Liquidators conducting public examinations under s 250 (and equivalent provisions) are not confined to matters in the liquidator's further report but may examine on any matter within the general topics described in the section, subject to the court's discretion to control the examination.
Later decisions that cite Rees v Kratzmann
Decisions cited by Rees v Kratzmann
REES v. KRATZMANN (1965) 114 CLR 63
Companies
High Court of Australia
Barwick C.J.(1), Kitto(2), Taylor(3), Menzies(4) and Windeyer(5) JJ.
CATCHWORDS
Companies - Winding up - Public examination concerning the promotion, formation, trade, dealings, affairs or property of the company - Whether examination limited to matters in liquidator's report - The Companies Act of 1961 (Q.), ss. 235*, 250**.
HEARING
Brisbane, 1965, June 4, 7;DECISION
September 9.2. Sub-section (4) enforces answers by the examinees to questions upon and related to these topics, but the legislature has reposed in the judge presiding at the interrogation, the traditional judicial function of ensuring that the examination is not made an instrument of oppression, injustice, or of needless injury to the individual. (at p66)
KITTO J. In the winding-up of a company by the Court under the provisions of The Companies Act of 1961 (Q.) the liquidators, having made their preliminary report in compliance with s. 235 (1) of that Act, made a further report under s. 235 (2), stating that in their opinion there had been a concealment of material facts by one Kratzmann, a former director of the company, in relation to the company since its formation. The report dealt in some detail with a number of specific matters, and in reference to answers which Kratzmann had given to a written requisition presented to him by certain creditors of the company the opinion was expressed that he had concealed material facts knowing that the purpose of the requisition was to ascertain the creditworthiness of the company. (at p67)
2. Upon the making of the further report, Philp J. ordered, pursuant to s. 250 and using the ipsissima verba of that section, that Kratzmann attend before the Court and be publicly examined as to the conduct of the business of the company and as to his conduct and dealings as an officer of the company. The examination was held before Philp J. himself. When it had proceeded a certain distance, counsel for the liquidators announced that he proposed to ask Kratzmann a question upon a subject which he conceded fell outside the matters referred to in the liquidators' further report. Counsel appearing for Kratzmann objected to the examination being allowed to extend beyond those matters, and Philp J. upheld the objection. In order to give the liquidators an opportunity to test the ruling, his Honour then made a formal order directing that counsel for the liquidators be not allowed to put the question, and that Kratzmann be not required to answer it, "on the ground that such question does not arise from the matters which are set out in the said report". His Honour gave the liquidators leave to appeal to the Full Court, and an appeal pursuant to that leave was taken. It was dismissed by Hanger and Lucas JJ., Wanstall J. dissenting. From the Full Court's order the liquidators now by special leave appeal to this Court. (at p67)
3. The point to be decided is one of general importance. Ever since company legislation in England first provided for the examination of persons before the Court in a winding-up, the Judges have been acutely aware of the possibility that grave and irreparable injustice may be done to a person by having him examined in public concerning his participation in the affairs of a company which has failed. At first the only provision that was made for examinations was the prototype of s. 249 of the present Queensland Act. In the absence of anything to require that an examination under that provision should be public, the courts held that save perhaps in exceptional cases it should be in private: see In re Property Insurance Co. Ltd. (1914) 1 Ch 775 . But in 1890 in England a new departure was made by the enactment of provisions from which the Queensland s. 250 is descended. These provisions were in s. 8 of the Companies (Winding-up) Act, 1890. The first two sub-sections, corresponding with sub-ss. (1) and (2) of the Queensland s. 235, made provision for a preliminary report and a further report by the Official Receiver. Then sub-s. (3) provided that the Court might, after consideration of any such report, direct that any person who had taken any part in the promotion or formation of the company, or had been a director or officer of the company, should attend before the Court and be publicly examined as to the promotion or formation of the company, or as to the conduct of the business of the company, or as to his conduct and dealings as director or officer of the company. There followed a number of other provisions of which it will suffice to mention those in sub-s. (6) that the Court might put such questions to the person examined as to the Court might seem expedient, and in sub-s. (7) that prior to the examination the person examined should be furnished at his own cost with a copy of the report, and that if he were in the opinion of the Court exculpated from any charges made or suggested against him the Court might allow him such costs as the Court in its discretion might think fit. (at p68)
4. On these provisions there was a series of decisions leading up to and following upon the decision of the House of Lords in Ex parte Barnes (1896) AC 146 . The question in that case was whether the words "after consideration of any such report" referred to the preliminary report as well as the further report. They were held to refer only to the further report. It is not denied in the present case that the point must be taken as similarly settled in respect of the Queensland section. Ex parte Barnes (1896) AC 146 is relevant only for some of the reasoning by which the decision was reached. Lord Halsbury (1896) AC, at p 151 took as his starting point the fact that sub-ss. (2) and (3), the provisions for the further report and for the making of the order for the public examination, were obviously correlative. The consequences of this his Lordship took to be, on "the broadest possible view of any such legislation", that the examination was to be upon the subject which had been called to the attention of the Court by the report, and that therefore the person against whom the allegation was made in the report was the person to be summoned to answer upon that subject. The provision as to the furnishing of a copy of the report and as to costs in the event of exculpation seemed to his Lordship to show that the report must make a finding of fraud, whether in terms or by the finding of facts amounting to fraud, against an individual who was pointed out. Of course, his Lordship's use of the word "finding" meant, to use Lord Watson's words, the disclosure of a prima facie case of fraud on his part (1896) AC, at p 153 . Lord Herschell considered that the absence of any provision (such as existed under the private examination section) for a tender of expenses, and the existence of the provision for a person's getting a copy of the report at his own expense and for his being allowed costs in the event only of his exculpating himself from the charges, were intelligible if the person to be examined was a person inculpated by the report, but otherwise were unintelligible. His Lordship plainly enough shared Lord Halsbury's view that the subject of the examination was to be the allegation made in the report, for in reference to the provisions as to getting a copy of the report he said: "He(the person to be examined) must bear even the expense of knowing what he is to be examined about" (1896) AC, at p 154 . No different view was expressed by any other of their Lordships. (at p69)
5. The view had formerly prevailed that the Official Receiver's further report must have shown upon its face that some fraud had been committed but not necessarily that it had been committed by a particular person. It must logically have followed from this view of the section that an order for public examination might have been made against anyone within the description appearing in the section, at least where the report did not single out an individual. The classes of persons who may be ordered to attend for public examination under the Queensland Act are much wider than under the English Act of 1890, and that fact has been relied upon as making inapplicable to the Queensland Act the observations, which Lord Halsbury and Lord Herschell made as to the subject to which the examination was to be directed. This makes it important to point out that, even while the English Courts were taking the wide view which Ex parte Barnes (1896) AC 146 corrected, they seem never to have doubted that the public examination which was authorized by the making of a report was a public examination upon the subject of the report. Neither the generality of the power given to the Court to put such questions as might seem expedient nor the width of the general topics described at the end of sub-s. (3) was treated as enough to show that the examination might extend beyond what was relevant to the matter which the report had revealed and the Court had taken into consideration in deciding whether the examination should be ordered. (at p70)
6. A reading of Lord Lindley's judgment in In re Great Kruger Gold Mining Co.; Ex parte Barnard (1892) 3 Ch 307 will show how jealously the Courts considered that they ought to interpret a provision for public examination. Lord Lindley said: ". . . the power given by the Legislature under this section is a very stringent power, and requires to be construed and limited according to those principles of justice which underlie everything in this country" (1892) 3 Ch, at p 328 . It may be asked why, then, did the courts hold, as they did, that the requirement of the section that the Official Receiver should have given it as his opinion that a fraud had been committed meant no more than that he should have expressed the opinion that on the information before him a prima facie case of fraud was made. The answer is significant for the present problem. It is found in the judgment of Vaughan Williams J. in In re General Phosphate Corporation (1895) 1 Ch 3 , where he said: "Now, the object of the examination is manifestly to ascertain whether such fraud has been committed. It is obvious, therefore, that one should not read the section so as to make the conclusion in fact that such a fraud has been committed a condition precedent to the order for examination" (1895) 1 Ch, at p 6 . (at p70)
7. That that was the object of the examination was, as I have shown, to be re-affirmed by Lord Halsbury and Lord Herschell in Ex parte Barnes (1896) AC 146 . The judgments in the subsequent case of In re Civil, Naval and Military Outfitters Ltd. (1899) 1 Ch 215 proceed plaintly on the same footing. The Court of Appeal there held that to enable the Court to order the public examination of a person the Official Receiver's further report must not only state the opinion that fraud had been committed but must also state facts showing a basis for the opinion "and warranting the judge" (I quote the headnote) "in calling upon the person implicated for an explanation". The Judge of first instance, Wright J., likened the Official Receiver, where forming an opinion under the section, to a magistrate who has to consider whether he will commit persons for trial. The judgment of Chitty L.J. contains this passage: "The object of the report is to raise a prima facie case of fraud - not a case which a man has to answer finally, but a case upon which a judge has to decide whether he is to undergo a public examination. And all that results from the public examination is that, as sub-s. 7 says, his answers 'may thereafter be used in evidence against him'. I do not see that the Act requires that the charge against him should be formulated in any strict and precise manner. But I think it is only fair - and the official receiver will no doubt in any future report bear this in mind - that he should endeavour to reduce to as precise a point as he can the nature of the charge" (1899) 1 Ch, at pp 234, 235 . Vaughan Williams L.J. dealt similarly with the nature of the report. The statement of the opinion, he considered must be "in such a shape that it can be said that there is a charge made against the person sought to be examined - a charge of such a kind that he can either exculpate himself or be incriminated" (1899) 1 Ch, at p 237 . Speaking of Ex parte Barnes (1896) AC 146 , he said: "The spirit of that decision is that you ought not to subject any one to a public examination unless you are satisfied on the report that the official receiver has come to the conclusion, and upon some substantial grounds, that a charge of fraud is disclosed by the facts against the person whom it is sought to examine - such a charge that he may understand what it is from which he will have to exculpate himself, and with which it is sought to incriminate him" (1899) 1 Ch, at p 240 . (at p71)
8. In the light of the views thus judicially expressed as to the object and scope of s. 8 of the English Act of 1890, it seems to me that if the question had arisen in England whether on a public examination ordered under that Act questions might be allowed which possessed no relevance to the charge made by the Official Receiver's further report the answer must have been an emphatic "No". I go so far as to say that even if none of the cases I have mentioned had been decided the very terms of the section would have demanded that answer, for unless the intention of the section were to authorize only an examination limited to matters relevant to the suggested fraud it would surely have been impossible to find any plausible explanation of the fact that the power of the Court to order the examination should have been made subject to the conditions precedent that a report should express an opinion that the fraud had been committed, and that the Court should ahve given consideration to the report. (at p71)
9. Yet the Queensland section, cast in the mould of the English section but with two additions made to it, is said to require an opposite conclusion. One of the additions is that the opinion of the liquidator which will support an order for a public examination may be either that a fraud has been committed or that a material fact has been concealed. The other is that not only the person or officer implicated in the charge, but also any other person within a wide variety of descriptions may be ordered to be examined. If the argument for the appellant is correct, the additions have turned the provision into one of a totally different character - have given it a function indistinguishable from that of s. 249 except that the examination is to be in public. To the question, why, if this be true, the old requirement of a specific charge in a further report of the liquidator has been retained, the only answer suggested is that the Legislature may have considered that whenever the liquidator reports that in his opinion some fraud has been committed, or some material fact has been concealed, by someone in the promotion or formation of the company, or by some officer in relation to the company since its formation, a case exists for the public examination of anyone within the new descriptions about anything at all provided it falls within the general category of the promotion or formation of the company, or the conduct of the business of the company or, in the case of an officer or former officer, as to his conduct or dealings as an officer. Anything less likely I really cannot imagine. To take a single illustration : suppose the liquidator reports that in his opinion a person, A, in the promotion of the company in 1930, concealed a fact X. According to the argument, that would suffice to authorize the Court to order the public examination of another person, B, who was not born until after 1930, as to a matter Y, entirely unconnected with the fact X, which arose in the conduct of the business of the company in 1960. It seems to be conceded on all hands that this would be absurd. If so, there must surely be some probability that the section is being misunderstood. The only answer offered by the appellant is that the Court has a general discretion and would use it to prevent an absurd result. This is no answer to the basic question: is it really true that a jurisdiction entrusted to a Court, expressly made conditional upon the liquidator's expressing a prima facie opinion that fraud or concealment of facts has occurred, is a jurisdiction to order a public examination having no necessary relation to the question whether the fraud or concealment has in fact occurred? The very width of the new categories of persons who may be examined throws into relief the improbability of such an intention. They include, in addition to "the person or officer", "any other person who was previously an officer of the company, including any banker, solicitor or auditor, or who is known or suspected to have in his possession any property of the company or is supposed to be indebted to the company, or any person whom the Court deems capable of giving information concerning the promotion, formation, trade, dealings, affairs or property of the company". Any or all of these may be publicly examined as to (i) the promotion of the company, (ii) its formation, (iii) the conduct of its business, or (iv) in the case of an officer or former officer, his conduct or dealings as an officer. But does this mean that within these exceedingly wide limits the examinations may roam at large, with no concern for relevance to the matters which the Court has been so carefully required to look for in the report and to take into consideration before ordering the examinations? (at p73)
10. The words decribing the mattes as to which a person may be publicly examined were in the English section of 1890. It was notwithstanding their presence that Lord Halsbury and Lord Herschell and Lord Lindley and the other great lawyers above-mentioned regarded an examination as directed to the subject-matter of the report. Why take the section of 1890, with its endowment of judicial exposition, and merely add to fraud the concealment of a material fact and make additional persons examinable if the intention is not that the report shall still be, as it always was, the place in which to find the subject of the examination identified? (at p73)
11. As if to put the matter beyond doubt, the addition of the new description of examinable persons has left standing, as the primary description, "the persons or officer". What person or officer? Obviously the one against whom the charge is made in the report. It is he who stands charged, throughout all the examinations. Is the section, then, to be so construed that the examinations may lawfully be allowed to wander off into any by-path concerning the conduct of the business of the company which the Court permits to be explored, unconnected with the charge though it be? If so, "those principles of justice which underlie everything in this country" (1892) 3 Ch, at p 328 must have lost some of their former persuasiveness. The section still presents those features which formerly marked it as a provision for the investigation of an antecedently defined charge. In my opinion that is still its character, and the consequence is that relevance to inculpation in respect of that charge must be observed as a limiting factor throughout the examinations. (at p73)
12. I have put this conclusion primarily upon the language of the section, seeking support in English decisions for the inference which in any case I should draw to the purposes for which the Act makes its provision for public examinations. I see the case as still another in the lengthening line of cases in which it has been proper to apply the principle of statutory construction that a provision conferring a discretionary power is subject to any limit which, though not specified, is indicated by the nature of the purposes for which examination of the Act reveals that the discretion is conferred : Water Conservation and Irrigation Commission (N.S.W.) v. Browning [1947] HCA 21; (1947) 74 CLR 492 ; Lloyd v. Robinson [1962] HCA 36; (1962) 107 CLR 142, at p 154 . (at p74)
13. In my opinion the judgment delivered in the Supreme Court by Lucas J., and concurred in by Hanger J. gives the section its true effect. I would dismiss the appeal. (at p74)
TAYLOR J. I am of opinion that s. 250 (1) of The Companies Act of 1961 (Q.) is couched in terms that do not admit of the limitation placed upon the operation of the section by the majority of the Full Court. I agree with the observations of Menzies J. which I have had the advantage of considering and I do not wish to add anything to them. (at p74)
MENZIES J. This appeal by special leave from an order of the Full Court of the Supreme Court of Queensland dismissing an appeal from Philp J. calls for the construction of s. 250 of The Companies Act of 1961 (Q.). On 28th February 1964 the appellants, as liquidators of N. A. Kratzmann Pty. Ltd., made a report under s. 235 (2) of the Act stating that in their opinion certain material facts in relation to the company since its formation had been concealed by N. A. Kratzmann, the company's former managing director. On 6th March 1964 Philp J., after consideration of this report, ordered that Kratzmann be publicly examined under s. 250 "as to the conduct of the business of the company and as to the conduct of the said Noel Austin Kratzmann and dealings as an officer of the company". On 13th May 1964, in the course of the public examination of Kratzmann under s. 250 before Philp J., the question was raised whether the witness should be compelled to answer questions outside the matters reported upon by the liquidators. After discussion, Philp J. refused counsel for the liquidators leave to ask Kratzmann a question relating to his conduct and dealings as an officer of the company but not arising from the matters set out in the liquidators' further report. Philp J. made it clear that his refusal to allow the question was based, not upon the discretion which he had under s. 250 to disallow particular questions, but upon a construction of the section limiting its operation to authorize examination only on matters arising out of the liquidators' further report under s. 235, sub-s. (2). The Full Court adopted this construction of s. 250 and accordingly dismissed an appeal by the liquidators. (at p74)
2. Section 250 is significantly wider than s. 270, the corresponding section of the Companies Act, 1948 (Imp.), which is based upon s. 8 of the Companies (Winding-up) Act, 1890 (Imp.) and to which further reference will be necessary. However, it appears to be accepted that the United Kingdom section does authorize "a roving inquiry, not confined to a predetermined issue, so long as it relates to 'the promotion or formation or the conduct of the business of the company', or as to the conduct and dealings of the person examined 'as officer thereof'" : Gore-Browne's Handbook on Joint Stock Companies, 41st ed. (1952) p. 721. The decision of the Full Court that an examination under s. 250 is limited to matters raised in the liquidators' report would give that section - notwithstanding its greater width - a narrower scope than that which practice, it seems, accords to s. 270 of the United Kingdom Act. (at p75)
3. Section 8 of the Companies (Winding-up) Act, 1890 was considered by the House of Lords in Ex parte Barnes (1896) AC 146 and, although the actual decision was simply that there could be no examination thereunder unless the Official Receiver had made a "further report" under sub-s. (2) thereof - a provision corresponding with s. 235 of the Queensland Act - members of the House of Lords did discuss s. 8 (3) generally. Thus, Lord Halsbury said : - "Now, in the first place, it is obvious to inquire what can be the sense or meaning of those provisions, unless they have reference to the report which calls attention to the fact that some person has committed a fraud in the promotion or formation of the company, or since the promotion or formation of the company. Those two provisions seem to be correlative. What is the sense or meaning of them unless they are correlative? And if they are, certain consequences are to follow. What are the consequences? At first sight one would say that, if the object is a public examination, and if the public examination is to be upon the subject which has been by the hypothesis called to the attention of the Court by any such report, the person against whom the allegation is made is naturally the person who is to be brought before the Court and examined in respect of it. I mean, the broadest possible view of any such legislation would at once suggest that the person who has been reported as guilty of fraud is to be examined, and he is to be summoned to answer upon the subject" (1896) AC, at p 151 and "My Lords, I confess I entertain not the smallest doubt that the meaning of this legislation is that, in order to give the Court jurisdiction to make such an order, there must be a finding of fraud, and a finding of fraud against an individual who is thereby made subject to being summoned before the Court, and is compelled to answer, whether the answer incriminates him or not, but, being exculpated, receives his costs" (1896) AC, at p 152 . Lord Watson said : - "I am also of opinion that the power committed to the Court by that sub-section has no application to any one of the persons therein mentioned who is not inculpated in this sense that a prima facie case of fraud on his part is disclosed by the further report" (1896) AC, at p 153 . Lord Herschell said : - "The only construction of the legislation that can make it reasonable is that no persons can be ordered to attend and be examined at their own expense but those who are prima facie inculpated" (1896) AC, at p 155 . The foregoing observations do, of course, indicate a close relationship between the "further report" and the subject matter of the examination but they do not deal with the point now under consideration and they were made with reference to legislation under which the person subject both to adverse report by the Official Receiver and examination by the Court was simply "any person who has taken any part in the promotion or formation of the company, or has been a director or officer of the company". It is also significant that, notwithstanding the remarks of the members of the House of Lords, the section which they discussed has not been regarded as limiting the examination of any person subject to examination to the fraud the subject of the Official Receiver's report. This, of course, is quite understandable when it is realized that, upon the terms of sub-s. (3), an examination may be ordered which goes beyond the reported opinion of fraud. Thus, an officer charged with a fraud in relation to the company since its formation may be examined as to his conduct and dealings as an officer of the company. (at p76)
4. Section 8 of the United Kingdom Act of 1890 was next considered in In re Civil, Naval and Military Outfitters Ltd. (1899) 1 Ch 215 . There, an application to discharge an order for examination made under s. 8 (3) was refused but it was decided that, before any examination could be directed, the "further report" of the Official Receiver must state facts showing the basis for the opinion expressed and warranting the judge calling upon the person inculpated for an explanation. Vaughan Williams L.J. said : - "Speaking for myself, I should hesitate very much to say that a mere statement of 'the manner' (to use the very words of sub-s. (2)) in which the company was formed, coupled with a statement that, in the opinion of the official receiver, a fraud had been committed by a person named, would be sufficient to justify an order for the examination of that person. I do not say that the judgment of the House of Lords in Ex parte Barnes (1896) AC 146 is at all conclusive on this point. But still it does suggest that the statement of that opinion by the official receiver must be in such a shape that it can be said that there is a charge made against the person sought to be examined - a charge of such a kind that he can either exculpate himself or be incriminated" (1899) 1 Ch, at p 237 . Again it is to be observed that a good deal was drawn from the circumstance that, under the legislation in question, it was the person reported against under s. 8 (2), and that person alone, against whom an order for examination could be made under s. 8 (3). (at p77)
5. I agree with Lucas J. that what is said in the two cases to which I have just referred could be regarded as giving some support to the conclusion that, upon the legislation there under examination, the public examination should be confined to the charges made in the Official Receiver's report, although it does seem that, notwithstanding these statements, the practice in England is otherwise. (at p77)
6. What has been said in the English cases, however, seems to me to shed little light upon the problem arising under s. 250 of the Queensland Act because that section authorizes the examination of persons not inculpated in any charge made by the liquidators and the description of those subject to examination strongly indicates the kind of examination that is authorized. In addition to the person inculpated by the "further report", the persons who may be ordered to attend for cross-examination are described as "any other person who was previously an officer of the company, including any banker, solicitor or auditor, or who is known or suspected to have in his possession any property of the company or is supposed to be indebted to the company or any person whom the Court deems capable of giving information concerning the promotion, formation, trade, dealings, affairs or property of the company". As I read s. 250, sub-s. (1), as a whole, it requires as a condition of the exercise of the power a report under s. 235 (2) stating the liquidators' opinion that some person has, in the promotion or formation of the company, either committed, a fraud or concealed a material fact, or an officer of the company has, in relation to the company since its formation, committed a fraud or concealed a material fact ; it also requires consideration of the foregoing report by the Court. It then authorizes an order for the examination of any person falling within the description already stated, and this examination may be "as to the promotion or formation or the conduct of the business of the company, or in the case of an officer or former officer as to his conduct and dealings as an officer thereof". In a section so providing, I can find no justification for reducing the wide words describing the subject matter of the examination to the narrow limits of the particular conduct which, in the opinion of the Official Receiver, amounted to the commission of a fraud or the concealment of a material fact. A liberal construction to avoid manifest injustice is permissible if it be consistent with the terms of a statute. However, because I find no ambiguity in the language of s. 250 (1) and, further I do not consider that the application of the sub-section in accordance with its terms works any injustice, I reject the implication which the Full Court has made based very largely upon sub-ss. (5) and (6). These sub-sections are explicable historically and do not, in my opinion, afford any substantial ground for implying an over-all limitation upon sub-s. (1) in its amended form. Arguments based upon them which, naturally enough, were accorded weight in Barnes' Case (1896) AC 146 have, with the amendment of sub-s. (1) to expose to cross-examination persons not covered by sub-ss. (5) and (6), lost their significance. (at p78)
7. Finally, it seems to me that concern lest the power conferred by the sub-section might be abused affords no justification for reading down the wide words with which the sub-section concludes. The safeguards against abuse of the statutory procedure of public examination which the legislature has provided expressly are the requirement that there can be no such examination without a direction of the Court, and that the direction of the Court can confine the examination of any person to any one of the matters referred to in the concluding words of the sub-section. Furthermore, by virtue of sub-ss. (3) and (4) it is only such questions as the Court allows to be put that must be answered. (at p78)
8. It is for the foregoing reasons that I consider that this appeal should be allowed. (at p78)
WINDEYER J. Section 250 of The Companies Act of 1961 (Q.) seems to me to have a different operation from that which earlier enactments on the same topic had. They provided for the examination of persons who were prima facie implicated in some way in a fraud : Ex parte Barnes (1896) AC 146 . A person who was examined was a person who might explain his conduct and be exculpated. But under this section, if the liquidator reports that in his opinion a fraud was committed or any material fact concealed by any person in the promotion or formation of the company or by any officer in relation to the company since its formation, a court may direct an examination of anyone who may be able to give information about the company's affairs. Persons who may be ordered to attend to be publicly examined include persons against whom no allegation of participation in the supposed fraud could be suggested. The victim of a suspected fraud, just as much as its suspected perpetrator, might it seems be required to attend and to answer questions. (at p79)
2. The matters on which a person may be examined are, however, not wholly at large. The court which directs the examination must, I take it, state in its order whether the person summoned is to be examined on matters concerning the promotion or formation, or the conduct of the business of the company, or, in the case of an officer or former officer of the company, as to his own conduct and dealings as such officer. And the court before which the examination is held has a discretion as to the questions that may be asked. The boundaries of the discretion are admittedly not defined. But the purpose of the inquiry is to gain information that may be relevant for the proper conduct of the winding-up of the affairs of a company in relation to which there are prima facie grounds for thinking that some fraud has been committed or some material fact concealed. Doubtless a court would be guided in the exercise of the discretion that the Act gives by its apparent policy and purpose. Jessel M.R., speaking of an analogous provision in bankruptcy law, said : "Now that is a very grave power to entrust to any court or any man, viz., power to summon any other man whom you suspect (for mere suspicion will do) to be capable of giving information, and to get any information from him, although that information may be extremely hostile to the interests of the man himself. It is a power which, so far as I know, is found nowhere except in bankruptcy and the winding-up of companies (which is a kind of bankruptcy) ; it is a very extraordinary power indeed, and it ought to be very carefully exercised": Ex parte Willey ; In re Wright (1883) 23 Ch D 118, at p 128 . And see Re The London and Globe Finance Co. (Limited) (1902) 50 WR 253 . But I see nothing in the Act that requires the court to limit the examination of a person to particular matters or transactions mentioned in the liquidator's report. Something of importance may emerge as the inquiry proceeds. How far trails may be followed cannot, I think, be laid down in advance, for the purpose of the inquiry is the discovery of facts. I need say no more on this aspect, for anything that I would wish to say has been said by my brother Menzies whose judgment I have read and in whose conclusion I agree. (at p80)
3. But the section is built, somewhat clumsily, upon the foundation of the earlier enactment. It was therefore argued that we should curtail its operation in somewhat the same way by adopting a construction based upon considerations of policy and justice that influenced the construction of the former provisions. I appreciate the force of this. There is in the common law a traditional objection to compulsory interrogations. Blackstone explained it : "For at the common law, nemo tenebatur prodere seipsum : and his fault was not to be wrung out of himself, but rather to be discovered by other means, and other men" : Comm. iv, 296. The continuing regard for this element in the lawyer's notion of justice may be, as has been suggested, partly a consequence of a persistent memory in the common law of hatred of the Star Chamber and its works. It is linked with the cherished view of English lawyers that their methods are more just than are the inquisitional procedures of other countries. But, strong as has been the influence of this attitude upon the administration of the common law, of the criminal law especially, it must be admitted that in the Chancery Court it had less place : and in bankruptcy jurisdiction it has been largely displaced. For example, a debtor upon his public examination in bankruptcy cannot refuse to answer questions on the ground that the answers may incriminate him (Re Paget ; Ex parte Official Receiver (1927) 2 Ch 85 ; Re Jawett (1929) 1 Ch 108 ), the purpose of the bankruptcy statute being to secure a full and complete examination and disclosure of the facts relating to the bankruptcy in the interests of the public. The provisions of The Companies Act reflect, it seems to me, the same idea. The honest conduct of the affairs of companies is a matter of great public concern to-day. If the legislature thinks that in this field the public interest overcomes some of the common law's traditional consideration for the individual, then effect must be given to the statute which embodies this policy. As the law stood in the past the mere summoning of a person to attend a public examination in a winding up necessarily carried a suggestion that he was in some way connected with a fraud. But the wider scope and purpose of the present section makes such an inference unjustifiable. The existence of s. 249 does not, I think, govern the construction of s. 250. That an examination may be had in private is, I shall assume, a matter which a court may properly take into consideration in the exercise of its discretion in the conduct of a public examination. But it is not, I think, a matter that imposes any legal limit upon the scope of that examination. An antipathy to secret inquests still has a place among the fundamental attitudes of the law in any matter which concerns the public. And a public hearing may sometimes be preferred by an individual who is to be examined : e.g. In re New Zealand Loan & Mercantile Agency Co. (1894) 10 TLR 379 . So that I do not think that to-day one can start with any predilection for a public or a private examination. The only general conclusion that, as it seems to me, can be drawn from the statute is that the legislature thought it in the public interest to widen the scope of public examinations but to entrust a considerable measure of control to courts concerned. It is apparent, however, that Philp J. in disallowing the question asked did not do so in the considered exercise of a discretion but to enable it to be decided whether or not the question was allowable in law. (at p81)
4. I would allow the appeal. (at p81)
ORDER
Appeal allowed with costs.Order of the Supreme Court of Queensland (Full Court) set aside. In lieu thereof order as follows :
Appeal to the Full Court allowed with costs. Order of Philp J. of 13th May 1964 set aside. In lieu thereof declare that upon his public examination pursuant to the order of Philp J. of 6th March 1964 the respondent may be required to answer any question as to the conduct of the business of N. A. Kratzmann Pty. Limited or as to his conduct and dealings as an officer thereof which the Judge before whom the examination is held may see fit to allow, whether or not relevant to any matter referred to in the further report of the liquidators.