Strand Nominees Pty Ltd v Pennywise Smart Shopping Australia Pty Ltd [1991] NTSC 9; 1 NTLR 17; 103 FLR 290

COURT IN THE SUPREME COURT OF THE NORTHERN TERRITORY OF AUSTRALIA Asche C.J.(1) CWDS Judgment and Orders - Application to amend order - slip rule - whether accidental slip or omission - not an oversight but afterthought - application dismissed - Supreme Court Rules r.36.07 Practice and Procedure - Application of slip rule - even if rule might otherwise apply, discretion to refuse where subsequent extraneous events make it inexpedient or inequitable Companies - Application by provisional liquidator - amendment of order to preserve rights of liquidator - Companies (NT) Code ss.230, 368, 379(3), 446, 451, 452 - Supreme Court (Companies) Rules r.92 Cases referred to: L. Shaddock and Associates Pty Ltd v The Council of the City of Parramatta (No. 2) [1982] HCA 59; (1983) 151 CLR 590 The Commonwealth v McCormack [1984] HCA 57; (1984) 155 CLR 273 Raybos (Australia) Pty Ltd v Tectran Corporation ; Tak Ming Co. Limited v Yee Sang Metal Supplies Co. In re Inchcape (Earl of) Craigmyle v Inchcape Gould v Vaggelas R v Cripps, Ex parte Muldoon and Ors Coppins v Helmers HRNG DARWIN #DATE 6:3:1991 Counsel for the Liquidator: C.R. McDonald Solicitor for the Liquidator: Ward Keller Counsel for Sommer and Co.: N. Henwood Counsel for Sommer and Co.: Cridlands ORDER Application dismissed. JUDGE1 This is an application that the order of this Court made on 8 December 1988 "be amended to be subject to the rights of the liquidator under ss. 451, 452, 446 and 368 of the Companies (Northern Territory) Code to recover any monies paid to Sommer and Co Proprietary Limited pursuant to the said order". 2. The application states that it is brought under s.379(3) of the Companies (Northern Territory) Code and R.92 of the Supreme Court (Companies) Rules. S.379(3) states: "The liquidator may apply to the Court for directions in relation to any particular matter arising under the winding up." Rule 92 states: "Upon the issue of any summons seeking directions pursuant to any right to do so under the Code the plaintiff shall take out an application for directions seeking, inter alia, directions as to service of the summons". In fact, while that subsection and that rule allows an application to the court for directions as to the exercise and control of the liquidator's powers, the real purpose of the application here is to invite the court to apply R.36.07 of the Supreme Court Rules, commonly known as the slip rule. That rule provides: "The court may at any time correct a clerical mistake in a judgment or order or an error arising in a judgment or order from an accidental slip or omission." 3. The application relates to an order made on 8 December 1988 by Rice J. by consent, or at least without opposition of any of the parties involved. I will refer to the relevant parts of that order later. 4. The history of the matter, so far as relevant, is that on 26 October 1988 Mr Perkins was, by order of the Master of the Supreme Court of the Northern Territory, appointed provisional liquidator of the company Pennywise Smart Shopping Australia Proprietary Limited, and given certain powers under the Companies (Northern Territory) Code. 5. Subsequently - and I quote from Mr Perkin's affidavit: "(Mr Perkins) became aware that a company, Sommer and Co Proprietary Limited, claimed to be a secured creditor of Pennywise, having or purporting to have a registered debenture over Pennywise's stock in trade, owned by it and stored from time to time at the warehouse premises occupied by Pennywise at (an address in South Australia)." 6. In late October 1988, Sommer and Co threatened to appoint a receiver, pursuant to its debenture. Mr Perkins at that time was seeking to continue the trading of Pennywise's business to enable the promotion of a scheme of arrangement of the creditors and shareholders of Pennywise. He considered that the appointment of a receiver would have jeopardised the proposed scheme. 7. Pennywise is a company incorporated in the Northern Territory, but a recognised company in the state of South Australia, registered to carry on business in that state. Sommer and Co is a company incorporated in South Australia. 8. Mr Perkins sought and obtained from the Supreme Court of South Australia, on 3 November 1988, an injunction restraining Sommer and Co from appointing a receiver. That injunction was extended to 17 November 1988. Mr Perkins says that subsequent to the granting of the injunction, he ascertained that the guarantee and debenture relied upon by Pennywise did comply with S.230 of the Companies Code. 9. To enable the continued operation of Pennywise's business and the promotion of the scheme of arrangement, Mr Perkins' solicitors entered into negotiations with Sommer and Co for Sommer and Co to be paid from the proceeds of sale of surplus stock of an approximate value of $1m. To achieve this Mr Perkins sought and obtained an order from the Master of the Supreme Court of the Northern Territory on 9 November 1988, giving him liberty to sell certain stock to a named purchaser, and from the proceeds of sale, to hold in an interest bearing account, the sum of $1m or such greater sum which might be payable to discharge the debt lawfully due to Sommer and Co, pending the determination of the validity of the security claimed by Sommer and Co. 10. On 17 November 1988, the solicitors for Mr Perkins forwarded to the solicitors for Sommer and Co a letter confirming Mr Perkins' agreement as provisional liquidator, to pay Sommer and Co the sum of $1,040,000 in full settlement of all claims Sommer and Co had under their debenture and guarantee, such sum to be paid out of the sale of stock. 11. For the purposes of this application the relevant part of this letter is paragraph 5 which reads as follows: "Please note that nothing herein or any conduct, statement or undertaking given by the provisional liquidator, or Pennywise Smart Shopping Australia Proprietary Limited, shall be construed as a waiver or shall in any way prejudice any rights that a liquidator of Pennywise Smart Shopping Australia Proprietary Limited may have pursuant to the provisions of sections 452, 368 and 451 of the Companies (Northern Territory) Code, now or at any subsequent time." 12. Mr Perkins then applied to the Supreme Court of the Northern Territory, and on 8 December 1988, obtained from Rice J. on 8 December 1988 the order which is now sought to be varied. The relevant paragraph of that order is paragraph 3, which reads: "The provisional liquidator be at liberty to satisfy the claim of Sommer and Co Pty Ltd in accordance with the order of the Master of this court dated 9 November 1988." 13. Mr McDonald, who appears for the plaintiff, also asks me to note paragraph 4, which gives the parties liberty to apply. Although I do note that, I do not consider that the application made today properly comes under the liberty to apply. 14. It can be seen that the provision referred to in paragraph 5 of the letter of 17 November 1988 is not included in the order. The present application is that the order be amended accordingly. 15. Mr McDonald concedes the possibility that this may not be necessary. He refers me to ss.368, 451 and 452 of the Code, which, he suggests, may in any event incorporate the provision for the protection of the provisional liquidator. Furthermore, Mr McDonald would be prepared to submit, if it became necessary, that the letter of 17 November 1988 contained terms of a valid agreement which the evidence would indicate was accepted by Sommer and Co. 16. So Mr McDonald has two strings to his bow; but he wants a third string. He says it may be out of abundance of caution; but he wants it. Or rather, his client does. 17. The affidavit of the solicitor who appeared for the provisional liquidator is not contradicted. He says that when he sought the order before Rice J., he did not ask the court to include in the order a reservation of the liquidator's rights under ss. 368, 446, 451 and 452 of the Code. He says: "It did not occur to me to bring those provisions to the attention of the court. I was not aware of the letter dated 17 November 1988." 18. Since the order was made, Pennywise have commenced proceedings in the Supreme Court of South Australia, number 1641 of 1989, seeking, inter alia, declarations that the debenture relied on by Sommer and Co was invalid, and that Sommer and Co repay certain monies to Pennywise. I am told the matter is fixed for trial in June 1991. 19. No doubt it is this situation which has prompted the present application, and no doubt Pennywise or its liquidator sees some advantage, and conversely, Sommer and Co see some disadvantage, in the present application being granted. At any rate, it is opposed by Sommer and Co, and, indeed, one of the arguments put forward by Mr Henwood, who appears for that company, is that it would be unwise to do something which may affect the proceedings before the Supreme Court of South Australia. 20. However, it seems to me that my first task must be to see whether the application properly comes under the slip rule. If it does not, that is an end to it. If it does, then, as appears from the observations of their Honours of the High Court in L. Shaddock and Associates Pty Ltd v The Council of the City of Parramatta (No. 2) ; at 597, there is a discretion in the Court to refuse an order if something has intervened which would render it inexpedient or inequitable that it should be made. 21. I do not, however, understand their Honours as suggesting the opposite situation that, in determining whether there is a slip, the Court may take into account subsequent events extraneous to that question. In other words, in determining whether the slip rule applies, I should not consider what effect such a determination may have on the proceedings in South Australia. It is only if I determine that there is a proper case for the operation of the rule, that I can look to subsequent events which may now make it inequitable or inexpedient to apply it. 22. Mr McDonald, in a strong and able argument, lays considerable emphasis on cases where it is plainly stated that the slip rule can apply to oversights or omissions of counsel. Hence, in L. Shaddock and Associates Proprietary Limited v The Council of the City of Parramatta (supra) at 594-595, their Honours of the High Court say:

issue between the parties, which has been resolved by the original order, but to the ancillary or consequential matter. The researches of counsel have not brought to light any judicial decision in which a court has exercised its power to correct an order once completed, by varying its determination on the substantial question in issue in a respect which, through inadvertence, was not dealt with at the original hearing.' 26. However, something more substantial did indeed occur in Commonwealth v McCormack (supra) when counsel for the Commonwealth was not instructed on a relevant matter, namely that an amount which the High Court had held could be set off by the Commonwealth against the amount owed to the plaintiff, had in fact been paid to the plaintiff together with interest. The court held that there was jurisdiction under the slip rule to remedy the situation. But that was clearly an obvious error which went to the root of the order being made by the court and arose from an accidental slip or omission. 27. Can it be said that the omission of the plaintiff's solicitor to ask for the order in the terms now sought was an accidental slip or omission? I think not. I make it quite clear that no blame can be attached to him. That is the point. He seems to have asked exactly what he was instructed to ask. His omission to ask for the terms of the order now sought was not the sort of omission in which it can be seen that what was needed was there at the time, should have been mentioned and was clearly an oversight. That was not so here. 28. At the time the solicitor appeared before his Honour he did not know of the existence of the letter. Ten minutes or indeed ten days after the order had been made, had he been asked if he had omitted anything, he would have said no. He says it did not occur to him to bring to the Court's attention the provisions of ss.451, 452, 446 and 368 of the Code. In the absence of the letter there seems no particular reason why it should have occurred to him. 29. Omissions to seek costs or interest can be true examples of oversight because they are usually a necessary part of the proceedings, and omission to ask for them at the time when they should be sought can almost invariably be explained in only one way. But a proviso to a substantive order, particularly one which was made on 8 December 1988, and the present application being filed on 14 January 1991, hardly stands on the same footing. It stands on the prohibited side of the borderline; because there must be a finis litium and parties cannot continually come back to Court to amend orders to include something they have thought of subsequently which would make the order more to their advantage. 30. Furthermore, the letter of 17 November 1988, the full text of which is set out in the affidavit of Mr Perkins, did not even ask or state that the terms set out on the letter were to be embodied in the court order. In its terms the letter is a confirmation of an agreement not a request that any court order be in its terms. The order ultimately sought and obtained related only to extending the powers of the provisional liquidator to enable him to carry out the agreement. There is no suggestion in the letter that paragraph 5 would necessarily be part of the order sought, any more than paragraphs 1 to 4 would be. 31. This is not an oversight. It is an afterthought. 32. The application is dismissed.

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Judgment (4 paragraphs)

Strand Nominees Pty Ltd v Pennywise Smart Shopping Australia Pty Ltd [1991] NTSC 9; 1 NTLR 17; 103 FLR 290 (6 March 1991)

Parties

Cases Cited (5)