Case law after David Grant
47 In Rodgers v Commissioner of Taxation (1998) 29 ACSR 270, the plaintiff liquidator sued the Commissioner under s 588FF (1) to recover group tax payments. He subsequently discovered that two additional tax payments had been made by the company, and sought leave to amend the statement of claim to add claims for recovery of the additional payments. The question was whether s 588FF (3) prevented the Court from granting leave to amend under the Federal Court Rules, on terms that the amendment would relate back to the date of commencement of the proceeding. Observing (at 276) that s 588FF (3) is concerned with the commencement of the proceeding rather than the amendment of an existing claim, while the relevant provision of the Federal Court Rules concerning amendments (Order 13 rule 2) regulated the position after a proceeding had been commenced, the Full Court held that the proposed amendment was permissible under the Rules notwithstanding s 588FF (3).
48 I have already pointed out (Brown v DML Resources Pty Ltd (No 5) [2001] NSWSC 973, 31 October 2001, paragraphs 24-25) that in reaching their conclusion, their Honours distinguished a case of amendment of a statement of claim, from a case of addition of a defendant, quoting with approval the observations on that point by Clarke JA in Fernance v Nominal Defendant (1989) 17 NSWLR 710. Therefore Rodgers' case is consistent with my interpretation of the Supreme Court Rules (albeit that the wording of the Supreme Court Rules is different from the wording of the Federal Court Rules).
49 The present point is that Rodgers' case is also consistent with my view about s 1322. Section 1322 was not in issue in Rodgers' case. It was referred to by the Full Court (at 275), but only in the course of their discussion of the David Grant case. After quoting a passage from the judgment of Gummow J in which he spoke about the meaning of the words "may only" in s 459G, their Honours said that Gummow J's statement establishes "an application first made outside the prescribed time is ineffective; it says nothing about an application to amend" [their emphasis]. In my opinion, this statement assumes rather than decides that Gummow J's observation may be extended to s 588FF (3), and then distinguishes it. The Full Court based its decision to permit the amendment on their opinion about the interaction of the Federal Court Rules and s 588FF (3), without reference to s 1322.
50 Emanuele v Australian Securities Commission (1997) 188 CLR 114 related to s 459P (2) of the Corporations Law, according to which an application by (inter alia) the Commission "may only be made" with the leave of the Court. Section 459P (3) states that the Court may give leave if satisfied that there is a prima facie case that the company is insolvent, but not otherwise; and s 459P (5) says that except as permitted by the section, a person cannot apply for a company to be wound up in insolvency. The High Court (Dawson, Toohey and Kirby JJ, Brennan CJ and Gaudron J dissenting) referred to the David Grant case. The majority construed the words "may only" as not imposing a condition precedent to the granting of leave, and held that leave could be granted after the winding up application had been made and heard, nunc pro tunc.
51 Toohey J (with whom Dawson J agreed) held (at 128) that s 459P (2) was not a jurisdiction conferring provision, did not create a cause of action and did not go to the relief that may be granted. He distinguished David Grant on the ground that compliance with s 459G went to jurisdiction (at 130-131). Further, citing observations by Lindgren J in Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61FCR 385, 406, Toohey J accepted a distinction between a situation in which there is a time limit within which the Court must be approached if an application for an order of a particular kind is to be made at all (as under s 459G), and a situation in which a proceeding is already under way and is subject to the Court's control and in which a timely but deficient order has been made. He noted that under s 459P (3) the Court must exercise a supervisory role, and that there were policy considerations favouring a liberal view of the requirements of s 459P, especially in a situation such as an application for an urgent ex parte order to appoint a provisional liquidator.
52 In a separate judgment Kirby J also referred to policy considerations, carefully tracing the legislative background to s 459P, contrasting it with the legislative policy underlying s 459G, and noting that the new statutory demand provisions were intended to establish a complete code (at 156).
53 The statutory context of the words "may only" in s 459P (2) is obviously very different from their context in s 588FF (3), and the legislative policies are also quite different. Moreover, the case did not raise the application of s 1322, but only the Court's general and inherent powers to grant leave after the application had been made. Therefore the case is not a directly applicable authority in the present circumstances. Nevertheless, it is of some relevance.
54 Part of the reasoning, especially in the judgment of Toohey J, would suggest that in the present case, compliance with s 588FF (3) is mandatory. I refer to the distinction enunciated by Lindgren J in Elyard Corporation and adopted by Toohey J at 131. The present case is a situation in which there is a time limit within which the Court must be approached if an application for an order is to be made at all, rather than a case where a proceeding is already under way and subject to the Court's control and in which a timely but deficient order has been made. However, the application of that distinction to the present case tends to beg the question, because if ss 588FF (3) and 1322 are read together, the case is not one in which the Court must be approached in advance, if an application for an order is to be made at all.
55 Toohey J's distinction between the case before him and David Grant, on the ground that s 459P was not a jurisdiction conferring provision while s 459G was, also tends to beg the question before me in this case. Here jurisdiction is conferred on the Court by s 588FF (1) to make orders with respect to voidable transactions, and by s 588FF (3) (b) to make an order for extension of time. Unlike s 459P, s 588FF (3) (b) is therefore a jurisdiction conferring provision. However, the real question for me to determine is whether, concurrently with that jurisdiction, the Court enjoys jurisdiction under s 1322, a matter not considered (nor necessary to be considered, in light of his conclusions) by Toohey J.
56 On the other hand, some aspects of the approach to construction adopted by both Toohey J and Kirby J tend to support the reasoning outlined above. Both of them regarded the legislative policy as important, and also the statutory context (in that case, the context provided particularly by ss 459P (3) and (5)). In a sense, Emanuele's case was a more extreme case than the present one. There the High Court was prepared to depart from a literal meaning of the words "may only" to allow the Court to exercise its inherent power to grant leave nunc pro tunc; here, there is an express statutory power to make a curative order, and the issue is whether the words "may only" should be construed literally so as to exclude that power from use. Moreover, the statutory context more strongly favoured exclusivity in that case than here. There is nothing in the present case comparable with the words "but not otherwise" in s 459P (3), and the words "except as permitted by this section, a person cannot apply …" in s 459P (5).
57 In Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270 the administrator of a company under voluntary administration convened the second meeting of its creditors to be held eight days earlier than the end of the convening period. Section 439A (2) states that the second meeting "must be held within 5 business days after the end of the convening period". Section 447A is a general provision authorising the Court to make such order as it thinks appropriate about how Part 5.3A is to operate in relation to a particular company. At first instance ((1997) 25 ACSR 1), Santow J made validating orders based upon both s 1322 and s 447A. His decision was affirmed by a majority in the Court of Appeal of New South Wales: (1998) 45 NSWLR 111 (a summary of Santow J's orders appears at 124).
58 The High Court held that s 447A enabled an order to be made altering the times stipulated by s 439A. As with Emanuele's case, this was a case where the High Court distinguished David Grant and chose not to give apparently mandatory language a mandatory effect. The Court (Gleeson CJ, McHugh, Gummow, Hayne and Callinan JJ) referred to the holding in David Grant that the requirement in s 459G should not be treated as supplemented or qualified by the operation of s 1322 (at 281), and said:
"But that conclusion followed from a number of considerations: not least, the fact that the express terms of s 459G (2) that "[a]n application may only be made within twenty-one days after the demand is … served" define the jurisdiction of the Court by imposing a requirement as to time as an essential condition of the new right conferred by the section. In addition, particular reference was made to the place occupied by s 459G in the scheme established by Part 5.4 and the consequences that would follow if s 459G were to be treated as supplemented or qualified by the operation of s 1322. Similar considerations do not arise in relation to s 447A."
59 This, it will be noted, was said notwithstanding the use of the word "must" in s 439A (2). The Court found it unnecessary to determine the relationship between s 1322 and Part 5.3A in general, and s 447A in particular, regarding the latter section as sufficient to justify the curative orders necessary to overcome the problem before the Court. However, their Honours did not disagree with the approach taken by the majority in the Court of Appeal of New South Wales, and by Santow J at first instance, that s 1322 was available as another source of power to make curative orders consequent upon a contravention of s 439A (2). This conclusion by the Court of Appeal and Santow J therefore stands, and is of some significance in the present case, where the complicating factor of a more proximate source of power to make a curative order (in that case, s 447A) is absent.
60 In my opinion, the High Court's observations at 281 should not be construed as meaning that whenever the words "may only" appear in a provision setting time limits, the provision is mandatory and excludes the use of s 1322. For one thing, the quoted passage acknowledges that the conclusion in David Grant flows from a number of considerations, including the place occupied by s 459G in the statutory scheme. Moreover, the quoted passage says that in David Grant the words "may only" were held to define the jurisdiction of the Court under s 459G, not that those words should always be construed as going to jurisdiction. The wider proposition would have been contrary to the decision in Emanuele's case. It seems to me, therefore, that the quoted passage is consistent with the approach I favour in this case, and tends to support it by saying that the conclusion in David Grant flowed from a number of considerations, not only the strict construction of the words "may only".
61 The view that I have taken is contrary to the considered opinion of Rolfe J in Star v National Australia Bank Ltd (1999) 30 ACSR 583, which therefore demands close consideration. In that case, as in Rodgers v Commissioner of Taxation, the plaintiffs in a proceeding alleging voidable transactions sought leave to amend the originating process to add claims for relief in respect of further transactions. Rolfe J held that leave to amend should be granted, and that the amendment would take effect from the date of the summons rather than the date of the amendment, having regard to Part 20 rule 4 (5A) of the Supreme Court Rules. In that case, unlike Rodgers v Commissioner of Taxation, s 1322 was specifically invoked, and his Honour made observations about it. He said that the wording of s 588FF (3) would prevent an application from being made under s 1322 to extend the three-year limitation period.
62 After referring to the David Grant case and s 459G, Rolfe J said (at 592-3);
"While the wording is obviously not identical to that in s 588FF (3), I think it is necessary to consider the words "only if" in s 459G (3) and "may only be made" in subsection (3) and the general structure of the sections. In each, although the words differ, the essential import is the same and, in my opinion, it is a condition of bringing an application under s 588FF, that the application must be made either within three years of the relation-back day, or within such extended period granted in consequence of an application within that three-year period."
63 After referring to s 1322 (4) (d) and quoting extensively from the David Grant case and cases preceding and following it, he continued (at 597-8):
"As I have stated, while there is some difference in wording between ss 459G and 588FF, each section requires that an application may be made to the Court for relief within a specified period from a specified and certain date. In the circumstances, and having regard to the scheme of the Law and the terms of the explanatory memorandum, to which I shall refer [he referred to paragraph 688 of the Harmer Report, quoted above], I do not see that there is any relevant distinction between the words in subsection (2) and those in subsection (3) (a). The consequence of that is that I am of the opinion that for a valid or competent application to be made pursuant to s 588FF (3) in respect to which the Court has jurisdiction, it must, relevantly for present purposes, be made within the time specified in subsection (3) (a)."