BERNIE MADOFF/FRAUD/ THE HISTORY OF THE $50B PONZI SCHEME SCAM

IS MADOFF A SYMBOL OF JEWISH GREED?

Why was he not detected earlier????

Who protected this shonk?????????

The Bernie Madoff fraud was the biggest Ponzi scheme and scam ever, thus defrauding thousands of investors.  Bernie Madoff or Bernard Madoff was born on April 29th 1938 in New York.  Prior to his scandalous arrest in December 2008, Bernie Madoff has been sentenced to an imprisonment of 150 years.
Background

Even Madoff’s parents were involved in investment business. Bernard began his career by working as a lifeguard and sprinkler installer and made $5000. Madoff married Ruth Alpern in 1959. Bernard, a graduate with Political Science, started an investment firm, along with his wife. He named it the Bernard L. Madoff Investment Securities LLC. He invested the full money he had earned from his previous venture in his investment firm. The firm had begun as just a penny stock trader in the initial years. Bernie Madoff got a lot of help from his father in law who referred him to a larger circle of people helping him expand his business. He even got celebrity clients to his firm. His firm became reputed within a very short period of time. It guaranteed annual returns of 10% or more and won the support of more and more investors gradually. So much so that by the 1980’s the firm was controlling around 5% of the volume in the New York Stock Exchange.
Now what Madoff’s investment firm did was develop stock quotes with the help of computer technology. Hence they came to develop the National Association for Securities Dealers Automated Quotations. The NASDAQ as it came to be known as found its chairman in Bernie Madoff, who served the chair until his arrest in 2008. Now as his firm was expanding, more and more family members of the Madoff family were engaged in it. Madoff’s brother, his two sons and his niece all came to be a part of the company he owned.
How He Got Caught

His business came to be under the doubts of various financial analysts as early as 1999. They believed that the returns claimed by the company were only theoretically impossible. But organizations such as the Securities and Exchange Commission (SEC) completely ignored the doubts and Madoff continued with his overtures for almost another 10 years. He finally got caught in December 2008. He was trapped after he confessed about his dishonesty to his very own sons. He confessed to his sons of his investment business being nothing but a big Ponzi scheme. His sons now reported his father’s fraud to the Federal Bureau of Investigation. Though Bernie confessed to have had started his Ponzi scheme in the 1990’s, investigators think otherwise. They believe the Ponzi scheme and defrauding of investors had begun in the 1980’s itself.
Now what actually happened was that in the very first week of December 2008, Bernie Madoff discussed his dilemma over having to pay his clients an amount of almost $7 billion as he didn’t have that much funds. Now within the very next two days Bernie told his sons that he made a huge profit and had decided to give away an early bonus, amounting up to $173 million. This confused the sons and they called for an explanation from their father. This is when their father confessed that his whole company worked through a “giant Ponzi scheme”. On December 11th 2008, Bernie Madoff was taken into house arrest. Had the stock market not had been in a sharp decline in 2008, who knows how much longer the fraud could have continued.
SEC Charges

Bernie was charged of federal offences like securities fraud, mail fraud, wire fraud, perjury, and money laundering, false statement making only to name a few. He pleaded guilty and was banned from security investment business for a lifetime. He was sentenced to the highest degree of punishment possible under this act; an imprisonment of 150 years. He was sent to the Federal Prisons of North Carolina where he is registered as inmate number #61727-054 and his release from prison is dated November 14, 2134, a day he shall never see keeping in mind that he is now aged 71 years.
Aftermath

So Bernie Madoff went on to become the greatest crook in the history of the security investment business. Mr. Madoff became a multi-millionaire by pulling off a very clever Ponzi scheme cheating upon thousands of clients and investors. What surprises investors even more is that he did it right under the nose of the federal organizations such as the SEC who never guessed anything before a long time had passed. Madoff’s fraud did affect a lot of people all around the world. Not only did his company manage the investment of lots of multi millionaire clients ranging from famous media personnel to giant business tycoons, the company also looked after many charitable organizations. These charitable organizations too weren’t saved from the greed and dishonesty of this fraud and suffered heavy losses along with the rich investors. Investigators believe throughout his whole career Madoff had moved around $170 million of his investors’ money to his private accounts. The total fraud is estimated between $35 to $65 billion dollars. Because of the nature of the fraud, it will never be know ju

Howrey Bankruptcy Trustee Objects To Class Action Against Ex-Partners

Howrey Bankruptcy Trustee Objects To Class Action Against Ex-Partners

Allan B. Diamond, the Chapter 11 trustee in the bankruptcy case of legal firm Howrey LLP, is arguing against a proposed class action targeting hundreds of equity security holders of the defunct firm. The class action suit accuses the equity holders of siphoning firm's funds to themselves in the years leading up to the bankruptcy.

Diamond of Diamond McCarthy LLP, says the suit interferes with the estate's own recoveries, violates the automatic stay and "seeks to hijack these bankruptcy proceedings.”

Diamond has aggressively targeted former partners for any excess compensation they received after the firm was insolvent. In his efforts to raise revenue to help repay creditors, he has spent months identifying how much work former partners and the firms that now employ them need to be clawed back.

Case law on the ability to claw back funds is well-established. The California statute known as Jewel v. Boxer says bankrupt law firms can seek to recover proceeds from unfinished business that departing partners bring with them to their new firms.

Prior to its demise, Howrey LLP was a global law firm that practiced antitrust, global litigation and intellectual property law. At its peak Howrey had more than 500 attorneys in 16 locations worldwide.

In April 2011, a group of alleged creditors of Howrey LLP filed an involuntary chapter 7 bankruptcy petition against the law firm with the United States United States Bankruptcy Court for the Northern District of California. That involuntary chapter 7 case was converted to a chapter 11 bankruptcy case in June 2011 at the request of the law firm. On July 6, 2011, Howrey filed schedules of assets and liabilities with the bankruptcy court which listed assets of $138.7 million and liabilities of $107 million.

Madoff Class-Action Lawsuit Is Blocked by U.S. Bankruptcy Judge

By Linda Sandler - Jun 21, 2012 2:01 PM ET

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A U.S. bankruptcy judge barred a class-action lawsuit filed in Florida against the estate of former Bernard Madoff investor Jeffry Picower.

The Madoff brokerage trustee, Irving Picard, settled a lawsuit against the Picower estate for $7.2 billion in 2010, after alleging Picower knew of and profited from Madoff’s fraud. Pamela Goldman and a related partnership asked U.S. Bankruptcy Judge Burton Lifland in Manhattan to let their suit go forward, even after similar actions had been barred by Lifland and other judges on appeal, the judge said yesterday in an order filed in court.

“This court has sole jurisdiction over the administration and distribution of estate assets to customers,” he said.

The judge’s ruling on the Florida class action may help Picard, who has been fighting to preserve his sole right to sue to recover money for the con man’s customers. Customers who have little prospect of being paid by Picard, and other parties, say he is interfering with their rights.

Joshua Angel, a lawyer for Goldman, didn’t immediately return a call seeking comment on the ruling.

Picower, one of the largest of Madoff’s investors, may have suspected the con man was running a Ponzi scheme, according to Picard. Picower drowned in 2009, and his estate forfeited the money to the U.S. and Picard.

California Suit

This month, Picard accused California Attorney General Kamala Harris of breaking the law by suing to recoup $270 million in illegal profits from Stanley Chais’s estate in competition with himself. Harris has said her suit isn’t barred under bankruptcy law, because she is exercising her policing power under state law.

Picard sued Chais and related entities in 2009, demanding the return of $1 billion allegedly withdrawn fraudulently from the Ponzi scheme. The money manager died in 2010.

Most of the $9 billion that Picard says he has raised from settlements is tied up in court challenges, and unavailable for distribution to customers who lost money.

Madoff, 72, is serving 150 years in prison after pleading guilty to orchestrating the fraud that destroyed his New York- based firm, which collapsed in December 2008. Picard and his law firm, Baker & Hostetler LLP, have charged about $273 million for liquidating the estate, while returning just $330 million to customers.

The Lifland ruling is on the docket of the main case: Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC, 08-ap-1789, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

[ASIC] v Pattison, Paul; Ex parte Micervski 
  Supreme Court of Victoria. Practice Court 


IN THE SUPREME COURT OF VICTORIA Not Restricted
AT MELBOURNE
PRACTICE COURT
No. 0469 of 2011
AUSTRALIAN SECURITIES AND
INVESTMENTS COMMISSION
Plaintiff
v
PAUL PATTISON Defendant
---
JUDGE: ROBSON J
WHERE HELD: Melbourne
DATE OF HEARING: 3 May 2011
DATE OF RULING: 3 May 2011
CASE MAY BE CITED AS: ASIC v Pattison; Ex parte Mircevski
MEDIUM NEUTRAL CITATION: [2011] VSC 252
---
PRACTICE AND PROCEDURE ––application by a party to a Federal Court proceeding to
use in the Federal Court proceeding an affidavit filed by ASIC in the Supreme Court of
Victoria in an application by ASIC to remove the defendant as liquidator of several
companies – Harman principles discussed – application granted
---
APPEARANCES: Counsel Solicitors
For Mr A Mircevski Mr G Slater A I F Lucas and Co
For the Defendant No appearance

HIS HONOUR:
1 Mr Mircevski seeks1
 an order that he may use an affidavit and the exhibits thereto of
Brett Stanley Sanders,2
 filed by ASIC in this Court in proceedings between ASIC and
Mr Pattison, in proceedings in the Federal Court of Australia between Mr Mircevski
and Mr Pattison.
2 Mr Slater of counsel appeared for Mr Mircevski. Mr Green announced to the Court
that he appears for Mr Pattison in the Federal Court proceedings, but does not seek
to appear for him on this application.
3 The Court received into evidence a letter dated 3 May 2011 by the Australian
Securities and Investment Commission that neither consents or opposes the
summons.
4 Mr Mircevski has instituted proceedings in the Federal Court of Australia for an
order under s 179 of the Bankruptcy Act to inquire into the activities of Mr Pattison as
Mr Mircevski’s trustee in bankruptcy. Mr Slater says, and I accept, that s 179 of the
Bankruptcy Act 1966 is the Bankruptcy Act equivalent of s 536 of the Corporations Act
2001 and that it is necessary for his client to establish the need for an inquiry before
an inquiry may be ordered.
5 In proceedings in this Court,3
 ASIC applied to remove Mr Pattison as the liquidator
or receiver of some 104 companies. From reviewing the file, it appears that the
affidavit of Mr Sanders was the basis of ASIC’s application. The file discloses that on
28 February of this year, orders were made by consent, inter alia, that other
liquidators be appointed as liquidators of the companies referred to in the order in
lieu of Mr Pattison. Those orders were made upon the basis that Mr Pattison had
agreed voluntarily to cease carrying on his practice as an official and registered
liquidator and that he would be resigning his posts from the 104 companies.
6 Mr Slater has provided me with written submissions. I direct these be placed on the
1
 Summons dated 2 May 2011
2
 Sworn 7 February 2011
3
 Matter no 0469 of 2011  2 T0252
court file. Mr Slater acknowledges that he is aware of the obligaation on counsel in
ex parte matters to inform the court of all relevant legal principles and facts, whether
assisting his case or not.
7 Mr Slater’s submissions address the Harman principle.4
 He contends that the Harman
principle is limited to circumstances where documents are provided under court
compulsion and does not apply to an affidavit voluntarily filed. He relied on the
decision of J. Forrest J in Rowe v Silverstein.
5
 There J. Forrest J held that the Harman
principle only applied to information provided under compulsion. He held that an
affidavit voluntarily filed in support of an application was not covered by the
Harman principle. J Forrest J said:6
[7] It is now settled law that where documents are required to be produced
under compulsion by reason of a rule of Court or specific order (express or
implied), there is an obligation upon the other party or parties to the
proceeding to use them only for the purpose related to the subject litigation.
For the documents to be used in other litigation requires the leave of the
Court.
In Hearne v Street, Hayne, Heydon and Crennan JJ said:
“Where one party to litigation is compelled, either by reason ofa rule of court, or by reason of a specific order of the court, or
otherwise, to disclose documents or information, the party
obtaining the disclosure cannot, without the leave of the court, use it
for any purpose other than that for which it was given unless it is
received into evidence. The types of material disclosed to which
this principle applies include documents inspected after
discovery, answers to interrogatories, documents produced on
subpoena, documents produced for the purposes of taxation of
costs, documents produced pursuant to a direction from an
arbitrator, documents seized pursuant to an Anton Piller order,
witness statements served pursuant to a judicial direction and
affidavits.” (My emphasis). (citation omitted)
8 I am not satisfied that the affidavit was read into evidence. It appears, from the
order, that the matter was dealt with by consent before the affidavit was read into
evidence. Nevertheless, I accept it was voluntarily filed . It was filed in support of
an application by ASIC. The affidavit was not produced or filed under compulsion.
4
 Home Office v Harman [1983] 1 AC 280
5
 [2009] VSC 157 (J Forrest J)
6
Ibid at [7]  3 T0252
It was prepared and filed pursuant to ASIC’s duty and obligation to enforce the
provisions of the Corporations Act 2001 and protect the public accordingly.
9 I can see no good reason why the disclosure of this affidavit, or its further use in
proceedings in the Federal Court, is prejudicial to any party. Accordingly, I will
give leave to Mr Mircevski to uplift the affidavit from the court file, copy it and use it
in the Federal Court. I will make orders accordingly.

Storm Financial/ Class Action/Macquarie Bank, Bank of Queensland, Commonwealth Bank

Examination/ Abuse of process/Valofo,/ Sheahan & Lock as Liq of Valofo Pty Ltd (in liq) [2010] NSWSC 1255

The Judge referred to comments in Valofo Pty Ltd (in liq) [2010] NSWSC 1255:
" ... whether or not liquidators have abused the process of an Examination Summons depends upon the same considerations as to whether they have abused any other litigious process which they might have commenced in the course of a liquidation: is the liquidator using the process, whatever it is, for a purpose for which it was not intended or designed or does the liquidator propose not to carry that process to its conclusion, but simply to use it as a means of coercion or to achieve a collateral purpose?"
and concluded that “in my view, what occurred in this case does not begin to approach an abuse of process”. 

	Valofo, In the matter of - Sheahan & Lock as Liq of Valofo Pty Ltd (in liq) [2010] NSWSC 1255
	HEARING DATE(S) :	22 October 2010
	JUDGMENT DATE :	22 October 2010
	JURISDICTION :	Equity Division Corporations List
	JUDGMENT OF :	Palmer J
	EX TEMPORE JUDGMENT DATE :	22 October 2010
	DECISION :	Application dismissed.

	CATCHWORDS :	CORPORATIONS – EXAMINATION – ABUSE OF PROCESS – whether issue and maintenance of examination summons was designed to coerce applicant into settling proceedings – whether examination summons should be set aside as abuse of process.
	LEGISLATION CITED :	Corporations Act 2010 (Cth) – s 596B
	CATEGORY :	Procedural and other rulings
	CASES CITED :	Londish v Sheahan [2010] NSWSC 337 Williams v Spautz (1992) 174 CLR 509
	PARTIES :	John Sheahan & Ian Lock as Joint and Several Liquidators of Valofo Pty Ltd (in liq) (Plaintiffs/Respondents) Ross Edward Seller (Applicant)
	FILE NUMBER(S) :	SC 2010/152694
	COUNSEL :	D. Sulan (Plaintiffs/Respondents) T.D. Castle (Sol) (Applicant)
	SOLICITORS :	O’Neill Partners (Plaintiffs/Respondents) Atanaskovic Hartnell (Applicant)

2010/152694 Sheahan & Lock as Liq of Valofo Pty Ltd (in liq) JUDGMENT – Ex tempore 22 October, 2010 1 On 30 June 2010, the liquidators of Valofo Pty Limited procured the issue of a Summons to Mr Ross Seller under s 596B of the Corporations Act 2010 (Cth), to attend an examination on 25 August 2010 into the affairs of Valofo. 2 On 25 August 2010, Mr Seller’s examination was adjourned in order to enable him to apply to set aside the Examination Summons. Mr Seller now moves to set aside the Summons on the ground that it is an abuse of process. He says that the liquidators’ predominant purpose in issuing the Summons was, and is, to coerce him into accepting a settlement of litigation on terms dictated by the liquidators but not agreed by Mr Seller. 3 The relevant background to this application is set out in my judgment in earlier and different proceedings between some of the parties: Londish v Sheahan [2010] NSWSC 337. The parties to this application have requested that I hear it, notwithstanding my involvement in the earlier proceedings. 4 The relevant portions of my earlier judgment which give a background to this application are as follows: “10. Valofo is the sole unitholder of the Baltarna Trust which, in turn, is the sole unitholder of the Prime Index Lease Trust (“PILT”). PILT Nominees Limited is the trustee of PILT. The assets of PILT are a number of service stations which had been leased to Shell Petroleum. 11. Valofo is a wholly owned subsidiary of Londish Nominees Queensland Pty Ltd (“LNQ”) which is, in turn, a wholly owned subsidiary of Vesudi Investments Pty Ltd (“Vesudi”). The shareholders of Vesudi are (omitting a minor shareholder of no consequence) three companies holding roughly one-third of the shareholding each, namely Tiffany Properties Pty Ltd (“Tiffany”), Argendram Pty Ltd (“Argendram”) and Masalo Pty Ltd (“Masalo”). Argendram is controlled by Mr Peter Londish,Tiffany by Mr Sid Londish, and Masalo by Mr Bowman. 12. Mr Sid Londish and Mr Bowman, acting in concert through their companies, control Vesudi which, in turn, controls LNQ which, in turn, controls Valofo which, in turn, controls the Baltarna Trust, which is the sole beneficiary of PILT, which owns the service stations. 13. Mr Sid Londish and Mr Bowman say that PILT was established by the parties with the intention that, by the time the leases of the service stations to Shell expired, the mortgages on the properties would be fully paid out, the properties would be sold, the PILT trust would be wound up and the profits of the trust distributed to the Baltarna Trust which, in turn, would distribute 55% of the profits to its sole unitholder, Valofo, and 45% to interests associated with a Mr Crossman and a Mr Sellers, who were instrumental in setting up the investment scheme. The distribution of profits to entities controlled by Messrs Crossman and Sellers respectively was to be effected via the Baltarna Class Trust, which was to be a beneficiary of the Baltarna Trust. 14. It appears that by 2008 the mortgages on the service stations had been paid out. On 6 March 2008 Mr Seller, as appointor under the Baltarna Trust Deed, removed the Baltarna Class Trust as a beneficiary of the Baltarna Trust, leaving the whole of the beneficial interest in the Baltarna Trust assets in its sole unitholder, Valofo. 15. In May 2008 Mr Crossman commenced proceedings in this Court against PILT Nominees, the trustee of the Baltarna Trust, Baltarna Pty Ltd, and Mr Seller, claiming a declaration that the removal of the Baltarna Class Trust as a beneficiary of the Baltarna Trust was void and claiming orders for the removal of Baltarna as trustee of the Baltarna Trust and of PILT Nominees as trustee of PILT. 16. On 27 May 2008, Hamilton J granted interlocutory injunctions restraining PILT Nominees from dealing with the service stations. Notwithstanding this injunction, in June 2008 PILT Nominees borrowed $11.3M on the security of the service stations. The directors of PILT Nominees are Mr P. Londish and Mr Seller. Of the proceeds of the loan, about $5.3M was paid by PILT Nominees to Davlon Management (“Davlon”). Mr P. Londish is the sole director and beneficial shareholder of Davlon. 17. On 16 July 2009, by a resolution of the directors of Valofo, the company was placed in voluntary administration and Messrs Sheahan and Lock were appointed administrators. The directors of Valofo who passed the resolution were Mr Sid Londish and Mr Bowman. There is no doubt that Valofo was placed in administration in order that the administrators, with the benefit of litigation funding, could pursue Valofo’s rights, through its unitholding in the Baltarna Trust, to attack the transactions with the service stations which had been effected by PILT Nominees and to secure distribution of the sale proceeds of the PILT assets ultimately to Valofo, and thence to their own companies. … 20. On 11 November 2009, PILT Nominees placed the service stations in the hands of real estate agents for sale. 21. On 26 November 2009 Mr Sid Londish and Mr Bowman, as sole directors of Valofo, resolved to place it in voluntary administration and appointed Messrs Sheahan and Lock. Again, there is no doubt that the purpose of the appointment was to enable the administrators, with the benefit of litigation funding, to pursue Valofo’s rights to a distribution of the PILT assets and to attack the transactions effected by PILT Nominees.” 5 On 8 December 2009, Valofo commenced proceedings 2009/029165 against Mr Seller, PILT, Baltarna and Mr Peter Londish seeking, inter alia, payment into court of the balance of net proceeds of sale of the properties held by PILT and orders restraining the Defendants from dealing with the assets of PILT and the Baltarna Trust. Directions hearings in those proceedings were stood over on a number of occasions earlier this year because Mr Peter Londish challenged the appointment of Mr Sheahan and Mr Lock as liquidators of Valofo. That challenge was heard by me and dismissed on 28 April 2010: see Londish v Sheahan (supra). 6 On the same day, the liquidators gave instructions to their solicitors to procure the issue of a Summons for the examination of Mr Seller relating to the affairs of Valofo. Mr Seller does not deny that he is capable of giving information to the liquidators concerning the affairs of Valofo. As I have mentioned, he was a director of PILT Nominees and of the trustee of the Baltarna Trust, Baltarna Pty Ltd, and he was intimately involved in the transactions which are called into question by the liquidators in the proceedings in aid of which the examination is sought. 7 On 7 May 2010, the solicitors for the defendants in the Valofo proceedings requested settlement discussions and the liquidators agreed. On 13 May 2010, the liquidators' solicitors wrote to Mr Seller's solicitors in the following terms: “Our clients are prepared to meet with Peter Londish and Ross Seller, and their respective legal representatives, with a view to resolving any and all claims that the Company and/or its liquidators may have against those parties or their related entities. In this regard we assume that all parties are intimately familiar with the affairs of PILT, Baltarna and Valofo, and that we do not therefore need to articulate the contemplated claims that our clients propose to investigate and, if appropriate, pursue. Suffice to say that our clients’ starting position is that Valofo is entitled to at least $7.5 million, and that through the actions of one or more of PILT, Baltarna, Seller and Peter Londish those monies are not now readily available to the Company. In order to reach a global settlement of all matters, the Company will need to receive a substantial payment, which will then be applied by its liquidators in accordance with the provisions of the Corporations Act. Any settlement will necessarily deal with, inter alia, the following matters: 1. the debt of $419,222 owing to the Company by Feenix Investments Pty Ltd; 2. repayment of the $5.3/$5.5 million paid by PILT Nominees to Davlon Management Pty Ltd; 3. $3.34 million paid by PILT Nominees to Baltarna Pty Ltd, described as trustee commission; 4. the repayment of the ANZ facility of $4 million ($11.5 million less $7.5 million); 5. an account of the residual funds and assets held by PILT; 6. any alleged misappropriation of funds and breach of directors’ duties; 7. an account of the distribution of the PILT ANZ facility of $11.5 million; 8. an account of the PILT NAB facility and any distribution therefrom; 9. any outstanding costs orders. Your clients would be aware that our clients are fully prepared to pursue the Company’s entitlements through the Courts. Even a cursory investigation into our clients’ track record would reveal their expertise in relation to this type of litigation and their prospects of success. Your clients should be under no illusion that this is a matter which will simply go away. However, our clients are cognisant of the fact that if they proceed with examinations, and any resultant litigation, they may be required to obtain external litigation funding which would necessarily result in a significant part of any ultimate recovery going to a funder. It is also inevitable that there will be significant professional costs incurred during the course of any investigation and subsequent litigation, all of which will result in an ultimately diminished return to the Company’s stakeholders. Accordingly our clients believe that an opportunity exists now to resolve this matter for a significantly lower sum than if the matter is allowed to continue. We believe that this represents a genuine opportunity to your clients for an early resolution of all matters in dispute and look forward to meeting with a view to achieving such an outcome.” 8 A meeting between the parties and their representatives took place on 28 May 2010. The possibility of a settlement of the liquidators' claims against Mr Seller was discussed. The liquidators said that they wished to have further information from Mr Seller about the borrowing by PILT of $11.5 million from ANZ Bank and about the transaction between PILT and Davlon. 9 On 2 June 2010, the liquidators sent a request to Mr Seller's solicitors seeking the provision of specified information. There was no response. 10 On 25 June, the liquidators' solicitors emailed Mr Seller's solicitors, enquiring whether Mr Seller was still interested in settlement discussions and enquiring further whether the solicitors had instructions to accept service of an Examination Summons to be issued to Mr Seller. The Examination Summons was in fact issued on 30 June 2010. 11 After some delay, Mr Seller's solicitors responded on 2 July to the request for information made on 2 June, but they provided only some of the information sought. 12 On 2 July the liquidators' solicitors sent to Mr Seller's solicitors a draft Deed of Settlement and release under cover of an email which made it quite clear that the liquidators' agreement to enter into the deed depended upon the provision by Mr Seller of the information which had been requested and the liquidators being satisfied by that information that the proposed compromise was acceptable. 13 On 22 July the parties and their solicitors attended a further meeting to discuss settlement. Further information was sought by the liquidators from Mr Seller as set out in an email from the solicitors sent later that day. 14 On 5 August Mr Seller provided certain information to the liquidators, but they regarded it as far from complete or satisfactory and they insisted on provision of all information requested. Mr T Castle, solicitor, who appears for Mr Seller, does not submit that the liquidators were not justified in insisting on receiving that information in order to enable them to determine whether to enter into a settlement with Mr Seller. 15 On 16 August Mr Seller's solicitors provided further information to the liquidators, but still it was not complete and the liquidators insisted upon all information requested being provided. 16 On 18 August the liquidators' solicitors sent the following letter to Mr Seller's solicitors: “We confirm that Mr Seller has not yet made available to us the books and records of PILT Nominees Pty Ltd, (and the PILT and Baltarna Trusts), as set out in our file note to you dated 22 July 2010. In relation to the proposed terms of the Settlement Deed, our understanding is that on the basis of the proposed deductions as advised by your client, a sale of the Property for $3.9 million (for example) would involve the following deductions: 1. National Australia Bank debt $1,975,176.81 2. Agents fees and commissions say $120,000.00 3. Payment to Radio Nominees Pty Ltd $219,000.00 4. Legal conveyancing costs $20,000.00 5. Chang, Pistilli & Simmons legal fees (estimate) $20,000.00 Total deductions $2,354,176.81 This would leave approximately $1.54 million available for Valofo. Obviously if the sale is for a price less than $3.9 million, the return to Valofo will reduce accordingly. This is not an acceptable outcome for Valofo. We note that at the conference with your client at our offices on 28 May 2010, a figure of $2 million was the sum advanced by Mr Seller as being the likely net outcome for the Company after the sale of the Property and a vesting of the remaining trust assets. Is PILT in possession or control of any other funds or assets other than the Davlon Management loans? We are instructed that if Mr Seller is not able to guarantee a net return to Valofo of $2.0 million from the sale of the Property, then the arrangements are not acceptable. The obvious source of any additional funds, is a return of a portion of the Trustee’s fees and Manager’s fees apparently paid from trust funds. We await your response to this letter, however we are instructed to: 1. proceed with Examination Proceedings listed for hearing on 25 August 2010; and 2. call upon the outstanding Orders for Production issued upon your clients at the production hearing of 24 August 2010.” 17 On 23 August Mr Lock had a telephone conversation with Mr Seller which Mr Seller has recorded in a file note. Mr Lock complained of delay in settlement discussions and in the provision by Mr Seller of the information which the liquidators had requested. Mr Lock and Mr Seller discussed a figure which the liquidators might accept for a full release of their claims against Mr Seller. 18 Mr Seller said that he could not agree to an exact figure for settlement because the amount of the settlement figure depended upon what sale price was achieved for the only remaining asset of PILT. According to Mr Seller, Mr Lock responded: “We will come after you, you can put money in we know all about you and how you are being pursued by the ATO and Wickenby, we believe you have money overseas and we want to know all about that. Unless you give us a resolution and certainty that’s what we will do as well as an application for vesting.” 19 “Wickenby” is a reference to the code name of a well-publicised investigation by the Australian Taxation Office into alleged tax frauds said to involve Mr Seller, concerning transactions completely unrelated to Valofo and its affairs. 20 Mr Lock denies that he made a statement to Mr Seller in the terms which Mr Seller alleges. Mr Lock says that he was well aware that "Wickenby" was irrelevant to an examination of Valofo's affairs and he says that he had instructed examining counsel not to refer to it. 21 Mr Lock admits that he referred to “Wickenby” in his conversation with Mr Seller, but he says that he did so in the course of telling Mr Seller that he knew that Mr Seller was involved in a large scale investigation by the ATO concerning funds kept overseas and he had taken into account difficulties which might be encountered in recovering the full amount of any judgment against Mr Seller in deciding whether it was worthwhile to pursue settlement discussions which could at least ensure receipt of a certain sum in the liquidation, even if that sum was smaller than the amount of a judgment, if the litigation had proceeded to its end. 22 I accept Mr Lock's evidence. First, it is inherently probable. Both Mr Lock, an experienced liquidator, and Mr Seller, who is a solicitor and a sophisticated tax adviser, must have known that the liquidators could not even have begun to raise “Wickenby” in Mr Seller's examination for the purpose only of embarrassing him publicly. The Registrar conducting the examination would have immediately stopped such a line of questioning as irrelevant and an abuse of process. A threat by Mr Lock to raise “Wickenby” in the examination would have been seen instantly by Mr Seller as utterly empty. 23 It is true that Mr Seller has not been cross examined in this application but that does not mean that I must accept his evidence without question. I am able to assess the inherent probability of Mr Seller's evidence, having regard to the other evidence in the case. 24 A second reason I accept Mr Lock's evidence is that, having regard to all of his evidence, both in chief and in cross examination, none of which has been shaken in cross examination, I accept him as a witness of credit who is doing his best to give a careful and correct account of what he recollects of his conversations with Mr Seller. 25 A third reason is that in any event, even if one accepts Mr Seller’s account of the conversation, Mr Lock did not threaten to raise “Wickenby” in the examination as a means of embarrassing Mr Seller publicly. All Mr Lock said was that he knew about “Wickenby” and that Mr Seller had funds overseas, which he could utilise in a settlement or to meet a judgment. 26 Mr Castle, who has argued the case for Mr Seller most ably, submits that I should find as a fact that the liquidators procured the issue of the Examination Summons and maintained their intention to proceed with it for an improper purpose, so that the Examination Summons should be set aside as an abuse of the court's process. As I have earlier noted, that improper purpose is said to be to coerce Mr Seller into agreeing to terms of settlement with which he otherwise would not have agreed. 27 What is an improper purpose constituting an abuse of the Court's process is authoritatively discussed in Williams v Spautz (1992) 174 CLR 509. The relevant proposition is set out in the headnote as follows: “Proceedings are brought for an improper purpose and thus constitute an abuse of propose where the purpose of bringing them is not to prosecute them to a conclusion, but to use them as a means of obtaining some advantage for which they are not designed or some collateral advantage beyond what the law offers. An improper act by the party instituting the process is not an essential ingredient in the concept of abuse of process.” 28 It is not in doubt in these proceedings that Mr Seller is capable of giving information relevant to the examinable affairs of Valofo. It is not in doubt that, if the liquidators of Valofo wish to continue with the proceedings which they have commenced, then the information which Mr Seller could give could be of material assistance in prosecuting that litigation. As I have said, it could not be submitted that the issue of the Examination Summons to Mr Seller is, on its face, an abuse of process because it could not achieve a legitimate purpose in the conduct of the litigation which the liquidators have commenced. 29 However, what is said is that the Court should find as a fact that the Summons was issued and, as it were, held like the sword of Damocles over Mr Seller's head by the liquidators in order to pressure him into agreeing to the terms of settlement which the liquidators sought to impose upon him. If such a purpose was found as a fact to be the purpose or the predominant purpose of the liquidators, then, even though the issue of the Summons in itself could be supportable as a legitimate exercise of the liquidators' power, the purpose for which that power was exercised would be so improper as to lead to the conclusion that the process was an abuse of process. 30 I am very far from satisfied that the liquidators’ predominant intention in issuing and proceeding with the Examination Summons was to use the threat of the examination to procure Mr Seller's agreement to terms of settlement to which he otherwise would not have agreed. I accept that the liquidators had in mind that, while settlement negotiations could be pursued, they should also proceed with the litigation in the event that the settlement negotiations came to nothing. 31 The fact that a party to litigation takes a step in prosecuting that litigation while settlement discussions are continuing does not, in itself, constitute an abuse of process even though taking that step has the effect of putting some pressure on the other side to come to agreement or else join battle in Court. Settlement discussions during the course of litigation is commonplace in litigious life. Mr Seller must have been aware of that commonplace by reason of his own professional experience. 32 I accept the liquidators' evidence that they were not persuaded that Mr Seller was entirely serious in the conduct of settlement negotiations by reason of his delay in providing the information which they sought. It took a letter from the liquidators' solicitors, enquiring as to whether Mr Seller was still serious about negotiation and a statement that an Examination Summons was about to be issued to provoke any response from Mr Seller through his solicitors. Although Mr Seller seeks to characterise that letter as a threat, in my opinion it is no more than a reminder that the settlement negotiations should proceed satisfactorily or else the parties should simply get on with the litigation. 33 Mr Castle urges that a liquidator, who has in his armoury of litigious weapons the process of examination, is in a special position distinct from that of other litigants. He says that how an examination is used or whether it is used against a defendant in proceedings brought by a liquidator can impact upon the process of settlement discussions and that a liquidator should be extremely careful in the way that he or she proceeds with examinations when a settlement discussion is in progress. 34 I do not accept that liquidators are under any special constraints in the way they conduct their litigation in terms of use of the examination process. It is certainly true that the examination process is a benefit accorded to liquidators which is not enjoyed by other litigants, but that benefit is conferred by statute because of the special difficulty in which liquidators are placed in investigating a company's affairs and deciding whether claims against third parties should be brought. Liquidators have no direct knowledge of a company’s affairs by reason of their own involvement as officers of the company. They are given the examination process as a means of finding out information, particularly information which may assist in prosecuting claims against third parties. 35 It seems to me that whether or not liquidators have abused the process of an Examination Summons depends upon the same considerations as to whether they have abused any other litigious process which they might have commenced in the course of a liquidation: is the liquidator using the process, whatever it is, for a purpose for which it was not intended or designed or does the liquidator propose not to carry that process to its conclusion, but simply to use it as a means of coercion or to achieve a collateral purpose? 36 In the circumstances of this case I am, as I have said, not at all persuaded that the liquidators' purpose was to coerce Mr Seller into agreeing to terms to which he otherwise would not have agreed. It seems to me that all of the communications between the parties, including the telephone conversation between Mr Lock and Mr Seller on 23 August, shows that all the liquidators were doing was to say to Mr Seller that, unless he provided the information sought promptly and unless the settlement discussions proceeded satisfactorily, they would not delay any further and would simply press ahead with their litigation against him, employing, in that process, the legitimate means of investigation afforded by the Examination Summons. 37 For those reasons, I am not satisfied that the liquidators have been guilty of any abuse of process as alleged. The application is dismissed. 38 The liquidators seek costs of and incidental to this application on the indemnity basis. They point to some correspondence in which they offered to compromise this application on the basis that the interlocutory process of Mr Seller would be dismissed with each party to pay its own costs. I do not think that that circumstance requires the imposition of an indemnity costs order against Mr Seller. 39 Mr Seller’s case was properly arguable and, indeed, it has been well argued by Mr Castle. Mr Seller was justified in proceeding on the basis that he wished the Court to determine his application on the merits. Having failed, Mr Seller will now have to bear the liquidators' costs of and incidental to the application on the party/party basis. 40 Those costs should include not only any costs of appearances in relation to this application on days prior to today, including the costs of the oral application for adjournment of the Examination Summons made to Barrett J on 25 August 2010, but they should also include any costs of and incidental to the examination of Mr Seller thrown away by reason of the successful adjournment application. 41 What amounts are included in costs thrown away will be for the costs assessor to determine. I do not attempt now to resolve any issues which may arise as to whether any particular element of costs thrown away is properly included in the costs order. 42 Therefore, the order of the Court as to costs is that Mr Seller will pay the liquidators' costs of and incidental to this application, including costs thrown away by reason of the adjournment of the examination on 25 August. – oOo –

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Examination summons/ Abuse of process/Mulsanne Resources Pty Ltd [2013] NSWSC 359

by Michael Murray | Apr 19, 2013

Company officers have been unsuccessful in challenging s 596A examination summonses issued by liquidators as being abuses of process. It was claimed that the summonses were being used as a threat to force the resolution of settlement negotiations.

Justice Brereton said that
“the fact that a party to litigation takes a step in prosecuting that litigation while settlement discussions are continuing does not constitute an abuse of process, even though that step has the effect of putting pressure on the other side. To the contrary, such circumstances are commonplace in liquidation".
The Judge referred to comments in Valofo Pty Ltd (in liq) [2010] NSWSC 1255:
" ... whether or not liquidators have abused the process of an Examination Summons depends upon the same considerations as to whether they have abused any other litigious process which they might have commenced in the course of a liquidation: is the liquidator using the process, whatever it is, for a purpose for which it was not intended or designed or does the liquidator propose not to carry that process to its conclusion, but simply to use it as a means of coercion or to achieve a collateral purpose?"
and concluded that “in my view, what occurred in this case does not begin to approach an abuse of process”. 

The Judge ordered the unsuccessful applicants to pay costs of the liquidators on an indemnity basis.
 See In the matter of Mulsanne Resources Pty Ltd [2013] NSWSC 359.

Supreme Court New South Wales

Medium Neutral Citation

In the matter of Mulsanne Resources Pty Ltd [2013] NSWSC 359

Hearing Dates

Tuesday 12 March 2013

Decision Date

12/03/2013

Jurisdiction

Equity Division - Corporations List

Before

Brereton J

Decision

Application to stay examinations dismissed with costs

Catchwords

CORPORATIONS - EXAMINATION - ABUSE OF PROCESS - whether conduct of examination had become an abuse of process.

Legislation Cited

(Cth) Corporations Act 2001, s 596A

Cases Cited

In the matter of Valofo - Sheahan & Lock as Liq'r of Valofo Pty Ltd (in liq) [2010] NSWSC 1255
Milner as Liquidator of DW Marketing Pty Ltd [2009] BSC 663

Category

Interlocutory applications

Parties

Nathan Leslie Tinkler (First Applicant)
Troy Allan Palmer (Second Applicant)
Matthew Thomas McClelland Keen (Third Applicant)
Amy Louise Hyde (Fourth Applicant)
Proper Officer of Aston Resources Investments P/L (Fifth Applicant)
Blackwood Corporation Ltd (Plaintiff)
Mulsanne Resources P/L (in liq) (Defendant)
Robyn Louise Duggan and John Melluish as liquidators of Mulsanne Resources Pty Ltd (Respondents)

Representation

Solicitors:
DLA Piper Australia (Applicants)
Clayton Utz (Respondents)

Counsel:
A Leopald SC w V Whittaker (Applicants)
C R Newlinds SC w D Sulan (Respondents)

File Number(s)

2012/ 296966

Judgment (ex tempore)

1HIS HONOUR: The present respondents, Robyn Louise Duggan and John Melluish, are the joint and several liquidators of the company Mulsanne Resources Pty Ltd, which was wound up by order of the Court made on 20 November 2012. On 7 February 2013, the liquidators procured examinations summonses to be issued, pursuant to (Cth) Corporations Act 2001, s 596A addressed to four examinees who were officers of the company, namely the first applicant Nathan Leslie Tinkler, the second applicant Troy Allan Palmer, the third applicant Matthew Thomas McClelland Keen, and the fourth applicant Amy Louise Hyde. The examination summonses were returnable on 8 March 2013, with further days appointed for the examinations on 14 and 15 March 2013. When the summonses were called on at 11am on 8 March, they were stood down until 2pm. At 2pm, the examinees foreshadowed the present application and obtained an adjournment of the examinations in aid of it. Pursuant to directions then made, by interlocutory process filed on 8 March 2013, the applicants claim orders staying the examinations. However, a draft minute of order has been handed up today which proposes orders in narrower terms, as follows:

1. That all extant summonses and orders in these proceedings be stayed until the solicitor for the Applicants (that is, the Applicants in the substantive proceedings), or a successor to the present solicitor for the Applicants, delivers to the Registrar of the Equity Division a signed undertaking that neither she (or he) nor anyone assisting her (or him) will represent Blackwood Corporation Limited (or any of its controlled entities) or Noble Group Limited (or any of its controlled entities) in any negotiations or communications concerning the examinations, or documentary production, in these proceedings.

2. A copy of any such undertaking is to be served on the solicitors for the examinees on the same day that it is delivered to the Registrar.

2The essential facts may be shortly summarised. The principal and sole external creditor in the liquidation is Blackwood Corporation Ltd, for whom the law firm Clayton Utz, and in particular Ms Jennifer Ball, acts. Its majority shareholder is a company called Noble Group Limited, for whom Clayton Utz and Ms Ball also act or have acted. Noble and its associates hold 51% of the shareholding in Blackwood.

3Blackwood is apparently a creditor of Mulsanne to the extent of $28.4 million, pursuant to a share placement agreement. It was on that debt that Mulsanne was wound up. The other creditors of Mulsanne amount to about $31,000 in all, and are associates of Mulsanne under the control of Mr Tinkler.

4Blackwood has funded the liquidator to conduct the examinations, and the liquidator has retained Clayton Utz to act for it. Although another lawyer, Mr Moriarty at Clayton Utz, plainly has a role, it is also plain that Ms Ball acts for the liquidators in connection with the examinations.

5On 6 March 2013 - at, it would seem, 2.32am - Andrew Travis of Holman Fenwick Willan Singapore, solicitors acting for the Tinkler interests, sent an email to Mr Moriarty at Clayton Utz, on which Ms Ball was one of several cc addressees, attaching a draft "umbrella deed" for review and comment. That draft deed contemplated that another Tinkler company, called Cayenne would make an offer to acquire the shares in Blackwood, conditional upon satisfaction of the condition precedent that certain orders be made in the winding-up proceedings by 8 March 2013 "and prior to the commencement of any public examinations pursuant to the examination summonses", namely, that the proceedings be dismissed, the examination summonses dismissed and the orders for production set aside. In addition, the draft deed provided for the release by Blackwood and discharge of Mulsanne and associates from all actions, suits, claims, demands and other liabilities which Blackwood now has or may have against them, including the debt which founded the winding-up proceedings, the winding-up proceedings, and the share purchase agreement. The covering email specified that the actions the umbrella deed "captured" included:

1. Ensuring the examinations do not proceed;

2. Providing releases; and

3. Governing the automatic launch of the bid.

6On 7 March, at 1.15pm, Mr Moriarty responded to one Mr Gordon, who was apparently also acting for the Tinkler interests, indicating that the Blackwood board could not accept the proposal in its current form but expressing the position that the board was minded to accept an alternative proposal which included:

3. The current proceedings would be stayed on signing of the documents until completion of a successful bid or successful exercise of the security. Blackwood will also consider dismissing the proceedings on signing of the documents if the terms and strength of the security are of sufficient comfort.

7On 7 March, at 6.05pm, Mr Gordon responded to Mr Moriarty, with a copy inter alia to Ms Ball:

We are happy to try to make this work and would therefore ask you to have the board consider, as quickly as they can, the following:

...

2. BWD confirming in writing (and procuring that the liquidator or its lawyers confirms the same) that the proceedings shall be adjourned until 14 March 2013 (the next date set aside) in order for us to document the transaction including the provision of the bank guarantee/escrow account. Such confirmation from the liquidator (or its lawyers) must also outline that based on the agreed adjournment that the liquidator (or its lawyers) is/are aware and agrees:

(a) that Nathan, Amy, Troy and Matt shall not be required to attend the court proceedings and shall not be called; and

(b) that the production order's requirements for tomorrow shall be adjourned, by consent, until 14 March 2013.

8The document then set out terms of an alternative proposal.

9Communications continued throughout the evening in respect of the alternative proposal and various aspects of it. On 7 March, at 7.28pm, Ms Ball sent an email to Mr Gordon in the following terms:

I have had the opportunity to have a detailed discussion with the Blackwood board ("board")and obtain instructions with respect to your clients' offer.

The board's position is as follows:

1. Not willing to formally consider your clients' proposal until we see evidence of your clients' ability to deliver 15m cash or guarantee on satisfactory terms to the board.

2. Subject to (1), the board is willing to consider standing the examinations down to 2pm tomorrow, provided you can convince our clients that the above cash guarantee will be in place ... prior to the recommencement of proceedings at 2pm tomorrow.

3. The current orders regarding production of documents under the orders of production to remain and are not to be vacated.

...

10Although there is some other evidence, essentially the applicants' case is that enumerated in paragraph (2) of that email which has the effect of converting the examination proceedings, which to that point are not said to have been without proper basis or foundation, into an abuse of process. As I understand the applicants' case, it is in essence that by engaging the same solicitor as Blackwood and empowering that solicitor to make decisions concerning the conduct of the proceedings, the liquidator enabled the examination effectively to be "hijacked" by Blackwood for the purposes of using the spectre of the impending examinations as an inducement (or "leverage") to succumb to Blackwood's terms.

11This needs to be seen in the following context. First, it is not suggested that in their inception and initiation the examination summonses constituted an abuse of process. In other words, there is no suggestion that when issued they were not issued bona fide for the proper purposes contemplated by Corporations Act, s 596A, and the associated provisions of the Act. What is said is that they became an abuse of process because of the manner in which an adjournment was offered as an inducement or in connection with a settlement offer.

12Secondly, the idea that the examinations should not take place, as part of an overall commercial settlement, emanated not from the liquidator, nor from Blackwood, but from the examinees. The proposal in the umbrella deed emanated from the examinees. The stipulation in the email of 6.05pm that the examinees not be required to attend the court proceedings and the production orders be adjourned by consent until 14 March emanated from the examinees. In those circumstances, it seems at least curious that it would be suggested that acceding to such a proposal, albeit for a significantly shorter time than the examinees proposed, would have the effect of converting the proceedings into an abuse of process.

13Thirdly, what was involved was a very minor deviation from the regular progress of the examination, namely, deferring it for a few hours from the appointed time of 11am, until 2pm. It is not as if the liquidator's solicitors embarked on a course of adjourning the examinations indefinitely while it was seen whether a settlement resulted; rather, the liquidator acceded to a very minor deferral of a few hours.

14Fourthly, the evidence establishes that the examination of Mr Tinkler at least could not have gone ahead in any event, because, despite the command of the summons, he was not even in the country.

15Fifthly, the proposed arrangement, if it came to fruition, would not have been without benefit to the company in liquidation, as it would have involved the release of Blackwood's debt (upon which the company had been wound up) and, at least in terms of the offer, the dismissal of the winding-up proceedings. Perhaps what was really contemplated was that, with the release of the Blackwood debt, the company would be in a position to have the winding-up terminated. In an event, there would have been benefit to the company in the release of the Blackwood debt.

16But most importantly, I do not subscribe to the view that the circumstance that the pendency of an examination may impose pressure on an examinee, which that examinee may wish to avoid by entering into commercial negotiations with the liquidator (or the creditors) converts the examination procedure into an abuse of process. In almost every case, an examinee will prefer not to be examined. Even where the examinee has nothing to fear from the examination in terms of what it might expose, it will be disruptive to the examinee in terms of time and cost. There will, therefore, almost always be some reason why an examinee may be interested in exploring a commercial alternative.

17The exploration of a commercial alternative may often make an adjournment desirable or necessary. That does not for a moment mean that the use of the procedure has thereby become improper or an abuse of process, any more than that the timing of steps taken in conventional litigation, which may have the effect of imposing deadlines or time pressures on another party, is improper.

18I have been referred by Mr Leopold, in his helpful submissions, to a judgment of the Supreme Court of Victoria (Gardiner AsJ) in Milner as Liquidator of DW Marketing Pty Ltd [2009] BSC 663, in which his Honour concluded that a letter written by the liquidator's lawyers to examinees which amounted, as his Honour put it, to a threat to use the examination provisions to cause expense and inconvenience to the examinees if their demand was not met, amounted to an abuse of process. That was in a context where negotiations had been on foot between the examinees, who were directors of the company, and the liquidator for some time, without success. The liquidator asserted that he had legitimate insolvent trading claims against the examinees. The letter specified various matters about which the examinees would be examined, including some going to possible criminal liability. Critically, the demand in the letter included amounts which would never have been recoverable against the directors, for such matters as the liquidator's legal costs of the liquidation and expenses.

19Mr Newlinds, on the other hand, referred me to the judgment of Palmer J of this Court in the matter of Valofo, Sheahan & Lock as Liq'r of Valofo Pty Ltd (in liq) [2010] NSWSC 1255, in which application was made to set aside examinations summonses as an abuse of process, the improper purpose being said to be to coerce the examinee into agreeing to terms of settlement with which he otherwise would not have agreed. Palmer J said:

29. However, what is said is that the Court should find as a fact that the Summons was issued and, as it were, held like the sword of Damocles over Mr Seller's head by the liquidators in order to pressure him into agreeing to the terms of settlement which the liquidators sought to impose upon him. If such a purpose was found as a fact to be the purpose or the predominant purpose of the liquidators, then, even though the issue of the Summons in itself could be supportable as a legitimate exercise of the liquidators' power, the purpose for which that power was exercised would be so improper as to lead to the conclusion that the process was an abuse of process.

30. I am very far from satisfied that the liquidators' predominant intention in issuing and proceeding with the Examination Summons was to use the threat of the examination to procure Mr Seller's agreement to terms of settlement to which he otherwise would not have agreed. I accept that the liquidators had in mind that, while settlement negotiations could be pursued, they should also proceed with the litigation in the event that the settlement negotiations came to nothing.

31. The fact that a party to litigation takes a step in prosecuting that litigation while settlement discussions are continuing does not, in itself, constitute an abuse of process even though taking that step has the effect of putting some pressure on the other side to come to agreement or else join battle in Court. Settlement discussions during the course of litigation is commonplace in litigious life. Mr Seller must have been aware of that commonplace by reason of his own professional experience.

20As His Honour points out, the fact that a party to litigation takes a step in prosecuting that litigation while settlement discussions are continuing does not constitute an abuse of process, even though that step has the effect of putting pressure on the other side. To the contrary, such circumstances are commonplace in liquidation. As His Honour also said:

35. It seems to me that whether or not liquidators have abused the process of an Examination Summons depends upon the same considerations as to whether they have abused any other litigious process which they might have commenced in the course of a liquidation: is the liquidator using the process, whatever it is, for a purpose for which it was not intended or designed or does the liquidator propose not to carry that process to its conclusion, but simply to use it as a means of coercion or to achieve a collateral purpose?

21Were it not for the inclusion of unsupportable elements in the demand, I would have expressed the respectful view that Milner was wrongly decided, but it may well be that the decision turns on the fact that the demand included sums that could never have been properly recoverable, which would have been enough to convert an otherwise unobjectionable procedure into an abuse of process. In any event, there is no correlation with that in the present case. A further distinction is that there is no suggestion that in Milner the proposal that the examination be relisted at a certain time emanated from, or as a result of entreaties made by the examinees. In this case, it is plain that the examinees wished the trouble and inconvenience of examination to be avoided if conceivably possible.

22In my view, what occurred in this case does not begin to approach an abuse of process. I order that the interlocutory process be dismissed with costs.

23As to the proceedings before the Registrar on Friday, in my view, the costs of those proceedings should be dealt with, at least in the first instance, by the Registrar. As to the present application, it seems to me that in circumstances where the proposal for the adjournment before the Registrar emanated from the examinees, for them then to assert that the liquidator's partial accession to that proposal converted the proceedings into an abuse of process, is sufficiently tenuous to justify an indemnity costs order.

24The costs that I have ordered be paid by the applicants to the respondents shall be assessed on the indemnity basis.

**********

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.