Kendle and ANOR v Melson and ANOR P5/1997 [1997] HCATrans 328 (21 October 1997)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Perth No P5 of 1997

B e t w e e n -

IVAN JOHN KENDLE

First Appellant

VELCRETE PTY LIMITED

Second Appellant

and

PETER MICHAEL MELSOM

First Respondent

STANLEY FREDERIC ROBSON

Second Respondent

BRENNAN CJ

McHUGH J

GUMMOW J

KIRBY J

HAYNE J

TRANSCRIPT OF PROCEEDINGS

AT PERTH ON TUESDAY, 21 OCTOBER 1997, AT 10.16 AM

Copyright in the High Court of Australia

MR R.H.B. PRINGLE, QC: May it please your Honours, I appear for the appellants in this matter. (instructed by Leonard Cohen & Company)

MR R.A. CONTI, QC: May it please your Honours, I appear for the respondents with MR K.L. CHRISTENSEN. (instructed by Tottle Christensen)

BRENNAN CJ: Mr Pringle.

MR PRINGLE: Yes, may it please your Honours. Before commencing the argument, your Honours, may I say a word about the authorities. My learned friends have provided one book in which your Honours will find the authorities which are on their list except for No 3 in the authorities to be read from and 6 from the other authorities cited. We have provided two small paginated bundles of authorities. One contains the only other two authorities which are not already in the respondent's bundle which are in our list of authorities to be read from and they contain two pages from Halsbury and the whole chapter from Professor Donovan's work dealing with joint and several appointments of receivers and managers.

I shall take your Honours to that chapter, but I propose only to deal with a couple of pages as indicated in the list of authorities. Then there is also, your Honours, a separate bundle which I had not intended to read from but which contains all the authorities in paragraph 5 of our outline: the authorities which we cite for the proposition that it is a general principle of law and equity that in the absence of words of severance the appointment of two or more persons to an office is joint only. I do not propose to read from those, but all those authorities or the relevant parts of them are collected in that second bundle. May I apologise for one small overlap between our authorities and theirs and that is that we have two pages from Re Gudgeon in our bundle, although the respondents have the whole of Re Gudgeon in their bundle.

BRENNAN CJ: I think you can proceed. We will deal with the authorities as we come.

MR PRINGLE: Yes. May I take it, your Honours, that we can take the chronology and paragraph 1 of the outline which sets out the background as read?

BRENNAN CJ: Yes.

MR PRINGLE: In that case, your Honours, may I simply say that the appeal concerns the appointment on 12 June 1986 of the respondents as joint and several receivers and managers of Velcrete Pty Limited, the appointment of more than one receiver and manager being based on the provision in the interpretation clause in the equitable mortgage to the effect that the words expressed in the singular include the plural and, having regard to the way previous cases have been decided, may I take you to a few provisions in the equitable mortgage which have a bearing on this appeal. If one goes to the appeal book, your Honours, page 27, one has the charging clause in the usual form, all the property of Velcrete as trustee was charged.

KIRBY J: What page is it, Mr Pringle? I am finding it a little hard to hear.

MR PRINGLE: Page 27, about a third of the way down the page and then if one goes to page 32 one gets the provision concerning default rendering the moneys lent due and payable. That is at the top of page 32.

GUMMOW J: Now, is Velcrete a party to this litigation?

MR PRINGLE: It was a party, your Honours, at the trial and on appeal. The appellant, Mr Kendle, applied in person for special leave to appeal. He could not, of course, represent Velcrete, but the practical effect, if the appeal is allowed is that, if the case goes back to the Supreme Court as the proceedings are incomplete, Velcrete would come back into the picture.

GUMMOW J: Was the Commonwealth Development Bank of Australia a party to the action?

MR PRINGLE: No, but Velcrete, your Honours, being a company, could not represent itself. Mr Kendle applied and obtained special leave in person. The next page, your Honours, page 33 - - -

GUMMOW J: So the relief that is being sought here would be, what, declaratory relief, would it?

MR PRINGLE: Well, your Honours, it would really be setting aside the order of the Supreme Court which declared in effect that the appointment of the respondents as joint and several receivers and managers was authorised by the equitable mortgage. If that is set aside, we go back to the position that his Honour Justice Parker found for as on all points, but the case went off on separate issues. Only certain issues were tried: all those touching the validity of the appointment. There were other issues remaining, so that if the appeal were to be allowed, we would respectfully submit that the matter would simply go back to the Supreme Court; presumably the Full Court, your Honours, for the reasons that the Full Court did not get to two of the issues which were raised by the other side.

GUMMOW J: Now, was the Commonwealth Development Bank a party in the action as constituted before Mr Justice Parker?

MR PRINGLE: No. The position about the Commonwealth Bank is that it gave an indemnity to the respondents, but it was not made a party and I take it that there is no quarrel between the bank and the receivers.

BRENNAN CJ: Looking at the further amended statement of claim at page 1 of the appeal book, who is the first plaintiff?

MR PRINGLE: Velcrete. That was the trustee at the time of the granting of the equitable mortgage and at the time of the first appointment of the two respondents. At the time the action commenced Mr Kendle was the trustee of the trusts in the deed and there was a dispute about that which fell away prior to - well, I think it actually fell away prior to the commencement of the evidence before his Honour Justice Parker.

McHUGH J: But the procedure in the case seems to me to be quite bizarre. This is an action for damages for trespass, for conversion and damages under paragraph 21 brought by Velcrete. Now, in the course of that it may be one thing to say that those who entered the land and took possession of the business had no authority to do so and were trespassers, but I just have a real difficulty in seeing how the present plaintiff gets into this matter. How does he get into it?

MR PRINGLE: Well, your Honours, if a trespass was committed, any chose in action would have been held by Velcrete upon trust for the beneficiaries of the trust.

McHUGH J: But this is an action for damages at common law.

MR PRINGLE: Yes, but the chose in action would have been an asset of the trust, in our submission.

McHUGH J: Well, that may be so.

MR PRINGLE: Admittedly it is a claim at common law, but - - -

McHUGH J: One can accept that, but how does Mr Kendle become a party to the action?

MR PRINGLE: Because he was the current trustee, your Honour, that is all. One way or the other we would respectfully submit that we have the right parties before the Court and at the present stage it is not necessary to decide which is the proper plaintiff. We certainly have the one who was there at the time of the appointment and we have the one who was there at the time the writ was served.

McHUGH J: But this seems to assume that there is a trust which is some entity known to the law quite separately from the legal rights of who happen to be the trustee. I would have thought either that there was a trespass against Velcrete, which was the legal owner, or perhaps later on it was against Mr Kendle. Perhaps it was against both. I do not know if that is the way you put your case.

MR PRINGLE: No, your Honour. Certainly the trespass was committed, if there was one, against Velcrete, but Kendle is the successor to Velcrete with an intervening trustee in between.

McHUGH J: Well, he may be, but did Velcrete assign its rights that it had to Kendle?

MR PRINGLE: Well, this was not a problem raised below.

GUMMOW J: Well, maybe it should have been, but would not Velcrete be a necessary party unless it has assigned and dropped out of the picture, assigned at law and dropped out of the picture?

MR PRINGLE: Well, your Honours, I do not have the provisions of the Trustees Act 1982 here, but my recollection - - -

GUMMOW J: But it does not need the Trustee Act. It is the legal owner of this chose in action. It has got to be in the action.

MR PRINGLE: Yes, but there is something in the Trustees Act about what happens to the trust property when one trustee retires and another is appointed.

GUMMOW J: Well, is there anything here that tells us what happened?

MR PRINGLE: I am afraid I did not have notice of this point, but all I can say, your Honours, is that there is no quarrel between Mr Kendle and Velcrete. As I said, if your Honours are with us in the appeal, Velcrete will be - - -

BRENNAN CJ: Yes, we understand that, but there is a problem about it. If one looks at the statement of claim, does Mr Kendle appear anywhere in there?

MR PRINGLE: Yes, your Honour.

BRENNAN CJ: Where?

MR PRINGLE: Page 10, your Honour.

KIRBY J: This is another case where the statement of claim has been produced but without the cover sheet which makes the reference to the parties. It is very obscure.

MR PRINGLE: Yes, but Mr Kendle is the second plaintiff, your Honours.

BRENNAN CJ: I know he is the second plaintiff, but there does not seem to be any allegation in the statement of claim which has anything to do with Mr Kendle.

McHUGH J: Paragraph 2 alleges he is the current trustee. Everything else seems to allege it is a trespass against the legal ownership of the first plaintiff.

MR PRINGLE: I am sorry, your Honours. I turned up the wrong page. Yes, your Honour, paragraph 2 contains the allegation - this is on page 1 - that Mr Kendle is the current trustee of the trust.

BRENNAN CJ: And that is relied on as a sufficient title to sue for the damages for trespass and conversion that, if the claim were successful, would result in an award of damages in favour of the person who suffered that loss?

MR PRINGLE: Well, your Honours, the prayer your Honours will see at page 5 refers to both plaintiffs and, in our submission, it was a reasonable precaution to take to join the current trustee as well as the trustee at the time of the trespass.

McHUGH J: It is not a question of whether it is reasonable or not. It is a question as to whether or not the statement of claim alleges any facts which enables the second plaintiff to have any interest in these proceedings at all, either as a matter of fact or as a matter of law. Now, there is certainly nothing there as a matter of fact which would enable the second plaintiff, which is the present appellant here, to bring this action. Now, unless there is something in the statute law of this State which varies the common law position, it would appear that the present appellant has no standing whatsoever in this case.

MR PRINGLE: Yes. Well, your Honours, may I say that now that the plaintiffs are represented by counsel, it would be a simple matter to put Velcrete back into the picture by allowing joinder of Velcrete on appeal. The only reason that Velcrete is not an appellant is that Mr Kendle applied for special leave to appeal in person.

McHUGH J: Well, it may well be the solution unless there is some problem about costs or the authority of who controls Velcrete now or what the situation is?

BRENNAN CJ: Velcrete was an appellant to the Full Court?

MR PRINGLE: Yes.

McHUGH J: A respondent, was he not?

BRENNAN CJ: A respondent to the Full Court, yes.

MR PRINGLE: I am sorry, a respondent to the Full Court. Yes, as I say, your Honours, the only reason, as I understand it, that Velcrete is not before you is because of the fact that Mr Kendle applied in person and if the case goes back to the Supreme Court - - -

BRENNAN CJ: Well, first of all, you have authority, I take it, Mr Pringle, to - - -

MR PRINGLE: Well, can I just confirm that? Yes, your Honour. Mr Kendle is in Court and he is a director of Velcrete.

BRENNAN CJ: Well, the question of your authority is a question entirely for you, Mr Pringle.

MR PRINGLE: Yes, but I need to be sure that I am telling - - -

BRENNAN CJ: You are appearing then for Velcrete, seeking an amendment of the proceedings to join Velcrete as the appellant?

MR PRINGLE: If you please, yes.

McHUGH J: It is not a matter so much for Mr Kendle. It is a matter of whether your solicitor has a retainer which would authorise - - -

MR PRINGLE: Well, he is not in Court, but I am prepared to take responsibility since I know the background of the case.

BRENNAN CJ: Well, unless your authority is challenged, we must accept your authority to apply on behalf of Velcrete to join Velcrete as a party to this appeal.

MR PRINGLE: If you please.

BRENNAN CJ: Mr Conti, what is your attitude to that application?

MR CONTI: We have no objection to that course. We only drew attention to the absence of Velcrete in paragraph 3 of our submissions because we were concerned Velcrete would somehow claim in this long and rather complex litigation that Velcrete would say it was not bound by any order of the Court and that is why we drew attention to the matter. It is a matter of some considerable trouble to us, but we would prefer the course that Mr Kendle has taken and we have got no objection to it and we make no special application for costs in relation to it.

BRENNAN CJ: Yes, very well. Then Velcrete will be joined as a party to the appeal and the title of the proceedings will be amended accordingly.

MR PRINGLE: If you please. Your Honours, may we go to page 32 of the appeal book and your Honours will see there in paragraph 3 at line 10 the provision concerning appointment of a receiver, that is, any person to be a receiver. I will take your Honours to the interpretation clause in a moment, but may I just point out two other provisions while we are dealing with the mortgage and that is if you look at (c) in the middle of the page you will see that one of the powers of the receiver is:

to carry on or concur in carrying on the business -

and towards the end of that subclause -

to do all acts which the Mortgagor might do in the ordinary conduct of its business for the protection or improvement of the mortgaged premises or any of them or for obtaining income or returns therefrom;

and with that should be read, in our submission, on the next page, about page 34, (g) and that is that there is a power:

to employ managers solicitors officers agents auctioneers workmen and servants for all or any of the purposes aforesaid at such salaries or remuneration as the receivers shall think fit;

and that would cover the purposes of doing everything the mortgagor could do and I mention this because it touches on the question of practicalities of appointing more than one - several receiver, but it is a point I will come to at the end of the argument. I am merely bringing your Honours' attention to the provisions at this stage. If we can then go, your Honours, to the interpretation clause which is at pages 38 to 39 and there are just a few features - I will not read it, but there are a few features to which I would like direct attention. The first is on page 38 towards the foot of the page you will see clause 31 and your Honours will see there references to mortgagor and when there are two or more mortgagors and then it says they:

include the Mortgagors or any of them -

and similarly in regard to debtors. So that the clause does, in fact, deal with multiplicity of some relevant entities. Over the page, your Honours, you will see about in line 5:

the receiver shall include a receiver and manager according to the nature of the appointment made by the Bank -

and then in the next line:

words importing the singular number or plural number shall include the plural number and singular number respectively -

and then the last sentence in clause 31:

And when two or more Mortgagors or Debtors are parties hereto the respective covenants and agreements on their part herein contained or implied shall bind them and every two or more of them jointly and each of them severally -

The point we would make is that the only way one can get to the appointment of more than one receiver and manager is to read the clause I read to your Honours about the appointment of a receiver with this definition and more particularly the words that the singular include the plural. This is not a case, in other words, where the instrument expressly contemplates the appointment of more than one receiver, certainly not in the way it was dealt with in the NEC Case in the Court of Appeal of New South Wales and in the application for special leave to this honourable Court from that decision and I will come to that shortly, your Honours.

So really we would submit that before the case reached the Full Court of the Supreme Court in this case the position in Australia at all events was that right up until the NEC Case we ought to win. We would win on the previous decision of the Court of Appeal in New South Wales, Kerry Lowe Management, because that followed the decision of Justice Davies in the Federal Court and Justice Franklyn in the Supreme Court of Western Australia in saying that where the reliance is upon an interpretation clause which includes a provision that the singular includes the plural, that does not save an appointment of receivers and managers jointly and severally and in the NEC Case there was express provision for the appointment of two or more receivers and managers and that was seized on together with the practicalities, a large receivership, to say that the proper construction of that document was that it authorised the appointment of receivers and managers jointly and severally.

KIRBY J: I sat in the NEC Case and I have forgotten the detail of it, so that if it is important to have a look at the deed in that case then you will have to take us to it.

MR PRINGLE: Yes. I do not want to go through the earlier cases. I am merely bringing to your attention the course of the litigation in this country leading up to the NEC Case. So what we would respectfully submit that his Honour - - -

GUMMOW J: But suppose, Mr Pringle, one could come to the proper view, construing this document, that it did authorise an appointment of a plurality of receivers and managers and that the plurality was the joint appointment, not joint and several?

MR PRINGLE: Yes.

GUMMOW J: Would one then be able to properly read down clause 2 on page 41 of the deed of appointment? That is the right spot, is it, page 41 of the appeal book?

McHUGH J: That question is reserved, is it not?

MR PRINGLE: I beg your pardon?

McHUGH J: That question of reading down is reserved, is not it, severance?

MR PRINGLE: Not as far as I - - -

McHUGH J: So it has never been dealt with by the Full Court?

MR PRINGLE: No, that is the point. I understood that it is not before your Honours.

McHUGH J: Yes.

MR PRINGLE: Well, I put that in the outline, that as far as we understand the position, that your Honours would want the Full Court to deal with that point before it came before you.

McHUGH J: I do not know about that. I mean, you were speaking about the cases a while ago, but it seems to me to put the cart before the horse. It is rather like the old days when they used to construe the cases first and the rule later. Surely one construes this document and then one goes to the cases to see if there is anything inconsistent with it or if they might illuminate it in some way, but should we not start with the document?

MR PRINGLE: Yes. Well, your Honours, my understanding of the grant of special leave in this case, it was confined, as I pointed out in the outline, and that is the question whether a single appointment would be allowed would not be a point of general importance. It would be relating only to the construction of this document on a one-off basis - - -

GUMMOW J: But it can never be otherwise. It has always got to construe the particular document.

MR PRINGLE: Yes, and the other question is severance. Of course, if the case goes off on severance, then the point of general public importance, in our respectful submission, is one to which your Honours do not come and that is not the way in which special leave to appeal is normally granted. So for those reasons I have taken it that your Honours would want to deal with the question of whether the Full Court got it right on the point upon which the other side succeeded.

KIRBY J: I think Justice McHugh's point is that if it is dealt with, it is dealt with in the context of construing a particular document.

MR PRINGLE: Yes.

GUMMOW J: Now, there was a ground of appeal to the Full Court, was there not, which appears at page 97, the Full Court of Western Australia, ground 2, Justice Parker:

should have found that the purported joint and several appointment should have been upheld as valid to the extent that it was a joint appointment.

MR PRINGLE: Yes.

GUMMOW J: Now, what happened to that ground of appeal in the Full Court?

MR PRINGLE: They did not deal with it.

GUMMOW J: Because they said valid as joint and several?

MR PRINGLE: That is so. That is the only point they dealt with. As I indicated earlier, there are two points left over. One is the question of severance and the other one is the question of whether the receivers and managers were in fact agents and not receivers and managers at all or perhaps both, and Justice Parker found against them on the facts on that one. So the question of severance is still a live issue between the parties, but I have actually - - -

GUMMOW J: But I am still not following this. The orders you seek in this Court appear at page 164, do they not, and it seems to be declaratory relief?

MR PRINGLE: Yes.

GUMMOW J: 3.2:

That the appointment was not valid and effective as a joint appointment of the Respondents.

MR PRINGLE: Yes.

GUMMOW J: Well, what does "joint appointment" mean?

MR PRINGLE: Well, I think I have indicated in the outline that we did not anticipate that this was a point to be dealt with in this appeal.

BRENNAN CJ: What orders are you seeking, Mr Pringle?

MR PRINGLE: I am seeking, your Honour, an order allowing the appeal and declaring that the decision of the Full Court was incorrect, saving the two points which the Full Court had not decided, and remitting the matter to the Full Court for those two points to be dealt with.

BRENNAN CJ: We do not usually make a declaration that a decision was incorrect. That might appear in the reasons for judgment, the consequence of which is the allowing of the appeal. What consequential orders are you seeking?

MR PRINGLE: Well, that the matter be remitted to the Full Court to deal with the questions of severance and agency because the - - -

GUMMOW J: What is the agency point?

MR PRINGLE: The respondents contend that there is a power in the equitable mortgage for the bank to appoint agents. So instead of putting receivers in, they could put agents in to deal with a matter much in the same way as receivership except, of course, that they would be responsible for the agent's conduct. The trial court found that there was no evidence whatever of an agency appointment. The appointment itself - - -

GUMMOW J: Well, that is under clause 4, would that be, on page 34, that sort of appointment?

MR PRINGLE: Is it F1, your Honours?

GUMMOW J: Well, page 34 of the appeal book, clause 4. Is that the sort of appointment that was being spoken of? That was never made, was it?

MR PRINGLE: No, it was never made and so his Honour the trial judge held.

BRENNAN CJ: Mr Pringle, could you turn to page 159, which is the order made by the Full Court. Now, if the appeal is allowed, this Court must make the order which the Full Court ought to have made. What is the order which, in your submission, the Full Court ought to have made?

MR PRINGLE: The Full Court would in the ordinary course of events, if it had been with us, have got to the other two points. I would respectfully submit that what your Honours ought to do would be to set aside paragraph 3 and then remit the case.

BRENNAN CJ: No, the question is what order ought to have been made by the Full Court? That is the question that you have to answer. It may be that there are some questions which are still remaining to be dealt with. They can be dealt with by remitter but in relation to the point that has been held against you, that has resounded in the order that was made by the Full Court and which you now seek to have set aside, what order do you wish this Court to make in place of the order at page 159? I take it that - - -

MR PRINGLE: That is subject to the questions to be remitted. That is leaving aside severance, your Honours.

GUMMOW J: I do not think I understand.

MR PRINGLE: That is saving the question of severance.

GUMMOW J: Look, you came away from Mr Justice Parker with some orders in your favour, did you not?

MR PRINGLE: Yes, your Honour.

GUMMOW J: And they are set out at page 87?

MR PRINGLE: Yes.

GUMMOW J: Do you want them back?

MR PRINGLE: That is so, your Honour.

GUMMOW J: Are you not saying the Full Court should have simply dismissed the appeal against you?

MR PRINGLE: If your Honour pleases. There is the problem about the remitter.

GUMMOW J: Just forget about remitter at the moment. What you want to achieve is what should have been achieved, you say, in the Full Court, which was a dismissal of the appeal, which would have resulted in the continuation of the orders of the trial judge, and they are set out at page 87.

MR PRINGLE: Yes, that is so. I have said that in the outline, your Honour.

GUMMOW J: One of them was a declaration that the appointment as joint and several receivers was invalid.

MR PRINGLE: I think in the outline we have indicated that we - and we understood - - -

BRENNAN CJ: Whatever the outline might say, what are you seeking?

MR PRINGLE: Your Honours, the restoration of the orders made by his Honour Mr Justice Parker.

McHUGH J: There are some problems about that, are there not? As you yourself concede, there are outstanding grounds of appeal. If you look at page 164, order 3.2 sought by you is an order:

That the appointment was not valid and effective as a joint appointment of the Respondents.

MR PRINGLE: Yes.

McHUGH J: That forecloses any question of severance if that order is made.

MR PRINGLE: Yes, I understand that, your Honour, but this - - -

McHUGH J: Could I just get this clear? Are you not pressing order 3.2?

MR PRINGLE: Can I tell your Honour what happened? The other side has objected to some of these orders and we said we would put in our outline that we agree that they are not to be dealt with in this appeal.

McHUGH J: But the problems that arise arise from the form of the notice of appeal, Mr Pringle, because this Court allows or dismisses an appeal from the Full Court and it substitutes for the orders of that court the orders it should have made. There is nothing in this document that deals with that problem at all.

MR PRINGLE: Yes. Can I simply say that what we are seeking would be orders allowing the appeal, reinstating the orders of Justice Parker - and that would be right until the Full Court deals with the other two points - and then a remitter on those two points. They surely are entitled to have those matters ventilated.

McHUGH J: What you are seeking is an order: appeal allowed, matter remitted to the Full Court to deal with the outstanding questions in the appeal?

MR PRINGLE: Yes.

BRENNAN CJ: Are you seeking this more specifically, looking at page 159 for this purpose: paragraph 1 stands; that in lieu of paragraph 2 the appeal, so far as it depends upon stated grounds in your opponent's notice of appeal to the Full Court, be dismissed and that the appeal, so far as it concerns the grounds not dealt with, be remitted to the Full Court. Is that what you want?

MR PRINGLE: If your Honour pleases.

BRENNAN CJ: To otherwise set aside the whole of the Full Court's order?

MR PRINGLE: If your Honour pleases.

McHUGH J: That leaves Justice Parker's orders on foot and then it is up to the Full Court to deal with the outstanding grounds of appeal?

MR PRINGLE: If your Honour pleases. Without reading from Kerry Lowe Management, may I say about it one or two things. That was the last of the strict construction, if we could put it that way, cases. Clause 26.15 on page 616 of the report contained a provision of severance which saved the notice in the Court of Appeal's view. I also just mention, your Honours, clause 26.14 on the same page where, obliquely perhaps, double or multiple appointments were contemplated. It was in the definition clause which both contained a "singular includes the plural" provision but it also says in the event of more than one receiver being appointed, certain things happened. It is different from - - -

BRENNAN CJ: Mr Pringle, this question of severance is on one approach intricately involved in the question of construction that you wish to argue. So that the attempt to isolate the question that you wish to argue from severance may on one view of the matter have an artificiality about it which would deprive this Court of its capacity properly to construe the instrument. That means that the limitation of the issues which might be thought to flow from the limited grant of special leave should be extended, but that, I suppose, is a matter largely for your opponent to consider.

MR PRINGLE: Your Honour, I have given considerable thought to the question, so I am ready to argue it.

BRENNAN CJ: Perhaps we should ask Mr Conti what his view is about that.

MR CONTI: We would be in a position to argue severance. We have not prepared, but it is a short argument, your Honour.

BRENNAN CJ: Then can we take it, Mr Conti, that for your part at all events, you would be prepared not only to argue severance but, if it was necessary to put in a notice of contention, to deal with it on that footing?

MR CONTI: Yes, that is so, your Honour.

BRENNAN CJ: I think we will proceed on that basis, Mr Pringle.

MR PRINGLE: Shall I deal with that now?

BRENNAN CJ: As you wish, Mr Pringle. We are involved in the construction of an instrument, so you present your argument as best you may, having regard to the scope of the issues that the Court will consider.

MR PRINGLE: I think it could be conveniently dealt with briefly now, your Honours. Can I say that his Honour the trial judge dealt with this matter at pages 68 to 69 of the appeal book at line 32. His Honour at the top of page 69 distinguished Kerry Lowe Management because in Kerry Lowe Management there was of course clause 26.15 which specifically saved the appointment. His Honour did not deal - - -

BRENNAN CJ: Does it? I did not know what Kerry Lowe Management said, so, if you wish to draw our attention to it, then do so.

MR PRINGLE: Can I take your Honours to No 3 in the other side's book.

KIRBY J: Could you help me in this way. You say that on the one side is Kerry Lowe, the decision of Justice Davies ex tempore in the Federal Court and a decision of Justice Franklyn. On the other side is NEC, is that correct?

MR PRINGLE: No, your Honour. My respectful submission is that they can all stand together because of the different wording in - - -

KIRBY J: What is the tension that exists between, on the one hand, Kerry Lowe, Justice Davies and Justice Franklyn, on the one side, and NEC in the Court of Appeal of New Zealand on the other?

MR PRINGLE: Express provision for the appointment of more than one receiver and manager. In fact, it was not said in NEC that any one of the earlier cases was wrongly decided. Can I take your Honours briefly to the headnote in Kerry Lowe first.

BRENNAN CJ: Please read into the transcript the citation.

MR PRINGLE: It is Kerry Lowe Management Pty Ltd v Isherwood & Sherlock & Ors 15 ACLR 615. The headnote is contained on page 615 and the first holding was that:

(i) The deed of charge did not authorise the appointment of joint and several receivers and managers. The deed only gave power to make a joint appointment.

(ii) That cl 26.15 of the deed of charge saved the appointment of the receivers and managers by deed dated 17 August 1987 in that the further purported appointment of the receivers as several receivers affected nothing and should simply be disregarded.....

(iii) The appointment to act as receivers and managers jointly and severally was different in substance and effect from an appointment of them to act jointly.

The third holding, in our respectful submission, is fundamental. Over the page at page 616, your Honours will see at the foot of the page only three lines, clause 26.15 which reads:

"If any term or condition of this charge or the application thereof to any person or circumstances is or becomes void voidable or otherwise unenforceable it shall be severed and the remaining terms and conditions shall not be affected."

That was what was relied on. Can I take your Honours just above that to clause 26.14 which is set out in full. Your Honours will see there in the middle of that clause:

words importing the singular number or plural number shall include the plural number and singular number respectively -

There are two other features on that page which may have some bearing on the case. The first is a few lines further on. Your Honours will see there reference to:

`receiver' shall include a receiver and manager and, where more than one person has been appointed as a receiver or receiver and manager, be construed as a reference to each other such person or persons.

That is a somewhat oblique reference to the possibility of a double appointment. In NEC Management and the New Zealand case of DFC Financial Services, however, the actual clause dealing with appointments referred to the possibility of double appointments. As your Honours will see in clause 6 which is also set out in full just above the middle of page 616, the second line says:

may appoint in writing any person to be a receiver of the mortgaged property -

So that was not a case in which there was an express provision in the appointing clause, as it were, to make a double appointment. As I say, there is an oblique reference in the definition clause to that possibility, but that does not seem to add much to "the singular includes the plural".

On page 617 in the middle of the page, your Honours, that sets out what the points were, the first point and the second point. The second point concerned clause 26.15 of the deed. That is something to notice in the middle of page 617, then there is a little passage which your Honours might look at at page 618, about a quarter of the way down the page:

The decisions in Wrights and Ward both dealt with two points: did the deed of charge empower the appointment of joint and several receivers and managers, and, if it supported the appointment only of joint receivers, was the appointment of joint and several receivers and managers valid as a joint appointment only: in both cases the answer to both points was no. For the reason I have briefly indicated I think the same conclusion should be reached in the present case on the first point.

Then his Honour went on to deal with the saving clause 26.15, and I do not propose to take the matter any further except in regard to the appointment itself, your Honours, it is important. If we are talking about severance of the notice of appointment, then your Honours have to go to page 617 at the top of the page and your Honours will see some quite distinctive language used. In clause 1, about four lines down:

(hereinafter called `the receivers') to be the joint receivers and managers and each of them to be the several receivers and managers of the mortgaged property -

That of course does not apply in this case. Here we have really simply got a clause 2 which says what the effect of clause 1 is.

GUMMOW J: What is the test for permissibility of severance in this situation?

MR PRINGLE: The question is whether - - -

McHUGH J: In that case the court held the appointment was valid as joint receivers and managers.

MR PRINGLE: Your Honours, they said you have a severance clause and you have something that can easily be severed.

GUMMOW J: And you say that is not so here? What is the test though; what is the principle of construction?

MR PRINGLE: Whether as a matter of construction it is to be determined whether the parties intended that severance could occur in the sense that it did not really matter. If it is substantially different, if one brings about a substantially different situation, then severance cannot take place. Can I come to a couple of authorities in a moment, your Honour.

GUMMOW J: I do not know if the authorities will help. One needs to know what the principle is.

MR PRINGLE: Your Honour, there is just one more reference to this case that I want to make, one sentence, and then I will have finished it. May I just do that and then I will come to the cases. It is on page 618 and if your Honours look up about ten lines, your Honours will find a sentence:

In the present case the position seems to me to be in substance the same as if there had been one document appointing joint receivers and managers and another appointing them severally.

That relates back to what I referred to as the distinctive language used near the top of page 617. The document virtually made two appointments and one was severed. Admittedly, this was a contract case, your Honours, but the case of Whitlock v Brew [1968] HCA 71; 118 CLR 445 in your Honours' Court contains at pages 460 to 461 a discussion about severance.

GUMMOW J: Is that on the list?

MR PRINGLE: No, it is not. I was not expecting to have to argue it, I am afraid, but I have brought a few pages with me. May I then proceed?

BRENNAN CJ: Yes, you proceed, Mr Pringle.

MR PRINGLE: If your Honour pleases. What three Justices of your Honours' Court said on page 461:

It, therefore, becomes necessary to determine whether the condition is severable from the rest of the provisions of the contract or whether the whole contract falls. On this point the learned judge of first instance after referring to the observations of Knox CJ in Life Insurance Co of Australia Ltd v Phillips, and to Fitzgerald v Masters, held that the condition was of such a quality that it could be ignored. But those cases and Nicolene Ltd v Simmonds, to which also he made a reference, are simply particular examples of conclusions reached by the application of a general principle. That general principle is stated by Knox CJ in the first-mentioned case:

"When a contract contains a number of stipulations one of which is void for uncertainty, the question of whether the whole contract is void depends on the intention of the parties to be gathered from the instrument as a whole. If the contract be divisible, the part which is void may be separated from the rest and does not affect its validity."

Observations in the same case make it clear that in seeking to ascertain the intention of the parties to a written contract extrinsic evidence may not be resorted to except where such evidence may be called in aid in the interpretation of the written instrument. Clearly enough, it seems to us, it is not to the point to make an independent examination of extrinsic facts, even if they were within the knowledge of both parties, and upon such evidence to conclude that a particular provision was or was not of importance to them or to either of them; the question for determination is the intention of the parties as disclosed by the contract into which they have entered.....Of course, cases may arise where a vague, uncertain or meaningless clause in a contract may simply be ignored.

Your Honours, there is one other observation which I may make because I did try and find some help outside the field of contract and there most of the cases seem to be in administrative law. But the point about administrative law is made in a decision in a case called Reg v North Hertfordshire District Council (1985) 3 All ER 486. One of the points made in a case cited at page 490 is this:

The question of severance has often arisen with regard to contracts. But there the position is quite different. It is a general rule that the court will not remake a contract and to strike out one term and leave the rest in operation is remaking the contract. So it is not surprising that there can only be severance of a contract in exceptional circumstances. But that is not so with regard to a unilateral licence or permission. It is important to remember that we are here concerned not with private law but with public law. Public law is not concerned with rights and obligations so much as powers, and the cases show that the courts have adopted a wider approach to the question of severance in public law than they have in private law.

This means that the cases in public law are not terribly helpful - disappointingly perhaps, but it does rather restrict the field of helpful authority. We have contract, other cases of course about notices, and really very little else. I have fairly diligently searched - - -

GUMMOW J: There is a whole body of law about powers of appointment surely?

MR PRINGLE: About severance, your Honour?

GUMMOW J: Yes.

MR PRINGLE: I have not been able to find - I may have missed them.

GUMMOW J: The power is executed to the extent of its capacity for execution and something else is added and the something else is beyond the scope of the power.

MR PRINGLE: Your Honour, we do have the - - -

GUMMOW J: One disregards the excess and preserves so much of what is valid subject to, I suppose, questions of the blue pencil rule and so on which do not arise here because one would just strike out the words "and several".

MR PRINGLE: But that would mean that the Kerry Lowe Management Case was wrongly decided on the first point because it was only the severance clause that saved the joint appointment in that case.

GUMMOW J: I do not know about that.

McHUGH J: Might have reached the same result without it. Their Honours never addressed the question as to what would have been the position in the absence of 26.15.

MR PRINGLE: There is just one other case to which I might refer, your Honours. It is the case of British Reinforced Concrete Engineering Company Limited v Schelff (1921) 2 Ch 563 at pages 572 to 573. In that case Lord Justice Younger gave judgment for Mr Justice Astbury and in doing so said at the foot of page 572:

Now while the desired severance here may be performed by a blue pencil, it is not sought either in respect of area, subject matter or class of customer, the only matters in respect of which this privilege has hitherto been permitted, and, I cannot think after Lord Moulton's observations in Mason's Case that this process be extended, even in the case of a vendor's covenant, to a case not hitherto covered by authority where the excess is not of trivial importance and is part of the main purport and substance of the clause. To my mind there is reason for not carrying the principle so far as is here required.

And so on. So that, in our respectful submission, the provision in clause 2 of the notice of appointment should be construed as of real significance and as simply defining the intent in regard to the appointment made in paragraph 1 of the notice. Paragraph 1, it is true, simply says that the two respondents were appointed as receivers and managers of property. Clause 2 then says:

Where this Appointment is directed to more than one person their appointment hereunder is joint and several.

GUMMOW J: Is there some difficulty with the remuneration clause which is at the end of clause 1? It says:

your remuneration shall be computed in accordance with the scale of charges.....laid down by the Insolvency Practitioners Association -

Does that deal with remuneration of joint receivers?

MR PRINGLE: I do not think there was in evidence the scale of charges.

GUMMOW J: I see.

MR PRINGLE: So I would be guessing.

MR CONTI: Your Honours, if I may say, it just takes this particular course. It is essentially a professional-type charge on a time basis scheme and so much for a principal partner, so much for an employed solicitor, so much for a clerk and so on, but it is on an entirely, as it were, time basis; it is not on any scale basis. That was the situation at the time the mortgage was entered into and the time the appointment was made. Unfortunately, we were trying to get the material to bring it down in case this question arose, but Mr Christensen, who does a very large amount of insolvency work is able to ensure the Court that that has been the case in terms of the scale of fees for quite some time.

MR PRINGLE: The other point, your Honours, that we would make in regard to paragraph 2 is that it really defines the scope of the appointment as a whole. To excise clause 2 would be to change the substance of the appointment. As Kerry Lowe said, there is a substantial difference between a joint appointment and a joint and several appointment.

McHUGH J: There certainly is, but that does not mean that the maker of the appointment would not have wanted to have kept them as joint receivers and managers, even if it lacks the power to make them several receivers and managers.

MR PRINGLE: But what one cannot do, in our respectful submission, is speculate what the bank would have done had it been told that this problem might arise.

McHUGH J: That may be.

MR PRINGLE: Whitlock v Brew says - - -

McHUGH J: No doubt that is right but it does not seem to me to answer the problem. You have to go back to the deed itself first of all before one starts construing the power of appointment. Could I take you back to clause 3 on page 33. That gives the bank the power to:

appoint in writing any person to be receiver of the mortgaged premises or any part thereof -

and so on. Having regard to the "singular includes the plural" clause in F31, was there anything to stop the bank appointing several receivers to several parts of the property?

MR PRINGLE: I suppose one could have appointed a receiver - - -

McHUGH J: For example, supposing this particular mortgagor - I do not know anything about its business, but assume it had a number of projects on foot. Is there any reason why the bank could not appoint receivers in respect of a business carried on in respect of separate projects?

MR PRINGLE: But there was only one.

McHUGH J: I am not worried about that. I am trying to test this as a matter of construction of this document.

MR PRINGLE: If one had a large concern with properties and businesses round the country, one might be able to say yes, but one of the things you have to take into account is you apply the documents to the facts. If you do that and you find there is one business carried on on the one property, then that would not make sense, with respect.

McHUGH J: Well, it might. What about time periods? Could they appoint a receiver for the month of June, another receiver for the month of September?

MR PRINGLE: They can appoint and remove according to this clause and, if they have appointed, then they can appoint somebody else. But that would be a very odd and oblique way to go about things.

McHUGH J: I am trying to test the construction of this clause to see what it authorises. As a matter of construction, it seems to me at the moment that it does authorise the appointment of a number of receivers in respect of the mortgaged premises or any part thereof.

MR PRINGLE: Singular receivers?

McHUGH J: Yes, for a start. There does not seem any reason why, on the proper construction of clause F3 read with F31, that the bank could not appoint six separate individuals as receivers of different parts of the mortgaged premises.

MR PRINGLE: Not in this case. It may be in other cases but not here.

McHUGH J: You say not in this case, but businesses expand. This was a mortgage of a business, was it not, as well as land?

MR PRINGLE: The land was actually charged twice: once by a Transfer of Land Act mortgage, as I understand it, and secondly by the land being part of all the property.

HAYNE J: What would be wrong with appointing a receiver for the book debts, a separate receiver to the lands and a third receiver to the balance of the undertaking of the company? Would that not be permitted under this instrument?

MR PRINGLE: Maybe. I would not like to concede it. But it would not really take one anywhere, this case, because it is a small concern and there was no appointment to part of the charged assets. There was appointment to all of them.

McHUGH J: Concerns grow. Microsoft was once a tiny corporation. It is now just about the largest corporation in the world. This company may well have prospered.

MR PRINGLE: That would not have happened under receivership. This was an appointment to all the property that your Honours can see at page 40. So that even if separate procedures could have been appointed to parts of the property does not help in getting to the point of joint and several receiverships, in our submission.

McHUGH J: But it does raise the question: If the bank can appoint receivers, several different individuals as receivers as parts of the property, why cannot it, in effect, cross over, and appoint each of them to several parts of the property.

MR PRINGLE: That really brings us to the heart of the argument. That is, we say, that there is a general principle of law and equity that if an appointment is made of two or more persons to an office including receivers and managers, the appointment is joint only unless something to the contrary is said.

BRENNAN CJ: The question is not so much the identity of the person, it is a question of the powers vested in them and the manner of their exercise.

MR PRINGLE: We come from the general principle to the use of language in the power and when it says "two or more receivers", using the singular includes the plural, one can go to the well-established position that appointments of two persons to an office without more result in a joint appointment; therefore the power in the instrument allowing appointment should be read in the same way. It would be very strange if one had a general principle that multiple appointments were joint, but some different rule of construction applied to the instrument authorising appointment.

McHUGH J: I do not know; I might be old fashioned, and I might be very modernistic, but it seems to me that the starting place is the instrument itself, see what it authorises.

MR PRINGLE: Yes.

McHUGH J: Do not worry about what the cases say. That is a port of last call. What is there under this document to stop a bank from appointing, to use Justice Hayne's illustration, X to be a receiver of various aspects of the business, and Y to be receiver of two, say, of those three aspects of the business?

MR PRINGLE: It would be very unusual.

HAYNE J: And what makes it unusual? What makes it unusual may be that, as a matter of commercial practice, it is unusual.

MR PRINGLE: Yes.

HAYNE J: Does that mean then that the instrument is to be construed by a backyard stick? If it does, what consequence follows?

MR PRINGLE: Ordinary practice must, in our respectful submission, have a bearing upon construction. If one is looking particularly at words which are ambiguous or at least capable, possibly, of more than one meaning, one goes with the general flow of things rather than the exceptions.

GUMMOW J: But you have to say, do you not, that the secured creditor here, faced with a situation where there could be no appointment, or a joint appointment, but no joint and several appointment, would have said, "We are going to have no appointment. We are so unhappy with the joint appointment that we are not going to have anything to do with it"?

MR PRINGLE: Whitlock v Brew say you cannot think along those lines.

GUMMOW J: Whitlock v Brew has nothing to do with this particular position.

BRENNAN CJ: Mr Pringle, if you take it step by step. If you look at clause 3 at page 33, that empowers the bank to appoint any person, meaning thereby any single or plurality of persons, to be receiver of either the mortgaged premises or a part thereof. Now, the person, or persons so appointed are then given the powers which are referred to in the lettered paragraphs. What is the difference between holding that the persons appointed are joint receivers, and holding that they are several receivers?

MR PRINGLE: We have an established principle, in our submission.

BRENNAN CJ: Whatever the established principle is, what does it say as to the meaning of a difference between "joint" and "joint and several"?

MR PRINGLE: The difference, of course, is that in the case of several receivers one could have conflicts between decisions made by one as opposed to what the other one decides, and so on.

BRENNAN CJ: It means that either the powers that are conferred in the lettered paragraphs can be exercised only with the concurrence of all receivers, or it means that they can be exercised at the will of any individual receiver. That is the difference, is it not?

MR PRINGLE: Yes.

BRENNAN CJ: Then, if we are construing clause 3, the question simply is, if we can appoint two or more, is there an intention that they should each be able to exercise these powers in relation to specific property, or that they should exercise them only with the concurrence of both? Is there any case that you can show us which indicates the answer to that question?

MR PRINGLE: Yes; NEC Information Systems. I think it is No 2, your Honours, in the respondent's book

BRENNAN CJ: Very well, take us to NEC Information Systems and show us how it demonstrates it. Thank you. We had better have the reference which is (1991) 22 NSWLR 518.

MR PRINGLE: Yes, thank you, your Honour. The relevant clause is referred to twice. One by Justice Kirby, the President, at page 523 letter E, and again by Justice Meagher at - - -

BRENNAN CJ: One place will do us. Just find where the clause is.

MR PRINGLE: Except the second one is a slightly longer quotation of the whole clause. Yes, page 528.

GUMMOW J: This was upheld as a joint and several appointment, was it not? This was upheld as a defective joint and several appointment.

MR PRINGLE: Only because the clause which provided for the appointment expressly contemplated the appointment of two or more receivers and managers, and on no other ground. That, your Honours - take the clause at page 523 letter E, your Honours will see there references in italics to "any person or persons" and "Receivers or Receivers and Managers". The reasoning starts at page 524 letter C where his Honour said:

In the present case, however, the parties did not leave it to inference or presumption that they contemplated the appointment of more than one person as receivers or receivers and managers. They expressly so provided in terms in cl 8(a). This express conferral of power to appoint a multiplicity of receivers and managers distinguishes the present case from three earlier decisions relied upon by Giles J in which the power had to be inferred.

Those are the three cases on which we rely - that is, Wood, Wright, Hardware and Kerry Lowe Management. Then, the issue was defined by his Honour between letters E and F on the same page. I am not going to read all of it, your Honours:

In this way the case comes down to whether that express contemplation of the appointment of more than one receiver and manager should be taken to import a power of such appointees to act severally as well as jointly.

It was held that the practicalities, together with that feature, allowed a construction of the power to appoint, as being a power to appoint jointly and severally. The other two justices in the Court of Appeal also expressed provision for appointment of more than one receiver and manager. That, your Honours will see at the middle of page 529 between letters C and D where his Honour Justice Meagher said:

Clause 8(a) obviously contemplates the appointment of more than one person.

McHUGH J: Having regard to the definition clause in F31 here, does not this case raise exactly the same question that Justice Meagher formulates there at page 529D. More than one person may be appointed, the question is whether or not they can be appointed jointly and severally.

MR PRINGLE: Yes.

HAYNE J: His Honour then goes on at page 529 between D and E to consider that question, having regard to what he identifies as the "commercial purpose of appointing multiple receivers", and by having regard also to whether detriment can be identified as flowing to the mortgagor.

MR PRINGLE: Yes.

HAYNE J: Do you say that that method of reasoning is permissible, or no, in relation to this instrument?

MR PRINGLE: We submit not, because the very point that is emphasised in that case is missing in this.

BRENNAN CJ: What, the difference between the expression of plurality in the clause in that case, as distinct from a general interpretation clause in this case. That is a pretty thin distinction, is it not, Mr Pringle?

MR PRINGLE: Your Honours, it was the one relied on in that case by distinguished judges.

McHUGH J: It was not relied on at all. They were not contrasting it with this case or a factual situation; they said that in that particular case, clause (a) referred to person or persons or receiver or receivers. Earlier this morning Justice Brennan put to you that you get exactly the same result with clause F3 when you read it with clause F31.

MR PRINGLE: Yes, but when you look at practicalities, as his Honour Justice Meagher did, you will see that there are two points to be made. Firstly, that it is not every act, however trivial, requiring the concurrence after due consideration of all appointees, which would apply in a case such as this. Normally, accountants are appointed. They use the persons who work for them to do some of the work, and as I pointed out, clause 3(g) authorised that. This is making something appear much more difficult than it is, in our respectful submission. What one needs in the case of a joint appointment is that all important decisions should have the benefit of both heads.

McHUGH J: No; all appointments - not all important appointments - all appointments.

MR PRINGLE: All decisions?

McHUGH J: All decisions, yes. All decisions have to be done jointly - expressly or impliedly, they have to jointly give their authority, if you are right.

MR PRINGLE: In our respectful submission, not. Clause (g) says that there is a power to engage solicitors, agents and servants to do some of the work.

McHUGH J: I appreciate that, but if your argument is right, they have to make that decision to employ those solicitors or people, jointly.

MR PRINGLE: Yes, but that is not burdensome.

McHUGH J: That means that every decision that is made by a receiver has to be made jointly.

MR PRINGLE: What could be done, in our submission, is that there should be a policy - they could sit down together and decide on the policy, and one of them could be authorised to go and do it. There is nothing wrong with that. In my respectful submission, this is made to look far more difficult than it really is in practice. One never hears of difficulties in any cases in which receivers and managers have been appointed jointly, that they have not been able to carry out their functions properly. It is unheard of.

GUMMOW J: Is there a distinction between an office which is held jointly and an office which is held jointly but with provision that the powers may be exercised by one or more untrained occupants of the office?

MR PRINGLE: Sometimes the instruments authorise - - -

GUMMOW J: In a joint office, normally, if one of them dies, this work would vest in the remainder entirely, with the remaining member.

MR PRINGLE: That is only, apparently, if provision is made to that effect. Otherwise you have to replace the person.

GUMMOW J: This is both appointment to an office and creation of an agency, is it not?

MR PRINGLE: Yes, that is possible, depending on the terms of the instrument, and it does happen. It certainly happens.

GUMMOW J: Well, no, the nature of the power of appointment, it says they are to be appointed receivers - that is one thing - but then it says they will be agents of the company.

MR PRINGLE: Yes.

GUMMOW J: So there is a double aspect to what is happening.

MR PRINGLE: Oh, yes.

GUMMOW J: Some of these cases seem to tell us about it all rather, to my mind.

BRENNAN CJ: Mr Pringle, in the NEC Case, there were, as you pointed out, express provisions for the appointment of a plurality of receivers and managers.

MR PRINGLE: Yes.

BRENNAN CJ: Let it be assumed for present purposes that your argument of a distinction between that ground and the present case fails - that is, that there is no difference between the express provision providing for the plurality, and a provision which provides for plurality by way of an interpretation clause. The next question that arises then is whether or not, when there is power to appoint a plurality, it is legitimate to consider the matters to which Justice Meagher referred at page 529 E to G, that is, the commercial convenience argument in interpreting the nature of the appointment that is made - or which can be made, I should say. That is the point of issue in this case, is it not?

MR PRINGLE: Your Honours, the trial judge dealt with that at pages 67 to 68, and came down against the view that practicalities required, in fact, more than one appointment.

BRENNAN CJ: That is the argument which you embrace?

MR PRINGLE: Yes.

BRENNAN CJ: Have you any authority otherwise than NEC to draw our attention to, to indicate the impermissibility of reference to what is taken to be commercial convenience?

MR PRINGLE: His Honour looked at the question of commercial convenience in this case. I am not suggesting you cannot look at it. His Honour looked at it and said that it did not necessitate a joint and several appointment. That is what his Honour's conclusion was, on the facts of this case, at pages 67 to 68.

BRENNAN CJ: That is not quite the approach that was taken in NEC, as I understand it. In NEC, what is said is, "as a matter of general commercial practice". In other words, one is construing this instrument according to the market place. One says, according to general commercial practice it is more convenient that there should be several, as well as joint appointments.

MR PRINGLE: You have to look a little higher up, at letter E, where his Honour made reference to multiple appointments:

is common in the case of insolvency of large corporations or in cases where it is perceived that difficult questions may arise.

His Honour does not simply say that it always happens. He says there may be a commercial justification for the course.

BRENNAN CJ: He says:

The commercial purpose behind this practice -

So he speaks of practice as the foundation, does he not?

MR PRINGLE: What his Honour says is that it is common to make appointments:

in the case of the insolvency of large corporations -

GUMMOW J: It is also common to have better drawn deeds than this one, so I do not really see what his Honour gets out of all that. Commercial practice involves a higher degree of competence than is involved in the drafting of this document, I would have thought. So, what his Honour is really doing is trying to elevate what was done to what should have been done to accord with a particular perceived standard of commercial competence in these matters.

MR PRINGLE: Yes.

BRENNAN CJ: What do you say is the argument as to the mode of interpreting this instrument? Does one look at commercial practice, and if so, how does one acquire knowledge of what the commercial practice is?

MR PRINGLE: The starting point is elsewhere. We would respectfully submit that there is a general principle of law and equity, that appointment of two or more persons to an office is to be construed as joint only unless provision is made to the contrary. That is talking about the actual appointment. As we point out in the outline, if one had an appointment following the language in the clause dealing with appointments read with the provision in the interpretation clause of the singular includes the plural, one would find, merely, that there be a power to appoint two or more receivers and managers.

BRENNAN CJ: In paragraph 5 of your notes of argument you have a series of authorities.

MR PRINGLE: Yes.

BRENNAN CJ: Do any of them vouchsafe the reason why the appointment is construed as being joint only?

MR PRINGLE: It is a rule.

BRENNAN CJ: A rule without a reason? Surely not.

MR PRINGLE: The rule to the reason was probably lost 600 years ago or thereabouts.

BRENNAN CJ: Then perhaps you can identify which of these cases most clearly states that this is a rule of ancient and unquestioned origin.

MR PRINGLE: What the authorities do say - and they are very short, fortunately, your Honours - - -

BRENNAN CJ: We can read the cases for ourselves. If you take us to the best and strongest.

MR PRINGLE: Can we go just to the first two because the points can be made very quickly. The pages in that series are paginated. Page 1 - "OFFICES AND OFFICERS"; a quarter of the way down the page and then you get Jones versus Pugh, and it says, the decision there:

if an office be granted to two, and one dies, the office does not survive, but determines; as if two sheriffs, and one dies, the other cannot act; otherwise if granted to two and the survivor of them.

The next case is Salter against Grosvenor on page 2, and you need only look at the end. It says about five or six lines up from the line near the foot of the page:

But in the principal case the bailiffs make but one officer, and the one cannot act without the other; therefore if a lease be made by the corporation to one of them, he is both lessor and lessee, which cannot be. If process should be directed to the Sheriffs of London, and one dies, the process is gone, because one sheriff cannot act without the other, for they both make but one sheriff.

McHUGH J: But the two cases you have so far read deal with an issue subsequent to the issue that we have to deal with here. They are dealing with a case where persons have been appointed to an office, and the question is whether they can act jointly or severally. Here, there is an anterior question: does this instrument authorise people to be appointed jointly or severally?

MR PRINGLE: Quite; but, your Honours, if there is, as we submit, such a principle, then one naturally reads words which conform to the principle in accordance with the principle. If it is well understood that an appointment of two people, without more, is a joint appointment, and you see in the instrument authorising appointment that the two or more people may be appointed, well, the obvious inference is it is joint only. That is if we are right in our submission that there is such a principle. That is what the presumption that is referred to from time to time depends on, in our submission.

These examples and the ones dealt with by his Honour the Chief Justice Malcolm in his reasons, dealt with the second point - perfectly true. He dealt with construction of appointment, and not construction of powers to appoint. But, in our respectful submission, all the cases are decided one way.

McHUGH J: That seems to me to be totally irrelevant. The question is, what does the instrument authorise? That must depend upon its language.

MR PRINGLE: Yes, but if the language used is language which is well understood in a principle of law and equity, then one - - -

McHUGH J: Yes, but you have not taken us to any case that says so. You have taken us to some cases that deal with an issue down the track. You have not taken us, so far.

MR PRINGLE: At all events, the text books are with us.

McHUGH J: I do not know about that. Are they?

BRENNAN CJ: You show us the text books.

MR PRINGLE: Would your Honours look at the NEC Case? Justice Kirby quoted two of them at the top of page 524. There is also the - - -

McHUGH J: The second quote does not support the proposition you put, although the first one does, I think.

MR PRINGLE: As far as goes, it supports us. I accept it does not say expressly what is said in the last sentence of the previous quote. There is also Professor O'Donovan who wrote, after the decision of the Full Court in this case, criticising it.

McHUGH J: You have some problems. This Court is very liberal about citing authorities, but did not Professor O'Donovan advise your client in this particular case before this decision?

MR PRINGLE: Yes.

McHUGH J: Now you want to cite to us a passage in his book criticising a decision which is contrary to the advice he gave?

MR PRINGLE: It is not likely that in committing himself to a view he had any thought of Mr Kendle.

McHUGH J: One can accept that in time entirely, but it seems to me, it makes me feel a little uncomfortable to say the least.

BRENNAN CJ: Makes me feel profoundly uncomfortable to think that whatever the integrity and standing of the author may be, that what is said in reference to a matter in which there has been a professional and commercial undertaking, should be cited to this Court as an indication of the way in which this Court might decide.

MR PRINGLE: Yes, if you please, your Honour, I will take that no further.

GUMMOW J: Can we return to Sir Gavin Lightman's book at the bottom of page 523 in NEC? That is a reference to the first edition of 1986. There is now a second edition of 1994. If we are to be referred to text books, we should be referred to the 1994 edition of Sir Gavin Lightman's book; that is all I am saying. That was the current edition at the time of NEC, obviously, it is in 1991.

MR PRINGLE: Yes.

GUMMOW J: But, as it happens, in the latest edition there is a discussion of NEC.

MR PRINGLE: Yes, thank you, your Honour.

GUMMOW J: We should not be left to forage for these things.

MR PRINGLE: I apologise for that.

GUMMOW J: In pages 85 and 86 of the 1994 edition of Lightman & Moss, "The Law of Receivers of Companies".

MR PRINGLE: Yes, thank you. I would like to take your Honours also to the application for special leave to appeal in the NEC Case. That, I think, is No 4 in the other side's bundle, and there are two page - - -

BRENNAN CJ: By all means take us to it, but you understand, of course, that this Court does not regard what is said in the peremptory proceedings of special leave as being of any great authority in this Court.

MR PRINGLE: Your Honours, may I just say that the point made in NEC was the point on which special leave was refused in that case. That is, the point Justice Kirby made about the importance of express provision - express provision being made for two or more appointees, in the clause which dealt with the power to appoint, at pages 17 and 21. On page 17 Justice Deane dealt with this aspect in questioning counsel for the applicant; and at page 21, the reasons for refusing special leave are set out.

BRENNAN CJ: That, perhaps, indicates the fortune that you have had in the grant of special leave in this case.

MR PRINGLE: I am just checking to see if there are any points that I have not yet dealt with, your Honours. I will not be long.

McHUGH J: There are - you might deal with this in your reply, but there are a lot of cases on powers of appointment and severance which you might care to have a look at. Justice Gummow referred you to them, but questions of excessive appointments of subject matter; appointments subject to conditions that went beyond power; limitations; matters of that nature. There are many, and Justice Gummow's - Farwell on Powers refers to some of those cases, and you will find in Halsbury, under Powers, many such cases.

MR PRINGLE: Thank you, your Honour. I think finally, your Honours, we would make simply these points, that our approach is supported by principle and history, principle of the cases in paragraph 5, history - there are, apparently, no counter examples, whereas we have analogies of agents and trustees, for example, which is accepted by the Full Court in this case. It is really quite a novel idea that an instrument that authorises particularly simply by the use of the interpretation clause and, in particular, provision that the singular includes the plural, that one can have joint and several appointments. It is a novel idea, not, apparently, one which has occurred before 1990, in that case in New Zealand.

GUMMOW J: I do not think that is right at all.

MR PRINGLE: I have not found a decision which - - -

GUMMOW J: There have been plenty of competently drawn deeds around for years that give rise to the problem.

MR PRINGLE: Yes. No, I am not suggesting, your Honours, that there are no instances of instruments authorising joint and separate appointments; I am not making that point. I am only saying that so far as an instrument - it simply says that you can appoint two. I have not been able to find a single instance before 1990 where a joint and several authority was held to exist. Thank you, your Honours.

BRENNAN CJ: Yes, Mr Conti.

MR CONTI: Your Honours, we will not, of course, repeat our written submissions to you, but in not taking that course, may we make it clear that we would wish to embrace what we have already said. As your Honours will appreciate, his Honour the Chief Justice put in a very large amount of work into his judgment, and what we have sought to do in our written submissions is to try and break up, as it were, by way of analysis that very lengthy and careful judgment which his Honour put together.

Can we just advance, in broad outline, these propositions. Your Honours, firstly, the power to make an appointment of multiple receivers exists here by virtue of the interpretation clause. That was debated below but it is not an issue before you. Secondly, a multiple appointment here would not be to a single office but to a dual office. Therefore, the cases, the two cases which you were taken to, the old cases, would have no application because that was to a single office. Just as the case of Bell and Head, which I will pass to you, (1832) 1132 cases in Michaelmas term in the third year of William IV - I am sorry, I have not got the actual reference at the moment, but I will get them for you - but this was a case of an appointment to the office of sheriff of two people and it was a joint appointment. It is a very short case, as all of them are. One of the sheriffs died and so the whole office came to an end. That is not this case. This is a dual office case.

BRENNAN CJ: Which case? What is the name of it?

MR CONTI: Your Honour, it is Bell and Head; it is in my learned friend's list and it is referred - - -

BRENNAN CJ: Bell and Head v Nixon and Davidson.

MR CONTI: Yes. I notice in my learned friend's - - -

BRENNAN CJ: It is (1832) 9 Bingham's Reports 394 in 131ER 664.

MR CONTI: That is so, your Honour. It was a case that was referred to in the course of the judgment by the Chief Justice. So that this is not a case of the multiple appointment sharing a single office of receivership. Thirdly, there is no presumption against severalty in the case of multiple receivers. That was a view which was embraced by the Chief Justice, we would respectfully submit, with the assistance of authority and in that regard differed from the view of Justice Davies, delivered in the unreported case of R.J. Wood Pty Limited, which is included in the bundle, being the Australian case which, as it were, set off this area of controversy, and - - -

GUMMOW J: Let me read you what Sir Gavin Lightman's book says, in the latest edition, at page 85, with reference to the Australian cases in the footnotes:

Where the debenture expressly contemplates the appointment of more than one receiver, the courts will readily imply a power to appointment joint and several rather than simply joint receivers. Where the debenture makes no express mention of more than one receiver, the inclination has been to construe the debenture as authorising only the appointment of joint receivers.

MR CONTI: But the latter situation did not have an interpretation clause, as I understood what you said, and what is at the heart or burden of what the Chief Justice has put below is that one should not devalue - to use his expression - the interpretation clause in this case, and that there is no difference in substance between an express provision, as to having multiple receivers, and an express provision for a single receiver coupled with an interpretation clause. We respectfully submit that is a sensible approach.

Your Honours, the third matter is this: there being no such presumption against severalty in the case of receivers, and that is because the situation stands in a different position to trustees - and I will, of course, elaborate upon this - there is the presumption in the case of trustees, we accept. That is private trustees, not charitable trustees or what are referred to as public trustees - and the cases are mentioned by the Chief Justice. In the case of private trustees we accept there is the presumption but not in the case of receivers, because there are critical distinctions between the office as exercised by a trustee and those by a receiver, to which we will take you.

Therefore, one gets to this situation. As a matter of construction of this deed, is it legitimate to have regard to considerations of commercial purposes of a several appointment? In that regard, the courts of appeal in New Zealand and New South Wales, and now in Western Australia, have answered that question in the affirmative: it is legitimate to have regard to commercial considerations. In each case that approach has returned an overwhelming view as to the affirmative commercial considerations involved in a joint and several approach. Your Honours, it is not a matter of saying, "Look - - -

GUMMOW J: Of course there is an important commercial sense of it all. There is also a sense to drafting these instruments so there is no reason for doubt about them.

MR CONTI: Your Honour, we cannot do much about that. We never have to - fortunately, instruments are poorly drafted, otherwise we would not have as much work before the courts.

GUMMOW J: This is a standard document put out by a bank, a major Australian trading - - -

MR CONTI: Your Honour, they are the ones that usually give rise to most construction problems. That is the problem with using a standard document, because people automatically say, "I'll take the precedent," rather than giving thought de novo to what is going to be its content. That is a fact of life.

McHUGH J: That has obviously happened with the appointment as well. Clause 2 is obviously a standard form document.

MR CONTI: That is so. I think that is right, your Honour. Precisely. Your Honours, if you are against us in those matters - and we submit that there is an excess of power here - I readily took the opportunity of dealing with the matter of excess of power. What troubles me is that I have not come here equipped with the authorities to assist you which we had below, but we can certainly remedy that by making any submission in writing.....the case if we could be allowed to that. Your Honour, we would submit that the question is a rhetorical one which really answered itself.

Your Honour Justice Kirby had no problem at all in NEC. You expressed this matter as a way of light following day that there should be severance, without giving any reasons, and so did Justice Samuels and Justice Meagher, that there should be severance in NEC, and not by reference to as a matter of construction but, we respectfully submit, as a matter of common sense, because it cannot be said - as Justice Gummow put rhetorically to my learned friend, that the bank would only appoint a joint and several receiver and no other form of receivership; it cannot be said that. In other words, to allow the mortgagor to remain in admitted default.

Your Honours, that is the basic outline of our submissions. Can we elaborate on those mainly by reference to the judgment of the Chief Justice, because he does, very helpfully, set out not only just reference to the cases but extracts from the judgment, which really suffice, for the most part, without having to take you to the individual cases; they are so comprehensively dealt with. Your Honours, my learned friend's case seems to really boil down to this general proposition: an appointment of two or more agents, such as receivers, to an office is joint unless otherwise - - -

GUMMOW J: There are two concepts: one is appointment to an office; another is an appointment of agent.

MR CONTI: Yes, but there can be an office of agents. I mean, the cases which deal with the appointment to office have involved agents. It is across the board, as it were. I mean, receivers in a sense, of course, we know are agents for the mortgagor for a very limited purpose.

GUMMOW J: Central purpose.

MR CONTI: The proposition is that the appointment of two or more agents, including receivers here - one for this purpose can include receivers - is joint unless otherwise stated in the instrument of appointment. Therefore, it is said by my learned friend, any power given to a third party - here the Development Bank - ought to be construed as similarly limited. In other words, you carry that through to the instrument creating the power to appoint. Your Honour, we submit that there is no reason in principle or logic why such a proposition should be sustained, for these reasons. Your Honours, firstly - and one needs no, with respect, authority for this proposition; it is a matter to which one can have regard as a fact of commercial life - receivers and managers, in the case of multiple appointments, are inherently capable of performing their duties of office jointly and severally. There is no reason why they cannot do that. There is nothing about the office of receivership which could exclude that conduct.

GUMMOW J: Is there a distinction between the nature of the office and the manner in which powers incident to the office may be exercised? May one have a joint office but nevertheless provide that the powers that go with the office can be executed jointly and severally, or is that a contradiction in terms?

MR CONTI: Your Honour, I am not sure if I have understood your question entirely.

GUMMOW J: An office is a piece of property.

MR CONTI: Yes, what I was - yes, I am sorry, it is a piece of property, yes.

GUMMOW J: Yes. It may be joint or it may be several. If we take the cases about the Sheriffs.....and so on and so forth. That may be one universe of discourse. Another universe of discourse is the notion of this agency which is involved. May one have a joint office which is exercisable in so far as this agency is conferred upon it, exercisable by them jointly or jointly and severally?

MR CONTI: Your Honour, one could have both.

GUMMOW J: Yes.

MR CONTI: Both. Your Honour, the second reason - - -

BRENNAN CJ: Could I just interrupt you for a moment. I am not sure that I am following this precisely. If one is speaking about an office that is held jointly and one dies - - -

MR CONTI: This is a single office?

BRENNAN CJ: A single office. What happens to the office?

MR CONTI: The office is vacated.

BRENNAN CJ: It is vacated. If, then, there was an appointment of a receiver jointly and one dies, what happens?

MR CONTI: It is not vacated because it is a dual office.

BRENNAN CJ: What is the duality?

MR CONTI: The duality is something to be discerned in relation to the nature of the office. If you appoint two receivers, where they are joint or several, we would submit it is not a dual office. Whichever way one gets to it, it is not a dual office, whereas these particular cases were very special appointments: appointment to the Sheriff of Nottingham or the sheriff of wherever it was; but two people were appointed to be sheriff. These are old English cases. I have not been able to find any modern exemplifications of those sort of remarkable usages. It is where the doctrines have, as it were, developed from those old cases and they can still, unfortunately, control us today, however illogical they might be.

BRENNAN CJ: If you are saying that the appointment of a receiver and manager is a joint appointment - let us assume that there is a joint appointment only, the office is not vacated if one dies.

MR CONTI: We would submit so.

BRENNAN CJ: So that then the office becomes one which is held and is exercisable severally.

MR CONTI: No, it is one that is then held singularly.

BRENNAN CJ: Singly.

MR CONTI: Yes, instead of one just - - -

BRENNAN CJ: If the office - - -

MR CONTI: Which, of course, would be authorised here.

BRENNAN CJ: If the appointment is made as a receiver and manager of two people, jointly and severally, what does that mean in terms of the distinction between that and the appointment of the office jointly?

MR CONTI: Your Honour, it means that if the receivers so choose to do, they can exercise their powers jointly or they can, as it were, go separate ways in respect of separate activities or fields.

BRENNAN CJ: What are the profits of the office?

MR CONTI: The profits of the office are not changed because - certainly in relation to this particular charging clause it is a charging according to a scale of fees on a time basis by insolvency practitioners. So if two are working on the matter, then each would be entitled to charge. That is why it is more advantageous to have a "joint and several" situation because otherwise one would obviously increase the expense when you have got situations on a time charge.

BRENNAN CJ: So they are not jointly entitled to the profits of the office, they are severally entitled to it.

MR CONTI: In the case - - -

BRENNAN CJ: One cannot give a discharge for the payment, is that right?

MR CONTI: I was going to say I would like to take it on notice, but I would really rather answer it now if I could, your Honour. I do not know if really the Insolvency Practitioners Association of Western Australia have that problem but one would have - look at it this way - I am sorry your Honours have not got this scale of fees in front of you, but there is a charge for a manager and the manger performs the function. There is going to be - - -

BRENNAN CJ: I could understand how it works in practice: you have so many hours for the manager, so many hours for one partner, so many hours for the other. You tote it all up and you get to a figure, and it is a rateable charge, a charge by way of rate, I presume. But that does really answer the question of principles.

MR CONTI: No, it does not, your Honour, because the situation never arises, other than theory, but I appreciate your Honour is putting in the theory to test the matter, because always these people are partners of the same firm, as has been observed by the Court of Appeal in all the cases.

GUMMOW J: That is another dimension of difficulty.

MR CONTI: That is a dimension which does not bear on construction, I appreciate that, your Honours. No, if one probes too deeply into this area one gets to the insoluble but it does not - - -

BRENNAN CJ: It is just that these terms "jointly and severally" seem to me oftentimes to be used in ways of familiarity that escape me, I must confess.

MR CONTI: Yes. Your Honours, of course, they have their origins - and there is reference to the case of White v Tyndall in the judgments below, which was as a covenant jointly and severally by lessees, and the question then arose that whether the lessee who - in relation to a default which was traceable - I am sorry, I will start again. There was a default and one of the lessees only was sued. Then the question is whether action could be maintained against that lessee alone, who was part of the joint and several covenant, or whether the action be brought against both, and it was held the latter.

I can remember when I first came to the Bar, as long ago as 1967, one would always look for joint covenants if one was doing a defence because then one would raise a plea - which has just escaped me for a moment, a plea of - - -

McHUGH J: An abatement.

MR CONTI: Yes, a plea of abatement, because all the parties were not joined. In answer to - - -

BRENNAN CJ: Then the question arises: if it is a joint and several appointment of receivers and managers, and one commits a tort in the course of the exercise of his functions, who is liable?

MR CONTI: In the absence - I have never actually had to face that before, your Honour. Certainly in the absence of vicarious - - -

BRENNAN CJ: It is the flip side to the question of the commercial reality.

MR CONTI: Yes, that is so.

BRENNAN CJ: Because then it is a question of the mortgagor's entitlement to recover.

MR CONTI: In the normal course, of course, being partners there is never a difficulty because partners would be liable for any commercial tort. If there was one person - - -

BRENNAN CJ: That is if it is in the course of a partnership.

MR CONTI: That is so; but if one of the receivers was a member of Coopers and Lybrand and the other a member of Arthur Andersen and Co, I do not know what the answer to that is.

HAYNE J: They would merge anyway. But if you have joint and several receivers and managers and one of those receivers takes possession of the mortgaged property, who is your defendant? Only that one, or is it both of them?

MR CONTI: Certainly that one would be liable himself in matters of trespass and conversion. I just cannot answer that, your Honour, because I cannot point to authority. I mean, it is an extremely interesting academic question, if I may say so, but I cannot point to - and it is unlikely there is authority because, as I say, these people are always partners and the issue never arises; but your Honour does test the proposition, I accept, that way. I do not want to guess something off the top of my head, your Honour; I just do not know.

BRENNAN CJ: Let me put the next step to you as it occurs to me in relation to this, and that is that if it is commercially sensible to construe an appointment of a plurality as joint and several in order to facilitate the realisation of the security, then what does one say to the mortgagor who seeks to have relief against an excess of enthusiasm on the part of one of the joint and several receivers and managers?

MR CONTI: One says to them - yes, I take your Honour's point. The first problem is a factual problem, that is to attribute the conduct, as it were, exclusively to one of the two.

BRENNAN CJ: Yes.

MR CONTI: Assuming that can be done and assuming that they are not otherwise liable because they are partners, assuming they are not insured as professional people, then, your Honour, in theory your Honour's point, if I may say so, is well taken. This question of theories was debated, if I may say so - and this is skirting the answer - both in the New Zealand Court of Appeal and before your Honour Justice Kirby in NEC, and what was pointed out by your Honour in NEC was that the arguments which were put as demonstrating some kind of detriment to the mortgagor insubstantial in reality and practice, some analogous arguments were put, but what the courts said was the overwhelming commercial purpose, irrespective of matters that could be pointed out - for instance, another inconvenience that was pointed out was there may be - one receiver may disagree with the other and that is going to cause considerable problems to the mortgagor, because it may create difficulties.

His Honour Mr Justice Meagher said for his part, and with whom Mr Justice Samuels agreed, again that is a theoretical situation which may only rarely arise, but in the ordinary course summons for directions in front of the company judge if there is a disagreement, as in the case of disagreeing trustees. Your Honours, one can certainly - please do not think this is in any way in derogation of the point your Honour made, but one can find, with the exercise of thought at depth, academic problems that can arise.

GUMMOW J: I do not think they are academic, they are conceptual; they go to the whole structure of it.

MR CONTI: The question is whether this Court is prepared to - - -

GUMMOW J: It is sought to brush this aside by saying, "We've just got to be `commercial'."

MR CONTI: No, it is just a case of looking at the - what three Courts of Appeal have now said is, in fairness to them, "Let's look at the overwhelming reality that - - -

GUMMOW J: I know they have said that. All I am saying to you is that that does not overwhelm me.

MR CONTI: Your Honours, if I cannot persuade your Honour with three Courts of Appeal, I cannot - - -

GUMMOW J: I want to be assisted with concepts.

MR CONTI: If I cannot persuade your Honour with the reasoning, I cannot persuade your Honour.

BRENNAN CJ: What you are really saying is that this is a case in a sense, so far as underlying principle is concerned, of first impression.

McHUGH J: Is it? Let us analyse it. If receivers are appointed as joint receivers and one of them does something, then it will depend upon what has happened between the receivers and the terms of the appointment; they are only authorised to act as joint appointments. If one goes outside the terms of the appointment, then that person is liable. If they have acted jointly, then by hypothesis the other receiver will have given authority, express or implied, and they will be jointly liable. The problem arises when they are appointed jointly and severally. Does the fact that one does something wrongfully, on his or her own choice, does that make both of them liable or only one of them?

MR CONTI: Your Honour, it just depends what - I think it really must boil down to what is the wrongful act. I mean, as your Honour was pointing out at the beginning of the argument this morning when your Honour was referring to acts of trespass, it is very hard to see how the trespass of a partner in a physical sense can be the trespass of all the partners, though one can understand - as I say, as soon as one gets in the area of commercial torts then it is much more comprehensible to understand how all the joint partners could be made liable. One would say that even in the case of joint - there must be some forms of tort, or kinds of tort, where even in the case of a joint receiver only one can be sued.

McHUGH J: Let us test it. Supposing we have a joint and several appointment and one of them goes in and sells a truck which was not covered by the mortgage document. Certainly the person who sells the truck can be sued in conversion. Can they both be sued?

MR CONTI: I would submit, your Honour, in that situation, where, as it were, it is a commercial type tort, what is being done can be traceable to the, as it were, the joint activity.

McHUGH J: It just occurred to me that the answer is that they probably cannot be because a person is authorised to act severally as agent of the mortgagor.

MR CONTI: Yes.

McHUGH J: And so in doing that, that was what he was authorised to do. If he does something wrongful in purporting to carry out that agency, then he or she is liable, but I do not know that it makes both of them liable. What do you say about that?

MR CONTI: Can I answer your Honour's question by switching the -your Honour, these matters would be easy to plead but not to do the advice on evidence. What I say is this, that - can I confess and avoid your Honour's question by putting the answer in this way: just assuming that one of the partner's harasses the female secretary, but that is done in the office in the ordinary course, it would be very hard to say that could visit the other appointee whether they were joint and/or several.

McHUGH J: I think under the doctrine of the Equal Opportunity Tribunal they would both be liable because they should have taken steps to stop it happening.

MR CONTI: Yes, that is true, your Honour; that is so. Your Honour, in that unsatisfactory situation, with my failure to come to grips with those matters, could I proceed. I put the proposition that there is no reason why people are inherently capable of performing their duties of office as receivers, jointly and severally. Your Honours, the absence of that presumption as to the need to act jointly unless explicitly so authorised by their instrument is dealt with by the Chief Justice at page 137 of the appeal book at point 7 of the page. What his Honour says is this - and we respectfully submit that this must be, with very great respect, true as a matter of common sense. At line 25 the Chief Justice says:

In my opinion, once the stage is reached where more than one receiver or receiver and manager may be appointed, it is open to the appointor to appoint them on the basis that they may act jointly, severally, or jointly and severally. I am unable to accept that it can make any difference to the validity of the appointment if the instrument expressly contemplates - - -

GUMMOW J: The first sentence in that paragraph is just non sequitur; it is just an assertion.

MR CONTI: It is an assertion, but what it - - -

GUMMOW J: "Once the stage is reached it is open" - no doubt.

MR CONTI: Yes, your Honour. In this area, as I say, one has to - if one starts the proposition - the validity of the proposition one may start with - and that was the proposition I started with - it can be established by going to a later, as it were, proposition, a proposition underneath that and, as it were, applying it retrospectively to show the sense of the opening proposition, and this is unfortunately the way one tests a lot of this area.

GUMMOW J: What is the "stage" referred to in the first sentence?

MR CONTI: Your Honour, that is - - -

GUMMOW J: Is that some process of interpretation of a particular instrument?

MR CONTI: What his Honour is doing there, with respect, is testing the proposition by looking forward and saying, "I'm going to assume a certain stage. Does that then assist me, by looking at that further stage, to postulate that there is no presumption of the kind that we are now considering?" Your Honours, the references to the commercial considerations which persuaded the majority of the Court of Appeal - persuaded all of the Court of Appeal in NEC, and also DFC, can be exemplified in these pages of the appeal book. Can I take your Honours, firstly, please, to page 135. The second paragraph - and - - -

GUMMOW J: One could agree with the paragraph beginning at line 12.

MR CONTI: Yes.

GUMMOW J: One can accept the second sentence. One can accept the third sentence. One can accept the fourth sentence. One can accept the fifth, and so. How does that assist in construing the question whether this particular instrument has risen to the requirements of a commercially expedient document?

MR CONTI: Because if - - -

GUMMOW J: In other words, you are saying they did what they ought to have done?

MR CONTI: No, what this is saying is, this being the commercial purpose of appointment of receivers, it is a valid proposition to apply that generally in relation to instruments that appoint multiple receivers. That is what it is saying. It is, in a sense - - -

GUMMOW J: One does not ordinarily construe a mortgage favourably to the mortgagee, does one?

MR CONTI: No. With respect, this is only as an exemplification of the Australian Performing Rights test laid down many years ago by Sir Harry Gibbs, namely that if one has any problem in any debatable area of construction one takes a - - -

GUMMOW J: That was a case of a commercial agreement between two commercial partners; it was not a mortgage.

MR CONTI: No, but as a general proposition one would look to the sensible commercial purposes that underpin this kind of legal transaction. Your Honours, the corresponding statement of your Honour Justice Kirby appears at page 137 - - -

GUMMOW J: I mean, does this principle now apply to guarantees? It is pretty clear what the commercial purpose of a guarantee is from the point of the person taking the guarantee.

MR CONTI: It could. It just depends upon what is the particular aspect of the guarantee under consideration. One could envisage that guarantees could well have a certain universality - - -

KIRBY J: There is a lot of special law on guarantees though, I think.

GUMMOW J: And a lot of special law on mortgages too; about 700 years of it.

MR CONTI: Yes, but there is a certain universality about the appointment of receivers at the time these instruments were entered into. There is a certain universality about the commercial exigencies and advantages of guarantees which may have been entered into, for instance, in recent years. There is nothing wrong in principle with this approach, with respect, and, as I say, it has been widely embraced.

HAYNE J: Hitherto you have emphasised that there is advantage to the mortgagee in being able to do this. There may be a question - and Justice Meagher in NEC, amongst others, looked at it - whether there is harm to the mortgagor.

MR CONTI: Yes, your Honour, that indeed was - - -

HAYNE J: What do you say about that?

MR CONTI: Your Honour, it is sufficient for me, if I may say so - and I realise this is not always - I am just trying to find the passage of your Honour Justice Kirby as well - the advantage or disadvantage of the mortgagor was discussed, if I may say so, in a universal type way - - -

GUMMOW J: That is right, not with reference to the tort example, for instance.

MR CONTI: No, that is true, but by reference to the commercial purposes. Your Honour, with respect, again if one were to discuss the tort example, one would come back to exactly the same things we have just been discussing. Today, when people enter into these kind of transactions, there can be nothing other than an academic disadvantage to the mortgagor, because these people are chartered accountants, they are insured.

The example has a theoretical attraction; but to use your Honour Justice Kirby's expression in NEC, it does not carry anything of substance in terms of the reality of the situation. The realities are overwhelming; that is what the courts have said in New Zealand and now in Australia. Can I take your Honours to where it was discussed in the New Zealand case. That is in the respondent's bundle at tab 1 and the passage is at page 161. The case is DFC Financial Services v Samuel, (1990) 3 NSWLR 156.

BRENNAN CJ: 3 NZLR?

MR CONTI: That is so, your Honour, yes; that is the authorised reports, in tab 1 of the respondent's bundle, and at page 161, at the top of that page, this appears:

An appointment of two or more receivers severally will only be justified if the terms of the document empowering appointment expressly or by necessary implication so provide; it is not enough that there is power to appoint a plurality of receivers. None of the cases -

And this is, of course, before NEC in the Court of Appeal.

None of the cases appear to me to provide any persuasive reason why that should be so. The most attractive proposition is that as an appointment of two or more agents is joint unless otherwise stated so the power given to a third person (the debenture holder) to appoint receivers (almost invariably agents of the company) ought to be similarly limited. Where, as here and in most cases, the debenture holder may appoint a sole receiver this seems of little weight: for there can in reality be no difference between appointing one or either one of two. That also provides a response to the suggestion that a company might readily empower the appointment of joint receivers but recoil from authorising joint and several receivers.

And it continues:

The proposition that an appointment of two or more agents requires them to act jointly unless there are words of severance has cast its shadow over this issue. A joint and several appointment has commercial advantages and does not seem to involve any prejudice to the borrower. Accordingly, I prefer to approach the matter on the footing that unless there is good reason for doing so the Court ought not to view such an appointment as requiring express power or necessary implication.

And so on. Your Honours took that up and elaborated upon and debated the various advantages and disadvantages before coming out overwhelmingly in favour of the commercial purposes.

Your Honours, the reference to what was said by your Honour Justice Kirby in NEC, if I make take you to it, is to be found in the report, (1991) 22 NSWLR 518, the report is in tab 2 of the respondent's bundle, and at this particular passage, which I will pick up by reference, if I may, to the appeal book at 526, your Honour said this, between lines D and E:

I regard these items of suggested prejudice as insubstantial, particularly when weighed against the practical circumstances which help to explain why provision was made for the appointment of more than one receiver or manger. As the debt said to be outstanding (nearly $8 million) indicates, the task of receiving and managing the property of the company, the subject of the charge, could be a substantial one.

And we emphasise "could be" because your Honour was obviously not, as it were, looking at subsequent events, but looking at the time of the document:

In the practical commercial context in which the debenture charge was drawn, the parties should be taken to have envisaged the possible need of a number of receivers and managers, any one of whom could not be expected to have done everything for himself. In the large company collapses which have so marked the Australian corporate scene in recent years, it has not been unusual for the Supreme Court to appoint a number of receivers, empowered to act severally, pursuant to the power provided under the Companies (New South Wales Code) Act, s373(8).

I have a copy of that there which I can pass to you directly, which gives that statutory power to appoint receivers jointly and severally. If I could pass that material to your Honours and it is in the section dealing with liquidators, as I say the section of the code, your Honour continued:

Signing cheque, executing documents and otherwise managing the affairs of the company may be performed more expeditiously if those functions may, where appropriate, be performed severally. A requirement that they should all be done jointly, no matter how trivial, mechanical or routine, would impose upon multiple receivers an unwieldy necessity of undivided common action which would wholly (or substantially) frustrate the very purpose apparently contemplated by the provision of power to appoint a multiplicity of receivers and mangers. In practical terms, the receivers and managers will generally be members of a single firm of accountants. They will decide amongst themselves an efficient and economical way of dividing responsibility, acting severally where that is suitable and jointly where that thought to be appropriate. To read the charge down as strictly as the opponents urged would hinder the achievement of the very benefit which would otherwise accrue from appointing multiple receivers. As that would frustrate giving effect to the apparent intention of the debenture charge, it is not a construction which should be preferred by the Court. To the extent that there is a presumption that such appointments should be joint and not joint and several, it is rebutted by the language and obvious purpose of the debenture deed in question here.

Your Honour, the only area where you differed in your reasoning from the other two members of the Court was that you saw the existence of a presumption in favour of joint appointments only in the absence of a clear - I am not sure if I am giving this to you fairly - can I just give you the passage.

KIRBY J: There is a lot of authority which supports that proposition, is there not?

MR CONTI: Your Honour, with respect, when the Chief Justice below came to examine the authority, he found there was no authority for that presumption, because the authority which he examined is an authority in relation to trustees not receivers and, of course, there is a very considerable gap between the functions of a trustee and the functions of receiver and manager. True it is that the receiver and manager is the agent of the mortgagor but for limited purposes. But his task is to sell the mortgagor's property, to account on behalf of the mortgagee, to account for the mortgagee's proceeds. Of course, he has got an obligation to pay over the net proceeds. He has got an obligation to restore the equity of redemption once everything has been satisfied.

But the reality of the situation is, as has been said in the cases, that a receiver and manager is an analogous situation of a mortgagee, and that breaks down, with respect, the analogy with trustees. The presumption which has been put forward in the cases, as the Chief Justice has traced with very considerable care in his analysis of the case, has been found to be related to situations of trustees. There is nothing in respect of receivers and managers.

BRENNAN CJ: Mr Conti, before we adjourn, could I just ask you this. Would you turn to page 4 of the appeal book. There seem to be there allegations of tort which found the claims that are made at the top of page 5 for damages of trespass, conversion, damages under paragraph 21. That, really, is the plaintiff's statement of claim. Your defence, I take it, is that this was done under authority. His reply is that the authority was invalid.

Now, the question of liability turns on whether the defendants, or the first defendant, to use the words in paragraph 13 of the statement of claim, are liable for those torts, not as a matter of construction of the instrument, but as a matter of liability or vicarious liability for what was done. So, we are concerned with the sufficiency of the defence that is raised.

Now, if that is so, all that you need to do is to point to an instrument giving authority to both defendants. It does not matter to you, does it, whether it is joint, or joint and several, so far as your defence is concerned? If there is a joint liability, or a joint and several liability, sought to be imposed upon you in tort, your defence is that you have got an authority.

MR CONTI: The replication to that is, for the reasons found by Mr Justice Parker, there was no such authority.

BRENNAN CJ: That is right. Now, that in turn will depend solely on the question of whether the words "and severally" can be excised from clause 2 of the appointment. Is that right?

MR CONTI: That is so.

BRENNAN CJ: That is the only point in the case.

McHUGH J: At this stage.

BRENNAN CJ: At this stage.

MR CONTI: It does not, with respect, entirely satisfy the requirements of my client because it then leaves open for rather messy controversy the matters which your Honour Justice McHugh raised and that is that, "But what about circumstances where the tort could not be attributed to the joint appointment but could only be attributed by virtue of the character of the tort to individual action?"

McHUGH J: That seems to be me, following on what the Chief Justice said, not to have much to do, if anything to do, with this case. Part of the problem is the way this case has been pleaded. I would have thought, in the first place, that the plaintiff would not have ever bothered to refer to the question of appointment, or it is a question of invalidity. The plaintiff would have simply alleged that the defendants unlawfully took possession of the business, full stop. Then you would have pleaded as an answer that you had lawful authority to take the assets and pleaded the document and the plaintiff would then put on a reply denying it was valid. Now, the reply does not say anything about validity because it deals with it in-chief. But, the question at the trial would be then whether the defendants took possession of these goods and as to whether they had any authority to do - perhaps one of them had authority and authorised the other one, but as long as one or other, or both had authority, it would be highly probable, I would have thought, that that is the end of the matter is it not?

MR CONTI: Can I take that on notice, your Honour?

BRENNAN CJ: That would be a good idea, I think. We will adjourn until 2.15 pm.

AT 12.48 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.15 PM:

BRENNAN CJ: Yes, Mr Conti.

MR CONTI: Your Honours, unfortunately my intellectual capacity has laboured somewhat during the lunch hour to find a satisfactory response to your Honour Justice McHugh's last statement before the lunch hour. Can I just say this in relation to the tortious situation, though - and I appreciate that I have not given the maximum assistance that I should have - your Honours, in the usual case of multiple receivers being partners, both would be liable, whether their appointment be joint or joint and several.

To the extent codified by section 17 of the Western Australian Partnership Act, which is section 10 of the New South Wales Partnership Act, section 14 of the Victorian Partnership Act and section 13 of the Queensland Partnership Act, namely, the concept of the partner acting in the ordinary course of business or with the authority of co-partners, there is one useful illustration of this. It was a case against receivers, which has been examined in Higgins & Fletcher's Law of Partnership in Australia and New Zealand 1996 Division, which is a case in the Court of Appeal in New South Wales of Walker v European Electronics Pty Limited (1990) 23 NSWLR 1, where, if I may say so, with the usual case of multiple receivers being partners in the same firm - and his Honour, Mr Justice Mahoney, did not have a great amount of difficulty in rationalising a cause of action against both receivers, but in that context. But as has been said in the other cases, that will be the usual context of joint and several receivers, namely, a firm of chartered accountants in partnership.

Your Honour, could we endeavour, however, to take the matter just one step further, which goes beyond that analysis, and the analysis, your Honour, starts under the heading "Wrongs" which is really near the foot of the second page of what we have copied, and the reference to the authority is on page 176; that is to say, Walker V European Electronics. But, your Honour, we make this submission in line with the philosophy which I realise has been debated this morning - it has been controversial - we make this submission, nevertheless, in the light of what has been said by the three Courts of Appeal on this issue of construction, that since receivership will be part of the ordinary course of a firm of chartered accountants, the potential disadvantage of a mortgagor being able to sue all of the receivers jointly and severally appointed would only crystallise if the decision-making partner was unable to satisfy a judgment in damages.

Your Honours, we submit that the doctrine underpinning the codification of the law as to partners could well apply in relation to receivers who are not partners upon a footing as to implied authority, though much would depend on the particular circumstances of the case. But, your Honours, our submission is that irrespective of this area which has been distilled by your Honour the Chief Justice earlier this morning, the postulated circumstance, we submit, is not enough to deprive the mortgage of the advantage of construction of a power to appoint a multiplicity of receivers, given that that power, in our submission, is inserted for the mortgagee's commercial benefit, not the mortgagor's, because the occasion for its exercise, of course, is where there has been default.

Your Honour, may I just pass very briefly, and conclude our submissions in-chief, on matters we did not quite complete this morning. Your Honours, we made the submission that there is no reported authority - no supportable authority, as matters now stand, for a presumption as to multiple receivers being required to act jointly and being as in the case of trustees. Your Honours, that is a presumption, we would submit, which was referred to your Honour Justice Kirby in NEC, which I will take you to very shortly. It was based on the proposition that if there is no express filling out of severalty, as well as joint, or, if severalty does not follow as a matter of necessary implication, then the receivers could not act jointly.

What that doctrine has been based on Australia, but has been exposed for its fallacies - it has been based solely on the so-called equation between receivers and trustees, and that equation does not hold and, if you agree with us that that equation does not hold, then it does not matter whether the commercial construction argument applies or not. If it be the situation that there is no presumption against multiple receivers acting severally as well as jointly, then it must follow, in our respectful submission, that it was open to the bank, irrespective of the terms of this deed, to appoint jointly and severally, if there is no presumption.

Multiple receivers - if there is a power to appoint two or more, why not be able to appoint those two jointly or severally? There is no reason other than, as it were, the shadow of the trustee doctrine, and we submit that the shadow should not be there, for reasons we will very briefly summarise. Your Honour, it arises, with respect, logically, because if there be - and forgive the repetition - but if one is given a multiple receivership appointment, then it is not a single office. As I laboured this morning, there are two offices and, therefore, all the old cases about single office are of no assistance.

Your Honours, just briefly on the question of the presumption, may I just take you to what - it is very conveniently summarised and analysed, if I may say so, with respect, by the Chief Justice, starting at page 122 of the appeal book. At 122, halfway down the page:

Davies J, however, considered -

and this is R.J. Wood -

that the appointment of two persons to hold such an office was ordinarily construed as requiring them to act jointly. His Honour referred to Re Gudgeon & Anor; Ex parte Pegler & Anor -

and, in that case, which was a case of statutory power, expressly there to be able to appoint receivers jointly and severally statutory power, Mr Justice Gibbs made the observation, as it were, as a starting point:

"The general rule of law is that trustees have a duty to act jointly, and, in the absence of statutory provision to the contrary -

et cetera. But then his Honour went on to say there was sufficient statutory authority for the trustees, who were trustees in bankruptcy, to act severally as well as jointly. Then Mr Justice Davies in Wood then went on to say:

The same principle applies with respect to receivers and managers.

And that is where issue is very much joined in the debate which is conducted by the Chief Justice in his reasons for judgment.

If two persons are appointed to act as receivers and managers, they must act jointly unless the instrument of their appointment specifically or impliedly authorises them to act severally. Likewise a power to appoint two or more persons to act as -

et cetera and so on. And then his Honour, over the page, refers to that particular statement being adopted by Mr Justice Franklyn in Wrights Hardware Pty Ltd. At the last sentence of that first paragraph:

The researchers of counsel were unable to point to any earlier authorities relating to the appointment of receivers or receivers and managers for the existence of such a presumption.

The presumption applied in R J Wood Pty Ltd that where two or more persons are appointed receivers or receivers and managers of property.....would seem to have its origin in the law relating to trustees. When one or more trustees are appointed they are required to act jointly in the exercise of their duties, powers and discretions.

A lot of old cases are there set out which support that. His Honour continues:

The principle does not apply to trustees of a charity who may act by majority -

and I think in Whitely there is also reference to the fact that a charity can mean just a charity per se, or what is called a public charity, which I suppose would be the same thing:

For example, where the trust instrument imposes a duty to sell with a discretionary power to postpone the sale and there are two or more trustees who cannot agree on the exercise of the power, then the duty to sell will prevail.

Then his Honour goes on and discusses Gudgeon and points out, of course, that that was a trustee matter, and then he asks himself the question, on page 124, the second-last paragraph:

Why the general rule of law relating to trustees should be applicable to receivers or receivers and managers is not made clear in any of the cases.

The he goes on to expound why - - -

BRENNAN CJ: Just pausing there, what is the difference between the duties of the trustee in bankruptcy and the receiver and manager?

MR CONTI: Because the receiver and manager are appointed under a debenture is primarily there, and concerned with, the property of the mortgagee. The trustee in bankruptcy is only concerned with one thing, and that is the property of the debtors.

BRENNAN CJ: Well, probably the mortgagee is one case, probably the debtor is in the other.

MR CONTI: But there is no, as it were, overriding duty of the trustee in bankruptcy to any third party, as it were; all his duty is to administer the estate. There is no duty to the person who has appointed him to, as it were, sell the property, pay the money over to him and so on. The analogy, with respect, is not the same.

BRENNAN CJ: Not the duty to pay out the creditors.

MR CONTI: There is, that is true. But, your Honour, when one looks at the accumulation of powers - can I take you to the accumulation of the powers - if one looks at them - they are discussed, your Honour, in the case of Expo. May I just say this, if I may, that - can I call on some assistance to answer your question by someone more learned than I am in this area of the law. At page 136 of the appeal book, halfway down the page Mr Justice Meagher is somewhat dismissive of the proposition. He says:

The case of Re Gudgeon; Ex parte Pegler (1969) 13 FLR 263 -

which is the one I read to you -

was also relied on. In that case a question arose as to the power to appoint two or more persons as trustees of a bankrupt estate extended to making their appoints several. That a negative answer was given is hardly surprising, as the question dictated the answer, once it is conceded - as it has to be - that the trustees are (with almost insignificant exceptions) obliged to act jointly.

So, his Honour draws a sharp line there between the situation of trustees, bankruptcy and receiver. To assist your Honour to that analysis, the decision of Mr Justice Needham, which has become classical, if I may say so, in relation to the nature of a receiver's duties is a case collected at the foot of page 124 of the appeal book, that is, Expo International Pty Ltd v Chant (1979) 2 NSWR 820. Mr Chant was a well known insolvent administrator in Sydney. Your Honour, our researchers would indicate that there is never anyone has expressed an adverse view about his Honour's analysis. It has become quite classic, and it is referred to in all the text books. We have not seen it noticed or referred to in any decisions of this Court, according to our computer researches. At the top of page 125, his Honour, Justice Needham, said this:

The receiver has a duty both to the mortgagee and the mortgagor. He is appointed for the purpose of enforcing the security. He has a duty to the mortgagee to pay over.....The receiver does not stand in a fiduciary position in relation to the mortgagor from the date of his appointment. As Needham J said at 830, a conclusion that the receiver stood in such a fiduciary position:

".... would be contrary to many statements of that relationship and would involve exceeding the extent of the duty to the mortgagee himself to the mortgagor. Of course, once the mortgagee has sold, he holds surplus moneys in trust for subsequent encumbrances and, ultimately, for the mortgagor. At that point, the receiver may be in the same position -

And then he said:

that a receiver and manager was not a "manager" in the usual sense.

"Manager" sort of connoting some kind of fiduciary duty, and he refers to Johnson and then, of course, he refers to proper accounts. So, your Honour the Chief Justice, if I may say so, obviously some of the powers and duties there do overlap those of a trustee in bankruptcy, but the underlying concept is the situation of an officer who is performing duties pre-eminently in favour of the mortgagee. Then his Honour concludes, at the foot of page 126:

"The conclusion I draw from the authorities to which I have referred is that the receiver -

et cetera, and then he sets out the duties which are owed to the mortgagor:

Those duties include the duty to exercise his powers in good faith -

and not to sacrifice recklessly, to act within the scope of the deed and so on. Now, that is all I wish to - - -

GUMMOW J: Just assume a simple case where A, by written instrument, appoints B and C the agents of A, full stop. If it does not say jointly, or jointly or severally, one assumes it is joint, does not one?

MR CONTI: No, your Honour. It depends what it is appointed to. See there has been - the cases are in there but, your Honour, I am sorry, I justs have not got them immediately to bring to your notice. There was an appointment in one of the Old English cases - and I will get it for you before I - and I will pass it to your Honour's associate - where a person engaged in the insurance business appointed some 15 attorneys to underwrite business for him, and the court said it was sufficient, if that power was exercised by any four out of the 15 - only four had signed.

Your Honour, if I may say so, so much depends on what duties the appointee is to take up and, of course, ultimately, of course, it always depends on the construction of the instrument. We always accept that; that is....., and much depends on the office to which he is appointed.

GUMMOW J: There is no office in that case, just an agent. That is why I asked about agents.

MR CONTI: Your Honour, there is no logical reason why that should not be so, particularly in the case, of course, in the nature of receivers because of the scope of their business. But as I say, we do not have to fall back, if necessary, on the commercial advantage. If there is a power to appoint receivers - because obviously multiple receivers can act severally, and they do act severally, so why should the law impose an inhibition upon them?

Your Honours, on the final matter of severance - I am sorry, but our attempts to get some assistance during the lunch hour failed - obviously it is a question of power, it is not a question of contract, but we would respectfully submit that the test must surely be, well, would the power have been exercised at all if the appointor could not entirely get his own way, and the answer to that must be, yes, the power would still have been exercised. An appointor will take whatever - exercise whatever powers it can upon a default.

Your Honours, lastly, in relation to the matter of joint appointment and whether it carries with it severalty, it cannot make any difference, as my learned friend has sought to say today, that the power is expressly conferred on the instrument, or whether it is not impliedly conferred but, in effect, spelt out by virtue of the interpretation clause.

GUMMOW J: This instrument does two things. The first part of it appoints them and, then, the second part vests powers in them.

MR CONTI: Yes, that is so. Your Honours, I meant to add one last thing; one of those powers is to appoint receivers to the mortgaged premises, or any part thereof. That was the power spelt out this morning. It would be a curious situation indeed if A and B could be appointed to the business, C and D to the reality, yet A and B, on the other hand, could not act severally in relation to the totality of the assets. There is no logic to underpin any such distinction.

McHUGH J: In relation to powers, it has been said that if there is a complete execution of the power with the addition of something improper, the execution is good and the excess bad and severable unless you cannot distinguish between the good and the bad.

MR CONTI: That is so. Your Honours, may I say that the approach of the Court of Appeal in NEC, when they concluded in favour of severance, was almost a - there was no reasoning applied. It was almost to say, "Of course. If we are wrong on this, well, of course you can sever." Both your Honour Justice Kirby and Justice Meagher took that view, and you did not add any reasons because it just seemed to you to follow as night followed day.

BRENNAN CJ: Mr Conti, before lunch I suggested to you that if the instrument was construed as authorising the appointment of the receivers and managers as joint, that would be sufficient to allow the plea of authority under the instrument.

MR CONTI: It would be, your Honour.

BRENNAN CJ: Because that, perhaps, might beg the question, it seems to me, because if the question is, is the power to be exercised jointly or severally, that may mean that the power which is exercised severally is exercised solely by the person who exercises it, and not on behalf of the two. So that, on that approach, it would still be necessary to determine whether this is joint or several, and not simply the question of severance.

MR CONTI: When I gave an affirmative answer, your Honour, what I was meaning to say is if we had - in effect, if severability became necessary and was accorded to us, then that would be an advantage to the receivers. But, of course, it would not be an entire advantage, because it does leave open the question as to the extent of conduct which must be attributed to the severalty of their administration.

GUMMOW J: But that is not what the complaint is, though. The complaint, or the tort is that the defendants did this.

BRENNAN CJ: Yes.

GUMMOW J: It is not just one of them. There would be a real problem, probably, if there was only one of them.

MR CONTI: The real problem is going to be when the reality comes of the - when statements of evidence are filed, and that sort of thing, and applications are made for leave to amend, and that is when the matter becomes very difficult.

GUMMOW J: Yes.

BRENNAN CJ: The concerning thing is that all of this might become irrelevant. If, for example, it is clear that the acts that were done were done after discussion between the two and, as a result, that that is what should happen, what is the significance of all this debate?

MR CONTI: Your Honour, there obviously would be a lot of area - and I do not know anything about the facts of the case - but there would be a lot of area for implying authority and retroactive ratification of authority, because the receivers, in the end, prepared accounts and I think, from memory, they were signed by both but, in any event, they were - certainly responsibility was taken for both, so that in the end there is probably ratification of authority in any event, your Honour is perfectly correct. Our trouble is that - if I can put this as tactfully as I can - the litigation has a history of - it shows no signs of ever a finite ending and obviously, therefore, we would see the expedient of upholding of the view of the Full Court as something extremely important to us.

McHUGH J: Before you sit down, can I ask you a question which is troubling me? Would you contend that clause F3 gave power to the bank, by independent instruments, to appoint receivers to collect the rent, or to take possession of a particular building, for example?

MR CONTI: I am not sure what the price of this concession is going to be, your Honour.

McHUGH J: Might be the end of your...., on one view of it.

MR CONTI: What your Honour is speaking about is the - you are referring to the power to act in respect of the premises, or part of the premises.

McHUGH J: Yes. I am quite troubled by this notion that the individuals are somehow or other separate from the office of receiver. You say that it is a dual - that they are dual offices and, undoubtedly, you can have a number of receivers. But if you appoint a receiver in respect of a particular object, in respect of a particular property, can you appoint two receivers in the sense that you could have two offices in respect of that, as opposed to the individuals who constitute the office?

MR CONTI: We would submit, with respect, certainly, your Honour. Certainly that would accord - - -

MR HAYNE: I am sorry, Mr Conti, I cannot hear you.

MR CONTI: I am sorry. That would accord, surely, with modern doctrines. I mean, obviously I would like to have a look at some of the cases on the law of receivers, but it is inconceivable that one has some sort of antiquated doctrine of a single office in the case of multiple receivers, with a consequence that when one receiver dies, or retires, then the whole receivership comes to and end. I cannot see how that could conceivably be so, your Honour.

McHUGH J: But it may be a question of what you can appoint a receiver in respect of. You may well be able to appoint receivers in respect of individual parts of an enterprise or property, but is there any case which says that you can appoint independent receivers in respect of the same property, or the same part of a property or enterprise? It seems almost a contradiction in terms that you can say, "By this instrument, I appoint X to take possession of the premises at such-and-such address and, by this separate instrument, I appoint Y to take possession of" - perhaps you can.

MR CONTI: If your Honour's proposition was taken to is logical conclusion, it would mean that an explicit power to appoint joint and several receivers in respect of a single item of property, whether it is identified as the mortgage premises or a particular building, would be, in effect, conceptually impossible.

McHUGH J: No, not necessarily, because that might be done on an instrument that authorises it. But what you are faced with in this case is the same question that Justice Meagher asked in respect of - whatever the clause was - clause 8, I think it was, in the NEC Case. You have certainly got a power to appoint receivers, and to appoint persons, but does that enable you to appoint a number of receivers in respect of the same property, or part of it, as opposed to a number of persons acting jointly as receiver?

MR CONTI: No, your Honour. Can I answer by analogy? The law as to trustees has grown up because it just, as it were, evolved, as a concept entirely of itself. It does not apply to private or charitable - it does not apply to charitable trusts or public trusts. You could create a charitable trust in respect of a building over the road for the returned soldiers, et cetera, but the law says, well, charitable trustees can always act by majority. That has just been the tradition of the law. That is why we say, why should this particular concept of receivers and managers be anchored into a tradition in relation to private trusts. There is no logical reason why it should. These things have grown up by their own dynamics, but there is no logical reason why the receiver should be anchored to trustees.

GUMMOW J: But is this to be true of court appointed receivers as well?

MR CONTI: Your Honour, no. Let me say this: all of the arguments in support of debenture appointed receivers do not apply to court appointed receivers, because one cannot postulate, for instance, the commercial advantages in relation to a court appointed receiver. Save as to that, again there is no - why should there be any distinction between court appointed receivers in terms of acting jointly or severally and no presumption against severalty, any more than in a court appointed trustees to a charity. On the one..... a charity in implementing a cy-pres scheme.

Your Honours, the cases that deal with charity - and I am sorry, I should have had these photographed for you. Those that relate to charities referred to in the judgment of the Chief Justice are as follows - - -

GUMMOW J: Well, they are uncontroversial, are they not?

MR CONTI: Yes, your Honour, totally uncontroversial. Your Honour, can I just this? In Re Whiteley, which is in the judgment - it is a 1909 case, it is very old - there is - this is one of the charity cases.

BRENNAN CJ: What page is this?

MR CONTI: I will just get it for your Honours. It is on page 123 of the appeal book. The reference to Re Whiteley is about point 7 of the page and also, on that particular page, your Honour, there is a case at point 5 of the page, Blacket v Blizard [1829] EngR 21; (1829) 109 ER 317, and that was a public trust, and it was held that the trustee is made by a majority, and that was a decision of three judges of the court. In Whiteley's decision, Mr Justice Eve - as your Honour says - it is uncontroversial. As I say, if one tries to approach all - - -

BRENNAN CJ: But what has that got to do with this? I mean, if you are talking about trustees of a charity who act by a majority, they are not acting individually, are they? They are acting by a majority.

MR CONTI: Yes, that is true. But they are not acting unanimously.

BRENNAN CJ: No. I just do not see where this leads us in terms of assistance in this case.

MR CONTI: Your Honour, it gives a - well, the assistance I was deriving was to answer Justice McHugh's argument, the concept of one office or two offices and, certainly, if one could have private - you could have charitable trustees, as it were, occupying one office, and yet it is not a majority decision situation, so you have different people deciding, but, of course, they are not exercising different functions necessarily, I accept that.

BRENNAN CJ: But to take the question that Justice McHugh asked you, is it possible to think of A appointing B, C and D by separate instruments to perform any function at all except on the footing that the first to perform it shall terminate the authority of the others to do the same or that the three together should consult and decide which of them will do it? Those are the only hypotheses that any agency could be contemplated on, is it not?

MR CONTI: If they were - yes, by separate instruments.

BRENNAN CJ: Yes. Is not that what is meant by "severally"?

MR CONTI: The only reason I am hesitating is I am just trying to think of the analogy of a situation where one would have, say, five receivers and they have - if three voted in favour of one decision and two against that decision - - -

HAYNE J: But the question, Mr Conti, may not be a question about rivalry between, in the Chief Justice's example, B, C and D. The question may not be concerned with rivalry between the persons appointed so much as whether the act of one or the act of all of them is either necessary or sufficient to assert power or give acquittance to A, the person against whom the power is to be exercised.

MR CONTI: Your Honour, I am not, with respect, quite sure that is necessarily so. I mean, just assuming one, as I say, had the example I am putting to you, five receivers, and three voted in favour of a particular course of action and then remedy was sought against receivers for the decision, it could well be said that is the decision of three not of two.

HAYNE J: Mr Conti, take three receivers appointed as receivers of the book debts of A Company. If the book debt comes into the hands of B rather than into the hands of C or D, then is that sufficient or is it necessary that it come into the hands of B and C and D? That is the question, is it not; not any question of whether C may complain because B has received the book debt into his hand?

MR CONTI: let me say that is really different sides of the same coin. I am not quite sure if I understand entirely the question. There is no reason why, in the case of - and this may not be an answer - there is no reason why in the case of several receivers why a given book debt comes into the hands of one and he collects it. In those circumstances, a very difficult question arises whether that has really been the conduct of a receiver, in the several sense, or whether he has really collected on behalf of the receivership and therefore it really in true essence is a part of a course of joint conduct. They are the kind of impossible variances one can have if one really gets down with dealing with individual examples.

McHUGH J: But there are a lot of problems about this notion of acting severally unless you have got an express power. Supposing in the conduct of the business you have got three people acting as receivers and it is decided you need a need clerk. Do the three of them - do they go their separate ways, each of them employs a clerk. Is the business stuck with it?

MR CONTI: That is true. What concerned the Court of Appeal in NEC was more in another area of activity, and that is receivers finding themselves obliged to consult in every aspect of decision making, however important or unimportant. That particular emphasis - there are all sorts of variances to these circumstances, and I can see the force of the proposition that one wonders whether the distinction, in many instances, between joint and several is more apparent than real, but - - -

McHUGH J: It is certainly real. If tonight you offered two bellboys a tip to get you a taxi and they both turned up with one, you would probably find you have got to pay them both a tip.

HAYNE J: The analogy is not immediately apparent.

MR CONTI: As a matter of the law of contract, I would have thought that is entirely right. I do not see any problem with that proposition.

McHUGH J: They are agents - - -

GUMMOW J: The salaries of these clerks, they all become a receivership expense, do they not; they get added on to the debt? That is not good news for the debtor; good news for the mortgagor.

MR CONTI: That is not so much decision making, that is just a matter of the administration, yes.

BRENNAN CJ: I mean, we are really concerned with the questions of authority and liability. Take the instance that Justice Hayne put to you, A Company and B, C and D appointed as receivers and managers. C receives the book debt and levants - - -

MR CONTI: Sorry?

BRENNAN CJ: And levants, disappears with the money.

MR CONTI: I see. Yes.

BRENNAN CJ: Has the debt been paid to C? Has the receivership taken the book debt? That is one question.

MR CONTI: It has been paid because the receivership is tainted in the sense that one of the receivers being validly appointed as a several receiver, because the doctrine of severalty necessarily means that payment to one discharges the debt. That must logically be so.

BRENNAN CJ: So that then B and D are not liable to the A Company for failing to account.

MR CONTI: Your Honour, if they were partners and that section of the Partnership Act applied - - -

BRENNAN CJ: If there is a - that is another question.

MR CONTI: But if they are not partners and it has been paid to one and he has disappeared with the money, it is given a full discharge, no, we would - if the authority was joint and several, that would be the mortgagee's problem; he could not look to the other two.

BRENNAN CJ: Perhaps the real commercial reality is that they are all joint appointments, but the joint appointees have power impliedly to authorise one of their number to do specific tasks on behalf of them all jointly.

MR CONTI: Your Honour, that - - -

GUMMOW J: That is what I was trying to ask you before lunch.

MR CONTI: Yes, your Honour. I do not quarrel with the - how can I put this; it might sound patronising - I do not argue with the common sense of that, and I suppose that is a very good argument conversely in favour of severance, because the severalty is largely a concept of - it does not really add much to the notion of the appointment. That is what you were putting, and I see that, as I say. It demonstrates the justification for dealing with instruction issue on both matters, because I see the point. Our difficulty is, we would wish to pursue the argument on our first basis because it will then become a highly difficult matter to manage, in terms of the litigation, if there is even an academic distinction between joint and several, which is outstanding, because it just means the litigation will get ever more complex. That is our worry, and I realise it is not your concern.

BRENNAN CJ: There may be another question, and that is the question of rescission of special leave at the end of this argument. That is one question that you perhaps need to consider, that is whether or not the whole matter may be in such a frame at the moment that it may prove to be academic and therefore the case is not a suitable vehicle for considering the issues that now arise.

MR CONTI: That is Mr Pringle's - - -

BRENNAN CJ: I know, it will be Mr Pringle's concern. The question is whether you would wish to seek rescission of special leave. That is one aspect of it and another matter that you have to consider, I think, and that is that we are awaiting a formulation of your notice of contention in relation to severance.

MR CONTI: Yes, your Honour. You say that is a formality which I realise is consequential. How long is your Honour prepared to wait for that? Could we do it some time in the next - on the other matter, your Honour, I would really like to talk to Mr Christiansen, if I could for a moment, while Mr Pringle - - -

BRENNAN CJ: Yes, I think in relation to the formation of the notice of contention, it is something which, perhaps, you could do within the next couple of days. Yes, Mr Pringle?

MR PRINGLE: Yes, thank you, your Honours. May I take your Honours to page 67 of the appeal book and bring to your attention two of the trial court's difficulties with the idea of severance. First of all, your Honours, you will see at line 25 a reference to "more modest enterprises" than the kind of enterprise considered and discussed in the NEC case, and following on that, your Honours, you will see at line 26 that his Honour noted:

that the evidence suggests that in the present case, despite the joint and several appointment, in fact all the work was undertaken by only one of the appointees.

And his Honour followed up that problem on page 69 by pointing out at line 12 that:

Furthermore, it is often the reality of a joint and several appointment that those appointed will in fact act severally. To hold that an appointment was valid in so far as it was made jointly would, in my view, create significant problems of its own as there would be likely to be many acts, performed severally, which would not be valid. Absent the particular circumstances present in Kerry Lowe Management Pty, this consideration tends, in my view, against a finding that the purported "joint and several" appointment in this case can be severed.

GUMMOW J: Do you complain, and you do not, as I see it at the moment, in your pleading of acts performed severally?

MR PRINGLE: Well, in the sense that it - - -

GUMMOW J: Not in a sense, but in the terms of page 4? Because if you want room to move you may be in trouble in holding on to your special leave.

MR PRINGLE: Well, can I tell your Honours that in argument before his Honour Justice Parker, we asked for leave to amend to deal with that problem if he was against us on severance. But his Honour was not against us on severance.

BRENNAN CJ: What do you mean - you wanted leave to - - -

MR PRINGLE: To allege that if there was a joint appointment no acts were performed jointly. They were all done by Mr Melsom. The evidence was that he was the only one who came round to Boulder and so on and that thick documentation without any suggestion that anywhere, as I recall it, that Mr Robson was involved in anything. And, as I say, we applied for leave, in the event that the court was against us, to amend to say that if there was a joint appointment all the acts were performed by one of the appointees only. Of course, that did not arise in the Full Court either, because they found that the joint and several appointment was right.

GUMMOW J: At what stage was this application to amend made and refused?

MR PRINGLE: During the course of the argument.

GUMMOW J: At trial?

MR PRINGLE: At trial.

GUMMOW J: After the evidence?

MR PRINGLE: After the evidence.

BRENNAN CJ: Why was it refused?

MR PRINGLE: It was not refused. I merely gave notice that that was what we would want to do if the court was against us on the issue of severance and that that matter should be left open, that we should be - - -

BRENNAN CJ: What do you mean, after judgment delivered?

MR PRINGLE: No. If the court was not going to reach the stage of final judgment in any event, it was only a case involving issues, that we wanted that kept alive if his Honour was with us on every issue except severance.

KIRBY J: Is this demonstrated by transcript, this exchange?

MR PRINGLE: Well, I think my learned friend Mr Conti can confirm that that happened.

MR CONTI: I am afraid I have no memory of the matter, your Honour, and my learned junior has the same memory.

MR PRINGLE: Well, I suppose your Honour, we could obtain it.

BRENNAN CJ: That really does make it a very dubious case for this Court intervening at all, Mr Pringle. Why should not we let the whole matter go to completion in whatever form?

MR PRINGLE: Because so far as the point on which special leave was granted this is a suitable vehicle for the decision. It throws up precisely the problem of the tension between Kerry Lowe Management Pty Ltd and NEC - - -

BRENNAN CJ: It throws up those cases, but the real problem that is underlying all of this is the nature of what is meant by joint and joint and several and liability in particular for that which is alleged to be a tortious act. On the argument that you have just been putting, it would seem that your argument at all events, so far as jointly is concerned, is that if something should be done by one of two joint receivers then that person who does the act on his own account is personally liable.

MR PRINGLE: Yes.

BRENNAN CJ: Why should not we wait to see whether that is what the finding is?

MR PRINGLE: Well, because, your Honours, we have here a ruling by the Full Court which would make any further progress on that part of the case by us very difficult. It would shut out that argument because joint and several has been found against us. I mean, the existence of a valid appointment jointly and severally would be something we could not overcome without at least that point being overthrown by your Honours, and that is the point which is the High Court point in the case.

BRENNAN CJ: Two possibilities then emerge, do they not? And that is that at the end of the day there is a finding of fact that the acts which were done were done by one receiver and manager, by Mr Robson, individually. The other - - -

MR PRINGLE: Mr Melsom.

BRENNAN CJ: Mr Melsom, done by him individually. The alternative is that these acts were done by Mr Melsom on behalf of both receivers and managers. Now, if the finding is in the former one the question then is, what is the significance of the several appointment? If it is in relation to the joint activity which was simply carried into execution by Mr Melsom, then the question is whether or not this is a good authority so far as it is joint?

MR PRINGLE: Well, that would cut across everything that has been said in the other cases where every trivial thing has to be done by both. I mean, it does require - - -

BRENNAN CJ: That seems to me to be a very false notion of putting it that way. If the true understanding is that there is a joint liability on the part of joint receivers and managers but that they have authority to authorise one of their number to do specific acts within that joint authority.

MR PRINGLE: Well, your Honours, we would say that a ruling to that effect would be necessary and helpful in this case and it would provide elucidation generally, which is the purpose of the argument before your Honours at all. Our respectful submission is that that second point holds good, whatever your Honours eventually decide should be the result of this appeal. The elucidation of a difficult area would, in our respectful submission, come out of your Honours decision in this case.

KIRBY J: And it is a new insight really advancing the two streams which have so far been emerging.

MR PRINGLE: And that would be necessary to be looked at and it would be very helpful to accountants and lawyers around the country to have an authoritative answer in that rather difficult area of law.

I do not have much more to say, your Honours. We raised the point of conflicting decisions which his Honour referred to briefly on page 67. He was not prepared to regard the risk as "insubstantial" in the debate before your Honours this afternoon with my learned friend. In our respectful submission reveals that may be an understatement.

In regard to the point about the difficulty in fastening liability on one of several separate receivers is one that we argued, as you will see at the foot of page 67 and again his Honour put it rather mildly in saying that:

there may be significant difficulties, or at least a costs burden, for a party wishing to challenge the propriety of actions taken in such a receivership in identifying which appointee is responsible for the particular acts to be challenged.

So that we would respectfully submit that there are important matters for mortgagors involved in those findings of his Honour.

GUMMOW J: May I ask you, as a confirmation to the position of Velcrete, it is not in liquidation, is it?

MR PRINGLE: Well, it is not as far as I know, your Honour.

GUMMOW J: It has only been in receivership?

MR PRINGLE: Only this receivership, as far as I know. We do not even know whether the receivers have retired yet, I am afraid.

GUMMOW J: But there has been no liquidation at any rate?

MR PRINGLE: Not as far as I know, your Honour. No, I am instructed not. I think only one or two other points, your Honours.

In regard to agents it was attempted by the Full Court at page 142 that joint appointments or appointments of two or more agents are joint only unless stated otherwise. So that, even if the argument that appointment of two receivers and managers is a double appointment and not appointment to a single office, the agency illustration shows that there is nothing in that argument because agents are also prima facie appointed jointly unless stated to the contrary. Our respectful submission is that the case of trusts and the case of agents are only analogies but the most helpful analogies. In regard to agency, of course, it is only a prima facie position. There may be a difficulty in the case of trustees in a private trust, say, you can each act separately. Equity might not allow that to happen. But that is not a point which I would submit your Honours need decide in this case.

In regard to partners, your Honours, and the question of liability, one of the problems would be that one partner acts without the knowledge of the other and acting alone beyond power might be met with the answer if one tried to fix the partnership with the - or all the partners with liability - is that that was not in the ordinary course because it was not authorised.

HAYNE J: And also say, Mr Pringle, that it is by no means unknown, at least in Victoria, for two appointees to be not in partnership, rather one to be a consultant to the firm and the other an active member of the firm.

MR PRINGLE: Yes, if your Honour please. I do not have any further submissions, your Honours.

BRENNAN CJ: Thank you, Mr Pringle. Do you wish to say something, Mr Conti?

MR CONTI: Only in response to what your Honour invited me to respond upon. We would have to say that we cannot deny the proposition that in the way in which the evidence may fall in this case and what we believe the evidence would be, the way it will fall, that we cannot deny the proposition that the issues we have debated in front of you are academic. We just cannot deny that proposition. That is all we wish to say. I do not wish to put the contrary proposition because it just would not be truthful.

BRENNAN CJ: Thank you, Mr Conti. Do you wish to say anything about that Mr Pringle?

MR PRINGLE: I am sorry, I did not quite hear what my learned friend said - - -

BRENNAN CJ: I think what he was saying was this: that it may turn out that the question of the findings of fact at the end of the day would show that the actions complained of in this matter are actions which were undertaken jointly. Is that right, Mr Conti? And on that account, the question of the difference between joint and several may be academic.

MR PRINGLE: But what would not be academic is whether the joint and several appointment was valid. That would not be academic.

BRENNAN CJ: Thank you, gentlemen. The Court will consider its decision in this matter.

AT 3.15 PM THE MATTER WAS ADJOURNED.