Helljay Investments v Dep Comm of Taxation

[1999] HCATrans 303

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S18 of 1999

B e t w e e n -

HELLJAY INVESTMENTS PTY LTD

Applicant

and

DEPUTY COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

Respondent

Application for removal pursuant to section 40 of the Judiciary Act 1903

HAYNE J

(In Chambers)

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON TUESDAY, 28 SEPTEMBER 1999, AT 10.45 AM

Copyright in the High Court of Australia

MR D.C. FITZGIBBON:  I appear, your Honour, for James Murphy who was one of the former directors of Helljay Investments Pty Limited. (instructed by Wayne Levick & Associates)

HIS HONOUR:   We leave over any debate for the moment, Mr Fitzgibbon, about whether you need leave or appear as of right.  We will leave that for the moment while I take other appearances.  Yes.

MR R.G. ORR:  If the Court pleases, I appear with my learned friend DR G.L. EBBECK for the Deputy Commissioner of Taxation. (instructed by the Australian Government Solicitor)

HIS HONOUR:   Yes, Mr Orr.  I was told that there may be an appearance on behalf of the liquidator of the applicant company.  Is there no appearance for the liquidator?

MR ORR:   They are here, your Honour, I know that because they have introduced themselves to me.

HIS HONOUR:   A Mr or Ms Smith was to appear.  Do any of the counsel know aught of what has happened about that?  Anxious messages are about to be sent outside, I suspect, so we wait.

MR P.E. SMITH:  I apologise, your Honour, I appear for the Liquidator, Mr  Rangott. (instructed by Gillespie-Jones & Co.)

HIS HONOUR:   Yes, thank you, Mr Smith.  Mr Smith, while you were absent Mr Fitzgibbon announced an appearance for James Murphy, a former director of Helljay Investments.  Are counsel agreed on the way in which this application should proceed?  Mr Fitzgibbon, do you have some application, do you?

MR FITZGIBBON:   Your Honour, I am instructed to raise a motion that your Honour disqualify himself from hearing the matter.  I do so with the greatest of respect,  they are my instructions.

HIS HONOUR:   Yes.  These applications are never easy are they, Mr Fitzgibbon?  What is the basis of the application?

MR FITZGIBBON:   The basis, your Honour - and if I might, I have had my clients list a file as quickly as we could get together this morning, a motion and affidavit and that has been, if I might hand that to the Court.

HIS HONOUR:   Yes, thank you.  Have other counsel seen this, Mr Fitzgibbon?

MR FITZGIBBON:   I have arranged that my solicitor supply them with copies.  There may not be sufficient copies.

MR SMITH:   I have not seen a copy yet, your Honour.

HIS HONOUR:   Yes.

MR ORR:   We were just recently served with a copy, your Honour.

HIS HONOUR:   Yes.

MR FITZGIBBON:   Yes, my instructions, your Honour, are to raise the issue because the respondent – and we had no notice until, I believe, late last week that the liquidator was going to take a part in this, as I understand it those are my instructions – but the respondent’s argument is contained, according to their authorities that I have received, totally on the Joosse Case, which of course your Honour sat in in Melbourne on 18 December last year.

HIS HONOUR:   Yes, and why does the decision in – the pronunciations vary greatly – the Joosse Case ‑ ‑ ‑

MR FITZGIBBON:   Yes, to which counsel you have.

HIS HONOUR:   Why does my determination in the Joosse Case mean that I should not sit in this proceeding?

MR FITZGIBBON:   Your Honour, in my submission the law is that judges should not sit where they have expressed clear views in a previous case ‑ ‑ ‑

HIS HONOUR:   On questions of law?

MR FITZGIBBON:   On questions of fact, according to Halsbury’s Laws of Australia and they rely particularly on two particular decisions, Livesey v the New South Wales Bar Association, and the other case which is this Court’s decision in Grassby v The Queen (1989) 168 CLR at page 1.

HIS HONOUR:   Yes.

MR FITZGIBBON:   I would have supplied copies, your Honour, but we were not sure that your Honour was going to sit until I saw the newspaper at 6.30 this morning.

HIS HONOUR:   Livesey and Grassby deal, do they, with questions of fact?

MR FITZGIBBON:   Yes, they do, your Honour, to this extent:  you see, perhaps, your Honour, I ought to say this, that I say that they are live and significant issues of fact on four grounds.  I know some determination has been made in Sue v Hill, but we do of course have the referendum pending about republicanism, we do have the issue who the ultimate sovereign is of the Queen, some would say of the United Kingdom, the Queen of Australia, or an elected president or cabinet.  Then, your Honour, it goes into questions of fact because it affects our international status, just off the top of my head.

HIS HONOUR:   I am sorry, Mr Fitzgibbon, I am simply not following this.  You will need to be much more explicit because I just do not understand the contention you are advancing.  Are you saying that there are certain questions of fact in this proceeding, the Helljay proceeding, which are questions of fact that arose and were determined in Joosse?

MR FITZGIBBON:   Yes.

HIS HONOUR:   What are the questions of fact?

MR FITZGIBBON:   In broad terms, in Joosse your Honour determined no merit in any of the arguments.  Your Honour then, of course, was, part together with the Chief Justice and Justice Gummow, of the Sue v Hill decision, which I say seems in part to run contrary to the Joosse decision.  The respondents in this matter, your Honour, rely entirely, as I say, on Joosse and that has the further questions in it, which include sovereignty, they include the questions of independence, and those, in turn, affect, in my submission, independence and international affairs.

HIS HONOUR:   But are these questions of fact, that is, questions for evidence, or are they questions of law?

MR FITZGIBBON:   I say they are questions of fact, your Honour.  I say that your determination, in particular the Court’s determination – let us take the date issue, just straight off the top of my head, but the date issue, of course, is one that the High Court in Sue v Hill had a number of approaches to.  Paragraph [94] or [98] of that judgment, your Honour together with the Chief Justice and Justice Gummow, indicated that at least by 1986 Australia had become independent.  Justice Callinan, at the other end, seemed to favour an issue somewhere around about 1919/1920, and I do not think I overstate the proposition.  Justice Kirby had a different approach altogether.  He mentioned the date in 1920.  I think from memory two of the other Justices never ventured on a date, as such.  Now those, in my submission, are questions of fact and they affect, as I say ‑ ‑ ‑

HIS HONOUR:   What is the question of fact?

MR FITZGIBBON:   Well, the question of fact that was posed in Helljay, in particular, was, first of all, that Britain was a foreign power and the Court has decided that is the case ‑ ‑ ‑

HIS HONOUR: No, the Court has decided that under section 44(1) - - -

MR FITZGIBBON:   Yes.

HIS HONOUR:   - - -a person who is a citizen of the United Kingdom is a citizen of a foreign power.

MR FITZGIBBON:   A foreign power, yes.

HIS HONOUR:   Yes.

MR FITZGIBBON:   And the second issue was when the date of independence was reached and, as I say, there is a variety of approaches to that.

HIS HONOUR:   And why, or how, is a question of date of independence, to adopt your expression, a question that falls for argument in the present application?

MR FITZGIBBON:   Because the argument here, your Honour, was, concerning particularly the establishment of two things:  one, the powers of the courts, including judges and registrars of the Commonwealth Territory, that is the Australian Commonwealth Territory, and, secondly, it also raised questions as to the Corporations Law.  What was said was the date determined ‑ ‑ ‑

HIS HONOUR:   As I understand it, the contention which your client seeks to make is, that, through mechanisms that I leave to one side for the moment, no valid law has been passed in this country since 1920 or thereabouts.  There is therefore no valid Corporations Law, there is no corporation incorporated under it, there is no Supreme Court of the Australian Capital Territory and the like. Do I capture the argument?

MR FITZGIBBON:   You capture the argument.  It is certainly ‑ ‑ ‑

HIS HONOUR:   That is to say that we are debating a non-existent body and its winding up by a non-existent court and the argument is one that goes, if I may say so, on its face at least, more than one bridge too far, in that we all implode, do we not ‑ ‑ ‑

MR FITZGIBBON:   I am not arguing a co-argument, please do not think I am.  I do not say that occurred.  Remember the co-argument was that Britain was the invader and that we were all subject invaders.  I do not argue that.  What I do argue is that the dates your Honour has determined in the Joosse matter, there is no merit at all in any of these arguments, and I say that two things arise out of that:  first of all, of course, the Court has determined what it has in Sue v Hill, but I say it has not determined at this point in time the latter issues as to whether it was 1919, 1920, 1931, whatever.  Even taking your Honour’s judgment, together with the Chief Justice and Justice Gummow, at least you say by 1986.

HIS HONOUR:   In the Australia Acts, yes.

MR FITZGIBBON:   Yes, and so it is in that area that I say they are questions of fact.

HIS HONOUR:   Now, is it an essential part of your argument that I should not sit that you identify an issue of fact that I have predetermined?  Is that essential to your contention?

MR FITZGIBBON:   No, I say that your Honour, in determining Joosse’s Case, covered a predetermination, I say, on almost all of those issues, apart from perhaps the two latter ones which I have raised for your Honour, that is the issue as to when we became independent and what effect that has on legislation following that.  That, I say, is something.

HIS HONOUR:   Can I draw attention to two cases, which I had dug out this morning, on this question of prejudgment?  Firstly there is the decision of this Court in JRL, 161 CLR 352, particularly at 352, by Justice Mason, where his Honour says:

It needs to be said loudly and clearly that the ground of disqualification is a reasonable apprehension that the judicial officer will not decide the case impartially or without prejudice, rather than that he will decide the case adversely to one party.  There may be many situations in which previous decisions of a judicial officer on issues of fact and law may generate an expectation that he is likely to decide issues in a particular case adversely to one of the parties.  But this does not mean either that he will approach the issues in that case otherwise than with an impartial and unprejudiced mind in the sense in which that expression is used in the authorities or that his previous decisions provide an acceptable basis for inferring that there is a reasonable apprehension that he will approach the issues in this way.  In cases of this kind, disqualification is only made out by showing that there is a reasonable apprehension of bias by reason of prejudgment –

The other case to which I would draw attention is a somewhat earlier decision in the Supreme Court of Victoria by Mr Justice Lush in Ewert v Lonie (1972) VR 308, where at 311 his Honour says, and in the context of town planning appeal tribunal litigation:

Every reasonable man knows that consistency in decision is one of the aims of judicial or quasi‑judicial institutions, but if he is exercising his quality of reasonableness he does not suppose that a tribunal will refuse to entertain or will fail to give proper attention to a submission opposed to its former decision merely because it is so opposed.

That is, his Honour expressed the view that the bare fact that identity of issue may lead to a prediction of likely outcome is not sufficient to constitute prejudgment sufficient to warrant the judicial officer disqualifying himself or herself.  With that in mind, if the decision in Joosse and, perhaps, also, the decision in Sue v Hill concern questions of law as opposed to fact, why should I not sit to hear and determine the present application?

MR FITZGIBBON:   The first answer to that, your Honour, is this:  I can take you back to Joosse’s Case.  In Joosse’s Case your Honour went to find, in my submission, a number of matters, but in particular – perhaps I ought to, in answering, deal with it this way: there was an allegation that certain questions of the Constitution were not operating. Your Honour found as a fact, of course, that clause 5 which is part of the ‑ ‑ ‑

HIS HONOUR:   It is not a finding of fact, covering clause 5. Covering clause 5 is a holding of law; that covering clause 5 binds me to apply the Constitution and laws made under the Constitution. That is not a finding of fact.

MR FITZGIBBON: With respect, your Honour, and I do not want to get into an argument on this, but clause 5, itself, of course, is not actually part of the Constitution, itself. That commences, of course, in clause 9. Your Honour has held – I say as a matter of law – but it was a determination, I say, in that area. In addition to that, the very issues that your Honour and I have discussed this morning concerning the issue of whether legislation is valid after a particular date – I am simply encapsulating what I say to be the answer to your Honour’s proposition. The other two matters are, firstly, that your Honour does find, on page 5 of that judgment, that:

The Imperial Parliament enacted the Statute of Westminster in 1931 but it was not until 1942 that the Commonwealth Parliament enacted legislation adopting the Statute of Westminster.  And then in 1986 the Australia Acts were passed.

They made be findings of law in your Honour’s judgment, but I suggest that they are matters of fact.

HIS HONOUR:   But the significance for Joosse was not the finding of fact, the significance was the legal consequences, if any, were to be attached to those events; events which were not disputed, and I assume are not now disputed.  Yes?

MR FITZGIBBON:   Yes, well, history has passed us by, has it not, to that extent, and that, of course, the Court has ruled on.  But, all I am saying is this is the sole basis upon which the tax department – well, it is the only authority they put up.

HIS HONOUR:   Yes.

MR FITZGIBBON:   On the issue of adversely finding:  your Honour, of course, has made the statements which I say are in Joosse and in Sue v Hill, and I say that there is sufficient there to, in fact, have your Honour disqualify himself.

HIS HONOUR:   Yes, thank you, Mr Fitzgibbon.  Do either counsel seek to be heard on this issue?  Mr Orr, do you seek to be heard?

MR ORR:   Yes, I would just simply like to put on the record that we would oppose this motion.  We would simply like it recorded that, as my learned friend said, they seek to have your Honour disqualified because of a predetermination of an issue of fact.  We say there has been no predetermination of an issue of fact in relation to these Helljay proceedings.  In Helljay, the proceedings before your Honour now, concerns the winding up of a company by the ACT Supreme Court, that company being Helljay Pty Ltd, and no facts in relation to that winding up were heard by your Honour in either Joosse or Sue v Hill.

We say that the decision in Joosse was pre‑eminently a decision as to law, not as to fact, that is relevant in these proceedings. Indeed, the decision in which - my learned friend is right, we will seek to rely on, is that the Constitution remains the law of Australia, and the Corporations Law is part of the law of Australia, that they were the findings in Joosse which are relevant to these proceedings, and the findings which are pre‑eminently findings of law, not of fact.  We would also submit that there is no basis

upon which it could be said that your Honour is biased, either actually, or apparently biased, in so far as consideration of this application to remove the Helljay proceedings is concerned.

HIS HONOUR:   Yes, thank you, Mr Orr.  Mr Smith, do you desire to be heard on this issue?

MR SMITH:   Yes, your Honour.  We also oppose the application and I adopt the submissions put forward by my learned friend, Mr Orr.

HIS HONOUR:   Yes, thank you.  Mr Fitzgibbon, do you seek to reply?

MR FITZGIBBON:   Just one very short reply, your Honour.

HIS HONOUR:   Yes.

MR FITZGIBBON:   What I have been attempting to say and probably putting very poorly indeed is that the legal consequences in Joosse are legal findings based on findings of fact.  It is on that basis that I say your Honour should not act.  Thank you.

HIS HONOUR:   Yes.  Thank you.  The application will be refused.  I will give my reasons for refusal at the time of giving reasons disposing of the principal application.  Now, your application is it, Mr Fitzgibbon, to remove?

MR FITZGIBBON:   Your Honour, my instructions are to have your Honour consider the matter on the papers as such.

HIS HONOUR:   Sorry.  I am not understanding what you seek.

MR FITZGIBBON:   I simply seek removal on the basis of the papers that have been filed, your Honour.  Those are my instructions.

HIS HONOUR:   You do not desire to add anything?

MR FITZGIBBON:   Nothing additional to that.  Thank you.

HIS HONOUR:   Yes.  Thank you, Mr Fitzgibbon.  Now, should I hear from you, Mr Smith, first or you, Mr Orr, first?  Are counsel agreed about which order I should take you in?

MR ORR:   Perhaps if you could hear from us first, your Honour.

HIS HONOUR:   Yes, Mr Orr.

MR ORR:   I know my learned friend is proceeding on the basis of the papers but I thought I should just ascertain the papers that we are relying on in these proceedings.  There is an affidavit of William Balfour Rangott dated 24 September 1999.  He is the liquidator who has been appointed to Helljay Pty Limited.

HIS HONOUR:   What consequence do you say follows from the absence of consent by the liquidator to the further prosecution of the application?  I need to go back a stage.  The application was instituted at a time before the order for winding up, was it not?

MR ORR:   Yes, your Honour.

HIS HONOUR:   I take it, in those circumstances, there can be no challenge to the validity of institution of the application for removal.  Is that so?

MR ORR:   That is true.  That is right.

HIS HONOUR:   The question that is dealt with to some extent in the papers then concerns whether it is open to Mr Murphy to continue to prosecute in the name of the company, or perhaps in his own name, the application for removal.  What do you say about what is happening?  Is Mr Murphy, on your contention, prosecuting in the name of the company in face of the prohibition to that regard in the Corporations Law or is Mr Murphy continuing in his own name?  How should I deal with things?

MR ORR:   Yes.  Our primary submission, your Honour, is that the proceedings are extremely confused, both in the ACT Supreme Court, in the Federal Court and in this Court and our primary submission is that that confused state makes them wholly inappropriate to be removed into this Court.

HIS HONOUR:   I doubt that, Mr Orr.  I mean, all that we know with stark clarity is that the director of this company contends it should not be wound up.  Now, that is a fairly narrow point, is it not?  The basis of the point may be of a different kind but no doubt about what he wants, is there?

MR ORR:   That is true, your Honour, and perhaps I am jumping ahead of myself at the moment but our submission is that there was an application to remove the winding up into this Court but that that did not operate as a stay on the proceedings in the ACT Supreme Court, that those proceedings continued and that the company was, in fact, wound up.

HIS HONOUR:   And there may then, it seemed to me, to be a lively question which may be unnecessary to address in this proceeding, whether the making of an order for winding up, in effect, determines that cause or matter.

MR ORR:   Yes.

HIS HONOUR:   After all, it is commonplace, for example, for liquidators to be going back in the winding up.

MR ORR:   Yes.

HIS HONOUR:   Directions for all sorts of consequential ancillary orders and the like to be made and to be made in the winding up and in that proceeding so it did not strike me as being burningly clear that the making of the order for winding up brought an end to that matter.

MR ORR:   Your Honour, our submission is that in terms of whether the company should be wound up, that did bring an end to that matter.

HIS HONOUR:   I understand that.

MR ORR:   There have been a number of appeals to the ACT Supreme Court.  There now is, apparently, an appeal to the Federal Court though, as your Honour notes from our submissions, the form of that, in our view, is inappropriate and confused so there are a number of proceedings around but as to the actual winding up we say that proceeding to wind up the company is not pending and therefore is not able to be removed, certainly not pending in the ACT Supreme Court.

HIS HONOUR:   Well, is that right?  If I were a director or creditor and sought to stay further proceedings in the winding up or to terminate the winding up as sometimes is done, I would apply in the original winding up proceeding, would I not?  I am harking back to all of those halcyon days when I sat as the company judge in Melbourne, Mr Orr, so I regret to say I am indulging myself.

MR ORR:   Yes, and certainly the Corporations Law provides a process whereby various matters can be brought back to the court and, indeed, one of the orders made in the winding up was that those matters could be dealt with by the registrar of the court under the Corporations Law so, clearly, there are a number of matters which can be brought back to the court but, as to whether the company has been wound up, we say that the ACT Supreme Court has made an order winding up the company.

HIS HONOUR:   Yes, but they made an order for winding up by the Court.  The company is not yet wound up. 

MR ORR:   No.

HIS HONOUR:   The winding up is proceeding and the liquidator is doing lots of things directed to that end.

MR ORR:   That is exactly right, your Honour, and there may be other proceedings following that but, as to the winding up order, the winding up order has been made.  The challenge to that order can only be pending if there is on foot an appeal, an appropriate appeal against that order.  We say there is none.

HIS HONOUR:   But assume for the purposes of argument that that question about the nature of winding up proceedings is one that may be open to contrary views, that brings me directly back to the unremedied break in sovereignty contention, does it not?

MR ORR:   Yes, your Honour.

HIS HONOUR:   And whether, assume there to be a cause pending, there is an arguable point worth removing. 

MR ORR:   I think there are two points.  I mean, I think there are several other points there.  One is whether there is an arguable point worth removing and our submissions are that there is no arguable point worth removing, that the points made in this case are hopeless points which have been considered and which have no merit and that is our primary submission.

HIS HONOUR:   And you say not a suitable vehicle for removal?

MR ORR:   Exactly, your Honour.  We also say that the status of the proceedings in the ACT Supreme Court or the Federal Court, in so far as there are possibly proceedings on foot in the Federal Court, are so disorganised and unsuitable that it would be wholly inappropriate for them to be removed into this Court.

HIS HONOUR:   Yes, I understand the contention.

MR ORR:   And really the position of the liquidator goes to that second submission.  It is saying whatever is happening here, on the face of the documents it is the company which is seeking removal into this Court but someone must be acting for the company.  That is not the liquidator and we say that is really just an additional issue which makes it inappropriate for these matters to be removed without needing to go into the actual factual situation of who is doing what.

HIS HONOUR:   Yes.

MR ORR:   Perhaps if I can just return, your Honour.  There was also an affidavit of Kylie Louise Neville dated 27 September 1999 which is filed in these proceedings, really just to establish the factual basis of these proceedings.

HIS HONOUR:   Yes, I have that.

MR ORR:   There is the respondent’s amended summary of argument which was filed on 10 August 1999.

HIS HONOUR:   Yes, I have that.

MR ORR:   And there is the respondent’s supplementary written submissions which go to the issue of costs which were filed on 24 September 1999.

HIS HONOUR:   Now, as to that, what is the order that you are seeking by way of an order for costs and against whom is that order directed?

MR ORR:   We seek an order for indemnity costs against the solicitors in this application.

HIS HONOUR:   Well, are the solicitors on notice in their personal capacity, as opposed to their capacity as solicitors of that application?

MR ORR:   Well, the issue of costs is raised in the respondent’s amended summary of argument ‑ ‑ ‑

HIS HONOUR:   I understand that.

MR ORR:   - - -and is also raised clearly in the respondent’s supplementary written submissions.

HIS HONOUR:   What is notable, Mr Orr, at the moment is, there is no appearance by or on behalf of the solicitors in response to process directed to them.

MR ORR:   That is true, your Honour.

HIS HONOUR:   Why should I entertain an application to make somebody not a party to the proceeding pay costs save on formal process?

MR ORR:   Yes, well, I take your Honour’s point and if that process needs to be undertaken then we will consider and I will take instructions as to whether that process should be taken.  Our basic submission is that the Court does have power to make costs against third parties.

HIS HONOUR:   For the moment I do not need persuasion of that.  It may be that there is contrary argument but for the moment I am not fussed about there being power to do it; what I am fussed about is there being sufficient and formal notice to the person against whom the order is sought of intention to seek the order.  Now, I know you have got it in the outline of argument, I know that has been given to the other side; I am just a bit troubled about is that sufficient basis on which I can proceed.

MR ORR:   Yes.  Well I note your Honour’s concerns there.  All I can say is that we have given notice; we have given notice within these proceedings.  The solicitors are acting for either the director of the company, it is unclear who, in these proceedings, and we would submit that that is sufficient to put the solicitors on notice as to the order that we are seeking.

HIS HONOUR:   Yes.  Now I understand that is the form of order for costs that you seek.  If I were, for any reason, against you on that, what form of order for costs do you say should be made?

MR ORR:   Well, the alternative order is that we seek those costs against the directors of the company, but I note that similar issues ‑ ‑ ‑

HIS HONOUR:   Well against Mr Murphy alone or against all directors?

MR ORR:   Well, as you will see annexed to the affidavit of Kylie Louise Neville dated 27 September 1999, is a corporate search, which reveals there are two directors of the company.

HIS HONOUR:   These things become harder and harder to read, I am afraid.  Yes, I see – James Joseph Murphy and Helen Margaret Murphy are the shareholders.  Where do I ‑ ‑ ‑

MR ORR:   They are noted as current directors.

HIS HONOUR:   The current directors, yes, I see that, but why should I make any order against, I assume, it is, Mrs Murphy?  Mr Murphy has appeared, Mr Murphy has moved; why should I make any order against her?

MR ORR:   Well, your Honour, it is difficult in these situations without knowledge as to what is happening in the company and who is bringing the proceedings.  All that can be said is, as we say in our submissions, these proceedings are without merit, they clearly should not have been brought, both as the substantive law involved and the procedure involved.  My client and my own solicitors have put on notice the solicitors for Helljay, that they regard these proceedings as wholly inappropriate and will be seeking the indemnity costs against the solicitors or directors.  Our submission is that this is an appropriate vehicle in which costs should be ordered against the directors, given the conduct of the company in this litigation, and it is impossible for us, your Honour, to determine who is governing the company and directing the company at this stage.  Those people are formally on the record as directors of the company and should bear the liability.  I can come to this in a minute, your Honour, but there are a number of cases which we have cited in our outline of submissions where courts have held that where companies are insolvent, by proceedings have been bought which are inappropriate, that it is appropriate to make an award against the directors as the moving parties in those proceedings.

HIS HONOUR:   Yes, I am generally familiar with those cases.  I do not say I have re-read them recently, but I am generally familiar with the proposition that costs can, in certain circumstances, be awarded against, if you like, the real moving party.

MR ORR:   Yes, well, in fact it is mentioned in Knight v FP Special Assets; there is a statement which supports that view, and also in our outline of submission, we note some English cases, where it is clearly held that where the company is insolvent, it is appropriate, not for the company to bear the costs of litigation, because the company is insolvent and it would be inappropriate for the creditors to have to, in effect, bear the responsibility for the litigation, but it is appropriate for the directors.

HIS HONOUR:   Yes, I do not think I need persuasion of the difficulty that would follow of ordering costs against the company and the consequences that that would have for the creditors for the burden of the costs would fall on the creditors and in an action which, on at least your contention or your construction of events, would be improvidently brought by directors in the name of the company, the burden of that should not fall on the general body of creditors, but on those who promote it.  That is the nub of the argument, is it not?

MR ORR:   Yes, your Honour, yes, and there are cases which are set out in our outline of submissions which support that position.

HIS HONOUR:   Yes, I understand.

MR ORR:   In the alternative, your Honour, we would seek costs in the normal event of the proceedings if your Honour is not minded, but perhaps with an ability to seek by summons that another costs order be made, either against the solicitors or the directors and I would seek instructions as to whether such a summons should be brought as an alternative to the normal order your Honour could make.

HIS HONOUR:   Yes.

MR ORR:   I sort of jumped there.  If I could just mention a couple of other things, your Honour.

HIS HONOUR:   Yes.  I think you were jumped to there, Mr Orr; you are very kind, yes.

MR ORR:   Your Honour, we have also filed, I think, a bundle of documents, which note are relevant, a number of cases and other sections of legislation.  If I could just briefly mention three matters:  first of all, the facts; secondly, our basis for saying that it is not appropriate to remove this cause, and I think I have dealt sufficiently with the costs order, so I do not need to come to that.  But as you will see from the affidavit of Ms Neville, Helljay was wound up by the Supreme Court of the Australian Capital Territory on 15 February 1999 and, in our submissions, we state that this was an order appropriately made by the Australian Capital Territory Supreme Court under the Corporations Act of the Commonwealth, which both allows for that winding up and gives jurisdiction to the Supreme Court and allows for applications to be made to that court. 

The affidavit sets out the confused state as to what has happened since then.  There does appear to have been appeals to the Australian Capital Territory Supreme Court, all of which seem to have been dismissed.  There does not appear to be an appeal to the Federal Court.  There are a range of documents in the Federal Court and it is very unclear what the status of those proceedings are.

On the basis of that factual basis we say that these matters should not be removed, firstly because there is no matter pending in the Australian Capital Territory Supreme Court and section 40 of the Judiciary Act requires pending proceedings, which can include an appeal, but not an original action which stands dismissed or dealt with.  It does appear that the applicant is seeking to remove those matters from the Supreme Court, but, as we say, they are not pending, they are not extant, in that court.  There are confused proceedings in the Federal Court, but they is significant confusion as to who is bringing those proceedings.  They seem to have been brought in the name of the director, not the name of the company.  They do not seem to be in a proper form.  They provide a scatter-gun approach to these wide issues.  Indeed, they seem to deal with issues, even going beyond the matters which are sought to be removed into these proceedings.

My solicitors have brought to the attention to the solicitors for Helljay or the director, significant problems with those Federal Court proceedings, in particular in a letter of 6 July, which is KLN 17, to the affidavit of Ms Neville.

HIS HONOUR:   I did not take that to be an act of charity, Mr Orr.

MR ORR:   So, in our submission, there is real doubt whether there is any matter in either the Australian Capital Territory Supreme Court or the Federal Court which can be removed, even if there is, we say, those proceedings are in a form which is clearly inappropriate to have them removed, given their confused state.  We also mention the point that it appears that there has not been the consent of the liquidator given to the removal of these proceedings. 

Our major point however is that we regard this as a hopeless case, in terms of the issues raised on the removal, a case where there is no point in removal and no argument warranting removal.  If I can just very briefly say that, I think, all the parties agree that Australia’s signing of the Treaty of Versailles, international instruments, has significant historical significance for Australia and perhaps demonstrated its developing status in the international community, but our submission is that this has no relevance at all as to what constitutes the law of Australia to be applied by Australian courts, and the signing of that treaty certainly does not relieve Australian companies with their obligations to comply with Australian law.

We adopt what your Honour said in the Joosse Case concerning covering clause 5 and section 106 of the Constitution with regard to the facts that this Court is subject to laws made by the Parliament of the Commonwealth under the Constitution which are binding on it and, similarly, laws made by the States.

I think my learned friend says that the decision in Sue v Hill supports him in some way in this argument.  We reject that submission.  We regard the submission in Sue v Hill as stating that the United Kingdom is a foreign power for the purposes of section 44 of the Constitution. It has no relevance to these proceedings. The Judges in that Court did look at the evolutionary process whereby Australia was transformed into a wholly sovereign nation but it was clear from all the judgments in that case that that evolution has taken place within Australia’s constitutional framework and that case provides no support for the argument that that constitutional framework, in essence, ceased to exist from about 1920.

I know your Honour is familiar with it but at page 675 of the reports in the Australian Law Report paragraph [95] of the judgment, page 14 of the bundle, the Chief Justice and Justice Gummow and your Honour summarised their findings with regard to this matter and that summary, in our submission, and, indeed, the whole case, provides no support to the applicants in this case, Helljay.  In paragraph [95] your Honours quoted Justice Gibbs that:

It is, as Gibbs J put it, “the result of an orderly development‑not…the result of a revolution”. 

That is the developments which they were talking in that case.

Further, the development culminating in the enactment of the Australia Act…..has followed paths understood by constitutional scholars writing at the time of the establishment of the Commonwealth.

Down into paragraph [96]:

The United Kingdom has a distinct legal personality and its exercises of sovereignty, for example, in entering military alliances, participating in armed conflicts and acceding to treaties such as the Treaty of Rome, themselves have no legal consequences for this country.  Nor, as we have sought to demonstrate in section III, does the United Kingdom exercise any function with respect to the governmental structures of the Commonwealth or the States.

Now, that is, in a sense, looking at the reverse to the position which the applicants are putting here but the reasoning in this case clearly supports the view that the governmental structures of the Commonwealth and the States are those as set out in the Constitution of Australia and that nothing which has happened in the evolution of Australia’s constitutional relations with the United Kingdom in the 20th century has had any radical effect on those relations.

We also adopt what your Honour said in Joosse that even if the Treaty of Versailles did purport in some way to have the effect claimed for, which we say it does not, but even if it did then it is clear that the Treaty does not form any part of Australian law unless properly incorporated into Australia law. The Treaty is not a law made by the Australian Parliament. The Treaty is not incorporated into Australian law, notwithstanding that it has been referred to in Parliament and that there is a Treaty of Peace Germany Act which simply allows for regulations giving effect to some of the economic clauses but the Treaty does not bind persons in Australia and, as the outline of submissions does show, we rely on numerous cases dealing with that including Teoh’s Case and Bradley v The Commonwealth which did refer to the Charter of the United Nations.

It is, in our submission, a submission which simply cannot be made that the Australian executive by signing an international treaty can make Australian law, let alone bring about a radical restructuring of Australia’s constitutional and legal framework. Laws must be made by the relevantly directly elected parliaments in accordance with the Constitution. The Constitution can only be amended by the democratic referendum process set out in section 128.

Further, briefly, we say that the submissions are full of stark inconsistencies. This Court is established by the Constitution yet the applicant seeks to bring proceedings in it inconsistently with its argument. These proceedings are brought under the Judiciary Act, an Act of the Commonwealth Parliament.  The company is incorporated under the Corporations Law and Acts of the Commonwealth Parliament.  The scatter‑gun approach of the applicants in these proceedings where issues are piled on each other in no orderly way, in our submission, makes it inappropriate for removal.

The documents in this case also seek to refer to a number of issues in relation to the Territory.  As I have said, your Honour, the winding up took place in the ACT Supreme Court, though under a law of the Commonwealth and the Corporations Act. We simply say that a number of matters which seem to be raised, in our submission, have no basis. The outcome of the referendum held in 1978 in relation to self‑government is irrelevant. The Commonwealth has plenary power to legislate with respect to territories pursuant to section 122 of the Constitution. Helljay Limited is a company registered in the ACT.

HIS HONOUR:   What do you take to be the burden of paragraph 7 of the further amended notice of motion where there is a series of references to the course of proceedings before Justice Higgins?  It is the further amended motion filed 21 May where some alternative submissions are made about, firstly, 78B notices, Corporations Act, the powers of Justice Higgins, breach of procedural fairness, absence of power, invalidity of appointment and the like. Now, those seem, at least at first blush, not to be matters directly touching the section 40 removal issue. They may, perhaps, be cast more widely but what do you say I should do in connection with those matters?

MR ORR:   Your Honour, as I said, the applicants in these proceedings tend to take a scatter‑gun approach and just seem to pile issue upon issue without ever developing or formulating particular issues.  There are a range of issues in relation to these proceedings which have been raised in a number of forums.  We say it is for the applicant to demonstrate to your Honour that any particular issue or part of the proceedings should be removed.

HIS HONOUR:   The status of the ACT court may, at least on one view of matters, be seen to have been determined by Re Eastman.

MR ORR:   Yes, your Honour.

HIS HONOUR:   Do you make any submission about whether a judge of the ACT court would be amenable to 75(v) jurisdiction?

MR ORR:   We do not see this as an appropriate case to get into those issues, your Honour.

HIS HONOUR:   I do not see it raised.  I see it flirted with and if it is not embraced it is not embraced and I did not understand Mr Fitzgibbon to embrace it.

MR ORR:   Yes, your Honour, and we say that the obligation is on the applicant to state clearly which proceedings it seeks to remove, the issues in those proceedings it seeks to remove, and these proceedings are the very antithesis of those requirements.  They are proceedings which are muddled to begin with and then there is a scatter-gun approach to all the issues involved in them.  So, we say it is wholly inappropriate to have these removed.  In so far as we understand these issues, we say that (a) the Commonwealth does have power to pass the Corporations Law for the ACT; (b) it does have power to establish the Supreme Court of the ACT; (c) it has appropriately given jurisdiction to that court to make winding up orders under the Corporations Law.

HIS HONOUR:   The ACT Court may now find its immediate, if not ultimate, origin in legislation of the ACT Assembly, may it not?

MR ORR:   Yes, your Honour, but ‑ ‑ ‑

HIS HONOUR:   Which in turn takes you back to the Self-Government Act and 122, and so the chain goes.

MR ORR:   Yes.  That is right in so far as the establishment of that court, that is the flow authority.  In so far as that court has been given jurisdiction under the Corporations Law of the Commonwealth, it is the Commonwealth law which has done that and, therefore, we say there can be no challenge to that. If there is some broader challenge to the ACT Supreme Court then that needs to be specifically made in an appropriate case.

HIS HONOUR:   Yes, and you say this is not it?  Yes, I understand that.

MR ORR:   We say this is clearly not it.  It appears that many of the issues ‑ as you say, your Honour, it is difficult to ascertain exactly what the issues are but in so far as some of them were obviously formulated before the decision of the High Court in Eastman, many of them do seem to have been dealt with by Eastman.  I have no other submissions, your Honour, thank you.

HIS HONOUR:   Yes, thank you, Mr Orr.  Now, Mr Smith, do you wish to add anything to what Mr Orr has said?

MR SMITH:   Not really, your Honour, but just to say the reason for my client’s appearance today is that it was necessary and proper for resolution of dispute before the Court today that my client be represented in these proceedings given that the proceedings were commenced in the name of a company.  My client, as the liquidator, has a legal interest in the dispute and in that regard I draw your Honour’s attention to the provisions of the Corporations Law dealing with the liquidator’s powers.  I would also be seeking the same orders in relation to costs that the respondent is seeking.

HIS HONOUR:   That is, do you seek orders against the solicitors?

MR SMITH:   I do.

HIS HONOUR:   Yes, and in default of that against the directors, and in default of that against Mr Murphy.  That is, as I understand it, the shopping list that has been suggested.

MR SMITH: In that regard, your Honour, I emphasise section 471A of the Corporations Law in relation to continuation of these proceedings.

HIS HONOUR:   Yes, and no leave sought and none given.

MR SMITH:   Thank you, your Honour.

HIS HONOUR:   Yes, thank you.  Now, Mr Fitzgibbon?

MR FITZGIBBON:   Your Honour, although I indicated before I did not want to address the issues I think I would be negligent in my duty if I did not raise certain matters.  Perhaps if I can come back to your Honour on the appointment of a provisional liquidator.  Over the interval I ‑ ‑ ‑

HIS HONOUR:   No, there is no appointment of a liquidator provisionally, is there?  There has just been an order for winding up and an appointment of a liquidator.

MR FITZGIBBON:   Yes.  Your Honour, I have printed out, if your Honour will forgive me, from the computer just before Court, authority on the issue of the appointment of a provisional liquidator and the general powers of directors.  It may be of assistance because there are a number of ‑ ‑ ‑

HIS HONOUR:   But there is no provisional liquidator.  There is an order for winding up by the court.

MR FITZGIBBON:   Yes, and all I am saying is, of course, there is very clear authority that, in fact, in those circumstances the directors do retain some residual power, both to oppose the winding up application or appeal against that winding up order and I am able to give that to your Honour if you wish, but it would be something that your Honour would be well aware of.

HIS HONOUR:   I am not for the moment concerned to agitate whether directors have powers sufficient to appeal against the winding up order.

MR FITZGIBBON:   No.

HIS HONOUR:   There may be, on one view of the case, a lively question about whether directors have power to continue, in the face of a winding up order, a pending application to the Court.  That, on one view of matters, is dealt with explicitly by 471A of the law.  But on other views of the case you never get to that point though the points made against you being either, this is not a vehicle for agitation of the issues or the issues are not capable of argument.

MR FITZGIBBON:   Well, your Honour, may I simply just encapsulate in this form.  I take your Honour back:  this was a statutory demand, it was not a judgment.  There was no proof of insolvency as such other than the statutory process that was followed.  In that regard, your Honour, of course, the further amended notice of motion sets out, in my submission, a very clear basis upon which the Court, in fact, could remove it.  Indeed, some of the questions have been resolved, your Honour, all of them have not and in that regard, your Honour, my friend talks of some of the Acts of Parliament and so on – I really do not want to go into those.  Those were specific Acts of the Australian Parliament in each and every case and they, in fact, are appendaged in the material.

So I say, your Honour, there still is a case that the Court can determine.  Your Honour, there is no process that I am aware of - indeed, I only received some of this material just before this hearing this morning including this large affidavit – I have not seen it before half past ten this morning and I note in there that one paragraph in particular, 29, the author says:

made a number of inquiries to the Federal Court and each time I have been informed and verily believe that the documents are yet to be properly filed in the Federal Court Registry.

Well, I just simply do not know what that means.

HIS HONOUR:   I do not think I am going to be determining the issue on that aspect of the matter, Mr Fitzgibbon.

MR FITZGIBBON:   Yes, thank you, your Honour, unless there is anything else.

HIS HONOUR:   Mr Fitzgibbon, you announced your appearance for Mr Murphy.  Do you say anything as to the application for costs that is made?  The applications are, as I understand it, in the first instance, for indemnity costs ordered against the solicitors, Mr Ebbeck’s firm.  Alternatively, against the directors.  Alternatively, against the – I wondered why there was a quick twitter at the Bar table.  I think I have attributed Mr Levick’s firm to Dr Ebbeck, and Dr Ebbeck to Mr Levick.  Now, somebody is going to be grossly insulted out of all that and I will leave them to sort out who is going to be the worse insulted.

MR FITZGIBBON:   That the application is in the first instance to ‑ ‑ ‑

HIS HONOUR:   Against the solicitors, then against the directors, then against Mr Murphy.

MR FITZGIBBON:   Yes, well, there has been no issue of process against the solicitors, your Honour, as my friend has already told your Honour.

HIS HONOUR:   But do you appear for the solicitors in their personal capacity?

MR FITZGIBBON:   No, I appear for the firm of Wayne Levick.

HIS HONOUR:   On their instructions.

MR FITZGIBBON:   On their instructions, your Honour.

HIS HONOUR:   Well then, what do you say about orders against the directors or against Mr Murphy?

MR FITZGIBBON:   Two things, your Honour:  when the issues were raised, of course, the High Court had not determined at least two of the issues.  They have subsequently, of course, because of the effluxion of time, determined those.  They were constitutional questions that were proper to put in place at that time and I believe the amended notice of motion which is dated, I think, 21 May, very clearly sets out a full documented basis for the basis of the application.  On that basis, your Honour, I say that to my knowledge there has been no application, as such, against the directors -those are my instructions - other than letters to that effect.  I think the final matter I would want to raise your Honour is Mrs Murphy has really taken little or not part in this matter at all.  Indeed, Mr Murphy has been the person who initiated it in the first place.  If there is anything else I can help your Honour on, that is my instructions, thank you.

HIS HONOUR:   Yes, thank you.  I will consider my decision in this matter.  I will adjourn to enable the video link to be established to Perth.

AT 11.50 AM THE MATTER WAS ADJOURNED