GPS First Mortgage v Lynch

[2000] HCATrans 304

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B50 of 2000

In the matter of DAMIAN MICHAEL LYNCH

GPS FIRST MORTGAGE SECURITIES PTY LTD

Applicant

and

DAMIAN MICHAEL LYNCH

Respondent

Ex parte –

THE ATTORNEY‑GENERAL OF THE COMMONWEALTH

Application for removal pursuant to section 40 of the Judiciary Act

CALLINAN J

(In Chambers)

TRANSCRIPT OF PROCEEDINGS

AT BRISBANE ON FRIDAY, 23 JUNE 2000, AT 10.41 AM

Copyright in the High Court of Australia

MR R.G. ORR, QC:   If the Court pleases, I appear for the Attorney-General of the Commonwealth.  (instructed by the Australian Government Solicitor)

MR C.R. COULSEN:   For GPS First Mortgage Securities, your Honour.  (instructed by GPS Spencer Woodhead)

MR R.A. ALLEN:   I appear for the respondent, Damian Lynch.  (instructed by Whitman & Co)

HIS HONOUR:   Mr Orr, the Attorney-General has a right to have this removed.  Is that right?

MR ORR:   That is right, your Honour. 

HIS HONOUR:   Yes.  All right.  Just looking at the proposed draft stated case that you filed, have the other parties had an opportunity to look at the draft case stated?

MR ALLEN:   Yes, your Honour.

MR COULSEN:   Yes, your Honour.

HIS HONOUR:   Are there any problems about the ‑ ‑ ‑

MR ALLEN:   We think the case as stated by the Attorney-General adequately covers what is sought to be ventilated before the Court.

HIS HONOUR:   Yes.  Did you have any problems with any of that?

MR ALLEN:  No, we do not.

HIS HONOUR:   Yes.

MR COULSEN:   We take no issue with the draft statement of facts, your Honour.

HIS HONOUR:   Do we have all the facts we need?  I am not suggesting we do not.  I just want to make sure that we have, that is all.  What is the section under which the company was registered by the Australian Securities Commission?

MR ORR:   The Australian Securities Commission Act, as it then was, provides that that Commission has powers and functions under section 11 of that Act.

HIS HONOUR:   Yes.

MR ORR:   And at section 11(7) which says that it has powers and functions in relation to national corporations laws. It was then, at the time of registration, the Australian Securities Commission Act and now, of course, differently titled but it is section 11(7) which says the Commission has any functions and powers that are expressed to be conferred on it by a national scheme law of another jurisdiction.

HIS HONOUR:   Right.  Now, what national scheme law, then, conferred the power of registration?

MR ORR:   As we understand it, your Honour, it is the Corporations Law of Queensland which operates.

HIS HONOUR:   Yes.

MR ORR:   It is Division 1 of Part 2.2 of that Corporations Law.

HIS HONOUR:   Of Queensland.

MR ORR:   Of Queensland and, in particular, sections 120 and 121.  Section 120 itself provides for registration.  Section 121 provides for a certificate of registration.

HIS HONOUR:   I am wondering whether it might not be more convenient for those provisions to be specifically included in paragraph 1 I do not mean the text of them but reference to them, so that paragraph 1 would read that “The company was registered”, perhaps “pursuant to section 11”.

MR ORR:   Yes. At the end of the first sentence there is a mention of Division 1 Part 2.2 of the Corporations Law of Queensland.

HIS HONOUR:   Yes.

MR ORR:   Perhaps we could insert after ‑ ‑ ‑

HIS HONOUR:   You understand what I have in mind, just specific reference to the sections under which registration is to be effected.

MR ORR:   Yes.  We come to this issue in paragraph 3 of the draft ‑ ‑ ‑

HIS HONOUR:   Yes, you are quite right.

MR ORR:   And then we come back to it in the questions.

HIS HONOUR:   That may be sufficient.  Let me go on then.  Mr Allen, the expression “juristic status”?

MR ALLEN:   That is a reference to section 123 whereby upon registration of the company it is then enpowered to sue, or be sued in this case. In this case it is to sue, because it is the petitioning creditor.

HIS HONOUR:   So 123.

MR ALLEN: Section 123 as it then stood of Corporations Law between 1 June 1991 and the amendments in the middle of 1998.

HIS HONOUR:   Corporations Law of Queensland?

MR ALLEN:   That is correct, your Honour.  It may be an indelicate reference but it ‑ ‑ ‑

HIS HONOUR:   No, it is just that I am more familiar with the expression “legal personality” but it obviously means the same thing.

MR ALLEN:   That is correct, your Honour.

HIS HONOUR: Section 123.

MR ALLEN:   That is correct.  As it then stood.  If you are looking at the current Corporations Law it has been changed.  There have been a lot of changes effected.

HIS HONOUR:   Could I have a look at the one that was in force at the time.  Are any of the other grounds in the notice to oppose of any relevance to this  ‑ ‑ ‑

MR ALLEN:   We do have a remaining issue but it is probably not something that should bother this Court.

HIS HONOUR:   Not something that should come to this Court, no.

MR ALLEN:   No, the Commonwealth is aware of what that remaining issue is.  I do not know why they actually said the whole of the matter, but we are quite agreeable to the whole of the matter ‑ ‑ ‑

HIS HONOUR:   I think it is usual for the whole of the matter to come to us because, if the whole of the matter does not come to us and somebody has an unanswerable point, there may be a question about whether we can finally dispose of or when otherwise we should have finally disposed of.

MR ALLEN:   One would have thought that there will not be a final disposition in this Court because of section 26 of the Act.  If it means that the petition has to be dismissed or a sequestration order made, this Court may not have that original jurisdiction in any event.

HIS HONOUR:   No.

MR ALLEN:   So that if the whole of the matter comes to this Court, there is one remaining point to go back to the trial judge.

HIS HONOUR:   What is that, Mr Allen.

MR ALLEN:   I could sum it up or I can tender the submissions, bearing in mind that our submissions were due next Monday before the trial judge.  The trial is on Thursday.  I can just tender the submissions and your Honour can see from them what that remaining issue is.

HIS HONOUR:   I do not want it ‑ ‑ ‑

MR ALLEN:   It goes to the delegations issued by the Official Receiver in Queensland to subordinate officers to issue bankruptcy notices.

HIS HONOUR:   Right.  There is no suggestion that that should be removed then.  Nobody wants that point.

MR ORR:   Your Honour, it is our application that the whole proceedings be removed and we would envisage that the High Court would deal with the constitutional matter and then remit any outstanding matters after that back to the Federal Court.

HIS HONOUR:   Yes.  That sounds not unsatisfactory, yes.

MR ALLEN:   That is perfectly acceptable to us, your Honour.

HIS HONOUR:   I am wondering whether we can define the questions, perhaps, a little more explicitly and the contention.  What is precisely the underlying contention, Mr Allen.

MR ALLEN:   The main contention of the respondent is that section 109 renders inoperative that part of sections 120 and 121 which confer duties and obligations upon the Commission.  That is the main contention of the respondent.  The secondary contention is that by some form of severance or rewriting of those sections, there is still some power or function conferred upon the ASC.  That conferral or acceptance by the ASC Act has to be grounded in an available head of power under the Constitution. That particular ground may not be reached if our main contention is accepted by the Court.

HIS HONOUR:   Which is a section 109 contention.

MR ALLEN:   Yes.  The section 109 contention renders inoperable, to the extent of the inconsistency, that part of sections 120 and 121 of the State law which is the Corporations Law of the State of Queensland and there is nothing left of sections 120 and 121 to confer anything upon the ASC.

HIS HONOUR:   Let me understand that.  Precisely which State law is inconsistent with the federal law?

MR ALLEN:   These companies were incorporated in the State of Queensland so the focus must be on the Corporations Law of this particular State, leaving aside all other replicas that exist throughout the country.

HIS HONOUR:   Yes.  That question, Mr Orr, in your draft case, the question that you suggested seems to be a lot broader a question than the one that Mr Allen has just articulated.

MR ORR:   Yes, that may be, your Honour.

HIS HONOUR:   We do not want to decide anything much more widely than the facts or the issues suggest.

MR ORR:   No.  The section 78B notice and the notice of contention lists a number of grounds, so whilst that is a summary of them, they are set out quite extensively in those documentations and I think the issue is put in a number of different ways and so, in our submission, the reason the question is put like this as the most basic question, that is did the Australian Securities Commission have power to register the companies, is the most basic question underlying the way in which the question was actually put in a number of alternatives in the section 78B notice.

HIS HONOUR:   Except that Mr Allen is really putting it, as I understand it, a little bit differently. He seems to be saying – I may not be correct about this, but you tell me if I am, Mr Allen ‑ Mr Allen seems to be saying that there is an inconsistency between section 11 of the Australian Securities Commission Act and section 123, is it, of the ‑ ‑ ‑

MR ALLEN:   The two sections are 120 and 121. Section 123 gives the juristic status to a company once it is registered.

HIS HONOUR:   Sections 120 and 121.

MR ALLEN:   Sections 120 and 121.  One is a power to actually register the company.  The other one is – it is not a power, it is a duty as expressed.  The second section deals with a duty to issue a certificate of registration.

HIS HONOUR:   Section 120. Interesting, is it not, because section 118 refers to the incorporation of a company, the person desiring the incorporation of a company may lodge an application in the prescribed form for the registration of a company. Why, Mr Orr, is not the question to the Court, and you correct me if I am not stating your proposition correctly, Mr Allen, why is not the question for the Court whether, in the events that have happened, there is a conflict between the section 120 of the Queensland legislation and section 11 of the Commonwealth legislation and whether, by reason of section 109, the section – how do you put that then, Mr Allen?

MR ALLEN:   The purported conferral of duties and obligations by virtue of the State law does not match the acceptance by the Commonwealth law.  It is wider than the purported acceptance, the corresponding acceptance, and to that extent, is rendered inoperable and is inconsistent.

MR ORR:   Just, with respect, your Honour, to focus on section 109 is to focus on, perhaps, a stage in the reasoning but not the final conclusion.  The conclusion is either the ASC has power or does not have power.  That is the central question.

HIS HONOUR:   Is it a Wakim point at all?

MR ORR:   Well, it is a Hughes‑type point.  This is a co-operative scheme in which a body established by the Commonwealth, the Australian Securities Commission, is established by the Commonwealth under Commonwealth power, and then a State law, the Corporations Law of Queensland, seeks to give that Commonwealth established body powers, functions, duties, in relation to do various things.  So, it is, as I understand the question, without putting words into my friend’s mouth, it arises from the reasoning in the Hughes Case as to whether the State law, together with the Commonwealth law establishing the ASC, can together enable the ASC to register the company which is why, your Honour, we have put it on the basis of power.  Can this body, the ASC – does it have the power under the ASC Act and/or the Queensland Act, to do this act?

HIS HONOUR:   It might be putting it a bit more narrowly for you than ‑ ‑ ‑

MR ALLEN:    Than is sought, yes, that is very narrow.

HIS HONOUR:   It might be better the way the Commonwealth has suggested it be put.  I am wondering whether you might not be stating your point a bit too narrowly.

MR ALLEN:    No.  If we lose on our main thrust of our argument, we then go on to further – the heads of power stand ‑ ‑ ‑

HIS HONOUR:   I understand that.  Well, in any event, you do not have a problem with the proposed draft case, I do not think, do you?

MR ALLEN:    I think it has sufficient flexibility to cover the points that are sought to be raised.

HIS HONOUR:   All right.  Well, Mr Coulsen, you have no problems with the draft case.  Was there any ‑ ‑ ‑

MR COULSEN:   No, your Honour.  We simply ask to be heard at some point on conditions of removal.

HIS HONOUR:   Yes.  Well, I would be prepared to state a case in the form proposed.  But you wanted to be heard on the conditions of removal.

MR COULSEN:    Yes, that is so, your Honour.

HIS HONOUR:   What was your submission on that?

MR COULSEN:    Your Honour, the short point is, this is a bankruptcy matter.  The underlying proceeding is a bankruptcy matter.

HIS HONOUR:   For a relatively small amount of money.

MR COULSEN:    That is so, and for the applicant creditor, it is a zero sum gain, your Honour.  It does not matter what happens, we end up disadvantaged.  If we succeed at the end of the day, we will have a costs order against an insolvent debtor.  If we lose at the end of the day and there is a costs order against us, well, it is through no fault of our own.

HIS HONOUR:   Should not the Commonwealth agree to pay Mr Coulsen’s client’s costs in any event?

MR ORR:   We would resist any order at this stage, your Honour, to that effect.  Our position is that the costs matters should be dealt with in the hearing by the High Court.  That is the usual process.  At that stage it could be resolved as to who should bear the costs.

HIS HONOUR:   I am very sympathetic to Mr Coulsen’s position.  For somebody to be caught up in major constitutional litigation can be an enormous burden, and constitutional litigation that is going to go to the High Court and which might not be resolved there, I mean, it is an enormous detour at great expense, for the litigant.

MR ORR:   Yes, your Honour, but our position is that Mr Lynch has raised this issue in the Federal Court.  He has issued a 78B notice and we have responded to it ‑ ‑ ‑

HIS HONOUR:   And you do not want it determined there.  He has issued the 78B notice because he has to issue it as a matter of law ‑ ‑ ‑

MR ORR:   That is true, your Honour.

HIS HONOUR:   The matter could be determined in the Federal Court, in which event, Mr Coulsen’s client would have his proceedings disposed of there and the matter could come to us on an appeal or otherwise.  The Commonwealth, for good reason – I am not suggesting otherwise – wants the matter resolved as quickly as possible and, finally, in the High Court.  Have orders of the kind which Mr Coulsen suggests been made in the past, that the Commonwealth bear the costs, at this stage?

MR ORR:   No, I do not believe so, your Honour.

HIS HONOUR:   Do you know of any, Mr Coulsen?

MR COULSEN:    Your Honour, I was not able to find any, and we do start from the point because this is a bankruptcy matter, it has some peculiar ramifications.

HIS HONOUR:   I am very sympathetic to your position.  If I have power, I will make an order.  I just need to be satisfied that I have power to do it.  Do you say I have not power to do it?

MR ORR:   Well, your Honour, we say that it would be an inappropriate course for your Honour to take to do that with regard to these proceedings.  These proceedings are on in the Federal Court, and this is a major constitutional issue.  Your Honour is right in that respect.  Removing them into the High Court to get the matter dealt with quickly and in one hearing, in fact, saves, in our submission, time and costs.

HIS HONOUR:   I do not know about that.  It will be in Canberra and every State will intervene.  What would otherwise perhaps be an issue that might be argued for half a day in the Federal Court in Brisbane, will

become an issue that is argued for two days, with comprehensive written submissions, which Mr Coulsen’s client will have to deal with, in Canberra.

MR ORR:   Yes, your Honour, and at that stage will be the appropriate time for the Court to assess the costs issue, as is usually done.  Your Honour will recall that section 78A(2) of the Judiciary Act provides that costs orders can be made against interveners and the general rule is that costs orders are, on occasions, made against interveners where their intervention has extended the proceedings which are on foot.  It would, in our submission, be wholly appropriate, at the end of the proceedings before the High Court, for this matter to be raised and to be dealt with by the High Court, but we say it is inappropriate for the matter to be dealt with now.

The Attorney-General has a right to remove the proceedings.  There is no provision with regard to costs of that remittal application, and the usual process is for costs issues to be dealt with by the High Court when it hears the matter.

HIS HONOUR:   What is the removal section?

MR ORR:   The removal section is section 40(1).

HIS HONOUR:   Of the Judiciary Act?

MR ORR:   Yes.

HIS HONOUR:   Section 40(1).

MR COULSEN:    We draw your attention to subsection (2), your Honour.

HIS HONOUR:   Is the case within subsection (2), Mr ‑ ‑ ‑

MR ORR:   No, we submit it is within subsection (1). This is a cause in the Federal Court involving the interpretation of the Constitution and an application has been made by the Attorney-General for its removal, removal of the whole of that cause and pursuant to subsection (1), that application is removed or is to be removed.

HIS HONOUR:   It should be plain to you why I would want to assist Mr Coulsen’s client.  He is going to have to go to Canberra.  It is obviously going to be a great deal more expensive to his client for the matter to be dealt with this way.  It is not a question of the matter being shortened.  It is going to be longer; it is going to be more expensive and there is going to be a great deal more that will have to be dealt with by his client.  It is also a bankruptcy matter.  At the end of the day, his client may get absolutely nothing anyway.  This is inevitably going to delay the proceedings.  The trial was going to be next Thursday, was it not?

MR ALLEN:    That is so, I believe, your Honour.

MR COULSEN:    That is correct, your Honour.  Your Honour, there are two other factors there, as well, in the sense that as we have a priority for any of our bankruptcy costs in any subsequent bankruptcy, that the escalation, but necessary escalation, in the costs, we would still claim our priority and, so, really, it is the other unsecured creditors who would be bearing the ‑ ‑ ‑

HIS HONOUR:   Yes, quite.

MR COULSEN:    That is what we say – because it is a bankruptcy, it is actually quite a peculiar circumstance ‑ ‑ ‑

HIS HONOUR:   It is an exceptional situation, is it not?

MR COULSEN:    That is so.  Your Honour, the other thing is, of course, my client, without the benefit of an order, may very well decide that it is just simply uneconomical to pursue it.  It cannot be right that we can be denied – the practical effect would be we cannot pursue our rights under Commonwealth legislation, given the downside, what we are looking at, without the benefit of an order.

HIS HONOUR:   The question is whether the words in section 40(1) ‑ ‑ ‑

MR COULSEN:    That seems to be the ‑ ‑ ‑

HIS HONOUR:   And “shall be made as of course”, whether that means that it must be made absolutely unconditionally, that is what has me concerned.

MR COULSEN:    Yes.  On my reading of it we would agree that that seems to be the tension there.

HIS HONOUR:   It is within subsection (1), as Mr Orr suggests, I think, rather than subsection (2).  It may be within both, but it is certainly within (1).

MR COULSEN:    Yes, it is certainly within (1).  If I can deal with it on two bases, your Honour.  The first one, in reading subsection (1), it talks about an:

application of a party for sufficient cause –

may –

be made on such terms as the Court thinks fit, and shall be made as of course upon application by or on behalf of the Attorney-General –

The first question is whether the second part of subsection (1) carries with it the opportunity for the Court to make an order as it “thinks fit” as to conditions.  The next question then becomes, if that is not correct and in circumstances where the Attorney-General can remove “as of course”, does subsection (2), nevertheless, have operation?  They really seem to be the two questions.  We clearly start from the point of view that if the interpretation urged by Mr Orr is correct, it ends up with a very strange result indeed, in that the innocent bystander, so to speak, as we are in this case ‑ ‑ ‑

HIS HONOUR:   The civilian casualty.

MR COULSEN:    Exactly.  But then the issue then arises, if Mr Orr is correct, how do you read subsection (2) in light of subsection (1)?

HIS HONOUR:   I do not think you can bring yourself within subsection (2).  You see, subsection (4) says that:

The…..Court shall not make an order under subsection (2) unless:

(a)  all parties consent to the making of the order;

Well, that is obviously inconsistent with subsection (1) which ‑ ‑ ‑

MR COULSEN:    With respect, your Honour, it is not necessarily inconsistent because it could be the point of view ‑ ‑ ‑

HIS HONOUR:   Inconsistent with the construction that you want to place on (1), I think.

MR COULSEN:   The question is, only if section (1) applies, then on its wording we would have to concede there is some difficulty, but perhaps not an impossible difficulty, that the second part of subsection (1) should not carry with it the availability of conditions.

HIS HONOUR:   Mr Orr, did you know that Mr Coulsen was going to make this suggestion?

MR ORR:   Yes, we did, your Honour.

HIS HONOUR:   Have you been able to obtain any instructions as to the Attorney’s attitude to it?

MR ORR:   Yes, the Attorney’s attitude is as I have said.  Our instructions are that I put the arguments that I have put.  That is that it is inappropriate for the costs order to be made – for such a condition to be put at this stage.  Of course, if your Honour were to make an appropriate order, then we would abide by that, but the submissions we put ‑ ‑ ‑

HIS HONOUR:   I understand.  I think it is a difficult question, Mr Orr ‑ ‑ ‑

MR ORR:   It is, your Honour.

HIS HONOUR:   Whether I have the power or not.  This occurs to me, however, that, on any view, it seems to me to be undoubtedly so that this is going to involve additional expense to Mr Coulsen’s client.  I do not think one can possibly deny that.  That being so, it would inevitably be, I would think, that an order would be made for the benefit of Mr Coulsen’s client by the Full High Court at some stage.  I think that is right, do you not?

MR ORR:   Well, two things, your Honour.  I just reiterate the point about costs.  The matter will need to be heard in the Federal Court next week.  In relation to the issue which is raised here, it would seem that this is a matter of significant constitutional importance which, even if heard in the Federal Court next week, would presumably go on appeal in some way, meaning that there would need to be a single judge of the Federal Court, perhaps a Full Court of the Federal Court, and then a High Court decision on this matter, given the significance of it.  So, I just reiterate our submission that removing the matter to the High Court at this stage may, in the long run, save time and costs.  Now, I know that there are some assumptions in that submission but it is the submission that we make. 

The other issue is, your Honour, it is again reiterated, that the time for assessing the costs is, in our view, at the hearing of the matter in the High Court.  If there are other interveners, as well as the Attorney-General for the Commonwealth, then section 78A(2) enables the Court to make appropriate orders in relation to those interveners and that order, as your Honour said, could well include people other than the Attorney-General for the Commonwealth who will clearly have an interest in this matter.

HIS HONOUR:   The States will all have a strong interest in this matter ‑ ‑ ‑

MR ORR:   Exactly, your Honour, in particular, the State of Queensland whose legislation is at issue as well and other States where, as my friend has said, exactly the same provisions apply.  So it is a matter of significance where one would predict that most, if not all, of the States will be involved and that appropriate costs orders can then be made in relation to the parties who argue the case.

HIS HONOUR:   The trouble about that - the real problem about that is that Mr Coulsen’s client may not even have the means to be in Canberra to be involved in that sort of litigation.  You know yourself, there could be eight different sets of written submissions and some of the parties may be taking different lines.  It is likely the States will, of course, try to uphold their legislation, but they may want to do it on different bases.  There could be enormous extra problems for Mr Coulsen’s client and his client just may not be able to afford to be there.  That is what worries me.

MR ORR:   Your Honour, just one final point on that is, your Honour, thought, that in terms of Mr Coulsen’s client, the Attorney-General of the Commonwealth’s position will be that these provisions are valid and that they do what they purport on their face to do.  In other words, the Attorney-General will be supporting the provisions and, therefore, supporting the position of GPS in these proceedings.

HIS HONOUR:   It might be a bit like Hungary in the Second World War when Germany came in and said, “We’re on your side.”  They may have fought for you, but they caused a lot of ‑ ‑ ‑

MR ORR:   The point I make, your Honour, is the involvement of GPS in the proceedings.  GPS may not need to be involved.  The Attorney-General for the Commonwealth will be intervening to support the provisions and, therefore, to support the position of GPS in the proceedings.

HIS HONOUR:   They will get the benefit of the heavy guns, but it is still their litigation, is it not?

MR ORR:   Yes. I can only make the submission again, your Honour, that in our view, the appropriate time for making the costs order is when the proceedings have been heard so that the various issues can be assessed, including the issues which GPS put strongly here, and then an appropriate order can be made then and that the funds will be paid and appropriate costs orders will be then implemented.  It is not as if the funds will be available in advance to GPS, even if some order were made now.  So we say it is better that the ‑ ‑ ‑

HIS HONOUR:   If I were to make an order, if I were, that the Commonwealth pay the costs, then GPS would have the reassurance of knowing that a substantial person would ultimately bear that cost, even if the money was not paid.  It would be very reassuring and it might assist GPS with its financier.

MR ORR:   I agree with that point, your Honour.  We simply say again that section 40 provides for removal of right, without conditions; section 40(1), that the application is made under that section.  There is no power under that section to imply conditions for removal, including costs orders.  There is no other provision enabling costs orders, and the provision for costs orders against the Commonwealth is section 78A(2) which provides for the order to be made against interveners and, at this stage, the Attorney-General is not an intervener.  This is simply a removal of the cause of the action under section 40 and the Attorney-General of the Commonwealth has yet to formally intervene in the proceedings.

HIS HONOUR:   Costs are usually also, of course, within the inherent power of the Court, are they not?

MR ORR:   Yes, your Honour.  But it is an unusual costs order and it is not really a costs order in the normal sense.  It is more a security for costs order.

HIS HONOUR:   Do you say I would not have any inherent power to make an order against the Commonwealth now?

MR ORR:   No, we would not say that, your Honour.

HIS HONOUR:   You do not submit that?

MR ORR:   No, your Honour.  The final point is that, in our research, we have not found a case where this has occurred in the past and therefore would be an unusual order to be made.  We also say that there are other proceedings where the parties were either insolvent or in liquidation or in bankruptcy or where the proceedings related to the solvency or liquidation or bankruptcy of the parties, and the normal course was followed there of making the order at the end of the proceedings.  Recently ‑ ‑ ‑

HIS HONOUR:   Lord Denning said if we never did anything because it had never been done before, we would never do anything at all.

MR ORR:   Yes, your Honour.  I just mention Residual Assco v Spalvins is a case where that was ‑ ‑ ‑

HIS HONOUR:   What did we do then?

MR ORR:   It was removed on the application of the Attorney-General of South Australia and the directors challenged the constitutional validity of matters.  Justice Gummow, in his decision at the end of the proceedings,

made an order for costs against them.  So it is a matter where we say the usual course was followed and the order was made at the end of the proceedings, not at the beginning.

HIS HONOUR:   But the Commonwealth does not submit that I do not have an inherent power to make an order for costs at this stage?

MR ORR:   That is correct, your Honour.

HIS HONOUR:   Thank you.  Did you want to add something, Mr Coulsen?

MR COULSEN:   No, your Honour.  I think we have made our position.

HIS HONOUR:   I have not asked you about any of this?

MR ALLEN:   We have problems of our own actually because if we actually succeed in this matter, we will not have a direct opponent against whom we can seek an order for costs.

HIS HONOUR:   I think your position is quite different, is it not, really?

MR ALLEN:   We are not looking to the Commonwealth either.

HIS HONOUR:   No.

MR ALLEN:   We do have that problem, and they are aware of the problem, but if we actually succeed, GPS Securities will not exist.

HIS HONOUR:   I am sure GPS Securities knows that.

MR ALLEN:   We would like to actually hand something up, if your Honour – after your Honour has finished with Mr Orr’s submission.

HIS HONOUR:   Yes.  You make whatever submissions you want to.

MR ALLEN:   I seek leave to read and file and affidavit by myself.

HIS HONOUR:   Is this to ground an application for security for costs, Mr Allen?

MR ALLEN:   No, your Honour.  What we seek is an order for disclosure of those – if GPS Security is removed from existence, we seek an order for disclosure of those who stood behind the company who might provide a real opponent, in order that we might notify them.  We do not want to join them as parties.  Under Order 1 of the Rules of this Court a party is defined fairly

expansively as not just the parties before the Court but those who appear in the proceedings and also are notified of the proceedings.  We just want to be able to notify the various persons against whom we seek the order – actually disclosure is by the company itself – while it still exists, in respect of its shareholders and those who stood behind the loan.  All we want to do is just notify them, look, the proceedings are – if the order for removal is made – in the High Court. We notify you of your entitlement, if any, to appear here and we notify you of our intentions to seek costs orders if we win.

HIS HONOUR:   Yes.  Did you have any notice of this application?

MR COULSEN:   No, your Honour.  My instructing solicitor says “not as such”.  There may have been some discussion but this is the first time we have seen any formal document on it.

MR ALLEN:   The contents of the actual affidavit, paragraph 4 says that submissions were tendered on 9 June and a copy was handed to Mr Hensler.  That was before Deputy Registrar Baldwin of the Federal Court.  The affidavit covers that, what has occurred.  They have been replicated as an exhibit to the affidavit because they virtually – the self same submissions were given to Mr Hensler on the 9th.

HIS HONOUR:   Mr Allen, you do not have any formal – you have not filed a formal ‑ ‑ ‑

MR ALLEN:   I tender a formal summons now, if your Honour requires it.  But you can see our point, your Honour, that we will not have an opponent ‑ ‑ ‑

HIS HONOUR:   You say if you win, you are winning against somebody who has ceased to exist or has never existed, if you win.

MR ALLEN:   Never existed.

HIS HONOUR:   It is very unusual.  You certainly have a point.  I just do not think I should deal with it, without notice on a formal summons.  I do not think I can deal with it today, but I am prepared to deal with your application on a proper notice, perhaps after the matter is removed.

MR ALLEN:   Thank you, your Honour.

HIS HONOUR:   You will need to file a summons.  This affidavit – I am prepared to receive it, but you may want to make a response to it. 

MR COULSEN:   We say it is not necessary to consider that today.  That is something which could be left until later on.

HIS HONOUR:   I think you are right, Mr Coulsen, and I think you should not have to consider it, except on formal notice on a proper application.

MR COULSEN:   There are really two issues arise out of this.  What is proposed to be done here may be something that is better left in the bankruptcy proceedings, in any event.

HIS HONOUR:   I do not know.  That may not suit Mr Allen, you see.

MR COULSEN:   That is what I am saying.  It is not something that should be dealt with today.

HIS HONOUR:   Mr Allen says that his client is entitled to some sort of assurance or knowledge before the big event, as it were, in the High Court where the matter is going to start involving very great expense.

MR COULSEN:   Yes, I understand that.  The short point is, your Honour, I cannot respond to this now.

HIS HONOUR:   That seems reasonable, I think, Mr Allen, but I think you are entitled to have ‑ ‑ ‑

MR ALLEN:   We just want to make our point at this stage that when it comes to costs, we will be bereft of an…..opponents.  We would like to seek costs against other parties.  They are not here at the moment.

HIS HONOUR:   I will give you leave to file this affidavit ‑ ‑ ‑

MR ALLEN:   Not the Commonwealth, by the way, your Honour, not the Commonwealth.  We do not think the Commonwealth has any culpability.

HIS HONOUR:   Mr Allen, I will give you leave to file this affidavit. 

MR ALLEN:   Thank you, your Honour.

HIS HONOUR:    But if you wish to pursue the matter, you will need to do it on filing a formal summons on notice and a date will be allocated to you by the Court to have the matter dealt with.

MR ALLEN:   Thank, your Honour.

HIS HONOUR:   Mr Orr, in my view the Commonwealth is entitled unconditionally to an order that the matter be removed to the High Court and I will make such an order.  However, as the Commonwealth does not contend that I do not have inherent jurisdiction to make an order as to costs at this stage I do propose to make such an order.

The order I would propose to make is that the Commonwealth pay to the petitioning creditor such further or additional costs as may be incurred by the petitioning creditor by reason of the removal of the cause to the High Court.  I do not suggest that payment of those costs can possibly be made in advance.  It is not the intention of the order that the costs be paid in advance but the order should provide some security to the petitioning creditor and should assist its capacity to participate in the proceedings in the High Court.

Mr Orr, you spoke about other interveners and, of course, they are likely to participate.  It may be that their activities will prolong the matter, but the Court has always got power to make an order which would enable the Commonwealth to be recouped in an appropriate case any costs that they may be obliged to pay to some party.  It is a little like a Bullock order, in a sense, is it not?

MR ORR:   Yes, your Honour, it is, but perhaps we could just reserve our position in relation to the Commonwealth seeking perhaps such other orders at a later stage.

HIS HONOUR:   Yes.  I would specifically note that any order I make is not intended in any way to foreclose or to inhibit the making by the Commonwealth of an application for costs to be paid by other parties or interveners as the Commonwealth may be advised.  I cannot do otherwise, anyway.  The matter of costs in the Full High Court will be at large, before the Full High Court, not for me.  I cannot do any more than say what I have done, I think.

Did you want to say anything, Mr Coulsen?

MR COULSEN:   Your Honour, just to clarify the terms of the order that is intended to be made.  We really have two concerns.  Firstly, we are on a magic carpet ride that we have no real control over.  That is one issue.  The second issue is at the end of the day, if Mr Lynch is successful, and if there was a costs order made against us, whether the terms of the order as suggested would cover both those eventualities.

HIS HONOUR:   No.  I do not intend the order to embrace any costs that your client, or those who stand behind your client, might find themselves liable to pay.

MR COULSEN:   Thank you, your Honour.  I was just clarifying that.

HIS HONOUR:   Certainly not.  You might have good arguments in respect of those matters, but that will all be a matter for the Full High Court.  It is not for me.  All I am doing is making an order which will provide your client, I would think, with some security and will assist its capacity to participate in the proceedings in the Full High Court.

MR COULSEN:   I will not take the matter further, your Honour. 

HIS HONOUR:   I understand what you were asking.

MR COULSEN:   In other words, whether we could look to the Commonwealth in both situations.

HIS HONOUR:   You will have to ask the High Court about that, if you are unfortunate enough to lose.

MR COULSEN:   Thank you, your Honour.

HIS HONOUR:   Do you have anything more, Mr Allen.

MR ALLEN:   No, nothing further, your Honour.

HIS HONOUR:   Nothing further from you, Mr Orr?

Mr Coulsen, the terms of my order should be clear enough.  The stated case, I think, should be re‑engrossed and then I sign it.  I think that is the correct procedure.  After that, it is a matter, I think, for the Registrar to provide a date.

MR ORR:   We could do that perhaps today, your Honour.

HIS HONOUR:   Yes.  The Court goes into recess after today, so it would be desirable that it be done today.

MR ORR:   As I understood it, your Honour was happy with the terms of it as it stood.

HIS HONOUR:   Yes, I was.  It is just you have “draft case stated”.

MR ORR:   Of course, your Honour, yes.  I was just checking ‑ ‑ ‑

HIS HONOUR:   No, I have made no changes.

MR ORR:   Thank you, your Honour.

HIS HONOUR:   Adjourn the Court.

AT 11.34 AM THE MATTER WAS CONCLUDED