ELYARD CORPORATION PTY LIMITED v DDB NEEDHAM SYDNEY PTY LTD

ELYARD CORPORATION PTY LIMITED v DDB NEEDHAM SYDNEY PTY LTD - [1995] FCA 943 - FCA 1995 case summary — Zoe

[11]

REASONS FOR JUDGMENT LOCKHART J. This appeal, by leave, from the judgment of a judge of the Court (Sheppard J.) (1995) 131 ALR 213, involves an examination of the principles governing what is usually referred to as 'the slip rule', and its application to the facts of this case. The facts may be briefly stated. On 18 November 1994 an application was filed in this Court by a creditor of the appellant pursuant to s. 459P of the Corporations Law, seeking to wind up the appellant. On 21 April 1995, another creditor was substituted as the applicant. On 9 June 1995 another substitution order was made by the registrar by consent, this time substituting the respondent, DDB Needham Sydney Pty Limited, as the applicant. The consent order further provided that the proceeding be adjourned to 16 June 1995. An application for the winding up of a company is to be determined within six months after it is made (s. 459R(1)). In this case, the period of six months expired on 18 May 1995. That period was extended up to and including 9 June 1995 by order of the registrar on 21 April 1995 (s. 459R(2)); but no further extension was sought by the respondent, and therefore none was included in the orders made by the registrar on 9 June. The registrar's order of 9 June had not been entered at any relevant time. The application came before the learned primary Judge on 16 June 1995. He delivered reasons for judgment on 20 July 1995 and made orders on 9 August 1995. The reasons for judgment of his Honour recited the circumstances which led to the respondent not seeking a further extension of the relevant period on 9 June. His Honour went on to find that he was entitled to apply the slip rule, which he did, by correcting the orders of the registrar made on 9 June. He added an order that, subject to further order, the time within which the application for winding up may be determined be further extended until 5pm on 30 November 1995. The primary question arising in the appeal is whether s. 459R(2)(b) of the Corporations Law prevented the making on 9 August 1995 of the order for extension. Section 459R reads as follows: '459R(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.'

[12]

It was submitted by counsel for the appellant, both at first instance and on appeal, that for two reasons the Court had no power to extend the time pursuant to s. 459R(2) in the circumstances of this case. First, it was argued that no extension of time could be granted because s. 459R(2) requires any application for extension to be made before the expiry of the period as earlier extended. As the application for extension was not made on or before 9 June, no order could be made within the period prescribed by s. 459R(1), as extended under s. 459R(2), because of the terms of s. 459R(2)(b). In this regard, particular reliance was placed by counsel upon the presence of the word 'only' in the introductory part of subsection (2). The second argument of counsel for the appellant was that the application to wind up the appellant was dismissed by operation of the Corporations Law itself, as s. 459R(3) provides that an application is, 'because of this subsection', dismissed if it is not determined as required by the section. As no extension was sought on 9 June, which was the last day of the application's life, it was automatically dismissed at the end of the day. The interpretation of s. 459R is assisted by reference to s. 459G of the Corporations Law, which provides for the setting aside of statutory demands, and is cast in language which for present purposes is indistinguishable from the language of s. 459R. The High Court recently resolved conflicting judgments of superior courts in Australia concerning the proper construction of s. 459G in David Grant & Co Pty Limited v Westpac Banking Corporation (1995) 131 ALR 353, in which it was held that s. 459G was not to be treated as supplemented or qualified by the operation of s. 1322(4), and that extension of time from outside the period of 21 days provided for in s. 459G was not possible. Importantly, although the conflict of judicial opinion concerning the construction of s. 459G had not been resolved by the High Court when Sheppard J. gave judgment, the approach which he adopted was in accord with the earlier decisions of the Appellate Division of the Supreme Court of Victoria in David Grant & Co Pty Limited v Westpac Banking Corporation (1995) 15 ACSR 771, and of the Court of Appeal of New South Wales in Re J & E Holdings Pty Limited (1995) 17 ACSR 319. And it was the view that was upheld by the High Court in David Grant. Sheppard J. observed that, if the slip rule applied, it could do so only by an order nunc pro tunc, that is by dating back to 9 June 1995. His Honour accepted that s. 459R(3) itself operates to bring about dismissal of a winding up application where the time provided for in the section has run out. His Honour said that the question before him was whether the Court could overcome the problem which subsection (3) posed by relying on the slip rule, so as to make the order retrospective to 9 June 1995. He held that the judgment of the High Court in L Shaddock & Associates Pty Limited v The Council of the City of Parramatta (1982) 151 CLR 590 established that the slip rule could be relied upon for this purpose, notwithstanding that s. 459R(3) has the effect to which reference has already been made. His Honour held that the slip rule was available to correct the error which had been made, and that there was no warrant for not exercising the Court's discretion in favour of correcting the error. Order 35 rule 7 of the Federal Court Rules is in the traditional form of a slip rule. It reflects the inherent or implied jurisdiction of a superior court of record 'at any time to correct an error in a decree or order arising from a slip or accidental omission': Milson v Carter [1893] AC 638 at 640. Order 35 rule 7 is in the following terms: '(1) The Court may vary or set aside a judgment or order before it has been entered. (2) The Court, where it is not exercising its appellate or related jurisdiction under Division 2 of Part III of the Act, may if it thinks fit vary or set aside a judgment or order after the order has been entered where - (a) the order has been made in the absence of a party, whether or not the absent party is in default of appearance or otherwise in default and whether or not the absent party had notice of the motion for the order; (b) the order was obtained by fraud; (c) the order is interlocutory; (d) the order is an injunction or for the appointment of a receiver; (e) the order does not reflect the intention of the Court; or (f) the party in whose favour the order was made consents. (3) A clerical mistake in a judgment or order, or an error arising in a judgment or order from an accidental slip or omission, may at any time be corrected by the Court. (4) Sub-rule (2) shall not affect the power of the Court to vary or terminate the operation of an order by a supplementary order.'

[15]

Gaudron J. cited the following passage from Coke on Littleton (Co Litt 260a): "Of courts of record you may read in my Reports: but yet during the terme wherein any judiciall act is done, the record remaineth in the brest of the judges of the court, and in their remembrance, and therefore the roll is alterable during that terme, as the judges shall direct; but when that terme is passt, then the record is in the roll, and admitteth no alteration, averment or proofe to the contrarie." See also Seton's Forms of Decrees, Judgments, and Orders in the High Court of Justice and Courts of Appeal, 4th ed., 1879, vol. 2, Pt 2, 1547-8; William Lawrie v George Lees [1881] 7 AC 19; Re Swire. Mellor v Swire [1885] 30 ChD 239; Henry William Hatton v Hugh Harris [1892] AC 547; Milson v Carter [1893] AC 638; MacCarthy v Agard [1933] 2 KB 417; and Gikas v Papanayiotou [1977] 2 NSWLR 944. The slip rule applies where the proposed amendment is one upon which no real difference of opinion can exist. It does not apply where the amendment is a matter of controversy; nor does it extend to mistakes that are the consequence of a deliberate decision: see Arnett v Holloway [1960] VR 22; Re Army and Navy Hotel [1886] 31 ChD 644; and Ivanhoe Gold Corp Limited v Symonds (1906) 4 CLR 642. The slip rule may be invoked irrespective of whether the order has been drawn up, passed and entered: Milson v Carter [1893] AC 638 at 640; Fritz v Hobson [1880] 14 ChD 542 at 560; Shaddock per Mason A.C.J., Wilson and Deane JJ. at 594-5; Gould v Vaggelas (1985) 157 CLR 215; and Tak Ming Co Limited v Yee Sang Metal Supplies Co [1973] 1 WLR 300. It is well settled 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 which the Court would have had, but for the failure that caused the accidental slip or omission: Symes v Commonwealth of Australia (1987) 89 FLR 356. The rule also extends to permit the correction of an order or decree where the omission results from the inadvertence of a party's legal representative: Fritz v Hobson [1880] 14 ChD 542 at 561-2; Chessum & Sons v Gordon [1901] 1 QB 694; Tak Ming Co Limited at 304; Shaddock per Mason A.C.J., Wilson and Deane JJ. at 594-5; and Gould v Vaggelas at 274‑275.

[16]

The circumstances in which the slip rule has been applied are numerous and varied. Examples of the application of the rule include amendments, to allow a proper order for costs: Armitage v Parsons [1908] 2 KB 410; to increase the amount of an award of damages: Storey & Keers Pty Limited v Johnstone (1987) 9 NSWLR 446; to permit a proper calculation of interest: Ninnis v Miller [1905] VLR 669; to permit a claim for interest to be added to the amount of the judgment: Shaddock; to order repayment of monies previously paid by the defendant where the subsequent appeal was upheld: Commonwealth of Australia v McCormack (1984) 155 CLR 273; to alter a wrong date or figure in the orders, where the parties and the Court both used the same wrong date or figure, but the correct figure had been available at the relevant time: Re J W Challand Pty Limited (1945) 62 WN (NSW) 166; and, to limit the time of an injunction's application: Shipwright v Clements (1890) WN 134. See also the Supreme Court Practice 1995 (UK) (the White Book) pp. 385-6, Notes 20/11/3 and 20/11/6. This case presents a problem with respect to s. 459R of the Corporations Law which, to my knowledge, has not previously been considered, though it has been considered in the context of provisions of the Bankruptcy Act 1966. The language of s. 459R(2) and (3) is the source of the argument of counsel for the appellant put on the two independent bases mentioned earlier: first, that the language of subsection (2) requires any application for an extension to be made before the expiry of the period as earlier extended; and secondly, that the application to wind up the appellant was dismissed by operation of subsection (3). In my opinion, the argument rests on a misconception of the nature and operation of the slip rule. 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. In the result, the registrar's order of 9 June 1995 embodied the correction of Sheppard J.'s subsequent order, so that the order of 9 June 1995 was corrected to extend the relevant period under s. 459R before the prescribed period had expired. 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. It may be trite, but it is worth repeating that the slip rule exists to avoid injustice (see Monaco v Arnedo Pty Limited, unreported, Full Court of the Supreme Court of Western Australia, 29 November 1994, per Malcolm C.J. at 5). The purpose of the rule would be denied if s. 459R operated to achieve the result for which the appellant contends. It is irrelevant that the later order of Sheppard J., which corrected the earlier order, was made after the expiration of the statutory time limit. The earlier order as corrected, and speaking by operation of the later order from the earlier date, operated with full force from a time which was within the statutory time frame. Sheppard J. relied strongly upon Shaddock to authorize the application of the slip rule. Shaddock involved O. 29 r. 11 of the High Court Rules, the equivalent of which is O. 35 r. 7 of the Federal Court Rules. Order 29 rule 11 empowers the High Court to correct an error arising in a judgment or order. The High Court said at 595 that it was within the power of the Court 'to amend the Court's previous order'. The order which the Court made was that there be 'included in the order of the Court' made on the previous occasion certain additional words. The approach of the High Court demonstrates the adoption by it of the view that, when the Court makes an order under the slip rule, that order has the effect of correcting the slip in the earlier order, and operates from the date of the earlier order. The legal operation of the later order is simply to correct a previous mistake. Once the later order speaks, the additional words are included in the earlier order; and the earlier order continues as the relevant and operative order.

[17]

Provisions such as s. 459R(2)(b) and (3) and s. 459G of the Corporations Law, and s. 52(3) and (5) of the Bankruptcy Act, reflect the intention of the Parliament that applications to wind up companies and petitions to sequestrate the estates of natural persons must be dealt with promptly. This evident purpose of the Parliament is not denied at all by the exercise by the Court of its power under the slip rule to correct accidental slips when justice requires that this be done. The Court has a discretion which it would be loathe to exercise except in clear cases. Prejudice to parties to the litigation, or to third parties, arising from uncertainty caused by delay in seeking to have the mistake corrected is one obvious matter which must be taken into account by the Court in the exercise of its discretion. But this says nothing about the power of the Court to make an order under the slip rule. An exercise of the power of the Court under the slip rule is ultimately to avoid injustice. This obvious purpose of the slip rule underlies a number of decisions of judges of this Court and of other courts including, with respect to the Bankruptcy Act, Streimer v Tamas (1981) 54 FLR 253; Re Draper; Ex parte Brosalco Pty Limited (1983) 48 ALR 656; Re Jago; Ex parte Paal Frame Pty Limited, unreported, Einfeld J., 28 February 1989; Re Van Coblyn; and Ex parte Mercantile Credits Limited, unreported, Einfeld J., 21 September 1992. There are judgments of single judges of this Court to the contrary of my opinion. In Re Hibbard; Ex parte Playroom Pty Limited; unreported, Pincus J., 5 December 1988, his Honour held that s. 52(5) of the Bankruptcy Act prevented the application of the slip rule because any order extending the life of the bankruptcy petition must be made before the expiration of the period of 12 months commencing on the date of the presentation of the petition. His Honour said that once the 12 months have expired an order could not be made thereafter under the slip rule, pre-dated to fall within the period of 12 months. I respectfully disagree with his Honour. To similar effect is the judgment of Heerey J. in Re Agushi; Ex parte Farrow Mortgage Services Pty Limited (In Liq) (1994) 126 ALR 704. As noted by the primary Judge, his Honour's judgment is not expressed as conclusively as that of Pincus J. in Re Hibbard on this point. In so far as it suggests that the slip rule cannot be applied in circumstances such as the present, I respectfully disagree. The reasons which I have given explaining the basis of the slip rule are inconsistent with the approach taken by their Honours in these two cases. In my opinion, 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; the earlier orders spoke from dates within the time period. Counsel for the appellant relied upon the following passage from the judgment of McLelland CJ. in Eq. in Re Australnet Limited (1994) 15 ACSR 394 at 396: 'The Court cannot of course make an order setting aside the dismissal of the winding up application, since the dismissal was affected not by an order of the Court, but by statutory enactment, and questions concerning the entry of an order of dismissal and the setting aside of a final order do not arise.'

[28]

When the proceedings were again before the Registrar on 9 June, by consent as between Bowater Tutt and Elyard it was ordered that Bowater Tutt be granted leave to withdraw, and by consent as between those parties and Needham the Registrar made the following orders: "1. The Notice of Motion filed by DDB Needham Sydney Pty Ltd ('DDB') be returnable immediately and that service be dispensed with. 2. DDB be substituted as applicant. 3. The substituted applicant amend the application accordingly. 4. The substituted applicant serve on the respondent the further amended application and any further affidavits on which he or she proposes to rely in support of the further amended application at or before 4pm, 13 June 1995. 5. The respondent file and serve on the substituted applicant a notice of appearance in accordance with Form 79, specifying any grounds of opposition and an affidavit verifying those grounds in accordance with Form 93A at or before 4pm, 15 June 1995. 6. Under Order 71, Rule 37(9) the requirement to publish a notice in accordance with Form 98 be dispensed with. 7. The proceedings be adjourned to 16 June 1995 to be listed with proceedings no. G3120 of 1995 and be returnable before a judge of the Court (Sheppard J). 8. Any affidavit in support of solvency to be filed and served by 15/6/95 midday. DATED: 9 June 1995". In consenting to these orders, Elyard as well as Needham necessarily contemplated that Needham's application for the winding up of Elyard would remain on foot and be capable of being determined after 9 June and at least down to 16 June. Likewise the Registrar, in making the orders. Otherwise, the consenting to and making of the orders were futile and nonsensical. As will appear from a facsimile transmission dated 15 June referred to in the next paragraph, at some time which the evidence did not identify precisely but which was no later than "the afternoon of 9 June 1995" Elyard's solicitors, Mavrakis & Associates ("Mavrakis"), held the view that s 459R of the Law had the effect that Needham's application was dismissed by the operation of that section in the absence of its being determined on 9 June. The evidence does not reveal precisely when on 9 June Mavrakis first held that opinion. But it does show that at some time on that afternoon, they advised Elyard of their view and that Elyard, no doubt relying on their advice, instructed them to do no further work in the matter. Mavrakis did not advise Allens of the problem until the day before the next day on which the proceedings were due to be before the Court. By facsimile transmission of 3.13 pm on 15 June 1995, Mavrakis advised Allens as follows: "We wish to advise that at tomorrows directions hearing we are instructed to draw the Courts attention to S459R of the Corporation Law. On our reading of this section, the application to wind up our client must now be dismissed. As a result of our reading of S459R, and our advice to that effect to our client, we were instructed on the afternoon of 9 June 1995 to do no further work in this matter. In relation to our client's application to set aside your client's statutory demand we would propose a timetable whereby our client files and serves all affidavits upon which it wishes to reply within say 3 weeks and your client files and serves any affidavits in reply within a further 3 week period. This will allow the Court to determine what debt if any is owed by our client to your client. If any debt is then owed and not paid by our client, it will then be possible for your client to bring an application to wind up our client."

[33]

The High Court's judgment was perfected by being entered. The plaintiffs came to appreciate that because of oversight on their part, there was a hiatus in respect of interest for the period between the date of Waddell J's decision (20 March 1978) and the date of the High Court's judgment (28 October 1981). They applied by motion in the High Court for an order that such interest be included in the judgment. On 22 October 1982 the High Court drew on the slip rule found in O 29 r 11 of the High Court Rules (the counterpart of this Court's O 35 sub-r 7 (3)) to include in the sum for which it had given judgment on 28 October 1981 an amount for interest in respect of that period. No issue was raised and therefore the Court was not called upon to address any question as to the retrospective effect of its order under the slip rule. Sheppard J noted an alternative ground on which the plaintiffs relied, namely that the Court should, pursuant to O 43 r 3 of the High Court Rules, ante-date its judgment on the appeal to the date of the trial judge's judgment. Order 43 r 3 provides as follows: "Rule 3 (1) When a judgment is pronounced by the Court, the entry of the judgment shall, subject to the next succeeding sub-rule, be dated as of the day on which the judgment is pronounced, unless the Court otherwise orders, and the judgment shall take effect from that date. (2) By special leave of the Court, a judgment may be ante-dated or post-dated." (cf O 35 r 3 of the Federal Court Rules which provides that "a judgment or order shall take effect on the date on which it is pronounced or made, unless the Court orders that it take effect at an earlier or later date".) Importantly for present purposes, the High Court noted that it was unnecessary to deal with this "ante-dating provision" in view of its conclusion that an order should be made under the slip rule. (It added that the application for an ante-dating order would have confronted formidable obstacles, citing authorities which show that a judgment made on the allowing of an appeal is not ante-dated merely by reason of its being substituted for the judgment appealed from, and that the discretion to ante-date is to be exercised only on good cause being shown.) Sheppard J held that Shaddock established that the slip rule could assist Needham notwithstanding sub-s 459R (3) of the Law, and said this: "It is true that the key to Shaddock's case lies in the construction of s 37 of the Judiciary Act considered by the High Court in the Shaddock case [s 37 provided, relevantly, that the High Court in the exercise of its appellate jurisdiction might modify the judgment appealed from and give such judgment as ought to have been given in the first instance]. The important point, however, is that, although the order of the High Court spoke from the date it was made, it was made in the terms in which it was because it corrected the slip or mistake made by counsel in not adverting to the question of interest between the date of the judgment at first instance and the date of the judgment of the High Court. The construction of s 37 of the Judiciary Act adopted by the High Court would not have availed the plaintiffs in Shaddock if it had not been for the High Court's application of the slip rule. It was the application of the rule which enabled the High Court to give the plaintiffs the remedy to which they would have been entitled if their counsel had asked for the relief in the course of the original argument. So here, the position needs to be looked at as it would have been if Needham's legal representative had done as had been intended and asked for an extension for the period provided for in subs 459R(1) of the Law. If that had been done, there can be no question but that the court would have acceded to the application. It would have been pointless not to do so. If an order for an extension of time had not been made, the other orders being made by the court, which were being made by consent, would have been of no utility." (at 131 ALR 222; 17 ACSR 722)

[37]

Although this ground of appeal was never withdrawn, counsel for Elyard conceded that if the seven-day extension had been applied for before the Registrar, it probably would have been granted. If the slip rule is effective and available as held by his Honour, the present case is, in my view, a strong one for its exercise. On 9 June 1995, both parties and the Registrar intended that the application should remain alive down to at least 16 June; the consenting to and making of the orders on 9 June were otherwise exercises in futility. An affidavit was sworn on behalf of Needham solely to support the obtaining of an extension of time and through oversight an order to that effect was not included in the notice of motion or short minutes of orders which Needham's solicitors prepared; Mavrakis was aware of Allens' oversight by, at the latest, the afternoon of 9 June when it remained possible for them to alert Allens and for Allens to approach the Court (outside normal Court hours if necessary) to obtain the order for extension. I am not persuaded by Elyard's submission that as a matter of discretion an extension would not have been ordered on 9 June because, in terms of sub-s 459R (2), the Court would not have been satisfied that "special circumstances" justified the extension. Apparently, Elyard would have consented to the extension; the period of the extension was only seven days; Needham was substituted as applicant in place of Bowater Tutt only on 9 June itself and the procedural steps referred to in paras 4-8 of the orders made on that date had to be taken in readiness for the hearing of the application. Against this background para 3 of the solicitor's affidavit sworn 8 June 1995 noted earlier would have established on 9 June the existence of "special circumstances" to support an order under sub-s 459R (2) extending the period within which the application was to be determined to 16 June. The case was a particularly strong one for the making of an order under sub-r 7 (3), on the assumption that such an order would be effective and the power to make it was available. Effect of order under slip rule In my view it is clear, as Sheppard J has observed, that where an order is properly made under the slip rule, its effect is that the "clerical mistake" or "error" in the original judgment or order is eradicated so that the original judgment or order is treated as having been always made as corrected. With respect, I think that his Honour was correct in holding that Shaddock is authority for this view. In Shaddock, the order which the High Court made on 22 October 1982 under the slip rule was as follows: "Order that there be included in the order of the court made 28 October 1981 after the words 'judgment for the plaintiffs in the sum of $173,938' the words 'and interest in the sum of $62,713'". The effect of this was that the judgment of the High Court pronounced on 28 October 1981 and entered in an amount of $173,938 had become a judgment pronounced on 28 October 1981 and entered for $236,651. So long as it remained unpaid, the full amount of $236,651 carried interest on judgment from the date of the entry of the judgment pronounced on 28 October 1981, not the date of the entry of the order which was made under the slip rule on 22 October 1982. The contrary construction of the slip rule and of the order made under it would signify that no interest would have accrued in respect of the intervening period. Indeed, in accordance with that construction, the Court could never, at least in reliance merely on the slip rule, overcome the problem of the non-accrual of interest in respect of the period intervening between the date of the judgment or order being corrected and the order correcting it (cf Nicol v Allyacht Spars Pty Ltd (No 2) (1988) 165 CLR 306 which was not a slip rule case). All the cases seem to have assumed that when an order under the slip rule is made, the correction speaks as from the date of the original judgment or order. Illustrations can be found in other cases like Shaddock in which the correction has been by way of the inclusion of interest previously omitted in a judgment or order (cf Tak Ming Co Ltd v Yee Sang Metal Supplies Co [1973] 1 All ER 569 (PC); Kewside Pty Ltd v Warman International Ltd (1990) ATPR 41-012 (FCA/French J)). A further illustration is found in In re Bickford Joinery Pty Ltd (1974) 7 SASR 438. On 14 May 1973 Hogarth J approved a scheme of compromise and arrangement under s 181 of the Companies Act 1962-1972 a copy of which appeared as a schedule to the order. Unfortunately, owing to a typographical error, cl 12 commenced "This scheme shall terminate on the 12th March 1973". There was evidence that the date always intended was 12 March 1974. The meeting of creditors at which the scheme had been approved had occurred, and as already noted his Honour's order was made, in each case after 12 March 1973. His Honour ordered on 7 March 1974 pursuant to the slip rule that "1974" be substituted for "1973" in cl 12 of the scheme. His Honour clearly assumed that the effect of this was that the scheme's currency as a Court approved scheme would be from 14 May 1973 to 12 March 1974 rather than only from 7 March 1974 to 12 March 1974. Availability of an order under the slip rule The question remains whether sub-ss 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. This was correctly treated by the parties as the most substantial issue raised by the case. It is a strong thing to hold that the rule is not available. Cases even more demanding of an order under the rule than the present one can be imagined. In submissions, Needham instanced the following. Assume that within the statutory period parties join in requesting a Registrar to make an extension order under sub-s 459R (2) by including provision for it in short minutes of orders signed by their legal representatives; that the Registrar is asked by those appearing to delete from the short minutes an order providing for the filing of affidavits; that the Registrar inadvertently deletes the order for extension of time instead and says "I make orders in accordance with short minutes of orders as amended and signed by me and placed with the papers"; and that the error is discovered only after the statutory period expires. Take another case: assume that the Registrar, intending to make an order by consent for extension to a particular date beyond the statutory period accidentally records a date still within that period and that the period expires without determination of the application (cf In re Bickford Joinery Pty Ltd (1974) 7 SASR 438 noted above). Elyard's submission must be that even in such cases, the inexorable effect of sub-ss 459R (2) and (3) is that upon expiry of the statutory period the application stands dismissed. I would attribute such an effect to those sub-sections only if it was clear that they and the slip rule cannot co-exist. There are authorities under the bankruptcy legislation which are instructive but do not speak with one voice. In Streimer the period allowed for compliance in a bankruptcy notice had been extended to expire on 6 April 1981. An application by the debtor to set aside the bankruptcy notice and an application by the creditor to set aside the orders extending the time were before the Court on that date. They were not reached in the list and the judge stood them over to the following day, but through oversight the debtor did not seek an order further extending the time for compliance with the notice. The creditor argued that after 6 April, the power given by sub-s 41 (6A) of the Bankruptcy Act 1966 to extend the time allowed by the notice was no longer available and further that any exercise of that power would be futile as the act of bankruptcy had already occurred. Deane and Ellicott JJ held that the express power given by sub-s 41 (6A) was still available. Sheppard J held that although it was not, the debtor was entitled to succeed on the ground that the case fell within "the court's inherent power to vary its own orders so as to carry its own meaning or to make its meaning plain" (at 37 ALR 222). Streimer was concerned with the time fixed in a bankruptcy notice. Other cases about to be noted relate to the lapse of a creditor's petition. Sub-sections 52 (4) and (5) are as follows: "(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 sub-section (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." In Re Draper; Ex parte Brosalco Pty Ltd (1983) 48 ALR 656, McGregor J held that pursuant to sub-s 33 (1) (c) of the Bankruptcy Act the life of the petition might be extended after expiry of the twelve months period. But as well, his Honour referred to Sheppard J's judgment in Streimer and said: "It may also be that I have power to make the order I propose by reference to inherent power. See per Sheppard J in Streimer at 223. The 'slip rule', as referred to in his Honour's judgment in that case may also apply, in the sense that the court proceeded up to the end of hearing upon the basis that the petition had not lapsed. Had the imminence of this been drawn to attention at an appropriate time, I would have extended its life pursuant to s 52 (5) and at least to such time as this judgment was given." (at 666)

[38]

In Re Young; Ex parte Smith (1985) 5 FCR 204, a Full Court of the Court disagreed with the holding in Re Draper, supra, that sub-s 33 (1) (c) provides the necessary power after expiry of the twelve month period notwithstanding sub-ss 52 (4) and (5). The Court observed that in Re Draper, McGregor J had also referred to the "slip rule" as a possible basis for the Court's power. It noted, however, that there could be no question of the slip rule's application on the facts of the case before it and so refrained from making any comment on the general question of its availability in the context of sub-ss 52 (4) and (5) (at 209). In Hibbard a bankruptcy petition was adjourned to a date outside the period of 12 months commencing on the date of presentation of the petition mentioned in sub-s 52 (4). Although none of the Bankruptcy Rules provided for correction of a slip, Pincus J described the power as "inherent". However, his Honour held that sub-s 52 (5)'s requirement that any order be made before expiration of the twelve-month period prevented invocation of this "inherent slip rule". His Honour thought that the wording of sub-s 52 (5) was significantly different from that of sub-s 41 (6A) considered in Streimer. In Re Jago; Ex parte Paal Frame Pty Ltd, unreported, 28 February 1989 a creditor's petition was, within the 12 month period, by consent expressed in short minutes of orders prepared by the parties, stood over to a date which lay beyond that period. Einfeld J said that if the matter had been drawn to the Court's notice, an order under sub-s 52 (5) would have been made. His Honour discussed the existence of the slip rule as an inherent power of the Court and its applicability in the circumstances. He exercised the power notwithstanding sub-s 52 (5) of the Bankruptcy Act. His Honour said this: " ... 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. In this case it is obvious that when the sequestration order was annulled on 8 November 1988, the petition would have been relisted before its expiry on 1 December 1988 to permit its valid rehearing if the parties had realised and drawn the Court's attention to the imminence of its expiry. On the authorities, this seems to me in principle to be a matter to which the slip rule may be applied. Respectfully contrary to the views of Pincus J [in Hibbard], it seems to me that if this did not permit an order to be made under section 52(5) extending the life of the petition in these circumstances, the rule would effectively become meaningless in contexts of this kind. That is not my understanding of the rule."

[39]

In Re Van Coblyn v Mercantile Credits Ltd, unreported, 21 September 1992, Einfeld J again, notwithstanding sub-s 52 (5) of the Bankruptcy Act, applied the inherent slip rule in a situation in which a creditor's petition had been adjourned to a date which took it beyond the 12 month period. The last case to be noted is the decision of Heerey J in Agushi. The facts of the case were somewhat different from those of other cases noted above in that the parties were not involved in the making of the order which took the creditor's petition outside the statutory period. Within that period a direction was made placing the case in the list of cases for hearing and the Registrar subsequently notified the parties that the case was fixed for hearing on a date some five months away. The date was in fact outside the 12 month period. Neither the Registrar nor the parties appreciated this until after the period had expired. Like Pincus J in Hibbard, Heerey J held that he had no power to make an order extending the period. He expressed the view that any relevant inherent or implied power was not available because it would be inconsistent with sub-s 52 (5) of the Bankruptcy Act. Although there is no express slip rule in the Bankruptcy Rules (O 2 sub-r 11 (1) of the Federal Court Rules provides that those Rules do not apply to proceedings under the Bankruptcy Act), the Court's power to correct its own judgments and orders when exercising bankruptcy jurisdiction is implied or inherent: Milson v Carter [1893] AC 638 (PC); Coppins v Helmers; Brambles Constructions Pty Ltd (Third Party) (1969) 72 SR (NSW) 273 (FC) at 277; and see Federal Court of Australia Act, 1976 (Cth), ss 22, 23. It may be, nonetheless, that Pincus J in Hibbard and Heerey J in Agushi would have approached the issue before them differently if it had arisen in the context of an express slip rule such as that in O 35 sub-r 7 (3). Be this as it may, I respectfully agree with Sheppard J that s 459R of the Law does not displace the slip rule found in O 35 sub-r 7 (3), and, with respect, I do not think that the approach taken in Hibbard and Agushi adequately recognises the true nature of the slip rule or the effect of the orders which it permits. Considerations touching both the Court's slip rule and the section of the Law lead me to this conclusion. The slip rule in O 35 sub-r 7 (3) should be read in the context of the preceding two sub-rules. Sub-rule 7 (1) gives the Court power to "vary or set aside a judgment or order before it has been entered". No limitations on or qualifications of this power are expressed. Sub-rule 7 (2) gives the Court power to vary or set aside a judgment or order even where it has been entered, but only in six situations specified in the sub-rule. The slip rule, sub-r 7 (3), applies whether a judgment or order has been entered or not. But as the scheme suggested by sub-rr 7 (1) and (2) might lead one to expect, the nature of the slip rule power, made available as it is in any case whatever where the judgment or order has been entered, is strictly confined. Unlike sub-rr 7 (1) and (2), sub-r 7 (3) does not give a power to set aside or vary. It addresses only "clerical mistakes" in a judgment or order and "errors arising in a judgment or order from an accidental slip or omission." These are situations in which, when the mistake, slip or omission comes to light, one might expect the response "Of course, it must be attended to. It is obvious. It goes without saying" (cf the test for implication of contractual terms enunciated by MacKinnon LJ in Shirlaw v Southern Foundries (1926) Ltd [1939] 2 KB 206 (CA) at 228). What this analysis emphasises in the context of the facts of the present case is firstly, 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. As I noted in Western Suburbs Electrical, s 459R is one of the provisions introduced into the Law as a result of the Australian Law Reform Commission's report on its General Insolvency Inquiry (1988) ALRC 45 ("the Harmer report"). The explanatory memorandum which accompanied the Bill which became the Corporate Law Reform Act 1992 (Cth) (Act No 210 of 1992) which inserted the present Part 5.4 (ss 459A-459T) in the Law, said this in relation to the then proposed s 459R (para 712): "An application for a company to be wound up in insolvency is to be determined within six months after it is made (proposed sub-section (1)). This is designed to ensure that decisions on a company's solvency are based on contemporaneous information. In relation to a statutory demand, for example, it would be inappropriate to order the winding up of a company on that basis on [sic -- of] non-compliance with a statutory demand made years ago."

[40]

The period of three months referred to in sub-s 459C (2) and the period of six months referred to in sub-s 459R (1) represent the legislature's definition of "contemporaneity" for this purpose. But s 459R expressly accepts that if the Court is satisfied that special circumstances justify an extension, the period may be extended. The word "only" in sub-s 459R (2) and the provision for automatic dismissal in sub-s 459R (3) are undoubtedly strong provisions. But I do not think that they or the policy which gave rise to them are set at nought in a situation in which the parties are before the Court on the last day of the statutory period; special circumstances exist justifying an extension; the parties and the Court intend that the application remain alive for a further seven days; orders are made by consent based upon and intended to give effect to that intention; even with the seven day extension, the statutory period will expire within one month of the expiry of the basic six month period; and the slip rule has to be invoked outside the current statutory period because full effect was not given to the Court's and the parties' intention by reason of the absence of an ancillary order under sub-s 459R (2). I conclude that the Court's slip rule found in O 35 sub-r 7 (3) is not rendered unavailable by s 459R of the Law. In Agushi, Heerey J expressed the view that in enacting sub-s 52 (5) of the Bankruptcy Act, Parliament must be taken to have contemplated that there would be human oversight and inadvertence. His Honour implies that Parliament must have intended that s 459G prevail over any provision such as that found in the slip rule designed to accommodate such oversight or inadvertence. However, with respect, I think that the view is equally tenable that Parliament, being taken to have contemplated human oversight and inadvertence, readily accepted that such a mechanism as the slip rule would co-exist, within its limited area of operation, with the statutory provision. 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. The terms and policy of s 459R as well as the special and limited scope of the slip rule must be borne in mind in any case where the Court is asked outside the statutory period to exercise its discretion to remedy the omission of an order within that period under sub-s 459R (2). It is not possible to identify all the factors which may be relevant to the exercise of the discretion. Consistently with the policy underlying s 459R referred to earlier one factor will be the length of the period beyond expiry of the period of six months that the application for winding up will remain alive. The appellant's case is that the power to make an order under the rule is excluded in all cases. In my view s 459R does not have that effect. General It remains to refer to two cases. I agree with the learned trial judge that my decision in Western Suburbs Electrical is distinguishable from the present case. It suffices to say that it is distinguishable because of the nature of the relief sought on motion by the applicant for winding up in that case and, consequentially, the way in which the case was argued. The parties did not address any submissions to the circumstances in which the Registrar made the order standing over the application for winding up to a date outside the statutory period. In particular, the applicant did not seek relief of a kind which would be produced by a successful invocation of the slip rule in relation to that order, namely, an order for extension of time. Rather, the applicant sought to overcome the expiry of the six month period and the statutory dismissal of its application, by seeking a "vacation" of an order which had been made within that period setting aside an earlier order in the proceedings for the winding up of the respondent and a "reinstatement" of that winding up order. The applicant accepted that if it did not succeed in obtaining this relief and thereby showing that its application had been "determined" within the six month period after all, the statutory dismissal operated. David Grant & Co Pty Ltd (Receiver Appointed) v Westpac Banking Corporation (1995) 131 ALR 353 (HC) is also distinguishable. The High Court there held that the requirement of s 459G of the Law that an application to set aside a statutory demand be made only within 21 days after service of it, is not supplemented or qualified by the operation of sub-s 1322 (4) (d) of the Law. Section 459G provides that a company may apply to the Court for an order setting aside a statutory demand served on it, only within 21 days after such service. Sub-section 1322 (4) (d) empowers the Court to extend the period for instituting or taking any proceeding under the Law or in relation to a corporation. This provision is not in the nature of a slip rule. The factual situation in cases where there has not been a timely application to set aside a statutory demand is far removed from circumstances covered by the slip rule. More particularly, the distinction is 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 (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.

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