Conway v Jackson

[2001] HCATrans 195

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S77 of 2001

B e t w e e n -

DENISE CONWAY

Applicant

and

ALAN JACKSON

Respondent

Application for special leave to appeal

McHUGH J
HAYNE J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 22 JUNE 2001 AT 3.36 PM

Copyright in the High Court of Australia

MR D. KNAGGS:   I appear for the applicant.  (of Douglas Knaggs)

MR A. JACKSON appeared in person.

McHUGH J:   Yes, Mr Knaggs.

MR KNAGGS:   Your Honour, the decision from which we seek leave to appeal is a decision by the Full Federal Court which came to the conclusion that section 41(6A) of the Bankruptcy Act includes an appeal as well as an application to set aside a judgment as a ground on which a debtor may apply to the Court for an extension of time to comply with the bankruptcy notice.  The essential point about the application is that the Federal Court failed to take into account two submissions which we say are our stronger submissions and which we put before the Federal Court as our strongest submissions which were not touched on at all by the Federal Court.

The first one is that “proceedings or application to set aside a judgment” as a phrase is a term of art which must be understood in legislation in the technical meaning which a lawyer would ascribe to it.  The case on which we relied in the Full Court below and before your Honours is Jenkins v Income Revenue Commissioners.  That case is at 22, 30 of the application book and at 22, line 30 the extract is this – the judge said:

It seems to me quite illegitimate to take a word which has a technical and precise meaning…and then argue that it has some extended meaning.  If the legislature wished to give the word…some unusual and extended meaning…I ask myself why in the world it did not do so.

McHUGH J:   But why do you say the words “proceeding to set aside a judgement or order in respect of which a bankruptcy notice was issued” is a technical phrase?

MR KNAGGS:   Because we say, your Honours, that any lawyer hearing the expression “proceedings or application to set aside judgment” would understand that not as an appeal but as a specific application to the court that gave the judgment to set it aside on grounds either of all the other and parting considerations or because of some error that might be jurisdictional but not an appeal in the sense that ‑ ‑ ‑

McHUGH J:   But why not?  Why does it not fall – an appeal is a proceeding, that is a legal proceeding and its object is to set aside a judgment or order, so why do not the words cover it?

MR KNAGGS:   To pick up a phrase your Honour used a moment ago when your Honour was discussing – was it the Chaney Case where your Honour said ‑ ‑ ‑

McHUGH J:   Yes.

MR KNAGGS:   We are saying it is analogous to what your Honour remarked there.  An application to set aside judgment in an application in which the end objective is setting aside the judgment.  An appeal is a proceeding where the end result is to go further than that and get another judgment and we say ‑ ‑ ‑

HAYNE J:   Not necessarily.  The order may be, “Appeal allowed, set aside the judgment, granted”, et cetera, “in lieu order retrial”.

MR KNAGGS:   Yes, well, with respect, your Honour, we say we do not have to show that it is always such a case.  We say that if the legislation had its wits about it – which we have to assume – they would be looking at the situation that an appeal very often wants a different judgment.

McHUGH J:   Well, now, could I raise another question, and this goes to the issue of granting special leave.  An order for an extension of time for compliance with the bankruptcy notice having been made, there would now be no failure to comply with that notice until the setting aside of the order on appeal for the extended time that is fixed running its course and it is probable that the extended time will expire before an appeal to this Court could be heard and determined.

MR KNAGGS:   Yes.  Your Honour, we say that this is such a matter of public importance that the High Court would not let that stop it hearing the matter.  Apart from that, we have got an expedited hearing which is why we are tacked on to the end of your Honours’ list today and we use every effort to make sure that that expedited hearing granted by the Court about three weeks ago would bring the matter on.

HAYNE J:   And thus the whole issue that you would want to debate in front of us will become moot, will it not?  Will it not all disappear in a puff of blue smoke when the expedited appeal is brought on and heard?

MR KNAGGS:   No, your Honours.

HAYNE J:   How does it remain alive?

MR KNAGGS:   Your Honour, Mr Jackson has just told me that he has a second mortgage of $100,000 on his property.  Research shows that that was entered two days after the District Court judgment came down.  Now, if he succeeds in his appeal your Honour is absolutely right, the judgment will go.  If he fails in his appeal, we will have the act of bankruptcy right where we want it.

HAYNE J:   Yes, but the time for compliance with the bankruptcy notice will, at the very earliest in the events that have now happened, expire, will it not, at the end of the proceedings of a Court of Appeal of New South Wales? 

MR KNAGGS:   I wonder whether your Honours would agree that the High Court would probably say that having set aside the decision of the judge in the Federal Court ‑ ‑ ‑

HAYNE J:   I am having regard to the fact that the reality is you will not come on in this Court for a considerable time.

MR KNAGGS:   Well, even with an expedited hearing, your Honour.  I mean, supposing this Court were to say, “We will set aside the judgment of Justice Branson and what we will do instead is say the act of bankruptcy occurred back then” which is what we would ask them to do.

McHUGH J:   Yes, but realistically, you would not get a hearing in this Court before, I would have thought, October.

MR KNAGGS:   It will not matter, your Honour, if he fails in his appeal.  We will get a relation back which we want, which is a year ago, now, rather than one – well, rather than not having one at all, and it would be very valuable.

HAYNE J:   Because there would have been an act of bankruptcy when?  When would there be a failure to comply, on this theory?

MR KNAGGS:   When 14 days expired from the date of service of a judgment which – date of service of a bankruptcy notice which, your Honours, if you do what will entreat you to do – of this High Court – hold that there was no power to extend the time for compliance and therefore, willy‑nilly, the 21 days run out 21 days after service which was nearly six months ago – nine months ago.

HAYNE J:   You said there were two bald points about why these words do not apply.  One, you say, in effect, technical meaning of the phrase used in the statute.  What is the second one?

MR KNAGGS:   Just before leaving the last point, your Honour, may I say that it is a matter of huge importance in that – there was a case of Alan Bond where the judgment was ‑ ‑ ‑

McHUGH J:   Yes, your point is that it does not matter when the appeal in this Court comes on for hearing.  If we set aside the order of Justice Branson then the act of bankruptcy was complete long, long ago, and affects relation back to - - -

MR KNAGGS:   But we also say that public importance is huge because in Bond’s Case which is at page 20 of the application book – page 20 shows that his judgment was half a billion Australian dollars against him.  He got an extension of time to comply not under section 41(6A) which was of course then in force but because the judge wrongly, according to the High Court case of James v Abrahams, thought that he had an overriding general discretion whereas James v Abrahams says that because section 41(6A) used specific instances of applying for an extension of time, that covers the field and there is no general discretion any more.

But, the second point I wanted to make is that – and, by the way, Bond lost his appeal and the creditors are wondering where the half a billion dollars got to and I might be wondering where the $100,000 got to.  The second point was that we argued before the Full Court and which they did not even touch on was it is not just a question of the phrase “proceeding to set aside judgment” because simultaneously with the passing of section 41(6A) as an amended subsection or a new subsection the rules are also changed and Part 77 rule 2(c) which your Honours will find is at ‑ ‑ ‑

McHUGH J:   I appreciate this argument that you put but it is a large proposition to say, is it not, that the meaning of an Act of Parliament can be controlled by what is done in subordinate legislation?  I know the Americans have a doctrine that in interpreting statutes you take into account in a way administrative agencies interpret it but it is ‑ ‑ ‑

MR KNAGGS:   Your Honour, I agree with you entirely.  It is often a very large proposition.  The rule maker may be working six months later and he may have misunderstood the section and then where are you?  On the other hand, Halsbury cites it at page 10 of the – Halsbury Australia picks it up as well, but Halsbury’s Laws of England at page 10 refers to the “Use of delegated legislation” and says that it:

may be taken into account as persuasive authority on the meaning of its provisions –

of the statute.  That is at the bottom of the left‑hand corner of page 10 at paragraph 1428 of Halsbury. 

Now, your Honours, what I said a moment ago about a rule-making body some six months later getting the Act wrong does not apply here.  This was a full legislative scheme and if your Honours will look at page 9A, B and C of the bundle you have of authorities – 9A – Order 77, of course, of the Federal Court has taken over the bankruptcy rules but the rule is exactly the same.  On 8 April 1980 two things came into force, section 41(6A) came into force and on exactly the same time and under exactly the same overall scheme the rule came into force as well.

McHUGH J:   Yes, I know, but one is made by an executive body and the other by Parliament.  But what I am more interested in, I have to say is, apart from your assertion about the meaning of the term “Proceedings to set aside the judgment” or “order”, is there any authority that you can refer to, apart from Justice Neaves’ line of judgments?

MR KNAGGS:   Your Honour, Justice Neaves was followed by virtually everybody except judges that got it wrong.  Well, when I say “got it wrong” ‑ ‑ ‑

McHUGH J:   You assert that, but ‑ ‑ ‑

MR KNAGGS:   No, I do not assert it as palpable.  They rely on a case called Taylor saying that Taylor was an appeal.  Certainly, it was an appeal but it was not an appeal against the judgment on which the bankruptcy notice was based, it was an appeal against a refusal to set aside that judgment and therefore has no value as a case in the strand of cases at all.

McHUGH J:   I know earlier that you said any lawyer would recognise that proceedings to set aside the judgment meant one to review it in the original jurisdiction.  I do not know what that says about me, but it does not strike me as clear as that.  I would have thought, prima facie, it would include the sort of application you refer to and an appeal, as well.  That was the view Justice Hill took of it.  Why should those words be read down, “proceedings to set aside the judgment”?

MR KNAGGS:   Your Honour, Justice Hill actually said, sorry, that – coming back to him – he actually said, “I do not need to worry about it” and says, “It is not necessary for me to determine the point”.  He seemed to indicate a qualified view, but it was not even argued on appeal.  The point was not even taken on appeal.  But, your Honour, to come back to your question, what we say is that – again, it is like what your Honour referred to in your argument in Chaney’s Case.  If I say, “I am going to court for an application for costs”, you do not think I mean an appeal because that is a very subsidiary part – I may be going for costs, most appeals do, but you do not think I might mean I am going for an appeal because you are looking at the end of the application, we say.

HAYNE J:   Yes.

MR KNAGGS:   If you went to a lawyer and said, “I have got an application to set aside a judgment on this afternoon”, they do not say, “What, do you mean an appeal or do you mean you are going back to the District Court to say your client was not there on the day because his diary was wrong?”

McHUGH J:   Well, there is no doubt that that is the most usual form.  You have to go so far as to say that the generality of the word “proceedings” is not sufficient to include an appeal to set aside the judgment.

MR KNAGGS:   Well, would your Honours let me, at the risk of being repetitious, say that an application you would never think of an appeal.  I know why they use the word “proceedings”.  They probably thought we cannot say “notice of motion” because the Federal Court, for one, calls it “an application to set aside” some other courts call it “a summons to set aside”.  You could not say application, although the rule makers ‑ ‑ ‑

McHUGH J:   But why not?  In the very next paragraph in (6A) they use the word “application”.  If your argument was right why did they not say in (a) “application to set aside the judgement”?  The contrast between “application” and “proceedings” cannot be accidental.

MR KNAGGS:   Does your Honour mean application to set aside a bankruptcy notice?

McHUGH J:   Yes.  They have used “application” there.  If your argument is right, as I understand it, you say in (a) it really means an application to set aside the judgment.

MR KNAGGS:   Your Honour, (b) has to say – the next paragraph has to say ‑ ‑ ‑

McHUGH J:   I know it has to say it, but ‑ ‑ ‑

MR KNAGGS:   Because that is the only form of application there is in that case, so saying “proceedings” would be silly.

McHUGH J:   But the effect of your argument seems to be that the word “proceedings” in (a) really means “an application”.

MR KNAGGS:   No, your Honour, they could not have – yes, but they could not say “application” because ‑ ‑ ‑

McHUGH J:   Why not?

MR KNAGGS:   Well, then, somebody would come to court and argue that was not application, that was a notice of motion.  That was not an application, that was a summons, because different jurisdictions – one has to ‑ ‑ ‑

McHUGH J:   It still seems to me to be an application, whether it was by way of notice of motion or whether it was by way of summons or even if it was by way of prerogative writ.  What about an application by way certiorari to quash the judgment, to set it aside?  Would that be caught by (a)?

MR KNAGGS:   Your Honour, I do not think it would because that is an application for a review which a lawyer would not understand you to mean.  Your Honour, we strongly urge that the very fact, though, that the rule did come into force on the same day and was part of the same scheme and they wanted it ready to go and that the rule does use the word “application” cannot be ignore.  But, your Honour, we simply say they could not have said “application to set aside” because it might have been interpreted by some court as meaning that it is only in those jurisdictions that call it an application to set aside that you would be able to use it.  Who knows?

McHUGH J:   But this is the Federal Court.

MR KNAGGS:   Yes, but it knows very well that it could be dealing with an application in a Local Court, a District Court, a Tasmanian – whatever they call it down there.

McHUGH J:   Yes.

MR KNAGGS:   Yes.  But, your Honour, the other point, though, that we make about the significance of proceedings to set aside, some of the cases were High Court applications for leave where the debtor goes along to the Federal Court and say, “I have an application before the High Court for leave.  I want you to call that an application to set aside the judgment”.  Now, it cannot be because you cannot even appeal where you need special leave before you apply for special leave and get it.  We say you cannot really call it an application before you, a proceeding to set aside a judgment.  It is a step that may eventually get you there – to pick up another one of your Honour’s phrases earlier in the last case where the lady appeared for herself.

McHUGH J:   Yes, but a special leave application is an application to commence proceedings in the Court.

MR KNAGGS:   Yes, but the courts have treated that as coming under application to set aside and call it an appeal but it cannot be an appeal when it is only an application for special leave.  We agree that it would be silly for the legislature not to take cognisance that some people have to get leave first but if they had their wits about them, which again I say we have to assume, they would have thought, “If we mean to cover appeal we are not really covering application for special leave”.  You cannot in an application for special leave be said to be applying to set aside a judgment or taking proceedings to set aside a judgment.

That is exactly the same as in the Bond decision and Chaney, in my submission, that you are looking at - an application has to – an application to do something is an inappropriate phrase where it is really an application for some preliminary step.  It is like saying, “A includes B and therefore A must equal B” in our submission.  But, your Honours, if you go to policy, we say that a court – the courts have always acknowledged they cannot run the appeal and unless it is manifestly hopeless they cannot even predict it.  They will not.  They say, “We are not going to pre‑empt what might be a four-day argument in the State Court of Appeal before three judges and say it is going to fail 99 times out of 100”.

So we say that if a court is trying to wrestle with an appeal as a ground for extending time to comply with a bankruptcy notice, then the three main considerations that natural justice would want the Court to look at are completely imponderable.  What they really want to know is, is the debtor secretly getting rid of half a million dollars worth of assets.  They have got no way of knowing that while he runs his appeal and therefore ‑ ‑ ‑

HAYNE J:   Much will turn, surely, for the exercise of the discretion on whether the judgment under appeal is stayed.  If there is no stay of execution of the first instance judgment, you are unlikely to get extension of time, are you?

MR KNAGGS:   No, your Honour, but on the other hand, if you do get a stay, we have still a year to wait, maybe, as in Bond, to see what happens.  Your Honour, the balance of convenience – society on the one hand which maybe lets – to keep talking about Bond – hundreds of creditors and some huge ones are looking at the court – are watching the court extend time for compliance for a year and then he loses his appeal.

McHUGH J:   When you talk about policy – I am not sure that there are many courts that now have jurisdiction to set aside a judgment that they have given themselves, unless it is on the ground of ex debito justitiae.

MR KNAGGS:   Exactly, your Honour.  They all do and they also have jurisdiction to set aside if through some accident the person was not heard because they all say basically a litigant has the right to be heard and if, by some misfortune, to quote the words ‑ ‑ ‑

McHUGH J:   But that is giving then (6A) a very limited scope and it would mean that even though an erroneous judgment had been given against a person then the fact that they had an appeal on foot would not be sufficient to enable an extension of time for the bankruptcy notice to be complied with?

MR KNAGGS:   Could I just ask for a short extension of time?

McHUGH J:   Yes, very short.  Very short.

HAYNE J:   Even though time has expired.

MR KNAGGS:   Your Honours, we say it works like this that the bankruptcy courts have always been prepared to go behind a judgment.

McHUGH J:   I know that.  I was in Mahony v Wren and I lost it so I am well aware of it.

MR KNAGGS:   They will take you to the threshold.  They will say, “Does it appear the judgment was completely monstrous because the court had no jurisdiction” or something “and therefore it could be applied to be set aside.”?  But they will not go to the extent of running the whole thing as an appeal.  They will look at in a review frame of mind, the bankruptcy courts, the Federal Courts, but they will not look at from the point of view of appealing and we say the same thing happens here.  An application to set aside is, A, predictable, it is over in a month; B, short and sweet and is not going to interfere with creditors any way; and C, it is the same sort of thing they are doing when they look behind a judgment during the hearing of a petition, perhaps.

But, your Honours, quickly two final points, if I may.  The other things that are completely imponderable to a court looking at whether an appeal should justify an extension, they do not know if there is 100 creditors or none and, as I have said, they cannot predict the outcome of the appeal and they do not know whether the assets are being squirreled away and the thing is done in a real vacuum, in my respectful submission.

McHUGH J:   All right.  I think your time is up, Mr Knaggs, thank you.

MR KNAGGS:   Yes, thank you, your Honours.

McHUGH J:   Yes, the Court need not hear you, Mr Jackson.

The Court is of the view that the decision of the Full Court is not attended by sufficient doubt to warrant the grant of special leave to appeal.  Accordingly, the application is dismissed.

AT 4.00 PM THE MATTER WAS CONCLUDED