Amorin Constructions Pty Ltd v Kamtech Electrical Services Pty Ltd

Supreme Court of NSW|2008-03-27|Before: Hammerschlag J, The J

CITATION : Amorin Constructions Pty Ltd v Kamtech Electrical Services Pty Ltd [2008] NSWSC 285 This decision has been amended. Please see the end of the judgment for a list of the amendments.

DECISION : Application dismissed with costs

CATCHWORDS : CORPORATIONS and PRACTICE AND PROCEDURE - winding up application not determined within six month period provided in s 459R(1) of the Corporations Act 2001 (Cth) - matter ordered within six month period to be set down to be heard after its expiry - no extension granted under s 459R(2) before expiry - application under Uniform Civil Procedure Rules Pt 36 r 36.17 for order supplementing setting down order by adding order for extension - whether relief available

Uniform Civil Procedure Rules LEGISLATION CITED : Corporations Act 2001 (Cth) Supreme Court Rules

Amorin Constructions Pty Ltd v Kamtech Electrical Services Pty Ltd [2008] NSWSC 267 Newmont Yandal Operations Pty Limited v The J Aron Corporation & the Goldman Sachs Group, Inc [2007] NSWCA 195 Symes v Commonwealth (1987) 89 FLR 356 Termijtelen v Van Arkel [1974] 1 NSWLR 525 Storey & Keers Pty Limited v Johnstone (1987) 9 NSWLR 446 Brew v Whitlock (No 3) [1968] VR 504 Campbells Cash and Carry v Fostif Pty Ltd (2006) 229 CLR 386 Westsub Discounts Pty Ltd v Idaps Australia Ltd (No 2) (1990) 94 ALR 310 Hatton v Harris [1892] AC 547 CASES CITED : Edwards v Waterproofing Manufacturers (Chendu) Pty Ltd [2000] NSWSC 1227 Reliance Financial Services v Martha's T Market (2003) 45 ACSR 287 Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385 Australian Securities and Investments Commission v Maxwell [2005] NSWSC 49 Westpac Banking Corporation v E & W Jury Pty Ltd (1998) 16 ACLC 547 Timms v Dellaplus Pty Ltd [2008] SASC 17 L Shaddock & Associates Pty Ltd v Parramatta City Council (No 2) (1982) 151 CLR 590 Australian Securities and Investments Commission v Maxwell [2005] NSWSC 49 Aussie Victoria Plant Hire Pty Ltd v Esanda Finance Corporation Ltd [2008] HCA 9 Farah Constructions Pty Limited v Say-Dee Pty Limited (2007) 81 ALJR 1107 Tillman v Attorney General for the State of New South Wales [2007] NSWCA 327

PARTIES : Amorin Constructions Pty Ltd ACN 090 600 749 Kamtech Electrical Services Pty Ltd ACN 063 608 846

COUNSEL : G.B. Carolan (Plaintiff) T.O. Bland (Defendant)

SOLICITORS : Kelvin Solari (Plaintiff) MacLarens Lawyers (Defendant)

13 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST

4218/2007 AMORIN CONSTRUCTIONS PTY LTD ACN 090 600 749 -V- KAMTECH ELECTRICAL SERVICES PTY LTD ACN 063 608 846 JUDGMENT 1 HIS HONOUR: This is an application under Pt 36 r 36.17 of the Uniform Civil Procedure Rules ("UCPR") for an order amending orders made by the Court on 26 November 2007 by including as an additional order that the time for determining the plaintiff's application for the winding up of the defendant be extended pursuant to s 459R(2) of the Corporations Act 2001 (Cth) ("the Act") to the time when the Court finally determines that application. 2 Section 459R of the Act is in the following terms: "(1) [ Time limit for determination ] An application for a company to be wound up in insolvency is to be determined within 6 months after it is made. (2) [ Court may extend time period ] 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) [ Where application will be dismissed ] An application is, because of this subsection, dismissed if it is not determined as required by this section. (4) [ Conditional order ] An order under subsection (2) may be made subject to conditions."

3 Part 36 r 36.17 UCPR is in the following terms: "If there is a clerical mistake, or an error arising from an accidental slip or omission, in a judgment or order, or in a certificate, the court, on the application of any party or of its own motion, may, at any time, correct the mistake or error." 4 By Originating Process issued on 27 August 2007, the plaintiff moved to wind up the defendant on the grounds of insolvency. 5 After a number of interlocutory skirmishes between the parties, the matter came before Austin J on 26 November 2007. The plaintiff asked the presiding judge for an early hearing date. The defendant proffered an undertaking to the Court that any surplus proceeds of sale of any property would be held in trust pending determination of the proceedings. The presiding judge indicated that the first available date for hearing was 28 February 2008. Short Minutes of Order were made by his Honour by consent which included an order in the following terms: "Fix matter for hearing on 28 February 2008" 6 The matter came before me for hearing on 28 February 2008, by which time the six-month period provided for the disposal of winding up applications in s 459R(1) had expired: see Amorin Constructions Pty Ltd v Kamtech Electrical Services Pty Ltd [2008] NSWSC 267. 7 No application for an extension under s 459R(2) of the Act had previously been made. 8 I am satisfied that neither the plaintiff nor its legal advisors were conscious of the requirement for an extension until I raised it on 28 February 2008. They did not have s 459R(1) in mind at any time, including when Austin J fixed the matter for hearing on 28 February 2008. Neither party drew it to his Honour's attention when the matter was, on 27 November 2007, fixed for hearing. His Honour clearly never had it in mind either. 9 Unless the statutory effect of s 459R(3) is ameliorated by now making an order to supplement the order of 26 November 2006 by including, so as to have effect from that time, the extension order sought, the winding up application stands dismissed. 10 By interlocutory process issued on 6 March 2008, the plaintiff now moves to amend the order made by Austin J on 27 November 2007 by including an order for extension under s 459R(2) of the Act.

11 Courts refer to "the slip rule" when referring to the power to correct mistakes or errors in judgments or orders resulting from an accidental slip or omission, whether that power stems from a particular Rule of Court, or from the Court's inherent jurisdiction over its own processes. 12 Where a particular Rule of Court is relied on, it is important to focus attention on the precise words of the rule rather than applying the terminology in the reasoning of prior case law: Newmont Yandal Operations Pty Limited v The J Aron Corporation & the Goldman Sachs Group, Inc [2007] NSWCA 195 at [24]. 13 The inherent jurisdiction of the Court is, on the other hand, not confined by the particular terminology of any particular Rule. The Court's inherent jurisdiction may call for a variation of orders which falls outside the slip rule: Newmont Yandal Operations Pty Limited v The J Aron Corporation & the Goldman Sachs Group, Inc at [18], [19] per Spigelman CJ. 14 It is clear that the application of the slip rule is not confined to giving effect to the intention of the judge at the time when the Court's order was made or judgment given. It extends to the intention that the Court would have had but for the failure that caused the accidental slip or omission: Symes v Commonwealth (1987) 89 FLR 356. 15 Before me, the plaintiff relied only on r 36.17 and did not seek to have the inherent jurisdiction of the Court invoked. 16 The central issue is whether r 36.17 is available to the plaintiff to bring about the result that there will be an extension of the date for the determination of its winding up application. 17 The three significant features of s 459R are that: a the Court may only extend the period if it is satisfied that special circumstances justify it; b the extension order must be made within the six-month period or as last extended by the Court; c if the winding up application is not determined within the period concerned it is, by operation of statute, dismissed. 18 The power given to the Court to extend the period under s 459R(2), if it is satisfied that special circumstances justify it, undoubtedly involves the exercise by the Court of an independent discretion. 19 Provisions such as s 459R(2) require the Court actually to reach the requisite degree of satisfaction. The Court is not bound to exercise its discretion in a particular direction even if there are admissions: Termijtelen v Van Arkel [1974] 1 NSWLR 525 at 529. 20 In Storey & Keers Pty Limited v Johnstone (1987) 9 NSWLR 446 ("Storey & Keers"), the Court was concerned with a rule of the District Court in precisely the same terms as r 36.17 UCPR. McHugh JA said the following at 453: "The rationale of the slip rule also requires that an omission or mistake should not be treated as accidental if the proposed amendment requires the exercise of an independent discretion or is a matter upon which a real difference of opinion might exist: cf Brew v Whitlock (No 3) (at 506). In general the test of whether a mistake or omission is accidental is that applied by Lord Herschell in Hatton v Harris (at 558) if the matter had been drawn to the court's attention would the correction at once have been made? Finally, the court always has a discretion to refuse to make an order under the slip rule "if something has intervened which would render it inexpedient or inequitable that it be made": L Shaddock & Associates Pty Ltd v Parramatta City Council [No 2] (at 597)." (emphasis added) 21 In Newmont Yandal Operations Pty Limited v The J Aron Corporation & the Goldman Sachs Group, Inc at [129], Spigelman CJ referred with apparent approval to what McHugh JA had said. 22 In Brew v Whitlock (No 3) [1968] VR 504, the Full Court said at 506: "There was no 'error' in the Full Court's judgment. It had no application before it and it did not intend to deal with the matter at all. Moreover, there was no error capable of being the subject of 'correction'. In our view it is necessary that it should appear not only that the judgment was wrong, but also what could and should be done to it to make it right; not only what was omitted, but what would need to be put in. It is impossible, in our view, to apply the rule to a case where, on the application to correct the judgment, it is necessary to exercise an independent discretion, not only as to whether interest should have been awarded but also as to the rate at which it should run and as to the time from which it should run. " (emphasis added) 23 In Newmont Yandal Operations Pty Limited v The J Aron Corporation & the Goldman Sachs Group, Inc (see [118] - [122]), the Court declined to follow Brew v Whitlock (No 3) to the extent that it stood for the proposition that the slip rule could not be invoked where the Court did not intend to deal with the matter at all. However, no doubt was expressed with respect to its correctness so far as discretionary decisions are concerned. 24 To have granted the extension on 26 November 2007, Austin J would undoubtedly have been required to exercise an independent discretion. 25 The fact that an issue may be simply resolved does not deny its existence: Campbells Cash and Carry v Fostif Pty Ltd (2006) 229 CLR 386. Equally, the fact that the circumstances might indicate a high degree of probability, perhaps even approaching certainty, that the discretion would have been exercised in a particular way does not deny the existence of the discretion. 26 In Westsub Discounts Pty Ltd v Idaps Australia Ltd (No 2) (1990) 94 ALR 310 at 316, Woodward J did not consider that it was appropriate to apply the slip rule where its exercise would require the Court to vacate the exercise of discretion on the subject of costs and to substitute a fresh exercise of discretion. 27 Had an application for extension been made to Austin J, his Honour would, self-sufficiently, have dealt with it. It may safely be assumed that his Honour would have intended to exercise his discretion. But a finding that he would have had that intention does not permit the Court now to exercise a special discretion his Honour did not and which his Honour was not called upon to exercise. 28 I consider that Storey & Keers precludes reliance by the plaintiff on r 36.17 in the present circumstances. 29 There are further reasons why, in my view, r 36.17 is not available.

30 As the Full Court in Brew v Whitlock (No 3) pointed out, there is a directly correlative relationship between an error and what must be done to correct it. 31 The error here was a failure of the parties (or, perhaps, the Court) to advert to the existence of the six-month limitation period having regard to the date on which the matter had been set down, and to make an application before its expiry. 32 In general, it has been held that the test of whether a mistake or omission is accidental is whether, if the matter had been drawn to the Court's attention, the correction would "at once have been made": Hatton v Harris [1892] AC 547 at 558; Storey & Keers at 453. 33 I do not consider that, had the s 459R issue been drawn to Austin J's attention, it is inevitable that his Honour would "at once" have made an extension order. There were still months to go before the six-month period would expire. The plaintiff was desirous of an earlier date. His Honour may have made additional efforts to procure an earlier date. His Honour may have stood the matter over for a week or two to ascertain whether a judge might have become available at an earlier date. His Honour may have adverted to the necessity of an application being made before the six months were up but not have made an order "at once". 34 It follows that I am not satisfied that the mistake was a failure to order an extension, the correction of which would require an equivalent order to be made. The mistake was one by the parties in failing to make an application before the six-month period expired or to take steps which would have obviated that necessity. 35 Finally, in Edwards v Waterproofing Manufacturers (Chendu) Pty Ltd [2000] NSWSC 1227, Hodgson CJ in Eq considered (at [13]) that Pt 20 r 10 of the Supreme Court Rules as they then applied (which was in exactly the same terms as r 36.17 UCPR) dealt with a correction of a minute of a judgment or order, rather than a correction of an order spoken by a judicial officer, and thus was directed towards making sure that the formal record of a judgment or order accords with the actual intention of the Court making that order. 36 In Reliance Financial Services v Martha's T Market (2003) 45 ACSR 287 at [4], Young CJ in Eq held that Pt 20 r 10 of the Supreme Court Rules covered only errors in a judgment or order. 37 On the basis of this reasoning, r 36.17 is not available to the plaintiff. 38 It follows that the plaintiff's application must fail.

39 The question whether slip rule relief (under Rules of Court or inherent jurisdiction) is available in the context of s 459R(2) of the Act has been considered and a different conclusion has been reached, for example, in: Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385 ("Elyard"); Edwards v Waterproofing Manufacturers (Chendu) Pty Ltd; Australian Securities and Investments Commission v Maxwell [2005] NSWSC 49; Westpac Banking Corporation v E & W Jury Pty Ltd (1998) 16 ACLC 547; Reliance Financial Services Pty Ltd v Martha's T Market Pty Ltd; Timms v Dellaplus Pty Ltd [2008] SASC 17. 40 For the most part, the orders have been justified on the basis of the inherent jurisdiction. 41 Of the instances where the matter has been considered, Elyard is the only authority at intermediate appellate level (or at any appellate level) to which the Court was referred in the present case. 42 Perhaps somewhat remarkably, none of the decisions referred to above appear to have considered either that s 459R(2) of the Act requires the exercise of an independent discretion. 43 Nothing in Newmont Yandal Operations Pty Limited v The J Aron Corporation & the Goldman Sachs Group, Inc, it seems to me, supports the conclusion that under its inherent jurisdiction, the Court is empowered directly or indirectly to exercise out of time a special statutory discretionary jurisdiction that was not exercised within time. 44 In Elyard, as the judgment of Lockhart J reveals at 388 to 389, the appellant submitted at first instance and on appeal that for two reasons the Court had no power to extend the time: firstly, s 459R(2) requires any application for extension to be made before the expiry of the period and because the application for extension was not made before expiry of the period, no order could be made within the period prescribed by s 459R(1); and, secondly, the winding up application had been dismissed by operation of law on expiry of the period absent an extension. 45 These difficulties were, the Court held, overcome by the precept that slip rule orders correct an earlier order and speak from the date of the earlier order which then operates with full force as corrected: L Shaddock & Associates Pty Ltd v Parramatta City Council (No 2) (1982) 151 CLR 590. Upon the making of an order outside of the period, the extension spoke from the date on which the Court considered it would have been made. Hence, the statutory dismissal never happened. 46 At 391, Lockhart J made reference to Storey & Keers, but only as an example of a circumstance in which the slip rule had been used to increase the amount of an award of damages. At 401, Lindgren J articulated the question as being whether s 459R(2) and (3) have the effect of excluding the availability of the slip rule in any case where the Court does not in fact make an order for extension within the time specified. His Honour did not refer to Storey & Keers nor to the principle that slip rule relief is not available where the exercise of an independent discretion which had not been exercised by oversight. 47 In Westpac Banking Corporation v E & W Jury Pty Ltd, where before expiry of the statutory period Emmett J had fixed the matter for hearing after its expiry without ordering an extension, the slip rule was invoked on the basis that when setting the matter down his Honour "was not intending to waste my breath or waste the Court's time" in making directions that had no utility (at 551). Having regard to his Honour's view that an extension would have been granted as a matter of course and could not have been opposed, the setting down order was amended to include an order under s 459R(2) of the Act. His Honour said at 551: "had I been asked I would have made an order under s 459R(2)". 48 His Honour also did not make any reference to the fact that an independent discretion was required to be exercised. 49 The fact, however, that the Court considers the facts to be such that an extension could not have been opposed says nothing of the requirement to exercise the discretion.

50 In Edwards v Waterproofing Manufacturers (Chendu), Hodgson CJ in Eq held that there would have been inherent jurisdiction in the Court to order the extension but, in the circumstances of that case declined to exercise it in the applicant's favour, principally for reasons of delay which would have involved a serious departure from the policy underlying the provisions in the Corporations Act concerning winding up applications, that they be dealt with promptly. 51 In Reliance Financial Services v Martha's T Market, it was not contested that the Court had an analogous inherent power to correct errors outside those contemplated by Pt 20 r 10 of the Supreme Court Rules including errors where solicitors do not direct their minds to serious problems. 52 In Australian Securities and Investments Commission v Maxwell [2005] NSWSC 49, Barrett J held at [14] that on the basis elucidated by the Full Federal Court in Elyard, it is open to the Court in its inherent slip rule jurisdiction to rectify the absence of a s 459R(2) extension: "By correcting (by way of supplement) pursuant to Part 20 rule 10 a minute of a judgment or order, or by correcting in like manner in exercise of the inherent jurisdiction an order spoken by a judicial officer. In acting on either of those bases, the Court supplies an element clearly implied by, but not explicitly stated in, the orders actually made." 53 Most recently, in Timms v Dellaplus, Sulan J following Elyard held at [41] that it is settled law that s 459R does not exclude operation of the slip rule. 54 It may readily be accepted that r 36.17 UCPR would operate to permit an extension order to be made or an order to be corrected or supplemented to reflect the outcome of the exercise by the Court of its discretion where its orders do not reflect either its actions or intentions. To that extent, s 459R does not exclude operation of the slip rule. 55 In Elyard 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." 56 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. 57 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 Act, which require winding up applications to be dealt with promptly. That policy has recently been reaffirmed by the High Court in Aussie Victoria Plant Hire Pty Ltd v Esanda Finance Corporation Ltd [2008] HCA 9 at [17]. 58 I am conscious that I should not depart from decisions in intermediate appellate courts in other jurisdictions (or indeed first instance decisions in this or other Australian jurisdictions) on the interpretation of Commonwealth legislation, unless I am convinced that the interpretation is plainly wrong: Farah Constructions Pty Limited v Say-Dee Pty Limited (2007) 81 ALJR 1107; Tillman v Attorney General for the State of New South Wales [2007] NSWCA 327. 59 In the present instance, however, the true question is whether the particular terms of the slip rule embodied in r 36.17 UCPR can be called in aid to assist the plaintiff. There is authority of the Court of Appeal in this State that indicates that it cannot. 60 That authority applies with equal force to both r 36.17 UCPR and to the exercise of the inherent jurisdiction where exercise or re-exercise of special independent statutory discretion is required. 61 It follows that the application is dismissed with costs. **********

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