Gordon v Tolcher & Anor

[2006] HCATrans 461

[2006] HCATrans 461

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S62 of 2006

B e t w e e n -

CHARLES STUART GORDON

Appellant

and

RAYMOND GEORGE TOLCHER IN HIS CAPACITY AS LIQUIDATOR OF SENAFIELD PTY LTD (IN LIQUIDATION)

First Respondent

SENAFIELD PTY LTD (IN LIQUIDATION)

Second Respondent

GLEESON CJ
GUMMOW J
HAYNE J
CALLINAN J
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON TUESDAY, 29 AUGUST 2006, AT 10.17 AM

Copyright in the High Court of Australia

__________________

MR B.A.J. COLES, QC:   If your Honours please, I appear with MR C.R.C. NEWLINDS, SC and MR D.A. ALLEN for the appellant.  (instructed by Linde Business Law)

MR G.O’L. REYNOLDS, SC:   May it please the Court, I appear for the respondents with my learned friends, MR R.C. SCRUBY and MR P. KULEVSKI.  (instructed by Kemp Strang)

MR H.C. BURMESTER, QC:   If it please the Court, I appear with MR G.A. HILL, my learned junior, for the Attorney‑General of the Commonwealth.  (instructed by Australian Government Solicitor)

MR P.J. HANKS, QC:   Your Honours, I appear with MR S.G.E. McLEISH for the Attorney‑General for the State of Victoria.  (instructed by Victorian Government Solicitor)

GLEESON CJ:   Yes, Mr Coles.

MR COLES:   Your Honours, the principal issue in this appeal is whether, after the dismissal of proceedings commenced under section 588FF(1) of the Corporations Act in a State court, provisions of State law authorising extensions of time fixed by the rules of the State court are picked up by section 79 of the Judiciary Act or whether, by virtue of the terms of section 588FF(3) of the Corporations Act, provision otherwise is made which precludes the picking up of the relevant State provision.  Your Honours, the appellant’s submissions attach the relevant provisions of the principal statutes of importance.

GUMMOW J:   Not all of them.

MR COLES:   Not all of them, your Honour, with respect.

GUMMOW J:   What is the section that is the law investing jurisdiction?  You have to start with ‑ ‑ ‑

MR COLES:   I think that is attached, your Honour – I was going to come to it, but I will deal with it now.  The submissions attach a copy of what is 1337E of the Corporations Act whereby by subsection (1), subject to a provision of the AD(JR) Act, jurisdiction is conferred on the lower courts of relevantly each State with respect to civil matters arising under the corporations legislation.

GUMMOW J:   We have to look at 58AA?

MR COLES:   In connection with another aspect of the matter, yes.  Section 58AA is not attached to the submissions, but we can make that ‑ ‑ ‑

GLEESON CJ:   Section 58AA is attached to the submissions.

MR COLES:   Is it?  I am sorry, your Honour.

GLEESON CJ:   These do not have numbers but ‑ ‑ ‑

MR COLES:   Yes, I am sorry.  It is in fact the first attachment, I do apologise, your Honour.

GUMMOW J:   Yes, you are quite right.

GLEESON CJ:   Is there a definition of lower “courts”?

MR COLES:   No.

GUMMOW J:   Yes, there is.

MR COLES:   Is there?

GUMMOW J:   Have a look at section 9.

MR COLES:   “Court” means any court – section 9 takes one, generally speaking, to 58AA.

GUMMOW J:   There is a definition of lower “court” in section 9.

MR COLES:   Yes, I see, your Honour.  I am indebted to your Honour.  It means any court that is not a superior court and hence the importance of the distinction between a lower court on the one hand and the Court referred to in section 58AA.

GUMMOW J:   Do we have 1337A?

MR COLES:   That is not reproduced in the submissions, your Honour, for ‑ ‑ ‑

GUMMOW J:   We will have a look at that too, 1337A(3) and (4).

MR COLES:   Yes, certainly 1337A(1) and, indeed, the whole section, and subsection (3) importantly records that:

This division does not limit the operation of the provisions of the Judiciary Act 1903 other than section 39B.

GUMMOW J: Yes, including section 79.

MR COLES: Including section 79, yes. So we rely on that. Your Honours, if it is not inconvenient, can I shortly draw your Honours’ attention preferably or ideally by reference to the attached portions of statutory material to what I will call the principal statutory provisions which enliven the appellant’s contentions. If your Honours would go firstly to 588FF of the Corporations Act which appears in Part 5.7B of the Act which relates to the “Recovering property or compensation for the benefit of creditors” and, importantly, subsection 588FF(1) provides that:

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 –

which relates to transactions by insolvent companies in particular periods prior to the onset of external administration -

the court may make one or more of the following orders -

and there are then included a range of orders principally relating to the payment of money or the re‑transfer back to the company of property or some similar related order.  Section 588FF(3) picks up on the provision made by section 588FF(1) in terms of the making of an application by the liquidator.

GLEESON CJ:   How do you find out how you make an application in a court?

MR COLES:   By these means, your Honour, because the federal Act does not prescribe any particular form or any particular content, for that matter, of what I will call generally originating process, that is a matter that is left to the respective courts, or the prescriptions.

GLEESON CJ:   You look at the rules of the court.

MR COLES:   You look at the rules of the respective courts to pick up what is an application.  But may I anticipate a submission we will in due course make, just at this point?  One would be looking – and here we are perhaps to some degree at odds with some submissions made by our learned friends who appear for the Commonwealth.  We would be urging on your Honours, in one aspect of our argument, a broader view of the word “application” than simply any particular form of specific originating process.  In other words, in our submission, an application is anything which, in accordance with the procedures of the court in which the application is brought, brings into life a proceeding for the recovery of relief in this case.

GUMMOW J:   Is that not consistent with what we decided in Agtrack?

MR COLES:   Yes, that is our very point, with respect, your Honour.  One is not taking an overly formal view about the specific content or specification of an individual application; one is looking at the substance of the particular process which according to the rules of the court enliven its entitlement to consider the particular federal matter.

GLEESON CJ:   But section 588F(3) is a time bar.

MR COLES:   It is.

GLEESON CJ:   So, subject to any capacity for relief, you need to be able to know with precision whether an application has been made within three years, or whatever the particular time provision is.

MR COLES:   Yes, you do.  A number of matters can be referred to at this stage about subsection (3).  Firstly, it is, as your Honour points out, a time bar.  The application must be made within three years of relation‑back day, which is a defined expression which in effect is coextensive with the beginning of the winding up, or under (b):

within such longer period as the Court –

as defined in section 58AA –

orders on an application under this paragraph made by the liquidator within those 3 years.

GUMMOW J:   Subsection (3)(b) itself was the creation of a new species of matter.

MR COLES:   Yes, it is, precisely, your Honour, but not conferred on the lower court by 1337E.

GLEESON CJ:   But once, according to whatever source of information you look to, you have ascertained, as you need to be able to ascertain with precision, whether an application has been made within three years, does subsection (3) have any further work to do?

MR COLES:   It may because a question may arise as to what is the content of the particular application that has been made within the three years.  In other words, issues may arise as to whether one may be entitled outside the three‑year period to amend the application.  That issue could arise, and the other way that it arises is of course the way we say it arises in this appeal.  If the application duly made within the three years has been finally disposed of by whatever means, then any endeavour to bring some other application to enliven the same claim for relief under subsection (1) is an application which on the argument we will be seeking to develop attracts in effect the prohibition which subsection (3) confers ‑ ‑ ‑

GUMMOW J:   What is the significance of “Court” in (3)(b) rather than “court” in the rest of the section?

MR COLES:   In our respectful submission, it is a fairly strong – indeed, perhaps almost a strident – demonstration of the legislature’s insistence that the topic of extensions of time to bring the proceedings outside the three‑year limit is to attract the attention only of superior courts because it is a topic of importance which requires the consideration which the legislature has ordained is appropriate.

GUMMOW J:   So it would have to go to the Supreme Court then?

MR COLES:   Supreme Court or the Federal Court or, for that matter, the Family Court I think are the relevant superior courts for the purpose.  Whatever else it is, it is not the intention of the legislature that one may, for example, go to the District Court in New South Wales and ask for an extension of time to bring proceedings in the District Court of New South Wales.  If the liquidator in this case had, against the apprehension that time was running out on him, wanted, as perhaps he should have applied for, an extension of time, then of course he had to go to the Supreme Court or the Federal Court for, in effect, leave to bring outside the three‑year period the proceedings he wanted to bring in the District Court.

That means, in our respectful submission, as we have put, that importance is attached to the question of extension of time and review by a superior court is the legislature’s intention when there will be an examination as to what circumstances justify a liquidator bringing forward a claim within the three‑year period to advance it outside the time limitation.

GUMMOW J:   What is the relationship between (1) and (3)?  I think you agreed it was a time bar.  I am not sure that is right.  Is this a Crown v McNeil situation?  In other words, is the time limitation part of the very right that is created?

MR COLES:   We submit so, your Honour, because it is so engrafted upon the entitlement to bring the application itself that – indeed, it perhaps follows also because if it be correct, as the authorities have suggested, that firstly you cannot extend the time referred to in (3)(a) by an application under other provisions of the Corporations Act which I will mention briefly in a moment ‑ ‑ ‑

GUMMOW J:   We had better be given a reference at some stage to the The Crown v McNeil line of cases – there is a whole lot of them.

MR COLES:   Yes, could I just show your Honours those now.  If your Honour would go over to the page you will see 1322 of the Corporations Act dealing with irregularities.  We have set out the provision in the written submissions, but 1322 contains subsection (4) on the next page which says:

Subject to the following provisions of this section but without limiting the generality of any other provision of this Act, the Court may, on application by any interested person, make all or any of the following orders . . . 

(d)an order extending the period for doing any act, matter or thing or instituting or taking any proceeding under this Act or in relation to a corporation (including an order extending a period where the period concerned ended before the application for the order was made) or abridging the period for doing such an act, matter or thing -

This Court in dealing – we have pointed this out in our written submissions ‑ ‑ ‑

GUMMOW J:   That is a “Court”.

MR COLES:   That is a “Court” which is the only court that can do the extension of time under subsection (3)(b) in any event.  Putting those matters together it has been recognised, certainly by this Court in David Grant, that at least in the somewhat analogous provisions relating to the time within which applications are set aside statutory demands must be brought the Corporations Act provisions for the extension of time are unavailable.

In conformity with that decision, the Court of Appeal of the Supreme Court of New South Wales has in the decision to which we have referred in our written outline, that is to say, BP Australia Ltd v Brown come to the same conclusion so far as 588FF(3)(b) is concerned.  It is in effect to use a, I trust, not controversial expression, said to be a provision which covers the field so far as extensions are concerned and having regard to its history and purpose excludes the application of the general provisions under the Corporations Act for extension of time.

Could I next invite your Honours to then note the relevant provisions or some of them anyway of the District Court Rules.  The District Court Rules, your Honour, are rules made by the Rule Committee of the ‑ ‑ ‑

GUMMOW J:   Before we get immersed in the District Court Rules, the latest case, I think, I am not sure, dealing with the The Crown v McNeil situation is Rudolphy v Lightfoot (1999) 197 CLR 500 at paragraph 13.

MR COLES:   Thank you, your Honour.

GLEESON CJ:   What is the section of the District Court Act under which these rules are made or are they made by statute?

MR COLES:   Section 161, I think, your Honour.  Yes, section 161 of the District Court Act provided that:

The Rule Committee may make rules, not inconsistent with this Act –

in relation to, in effect, matters necessary or convenient to be prescribed by the rules. I am reminded, your Honour, section 18A and 18B establish a Rule Committee and being therefore statutory rules or statutory regulations the Interpretation Act (NSW) picks up the further processes of dealing with the rules and they lie on the tables of the respective parliaments for potential disallowance within the following month.

Could I ask your Honours then to just notice for the moment the three important rules to which we would draw attention.  If your Honours would go to the second‑last page of the statutory materials, your Honours will see set out rule 9 of Part 18 – this is at the foot of the second‑last page of the extract of the District Court Rules and is in a part of the rules which is Part 18 called “Withdrawal and discontinuance”.  Rule 9 is headed “Dismissal of dormant actions commenced by lodging statements of liquidated claims”:

If an action is commenced by the lodging of a statement of liquidated claim –

as, I interpolate, the proceedings presently in contention were –

and, on the expiry of the period of 6 months and 28 days from the date of the commencement of the action:

(a)a notice of grounds of defence has not been filed, and

(b) default judgment has not been entered or the action otherwise disposed of by judgment or final order,

the action is taken to be dismissed on the day following the day on which that period expires.

GLEESON CJ:   When did that rule come in?

MR COLES:   I think we have ascertained the date, although it is not in our submissions, but could I just take that on notice, your Honour, and see if we can supply that to your Honour?  It was not part of the original rules and it was not around, I think we can fairly say, at the time – according to the then District Court practice, your Honour, it was inserted, or took effect, anyway, by publication in the Gazette on 12 April 2002.

GLEESON CJ:   Is there any corresponding rule in relation to unliquidated claims?

MR COLES:   No, it is a rule specifically confined to proceedings instituted by the lodgement of a statement of liquidated claim.

GLEESON CJ:   So what it means in practice in an ordinary debt‑collecting situation is that unless you sign judgment within six months and 28 days the action is dismissed?

MR COLES:   That is right, and what it means is that within that six months and 28 days one must of course effect service of the originating process, or the statement of liquidated claim, in fact, in time to enable a defence to be filed or the default judgment in the absence of a defence to be entered up or some other mode of disposition and if those things do not happen the proceedings are in terms of the section taken to be dismissed.

GLEESON CJ:   What if the defendant is evading service?

MR COLES:   If the defendant is evading service, the two courses open to the plaintiff are to seek to extend the time within which service may be effected before the action becomes dormant, as I think did happen in this case although not, let me emphasise, for any reason involving the defendant’s evasion of service.  To the contrary, the liquidator on the facts abstained from serving him for some time while – attempting to serve him for some time while he abided the outcome of an application for litigation ‑ ‑ ‑

GUMMOW J:   An application for what?

MR COLES:   For litigation funding. 

GUMMOW J:   I see.

MR COLES:   So there were, I think, three or four attempts made to serve the defendant within the time, but through no fault of his own he was not at his residence and no other endeavour was made to effect service on him whenever he was.  The second mechanism, I suppose, to answer your Honour the Chief Justice’s question, if the defendant is evading service, you get substituted service.

GLEESON CJ:   You get substituted service, yes, but he would have to do that within the correct time.

MR COLES:   Yes.

GLEESON CJ:   This must be good for court clear‑up rates.

MR COLES:   Well, indeed, but we see it may have a more beneficial purpose and perhaps, though, no one would suggest it was done for this reason, but it has a harmonious congruence we would be inclined to say, although whether this is right, it does not really matter ultimately, but it has an harmonious consistency with the objective of 588FF(3) because it tells people to get on with things.  But, in any event, whatever its purpose, what is in contention in the present proceedings is its effect, that is to say, what is the effect of a dismissal or the effect of a legislative prescription that the action is taken to be deemed to be dismissed?  That is answered, in our respectful submission by the rules themselves.

GLEESON CJ:   I am sorry, you may have mentioned this already, but what is it that gives these rules the force of law?

MR COLES:   I will have to give your Honour the – they become statutory rules, on my understanding, your Honour, within the meaning of the Interpretation Act, and then they lie on the table of Parliament unless they are disallowed within the period in question, but they take effect as statutory rules.  But I will have to give your Honour ‑ ‑ ‑

GUMMOW J:   They are statutory rules, but what is the statute of New South Wales which provides for all this to happen?

MR COLES:   I think 161 of the District Court Act, allied with 18A and 18B which constitutes the Rule Committee for the purpose.  The Interpretation Act contains section 39 dealing with publication in the Gazette and its taking effect, section 40 dealing with the written notice of the making of a statutory rule being laid before each House of Parliament, and section 41 either House being authorised to resolve to pass a resolution disallowing statutory rules. “Statutory rule” is defined by section 20 of the Interpretation Act 1987 (NSW) as:

(a)      a regulation, by‑law, rule, or ordinance . . . 

(ii)that is made by a person or body other than the Governor, but required by law to be approved or confirmed by the Governor, or

(b)      a rule of court. 

So we think a statutory rule would qualify as a rule of court.  The expression “rule of court” is defined in the Interpretation Act 1987:

in relation to a court or tribunal, means rules made by the person or body having power to make rules regulating the practice and procedure of the court or tribunal.

GLEESON CJ:   That expression in rule 9 of Part 18 “taken to be dismissed”, taken by whom and for what purposes?  Is this sort of given the force of an order of the court?

MR COLES:   Practically speaking, it is, in our submission.  Can I ask your Honours to go back two pages to where the expression “dismiss” is actually defined by the District Court Rules themselves, because it is our submission, and we, needless to say, lay some emphasis on this perhaps more than any of the submissions of our learned friends, but “dismiss”, if your Honour sees the definitional provisions three pages back into the outline:

dismiss, in relation to any proceedings, means finally dispose of the proceedings, but (except where the proceeding consist of an appeal to the Court) without prejudice to any right to commence fresh proceedings seeking the same, or substantially the same, relief. 

Although we have not extracted it for you, that is part of the definitional provision in – that is taken, your Honour, as the – that is rule 4 – or the definitions are, in fact, contained in rule 4 of Part 1 which is headed “Interpretation” and each of the definitional expressions is prefaced with the comment or prefaced with the words:

In these rules, unless the context or subject matter otherwise indicates or requires –

which, it is our submission, it does not, then the words have the meanings thereafter set forth.

GLEESON CJ:   This concept of dismissal is fairly complex in these rules, is it not?  I notice there is something called a preliminary dismissal order.

MR COLES:   That is under another rule and it is of some interest, your Honour, though not perhaps decisive, of I suppose passing importance that provision is actually made in relation to the effect of a preliminary dismissal order because there may be mechanisms for undoing that in a way that are not in terms provided for by Part 18 rule 9.

GLEESON CJ:   But if a judge deals with an application and says “The application is dismissed”, that does not mean that somebody can commence fresh proceedings seeking the same relief, does it?

MR COLES:   I think it may because Part 1 rule 7A defines a preliminary dismissal order as:

an order made by the Court dismissing proceedings other than . . . after there has been a trial or hearing on the merits –

and then subrule (3) tells you the effect and subrule (5) says:

Any party to proceedings in respect of which a preliminary dismissal order is made may, within the period of 28 days after the making of the order, apply to the Court to set aside the order.

So there is built in as part of the preliminary dismissal type of order a mechanism for an application to set it aside, which of course is not plainly built into the more unqualified dismissal which Part 18 rule 9 provides for.

GUMMOW J:   What is the other rule that actually uses this expression “preliminary dismissal order” apart from the definition?

GLEESON CJ:   Rule 7A, is it not?

GUMMOW J:   Is it just 7A?  It is a definition and nothing else.  You only find its application by 7A(1).  It is a description of the operation of other rules which is then given a definition.

MR COLES:   Part 18 rule 3 also deals independently with want of prosecution, but the scheme of the definition seems to be to pick up anything that falls within the definition of “preliminary dismissal order” because a judge is dissatisfied with the compliance by the defendant with the timetable or some other cause.

GUMMOW J:   Why was not Part 18 rule 9 a preliminary dismissal order?

MR COLES:   Because it is not made by a court.  It is a condition of the preliminary dismissal order as defined ‑ ‑ ‑

GLEESON CJ:   There is sometimes a slight risk of looking at individual rules of court without looking at them in their entire context.

MR COLES:   I am not disagreeing with your Honour.  Apart from indicating that in the preliminary dismissal type of order there are built‑in procedural palliatives which do not exist in Part 18 rule 9 which ‑ ‑ ‑

HAYNE J:   In a case that does not concern the Corporations Act, how would a party set about getting around the consequence of Part 18 rule 9?

MR COLES:   In our respectful submission, by the very means that the rule itself, as expanded by the definitional provision built into it, the parties so confronted with that situation would say, “Well, I have had my proceedings commenced by a statement of liquidated claim finally disposed of.  What will I do about that?  I notice that that dismissal is without prejudice to any right to commence fresh proceedings and I shall do so.”

HAYNE J:   And if a time bar had intervened?

MR COLES:   Exactly, if a time bar had intervened, that would be a very considerable difficulty and the fresh proceedings could not be so commenced.

HAYNE J:   Could not the general rules of court concerning with dispensing with compliance, extending time and the like be engaged?

MR COLES:   Perhaps so, your Honour, and indeed there are decisions in New South Wales that suggest that ‑ ‑ ‑

HAYNE J:   Do we not need to understand whether they could be engaged to understand what, if it be relevant, Part 18 rule 9, if attention is confined to the four corners of the rules, means and how it operates?

MR COLES:   Yes, we have in some submissions in reply, to which I will perhaps come shortly, sought to draw attention to other rules where time extension powers are called in aid, perhaps your Honours, although it is not a matter that arises in terms as a subject of the appeal, simply to point out that there are provisions of the rules which stand in contrast to Part 18 rule 9 inasmuch as those provisions do build in extension of time provisions of their own or condition the operation of a particular rule as being subject to other rules or the like.

In terms, for the moment at least, Part 18 rule 9 does not do that.  Really, the question in the appeal engages the question your Honour asks.  Because it is, I think, at least the respondent’s position that there is some inseverable linkage between the general provisions of the rules relating to extension of time and the specific provisions of the rules that bring about the final disposal of the proceedings, subject to the right to bring fresh proceedings.

HAYNE J:   Is it an essential step in your argument that the consequence of application of Part 18 rule 9 is that the proceeding that was commenced is at an end beyond redemption?

MR COLES: Yes, unless by virtue of section 79 of the Judiciary Act, Part 3 rule 2 can be picked up to, in effect, enable an enlargement of the time and, if that be so, the two questions which we have raised arise, namely, whether that can happen at all once the proceedings have been finally dismissed, and the second issue is whether that is not, in any event, inconsistent with 588FF(3).

HAYNE J:   I understand those questions arise, but can I take you away from proceedings rooted in the Corporations Act?  Can we confine attention for the moment to the rules of court?  Is a dismissal under Part 18 rule 9 a disposition which dismisses the proceedings beyond redemption?

MR COLES:   According to the decision of the Court of Appeal in the present case, no.  Their Honours have extended time, in effect.  Our grant of leave to appeal does not extend to challenging that state of affairs and we rather feel it to be the case that your Honours would regard it as unlikely that this Court would want to engage in an analysis of the methods by which the final court of a State construes its own rules, but that state of affairs, as we seek to demonstrate, is not dispositive of the appeal in this Court by any means because, after all, we are not in this Court dealing with the State rules as State rules; we are dealing with them as Commonwealth legislation according to whether or not they are picked up.

GLEESON CJ:   Are there corresponding rules in the Supreme Court of New South Wales?

MR COLES:   There is not a corresponding rule to Part 18 rule 9.  When they repealed these District Court Rules, and indeed most of the Supreme Court Rules, in what is in New South Wales the Civil Procedure Act and the Uniform Civil Procedure Rules, this rule 9 was in substance re‑enacted but confined by its operation to the District Court.  So it is still a – and a footnote to our written submissions records that the rules have been repealed and replaced by the Civil Procedure Act.  Part 18 rule 9 has been replaced by a provision in similar terms in what is now rule 12.9 of the Civil Procedure Rules 2005.  It does not follow the Supreme Court.

Importantly, the same concept of the effect of dismissal, that is to say the dismissal is, to use the words of the rule, something which finally disposes of the proceedings but subject to the right to bring fresh proceedings, that now finds its place not in the rules but in section 91 of the Civil Procedure Act 2005 (NSW).

GLEESON CJ:   Are the rules with which this appeal is concerned now out of date?

MR COLES:   Yes, as of 2005 there is a whole new rulebook in civil procedure in New South Wales both in the Supreme Court and the District Court and, for that matter, the Local Court.  There has been an assimilation of the rules of the three courts into what is in effect the one Code subject to inevitable exceptions and carve‑outs, one of which is the confinement of what in these proceedings is Part 18 rule 9 to the District Court and I think the Local Court.

GUMMOW J:   It was a Woolf reform, was it not?

MR COLES:   Probably, your Honour.

GUMMOW J:   A Lord Woolf style reform, just have one set of rules but the nibbling always goes on.

MR COLES:   I do not want to ‑ ‑ ‑

GLEESON CJ:   Does that mean that the Rule Committee of each court cannot alter its own rules?  Who now alters the rules of the Supreme Court of New South Wales?  It used to be the judges of the Supreme Court, I mean.

MR COLES:   I think they can but I cannot say, your Honour, I have made myself familiar with the mechanism for doing that.  I suspect it is not conceptually different to the way they used to do it before. 

GUMMOW J:   Your junior knows.

MR COLES:   Apparently it is more sophisticated than I thought, your Honour.  There is a combined Rule Committee but a separate Supreme Court Rule Committee.

GLEESON CJ:   I am sorry I missed that.

MR COLES:   Perhaps we can let your Honour have a note.  The thrust of the first part of the submission is to note these matters, that when Part 18 rule 9 operated on the liquidator’s proceedings so as finally to dispose of those proceedings, it left Mr Tolcher, the liquidator, the option to institute, if he could, fresh proceedings seeking the same or substantially the same relief.  There is no contention, as we understand the position of our learned friends or those who intervene, that had Mr Tolcher following that dismissal commenced the fresh proceedings which the dismissal rule contemplates, he would inevitably have been out of the time fixed by section 588FF(3) and those proceedings would be in effect futile.

GLEESON CJ:   It is common ground, is it, that originally he complied with that time?

MR COLES:   Yes, he did.  He had the whole three years to do it and he just got in but none the worse for that.

CALLINAN J:   Three days, was it not?

MR COLES:   Three days, yes.  Except if one were looking at questions of, for example, discretion in extensions of time, it is difficult for me to say anything critical or to make any observation of that in the sense that again our grant of leave to appeal in these proceedings does not extend to what we would otherwise be claiming represents significant discretionary errors by the Court of Appeal, but we are not I think in a position to do that here.

The time scheme, your Honours will note, is set out in the chronology on page 11 of the written outline.  The liquidator, Mr Vouris, was appointed on 5 June 2000.  He filed his statement of liquidated claim on 2 May 2003, two days before 5 May 2003 when the period provided for by ‑ ‑ ‑

HAYNE J:   Why did the relation‑back period start in May, not June?  Had there been an earlier administration or something?

MR COLES:   I think there was a preceding voluntary administration, yes.  That would probably dovetail into the 28‑day period within which the second creditors’ meeting – I think probably that is common ground actually, your Honour, but we will confirm that.  The period therefore provided for in subsection (3) of the Corporations Act expired on 5 May.  The next, for present purposes, relevant or important date is 1 December 2003 which records the date when, pursuant to Part 18 rule 9 of the District Court Rules, the statement of liquidated claim was dismissed for want of prosecution.

GLEESON CJ:   I am sorry to nag away at the rules at the moment, but can I take you back to the definition of “dismiss” in Part 1 rule 4.  You will see it uses the expression “without prejudice to any right to commence fresh proceedings”.  That assumes the existence of a right.

MR COLES:   Yes.

GLEESON CJ:   It does not create the right.

MR COLES:   No, quite.  It assumes that the cause of action is still available to be pursued by the institution of a new case.

GLEESON CJ:   So forget this particular period of limitation with which we are concerned, if under some limitation statute, some New South Wales limitation statute, for example, there was a limitation problem about commencing fresh proceedings, this part of the definition of “dismiss” would have nothing to say to that?

MR COLES:   No, that is right, your Honour.  To take the typical example which would mostly happen, the statement of liquidator’s claim is issued for debt near the end of a six‑year period.  If the dismissal happens and the six‑year period happens to have passed in the meantime, then there is a Limitation Act defence available to the defendant in answer to the fresh proceedings which the plaintiff was entitled to bring.

GLEESON CJ:   Well, you, I suppose, place emphasis on the concept that these are fresh proceedings.

MR COLES:   What we say, your Honour, is if you look at the notice of motion that the liquidator filed seeking an extension of time to bring proceedings which on our submission were in effect legally dead, that constituted the institution of a fresh proceeding or fresh application.

GUMMOW J:   But wait a minute.  That is not asserting a right; that is claiming the benefit of a mercy, is it not?

MR COLES:   Well, it is probably an immunity or a protection, yes.

GUMMOW J: No, but when you come along under Part 3 rule 2, was it?

MR COLES:   Yes.  Well, the next rule I have not taken you to – the last rule I wanted to take your Honour to in the bundle of regulatory material ‑ ‑ ‑

GUMMOW J:   But in answer to the Chief Justice you said there was a second application.

MR COLES: No, I am sorry, your Honour misunderstood. Can I take your Honours to Part 3 dealing with time?

GUMMOW J: I know that, and they applied under Part 3 rule 2.

MR COLES: And an application was brought essentially pursuant to Part 3 rule 2(2) whereby the court may extend time ‑ ‑ ‑

GUMMOW J:   Yes, that is right.  All I am asking you is, is that any right to commence?  That was not the exercise of a right to commence fresh proceedings, was it, within the meaning of the definition of “dismiss”?

MR COLES:   No, it was not.  Plainly, the liquidator appreciated the difficulty which the final disposal effected by the dismissal wrought and the impossibility of bringing fresh proceedings because out of time or outside the time limit imposed by 580FF(3).  So what he did, in effect, to escape that consequence ‑ ‑ ‑

GUMMOW J:   What I am trying to get you to grapple with is, can Part 3 rule 2(2) ever have any application after there has been a dismissal under Part 18 rule 9?

MR COLES:   It would be our submission, no, but I do point out, your Honour, that the result of what the Court of Appeal has held in this case is that it does, but that is not something we were given leave to appeal about.

GLEESON CJ:   Can it have an application where there has been a dismissal under Part 18 rule 9 and there is a time bar in the way of “a right to commence fresh proceedings”?

MR COLES:   Yes, but, importantly, there is, I suppose, an observation to be made, your Honour, in this sense, that by adopting the mechanism under Part 3 rule 2 by a motion in the disposed of proceedings to extend time under that rule, in effect, the liquidator coped or did his best to deal with the fact that he was not able to bring the fresh proceedings which he was entitled to bring in consequence of the dismissal.

It is one of our submissions or one of the ways of putting what is essentially the same submission is that there is functionally or in substance little distinction to be drawn between bringing the notice of motion under Part 3 rule 2 to extend time after it has expired, there being no proceedings on foot at the time that application was brought. There is little difference between that in substance and a fresh application because in each case the object and purpose of the exercise is to generate an activity within the Court under section 588FF(1).

GUMMOW J:   At the end of the day the question has to be whether this motion put on under Part 3 rule 2 was something that could not be picked up because it was otherwise provided within the meaning of section 79 in the face of the time bar which had clamped down by then.

MR COLES:   Yes, that is right.  We submit, to put the matter ‑ ‑ ‑

HAYNE J:   The premise for that debate on your side is that the dismissal has worked a final determination of the proceeding that was instituted within time.

MR COLES:   Yes.  We say, your Honours, that has, of course, consequences because of the court acting in federal jurisdiction because we, needless to say, adopt the learning of this Court which is uncontroversial in these proceedings.

HAYNE J:   Before you come to that, just that premise, what is the order of or the part of the rules which deals with judgments and orders?  Is there a part of the rules that bears upon this expression “taken to be dismissed”?  Is that an expression which is picked up and dealt within the rules of court, whether in the judgments and orders rule or in the Act or elsewhere?  Is it simply ‑ ‑ ‑

MR COLES:   Relevantly, judgments and orders in the District Court Rules are contained ‑ ‑ ‑

GUMMOW J:   Why does it not mean taken to be dismissed by order made by the court, so it is then a preliminary dismissal order?

MR COLES:   That is right.

GUMMOW J:   That is your problem, is it not?

HAYNE J:   Just so.

MR COLES:   No, because this is not ‑ ‑ ‑

HAYNE J:   Or is it just an administrative record in the records of the court?  Taken to be dismissed under ‑ ‑ ‑

GLEESON CJ:   Which does wonders for productivity.

HAYNE J:   Exactly.  A statistical tool, Mr Coles.

MR COLES:   However one so describes it, but it has effect in New South Wales as part of the law of that State and more significantly for present purposes ‑ ‑ ‑

HAYNE J:   I understand that.  I am just trying to understand what the effect is.  You assert it is a final determination like a judgment.

MR COLES: The rule says that and I cannot improve on the statutory language and it would be temerity to try, but the words “final disposal” or “finally disposed” mean, in our respectful submission, what they say. When they are picked up by section 79 of the Judiciary Act, they produce by the result of federal legislation the consequence that the proceedings commenced by the liquidator are finally disposed of and that is final disposal produced as a consequence of the application of federal law in federal proceedings, or proceedings in federal jurisdiction.  Now, no one, in our respectful submission, or no one to our observation appears to controvert that proposition.  There does not seem to be any controversy at the Bar table.

GUMMOW J:   No, but there was no application to set it aside.

MR COLES:   No.

GUMMOW J:   No application for the court to set it aside or to confirm it ‑ ‑ ‑

MR COLES:   Page 18 of the appeal book, your Honours ‑ ‑ ‑

GUMMOW J:   - - - under Part 1 rule 7A(6).  I mean, if “taken to be dismissed” means taken to be dismissed by the court that then would trigger 7A.

MR COLES:   Yes, it would.

GUMMOW J:   But it was not used.

MR COLES:   But it was not used, no, no, that is right, nor, for that matter, was any application made to the court otherwise to vary or dispense with the operation of the rules or to activate any facilitating or palliating outcome.  So that one simply finds the statute of New South Wales as picked up in federal jurisdiction by the Judiciary Act operating according to its terms in a way and, importantly, not only is it picked up, in our respectful submission, but effect must be given when one is contemplating section 79 of the Judiciary Act to the word “binding”.

GLEESON CJ:   Does rule 7 of Part 18 throw any light on the meaning or effect of rule 9?  The context of rule 9 is in Part 18 headed “Withdrawal and discontinuance”.

MR COLES:   Yes, well, it produces the same outcome.

GLEESON CJ:   Rule 9 is headed “Dismissal of dormant actions”, and rule 7 deals with discontinuance of actions ‑ ‑ ‑

MR COLES:   Yes, and the common theme ‑ ‑ ‑

GLEESON CJ:   - - - which does not prevent what is said to be bringing fresh action.

MR COLES:   Yes, and the common theme, in our respectful submission, is that there has been no adjudication of the matter on the merits.  So, therefore, the facility for a fresh action is not precluded by judgment estoppel.  In either case, as we see it, the application is over.  So you do not have the problem of vexation produced by the bringing of a succession of proceedings without the anterior disposal of the prior proceedings.

GLEESON CJ:   What happens if there is a discontinuance of an action and then a statutory limitation period overtakes the action and then there is an attempt to bring fresh proceedings?

MR COLES:   Well, again, the fresh proceedings must, in our submission, be defeated by the applicable limitation provision.

GUMMOW J: Why cannot there be now an application under Part 3 rule 2 to extend the time under Part 1 rule 7A(5) to 28 days? You have 28 days to come along and get the preliminary dismissal order set aside.

MR COLES:   That may be, it is possible that may be so, your Honour, but that, if anything, perhaps stands in fairly stark contrast to Part 18 rule 9 which does not contain that inbuilt facility and perhaps has that significance.

GLEESON CJ:   It is not quite accurate to say that there is no corresponding rule in relation to actions commenced by unliquidated statements of claim.  Part 12 rule 4C headed “Dismissal of dormant actions commenced before 1.1.96” deals with the same kind of question and I think probably has the same kind of purpose.

MR COLES:   I am sorry, I am afraid that one escaped my attention, your Honour.  I apologise for that.

GLEESON CJ:   I think it is important to look at the whole of the District Court Rules.

MR COLES:   Again, there seems to be built into Part 12 rule 4C in its terms some provision for alleviating its consequences by an order being made for the future conduct of the action in subrule (4).

GUMMOW J:   I think you have to look at them all because then you have to – only then really can you sensibly apply 79 and this question of “otherwise provide”.

MR COLES:   I do not dissent from that proposition and, indeed, it is supported by observations of the Court in other cases.

HAYNE J: Step one might be thought to be Part 1 rule 5 which is “Adherence to and relief from rules”. You start there, you then marry that with Part 3 rule 3 “Fixing time” ‑ ‑ ‑

MR COLES:   As I say, I think, your Honour, Part 1 rule 5 is not, in our respectful submission, a kind of self-executing type of provision.  It would require its terms to be invoked.

HAYNE J:   But 5(1):

Subject to subrule (2), the practice in the court shall be the practice provided by the Act or the rules.

You start there, that is subject to certain capacities to dispense from compliance under 5(2) and 3(3).

MR COLES: Indeed. The next point we wish to make really by way of response to some things said against us is that it is of course not accurate to say that Part 3 rule 2 would not in some instances have some scope for applying to Part 18 rule 9 and could be picked up in proceedings in federal jurisdiction in certain circumstances. I think, for example, if during the currency of an action which was not being summarily disposed of or was not being deemed to be dismissed, various procedural questions arose, various time limits failed to be complied with, whether for the filing of pleadings or witness statements….., no one would doubt that Part 3 rule 2, a rule of general application, would be applicable during the currency of a proceeding on foot and regularly passing its way through the court system but, in our respectful submission, it does not follow from the recognition that Part 3 rule 2 may have application in particular instances in the course of an action that that rule will inevitably and always and without more be picked up in federal jurisdiction if there is some provision otherwise in applicable form of the legislation.

Can I point out firstly, your Honours, that, although, as I say, we accept that the general rules for the extension of time may be picked up typically during the progress of a case in its ordinary ‑ ‑ ‑

GUMMOW J:   What is picked up are the laws relating to procedure.  On the face of it, that is all of this.

MR COLES:   With an important qualification of course if federal law otherwise provides and that is really the issue here. Perhaps the first problem we would identify, perhaps as a threshold matter, is that what section 79 does is render the State law applicable where the court is exercising federal jurisdiction in a State. As it seems we understand everybody’s position at the Bar table, there does not seem to be any problem with the recognition that section 79 picks up Part 18 rule 9 and that presumably “final disposal” means what it says.

The question is what then is the condition when a proceeding authorised by the Corporations Act to be brought in an inferior court, when that action comes to end and there is, in effect, no federal matter before the lower court, the question then arises if section 79 only renders the State law applicable where the court is exercising federal jurisdiction and if that federal jurisdiction has come to an end because those proceedings in the State court have been finally disposed of by provisions picked up by the Judiciary Act and thus finally disposed of by the operation of federal law, one asks what jurisdiction is the State court exercising when it applies Part 3 rule 2 to extend time in a matter which, if the words “finally disposed of” mean what they say, has come to end so far as the exercise of federal jurisdiction is concerned.

We draw attention, your Honours, that this Court has emphasised, in our submission, on a number of occasions that the exercise of federal jurisdiction at the relevant time is an essential condition of the application of section 79 to pick up State law. The question really is having, in the events that have happened, does section 79 pick up Part 3 rule 2 to authorise the extension of time and if so ‑ ‑ ‑

GLEESON CJ:   Is it the case that the time fixed by the rules which was relevantly to this case the subject of Part 3 rule 2(1), was the time fixed by Part 18 rule 9?

MR COLES:   Yes.  Part 18 rule 9, we would think, uncontroversially, fixes a time.

GLEESON CJ:   That just means, does it not, that you read Part 18 rule 9 as though it were introduced by the words “subject to Part 3 rule 2”?

MR COLES:   That is a possibility, but our preferred view on that, your Honour, is that when the Rules Committee wanted to specifically subject particular rules to other rules they as often as not have said so and one finds illustrations of that in Part 1 rule 7A.  One may do that but that will not, in our respectful submission, solve the difficulty of whether when one comes to apply the extension of time provision there is not an inconsistency with that application and the provisions of the Corporations Act which limit the time for the proceeding.

GLEESON CJ:   The time limited by Part 18 rule 9 is by most standards a fairly short time.

MR COLES:   It is.

GLEESON CJ:   Particularly when you deal with the possibility the judgment debtors might be evading service of process, or the debtors might be evading service of process, for example, in ordinary debt‑collecting cases.  It is not difficult to understand why, when the Rule Committee fixed that relatively brief time for a deemed dismissal, it did it or would have intended to do it subject to the qualification, the general qualification contained in the earlier rule.

MR COLES:   As I say, whether in State jurisdiction that is so or not is a matter, in one sense, the appeal does not really raise, but our preferred position there, your Honours, is that one would not accept the proposition that there is some integral relationship between 18 and rule 9 and the general powers of extension for at least these reasons.  One is not in terms subject to the other; secondly, of course, the words “final disposal” tend to suggest a certain finality; thirdly, the qualification on final disposal, namely, the entitlement to bring fresh proceedings, generally tends to suggest that the Rules Committee contemplated an available avenue to those who had suffered their proceedings to be dismissed.

HAYNE J:   Can I just test this understanding you give to the word “dismiss”?  I assume the District Court Rules have the usual ex parte provisions about proceeding ex parte at trial if there is no appearance by one party?

MR COLES:   Yes, I think so.

HAYNE J:   Let it be assumed that the plaintiff in this proceeding did not appear on the day fixed for trial, the defendant moved for judgment, judgment was entered accordingly, proceeding dismissed.  Could the plaintiff in those circumstances, on demonstrating that he had been bowled over by a bus on the way into the courthouse door, engage the ex parte rule to have judgment set aside and the action tried inter partes?  Your submission seems to be that dismissal equals dismissal equals no.

MR COLES:   Well, except I rely on no more than the words of the rules themselves.

HAYNE J:   I understand that.

MR COLES:   “Finally dispose” means finally disposed and “binding” in the Judiciary Act means binding.  So that the textual foundation for ‑ ‑ ‑

HAYNE J:   It is a textual foundation that fastens especially upon that rule to the exclusion of such cases as the ex parte rule contemplates.

MR COLES: Yes, but in the situation your Honour is describing it may well be feasible to suppose or, indeed, it may be very well reasonable to apply the general extension of time provisions, but that needs to sustain a further analysis when the matter is in a court exercising federal jurisdiction and where there is claimed to be the provisions of federal legislation which otherwise provide. So, in other words, in our submission, the issue is not resolved merely by a recognition of the applicability of the State procedural laws which inject – even if the position your Honour the Chief Justice described, namely, as a matter of construction, you would in effect read Part 18 rule 9 as if it were amenable to or subject to the provisions of rule 3.2. By the time we get to our case, Part 18 rule 9 has done its work and all that is left hanging there waiting for something to pick it up is Part 3 rule 2. One asks, is that either pick uppable at all because do we have any federal jurisdiction left? If it is, is it not inconsistent with subsection (3)?

GLEESON CJ:   Mr Coles, just to narrow the focus of this argument, if in the present case prior to the expiration of the time fixed in Part 18 rule 9 an application were made under Part 3 rule 2 to extend the time because they were having difficulty serving, for example, would there be any problem?

MR COLES:   I do not think so, your Honour.

GLEESON CJ:   So the real problem is Part 3 rule 2(2), is it?

MR COLES:   Yes, that is right.

GLEESON CJ:   It is the nunc pro tunc aspect of the matter?

MR COLES: Yes, that is right, your Honour. So…..problem as we would see it, your Honour. In relation to the observation I made in connection with the need for an existing federal cause of action to sustain the picking up by section 79 of a State provision, can I just shortly refer your Honours to two references which will be well known to the Court. One is in Mewett v The Commonwealth (1997) 191 CLR 471 at 555. Your Honours will note the passage two‑thirds of the way down the page:

Section 79 of the Judiciary Act does not apply the laws in question in all circumstances and for all purposes. Rather, in the present case, s 79 rendered the laws of New South Wales (including its choice of law rules) binding on the Federal Court, on the footing that it was “exercising federal jurisdiction in that State”.

That being a quotation of course from section 79. Your Honours Justices Gummow and Kirby then said:

The exercise of federal jurisdiction by a particular court in a particular matter is the essential condition both of the operation of s 64 and the application of s 79 to “pick up” the limitation laws of a State.

To like effect at page 557 where the Court pointed out that the relevant provisions there under consideration – well, I am sorry, I need not take your Honours to that.  Perhaps one other reference, your Honours, along the same lines is in Edensor’s Case, if I can just give your Honours the reference.  It is a passage in the judgment of Justice McHugh which, in our submission, supports the proposition if it be relevant.  The relevant passage is in Australian Securities and Investments Commission; Ex parte Edensor Nominees (2001) 204 CLR 560 at 609. The particular passage I have in mind to refer your Honours to is in the judgment of Justice McHugh where at paragraph 130 his Honour says, amongst other things:

State laws cannot be picked up by s 79 unless they facilitate the exercise of the judicial power conferred by Ch III of the Constitution.

Now, if it be correct, your Honours, that section 79 in this case operated to dismiss these proceedings in the sense in which that dismissal was picked up, that is to say, finally to dispose of them, then, in our respectful submission, a provision of the rules of a State court, after the federal jurisdiction is spent because the proceeding is disposed of, could not operate to reinvest in the District Court a federal jurisdiction which had terminated by operation of a provision picked up and made applicable by section 79. So that is the threshold matter we identify. Otherwise our submissions focus on two matters and, your Honours, I have really adverted to them already and they are developed in our written submissions.

We say section 588FF(3) is concerned with the making of an application not with any particular form.  We perhaps would wish to say that the words of the section must be regarded – the section does not say filing, as perhaps the emphasis laid, I think, by our learned colleagues of the Commonwealth suggest.  One looks at making an application, not simply at a historical phenomenon of the filing of an originating process. 

In our respectful submission, if the originating process originally filed has been finally disposed of, then that is the position so far as the proceedings, or the application that was made in those proceedings, and any circumstance which has arisen whereby there is no application within the three‑year period on foot before the court which outside that three‑year period is made the subject of an application to the court attracts the prohibition or offends the prohibition in 588FF(3)(a).  It is an application, albeit in the present case made by a notice of motion in what were once existing proceedings originally commenced in time – it is nonetheless an application the purpose and thrust of which is to engage the jurisdiction of the court under section 588FF(1). 

We say that jurisdiction was so engaged by the liquidator by his notice of motion, which your Honours will find at paragraph 18 of the appeal book, outside that three‑year period and therefore in contravention of the bar.  It was in substance no more and no less than a fresh application of the kind which the liquidator could not make, albeit the dismissal rule might have authorised that course in other events.  We simply say that any step which seeks to activate the court’s processes where there is no proceeding then on foot or already on foot, whether because there was one once which has been finally disposed of or for any other reason, is itself an application for relief under the primary subsection, subsection (1), and if made outside of time attracts the prohibition.

The other way we put it, your Honours, which is merely saying the same thing, equally we would say that extending the time for the liquidator to be able to ask the court, albeit in an original but now disposed of application, extending the time to enable him to ask the court to grant him relief under 588FF(1), in effect immediately encounters the strictures which section 588FF(3)(b) imposes, namely any application for an extension of time must be brought within the three‑year period, which self‑evidently the present one was not.  Those, if your Honours please, are our submissions.

GLEESON CJ:   Thank you, Mr Coles.  Yes, Mr Reynolds.

MR REYNOLDS:   Your Honours, can I begin by trying to state as precisely as we can what the inconsistency argument is which my learned friends are raising in their argument.  Your Honours know obviously that the relevant Commonwealth provision which gives rise to the inconsistency is section 588FF.  Your Honours also know that my friends are saying that there is some inconsistency between that Commonwealth section and the rules.  That much is certain, but I would suggest your Honours may be in a little bit of doubt as to exactly what rules are said to be inconsistent with the ‑ ‑ ‑

GUMMOW J:   Yes, I was wondering about that.  Can we look at the motion that was in the District Court on page 1.  That seemed to lay it all out actually.  The draftsman of that seemed to appreciate that there were a number of possibilities – page 18 of the appeal book – in particular, that it was a preliminary dismissal order.

MR REYNOLDS:   Quite. So if one actually formulates with precision what the inconsistency argument is in this case, one really starts from an observation that your Honour the Chief Justice made a little while ago which is that one reads Part 18 rule 9 as if it included the words “subject to Part 3 rule 2”. If one bears that in mind, the argument that is actually being put to your Honours ‑ ‑ ‑

GUMMOW J:   That is not quite right, is it, Mr Reynolds?  The question is:  taken to be dismissed by whom; as if it was what?

MR REYNOLDS:   Under the rules.

GUMMOW J:   “Taken as if” suggests deeming, so – but deemed to have been dismissed by order of the court.  Is that the sense of it?

MR REYNOLDS: Can I come back to that because it is not an issue of inconsistency, or that separate argument that I am coming to. What I am coming to is whether or not this whole argument is futile. Can I try and explain why. If I have correctly characterised the argument as to inconsistency, that is the inconsistency is between section 588FF and Part 18 rule 9 read subject to Part 3 rule 2, then what my learned friends are really saying is that Part 18 rule 9 read subject to Part 3 rule 2 is inconsistent with that Commonwealth section.

Let that be assumed against my clients.  What is the consequence of it?  The consequence of it is that Part 18 rule 9 is never picked up.  If Part 18 rule 9 was never picked up, there was never any deemed dismissal to begin with.  We suggest that that is a fundamental difficulty with the whole of the argument that is put to your Honours, that even assuming inconsistency, it does not get the appellants anywhere.  Now, that said, can I backtrack and look in a little more detail at this issue of inconsistency.

GUMMOW J:   The section does not use the expression.

MR REYNOLDS:   No, and your Honour, with respect, is quite right to pick me up on that.  It uses the words “otherwise provides” and there may be some differences between that phrase “otherwise provides” and inconsistency, but can I use the word “inconsistency” just as a shorthand expression to characterise the argument.  Can I begin, your Honours, with section 588FF which, because it is rather long to say, I will call the Commonwealth section.  I want to make just two very, very basic points about that provision. 

The first is that if your Honours look at it, even briefly, it is clear that it applies only to the time within applications are made.  Secondly, it does not say anything at all about the time within which actions commenced within time must be prosecuted.  It says nothing about that.  So that, for example, a rule of court – I think we said this in our submissions – which said that proceedings cannot be struck out for want of prosecution until 40 years, say, had expired would not be inconsistent with that particular Commonwealth provision.

If your Honours put down that section of the Act and go to the rules, both Part 18 rule 9 and Part 3 rule 2, the submission about irreconcilability is dealt with in our submissions essentially at paragraphs 41 to 45. What in essence we have said there is this, that for the rules to be irreconcilable with the Commonwealth section they would have to be either in form or in substance permit the making of a fresh application by my clients outside the three‑year time limit in the Commonwealth section.

Now, it cannot possibly be suggested that orders made under Part 3 rule 2 vis-à-vis Part 18 rule 9 operate to permit the commencement of fresh proceedings as a matter of form. So the only argument really, we submit, is one based upon the characterisation of Part 18 rule 9 with Part 3 rule 2 as a matter of substance. If your Honours go to that rule ‑ ‑ ‑

GUMMOW J:   Just a minute.  That comes down to notions, does it not, of impairing or detracting? 

MR REYNOLDS:   Quite.

GUMMOW J:   Is that not how it has to be put?  It is not expressed in these paragraphs.  But is that not how it has to be put, that it somehow impairs or detracts from the obligation to commence within three years or to go to the Supreme Court?

MR REYNOLDS:   Your Honour, can I first, with respect, just complete what I want to say about the substance of this provision and then address the test that your Honour has just mentioned to me which is the test my learned friends rely upon, because I submit if your Honour sees ‑ ‑ ‑

GUMMOW J:   I am not sure they do, actually, in terms.  Anyhow, go on, Mr Reynolds.

MR REYNOLDS:   My point is this, your Honours, that if you look at Part 18 rule 9 read subject to Part 3 rule 2, it operates in substantially the same way as a Rule of Court or the court’s inherent power to dismiss for want of prosecution. Exactly the same sorts of relevant factors are relevant on whether or not there is an extension of time under Part 3 rule 2, vis-à-vis Part 18 rule 9. The only real differences are that there is first of all a set time limit rather than one that is discretionary, and the second is that once that set time limit cuts in it places an onus on the plaintiff to show why the extant proceeding should be allowed to continue rather than in the case of a dismissal for want of prosecution, there being an onus on the defendant to show why the proceedings should be dismissed.

GLEESON CJ:   It is a way of getting cases out of court lists without judges having to look at them.

MR REYNOLDS:   Quite, your Honour.  We would submit that there is a double purpose here.  We do not have a second reading speech, we cannot go to what was in the mind of the Rule Committee, but we submit there are probably two purposes.  One is the purpose your Honour has just identified because it cleans up the lists certainly in a particular year.  It has a massive, one would imagine, effect on the court’s statistics, and your Honours – particularly your Honour the Chief Justice would know the sort of pressure the courts are under to improve their statistics.

The other thing it does is it is simply a regulation, if you like, of this whole idea of dismissal for want of prosecution.  It does not operate the same way because with a dismissal for want of prosecution the onus is on

the defendant.  There is no set period, but again, the same sorts of factors arise.  So if one is looking to characterise this provision, we submit as a matter of substance, it is fairly to be characterised as a provision about dismissal for want of prosecution, although it works, as I have said, slightly differently in at least two ways.

So that means the Commonwealth Act is dealing with the time within which actions must be commenced, whereas the rules are talking about the time within which they must be prosecuted.  They are two separate areas of operation and we submit for that reason there is not any inconsistency.

Going back to the question that your Honour Justice Gummow asked me a moment ago, referring probably to the test relied upon by my friends from Justice Dixon in Stock Motor Ploughs v Forsyth, even assuming that after three years there is an accrued right not to have fresh proceedings commenced, the rules do not destroy or impair that right because neither in form nor in substance do these time extensions under Part 3 rule 2 operating on Part 18 rule 9 permit fresh proceedings to be instituted. They simply allow extant proceedings to continue. If your Honours please, those are my submissions.

GLEESON CJ:   Thank you, Mr Reynolds.  Mr Burmester.

MR BURMESTER:   Your Honour, we have set out in our written submissions in some detail the reasons why we agree with the arguments of the respondents in this matter.

GUMMOW J:   What do you say is the relation between 588FF(1) and 588FF(3)?  In other words, is it a limitation provision or is it an inherent part of the statutory right that is created, namely, you read it “Where on an application made within three years or within such longer period, the Court is” and then you go on.  Is it a Hoogland type provision?

MR BURMESTER:   No, your Honour, we are prepared to accept that that is its operation, or the way it operates, but the area in which it operates, as ‑ ‑ ‑

GUMMOW J:   Yes, it may not have any particular operation on the result of this case.

MR BURMESTER:   It is confined to the initiation of proceedings, so ‑ ‑ ‑

GUMMOW J:   Yes, one has to construe the federal law first and I am just trying to do that.

MR BURMESTER:   Yes.  It does have the words and application under subsection (1) “may only be made” and so we ‑ ‑ ‑

GUMMOW J:   It is a Rudolphy v Lightfoot provision, on the sense of it.

MR BURMESTER:   Yes, except that it fell within the David Grant – the Rudolphy type provision, and qualifies the right that subsection (1) confers.

GUMMOW J:   Then I suppose you ask whether the State system of the Rules of the District Court impairs or detracts from that creation of 588F.  You say it does not.

MR BURMESTER:   That is right, your Honour.

GLEESON CJ:   That is the importance of Mr Reynolds’ argument that this is not a provision about diligent prosecution of claims, it is a provision about commencement of claims.

MR BURMESTER:   That is right, your Honour, and we make the same point that the field ‑ ‑ ‑

GUMMOW J:   But once they are commenced you say it is handed over to the procedures of the particular court.

MR BURMESTER:   Once it is commenced, that is right.  The rules about dismissal come from the State court.

GUMMOW J:   Which may be in the Federal Court Rules, for all we know.

MR BURMESTER:   Or the Federal Court Rules, that is right, but whether the matter is dismissed or not depends on the relevant rules of court.  There is nothing in the Corporations Act about dismissal and rules about whether dismissals can be revived or reviewed again come from State court rules and nothing in the Corporations Act, we say, intrudes into that area so there is no impairment or alteration of 588FF in any regard by the operation of these particular court rules.

GLEESON CJ:   What would impair the operation of 588FF is if there was some provision in the District Court Rules that gave a general power to the court to extend time for commencement of proceedings.

MR BURMESTER:   Yes, your Honour, that is certainly true, but the court rules we are concerned about here are not doing that.  They are talking about extension of time in relation to steps that might be taken once proceedings have been instituted.  But, yes, your Honour, we accept that State court rules that said notwithstanding any other limitation period we can extend time.  That could well impair or detract, just as a general provision as in the Corporations Act in the David Grant Case was seen to detract from a particular express limitation, so whether it was in a State Limitation Act, or whatever, something that purported to extend the time within which to commence proceedings we agree would be inconsistent with 588FF.

GUMMOW J:   David Grant was all within the one Act, was it not?

MR BURMESTER:   That was in the one Act, yes.

HAYNE J:   Is there any provision of the Corporations Act that obliges a liquidator to prosecute the winding up of the company promptly or according to certain time limits?

MR BURMESTER:   No, your Honour, not that I am aware of.  There may be a general duty on the liquidator presumably to take steps in appropriate reasonable time but I cannot point your Honour to any specific provision in that regard.

HAYNE J:   Because, in essence, that is the sort of intersection that is being hypothesised that there is some intersection between federal law saying a liquidator should get on with in and a provision of a State Act which is designed to regulate the speed with which particular proceedings are prosecuted.

MR BURMESTER:   Yes, your Honour, and there is no doubt that the legislative history of 588FF was to try and prompt liquidators to at least commence actions or at least go to court and get approval to take a little longer, so that was clearly behind the purpose of the provision.  But, in terms of the way it is drafted and what it deals with, we say, it is still confined to that initiation stage that does not deal with the subsequent steps that might be taken.  That does mean that it is very much in the hands of the court in which the action has been taken.

GUMMOW J:   And of the other party to activate the court rules to bring it to an end if it is being abused.

MR BURMESTER:   The submissions of the appellant have the consequence that court rules operate to a certain extent to dismiss a proceeding but then in what we submit is a rather artificial way which reads the effect of that dismissal in a way which would seem rather unusual given it is done though court rules - it is not a substantive dismissal provision and we say that it would be a very odd consequence to think that rules of court, essentially procedure provisions, could affect a dismissal that says taken to

be dismissed, it is not a substantive dismissal and therefore, we say, there is scope for the State rules to revive what has purportedly been dismissed if, as a matter of discretion that is thought appropriate and it does not impair or detract from the Commonwealth provision in that regard.

The suggestion that because the provision that the proceeding had been dismissed under the State rule meant there was nothing for a court in federal jurisdiction to do in terms of extending time, your Honour, we have dealt with that argument in our written submissions in paragraph 21 and given your Honours a reference to the Elders v Swinbank Case.  Clearly, there is federal jurisdiction to deal with an application for extension of time in relation to something in federal proceedings that has been dismissed, but, your Honour, I am not sure that I can take it any further than what is in our written submissions.

Your Honours, one final point, my learned junior reminds me, that there is in the Corporations Act section 5E which makes clear that the Corporations Act is not intended to operate to the exclusion of State laws that can operate concurrently and we say that reinforces the view that 588FF was not intended to cover more than what on its terms it says it is intended to deal with.

HAYNE J:   Just apropos of that question of getting on with the winding up, 479(4) says that:

Subject to this Part, the liquidator must use his or her own discretion in the management of affairs and property of the company and the distribution of its property.

These are decisions that are confided to the liquidator, I think, rather than there being a statutory prescription of the way in which the liquidator should conduct the winding up.

GLEESON CJ:   Decisions that are often made in the light of funding exigencies.

MR BURMESTER:   Thank you, your Honour.

HAYNE J:   Cruel hard realities sometimes intrude.

MR BURMESTER:   If the Court pleases.

GLEESON CJ:   Thank you, Mr Burmester.  Yes, Mr Hanks.

MR HANKS:   Your Honours, the Attorney‑General for Victoria also intervenes in support of the respondent.  We have little to add to our written

submissions or, indeed, to the oral submissions that have just been made on behalf of the Attorney-General for the Commonwealth.  Your Honours asked our friend, Mr Burmester, some questions, he answered them, we would give the same answers to those questions.

There is, perhaps, only one matter, that we would mention.  In paragraph 32 of the respondent’s submissions, there is a reference to a judgment of the Court of Appeal of New South Wales by the name of Harding v Bourke 48 NSWLR 598. That case, which I think has not found its way onto any of the lists of authorities, was decided in 1999. In a judgment by the President, Justice Mason, with which Justices Meagher and Heydon agreed, there is reference to the rule which your Honour the Chief Justice raised earlier in the appellant’s argument this morning, Part 12 rule 4C which provides for effectively deemed dismissal of those matters commenced before 1 January 1996 which had not been prosecuted. At page 602, at the bottom of the page, the President made this point:

The Court’s overriding concern to avoid injustice indicates to me that it is unlikely that Pt 12 r 4C(4)  –

which provided for the deemed dismissal –

was intended to stand alone and to exclude altogether the well‑recognised power to extend time nunc pro tunc that is conferred in Pt 3 r 2.

GLEESON CJ:   Especially because before that rule came into force these courts had what used to be called a dormant cases list.

MR HANKS:   Yes, your Honour, and it would, with respect, reinforce the point that your Honour made that in relation to the particular deemed dismissal rule with which we are concerned it would, we would submit, be read as if it included as an introduction “Subject to Part 3 rule 2”. If your Honours please.

GLEESON CJ:   Yes, thank you, Mr Hanks.  Yes, Mr Coles.

MR COLES:   If your Honours please, a couple of small points, if I may.  We would respectfully adopt the view that the time limitations in section 588FF(3) are stipulations of an essential jurisdictional kind and ‑ ‑ ‑

GUMMOW J:   I am not sure that helps you.

MR COLES:   Well, they seem to be, in any event, your Honour, but it is important, in our respectful submission, when one is looking at the opportunity or the extent to which they are able to be given full force and

effect to when there is a countervailing state Act that was said to be picked up ‑ ‑ ‑

GUMMOW J:   The argument against you is it leads you up to the door of the court and the filing fee and then it hands what happens next over to this miscellany of courts, some State and some federal.

MR COLES: Yes, indeed, but we would wish to say that one needs to be cautious about too rigid a dichotomy between the concept of recognising section 588FF as concerned only with the commencement of proceedings. It undoubtedly is. Diligent prosecution of proceedings is no doubt the function of the case management procedures and rules of the court in which the proceedings are brought but, in our respectful submission, assuming it be so that for some relevant purposes in State law Part 18 rule 9 can pick up or does pick up Part 3.2, we would emphasise, your Honour, one must bear this in mind in the context of the fact that things change. In other words, one must always be looking, we would submit, at the time at which things are happening.

One may well say that – and this is putting it as well as we can against ourselves – at the time the liquidator commenced his proceedings within time, if he was going to become subject to Part 18 rule 9 with Part 3 rule 2 built into it, he in effect obtained that facility. But in reality, in our submission, the beneficial effects of Part 3.2 were available to him so long as his action was on foot and when the action ceased to be, if he wanted Part 3 rule 2, he had to face, and does have to face, in our submission, the question whether to invoke Rule 3.2 after the proceedings have been finally disposed of is not in opposition or is not detracting from or detrimental to or impairing the operation of section 588FF(3). In our submission, the conclusion should be reached that it is.

The only other matter, I think, your Honours, in connection with the provisions of the corporations legislation that deal with encouragements to liquidators to move on, there is section 478 and section 474 which, at least in windings up in insolvency or by the court, tend to encourage liquidators generally to move on a bit. There is also, although I confess I do not have the reference to it to hand, but in part 6 of the Companies Regulations relating to the payment of proofs of debt the liquidator is given statutory encouragement to attend to that process as soon as the circumstances permit. Those are our submissions in reply.

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

AT 11.58 AM THE MATTER WAS ADJOURNED