Background
Keystone Asset Management Limited was the trustee of the Chiodo Diversified Property Fund (CDPF), a managed investment trust that received substantial investor funds and advanced approximately $385 million (together with a related fund) to special purpose vehicles (SPVs) for property development projects. Virtually all of those projects failed. The liquidators of Keystone, Mr Jason Tracy and Mr Glen Kanevsky, sought to investigate whether CDPF funds were misapplied by being improperly channelled to entities and individuals associated with director Paul Chiodo — including Chiodo Corporation Pty Ltd, Pure Development & Project Management Pty Ltd, Mr Chiodo personally, his wife Julie Chiodo, and a daughter — during the period 1 January 2017 to 1 November 2019.
To pursue that investigation, the liquidators had earlier issued subpoenas in December 2025 to ANZ, the Commonwealth Bank, and Westpac seeking bank statements for the relevant accounts. Mr Chiodo applied to set aside those subpoenas. The court dismissed that application in February 2026 (No 4, [2026] FCA 89), but stayed the inspection order pending Mr Chiodo’s application for leave to appeal, which remained unresolved. The liquidators then brought a separate, informal application under s 597(9) of the Corporations Act 2001 (Cth) in the examination proceeding, seeking a court direction that Mr Chiodo produce the same bank statements at his examination.
Mr Chiodo opposed the s 597(9) application on two grounds: first, that it was an abuse of process designed to circumvent the stay order protecting his pending appeal; and second, that (with one exception) the documents did not relate to the “examinable affairs” of Keystone within the meaning of the Corporations Act.
The Court’s Holding
Justice Moshinsky rejected both grounds of opposition and directed production of most of the bank statements sought. On the abuse-of-process question, his Honour held that a direction under s 597(9) is a legally independent basis for obtaining production of documents, entirely separate from the subpoena regime. Because the liquidators were entitled to pursue production on this independent basis, doing so was neither unjustifiably oppressive to Mr Chiodo nor productive of disrepute to the administration of justice. The court accepted that a successful s 597(9) direction might have a practical effect on the appeal prospects regarding the subpoenas, but held that this was merely a consequence of an independent legal entitlement and did not render the application an abuse of process. The court also found that the appeal on the subpoena issue would not be rendered nugatory, because it could still be determined on its merits regardless of the examination direction.
On the “examinable affairs” question, Moshinsky J was satisfied that bank statements for accounts of Chiodo Corporation, Pure Development, Mr Chiodo personally, Julie Chiodo, and the Chiodo daughter all related to the examinable affairs of Keystone, on the basis that the Tracy Affidavit provided a proper evidentiary foundation to investigate whether CDPF trust funds were paid (directly or indirectly) into those accounts without legal entitlement. The court declined, however, to order production of statements for one Chiodo Corporation Operations account (ending x53589), finding insufficient evidentiary basis to conclude that entity may have received CDPF funds. To address any residual concern about the stay order, the court carved out from the direction any documents in Mr Chiodo’s possession solely because he or his representatives had uplifted copies produced under the subpoenas.
The court stayed its orders until 4:00 pm on 12 June 2026, and further if Mr Chiodo filed an application for leave to appeal by that time, until determination of that application and any appeal. Mr Chiodo gave an undertaking to pursue any such appeal expeditiously.
Key Takeaways
- A liquidator’s s 597(9) examination direction is a legally independent mechanism for compelling document production; the existence of a stayed subpoena for the same documents does not render a parallel s 597(9) application an abuse of process.
- The “examinable affairs” threshold under s 597(9) requires only that documents be relevant to matters to which the examination relates — it does not require proof of a specific cause of action — but the liquidators must provide a sufficient evidentiary basis linking the accounts to potential misapplication of trust funds.
- Courts will scrutinise each account individually: where the evidentiary connection to misapplied funds is too thin (here, a single sentence about GST refund claims), the direction will be refused for that account.
- Where a stay order protects pending appellate proceedings, courts may craft a carve-out excluding from a production direction any documents the examinee holds only by virtue of having inspected subpoenaed material, preserving the integrity of the appeal without blocking the independent examination power.
Why It Matters
This decision clarifies the interaction between the subpoena regime and the examination regime in corporate insolvency proceedings. Respondents to examination summonses cannot insulate documents from production simply by obtaining a stay of a parallel subpoena inspection order: liquidators retain a freestanding statutory pathway under s 597(9), and courts will not treat resort to that pathway as procedurally improper. The ruling reinforces that the Pt 5.9 examination regime carries an extremely wide ambit and is a powerful investigative tool for insolvency practitioners tracing misapplied trust funds.
For practitioners, the case also underscores that applications to expand examination production orders must be grounded in affidavit evidence that traces, at least in general terms, a plausible flow of funds to each specific account sought. A bare assertion that an entity may have received trust funds will not suffice, and courts will excise from production orders those accounts for which the evidentiary foundation is inadequate.