material in any meaningful way. These matters were significant and should have been disclosed. As Justice Allsop J (as he then was) said in Walter Rau Neusser Oel Und Fett AG v Cross Pacific Trading Ltd [2005] FCA 955, it was not for the Registrar to “search out, organise and bring together what can be said on the respondents’ behalf. That is the responsibility of the applicant, through its representatives”: at [38].

6. [140]

   The liquidator submitted that it is not incumbent on the liquidator to include in the affidavit every possible thing which might be said about the dealings between the company and the examinees or companies and entities associated with them or every possible issue that might be raised during the examination hearings: Godfrey as liquidator of Pobjie Agencies at [81] (per White J). The liquidator denied that there was any failure to disclose the extent of the liquidator's dealings with Ms Culver and a potential litigation funder prior to his appointment. Ms Culver's threats could not materially affect the decision of the Registrar to grant the examination orders. All that needed to be disclosed was that the company’s claims against the NRL, whatever their substance, had not been settled. The fact that the NRL had denied the claims was not a material fact that ought be disclosed, nor the particulars of convoluted letters between Ms Culver and the NRL's solicitor. The solvency or otherwise of the company was said to be an irrelevant consideration on the issue of the examinations summonses.

7. [141]

   The fact of Mr Greenberg's involvement in the negotiations was said to be the relevant consideration as it led to a credible conclusion that he has information relevant to the claims, being the examinable affair. It was not material that Mr Greenberg might have (a matter not known by the liquidator) ceased to have any involvement in the matter. It was his involvement (said to be demonstrated by the evidence) that was the matter conclusive of the basis for issuing the summonses. The NRL's requests for information from Ms Culver were also said to be irrelevant to the issue of the summonses. The NRL's attitude to providing documents voluntarily was not something the liquidator was required to disclose even if he knew that position: Hong Kong Bank of Australia Limited v Murphy at 520.

8. [142]

   Alternatively, the liquidator submitted that it is a matter for the discretion of the Court as to whether the summons ought be set aside: Southern Equities Corporations Ltd at 422; Re Owston Nominees No 2 at [51] per White J. The matters which the NRL says should have been brought to the Registrar's attention are now before the Court and, it was submitted, did not establish that the conduct of the examinations is an abuse. As such, setting aside the summonses would serve no useful purpose as immediate application may be made by the liquidator for new orders to the same effect: Re Owston Nominees at [54]; Re Mendarma Pty Limited (in liq) (2006) 24 ACLC 1611; [2006] NSWSC 1306 at [49]; Southern Equities Corporations Ltd at 424.

9. [143]

   The principles in respect of disclosure are stated in Re Southern Equities Corporation Ltd by Lander J at 422-423:

10. [144]

    In Affinity Capital, Ward J emphasised that, whilst the non-disclosure must be material, “it does not follow that this should be tested by asking whether the disclosure of the information would have made a difference to the Registrar’s decision”: at [79] citing Re Mendarma at [58] per White J.

11. [145]

    For example, in Re Owston Nominees No 2, Black J set aside a summons for examination as the liquidator did not disclose that his solicitor and counsel were also acting for a director of the company in family law proceedings. An examinee was a secured creditor of the company whose receiver and manager was appearing in the Family Court proceedings and contending for a different outcome than the director. The affidavit did not disclose the issues in the Family Court proceedings, the overlap between those proceedings and the issues sought to be investigated in the examinations, nor that the documents sought in orders for production were relevant to the Family Court proceedings, nor that the director may have a forensic advantage in the Family Court proceedings by reason of the examination summons and orders for production. Nor was it sufficient to attach correspondence which referred to the Family Court proceedings as reference to the proceedings in an annexure to the affidavit did not sufficiently draw the Registrar’s attention to the relevant issues; the matters relevant to the Registrar’s decision should have been expressly addressed in the affidavit: at [47].

12. [146]

    In Godfrey as liquidator of Pobjie Agencies, White J rejected the submission that the liquidator failed to disclose relevant matters to the Registrar by failing to disclose that the allegations against the examinee were fanciful and a wide range of other matters, noting that if each of these matters had been addressed then the liquidator’s affidavit would have run into hundreds of pages and anticipated the arguments advanced by the applicants on the application to set aside the examination summonses: at [81]. However, his Honour accepted one material non-disclosure: the affidavit did not disclose what information the examinees had already voluntarily provided to the liquidator and it was conceivable that such information may have been material to the Registrar’s decision to issue the summonses: at [82].

13. [147]

    Finally, in Pockett v Dean-Willcocks, the company had been in negotiation with Woolworths for some time in relation to providing a product. The negotiations ended and the company was placed into voluntary administration. The administrators applied to issue examination summonses, including to Woolworths, and an application to set aside the summonses was based inter alia on the submission that the material put to the Registrar did not show what information the administrators lacked, particularly where they had written records concerning alleged representations, the co-operation of directors, and in general terms all the information that the company would have had if it was not in administration. Hodgson JA (with whom Tobias and Bryson JJA agreed) did not agree. The affidavit relied on before the Registrar sufficiently showed that the administrators considered that information was lacking as to a number of relevant matters, including the reasons why Woolworths withdrew from the negotiations, the extent to which Woolworths disputed the making of representations, and the potential quantum of damages: at [30].

14. [148]

    If I am wrong about the liquidator’s abuse of process then it is fair to say that Mr Needham’s affidavit in support of the application for the issue of examination summonses was brief and, in light of the evidence before the Court, inaccurate in places. However, many of the matters which the NRL says that Mr Needham should have disclosed to the Registrar do not appear to me to have been known to him at the time he swore the affidavit as the documents in his possession appear to have been a sub-set of the documents held by Ms Culver, although nor did he call for the books and records from Ms Culver, usually a first step in any liquidation.

15. [149]

    I can only safely conclude that Mr Needham had the documents referred to at [50], [54] and [55]. Assuming this to be the position, Mr Needham deposed that he wished to investigate whether a contract was entered into between Newheadspace and whether the NRL had breached the contract. Mr Needham had Ms Culver’s November 2017 letter to the NRL in which she effectively conceded that there was no contract. I consider that the Registrar would have been interested to know that the director of Newheadspace largely accepted that there was no contract. This may have indicated to the Registrar that it was not necessary to investigate that matter by issuing the examination summonses sought.

16. [150]

    Mr Needham also deposed that he wished to investigate whether the NRL had retained and made use of Newheadspace’s intellectual property. I consider that the Registrar may have been interested to know that such an allegation had been made by Newheadspace three years earlier and – also for three years – the NRL had been asking Newheadspace to provide a single piece of paper to corroborate that allegation and Newheadspace had steadfastly refused to provide any. This piece of information may have indicated to the Registrar that invoking the coercive powers of the Court to bring the NRL’s officers to be examined on that subject should not, in their discretion, be ordered in circumstances where the primary source of that information – the company and director – had failed to provide such information to the NRL over a prolonged period of time and that source should be exhausted by the liquidator before troubling the NRL.

17. [151]

    I do not think that Mr Needham’s description of Mr Greenberg’s role was accurate in circumstances where Mr Needham had Mr Greenberg’s emails from July 2016 which, fairly read, indicated that Mr Greenberg’s role was peripheral at best. I consider that the Registrar would have been interested to know this fact when deciding whether to compel Mr Greenberg to attend court to be examined. Whilst the July 2016 email was attached to Ms Culver’s statement which was exhibited to Mr Needham’s affidavit, it should have been expressly addressed in his affidavit.

18. [152]

    Nor did Mr Needham disclose that Ms Culver had been co-operating with him for months and had been doing most of the ‘leg work’ in respect of the suggested claim against the NRL. I consider it would have been relevant to the Registrar to know that, not only had Ms Culver given a statement to the liquidator, but Ms Culver stood ready to assist the liquidator wherever possible. This may have suggested to the Registrar that it was not necessary to issue an examination summons to Ms Culver and use court time to conduct such an examination.

19. [153]

    Nor did Mr Needham disclose that Newheadspace had been threatening the NRL with adverse public attention including foreshadowing the appointment of a liquidator who may conduct public examinations. Mr Needham had this correspondence but it was not annexed to his affidavit nor Ms Culver’s statement. Nor did Mr Needham disclose that the primary focus of appointing him was to conduct just such examinations. Whilst Mr Needham was largely not privy to the email traffic between Ms Culver, Mr Whelan, Mr Westfield and Mr Stevens referred to in this judgment, I consider it was reasonably apparent to him – from the initial approach by a funder, the pre-appointment meetings thereafter and the Action Plan – what he was being asked to do. I consider that a Registrar of this Court would have been most interested in such information as it may have suggested that the processes of the Court would be abused if the summons were issued as requested.

20. [154]

    As to why such matters were not disclosed, it seems to me that it was because Mr Needham left the preparation of his affidavit to others and did not actively review the documents or the suggested claim against the NRL himself. That is not a reason, it seems to me, to refrain from setting aside the examination summonses. Accordingly, I would also set aside the examinations on this basis.

21. [155]

    By prayer 9 of the Interlocutory Process, innocuously seeking “[a]ny further or other order that the Court sees fit”, the NRL seeks that the Court, of its own motion, terminate the liquidation of Newheadspace under section 90-15 of the Insolvency Practice Schedule (Corporations). It was submitted that, in Re Hugh J Roberts Pty Ltd (in liq), Street J opined in respect of an examination summons that the court will find no difficulty in moulding an order appropriate to prevent an abuse of its process. Following the introduction of the Insolvency Practice Schedule, section 90-15 allows the Court to terminate a voluntary winding up: Re Manband Pty Ltd (in liq) (Subject to Deed of Company Arrangement [2018] NSWSC 1282 at [19] (Black J), citing Krejci (liquidator), in the matter of Community Work Pty Ltd (in liq) [2018] FCA 425 (Gleeson J). Whilst the NRL accepts that it does not have standing under the Insolvency Practice Schedule to seek the termination of the winding up, it invited the Court to do so on its own initiative by making an order under section 90-15(1).

22. [156]

    The liquidator submitted that the company is insolvent and, thus, ought be in liquidation. Even if not insolvent, the company had been dormant for a number of years prior to the winding up and had ceased to carry on any business beyond the pursuit of a potential claim against the NRL. Such a company ought be wound up and deregistered once its assets have been realised, debts paid and any surplus distributed to members.

23. [157]

    Whilst the Court has power to terminate a voluntary winding up under section 90-15 of the Insolvency Practice Schedule, I am not minded to terminate the liquidation on the Court’s own initiative. The Interlocutory Process did not, by prayer 9, give adequate notice that such an order would be sought. Ms Culver has not been joined to these proceedings and is an interested person in any such application as she initiated the appointment of a liquidator, is the sole shareholder of Newheadspace and would, on termination of the winding up, become its sole director again. ASIC should also have been notified that an order was being sought under section 90-15.

24. [158]

    Further, ordinarily on applications to terminate a winding up the Court will have regard to inter alia matters of ‘commercial morality’: see In the matter of Parkway One Pty Limited (in liquidation) [2019] NSWSC 1495 at [78] and [85]. I am concerned that Ms Culver has rendered an invoice to her company without a proper basis and obtained a second invoice from a litigation funder suffering from the same defect. On the basis of these invoices, Ms Culver has resolved to appoint a liquidator to her company on the basis that it is unable to pay these invoices. This, together with signing a declaration that the information in the RATA as to unsecured creditors was true and correct, gives pause for thought as to whether Mr Needham should cease to wind up the company and Ms Culver should return to its helm. I would not be minded in these proceedings to terminate the liquidation for this reason alone. Of course, on an application to terminate the liquidation configured in a more traditional format, I would expect to hear from Ms Culver as to each of these matters and, it goes without saying, that I have not had the benefit of any evidence from Ms Culver on this application.

25. [159]

    I am, however, concerned about leaving Mr Needham as the liquidator of Newheadspace given the findings I have made. I wish to hear from Mr Needham as to whether he wishes to continue to be the liquidator and, if so, why he should not be removed under sections 90-15(3)(b) and (c) of the Insolvency Practice Schedule.

26. [160]

    For these reasons I make the following orders:

    1. (1)

       The summonses for examination made by the Registrar on 3 October 2018 directed towards Todd Greenberg and Paul Heptonstall be set aside as an abuse of process.

    2. (2)

       The Respondent to pay the Applicant’s costs of prayer 4 of the Interlocutory Process filed on 28 November 2018.

    3. (3)

       Direct the Respondent to notify the chambers of Rees J within 14 days whether he wishes to continue as liquidator of Newheadspace Pty Limited (in liq).

    4. (4)

       In the event that the Respondent notifies the Court that he wishes to continue as liquidator of Newheadspace Pty Limited (in liq), direct the Respondent to:

    5. (5)

       Stand the matter over to 31 March 2020 for further directions and excuse the applicant from further appearances.

    6. (6)

       Liberty to apply on 2 days’ notice.