Davies v Chicago Boot Co Pty Ltd (No 2) - [2007] SASC 12

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court: Civil)
DAVIES & ANOR v CHICAGO BOOT COMPANY P/L (No 2)
[2007] SASC 12
Judgment of The Full Court
(The Honourable Justice Gray, The Honourable Justice Sulan and The Honourable Justice Anderson)
19 January 2007
CORPORATIONS - WINDING UP - CONDUCT AND INCIDENTS OF WINDING UP - EFFECT OF WINDING UP ON OTHER TRANSACTIONS
Appeal against decision of single Judge allowing an appeal against decision of Master with respect to the amendment of a pleading - application to amend existing pleading to add claim outside time limit - whether application permissible - whether section 588FF of the Corporations Law barred the proposed claim - whether Supreme Court Rule 53 applicable - consideration of relevant case law -- appeal allowed - decision of primary judge refusing application set aside - application remitted to Master for hearing and determination.
Corporations Law s 588FF, s 1337B(2); Supreme Court Rules 1987 r 53; Judiciary Act 1903 (Cth) s 79; Corporations Rules r 1.3, referred to.
Davies & Anor v Chicago Boot Co P/L [2006] SASC 241; Rodgers v Commissioner of Taxation (1998) 88 FCR 81; Gordon v Tolcher [2006] HCA 62; Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485; BP Australia Ltd v Brown (2003) 58 NSWLR 322; Harris v Western Australian Exim Corporation (1994) 56 FCR 1; Star v NAB (1999) 30 ACSR 583; Rambaldi v Dalebrook Pty Ltd (2003) 21 ACLC 1190; Newcap Reinsurance Corporation v Reaseguros Alianza (2004) 186 FLR 175; Tolcher v Capital Finance (2005) 143 FCR 300; Greig v Stramit Corporation Pty Ltd [2004] 2 Qd R 17; BP Australia Ltd v Brown (2003) 58 NSWLR 322, considered.

DAVIES & ANOR v CHICAGO BOOT COMPANY P/L (No 2)
[2007] SASC 12
Full Court: Gray, Sulan and Anderson JJ
GRAY J:
Introduction

The issue for resolution on this appeal concerns the construction of section 588FF of the Corporations Law. The same provision has been re-enacted in the Corporations Act 2001 (Cth).
A Judge of this Court allowed an appeal from a Master with respect to the amendment of a pleading.[1] It is in the context of this interlocutory dispute that the question of construction arises. As the learned Judge observed, the appeal raises:[2]
… important issues as to the operation of the limitation period prescribed by s 588FF(3) of the Corporations Law, the law in force at the time of the transactions the subject of these proceedings.
[1] Davies & Anor v Chicago Boot Co P/L [2006] SASC 241.
[2] Davies & Anor v Chicago Boot Co P/L [2006] SASC 241 at [1].
It is convenient at the outset of these reasons to set out the full text of section 588FF:
Courts may make orders about voidable transactions
(1)     Where, on the application of a company’s liquidator, a court is satisfied that a transaction of the company is voidable because of section 588FE, the court may make one or more of the following orders:
(a)an order directing a person to pay to the company an amount equal to some or all of the money that the company has paid under the transaction;
(b)an order directing a person to transfer to the company property that the company has transferred under the transaction;
(c)an order requiring a person to pay to the company an amount that, in the court’s opinion, fairly represents some or all of the benefits that the person has received because of the transaction;
(d)an order requiring a person to transfer to the company property that, in the court’s opinion, fairly represents the application of either or both of the following:
(i)money that the company has paid under the transaction;
(ii)proceeds of property that the company has transferred under the transaction;
(e)an order releasing or discharging, wholly or partly, a debt incurred, or a security or guarantee given, by the company under or in connection with the transaction;
(f)if the transaction is an unfair loan and such a debt, security or guarantee has been assigned – an order directing a person to indemnify the company in respect of some or all of its liability to the assignee;
(g)an order providing for the extent to which, and the terms on which, a debt that arose under, or was released or discharged to any extent by or under, the transaction may be proved in a winding up of the company;
(h)an order declaring an agreement constituting, forming part of, or relating to, the transaction, or specified provisions of such an agreement, to have been void at and after the time when the agreement was made, or at and after a specified later time;
(i)an order varying such an agreement as specified in the order and, if the Court thinks fit, declaring the agreement to have had effect, as so varied, at and after the time when the agreement was made, or at and after a specified later time;
(j)an order declaring such an agreement, or specified provisions of such an agreement, to be unenforceable.
(2)     Nothing in subsection (1) limits the generality of anything else in it.
(3)     An application under subsection (1) may only be made:
(a)within 3 years after the relation-back day; or
(b)within such longer period as the Court orders on an application under this paragraph made by the liquidator within those 3 years.
(4)     If the transaction is a voidable transaction solely because it is an unreasonable director-related transaction, the court may make orders under subsection (1) only for the purpose of recovering for the benefit of the creditors of the company the difference between:
(a)the total value of the benefits provided by the company under the transaction; and
(b)the value (if any) that it may be expected that a reasonable person in the company’s circumstances would have provided having regard to the matters referred to in paragraph 588FDA(1)(c).
Background
On 2 April 2004, within the three-year limitation period set out in section 588FF(3), the liquidators of Harris Scarfe Limited and Harris Scarfe Wholesale Pty Ltd commenced proceedings against the defendant, Chicago Boot Co Pty Ltd, the respondent to this appeal.
Harris Scarfe Limited operated a substantial department store in Adelaide. It also had other retail outlets. Harris Scarfe Wholesale Pty Ltd was a wholesale purchaser. Both companies were, at relevant times, wholly owned subsidiaries of Harris Scarfe Holdings Limited. On 3 April 2001, a receiver was appointed for all three companies. On 3 January 2002, a resolution for the voluntary winding up of the three companies was carried at a meeting of creditors. Michael Joseph Dwyer and Lindsay Philip Maxsted were appointed joint and several liquidators of each entity. Chicago Boot Pty Ltd was a supplier of goods.
The statement of claim joined two separate claims each seeking to set aside voidable transactions as preferences: - a claim by the liquidators in their capacity as liquidators of Harris Scarfe Limited, in the sum of $273,261.23; and a claim by liquidators in their capacity as liquidators of Harris Scarfe Wholesale for an amount of $43,540.10.
The Harris Scarfe Limited claim is made in respect of five payments pleaded and identified by cheques drawn on Harris Scarfe Limited’s account. The Harris Scarfe Wholesale claim is in respect of one payment pleaded and identified as a cheque drawn on Harris Scarfe Wholesale’s account.
Following an exchange of correspondence, the Harris Scarfe Wholesale claim was transferred to the District Court with the consent of Chicago Boot. On 19 November 2004, an amended statement of claim was filed in the within proceedings reflecting the disjoinder of the Harris Scarfe Wholesale claim.
On 20 March 2006, Chicago Boot sought to amend its defence in the within proceedings. The proposed amendments included a plea that there was no relationship of debtor and creditor between Harris Scarfe Limited. Further it was to be alleged by Chicago Boot that the goods were supplied to Harris Scarfe Wholesale pursuant to a contract with that entity.
At the hearings before the Master and the primary Judge, the liquidators of Harris Scarfe Limited did not oppose the proposed amendments to the defence. This however was subject to the Court imposing conditions on the grant of leave whereby a proposed alternative claim could be advanced by the liquidators of Harris Scarfe Limited and Harris Scarfe Wholesale, that the claims of Harris Scarfe Wholesale and Harris Scarfe Limited be rejoined in the Supreme Court, and that Chicago Boot not maintain any time limitation defence in relation to the amended Harris Scarfe Wholesale claim.
The Master outlined the liquidators’ position as follows:
The plaintiff’s position was that it did not oppose the amended defence provided leave to file it was made on terms that the District Court action relating to HSW was transferred back to the Supreme Court, the plaintiff was given leave to amend its pleadings in this action and in the District Court action to claim the payments as voidable preferences in each liquidation in the alternative and the defendant was not to be allowed to plead any limitation defence under s 588FF(3) of the Act to the expanded claim. The defendant’s counsel opposed any such terms being imposed and indicated that if any such terms were to be imposed the defendant would not pursue its application to amend and would go to trial on its existing defence.
The Master considered that leave to amend the defence should be subject to the conditions as sought. Chicago Boot would not agree to the conditions. As a result, its application to amend the defence was dismissed.
The primary Judge summarised the hearing before the Master and his approach in the following terms:[3]
At the hearing before the Master, counsel for the defendant submitted that the amendment should be allowed because there had been considerable correspondence before the action in which the defendant had alleged it had been contracting with HSW and not with HSL. Counsel for the liquidators stated that they did not oppose the amended defence provided they were granted leave to transfer the action against HSW back from the District Court to this Court, that they were given leave to amend their pleadings in this action and in the District Court action to claim the payments as voidable preferences in each liquidation in the alternative and, that the defendant was not to be allowed to plead any limitation defence under s 588FF(3) of the Corporations Act in respect of that expanded claim. Counsel for the defendant opposed the imposition of any terms upon the grant of leave. The Master dismissed the defendant’s application and refused leave to amend. The defendant has appealed against that decision.
[3] Davies & Anor v Chicago Boot Co P/L [2006] SASC 241 at [8].
On the hearing of the appeal, the primary Judge directed that the liquidators prepare proposed amendments so that the nature of the proposed claims was clear. No formulation of the proposed amendments had been made when the matter was before the Master. Two forms of proposed amendments were prepared. The primary Judge observed:[4]
Although expressed in different terms, there is no material difference in the two proposed amendments so far as the issues in this appeal are concerned. It is sufficient to note that one proposal seeks to amend the applications in respect of the five HSL transactions to add an alternative plea that the goods were supplied pursuant to contracts between the defendant and HSW. Thus, the statement of claim now pleads a supply of goods by the defendant to HSL or, in the alternative, a supply of goods by the defendant to HSW. The statement of claim then alleges that the HSL transactions are voidable and, in the alternative, that the five payments which constitute the HSL transactions were payments made by HSW. The effect of that application is that the liquidators of HSW seek to be added as plaintiffs so that they may plead an application in the alternative to the application by the liquidators of HSL in respect of the same five payments. That application is, on any view, a fresh application made outside the period of three years prescribed by s 588FF(3). The liquidators seek to avoid that result by amending the existing application.
The other proposed amendment proceeds on the footing that the claim in the District Court is transferred back to this Court. It is convenient to continue to refer to it as the District Court action. The proposed amendment alleges contracts by which the defendant supplied goods to HSL or, in the alternative, contracts by which the defendant supplied goods to HSW. It further alleges that in the six month period before the relation‑back period HSW made all six payments listed in paras 5 and 6 of the initial statement of claim or, in the alternative, that HSL made all of those six payments. The effect of this proposed amendment is twofold. First, the liquidators of HSL seek to add to the existing five applications an additional application to impugn the payment by cheque number 47834 on 4 October 2000, initially the subject of the claim by the liquidators of HSW. Secondly, the liquidators of HSW seek to be added as a plaintiff and to add the five payments initially the subject of the application by the liquidators of HSL to the existing application to impugn the payment by cheque number 47834 on 4 October 2000. Those are fresh applications which are also outside the period of three years prescribed by s 588FF(3).
[4] Davies & Anor v Chicago Boot Co P/L [2006] SASC 241 at [10]-[11].
The primary Judge then examined the question as to whether Chicago Boot should be granted leave to amend its defence:[5]
The amendments which the defendant seeks to make will clarify the issues and will enable the real matters in controversy between the parties to be addressed. The amendments raise arguable issues. There has been no undue delay. The action has not been set down for trial. There is no prejudice to the liquidators which could not be cured by an order as to the costs occasioned by the amendments. The interests of justice are the paramount consideration: State of Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146 at 155. The application accords with the principles expressed in Duke Group Limited (in liq) v Arthur Young (Reg) (1991) 4 ACSR 355 at 355. In my view, there was no proper ground on which to refuse the grant of leave. The defendant should, therefore, be granted leave to amend its defence.
[5] Davies & Anor v Chicago Boot Co P/L [2006] SASC 241 at [14].
The primary Judge then turned to consider the liquidators’ applications to amend. The Judge considered that the proposed amendment in either form, sought to advance causes of action that were statute barred, and that leave to amend should be refused:[6]
It is sufficient for the purposes of this appeal to note that the liquidators of HSL and the liquidators of HSW each seek to add to each of the existing applications under s 588FF an additional application in respect of payments not included in each application as initially made and that those applications are made outside the period of three years prescribed by s 588FF(3). The application by the liquidators of HSL to impugn the payment made by HSW on 4 October 2000 was not made by them within the period of three years after the relation-back day as prescribed by s 588FF(3) of the Corporations Law. That application is, therefore, out of time. Similarly, the application by the liquidators of HSW to impugn the five payments initially the subject of the HSL action were not made by them within the period of three years after the relation-back day as prescribed by s 588FF(3) so that these applications are also out of time.
…
In the action in which the liquidators of HSL are plaintiffs, the liquidators seek to add one other transaction to the existing applications in respect of the five payments made by HSL which are the subject of the existing applications. In the action in which the liquidators of HSW are plaintiffs, the liquidators of HSW seek to add the five payments which are the five payments subject of the proceedings instituted by the liquidators of HSL. For the reasons which follow, I think that s 588FF(3) does not permit the applications to set aside the additional transactions to be added to the existing applications and that r 53.03 does not avail the liquidators. That is a consequence of the fact that s 588FF(3)(a) requires an application to be made within three years after the relation-back day and that sub-s (3)(b) provides an exclusive régime for the extension of the time limit.
[6] Davies & Anor v Chicago Boot Co P/L [2006] SASC 241 at [17], [21].
The primary Judge considered that the reasoning of the High Court in David Grant v Westpac Banking Corporation,[7] to be of assistance. The section of the Corporations Law (Vic) then under consideration was said to be in materially similar terms to section 588FF(3).
[7] David Grant v Westpac Banking Corporation (1995) 184 CLR 265.
The primary Judge continued:[8]
Once it is concluded that s 588FF(3)(b) covers the field of applications to extend the three year period in sub-s (3)(a), other statutory instruments or Rules of Court empowering a court to extend that time are inconsistent with s 588FF(3) and so can have no operation. Rule 53.03(c) authorises the Court to add a new cause of action to an existing action notwithstanding that the relevant limitation period has expired. As s 588FF(3)(b) covers the field of applications for extending the three year period specified as in para (3)(a), the rule can have no operation. If s 1322(4)(d) of the Corporations Law does not provide a means of extending the three year period specified in para (3)(a), a fortiori r 53.03(c) cannot do so.
…
In those instances where the liquidator applies to amend the proceeding to add another application to set aside an additional transaction to those already mentioned in the statement of claim, while the application to amend is on its face an application to amend the proceeding, it is in fact an application to make a fresh application to set aside another transaction outside the period prescribed by s 588FF(3). The fact that the liquidator seeks to amend an existing proceeding cannot alter the fact that it is a fresh application which has been made out of time. The fact that the liquidator must plead compliance with s 588FF(3)(a) serves to emphasise that it is a fresh proceeding to which the relation-back period cannot apply. It is the combination of the fact that the requirement as to time is an essential ingredient of the right to make an application under s 588FF and the fact that s 588FF(3) is an exclusive régime for extending time which prevents the relation-back principle from applying.
[8] Davies & Anor v Chicago Boot Co P/L [2006] SASC 241 at [27], [29].
The primary Judge then addressed the decision of Rodgers v Commissioner of Taxation, [9] a decision of the Full Federal Court:[10]
In reaching this conclusion, I have carefully considered the reasons of the Full Court of the Federal Court in Rodgers v Commissioner of Taxation… where it was held that the power of amendment in Order 13 of the Federal Court Rules enabled the Federal Court to allow an amendment of an application under s 588FF to add applications made outside the three year period. That decision has been followed and applied in Star v National Australia Bank Ltd, Rambaldi v Dalebrook Pty Ltd, New Cap Reinsurance Corporation Ltd (in liq) v Reaseguros Alianza SA, and Tolcher v Capital Finance Australia. I acknowledge also the force of the observations of the High Court in Australian Securities Commission v Marlborough Gold Mines Ltd as to the desirability of uniformity of decisions in the interpretation of the Corporations Law and, in particular, its direction that a single judge should not depart from an interpretation placed on the law by an intermediate appellate court:
[U]niformity of decision in the interpretation of uniform national legislation such as the Law is a sufficiently important consideration to require that an intermediate appellate court – and all the more so a single judge – should not depart from an interpretation placed on such legislation by another Australian intermediate appellate court unless convinced that that interpretation is plainly wrong.
And then concluded:[11]
However, the later decision of the Court of Appeal in BP Australia Ltd v Brown contains reasoning which calls the decision of Rodgers into question. For the reasons which follow, I respectfully believe the decision in Rodgers to be incorrect. This is an instance of a single judge being faced with two decisions of intermediate appellate courts which contain conflicting reasoning.
[9] Rodgers v Commissioner of Taxation (1998) 88 FCR 61.
[10] Davies & Anor v Chicago Boot Co P/L [2006] SASC 241 at [32] (references omitted).
[11] Davies & Anor v Chicago Boot Co P/L [2006] SASC 241 at [32].
The Appeal - Preliminary Matters

Before proceeding to discuss the construction of section 588FF, it is convenient to deal with three preliminary matters.
A Change of Position
On the hearing of this appeal, the liquidators no longer “conditionally” opposed the application to amend. It was accepted that any prejudice could be met by appropriate orders for costs. Accordingly, there was no longer any challenge to that aspect of the primary Judge’s order.
The liquidators also sought to vary the terms of their proposed amendments. Their primary position was that the claims should be rejoined in this Court and that the claims be amended. The amendment would include an allegation in the alternative that in respect to the Harris Scarfe Limited contract, Harris Scarfe Wholesale made a payment on behalf of Harris Scarfe Limited and that with respect to the Harris Scarfe Wholesale contract, Harris Scarfe Limited made a number of the payments on behalf of Harris Scarfe Wholesale.
Although Harris Scarfe Wholesale was not a party to the proceedings, the appeal was argued on the understanding that if the appellant was successful in showing error on the part of the primary Judge, appropriate orders could include rejoinder and amendment.
Supreme Court Rule 53
The primary Judge reasoned that rule 53 of the Supreme Court Rules1987 had application as a consequence of the terms of rule 1.3 of the Corporations Rules and, alternatively as a consequence of the terms of section 79 of the Judiciary Act 1903 (Cth).
As noted by the primary Judge, rule 1.3(2) of the Corporation Rules allows the use of Rules of Court so far as they are relevant and not inconsistent with the Corporations Rules.
The primary Judge further observed that a Commonwealth law will be taken to have “otherwise provided” for the purposes of section 79 if the State law adds to or derogates from the Commonwealth law in question. That section provides:
The laws of each State or Territory, including the laws relating to procedure, evidence, and the competency of witnesses, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all Courts exercising federal jurisdiction in that State or Territory in all cases to which they are applicable.
On the hearing of the appeal, counsel for the liquidators suggested there was a further avenue by which these powers were available - section 1337B(2) of the Corporations Act. That section provides:
Subject to section 9 of the Administrative Decisions (Judicial Review) Act 1977, jurisdiction is conferred on the Supreme Court of:
(a)     each State; and
        (b)     the Capital Territory; and
        (c)     the Northern Territory;
with respect to civil matters arising under the Corporations legislation.
Section 1337B(5) provides:
The jurisdiction conferred on a Supreme Court by subsection (2) or (3) is not limited by any limits to which any other jurisdiction of that Supreme Court may be subject.
Counsel for Chicago Boot accepted that section 1337B(2) conferred on this Court the ability, power and authority to consider and determine a preference claim as a civil matter, and to hear and determine that matter in accordance with the rules and procedures of the court.
Rule 53.01 of the Supreme Court Rules1987 relevantly provides:
(1)A party may amend any document, other than an order, filed by such party in a proceeding once without leave of the court at any time up to 14 days after discovery of documents has been made by all parties pursuant to Rule 58A, or at any time by consent of all other parties, or, subject to Rule 67.01(6), with the leave of the Court.
The question was therefore whether these powers could be exercised, having regard to the terms of section 588FF.
Following the hearing of submissions the High Court’s decision in Gordon v Tolcher[12] was handed down. The High Court considered section 588FF in Gordon v Tolcher. The question there under consideration concerned the power of the District Court in New South Wales to allow proceedings claiming certain transactions to be voidable to be maintained after the proceedings were “taken to be dismissed”. The Court concluded that the District Court had that power under its procedural Rules of Court. The High Court described the controversy for resolution as follows:[13]
[12] Gordon v Tolcher [2006] HCA 62.
[13] Gordon v Tolcher [2006] HCA 62 at [12].
The controversy in this Court concerns the operation of s 79 of the Judiciary Act. In short form, the issue is whether in the District Court proceedings certain provisions of the Rules were not “picked up” by s 79 because, within the meaning of that section, there was a law of the Commonwealth, namely s 588FF of the Corporations Law, which “otherwise provided”.
The terms of the grant of leave were limited:[14]
An application by the appellant to this Court for special leave was dismissed in so far as he disputed the manner and exercise by the Court of Appeal of the relevant powers under the Rules. However, leave was granted upon the issue of whether the Court of Appeal had erred in failing to hold that the provisions of the Rules authorising extension of time within which the respondents' application might be maintained, notwithstanding their earlier dismissal under those Rules, were not applied by s 79 of the Judiciary Act because s 588FF(3) of the Corporations Act was a Commonwealth law which "otherwise provided".
The High Court considered the interrelation between the Judiciary Act and the Corporations Act and concluded:[15]
Section 1337A of the Corporations Act is included in Div 1 of Pt 9.6A, which deals with civil jurisdiction. The section excludes the operation of s 39B of the Judiciary Act which confers certain jurisdiction on the Federal Court (s 1337A(2)). However, Div 1 does not limit the operation of the other provisions of the Judiciary Act (s 1337A(3)). The Division thus recognises the concurrent operation of s 79 of the Judiciary Act. Further, the Division does not limit the operation of s 39(2) of the Judiciary Act with respect to civil matters arising under the Corporations Act (s 1337A(4)). Section 39(2) is the general provision for the investment of federal jurisdiction in the several courts of the States. This included the appellate jurisdiction exercised in this case by the New South Wales Court of Appeal.
...
Section 588FF does not deal with the investment of federal jurisdiction in any court or with the manner of exercise of that jurisdiction. The section is found in Pt 5.7B, whilst the jurisdiction of courts is provided for in Pt 9.6 A. Section 588FF is silent respecting the procedures to be adopted by the court exercising federal jurisdiction in the present matter; this jurisdiction is conferred by s 1337E upon the District Court. Section 588FF evinces a two-fold legislative intention. First, conferral of federal jurisdiction is left to Pt 9.6A of the Corporations Act. Secondly, subject to any operation of other provisions of the Corporations Act, after the institution of an application the procedural regulation of the conduct of a matter is left for that particular State or territorial procedural law which is to be picked up by s 79 of the Judiciary Act.
[14] Gordon v Tolcher [2006] HCA 62 at [22].
[15] Gordon v Tolcher [2006] HCA 62 at [29], [32].
Uniformity
In Australian Securities Commission v Marlborough Gold Mines Ltd,[16] the High Court observed:[17]
[U]niformity of decision in the interpretation of uniform national legislation such as the Law is a sufficiently important consideration to require that an intermediate appellate court – and all the more so a single judge – should not depart from an interpretation placed on such legislation by another Australian intermediate appellate court unless convinced that that interpretation is plainly wrong.
This observation is of particular importance in the present appeal having regard to the decision Rodgers.
[16] Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485.
[17] Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485 at 492.
The Appeal
Counsel for the liquidators submitted that the decision in Rodgers should not be departed from; the decision was plainly correct. Alternatively, it was submitted that Rodgers could not be said to be plainly wrong. It was further contended that Rodgers had been followed at the appellate level and in a number of first-instance decisions both in the Supreme and Federal Courts. As noted above, the primary Judge took the view that Rodgers contained reasoning that conflicted with the New South Wales Court of Appeal decision in BP Australia Ltd v Brown.[18]
[18] BP Australia Ltd v Brown (2003) 58 NSWLR 322.
The Rodgers Decision
As the primary Judge observed, the decision of the Full Federal Court in Rodgers, addressed the construction of section 588FF(3) of the Corporations Law. The Court was there concerned with an attempt to amend an application by a liquidator seeking to set aside, as voidable, transactions alleged to be a preference. The liquidator made the application within three years of the relation-back date but, at that time, was unaware of two further payments. On becoming aware of these further payments, the liquidator applied to amend his application. The application to amend was outside the three-year limitation period to seek relief in respect of the two further payments. Relevantly Rodgers was factually “on all fours” with the present proceedings.
The Full Federal Court in Rogers had regard to the terms of Order 13 of the Federal Court Rules, and noted that relevantly that rule was in the same terms as the rules of other State Supreme Courts. These other rules included rule 53 of the Supreme Court Rules of this Court.
The Full Federal Court then reasoned:[19]
In support of the submission that s 588FF(3) governed this case, counsel for the Commissioner referred to the High Court decision in David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265. That case concerned a time limitation on the making of a statutory demand. More precisely, the question was whether s 1322 of the Law authorises an extension of time for compliance to be granted in circumstances where no application had been made within time. Section s 459G(2) of the Law stipulates an application for an order setting aside a statutory demand may only be made within 21 days after the demand is served. Section 1322 of the Law empowers the Court to make an order extending the period for taking any proceeding under the Law or in relation to a corporation even where the period expired before the extension application was made. Gummow J, with whom all other members of the Court agreed, said (at 277):
“The force of the term ‘may only’ is to define the jurisdiction of the court by imposing a requirement as to time as an essential condition of the new right conferred by s 459G. An integer or element of the right created by s 459G is its exercise by application made within time specified.” (Emphasis added.)
This statement establishes an application first made outside the prescribed time is ineffective; it says nothing about an application to amend.
In Harris v Western Australian Exim Corporation (1994) 56 FCR 1, Hill J adverted to the operation of O 13, r 2 in its amended form. He decided the Court had power to permit an amendment to pleadings in order to raise, for the first time, a claim against a respondent based on a breach of the Fair Trading Act 1987 (NSW) (FTA). The application originally alleged only a breach of s 52 of the Trade Practices Act 1974 (Cth) (TPA). When the amendment application was made, a fresh proceeding seeking relief pursuant to the FTA would have been statute barred, although it would not have been barred when the proceeding was commenced. His Honour held the Court had power to permit the amendment pursuant to O 13, r 2. He said the limitation imposed by s 79(2) of the FTA was procedural rather than substantive in nature; an amendment to the pleading would operate retrospectively to the date of the original pleading, thereby satisfying the limitation requirement. Hill J said (at 9):
“Another way of looking at the matter is to say that all s 79(2) requires is that the action … be commenced within three years of the cause of action accruing. An action has, in the present circumstances, been commenced. True, that action was based on another cause of action but an amendment to the pleading operates, as I have said, retrospectively to the date of the original pleading …”
[19] Rodgers v Commissioner of Taxation (1998) 88 FCR 61 at 66-67.
The Full Federal Court applied the principles identified in Harris,[20] to the case before it and observed:[21]
The 1994 amendments, which included the insertion of s 59(2B) into the FCA Act and the amended FCR O 13, were made in response to the observations of Toohey J in Wardley and for the purpose of removing doubt as to the extent of the Court’s power to permit amendments to pleadings.
The language of O 13, r 2 draws no distinction between “substantial” and “procedural” amendments, nor between elements of a claim and elements of a defence to a claim. The rule regulates the position after a proceeding has been commenced. In that situation, O 13, r 2(3) enables the Court to allow an amendment notwithstanding expiry of a relevant limitation period. The word “nevertheless”, in par 3, reflects an appreciation that there might previously have been an obstacle to the grant of leave to amend. Leave can only be granted if the Court thinks it is “just” to do so.
This provision is to be contrasted with s 588FF(3), which is concerned with the making of an application to the Court; that is, the commencement of the proceeding itself. Section 588FF(3) is not directed to an amendment of an existing claim; at least if that amendment does not involve a new cause of action: see Quick v Stoland (1998) 87 FCR 371. There is no inconsistency between O 13, r 2 and s 588FF(3). One is concerned with making an amendment to a pleading in an existing proceeding; the other is concerned with the commencement of a proceeding.
Paragraph (7) of O 13, r 2 extends the power conferred by par (2) so as to include the addition or substitution of a new claim, where the new claim arises out of substantially the same facts as those already pleaded. The term “notwithstanding” in par (7) is a further indication that the drafters of the amended rule appreciated the constraints which earlier applied and intended to lessen those constraints.
[20] Harris v Western Australian Exim Corporation (1994) 56 FCR 1.
[21] Rodgers v Commissioner of Taxation (1998) 88 FCR 61 at 67-68.
The Full Federal Court concluded:[22]
No doubt it is correct to say each payment amounted to a separate transaction; nonetheless we consider these additional claims arise out of substantially the same facts as those pleaded to support the original claims. The additional claims are said to be part of a pattern of conduct extending over a period of approximately eight months and involve allegations identical in form to those of the earlier claims. The additional payments were both made within five weeks of the date of the last payment specified in the original application. The requirements of O 13, r 2(7) are satisfied in respect of these two payments.
[22] Rodgers v Commissioner of Taxation (1998) 88 FCR 61 at 70.
Counsel for Chicago Boot accepted that if Rodgers were to be followed, then this Court had jurisdiction under rule 53 to consider and, if thought appropriate, allow the proposed amendments.
Rodgers - Followed and Applied
Rodgers has been applied in a number of subsequent single judge decisions, including Star v National Australia Bank,[23] Rambaldi v Dallbrook Pty Ltd,[24] New Cap Reinsurance Corporation v Reaseguros Alianza,[25] and Tolcher v Capital Finance.[26]
[23] Star v National Australia Bank (1999) 30 ACSR 583.
[24] Rambaldi v Dallbrook Pty Ltd (2003) 21 ACLC 1190.
[25] New Cap Reinsurance Corporation v Reaseguros Alianza (2004) 186 FLR 175.
[26] Tolcher v Capital Finance (2005) 143 FCR 300.
Rodgers has received apparent approval by the Queensland Full Court in Greig v Stramit Corporation Pty Ltd.[27] The Court there addressed a different issue under section 588FF. Relevant to the question arising in the present proceedings, Williams JA observed:[28]
Counsel for Stramit drew a distinction between an application to amend an existing cause of action, commenced within the time limit prescribed by s. 588FF(3)(a), by adding new causes of action against an existing defendant, and an application by liquidators to amend an application for an extension of time, brought pursuant to s. 588FF(3)(b), to add a new party outside the three year time limit prescribed in that section. The decisions in Rodgers and Star were concerned with the first situation. I accept that distinction.
Jerrard JA commented:[29]
As Williams J.A. notes, there is authority for the proposition that an amendment can be made to a proceeding brought pursuant to s. 588FF(1) within time, although the amendment is made after the expiry of the time limitations provided for by s. 588FF(3). However, that authority distinguishes between amendment to a proceeding commenced within time, and the addition of a new defendant. In Rodgers the Full Federal Court cited with apparent approval the remarks of Clarke J.A. in Fernance v. Nominal Defendant (1989) 17 N.S.W.L.R. 710 at 733, to the effect that there is a clear distinction between a case in which a defendant is added and a case in which an additional cause of action is raised against an existing defendant. Clarke J.A. reminded, and in my respectful opinion forcefully, that when it is sought to add a defendant after the expiration of a time period, this may occur years after the expiration of the relevant limitation period and without any prior notice.
[27] Greig v Stramit Corporation Pty Ltd [2004] 2 Qd R 17.
[28] Greig v Stramit Corporation Pty Ltd [2004] 2 Qd R 17 at [88].
[29] Greig v Stramit Corporation Pty Ltd [2004] 2 Qd R 17 at [126].
BP Australia
Counsel for Chicago Boot submitted that the decision in BP Australia Ltd v Brown,[30] contained reasoning that directly conflicted with the reasoning and decision in Rodgers. As has been observed, this is a view the primary Judge took and it was a resolution of that conflict that led to his decision to allow the appeal and refuse the liquidators leave to amend.
[30] BP Australia Ltd v Brown (2003) 58 NSWLR 322.
BP Australia concerned a different issue from that which arose in Rodgers and which arises on this appeal. In BP Australia, liquidators were seeking to make a “shelf” application - an application to preserve the right to seek an extension of time prior to the issue of a substantive application. The “shelf” application was designed to protect a liquidator against the contingency that relevant transactions, that he may wish to impugn, may not be discovered before the three-year time limit had expired. BP Australia did not address the situation where an application had been issued and whether such an application could be amended after the limitation period had expired.
The court in BP Australia did not address the factual circumstance that arose in Rodgers or that arises in the present case. Spiegelman CJ, in the principal judgment, made no reference to Rodgers or to the question of amending an existing application to add further causes of action against the same defendant. It is clear that this was no oversight. Spiegelman CJ referred to the decision of Star which, in turn, had on a separate question applied Rodgers. BP Australia was a thoroughly researched judgment.
Counsel for the appellant submitted that the primary Judge had proceeded in his analysis having effectively presumed or concluded that the application to amend was a new application within section 588FF. It was submitted that this conclusion was flawed. It is said that in the present matter, an application had been issued in time, and all that was sought was to amend that application, not make a further application.

There is no direct conflict between the reasoning of the courts in BP Australia and Rodgers. The decision in Rodgers specifically addressed the application to amend an existing application. This issue did not arise in BP Australia.
Should Rodgers be Followed?
As earlier observed, this Court has been referred to a number of relevant authorities in both the Federal and State appellate and first instance jurisdictions. These authorities have adopted a consistent approach to the issue arising in these proceedings. The Courts have concluded that it is appropriate to utilise the applicable rules of the courts to allow amendments to add new causes of action against the same defendant outside the relevant statutory limitation period. That is what the liquidators seek to do in this case. These authorities should be followed and applied by this Court in accordance with the principles enunciated by the High Court in Marlborough Gold Mines Ltd. There is no authority to the contrary. BP Australia addressed a different issue.
The reasoning in Rodgers and the other authorities is cogent. It cannot be said to be plainly wrong. There cannot be a conviction that it is plainly wrong. To the contrary, the reasoning is sound. The reasoning allows a consistent approach to be taken to the amendment of existing applications in accordance with well-established procedures in all jurisdictions in Australia.
Counsel for the parties agreed that in the event of the Court reaching this conclusion, the appeal should be allowed for the purpose of remitting the applications for amendment and rejoinder to a Master for determination.
A Postscript
The High Court in Gordon v Tolcher considered the operation of section 588FF and observed:[31]
[31] Gordon v Tolcher [2006] HCA 62 at [37]-[41].
The provision in sub-s (3) of s 588FF as to the time of the making of the application is of the essence of the provision made by s 588FF; it is not to be characterised merely as a time stipulation of a procedural nature. The significance of sub-s (3) in the statutory scheme was considered by Spigelman CJ, who gave the leading judgment in BP Australia Ltd v Brown. His Honour referred to the General Insolvency Inquiry ("the Harmer Report"), published in 1988.
Paragraph 688 of the Harmer Report had stated:
Actions by a liquidator to recover the proceeds of a void execution, a preference, a transaction at an undervalue or a transaction with intent to defeat should be commenced within a reasonable time. The Commission proposed in [Discussion Paper 32 (par 454)] that a liquidator should have three years to commence such an action, although the court might extend that time. Under the existing law the time period would be six years (for example, [the Bankruptcy Act 1966 (Cth), s 127)]. Many submissions to the Commission complained about the sometimes inordinate delay in commencing proceedings in respect of voidable transactions. In addition, there have been recent judicial observations critical of the general delays associated with the winding up of insolvent companies. It is therefore considered desirable to place liquidators under a more rigorous but, nonetheless, reasonable time limitation for taking action under these provisions. The Commission recommends accordingly.
In BP, Spigelman CJ said of s 588FF:
Prior to Pt 5.7B, the practice was for the court to declare a disposition to be void with the consequences left to the general law, together with some statutory powers of limited scope such as s 567 of the Corporations Law. Section 588FF(1) identifies a range of specific orders that can be made and which are more focused and more comprehensive than the orders that were hitherto available by way of relief under the general law or statute.
His Honour further remarked that the original proposal in the Harmer Report had significantly been strengthened by the inclusion both by the introductory phrase "may only be made" in s 588FF(3) and also by the stipulation that an application for extension beyond the three year period had to be made within the original stipulation period. Spigelman CJ added:
The time limit in s 588FF(3) has the effect that at the end of the period of three years, such a person will know whether [that person] remains at risk. In a legislative scheme which seeks to balance conflicting commercial interests of this character, that appears to me to be a perfectly reasonable requirement. Those who have an interest, or who represent those who have an interest, to disturb transactions must indicate, within three years, whether they wish to keep open the option of doing so. In this, as in other areas, legal policy favours certainty.
…
Section 588FF(3) does not have the effect of requiring all applications to be brought within a short period of time. It does, however, have the effect of requiring those who wish to keep open the option to do so, to determine that they do wish to do so within the three year period and to seek a determinate extension of the period. One thing that must be decided within the three year period is how long the process of deciding whether to pursue voidable transactions will take. Eventually, investigations to overcome deficiencies of information or the pursuit of funding must cease. Parliament has identified a reasonable time for such matters to occur, subject to a single determinate extension of time.
Accordingly, s 588FF is dealing, as an essential aspect of the regime it creates, with the period within which the application must be made. An application may be made only to a court invested with federal jurisdiction by one or other of the provisions of Pt 9.6 A. Thereafter, and subject to any other relevant provision of the Corporations Act, the conduct of the litigation is left for the operation of the procedures of that court. These procedures will vary from one State or Territory to another and within the court structures of those States and Territories. The scheme of the Corporations Act is not to impose a direct federal and universal procedural regime. Rather, s 79 of the Judiciary Act is left to operate according to its terms in the particular State or Territory concerned.
Thus the relationship between s 588FF and s 79 (and between Pt 9.6A and s 79) is not one of which it may be said that the former provision is a law of the Commonwealth which "otherwise provides" so as to deny the operation of s 79 in this case to pick up so much of the Rules as supported the orders made by the Court of Appeal.
The decision in Gordon v Tolcher is of assistance in determining the issues before this court. There, as in the BP Australia decision, the court was concerned about the status of an application and not an attempt to amend an existing application. However the High Court upheld a decision of the Judge at first instance to allow an application that had been taken to have been dismissed to be in effect reinstated. Although distinguishable this situation has some parallel to the present proceedings. The result is not in conflict with the reasoning of Rodgers – to the contrary it is consistent with that reasoning. There is nothing in the High Court reasoning that would suggest that Rodgers was incorrectly decided.
Conclusion
I would allow the appeal, set aside the order of the primary Judge refusing the appellants’ applications for amendment and rejoinder and remit those applications to a Master of the court for hearing and determination.
SULAN J: I would allow the appeal. I agree with the orders proposed by Gray J. I agree with the reasons of Gray J.
ANDERSON J: I would allow the appeal for the reasons given by Gray J and I agree with the orders he proposes.