The NSW Supreme Court handed down a judgment in favour of Banton Group’s clients, Mr Kishore Matta and Avia Corporate FS Pty Ltd, which has paved the way for our clients to proceed with their proposed examinations of James Dampney, Peter Gothard and Stephen Parbery, the former administrators (Administrators) and (in the case of Mr Dampney and Mr Gothard) current liquidators (Liquidators) of the Jewel Fine Foods Group (Jewel Group).
The decision is In the matter of Jewel of India Holdings Pty Ltd  NSWSC 356.
The Jewel Group was founded in 1997 by Mr Matta and his wife and specialised in industrial scale food manufacturing. In 2019, the CBA appointed the Administrators and later, the Liquidators to the Jewel Group.
In November 2020, our clients applied to ASIC to be granted eligible applicant status to conduct examinations of the Administrators (ASIC Application). These examinations were sought for the purpose of investigating claims in relation to:
- The Administrators apparent failure to undertake appropriate steps in the sale of the business of Jewel Fine Foods.
- The Administrators apparent failure to investigate and prosecute potential unconscionable conduct and promissory estoppel claims against the Commonwealth Bank of Australia (CBA) on behalf of the Jewel Group.
The ASIC Application was approved in May 2021 and in July 2021. Banton Group applied on behalf of our clients to the NSW Supreme Court for examination summonses to be issued to the Administrators and for orders for production to be issued to the Administrators and the CBA (Examinations Application). The Examinations Application was granted by the NSW Supreme Court in August 2021.
The Motion to Dismiss
In August 2021, the Administrators filed a motion to set aside the examination summonses and orders for production, alleging that they were an abuse of process. The applicants’ fundamental contention was that, despite what is contained in the ASIC Application and Examinations Application, our clients sought the examination summonses for the predominant purpose of attempting to secure a position of commercial leverage in relation to potential claims that the Liquidators were pursuing against Mr Matta. The applicants also sought to suggest that our client’s engagement of Banton Group was to strategically serve this improper purpose.
In reaching the decision, Justice Williams, referred to the public interest in the external administration of a company that underpins the purpose of s 596A and considered that this was relevant to not only determining whether an examination summons was sought for permitted purpose but also the question whether circumstances that may be burdensome for an examinee are capable of constituting unjustifiable oppression or bringing the administration of justice into disrepute. Ultimately, the Court held that the Liquidators had failed to establish that the examination summonses are an abuse of process and in reaching this decision, accepted Banton Group’s submission that the notion that our clients’ predominant purpose was to secure commercial leverage against the Liquidators was “fanciful”. In considering the evidence leading to this point, Justice Williams also concluded that Banton Group’s engagement did not give rise to an inference that Mr Matta had an improper purpose but rather merely gave rise to an inference that: “Mr Matta had greater confidence in Banton Group’s ability to represent his interests in relation to the external administration of the Jewel Group going forward.”
The Administrators also challenged the examination summons and orders for production with arguments that were based on cost and disruption, and utility of the examinations. The Administrators alleged that compliance with the examination summons would result in a substantial and costly intrusion into the external administration. However, Justice Williams rejected submissions that it would be oppressive for the Liquidators to incur any costs in complying with the examination summons. In reaching this decision, her Honour noted that each of the liquidators were only required to initially prepare for an attend one day of examinations and in accordance with the decision in Kimberley Diamonds Limited v Arnautovic (2017) 252 FCR 244, current and former administrators and liquidators are in no different position than any other current or former officer liable to be summoned for examination under s 596A.