Plaintiff v Defendant

1 The originating process sought orders pursuant to s 601AH(2) of the Corporations Act 2001 (Cth) ('the Corporations Act') directing Australian Securities and Investments Commission ('ASIC') to reinstate the registration of Fuji Fuels Pty Ltd (In Liq). In addition, the plaintiff sought leave pursuant to s 471B granting leave, nunc pro tunc, to proceed under the generally endorsed writ dated 13 September 2016 and the County Court application CI-16-04119 filed on 14 September 2016.

2 Given that the primary application concerns an action pursuant to s 601AH(2) of the Corporations Act, the key question for determination is whether the Court is satisfied that it is just to reinstate the company's registration. This necessarily requires consideration of the following issues:

(a) whether the plaintiff is a 'person aggrieved by the deregistration' for the purposes of s 601AH(2)?

(b) whether leave should be granted, nunc pro tunc, pursuant to s 500(2) of the Corporations Act in order for the plaintiff to pursue the County Court proceeding against Fuji (if reinstated)?

(i) whether the plaintiff's claim is statute barred?

(ii) whether the court should exercise its discretion to grant leave in these circumstances?

3 On 6 October 2010 an explosion occurred at Fuji Fuels' premises and, the plaintiff contends that the resulting fireball and debris encroached upon the plaintiff's premises causing loss and damage.

4 Zurich Australian Insurance Ltd was the plaintiff's insurer. I take it that Zurich has indemnified the plaintiff and has been subrogated to the plaintiff's claim, pursuant to the provisions of its insurance policy.. The subrogation would entitle Zurich to prosecute the proceeding in the County Court in the name of the plaintiff.

5 Newline Underwriting Management Ltd is the insurer of Fuji Fuels.

7 On 17 February 2012, voluntary administrators were appointed to Fuji Fuels.

8 On 26 March 2012, liquidators were appointed to Fuji Fuels pursuant to a creditors' voluntary winding up. (Hence the appropriate section to proceed for granting leave is s 500(2), not s 471B).

9 On 2 July 2012, Zurich made demand of Fuji Fuels. That demand included:

If you are insured for such loss, please complete the section below and return it to us. We will then take this matter up with your insurer direct saving further inconvenience. ...

10 On 18 October 2013, Zurich's solicitors sent a letter to Paul Quinn of McLardy McShane. That letter attached a copy of the letter of demand to the liquidators of Fuji Fuels and noted:

In response to our letter of demand, the liquidators have identified your firm as Fuji Fuels insurance broker.

11 On 27 October 2014, Zurich's solicitors wrote to Newline's solicitors seeking a response or payment of $300,000 within the next seven days.

12 On 28 November 2014, Newline's solicitors sent a letter to Zurich's solicitors which outlined the reasons that Fuji Fuels is not liable and sought withdrawal of the claims.

13 On 29 May 2015, Newline's solicitors sent a letter to Zurich's solicitors setting out Newline's position denying liability and questioning the quantum.

14 On 10 August 2015, Zurich's solicitors sent a letter to Newline's solicitors setting out its position as to why Fuji Fuels is liable and how the sum of $300,000 was arrived at. Zurich repeated its demand for $300,000 plus costs. The letter concluded:

If Newline continues to deny liability, we will seek instructions to commence recovery proceedings forthwith.

15 On 14 September 2016, a generally endorsed writ was filed in the County Court.

16 On 6 October 2016, the limitation period as set out in s 5 of the Limitation of Actions Act 1958 (Vic) expired.

18 On 19 January 2017, the plaintiff's solicitors wrote to Newline's solicitors.

19 On 27 January 2017, Newline's solicitors wrote to the plaintiff's solicitors which noted:

1. We acknowledge your letter of 19 January 2017.

2. We note that the file rests with our letter of 15 January 2016.

3. Since then, of course, the limitation period has expired. ...

1. To enable us to take instructions on your letter under reply, we request that you provide to us a copy of the Writ as issued (the final paragraph on page 2 of your letter refers).

20 On 27 January 2017, a copy of the writ was provided. The letter enclosing the same did not purport to effect service.

21 On 8 February 2017, Newline's solicitors wrote to the plaintiff's solicitors including:

1. We refer to your letter of 7 February 2017.

1. We confirm our original request for a copy of the requisite antecedent order. If the leave of the Court has not been obtained to issue, then the Writ is a nullity.

22 On 8, 9 and 10 February 2017, correspondence passed between the solicitors dealing with the issue of whether there is jurisdiction to grant leave. The transmission from the plaintiff's solicitors dated 9 February 2017 includes:

We are in the process of making an application for reinstatement of your client and seeking leave to validate the proceedings. That is to say, no Order has yet been obtained.

23 On 2 March 2017, the plaintiff's solicitors wrote to Newline's solicitors setting out the plaintiff's position with respect to the Limitation of Actions Act 1958 (Vic). That position is that the claim was not statute barred. Reliance was placed upon Pagnon v WorkCover Queensland ('Pagnon').[1]

24 On 6 March 2017, Newline's solicitors wrote to the plaintiff's solicitors joining issue with the position in relation to the limitation period.

25 On 19 April 2017, originating process was filed in this proceeding. The originating process was not served upon the liquidators for leave to proceed. The plaintiff proposes to appoint Mr Andrews as liquidator if the reinstatement order is made.

26 Section 601AH(2) of the Corporations Act:

601AH Reinstatement

Reinstatement by ASIC

(1) ...

Reinstatement by Court

(2) The Court may make an order that ASIC reinstate the registration of a company if:

(a) an application for reinstatement is made to the Court by:

(i) a person aggrieved by the deregistration; or

(ii) a former liquidator of the company; and

(b) the Court is satisfied that it is just that the company's registration be reinstated.

(3) If:

(a) ...

(b) the Court makes an order under subsection (2);

the Court may:

(c) validate anything done during the period:

(i) beginning when the company was deregistered; and

(ii) ending when the company's registration was reinstated; and

(d) make any other order it considers appropriate.

27 Section 601AG of the Corporations Act:

A person may recover from the insurer of a company that is deregistered an amount that was payable to the company under the insurance contract if

(a) the company had a liability to the person; and

(b) the insurance contract covered that liability immediately before deregistration.

28 Section 500(2) of the Corporations Act:

500 Execution and civil proceedings

...

(2) After the passing of the resolution for voluntary winding up, no action or other civil proceeding is to be proceeded with or commenced against the company except by leave of the Court and subject to such terms as the Court imposes.

...

29 Section 5 of the Limitation of Actions Act 1958 (Vic):

5 Contracts and torts

(1) The following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued -

(a) Subject to subsections (1AAA), (1AA) and (1A), actions founded on simple contract (including contract implied in law) or actions founded on tort including actions for damages for breach of a statutory duty;

...

30 The issue of standing does not appear to be an area in contention in these proceedings. However, I will address it briefly. In Chalker v Clark,[2] Whelan J said:

It is often not appropriate for prospective defendants to a proceeding proposed to be pursued after reinstatement of a deregistered company to be permitted to make submissions as to the merits of the proposed action on the reinstatement application. In some circumstances it is appropriate to entertain such submissions; for example, where it can be demonstrated that reinstatement is futile as the proposed cause of action is clearly statute barred.[3]

31 The plaintiff, quite properly, did not cavil with the proposition that Newline was entitled to be heard in relation to the application. In any event I would have, following Whelan J, determined that it was appropriate in these circumstances.

32 Zurich having indemnified the plaintiff in relation to the incident on 6 October 2010, stands in the shoes of the plaintiff. Zurich is entitled to prosecute this application in the name of the plaintiff and seeks reinstatement of and leave to proceed against Fuji Fuels to enable it to recover the amounts from Fuji Fuels. In reality, the recovery will be from Fuji Fuels' insurer, Newline. As such, Newline is directly affected by any order made on this application.

33 Two main issues for consideration arise in an application under s 601AH to reinstate, namely, whether the application is made by 'a person aggrieved' and whether the Court is satisfied that 'it is just' that the company's registration be reinstated.

34 In relation to the first question, the plaintiff, having suffered damage as a result of the explosion of Fuji Fuels' premises, is clearly a 'person aggrieved' to the extent that it has a claim against Fuji Fuels for recompense.

35 In relation to the question of whether 'it is just' to reinstate, the Court's discretion is wide. As was explained in Australian Competition and Consumer Commission v Australian Securities and Investments Commission:

The wording of the section is very broad, and the cases confirm that it gives the court a wide discretion. The court takes into account the circumstances in which the company came to be dissolved; whether, if the order were made, good use could be made of it; and whether any person is likely to be prejudiced by the reinstatement.

These matters are only factors to be weighed in the exercise of the court's discretion. They are not limits on the court's power. Here, the reinstatement is likely to lead to the company being joined in proceedings in which the ACCC will seek orders for pecuniary penalties against it. The company may therefore be prejudiced. The court may nevertheless conclude that it is just that the company's registration be reinstated, having regard (for example) to the strong public interest which is involved. It is appropriate for the court to take into account questions of public interest in exercising its discretion under s 601AH.[4]

36 In Chalker v Clark,[5] Maxwell P said:

It follows the application for reinstatement was a device to escape the application of a limitation period, in circumstances where the limitation period should operate to secure the purpose for which it is established, that is to say, to protect the defendants against litigation being commenced too long after the events the subject of the litigation. I cannot imagine that a court would have allowed s 601AH(3) to be used in that way. [6]

37 The comments by Maxwell P are consistent with the policy consideration enunciated by Ormiston JA in Pagnon.[7]

38 The determination of whether leave nunc pro tunc should be granted is relevant to the assessment of whether the company's registration should be reinstated, given that if leave is refused, such reinstatement would be futile, as the claim by the plaintiff will not be able to be prosecuted in curial proceedings.

Should leave be granted, nunc pro tunc, pursuant to s 500(2) of the Corporations Act in order for the plaintiff to pursue the County Court proceeding against Fuji (if reinstated)?

39 The first question to be determined in relation to this issue is whether the plaintiff's claim is statute barred pursuant to s 5 of the Limitation of Actions Act 1958 (Vic). Prima facie, the limitation period with respect to the incident on 6 October 2010 expired on 6 October 2016. However, the plaintiff submitted that the limitation period ceased to run on 20 February 2012, which was when Fuji Fuels was placed into administration or on 26 March 2012, when Fuji Fuels was wound up by resolution of the creditors.

40 The plaintiff seeks to rely on Pagnon to support an alternative argument that it might have a claim pursuant to s 601AG of the Corporations Act. It is submitted that the relevant time for determining a liability pursuant to this section is at or immediately before deregistration.

41 Essentially, in relation to s 601AH(3)(b), Pagnon is authority that the court can order that, in a case where a claimant against the company was not statute barred at the time of deregistration, the period between the deregistration and reinstatement should not be counted for the purpose of the limitation statute, approving Megarry J in Re Lindsay Bowman Ltd.[8] The Court of Appeal held:

That under s 601AH of the Corporations Law a person claiming damages for personal injuries against a deregistered company as his former employer might apply to the Court for orders that its registration be reinstated and that the time between deregistration and reinstatement not be counted for the purposes of the Limitation of Actions Act 1974.[9]

42 I note that in Pagnon, unlike the present case, s 601AH(3)(B) was not in contest_,_ as the case concerned an application pursuant to s 186 of the Workers' Compensation Act 1990 (now repealed). Throughout the course of the judgment, McPherson JA referred to a number of cases which concerned legislative provisions of the same type as s 186; canvassed authorities dealing with the consequences for a limitation period of a defendant company's being deregistered; and referred to ss 601AH(2) and (3) - then of the Corporations Law, now of the Corporations Act - concerning the court's power to order reinstatement and to make 'appropriate' consequential orders inter alia that the time for which the company was deregistered should not count for the purposes of a limitation period. The court states that had the plaintiff in Pagnon relied on this section, it would have been successful.[10]

43 However, for the following reasons, Pagnon can be distinguished from the present case. Firstly, the claim in Pagnon was not statute barred at the time of deregistration, but instead it had expired at the time of the s 186(1) action. In the present case, the relevant limitation expiry was on the 6 October 2016, pursuant to s 5 of the Limitation of Actions Act 1958 (Vic). Deregistration of the company occurred on 7 January 2017. Therefore, the claim was statute barred prior to the deregistration of the company.

44 Secondly, the circumstances in Pagnon did not give rise to the unexplained delay by the plaintiff in the present case.

45 Finally, reliance was placed by the plaintiff on the fact that the court in Pagnon cited Motor Terms Co Ltd v Liberty Insurance Ltd (in liq)('Motor Terms') as support for the proposition that 'a cause of action is available at the time of the petition (or, as at the time of the winding up order since the Corporate Law Reform Act 1992) remains a liability.'[11]

46 The ratio in Motor Terms was that there had been an acknowledgement of the debt sufficient to take it out of the statute of limitations. Barwick CJ, Taylor and Menzies JJ (Kitto J contra and Owen J expressing no opinion) held that an order for the winding up of a company under the applicable Act may be made on the petition of a creditor whose debt has become statute barred between the date of the presentation of the petition and the date of the making of the winding up order. Barwick CJ and Taylor J further held that the commencement of the winding up, namely the date of the presentation of the petition, is the date at which to determine the creditors and at which to adjust their rights.

47 Putting aside the acknowledgement of the debt; the status of a petitioning creditor; and the argument about payment of interest extending the limitation period; the proposition which can be distilled from Motor Terms and the cases referred to therein is that a debt which is statute barred prior to the commencement of the winding up is not provable in the liquidation. A debt which was not barred at the commencement of the winding up may still be proved in the liquidation, even if it is proved after the debt would ordinarily be statute barred (that is, irrecoverable by action). That proposition was accepted by Kitto J who did not agree with Barwick CJ, Taylor and Menzies JJ with respect to the position of the petitioning creditor. Motor Terms does not stand for the proposition that the time prescribed by the statute of limitations ceases to run on liquidation.

48 In any event, Motor Terms was confined to the issue of whether an order for winding up could be made on a claim which was not statute barred at the time of presentation. It does not answer whether a claim could be made after the expiration of the limitation period. Therefore, the facts are distinguishable from the present, as the court in Motor Terms were concerned with ascertaining the date to which the determination of standing to apply for the winding up of the company could be made, whereas the present case is not concerned with whether a creditor has such standing.

49 Furthermore, the plaintiff's submission in relation to Pagnon neglects the context in which the court made reference to Motor Terms, as the discussion of Motor Terms was directed at the previous process of winding up, prior to the new statutory regime. After discussing Motor Terms in that context, the court in Pagnon then goes on to state the current position pursuant to s 601AH, which is that the period between deregistration and reinstatement should not be counted for the purpose of the limitation statute (emphasis added). For these reasons, I am satisfied that both Pagnon and Motor Terms do not support the plaintiff's submissions in the way contended.

The courts in cases cited by Almario and Mercer, entirely failed to consider the High Court in Motor Terms.

Due to the Court's failure in Almario and Mercer to even consider the High Court authority on the issue, the Court in each case fell into error.

51 In Almario v Alliance Australia Workers Compensation (NSW) Insurance Ltd ('Almario'),[12] the injured employee relied on s 151D(2) of the NSW Workers Compensation Act 1987 and s 601AG of the Corporations Act to bring an action against the insurer of the employer. Section 151D(2) of the Workers Compensation Act 1987 (NSW) provided for a 3-year limitation period. However, the limitation period could be extended by application to the court. At the time the claim was brought, the 3-year limitation period had expired. The Court took a purposive approach in construing s 601AG and held that the section should be read as 'a person may recover from the insurer of a company that is de-registered (as if the insurer was the deregistered company) an amount that was payable to the company under the insurance contract.'[13] Further, the Court held that it would be open for the insurer to rely on the limitation defence afforded by s 151D(2). At the same time, the applicant was entitled to apply for extension under the same section.[14]

52 In Alliance Australia Insurance Ltd v Mercer ('Mercer'),[15] the trial Judge held that the plaintiff's claim was not time barred at the time the proceeding was brought or at the time of the company's deregistration. The Trial Judge's earlier determination was appealed on the finding of the 'date of discoverability' and the appeal was successful. This case is of little assistance to the present, as the central issue was the operation of the Limitation Act in context of the date of discovery and the accrual of the cause of action.

53 In the present case, there is no ascertainable provision that allows the court to extend the limitation period, such as that in Almario. Whilst the plaintiff did not submit that the limitation period could be extended, it is contended that the limitation period had not yet expired by reason of the commencement of the liquidation of Fuji Fuels. Alternatively, it was argued that leave ought to be given nunc pro tunc. In these circumstances, it is trite to say that s 500(2) of the Corporations Act does not grant the Court the power to extend the limitation period. The limitation period expired after the commencement of the County Court proceeding and before the leave application was made pursuant to s 500(2). For these reasons, I reject the plaintiff's submission that the court fell into error in Almario and Mercer in the manner contended.

Should the court exercise its discretion to grant leave in these circumstances?

54 The determination of whether to grant leave pursuant to s 500(2) of the Corporations Act is discretionary. The range of factors relevant to the exercise of the discretion were succinctly summarised by Derham AsJ in TimberCorp Finance Pty Ltd (In Liq) v Vivian.[16]

Although s 500 of the Corporations Act is silent as to the principles under which leave to proceed will be granted, there are many authorities that establish a range of principles and factors relevant to the exercise of the discretion to grant leave, as follows:

(a) the prohibition on proceedings without the grant of leave is intended to give effect to the statutory policy of ensuring that the assets are distributed rateably amongst all creditors so that no creditor will obtain an advantage over another;

(b) the purpose of the provision is to prevent a company in liquidation being potentially unnecessarily subjected to actions that are expensive and, therefore, carried on at the expense of the company creditors;

(c) the liquidator's attention and resources should not be diverted into expending substantial funds on defending proceedings by those with claims against the company when there is a simpler procedure available, namely, calling for and adjudicating upon creditors' proofs of debt, with a right of appeal under s 1321 of the Corporations Act;

(d) there is, in effect, a presumption in favour of leaving those with claims against companies in liquidation to the ordinary proof of debt procedure which is, generally speaking, a cheaper and more efficient way of resolving their claims;

(e) the starting point is that a claimant must lodge a proof of debt unless that person can demonstrate there is good reason to depart from that procedure;

(f) in determining whether leave should be granted, the Court considers whether the balance of convenience lies in allowing the applicant to proceed by way of action to judgment, or whether the applicant should be left to pursue their claim by lodging a proof of debt with the liquidator. This is a discretionary matter and the onus is on the applicant to demonstrate why it is more appropriate, to proceed by way of action;

(g) there must be a serious or substantial question to be tried and the claim must not be futile. This has been expressed in different ways as 'that the claim has a solid foundation and gives rise to a serious dispute', and as akin to the test used in considering whether interlocutory relief should be granted 'a serious question to be tried'. There must be evidence establishing the basis for the existence of a serious question to be tried. Mere assertion, which is unsupported by a solid foundation, will not suffice. However, an applicant is not required to adduce evidence of every element of its claim because to impose that burden would be to shut out many meritorious claims;

(h) claims for unliquidated damages for misleading or deceptive conduct, for breach of contract or for tort are admissible to proof in a liquidation; and

(i) it is impossible to state exhaustively the circumstances in which the Court should exercise its discretion to grant leave to proceed. However, in determining whether leave to proceed should be granted, generally relevant factors will include:

(iv) the amount, nature and seriousness of the claim;

(v) the degree of complexity of the legal and factual issues involved;

(vi) whether the relief is not otherwise available to the applicant except by application to the Court;

(vii) the stage to which the proceedings, if already commenced, may have progressed;

(viii) in the case of a counterclaim (or cross-claim), whether it arises out of the same factual matrix as the claims made in the primary proceedings;

(ix) whether there is a risk that the same issues would be re-litigated if the claims were to be the subject of a proof of debt;

(x) whether the proceedings will result in prejudice to the creditors;

(xi) whether the company has a policy of insurance from which any judgment will be paid;

(xii) whether the claim is in the nature of a test case for the interest of a large class of potential claimants;

(xiii) whether the grant of leave will unleash an 'avalanche of litigation';

(xiv) whether the cost of the hearing will be disproportionate to the company's resources;

(xv) delay; and

(xvi) whether pre-trial procedures, such as discovery and interrogatories, are likely to be required or be beneficial.

Where there is an insurance company standing behind the company to pay any judgment which the claimant may obtain, that is a factor strongly favouring the grant of leave. In such circumstances, the proceedings will generally cause no prejudice, either procedural or substantive, to the other creditors.[17] [citations omitted]

56 As in the present case, Derham AsJ was also required to grapple with claims that were statute barred. At [47] his Honour stated:

It seems to be clear that the limitation period applicable to the defendant's claim for breach of the implied contractual warranties is statute barred. The grant of leave to proceed against Timbercorp Finance will be conditional upon that claim being removed from the defence and proposed counterclaim. In other respects, I refer to my consideration of the limitation of actions issue in respect of the application for leave to proceed against Timbercorp Securities.

57 Having excluded the statute barred claims against Timbercorp Finance, in relation to claims against TimberCorp Securities, his Honour said:[18]

There are insufficient facts before me to enable a confident conclusion as to the circumstances in which damage was sustained by the defendant, or he became entitled to compensation, to justify an answer to the question when the several causes of action accrued. This is a case where the cautionary words of the plurality in the High Court apply:

We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question. Magman International illustrates the problems which can arise, particularly in a case involving foreign loans.[19]

58 This is not a case where it is necessary to heed these cautionary words. Apart from the general submission by the plaintiff that an application for leave to proceed and reinstatement is not the appropriate vehicle to decide any limitation point and the general statement that at trial evidence might be advanced which may have some bearing on the limitation question; nothing was put to me to seriously challenge the expiry of the limitation period or any basis upon which it might be extended. Nor was there any submission advanced to adequately explain the reason for the plaintiff's delay in pursuing the action. The primary submission was that the limitation period was suspended by virtue of the liquidation. Given the lack of substantial argument raised in relation to this point, it is appropriate that I proceed on the basis that the limitation period has expired.

59 In terms of exercising the court's discretion to grant leave in these circumstances, Derham AsJ referred to Re Coastal Constructions Pty Ltd (In Liq),[20] where White J stated in relation to insurance:

Leave is more likely to be granted where there is an insurance company standing behind the company to pay any judgment which the plaintiff may obtain against it. If successful, such an action is unlikely to prejudice the creditors or the company: Re Sydney Formworks Pty Ltd (In Liq)...; Re AJ Benjamin (In Liq)...The section is not designed to protect an insurer.[21] [emphasis added]

Leave may be granted after the expiry of the relevant period of limitation, to continue an action commenced within the limitation period without leave of the Court.

61 It seems that White J relied upon a similar statement set out in Ex parte Walker.[22] No authority is set out for that proposition, and each statement is inconsistent with subsequent decisions.

62 In Hartley Poynton Ltd v Ali,[23] the Court of Appeal was required to consider the effect of a nunc pro tunc order to resurrect barred substantive rights.

63 Although this case did not specifically consider s 500(2) of the Corporations Act, it provides a comprehensive account of the history and rationale of the power of a superior court to give judgment or make an order nunc pro tunc. To this end, Ormiston JA considered authorities including that of Mahoney JA in El Ali v Government Insurance Office of New South Wales.[24] After noting Mahoney JA's analysis of the historical basis for nunc pro tunc orders, Ormiston JA said:

His Honour's description usefully demonstrates why so many of the cases which purport to permit orders nunc pro tunc have relatively little effect on the legal rights of the parties other than those prescribed by court rules or practices.[25] Care should be taken when examining cases which have used the fiction to overcome procedural oversights, which at times require benevolent intervention by the courts: See the recent analysis of the policy underlying this approach by McColl JA in Walshe v Prest.[26] Where substantive rights are in issue quite different considerations arise.

The purpose of an order nunc pro tunc is important in considering the next group of cases, for in each a deemed order going to a time other than that when it was in fact pronounced was suggested as a way of getting past a statutory bar. In Clarke v. Bailey, a New South Wales Court of Appeal concluded that a provision of the Limitation Act 1969 (N.S.W.) required that an extension order should be made on or before a fixed date, so that the Court could not make an order out of time granting the relevant leave by antedating the order to an earlier date within time. The authorities to which I have just referred, including A-G. v. Wylde and El Ali, as well as a number of common law cases in which nunc pro tunc orders were made, were put forward as a basis "to prevent unjust prejudice to a party claiming relief occasioned by delay which unavoidably arises without fault on that party's part and simply because of the exigencies of court lists", relying on the maxim actus curiae neminem gravabit, as discussed in Broom's Legal Maxims. So an order was sought which would take a form deeming it to have been made before the time limit expired. Although Kirby, P. noted the "ingeniousness" of these comments, and that they flowed from the inherent powers of the Court, which were not contested, the respondents nevertheless argued successfully that it would defeat the clearly expressed terms of an act of Parliament, which the learned President (with the concurrence of Mahoney and Sheller, JJ.A.) considered "irresistible", as follows:

"But they argued that in such a case ... the order would actually be 'made' as from the date upon which it was pronounced. It might have an earlier operation. But nothing could alter the date on which the court actually 'made' the order. This would be shown on the face of the order and in the register of orders of the court. The court would thus 'make' the order nunc. It would not 'make' the order tunc."

The particular section of the Limitation Act, s.4(4) said explicitly that "the court may make an order" by a date specified in the section. As his Honour continued[183], to make an order beyond the specified period would contradict the terms of the paragraph and defy its purpose, for the paragraph limited the power of the Court "to make orders under the sections". Because the power to extend time affected rights and liabilities it was essential for the Court to keep itself within the powers expressed by the statute and any order made otherwise than before 1 September 1993 (the relevant date) would not be "a lawful order". This discussion, cited with approval on a number of occasions, makes clear the limitations of the power of the Court to make orders nunc pro tunc and shows, albeit without direct discussion of Turner or Ecroyd, the limits on the power to deem things to be done which clearly have not been done at a certain time or within a certain period. In my opinion the inference to be drawn is that, whereas in certain circumstances where only procedural rights are affected, an order or an action may be deemed by a court to have taken place at an earlier time, the Court cannot make an order which deems something to have been done at an earlier time if the substantive rights of the parties preclude the later making of such an order. Those are the circumstances which have to be faced in the present case, at least in my analysis of it. [27]

64 Ormiston JA made it clear that there is a dichotomy between procedural rights and substantive rights. Reliance upon a limitation defence is a substantive right which the Court ought not disturb. Ormiston JA then seems to take it a step further:

...the Court cannot make an order which deems something to have been done at an earlier time if the substantive rights of the parties preclude the later making of such an order.[28] [emphasis added]

65 In HFPS Pty Ltd (Trustee) v Tamaya Resources Limited (in liq) (No 1),[29] Foster J also refused to grant leave to interfere with the limitations defence that the defendant had in the subjective proceeding. Foster J at [91] said:

I think, in all the circumstances, that I should not grant leave to proceed nunc pro tunc. A consequence of that decision will be to leave the limitation arguments, such as they may be, intact for a later date. However, I think that I should order that the leave which I propose to grant should come into effect on 5 February 2015 when the plaintiffs filed their Interlocutory Application for leave to proceed.

66 In Re Link Construction (NSW) Pty Ltd (in liq),[30] Black J followed this approach and refused to grant nunc pro tunc leave because the application for leave was brought nearly four months after the commencement of the proceeding, by which time, the limitation period had expired.. Black J explained:

I have given consideration to the question whether leave should be granted, nunc pro tunc, from the date of commencement of the District Court proceedings or, nunc pro tunc, from the date of the commencement of the Originating Process for leave, or on the basis that operates prospectively from today. It seems to me that this is not a case of a short delay in the application for leave. It is not, for example, the case that I raised in submissions, where an application for leave was made a day or two after the commencement of the proceedings, and there would be no particular reason to distinguish the position between the date of the application and the date of the commencement of the proceedings. Here, there have been several months' delay, since the commencement of the proceedings, in seeking leave. It seems to me that an order made, nunc pro tunc, to the date of commencement of the District Court proceedings, has the potential to disadvantage Allianz, if a view is ultimately taken that whether leave was granted in time is relevant to whether the proceedings were commenced in time. To that extent, it seems to me that it would be unfair, in the circumstances, to grant leave that is retrospective to an earlier date than that on which it had been sought.[31]

67 The statement referred to Black J is consistent with Ormiston JA's assessment of policy considerations in Hartley Poynton, where Ormiston JA said:

[T]he issue remains to be resolved whether the policy of the law requires consideration of the statutory restriction placed on the right to sue or whether that restriction should be ignored because of a more general policy relating to the antedating of judgments and orders. I cannot for myself see that the court can ignore the express requirements of Parliament. To do so would be to create (or, more precisely, recreate) a right and to give effect to it by an increased award of damages by enforcing a right which no longer exists and which does not survive in favour of the plaintiff's personal representative. The practice of the courts in giving judgments or in making orders nunc pro tunc, effectively by antedating them, whether pursuant to the rules or under their inherent jurisdiction, cannot deem something to exist which does not exist and cannot deem something to have remained in existence which no longer remains in existence. That was the essence of cases such as Clarke and Foppoli and it is the policy of the law which should be insisted upon wherever substantive rights are in issue, whatever may be said in circumstances raising only procedural issues or in circumstances where existing rights are appropriately capable of being adjusted before or after the event.[32]

68 Turning to the present case, the limitation period expired after the commencement of the County Court proceeding and before application for leave was filed. Granting leave nunc pro tunc in these circumstances would therefore deny the defendant of its right to the limitation defence. As a matter of policy, the Court should not utilise the power to grant a nunc pro tunc order pursuant to s 500(2) to interfere with the right created by parliament in the Limitations of Actions Act 1958 (Vic).

69 The plaintiff has known or should have known of Fuji Fuels' winding up since October 2013 at the latest. Certainly '(in liq)' was used in correspondence as early as October 2013.[33] '(In Liq)' was also used in correspondence in August 2015.[34] No explanation other than 'oversight' was proffered for the failure to seek leave either immediately before or at the time of filing the County Court proceeding. Given the analysis in Hartley Poynton, I doubt that there is any residuary discretion to permit an order nunc pro tunc once substantive rights accrue. However, if there is, I have regard to Black J's observations in Re Link Construction (NSW) Pty Ltd (in liq) where a four month delay was considered a significant reason to refuse leave. In this proceeding, the application for leave was not filed until seven months after the appropriate time. Further, the leave application seems to have been actuated because of the deregistration rather than the need to regularise the proceeding. Given that no cogent reason has been submitted to adequately explain the reason for either the delay in issuing proceedings or the failure to obtain leave in the first instance, I can see no reason to depart from the reasoning set out by Black J. On this basis, leave nunc pro tunc is refused

Overall, should the court grant reinstatement of the company, if leave nunc pro tunc is refused?

70 The primary issue remains whether the company's registration should be reinstated. Whilst the claim in this case is prima facie covered by insurance, thereby making it more likely for the Court to order reinstatement, in my view, given that leave nunc pro tunc is refused, it would follow that reinstatement of the company's registration in these circumstances would be futile. Moreover, there are other factors that weigh against reinstatement. The unexplained delay of the plaintiff, which resulted in the claim becoming statute barred, in addition to being a relevant consideration for an application for leave nunc pro tunc, has also been considered a factor that weighs against the reinstatement of company registration.

71 The case of Herbert v Nozala Pty Ltd concerned a six year delay by the plaintiff in initiating proceedings against the directors of the deregistered company.[35] According to the court, this in effect, meant that any claim against the directors would have been statute barred by that time. This factor inter alia was significant in finding that the reinstatement was not just in the circumstances. Of relevance, White J stated:

Moreover, even if a claim by the company against the directors would not be barred on the principle of the application of the Limitations Act by analogy, the passage of time since May 2000 is likely to have affected, adversely, the ability for there to be as fair a trial of any action against the directors as could have been available if any such claim had been brought promptly. As McHugh J said in Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541 at 551:

... The enactment of time limitations has been driven by the general perception that '[w]here there is delay the whole quality of justice deteriorates'. Sometimes the deterioration in quality is palpable, as in the case where a crucial witness is dead or an important document has been destroyed. But sometimes, perhaps more often than we realise, the deterioration in quality is not recognisable even by the parties. Prejudice may exist without the parties or anybody else realising that it exists. As the United States Supreme Court pointed out in Barker v Wingo, 'what has been forgotten can rarely be shown'. So, it must often happen that important, perhaps decisive, evidence has disappeared without anybody now 'knowing' that it ever existed.

In my view, after the long period of delay which this present application exhibits, it would not be just that the company's registration be reinstated in order for there to be the inquiries or claims brought which have been foreshadowed.[36]

72 Moreover, the defendant submitted that it would be prejudiced if reinstatement were to be ordered by reason of the passage of time and the death of a witness. Such factors were considered telling against the applicant in Blazai Pty Ltd v Gateway Development (St Marys) Pty Ltd_._[37] However, given the limitation issue, I will not embark upon an analysis of whether the prejudice is such to preclude reinstatement or whether that issue ought to be left to a trial judge.

73 Overall, the unexplained delay of the plaintiff, in addition to those factors already considered, serve to strengthen the arguments regarding the limitations defence and the potential interference with the substantive rights of the defendant. For these reasons, it would not be 'just' to order reinstatement in the present case. Therefore, I dismiss the plaintiff's application. Notwithstanding that it is usual for the costs to follow the event, I will not order costs in this instance. Newline was not a necessary party to the application, but chose to appear and foster its position.

[1] [2000] QCA 421; [2001] 2 Qd R 492.

[2] [2006] VSC 457.

[3] Ibid [34]; See also, Pilarinos & Ors v ASIC [2006] VSC 301, [29]; AMP General Insurance Limited v Victorian Workcover Authority [2006] VSCA 236 [42].

[4] [2000] NSWSC 316; (2000) 174 ALR 688 [27]-[28] (citations omitted).

[5] [2008] VSCA 92.

[7] [2000] QCA 421; [2001] 2 Qd R 492, 499-500 [15]-[17].

[8] [1969] 3 All ER 601.

[9] Pagnon v Work Cover Queensland [2000] QCA 421; [2001] 2 Qd R 492, 492.

[10] Pagnon v Workcover Queensland [2000] QCA 421; [2001] 2 Qd R 492, 499 [15].

[11] [1967] HCA 9; (1967) 116 CLR 177.

[12] [2005] NSWCA 19; (2005) 62 NSWLR 148.

[15] (2016) 330 ALR 157.

[16] [2016] VSC 338; (2016) 114 ACSR 198.

[19] Ibid citing Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514, 533.

[20] (1994) 13 ACSR 329.

[22] (1982) 6 ACLR 423 426 (Master Lee QC).

[23] [2005] VSCA 53; (2005) 11 VR 568.

[24] (1988) 15 NSWLR 303,313-14.

[25] Hartley Poynton Ltd v Ali [2005] VSCA 53; (2005) 11 VR 568, 603: That is, not to say, as has occurred in a number of reported decisions, that such rights are unimportant in certain cases or that the fairness of the matter might deny the creation of such a fiction.

[26] [2004] NSWCA 94.

[27] Hartley Poynton Ltd v Ali [2005] VSCA 53; (2005) 11 VR 568, 603-604 [68]-[69].

[29] [2016] FCA 442.

[30] [2016] NSWSC 684.

[32] [2005] VSCA 53; (2005) 11 VR 568, 612-613 [91].

[35] [2006] NSWSC 1437.

[37] [2009] NSWSC 800.