Primary Securities Ltd v Saker

BETWEEN: PRIMARY SECURITIES LIMITED (ACN 089 812 635)

AND: ANDREW SAKER, DARREN WEAVER, JAMES STEWART AND MARTIN JONES IN THEIR CAPACITIES AS LIQUIDATORS OF GREAT SOUTHERN MANAGERS AUSTRALIA LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN 083 825 405)

JUDGE: GILMOUR J DATE: 23 DECEMBER 2010 PLACE: PERTH

REASONS FOR JUDGMENT 1 By notice of motion dated 4 November 2010 the applicant, Primary Securities Ltd (PSL), seeks an extension of time in which to file and serve a notice of appeal from the judgment delivered by McKerracher J in proceeding WAD 244 of 2010 (the Proceeding) on 1 October 2010 (the judgment): Saker, in the matter of Great Southern Managers Australia Ltd (Receivers and Managers Appointed) (in liquidation) [2010] FCA 1080. 2 These reasons variously adopt where possible the written submissions of the parties without attribution at every point. At the hearing the motion was amended by which PSL also seeks leave to appeal from the judgment. 3 The case concerns several managed investment schemes. The respondents are liquidators of Great Southern Managers Australia Ltd (GSMA). GSMA had been the Responsible Entity (RE) of the managed investment schemes but was replaced as RE in those schemes by PSL. 4 PSL as the new ongoing RE contended that it should have access to four Trust Maintenance Fund term deposit accounts formerly controlled by GSMA. 5 The liquidators contended that those funds should be available, amongst others, for the creditors of GSMA. The liquidators sought, in the Proceeding, determinations by the Court pursuant to s 511 of the Corporations Act 2001 (Cth) (Corporations Act) which provides, relevantly, that a liquidator may apply to the Court to determine any question arising in the winding up of a company. The questions posed for consideration of the Court were as follows: THE QUESTIONS ASKED Against that background, the specific questions asked by the liquidators are these: 1. A determination of whether the plaintiffs, as liquidators of [GSMA], should: (a) pay to [PSL]; or (b) retain and apply in accordance with Chapter 5 of the Act, the funds held in the Hamilton Term Deposit referred to in paragraphs 25(a), 26 and 27 of the affidavit made by Andrew John Saker on 7 September 2010 (the Saker Affidavit). 2. A determination of whether the plaintiffs, as liquidators of [GSMA], should: (a) pay to PSL; or (b) retain and apply in accordance with Chapter 5 of the Act, the funds held in the Jeremy 1 Term Deposit referred to in paragraphs 25(b), 28 and 29 of the Saker Affidavit. 3. A determination of whether the plaintiffs, as liquidators of [GSMA], should: (a) pay to PSL; or (b) retain and apply in accordance with Chapter 5 of the Act, the funds held in the Jeremy 2 Term Deposit referred to in paragraphs 25(c), 30 and 31 of the Saker Affidavit. 4. A determination of whether the plaintiffs, as liquidators of [GSMA], should: (a) pay to PSL; or (b) retain and apply in accordance with Chapter 5 of the Act, the funds held in the Mossgrove Term Deposit referred to in paragraphs 25(d), 32 and 33 of the Saker Affidavit. 6 PSL had issued its own proceeding against the liquidators seeking the necessary relief which would permit it to have access to the funds. In that proceeding (WAD 148 of 2010), the liquidators objected to leave being granted to PSL to issue proceedings against the company whilst it was in liquidation. The primary judge did not determine the question of leave and it was the Proceeding, pursuant to s 511 of the Corporations Act, which was heard and determined by the primary judge whose judgment in that respect is now under challenge. 7 Section 24 of the Federal Court of Australia Act 1974 (Cth) defines the Court's jurisdiction to hear and determine appeals from, inter alia, judgments of the Court constituted by a single Judge exercising the original jurisdiction of the Court. 8 Order 52 rule 15(2) of the Federal Court Rules gives this Court power to extend the time for filing and service of a notice of appeal for special reasons. 9 However, there is a threshold question before consideration of extending time to file and serve a notice of appeal. As the applicant was not named as a party to the Proceeding, the applicant, by amendment of its motion at the hearing, now, necessarily, seeks this Court's leave to appeal against the judgment. 10 In Sen v The Queen (1991) 30 FCR 173 at 175 a Full Court of this Court held that s 24(1) of the Act must be construed as giving a right of appeal only to a party to the proceeding giving rise to the judgment. And in Shields v Official Receiver in Bankruptcy (1996) 66 FCR 171 Carr J (with whom Black CJ and Kiefel J agreed) said, inter alia, that: The decision of the Full Court of this Court in Sen v The Queen (1991) 30 FCR 173 … confirms that s 24(1) should be construed as giving a right of appeal only to a party … 11 However, as the Full Court explained in Commonwealth v Construction, Forestry, Mining and Energy Union (2000) 98 FCR 31 at [19]: Cases such as Sen v The Queen (1991) 30 FCR 173 and Shields v Official Receiver in Bankruptcy (1996) 66 FCR 171, in which it is said that a non-party cannot appeal under s 24, do not bear upon the present question, which is whether a non-party can obtain leave to appeal, not whether the non-party can appeal as of right. 12 The applicant does not submit that it may appeal against the judgment as of right. Rather, the question here, as in Commonwealth v Construction, Forestry, Mining and Energy Union, is whether the applicant should be granted leave to appeal against the judgment of this Court and an extension of time for filing and service of a notice of appeal. The Full Court explained at [18]: Having regard to the legislation and the authorities discussed in the preceding paragraphs, we are of the view that s 24 picks up the long established practice that permits non-parties to appeal by leave. In [Witness v Marsden [2000] NSWCA 52 (2000) 49 NSWLR 429 at [85]] Heydon JA referred to the observations of Knox CJ and Starke J in Cuthbertson v City of Hobart (1921) 30 CLR 16 at 25 that a person not a party to proceedings cannot appeal except by leave, and that leave is given as a rule if the person applying might properly have been a party. 13 The applicant submits that leave to appeal should be given because the applicant would properly have been a party to the Proceeding as a person with sufficient interest in the subject-matter of that Proceeding and accordingly there exists a "justiciable controversy" or "matter" within the meaning of Chapter III of the Constitution such that it is a proper subject of an appeal from the judgment. 14 The applicant submits that, although not formally a party to the Proceeding, it was both sufficiently interested in, and aggrieved by, the judgment in light of the following: (a) the applicant's role as the successor responsible entity for each of the Schemes, having replaced Great Southern Managers Australia Limited (receivers and managers appointed)(in liquidation) as responsible entity in April 2010; (b) the applicant's need to draw on the balances of the respective TMFs for each of the Schemes in order to meet the cost of maintaining the Schemes' plantations - a matter that was acknowledged by McKerracher J at para [16] of his Honour's reasons for the judgment; (c) the live issue in the Proceeding was whether the respondents should pay to the applicant or retain and apply in accordance with Chapter 5 of the Corporations Act, the monies standing to the credit of the TMFs for each of the Schemes - para [22] of McKerracher J's reasons for the judgment; (d) the applicant was given a right to be heard at the Proceeding and accordingly made submissions to the Court during the course of the Proceeding; and (e) the judgment bound the applicant and thereby prevented the applicant from asserting a right to payment of the balances of the TMFs from the respondent - para [85] of McKerracher J's reasons for the judgment. 15 However, the respondent submits that there is not now in existence any "justiciable controversy", or "matter" within the meaning of Chapter III of the Constitution, which could be the subject of an appeal from the judgment. It follows, the respondent contends, that the Court has no power to grant the leave sought. 16 The decision of the High Court in Re McBain; ex parte Australian Catholic Bishops (2002) 209 CLR 372 has some bearing here, although it should be emphasised that it did not involve an application for, nor consideration of, applications by non parties for leave to appeal. 17 Dr McBain, a specialist gynaecologist, licensed under the Infertility Treatment Act 1995 (Vic) to perform fertilisation procedures in Victoria. By s 8(1) of that Act those procedures were available only if the woman was married and living with her husband or living in a de facto relationship. Dr McBain wished to provide those services to a single woman. He sought a declaration in this Court that s 8(1) was inconsistent with s 22 of the Sex Discrimination Act 1984 (Cth). The respondents were the State of Victoria, the responsible minister, an authority established under the Act and the woman concerned. None of these sought to resist the doctor's claim. The Conference of Catholic Bishops and its corporate trustee the Episcopal Conference applied to be joined as respondents or to be heard as amici curiae. At the hearing they did not pursue the application to be joined but were heard as amici curiae. 18 The declaration sought was made. None of the respondents appealed. 19 By a first application, the Conference and the trustee sought inter alia an order for a writ of certiorari to quash the Federal Court's decision for non-jurisdictional error of law on the face of the record. By a second application, the Attorney-General for the Commonwealth on the relation of the trustee sought the same order. The applications invoked the original jurisdiction of the High Court under s 76(i) of the Constitution, as conferred by s 30(a) of the Judiciary Act 1903 (Cth), and the power of the High Court under s 32. A ground common to the two applications was that the Federal Court had erred in holding that s 8(1) of the Infertility Treatment Act was inconsistent with s 22 of the Sex Discrimination Act. In the first application, a further ground was that s 22 of the Sex Discrimination Act, to the extent it applied to the treatment procedures in s 8(1) of the Infertility Treatment Act, was not a valid law of the Commonwealth. 20 A majority, Gleeson CJ, Gaudron, Gummow and Hayne JJ held that neither application gave rise to a "matter" under s 76(i) of the Constitution founding the exercise of the original jurisdiction of the High Court, applying In Re Judiciary and Navigation Acts (1921) 29 CLR 257 and James v South Australia (1927) 40 CLR 1. 21 Gleeson CJ said at [25]: Whether the outcome of the Federal Court action was correct or erroneous, the rights of Dr McBain in relation to the effect of s 8 of the Victorian Act upon his medical practice have been declared by an exercise of the judicial power of the Commonwealth. The parties bound by that declaration include the State of Victoria and the Authority charged with the responsibility of administering the Victorian Act. There is no justiciable issue between the Bishops and Dr McBain, or the Attorney-General of the Commonwealth and Dr McBain, as to those rights. And there is no justiciable issue between the Bishops or the Attorney-General of the Commonwealth and Sundberg J. 22 Hayne J said at [245]-[246]: It is necessary, then, to bear steadily in mind that the controversy which it is sought to have explored in the present proceedings is a controversy about the rights and duties of Dr McBain and State of Victoria as they were reflected in the declarations that were made, not any power or duty of the judge. Neither of those parties, however, seeks to impugn these declarations. Those who now apply for orders quashing them were not parties to the proceedings in the Federal Court. For that reason, they are not in any way bound by the outcome of those proceedings. 23 The Full Court decision in Australian Industry Group v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (2002) 125 FCR 529 (AIG) considered McBain's case. 24 In AIG, the majority, Goldberg and Finkelstein JJ said at [72] that: The application raises a number of important issues, some more controversial than others. Can a non-party, by leave, appeal a decision with which it is dissatisfied? If it can, in what circumstances will leave be granted? Is there a justiciable controversy which could be the subject of appeal … that is, is there in existence a "matter" within the meaning of Ch III of the Constitution? 25 Later at [83] the majority said that: Inevitably a justiciable controversy must come to an end, with the consequence that the "matter" will cease to exist. Usually this will occur either when a dispute is settled or when the court rules in favour of one party or the other and grants the appropriate remedy. In most cases the unsuccessful party has a right of appeal, although in some cases leave is required. Whenever there is a right of appeal the justiciable controversy will not be at an end until the rights of appeal are exhausted or foregone. Until that occurs the "matter" subsists. 26 The Union respondent in AIG called McBain in aid of its submission that the justiciable controversy between it and the other party at first instance (Emwest) had come to an end when Emwest decided not to prosecute any appeal. 27 However, the majority distinguished the position in AIG from that in McBain on the basis that, in McBain, the Federal Court's jurisdiction had been exhausted. They continued at [87]: If an appeal has been instituted calling into question the correctness of Sundberg J's decision, the justiciable controversy would have remained alive. But as there was no appeal the controversy was at an end. In the present case AIG sought to enliven the appeal process within the time limited for instituting an appeal. That AIG was not a party to the original decision, and that no party to the decision sought to appeal the order made by the judge, does not mean that the controversy had come to an end. The controversy remained alive while it was possible that some person, whether a party or not, might bring an appeal. (Emphasis added) 28 It is apparent from their Honour's reasoning in AIG that if no appeal had been brought within the appeal period the jurisdiction of the Court would have been at an end. That is the position in the instant case. 29 The conclusion in McBain that the jurisdiction of the Federal Court was ended is illustrated in the joint judgment of Gaudron and Gummow JJ at [41], based on the fact that no appeal from the judgment at first instance had been instituted and later at [63] that there had been no enlivening of the appellate processes of the Federal Court. 30 Again, the position here is no different. 31 In the present case, the respondents who were the only parties to the Proceeding, had a right to appeal from the judgment by filing a notice of appeal on or before 22 October 2010, being 21 days after the date when the judgment was pronounced: Federal Court Rules O 52 r 15(a)(i). However, the respondents did not exercise that right. 32 Consequently, by 23 October 2010 the only right of appeal from the judgment which had been in existence had been "foregone". Therefore, consistently with the reasoning of Goldberg and Finkelstein JJ in the AIG case, there is not now, and since 23 October 2010 there has not been, in existence any relevant "justiciable controversy", or "matter" within the meaning of Chapter III of the Constitution, which could be the subject of an appeal from the judgment. 33 The applicant points to the fact that although it was not a party to the Proceeding this overlooks the fact that the Proceeding was instituted to decide issues which were the subject of the applicant's proceeding in WAD 148 of 2010 in this Court and in which the applicant was named as plaintiff. Although the applicant was not named as a party to the Proceeding, it contends that the judgment decided issues which arose in WAD 148 of 2010. It follows, so the applicant submits, that it would have been a proper party to the Proceeding. The consequence, the applicant says, is that the Proceeding is, in substance, part of a single matter, namely WAD 148 of 2010. The applicant refers to and relies upon the following statement by McKerracher J in his reasons for judgment at [4]: PSL has issued its own proceeding against the liquidators seeking the necessary relief which would permit it to have access to the funds. In that proceeding (WAD 148 of 2010), the liquidators object to leave being granted to PSL to issue proceedings against the company whilst it is in liquidation. That contest does not need to be resolved by reason of the liquidators coming to the Court posing, relevantly, similar questions. 34 I reject this submission. The judgment was delivered in the respondents' s 511 proceeding. The primary judge did not resolve the applicant's proceeding in WAD 148 of 2010 as is apparent from what he stated at [4] of his reasons. Had he done so, his Honour would inevitably have had to consider the need for leave to proceed to be granted to the present applicant in that proceeding as the respondent is in liquidation. It seems that for perfectly understandable reasons the applicant elected not to press that proceeding, thus avoiding the need to make out grounds for leave to proceed. Likewise it was its forensic choice not to seek joinder as a party in the Proceeding. It seems to me that it is left with the consequences of those choices. No criticism arises on those facts, of the present respondents or indeed the primary judge. 35 For these reasons I conclude that the Court has no power to grant PSL leave to appeal. 36 Even if I am wrong in this conclusion I would not have exercised my discretion in PSL's favour on the leave question for the following reasons. 37 As I mentioned earlier, the Proceeding before the primary judge was brought pursuant to s 511(1) of the Corporations Act. Section 511(1) provides, relevantly, that a liquidator may apply to the Court to determine any question arising in the winding up of a company. It sought no relief by way of positive orders. The questions posed are set out at [5] above. 38 Answers or determinations which are, in effect, the opinion of the Court were given by the primary judge. 39 These determinations did not require the respondents or anyone else to do or refrain from doing any act. The respondents, however unlikely it would be, are not even obliged to act in accordance with the determinations of the several questions by the primary judge. Against that background I do not regard PSL as having any special or other relevant interest in the Proceeding. The same, of course, cannot be said concerning its own separate proceeding. 40 Moreover I do not consider that PSL might have been a "proper party" in the sense described by the Full Court in Commonwealth v Construction Forestry Mining and Energy Union at [18]. I think it is most unlikely that an application for joinder by PSL would have been successful. The object of s 511(1) is in the determination of questions and not the resolution of inter partes litigation. 41 PSL in its proceeding sought injunctive relief to restrain GSMA as well as its liquidators from dealing with the monies in certain funds including the Trust (Maintenance) Fund and for orders that they pay those monies to PSL. It is still open to it to pursue those proceedings although it will have to overcome the precedent effect of the judgment. 42 It is unnecessary to deal with the other relief sought on the motion. 43 For these reasons the motion as amended will be dismissed with costs. I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour.