Klatt v API Limited (10825)

 

A. Introduction  

 

1. This was a contested application to revoke the Orders dated 17 January 2024 for the disclosure of the company records of the international company First Defendant API Limited (10825) (‘API’).      

 

2. The hearing was necessarily spread across 5 days, at times that the Court had available and that counsel could attend.       

 

B. Background  

 

3. The Claimant Michael Klatt is the Administrator with the Will of the estate of Malcolm Roy Smith (deceased) (‘Mr Smith’).   

 

4. Mr Smith died in Australia on 4 April 2021. He was ordinarily resident in Papua New Guinea (‘PNG’).   

 

5. Mr Klatt is the administrator of Mr Smith’s estate pursuant to an order of the Supreme Court of Queensland, Australia dated 18 May 2022 and to letters of administration with a will dated 25 May 2022. The letters of administration with the will were resealed in the Supreme Court of Vanuatu by Order dated 31 August 2023 in Probate Case No. 2027 of 2023 (the ‘reseal proceedings’). 

 

6. API is an international company registered in Vanuatu. On 19 June 1992, it was registered as an exempt local company limited by shares (no. 4663). On 7 November 1994, it was de-registered and re-registered as an international company under the International Companies Act [CAP. 222] (the ‘Act’).    

 

7. The company records of a company registered under the Act (i.e. an international company) are confidential: subs. 125A(3) of the Act. No person may disclose or be involved in any way in the disclosure of the details of company records of any company registered under the Act, except as required or permitted under the Act: subs. 125A(4) of the Act.   

 

8. A person who contravenes subs. 125A(4) of the Act commits a criminal offence: subs. 125A(5) of the Act.  

 

9. A shareholder is authorised to disclose the identity of the company’s beneficial owners: subs. 125A(9) of the Act. Otherwise, company records may only be disclosed by the Interested Party the Vanuatu Financial Services Commission (‘VFSC’), or a person authorised by the VFSC, if required to do so by a court of competent jurisdiction under s. 125B of the Act: para. 125A(6)(a) of the Act.   

 

10. The Second Defendant Waterford Limited (3375) is a local company and a Director Services Provider under the Company and Trust Services Providers Act No. 8 of 2010 (‘CTSP Act’) and is the registered agent of API (‘Waterford’).  

 

11. The Third Defendant Mark Conway trades under the business name Conway & Co, which is a General Services Provider under the CTSP Act and at various times since at least 1992, provided and continues to provide general company services to API. He is a Director of Waterford.   

 

12. The Fourth Defendant Mark Morton has been the Authorised Representative for API, appointed by API, since Mr Smith’s death.  

 

13. On 27 October 2023, the Claimant filed the Claim and an interlocutory application titled, “Applicant’s Disclosure Application under Section 125A(6)(a) and 125B of the Act and Rule 8.9 of the Civil Procedure Rules” (‘CPR’) (the ‘Disclosure Application’).   

 

14. The Claimant also filed on 27 October 2023 the following Sworn statements in support:   

 

a) Michael Karl Klatt;  

 

b) Philip Clive McKay; 

 

c) David Michael Salmon; and    

 

d) Kevin Russel Smith.  

 

15. On 15 November 2023, the Claimant filed the Sworn statement of Service of Marie Hellen Omry of proof of service on 13 November 2023 on the registered office of API and Waterford Limited of inter alia the Claim, Disclosure Application and sworn statements.  

 

16. On 27 November 2023, counsel Mr Malcolm filed First Defendant’s Response stating that API disputed all of the Claim.   

 

17. On 28 November 2023, Mr Malcolm filed Second Defendant’s Response. He did not tick any of the options on the second page of the Response, but I assume from the stance taken till now that Waterford disputes all of the Claim.   

 

18. On 30 November 2023, I issued Orders for the substituted service of Mr Morton. 

 

19. On 1 December 2023, I issued Orders for the substituted service of Mr Conway. 

 

20. By the same Orders dated 1 December 2023, I directed the Claimant to serve the Disclosure Application and supporting sworn statements, and file proof of service, by 4pm on 11 December 2023. I directed the Defendants to file and serve submissions in response to the Application by 4pm on 15 January 2024. I stated that the Court would determine the Application on the papers after that.   

 

21. On 12 December 2023, the Claimant filed the Sworn statement of Service of Breeanna Emelee of proof of service of inter alia the Claim, Disclosure Application and sworn statements by emails dated 7 December 2023 to Mr Conway and Mr Morton.  

 

22. No submissions were filed in response or opposition to the Disclosure Application.  

 

23. By Orders dated 17 January 2024, I granted the Disclosure Application and stated at [4]-[6] as follows:  

 

 

 

 

 

 

 

 

 

 

 

 

5. Accordingly, the Application is granted and it its ordered as follows:   

 

 

 

6. The costs of the Application are reserved.  

 

24. On 31 January 2024, the Defendants filed the Application seeking orders revoking the Orders dated 17 January 2024 (the ‘Defendants’ Application’). On 12 February 2024, the Sworn statement of Mark William Conway was filed in support.   

 

25. On 6 February 2024, I convened a conference at short notice. All counsel attended. I stated as follows in the Minute and Orders dated 6 February 2024 at [6] and [7]:   

 

 

(my underlining)   

 

26. On 15 February 2024, having heard counsel as to costs, I ordered the following in the Minute and Orders dated 15 February 2024 at [9]:  

 

 

27. On 16 February 2024, the Claimant filed the Sworn statement of Saphy Jeffrey attaching a copy of “Form 16 Sworn statement – Reseal of foreign grant” Sworn statement of Michael Klatt filed on 2 August 2023 in the reseal proceedings.   

 

28. The parties filed the following in advance of the hearing:   

 

a. Defendants’ Submissions regarding the Disclosure Application and the Interlocutory Orders for Disclosure in relation to API Limited (Vanuatu) filed on 12 February 2024; 

 

b. Claimant’s Reply Submissions in re Disclosure Application (Section 125A(6) and 125B, International Companies Act [CAP. 222]) filed on 15 February 2024; and  

 

c. Sworn statement in Support of Marie-Noelle Ferrieux Patterson filed on 15 February 2024.

 

29. By Minute and Orders dated 28 February 2024, I stated that the inter partes hearing was to hear the Defendants’ Application, not to rehear the Disclosure Application. I stated that the Disclosure Application had already been determined by way of the 17 January 2024 Orders, “on an ex parte basis.” Then the Defendants filed their Application seeking orders for the revocation of the 17 January 2024 Orders and relisting of the matter. By listing the hearing of the Defendants’ Application, I had relisted the matter as sought, however the Court’s consideration of whether or not to revoke those Orders, or vary or maintain them, could only occur following that hearing. Accordingly, the inter partes hearing was to hear the Defendants’ Application therefore Defendants’ counsel would make their oral submissions first, then Claimant’s counsel in response and if necessary, Defendants’ counsel in reply.   

 

30. I noted in the same Minute and Orders dated 28 February 2024 that it followed that all references in the Minute and Orders dated 6 February 2024 and the Minute and Orders dated 15 February 2024 to the inter partes hearing of the Disclosure Application were references to the hearing of the Defendants’ Application.    

 

31. On 29 March 2024, the Defendants objected to the admissibility of parts of Mrs Ferrieux Patterson’s sworn statement. Claimant’s counsel agreed that paras 2 and 5(a)-(e) be struck out and handed up a document on which they had hand-written, “agree” next to the objections with which they agreed. I ruled that those paragraphs were struck out of Mrs Ferrieux Patterson’s sworn statement. 

 

32. On 1 March 2024, there was a contested application to adjourn and I ordered wasted costs in favour of the Defendants.  

 

33. I now determine the Defendants’ Application.    

 

C. The Law 

 

34. Section 125A of the Act provides as follows: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

35. Section 125B of the Act provides as follows:   

 

 

 

 

 

 

 

may be held in an open Court.    

 

36. Rule 8.2 of the CPR provides as follows:   

 

 

 

 

 

37. Rule 8.8 of the CPR provides as follows:   

 

 

 

 

 

 

38. Rule 8.9 of the CPR provides for specific disclosure as follows:   

 

 

 

 

 

 

 

 

 

 

 

D. The Claim  

 

39. The following is an account of the facts alleged by Mr Klatt in the Claim:  

 

a. That throughout his lifetime, Mr Smith exercised control over API and “related entities” and benefitted from them by receiving dividends and remuneration since their incorporation: para. 7;   

 

b. “Related entities” is not defined;  

 

c. That at all material times, Mr Smith exercised a controlling interest in API and “related entities” as if he were the shareholder or their shares were held for his benefit: para. 8;   

 

d. The affairs of API were at all times conducted by Mr Conway, and, since November 2020, he has represented himself as the owner of the shares of API as a nominee shareholder for a number of other people whose identifies he has refused to disclose: para. 14;  

 

e. That since Mr Smith’s passing, Mr Conway has stated that Mr Smith was not the owner of or beneficially entitled to any shares in API. Mr Conway has refused to explain how Mr Smith had been entitled to instruct him about the affairs of API and to receive benefits from API: para. 15;  

 

f. That Mr Smith conducted extensive business dealings through companies in PNG, Australia, Singapore, New Zealand, Hong Kong, Nepal and Vanuatu: para. 19;  

 

 

Malcolm Roy Smith known companies structures  

 

g. That at all material times prior to his death, Mr Smith did represent and conduct himself as the controller and ultimate beneficial owner of API: para. 20;  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

40. The following relief is sought:     

 

 

 

 

 

 

 

 

 

41. No Defences have been filed. Defendants’ counsel stated that defences would be filed after determination of the Defendants’ Application: Minute and Orders dated 15 February 2024 at [12].  

 

E. The Defendants’ Application and Submissions in Response    

 

42. By the Defendants’ Application, the Defendants seek the following orders on the grounds that:   

 

THE DEFENDANTS jointly apply for orders:-  

 

 

 

 

 

 

 

 

43. The Defendants submitted the following in their written submissions at [1]:   

 

 

 

 

 

 

 

 

44. The balance of the written submissions elaborated on each of the “grounds” set out at its [1](a)-(f) (at pp 2-5) then analysed the Claim (at pp 5-9), the Disclosure Application (at pp 9-12) and the Claimant’s sworn statements (at pp 12-13) to demonstrate, in the Defendants’ submission, the speculatory nature of the Disclosure Application, the abuse of process, and the misuse of the Act by Mr Klatt and his counsel. 

 

45. The Defendants submitted that it was open to the Court not only to permanently stay the 17 January 2024 Orders, but also to strike out the Disclosure Application for being a clear abuse of process.    

 

46. The Second and Third Defendants’ counsel Mr Hurley submitted that the Disclosure Application was an abuse of process and Mr Klatt erred procedurally by seeking disclosure ex parte and that he took advantage of the Court vacation and the likely absence of the Defendants. He submitted that Mr Klatt had not made full and frank disclosure which was a serious failure, and that this Court did not have power under the Act to make the orders at [5](a) of the 17 January 2024 Orders as the Disclosure Application was a “fishing expedition” for the purposes “of a Court proceeding” rather than “in a proceeding”, because the Second-Fourth Defendants were not international companies, because API was incorporated well before any requirement to provide the documents at [5](a)(i)-(iv) to the VFSC, and that [5](a)(v) of the Orders was a fishing expedition in respect of “other companies” when no “other companies” were party to the Disclosure Application or to the Claim.   

 

47. The First Defendant’s counsel Mrs Motuliki and the Fourth Defendant’s counsel Mr Morrison adopted Mr Hurley’s submissions.  

 

48. In response, Claimant’s counsel Ms Raikatalau submitted that the Disclosure Application was not heard ex parte as it was served, the Defendants were given the opportunity by Orders to respond but did not, hence the 17 January 2024 Orders were made ex parte simply for lack of participation by the Defendants. She submitted that what happened in the present case was different from the facts in Ebbage v Ebbage [2001] VUCA 7 (‘Ebbage’) in which there were ex parte orders. She submitted that any issues as to service on Mr Conway and Mr Morton were immaterial as neither of them are required by the Act to keep API’s company records. She submitted that there had not been any procedural irregularity requiring the Court to act to protect the integrity of its processes by setting aside its Orders, citing Republic of Vanuatu v Natonga [2016] VUCA 28 (‘Natonga’).   

 

49. She submitted that the disclosure sought was intra vires s. 125B of the Act because it was relevant to the proceedings and “in a Court proceeding”. She submitted that the substance of the Orders was allowed by law and that the Court could amend the Orders if necessary.   

 

50. Ms Raikatalau also submitted that the Defendants could not rely on Australian Competition & Consumer Commission v Golden Sphere International Inc [1998] VUSC 24 (‘ACCC’) to say that Mr Klatt had not made full and frank disclosure when they had had the opportunity to respond to the Disclosure Application but did not. She submitted that in any event, it was only one letter which was not disclosed and that the letter would not have had any bearing on the Court making the 17 January 2024 Orders.  

 

51. She also submitted that there was a strong supposition that at the time of his death, Mr Smith held a controlling interest and was the beneficial owner of API, and that this was backed by an overwhelming amount of material and overwhelming evidence. She submitted that no evidence had been filed to negate this strong supposition to justify the revocation of the 17 January 2024 Orders. She submitted that the insurmountable evidence leaned towards there being likely pilfering of the estate assets through fraudulent means. She submitted that if the Orders were set aside, that the Court applying Natonga should rehear the Disclosure Application inter partes.   

 

52. In reply, Mr Hurley submitted that the contents of Mr Klatt’s sworn statement in the reseal proceedings (that Mr Smith left property in Vanuatu, namely, API) and then his evidence in the present proceedings months later seeking a declaration that Mr Smith was the ultimate beneficial owner of API at the time of his death must bear on the veracity of Mr Klatt overall. He invited the Court to comment on the obvious conflict between those matters.   

 

53. He submitted that the Disclosure Application is speculative as there is no evidence to rebut that Mr Conway is the beneficial owner of API (as shown in Annexure “MKK-5”). His understanding of the Claimant’s submissions was that there still had to be an inter partes hearing of the Disclosure Application, however the hearing of the Defendants’ Application was the inter partes hearing. He submitted that the Court was functus oficio in relation to the Disclosure Application as it had already determined that application.  

 

F. Consideration   

 

Whether Court functus oficio in respect of the Disclosure Application   

 

54. The Disclosure Application has already been determined by way of the 17 January 2024 Orders. I agree therefore that the Court is functus oficio in respect of that application.      

 

55. With respect, the Claimant’s submissions rest on a misapprehension of Natonga in urging the Court to rehear the Disclosure Application inter partes if the 17 January 2024 Orders are set aside or revoked. In Natonga, the Supreme Court Judge determined that he did not have jurisdiction to determine an application to set aside consent orders. The Court of Appeal held on appeal that the Judge had jurisdiction and remitted the application to set aside the consent orders back to the Supreme Court for determination. In Natonga, the application to set aside consent orders had not yet been determined on its merits whereas in the present matter, the Disclosure Application has already been determined. Accordingly, in the event that the 17 January 2024 Orders are revoked or set aside, there will not be a rehearing of the Disclosure Application, inter partes or otherwise.  

 

Whether or not abuse or process or that Mr Klatt erred procedurally by seeking disclosure ex parte      

 

56. Having heard counsel at the conference on 6 February 2024, I stated that I was satisfied that the 17 January 2024 Orders were made “on an ex parte basis” and that an inter partes hearing was now required, in accordance with Ebbage.   

 

57. I then stayed the 17 January 2024 Orders pending the determination of the Disclosure Application following an inter partes hearing. 

 

58. It was not until counsel appeared before me on 28 February 2024 that I realised that what was required was to hear the Defendants’ Application, not an inter partes (re)hearing of the Disclosure Application. I therefore stated in the Minute and Orders dated 28 February 2024 that my references in the Minutes and Orders dated 6 February 2024 and 15 February 2024 to the “inter partes hearing of the Disclosure Application” were references to the hearing of the Defendants’ Application.     

 

59. I consider that by listing the hearing of the Defendants’ Application, I had relisted the matter as sought in that application. However, the Court’s consideration of whether or not to revoke the 17 January 2024 Orders, or vary or maintain them, could only occur following that hearing. 

 

60. Unfortunately, I also set out in the Minute and Orders dated 6 February 2024 at [6] that the Defendants Application was granted. However, it is clear from the foregoing that I had only partially granted the Defendants’ Application in that I had relisted the matter for argument as sought and had stayed the 17 January 2024 Orders pending the hearing of the Defendants’ Application. 

 

61. In the Minute and Orders dated 15 February 2024, I ordered that the costs of the Defendants’ Application were in the cause. However, the hearing of that application had not yet occurred. It follows that the costs will in the cause until determined otherwise as a result of the determination of the Defendants’ Application. I will deal with the costs of the Defendants’ Application at the end of this decision.   

 

62. The Defendants submitted that Mr Klatt sought disclosure ex parte and that he took advantage of the Court vacation and the likely absence of the Defendants. Presumably, they made those submissions given my statement in the Minute and Orders dated 6 February 2024 that I was satisfied that the 17 January 2024 Orders were made “on an ex parte basis”. However, that is disappointing because those submissions completely overlook that the Disclosure Application was served on the Defendants and proof of service was filed, that both API and Waterford were represented by counsel by 27 November 2023, that the Orders dated 1 December 2023 gave the Defendants the opportunity to file and serve submissions in response by 4pm on 15 January 2024, and that they did not do so.    

 

63. In the Minute and Orders dated 6 February 2024, I also cited Ebbage for the principle that after making ex parte orders, the Court must list the matter for an inter partes hearing. However, in Ebbage, the Court made its orders on an application which had not been served and in the absence of the defendant, therefore ex parte. On the other hand, in the present case, the Disclosure Application was served and the Defendants were given the opportunity to respond, but they did not. Accordingly, I described the 17 January 2024 Orders as having been made “on an ex parte basis” for lack of participation by the Defendants but those Orders were not actually made ex parte in the correct usage of that term, “ex parte”.    

 

64. In the circumstances, I reject the Defendants’ submissions that the Disclosure Application was an abuse of process or that there was procedural irregularity justifying the revocation or setting aside of the 17 January 2024 Orders. This disposes of part of ground [1](a) of the Defendants’ written submissions.     

 

 

Full and frank disclosure      

 

65. It is accepted that the Claimants’ evidence did not include the letter dated 10 August 2021 from Mr Morton (at that time, an executor of Mr Smith’s estate) to Mr Conway [Attachment “MWC1”, Mr Conway’s sworn statement]. This was the letter that Mr Conway was responding to by way of his letter dated 27 August 2021 to Mr Morton [Attachment “MKK-10”, Mr Klatt’s sworn statement], in which Mr Conway stated that Mr Smith had not held a beneficial interest in the shares of API “during the period I have been a director of API Limited”.   

 

66. I understood the Defendants’ submissions to be that if the 10 August 2021 letter had been included, that it would have been clear that by 27 August 2021, Mr Conway had already told Mr Morton (then an estate representative) that Mr Smith was not the beneficial owner of API therefore the omission of the letter meant that there had not been full and frank disclosure. Further, that full and frank disclosure is a factor for the Court to take into account in deciding whether or not to set aside the 17 January 2024 Orders, as Saksak J did in ACCC.  

 

67. However, the pleadings in the Claim clearly allege that since Mr Smith’s passing, Mr Conway has stated that Mr Smith was not the owner of or beneficially entitled to any shares in API, and that Mr Conway has refused to explain how Mr Smith had been entitled to instruct him about the affairs of API and to receive benefits from API – see the Claim at [15]. It is also pleaded that since Mr Smith’s death, the Defendants have simply denied that Mr Smith’s estate has any interest in API – see the Claim at [27].     

 

68. Mr Klatt included in his evidence the document titled, “Register of Members (Shareholders) – Summary” which was certified by Geoffrey Gee on 13 April 2021 which shows API’s list of members since its date of registration and that since 20 November 2020, Mr Conway is the sole shareholder of API [Annexure “MKK-5”].    

 

69. In the circumstances, I do not agree that the omission of Mr Morton’s 10 August 2021 letter from the Claimant’s evidence was an omission of a material fact. It is pleaded in the claim that Mr Conway has since Mr Smith’s passing, stated that Mr Smith was not the owner of or beneficially entitled to any shares in API. Mr Klatt’s own evidence included API’s shareholder register showing Mr Conway as the sole shareholder since 20 November 2020. Accordingly, I agree with Ms Raikatalau’s submission that even if the letter had been disclosed, that it would not have had any bearing on the Court making the 17 January 2024 Orders. That disposes of ground [1](e) of the Defendants’ written submissions.      

 

 

 

70. Annexure “MKK-5” shows that since 20 November 2020, Mr Conway is the sole beneficial owner of API. The Defendants invited me to hold that there was no evidence rebutting that and that there was no definitive evidence by Mr Klatt that Mr Conway had managed API on Mr Smith’s behalf. 

 

71. However, these are conclusions for the Court to draw (if at all) after trial. They are matters as to the merits of the Claim which can only be determined after trial. The Court cannot make findings on disputed questions of fact on an interlocutory application.  

 

72. As the Court of Appeal held in Union Electrique du Vanuatu Ltd v Republic of Vanuatu [2012] VUCA 2 (‘Union Electrique’) at [70]:   

 

 

73. I was also invited to conclude that Mr Klatt should not have deposed in the reseal proceedings that Mr Smith left property in Vanuatu, when he already had evidence [Annexures “MKK-5” and “MKK-10”] that Mr Smith was not the beneficial owner of API, therefore he should not have brought an Application to reseal the letters of administration nor should the reseal Orders have been made. I was invited to comment on the obvious conflict between the evidence in the reseal proceedings, and Mr Klatt’s evidence in the present proceedings months later seeking a declaration that Mr Smith was the ultimate beneficial owner of API at the time of his death, and that this must bear on the veracity of Mr Klatt overall.     

 

74. However, I cannot make credibility findings on an interlocutory application. Such findings must be made after trial, as the parties had had the opportunity to cross-examine the witnesses and then make their submissions based on the evidence.   

 

75. I also cannot consider a challenge to the reseal Orders in the present proceedings via the interlocutory application that is the Defendants’ Application. Any such challenge must be raised in the reseal proceedings or in separate proceedings.  

 

 

76. The disclosure sought is of the company records of API, which is an international company therefore any such disclosure can only be made “if required to do so by a court of competent jurisdiction under s. 125B”: para. 125A(6)(a) of the Act.   

 

77. What matters is that API is an international company. It is wholly irrelevant to the question of disclosure pursuant to para. 125A(6)(a) and s. 125B of the Act that the Second-Fourth Defendants are not international companies. 

 

78. Accordingly, I reject the Defendants’ submission that para. 125A(6)(a) and s. 125B of the Act does not empower the Supreme Court to make the 17 January 2024 Orders in respect of those Defendants. That disposes of ground [1](c) of the Defendants’ written submissions.   

 

Whether the 17 January 2024 Orders are vague and unenforceable so far as the VFSC is concerned    

 

79. I do not agree with the Defendants’ submission that the 17 January 2024 Orders are vague and unenforceable so far as the VFSC is concerned as API was incorporated well before any requirement to provide the documents at [5](a)(i)-(iv) to the VFSC. If the VFSC does not possess one or other of those records, it simply needs to inform the Court. It must necessarily do so post-Orders because it has chosen so far not to participate in the proceedings and to abide the Order of the Court. That disposes of ground [1](d) of the Defendants’ written submissions.     

 

80. I turn now to the jurisdictional attacks on the 17 January 2024 Orders, that is, grounds [1](a) and (b) of the Defendants’ written submissions.   

 

 

81. The Defendants submitted that this Court did not have power under the Act to make the orders at [5](a) of the 17 January 2024 Orders as the Disclosure Application was a “fishing expedition” for the purposes “of a Court proceeding” rather than “in a Court proceeding”, and that the Disclosure Application was contrary to the purpose and intention of the provisions of the Act. In addition, that [5](a)(v) of the Orders were a fishing expedition in respect of “other companies” when no “other companies” were party to the Disclosure Application or the Claim.     

 

82. The Disclosure Application was made pursuant to para. 125A(6)(a) and s. 125B of the Act and rule 8.9 of the CPR.    

 

83. Sections 125A and 125 of the Act were inserted by the International Companies (Amendment) Act No. 4 of 2016. Prior to that, a single section namely s. 125 of the Act provided for secrecy of information relating to international companies. Section 125 was repealed and a new s. 125 was substituted by the Amendment Act No. 4 of 2016, and then was repealed altogether by the International Companies (Amendment) Act No. 14 of 2017.   

 

84. The Court of Appeal held as follows about s. 125 of the Act in PKF Chartered Accountants v Supreme Court [2008] VUCA 32 (‘PKF’) at [70]-[72]:   

 

 

 

 

85. In analogous manner to the provision in s. 125 of the Act (now repealed), s. 125A provides for secrecy of information relating to international companies, and makes it an offence for the specified information to be divulged. There is also, crucially, an exception set out in para. 125A(6)(a) of the Act, namely, that the VFSC or a person authorised by the VFSC may disclose company records if ‘required to do so by a court of competent jurisdiction under section 125B.’    

 

86. In the same way that the Court of Appeal held in PKF about s. 125 of the Act, in my view, it is clear that neither of ss 125A and 125B of the Act are intended to prevent the divulging of information about an international company when that is required by a court order.  

 

87. In the circumstances, I do not agree that the Disclosure Application was contrary to the purpose and intention of the provisions of the Act. That disposes of the remainder of ground [1](a) of the Defendants’ written submissions.    

 

88. How is the Court to decide whether or not to order disclosure?   

 

89. Part 8 of the CPR provides for disclosure (known prior to the coming into force of the CPR as ‘discovery’).  

 

90. Every party to a proceeding has a duty to provide disclosure. Rule 8.2(1) of the CPR provides that a party must disclose a document if (a) the party is relying on it; or importantly, (b) the party is aware of the document and the document to a material extent adversely affects that party’s case or supports another party’s case.   

 

91. The duty to disclose continues throughout a proceeding, even after the trial has started: rule 8.8 of the CPR.   

 

92. Until a sworn statement of disclosure is given (whether as to disclosure generally or specific disclosure), it is generally not possible to know whether there are documents in the possession of the disclosing party which are relevant to the proceeding and existing, or whether there are any other relevant documents. That is why the order for disclosure is made and ought to be complied with: Melsul v Public Service Commission [2006] VUSC 80 at [6] per Tuohy J.    

 

93. There is a significant factor in the present case which is that it is known that API and Waterford are required to keep API’s company records. Accordingly, the Disclosure Application sought their disclosure of API’s company records.   

 

94. Rule 8.9 of the CPR provides for specific disclosure. Rule 8.9(3)(a) of the CPR provides that, “The court may order disclosure of the documents if the court is satisfied that disclosure is necessary to: … decide the matter fairly;” (my bolding).   

 

95. In Unelco (Vanuatu) Ltd v Republic of Vanuatu [2015] VUSC 178 (‘Unelco’) at [9]-[11], Harrop J set out the approach to an application for disclosure under rule 8.9 of the CPR as follows:   

 

9. I proceed on the basis that being satisfied that disclosure is necessary to decide a matter fairly mean simply that disclosure should be ordered of documents relating to any matter in question in the proceedings. As Lindgren J said in Trade Practices Commission v CC (New South Wales) Pty Ltd and Others [1995] FCA 1418; (1995) 131 ALR 581 at 590: “The “matters in question” in the proceedings are the issues as revealed by the pleadings.”  

 

 

 

96. In Trade Practices Commission v CC (New South Wales) Pty Ltd and Others [1995] FCA 1418; (1995) 131 ALR 581 (‘Trade Practices Commission’) at [43] and [49], Lindgren J held as follows:  

 

 

 

97. Mr Klatt filed the Claim seeking a declaration that Mr Smith was the ultimate beneficial owner of API at the time of his death, and consequential orders. The cause of action in the Claim appears to be Mr Klatt’s obligation by law to enquire into the assets of Mr Smith’s estate, and that because of the factual matters pleaded, the beneficial ownership of API is an interest that Mr Smith held at the time of his death, which Mr Klatt as Administrator is entitled to call into Mr Smith’s estate.   

 

98. The issues posed by the Claim therefore include:   

 

(i) Whether or not prior to his death, Mr Smith represented and conducted himself as the controller and ultimate beneficial owner of API;   

 

(ii) Whether or not the beneficial ownership of API is an interest that Mr Smith held at the time of his death; and 

 

(iii) If yes, did this amount to a revocable trust held by Waterford in Mr Smith’s favour during his lifetime, which upon his death became irrevocable and subject only to beneficiaries’ rights and permissions.      

 

99. The Claimant’s submissions included that the evidence in the present matter leaned towards there being likely pilfering of the estate assets through fraudulent means. However, fraud has not been pleaded in the Claim. That submission is not relevant to any issue revealed by the pleadings. It is unmeritorious.    

 

100. At [4](d) of the 17 January 2024 Orders, I stated that I was satisfied that there was a strong supposition that at the time of his death, Mr Smith was the beneficial owner holding a controlling interest in API (which I mistakenly referred to as Mr Conway) “and other related companies”. I went on to order in [5](a)(v) of those Orders the disclosure of information relating to “other companies (being entities that the Deceased was believed to have an interest in in his life up until his death domiciled with the Third Defendant and/or Conway & Co, including but not limited to Malkris International Limited).”   

 

101. The pleaded Claim relates only to the beneficial ownership of API, not of any other company. I must conclude therefore that the disclosure sought in relation to “other companies” was for the purpose of ascertaining whether a case exists vis-à-vis those companies therefore I agree with the Defendants’ submission that that aspect of the Disclosure Application was a fishing expedition: Trade Practices Commission at [49] per Lindgren J. Accordingly, even if the 17 January 2024 Orders are maintained, [5](a)(v) of those Orders must be revoked or set aside.  

 

102. One of the issues raised by the Claim is whether or not the beneficial ownership of API is an interest that Mr Smith held at the time of his death. The disclosure sought by the Disclosure Application of API’s company records included of its share register and register of beneficial owners. These are documents squarely related to the issue revealed by the pleadings of the beneficial ownership of API therefore I am satisfied that such disclosure is necessary to decide the matter fairly: rule 8.9(3)(a) of the CPR and Unelco at [9]-[11] per Harrop J.   

 

103. In addition, API and Waterford are required by the Act to keep API’s company records therefore are likely to have those records. On the other hand, there is no likelihood of Mr Klatt having those documents given the secrecy provisions in the Act relating to international companies. It seems to me, therefore, to be prima facie “necessary” for that reason also that the disclosure sought be ordered: rule 8.9(3)(a) of the CPR and Trade Practices Commission at [43] per Lindgren J.  

 

104. Given Mr Conway’s denials since Mr Smith died that Mr Smith has a beneficial interest in API, and because of the secrecy requirements of the Act in relation to API’s company records, there is no guarantee that API and/or Waterford would have sought a court order for the disclosure of those records. In the circumstances, it makes sense that Mr Klatt sought their disclosure. No doubt seeking their disclosure at this early stage of the proceedings would also inform his assessment of his prospects of success and whether or not to continue with the proceeding. 

 

105. Was there already some evidence that a case exists for Mr Klatt?  

 

106. I had stated in the 17 January 2024 Orders that I was satisfied that there was a strong supposition that at the time of his death, Mr Smith was the beneficial owner holding a controlling interest in API.  

 

107. Ms Raikatalau submitted that that strong supposition was backed by an overwhelming amount of material and overwhelming evidence. She submitted that no evidence had been filed to negate this strong supposition to justify revocation of the 17 January 2024 Orders. Counsel for the Defendants strongly opposed this. Mr Hurley submitted that for all the ‘overwhelming’ and ‘insurmountable’ evidence referred to by Claimant’s counsel, there was no evidence to rebut Annexure “MKK-5” which shows that Mr Conway is the beneficial owner of API.    

 

108. However, a merits assessment of disputed facts is a matter for trial therefore not to be undertaken at this interlocutory stage: Union Electrique at [70] per the Court of Appeal. 

 

109. As per the test in Trade Practices Commission at [49], all that is required is that there is already some evidence that a case exists. I am satisfied that on the evidence set out in the sworn statements filed by the Claimant, that there is evidence that at times prior to his death, Mr Smith represented and conducted himself as the controller and ultimate beneficial owner of API. Accordingly, there is already some evidence that a case exists for Mr Klatt. It follows that the disclosure sought of API’s company records was for the purpose of compelling the production of documents where there is already some evidence that a case exists, therefore such disclosure is necessary to decide the matter fairly and was not a fishing expedition: rule 8.9(3)(a) of the CPR and Trade Practices Commission at [49] per Lindgren J.   

 

110. The foregoing disposes of ground [1](b) of the Defendants’ written submissions.     

 

111. In conclusion, in my view, the disclosure sought was intra vires para. 125A(6)(a) and s. 125B of the Act, and within the purpose and intention of the provisions of the Act. The Court had the power to make the 17 January 2024 Orders, however [5](a)(v) of those Orders was a fishing expedition and therefore must be set aside.       

 

112. The 17 January 2024 Orders are otherwise maintained.    

 

113. Given that both the Claimant and the Defendants have succeeded on an aspect of their cases, each party is to bear their own costs of the Defendants’ Application.  

 

G. Result and Decision  

 

114. The Defendants’ Application filed on 31 January 2024 is partially granted and it is ordered that para. 5(a)(v) of the Orders dated 17 January 2024 is set aside.  

 

115. The Orders dated 17 January 2024 are otherwise maintained.    

 

116. Each party is to bear their own costs of the Defendants’ Application.   

 

117. This matter is listed for Conference at 1.15pm on 30 May 2024.