Where the onus on arrest warrants lies

While the words “discharge” and “onus” should never appear in a sentence aspiring to politeness, in obtaining arrest warrants for two men linked to failed iron ore play Ochre Group Holdings (OGH), Cor Cordis West Australia partner Jeremy Nipps has extracted a useful judgment in respect of where onus lies in negating reasonable cause, and how that onus is discharged.

Short of having the men apprehended and delivered in shackles to the Commonwealth Law Courts at No.1 Victoria Avenue Perth, Nipps had tried everything to get Made Sumarya and Nathan John Featherby into the witness box to be examined about OGH’s affairs.

” … courts have generally proceeded on the basis that there is an onus of negativing reasonable cause on the applicant for the warrant, although, since knowledge of the cause is almost exclusively in the possession of the prospective examinee, only slight evidence is needed to discharge that onus”. Justice Darren Jackson.

The key difficulty was that neither was making it easy for Nipps’ lawyers Mills Oakley to effect service of the summonses for examination that the court had issued for the pair back on April 3 this year.

Sumarya was in Indonesia while Featherby, 43, had decided to tread in the footsteps of the great enlightenment thinker Charles Darwin, and depart for Argentina.

As can be imagined, nobody was responding to emails or texts sent to the respective last known digital addresses and phone numbers confirming that they’d received the relevant documents.

Given the absence of any acknowledgement of receipt of the communications, it was therefore impossible for either man to claim that they had reasonable cause for not attending, something Federal Court judge Darren Jackson explored at some length in Nipps (Liquidator), in the matter of Ochre Group Holdings Limited (in liq) (No 3) [2023] FCA 1404.

Declaring that the onus for negativing reasonable cause for failure to comply with a summons lies on the applicant for the arrest warrant, the judge conceded that: “courts have generally proceeded on the basis that there is an onus of negativing reasonable cause on the applicant for the warrant, although, since knowledge of the cause is almost exclusively in the possession of the prospective examinee, only slight evidence is needed to discharge that onus”.

The judge said that in the case of Sumarya there was essentially no evidence as to whether he had a reasonable cause not to attend.  

That meant, he concluded, that he was required to determine whether rule 11.10(2) of the Federal Court (Corporations) Rules 2000 (Cth) (Corporations Rules), imposes an onus on a liquidator to negative reasonable cause.

Referring to Judge Paul Brereton’s decision in Re Struthers [2005] NSWSC 864 and the Full Federal Court’s decision in Mensink v Parbery [2018] FCAFC 101; (2018) 264 FCR 265 his honour found that it wasn’t on Nipps to show the court why the examinees didn’t have a good excuse for refusing to be examined.

“Applying these principles to r 11.10 of the Corporations Rules indicates that the onus of establishing that there is reasonable cause lies on the prospective examinee, not the other way around,” the judge said.

“The nature of the obligation for the enforcement of which the rule provides is clear enough; it is to obey the summons.

“If there is a reasonable cause for not obeying the summons, that is in the nature of an excuse or justification; it is not part of the total statement of the obligation.

“If there is a reasonable cause, it will appear from new or additional facts, and those facts are likely to be uniquely within the knowledge of the examinee and, in the circumstances for which the rule provides, difficult or impossible for the applicant for the warrant to prove.

“It is unlikely that the benefit of the rule is intended to be confined to cases, like Re Struthers and like Mensink v Parbery, where the examinee makes some contact with the liquidator about the warrant, whether directly or through solicitors, so that inferences about the cause of his or her non-attendance are more readily reached,” he said.

So the liquidator was granted his warrants. iNO will update if and when they’re effected.

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