Onefone Australia Pty Ltd v One.Tel Limited; Weston v Publishing and... [2007] NSWSC 1320 | Case summary

(1) Onefone Australia Pty Limited - First Plaintiff DCA Resources Australia Pty Limited - Second Plaintiff Pacific Finance Group Pty Limited - Third Plaintiff Concept Systems (Australia) Pty Limited - Fourth Plaintiff One.Tel Limited - First Defendant Steven Sherman - Second Defendant Peter Walker - Third Defendant (2) Paul Gerard Weston in his capacity as special purpose liquidator of One.Tel Limited - Plaintiff Publishing and Broadcasting Limited - First Defendant Consolidated Press Holdings Limited - Second Defendant Robbdoc Pty Limited - Third Defendant Toranaga Pty Limited - Fourth Defendant PARTIES : Cavalane Holdings Pty Limited - Fifth Defendant News Limited - Sixth Defendant Leteno Pty Limited - Seventh Defendant James Douglas Packer - Eighth Defendant Peter Wilson Yates - Ninth Defendant Lachlan Keith Murdoch - Tenth Defendant Peter John Macourt - Eleventh Defendant Kevin Beck - Twelfth Defendant Mark Alan Silbermann - Thirteenth Defendant Peter David Howell-Davies - Fourteenth Defendant Pirjo Hannele Kekalainen-Torvinen - Fifteenth Defendant Persons named in Schedule A trading as Freehills who are named in Schedule A to the Statement of Claim filed on 25 May 2007 - Sixteenth Defendant Persons named in Schedule B trading as Ernst & Young who are named in Schedule B to the Statement of Claim filed on 25 May 2007 Persons named in Schedule C trading as Ferrier Hodgson who are named in Schedule C to the Statement of Claim filed on 25 May 2007 - Eighteenth Defendant

1 The special purpose liquidator of One.Tel Limited has two applications pending before the court. It is necessary to describe them briefly before turning to the separate but related applications now before me. 2 The special purpose liquidator's first application is an application in proceedings 5291/03 for an order varying, mainly by way of extension in certain respects, the functions and powers of the special purpose liquidator. These were prescribed initially by the order which appointed him and have been varied from time to time by subsequent orders. 3 The special purpose liquidator's second application is an application in proceedings 2902/07 for an order extending the time within which originating process remains valid for service in those proceedings which are proceedings commenced by One.Tel, through the special purpose liquidator, against Publishing and Broadcasting Limited and others. As the nature of the application implies, there has as yet been no service of originating process on PBL and the other defendants. The originating process is a statement of claim filed on 25 May 2007. I shall refer to the proceedings initiated by that statement of claim as "the unserved proceedings". 4 In relation to each of these applications made by the special purpose liquidator, there is an application by seven of the defendants in the unserved proceedings (who, for convenience, I shall call "the PBL parties") for leave to be heard upon the hearing of the special purpose liquidator's application. 5 Different bases are put forward in each case in support of the proposition that the PBL parties should be heard. It is necessary to deal separately with the position of the PBL parties in relation to each of the two pending applications brought by the special purpose liquidator. 6 I deal first with the application by the PBL parties relating to the special purpose liquidator's application for an extension of the time within which originating process remains valid for service in the unserved proceedings. It is said by the PBL parties that, as the named defendants to the unserved proceedings, they have an obvious and direct interest in those proceedings and, therefore, in the question whether the time for service of the statement of claim should be extended. 7 The PBL parties say that s.23 of the Supreme Court Act 1970 is a source of jurisdiction for the court to order that they be given a right of audience when the special purpose liquidator brings before the court the question of extension of the time for service. There is, of course, some debate about whether s 23 merely puts into express statutory form what is in any event the court's inherent jurisdiction. I do not need to enter into that debate here. Iit is sufficient to assume that there is a general correspondence between the s 23 jurisdiction and the inherent jurisdiction. 8 As Mr Robb QC has pointed out on behalf of the special purpose liquidator, questions of intervention in proceedings before the court were considered by the Court of Appeal in Corporate Affairs Commission v Bradley [1974] 1 NSWLR 391. It was there held that there is no inherent power in the Supreme Court to permit intervention in proceedings. It follows I think that, unless a particular provision envisages intervention and is relied on, there should be no intervention. I do not regard s 23 and its general specification as a particular provision in this sense. 9 There is, in any event, a strong indication in the rules of the court themselves that a person named as a defendant in unserved originating process is not intended to be heard on an application for extension of the time for which the process remains valid for service. Rule 12.11(1)(e) of the Uniform Civil Procedure Rules 2005 is in these terms: "In any proceedings, the court may make any of the following orders on the application of a defendant: ... (e) an order discharging any order extending the validity for service of the originating process." 10 This, it seems to me, recognizes the obvious point that there will be cases in which filed but unserved process is never served. Unless and until a filed process is served, the defendant has not been drawn into the proceeding. The rule works on the basis that the named defendant is a non-participant in the process by which the court decides whether the time for service should be extended and that a defendant's interest in that question, if there is any, is something that is to be aired and dealt with after the event - that is, when the plaintiff has, by service, shown that it does in truth draw the defendant into the proceeding. 11 To put this another way, a defendant who has been served and who is thereby given a definitive status in relation to proceedings which it is by then clear will be pursued should be heard only retrospectively on the question of extension of time for service, assuming he or she wishes to be heard at all. 12 This is, to my mind, an example of a situation in which the rules of court expressly put to one side the general expectation that affected persons should be heard before any order affecting them is made. The expectation evidenced by the rules in this area is one of being heard after the event, not before the event, in much the same way as one might expect in relation to, for example, a subpoena. Much time and effort could be wasted if an unserved defendant were heard on a question that would become entirely academic if the plaintiff eventually decided not to serve at all. 13 Leave to be heard will not be granted to the PBL parties in relation to the application by the special purpose liquidator for an extension of time within which the originating process in proceedings 2902/07 remains valid for service. 14 I consider next the application of the PBL parties for leave to be heard in proceedings 5291/03 upon the special purpose liquidator's pending application for an order varying the functions and powers of the special purpose liquidator. The variation or extension to be sought is, in general terms, such as to enable the special purpose liquidator to pursue the application for an extension of the time for service and to take certain steps along the way to a decision whether to serve the statement of claim in the unserved proceedings (including, potentially, amendment of the statement of claim). 15 In that case, it is accepted on both sides that there is an applicable rule regarding intervention, being rule 2.13(1) of the Supreme Court (Corporations) Rules 1999: "(1) The Court may grant leave to any person who is, or who claims to be: (a) a creditor, contributory or officer of a corporation, or (b) an officer of a creditor, or contributory, of a corporation, or (c) any other interested person, to be heard in a proceeding without becoming a party to the proceeding." 16 The PBL parties - or, in some cases, subsets of them - claim to have status under this rule in various ways. In the first place, three of them are shareholders and therefore contributories of One.Tel, a status clearly recognized by rule 2.13(1). 17 Second, all of them are named as defendants in the unserved proceedings and therefore have an interest, in a general sense, in the question whether the special purpose liquidator's functions and powers are extended in ways relevant to the progressing and possible expansion of the unserved proceedings. 18 Third, some of the PBL parties or their associates have been subject to Part 5.9 examination by the special purpose liquidator and they or others associated with the PBL parties may possibly be subject to new or further examination, which examination, they fear, may overstep proper boundaries. They refer to the well-known principle that examination may not be a dress rehearsal for cross-examination. Also, in the present context where there is apparently a parallel proceeding on foot at the instigation of a private litigant, they maintain that examination by a liquidator would be improperly undertaken if undertaken to assist that litigant in that litigation. 19 I pause to remember that what will ultimately be before the court upon the second of the special purpose liquidator's pending applications is the question whether the special purpose liquidator's functions and powers should be varied. The special purpose liquidator is in a position different from that occupied by a liquidator appointed and acting in the ordinary course. The functions and powers of a liquidator appointed and acting in the ordinary course would extend to all the aspects of the activity to which the special purpose liquidator's application relates. And this would be so in the absence of any court order expressly conferring the functions and powers. It is only because of the unusual circumstances of the appointment of the special purpose liquidator and the definition of his functions and powers by orders of the court that any need for this application arises. 20 The central question on the application the special purpose liquidator wishes to pursue is whether the special purposes for which he has been appointed will be served and enhanced by the extension or variation of functions and powers sought. 21 To the extent that examinations may be undertaken, that will be a product of yet further and separate applications made by the special purpose liquidator in the exercise of the extended powers and in furtherance of the extended functions, assuming the extensions are made. The question whether particular examinations might, for example, entail an abuse of process would logically be addressed if and when those particular examinations were initiated, not when the question before the court was the general question whether the purposes of the appointment will be served by pursuing examinations of a particular kind or on a particular subject. 22 I come back, then, to the several capacities said by the PBL parties to justify an order giving them leave under rule 2.13(1) to be heard on the special purpose liquidator's application for variation or extension of his powers and functions. The capacity or status of a member or contributory may be rejected at once as insufficient. This company is insolvent. Its members have no tangible financial interest in the conduct of its winding up. These particular members do not stand apart from any of the other members of One.Tel which, after all, was a listed public company presumably with thousands of shareholders. 23 There is then the status or capacity as persons named as defendants in the unserved proceedings. For the reasons I have already given in relation to the other application, that status or capacity is insufficient. One matter involved in the extension of functions application is whether the functions or powers of the special purpose liquidator should be enlarged to enable him to make the extension of time application on which I have already said that no right of audience should be given to the PBL parties. The same result should follow in relation to a right of audience in relation to the anterior application for extension of functions and powers. 24 The status or capacity of some of the PBL parties as persons who are (or are associated with) examinees or potential examinees is also insufficient to warrant grant of a right of audience upon the hearing of the application for extension of powers and functions. As I have said, they will have the chance to challenge moves or further moves to examine them in the ordinary course if and when those moves are made in the ordinary course. 25 In summary, I see no good reason why the PBL parties should be regarded as having such an interest as to make it necessary or desirable that they be heard on the question whether the special purpose liquidator's functions and powers should be extended to allow him to put into motion processes which any other liquidator could put into motion as a matter of course and without assistance from the court. 26 The application of the PBL parties in proceedings 5291/03 for an order granting leave under rule 2.13(1) in relation to the special purpose liquidator's application for an order extending and varying his powers is refused.

Onefone Australia Pty Ltd v One.Tel Limited; Weston v Publishing and Broadcasting Limited

At a glance

Court

Decision date

Before

Source

Judgment (15 paragraphs)

Cited By (13)