EDWARDS V. WATERPROOFING MANUFACTURERS (CHENDU) PTY. LTD. [2000] NSWSC 1227

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

NO. 4318 OF 1999 EDWARDS V. WATERPROOFING MANUFACTURERS (CHENDU) PTY. LTD.

1 These are proceedings in which the plaintiff, Mr Edwards, seeks the winding up in insolvency of the defendant, Waterproofing Manufacturers (Chendu) Pty Ltd, and they were commenced on 14 October 1999. By force of section 459R of the Corporations Law, an application for a company to be wound up in insolvency must be determined within six months; and that means that these proceedings should have been determined by 14 April 2000. 2 However, after an order under section 459S of the Corporations Law had been made by Master Macready on 16 March 2000, further affidavits were filed, and it appeared that the matter would have to be determined at a substantive hearing. On 28 March 2000, Registrar Berecry made the following orders by consent: firstly, that there be a return of subpoeanaes at 9am on 5 April 2000, and secondly, that the matter be allocated to the Master's call over. Ultimately, the matter came into the Equity General List callover on 8 November 2000, and it was then allocated a hearing date on 16 February 2001. 3 It came before me for pre trial directions on 7 December 2000, and on that occasion it was noted that the effect of section 459R had been overlooked. Ms Cohen, who appeared for the plaintiff, handed up a Notice of Motion seeking correction under the "slip rule" of the orders made by Registrar Berecry on 28 March 2000, to the effect that the period within which the winding up proceedings should be determined be extended until 28 February 2001. I accepted the Notice of Motion, and stood it over for hearing today. 4 Ms Cohen for the plaintiff referred me to Ellyard Corporation Pty Ltd v. DDB Needham Sydney Pty Ltd (1995) 61 FCR 385. In that case, the full Federal Court held that, where a later order made under the slip rule corrects an error in an earlier order, the later correcting order speaks from the date of the earlier corrected order, so that the earlier order is deemed or treated as having always operated as corrected; and that section 459R of the Corporations Law did not displace the application of the slip rule or render it unavailable. 5 In that case, there was an application for winding up filed on 18 November 1994. Orders extending the time for determination of that application were made on 21 April 1995 and again on 26 May 1995, the latter order extending the period until 9 June 1995. On 9 June 1995, the proceedings were adjourned to 16 June 1995, but by mistake no extension of time was sought or made. On 16 June 1995, an application was made for an extension in reliance on the slip rule, and on 20 July 1995, Sheppard J extended the time, making an order that the orders made on 9 June be corrected by adding an order that the time within which the application might be determined be further extended until 5 pm on 30 November 1995. An appeal was taken to the full Federal Court, and on 24 November 1995, that appeal was dismissed. 6 Ms Cohen, in relying on that case, drew my attention to a difference between the relevant slip rule in the Federal Court rules, Order 35 Rule 7, which relevantly provides that an error arising in a judgment or order from an accidental slip or omission may be corrected by the Court, and the Supreme Court rule, Part 20, Rule 10, which relevantly states that, where there is an error arising from an accidental slip or omission in a minute of a judgment or order, the Court may at any time correct the mistake or error. Ms Cohen submitted that, even if the Supreme Court Rule does not literally cover the present situation, this Court has an inherent jurisdiction to the same effect as provided by the Federal Court rule, and could exercise power under an implicit "slip rule" in the same way as the Federal Court. 7 Ms Cohen submitted that the Court, therefore, did have power to correct the situation, and to make the order sought in the Notice of Motion. Ms Cohen submitted further that, as a matter of discretion, the Court should make such an order. The parties and the Court had at all times acted on the basis that this matter was to be given a hearing on the merits. The defendant had put on no evidence that it was in any way prejudiced by the absence of the correct order being made on 28 March. That order and orders made since would make no sense at all in the absence of an order extending time for determination of the application. The defendant had put on no evidence that it would have acted any differently, had the order been sought and made on 28 March. 8 Ms Byrne for the defendant submitted first that the Ellyard case was incorrectly decided, and that the High Court case of David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 should not have been distinguished in Ellyard. In that case, the High Court had held that the requirement of section 459G of the Corporations Law, that an application to set aside a statutory demand be made within 21 days after service of the demand, was not supplemented or qualified by the operation of section 1322(4)(d) of the Law, empowering the Court to extend the period for instituting or taking any proceeding under the Law, or in relation to a corporation. Ms Byrne submitted that the High Court decision should be taken as deciding that, just as section 1322 of the Law cannot be used to defeat the strict time limitations imposed in relation to winding up proceedings by the Corporations Law, the same should apply to the slip rule. 9 Next, Ms Byrne submitted that the difference between the Supreme Court Rule and the Federal Court Rule meant that the Ellyard case was distinguishable. The Supreme Court Rule only allowed the correction of a formally drawn up order to make it accord with the order actually intended by the court; it did not extend to the correction of accidental mistakes in the making of the order in the first place. 10 Finally, Ms Byrne submitted that this was a very different case on the facts from Ellyard and from other decisions in which the slip rule had been applied. Ellyard was a case where two extensions had already been obtained. There was an obvious accidental slip in obtaining an additional extension, and that was sought to be corrected within a week. In this case, there had been no previous extension. The requirement of the section had simply been overlooked, and the application to correct the situation was being made eight months after the time had expired, seeking an extension to a time ten months after the time had expired. 11 Ms Byrne referred me particularly to the discussion by Lindgren J in Ellyard, to the effect that the terms and policy of section 459R, as well as the special and limited scope of the slip rule, should be born in mind in any case where the Court is asked, outside the period, to exercise the discretion to remedy the omission of an order made within the time limited by section 459R. 12 In my opinion, I should accept that Ellyard was correctly decided, and that a valid distinction was drawn between the situation dealt with in that case and the situation dealt with by the High Court in David Grant. 13 In my opinion, also, the difference between the Federal Court Rule and the Supreme Court Rule does not mean that this Court has any less power than the Federal Court to correct accidental mistakes made in court orders. I accept that Part 20 Rule 10 in its terms is dealing with the correction of a minute of a judgment or order, rather than correction of an order spoken by a judicial officer, and thus is directed towards making sure that the formal record of a judgment or order accords with the actual intention of the Court making that order. However, in my opinion, this Court plainly has an inherent jurisdiction under an implicit slip rule to the same effect as the provision of the Federal Court rule. 14 The question is whether the power to correct an accidental error can and should be exercised in this case. 15 I accept Ms Cohen's submission that, had the Court adverted to section 459R and its effect, it would not have made the order which was made on 28 March 2000. It would have made an order which either ensured that the matter would be heard on or before 14 April, or else would have made an order extending the time and an order ensuring that the matter came back at an early date either for hearing, or for a further extension of time within the time then extended. 16 It is unlikely in the extreme that on 28 March 2000 the Court would have made an order extending the time under section 459R to 28 February 2001, as is now sought. However, Ms Cohen submits that the correction of an accidental error or omission can be by way of achieving the substance of what a correct order would have provided, rather than simply providing literally for what the correct order would have provided at the time. I accept that submission so that, as I see it, the question whether the order now sought should be made is one of discretion: that is, although in my opinion it is clear that an extension of time to the end of February 2001 would not have been granted on 28 March 2000, the only way now of giving substantial effect to what should have been done on 28 March 2000 would be to grant an extension of time to the end of February 2001. 17 I accept that the defendants have not put on any evidence of particular prejudice arising from the delay. However, I have come to the view that, as a matter of discretion, the order should not be made. 18 There is a very clear policy indicated by section 459R and associated sections of the Corporations Law that applications to wind up companies in insolvency should be promptly dealt with. Where there is plain error made by the Court, and perhaps by the parties, in omitting to obtain an extension of time within the time limited, and that error is sought to be corrected very soon afterwards, then it seems to me that that policy of the legislature is not seriously departed from. However, in my opinion, it would be a very serious departure from the policy indicated by those sections to grant an extension, eight months after the time has elapsed, for a further period of two months. Indeed, to do so would go a long way towards rendering nugatory the requirement that extensions of time be granted within extant limitations of time, because in most cases it could be said to be a mistake in an order that an extension was not granted within time. 19 It seems to me also that, if such an extension were available to a plaintiff in winding up proceedings after such a long lapse of time, this would have an element of unfairness, when companies in respect of which statutory demands are issued have no possibility whatsoever of any extension of the time limited to them for challenging statutory notices. 20 For those reasons, I propose to dismiss the Notice of Motion. The effect of this is that the proceedings are, by virtue of section 459R(3), dismissed. 21 Ms Byrne has applied for an order for costs, and in particular, an order for the costs of this application. 22 The problem has arisen because of a mistake by the plaintiff and a mistake by the Court. A defendant, as I see it, does not have an obligation to ensure that the plaintiff does not make a mistake, but it seems to me that if a defendant is aware that the Court is making an order which is plainly an accidental mistake, there is a duty on the defendant to draw that to the Court's attention. Of course, if the defendant is unaware of it, then the defendant, really, is in the same position as the plaintiff and the Court. 23 In all those circumstances, I think it is appropriate that there be no order as to costs. 24 The orders that I make are these. 25 I dismiss the Notice of Motion. 26 I note that, accordingly, the proceedings are dismissed under section 459R of the Corporations Law. 27 I make no order as to costs. 28 I vacate the hearing dates. *******

Last Modified: 12/20/2000 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.