Tolcher (as Liquidator of Lloyd Scott Enterprises Pty Ltd (In Liq)) v Capital Finance Australia Ltd

reasoning 15 The application made by the Liquidator on 22 June 2004, which was within the three year period specified in s 588FF(3)(b) of the Act, sought an order that the period prescribed by that sub-paragraph within which "any application in respect of any voidable transaction" is to be made, be extended up to and including 20 December 2004. 16 Section 588FF(1) refers to an order to be made on the application of the Liquidator in circumstances where the Court is satisfied that a transaction is voidable because of the requirements of s 588FE. The application referred to in sub-section 588FF(3)(b) is, in the present case, for an order directing payment of money in circumstances where the Court is so satisfied. There is nothing in the language of s 588FF(3)(b) that expressly requires any application for an extension to specify a particular transaction as opposed to a class or category of transactions. 17 In Brown v DML Resources Pty Ltd (No. 2) (2001) 52 NSWLR 685 at 693, Austin J considered the application of s 588FF(3) in the context of an argument that it did not provide for general orders but provided only for an extension of time to commence an application under subsection (1), which called for the Court to grant specific relief against particular persons in respect of particular transactions. At [32], his Honour considered the authorities and formed the view that while this issue had not been considered in decided cases, in a number of instances orders had been made in general terms. 18 In response to the applicants' submission in that case that a general order could not be made, his Honour said at [33] and [34]: "In my opinion the applicant's submission places an unduly restricted interpretation on s 588FF(3). The statutory language does not literally require the construction that they advance. It is true that subs(1) speaks of a particular application concerning a single transaction, and that the opening words of subs(3) refer to the specific application identified by subs(1). But subs(3)refers to the application under subs(1) only in order to say that such an application must be made within the period of time that subs(3) sets. … there will be some cases where, notwithstanding the most diligent of efforts, the liquidator is so far short of completing his or her investigations towards the end of the time limit that it is impossible to identify particular transactions in respect of which orders for extension of time could be made." 19 The question was considered by the New South Wales Court of Appeal in BP Australia Ltd v Brown (2003) 58 NSWLR 322 at [175]-[194] and [209] (BP). At [168], Spigelman CJ (with whom Mason P and Handley JA agreed) said: "In any event, I am of the view that Austin J was correct in the conclusion to which he came that an application under s 588FF(3)(b) seeking a general order for an extension of time to make an application under s 588FF(1) against any creditor, is a valid application and an order in those terms is a valid order. I agree with his Honour's analysis in the second judgment …" 20 The "second judgment" referred to by Spigelman CJ is that of Austin J quoted above. 21 The reasoning which underpins the Court of Appeal judgment appears at [170] in these terms: "The power to extend the time limit for commencing proceedings is intended to provide for the circumstance in which a liquidator is not in a position to commence proceedings within three years of the relation-back day, for whatever reason, subject to the assessment of the Court of all relevant circumstances, including the liquidator's conduct. It is not difficult to envisage a circumstance in which a liquidator is still ascertaining the identity of the recipients of benefits under possible voidable transactions and cannot give the court an indication of the creditors to be targeted. The power should be broad enough to allow, in those circumstances, for an order granting an extension of time in general terms." 22 The reasoning of the Court of Appeal and that of Austin J was considered and in substance applied by White J of the New South Wales Supreme Court in New Cap Reinsurance v Reaseguros Alianza SA [2004] NSWSC 787 at [14]-[28] (New Cap). At [20], White J expressed the view that he did not consider that an application for an extension of time under s 588FF(3) needed to refer to an identified sub-set of voidable transactions in respect of which extension was sought. 23 In Greig & Duff v Australian Building Industries Pty Ltd (2004) 2 Qd R 17 (Greig & Duff),the Queensland Court of Appeal reached a different conclusion: see [111] and [112]. 24 At [111], Jerrard JA said: "I agree with the view expressed by Williams JA that s 588FF(3) does not, as a general rule, authorise blanket applications made ex parte and without any identification in the application (or order made) of any person or persons against whom an application may ultimately be made for any one of the variety of orders provided for in s 588FF. … These are all orders requiring carefully prepared applications, and it seems incongruous that s 588FF(3) should be construed as allowing a (necessarily very specific) 'application under subsection (1)' to be made within such extended period as the court orders, on an application brought ex parte in the broadest possible terms." 25 His Honour referred to this as being a general rule. At [112], his Honour referred to the views of Austin J and expressed the view that some circumstances could take the case out of the general rule. Therefore, it is evident that his Honour was directing his attention to the application of the section rather than to the proper interpretation of the section as White J points out. 26 In both the New South Wales Court of Appeal decision in BP and the decision of White J in New Cap Reinsurance referred to above, the attention of the Court was drawn specifically to the reasoning of the Queensland Court of Appeal in Greig & Duff and to the expressions of opinion in that case as to whether an application of a general nature was within s 588FF(3). 27 In McGrath & Ors v HIH Insurance (In Liquidation) [2004] 22 ACLC 449, Barrett J of the New South Wales Supreme Court made an order substantially in the form extending time within which the plaintiffs might make an application under s 588FF(1) of the Act with respect to "any voidable transaction" involving the HIH companies which had not been identified by the Liquidators as at the date of filing the application. 28 In my view, the weight of authority and legal reasoning leads me to conclude that an application in the present case is a valid application and that the Court has the necessary power to grant the extension sought. Apart from authority, the literal wording of the Act and the practical commercial considerations favouring such an application of the provision persuade me that the submissions of the respondent as to the extent of the power under s 588FF(3)(b) should be rejected. 29 The second principal submission for Capital Finance and Capital Corporate is that the Court should not make such an order because it would be futile to join Capital Corporate as the three year limitation period in s 588FF(3) has now expired. 30 In my view, this submission also lacks substance. The effect of an order made pursuant to s 588FF(3) which extends time is that the proceeding may be commenced by making the application under s 588FF(1). The provision is not directed to an amendment of an existing claim but rather with the bringing of a new claim. As the Full Federal Court said in Rodgers v Commissioner of Taxation (1998) 88 FCR 61 at 67-68 after referring to the provisions of O 13 r 2(3) of the Federal Court Rules ("FCR"): "This provision is to be contrasted with s 588FF(3), which is concerned with the making of an applicationto the Court; that is, the commencement of the proceeding itself. Section 588FF(3) is not directed to an amendment of an existing claim; at least if that amendment does not involve a new cause of action … There is no inconsistency between O 13 r 2 and s 588FF(3). One is concerned with making an amendment to a pleading in an existing proceeding; the other is concerned with the commencement of a proceeding." 31 In Star v National Australia Bank (1999) 30 ACSR 583, Rolfe J said at [86]: "I have come to the view that the legislation and rules under which amendments are permitted in this Court are such that an application to amend a proceeding brought in compliance with s 588FF(3) may be granted, and that it is proper for me to follow the Full Court's construction of s 588FF(3) to the effect that it is not concerned with that topic, but only with the bringing of an original application. Far from being satisfied that it is wrong, I consider that it is correct and gives full rein the extensive powers of amendment. The amendment provisions clearly have work to do, and they are unfettered by the restraints s 588FF(3) places on the commencement of original applications. There is, accordingly, no inconsistency between s 588FF(3) and the amendment provisions of this Court." 32 These decisions were applied by Hansen J in Rambaldi v Dalbrook Pty Ltd (2003) 21 ACLC 1190 and by White J in New Cap Reinsurance referred to above: see the helpful discussion by White J on this point at [40]-[50]. 33 It is evident from the above authorities that the amendment powers operate independently of the power conferred by s 588FF(3)(b) of the Act. Accordingly, it is not appropriate, as Capital Finance seeks to do in the present case, to invoke the provisions of O 6 r 11(3) of the FCR to support the contention that any application for joinder of Capital Corporate would be futile as being outside the three year limitation period.

Discretion 34 The relevant principles concerning the granting of an extension of time in the context of the limitation provision, by reference to the interests of justice, were considered by McHugh J in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 554 in these terms: "In this context, justice includes all the relevant circumstances relating to the application including the various rationales for the enactment of the limitation period involved … the object of the discretion … 'is to leave scope for the judicial or other officer who is investigating the facts and considering the general purpose of the enactment to give effect to his view of the justice of the case'. In determining what the justice of the case requires, the judge is entitled to look at every relevant fact and circumstance that does not travel beyond the scope and purpose of the enactment authorising an extension of the limitation period. 35 The touchstone for the exercise of discretion is what is fair and just. See Salido v Nominal Defendant (1993) 32 NSWLR 524 at 532 per Gleeson CJ and Itek Graphix Pty Ltd v Elliott (2002) 54 NSWLR 207 at [87]-[90]. 36 In the present circumstances, having regard to the history and timing of relevant events as set out earlier, the clear purpose of the provision, and in the light of the authorities, I am of the view that as a matter of discretion the extension of time should be granted in this case. The identity of interest between the two companies and the respective roles played by them in the transactions, as indicated by the pleadings and the material before me, together with the fact that the asserted role of Capital Corporate only became finally clear upon filing of the defence in November 2004, reinforce this conclusion. 37 Accordingly, for these reasons I decide in favour of the applicant and direct the applicant bring in Short Minutes to give effect to these reasons. I will hear submissions on the final form of the Orders. I also will hear submissions as to costs in view of the fact that Capital Corporate had been restored to the Register apparently at the time when the first argument was taking place so that if this was the case then that issue became hypothetical before it was argued. I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin.

Associate: Dated: 18 February 2005 Counsel for the Applicant: R Harper SC

Date of Hearing: 1 December 2004 and 3 December 2004