Keylink Physical Care Pty Ltd v Ergoline (Australia) Pty Ltd

[1999] SASC 483

KEYLINK PHYSICAL CARE PTY LTD v
ERGOLINE (AUSTRALIA) PTY LTD
[1999] SASC 483

Civil

DOYLE CJ

Background

1. This is an application to have dismissed as incompetent an “Amended Notice of Appeal” filed in this Court on 25 August 1999.

2. The application is made by the defendant in an action in this Court. The defendant is the respondent to the proposed appeal. For convenience I will refer to the parties as plaintiff and defendant.

3. The defendant served on the plaintiff a statutory demand relying on s 459E of the Corporations Law. The plaintiff issued a summons, out of this Court, seeking an order pursuant to s 459H of the Corporations Law setting aside the statutory demand.

4. A Master heard the summons. His reasons indicate that he declined to set aside the statutory demand, but made an order pursuant to s 459H(4) varying the amount of the statutory demand.

5. The reasons have a stamp on them indicating that they were delivered at 9.00am on 26 July 1999. While the reasons indicate what the Master’s decision is, they conclude with the heading “Orders”, but the only order recorded there is an order adjourning the matter to Monday, 9 August. The reasons indicate that that was for the purpose of submissions on costs. The Court record records “Reserved decision delivered” on 26 July 1999, and that the matter was adjourned to 9 August 1999.

6. I understand that the reasons were published by sending them by facsimile to the parties.

7. On 9 August 1999 the Master heard submissions on costs, and made an order as to costs. That order is recorded in the Court record.

8. There is no order recorded in the Court record refusing the application to set aside the statutory demand, and varying the amount of the statutory demand. As I have said, the only decisions recorded in the Court record are the delivery of the reserved judgment, the adjournment of the matter, and the later decision on costs.

9. On 9 August 1999 the plaintiff filed a Notice of Appeal. The Notice states that the appeal is brought pursuant to s 50(2) of the Supreme Court Act (“the Act”) against orders made on 26 July and 9 August 1999. The notice states that the appeal is made to “a Judge of the Supreme Court”.

10. Apparently the Notice of Appeal was not served on the defendant until 16 August. On 19 August the solicitors for the defendant contacted the solicitors for the plaintiff stating that an appeal to a single Judge did not lie as of right, and that an appeal lay to a single Judge only if the parties consented. The message made the point that there was no such consent. It was stated that the appeal was incompetent.

11. Section 50(2) of the Supreme Court Act provides as follows:

    “Subject to the rules of court, an appeal shall lie to a judge against a judgment, order, direction or decision of a master.”

12. Rules have been made regulating appeals from a decision of a Master.  Rule 106.05 provides as follows:

    “(1).. Subject to subrule (2) below an appeal from any assessment or award of damages or any other final finding, decision, direction, award or judgment, arrived at, made, given, directed or entered on the trial or hearing of any proceedings or of any question or issues by a Master lies to the Full Court and is to be governed by Rule 95.

    (2)Any appeal from a Master:

    (a).... in relation to an order made under the Real Property Act 1885 or under Rule 60;

    (b)    from an order, decision or judgment to which subrule (1) does not apply;

    (c)... where the parties consent to the appeal being dealt with by a single Judge is to be to a single Judge and is to be governed by Rule 97.

    (3)... An appeal under subrule (2) is to be instituted within 7 days of the order, decision or judgment appealed from.”

13. There were some further communications between the solicitors. Then, on 25 August 1999, the plaintiff’s solicitors filed an “Amended Notice of Appeal”. This document again states that it is an appeal pursuant to s 50(2), against the same orders, but now states that the appeal is made to the Full Court. In the portion of the document that states the orders sought on appeal, the plaintiff claims an extension of time to 25 August 1999 for filing the amended Notice of Appeal “To the extent necessary.”

14. The solicitors for the defendant then sent a further facsimile message to the solicitors for the plaintiff, repeating that the original Notice of Appeal was incompetent, and that the incompetency could not be cured by amendment. It was also asserted that the Amended Notice of Appeal was incompetent.

15. It is in that context that the defendant’s solicitors in due course issued the application to have the Amended Notice of Appeal dismissed as incompetent.

16. Although the records of the Court do not record an order dismissing the application to set aside the statutory demand, and varying the amount of the demand, I propose to propose to proceed on the basis that the Master has made such an order. The matter was argued on that basis. I will have to return to the question of the date on which the order is to be taken to have been made.

The right of appeal

1. It is clear from s 50(2) of the Act that an appeal lay from the decision of the Master, subject to any relevant provision in the Rules.

2. If the Master’s decision is one those decisions described by r 106.05(1), then the appeal lay to the Full Court. Otherwise, by r 106.05(2)(b) the appeal lay to a single Judge. The Master’s decision was not an assessment or award of damages. The issue for present purposes is whether it was a “final finding, decision, direction, award or judgment”. Whatever the decision was, it was made or given on the hearing of proceedings, being the application to have the statutory demand set aside.

3. Section 50(1) of the Act distinguishes between appeals against final orders and appeals against interlocutory orders (I refer only to orders for convenience). As is well known, this is a distinction which has given rise to considerable difficulty. There are many cases grappling with the issue of what is a final order, and what is an interlocutory order. Rule 106.05 does not in terms draw the same distinction. Relevantly, it refers to a final decision (again, for convenience, I refer only to a decision) and on the other hand in r 106.05(2)(b) to any other type of decision. Although the distinction between final and interlocutory decisions is not drawn in terms, I consider that the language of the Rule is intended to reflect the same notion. I approach the question of whether the decision of the Master falls within r 106.05(1) on that basis.

Is the decision a final decision?

1. The Master’s decision was to refuse to set aside the statutory demand. He ordered that the amount of the demand be varied, and that the demand have effect, as varied, from the date of service of the demand: see s 459H(4) and s 459L. The result was that the plaintiff’s application to have the statutory demand set aside had not been successful. The demand continued to have effect. It continued to provide a ground for the winding up of the defendant, should the plaintiff fail to comply with the statutory demand: see s 459Q.

2. Although, in theory, there might be more than one application made to have the statutory demand set aside, any such application had to be made within 21 days of the service of the demand: s459G(2). Once that time limit had expired, no further application could be made, because the time within which to apply could not be extended: David Grant & Co Pty Limited (Receiver Appointed) v Westpac Banking Corporation (1995) 184 CLR 265. The time for making an application had expired, and so when the Master made his decision he determined, as between the parties, the validity and effectiveness of the statutory demand. His decision was that the statutory demand was valid, and accordingly the statutory demand continued to have the effect that the Corporations Law gave to it.

3. Nevertheless, certain other rights as between the parties remained unaffected. The Master did not determine that the plaintiff was indebted to the defendant, only that the demand was a valid demand. The Master did not determine that the plaintiff was insolvent, or should be wound up. That would come later, if at all, as a result of an application for a winding up order. All that the Master determined was the validity of the statutory demand. However, that was something that he did finally determine, in the sense that, subject to an appeal, the statutory demand continues to have effect under the Corporations Law.

4. In Carr and Anor v Finance Corporation of Australia Limited (1981) 147 CLR 246 Gibbs CJ said (at 248) that the test to be applied in determining whether a judgment is final or interlocutory for the purposes of rules relating to appeals was whether the judgment or order appealed from, as made, finally determined the rights of the parties. This was to be decided having regard to the legal effect of the judgment rather than its practical effect. I consider that that is the appropriate principle to be applied in this case. As I have already said, the distinction between a final order and an interlocutory order is one that has given the courts much difficulty in practice, but the only safe course forward is to endeavour to apply the appropriate principle.

5. My view is that the right in issue in the proceedings was the right to challenge the validity of the statutory demand, or, putting it a little differently, that the matter that was in issue was the validity of the statutory demand. My view is that the Master has finally determined that matter, because he has determined that the statutory demand is to continue to have its statutory effect. That issue is now concluded, as between the parties, subject to an appeal. Whatever the significance might be of the ability to bring a further application within the 21 day period, that period had expired and so no further application could be made. It is therefore my view that the order, as made, finally determined the right of the plaintiff to have the statutory demand set aside.  Once the 21 days had expired, no further challenge to the validity of the demand could be made. The order as made finally determined the validity of the statutory demand.

6. In A-Pak Plastics Pty Ltd v Merhone Pty Ltd (1995) 13 ACLC 896 the Court of Appeal of the Supreme Court of New South Wales held that an order setting aside a statutory demand was a final order. The court took the approach that the only proceedings on foot between the parties were those begun by the application to set aside the statutory demand, and the court concluded that the decision in question finally determined the rights of the applicant concerning the statutory demand. That decision dealt with a decision to set aside a statutory demand. In the present case, the decision was that the statutory demand should not be set aside. However, my view is that, properly understood, the order in question was a final order. I respectfully agree with the general approach taken by the Court of Appeal, which was to analyse with some care the right in issue and the effect of the order in question on that right. To the extent that the point at issue is open to doubt, I would in any event have followed the reasoning of the Court of Appeal, in the interests of consistency of approach in the application of the relevant provisions of the Corporations Law, and in interests of consistency of approach to the question of whether the decision in question was a final decision or not.

7. In reaching its conclusion the Court of Appeal distinguished a number of other decisions on the basis that those decisions dealt with the question of what was an interlocutory decision or order, not in the context of provisions relating to the right of appeal, but in the context of whether affidavits could be received in which facts were stated on the basis of information and belief. In that respect I also agree with the approach of the Court of Appeal. My view is that the question of whether an application is an interlocutory proceeding for the purpose of determining the form in which affidavits may be expressed raises somewhat different issues, and may produce different results, however untidy or unattractive the lack of symmetry may be.  That distinction was made by Hayne J in Mibor Investments Pty Ltd v Commonwealth Bank of Australia (1993) 11 ACLC 1,062 at 1,067. See also Jesseron Holdings Pty Ltd v Middle East Trading Consultants Pty Ltd (1994) 122 ALR 717 at 719 and Joshua Corporation Pty Ltd v KTX Technology Pty Ltd [1998] WASC 90.

8. Finally, in fairness to the parties I should add that when the matter came on before me both parties submitted that the order of the Master was a final order. I expressed some doubt about this, indicating that while an order setting aside a statutory demand probably was a final order, an order refusing an application to set aside a statutory demand might not be a final order. I  gave the parties leave to file a supplementary submission on this point. Mr Cohen, counsel for the defendant, subsequently filed a submission to the effect that the order was interlocutory. Mr Keen, counsel for the plaintiff, adhered to his original submission. Having considered the matter in the light of the further submissions from the parties, and in the light of the authorities, I have come to the conclusion that the submission originally advanced by both parties was correct. In my opinion the order of the Master was a final order.

Is the Notice of Appeal valid?

1. As the appeal falls within r 106.05(1), it is governed by r 95 of the Supreme Court Rules.

2. The appeal had to be instituted within 14 days of the decision: r 95.02(a).  On any view of the date on which the Master’s order was made, the appeal was instituted within that time. Accordingly, although the date of the Master’s order remains uncertain, there is no need to consider that matter any further. I mention in passing that it is desirable that such uncertainty be avoided.  In all cases the Court record should record the order made disposing of an application to the Court and the date of the order.

3. Rule 95.01(1) deals with the requirements for a Notice of Appeal. The rule provides that the notice must set out:

   “(1).. .......

   (a).... a brief statement of the decision appealed from;

   (b)    the grounds of appeal in sufficient detail to enable the Full Court to know what points are being relied on in support of each ground;

   (c)... whether all or part only, and if so which part, of the decision is complained of;

   (d)    the order sought by the appellant;

   (e)... in the case of an appeal brought by leave, state that fact .....”

4. The Notice of Appeal met the requirements of the subparagraphs, subject to one matter. Mr Cohen submitted that the grounds of appeal were not expressed in sufficient detail to enable the court to know what points were being relied upon in support of each ground. There is considerable force in that submission. The grounds of appeal are very poorly expressed. However, to my mind the grounds of appeal are not so deficient that the document cannot be regarded as a valid Notice of Appeal. Nevertheless, I agree that they require amendment.

5. That leaves for consideration the question of whether the fact that the Notice of Appeal states that the appeal is made “to a judge of the Supreme Court” means that the Notice of Appeal is a nullity, or whether that error is a mere irregularity capable of being cured by amendment. It was the submission of Mr Cohen that the effect of the error was to make the Notice of Appeal a nullity, and incapable of being cured by the filing of the Amended Notice of Appeal.

6. My view is that the error amounts to an irregularity, and does not make the Notice of Appeal a nullity. I appreciate, of course, that notwithstanding the reluctance of a court to decide that proceedings are void, and a clear preference to treat errors as capable of correction in the exercise of the court’s power to amend or regularise proceedings, there is a point at which proceedings or a step in proceedings must be treated as a nullity. This is so, even though r 3.05(1) provides:

   “non-compliance with any of the Rules does not render a proceeding or a step in a proceeding void.”

7. In the present case the appeal is to the Supreme Court, although it lies to the Full Court of the Supreme Court by virtue of r 106.05(1). The Full Court of the Supreme Court is not a separate court. It exercises the jurisdiction of the Supreme Court. It is the Supreme Court consisting of not less than three judges: s 5(1) of the Act.

8. I consider that the plaintiff’s misstatement in the Notice of Appeal is a mere error curable by amendment.  The plaintiff has directed the appeal to the correct court, but has misdescribed the constitution of the Court that has power to hear the appeal.  The appeal has been filed in the correct court and is directed to the correct court.  The Notice of Appeal meets (in form at least) the express requirements of the Rules.  For what it is worth, I add that no particular form is prescribed by the rules for a Notice of Appeal. No doubt the rules, and r 95 in particular assume that the Notice of Appeal will state that the appeal lies to the Full Court, but it is of some significance that there is no prescribed form requiring that that be stated.

9. I conclude that the Notice of Appeal is a valid Notice of Appeal.  The statement in the Notice of Appeal that the appeal is made to a single Judge of the Court is an irregularity only.  To the extent necessary I would have made an order under r 3.04(c) validating the Notice of Appeal and directing that it be amended to refer to the Full Court.  It is not necessary to do so because the plaintiff has exercised the power given by r 95.06 and has amended the Notice of Appeal by filing and serving the Amended Notice of Appeal.

10. I refuse to strike out the Amended Notice of Appeal as incompetent.  In my opinion it validly corrects the irregularity referred to.

What if the decision is not a final decision?

1. If the decision is not final, an appeal lay to a single Judge:  r 106.05(2).  The appeal had to be instituted within seven days of the Master’s decision:  r 106.05(3).

2. If the appeal lay to a single Judge, leave to appeal was not required. Section 50(2) of the Act makes it clear that in the case of an appeal against a decision of a Master, leave to appeal is not required. In that respect I agree with what Lander J said in BQ & HM Doe Pty Ltd v National Australia Bank [1999] SASC 124 at [10].

3. In that event, the date of the Master’s decision becomes important.  The appeal was out of time if the decision was made on 26 July.  If necessary, I would have extended the time for instituting the appeal, because of the doubt about the date of the order.

4. On this approach it would have been appropriate to strike out the Amended Notice of Appeal, because it purported to direct the appeal to the Full Court instead of to a single Judge.

Conclusions

1. For those reasons I conclude that the Notice of Appeal is valid but irregular.  The irregularity has been cured by filing the Amended Notice of Appeal.  I refuse to strike out the Amended Notice of Appeal.

2. At the hearing I understood the parties to have indicated that they wished me to make orders that would enable the matter to proceed without the parties having to incur further costs, to the extent possible.  Accordingly, I order;

   (1)... That the defendant’s application to have the Amended Notice of Appeal struck out be dismissed.

   (2)That the Amended Notice of Appeal stand as the Notice of Appeal in the matter.

   (3)... That the plaintiff have leave to amend the grounds of appeal within seven days of today.

3. I will hear the parties on the question of costs.