Hamilton v Oades; Corporate Affairs Commission of New South Wales v Oades

[1988] HCATrans 245

IN THE HIGH COURT OF AUSTRALIA

Office of-the Registry

Sydney No S60 of 1988

B e t w e e n -

WILLIAM JAMES HAMILTON

Applicant

and

MICHAEL GEORGE OADES

Respondent

and

CORPORATE AFFAIRS COMMISSION

OF NEW SOUTH WALES

Intervener

Office of the Registry

Sydney No S62 of 1988

B e t w e e n -

CORPORATE AFFAIRS COMMISSION

OF NEW SOUTH WALES

Applicant

Oades

WILSON J

DAWSON J

TOOHEY J

and

MICHAEL GEORGE OADES

First Respondent

and

WILLIAM JAMES HAMILTON

Second Respondent

Applications for special leave

to appeal

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TRANSCRIE-T- OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 14 OCTOBER 1988, AT 10.09 AM

Copyright in the High Court of Australia

MR R.A. CONTI· QC: May it please Your Honours, I appear-with

MR J.A. TIMBS and MR D.L. WILLIAMS, for the applicant.

(instructed by Dibbs, Crowther & Osborne)

MR G.A. PALMER, QC:  May it please the Court, I appear for -f,

the Corporate Affairs Cormnissio~ with my learned

friend, MR H.K. INSTALL, the intervener in the first

application and the applicant in the second application.

(instructed by R. Watzlaff, Solicitor for the

Corporate Affairs Commission of New South Wales.

MR T.S. ROBERTSON:  May it please the Court, I appear for

Michael George Oades, who is the respondent in

the first application and the first respondent in the

second application. (instructed by Michael George Oades)

WILSON J:  Thank you, Mr Palmer and Mr Robertson. Is there

any reason why these two applications should not

be heard together.

MR ROBERTSON:	No, Your Honour.
WILSON J:	Mr Conti.
MR CONTI:	Your Honours, I should mention before I take you

to the issues that I ascertained only this morning -

and Mr Robertson may correct me if I am wrong -

that of a large number of charges which were pending

against Mr Michael Oades at the time of the hearing

before the Court of Appeal, he has pleaded guilty

to three of those charges but not to the remainder,

and there are a large number as I understand it of

remaining charges, and he has not been sentenced

in respect of those, in respect of which he has

pleaded guilty.

So in those circumstances the issue so far as

Mr Oades is concerned, as we see it,is still a live

one.

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Oades

WILSON J:  Are the other charges being proceeded with? Has

that being clarified?

MR CONTI:  As presently advised, yes, Your Honour. Mr Palmer,

who appears for the Corporate Affairs Commission,

-~sable to obtain more direct instructions because

I only appear, as you appreciate, for the liquidator.

WILSON J:	Yes.
MR CONTI:	But it must be said that the liquidator does

contemplate not only bringing the large number of

proceedings in relation to vitiating transfers

of property, preferential payments and the like, but

it must be said that he proposes also to proceed

against the directors personally for damages in

misfeasance once the termination of the criminal

charges has taken place.

WILSON J:  Yes. But perhaps we should, before we go on,

Mr Conti, just ask Mr Palmer to clarify the

position with respect to the charges that are

pending but not heard.

MR PALMER:  Your Honours, the position, as I understand it

from instructions this morning is this: there are

three charges to which Mr Oades has pleaded 8Uilty

in the sense that he has filed a notice,which is called a committal for sentence on plea of guilty

form. That has this effect~ that the matter then,

on those charges, goes before the court for sentence

but up until sentence the accused is entitled to

withdraw that notice and revert to a plea of not

guilty. In relation to the other charges which

have been laid against him they have not proceeded

with to the point of a committal proceeding. As

I understand the matter those charges were left

in abeyance while the three principal c~arges

were dealt with.

WILSON J:  Were they the subject of committal proceedings, the three principal charges?

MR PALMER:  Yes, they were, I am instructed, Your Honour,

they were. The position, however, as I understand

it in the broader picture is this: it has only very

recently been brought to Mr Oades' attention by

the liquidator that if he pleads guilty and is

convicted on the charges in respect of which he

has filed this notice then the liquidator will

apply to the court under section 229(6) of the

Code which provides that the court on conviction of the offences to which he has pleaded,may at the same time order compensation to be paid by

the convicted director. My instructions are that

the liquidator will seek a very substantial sum

to be paid by way of compensation. That has been

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Oades

advised to Mr Oades and Mr Oades is now considering

his position. So that we do not know whether,

when the matter does become before the court for

sentencing, the position will be that Mr Oades

withdraws his plea in view of the consequences

-=--which may flow. That is why the other charges,

the remaining charges which have not proceeded to committal stage, are still on foot and they may be continued and proceeded with if there is no
conviction on these three charges.

WILSON J:	So that if these pleas of guilty remain then there is not likely to be any further proceedings
against Mr Oades?
MR PALMER:	That would be so, Your Honour, so we would

understand it.

WILSON J:  What is your attitude to the present application

then, in the light of those facts. Do you wish to

proceed to prosecute the application this morning?

MR PALMER:	Yes, most definitely, for two reasons dealing with the facts of this particular case, because it
is not at all clear, in view of the very recent
developments that there will be finality of all
matters on all criminal charges, when these three
come up for sentence, the position is fluid and may
well change.  So that we see the issues as still
live and of some importance. Secondly, on the
broader base,. the appeal raises questions of very considerable public importance in terms of
how the Commission deals with examinations under
541, its role as investigator, as prosecutor and
the administration of the duties of it under the
Act generally.
WILSON J:	Well, there would be no doubt of the importance

of clarifying the question, Mr Palmer, but that

would not warrant the Court in embarking upon an

advisory opinion?

MR PALMER:  We certainly appreciate that, that is why I put

my first proposition on the basis - - -

WILSON J:	When is Mr Oades likely to come up on the - and the question of pleas of guilty be finalized?
MR PALMER:	I am instructed that the matter comes on for

sentencing in November of this year.but~ of

course, what may happen - - -

WILSON J:	Sometime in - did you put a date, I am sorry?
MR PALMER:	In November this year, Your Honour.
WILSON J:	In November; sometime in November?

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MR PALMER:	Yes.	I am not instructed as to the precise

date but it is anticipated that the matter will take
at least three days because if the matter does

proceed for sentencing at the same time the

liquidator, as I understand it, will be seeking

compensation under 229(6). But we, at the present,

~-regard the issues as still very live in terms of the facts and whether or not there will be finality

to these convictions. We regard the situation

as very fluid and we would urge the Court, if the

Court is otherwise minded, to grant special leave

to, as it were, entertain the application or

entertain the appeal subject to events which may

transpire such as a conviction and sentence being

finally entered and then the matter may then be

reviewed. If no other charges are being pressed,

of course, that puts a different complexion entirely
on the utility of proceeding and the possibility

of proceeding with the case.

WILSON J:  Yes. Mr Conti, what are the merits of adjourning

the applications? If there is a real prospect of the prosecutions being determined next month, is there really any warrant for taking the time of the

Court now, even dealing with the application for

special leave? One could proceed to deal with

it and if it were granted then, no doubt, with

a view to saving costs, no steps would be taken

to prosecute it until the position was clarified

in relation to the charges. Do you have anything

to say about the merits of adjourning the application

now?

MR CONTI:  Your Honours, only that in relation to this

particular insolvent administration the sums of

money involved, and which desire. to be

recovered as such, that even if, as it were, the

programme of ultimately crystalization of the

issues can be lost even temporarily for a monthor so

then it has potential prejudice for the creditors.

The transactions that are sought to be dealt with

are very substantial ones and they involve

transaction of the companies.

DAWSON J:  I am not sure I understand that submission. say you want to keep the pressure on? You

MR CONTI:  We assume that, ultimately, Mr Oades takes the

view - and we have not yet heard, of course, from
Mr Robertson - that he wishes to, as it were, hold

ultimately, in a month's time, or in six weeks

the benefits of his result in the Court of Appeal.

time, he may take a different view, then that

period of four to six weeks has been lost in a

very large and important insolvent administration.

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We are troubled that the four to six weeks may, as

a great underestimate and one can understand·	in the events which have just been described, be
the difficulties that my learned friend would have

_pn behalf of his client in the light of the matters

--that Mr Palmer has said of consenting, as it were,

to the benefits of the Court of Appeal's judgment

being set aside and the motions being dismissed.

WILSON J: Well, Mr Conti, rather than spend time on the

question now, unless there is an application to

adjourn the applications for special leave the

Court will proceed to hear them now with the ruling,

of course, that if the prosecutions were resolved
before the Court comes to deal with the appeal
the Court may well revoke the grant of special

leave.

MR CONTI:	Yes, we do appreciate that.
WILSON J:	Mr Robertson,  do you wish to be heard?

MR ROBERTSON:  Yes, very briefly. Mr Palmer was, with

respect, quite incorrect concerning the status

of the criminal proceedings against my client.

My client has entered a plea of guilty and is

presently part-heard before Judge Madgwick in

sentence in the District Court of New South Wales in relation to two of the three principal charges

which had been preferred against him and which
were the subject of argument in these proceedings

in the Court of Appeal. If Your Honours go to the appeal book at page 19 those three charges are set out by His Honour Justice Clarke. The first charge, (a) is a conspiracy to "cheat and

defraud". There has been no plea to that charge.

It remains on foot in the Local Court of New South

Wales.

There is a mention in it in December, no

hearing date has been set. In relation to charges

(b) and (c) my client pleaded guilty and was

cotmnitted for sentence by the Local Court of

New South Wales to the district court. He entered

a plea in the district court before Judge Madgwick, QC,

and is presently part-heard in those matters.	He
cannot withdraw the plea of guilty without the

leave of Judge Madgwick and no leave has been sought.and

an my instructions no leave will be sought. So

there is one live charge and that is, the first, the conspiracy to "cheat and defraud". Now, that

may well justify the Court hearing the special

leave application because it, alone, is a charge

of some breadth but it is a matter for the Court.

But I thought it appropriate to correct what

Mr Palmer said. My client has not pleaded guilty

to three charges, only to two.

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WILSON J:	Thank you, Mr Robertson.	Yes, Mr Conti.

MR CONTI:  Your Honours, may I hand you a bundle of the

authorities which we did not get to the Court in

time. They contain the statutes that need to

~--be looked at, that is, the present section 541

at the beginning.

TOOHEY J:  Mr Conti, could I just ask you something in

relation to these charges that have been or have

not been disposed of. So long as there is any

charge pending against the respondent, does the
judgment of the Court of Appeal operate as a bar
to the liquidator pursuing his inquiries generally

or only his inquiries in relation to those matters

that have not been disposed of?

MR CONTI:  Your Honour, can I just speak to Mr Timbs who

is actually involved in the trial and can give

me a better - it would still be impractical to

continue with the examination.

TOOHEY J: For what reason?

MR CONTI:  Such as the scope of those charges that remain

to be dealt with.

TOOHEY J:  I am not sure what you mean by that. Do you mean

that the charges themselves overlap in terms

of the area of actual inquiry?

MR CONTI:  That is so, yes. Your Honours, we have put at

the end of the - - -

WILSON J:  Can I just say, by way of assistance, Mr Conti,

that the Court, I think, is primarily concerned

in this matter with the consideration of the

correctness, or whether sufficient doubt attends

the decision. It would seem to warrant the

description as a matter of general importance.

MR CONTI:  Thank you, Your Honour. Your Honours, I thought

it might be convenient to take the unusual course

of starting by taking you to one authority that

has been decided since judgment was handed down

by the Court of Appeal. That is the last case

in the bundle, the case of RE GORDON, 80 ALR 289,

a decision of Mr Justice Pincus of the Federal Court.

Your Honours, what His Honour had to consider there

was, as it were, the BANKRUPTCY ACT equivalent

of section 541(12) which falls for critical

consideration in this case. If you look at the

headnote you will.see in the second pa~agraph the

reference to section 69(12) of the BANKRUPTCY ACT, and

when I taKe~you to section 541 the ingredients

of subsection (12) there will strike you as

being relevantly similar to the one we have to

consider.

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His Honour at page 290 of the report, between

lines 35 and 40, picks up reference to the

recent decision in OADES V HAMILTON and describes

it in terms- of the:

rather rigid rule thought to be of the

New South Wales Court of Appeal derived

from the judgments.

Then over to page 293 between lines 45 and 48,

the second last paragraph, His Honour observes:

Generalising the ruling -

this is page 293, the penultimate paragraph between

lines 45 and 48 -

Generalising the ruling, it appears to have been that any question relating to matters

which the prosecution might be thought likely

to desire to prove in the criminal case should
be disallowed, on the authority of OADES'

case.

Then,His Honour, at the top of page 294, said:

It would seem to me inconsistent with the
intention of s 69, read in the light of

its history, to hold that in those

circumstances, examination of the bankrupt

must stop, perhaps for a long time.

Drop down to the next paragraph:

In my opinion, there is no prima facie

rule that answers to incriminating questions

under s 69 may not be compelled.

Then down to line 26, the paragraph cormnencing:

The intention of the legislature in enacting

s 69(12), like its predecessors, was to
give a discretion to excuse or not to

excuse the bankrupt from answering

questions the answer to which might tend
to incriminate him.

And we make the same submission about 541(12).

Then, over on page 295 at line 10, His Honour

offers the view in relation to section 541(12)

which, of course, is a section he is not directly

considering. After referring back and going to

OADES V HAMILTON he says:

It will be noticed that sub-s (12) absolutely

removes the privilege and does not remove it

subject to a discretion.

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His Honour's view there seems to be contrary

from what has been said in the Court of Appeal.

At line 35 of the same page,he said:

I find it difficult, with respect, entirely
to accept that. It must have been obvious

to the draftsman of s 541 that attempts by a

liquidator to recover a failed company's

property and criminal proceedings against
alleged malfactors in relation to the

affairs of the company may be lengthy and

concurrent. There would have been no

difficulty, had that been the legislature's

true intention, in adding a qualification

that the express requirement to answer

questions though they might tend to

incriminate should not apply where charges

had actually been laid, as opposed to being

merely expected. The statute considered

by the Court of Appeal contains no such

qualification.

Then His Honour went on to refer, at page 49 -

to summarize the differing views in the Court of

Appeal, what one might say, the more liberal view viewed

from the point of view of the liquidator expressed

by Mr Justice Mahoney, the more restricted view

in favour of the examinee expressed by

Mr Justice Priestley and then the opinion of

Mr Justice Clarke where he expressed the test

in terms of which go to the heart of the charges.

DAWSON J:	Justice Pincus refused to follow OADES and so there are two conflicting lines of authority,
the one of the single judge in the Federal Court and of the Court of Appeal in New South Wales?

MR CONTI:  Yes. So therefore His Honour Mr Justice Pincus'

view would be in consonance of that of

Mr Justice McClelland below, in this case.

Before judgment was delivered by the Court of

Appeal there was another decision of the equity

division, Mr Justice Young, where he referred

to the controversy that was being argued before the Court of Appeal in OADES V HAMILTON because

he did not have the benefit of the judgment.	He
said that he would -adhere to the reasons of
Mr Justice McClelland.

WILSON J:  Yes. Mr Conti, in the circumstances perhaps

we could relieve you from pursuing your address

at this moment until we have heard Mr Palmer and

Mr Robertson. Mr Palmer, the Court is minded to

think that Mr Robertson may be able to assist us

but do you wish to say anything?

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MR PALMER:  Well, all I wish to say is that we fully adopt

the course of Mr Conti's submissions and would

not seek to add anything at this stage.

WILSON J:  Yes, thank you. Mr Robertson, you oppose the

_grant of special leave?

MR ROBERTSON:  Yes, if the Court please. Your Honours,

this is a case where an intermediate appellate

court was asked to consider an authority of this

Court decided in 1982 and apply the ratio of that

authority or its principle to an analogous

legislative scheme and a set of facts which were,

for all relevant purposes, indistinguishable from

those considered by the Court in HAMMOND's case.

I do not know where HAMMOND's case appears,

Your Honours, in Mr Conti's collation, but it is

152 CLR and I am told it is amongst - - -

WILSON J:	It is immediately following MORTIMER V BROWN.
MR ROBERTSON:	- - - about a thi:b.d of the way in. It

commences at page 188. The circumstances which gave rise to HAMMOND's case was that Hammond was a witness before the then Royal Commission into

the horse meat substitution scandal which royal

commission had commenced upon letters patent to

Australia in the familiar mirror form in which letters patent are issued to joint royal commissions.

the royal commissioner being issued by the of

Hammond had, at the time the commissioner sought

to question him, been committed for trial on the

subject-matter of the matters in°which he was

sought to be questioned and the commissioner had
foreshadowed eliciting from Mr Hammond under

compulsory examination answers which would go to

the heart of the criminal proceedings against him

in the County Court of Victoria.	Now, to understand
the analogy with these proceedings it must be

understood that the parties conceded that both

the Victorian and Commonwealth ROYAL COMMISSIONS

AC'ISabrogated the principle against self-incrimination,

so that was accepted by the parties for the purposes

of the proceedings.

That, then, draws the analogy with section 541

of the COMPANIES CODE,because that section expressly
abrogates cne right to non-incrimination and

provides relevantly that the answers cannot be

used against the witness :in subsequent proceedings, except

proceedings for perjury in the 541 inquiry. That was the

assumption upon which HAMMOND's case was argued so,

so far, there is a strict analogy between the

provisions of section 541 and the scheme of the

ROYAL COMMISSIONS ACT. Where the matter becomes

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analogous rather than identical is the nature of

the two inquiries. In the case of the royal

commission that was an executive inquiry under

letters patent authorized by statute. In the

case of Victoria, I think, the EVIDENCE ACT; in

--=--che case of the Commonwealth, the ROYAL COMMISSIONS

ACT 1902. Section 541, on the other hand,

reposes in the court - and in this case relevantly

the Supreme Court of New South Wales - the power

to conduct an inquiry or, in truth, to preside

at an examination of witnesses called by the

person conducting the examination. Section 541
provides that that person may either be the

liquidator of the corporation or the Corporate

Affairs Commission, and it is a practice in New

South Wales that mostly examinations are conducted

by the Corporate Affairs Commission.

The purposes of the examination are set out in section 541(2). Can I just take Your Honours to that subsection. Your Honours will see that

(2)(a) provides that the court can order an

examination where it appears that a person who

has taken part in the management of a corporation

has been guilty - or may have been -

guilty of fraud, negligence, default,

breach of trust, breach of duty or other

misconduct

or

(b) a person may be capable of giving

information in relation to the ..... affairs
of a corporation.

So to a very large extent the scope of the examination is similar to the scope of a royal commission

inquiring into whether, amongst other things,

certain persons have been guilty of a breach of
the law or a fraud in relation to the substitution

of meat in the export trade. And I should perhaps

notice that section 542(2); its successor section,	provides that the court may make orders against
a person where it:

is satisfied that a person is guilty of

fraud, negligence, default, breach of

trust or breach of duty.

So one can see that one of the purposes, or a

principal purpose of section 541 is to assist

the court in subsequently making orders in a

fresh proceeding against one of the persons who

is examined. Similarly, the evidence-gathering

function of a royal commission is an apposite

analogy.

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DAWSON J:  Well, there is little difficulty with that

proposition, is there not? I mean, a function

which is sanctioned by the court and which is

to add the court's ultimate processes can hardly

be said to be an inference with the administration

__ of justice as a royal commission can be said because; of course

- - the latter is an executive function?

MR ROBERTSON:  Your Honour, it is difficult to characterize

the activities of an examination as a judicial

proceeding except for the fact that it is presided

over by an officer of the court - in New South Wales

it is a deputy registrar in equity.

DAWSON J:  It is under the control of the court?

T3 MR ROBERTSON: It is certainly under the control of the

court.

DAWSON J: Well, all I am saying is it difficult to say that

something under the control of the court constitutes

an interference with the administration of justice?

MR ROBERTSON:  And, indeed, that was not what was found

by the Court of Appeal in this case. It really

went to the nature of the relief that was sought.

Obviously it could not be contempt because it would be a superior court acting, I suppose, in contempt

of an inferior tribunal because the tribunal before

which my client was then and still is charged, is

a local court in New South Wales, so there is that

difficulty. The alternative basis for relief was

abuse of process on the grounds of interference in

the due administration of justice and that was,

as it were, a contradiction in terms and dismissed

by the court.

The third basis for granting relief was the inherent power of the court to control its own

proceedings and to stay proceedings where there

would be unfairness or where - if the matters,

the subject-matter of the proceedin&were

committed by a person other than a court they

would constitute contempt or interference in the

due administration of criminal justice in the

sense in which HAMMOND's case addressed that

question.

DAWSON J:  You see, in HAMMOND's case what was said, "Well,

we grant that the royal commission has power to

ask these questions and we accept that a person

being questioned is required to answer them, but

in the circumstances to pursue that policy would

be an interference with the administration of

justice." That is right, is it not? But you

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cannot say that where you are dealing with a court,

you are left in the position where the legislature
has expressed itself and it is a question of

whether or not you follow the dictates of the

statutory position?

MR ROBERTSON:  Well, with respect, Your Honour, the royal

commission is a creature of the legislature.

DAWSON J:	Maybe, but its function is an executive function?
MR ROBERTSON:	Indeed, but both flow - they have their

source - I mean, once upon a time the royal

commission was a creature of the prerogative,

at least in relation to the Commonwealth royal

commissioner in so far as he is exercising powers

of the Commonwealth law. He is a creature of the

legislature.

DAWSON J:  All I am saying is there is a limited amount to

be got from HAMMOND's case in this particular case.

MR ROBERTSON:  Well, with respect, we would say that there

is much to be got from HAMMOND's case and that it

is directly analogous.

WILSON J: But the question is whether there is sufficient

to warrant further review in order to resolve the

judicial conflict of opinion.

MR ROBERTSON:  Yes. Your Honour, what I am suggesting

is that apart from the executive judicial dichotomy

the facts in HAMMOND's case and the circumstances
are so similar that the Court of Appeal was
entitled to say that according to the doctrines
of precedent it was bound to follow, or ought to

follow, the decision in HAMMOND's case and

develop the rule and principle there and apply it

to an analogous proceeding. My proposition is

simply this: if the Court accepts that then that

is an appropriate course for an intermediate

appellate court to take in Australia and if the

principle is clear - and unless this Court proposes

to ;review the decision in HAMMOND' s case - then it
ought not to interfere or unsettle the workings

out of an established principle by an intermediate

Court of Appeal.	With respect, those are our
submissions.

WILSON J:  Thank you, Mr Robertson. The Court need not

hear you,Mr Conti or Mr Palmer. Special leave

will be granted in these cases.

AT 10.42 PM THE MATTER WAS ADJOURNED SINE DIE

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