A liquidator may seek to have directors, officers, employees, creditors and debtors of an (insolvent) company examined publically and before the Court to recover property or to facilitate the winding up of a company.
Here are some topics:
- Legislation relevant to public examinations
- Procedures in place by the Courts for a public examination
- Purpose of a Public Examination
- What types of public examination are there?
- In a public examination, what are examinable affairs of a company?
- How is the application for a public examination made?
- What else can the summons for public examination ask for?
- What can you do if you receive a Summons seeking to have you publicly examined?
- Who can listen to the public examination?
- What must the person, being publicly examined, do?
- Do you have the right to a lawyer if you are being summonsed to be publicly examined?
- Can you get some costs if you are summonsed?
Legislation relevant to public examinations
ss 596A and 596B of the Corporations Act 2001 (Cth).
See also:
- information on the Supreme Court of NSW website here
- information regarding Supreme Court of NSW Form 29 re: production
- information on the Federal Court website re: Summons for Examination and access to the transcript and the Guide for Practitioners and Parties
Purpose of a Public Examination
Generally, the idea of a public examination is to help a liquidator recover property of the (insolvent) company or to otherwise help him or her administer a winding up.
What types of public examination are there?
A “mandatory examination” is when a person must be summoned by the Court so they can be examined by the liquidator’s lawyers about the “examinable affairs” of the (insolvent) company. Often, the person examined here was an officer of the company in the 2-year period before the liquidator was appointed.
Also, “discretionary examination” is when the court has a discretion about whether to summon a person. Before the court will exercise that discretion, there needs to be evidence the the person took part in (or can give evidence about) the (insolvent) company’s examinable affairs. Usually, this involves (former) employees of the relevant company and maybe even debtors and creditors being examined.
In many cases, the public examination is of a director or former director of the company and by the liquidator's lawyers to determinate what, if any, proceedings can be brought to recover property on behalf of the company.
In a public examination, what are examinable affairs of a company?
The definitions to the Corporations Act 2001 (Cth) set out the meaning. Simplistically, this covers a wide variety of activities of the (insolvent) company such as matters regarding the:
- promotion
- formation, and
- management
- etc.
How is the application for a public examination made?
Under s 596B of the Corporations Act 2001 (Cth) the application is often made in the absence of the party.
The recipient of the summons will only find out when they are served by the lawyers for the liquidator. Normally, the recipient cannot see the affidavit that was provided in support of the application for an examination summons to be issued.
What else can the summons for public examination ask for?
In many cases the liquidator will ask you to produce certain books and records regarding the examinable affairs of the company.
What can you do if you receive a Summons seeking to have you publicly examined?
In rare cases, there may be grounds to set aside the summons. To do so there needs to be proper grounds and the application must be brought within an incredibly short time.
Who can listen to the public examination?
In normal times, outside Covid-19, the examination is held in public. However, during the pandemic many hearings are held via Microsoft Teams.
What must the person, being publicly examined, do?
There will be a need to give evidence on oath and to answer honestly.
In highly limited cases the person can seek to be excused from answering a question, although that is likely to be controversial and may be contested. This may apply where the answer would engage a privileged communication.
The examinee may also be required to sign a transcript of the hearing which may potentially be used in a subsequent hearing.
Do you have the right to a lawyer if you are being summonsed to be publicly examined?
Yes, you can have your own lawyer and this can be a useful exercise, however, you will need to pay for your own lawyer. If the examination goes for days then the costs will be expensive.
Can you get some costs if you are summonsed?
Yes, in some cases, you can get certain costs such as the costs of attending but not the costs of having your lawyer present.
For more information on public examinations please contact our commercial litigation lawyers.
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