Eddie and others are being sued for alleged insolvent trading in the Federal Court (“FC”).
The liquidators also want to publicly examine him and others in the Supreme Court (“SC”). Eddie’s not happy.
The liquidators argue that the public examination is required because they do not know whether Eddie has sufficient assets to meet the insolvent trading claim, if the liquidators were successful.
This is because the real property they located is owned jointly between the defendants, with a mortgage granted to a third party related party.
Eddie and others argue that the summonses for public examination should be set aside.
The SC, in dealing with Eddie’s arguments, finds that:
1) Eddie, being an officer of the Company, is mandatorily examinable (section 596A);
2) the expression ‘Court’ in section 596A grants the SC jurisdiction, so the SC is an appropriate forum and is permissible;
3) the argument that the liquidators would be at a forensic advantage is without authority;
4) it is permissible under section 597 Corporations Act; and
5) various cases (Meteyard v Love; Re Hugh; Grosvenor Hill) provide that ‘the worth’ of a potential defendant is examinable.