Fortress Credit Corporation (Australia) II Pty Limited & Anor v William John Fletcher and Katherine Barnet as Liquidators of Octaviar Limited and Octaviar Administration Pty Limited & Ors [2014] HCATrans 233 (17 October 2014)

Last Updated: 20 October 2014

[2014] HCATrans 233

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S130 of 2014

B e t w e e n -

FORTRESS CREDIT CORPORATION (AUSTRALIA) II PTY LIMITED ACN114624958

First Applicant

FORTRESS INVESTMENT GROUP (AUSTRALIA) PTY LIMITED

Second Applicant

and

WILLIAM JOHN FLETCHER AND KATHERINE BARNET AS LIQUIDATORS OF OCTAVIAR LIMITED (RECEIVER AND MANAGERS APPOINTED) (IN LIQUIDATION) AND OCTAVIAR ADMINISTRATION PTY LIMITED

First Respondent

OCTAVIAR LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION)

Second Respondent

OCTAVIAR ADMINISTRATION PTY LIMITED (IN LIQUIDATION)

Third Respondent

Application for special leave to appeal

CRENNAN J
GAGELER J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 17 OCTOBER 2014, AT 10.57 AM

Copyright in the High Court of Australia

____________________

MR N.C. HUTLEY, SC: If your Honours please, I appear with my learned friend, MS R.C.A. HIGGINS, for the applicant. (instructed by Baker & McKenzie)

MR B.A.J. COLES, QC: I appear, may it please the Court, with my learned friends, MR P.J. DOWDY and MR A.K. FLECKNOE-BROWN, for the respondents. (instructed by Henry Davis York)

CRENNAN J: Thank you, Mr Coles. Yes, Mr Hutley.

MR HUTLEY: Your Honours, on 19 September 2011, Justice Ward made an order for the purposes of section 588FF(3)(b) of the Corporations Act extending the time for the making of applications under 588FF(1) to a date of 3 April 2012.

GAGELER J: We do not actually see that order in the application book, do we?

MR HUTLEY: I am sorry, your Honour. Your Honour can take it that it was made and it was in the form of what has come to be known as a “shelf order”. That was a plenary extension of time for any application for that period – up to the period. An application was brought by our learned friend’s client against my client on the last day of the extended period in respect of – against my clients. We challenged that on the basis that the form of order I will call the shelf order is one which is beyond the power and your Honours - - -

CRENNAN J: We are fairly familiar with the argument - - -

MR HUTLEY: Yes, your Honour. Your Honours have been there.

CRENNAN J: - - - Mr Hutley, as you will be well aware from Ansell and so on.

MR HUTLEY: Exactly. The point is - - -

CRENNAN J: Now, I think in the Court of Appeal some of the justices were of the view that BP v Brown was plainly wrong, others thought it was plainly correct.

MR HUTLEY: I think no one thought it was plainly wrong. The Chief - - -

CRENNAN J: Could not be said, I am sorry, I have left it - - -

MR HUTLEY: Could not be said, yes.

CRENNAN J: - - - to be plainly wrong whereas thought it was in fact correct but - - -

MR HUTLEY: It is 4-1, I think. The Chief Justice - - -

CRENNAN J: But, in any event, there was no decision in your favour below, was there?

MR HUTLEY: No, your Honour, and, in our respectful submission, as we said, we are back. If your Honours go to the Chief Justice’s reasons in the application book commencing at page 87, paragraph 88 - - -

CRENNAN J: Paragraph 88.

MR HUTLEY: - - - and he deals with the argument between – sorry, and 99 - your Honours, we say the argument is exposed fully by his Honour. It is an important question, it is open - - -

CRENNAN J: Just one moment, Mr Hutley. I might ask you if you would take your seat, Mr Hutley.

MR HUTLEY: If your Honour please.

CRENNAN J: I call upon you, Mr Coles, I might be assisted from hearing from you.

MR COLES: If your Honours please, may we put shortly the following matters. The question whether there is power in the court to make an extension order under subsection (3) without nominating the transaction – a transaction and perhaps parties to it is a question to be decided by the construction of the Act. Importantly, and perhaps crucially textually, one does not take the flavour of subsection (3) from subsection (1). Indeed, one contrasts them, as the learned President did.

Subsection (1) deals with the necessary form of application which requires the specific identification of a transaction and necessarily parties. Subsection (3), the extension power, simply says on an application under this provision the court may extend time. So our first point is that textually the proposition that there is an absence of power is perhaps against our learned friend’s position.

Secondly, we say that, in any event, these are powers conferred on a court and they are not to be read down or subject to implications impinging on the generality. In short, what happened here, the liquidators made an application for an extension of time, the court had power to hear that extension of time and it was granted.

The third matter we say is that in relation to those aspects of our learned friend’s submissions that draw attention to the purpose of the provision – we accept the purpose of the provision – and identify that purpose as including conforming with aspirations or objectives of certainty, we say like all purposes in statutes they only go so far, and the other purpose, a purpose at least in this legislation, is to supply mechanisms for a liquidator to pursue voidable transactions in more time if the liquidator needs it. Fourthly, we say - - -

CRENNAN J: One problem, Mr Coles, is the question about the power to make a shelf order does have a certain déjà vu about it and it is impossible not to wonder whether it should be treated as a question of general public importance to perhaps be heard reasonably promptly in this Court because we understand, of course, the implications of uncertainty about the meaning of the provision.

MR COLES: The only matter I would put on that, your Honour, most matters involving practical aspects of the Corporations Law are of a certain degree of general significance. Here, of course, your Honours, although we accept, of course - and your Honours can take into account that in Ansell, for example, there was a grant of special leave for a ground that – I am not sure it was limited to it but certainly included the ground Mr Hutley relies on. What we say as to that is once upon a time there was a little bit of uncertainty about whether, for example, BP v Brown conflicted with Greig v Stramit in the Queensland Court of Appeal. We say much analysis on that topic proves that there is no inconsistency or no uncertainty spread in the marketplace, as it were, about that state of affairs.

CRENNAN J: Yes.

MR COLES: We say three things. The second one is that – next we say that after three judges in BP v Brown, confirmed really by five judges that specially sat in the Court of Appeal for this case, three more judges in between in the Court of South Australia, in the Supreme Court of South Australia which is the litigation to which your Honour refers, there is a uniformity of acceptance over the state of affairs that acknowledges the propriety of a shelf order and, more importantly, there is no suggestion through that whole period, whole 10 or 12 year period, that any inconvenience to the commercial community, for example, as occasioned by supposed uncertainties generated by the fact that the liquidator has simply got itself or himself or herself an extension of time to do something for a little bit longer.

To the contrary, we would say that to deny – and perhaps this is more a matter for later argument, I will say it but briefly, but one can readily perceive that if the liquidator were required to nominate in his application for an extension the transaction and the parties to it in relation to if she wanted an extension of time, it was rather pointless applying for the extension of time, you may as well simply institute the proceedings. Then it will be said if once he obtained that extension of time – well, probably a good ground for opposing the application for an extension of time because you do not need it because you are in a position to start the premise.

CRENNAN J: Yes, I understand the point being made.

MR COLES: So, with respect, your Honour, there are other difficulties too. One would be bedevilled by an extension in those circumstances because one would see it after one commenced one’s eventual proceeding under subsection (1), everybody would say, well, never mind that you have the extended period of time to think about it, you can only use the causes of action or the transactions you have identified and the parties to it that you have specified in your extension and even though the liquidator has had the advantage of some more time that that advantage is no advantage at all because he is stuck with the – in other words, this encroaches on the text of subsection (1). It subjects subsection (1) really to the impermissible gloss, or really the first part of subsection (3):

An application under subsection (1) may only be made –

if there has been – if in the circumstances of an extension of time an extension of time which had identified the subject matter of that application. In our respectful submission, that is too inhibiting. In our respectful submission, the commercial community suffers no deep grievance by the universal practice throughout Australia, including Queensland, for making orders in the form of which the applicant complains. If your Honours please.

CRENNAN J: There will be a grant of special leave in this matter. It should not take more than a day, should it, Mr Hutley?

MR HUTLEY: Your Honour, I think it could be comfortably done in half a day or - - -

CRENNAN J: Yes. Two matters: the draft notice of appeal seems to deal with more than the point of construction.

MR HUTLEY: Your Honour, the second matter flows out of - if we are successful on the first matter, there was an issue then if we are right as a matter of construction that you have to nominate the – in effect, identify the claim, then the question arises is to the liquidator would say they – when the order was discharged the application was on foot. They then had identified us. The evidence was that we were not identified or not capable of being identified when time ran out, but at the time later on if an order is set aside, then at that time they can identify us and your Honours could then make, or a court could then make an order extending it to us. We would say that is beyond power. There is a cut-off date. We have got to be identified into a transaction by the end of the extension period.

CRENNAN J: Well, can I say this?

MR HUTLEY: That might be remitted, your Honour, of course.

CRENNAN J: Well, yes. Without limiting the grant of special leave, could you give some attention to the notice of appeal, particularly from the point of view of rationalising it and ensuring focus on the point of construction which is the essential reason why.

MR HUTLEY: Yes. I will speak to our learned friend. We would be content if that question is determined for the matter to be remitted to the Full Court to deal with the question of what flows since they did not address that question and your Honours might be assisted by their consideration of that.

CRENNAN J: Well, that might be a reasonable course to follow, and there is no notice of contention in prospect, is there, Mr Coles?

MR COLES: No, there is not, your Honour.

CRENNAN J: No. From that point of view, there is a high probability the matter could be heard in this Court on 11 December, and we would remind you about the timetabling requirements and ask you to make some inquiries about a possible timetable.

MR HUTLEY: If your Honours please.

CRENNAN J: Thank you. The Court will adjourn to reconstitute.

AT 11.10 AM THE MATTER WAS CONCLUDED