Lockhart & Anor v NEC Information Systems Australia Pty Ltd

[1991] HCATrans 189

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No SSl of 1991

B e t w e e n -

FRANK IVESON LOCKHART and JAN

MARK POZDENA

Applicants

and

NEC INFORMATION SYSTEMS

AUSTRALIA PTY LTD

First Respondent

GREGORY PAUL KELLY and BARRY

RAYMOND COOKE

Second Respondents

AMICRON COMPUTER SERVICES PTY

LTD (receiver and manager

appointed) (in provisional

receivership)

Third Respondent

Application for special leave

to appeal

MASON CJ
DEANE J

McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON MONDAY, 5 AUGUST 1991, AT 10.51 AM

Copyright in the High Court of Australia

Lockhart 1 5/8/91

MR G.T. PAGONE:  If the Court pleases, I appear on behalf of

the applicants. (instructed by Freehill

Hollingdale & Page)

MR M.A. PEMBROKE: If Your Honours please, I appear for the

first and second respondents.	(instructed by Hunt
& Hunt)

MASON CJ: Yes, Mr Pembroke. The Registrar has been

informed that the liquidator of Amicron Computer

Services Pty Ltd, the third-named respondent, does not intend to appear on the hearing of the

application, nor does he consent to any costs being

awarded against the company which would be payable

by him as liquidator.

MR PAGONE:  I am indebted to Your Honour. Your Honours,

this was a case which involves an application for

leave on two issues. The first is whether the New

South Wales Court of Appeal had jurisdiction to

entertain an appeal under the provisions of the

(Cross-Vesting) legislation, either State or

Commonwealth, once a proceeding had been

a multiplicity of receivers and managers is

transferred from the supreme court to the appoint

a power to do so jointly and severally.

A secondary issue arises in that respect,

namely that if the answer to the question is, "No,

power to appoint multiple receivers and managers is

to do so only jointly whether the consequence of a

joint and several appointment, at least on facts

such as those in the present case", would render

the appointment invalid.

MASON CJ:	On that second point, this Court has already refused to grant special leave to appeal, has it
not?
MR PAGONE: It has, indeed, Your Honour, although I will

take Your Honours to the transcript of that

application because what seemed to have motivated

Your Honours in doing so was the fundamental point

in the Kerry Lowe case where special leave was

refused - the fundamental point really was whether

a power to appoint multiple receivers and managers

was_ a power to do so jointly or severally and the

Court of Appeal there said that the power was to

do so only jointly and there this Court said the

issue was not attended with sufficient doubt

and -

MASON CJ: That it would not have led to an invalid

appointment.

Lockhart 2 5/8/91

MR PAGONE: Quite so, Your Honour, because in that case

there had been a simple exercise of the ordinary

rules about severance. In that case it was

perfectly possible to sever. In this case we say

that same application could not be made and,

indeed, that on this case the facts are much more

like other cases where courts have said that the

consequence is in validity and that you cannot save

the appointment otherwise. But, in any event,

Your Honour, that is, as it were, the secondary

point of the second point in the application.

May I turn, Your Honours, first to the

question about the jurisdiction of the Court and

one needs just to mention some dates. Your Honours

will see in the application book at pages 51 to 52,

there is set out the relevant dates in respect of

this matter. To that really needs to be

supplemented one date but, as Your Honours will

see, on page 52, on 27 April 1990 a summons was issued in which Amicron sought orders seeking a

variety or relief against the present

applicants - and that is not the summons referred

to in paragraph 4.

On 25 July 1990, His Honour Mr Justice Brownie

ordered that there be tried separate questions.

On 8 August 1990, His Honour Mr Justice Giles

of the supreme court decided those separate
questions in favour of the present applicants.

On 23 August 1990, the respondents filed a summons in the New South Wales Supreme Court for

to the Federal Court pursuant to the

leave to appeal and five days after that the the case

(Cross-Vesting) legislation. There is some dispute

about whether it is the State legislation that

applies or the Commonwealth legislation that

applies but nothing turns upon that.

On 21 September 1990 - and this date is

critical, Your Honours - Chief Judge Rogers, in the

commercial division, ordered:

that the proceedings be transferred to the

Federal Court.

On 18 December there was then a hearing of the

application for leave to appeal before a single

judge of the Court of Appeal pursuant to a

procedure that was agreed to between the parties

and the hearing of the application for leave to

appeal was, in effect, treated as also the appeal

itself.

Lockhart 3 5/8/91

On 19 April 1991, the Court of Appeal both

granted leave and decided adversely to the present

applicants overturning the decision of His Honour

Mr Justice Giles.

The jurisdictional question, Your Honours,

comes down ultimately to perhaps two questions, but

fundamentally whether there was anything left for the New South Wales Court of Appeal to adjudicate

upon.

MASON CJ: But, Mr Pagone, if we assume for a moment that

the Court of Appeal was right in relation to the

second question that you seek to raise, would there

be any point at all in our granting special leave

to appeal on the first point?

MR PAGONE:  Yes, Your Honour, because if the Court ruled

upon the second question, the joint and several

point question, without jurisdiction, then there is
a severe doubt as to what the effect of that

decision would be.

MASON CJ: But if it is right, if the decision is right,

what point would be gained by granting special

leave on the first question?

MR PAGONE:  As between the parties, Your Honour, it would

certainly mean that we would simply ignore it if

the Court did not have the jurisdiction to decide

upon the question at all.

MASON CJ:  You would ignore it, notwithstanding that it was

right?

MR PAGONE:  Your Honour, from our point of view, we say it

is wrong and, indeed -

MASON CJ: But the hypothesis I was putting to you was that

it was right. In other words, I was suggesting to

you that you really have to demonstrate to us that

the second point which you have regarded as a

secondary point has real substance to it in order

to persuade us to grant special leave on the first

point.

MR PAGONE:  Your Honour, I am happy to go to the second

poi~t. I did not mean to lower it in importance.

MASON CJ:  No, I do not want necessarily to take you to the

second point now, but I was just putting to you

what I see as a difficulty in the way of the first

point.

MR PAGONE:  Yes, Your Honour. Can I answer Your Honour's

point on that by saying that if the Court has made

a determination which it has no jurisdiction to

Lockhart 4 5/8/91

make at all, then to the extent that we do so at

our peril, we would none the less still be able to
ignore it because it simply has no operative
effect, but more fundamentally and more importantly

on a simple, practical basis, the proceeding has now been transferred and had been transferred to

the Federal Court.

Section 11 of the (Cross-Vesting) legislation,

in whichever system, says that all the steps taken

in the transferor court are regarded as steps

having been taken in the transferee court and the

transferee court - in this case the Federal Court -

has appellate jurisdiction in respect of the

matters which were the subject of the proceedings

in the supreme court. So that, on one view, if the

decision is simply a nullity, it would be open for
the parties to agitate it again in the
Federal Court by way of an appeal when and if they
elect to do so, and if they do not in reliance upon
the supreme court decision which, we say, is
without jurisdiction, they may not appeal the point
and find ultimately that they are not entitled to
the relief they seek. But, in any event, it places

the Federal Court in the awkward position of not

knowing whether an issue estoppel has arisen

between the parties; whether they should give

effect to the decision of the Court of Appeal in

New South Wales. We would certainly be contending

there - if special leave is not granted but without

the jurisdictional point being, as it were, ruled

upon - that there is no issue estoppel because the

point was decided without jurisdiction.

Your Honours, mindful with what you said, I

thought of dealing with the jurisdictional question

because, as it were, it arises logically first.

MASON CJ: Yes.

McHUGH J:  Does that mean, if we refuse special leave, you

will still argue in the federal system that the

decision of the Court of Appeal created no

estoppel?

MR PAGONE:  Your Honour, it really depends on what you say

when refusing, if you do - which is at the moment a

hyp9thetical possibility - but if the Court were

minded to say that it did not have to consider the

jurisdictional point at all because they were so

clear that the other point was correct, then there

would be a question about whether we could simply

ignore the Court of Appeal decision; it just would

depend upon what is said by the Court, Your Honour.

May I hand up, Your Honours, a bundle of

books. I do not propose to go through all of those

Lockhart 5/8/91

cases or references, as Your Honours will no doubt

be relieved to hear, but I thought it appropriate

to have them all gathered together and Your Honours

will see from the index the material is divided up

into four categories.

I wish to take Your Honours first of all to

the material behind tab C, the legislation. For

convenience sake, Your Honours, I shall refer to

the New South Wales Jurisdiction of Courts

(Cross-Vesting) Act of 1987 but they are materially

no different from the Commonwealth legislation. In

particular, Your Honours, can I take you to

section 6.

Now, it is common ground between the parties

that the transfer that took place here was a

transfer made under section 6(6) of the New South

Wales Act and, if it matters, it is subsection (7)

of the Commonwealth Act. That section provides

that:

The Attorney-General of the Commonwealth may

request the Supreme Court to transfer to the

Federal Court a proceeding referred to in

subsection (1) that is pending and, where such

a request is made, the Supreme Court shall

transfer the proceeding to the Federal Court.

Your Honours, it is, as I said, common ground that

it is that section - either in this manifestation

or the Commonwealth Act - that is the one that

people have acted upon and what that does is to

effect a transfer of the proceeding. That effect is cut back slightly by subsection (8) in the New

South Wales Act or section 9 in the Commonwealth

Act. As Your Honours will see:

This section does not apply to a proceeding by

way of an appeal that is instituted in the

Full Court of the Supreme Court if -

(a) the court the decision of which is the

subject of the appeal had made an order under

subsection j(l) in relation to the special
federal matter; and

(b) the Attorney-General of the Commonwealth
did not request the court referred to in

paragraph (a) to transfer the proceeding to

the Federal Court.

So that, what one sees there, Your Honours, is

that there is a carving out from the effect of the
transfer and it is a carving out that is

exceptionally limited in character. It is limited

in a number of ways. First of all, it is a

Lockhart 6 5/8/91

proceeding by way of appeal. If I pause there for

a moment and say to Your Honours there one sees for

the first time and quite clearly what the composite

expression "proceeding by way of an appeal" means.

The words "by way of an appeal" give content to a

proceeding which would otherwise be the whole thing

transferred by subsection (6). I will have to come

back to that Your Honours because that is, in

effect, what the Court of Appeal took a different

view about but if at the moment I can just note

that.

Secondly, it is such a proceeding that is

instituted. So that presupposes not something in

respect of which leave is required but something in

respect of which there has been an appeal

instituted. But more significantly, Your Honours,

are the two conditions in (a) and (b) before the

proceeding does not go across. It says in (a) that

if:

the court -

if I may refer to it as the transferor court -

had made an order under subsection (1) -

and (b):

the Attorney-General of the Commonwealth did

not -

make a request, then and only then is such a

proceeding not the subject of a transfer effected

by the section.

So that what is put as the first proposition,

and indeed quite simply so, is that what went

across to the Federal Court was everything and

there was not a proceeding within the relevant

meaning of subsection (8) that could be excluded

from the transfer and hence the Court of Appeal

could not have dealt with the matter at all.

Your Honours, going to that subsection - that is to say section 6 - is indeed the approach that

was preferred by the President of the Court,

His_Honour Mr Justice Kirby. If one turns to

page 26 of the application book one sees, at about

line 15 that His Honour said:

The only impediment to these arguments of

construction and policy relied upon by the

opponents was the exemption from transfer of

"a proceeding by way of an appeal" instituted

from a decision in the Supreme Court and

before the Attorney-General had made a request

Lockhart 5/8/91

to that Court to transfer the proceedings to

the Federal Court.

His Honour then refers to sections 6(8) and 6(9) of the State Act and Federal Act respectively. For

the purposes in the first submission it is simple

enough to say it just had gone and that there was

no proceeding by way of an appeal within the

meaning of subsection (8) to remain.

What, however, the court did was to look at

section 7(3) which is, indeed, section 7(3) in

whichever place one looks. That section purports

to preserve the institution and hearings of certain

appeals and it provides that:

Where it appears that the only matters for

determination in a proceeding by way of an

appeal from a decision of a single judge of

the Supreme Court are matters other than

matters arising under an Act specified in the

Schedule to the jurisdiction of Courts

(Cross-Vesting) Act 1987 of the Commonwealth,

that proceeding shall be instituted only in,

and shall be determined only by, the Full

Court of the Supreme Court.

There may be all sorts of difficulties with

that subsection, but for present purposes it is

sufficient if one notes that the words are

"proceeding by way of an appeal" and what the Court

of Appeal held was that proceeding by way of an

appeal means something less than a full appeal because, as I think it fair to say is probably conceded, where one needs to seek leave to appeal

so far as the New South Wales rules are concerned

there is no appeal instituted until leave is

granted. That, of course, did not occur until this

year when it was both granted and decided at the

same spot. Whilst I am on that, Your Honours, may

I just simply refer you very briefly to the

provisions of - - -

McHUGH J:  If it is 7(3), it is going to mean an appeal from

a decision and that would seem to indicate that it

must be a decision which constitutes the final

order in the proceeding rather than not.

MR PAGONE: It does, Your Honour. There are difficulties

with 7(3), and one cannot run away from either

party the difficulties in drafting, but what the

court did do was to focus quite deliberately and

narrowly upon the words "proceeding by way of an

appeal" and then said, "Well, those words are used

at times in the same section and other times the

word 'appeal' is used". There must have been a

difference for the use of the two words - of, on

Lockhart 5/8/91

the one hand, a phrase and, on the other hand, a

word - and the reason that the Court of Appeal

decided was that it meant something less.

In my respectful submission, that reason disappears entirely when one goes back to the preceding section and one sees why it is that one

has to refer to proceeding by way of appeal because

it is only that that is preserved from otherwise an

effective transfer. But, with respect,

Your Honour, I accept what Your Honour has put to

me that the use of the word "determination" does

suggest precisely that it be a final order.

I was just going to mention very briefly,

Your Honours, the point about there being no appeal

where leave is required until leave is granted.

The relevant provisions, which are again extracted in the folder behind tab 20, are Part 51.3, which

provides the mechanism for the making of an appeal:

An application for leave to appeal ..... shall

be made by summons.

Then, 51.4 provides for the time for the appeal.

Part 51.5 prov~des that:

An appeal to the Court of Appeal shall be

instituted by filing in the registry of the

Court of Appeal, a notice of appeal.

So that we have there a complete and careful code

of what constitutes the institution of an appeal

for the purposes of an appeal in New South Wales to

the New South Wales Court of Appeal and leave to

appeal is not that.

Your Honours, the other judge of the Court of

Appeal that delivered reasons with his judgment is

Mr Justice Meagher and his reasons on this point

appear in the appeal book at pages 45 to 46.

Your Honours will see at the bottom of page 45 that

he articulates, at about line 46:

The general policy of the legislation is that

an order transferring proceedings from one

court to another is not to prejudice any appeals on foot at the date of transfer.

He then refers to section 7(3) only.	Then at
page 46, at about line 31 he says:

If that question -

in other words, what is comprehended by the meaning

of the words "proceeding by way of appeal" -

Lockhart 9 5/8/91

be answered in the affirmative, there is

jurisdiction. Whilst it is true that a notice	jurisdiction; if not, there is not
of appeal is not the same thing as a summons for leave to appeal, it is also true that a
summons for leave to appeal is, where it is
refused, the first step in the appellate process. Bearing in mind the evident intention of the legislation, I am of the view that the expression "proceeding by way of an
appeal" should be construed as covering all
the steps in the appellate process, whatever those steps may happen to be in a given case.

So that, what he says is that for the purposes of

section 7(3) "proceeding by way of an appeal"

extends to something less than an appeal.

Your Honours, in support of the application

for special leave it is said that that is just

wrong and that if one looks at section 6 one sees

precisely what is meant by "proceeding by way of an

appeal". What is carved out from transfer is

really quite narrow. It had been transferred;

there was nothing left to transfer. That is to
say, there was nothing left that could have been
the subject of the appeal. It is also said that

the decision fundamentally runs counter to the
evident policy and scheme of the legislation.

I have already noted section 6, Your Honours, which is the one that actually effects the transfer

and it contains a very precise code for what is not

to be transferred in subsection (9). It is

perfectly clear that if the supreme court says,

"Well, I don't think.it ought to go", for one

reason or another, then it may make an order under subsection (1), or if the Attorney-General has not given the letter then it will not be transferred.

When one then looks at section 11, one sees

that section 11(3) of the Act has the effect of

making all of the steps, including all

interlocutory decisions, of the transferor court as

those of the transferee court.

Section 4(1) has the effect of giving the

Fed~ral Court all necessary appellate jurisdiction and, just as any interlocutory decision against the

parties, this issue could have been the subject of

a subsequent appeal.

It is perfectly clear, in my submission, that

what section 7 is designed to do is to preserve

from transfer the whole of proceedings where the

only points in the proceedings are things that have not been transferred. Indeed, the only reason that

Lockhart 10 5/8/91

one needs section 7 is to cut back the otherwise

all-encompassing effect that section 4 would have

had. Section 4 would otherwise have given full

appellate jurisdiction to the Federal Court from

decisions of the supreme court and what section 7

is plainly designed to do is to preserve from

transfer very limited classes of proceedings and it

would simply be contrary to the policy to say to a

Federal Court, "Well, this is a proper case for you

to decide but some of the interlocutory steps

you're not going to decide because the way we

interpret section 7(3), in effect, deprives you of

that jurisdiction".

Your Honours, I also say that the filing of

summons for leave to appeal is not a proceeding by

way of an appeal. I referred the Court to a number

of matters and I do not wish to review them, but I

should refer Your Honours to section 103 of the

Supreme Court Act which Your Honours will find at

tab 18. Your Honours will see that that section,

which is the section that permits an appeal from a

single judge to the Court of Appeal on an

interlocutory matter, provides that:

An appeal shall, by leave of the Court of Appeal, lie to the Court of Appeal from a

decision in proceedings in the Court of any

question or issue ordered to be decided

separately from any other question or issue.

That is the jurisdictional foundation upon

which the Court of Appeal had to proceed in order
to hear the matter at all because otherwise

section 7 of the (Cross-Vesting) legislation would

have nothing to preserve at all. That section

presupposes a continuing proceeding in respect of

which the separate question has been decided and
which is the subject of an appeal. Here, that had
gone and it is said the whole substratum which

would have given the Court of Appeal jurisdiction

has also gone with it.

It is, Your Honours, also curious, in my

submission, that the Federal Court should be denied

the jurisdiction, as it plainly would be by this

way, of deciding a matter which is plainly an

int~rlocutory matter and upon which it will need to

decide in due course.

DEANE J: What if leave had been granted and an appeal had

been lodged though?

MR PAGONE: If the appeal had been instituted - - -

DEANE J: What my question was directed to is, all your

arguments of convenience of policy and so on would

Lockhart 11 5/8/91

apply equally to this case if leave had been

granted and the appeal had been filed.

MR PAGONE: Not all, Your Honour, no.

DEANE J: Well, which ones would not?

MR PAGONE:  The one that relies upon section 6 does not and

really one does see the scheme in section 6,

Your Honour, because section 6(1) begins that:

Where a matter for determination in a

proceeding that is pending in the Supreme

Court is a special federal matter, the Supreme
Court shall transfer the proceeding to the

Federal Court unless the Supreme Court makes

an order that the proceeding be determined by

the Supreme Court.

Now, it provides for the making of an order by

the supreme court, in effect, saying "No, we won't
transfer it". In any event, the transfer is

formally effected by an order of the supreme court

in subsection (6) so that where a transfer is being

contemplated, the most obvious procedure to follow

is to say to the supreme court, "Well, wait a

minute, but you shouldn't transfer it because of

this appeal point and it raises matters so

important to State law that you should say it ought

to stay here", and so on. Even then, Your Honour,

there would be a difficulty about whether the

matter would be transferred if there had been an

order simply transferring the proceeding with an

order cutting it back. That problem might arise by

subsection (8) but, mercifully, one does not have

to consider that question because that is just a

problem of the drafting of the legislation that has

no relevant operative effect here. But, in answer

to Your Honour's question, the first proposition is

that once an order for transfer is made, it is just

gone and - - -

DEANE J:  I follow what you are putting. It seems to me,

though, that in terms of policy and common sense

there is little to be said for distinguishing

between an application for leave to appeal and an appeal in a context where, among other things, it

will affect the symmetry of the overall scheme in

so far as, if you have an automatic appeal in the

Federal Court and you need leave in the supreme

court you will have, as it were, a different effect

of the legislation and problems arising as to what

happens after transfer.

MR PAGONE:  Your Honour, to the extent that that is a

problem, it is a problem that may be compelled by

the provisions of section 6 because what it says is

Lockhart 12 5/8/91

that it is the proceeding that is transferred and

unless it can be said that the appellate thing - if

I may use that neutral word - is a separate

proceeding, or a proceeding separate from the thing

being transferred, then the force of the operation

of the order is that it just goes. That is why,

Your Honour, with respect, one says that the

supreme court when deciding whether to transfer, as
it must do under subsection (6), should perhaps

say, "Well, I'll transfer this but I won't transfer

the appellate proceeding" and then make an order

under subsection (1).

But, Your Honour, there is clearly there a

symmetry, a fairly carefully defined symmetry, and

one which would work perfectly sensibly. The

difficulty now, Your Honour, is this: that on a

Court of Appeal decision, one preserves from

transfer anything in respect of which a mere

summons is filed and when one bears in mind that

this procedure is a procedure that applies, as I

understand the procedures in New South Wales on all

interlocutory matters where leave is required, the

consequence is that a litigant can simply file the

summons and notionally have that matter - that

interlocutory matter - preserved from the transfer.

DEANE J:  Do you need leave to appeal from an interlocutory

matter in the Federal Court?

MR PAGONE:  My understanding is you do, Your Honour, yes.

If one did not, though, my submissions would not

alter.

Your Honours, that is all I desire to say

about the jurisdictional point. If I may turn now

to the joint and several question. This case is

one involving on the face of it an interpretation

of a debenture charge, and that debenture charge

Your Honours will find beginning at folio 62 of the

application book.

The relevant clause is clause 8(a) which

Your Honours will find at page 73, and it provides:

At any time after the moneys hereby secured

become payable the Mortgagee may appoint in

writing any person or persons to be a Receiver

or a Receiver and Manager or Receivers or

Receivers and Managers (which person or persons is and are hereinafter referred to as

"Receiver").

So it plainly contemplates the appointment of a

multiplicity of receivers and managers.

Clause 8(b) contains a similar but different

Lockhart 13 5/8/91

provision, but it is 8(a) that is the relevant one

for present purposes.

It is plain that there is no express provision

anywhere that this power of appointment of more

than one receivers and managers is a power to

appoint them jointly and severally. The deed is

simply silent, that is to say expressly so, on that

question.

The deed of appointment Your Honours will find

at folio 87 of the application book at line 45.	I
should first of all take Your Honours to line 20 where Your Honours will see that the persons

Messrs Kelly and Cook are defined as the receivers, and then line 45:

The Mortgagee doth hereby appoint the

Receivers jointly and severally to be
Receivers and Managers of the whole of the

undertaking, property -

et cetera. So there is no question about the

appointment purporting to be one appointment and an

appointment that is joint and several.

Now, Your Honours, in the absence of an

express provision in the deed that the appointment
could be joint and several, the Court of Appeal has
held that it should be inferred in the absence that

it could be a joint and several appointment and

that, in my submission, Your Honours, is a

fundamental reversal of the law as it had been

hitherto thought.

May I just mention folio 30 where the

President of the Court of Appeal respectfully

refers to and sets out the passages from Lightman &

Moss and Picarda, and if I can just quote the

Lightman & Moss passage:

"It is a question of construction of the

debenture whether the appointer can appoint

more than one person to act as joint

receivers. In the absence of some indication

of a contrary intention, the singular in the

debenture should be construed as construing

the plural ... and accordingly the power to

appoint a receiver should be construed as a

power to appoint joint receivers.

And then the next sentence which is critical,

Your Honours:

Express provision in the debenture is required

to authorise joint receivers to act severally

as well as jointly."

Lockhart 14 5/8/91

That proposition, Your Honours, is not found only

in that work, but in other works. I will not take

Your Honours to it but in O'Donovan's book one

finds the same proposition, and one sees that it

has been referred to and applied in all sorts of

cases. Recently the decision of His Honour

Mr Justice Davies in R.J. Wood v Sherlock which I

believe is still unreported but that decision

itself has been referred to and applied in other

courts. So we have a Federal Court decision

applying that. It was applied in Wright's Hardware

v Evans in 1988. It was applied in Kerry Lowe v

Isherwood and, as Your Honour mentioned to me at

the outset, the Kerry Lowe decision was the subject

of an application for special leave to appeal,

ironically a year ago tomorrow, when special leave

in that case was refused. If I may hand to the

Court copies of the transcript of that

application -

MASON CJ:  What is the point in our referring to that?

MR PAGONE:  Two purposes Your Honours. The first is that

passages from the transcript show that, in my

respectful submission, the court was of the view

that the Kerry Lowe decision on the substantive

point of construction, in other words that - - -

MASON CJ: Did not the Court say the decision was correct,

or not attended with sufficient doubt, to be more

accurate?

MR PAGONE: It did, Your Honour, yes.

MASON CJ:  Now, the decision was that the appointment was a

valid appointment -

MR PAGONE: That is correct, Your Honour.

MASON CJ:  - - - the applicant contending that the

appointment was invalid?

MR PAGONE: That is correct, Your Honour.
MASON CJ:	How does that really help us?
MR PAGONE:	Because, in my submission, what is seen from the

ar~µment between the court and counsel the court

was not persuaded with the argument about severance

because even if that was a good point, the

fundamental other concern would never arise and was

correct. What the court was, in fact, saying, in

my submission, was that henceforth the decision in

Kerry Lowe, as a matter of drafting, will now be

the decision that people will be acting upon.	And
in response to the question - - -

Lockhart 15 5/8/91

MASON CJ:  But that was the remark made during the course of argument.

MR PAGONE: Correct, Your Honour.

MASON CJ: It is not a reason for the decision. It is not

part of the court's reasoning.

MR PAGONE:  I do not say that it is, Your Honour, no. But I

do wish to try and press this point, Your Honour, that in so far as members of the court indicated

that they were minded to the view that the decision
on construction in Kerry Lowe was correct, then

what we have now is an appeal on the opposite construction which I would wish to contend is

implicit from what was said in Kerry Lowe cannot be

correct.

MASON CJ: Yes.

MR PAGONE: That was my point, Your Honour, and the relevant

passages appear - - -

MASON CJ:	We can read that for ourselves.
MR PAGONE:	May I just refer to the page numbers?

MASON CJ: Yes.

MR PAGONE:  Pages 7 and 8. Your Honours, the only other

case in which the point has been decided in the

same way as the Court of Appeal has decided is a

decision in New Zealand, a very recent decision in

New Zealand, of DFC Financial Services v Samuel,

(1990) 3 NZLR 156, ~hich is tab 15.

But, Your Honours, one now has this

awkwardness. One has two decisions of the Court of

Appeal saying what is respectfully submitted is

inconsistent, prima facie rules of construction

where a deed is silent, and the relevant passages

where it appears in the present judgment

Your Honours will find the President at folio 30 through to folio 34, particularly lines 35 to 59;

and His Honour Mr Justice Meagher particularly at

folios 42 and 43 where what appears to have weighed

greatly upon Their Honours' minds was the practical

sig~ificance.

None the less, Your Honour, we have two

decisions of the Court of Appeal in New South Wales

going in different directions. We have a decision

of the Federal Court going in the opposite

direction from the present decision, and we have a

decision in the Western Australian Supreme Court
which again goes the opposite way from the present

decision. There must now be the plain difficulty

Lockhart 16 5/8/91

about knowing which decision is likely to be

followed and the law possibly being different,
depending whether you commence proceedings in the

Federal Court or outside of New South Wales, and possibly depending upon the composition of the

court in New South Wales. The significance of the

question, Your Honours, it is submitted, is quite

substantial. There are thousands of these deeds throughout the country being acted upon more and

more every day. It is an area where it is

absolutely critical that there be certainty in

knowing what the rules of construction are.

DEANE J:  In any of the earlier decisions which you say

favour your argument was there an express power to

appoint more than one receiver?

MR PAGONE:  No, but there was a power to appoint more than

one receiver, in effect, because there was a -

DEANE J:  I follow that by reading where "singular" is

plural.

MR PAGONE: That is a difference between the two. But,

Your Honour, with respect, we say that that is not

a difference that goes anywhere, vis-a-vis, this

judgment.

DEANE J: Well, is it not the point on which the President's

judgment turns?

MR PAGONE:  No, Your Honour. The point upon which the

President's judgment turns is the tactical reality,

as he saw it, and indeed the convenience, of the

appointment of receivers in modern life. Perhaps

if I take Your Honours to -

DEANE J:  What I had in mind was the paragraph commencing on

page 31 where His Honour has pointed to the fact

that the deed expressly authorizes more than one

and then defines the question in the case.

MR PAGONE:  Your Honour, I cannot take issue with the fact

that this deed does have that difference.

DEANE J: But what I was suggesting to you was that the

President's judgment turns on that very difference.

MR PAGONE:  Your Honour, with respect, I would say that it

does not because what His Honour really said is

that the reason that that makes a difference is the

considerations of - - -

DEANE J: In the next paragraph he says he is -

assisted in reaching my conclusion -

Lockhart 17 5/8/91

but if you read that paragraph, is he not saying

quite clearly and precisely that it is the express

contemplation of a multiplicity of receivers and

managers which is the question in the case on which

his judgment turns?

MR PAGONE:  I accept what Your Honour says to me that that

is the question in the case, but the formulation of

the question, Your Honour, does not tell us what

factors were operative in His Honour's mind when

reaching the decision, and if one finds that - - -

DEANE J:	I follow the point you are making.
MR PAGONE:	Indeed, what one finds as being operative really is at page 34, particularly, if I can take
Your Honours to about line 54, where His Honour
said:

In the practical commercial context in which the debenture charge was drawn, the parties

should be taken to have envisaged the possible

need of a number of receivers and managers,

any one of whom could not be expected to have

done everything for himself. In the large

company collapses which have so marked the

Australian corporate scene in recent years, it

has not been unusual for the Supreme Court to

appoint a number of receivers, empowered to

act severally, pursuant to the power

provided -

and so on. Then he talks about the practical

realities of -

signing cheques; executing documents and

otherwise managing the affairs of the company

may be performed more expeditiously

if ..... performed severally.

Your Honour, it is submitted that there is an error

contained in the application of those

considerations because there is no question about

signing cheques and engaging in all of these purely

ministerial matters as being relevant to a joint or

several appointment for a number of reasons, one of

which is that the deed itself unquestionably

cat~red for just that possibility by permitting the appointment of agents, by permitting the delegation of some of the powers to other people. And in any

event, it is submitted, it is wrong in principle

because what one is concerned about here is the

question of authority to make decisions and not who physically goes out to minister them. It has never been the case that the receiver must himself

personally go and collect the rents, but it is

understood that it is the receiver that is

Lockhart 18 5/8/91

physically responsible for doing so. So that the

very factors that His Honour relies upon no doubt

pressed by my learned friends, simply do not have

the consequence that His Honour thought were

significant.

But what is plain, Your Honour, is that the

operative reasons for reaching a conclusion, a
conclusion of widespread and universal application

which, in my submission, runs counter to all of the

cases thus far, are those found there; and

similarly Mr Justice of Appeal Meagher at folios 42

to 43, where His Honour says perfectly clearly

beginning at line 36:

On the question whether the provisions of

clause 8(a) empowers the appointment of

several as well as joint receivers, the charge

itself is silent. In order to interpret it,

therefore, one must turn to a consideration of

commercial purpose of appointing multiple

receivers. To make multiple appointments -

either of receivers or of liquidators - is

common.

And then two lines from the bottom:

The commercial purpose behind this practice

must be that it is more convenient to conduct an expeditious receivership or liquidation if

decisions can be made by one only of the

appointees.

And so on along similar vein. But it is perfectly

plain, Your Honour, that we now have a new rule of

interpretation and it is a new rule of

interpretation that is not confined, and certainly

so far as His Honour Mr Justice Meagher is

concerned, with whom I should add that the other

member of the Court of Appeal expressly

agreed - one does not know whether he is

disagreeing with the President as well; he is

silent on that question - but it is certainly a

consideration that would be operative in all such

deeds and therefore one really has for the first

time the clear possibility of conflict of the rules

applicable depending upon the court that you happen

to-pe in.

Your Honours, I was saying something about the

significance of the decision. It does plainly

operate in a widespread manner across a vast

number. It is contrary to the law as it was

hitherto thought to be - - -

MASON CJ:  I think you have made that point, Mr Pagone.

Lockhart 19 5/8/91

MR PAGONE:  Your Honour, the only other point I should say

on this matter is then that the power of

appointment of joint only or joint and several is

fundamentally different because from the point of

view of the mortgagor it does expose the mortgagor

conflicting decisions, and all of the factors that	to additional risks, additional possibilities of to 11 of the application book. That leaves only
the question which is the consequence of
invalidity, whether one can have pro tanto
invalidity.

The Kerry Lowe case, Your Honours, was very

different. May I just very briefly take

Your Honours to what was said by Justice of Appeal

Priestley at page 618 of the judgment. There the

appointment is seen at page 617 about ten lines

down and one sees that it is -

HEREBY APPOINTS ANTHONY GARDINER SHERLOCK AND

PAUL DEAN RAMSBOTTOM ISHERWOOD ..... to be the

joint receivers and managers and each of them

to be the several receivers and managers.

At page 618 His Honour says about two-thirds of the

way down:

As to proposition (iii), it may well be

applicable to a case where the deed of

appointment is to be construed as showing that

the appointment was of receivers and managers

jointly and severally or not at all, but in a

case such as the present, where the

appointment in ~y opinion purported to effect

distinct appointments of the first defendants

as joint receivers and managers, and then of

each of them as several managers, the

proposition can have no operation. In the

present case the position seems to me to be in

substance the same as if there had been one

document appointing joint receivers and

managers and another -

another document -

appointing them severally.

-

That is possible, Your Honour, because of the terms

of the appointment itself. On the present case we

have one appointment of both of them in both

functions, and that unified appointment is the one

that we find more readily in all of the other cases

where the consequence has been that you cannot

sever for the reasons that His Honour

Mr Justice Davies articulated in Wood, and which

were followed in Wright's case, there has to be

Lockhart 20 5/8/91

strict observance and so on. If Your Honours

please.

MASON CJ:  The Court will take a short adjournment in order
to consider the course it will take in this matter.

AT 11.52 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.58 AM:

MASON CJ:  The Court need not trouble you, Mr Pembroke.

In support of this application for special

leave, the applicants raised two points: the first

one of jurisdiction, the second one of substance

relating to the validity of a joint and several

appointment of receivers and managers.

As to the first question, Justice Deane and I

are of the view that the decision of the Court of

Appeal is not attended with sufficient doubt to

justify the grant of special leave to appeal.

As to the second question, we are of the

opinion that the resolution of that question does

not, in the circumstances, raise a question of

general principle. The decision turns on the

interpretation of a· particular provision in the

deed between the parties and, in saying that, we

have it in mind that the deed made express

provision for the appointment of more than one

receiver and manager.

In the circumstances, we do not consider that that question is appropriate for the grant of

special leave to appeal and we would therefore

refuse the application.

McHUGH J:  I do not think that the actual decision of the

Court of Appeal is attended by sufficient doubt to

warrant the grant of special leave. If the Court
of Appeal did not have the jurisdiction to

determine the question, that point can be raised in proceedings in the Full Court of the Federal Court,

but since I am of opinion that the actual decision

of the Court of Appeal was clearly correct, it

follows in my opinion that the Full Court would

come to the same conclusion. In the circumstances,

I do not think that the case is a proper one for the grant of special leave to appeal.

Lockhart 21 5/8/91

MASON CJ:  The order of the Court therefore is that the

application for special leave to appeal is refused.

MR PEMBROKE:	I ask for costs, Your Honour.
MASON CJ:	You do not oppose costs, Mr Pagone?
MR PAGONE:	No, Your Honour.
MASON CJ:	The application is refused with costs.

AT 12.00 NOON THE MATTER WAS ADJOURNED SINE DIE

Lockhart 22 5/8/91