J T Interior Pty Ltd v Ozzy States Pty Ltd

1. [1]

   HIS HONOUR: On 18 December 2017, an examination order was made that required Remolo Nigro, a director of the defendant, to produce documents as follows:

2. [2]

   The defendant has now sought an order by notice of motion filed on 4 July 2018 to set aside this portion of the examination order pursuant to UCPR r 36.15.

3. [3]

   UCPR r 36.15 provides as follows:

4. [4]

   This rule would not appear to apply in the present case.

5. [5]

   However, there is an inherent power in the Court to permit a person affected by an ex parte order to apply to set it aside or vary it: see New South Wales Crime Commission v Bonaccorso [2010] NSWSC 876 at [31] per Davies J. The defendant would appear to qualify as it is not in issue that the examination order was made in its absence.

Procedural history

1. [6]

   On 2 November 2017, the plaintiff obtained a judgment against the defendant in the sum of approximately $1.166M under the Building and Construction Industry Security of Payment Act 1999. The defendant has paid only a portion of that debt to the plaintiff. An examination order was issued on 18 December 2017. Mr Nigro attended for examination before the Registrar on 9 March 2018. The examination was adjourned part heard. The defendant filed the notice of motion in July 2018.

Legislative scheme

1. [7]

   Section 108 of the Civil Procedure Act 2005 is in these terms:

2. [8]

   UCPR r 38.3(5) provides as follows:

Submissions

1. [9]

   The defendant contends that the documents sought in paragraph 2 of the examination order go well beyond its purpose as prescribed by s 108(5) of the Act and that the plaintiff cannot demonstrate a legitimate forensic purpose with respect to many of the documents sought. The material questions in s 108(5) of the Act relate only to the means whereby a judgment debtor can satisfy the judgment. The answers to the material questions are designed to inform a judgment creditor about what, if any, enforcement action might be available to it: see Quadunion Builders Pte Ltd v Aircraft Support Industries Pty Ltd (No 2) [2015] NSWSC 1857 at [33] per Adamson J. The examination order in the present case is intended to facilitate or assist the plaintiff to identify any means by which the defendant could pay the judgment debt.

2. [10]

   Having regard to these matters, the defendant makes the following complaints.

3. [11]

   First, paragraph 2(a) calls for “all documents” without limitation as to particular dates or times. Moreover, it calls for documents to support monies that “remain owing”. The only limiting words are “in relation to” a particular aspect of the material question prescribed by s 108 of the Act. This is so broad as effectively to require the defendant to collect all forms of documents, whether in electronic form or hardcopy, including correspondence with third parties who may currently owe money.

4. [12]

   Secondly, paragraph 2(a) captures a number of documents that are unlikely to have any relevance. By way of example, in the absence of any time restraints, the documents sought include debts that, whilst they may remain owing, may be statute barred and therefore could not be relevant to the material question.

5. [13]

   Thirdly, paragraph 2(b) calls for “any document/s in relation to any obligation to pay monies to the company that will become owing in the future” and is not limited to particular dates or times. This is so broad as effectively to require the defendant to collect all forms of documents, whether in electronic form or hardcopy, including correspondence with third parties who may currently owe money. This would be wide enough to capture rebates that might be payable by the ATO, such as GST returns, and third-party providers.

6. [14]

   Fourthly, paragraph 2(c) calls for the production of “any document evidencing any transfer/s of monies to bank accounts of any Related Entity since January 2007”. This goes well beyond the defendant’s bank statements and calls for the production of each and every receipt, remittance advice, cheques, cheque butts and any other document that may be issued by a bank when a transaction takes place. Moreover, the plaintiff has not demonstrated a legitimate forensic purpose for this additional information when the pertinent information would be disclosed in the defendant’s bank records.

7. [15]

   Fifthly, paragraph 2(c) calls for bank statements, receipts, remittance advices, cheques, cheque butts and any other document that may be issued by a bank for transactions between:

8. [16]

   The ambit of such documents would arguably include a voluntary superannuation contribution made by a relative of Mr Nigro or his wife to their superannuation fund, a payment made by Mr Nigro or his wife to their child and payments between cousins of either Mr Nigro and/or his wife.

9. [17]

   The defendant contended that the plaintiff cannot demonstrate a legitimate forensic purpose as to how such transactions assist or may assist with the material purpose prescribed by s 108 of the Act.

10. [18]

    The plaintiff contends that the defendant has not demonstrated a sufficient cause for setting aside the order. The examination is part-heard and any issues with the order should have been raised long before now. The delay in bringing the present application has not been adequately explained.

Disposition

1. [19]

   In my view, the orders about which the defendant complains have been somewhat loosely drafted. The documents to which the plaintiff seeks access are in fact those documents that demonstrate the existence of the defendant’s assets in its possession or control, or assets to which it realistically has access, and which may be available to the plaintiff to satisfy the judgment.

2. [20]

   One of the difficulties with the examination order is that it describes the documents in a general adjectival way, rather than by the use of descriptions that are not susceptible to interpretation, and hence doubt, by the person who is the subject of the examination order. For example, an order to produce copies of the defendant’s banks statements could hardly be misunderstood and could not correspondingly be objectionable. Similarly, an order to produce Mr Nigro’s bank statements, upon the basis that they may evidence payments to him by the defendant, would also not appear to be objectionable.

3. [21]

   The “related entity” documents would on one view appear to be an unnecessary complication. At least as a matter of theory, once the plaintiff is armed with the banking details of the defendant and its director/s, the examination of Mr Nigro will presumably identify all or any payments made by the defendant by him to third parties, whether related entities or not. It may be in the modern era that cheque butts or similar hard copy documents that evidence payments that the defendant has made will be less significant than electronic banking records. Be that as it may, it seems to me that the plaintiff ought to be able to describe the things that it wants Mr Nigro to produce in clear and unambiguous terms.

4. [22]

   Accordingly, I will stand this application over for a short period to be determined in consultation with the parties and direct the plaintiff to bring in a proposed draft of any amended or varied terms of the examination order that appears to give effect to the defendant’s concerns and my remarks.