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Luck v University of Southern Queensland [2018] FCAFC 102 (29 June 2018)
Last Updated: 2 July 2018
FEDERAL COURT OF AUSTRALIA
Luck v University of Southern Queensland
[2018] FCAFC 102
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Appeal from:
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File number:
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Judges:
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Date of judgment:
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Catchwords:
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BANKRUPTCY AND INSOLVENCY – hearing
of creditor’s petition adjourned by a Registrar of the Federal Circuit
Court of Australia to a date after the
petition was due to expire – order
subsequently made by the Registrar pursuant r 16.05(2)(e) of the Federal
Circuit Court Rules 2001 (Cth) so as to extend the life of the petition
– corrective order made after life of petition would otherwise have
expired
– whether power conferred by r 16.05(2)(e) available to be
exercised on the facts– whether earlier order for the adjournment
reflected the intention of the Registrar - whether the power conferred by the
slip rule was inconsistent with subss 52(4) and (5)
of the Bankruptcy Act
1966 (Cth) – whether subsequent sequestration order validly made.
Held – appeal dismissed.
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Legislation:
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Federal Circuit Court Act 1999 (Cth), ss 8(4), 28(1), 28(2)(c),
43(2)(b), 99(1), 102, 103, 104
Federal Circuit Court (Bankruptcy) Rules 2006 (Cth)
Federal Court Rules 1979 (Cth) r 7
High Court Rules 1952 (Cth) r 11
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Cases cited:
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Communications, Electrical, Electronic, Energy, Information, Postal,
Plumbing and Allied Services Union of Australia v Australian
Competition and
Consumer Commission [2007] FCAFC 132; (2007) 162 FCR 466
COZ16 v Minister for Immigration and Border Protection [2018] FCA
46
Hicks v Minister for Immigration & Multicultural & Indigenous
Affairs [2003] FCA 757
Minister for Immigration and Border Protection v BJC16 [2017] FCAFC
114; 347 ALR 62
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Date of last submissions:
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24 May 2018
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Registry:
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Victoria
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Division:
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General Division
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National Practice Area:
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Commercial and Corporations
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Sub-area:
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General and Personal Insolvency
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Category:
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Catchwords
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Number of paragraphs:
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Counsel for the Appellant: |
The Appellant did not appear |
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Counsel for the Respondent:
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Mr B Petrie
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Solicitor for the Respondent:
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Clayton Utz
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ORDERS
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AND:
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University of Southern
QueenslandRespondent
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LOGAN, MORTIMER AND CHARLESWORTH JJ
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DATE OF ORDER:
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THE COURT ORDERS THAT:
- The
appeal be dismissed.
- For
the avoidance of any doubt, the operation of the stay granted by the Court on
20 April 2017 cease such that the sequestration
order made by the Federal
Circuit Court on 4 April 2017 have effect on and from the date on which it
was made by that court.
- The
respondent’s costs of and incidental to the appeal be taxed and paid from
the estate of the appellant in accordance with
the Bankruptcy Act 1996
(Cth).
REASONS FOR
JUDGMENT
LOGAN J:
- Like
Mortimer J, I have had the advantage of reading in draft the reasons for
judgment of Charlesworth J. In turn, I have had the
advantage of reading
in draft the reasons for judgment of Mortimer J.
- Charlesworth J
has summarised the background facts, the relevant legislative and regulatory
provisions, the grounds of appeal and
the submissions of both Ms Luck and the
University of Southern Queensland (USQ). These summaries I gratefully
adopt.
- I
agree generally with the reasons for judgment of Mortimer J, both in
respect of why her Honour expresses agreement with the reasons
for judgment of
Charlesworth J and why her Honour expresses disagreement. It follows that,
like Mortimer J, I would dismiss Ms Luck’s
appeal and make the
other orders proposed by Mortimer J.
- I
wish to make some additional observations.
- The
question as to whether, by the use of the “slip rule” and, if so, in
what circumstances a court may, under s 52(5) of the Bankruptcy Act
1966 (Cth) (Bankruptcy Act), by an order made after the expiration of
the period of 12 months commencing on the date of presentation of a
creditor’s petition,
extend the period at the expiration of which that
petition will lapse has proved a vexed one. Analogous controversy has attended
the question as to whether, under s 459R(2) of the Corporations Act
2001 (Cth) (Corporations Act), a court may, by an order made after
the expiry of the period, extend the six month period within which an
application for the winding
up of a company.
- We
were not confronted in this appeal with a contention that the text of
s 52(5) of the Bankruptcy Act, with its explicit prescription of a time
limit for the making of an extension order, codified a purpose of expedition in
an insolvency
controversy which was inconsistent with any ability to have resort
to a slip rule so as to make, after the expiry of that time limit,
an order
extending time having effect prior to that expiry. Such a contention might
perhaps have proceeded by analogy with the recognition
in David Grant &
Co Pty Ltd v Westpac Banking Corporation [1995] HCA 43; (1995) 184 CLR 265 (David
Grant & Co Pty Ltd v Westpac Banking Corporation) as to the rigidity
of the prescription in s 459G of the Corporations Act of the time within
which a company may apply for an order setting aside a statutory demand, the
recognition in Grant Samuel Corporate Finance v Fletcher [2015] HCA 8; (2015) 254 CLR
477 (Grant Samuel Corporate Finance v Fletcher) that
s 588F(3) of the Corporations Act operated as a code in respect of the
times for the bringing of applications by liquidators in respect of certain
voidable transactions
and with the policy of expedition evident in Pt 5.4
of the Corporations Act, recognised in Aussie Vic Plant Hire Pty Ltd v Esanda
Finance Corporation Ltd
[2008] HCA 9 
; (2008) 232 CLR 314 at 324 [17] . I expressly refrain
from passing upon whether any such contention would have had merit.
- A
trilogy of cases determined by this Court at intermediate appellate level holds
that resort to the slip rule is available even after
the expiry of the period
mentioned in s 52(5) of the Bankruptcy Act or, as the case may be,
s 459R(2) of the Corporations Act so as to make an order which would have
been made prior to the expiry of a specified time limit but which through
inadvertence was
not and which speaks from a date prior to the expiry of that
time limit: Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd
(1995) 61 FCR 385; Flint v Richard Busuttil & Co Pty Ltd [2013] FCAFC 131; (2013) 216
FCR 375 (Flint v Richard Busuttil) and Ramsay Health Care v
Compton [2016] FCAFC 125; (2016) 247 FCR 387. In the last of this trilogy, David Grant
& Co Pty Ltd v Westpac Banking Corporation and Grant Samuel Corporate
Finance v Fletcher are expressly cited, with neither being regarded as
inconsistent with the upholding of an ability to have resort to the slip rule
in
circumstances such as the present.
- On
the footing that resort to the slip rule was available, the present was, in my
respectful opinion, a paradigm case for its application.
There was at the
relevant time a consensus between the parties, for their own separate reasons,
that the creditor’s petition
ought to be adjourned, rather than be the
subject of any contest as to whether it should be allowed to lapse. It was only
by inadvertence
that neither the parties nor the registrar did not, in seeking
or, as the case may be, in responsively ordering the adjournment of
the petition
prior to the expiration of the 12 month period additionally seek and order
an extension of time. That a discretion
would at the time have been entailed in
the granting of an extension is not, as is explained in Flint v Richard
Busuttil, by reference to L Shaddock & Associates Pty Ltd v
Parramatta City Council (No. 2) [1982] HCA 59; (1982) 151 CLR 590, incompatible with an
ability later to have resort to a slip rule.
I certify that the preceding eight (8) numbered
paragraphs are a true copy of the Reasons for Judgment herein of the Honourable
Justice
Logan . |
Associate:
Dated: 29 June 2018
REASONS FOR JUDGMENT
MORTIMER J:
- I
have had the advantage of reading, in draft, the reasons for judgment of
Charlesworth J. Her Honour has set out the background to
this appeal, the
relevant legislative and regulatory provisions, Ms Luck’s grounds of
appeal and the University of Southern
Queensland’s answers to them. I
gratefully adopt her Honour’s summary of those matters. I agree with her
Honour’s
conclusions on some matters, but not all. As a result of
different conclusions I have reached on some of the grounds of appeal, I
consider the appeal should be dismissed.
- I
agree with her Honour that grounds 1 and 3 are expanded within the terms of the
other grounds and do not need to be considered separately.
In my opinion, they
must fail because the other expanded grounds fail.
- My
different approach, and different conclusion on one critical aspect, concern
grounds 2, 4 and 5 of the notice of appeal.
- Grounds
6 to 9 are more straightforward, and I agree with the conclusions of
Charlesworth J on these grounds.
- As
Charlesworth J notes at [75], the University of Southern Queensland abandoned
reliance on its notice of contention, so it has not
been necessary to deal with
that matter in these reasons.
GROUNDS 6-9
- In
relation to ground 6 of the notice of appeal, there is no requirement that an
order refer expressly to the statutory source for
it to be made, nor that a
party needs to consent to the absence of such a reference. Whether the exercise
of power is authorised
is what matters. The authorities go so far as to
recognise that a decision-maker may refer to an incorrect source of
power, but if there is an available source of power, the exercise of power will
be supported: Eastman v Director of Public Prosecutions (ACT) [2003] HCA
28; 214 CLR 318 at [124] (Heydon J); Australian Education Union v Department
of Education and Children’s Services [2012] HCA 3; 248 CLR 1 at [34]
(French CJ, Hayne, Kiefel and Bell JJ); Attorney-General (SA) v Corporation
of the City of Adelaide [2013] HCA 3; 249 CLR 1 at [175] (Crennan and Kiefel
JJ). If this is the case, the absence of a reference to the source of power
cannot, of itself, indicate error.
- I
consider the contention by Ms Luck in her written submissions at 12(d) that it
was this failure to refer expressly to the source
of power as s 52(5) of the
Bankruptcy Act 1966 (Cth) in the Registrar’s orders which was the
cause of her “discontent”, is an attempt to avoid the fact that she
consented to the course undertaken by the Registrar, until she subsequently
discovered an argument which might impugn the sequestration
orders. It is to be
expected that Ms Luck would feel the need to explain why she was now impugning a
course of conduct to which she
consented (and indeed encouraged). However, her
explanation – couched as a legal submission – should not be
accepted.
Ground 6 must fail.
- I
now turn to ground 7. I understand this ground, read with the short written
submissions Ms Luck makes on it, to concern s 102(2)(i)
of the Federal
Circuit Court Act 1999 (Cth), which relevantly provided at the
time:
(2) The following powers of the Federal Circuit Court of
Australia may, if the Federal Circuit Court of Australia or a Judge so directs,
be exercised by a Registrar:
...
(i) a power of the Federal Circuit Court of Australia prescribed by the Rules
of Court.
- On
Ms Luck’s argument, since neither this provision, nor r 2.02(1) of the
Federal Circuit Court (Bankruptcy) Rules 2016 (Cth) (on which Ms Luck
also relies), altered the “manner” or “method” by which
a creditor’s petition
could be extended under s 52(5) of the Bankruptcy
Act, the “manner” or “method” in s 52(5) had to be
applied. That meant, Ms Luck’s argument runs, the discretion had to be
exercised before the 12 month period expired,
which it was not.
- Whatever
might be said about the quite difficult issues to which this argument gives rise
(which are dealt with below in relation
to grounds 2, 4 and 5), it is obviously
incorrect that, as Ms Luck contends, the learned Federal Circuit Court
judge failed to “deal
with” the question central to the disposition
of Ms Luck’s argument. His Honour’s reasons deal expressly and in
detail with the interrelationship between the various provisions, and also with
the issue of retrospectivity. They do so in a manner
not favourable to Ms Luck,
but that is addressed in relation to other grounds of her appeal. Ground 7 must
fail.
- In
relation to ground 8, there was no failure by the Federal Circuit Court to
express its reasons for its orders in sufficient detail
to meet the requirements
expressed by the Court of Appeal in Hunter v Transport Accident Commission
[2005] VSCA 1, on which Ms Luck relied. I assume for the purposes of this
ground of appeal that the principles articulated in that proceeding do
not
differ in substance from the ones articulated in this Court: see COZ16 v
Minister for Immigration and Border Protection [2018] FCA 46 (Griffiths J)
at [32]-[46]; DAO16 v Minister for Immigration and Border Protection
[2018] FCAFC 2 at [47]- [48] (Kenny, Kerr and Perry JJ).
- At
[21] of Hunter, Nettle J (Vincent JA and Batt JA agreeing) set out the
nature and content of a judge’s duty to give reasons:
the reasons should deal with the substantial points
which have been raised; include findings on material questions of fact; refer
to
the evidence or other material upon which those finding are based; and provide
an intelligible explanation of the process of reasoning
that has led the judge
from the evidence to the findings and from the findings to the ultimate
conclusion.
(citations omitted)
- His
Honour added that where evidence is rejected, a judge should generally explain
why the evidence was rejected, and not simply refer
to evidence that was
accepted in her or his reasons. Of course, the nature and content of the
judicial obligation was couched the
way it was in Hunter because the
Court of Appeal was dealing with an appeal from a contested trial, where
evidentiary issues were of central importance.
Those observations have no direct
application to the Federal Circuit Court’s reasons for judgment in this
case, which were
overwhelmingly concerned with a series of legal questions,
rather than findings of fact.
- Putting
that to one side, the learned Federal Circuit Court judge’s reasons
examine thoroughly the source of the Registrar’s
powers in bankruptcy
matters, both through the Bankruptcy Act and the Federal Circuit Court
Bankruptcy Rules. The reasons also examine which of the Federal Circuit
Court’s general rules
are applicable in bankruptcy proceedings. His
Honour explains his reasoning in detail. There is no failure to provide
sufficient
reasons. Ground 8 must fail.
- In
relation to ground 9, I agree with Charlesworth J that in her written
submissions Ms Luck did not expand upon what the denial of
natural justice
was. There is nothing in the material before the court to support an allegation
that the Federal Circuit Court denied
Ms Luck natural justice. Ground 9
must fail.
GROUNDS 2, 4 AND 5
- These
grounds all concern what might be compendiously described as the “r
16.05(2)(e) issue”, the “retrospectivity
issue”, and the
“inconsistency issue”. They are the more substantive grounds
requiring resolution on this appeal.
I take a different view to
Charlesworth J on the r 16.05(2)(e) issue. I agree with her
Honour’s conclusion on the retrospectivity
issue, and the inconsistency
issue, although my reasoning is somewhat different. I also prefer to approach
these issues in the appeal
in a slightly different way.
- There
are two key matters central to the resolution of these grounds.
- The
first is whether the Registrar could rely on r 16.05(2)(e) of the Federal
Circuit Court Rules 2001 (Cth) as a source of power to make the impugned
order on 31 May 2016. Rule 16.05(2) is quite different in form now, and
expressly includes registrars: see the extract at [77] of Charlesworth J’s
reasons. Resolution
of issues around the Registrar’s reliance on
r 16.05(2)(e) determines whether he was able to exercise the “slip
rule”
power under that rule or not. It has a number of strands, some of
which Ms Luck identifies and one of which arises because of the
Full Court
decision in Minister for Immigration and Border Protection v BJC16 [2017]
FCAFC 114; 347 ALR 62. I understand these matters to be comprehended by ground 5
of the notice of appeal. I consider this ground is so closely
related to the
issue in BJC16 that this Court should deal with that question as well,
although it is not directly raised by Ms Luck. Quite properly, it was raised
by
USQ.
- The
second is, even if the Registrar was able to rely on r 16.05(2)(e) as a source
of power to make the order, whether that power
could be used as a method by
which to achieve the result which could have been achieved through an exercise
of the discretion in
s 52(5) of the Bankruptcy Act, to extend the life of a
creditor’s petition beyond the statutory time limit of 12 months.
Included in this second matter is
whether such an outcome can be achieved
retrospectively. This issue is often put in Ms Luck’s written submissions
by reference
to contentions about what is the proper “manner and
method” for extending a creditor’s petition. I understand these
matters to be comprehended by grounds 2 and 4 of the notice of appeal.
First issue: r 16.05(2)(e)
Ms Luck’s argument
- By
r 1.04 of the Federal Circuit Court Bankruptcy Rules, those Rules apply to a
proceeding in the Court to which the Bankruptcy Act applies, as do the Federal
Circuit Court’s general rules, unless the latter are inconsistent with the
Federal Circuit Court
Bankruptcy Rules. That is what the Federal Circuit Court
found at [115] of its reasons, and it was correct to do so.
- Ms
Luck identifies what she submits is an inconsistency by reason of r 2.02(1) of
the Federal Circuit Court Bankruptcy Rules. As the
Federal Circuit Court noted
at [109] of its reasons, the 22 March 2016 orders were made during the period of
the operation of the
Federal Circuit Court (Bankruptcy) Rules 2006 (Cth),
whereas the impugned 31 May 2016 orders were made pursuant to the successor
rules, which I will refer to as the 2016 Bankruptcy
Rules.
- Rule
2.02(1) of the 2016 Bankruptcy Rules provides:
For the purposes of paragraph 102(2)(i) of the Act, a
power of the Court under a provision of the Bankruptcy Act referred to in
Schedule 1 is prescribed.
- As
the Federal Circuit Court noted at [117] of its reasons, the reference to
“Act” in r 2.02(1) is to the Federal Circuit
Court Act (see r
1.05(1)).
- The
power in r 16.05(2) is not contained in Sch 1 to the 2016 Bankruptcy Rules.
- Relevantly,
as Ms Luck submitted, in item 12 of Sch 1, the power in s 52(5) to extend the
life of a creditor’s petition is prescribed.
Thus, Sch 1 comprises one of
the “directions” by the Court, or the judges of the Court under s
102(2) of the Federal
Circuit Court Act, about the powers of the Court
exercisable by registrars. By its inclusion, registrars were given the power to
extend the life of a creditor’s petition under s 52(5) of the Bankruptcy
Act. Ms Luck submits it would be inconsistent to apply the general rule in r
16.05(2) to a proceeding to which the Bankruptcy Act applies.
- The
learned Federal Circuit Court judge dealt with Ms Luck’s argument
thoroughly at [118]–[132], appropriately separating
out the
retrospectivity question for separate consideration. His Honour’s
reasoning in these paragraphs is correct: Sch 1 is
not exhaustive of the powers
conferred on and exercisable by registrars in bankruptcy proceedings in the
Federal Circuit Court. It
is inclusive, but not exhaustive. There is no reason
to see the application of r 16.05(2) to bankruptcy proceedings in the
Federal
Circuit Court as involving any inconsistency with the 2016 Bankruptcy
Rules (or their predecessor rules).
- The
“inconsistency” argument, which can be understood to feature in both
grounds 4 and 5 of the notice of appeal, must
fail.
BJC16
- Nevertheless,
and this qualification becomes relevant as I now explain, in order to rely on
the terms of s 102(2)(i), a “direction”
from the Court or the judges
of the Court must be found before a registrar can exercise a power conferred on
the “Court”.
The “Court” here means the judges of the
Federal Circuit Court, not the officers of the Federal Circuit Court. The term
“Court” was not defined in the Federal Circuit Court Act as it was
at the time. However, by reason of s 8(4) of the Federal
Circuit Court Act, the
Federal Circuit Court consists of the Chief Judge and judges holding office in
accordance with that Act: see
BJC16 at [42].
- It
is at this point that the difference between the version of r 16.05(2) in force
at the time the Registrar relied on it on 31 May
2016, and as it is now in
force, becomes important.
- I
consider it is appropriate to deal with the potential application of
BJC16 as it was a matter raised by USQ in its written submissions, which
were served on Ms Luck, and to which she did not respond in her
submissions in
reply. Further, if BJC16 applies, it is a matter favouring the success of
Ms Luck’s appeal. However what is most important is that the party against
whose interests the decision stands (USQ) has dealt with this argument.
- BJC16
concerned an exercise of power by a registrar to dismiss a judicial review
application for non-appearance (by an applicant) at the
first court date,
relying on r 13.03C(1)(c) of the Federal Circuit Court Rules. Relevantly (there
were other issues), the Full Court found that the power in r 13.03C(1) was
a power exercisable only by the Court,
constituted by a judge or the Chief
Judge. The Full Court held that r 13.03C(1) conferred power on “the
Court” to do
a number of things in the event that a party was absent from
a hearing, and that expression did not include registrars, who are its
officers
(as defined in s 99(1) of the Federal Circuit Court Act). The Court held s 103
did not apply because there was no delegation
of the power in r 13.03C(1):
see [46]-[58].
- On
31 May 2016, when the Registrar made the order under r 16.05(2)(e), s 103
of the Federal Circuit Court Act was in the same form
as it was in BJC16
and provided:
(1) The Rules of Court may delegate to the Registrars
any of the powers of the Federal Circuit Court of Australia, including (but
not
limited to) all or any of the powers mentioned in subsection 102(2).
(2) A power delegated by Rules of Court under subsection (1), when exercised by
a Registrar, is taken, for all purposes, to have
been exercised by the Federal
Circuit Court of Australia or a Judge, as the case requires
...
Application of laws
(7) The provisions of this Act, the Rules of Court and any other law of the
Commonwealth that relate to the exercise by the Federal Circuit Court of
Australia of a power that is, because of a delegation under subsection (1),
exercisable
by a Registrar, apply in relation to an exercise of the power by a
Registrar under the delegation as if references in those provisions
to the
Federal Circuit Court of Australia were references to the Registrar.
(emphasis added)
- I
have extracted the relevant part of s 102(2) at [16] above.
- There
was an argument in BJC16 about the application of s 103(7), and what the
words “relate to” mean in that provision. The Full Court held (at
[54])
that these words refer to a power of the Court under another provision,
which “touches or concerns” a power that is delegated
to, and
exercisable by, a registrar. At [55], the Full Court rejected the
Minister’s submissions that there was such a relationship
in the powers he
identified on the appeal. Thus, s 103(7) could not be used in BJC16
to overcome the primary finding made by the Full Court.
- Here,
USQ submits s 103(7) can be employed. That is because the power in
r 16.05(2)(e) “touches or concerns” a power expressly
delegated
to the registrars: namely, the power in s 52(5) of the Bankruptcy Act.
Therefore the power in r 16.05(2)(e) is “related to” that delegated
power in s 52(5).
- The
question, to put it the other way round, is whether the power in r 16.05(2)(e)
is properly seen as “separate and distinct”
from the power delegated
to registrars through s 102(2)(i) of the Federal Circuit Court Act, read
with r 2.02(1) of the Federal Circuit
Court Bankruptcy Rules.
- Although
the distinction is a fine one, I am prepared to accept USQ’s submission
that the two powers are not separate and distinct.
The slip rule, as embodied in
r 16.05(2)(e), is not free-standing. It operates only relatively to another
power of the Court. Its
function is to empower correction of other orders of the
Court, made in exercise of other powers. Another way to describe it is that
it
is derivative. An exercise of power under r 16.05(2)(e) will, necessarily,
“touch or concern” another power. If that
other power has been
delegated to a registrar, then it seems to me s 103(7) is applicable.
- My
view is confirmed by the terms of the second portion of s 103(7): “and
apply in relation to an exercise of the power by a Registrar under the
delegation as if references in those provisions to the Federal Circuit Court
of Australia were references to the Registrar” (my emphasis).
It is
through this part of s 103(7) that the connection can be identified.
- In
the 31 May 2016 order, the Registrar purported to exercise the power under s
52(5), which is a delegated power, because there was
an error or omission to do
so on 22 March 2016. Rule 16.05(2)(e) conferred the power to correct this
error or omission. By reason
of s 103(7), this power was exercisable by the
Registrar (and not only by a judge of the Court) because the power to correct
the
error in r 16.05(2)(e) necessarily touches or concerns the Registrar’s
delegated power to extend time under s 52(5) of the Bankruptcy Act.
- The
Federal Circuit Court’s reasons do not address this issue because
BJC16 had not been decided when its orders were pronounced. Nevertheless,
the decision in BJC16 does not result in the appeal being allowed on the
basis of the reasoning in that decision.
What is the intention required by r 16.05(2)(e), if it
applies?
- I
have concluded the power in r 16.05(2)(e) was exercisable by the Registrar.
- After
the Court had reserved its decision, the Court wrote to the parties seeking
submissions on the question whether r 16.05(2)(e)
should be construed as
limiting the operation of the “slip rule” to circumstances where the
Court in fact intended to
make an order in relation to a question that was in
fact considered by the Court (rather than, for example, overlooked), but the
order does not reflect that actual intention. The Court indicated in its
correspondence that it considered the approach taken by
the Federal Circuit
Court (at [192]-[193] of its reasons), and which had been assumed on the appeal
to this point, was that the authorities
relied on by the Federal Circuit Court
which related to other rules of the Court, or other powers of Courts, were
applicable to r
16.05(2)(e). This issue was not raised by Ms Luck in her notice
of appeal, nor in her submissions, and was not the subject of submissions
by USQ
on the appeal.
- Both
parties filed supplementary written submissions. Ms Luck’s submissions did
not address the question asked of her, but rather
repeated and developed other
points she had made in her previous submissions such as her “manner and
method” argument.
Ms Luck also submitted that the Registrar had made a
“deliberate decision” on 22 March 2016 to adjourn the petition,
and
should be presumed to have known the petition would expire on 8 April 2016. In
those circumstances she submitted that there
could be no lawful exercise of
power under r 16.05(2)(e), because the adjournment decision on 22 March
2016 was a “deliberate”
one. Ms Luck’s submissions did
not engage with the construction issue to which the Court directed the
parties’ attention.
That is not a criticism of Ms Luck: she is a
self-represented litigant and was no doubt doing her best to respond to the
Court’s
invitation. However, her submissions do not engage with the
question raised.
- USQ
made three distinct submissions:
(1) The use of the term “intention” in r
16.05(2)(e) indicates that the Court has “at least turned its mind to a
matter prior to delivering judgment or making an order”. Therefore
whether the requisite intention exists will be a question
of fact in each case.
In the present circumstances, the Registrar’s email to the parties, dated
30 May 2016, provides evidence
of the requisite intention. Accordingly, the
power in r 16.05(2)(e) was available.
(2) If, contrary to USQ’s original submission (that r 16.05 is a
legislative expression of the slip rule, as the Federal Circuit
Court had
assumed in its reasons), then nevertheless by reason of r 1.05(2) of the Federal
Circuit Court Rules, read with s 43(2)(b) of the Federal Circuit Court Act,
the Federal Circuit Court had available to it the power conferred in r 39.05(h)
of the Federal Court Rules 2011 (Cth), to vary or set aside an order if
“there is an error arising in a judgment or order from an accidental slip
or omission.”
USQ refers to two decisions where through this method orders
were made extending the life of a creditor’s petition (by Federal
Magistrates). USQ appears to submit this power was also available to the
Registrar through the operation of these rules. However,
later in its
submissions USQ submits a further option would be for this Court to remit the
matter to the Federal Circuit Court under
s 28(2)(c) of the Federal Court
Act, so it could exercise the power under r 39.05(h) to correct the
22 March 2016 order.
(3) Third, if r 16.05(2)(e) was not available to the Registrar at all in this
instance, it would be open to this Court under s 28(1)
of the Federal Court Act
to dismiss the appeal, but vary the judgment at first instance, by making an
order under r 39.05(h) of this
Court’s Rules amending the
Registrar’s orders of 22 March 2016, in accordance with the form of the
order made by the
Registrar on 31 May 2016
- The
submission by USQ that I have summarised at [52(1)] above is narrower than the
position taken by USQ in its principal written
submissions. This may be because
USQ had (wrongly) assumed all members of the Court had reached a view to that
effect. I infer that
might be the case because at [5] of its supplementary
written submissions, USQ states:
The Respondent accepts the proposition which has been
suggested by the Court in its email of 10 May 2018.
- The
question of the proper construction of r 16.05(2)(e) does not fall for
determination in this appeal because it does not form any
part of Ms
Luck’s grounds of appeal. Even when invited she has not pressed any
argument that the Registrar’s exercise
of power was outside the terms of r
16.05(2)(e) because there was no relevant “intention”. I do not
consider the Court
is called on to decide the question, but now that the Court
has invited submissions on the matter, I propose to express my opinion.
- For
my own part, I am not inclined to give r 16.05(2)(e) a construction which
is limited to intention “in fact”, as Charlesworth
J expresses it:
see [143] and [153] of her Honour’s reasons. That construction seeks to
distinguish many of the authorities
on which the Federal Circuit Court relied. I
would have been inclined to see that as too narrow, and as tending to frustrate
the
purposes of the slip rule, which in my opinion r 16.05(2)(e), even in the
form prior to the amendments to the Rules, was undoubtedly
designed to
reflect.
- In
Amorin Constructions Pty Ltd v Kamtech Electrical Services Pty Ltd [2008]
NSWSC 285; 73 NSWLR 627 at [56], Hammerschlag J accepted that the slip rule and
its application (including in the way contemplated in Elyard Corporation Pty
Ltd v DDB Needham Sydney Pty Ltd [1995] FCA 943; 61 FCR 385) was apposite in
situations where correction was needed because of an “intention of the
Court — or the intention that the Court would have had but for the
failure that caused the accidental slip or omission” (my emphasis).
The latter situation is in my opinion still comprehended by the use of the term
“intention”. The
“intention” is referable to the whole
of the situation the judge or registrar foresaw as existing after the making of
the orders. That will include a positive circumstance (in terms of positive
orders intended to be made but not made, or not made
in the terms contemplated)
and a negative circumstance (in terms of a failure to make orders, or parts of
orders although there was
a clear contemplation of the situation which would or
should exist after the orders were made). Both are covered by what the Court
“intends”. The latter (negative) circumstance is the situation that
faced the Registrar in the present case. He had intended
the situation which
would exist after the orders made on 22 March 2016 would be that the
creditor’s petition would continue
to be pressed, but its consideration
would be adjourned for a period of time until Ms Luck’s other matters had
been sorted
out, as the parties had jointly requested. That is the only rational
explanation for an adjournment order. The order as made did
not reflect that
intention, not because of anything it positively stated, but because of what it
failed to deal with (namely, the extension of time under s 52(5)).
- Indeed
the evidence shows that Ms Luck sought, and obtained, two further adjournments
of the hearing of the petition in September
and December 2016. Both were granted
on orders made by the Registrar. The intention the Registrar “would have
had, but for
the accidental omission” was to keep the petition on foot, so
that it could be heard after all the other matters Ms Luck sought
to have
dealt with first were determined.
- In
its reasons, the Federal Circuit Court described its approach in the following
way at [192]- [193]:
The criterion that is stipulated by, and which engages
the discretionary power to vary an order pursuant to r.16.05(2)(e) is that
the
order does not reflect the intention of the Court. This intention may be
inferred from all the circumstances. As the reasoning in Shaddock
confirms, the court is entitled to consider what intention the court making
the earlier order would have had but for the failure, by reason of which
there was an accidental slip or omission, on the part of the legal
representatives (or, it may be added, a self-represented
litigant). The same
test was applied in Construction, Forestry, Mining and Energy Union v Mammoet
Australia (No 2) [2012] FCA 1404; (2012) 209 FCR 123, [10] (Gilmour, J) (citing Symes v
Commonwealth of Australia (1987) 89 FLR 356, 357), and in Deputy
Commissioner for Taxation v Statewide Contracting Qld Pty Ltd (No 2) [2015]
FCA 690, [15] (Greenwood, J). (my emphasis in bold)
- The
test poses an objective inquiry as to what the Court would have done at the time
the original order was made had the subject matter
of the slip (e.g. failure to
seek an extension) been brought to its attention. Here, the application of that
test required the Registrar
to consider on 31 May 2016 what order would have
been made on 22 March 2016 had the imminent lapse of the University’s
creditor’s
petition been brought to its attention. The Registrar was in no
doubt as to that matter. Nor were the parties.
- Again,
relying on L Shaddock & Associates Pty Ltd v Parramatta City Council (No.
2) [1982] HCA 59; 151 CLR 590, this passage emphasises that
“intention” includes the intention the Court would have had, but for
the failure. I see
nothing erroneous in the reasoning of the learned Federal
Circuit Court judge, and if the matter needed to be determined on this
appeal, I
would have upheld his Honour’s reasoning.
- In
her reply submissions (at [6]-[9]), Ms Luck refers to the amendments made to
r 16.05 in 2016. It is unclear what use she makes
of the amendments, and
whether it goes beyond repeating her submissions about s 52(5) of the Bankruptcy
Act providing the only correct “manner and method” for extending the
life of a creditors’ petition. If her submissions
do go beyond this, then
it should be noted that the circumstances in which it may be permissible to
construe an existing power or
provision by reference to subsequent amendments
are limited: see Interlego AG v Croner Trading Pty Ltd [1992] FCA 992; 39
FCR 348 at 382; Re Samuel [1913] AC 514; compare Grain Elevators Board
(Vic) v Dunmunkle Corp [1946] HCA 13; 73 CLR 70. The limited circumstances
in which the method used in Dunmunkle might apply was emphasised again by
the Full Court of this Court in Allina Pty Ltd v Commissioner of Taxation
[1991] FCA 87; 28 FCR 203 at 212, and see also R v Sieders [2008] NSWCCA
187; 72 NSWLR at [121]-[128].
- Finally,
on this matter, as USQ points out in its written submissions at [57(c)], and in
its supplementary submissions, the evidence
is that the Court itself informed
the parties, in its email, that when the Registrar made the order on 22 March
2016, it was his
intention that the creditor’s petition not lapse. The
email sent from an officer of the Federal Circuit Court to the parties
on 22
March 2016 recorded, relevantly, that:
On 22 March 2016, the Registrar made an order adjourning
the petition until 31 May 2016.
...
As at the date of the Registrar’s order adjourning the petition, it was
his intention that the petition remain current and
be dealt with at the time of
the adjourned hearing.
Accordingly...the Registrar intends on making an order under rule 16.05(2)(e) of
the Federal Circuit Court Rules 2001, varying the order of 22 March 2016
and providing for an extension of the lifetime of the petition pursuant to
section 52(5) of the Bankruptcy Act 1966, consistent with his intention
at the time of the earlier order...
- That
is the state of the evidence: namely, that the Registrar had an intention the
petition would not lapse. The error or omission
is that by failing to make an
order under s 52(5), it did lapse. That is what was corrected by the
exercise of power on 31 May 2016. Without a full hearing into the matter, this
Court
should not make findings inconsistent with that evidence, especially given
it is the stated position of a registrar of this Court.
- The
fact that later amendments to r 16.05(2) have added other grounds for the
application of the slip rule is not in my opinion determinative.
However, since
this matter was not argued, I say no more.
- These
conclusions make it unnecessary for me to consider the two other aspects of
USQ’s supplementary submissions, concerning
alternative ways in which the
slip rule might be employed to correct the omission to extend the life of the
creditor’s petition
if r 16.05(2) must be read more narrowly than the
Federal Circuit Court read it.
Second issue
- As
to the “retrospectivity” aspect of this appeal, the learned Federal
Circuit Court judge dealt with this in detail,
first by an examination of the
scheme of the Bankruptcy Act at [132]-[142], before turning to consider s 52 in
particular. In the next part of his reasons, his Honour considers the decision
in Elyard, and concludes at [157]-[158]:
The immediate importance of Elyard was the
holding that s.459R did not preclude resort to the slip rule in appropriate
cases. I note that Lockhart J was both a member
of the Full Court in Re
Young; Ex parte Smith (where the operation of the slip rule was left open),
and in Elyard (where the availability of the slip rule was confirmed as a
source of power to extend time notwithstanding the expiry of the statutory
period fixed for determination of the application).
The analysis in Elyard has been applied to confirm that s.52(4) does not
present an insuperable barrier to the applicable of the slip rule in bankruptcy
proceedings.
- From
this point in its reasons until [191] the Federal Circuit Court conducts a
detailed examination of the relevant authorities since
Elyard, as well as
explaining why the decision on which Ms Luck relied – Re Young; Ex
parte Smith [1985] FCA 75; 5 FCR 204 – was not the end of the matter.
It is not necessary to describe that analysis in detail, nor to express
agreement or disagreement
with each step of the reasoning process, since there
are no grounds of appeal challenging the detail of that reasoning process. The
summary by USQ in its written submissions at [55] is consistent with that given
by his Honour.
- On
the evidence, this is not a situation where there would have been any
independent discretion to be exercised had the error or omission
not occurred:
cf Flint v Richard Busuttil & Co Pty Ltd [2013] FCAFC 131; 216 FCR
375. In that authority at [46], the Full Court said:
. . . if the surrounding circumstances are such (as they
can be taken to have been in Elyard) that it can be concluded that proper
attendance to the matter (had the error not occurred) could only have resulted
in the discretion
being exercised in one way, it is difficult to see why the
rule should not apply in the same way that it would if the discretion
had been
exercised and there had been a mere failure to record it. As Lockhart J said in
Elyard at 392, the purpose of the rule is to avoid injustice. The force
of Storey & Keers and Whitlock v Brew can be accepted if there is any
room for debate as to the exercise of the discretion. For instance, if there is
any debate as to
whether it would have been just and equitable to have made an
order under s 52, in line with well-established principle, the slip rule cannot
apply.
- As
the Federal Circuit Court observed rhetorically in its reasons at [167] when it
quoted this passage from Flint, there is no reason those principles
should not apply to the circumstances of this appeal, where the parties were
with one voice
urging the Registrar to adjourn the petition pending other
proceedings being finalised. Although Ms Luck now seeks to enforce the
12 month limitation period through her arguments in this proceeding, at the
relevant time (late May 2016), her focus was quite different:
it was on
adjournment of the proceedings so she could pursue her other appellate options.
Indeed, as I have noted she sought and
was granted two further adjournments,
which took the hearing of the creditor’s petition into 2017. She did not,
for example,
seek dismissal of the petition.
- Accordingly,
Ms Luck’s argument that the only “manner and method” which
could be used to extend the life of the
creditor’s petition was the method
in s 52 (that is, extension before expiry of the 12 month period) should be
rejected. It is rejected because, as Lockhart J pointed out in
Elyard, what in law is occurring when the slip rule is employed is that
the exercise of power is located at the time the omission or failure
occurred:
see Elyard at 391F-G. Here, that was 22 March 2016, within the 12
month period.
- Grounds
2 and 4 of the notice of appeal must fail.
CONCLUSION
- For
the reasons set out above, I would dismiss Ms Luck’s appeal. There is no
basis for anything other than the usual order
for costs. The sequestration
order has remained effective from the time it was originally made by the Federal
Circuit Court on 4
April 2017. It is unclear whether the stay granted by
North J on 20 April 2017 has had any substantive effect, because it is
unclear
whether the trustee has sought to take any steps in relation to Ms
Luck’s estate. The terms of the stay suggest it ceases
on the making of
the Court’s orders on the appeal. However, out of an abundance of
caution, there will be an order lifting
the stay granted by North J. There
should be an order to the effect that USQ’s costs be paid from the estate
of the applicant
debtor in accordance with the Bankruptcy
Act.
|
I certify that the preceding sixty-four (64) numbered paragraphs are a true
copy of the Reasons for Judgment herein of the Honourable
Justice
Mortimer.
|
Associate:
Dated: 29 June 2018
REASONS FOR JUDGMENT
CHARLESWORTH J:
- This
is an appeal against a sequestration order made by a judge of the Federal
Circuit Court of Australia (FCCA) on 4 April 2017 over
the estate of the
appellant, Ms Gaye Luck: University of Southern Queensland v Luck
[2017] FCCA 639. The order was made upon a creditor’s petition presented
by the University of Southern Queensland (USQ) nearly two years prior
on
9 April 2015.
- A
creditor’s petition lapses at the expiration of 12 months commencing
on the date of the presentation of the petition, or at
the expiration of a
period fixed by the bankruptcy court in accordance with s 52(5) of the
Bankruptcy Act 1966 (Cth): see s 52(4). The issue on
this appeal is whether the period prescribed in s 52(4) of the Bankruptcy
Act was validly extended by an order made by a Registrar of the FCCA on
22 March 2016, as varied (or purportedly varied) by a later order
made by
the Registrar under r 16.05(2)(e) of the Federal Circuit Court Rules
2001 (Cth) (FCCA rules). The later order was made after the period
prescribed in s 52(4) had expired.
- The
appeal was set down for hearing on 16 November 2017. Shortly prior to the
hearing, Ms Luck, a self-represented litigant, informed
this Court that she
could not attend the hearing because of matters affecting her health and living
arrangements. She requested
that the appeal be heard and determined in her
absence. At the commencement of the hearing, USQ consented to the Court
determining
the appeal on the papers pursuant to s 25(2B)(c)(ii) of the
Federal Court of Australia Act 1976 (Cth) (FCA Act). At the same
hearing, USQ abandoned an application for an extension of time to file a notice
of contention. The
Court has not read that part of USQ’s written
submissions directed solely to the notice of contention.
LEGISLATION
- Section 52(4)
and (5) of the Bankruptcy Act are to be read together. They provide:
(4) A creditor’s petition lapses at the expiration
of:
(a) subject to paragraph (b), the period of
12 months commencing on the date of presentation of the petition; or
(b) if the Court makes an order under subsection (5) in relation to the
petition—the period fixed by the order;
unless, before the expiration of whichever of those periods is applicable, a
sequestration order is made on the petition or the petition
is dismissed or
withdrawn.
(5) The Court may, at any time before the expiration of
the period of 12 months commencing on the date of presentation of a
creditor’s
petition, if it considers it just and equitable to do so, upon
such terms and conditions as it thinks fit, order that the period
at the
expiration of which the petition will lapse be such period, being a period
exceeding 12 months and not exceeding 24 months,
commencing on the date of
presentation of the petition as is specified in the
order.
- As
presently in force, r 16.05 of the FCCA rules provides:
16.05 Setting aside or varying judgments or
orders
(1) The Court or a Registrar may vary or set aside a judgment or order before it
has been entered.
(2) The Court or a Registrar may vary or set aside a judgment or order after it
has been entered if:
(a) it was made in the absence of a party;
or
(b) it was obtained by fraud; or
(c) it is interlocutory; or
(d) it is an injunction or for the appointment of a receiver; or
(e) it does not reflect the intention of the Court; or
(f) the party in whose favour it was made consents; or
(g) there is a clerical mistake in the judgment or order; or
(h) there is an error arising in the judgment or order from an accidental slip
or omission.
(3) This rule does not affect the power of the Court or
a Registrar to vary or terminate the operation of an order by a further
order.
- At
the time of the Registrar’s orders on 22 March 2016 and 31 May
2016, subr 16.05(2)(g) and 16.05(2)(h) were not in force.
The only
sub-rule invoked by the Registrar was r 16.05(2)(e).
Sub-rule 16.05(2)(h) is equivalent to r 39.05(h) of the Federal
Court Rules 2011 (Cth) (FCA rules). It was in force as at 31 May 2016,
and at the time that the primary judge made the sequestration order.
- As
will be seen, the authorities to which the parties referred are largely
concerned with the construction and application of r 39.05(h)
of the
FCA rules and its statutory equivalents, rather than r 16.05(2)(e) of
the FCCA rules or its analogues.
- At
least in superior courts of record, rules equivalent to those contained in
r 16.05 of the FCCA rules operate in addition to inherent
or implied
powers of a court to correct an error or “slip” in an order, whether
before or after its entry: see generally
Burrell v The Queen
[2008] HCA 34; (2008) 238 CLR 218; Achurch v The Queen [2014] HCA 10; (2014) 253 CLR
141; Flint v Richard Busuttil & Company Pty Ltd and
Anor [2013] FCAFC 131; (2013) 216 FCR 375 at [19]. The power “is one to be exercised
sparingly, lest it encourage carelessness by a party’s legal
representatives and
expose to risk the public interest in finality of
litigation”: Gould v Vaggelas (1985) 157 CLR 215 at 275.
- In
these reasons, the phrase “slip rule” may be used as a shorthand
description for rules of this kind, whatever their
source or form. It will
nonetheless be necessary to focus particular attention on the precise form of
words in r 16.05(2)(e) of
the FCCA rules, as that is the only sub-rule
invoked in Ms Luck’s case.
- Section 102(2)
of the Federal Circuit Court of Australia Act 1999 (Cth) (FCCA Act)
sets out the powers of the FCCA that may, if the FCCA or a judge so directs, be
exercised by a Registrar of that
Court. They include a power of the FCCA
prescribed by the Rules of Court: s 102(2)(i).
- The
Federal Circuit Court (Bankruptcy) Rules 2006 (Cth) and the Federal
Circuit Court (Bankruptcy) Rules 2016 (Cth) (together, the Bankruptcy Rules)
applied at relevant times to proceedings in the FCCA under the Bankruptcy Act:
see Bankruptcy Rules, r 1.03(1) (as in force before 1 April 2016) and
r 1.04(1) (as in force from 1 April 2016). The other rules
of the
FCCA also applied in bankruptcy proceedings, “so far as they are not
inconsistent with” the Bankruptcy Rules:
see Bankruptcy Rules,
r 1.03(2) (as in force before 1 April 2016) and r 1.04(2) (as in
force after 1 April 2016).
- For
the purposes of s 102(2)(i) of the FCCA Act, r 2.02(1) of the
Bankruptcy Rules (as in force after 1 April 2016) prescribes certain
powers.
Among them is the power conferred by s 52(5) of the Bankruptcy Act to
extend the period at the expiration of which a creditor’s petition lapses:
Bankruptcy Rules, 2.02(1), Sch 2, item 12.
- Subsection 102(6)
of the FCCA Act provides:
The provisions of this Act, the Rules of Court and any
other law of the Commonwealth that relate to the exercise by the Federal Circuit
Court of Australia of a power that is, because of subsection (2), exercisable by
a Registrar, apply in relation to an exercise of
the power by a Registrar under
this section as if references in those provisions to the Federal Circuit Court
of Australia were references
to the Registrar.
- Section 103(1)
of the FCCA Act provides that the Rules of the FCCA may delegate to the
Registrar any of the powers of that Court,
including (but not limited to) all or
any of the powers mentioned in s 102(2). When exercised by a Registrar, a
power delegated
by the Rules of Court under s 103(1) is taken, for all
purposes, to have been exercised by the Court or a judge, as the case requires.
At the relevant time, s 103(7) was in equivalent terms to
s 102(6).
- Rule 20.00A
of the FCCA rules delegates certain powers to a Registrar who is approved,
or is in a class of Registrars who are approved,
by the Chief Judge for the
exercise of the power. As at 31 May 2016, the powers delegated by that
rule did not include the power
to make an order under r 16.05(2)(e) of the
FCCA rules.
GROUNDS OF APPEAL
- The
grounds of appeal are expressed as follows:
1. The Honourable Court erred in
law.
- The
Honourable Court erred in law when it misconstrued the meaning of
Rule 2.02(1) of the Federal Circuit Court (Bankruptcy) Rules
2016 (FCCBR), in as far as the expression
‘...a power of the Court under a
provision of the Bankruptcy Act referred to in Schedule 1 is
prescribed’
relates to the exercise of a Federal Circuit Court Registrar’s prescribed
powers pursuant to the Bankruptcy Act 1966 (Cth) (BA) and the
FCCBR.
3. The Honourable Court misapplied the
law.
- The
Honourable Court misapplied Rule 2.02(1) of the FCCBR, for
the purpose of section 102(2)(i) of the Federal Circuit Court of
Australia Act 1999 (FCCAA), to the exercise of the Registrar’s
prescribed power pursuant to Item 12 of Schedule 1 of
the FCCBR, subsection 52(5) (read together with
subsection 52(4)) of the BA, which provisions contain
prescribed periods of time, outside and inside of which, certain events would
occur (lapse of petition),
or could occur, to prevent expiration of petition (an
order that the period at the expiration of which the petition would lapse,
be
extended).
- The
Honourable Court erred in law when it wrongly affirmed the Registrar’s
misapplication of Rule 16.05(2)(e) of the Federal Circuit Court
Rules 2001 (FCCR), on 31 May 2016, outside of the parameters of
prescribed powers provided by Rule 2.02(1), Item 12 of
Schedule 1 of the FCCBR, and subsection 52(4) and
(5) of the BA, to an order of the Registrar, made on 22 March
2016, to vary the life of the petition, after its expiry on 8 April
2016.
- The
Honourable Court erred in law when it wrongly affirmed the Registrar’s
failure to give validity to the order of the Registrar
made on 31 May 2016,
which failed to reflect, in the order, the FCCBR legislative scheme’s
provisions and prescribed power
to make the order, pursuant to
sections 52(4) and (5) of the BA.
- The
Honourable Court erred in law when it failed to consider or deal with the issue
and definition of a ‘power’ that is
‘prescribed’, the issue upon which, the decision to exercise
the Registrar’s prescribed power, in relation to extending the period
at
the expiration of which the petition would lapse, after its expiration, pursuant
to subsection 52(4) and 52(5) of the BA, was
dependent.
- The
Honourable Court erred in law when it failed to give reasons for failing to
consider or deal with the issue and definition of
a ‘power’ that is
‘prescribed’ the issue upon which the decision to exercise the
Registrar’s prescribed
power, in relation to extending the period at the
expiration of which the petition would lapse, after its expiration, pursuant to
subsection 52(4) and 52(5) of the BA, was
dependent.
9. The appellant was denied natural justice.
- The
allegations in [1] and [3] are particularised by what follows them. They do not
require separate consideration.
- The
allegation in [6] involves two propositions. Ms Luck submits that the
order of the Registrar made on 31 May 2016 is invalid because
it did not,
on its terms, expressly refer to the statutory sources of power for the order.
That submission may be shortly rejected.
In written submissions, Ms Luck
raises a separate issue that fairly falls within this ground of appeal. The
issue goes to the existence,
nature and quality of her consent to the making of
the order in that, she argues, she did not consent to an order that did not
contain
an express reference to the statutory provisions upon which the
Registrar relied. The fact, quality and relevance of Ms Luck’s
consent to the order of 31 May 2016 will be considered in the course of
determining the remaining grounds of appeal.
- In
written submissions, the allegation in [9] was enlarged upon in terms that
amount to an assertion that the FCCA “constructively
failed to exercise
its jurisdiction” when it made a sequestration order against Ms Luck.
Ms Luck does not otherwise make a
specific allegation that the proceedings
before the primary judge were conducted in a manner that was procedurally
unfair. The complaint
underlying that ground is the same as the substantive
complaint underlying the remaining grounds of appeal.
- Read
in conjunction with Ms Luck’s written submissions, the remaining
grounds raise three questions. The first is whether the
Bankruptcy Act, on its
proper construction, precluded an order being made pursuant to
r 16.05(2)(e) of the FCCA rules after the expiration of the
period
prescribed in s 52(4) so as to retrospectively vary an order made before
the expiry of, and so extend the life of, USQ’s creditor’s petition.
The second question is related to the first. It is whether the Registrar
exceeded his delegated powers under the FCCA rules or the
Bankruptcy Rules by
making an order in a “manner” or by a “method” that was
inconsistent with the requirements
of s 52(4) and (5) of the Bankruptcy
Act. The third question is whether r 16.05(2)(e) was properly enlivened on
the facts as they stood at the time when the order pursuant
to that sub-rule was
made.
FACTS
- The
facts are largely undisputed.
- Ms Luck
was served with a bankruptcy notice on 25 January 2015. It claimed a debt
of $43,804.22 owing to USQ, being costs to which
it was entitled by an order
made in earlier litigation between the parties (Costs Order).
- Ms Luck
commenced an application in this Court for an order that the bankruptcy notice
be set aside on grounds including that she
had commenced an application in the
High Court of Australia for special leave to appeal from (among other things)
the Costs Order.
The time for Ms Luck’s compliance with the
bankruptcy notice was extended pending the determination of the application to
set it aside. Davies J dismissed that application on 30 March 2015
and further dismissed Ms Luck’s application for a further
extension
of time in which to comply with the bankruptcy notice: Luck v University of
Southern Queensland [2015] FCA 286.
- The
creditor’s petition alleged that Ms Luck had committed an act of
bankruptcy by not complying with the bankruptcy notice
within the extended time.
The petition was first listed for hearing on 21 May 2015. By that time,
Ms Luck had filed an appeal from
the orders of Davies J, and
applications for the removal of the appeal and the creditor’s petition to
the High Court.
- A
Registrar of the FCCA adjourned the hearing of the creditor’s petition on
eight occasions. In large part the adjournments
were granted at the request, or
with the consent, of Ms Luck, pending the resolution of the Full Court and
High Court proceedings.
- By
an order made on 19 November 2015, the hearing of the creditor’s
petition was adjourned to 22 March 2016. In advance of
that adjourned
hearing date, USQ transmitted an email to the Registry of the FCCA.
Ms Luck was copied in the email. The email stated
that the Full Court
appeal and the High Court removal application had not been finalised. It
continued:
We have spoken to the respondent, copied to this email,
and the parties are agreed in inviting the Court to adjourn the matter again
when it is called on for hearing on 22 March 2016 at 11.00am. Although we
leave it to the Court’s discretion, it may be appropriate
to adjourn the
hearing to the first available date after the Full Federal Court sittings in May
2016. By that date, the [other proceedings]
may be
finalised.
- On
22 March 2016, in response to the parties’ invitation, and with the
consent of Ms Luck, the Registrar made an order in the
following
terms:
The further hearing of the petition be adjourned to 31
May 2016 at 11.00 am.
- As
has been mentioned, the creditor’s petition was filed on 9 April
2015. In accordance with s 52(4) of the Bankruptcy Act, the petition would
lapse at the expiry of 8 April 2016, subject to an order made in the
exercise of the power under s 52(5).
- Ms Luck
sent an email to USQ’s solicitors on 18 May 2016. Among other
things, she stated:
... I seek to arrange consent to adjourn the hearing
listed for 31 May 2016 of [the creditor’s petition] until such time
as
the High Court deals with and disposes of the other matters
...
- On
23 May 2016, USQ’s solicitor transmitted an email to the FCCA seeking
a further adjournment, by consent, of the creditor’s
petition.
Ms Luck was copied in the email.
- A
Legal Case Manager to the Registrar transmitted an email to the parties on
30 May 2016. Given its significance to the outcome of
this appeal, it is
here set out in full:
Good afternoon
On 22 March 2016, the Registrar made an order adjourning the petition until
31 May 2016.
At the time, it was not brought to his attention and the Registrar was not aware
that the petition would lapse in accordance with
section 52(4) of the
Bankruptcy Act 1966 on 8 April 2016.
As at the date of the Registrar’s order adjourning the petition, it was
his intention that the petition remain current and
be dealt with at the time of
the adjourned hearing.
Accordingly, after the matter is called in open court in tomorrow’s
bankruptcy list, the Registrar intends on making an order
under rule 16.05(2)(e)
of the Federal Circuit Court Rules 2001, varying the order of
22 March 2016 and providing for an extension of the lifetime of the
petition pursuant to section 52(5) of the Bankruptcy Act 1966,
consistent with his intention at the time of the earlier order.
Given the late notice of this communication, the Registrar is content to have
the parties make any submissions in relation to this
point via telephone
appearance in court. Please advise whether you seek to appear at the hearing,
and, if you intend on appearing
by telephone, the best number at which you can
be reached.
Otherwise the Registrar understands the parties have consented to the further
adjournment of the petition.
..
- As
foreshadowed by that email, on 31 May 2016, the Registrar made orders
relevantly in the following terms:
- The
further hearing of the petition be adjourned to 1 September 2016 at
11:00 am.
- Pursuant
to rule 16.05(2)(e) of the Federal Circuit Court Rules 2001, the
order in this proceeding of 22 March 2016 be varied so that the life of the
petition be extended to 8 April 2017, and that extension
apply from
22 March 2016 as if it had been ordered on that date.
- The
order was not opposed by Ms Luck at the time that it was made.
- In
the months following, the Registrar ordered two further adjournments, again with
the consent of Ms Luck.
- On
17 January 2017, Ms Luck filed an outline of submissions which
challenged, among other things, the validity of the Registrar’s
orders of
31 May 2016. On USQ’s application, the creditor’s petition was
referred to a Judge of the FCCA for hearing.
- On
10 February 2017, Ms Luck filed an Application in a Case by which she
sought orders setting aside the order of 31 May 2016 extending
the life of
the creditor’s petition on broadly the same grounds as those now argued on
this appeal.
- The
learned primary judge rejected the arguments, dismissed the Application in a
Case and sequestered Ms Luck’s estate. It
is not disputed that the
validity of the sequestration order turns upon the validity of the
Registrar’s order of 31 May 2016
extending, or purporting to extend
the life of the petition.
VALID DELEGATION
- The
power of a Registrar to make an order under r 16.05(2)(e) of the FCCA rules
has its source either in s 102(6) or s 103(7) of the
FCCA Act.
The sub-rule is a rule of the FCCA that “relates to” the exercise of
a power exercisable by a Registrar because
of s 102(2) or s 103(1)
respectively.
- Ms Luck
did not submit that the power to make an order pursuant to r 16.05(2)(e) of
the FCCA rules was not available to be exercised
by a Registrar in every case.
Rather, in reliance on Downey v Pryor [1960] HCA 49; (1960) 103 CLR 353,
Ms Luck contends that the Registrar did not comply with the express
requirements of s 52(5) of the Bankruptcy Act when making an order in the
exercise of the delegated power.
- To
the extent that Ms Luck submits that the delegated power under s 52(5)
of the Bankruptcy Act to make an order extending the life of the
creditor’s petition must be exercised in such a manner and by such a
method as is
prescribed by s 52(5) itself, her submission is to be
accepted.
- However,
for the reasons given below, the “manner and method” by which the
power under s 52(5) of the Bankruptcy Act is to be exercised does not
preclude the making of an order pursuant to r 16.05(2)(e) of FCCA rules
having retrospective effect,
in the limited factual circumstances in which that
rule may be invoked on its terms. Rule 16.05(2)(e) of the FCCA rules is
not inconsistent
with the Bankruptcy Rules and so is capable of applying in
matters arising under the Bankruptcy Act.
- Ms Luck’s
contention that the primary judge failed to give reasons dealing with her
submissions on this topic should be rejected.
The primary judge gave adequate
reasons for dismissing Ms Luck’s Application in a Case in which she
challenged the validity
of the 31 May 2016 order. To the extent that the
minutiae of her submissions are not expressly grappled with in the reasons for
judgment, that is because they are subsumed in the greater generality of the
decision.
MEANING AND APPLICATION OF SUB-RULE 16.05(2)(E)
- Ms Luck
submits that an order under r 16.05(2)(e) cannot be made by a Registrar of
the FCCA after the expiration of the period specified
in s 52(5) of the
Bankruptcy Act so as to retrospectively vary an order made prior to the
expiration of the period, and so extend the period. To consider that submission
it is necessary to survey the dissonant authority leading up to and following
the decision of the Full Court of this Court in Elyard
Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385, upon
which the primary judge relied. That case arose in a corporate insolvency
context and involved the invocation of a different
iteration of the slip rule
than that under consideration in the present case.
The authorities
- A
convenient starting point is the judgment of the High Court in L
Shaddock & Associates Pty Ltd v Parramatta City Council
[No 2] [1982] HCA 59; (1982) 151 CLR 590. In that case, the High Court held (at 595)
that it was competent for that Court to make an order under the slip rule then
prescribed
in O 29 r 11 of the High Court Rules 1952 (Cth) to
deal with the consequences of an omission by the appellant’s counsel to
seek an award of pre-judgment interest assessed
as at the date of judgment on an
appeal. The rule under consideration was in the same terms as that now
expressed in r 16.05(2)(h)
of the FCCA rules and r 39.05(h) of
the FCA rules. By virtue of counsel’s omission, the High Court had,
at the time of judgment,
made an award of damages in an amount notionally
assessed by the trial judge, which included a component of interest calculated
to
the date of judgment in the trial court. The Court made an order under the
slip rule to the effect that the order awarding damages
made at the time of
judgment on the appeal be amended to include an award of interest for the period
between the date of judgment
at trial and the date of judgment on the appeal.
The High Court emphasised (at 596) that there was no statutory provision
prescribing
the time by which an application for an order allowing interest must
be made, and so the circumstances were distinguishable from
earlier cases in
which relief under the slip rule had been refused in similar factual
circumstances: see Brew v Whitlock [1968] HCA 71; (1968) 118 CLR 445 (Taylor, Menzies
and Owen JJ at 463 – 464).
- In
Re Hibbard; Ex parte Playroom Pty Ltd [1988] FCA 689, as in the
present case, the hearing of a creditor’s petition was adjourned to a date
falling outside the 12 month period prescribed
in s 52(4) of the
Bankruptcy Act. The petitioning creditor applied to have the adjournment order
corrected so as to add to it an order extending the period under
s 52(5).
Pincus J referred to Shaddock. His Honour emphasised that
the slip rule in question may be invoked in circumstances where the error or
omission was not a mis-recording of the Court’s
own intention, but rather
a failure on the part of counsel to ask for an ancillary order which the Court
would plainly have made
at the time, had it been asked to consider its
necessity. His Honour nonetheless dismissed an application for a corrective
order
to be made in the exercise of the Court’s implied jurisdiction to
correct a slip or omission. Such an order would, his Honour
said (at
4):
... be an infringement of the requirement in
s 52(5) that any order extending the petition be made before the expiration
of the period of twelve months commencing on the date of presentation
of the
petition. It does not appear to me that, on the proper construction of
s 52(5), an order for extension may lawfully be made, after the twelve
months’ period has ended, predated so as to fall within the
twelve
months.
- Einfeld J
expressed a contrary view in Re Jago; Ex parte Paal Frame Pty Ltd [1989]
FCA 52 and later in Re Van Coblyn; Ex parte Mercantile Credits Limited
[1992] FCA 1018. In each case, his Honour made orders pursuant to the
Court’s implied power to correct an accidental slip or omission. As
to
whether the exercise of that power was inconsistent with s 52(5) of the
Bankruptcy Act, Einfeld J said (at [15]):
... the slip rule does not need to be expressly
permitted by legislative or regulatory enactment before it can be availed of.
Indeed,
it seems to have been designed to deal with situations where the legal
framework does not deal at all or adequately with the correction
of an
accidental oversight or error by the Court in expressing or giving effect to its
intention, or to what would have been its
intention if the parties had not
failed to seek an appropriate order or draw the Court’s attention to
factors which would influence
the achievement of the obvious intention. If
applicable statutory provisions or the common law otherwise dealt with this
situation,
there would be no need for the rule at all.
- Einfeld J
did not expressly approach the question by reference to whether the earlier
judgment of Pincus J in Hibbard was plainly wrong, although it is
implicit that his Honour determined as much: see Hicks v Minister for
Immigration & Multicultural & Indigenous Affairs [2003] FCA 757 at
[75] ⸺ [76]; Frugtniet v Australian Securities and Investments
Commission [2017] FCAFC 162 at [93].
- The
question next arose in a bankruptcy context in Re Agushi; Ex parte
Farrow Mortgage Services Pty Ltd (in liq) and another [1994] FCA 641;
(1994) 126 ALR 704. Consistent with the reasoning of Pincus J in
Hibbard, Heerey J held that the power to correct a slip or omission
in an order could not prevail against the express provision of s 52(5) of
the Bankruptcy Act. His Honour said (at 706):
I do not doubt that in the present case there was an
honest and understandable inadvertence. If there were power to extend, I would
not hesitate to exercise it. But it does seem to me that the Act specifically
provides for petitions to be heard and determined
within 12 months, and by
s 52(5) expressly provides that extension can only be granted within that
period.
- The
judgments in both Hibbard and Agushi were disapproved by the Full
Court in Elyard (Lockhart J at 392 – 393, Lindgren J at
404, Black CJ agreeing at 387 – 388). The grounds of appeal in that
case challenged
the validity of an order made at first instance by
Sheppard J pursuant to O 35 r 7(3) of the now superseded
Federal Court Rules 1979 (Cth), equivalent in terms to what is now
r 16.05(2)(h) of the FCCA rules and r 39.05(h) of the FCA rules. The order
appealed against
had the purported effect of correcting an earlier order so as
to extend, with retrospective effect, the life of an application to
wind up a
company pursuant to s 459R of the Corporations Law as then in force. It
provided:
(1) An application for a company to be wound up in
insolvency is to be determined within 6 months after it is made.
(2) The Court may by order extend the period within which an application must be
determined, but only if:
(a) the Court is satisfied that special
circumstances justify the extension; and
(b) the order is made within that period as prescribed by subsection (1), or as
last extended under this subsection, as the case
requires.
(3) An application is, because of this subsection,
dismissed if it is not determined as required by this section.
(4) An order under subsection (2) may be made subject to
conditions.
- On
appeal, the company submitted that an order made pursuant to the relevant slip
rule could not retrospectively overcome the express
requirement of s 459(2)
and the self-executing effect of s 459R(3). Rejecting the same arguments
at first instance, Sheppard J said
in DDB Needham Sydney Pty Ltd v
Elyard Corporation Pty Ltd [1995] FCA 603; (1995) 131 ALR 213 (at ALR
223):
With respect to Pincus J [in Hibbard], I
fail to see why the conclusion he has arrived at should follow. If the slip
rule is capable of applying, as I think it is, and
it has the retrospective
effect which Pincus J appears to acknowledge and which the High Court in
Shaddock decided it has, I do not see why there is any difficulty, in an
appropriate case, in making an order which will overcome the slip.
Otherwise,
there is no purpose in the rule.
- His
Honour continued:
The fact that a statute such as s 52 of the
Bankruptcy Act or s 359R of the [Corporations Law] has the effect
which it does, does not touch the court’s power to correct, in a proper
case,
its own order. That is part of its practice and procedure. Nothing in
s 459R(3) suggests that the court was not to continue to
be able to
maintain a correct record of its proceedings. After all the error or omission
which needs correction may be that of the
court, not the party. What needs to
be emphasised is that it is the position after the correction of the order has
been made that
must be looked at. Only then can one tell whether the particular
provision has been complied with.
- In
separate judgments, Lockhart and Lindgren JJ applied the same reasoning.
The argument advanced by the appellant company rested,
Lockhart J said, on
a “misconception of the nature and operation of the slip rule”. His
Honour held (at 391):
This is the case because the later order corrects the
earlier order, and speaks from the date of the earlier order, which then
operates
with full force as corrected. Hence, the order made by the primary
judge in this case, on 9 August 1995, corrected the order of
the Registrar
of 9 June 1995, which then operated with full force from 9 June 1995.
The slip rule, with retrospective operation,
corrected the earlier order ... The
essential purpose of the slip rule is to give effect to the intention which the
court would have
had, if it were not for the failure which led to the accidental
slip or omission.
- His
Honour said that the operative orders in Hibbard and Agushi were
not the later correcting orders, but the earlier orders as corrected,
notwithstanding that the later orders were made outside
the statutory time
limit. As corrected, the earlier orders “spoke from dates within the time
period” (at 393) and the
requirement that the extending order be made
before the lapse of the petition was thereby fulfilled.
- After
noting (at 402) that authorities decided in the bankruptcy jurisdiction of the
Court did not “speak with one voice”,
Lindgren J held (at 404)
that the approach taken in Hibbard and Agushi did not adequately
recognise “the true nature of the slip rule or the effect of the orders
which it permits”. His Honour
placed considerable emphasis on the terms
of O 35 r 7(3) as then in force, which conferred a power to correct an
order, as distinct
from O 35 r 7(2) (which concerned a power,
equivalent to that in issue in the present case, to vary or amend an order so as
to reflect
the intention of the Court). Lindgren J concluded (at 404
— 405):
What this analysis emphasises in the context of the
facts of the present case is first, that there must have been an order made
within
the statutory period, and secondly, that an order under the slip rule in
relation to such an order is appropriately seen not as varying
it or setting it
aside, but as merely correcting it by including an ancillary order which the
Court and the parties intended to be
included.
- The
correcting order in Elyard was made in factual circumstances similar to
those arising in Hibbard and Agushi and, for that matter, in the
present case: an order was made granting an adjournment of a hearing to a date
beyond the statutorily
prescribed period, the creditor in each case having
omitted (by inadvertence) to apply for an order extending the period. It is
apparent from the above passage that Lindgren J considered the slip rule in that
case had been properly invoked to include an order
which both the Court and the
parties in fact intended, at the time of the earlier order, to be included.
Lockhart J noted (at 391)
that the slip rule extends to permit the
correction of an order or decree where the omission results from the
inadvertence of a party’s
legal representative, and thus extends to give
effect to the intention that the Court would have formed, but for the
failure that caused the accidental slip or omission. To the extent that there
is a difference between the
reasons for judgment of Lockhart J and
Lindgren J as to the scope of the slip rule in question, it is not resolved
by the judgment
of Black CJ, his Honour agreeing with the reasons given by
both Lockhart and Lindgren JJ.
- Elyard
was decided under the Corporations Law as then in force. Strictly speaking, the
reasoning of the Court is obiter insofar as it concerns the proper
construction of the provisions of the Bankruptcy Act and their interrelation
with the so-called slip rule in any of its express or implied forms. The
decision has nonetheless been followed
by single judges of this Court and a
subsequent Full Court in the exercise of its bankruptcy jurisdiction, albeit
with some expression
of disquiet: Re Howell; Ex parte Commissioner of
Taxation (1996) 70 FCR 261 (Burchett J); Komesaroff v Law Institute
of Victoria [1997] FCA 965 (Heerey J); Matthews v Collett [2000]
FCA 224 (Spender J); Re Langridge; Ex parte Bennett, Carroll &
Gibbons [1998] FCA 879 (Kiefel J). These cases do not involve any
consideration of the proper construction of any equivalent to r 16.05(2)(e)
of the FCCA rules.
- In
Amorin Constructions Pty Ltd v Kamtech Electrical Services Pty
Ltd [2008] NSWSC 285; (2008) 73 NSWLR 627, Hammerschlag J of the Supreme Court of New
South Wales declined to follow Elyard on the basis that it was plainly
wrong. That case concerned the interrelation between s 459R of the
Corporations Act 2001 (Cth) (equivalent to s 459R of
the Corporations Law) and the slip rule in r 36.16 of the Uniform Civil
Procedure Rules 2005 (NSW) (equivalent to what is now r 16.05(2)(h) of
the FCCA rules). His Honour first acknowledged (at [54]) that the slip
rule would
operate to permit an order to be corrected or supplemented to reflect
the actual outcome of the exercise by the Court of its discretion,
but only
where its orders do not accord with its actual actions or intentions. To that
extent, his Honour held, s 459R of the Corporations Act did not exclude the
operation of the rule.
- His
Honour continued (at [55] — [57]):
- In
Elyard Corporation (at 405), Lindgren J said: ‘It is of
the greatest importance to distinguish between the availability of the slip rule
and the
exercise of discretion whether to make any order or a particular order
under it’.
- It
seems to me that it is equally important to distinguish between the exercise of
a discretion to correct an error so as to reflect
the intention of the Court
— or the intention that the Court would have had but for the failure that
caused the accidental
slip or omission — on the one hand, with the
exercise by the Court of an initial special statutory discretion which the
earlier
Court omitted to exercise on the other.
- An
outcome that permits the latter to occur under the guise of the slip rule would,
in addition to the difficulties identified above,
undermine the clear policy
dictates of Pt 5.4 of the Corporations Act (Cth), which require
winding up applications to be dealt with promptly. That policy has recently
been reaffirmed by the High Court
in Aussie Vic Plant Hire Pty Ltd v Esanda
Finance Corporation Ltd [ 2008] HCA 9 ; (2008) 232 CLR 314 at 324 [17] .
- On
the facts, Hammerschlag J held that neither the plaintiff creditor nor its
advisers were conscious of the requirement for an extension
of time under
s 459(2) of the Corporations Act, and that the earlier presiding judge
“clearly never had it in mind either” (at [8]). His Honour
emphasised the importance
of training focus on the precise words of the rule
relied upon, rather than applying the terminology in the reasoning of prior case
law (at [12]). The test was whether the mistake or omission was truly
accidental within the meaning of the particular rule, such
that if the question
of extending the life of the winding up application had been drawn to the
Court’s attention, an order
would “at once have been made”:
Hatton v Harris [1892] AC 547; Storey & Keers Pty Ltd v
Johnstone (1987) 9 NSWLR 446 at 435 (McHugh JA).
- The
question next came before a Full Court of this Court in
Griffiths v Boral Resources (Qld) Pty Ltd [2006] FCAFC 149; (2006) 154 FCR
554. In that case, a federal magistrate at first instance reserved judgment
after the hearing of a creditor’s petition, but did
not deliver judgment
until after the period fixed in accordance with s 52(4) of the Bankruptcy
Act had expired. The Court (Spender ACJ, Dowsett and Collier JJ) said
of the decision in Elyard (at [30]):
With all respect, we are a little uncomfortable with the
view, inherent in Elyard, that the slip rule may be used to extend time
notwithstanding the statutory requirement that such order be made within a
period
of time which has elapsed. However, Elyard concerns the practice
of the Court and has now stood for over 10 years without legislative
intervention. We are reluctant to reconsider
it. Although it does not directly
bind us in applying s 52 of the Bankruptcy Act, to take a different
approach would cause substantial confusion in insolvency
practice.
- The
Court in Griffiths is to be understood as applying the reasoning in
Elyard in its application to orders made pursuant to s 52(5) of the
Bankruptcy Act. The slip rule invoked in that case was expressed in the same
terms as that invoked in Elyard. Consistent with what was said by
Lindgren J in Elyard, the Full Court in Griffiths held (at
[33]) that for the rule to be invoked in order to retrospectively effect an
extension of time under s 52 of the Bankruptcy Act, then:
... there must be a judgment or order to be corrected,
and it must have been made within the prescribed time. The power is to correct,
not to vary or set aside. There is no general power to relieve from the
consequences of [s 52(4)].
- On
the facts, however, no order had been made within the statutory time frame that
was capable of correction within the meaning of
what was then r O 35
r 7(3): the mere reservation of judgment by the magistrate did not
constitute an “order” within
the meaning of the rule.
- In
Flint, the Full Court held that the evidence was insufficient to support
an inference of error or omission either on the part of the creditor’s
lawyer, or on the part of the magistrate at first instance. On the facts, it
was unclear whether the magistrate would have exercised
his discretion to extend
the life of the creditor’s petition had he been asked to do so within the
statutory period. Accordingly,
there was no “accidental slip or
omission” so as to enliven the power in r 39.05(g) or r 39.05(h)
of the FCA rules in
any event. The Full Court concluded (at
[43]):
The above reasons make it unnecessary to reconsider
Elyard in the light of the doubts expressed in Griffiths and the
criticism of Hammerschlag J in Amorin.
- It
is apparent from this passage that the Full Court in Flint accepted a
submission advanced by the appellant in that case to the effect that the
reasoning in Griffiths was obiter. I respectfully agree. In each case
the rule was not enlivened on its terms, and so its interrelation with the
bankruptcy
regime did not fall to be decided.
- Finally,
in Ramsay Health Care Australia Pty Ltd v Compton [2016] FCAFC 125; (2016) 247 FCR 387
(Rares, Gleeson and Markovic JJ) a primary judge made an order within the
period prescribed by s 52(4) of the Bankruptcy Act extending the life of a
creditor’s petition for an additional three months. The primary judge was
held to have “intended”
to make the order, albeit on the erroneous
assumption that the Court retained the power to further extend the life of the
period
by a subsequent order. The Full Court held that the slip rule could not
apply in the circumstances because the order was the product
of an intentional
decision (albeit based on error) and the order correctly reflected that
intention. The slip rule under consideration
in that case was expressed in the
same terms as that considered in Elyard.
The proper construction of r 16.05(2)(e)
- The
authorities summarised at [44] to [65] above largely concern the inherent power
of a court of unlimited jurisdiction, or an express
(but differently worded)
rule such as that contained in r 39.05 of the FCA rules and its
antecedents. In Elyard, the latter type of rule was found to apply in
cases where, by an accidental slip or omission (including the omission of a
part),
the necessity to make the order in question had not been brought to the
Court’s attention at all.
- This
Court invited supplementary submissions as to whether r 16.05(2)(e) should
be construed as applicable only in circumstances where
the Court in fact
intended to make an order in relation to a question that was in fact
considered by the Court (rather than, for example, overlooked), but the order
does not reflect that actual intention. It is to be
acknowledged that
submissions in respect of that question were not advanced by either party before
the primary judge. The primary
judge assumed that authorities concerning the
meaning and effect of r 39.05 of the FCA rules were applicable
(reasons [192] –
[193]).
- In
its outline of submissions dated 30 October 2017, USQ argued that
“Rule 16.05 of the [FCCA rules] is a legislative expression
of
the slip rule” and that “The purpose of the slip rule
is to avoid injustice to litigants by ensuring that the Court’s orders
reflect the intention that the orders would have had but for the failure
that caused the accidental slip or omission” (emphasis added). These
submissions were premised on an assumption
that r 16.05(2)(e) of the
FCCA rules is not relevantly different in its meaning or operation from the
sub-rule invoked in Elyard.
- In
response to the Court’s invitation to make supplementary submissions, USQ
contended that the word “intention”
in r 16.05(2)(e) should be
construed having regard to the remedial nature of r 16.05(2) and that it
should, accordingly, have a broad,
rather than narrow or technical meaning. The
word should otherwise, USQ submitted, be construed according to its natural and
ordinary
meaning. USQ supplied dictionary meanings of the word: “the act
of determining mentally upon some action or result”
or “a purpose or
design” or “the end or object intended”.
- Ms Luck’s
written submissions are cast in broad terms. They are cryptic in parts.
Insofar as they concern the operation of
r 16.05(2)(e), the submissions
assert that the Registrar could not invoke the rule on the facts because to do
so would involve a
failure to observe the “manner and method” by
which an order extending the life of a creditor’s petition must be
made.
The phrase “manner and method” is borrowed from Downey at 361
— 362 in which Kitto J said:
... the introduction, into a provision conferring [an
authority], ... of words requiring that in exercising the authority a prescribed
method (to use the word in a comprehensive sense) shall be observed, ... a
person exercising the authority must observe any method
which is prescribed for
the time being; but if none is prescribed the authority is exercisable by any
appropriate method.
- In
her supplementary submissions, Ms Luck argued that the Registrar had made a
deliberate decision to adjourn the hearing of the petition,
which decision was
affected by an error of law, namely, an error as to when the petition would
lapse. Whilst not directed to the
meaning of the word “intention”
in r 16.05(2)(e), the submission asserts (at least impliedly) that the rule
should not
apply in circumstances where a mistake “of law” has been
made in respect of the lifespan of a petition. Ms Luck further
submitted
that the question of whether the rule could be invoked was a matter of
controversy that ought to have been referred to
a judge of the FCCA to decide.
The Registrar had, the submission goes, wrongly used r 16.05(2)(e) to
review and correct his own
error of law.
- The
manner and method by which the power to make an order is to be exercised
includes not only the time period in which the order
must be made, but the
fulfilment of two further mandatory and interrelated criteria. First, the Court
must be satisfied that it
is just and equitable to make the order. Second, the
Court must consider and specify the period of time by which the creditor’s
petition is to be extended (not being a date beyond 24 months after the
date of the presentation of the petition). Although Ms Luck’s
submissions make no specific reference to these additional criteria,
Ms Luck did submit that the effect of adjourning the petition
to a date
after it would lapse was an event that “could not be varied by
reconsideration, let alone alteration, of the substance
of the result that was
reached and recorded, that being that the petition had lapsed on 8 April
2016”. Ms Luck cited Achurch (French CJ, Crennan, Kiefel
and Bell JJ at [18]) and this passage from Burrell at
[21]:
The power to correct the record so that it truly does
represent what the court pronounced or intended to pronounce as its order
provides
no substantial qualification to that rule. The power to correct an
error arising from accidental slip or omission, whether under
a specific rule of
court or otherwise, directs attention to what the court whose record is to be
corrected did or intended to do.
It does not permit reconsideration, let alone
alteration, of the substance of the result that was reached and recorded.
(footnote omitted)
- Ms Luck
otherwise made no clear submission concerning the difference in wording between
r 16.05(2)(e) of the FCCA rules and r 39.05(h)
of the
FCA rules and the implications of that difference for the outcome of the
appeal.
Intention
- It
is not correct to say that r 16.05(2)(e) is remedial and so should be
construed broadly. The objective of the sub-rule is to confer
a power to vary
an order for (and only for) the expressly stated purpose: the order in fact made
does not reflect the intention of
the Court. The rule is to be construed in a
legal context in which orders (once entered) are final. In that context, the
word “intention”
should be construed as meaning an intention
actually formed upon actual consideration of an issue arising for determination.
The
word does not encompass a situation in which the Court has, whether by its
own omission or the omission of a party, failed to consider
the issue at
all.
- Rule 39.05(h)
of the FCA rules is cast in wider terms. The authorities construing the
wider iteration of the slip rule (including
Elyard) confirm it may be
invoked in at least two categories of case. The first is that in which, by an
accidental slip or omission, an
earlier order does not reflect the actual
intention of the Court in respect of a question that was in fact considered and
determined
by the Court at the time that the earlier order was made. The second
is that in which, by reason of an accidental slip or omission,
an earlier order
does not reflect the intention that the Court would have formed in
relation to a question, had the necessity to determine the question been
appreciated at the earlier time. In either case, the accidental slip or
omission resulting in the error may be that of a party and not that of the Court
itself.
Retrospectivity
- That
is not to say that an order made pursuant to r 16.05(2)(e) of the
FCCA rules could not operate with retrospective effect.
- The
Full Court in Elyard held that an earlier order corrected by a later
order made pursuant to O 35 r 7 as then in force would speak in its
corrected form from the date of the earlier order. The later order operates
retrospectively in that limited sense.
- In
cases where it is available to be exercised on the facts, r 16.05(2)(e) of
the FCCA rules would operate in the same way, provided
that the later
variation of the earlier order was not otherwise precluded by the enactment
under which the substantive issue falls
to be decided.
- Returning
to the present case, the substantive issue was whether an order pursuant to
s 52(5) of the Bankruptcy Act should or should not be made. It would only
be necessary to decide whether the retrospective operation of an order made
pursuant
to r 16.05(2)(e) of the FCCA rules would be precluded by
s 52(5) of the Bankruptcy Act if the power conferred by r 16.05(2)(e)
was enlivened on the facts.
- In
my view, the learned primary judge misconstrued the rule by assuming that it was
as wide in its meaning as the rule applied in
Elyard and, as a
consequence, there is error affecting the conclusion that the power conferred by
the rule was enlivened in the circumstances
that arose before the
Registrar.
Unavailability of r 16.05(2)(e) on the facts
- When
making an objective assessment of the Registrar’s actual intention as at
22 March 2016, the email correspondence (extracted
at [31] above) is to be
read in the context of all that had preceded it.
- The
primary judge said this in respect of the email (reasons at [198]):
The evidence adduced by the University also confirms
that the Registrar’s intention on 22 March 2016 was to keep the matter
on
foot. Had the potential for lapse of the petition been brought to his
attention, an order would have been made extending the
life of the
petition.
- As
at 22 March 2016, the salient facts were:
(1) absent an order pursuant to s 52(5) of the
Bankruptcy Act, the petition would expire on 8 April 2016 (expiry
date);
(2) the parties did not make the Registrar aware of the expiry date;
(3) the Registrar intended to make an order adjourning the hearing of the
petition to 31 May 2016;
(4) the Registrar intended the adjournment order to have legal effect, so as to
compel the parties to attend before the FCCA for
the hearing of USQ’s
creditor’s petition;
(5) the Registrar wrongly assumed that the petition would not have expired as at
the adjournment date and so did not turn his mind
to the question of whether the
petition would have expired by that time;
(6) the wrong assumption was induced by the parties’ omission to draw the
Registrar’s attention to the impending expiry
of the petition; and
(7) by reason of the parties’ omission, the Registrar did not consider
whether it was just and equitable to make an order pursuant
to s 52(5) of
the Bankruptcy Act to extend the life of the petition, nor was consideration
given to the particular date upon which the petition should be ordered
to
expire, nor to whether an order extending the life of the petition should be
subject to any terms the Registrar thought fit.
- The
use of the word “intention” in the email correspondence is to be
interpreted in a manner consistent with the Registrar’s
unqualified
acknowledgement that, as at 22 March 2016, he was ignorant of the date upon
which the petition would lapse. The “intention”
that the matter be
kept on foot is to be properly regarded as referring to an assumption in fact
made by the Registrar that the creditor’s
petition would not have lapsed
by the adjournment date. The “intention” to which the email refers
is the intention to
make an order pursuant to s 52(5) of the Bankruptcy Act
that the Registrar would have formed had the potential for the lapse of
the petition been brought to his attention, and so ensure that the petition
would “remain
current” as at the adjournment date.
- As
at 22 March 2016, the order granting an adjournment in the circumstances
was futile. Whilst the Registrar is not to be imputed
with an intention to make
a futile order, it is clear that the futility of the order did not become
apparent to the Registrar until
a later time. The futility of the adjournment
order supports (indeed demands) the inference that the Registrar would have
formed
the intention to extend the life of the petition had he considered the
question and addressed his mind to the statutory criteria
for an order under
s 52(5) of the Bankruptcy Act on 22 March 2016.
- As
at 22 March 2016, there was no intention, actually formed, to extend the
life of the petition. Consistent with the reasoning in
Elyard, these
facts were sufficient to enliven the power under r 39.05(h) of the
FCA rules. However, r 16.05(2)(e) of the FCCA rules was
not available
to be exercised, whether by a registrar or a judge of the FCCA. As an order of
a non-judicial officer of an inferior
court, the order of 31 May 2016 was
beyond power and invalid (whether or not “set aside”).
- Subject
to what is said below, it follows that it was not within the power of the
primary judge to make the sequestration order on
4 April 2017.
DISPOSITION OF THE APPEAL
- Notwithstanding
all of the above, I would not grant Ms Luck the relief sought on the
appeal.
- In
the exercise of its appellate jurisdiction, this Court may give such judgment,
or make such order as, in all of the circumstances,
it thinks fit: FCA Act,
s 28(1)(b). That power may be exercised in favour of a respondent to an
appeal: FCA Act, s 28(3).
- As
the Full Court said in Communications, Electrical, Electronic, Energy,
Information, Postal, Plumbing and Allied Services Union of Australia v
Australian
Competition and Consumer Commission [2007] FCAFC 132; (2007) 162 FCR 466 at
[108]:
... in exercising those powers [in s 28], the Court must
always have regard to the interests of justice, including the correction
of
error or injustice, the need of the parties for finality in the matter, the
public interest in finality of litigation and the
fair and open administration
of justice, and the requirement in s 24(1) to hear and determine the
appeal.
- Notwithstanding
the width of s 28(1)(b), the provision does “not set the court on an
unchartered course without legal reference
points by which to steer”:
Minister for Immigration and Citizenship v Maman (No 2) [2012] FCAFC 35
(Flick and Foster JJ at [9], citing Robins v Incentive Dynamics Pty
Ltd [1999] FCA 1651; (1999) 91 FCR 423 at 432 (Branson, Sackville and Kiefel JJ);
Johns v Australian Securities Commission [1993] HCA 56; (1993) 178 CLR 408 at 433
(Brennan J).
- For
USQ it is argued that in the event that this Court should find that the
Registrar’s invocation of r 16.05(2)(e) of the FCCA
rules was
erroneous, it should proceed to make an order pursuant to r 39.05(h) of the
FCA rules extending the life of the creditor’s
petition. Implicitly,
the submission is that the 22 May 2016 order should be varied so as to
effect an extension of the life of
the creditor’s petition to 8 April
2017 and so regularise the sequestration order.
- I
am satisfied that there is a proper legal and factual basis for making the order
sought by USQ in the exercise of the Court’s
appellate powers, and so deny
Ms Luck the relief sought on this appeal.
- It
is to be recalled that the creditor’s petition was referred by the
Registrar to the primary judge for hearing and determination
upon a request made
by USQ pursuant to s 104(3) of the FCCA Act. Upon the referral, it was
clearly open to the primary judge to
set aside any order previously made by the
Registrar. If the referral of the creditor’s petition to the primary
judge did
not have that effect, then the Application in a Case filed by
Ms Luck most certainly did. Upon the referred hearing, there was no
legal
impediment in any event to Ms Luck challenging the jurisdiction of the
primary judge to make the sequestration order by way
of a collateral challenge
to the validity of the 31 May 2016 order upon which the power to make the
sequestration order depended.
- In
response to Ms Luck’s Application in a Case, USQ advanced an
alternative submission to the effect that, if it were held that
the Registrar
had erred in the application of r 16.05(2)(e) of the FCCA rules, the
primary judge should himself “re-exercise
the slip rule”. In the
result, the primary judge held it was unnecessary to consider the merits of
USQ’s alternative
submission, given his conclusion that the Registrar was
not in error: reasons [209] – [213].
- This
procedural background assumes some importance in the final disposition of this
appeal. USQ’s submission that it was open
to the primary judge to
“re-exercise the slip rule” was correct. In my view, the primary
judge should have concluded
that the Registrar’s order of 31 May 2016
was beyond power, and then turned to consider the merits of USQ’s
alternative
submission. In that event, the powers available to the primary
judge would have been wider than those available to the Registrar.
They
included the power in r 39.05(h) of the FCA rules. That rule was
exercisable by a judge of the FCCA in the exercise of its
bankruptcy
jurisdiction by virtue of r 16.05(2) of the FCCA rules, in
circumstances where the FCCA rules were insufficient.
- Although
USQ did not expressly urge that particular course upon the primary judge, that
omission is explained by the absence of any
submission by Ms Luck to the
effect that r 16.05(2)(e) was relevantly distinguishable from the rules
invoked in the authorities upon
which USQ had relied.
- The
primary judge was entitled to consider alternative sources of power to vary the
22 March 2016 order in any event.
- Apart
from those submissions that have been rejected in the course of these reasons
for judgment, Ms Luck did not advance any unambiguous
argument to the
effect that Elyard was wrongly decided and so should not be followed by
this Full Court if it were otherwise applicable. It is appropriate that this
Court apply the principles in Elyard without expressing any view as to
its correctness.
- In
the circumstances explained above, r 39.05(h) of the FCA rules was
available to be exercised by the primary judge on the facts,
even if
r 16.05(2)(e) of the FCCA rules was not. Further, in circumstances
where Ms Luck jointly sought multiple adjournments of
the creditor’s
petition and where multiple adjournments were granted for the purpose of
enabling Ms Luck to advance her interests
in other pending proceedings, it
is clearly in the interests of justice to make the order that would have been
made, had the necessity
to extend the petition been brought to the
Registrar’s attention on 22 May 2016. Ms Luck should not be
permitted to obtain
an advantage from the invalidity of an order she consented
to, in circumstances where there existed an alternative source of power
to
extend the petition which could and should have been exercised by the judge at
first instance. This Court ought to do what the
primary judge could and should
have done so as to do justice between the parties and bring finality to their
long-running controversy.
- In
the ordinary course, I would invite the parties’ submissions as to the
form that an order under r 39.05(h) of the FCA rules
should take, make
the order, and then dismiss the appeal. However, as orders dismissing this
appeal are to be made by a majority
of this Full Court on a different legal
basis, the course I have proposed will not be taken.
|
I certify that the preceding one hundred and one (101) numbered paragraphs
are a true copy of the Reasons for Judgment herein of the
Honourable Justice
Charlesworth.
|
Associate:
Dated: 29 June 2018
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