Emanuele & Anor v Australian Securities Commission & Ors A23/1996 [1996] HCATrans 309 (13 August 1996)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Adelaide No A23 of 1996

B e t w e e n -

ROCCO EMANUELE and LYNTON EMANUELE

Appellants

and

AUSTRALIAN SECURITIES COMMISSION

First Respondent

CARSIM PTY LTD (IN LIQUIDATION) and OTHERS

Second Respondents

THE COMMONWEALTH OF AUSTRALIA

Third Respondent

BRENNAN CJ

DAWSON J

TOOHEY J

GAUDRON J

KIRBY J

TRANSCRIPT OF PROCEEDINGS

AT ADELAIDE ON TUESDAY, 13 AUGUST 1996, AT 10.02 AM

(Continued from 12/8/96)

Copyright in the High Court of Australia

______________________

BRENNAN CJ: Yes, Mr Bennett.

MR BENNETT: Your Honours, I have circulated to your Honours and my learned friends a bundle of statutory provisions which will be useful in referring to the two cases I want briefly to take your Honours to. The first case is Re Testro Bros Consolidated Ltd [1965] VicRp 4; (1965) VR 18. Your Honours will see this was an application which involved section 199 of the Victorian Act of 1961, which is the first Act I have provided to your Honours. Might I just show your Honours section 199, the Companies Act 1961 (Vic). Your Honours will see section 199 deals with the commencement of proceedings against a company in official management and it says:

Except by leave of the Court and subject to such terms.....no action or proceeding in any court shall be proceeded with or commenced -

and I stress those words -

against the company -

et cetera. Now, at page 32 of the report in Testro Bros, Justice Sholl, who of course was the company judge in Victoria for many years, in the middle of the page at about line 23 - - -

GAUDRON J: What page, Mr Bennett, sorry?

MR BENNETT: Page 32, your Honour.

GAUDRON J: Thank you.

MR BENNETT: At line 23. It is:

Accordingly, though not without some doubt, I hold that an Attorney-General's petition under ss 175 and 221(1)(e) is in the same position as any other petition for the purposes of s 199. No leave was obtained to present this petition, and accordingly it has proceeded in contravention of the section.

7. The next question then is whether the Court can give such leave retrospectively, nunc pro tunc, and if so, whether it ought to do so.

His Honour then refers to the decision of Justice Gillard in Re Excelsior holding the court had no power and that was the previous year and he goes on to discuss a number of earlier cases in New South Wales and Queensland. I will not take your Honours through that. That goes on for some pages and on the next page, page 33 at line 43, his Honour says:

There is thus, as Mr Gilbert pointed out, a uniform set of authorities in Australia, extending over 70 years, for the granting of leave under such sections -

plural -

nunc pro tunc. Now it has always been the view of the courts since the early days of company legislation in England, that sections such as our present ss 199, 230(3) and 263(2) do not impose conditions precedent to the jurisdiction.

Now, I have given your Honours those sections. If your Honours go back to the volume of legislation, or the bundle, in the same Victorian Act, your Honours will see section 199, which I have taken your Honours to. On the next page section 230(3) says:

When a winding up order has been made or a provisional liquidator has been appointed no action or proceeding shall be proceeded with or commenced against the company except -

(a) by leave of the Court; and

(b) in accordance with such terms -

and on the following page, section 263 is the corresponding provision in relation to:

attachment, sequestration, distress or execution -

and, again, subsection (2) uses identical words. So, he is referring to those three provisions and says:

since the early days of company legislation -

sections such as that -

do not impose conditions precedent to the jurisdiction.

He goes on to discuss some more cases about that and then on page 34 he deals with the question of principle at line 35 and he says:

Now since the proceedings are within jurisdiction, there is also jurisdiction to stay them. no doubt a stay would normally be granted ex debito, but a stay is a discretionary remedy and the Court cannot be obliged to impose it under all circumstances. I think a court other than the Supreme Court might stay proceedings pending an application to the latter. If the proceedings are brought without leave in the Supreme Court itself, they are irregular as lacking that Court's own leave -

and we stress the word "irregular" -

If this Court were unable to give the leave once the proceedings had begun it would be necessary to start them afresh, as indeed Gillard, J, has held. But with all respect, I do not feel able to adopt the view that this Court is prevented by the statute from recognizing and sanctioning, even retrospectively, its own proceedings, more especially when the principal, and it may be the sole, effect of its order will be to save costs, and the re-issue, re-service, and re-delivery of documents identical with the existing documents. If the Court is of opinion that leave, had it been applied for, would have been given, why should it not decide if it wishes, to treat as regular and effective, proceedings over which ex concessis it has jurisdiction, and dispense with the need merely to repeat them? If the Court can stay the current proceedings, and yet grant leave to bring them all over again, it seems to me that it must be able to achieve a similar result by treating the current proceedings as if brought with leave, whether it calls what it does giving leave nunc pro tunc, or not. There may be cases where it would be unjust to do that, as, e.g., where the validation of a winding-up petition may affect transactions -

and he goes on to discuss that. Then he discusses the effects of section 366, which was the general dispensing section, and he holds that the general dispensing section does not apply because that would defeat the provision and says as a result that it is, in effect, a reason why one ought to be able to give leave nunc pro tunc and his conclusion is in the middle of that page and he makes the order.

BRENNAN CJ: Well then, Mr Bennett, if that reasoning on page 35 were applicable to the present case by reference to section 367A, I think, that parcel would be against you.

MR BENNETT: Well, your Honour, in one sense it might be but it is unnecessary for his Honour's reasoning - - -

BRENNAN CJ: Well, that may be so. I am just thinking in terms of what, if any, are the points of distinction that you would raise in respect of Justice Sholl's observations on section 366 and the present operation of section 467A?

MR BENNETT: Your Honour, 467A is, of course, rather more specific than 366 because it is concerned with these specific provisions. So, it may well be that in relation to 467A one might take the view that it is able to be applied but, your Honour, we submit that it does not, in the end, affect the argument. If the order that was made below could have been made under section 467A and if your Honours take that view as a factor why leave nunc pro tunc should not be given, then, we would submit, at the end of the day the appropriate order is to remit the matter to the trial judge with a view to his determining whether an order should be made under section 467A and, if that occurred, of course, even though the appeal would be allowed and the precedent established, it would solve the problem of the parties to a large extent.

TOOHEY J: I am not sure what you mean by an order under 467A. I mean, what sort of an order would be made?

MR BENNETT: I use that phrase compendiously and inaccurately, your Honour. What I mean is making the winding up order, having satisfied itself that substantial injustice could be remedied by the order. In other words, an application must not be dismissed merely because of a defect or irregularity, unless the court is satisfied a substantial injustice has been caused. Now, your Honours could do one of two things. Your Honours could determine for yourselves that substantial injustice has not been caused on the basis of the factors that we know of in the judgments or your Honours could remit it to the trial judge in order to see whether he was satisfied that substantial injustice could not be caused and if he was satisfied of that then he would simply make the order which he made before.

TOOHEY J: Yes, I understand that.

MR BENNETT: The section his Honour was referring to, of course, corresponds to section 1322, which is the general irregularity section, and that is the section that his Honour held to be inapplicable.

BRENNAN CJ: Mr Bennett, could I ask you another question about Testro? We have here some observations by Justice Sholl with respect to sections that have to do with the commencement of proceedings against a company that might be in financial difficulties. The present case is not concerned with the commencement of proceedings against a company of the same kind. It is concerned with the presentation of a petition or an application for winding up. We have also the observations of this Court in the David Grant Case.

Now, if one looks at the passage that you have referred us to at the bottom of 34 and the top of 35 of Testro, does it not appear that one looks at the operation of the section in order to determine whether, on the one hand, one would apply the Testro approach or whether one would apply the David Grant approach and why is it that this case is not more in accordance with the David Grant approach in the sense of the consequences of the order, if made, would be to expose the company to the publicity of the application being made?

MR BENNETT: Because, your Honour, in David Grant there was a time limit which, like an option time limit, produced two diametrically opposed results, depending on whether one course or another was taken before that limit expired. A bit like a bankruptcy notice, I suppose, in another area of jurisprudence. In such a case, one can well understand a court saying, if one grants leave to do something after the event has occurred by extending time or by granting some sort of leave which has that effect, then one reverses the election which has occurred or the choice between those two courses which has occurred and that is contrary to the structure of that part of the Act.

That part of the Act says a notice is served, one of three things happens: it is paid, it is set aside or it gives rise to a right to present a winding up petition and one could well understand a court taking the view that is something where at the moment of expiry, it is all over. That is different to a situation where there is merely a requirement that the court be satisfied something is an appropriate case for doing something and there is less significance in whether it is done before or after.

One can still, in a sense, have what Mr Justice Young has called the "rogue petition". I will come to Mr Justice Young's judgment in a moment. What his Honour says is that where you have what he describes as a "rogue petition", a petition which simply should not be there and is vexatious and presented for an improper purpose and so on, one can set that aside ex debito justiciae and once one has done that it is as if no petition has been presented and he gives the example of the case where the Corporate Affairs Commission froze someone's bank account and he then presents in a winding up petition against the ANZ Bank. Now, that is a case where the petition was very quickly set aside as a rogue petition, ex debito justiciae.

Had the ANZ Bank been party to some debenture internationally which would have crystallised if a winding up petition was presented, his Honour says that clause would not have been invoked by the presentation of that petition. So, one can solve that sort of problem in other ways. The effects of a winding up petition can be solved. Advertisement, of course, a person can, no doubt in contempt of court, put an advertisement in the newspapers saying a winding up petition is being presented which is quite untrue. Again, there may be damage done by it. That damage would have to be assuaged in the best manner it can.

At the end of the day, the damage flowing from the presentation of a winding up petition that should not be presented can be controlled and there is also an equally serious detriment, in some cases more serious like this one, where there is a detriment if one does present a petition and it is not allowed to proceed because of the accidental omission. Rules of Court have always contained provisions justifying dispensations with the rules and extensions of time and, indeed, the first thing a young lawyer learns is the importance of those rules. That is for a very good reason because if one does not have that, one has many cases of injustice, some of which are "solved by being able to sue lawyers", some of them are not.

That line of injustice that the court cannot cure something and grant a leave that obviously should be granted later is, in my respectful submission, more serious and something which overbalances or outweighs the detriment caused of the types which are referred to in Grant. For these reasons, we submit, Grant is distinguishable and it is the Testro line rather than the Grant line. May I just show your Honours one other case in the Testro line very briefly? I will not spend as long on this as I did on Testro and that is the decision of Justice McLelland, this is the first Justice McLelland, the former Chief Judge in Equity, in Re Sydney Formworks (1965) NSWR 646. It is tab 6 in my volume. I am not sure if it is the same in your Honours'.

That concerned section 218 of the New South Wales Companies Act 1961 which, again, is in the volumes your Honours have. I am sorry, it is not in the volume, it is set out in the report. The section appears at page 648 of the report at about point 2 of the page and it is, again, the equivalent of section 471B in the current law that:

When a winding-up order has been made.....no action or proceeding shall be proceeded with or commenced -

and his Honour at the bottom of page 649, after dealing with the only cases, at line 53 says:

The result of the cases on the Companies Act which I have mentioned is that the section cannot be pleaded in bar to the action and that the Court administering the liquidation may give leave, if it thinks proper to do so, to continue an action.....This view is in keeping with what I consider to be the obvious intention of the section, namely to ensure that the assets of the company in liquidation will be administered in accordance with the provisions of the Companies Act and that no person will get an advantage.....and to enable the Court effectively to supervise all claims brought against the company which is being wound up.

He refers to a number of further cases including one Indian case at the bottom of that page where the Indian court supplied the English cases and then over on 651 he says:

I am clearly of opinion that this Court in the present case has jurisdiction now to make an order that will enable the action for damages against the company to continue, whether the order be couched in terms simply giving leave to continue with the action or in terms that the applicant may be at liberty nunc pro tunc to commence the action.

So, both his Honour and Justice Sholl draw that distinction but then say, "It does not matter and I can do it either way. I can either grant leave to continue with the action or leave nunc pro tunc to commence it", and your Honours will note that that is in the face of a section which says "commence or continue" or words to that effect and as I pointed out yesterday, if your Honours now go to the Code, section 471 uses paragraph B, which is the current section in that line, again says:

a person cannot begin or proceed with:

Shorter, more Anglo-Saxon synonyms are used in preference to the Latin-based words but otherwise, the section is the same. It is a matter of some importance that despite those mandatory terms "commence or continue" the courts have said that. When one comes to 459P, those words do not appear which suggests less of a temporal significance and the words that do appear, the words that are cited against me are the words "only" in 459P(2) and "cannot" in 459P(5).

In my respectful submission, for the reasons I gave yesterday, if the legislature had intended to make it clear that this practice of granting leave nunc pro tunc in sections containing this sort of requirement was not to apply, it would not have done it obliquely by using the words "only" and "cannot" which are really just different words for others, it would have done it by saying "prior leave". If it had said without the prior leave, one short five letter word, there would have been no ambiguity. Now, why was that not done? We would submit, faced with that line of authority where again and again the courts have said notwithstanding that you cannot commence or proceed with, it is not jurisdiction, you can get leave nunc pro tunc, why would the legislature not have said that there?

When you add the factors we have put about Grant's Case, it is my respectful submission that the result is clear. Now, I said I would take your Honours very briefly to the decision of Justice Young about rogue petitions. The decision is that of Torsir Pty Ltd v Maxgrow Developments Pty Ltd (1995) 18 ACSR 201 and this dealt with a petition which was brought contrary to section 444E of the current law, 444E being the section which precluded the commencement of proceedings while there was a deed in force and that says, without any provision for leave, the person - that is a creditor when there is a deed - cannot make an application for an order to wind up the company or proceed with an application, not cannot with leave, simply cannot.

His Honour had to deal with that provision and what he said was, at page 205, line 37:

It seems to me that in s 444E when read with s 459P(5) the word "cannot" means that the creditor is disqualified from having locus standi to file a summons to wind up.

However, not having locus standi does not mean that proceedings commenced by that person are not validly commenced. They are not a nullity. This view is in fact reinforced by s 81 of the Supreme Court Act. It is also reinforced by the standard practice of this court -

where -

proceedings to be commenced by summons, the first prayer of which seeks leave to commence the proceedings.

So, he is referring to summonses which one issues where one needs leave and the "first prayer" is a prayer for leave. He describes that as a standard practice in this court:

though, as I will show later, this is a broken reed on which to rely. If Mr Bannon's submission is correct there would have to be two separate applications, the first for leave to commence and the second the substantive proceedings.

Thus, in my view, when the summons seeking setting aside of the deed and for winding up was filed, there was a valid filing of the equivalent of a petition -

So, a petition presented in breach of that is a valid filing. He then says:

it is also my view that, if a petition to wind up will be dismissed ex debito justiciae, it usually does not amount to a petition to wind up within the meaning of a clause such as special condition 3 of this contract. What the parties had in mind was not a rogue petition collusively or improperly presented, but a petition which seriously contested the company's right to continue in existence. Occasionally such a rogue petition is filed.

And he refers to Eddie Solomon Emporium v ANZ Bank which I have already told your Honours about. He then, at the end of the day, holds at line 25 on the next page he says:

They are cases where there is no practical reason for anyone taking the technical point, and the court does not waste time by insisting on two sets of proceedings.

And he goes on to discuss that aspect.

KIRBY J: This, of course, was before Grant.

MR BENNETT: Yes, your Honour.

KIRBY J: Are there any commentaries in the academic texts or have they had time to comment on this yet?

MR BENNETT: I am not aware of any, your Honour, but that does not gainsay the possible existence. Your Honours, we would submit when those matters are put together, Grant does not stand in the way of this application and does not dictate the result in this appeal. One can do it, as I have submitted, in one of two ways, either by saying that section 459P is satisfied by a late application and that it has nothing to say about when the order is made. The alternative is to read the word "apply" in 459P(5) as the final application made on one's feet rather than as the making of the application which occurs in the court registry some time earlier. That enables the same result to be reached by a slightly different route.

Your Honours, the other matters we have referred to in the submissions, and I will not take your Honours through them, we would remind your Honours that the insurance cases really do concern a very different principle and we would not quail from submitting that National Mutual Fire Insurance, Radcliffe, and Spautz v Kirby are wrong. Radcliffe and Spautz were both cases which were decisions of Mr Justice Hunt relying on, as he was bound to do, the Full Court in National Mutual Fire. The insurance situation did involve some different considerations.

Finally, we ask your Honours this: If your Honours propose to allow the appeal we would respectfully ask your Honours to take a slightly unusual course and that is to deliver reasons and then stand the matter over for a few days for the making of orders. The reason for that is twofold. We will need to co-ordinate the making of orders in this Court with applications for fresh orders in the Federal Court and it is very desirable as a matter of timing that that take place on the same day. What we have in mind, if your Honours were prepared to take that course, we would then arrange for the Federal Court to be sitting to hear the applications that need to be made to it within a few minutes of your Honours making your Honours' orders. That would obviously not be logistically possible before we know what your Honours orders are going to be. The other aspect is this - - -

TOOHEY J: Would that be necessary, Mr Bennett, in view of the undertakings which condition the grant of special leave.

MR BENNETT: Yes, your Honour, because those undertakings require a number of alternative courses but we do not know which one is going to be taken and the other reason is this, your Honours. We moved the Federal Court a few weeks ago to wind up the companies on our petition, notwithstanding the making of the existing order which is on appeal to this Court and we argued that there was no reason why there could not be two winding up orders.

That application failed and that is, at the moment, on appeal to the Full Federal Court. Now, we do not know at the moment whether the Full Federal Court will be able to hear that and determine it before your Honours publish reasons but that again may affect what orders need to be made or need to be obtained consequent upon what your Honours do. The importance of the matter is that there are three or four different ways in which these companies can be wound up and which one will obtain the maximum relation back period may depend on what your Honours say about what has happened below in this case, and consistently with the spirit in which special leave was granted, which was that the respondents ought not to be prejudiced by the success of the appeal to any more extent than is required by law, there will need to be some thought given to exactly which course is taken as a matter of great urgency when your Honours make orders. I would suspect this, that the parties will be able to agree on the orders that your Honours would make once we have your Honours' reasons so I do not anticipate there will be argument on the short minutes.

KIRBY J: Can I just ask on that, it is usual to formulate orders in order to test your legal conclusions. The staying of the implementation of the orders or their being given effect to is a different question and you have made your application in that respect. Is there any comment that you have to make if the Court were to allow the appeal on the orders that are sought in the submissions of the appellants?

MR BENNETT: Your Honour, it is less the form of the orders than the speed with which we have to act once the orders are made.

KIRBY J: Yes, I understand that.

MR BENNETT: In relation to the form of the orders, your Honours appreciate that the Full Court has purported to grant leave nunc pro tunc and my learned friend has a cross-appeal which seeks to preserve that in slightly different form. Of course, if that is successful that may well affect what other orders should or need to be made. Otherwise, there is also the question of remission to the trial judge for the purpose of making orders under, I think it is 467, but the section your Honour referred me to which is the specific power to dispense with irregularities in these parts.

GAUDRON J: But there is no power to make orders under 467.

MR BENNETT: No, your Honour, it is not an order under 467. In one sense it is a reason for not allowing the appeal - - -

GAUDRON J: It is a reason for making no order.

MR BENNETT: Or a reason for making an order notwithstanding the defect.

GAUDRON J: Yes, 467, on your submission, would result in this Court making no order other than "Appeal dismissed."

MR BENNETT: Either that or saying because the trial judge did not consider 467, the appeal should be allowed and the matter should go back to the trial judge to determine whether he applies section 467 and if he does not apply it to dismiss, if he does apply it to make an order.

GAUDRON J: Yes.

KIRBY J: My recollection is that neither the primary judge nor the Full Court were asked to apply the relieving provisions of 467.

MR BENNETT: That is so, your Honour.

KIRBY J: Where is the error that we are asked to correct? If you do not ask a judge to correct - to apply the section where is the error in failing to apply it?

MR BENNETT: Your Honour, the Full Court had no cause to apply it or deal with it because it dealt with it as granting leave nunc pro tunc. His Honour did not apply it because he was not even asked to do that but, in my respectful submission, one does not need error, in the pejorative sense, to result in a matter being sent back. If his Honour's attention had been directed to the defect in what he was doing, no doubt one matter he would have given attention to is that provision. His Honours attention, not even being directed to that, the question never arose and, in my respectful submission, justice requires that his Honour have the opportunity, if he is now told that the order is without jurisdiction, of considering whether that section would have enabled him to make the order in any event.

TOOHEY J: It is really just a question of what orders should be made consequent upon the allowing of the appeal if the appeal is successful.

BRENNAN CJ: Yes, it is, your Honour.

BRENNAN CJ: If the order that has been made is one for the winding up of the companies and if the appeal otherwise is successful, why is it not a matter of considering whether the order, that is for the winding up, is correctly made in the light of 467A, the question being whether the absence of prior leave is or is not, as a matter of law, a defect or irregularity?

MR BENNETT: Yes, if your Honours were against me on it being a defect or irregularity under that section then, of course, this submission would not arise.

BRENNAN CJ: But if we were with you on the question of a defect or irregularity then what orders should be made?

MR BENNETT: Your Honour, unless my learned friend submits to the Court that there is evidence he would have called on the question raised by that section, unless he says that to the Court, there is no reason why this Court could not take that step itself and come to the conclusion for which we submit, but if my learned friend makes that submission, I could not oppose him having the right to call that evidence before the trial judge.

BRENNAN CJ: What I am puzzled by - this relates to the connotation of the terms "defect or irregularity - is what evidence might be relevant if the relevant defect or irregularity is said to be nothing other than the absence of a grant of leave.

MR BENNETT: It is hard to see what evidence he could rely on to show that substantial injustice has been caused but cannot otherwise be remedied. That is what he would have to show. It is very hard to imagine what evidence could be relied on by him to demonstrate that. It is really a matter for him to deal with that but my submission, certainly my primary submission is that if this Court can be satisfied under 467A, that would be a reason for dismissing the appeal. In fact it is "unless the Court is satisfied", so, in a sense it is a negative onus.

The final matter I should mention is costs and that is another reason why it is desirable to deal with the matter on short minutes. I simply remind your Honours that both at the hearing and on appeal before the Full Court there were a large number of matters dealt with in relation to which we were successful and the other respondents were successful and that therefore, if the appeal is allowed, there should only be very limited interference with orders for costs below. Whether that is sent back to those courts to deal with or dealt with by this Court is a matter, of course, for your Honours but we would submit again, it is a convenient matter to be dealt with by publishing reasons and deferring the making of orders. May it please the Court. I apologise for having been inaccurate in my estimates yesterday and today.

BRENNAN CJ: Yes, quite, Mr Bennett. Mr Blue?

MR BLUE: May it please the Court, in general terms we respectfully adopt the submissions of both my learned friends, Mr Gray and Mr Bennett. I only wish to amplify them or adopt a slightly different approach in four respects. The first is in respect of 459P(5) which is the section that provides:

Except as permitted by this section, a person cannot apply for a company to be wound up in insolvency.

If I can take the Court to the explanatory memorandum that was before Parliament when these amendments were introduced which is in, I think, Part 5 of my learned friend Mr Morcombe's book of authorities. If one works from the back of Part 5, it is the third page back being a page that has a number at the bottom, page 142, and in respect of which the first full paragraph is paragraph 707. I would just wish to draw the Court's attention to paragraph 7(10) which is the explanation in respect of subsection (5) and it is worded:

No person other than those provided for in the section may apply for a company to be wound up in insolvency, proposed subsection (5) -

What we would seek to draw from that is that Parliament's intention was that subsection (5) is dealing with persons who are named in subsection (1) such as the company, the creditor, et cetera. Parliament's intention was not to deal with the procedural aspect of leave which is the subject of subsection (2) because the explanatory memorandum is referring to no person. It is not referring to the aspect of leave under subsection (2).

KIRBY J: It does not really add very much to the terms of the statute.

MR BLUE: It does not add a lot, your Honour, but perhaps it is at best a negative in that Parliament did not appear to be regarding subsection (5) as a matter of vital importance vis-a-vis subsection (2).

KIRBY J: This is not Parliament, this is some official in the department who has written this.

MR BLUE: Yes, for the guidance of Parliament, your Honour. The second matter is really an amplification of the submission that my learned friend, Mr Bennett, put in relation to the wording that is now used in section 459P, and that is the words "may only" and the words "cannot apply". In our respectful submission, that change of wording is really the result of the adoption of plain English in legislative drafting, and, substantively, the same effect is being achieved as in the more cumbersome wording of the older sections. For example, my learned friend, Mr Bennett, handed up an extract from the Victorian legislation which dealt with section 199. That was the subject of Justice Sholl's decision and there the wording was:

Except by leave of the Court.....no action or proceeding in any court shall be proceeded with or commenced -

So, it is a more cumbersome way of saying the same thing. In our respectful submission, nothing can be drawn from the fact that Parliament has now chosen to use plain English to express its concepts more economically.

BRENNAN CJ: It would be helpful if they learnt where to place the adverb "only" when they are using plain English.

MR BLUE: Yes, your Honour. That does, perhaps, lead to an allied point and that is it was necessary that Parliament used the word "only" in order to convey its intent. There is no doubt that Parliament's intent was that applicants ought to be getting leave - I am sorry, these particular applicants that are the subject of subsection (2) ought to be getting leave so Parliament had to use words like "cannot" and "may only", otherwise it would just appear to be optional. In our respectful submission, that is not the issue here. The issue is not whether Parliament intended that to be a requirement. The issue rather is whether it is a procedural requirement or whether, in my learned friend, Mr Morcombe's words, it is a substantive requirement or, in your Honour the Chief Justice's words, it goes to jurisdiction or it goes to power.

In our respectful submission, subsection (2) is going to procedure whereas subsection (1) might be seen as going to power or jurisdiction. The third matter that we would seek to amplify is in respect of the word "apply" in section 459P(1). In theory that word could be interpreted, as both my learned friends, Mr Gray and Mr Bennett, have said, in two ways. It could apply to the originating process, the formal document by which the action is originated, on the one hand, or it could mean the moving of the court on the day for the order in question.

In our respectful submission, whichever way that word is interpreted then the result ought to be the same. If it is interpreted to mean the originating process, then it was satisfied here by the Commonwealth's formal application by which the action was begun and if that is the meaning of the word "apply" then it can be truly said that the order was made on the application of the Commonwealth within the meaning of subsection (1), notwithstanding that the ASC actually moved for it on the day. On the other hand, if the word "apply" means "moving Court", then it was on the application of the ASC. In our respectful submission, in that event, if the application was made on the day then there were, in fact, two errors that Justice O'Loughlin made.

The first error was in failing to address the question of leave under subsection (2) and the second error was in then going on and making a winding up order, having failed to address that first matter. In our respectful submission, they are two distinct errors and they call for different remedies on appeal. The first error, in our respectful submission, if the Court is satisfied that leave ought to have been granted, and the Full Court was satisfied and there is no real challenge as a matter of discretion in this Court to that, then the first error can be corrected on the cross-appeal and an order substituted granting leave for the error of Justice O'Loughlin in not addressing that question.

In that respect, if the Court does come to the conclusion, contrary to our submissions, that this is a matter of jurisdictional power and not just a matter of procedure, then the authorities have established that a judge always has an obligation to satisfy him or herself that there is power and that there is jurisdiction regardless of whether a party takes the point. So, in that event, it could be said that Justice O'Loughlin failed to, of his own motion, consider the question of jurisdictional power, in other words, leave, and, therefore, the Court on appeal can remedy that. On the other hand, the second error, that is, Justice O'Loughlin then proceeding to make the winding up order, would otherwise be corrected by the orders that my learned friend, Mr Morcombe, seeks, but if the first error is first corrected, then the second error would not need to be corrected.

The final matter is in relation to the case of Torsir, to which my learned friend, Mr Bennett, took the Court. There is one additional passage to which I seek to refer, which is at page 207, and it is a passage that my learned friend, Mr Morcombe, took the Court to yesterday, at line 12, where Justice Young said:

Was then, the summons filed under circumstances where the claim for winding up could be dismissed ex debito justiciae? An affirmative answer must be given to this question. Section 444E says that what was done cannot be done and that the Farrow company did not have locus standi to make such a claim.

Now, just pausing there. Farrow was bound by the deed and there was no way that that could be avoided. There was no possibility of leave being granted or otherwise. So, Justice Young then goes on to say:

Although there are situations where a claim can be made and validated by a nunc pro tunc order subsequently, usually, when a claim is made be a person without standing, despite s 81 of the Supreme Court Act, it is an incurable defect and the proceedings must be dismissed.

Now, our submission in respect of that is twofold. Firstly, Justice Young is not there dealing with an order that the Court had made, but rather merely with an application. So, it had not yet got to the point of an order and, as my learned friend, Mr Morcombe, has conceded, an order of a superior court such as the Federal Court remains valid unless and until it is set aside. The second point of distinction is that in that case there was no possibility of remedying the defect. Farrow was bound by the deed and, therefore, it lacked locus standi absolutely, just as if a person presented a summons purporting to be a creditor, but, in fact, were not.

In this case, in our respectful submission, the position is different. The Commission did have standing under subsection (1). It is merely that it had not obtained leave under subsection (2). So, in our respectful submission, the position here is that the defect that relates to standing is one that can be remedied provided that the court on appeal was satisfied that leave ought to have been granted. Again, the Full Court was so satisfied and there is no challenge in this Court to that. That, your Honours, completes our submissions, if the Court pleases.

BRENNAN CJ: Thank you, Mr Blue. Yes, Mr Morcombe?

MR MORCOMBE: May it please your Honours, there are several matters in reply. I would first like to correct something that I put to your Honours yesterday as a matter of fact. I said to your Honours that all the Australian Tax Office applications had been issued after the execution of the deeds. That is not, in fact, correct. All of the Australian Tax Office applications were issued during the period of administration, but prior to the execution of the deeds. That means, your Honours, that the issuing of those applications by ATO was not in breach of section 444E(2) but, nevertheless, leave would still have been required under section 440 because under section 440D if the company is in administration then leave is required to issue.

Your Honours, my learned friend, Mr Gray, also put to you that the ASC had not issued an application. It was the first point that he made in his submissions. The notice of motion issued by the ASC appears at pages 58 and 59 of the appeal book. That notice of motion reads:

The AUSTRALIAN SECURITIES COMMISSION will.....move the Court for orders:

1. Pursuant to section 459P.....that the companies.....be wound up in insolvency.

And, secondly, seeking a dispensation from the notice requirements that would normally follow the issue of such an application.

TOOHEY J: What about the numbering of the documents, Mr Morcombe? Would that indicate that this was a separate application to one filed earlier or that it was a motion within the framework of the earlier application?

MR MORCOMBE: I am happy to concede that it was within the earlier application, your Honour. It was not a fresh action, but, in my submission, that does not affect the submissions that I have put. It is, nevertheless, an application made by notice of motion in an already existing action.

BRENNAN CJ: I must say you have quite lost me in relation both to 440D and E and in relation to this last submission.

MR MORCOMBE: I am sorry. They are separate points, your Honour.

BRENNAN CJ: I know they are separate points. I just do not understand either of them.

MR MORCOMBE: I am not batting well at this stage then, your Honour. 444E(1) refers to things that may not be done by a person bound by a deed.

BRENNAN CJ: Right.

MR MORCOMBE: I put to your Honours yesterday that the ATO was bound by the deed, which it was upon execution, and, therefore, it could not bring its applications.

BRENNAN CJ: That is right.

MR MORCOMBE: What I am now saying to your Honours is that I was incorrect, factually, in putting that to you because the applications issued by the Australian Tax Office had already been issued.

BRENNAN CJ: What do you mean by "applications"?

MR MORCOMBE: The proceedings being commenced and that document which appears at page 1 of the appeal book is the notice of motion issued by the Australian Tax Office, or at least the amended notice of motion. Your Honours, at appeal book, page 68, there is a list, being a schedule to the statement of agreed facts, and the third column indicates the dates on which applications were issued.

TOOHEY J: Is the point of this, Mr Morcombe, that the Court is not concerned in any way with section 440D?

MR MORCOMBE: Your Honour, we say that under 440D, because the companies were under administration at the time of issuing the applications - - -

BRENNAN CJ: This is the application for winding up, we are talking about?

MR MORCOMBE: Yes, your Honour.

BRENNAN CJ: I am sorry, I am not following this at all. We are talking about an application for winding up by the Australian Tax Office, is that right?

MR MORCOMBE: Yes, your Honour.

BRENNAN CJ: Now, am I right in saying that you now either contend or concede, I am not sure which, that 444E(2) has no application?

MR MORCOMBE: No, I do not say that, your Honour, but I do say that 444E(2)(a) has no application, but 444E(2)(b) did have application.

BRENNAN CJ: Yes, all right. I thought that was clarified yesterday.

DAWSON J: So the application was made before the deed?

MR MORCOMBE: The application was made before the deed.

DAWSON J: And then there was an application to continue?

MR MORCOMBE: I am not sure that there was.

BRENNAN CJ: There is a need for an application.

MR MORCOMBE: There is a need for an application to proceed, so, yes.

BRENNAN CJ: Yes.

DAWSON J: But they did not because of the other deed.

MR MORCOMBE: The reason I am raising it is that Mr Bennett raised it with me this morning and I was incorrect in what I put to your Honours yesterday and I needed to clarify it.

BRENNAN CJ: Yes.

MR MORCOMBE: Thank you. Your Honours, the second point, the notice of motion commencing at page 58 of the appeal book is the notice of motion issued by the ASC and in it the ASC seeks an order that those companies be wound up in insolvency and dispensation from the rules that are normally consequent upon the issuing of an application. At appeal book, page 117 - and I do not invite your Honours to go to it, but during the submissions to his Honour the learned trial judge counsel sought the orders to be made on that application. His Honour the learned trial judge at appeal book, page 169, in his orders, in particular in paragraph numbered 2 ordered that:

The notice requirements set out in section 465A of the Corporations Law be dispensed with in relation to the Australian Securities Commission's motion dated 29 August 1995 to wind up the Group A Companies.

And at appeal book, page 198, the Full Court, in fact, proceeded on that basis. Your Honours, Mr Gray also addressed you on section 467A. That, in fact, was addressed by this Court in the David Grant Case and I refer your Honours to page 279, line 7, where this Court said that that section has no application to the matter before them.

KIRBY J: Page 279, did you say?

MR MORCOMBE: Page 279, line 7, your Honour. Your Honour Justice Toohey also sought a reference to those parts of the David Grant Case where there is reference to jurisdiction. The word "jurisdiction" is referred to in a number of places, which I will take your Honour to in a moment, but the question of jurisdiction power and locus are all closely associated in this matter, and could I give your Honours the page references to those matters. At page 271, halfway down the page there is a reference by Justice Gummow in the paragraph commencing "Section 57" where he refers to section 1322(4) of the law empowering the Court to extend. At 272, point 1, there is a reference to exclusion of the authority of the Court. At 276 , point 1, there is a reference in the first line to provisions which confer jurisdiction. At 276, point 5, in the paragraph commencing "In addition" and his Honour there refers to section 459G operating to define the jurisdiction, and at the end of that same paragraph the source and nature of the jurisdiction involved.

At 277, point 1, his Honour refers to attaching a limitation or condition upon the authority of the Court to set aside the demand. At 277, point 2, the sentence commencing "The force of the term `may only' is to define the jurisdiction of the Court". Finally, 279, point 3, where his Honour adopts the decision in Re J & E Holdings Pty Ltd where the Court said:

"The position is quite simply that unless the Court has a power to extend the time -

et cetera. My second last point - your Honour Justice Toohey asked me about the seventh edition of the CCH. Our inquiries indicate that that is the current edition and it contains the relevant provisions that are relevant to this appeal.

TOOHEY J: Thank you.

MR MORCOMBE: The final point - Mr Bennett submitted that there should be some order other than costs being allowed to the appellant in the event that we are successful. In our submission, the costs should follow the event because if we are correct in our submission that the application should not have been brought in the circumstances in which it was, then it follows, we say, that costs thereafter should follow the event if we are successful and we should be allowed the costs before the learned trial judge, the Full Court and this Court, if we succeed.

BRENNAN CJ: What do you say about the proposition from Mr Bennett that the Court should publish reasons without making a formal order?

MR MORCOMBE: Your Honours, I can imagine some difficulty in assembling this same Court to enable that to happen. We say that if we are successful, then, automatically, the orders sought in my outline of submissions should follow and it is difficult to imagine that there should be any orders other than as are sought.

BRENNAN CJ: I do not think that is the problem that is being addressed. Assuming that the Court were in your favour in relation to the orders that were to be made, what do you say about the pronouncing of the reasons for decision, including therein a proposal to make the order in those terms, followed by an adjournment in order that the time may lapse before the formal orders are made?

MR MORCOMBE: I would have no opposition to that, your Honour.

BRENNAN CJ: Yes, thank you.

MR MORCOMBE: Thank you, if the Court pleases.

BRENNAN CJ: Thank you. Yes, Mr Gray?

MR GRAY: Your Honour the Chief Justice asked us to offer some form of order we would seek on the cross-appeal if the Court was to allow that.

BRENNAN CJ: Yes.

MR GRAY: There are two versions that I provide to the Court. The reason for two versions, it would depend on how much of the existing Full Court order was vacated. The essential difference is the seeking of an order for granting of leave, as the Court will see. The cross-appeal, of course, only has utility in the event of the appeal being allowed. If the appeal was not allowed, the cross-appeal would not be pressed.

BRENNAN CJ: Has Mr Morcombe had an opportunity to consider these?

MR GRAY: I will pass them to him. I put that badly. If the appeal is dismissed, there is an opportunity for the cross-appeal to be advanced.

MR MORCOMBE: Your Honour, we say that if the appeal is successful then there is no matter before the Court on which the cross-appeal could be based, that is, there could not be an order on the cross-appeal if our submissions are correct.

BRENNAN CJ: Yes, thank you. The Court will consider its decision in this matter.

AT 11.05 AM THE MATTER WAS ADJOURNED