Australasian Memory P-L & Anor v Brien & Anor

[2000] HCATrans 8

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S84 of 1999

B e t w e e n -

AUSTRALASIAN MEMORY PTY LIMITED

First Appellant

BARRY CHARLES AMOR

Second Appellant

and

RICHARD CAMPBELL BRIEN

First Respondent

STEVEN NICOLS

Second Respondent

GLEESON CJ
McHUGH J
GUMMOW J
HAYNE J
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 2 FEBRUARY 2000, AT 10.18 AM

Copyright in the High Court of Australia

MR B.W. RAYMENT, QC:  May it please your Honours, I appear with my learned friend, MR J.G. DUNCAN, for the appellants.  (instructed by Gillis Delaney Brown)

MR S.D. ROBB, QC:   May it please the Court, I appear with my learned friend, MR G.L. RAFFELL for the respondents.  (instructed by Barker Gosling)

GLEESON CJ:   Yes, Mr Rayment.

MR RAYMENT:   Your Honours, it appears to be desirable before referring in detail to our submissions in the case, which are largely adumbrated in our written submissions, to refer to a number of provisions of the Part, which is quite unusual, if your Honours please, and it will perhaps clear up some misapprehensions that we have noticed in the other side’s submissions about the way in which we put this case if we make some of these preliminary submissions.

Your Honours will have noticed that the word “must” is used very copiously in Part 5.3A.  In our submission, sometimes that will have the consequence, if it is breached, that the administration will come to an end automatically and sometimes it will not.  Indeed, it is not essential to find the word “must” to find that a consequence of termination automatically occurs.  An example of the use of the word “must” which we submit would not lead to invalidity if breached is to be found in section 436E which provides that, leaving out irrelevant words:

The administrator…..must convene a meeting –

which is the first meeting of creditors –

in order to determine:

(a) whether to appoint a committee of creditors; and

(b) if so, who are to be the committee’s members.

Your Honours will notice that the first meeting may, under subsection (4), take the step of removing the Administrator from office and appointing someone else, so it is a fairly important meeting.

If one reads through the events listed in section 435C as bringing about the termination of the administration, this is not one of them if it is breached.  Similarly, there are those that one would expect ‑ ‑ ‑

McHUGH J:   Well, Mr Rayment, what is the point that you are seeking to make?  It is the problem I have with your written submissions, they do not make a point.  Certainly they do not make a point at the outset.  I am always helped if I know what the point is before I hear the argument in support of it.  What proposition of the other side are you seeking to deny or to support your own case?

MR RAYMENT: Well, your Honours, the submissions that I am leading up to are these, if I may make them plain in summary form. First, we wish to submit that section 447A is available only where the administration is on foot or the deed of company arrangement is still on foot, if there be a deed of company arrangement. Secondly, we wish to submit that once an administration has come to an end by force of the statute, that situation is not provisional or defeasible, that is to say there is no room for the making of any order, whether under 447A or under section 1322, restoring or reviving an administration which has come to an end.

That leads to a submission that section 447A will permit a prospective order, in our respectful submission, which will alter the course of an administration prospectively but not retrospectively so as to revive or restore an administration which had come to an end.

GUMMOW J:   Well (3) is a different proposition to (1) and (2) really, is it not?

MR RAYMENT:   It is.

GUMMOW J:   You could be wrong about (3) but still right about (1) and (2), that would be so, would it?

MR RAYMENT:   Yes, that is so.  Next, your Honours, we submit that there are important factors to be taken into account in determining the meaning of section 447A.  That are not, perhaps, conclusive taken individually but they help, in our respectful submission.  They are, firstly, the failure of section 447A to use familiar language.

McHUGH J:   To use?

MR RAYMENT:   Familiar language found in the curing provision.  Secondly, the use in section 447A of language which, we submit, is prospective in its tenor.

GUMMOW J:   One way of doing it would have been to, in effect, write out 447A in every other substantive section.

MR RAYMENT:   Yes.

GUMMOW J:   I suppose the question is why is that not the effect of what has been done?

MR RAYMENT:   We wish to come to that in some detail, if your Honour pleases.  I am just summarising at the moment.  The final group of submissions we wish to make about 447A is that it is not consistent with the ordinary approach to a detailed specific provision, when compared to a general provision, to allow it to overcome deficiencies which would arise from the conditions placed upon a specific grant of power.  For example, 439A(6) enables an application for an extension of time to be made but only within the primary period of time.  We would submit that it would not be consistent with ordinary approach to construction to hold that section 447E could be used to deal with that gap.

McHUGH J:   How far do you push this submission, Mr Rayment?  Is it a submission that it cannot be used to contradict the specific provisions or do you have some fall-back situation?

MR RAYMENT:   Your Honour will see how we seek to put it when we come to it, if I may, so that I do not want to try and do it now because it will ‑– but, your Honour, there is certainly a question about the reach of that.  One of our submissions is that almost all of the cases which have applied section 447A, contrary to a provision such as 439A(6) and contrary to section 444B(2), are wrong because they directly contradict what was said in this Court R v Wallis, in Downey v Trans Waste, and David Grant v Westpac and in Anthony Horderns.

Now, whether we can have the benefit of that directly in this case, if it be right, is itself a question that I need to address because we are not concerned in this case with a provision which empowers a court to do a thing subject to conditions. We would seek to make use of it, and as your Honour will see, how we will seek to do it when I come to that. Your Honours, then when we come to section 1322, we will be wanting to put a number of similar propositions about that section to those which we have put about section 447A. There are some differences. It is a later provision in Part 5.3A and the like, and the relevance of David Grant to section 1322 will need to be considered. Those are basically the submissions that we have put in writing and with your Honour’s leave, if I may go back to where I was, it becomes important to know what the word “must” means in this statute.

McHUGH J:   That is what I was having trouble with as to how – you just took us to 436E, now, in what way does each of those propositions ‑ ‑ ‑

MR RAYMENT:   It has been submitted by our learned friend that what we have said here is that whenever there is a breach of anything in Part 5.3A the administration will come to an end because wherever the word “must” is used, that has that consequence.  We do not seek to go so far as that.  It will only be, in our respectful submission, where there is an indication in the Part that the effect of a non-compliance will be to terminate the administration and that result will be achieved.

McHUGH J:   It is a matter for you the way you direct your argument, but is it not better to put your own positive submissions so we understand your case, before you then need to show the weaknesses of the other side’s argument.

MR RAYMENT:   It was just on the way.  I was about to say, your Honours, that rather than coming and going between the Part and the argument, I had in mind, if I may, to collect references to the Part first and then come to the detailed submissions.

Your Honours, can I just seek to make good what I was seeking to say?  Your Honours, there are cases of automatic termination of an administration where the word “must” is not used.  For example, section 439C says that the creditors may pass certain forms of resolution and says nothing about what happens if they do not but section 435C(3) says that if no such resolution is passed the administration comes to an end so there is the result achieved without the use of the word “must” at all and, similarly, if one looks at 435C(3), paragraphs (a) and (g) are cases where administration will come to an end without some non‑compliance.

Now termination, nextly, may not be the only consequence of the breach of a “must” provision.  For example, section 446A brings about the result that in addition to the termination of the administration, the company will be deemed to have passed a resolution for its voluntary winding up if the deed of company arrangement is not signed in due time.

Now, your Honours, importantly, there are a group of provisions which make it plain that there is a need to know definitively whether the administration is pending or not.  It is a serious state of affairs.  First of all, the Administrator is given wide powers by section 437A.  The powers of other officers of the company are suspended during the administration by section 437C.  Dealings by the company during the period of the administration, but not otherwise, are, in effect, void unless the Court otherwise orders if the Administrator did not participate in them.        I am summarising very briefly section 437D. 

The company may only wind itself up voluntarily if the company is under administration pursuant to section 446A.  Charges entered into by the company are unenforceable without the leave of the Court or the consent of the Administrator - section 440B.  The lessor or the owner of the property cannot recover it subject to the same provisos - section 440C.  There is a stay of proceedings against the company, prima facie, section 440D and there is a stay of execution on judgments, prima facie, section 440F.

Guarantees cannot be enforced without the order of the Court against directors under section 440J.  The Administrator may deal with assets subject to a fixed and floating charge as if the charge were still floating, subject to certain provisos pursuant to section 442B.  The Administrator is, during the administration, liable for debts incurred – 443A - with a right of indemnity out of the assets.  Shares cannot be transferred unless the Court otherwise orders – 437F - and the appointment of the Administrator itself is irrevocable subject to a power of removal under 449A.

If the company does not sign a deed of company arrangement within time, within 21 days or within the extended time applied for during that period, then the consequences are deemed voluntary winding up, 446A.  That led, your Honours might recall, to a difference of opinion the Court of Appeal in MYT v Mulcon which this Court decided on different grounds.  Justices Handley and Powell would have held in Mulcon that the effect of 446A was essential, consistently with what this Court held in David Grant.  Mr Justice Dunford disagreed.  Then, Mr Justice Handley published a subsequent judgment, in effect leaving open the question of whether 447A could be used for that purpose.

Your Honours, three provisions of section 435C(3) refer directly or indirectly to the provisions of section 439A and they are paragraphs (b), (c) and (d) of subsection (3).  The one which is relevant in this case is (b).  Subsection (c) refers expressly to the provisions of section 439A(6) and (d) refers to the situation which arises where a meeting ends without a meeting being convened.  Now, the Part contains some provisions for extension of time with express limitations upon the power of the Court to grant such an extension.  The first of those is 439A(6).  The second is section 444B(2) which empowers the Court to extend the 21 days for the signing of the deed of company arrangement if the application for that extension is made within those 21 days.  Then, the consequence, according to section 444B(7) is that Division 12 will have application and Division 12 attracts the provisions of section 439B.

GUMMOW J:   439?

MR RAYMENT:   446A, I should have said, which deems the company to have passed a resolution for its own voluntary winding up in the event that there is a non-compliance with section 444B(2).  There are then some powers expressed in the Part of validation or invalidation of what has previously occurred and they are these provisions - 445G(3) is the first one.  There is a power there for the Court:

the Court may declare the deed, or a provision of it, to be valid, despite a contravention of a provision of this Part, if the Court is satisfied that:
(a) the provision was substantially complied with;
(b) no injustice will result –

Section 446A ‑ ‑ ‑

GLEESON CJ:   May I take you back to one provision you have passed over, just a very small point of construction, Mr Rayment.  Section 435C(3) ‑ that, as I understand it is the provision which you say operated to bring this administration to an end.

MR RAYMENT:   Yes, your Honour.

MR RAYMENT:   Yes, your Honour.

GLEESON CJ:   And because of that provision, the capacity to make an order under 447A or 1322 did not exist.

MR RAYMENT:   Yes.

GLEESON CJ:   Section 435C(3) says:

the administration of a company may also end because:

(b) -

Do you read that as meaning the administration of a company shall end if (b)?

MR RAYMENT:   We do.  What we submit about it is that if you look at 435C, there are these things apparent about it:  first of all, it is right at the beginning of the Part, it is the first substantive provision of the Part.  It approaches the matter chronologically and subsection (1) of it is perhaps the most critical subsection of it.  It says:

The administration of a company:

(a) begins when –

one of the events occurs referred to in paragraph (a) –

and

(b) ends on the happening of whichever event of a kind referred to in subsection (2) or (3) happens first after the administration begins.

So it is really that provision strictly which brings the administration to an end.  Your Honour is right to point to the word “may”, but when one reads the section as a whole, we submit that is the result.

GUMMOW J:   What does 435C(4) mean?

MR RAYMENT:   It is beyond me, I am afraid, your Honour.  Your Honours, section 445D gives a power to terminate a deed if the court is satisfied of certain things and it is specifically expressed.  Then section 437D(4) gives a general power for the court to otherwise order in respect of a transaction entered into which would otherwise be void.  Then there is section 437F which gives the court a general power to validate a transfer of shares which is made during the administration.  Finally in this list, there is section 450F which is a power for the court to invalidate if there is a breach of the notification provisions of that division.  It is not void unless the court otherwise orders.

GLEESON CJ:   Suppose the opening words of section 435C had been “unless the court otherwise orders, the administration of a company ends on the happening”, et cetera.

MR RAYMENT:   Yes.

GLEESON CJ:   There might still be a question whether such an order could be made after the happening.

MR RAYMENT:   There might, but it is the absence of those words, in our respectful submission, which is significant.  It puts it out of the question, we would submit.

GLEESON CJ:   Unless the purpose of 447A is to avoid the necessity of introducing almost every section in the Part with words of qualification to that effect.

MR RAYMENT:   But your Honour will have noticed that 447A is mentioned in 435C.  It is mentioned in subsection (3)(a).  It is not as if it is, as it were, a silent supplement to section 435C.  It is ‑ ‑ ‑

GUMMOW J:   Sorry, 435 - - -?

MR RAYMENT:   435C(3)(a) ‑ ‑ ‑

GUMMOW J:   Yes.

MR RAYMENT:   ‑ ‑ ‑ takes account of the possibility of an order under section 447A for that purpose.

GUMMOW J:   Yes.

MR RAYMENT:   It gives as one of the ways in which the administration may end the making of a termination order under section 447A.  It is striking, we would submit, if it was intended that a reviver order would be possible under that section.  That it is not referred to.  In other words, unless the court makes an order for reviver.

GLEESON CJ:   Well, that is a specific indication of a legislative contemplation as to one example of the way in which 447A may operate.

MR RAYMENT:   Yes.  I am not suggesting that it is a plain indication that 447A cannot have any other operation, but it is noticeable, we submit, that they have taken it into account in this list.  There is a desire to make this provision definitive, we submit, and one gets a further indication of that from the explanatory memorandum, which I will come to, but if it is to be definitive, it has a significant gap if the other side’s case is right, we submit.  We submit that section 435C as a whole exhibits the features of a provision designed to create a code and its presence, we have already submitted, is the first substantive provision of the Part suggests its importance.

Your Honours, could I just notice a couple of other things before going into the detailed submissions we wish to make.  First of all, there is no problem about successive administrations.  It has happened in one of the reported cases that an administrator is appointed; there is an automatic termination and a further administrator is then appointed and section 436D envisages only that you cannot have two administrations at once.  Next, could we just observe that sometimes the effect of the termination of the administration will be to put the company back into the hands of the directors and sometimes it will be to put the company back into the hands of the liquidator because one of the persons who may appoint ‑ ‑ ‑

GUMMOW J:   Or a receiver.

MR RAYMENT:   Yes, because one of the persons who may appoint is a liquidator under section 436B, and your Honour is right, of course.  Your Honours, that concludes what we wanted to draw attention to specifically in the Part, apart from 447A itself.  Could we go to just a few paragraphs in the explanatory memorandum, which I hope your Honours have before you.  The first paragraph we draw attention to is paragraph 447:

Division 1 will comprise 3 sections…..The Division will set out the object of the new Part and define when an administration under the new Part begins and when it ends.

McHUGH J:   I am sorry, what page are you reading from, Mr Rayment?

MR RAYMENT:   If your Honours have the same copy as I, it is page 93 of the explanatory memorandum, paragraph 447.  Does your Honour have that?

McHUGH J:   I have page 93 but I do not ‑ ‑ ‑

MR RAYMENT:   It is under the heading “Proposed Division 1 – Preliminary”.

McHUGH J:   I see.  I was looking for the section but you are referring to the paragraph.

MR RAYMENT:   Yes, I was referring to paragraph 447.  Then paragraph 449, the first bullet point refers to the new Part being intended to provide for:

speed, and ease of commencement, of administration –

That matter is underlined by a sentence within paragraph 459 which, by the way, harks back to the Harmer Report.  In paragraph 459, the second‑last sentence says:

Further, the new procedure guarantees creditors an opportunity within 35 days to vote on the question of whether the company should be wound‑up, a period sufficiently brief that the positions of creditors would usually not be prejudiced severely by allowing it to run.

Your Honours, 452, about section 435C itself, points out:

A number of important legal consequences will flow from the fact that a company is placed under administration.  For example…..the rights of creditors to enforce any securities they may have over property of the company will be suspended.

The final sentence we would stress:

Because of the significance of these legal consequences, it is necessary to define quite precisely when a company is under administration.

That would not be happening if there is a power of reviver.

HAYNE J:   Why?  Why would it not happen?  Why would creditors and others not be able to resort to the order of the court to identify with exact precision when the administration began or ended?

MR RAYMENT:    Because you would not know in the no‑man’s‑land.  The other side’s case really involves this, that the administration might come to an end by force of the statute and then days or weeks or months might go by before a court might be approached to make a curative order under section 447A.

HAYNE J:   And those may be the most powerful reasons why no such order should be made.

MR RAYMENT:    Perhaps.

HAYNE J:   Intervening rights have been created, but let it be assumed that a court on consideration is unpersuaded that intervening rights have arisen.  Where lies the difficulty?

MR RAYMENT:   What is sacrificed in that is the certainty and the definition of the circumstances in which it will begin and end.  It could be restored contrary to what would be thought to be an ending.

GLEESON CJ:   Section 447A, in its terms, seems to bring about a major qualification upon certainty.

MR RAYMENT:   It brings about a major qualification upon certainty perhaps only prospectively, your Honour, and that being one of the issues in this case.  If it is not available for the making of a retrospective order then it does not touch the certainty that paragraph 452 of the explanatory memorandum seeks.

GLEESON CJ:   You will need to come to this in due course but I am just wondering whether this dichotomy between retrospective and prospective orders covers all the possibilities.

MR RAYMENT:   We would submit that a distinction between the two is readily understandable.  Your Honours, can I just draw attention in the explanatory memorandum to the fact that in paragraph 454, and then 458, the matter is spoken of as if section 435C(3) is exhaustive of the circumstances in which administration will come to an end.  Then 478 in the words in brackets again says that the concept of the administration ending is “defined in proposed section 435C(3)”  Then 507 refers to the power to extend time which is contained in section 439A(6).  It says:

The Court will be given a power to extend these periods (proposed subsection (6)) –

and that, of course, does not refer to either section 447A or section 1322, but only subsection (6) as the source of the power to extend time. Section 583 says that:

If the company contravenes proposed subsection 444B(2) by failing to execute the deed within the time allowed, the company will proceed to winding up in accordance with Division 12 of proposed Part 5.3A –

that is not said unless the Court orders under 447A or otherwise.  Then 611, finally, provides the proposed subsections (2) and (3) of 445G:

will provide that the Court may order the deed or a provisions of the deed to be void, but may alternatively declare the deed to be valid, despite a contravention of a provision of proposed Part 5.3A, if the Court is satisfied that the provision was substantially complied with, and no injustice would result for anyone bound by the deed if the contravention was disregarded.

And, again, that does not mention the possibility of any other curing order under 447A or 1322.  Your Honours, very little emerges from the second reading speech, and I go briefly to that.  It is short.

GLEESON CJ:   Paragraph 620 is the one that explains section 447A.

MR RAYMENT:   Yes, it just says what is there said.

HAYNE J:   Before you come to the second reading speech, the passages you have just taken us to in the explanatory memorandum at least describe the way in which the Part would operate in the absence of any order under 447A.  Why is it that they say anything about whether 447A extends to permit some modification of the operation of the Part?

MR RAYMENT:   We would submit they do by implication because what is sought to be done, it would seem, by the provisions of the explanatory memorandum which we have just referred to, is to identify comprehensively the circumstances in which the administration will begin and end and to stress the importance of it.

HAYNE J:   The point against you, I suspect, may be that the explanatory memorandum identifies comprehensively the way in which the unmodified Part would operate leaving open the question, “What is the extent of the power of modification?”; that there is a risk of circulatory of reasoning.

MR RAYMENT:   Well, of course, all of the curing provisions that are within the Part, all of the plainly curing provisions are mentioned as qualifications of the position that would otherwise arise throughout that explanatory memorandum, and I have given a reference to it in the written submissions.  So, one would find one missing if the whole concept of the administration is defeasible.  It is a surprising omission, we would submit, because it looks as if both the Part is a code and the explanatory memorandum has desired to indicate where there are qualifications and where they might arise.

HAYNE J:   But if the Part is to be understood as a code, how does that leave room for any operation for 447A, for example, of the kind given in 447A(2)?

MR RAYMENT:   I was not seeking to submit that there is no operation to 447A.  Not at all.  I will not be making that submission to your Honour.

HAYNE J:   No, but is not the submission that the Part is a code one that, unless looked at with care, might be seen as denying any or any real operation to 447A, and that is the question, what is the operation to be given to it?

MR RAYMENT:   The court is given, according to Harmer, during the administration – and we would stress those words – a general supervisory role.  That is what the court is to be given and if one – if I may, with respect, your Honour, what I would seek to do is to finish what I want to say about these explanatory memoranda and come to these detailed matters because I seek to approach your Honour’s question in due course.

Your Honours, the second reading speech I was about to say refers at page 2401 back to the Harmer report.  Mr Duffy, the Attorney-General, referred to the fact that the insolvency reformers in this bill, and it is the right‑hand column, second‑last paragraph:

result from a report by the Australian Law Reform Commission.  It is now some nine years since the inquiry which led to that report commenced.

Then, at page 2404 in Hansard, left‑hand column, main paragraph beginning “What is really needed”, he says this:

The emphasis is on informality and flexibility.  The emphasis is also on speed of action.  The procedure does not allow the indefinite administrations which can occur, for example, under the United States chapter 11 approach.

Now, we have given a reference, finally, to the Harmer Report itself in the written submissions and I do not know that I need to ask your Honours to look at them again now.  Paragraphs 56 and 62 seem to envisage that the role of the court will be of a supervisory nature, that it will be limited to the term of the administration which may become important to a submission I am about to come to.  It is fair to say when your Honours look at the draft legislation before the Harmer Committee VA41 is quite different from 447A or reasonably different.  It is an old ancestor, as it were, of 447A.

Now, your Honours, if I can then come to the detailed submissions we wish to put about section 447A.  The first is that the section is available only where either the administration is on foot or a deed of company arrangement is still on foot.  Now, for that proposition we would refer to the language of the section, first of all.  It seems to proceed on the basis that the parties will operate in relation to the company.

HAYNE J:   Is that right in light of what appears in 447B(1) and (2) where there is express reference to “while the company is under administration”, a phrase that is notably absent from 447A?

MR RAYMENT:   That is so.  It is absent from 447A.  It is present in that section and a number of other sections, those words, but, your Honours, the purpose of it is, in its terms, to make an order about how this party is to operate in relation to a particular company.  That seems to achieve the same result, we would submit.  You do not read one section down because of what is in another section or, nor we submit up, by the interpretative provision in 447F.

GLEESON CJ:   Those two subsections that have just been mentioned are like section 439A(6), that is they refer to specific cases in which the statute defines the time during which, or within which, a certain kind of court order can be made but there is no such definition in 447A(1).

MR RAYMENT:   No, that is correct, your Honour, but 447F may bear upon that issue but, more importantly, 447A would seem to be intended to go beyond the term of the administration to include the case of where a deed of company arrangement has been entered into and one gets that from 447A(4)(d) which makes one of the applicants the deed’s Administrator.  So, 447A could not say what 447B says in that respect.  If it was going to make such a provision it would be a slightly different provision.

HAYNE J:   I am sorry, I just have not followed that, Mr Rayment.  Can you put it again?

MR RAYMENT:   I am sorry, your Honour.  Section 447A, in our respectful submission, is available in two circumstances, first, when the administration is on foot, and, second, if there is current in respect of the company a deed of company arrangement and all that is made plain by the words in 447B is that that section is available in the first of those cases, not the second.  One gets the fact that 447A is available in the second of those cases from the terms of 447A(4)(d).  Now, a submission that section 447A will not be available to revive, not be available after the Part has done its work, obtains some support from the Harmer Report in the paragraphs I have just referred to; 56 says during “the procedure” which would suggest that the reach of the general supervisory role will be during the administration.

HAYNE J:   Does it follow from that submission that if there were some deficiency in appointment under 436A(1), so the company by writing, but not under its common seal, purported to appoint an administrator after the relevant board resolution and all that was missing was the affixing of the common seal constituting the instrument of appointment, the court not, under 447A, order that the Part was to apply as if the administration began on the date of the informal writing.

McHUGH J:   You have got 447C dealing with that issue.

MR RAYMENT:   Exactly.  My junior just referred to that, your Honour, to me.  That I think is perhaps there for that purpose.

HAYNE J:   It may not be sufficient I think, may not be.

GLEESON CJ:   This concept of a court or an administrative body having a power to modify the operation of legislation in relation to a particular company is similar to the provisions of the Corporations Law relating to takeovers under which the Australian Securities and Investments Commission is given a power to declare a part of the law shall apply as if specified provisions were omitted or modified or varied.  Which came first, the takeover provision or this?

MR RAYMENT:   We will check.

HAYNE J:   Part 6 came first, did it not, Mr Rayment, owing its origins to the original CASA Code?

MR RAYMENT:   To the Corporations Law.

HAYNE J:   And 447A was brought in the 92 amendments, or 91?

MR RAYMENT:   My recollection accords with what your Honour says but we will have it checked.

HAYNE J:   Yes.

GLEESON CJ:   It looks as though then, does it not, the inspiration for 447A might have been Chapter 6.

MR RAYMENT:   I want to be very careful about - your Honours have granted special leave on two issues only in this matter and not the question of power and I do not want to be in any way guilty of seeking to enlarge my grant of special leave when I answer that question, your Honour, but, with respect, yes, there is some similarity. 

Now, your Honours, the second proposition we wish to assert about section 447A and the Part as a whole is that the intention is that once an administration has come to an end, that is it, it is not provisional or defeasible in the way in which the party is couched and the way in which the explanatory memorandum is expressed.

Now, your Honours, a similar point about the legislation considered in this Court in David Grant have been made in the appeal division of the Victorian court in David Grant (1995) 2 VR 495 and may I have leave to hand that up to your Honours. In the judgment of Justices Brooking and Phillips at page 502 of the report ‑ ‑ ‑

GUMMOW J:   What was held in this case?

MR RAYMENT:   It reached the same conclusion as did your Honours.  This was the judgment, in effect, upon which your Honours dismissed an appeal.

GUMMOW J:   Yes.

MR RAYMENT:   And their Honours point out that there would be uncertainty flowing from the contrary view from the view of the Queensland court which they disagreed with.  Their Honours say:

What occurred in Bowes and Brown illustrates the uncertainty which will arise if s 459F(2) and s 459G are construed as allowing the time for the making of an application to set aside the demand to be enlarged.  Such uncertainty is surely the opposite of Parliament’s intention in respect of statutory demands.  At the end of the time allowed by the notice for compliance a creditor is entitled to know what rights he has in consequence of non‑compliance within that time.  In certain circumstances (an existing application to have the demand set aside) a creditor knows that he must await the outcome of the application; in all other cases he can proceed upon the basis of a statutory presumption of insolvency if he chooses to apply for winding up in insolvency.  That scheme is clear and certain and it would be unfortunate if uncertainty were introduced by judicial decision......

If we were wrong in the foregoing, some remarkable situations might arise.  A winding up application might come on for hearing in the morning at a time when no application to set aside the statutory demand had been filed and served.  At that stage, on the argument put for the present appellants, the demand would, it seems, have a defeasible status and effect as a demand that had not been complied with so as to give rise to the statutory presumption of insolvency.  If over the luncheon adjournment an application to set aside was filed and served, and if on the resumption of the hearing the judge enlarged the time for the making of the application nunc pro tunc.....the demand would lose its status and effect and the time for compliance with it would have to be determined in accordance with para (a) of s 459F(2).

GUMMOW J:   Now, I thought Mr Robb dealt with this David Grant decision in paragraphs 26 and 27 of his outline and what initially struck me is convincing manner, which has the result it is not very much assistance to me.

MR RAYMENT:   All I was really seeking to put about it is that one of the factors which led the Victorian court to its conclusion in that case was the undesirability of there being defeasibility and we seek to refer to a corresponding matter in this case.  It would, we submit, be destructive of the certainty that seems to be, we submit, the intention of the legislation, not to mention the speed which is required to be applicable to administrations, if there can be some reviver after the event.  Your Honours, we submit that the absence of the possibility of reviver being referred to in section 435C and in the explanatory memorandum is significant reason for thinking that 447A was not conceived as a power which would enable to be undone what the certainty of the Part brought about.

GUMMOW J:   David Grant is concerned with what part of the rule?

MR RAYMENT:   David Grant is concerned with Part 5.4 which came in at the same time as Part 5.3A, by the same Act of Parliament, actually.

GUMMOW J:   Yes, but there was no 447A.

MR RAYMENT:   No.

HAYNE J:   And the provision in question in Grant was 459G(2) which, on its face, seemed to prescribe an absolute time within which application might be made.  Application may only be made within 21 days.

MR RAYMENT:   Yes, it corresponds almost exactly, we would say, to 439A(6) and to 444B(2) in the present Part and, as a matter of fact, your Honours, we are driven to submit that because of the rule applied in David Grant, all of the cases that our learned friend refers to which seek to go against, as it were, the provisions of 439A(6) and 444B(2) to overcome the limitations that arise by reason of those provisions on their face are contradicted, we would respectfully submit, by this Court’s decision in David Grant and by the line of country referred to in R v Wallis, Downey v Trans Waste and David Grant and Anthony Horden.  Almost all of the cases referred to by our learned friends as instances of the use of section 447A are cases where the courts have made orders under that section in circumstances that would be unavailable under 439A(6) and 444B(2), and we submit that they are all wrong.

McHUGH J:   Your written submissions do not place any reliance on the principle that you do not construe a general power as authorising the taking away of vested rights, except in the face of plain language.

MR RAYMENT:   Yes.

McHUGH J:   Do you rely on that principle?

MR RAYMENT:   I do, if your Honour pleases.  It is highly consonant with the submissions we have made ‑ ‑ ‑

McHUGH J:   We refer to it in Coco? v The Queen and Plenty v Dillon.

MR RAYMENT:   Yes.  With respect, your Honour is right to draw attention to it and I do rely upon it.

GUMMOW J:   It is a quite distinct idea from the Anthony Hordern’s idea.

MR RAYMENT:   Yes, it is separate from that idea.  It is consonant with it.  It reaches the same result for a not dissimilar reason, but we would respectfully submit it ought to be distinctly put, as your Honour Justice McHugh suggests.

McHUGH J:   You get some support for that from the Harmer Report talking about procedure and how it effectively defines “procedure” in the opening paragraph of that report.

MR RAYMENT: May it please your Honour, we gratefully embrace that. Can I just shortly refer to a couple of additional matters about 447A. We submit it is significant that it fails to use language which is traditional in a curing provision. That was a matter referred to below. Mr Justice Santow actually traced the history of section 1322 at page 45 of the appeal book back to earlier provisions of the New South Wales Companies Act in 1936 which had interstate equivalents.  There has been a section like 1322 for most of the last century.

HAYNE J:   But what are we to make of the departure from traditional language when we go to the section and we find such things as examples given?  All that is missing from this Act are the circles and diagrams we now find in the Tax Act.  What weight can we put on the adoption of different drafting techniques or styles?

MR RAYMENT:   We would submit that when they have gone – one can find in the provisions that I made reference to earlier the actual curing provisions which are expressed there, some language quite similar to the language that you find in 1322 and, by the way, more importantly, some of the safeguards which 1322(6) embodies, “substantial injustice is to be avoided” and the like.  You do not find any such thing at all.  It is left to the discretion of the court if 446A extends this far without any of the safeguards that the legislature has thought fit to put upon the same court under 1322(6) and under the various provisions of this Part that give a curing power.  So you have no curing language which is – it is not as if the draftsman does not know about the Corporations Law.  He has incorporated by reference a number of other Parts, a number of other sections, near 1322.  He has incorporated by reference 1318 and 1323 in various provisions of Part 5.3A.

McHUGH J:   But there does not seem to be any choice between a very narrow view of the section and a very large view.  It occurred to me at one stage that by reason of subsection (1) referring to how this Part is to operate as opposed to how the provisions of this Part are to operate and the example given in subsection (2), that it might have a very narrow scope indeed and really must give the court a very limited power to exclude the operation of the Part or bring it to an end very quickly.  But that would be a very restrictive view to take that view of it, particularly having regard to subsection (3) which says an order may be made subject to conditions.

MR RAYMENT:   Your Honour, what we submit is suggested by the general language of the Part is its prospective nature.

McHUGH J:   Yes, it does talk about “is to operate”.

MR RAYMENT:   “Is to operate”, and that suggests the future rather than the past.  That, at least, was common.  That was one thing the members of the Court of Appeal, in this case, agreed about, that that language does suggest that.  Mr Justice Powell put it at the heart of his judgment in Mulcon and Mr Justice Sheppard expressed agreement with it as a factor in this case to be taken into account. We would submit that, so understood, that there is, therefore, excluded from its terms that which section 1322 in another case would permit, that is, curing.

McHUGH J:   Another aspect that seems to support some reading down of the section, I suppose, is the very existence of 447B, 447C, et cetera, although one has to bear in mind 447F, that nothing in this division limits the generality of anything else in it.  But you have to ask yourself if 447A has this wide operation, is not 447C superfluous?  For example, in the illustration that Justice Hayne gave earlier in the argument, it may not be covered by 447C ‑ ‑ ‑

MR RAYMENT:   But, and all of the curing provisions that are in the Part.  Those are not in this division.  The curing provisions which are there are in other parts of Part 5.3A, your Honours – 445G(3), 445D, 450F, and so on, they are all express powers which would be unnecessary if 447A has a curing aspect, completely unnecessary, and if one is to read it alongside every section in the Part, one is in that position.  We would submit that those factors are all consistent with and suggestive of the incorrectness of the majority view in the Court of Appeal.  Your Honours, can I just give a reference to page 127 of the appeal book where Justice Sheppard agreed with Mr Justice Powell about the prospective suggestion in this language.

McHUGH J:   What is it, 127?

MR RAYMENT:   Page 127.  Now, your Honours, with respect, need no further reference to R v Wallis where Justice Dixon discussed the procedure which is to be followed when there are two powers, a general power and a specific power subject to limitations, that there is no room for the operation of the general power in those circumstances.  Page 550 of ‑ ‑ ‑

GUMMOW J:   How would that apply here?

MR RAYMENT:   Well, it would apply, we would submit, directly to 449A(6), directly to 444B(2).

GUMMOW J:   Just a moment, 449?

MR RAYMENT:   Section 439A(6) and 444B(2).

GLEESON CJ:   Just dealing with 439A(6), a possible meaning of 447A is that an application could be made to a court on the basis that in relation to a particular company section 439A(6) should operate not according to its terms but in some modified or varied manner.

MR RAYMENT:   But that would make nugatory, would it not, in that case and in any other case where it happened, 439A(6).  The words “on an application made within the period referred to” would be as if not there because the court could depart from it under 447A in any and every case.

HAYNE J:   But must that not always be so where there is any order under 447A that there be some modification, namely, provisions otherwise found in the Part do not have the operation they otherwise would have?

MR RAYMENT:   We submit there is a big difference between that before and doing it afterwards.  If you do it afterwards you take away the limitation.

GUMMOW J:   That is a different point.  The point you rely on from Wallis has to be good whether it is prospective or not.  Suppose they came along right at the beginning and said 28 days is just going to be too short.  We want 56.

MR RAYMENT:   Yes.

GUMMOW J:   Why could they not do that?  Wallis operates on the basis that there are concurrent paths to reach the same end but one path has conditions attached to it.  This is not what involves here.  This involves one path but with the power to change that path.

MR RAYMENT:   Yes, but what we submit you could not do is use 447A to make an application of the kind mentioned in subsection (6) outside the period referred to in (5)(a) or (b) before or after or any other time because you would be directly within Wallis, we would submit, if you did so.  You have one power and one power only to extend time in 439A(6).  To say that you can use a general power after the event to extend the time, we submit, contravenes Wallis whatever may be the position about a prospective order.  In other words, to the extent to which a late application is made for the kind of relief mentioned in 439A(6) relying upon section 447A, we submit, for the court to construe 449A as permitting such an order to be made would contravene Mr Justice Dixon’s dictum.

GLEESON CJ:   But leaving to one side your argument about the difference between prospective and retrospective application and concentrating solely on orders under 447A that have prospective application, orders under section 447A made in a variety of circumstances could modify specific provisions and limitations.  That is what it is there for, is it not?

MR RAYMENT:   The notion of a court ordering under 447A that a later court might receive an application to extend time in certain circumstances may raise questions which are not before the Court, with respect.

GLEESON CJ:   Is not 447A there for the very reason that the legislature put a whole lot of strict time limits - things have to be done within five days, for example – into the legislation but then wanted to leave open the possibility that in a particular case somebody could persuade a court that it was unreasonable, or unnecessary, or inappropriate that that particular time limit should apply.  So, instead of saying at the beginning of every section, “Unless a court otherwise orders” or, “Subject to such provision as a court may make” you have this pattern of legislation with all these particular provisions about the way you dot i’s and cross t’s and the time within which things have to be done and then you have a general power to modify the operation of those provisions, having regard to the circumstances of the individual case, and at least in cases where that power operates prospectively, as distinct from retrospectively so that there is no problem about taking away vested rights, it cuts across the dictum on which you rely in Wallis.

MR RAYMENT:   All we put it about it is this, if you had such a view, that is, a view that the court ought to be able to do that, you would not have included within 439A(6) the requirement that the application for an extension of time in that section must be made within the period mentioned in subsection (5).

McHUGH J:   But once you concede that it may operate in respect of provisions, as opposed to the Part as a whole, is it not difficult to pick out any individual provision and say it cannot be subject of a 447A order, at least prospectively.  I mean, take 439C.  Could the court order that at a meeting convened under section 439A that the creditors could not resolve that the company be wound up?  I know it is a far‑reaching exercise of the power, but why could not the Court make such an order or that the administration should not end – that they may not resolve that the administration should end.

MR RAYMENT:   You could imagine orders that are so wide that the power could not be there, with respect.

HAYNE J:   But given the variety of companies to which this Part may apply, the one individual company through to the very large commercial enterprise, is it surprising that there should be some modifying power, some dispensing power?  The example Justice McHugh gives of the order that the creditors may not resolve for winding up might be made in a case where the court was faced with evidence that showed the clear need for a curial winding up rather than some creditors voluntary.  I cannot for the moment bring to mind the circumstances but I think they can be imagined, can they not?

MR RAYMENT:   Really the discussion, with respect, is suggestive of the proposition concerning section 447A(1) that the words “how this Part is to operate” will exclude the operation of a particular provision rather than the operation of the Part as a whole.  A submission made below to which the special leave grant does not extend was that this really conferred an executive power on the court or a legislative power.  Your Honours, one can imagine ‑ ‑ ‑

GUMMOW J:   That was all pre-Wakim anyway.

MR RAYMENT:   Yes, it was but, your Honours ‑ ‑ ‑

GUMMOW J:   The eagle has taken off, gone.

MR RAYMENT:   Yes.

GUMMOW J:   And it is not coming back.

MR RAYMENT:   No, I am not seeking to bring it back but what I am saying is that the need for this power to be a judicial power ‑ ‑ ‑

GUMMOW J:   We are talking entirely in the State realm now.

MR RAYMENT:   Yes, I see.

McHUGH J:   It does not seem much of a Kable point anyway.

MR RAYMENT:   No.

GLEESON CJ:   Take as an example section 440B.  Suppose an application were made under 447A for an order that in relation to a particular company the Administrator should not have power to consent to a person enforcing a charge on the property of the company, so that it was only with the leave of the court.  Suppose there were particular circumstances in relation to a particular company that made people want to force somebody who wanted to enforce a charge to go to the court rather than have the opportunity to rely on the Administrator’s written consent.  Why would not the power given by 447A be wide enough to comprehend a power to order, in effect, that it was only with the leave of the court that a person could enforce a charge on property of the company?

MR RAYMENT:    Section 440B seems to be in exclusive terms, your Honour.  It says you:

cannot enforce a charge on property of the company, except –

with (a) or (b) by force of the statute.  Your Honour ‑ ‑ ‑

GLEESON CJ:   Could the court under 447A write out (a)?

MR RAYMENT:    We would submit not, just as a matter of construction of 447A.

GLEESON CJ:   I pick that example because it is something that happens during the administration of the company and that there is no problem about your prospective/retrospective dichotomy.

MR RAYMENT: Yes, we would seek to say not. Your Honours, closely similar questions arise in this appeal with respect to section 1322 as arise with section 447A.

HAYNE J:   Just before you come to 1322, Mr Rayment, if you were to make good the proposition you have made in relation to provisions such as 439A(6) or 444B(2), is that a proposition that has direct effect in this case?  What is the particular provision that you say is exhaustive of the power of the court?

MR RAYMENT:   Thank you.  Your Honour, could I go to 435C(3).  That provision, in our submission, declares to the contrary of any power to extend time except as provided by subsection (6) or section ‑ ‑ ‑

GLEESON CJ:   Or, more accurately, it would be 435C(1)(b), would it not?

MR RAYMENT: Yes, with 435C(3), and declares to the contrary of there being a power to modify section 444B(2). It takes those two cases and treats them as cases where the administration ends. Now, significantly, in our submission, (b) in paragraph 435C(3) is in the same enumeration and, moreover, as we have previously submitted, 435C(3) is subject to no proviso saving possible effect of section 447A or section 1322. Compare section 437D(4) which saves such a possible effect, saves the power of the court to otherwise order.

Nothing corresponding to that provision is found in 435C(3) but we submit that the principles that are referred to in R v Wallis, if thought to be applicable, have that degree of relevance because the same enumeration treats paragraph (b) in the same way in subsection (3).

GLEESON CJ:   Mr Rayment, you pointed out to us earlier that at least we know one example of a way in which 447A does operate and we find that example referred to in 435C(3)(a).

MR RAYMENT:   Yes, your Honour.

GLEESON CJ:   The legislature itself gives an example of the way 447A may operate.

MR RAYMENT:   Yes, your Honour.

GLEESON CJ:   Now, in relation to that example, what is the source of the power under 447A to make an order of the kind referred to as an example of the operation of 447A in 435C(3)(a)?

MR RAYMENT:   Well, subsection (2) makes it plain enough that it is an example of subsection (1), we would submit.

GLEESON CJ:   But what is it an example of?  I mean by that ‑ ‑ ‑

MR RAYMENT:   The kind of order that the court might think it appropriate to make, namely an order for terminating the administration.

GLEESON CJ:   Well, it is an example of the court making an order that it is not empowered anywhere else to make.

MR RAYMENT:   Yes.  For what may or may not be empowered anywhere else to make, one has to bear in mind all the time 447F, for example.

GLEESON CJ:   But those examples given in subsection (2) have to be particular examples of something more general, and what we are concerned with is the given appropriate description of the more general.

MR RAYMENT:   Your Honour, section 109L is the provision of the law about examples, and all it tells us is that the example is not exhaustive, which does not suggest that it is – it may or may not be exhaustive, but it is not taken to be exhaustive - and if the example is inconsistent with the provision, the provision prevails.  So if this Court construes the section in such a way that it does not agree with the example, well then, so be it.

HAYNE J:   The other source of power for a court to terminate a deed that might bear on this is 445D(1)(g).

MR RAYMENT:   Yes.

HAYNE J:   It terminates for some other reason.

MR RAYMENT:   Yes, yes, that is terminating the deed.

HAYNE J:   Yes, and if you terminate the deed, does the administration automatically come to an end?  That is terminating a deed, not terminating an administration.  Yes.

MR RAYMENT:   Yes, the administration – it is regarded as an outcome of the administration that the deed is entered into.

HAYNE J:   Yes.

MR RAYMENT:   And the Administrator of the deed will prima facie be the Administrator of the company, but need not be.  But I think it is regarded as being an end of the administration once the deed commences, your Honour.

HAYNE J:   And there is no equivalent provision for terminating administration, as opposed to terminating a deed?

MR RAYMENT:   Section 447A seems to go to both, it would seem, but there is no specific one, I think that is right.

HAYNE J:   Yes.

MR RAYMENT: Now, your Honours, so far as section 1322 is concerned ‑ ‑ ‑

GUMMOW J:   Just before you go to that, Mr Rayment, page 87 of the appeal book sets out Justice Santow's orders and in particular, it is order 4 that you attack, is it not, on this branch of the case?

MR RAYMENT:   Yes.

GUMMOW J:   That carefully lists the various sections.

MR RAYMENT:   Yes.

GUMMOW J:   That is the detail of the answer you were giving to Justice Hayne a while ago, is it not?

MR RAYMENT:   Yes, yes.

GUMMOW J:   Section 439A(2), 435C(3), 439B, 439C, 449E(1), that is it.

MR RAYMENT:   Yes.

GUMMOW J:   Well.

MR RAYMENT: Your Honours, if section 447A does not have the relevant effect, and if resort may only be had to section 1322, as we submitted in our final paragraph in our written submissions, that would not take the case far enough because section 435C(3)(b) refers to the effect that the section has, not to the effect that some order of the court might have.

GUMMOW J:   How do you attack orders 1, 2 and 3?

MR RAYMENT:   It may be that part of the desired result was sought to be justified under 1322 because the whole of it could not be justified under 1322, and that is really the point I am presently making.

GUMMOW J:   So you are saying that orders 1, 2 and 3 would not have been enough?

MR RAYMENT:   Would not have been enough, and you would need 4 before this matter would be fixed up.  A corresponding point arose in David Grant. The next matter is this, that we would submit that the operation of the general provisions of section 1322 would be repugnant to the special scheme enacted by Part 5.3A. Your Honours, if Part 5.3A contains a code for the commencement and ending of administration and a definition of that state of affairs in section 435C, then section 1322 has no room to operate. We submit that for the same reasons as 447A is bad, section 1322 is bad as a source of power. May it please your Honours, those are our submissions.

GLEESON CJ:   Thank you, Mr Rayment.  Yes, Mr Robb.

MR ROBB:   Your Honours, we have substantially set out our submissions in our written submissions.  I would not seek to repeat what we there say at great length.

May I start by going to section 439A and pointing out that which is obvious, that being that in each of the subsections there are various requirements described in terms of the peremptory “must” both in relation to timing of meetings and in relation to the duration of notice and the way notice should be given and what should be included with notices.

Now, we submit that the Court should interpret legislation on the assumption that the legislature will be reasonably aware of the practical exigencies and circumstances in which the legislation will operate.  We also submit that even in the most conscientious administration the time limitations and requirements are such that human fallibility being what it is and the human race being not uniformly numerate, things such as missing time periods, while on the face of it they should never happen, common experience says that from time to time that sort of thing does happen notwithstanding the best attempts to comply with requirements.

Now, we would submit that it is not too colourful to raise the possibility that there are any number of administrations, deeds of company arrangement or liquidations that are being conducted in accordance, purportedly, with Part 5.3A in relation to which at some stage one or other of these peremptory requirements has not been complied with.  This is one such case and there are others.

GLEESON CJ:   Well, 439A(2), I would have thought, provides a good example of that bearing in mind the learning, including decisions of this Court, as to how you go about calculating when a period of that kind, which is a very tight period, begins and ends, a form of calculation that I always used to do on my fingers.

MR ROBB:   Yes.  If one has time this counsel tries to do it with a diary but that is usually in the quiet of my chambers.

GLEESON CJ:   Yes, but you need to know which midnight is the relevant midnight.

MR ROBB:   Where you start.  Yes.

GLEESON CJ:   What is there – Forster v Jododex is the case on it, is it not?

MR ROBB:   Yes, and some of the cases – I think the Cawthorn case is one, there are others - in this particular context decide that you count the first day whereas in some situations you do not.  That is not a point that, frankly, I have studied for the purposes of this particular appeal but your Honour is quite right, with respect, on the point that there are issues that simply may not be appreciated let alone in the hurly‑burly of an administration.

Now, we would simply make the point, and it is not, we submit, irrelevant, that if my learned friends are right there are any (unknown) number of deeds of company arrangement and liquidations with the usual consequences that are, in fact, invalid.  Now, it is true that section 439A(6) deals with, in express terms, the court’s extending “the convening period on an application made within the period” and in section 439B(2) there are provisions concerning the adjournment of meetings to the effect that they shall not “be adjourned to a day that is more than 60 days after the first day” et cetera.

Now, it is clear, we accept, first that the legislature has expressed an intention, at least in the ordinary case, that the duration of administrations will be a matter of concern and it is expressed at one place or another in the explanatory memorandum that there was a concern that the American Chapter 11 procedure not apply in Australia but we would submit first that whatever may be the position in relation to meetings held too late, it is quite a different thing for meetings held too early.  In the first place, the consequences of a meeting being held too early are simply not dealt with expressly.  In appropriate circumstances the holding of meetings too early would be in conformity with the objects of the Part and we have indicated in our written submissions parts of the explanatory memorandum to that effect.

GUMMOW J:   This seems to be a very narrow submission, is it not, at the moment?

MR ROBB:   Well, it is, yes.  It is not the most important submission.  It is made only because, in the context of taking your Honour to 439A, I have raised it.

GUMMOW J:   Would uphold paragraph (a) of order 4?

MR ROBB:    I am sorry, I misheard you.

GUMMOW J:   It would uphold paragraph (a) of order 4 made by Justice Santow?  That is what you are talking about, is it, on page 87 of the appeal book?  Namely ‑ ‑ ‑

MR ROBB:    Yes.

GUMMOW J:   What his Honour ordered about 439A(2).

MR ROBB:    Yes, that is right.  We simply wish to make a slightly wider point that all of the arguments dealing with the circumstance where there is an open provision like 447A and specific provisions ‑ ‑ ‑

GUMMOW J:   The question really is, Mr Robb, what do you mean by open?

MR ROBB:    It is a term I ‑ ‑ ‑

GUMMOW J:   What would a ground of appeal ever be that was open against an order made under 447A?  How could one ever attack an order made under 447A in an appeal?

MR ROBB:    Not on the ground that the court could not have power.  We accept, with respect, the statements that the learned Chief Justice made that 447A being a part of Part 5.3A gives the court power, at the very least, in a prospective sense ‑ ‑ ‑

GUMMOW J:   Does it include 447A itself?  That is part of it.

MR ROBB:    I would have to submit no, but that, perhaps, has logical connotations which I have to confess I find hard to grasp.

GUMMOW J:   It is a starting point, surely.

MR ROBB:    We would submit that the apparent intent of section 447A is that it empowers the court to make orders as to how other sections are to operate.  If it were argued that somehow 447A was a hole in time or space whereby the court could suddenly give itself more power within the context of section 447A, that, we would think, would be a different thing.

GLEESON CJ:   I am not sure that Mr Rayment denies that if, in the present case, the people concerned had come quickly to the court and said, “Look, there is a very good reason why we want to have this meeting early.  It is to do with persuading people to continue with supplies to the company.  We want you to make an order under 447A, modifying 439A(2) in the manner that appears on page 87 at line 15”, then it is not necessarily inconsistent with Mr Rayment’s argument that that power would have existed.

MR ROBB:    I must confess I had understood that he was making a general submission, and your Honour’s will be the judge of this, that 447A did not empower the court to make such orders.  We understand that he has made another submission that where a section like 435C has effect in accordance with its terms and the administration comes to an end, then whatever power might otherwise have resided in the court under 447A no longer exists.

GLEESON CJ:   Perhaps it would be more accurate to say it is not necessarily inconsistent with the reasoning of Mr Justice Powell in the Court of Appeal, that an order under 447A could have been made in the present case if it had been sought within time.

MR ROBB:   Yes, that is true, your Honour, but it is our submission, your Honour, that putting aside the issue of whether 447A somehow entitles the court to alter the effect of 447A, which I humbly admit I find difficulty dealing with conceptually, we submit that 447A entitles the court to make both prospective and to use the term retrospectively “operating orders” as to how the other sections of the Part will operate.  We acknowledge, as we must, that there is a flavour in the use of the words “is to operate” which has a future connotation, but we would submit that there is no reason to restrict the operation of that provision in that way and very much to the contrary.

GUMMOW J:   Well, the answer may be that the court may make an order and “is to operate” refers to “is to operate by virtue of the order”.

MR ROBB:   Yes, that is what we submit, that there is a perfectly proper way that those words can be understood.  In one sense, if a court makes an order today, it always operate from the date of the making of the order, but if it has effect from that date of adjusting things that have happened in the past, that does not crash into the language in any way and we would add, if we may, that as a matter of practical reality administrations go so quickly that if a power on the face of it wide such as that in section 447A could only be made if the parties got to court early enough, that would be very, very restrictive and, we would submit, unnecessarily so.  If one has to call a first meeting within five days or whatever the period is, it is almost practically inconceivable how one gets to court properly armed with evidence in those sorts of time periods.

McHUGH J:   Well, do you submit an order could be made under 447A before the administration of the company has commenced?

MR ROBB:   Yes.

McHUGH J:   You go that far?

MR ROBB:   Yes, and such an order could only be prospective and for the moment my common failing is in thinking of good examples, but one imagines that normally directors who become aware that the company is insolvent would have to act quickly, so it is hard to think of good examples where acting quickly is consistent with getting to the court, but the circumstances in which companies are insolvent are so diverse that it is conceivable that it may be apparent that an administration is the only sensible way to go but that, to use the example I think Justice Gummow gave, is that if it started on the basis that it is five days, 21 days, that is hopeless, it will never work and it will explode, so perhaps one would get to the companies judge or a duty judge early enough to get those orders and if it be correct that it is easier to defend section 447 with a prospective operation than retrospective, then we would submit that that would tend to support the proposition that we have just put.

GUMMOW J:   But such an order would have to be conditional upon the steps then being taken forthwith to initiate the administration, would it not?

MR ROBB:   Yes, that would have to be the case and one imagines there would be ‑ ‑ ‑

GUMMOW J:   I mean, the person or persons involved would have to be competent to give that sort of undertaking.

MR ROBB:   Yes.

GUMMOW J:   In other words, it would have to be an undertaking that could be effective because they would have to have the relevant capacities to institute or have instituted.

MR ROBB:   Yes.  Your Honour, if the question is whether the court has power to do it, we would submit the answer is yes.  I would not like to be briefed to get such an order because for all sorts of reasons ‑ ‑ ‑

HAYNE J:   But why not in the case of the defective commencement?  In the case of the defective commencement of administration can 447A remedy the defect?

MR ROBB:   We submit yes.  Various comments have been made about it in the course of argument but focussing even on the provisions dealing with the calling of meetings, the first meeting, the second meeting and meetings to amend deeds of company arrangement, which is 445F, as a matter of appearance there are specific time frames, notice periods, means of giving notice and what has to be given to the creditors, but, as an integral part of Part 5.3A one finds 447A.  We would submit that there is reason to approach the interpretation of the Part as follows:  in the explanatory memorandum and elsewhere one thing that is stated is that the Part will operate in a flexible way and will not require constant court attention and constant court orders.

If that is ever to be achieved then it would seem to follow that there must be at least a regime laid down with some specificity that in the ordinary course could be followed by members of the public who were trying to implement the Part, hence, what one might see as a very particular regime.  It is not going too far to suggest that there may be many cases where for all sorts of reasons it is unrealistic to think that the stated objectives of the Part can be achieved with strict adherence to the regime.

GLEESON CJ:   If you are going to have a whole series of what look like sudden death provisions you might, in order to make them practicable, need to have a fairly wide relieving power.

MR ROBB:   Yes.  And if 447A – if, we submit it does not - but if it appears to the eye to be somewhat startlingly broad, given its context, that is almost driven by, we would respectfully submit, the multifarious specificity and otherwise legal rigidity of Part 5.3A, that the legislature in a sense had a choice of giving a broad power in 447A and making it discretionary, allowing the Court to impose conditions.

GUMMOW J:   Yes, I know.  Just stop there for a minute.  You say “making it discretionary”.  What does that mean?  Discretion controlled by what factors?

MR ROBB:   The only answer that one ‑ ‑ ‑

GUMMOW J:   Does the phrase “as it thinks appropriate” really add anything?

MR ROBB:   No.

GUMMOW J:   It would hardly empower the court to make orders it thought to be inappropriate.

MR ROBB:   Yes.

GUMMOW J:   Why is paper  consumed with these words being strewn across it?  So the court may make such to order and what is it that informs the limits of that discretion?  Is it just an order – a Water Conservation and Irrigation Commission v Browning-type power, that you have to look to the subject, scope and purpose of the Act and that is all that you can do?

MR ROBB:   To start with, it is an onerous discretion because of the very broadness and if, in fact, it has the effect raised by the Chief Justice, that is, it is albeit somewhat distant equivalent of provisions in Part 6.  Then I would submit that there is a discretion, and it must be exercised judicially, that would be somewhat out of the common run of exercises of discretion that may be made, for instance, on an application for an injunction.  But nonetheless, the courts would have regard to various things, as has successfully happened in a relatively substantial number of cases that are listed.

GUMMOW J:   Now, does this involve consideration of parties in any way?  In other words, an interlocutory injunction should worry about third parties who are not there.

MR ROBB:   Yes.

GUMMOW J:   Does that sort of consideration intrude here?  Is it a necessary factor in formulating this discretion, because it may, if it is retrospective, have significant impact on third parties mainly.

MR ROBB:    Yes.

GUMMOW J:   This is what worried Justice Powell.

MR ROBB:    Yes.  We would respond in this way.  How 447A has effect in that regard will always depend upon the particular facts before the court.  If the issue were that the court were asked to substantially reconstruct, from scratch, the way 447A was to apply and, in fact, was asked three months into the administration of a Deed of Company Arrangement to do so, then I have to confess that I find it difficult to grasp the particular considerations, and the onerous nature of the considerations, and one imagines a court would be, for various reasons, reluctant in the greatest degree to do that.  When one sees that this case, as in most of the other cases, are almost slip cases where ‑ ‑ ‑

GUMMOW J:   This is an easy case, it seems to me.

MR ROBB:    Yes, that is right.

GUMMOW J:   But we have to think about the hard ones.

MR ROBB:    Quite.

HAYNE J:   Well let us give it some specificity.  By hypothesis, the company concerned is insolvent.

MR ROBB:   Yes.

HAYNE J:   Necessarily there will be, or almost inevitably, there will be both creditors and contributories.  Their interests would have to be taken into account, would they not?

MR ROBB:   Yes.

HAYNE J:   We have the breadth of statement in 435A about the objectives of the Part.  Presumably, a judge exercising the discretion under 447A(1) may be influenced, probably should be influenced, by those objects.  Are there any other criteria or principles that would inform the exercise of the discretion under 447A?

MR ROBB:   I hesitate to give an absolute answer because I am likely to be wrong, but I first struggled to answer Justice Gummow’s question theoretically, and it is hard to do absolutely and across the board, but one imagines that there would be an insolvent company, there would have been creditors’ meetings that have been held, there would have been reports from the Administrator  ‑ ‑ ‑

HAYNE J:   None of those steps necessarily have occurred if somebody leaps into court very quickly.

MR ROBB:   Yes.  That the answer depends upon the circumstances is not a very attractive answer, but  ‑ ‑ ‑

GUMMOW J:   But there may be property rights of third parties, as Justice McHugh mentioned.

MR ROBB:   Yes.

GUMMOW J:   Or vested rights of third parties that may be divested by this.

MR ROBB:   Yes.

HAYNE J:   Such as, Mr Robb?  What right would be divested by or could be divested by an order of the kind now in question?  The right, for example, of a secured creditor to enforce that security may be affected, it may be suspended if administration goes forward.

MR ROBB:   Yes.  The rights of third parties that might be affected perhaps fall into two classes.  One is rights that arise under the law outside the very operation of Part 5.3A itself, and if one is asked to give a satisfactory general answer as to how the operation of 447A might apply in relation to what I might call, for want of better, genuine third party rights that pre-exist and are vested, that is one thing.

But a point we wish to make in our submission, which may be appropriate to make here, the other class of supposedly vested rights are rights that arise because under the operation of 435C an administration has come to an end.  They are the sort of rights that my learned friend would have to say are vested in this case, and we would submit about that that first, at a legal level, once one accepts that 447A is part of 5.3A, and assuming that there is no other reason why it should not be applicable, there is no part of the Part – forgive me – that gives rise to vested rights in a way that are not subject to orders made under 447A.  That is to say, if something happens which would come technically within the terms of 435C and bring the administration to an end, whatever it is is subject to an order being made subsequently under 447A.  The right does not become vested, it is not separate.  It does not arise independently of 5.3A.  If that were – I am sorry, forgive me?

McHUGH J:   Do we know what happened to this company between the making of the declaration by Justice Whitlam on 19 June 1997 and the commencement three or four weeks later of the proceedings in front of Justice Santow?  What happened in that period?

MR ROBB:   Those assisting me will correct me if I am wrong, but I do not recall that there is any evidence of what happened separately between Justice Whitlam’s declaration and the commencement of the proceedings for relief.  There is ample evidence that between the date of the meeting at which the creditors resolved that the company go into liquidation the company was substantially wound up.  There is no doubt that the trigger for what has subsequently occurred is that one of the steps which the liquidators tried to take to get in the company’s assets was to serve statutory demands on companies associated with Amor, who was the director who instigated the administration in the first place.

That much is quite clear.  The employees were terminated, the assets were gotten in and the secured creditor paid out.  The evidence does not go into minute detail about that, but that is what substantially happened.  That is why we do make the submission that if the occurrence of an event comprehended within 435C once and for all brought the administration to an end and vested rights, then the reality of it is that these liquidators and everybody else who is acting upon the appearance of a valid revolution committing trespass and heaven only knows what - - -

GLEESON CJ:   But Justice Santow dealt at length in his judgment, did he not, with arguments with which we are not concerned on the exercise of his discretion based in part upon suggested interference with rights of third parties?

MR ROBB:   That is correct.  The whole thing was litigated at length and in fact, properly, the party resisting the relief was entitled to rely upon vested rights of third parties who did not choose to come to court to preserve their own rights, and that was litigated in great length and the court found that no rights were interfered with.

GLEESON CJ:   I must admit I skipped very quickly over that part of the judgment because it is not the subject of the grant of leave to appeal but, apart from the circumstances of this particular case, it is easy to imagine cases in which there could have been substantial inference with vested rights.

MR ROBB:   Yes.

GLEESON CJ:   Your argument is that that might constitute a discretionary consideration but it does not touch the power to make an order under 447A?

MR ROBB:   Yes, and in some of the first instance decisions – I am afraid I could not bring them to mind from the collection, the order has been made subject to the right of an interested party to move to set it aside.  That is a course which equity trial judges take in such circumstances but we would submit that unless one interprets 447A in a very restrictive way as Justice McHugh was indicating, it has to be given a broad interpretation in accordance with its words and that, if there be a risk that the rights of third parties will be affected, that must be protected in the way the power is implemented rather than deny the power to start off with.

McHUGH J:   That means that you substitute for a fixed rule of law a discretionary judgment of a court.  Is that consistent with what we said in Plenty v Dillon and in Coco v The Queen and other cases, that you do not construe general powers as taking away, I think we said fundamental rights, except where the language is clear?

MR ROBB:   That must be true as a prima facie proposition but this Part 5.3A has radical effect in accordance with the express language of the statute in relation to the rights of third parties.  The starting position is that almost anything that third parties would normally be entitled to do in the ordinary implementation of their rights cannot be done.  That is somewhat of a generalisation.

McHUGH J:   Not if it operates prospectively.  You are talking about a situation where the administration has ended as a result of the operation of the Act but then you want to use 447A to revive it.

MR ROBB:   The difficulty which we understand when one looks to the significance of vested rights has to be matched by the fact that almost invariably parties will act in accordance with the appearances that the requirements of Part 5.3A have been complied with.

McHUGH J:   For the most part I would have thought the vested rights to be effected would really be, in effect, rights of a company or, perhaps, the directors.

MR ROBB:   Yes.

HAYNE J:   But the rights of the creditors and contributories are regulated by 5.3A.  On one view of events the rights and duties they have can be understood as regulated by the whole of 5.3A without regard to 447A.  If you take the step of saying that the rights and duties of creditors and contributories that are identified in Part 5.3A are rights and duties subject to defeat by, or modification by, 447A some, at least, of the problems may diminish.

MR ROBB:   Yes.

HAYNE J:   I am not sure that they go away, though.

MR ROBB:    It is hard to think that a Part of this extraordinary nature, if I may use that word, can be interpreted in a way that there will never be any problems left over.  The Part, we submit, demonstrates a clear intention that if the company by the directors on the ground of insolvency put the company into administration, that it is for the creditors to resolve whether there would be a DCA, a winding up or a return to the hands of the directors, and that if the argument my friend has put is right, the effect of this reliance upon supposed vested rights by operation of 435C is that the clear intent of the legislature effectively implodes because of a non‑compliance with a technical but peremptory requirement, notwithstanding at the appearance that there are meetings and resolutions and notwithstanding that from a certain date indefinitely into the future, all relevant parties act on the assumption of validity.

McHUGH J:   Take a case where an administrator quickly sees that there is a problem and he says, “I’m out of here.  As far as I’m concerned, the administration is finished”, and the company resumes business.  But then an interested person makes an application under 447A and says, “Well, the administrator was wrong or, if he was right, the administration ought to continue”.  Does the court have power in that situation?  You would say, I suppose, they could mould their orders and it is a discretionary matter, but does the court really have power in that situation to interfere with rights that would then come into being between the company and third parties?

MR ROBB:    Our submission would be yes, that the case is so extreme that it might be an evident misuse of the power to do so.  With respect, one understands the difficulty.  We are trying to rely upon the section in what might be described as an easy case.

McHUGH J:   Yes, ordinarily I think the only vested rights that are really going to be affected are the rights of the company and indirectly its directors and shareholders, and that if people have been acting in accordance with - or the assumed validity.  They have entered into arrangements when the Administrator has entered into arrangements, rights have come into being with third parties and by reason of the operation of one of these provisions it may be invalid or avoid transactions, so the company then may have rights to obtain property back, and so on.  So, it is really the company’s rights that I would think generally would be ‑ ‑ ‑

MR ROBB:   Yes.  If I may take that one further, addressing an issue we do raise in our written submissions, when section 435C(3)(b) talks about a convening period ending without something having happened, if what had to happen just has not happened, it just was not done, then one imagines that parties would then act upon the appearance that a requirement had not occurred, the company had ceased to be in administration, and that a secured creditor could enforce the charge, your Honour Justice McHugh might ask me does it not follow from my submission, if 447A is as wide as we submit, that at some later time the court could say, “Well, we’re going to rule that notwithstanding that the requisite act did not happen and everybody acted on the basis that it didn’t happen, the company will be in liquidation,” or whatever.

It is hard, given the language of the statute, to say that there is no such power.  It is easy to say it may be a completely inappropriate exercise of the power and be obviously inappropriate.  Our case is on the other side of the line where not only are appearances that the requirements of Part 5.3A were complied with, but in the ordinary course of human affairs everybody has acted in accordance with that.  One has to acknowledge the difficulty of the extreme position, but if that difficulty were sufficient to destroy the width of the power in 447A, then subject to the availability of 1322 ‑ we are happy to be preserved by either – 447A could not be used where there is an irrelevant – I will not say irrelevant – a technical defect in the commencement of the administration which is irrelevant to all purposes which is not discovered – one can get very colourful – for five years, heaven only knows, anything could be done on the assumption and appearance that the requirements of the Act were complied with and it will not be remediable.

McHUGH J:   Well, all judges bring a certain amount of intellectual and other baggage to the judgment seat.  I am rather like Justice Brennan.  I
am reluctant to see people’s rights depending upon the exercise of discretions by anybody, courts, public officials or otherwise.

MR ROBB:   Your Honour, one accepts that view but one starts from the reality of Part 5.3A which, on any reading of it, starts by having radical effects on the rights of third parties.

McHUGH J:   I appreciate that but that is Parliament that has done that and it has set out its position very clearly.

MR ROBB:   Yes.  Then, the second thing it does, perhaps in a non‑traditional way, it gives the Court a very wide power to fix the consequences of what could be a serious – among other things – prejudicial effects on vested rights because otherwise Part 5.3A is like a tractor out of control, it just keeps ‑ ‑ ‑

GLEESON CJ:   Well, vested rights or rights that people might reasonably have thought were vested rights.  A possible point of view is that when you bear in mind the ample possibility for slips in relation to the application of this Part, and when you bear in mind the practical consequences that might follow from such slips if they are not discovered for a substantial time, there is a large possibility, indeed an almost moral certainty that you will have companies proceeding under what are reasonably believed to be valid administrations which could be upset a long time after the event on the basis of some technicality of which that case of MYT v Mulcon, as I recollect it, provides a good example.

MR ROBB:   On its basic facts, yes, we so submit and when one takes into account those rights, those expected rights, whether they are vested in law or not, one simply has to deal with those and the reality of those as well as what rights may have antedated.

GLEESON CJ:   But, that was a case in which a majority of this Court, it is true, held that there was not actually the irregularity that was thought to have occurred but the irregularity that was thought to have occurred, and that could well have occurred in the given case, involved a highly technical matter of the operation of the memorandum and articles of association of a small company in circumstances where there was a director heading overseas and a long time after the event somebody noticed and took the point and said, “On that basis what everybody thought was a valid administration was not a valid administration at all and the company, although you did not know it, has been in liquidation for many months”.

MR ROBB:   Yes.  That is, with respect, a good example and it is why we make the point that I will not repeat in paragraph 25 of our submissions concerning certainty.  The very proposition that my friend’s interpretation will lead to certainty in application of when administrations begin and end is, with respect, illusory because, if the reason why the administration comes to an end is some technical flaw in the way meetings are contravened which in the nature of things is likely to be missed, then everybody will not assume that the administration has come to an end; they will assume that legal consequences are in accord with appearances.

McHUGH J:   But both sides seem to go for an almost all or nothing situation.  We said in Project Blue Sky that one should attempt to give a harmonious construction to leading provisions and subsidiary provisions to make them both operate.  Take the 60-day provision.  On your view, courts can just ignore that.  They can just extend it indefinitely as a matter of discretion.  Do you have any submissions as to whether or not 447A may have its full effect in respect of some provisions but not in respect of others as a matter of power or do you say it is all a matter of discretion?

MR ROBB:   We must accept that there is an available argument that where there is a specific time‑extending provision which is to be done on a certain basis, that the particular would apply to the exclusion of the general.  We do not need to rely upon that; that is not our case.

GUMMOW J:   What is the general?

MR ROBB:   Section 447A.

GUMMOW J:   It is not the general; it is a particular power to modify a particular.

MR ROBB:   Yes, forgive me, Justice Gummow.  What your Honour says is accepted.  I am not trying to say to the contrary of that, but what I am simply saying is that on any view where there is a power which is specific, there is some ground for arguing that that means that 447 should be given some restricted meaning.  That is not our submission. We submit that in our case, there is no such specific provision and either 447A applies or it does not.

GLEESON CJ:   As a matter of legislative intention, it might be thought that one of the very reasons you need 447A is because of all these specific provisions which might operate quite unreasonably in a given case.

MR ROBB:   Yes, that is our submission.

GLEESON CJ:   That does not deal with Mr Rayment’s prospective versus retrospective argument, but it deals with his argument concerning Wallis.

MR ROBB:   Yes, that is so, we have to rely upon other arguments in relation to the prospective/retrospective issue.  Having the opportunity of relying upon 447A and 1322, we do.  We succeed if either of them is available as ‑ ‑ ‑

GLEESON CJ:   What do you say about Mr Rayment’s argument that 1322 does not get you far enough, absent the availability of 447A?

MR ROBB:   Yes, we submit that  ‑ ‑ ‑

GUMMOW J:   In other words, could order 4 have been made under 1332?

MR ROBB:   May I approach the answer to that in a particular way.  We submit that 435C says that if certain things do not happen by a given date, the administration will end.  If 1322 empowers the court, as we submit it does, to declare that the conditions for section 435C have occurred, then even though the order takes effect retrospectively, the result is that consequent upon the court’s remedial order, the administration has not come to an end.

When one looks at 1322, it does not empower the court to make an order that administration has not come to an end.  But if the administration comes to an end because a meeting has not been validly convened and a resolution validly made, then an order which retrospectively invalidates those conditions then underpins 435C in a way that the meeting just has not come to an end.

GLEESON CJ:   What is the proceeding that is by a virtue of 1322 not invalidated?

MR ROBB:   I should look at the orders, because otherwise I might  ‑ ‑ ‑

McHUGH J:   Section 439A, is it not, by reason of the provisions of 439A?

MR ROBB:   Yes.

GLEESON CJ:   I just want you to relate the words of 1322 to the facts of this case.

MR ROBB:   Yes.  The answer is, the proceeding is the meeting and the resolution of the creditors.  Frankly, I confess I cannot bring to mind – various of the cases that are in the list of cases in this context have held that these sorts of delays are effectively proceedings for the purpose of 1322.

HAYNE J:   The relevant event specified in 435C(3) is the expiry of a particular time without a “meeting being convened in accordance with”.

MR ROBB:   Yes.

HAYNE J:   How do you relate the words of 1322 to that set of provisions?  Firstly, which of the subsections of 1322 applies and then next, how do the words of that subsection operate?

MR ROBB:   If one goes to 1322(4) one finds:

Subject to the following provisions of this section but without limiting the generality of any other provision of this Law, the Court may, on application by any interested person, make all or any of the following orders, either conditionally or subject to such conditions as the Court imposes:

(a) an order declaring that any act, matter or thing purporting to have been done, or any proceeding purporting to have been instituted or taken, under this Law or in relation to a corporation is not invalid –

I think I confused myself when I answered your Honour the Chief Justice’s question because I did assume that there needed to be a proceeding.

GLEESON CJ:   They say the meeting “is not invalid by reason of any contravention” of 439A(2).  Is that right?

MR ROBB:   Yes.

McHUGH J:   But they had to make an order abridging the time under 1322(4)(d).

MR ROBB:    I thought, thinking back to it, that that was done in the alternative for more abundant caution, to get the same result by two routes, as I recall drafting the order that was proffered to the court.

HAYNE J:   Well, again, I am sorry to delay you on this, but which particular words in 1322(4)(a) do you pray in aid?

MR ROBB:   Your Honour:

any act, matter or thing purporting to have been done…..under this Law –

because the meeting was purported to be convened under the law.

HAYNE J:   Yes, “is not invalid by reason of any contravention”.  How does that apply in the case of 435C?  Perhaps I am straining at a gnat but I just for the moment do not understand the way in which you say the words of 1322 actually work.  I am used enough, Mr Robb, to 1322 being prayed in aid by counsel saying it cures all, and generally speaking that is right, but we may have to look a bit more carefully here.

MR ROBB:    I accept that, your Honour.  Maybe I am starting at the wrong end of it.  If I rely upon subsection (4)(d) and that there is a proper order abridging the time, then the effect is that the only reason why paragraph (3)(b) applied has been cured.  It was held too early and if the time is abridged it was not held too early, therefore, the meeting that was held was a meeting of the relevant type, so that 435C no longer impinges on events to bring the administration to an end.

McHUGH J:   But that produces the curious consequence, as Justice Powell, I think pointed out, that you have a declaration by Justice Whitlam binding on the relevant parties that the meeting was not validly convened within the meaning of the section and then you have an order saying that it was, or a declaration that it was.

MR ROBB:   Yes.  That cannot be escaped.  That is the reason why Justice Santow imposed clearly a condition which he thought was adequate in the circumstances to avoid the consequence that the making of his remedial order which was seen otherwise to be in the interests of everybody would – I am sorry, my sentence has been lost – would have an effect which improperly affected vested rights.  If that is not the way it is done then the mere existence of vested rights anywhere in anybody will be reason to collapse the ambit of the power and it is very hard to see how one collapses short of a singularity.

GUMMOW J: But how do you support order 3, going back to Justice Hayne’s question? That rather coyly just says section 1322(4). It does not condescend to a paragraph like orders 1 and 2.

MR ROBB:   That was made under the consequential provision at the end of subsection (4):

and may make such consequential or ancillary orders as the Court thinks fit.

Now, whether that be right nor wrong, that is where it was made, to make the consequence clear to anybody who could not work out what the effect of shortening times were.

GUMMOW J:   Yes, I follow.

GLEESON CJ:   In relation to order 1 – and we might as well be comprehensively technical – if a statute says you can only do something after St Patrick’s Day and you do it before St Patrick’s Day and you want to get an order that doing it before St Patrick’s Day is effective, does that constitute abridging the time for doing it?

MR ROBB:   I think it does.  I am sorry to put it at that level.

HAYNE J:   But it makes it kosher anyway.  That is all right.

MR ROBB:   In this case there was a shortening of a stipulated time period which makes it easier to conceive of it as an abridgement of time, but the answer I think to your Honour’s question must be yes ‑ ‑ ‑

GLEESON CJ:   It was the word “after” that caused the problem, was it not?

MR ROBB:   Yes.

GLEESON CJ:   Five days after something.  Justice Santow in the form of order 1 got around that by treating the time as something that commenced on 18 February 1997 and then abridging the period after that date.

MR ROBB:   Yes.

GLEESON CJ:   How long do you think you will require to complete your submissions, Mr Robb?

MR ROBB:   Boldly or otherwise, I have taken the view that I had set out fairly extensively most of what I wanted to say positively and I had not thought it appropriate to take the Court to any of the cases that are listed.  I had only, in fact, intended, subject to instructions and what the Court might otherwise ask me, to make one more very brief point.

GLEESON CJ:   We will sit on till one o’clock.  Yes.

MR ROBB:   The brief point is, I hope, a short one.  In paragraph 10 of our written submissions we refer, without elaboration, to an annexure which lists the decisions at first instance and in some cases, appellate courts or at least one case, in this area.  We have to acknowledge that in Watson v Uniframes Limited 55 FCR 556 decided by Justice Davies and in Re Bernsteen 13 ACLC 1608 decided by Justice Branson, those judges in the context of an application under 447A to effect 439(6), that is the extension of time for a meeting, declined to do so.

We simply wish to point out that Justice Davies at page 613 had stated his own opinion that were it not for the express words of subsection (6) that he would have accepted that – I am sorry, I think it was 1322 would have applied in the context of 5.3A.  Now that takes us no further than to say that at first blush his Honour’s decision appears to be against us but when you realise that our case is a different case to that which his Honour was considering, his Honour was in favour of us.

The only other point we would wish to make was that though Justice Branson felt obliged to find in the same way as Justice Davies, in other cases, i.e. Re I & J Foods 58 FCR 92 and Mulvaney v Robb Wintulich

in 60 FCR 81, her Honour was also of the mind that 447A could apply in the context of ‑ ‑ ‑

GUMMOW J:   Yes, you have set that out in cases 15 and 17 on your list.

MR ROBB:   Yes, I am sorry.  Thank you, your Honour.  If it please the Court, they are our submission.

GLEESON CJ:   Thank you, Mr Robb.  Yes, Mr Rayment.

MR RAYMENT:   Your Honours, we are at issue and I will be very brief.  First of all, we would respectfully submit that a power to modify something in a particular case is relevantly a general power for the purposes of the Wallis principle.

Your Honours, so far as the point concerning section 1322 is concerned, we submit that one would not read section 435C(3) as if it said, in paragraph (b)(i), “without the meeting being convened in accordance section 439A subject to any order of the Court under section 1322”. That would make it mean a different thing, in our respectful submission, and that was, we submit, correspondingly held to be the case with respect to the same section, 1322, in Grant’s Case in this Court.  But otherwise, may it please the court, we are at issue.

GLEESON CJ:   Thank you, Mr Rayment.  We will reserve our decision in this matter and we will adjourn until 10.15 tomorrow morning.

AT 12.49 PM THE MATTER WAS ADJOURNED