Manfal Pty Ltd (in Liquidation) v Trades Practices Commission

[1990] HCATrans 313

d-C\

HIGH COURT OF AUSTRALIA

In Chambers

MR JUSTICE TOOHEY

No. P 42 of 1990

MANFAL PTY LTD (In Liquidation)

and

TRADES PRACTICES COMMISSION AND OTHERS

TRANSCRIPT OF PROCEEDINGS

PERTH

2.15 PM, THURSDAY, 20TH DECEMBER 1990

P42/90

AD 1 ?n.1? on

78B,PR22,2,15

TOOHEY J: Yes, Mr Martino?

MR MARTINO:  Thank you, your Honour, and thank you for sitting

at such short notice to hear this application.

TOOHEY J:  I thought it would be surprising if this close to

Christmas I escaped entirely!

MR MARTINO:  I have prepared an outline of my submissions and

there are two identical copies here.

TOOHEY J: Yes, thank you.

MR MARTINO: This is an application seeking a stay of the

effect of orders made by the full court of the Federal Court which allowed an appeal against the decision of Mr Justice Lee, the effect of which was to require the first respondent, the Trade Practices Commission, to seek leave of the Supreme

Court of Western Australia under sub-section (2) of section

372 of the Companies (Western Australia) Code before

proceeding with its action against the applicant in the

Federal Court.

That action is an action under section 52A of the Trade

Practices Act, alleging that Manfal Pty Ltd, the applicant,

which was a building company engaged in unconscionable

conduct. That action was commenced on the 30th of June 1989

and on the 15th of June 1989 the Supreme Court of Western

Australia had appointed a provisional liquidator to Manfal

and, subsequently, on the 6th of September the Supreme Court

of Western Australia ordered that the applicant be wound up.

In October the applicant applied for a stay of the action

under section 371(2) of the Companies (Western Australia)

Code, which application was at first instance successful, but

that decision was reversed on appeal.

TOOHEY J:  Mr Martino, what would be the effect of ·simply

staying the judgment of the full court of the Federal Court?

MR MARTINO:	The orders
TOOHEY J:	What that does is allow the appeal from Justice Lee

- or is there more to it than that?

MR MARTINO: There is more to it than that, your Honour. I

would refer you to the order of the full court, which is in

the papers in support of the application for special leave,

and it is exhibit BD7 to the affidavit of Bruce Stevenson

Dodd? sworn the 3rd of December 1990. You will see that

order number 2: " ... the orders appealed from" ( they are the orders of Mr Justice Lee) "be set aside and in lieu thereof it

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be ordered that the motion by Manfal be refused, with costs".

The orders of Mr Justice Lee is exhibit BD4 to that same

affidavit and those orders were:

"l. The direction in respect of the first

respondent in the primary matter be vacated.

"2. The matter in respect of the first respondent

be stayed until such time as leave is obtained
by the applicant pursuant to section 371(2) of

the Companies (Western Australia) Code."

So what we are seeking is a stay on the order setting aside Mr

Justice Lee's orders.

TOOHEY J:  So, effectively to reinstate the order of Mr

Justice Lee for the time being?

MR MARTINO: Until the application for special leave is

disposed of, yes.

TOOHEY J: Yes; I understand the implications of the

variations that is sought of the directions given by Mr

Justice French following the order of the full court.

MR MARTINO:  Yes, your Honour.

TOOHEY J: Yes. Sorry - I took you away from your chronology.

MR MARTINO: On the 3rd of December the applicant applied to

the High Court for special leave to appeal from the decision of the full court. That application has not yet been given a date. I am informed it is likely to be given a date around March or April of next year, but no date has yet been fixed. On the 11th of December the applicant applied to the Federal

Court for a stay of the full court's orders.

On the 18th of December Mr Justice French dismissed that

application. He dismissed the application, firstly, because

his Honour held that he did not have jurisdiction as a single

judge to order a stay of the decision of the full court of the

Federal Court. His Honour's decision was that it was not a

matter within his jurisdiction and that any such application

must be heard by the full court of the Federal Court.

This application is not an appeal against that decision;

what we are saying is in all the circumstances it is not practical for us to seek that, and that is why we are applying to this court for that stay.

This court clearly does - as I said, you as a single justice of this court clearly do - have this jurisdiction.

TOOHEY J:  I don't think you need to persuade me of that,

although you might need to persuade me of the circumstances

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that warrant the exercise of the jurisdiction - but just

before you leave the judgment of Mr Justice French, you said

that his Honour held that he had no jurisdiction as a single

judge. I rather thought you were going on to suggest that he

said something else as well?

MR MARTINO:	He did, yes.
TOOHEY J:	What was that?

MR MARTINO: He said that if the application had been

differently framed, if the applicant had applied not for a stay of the decision of the full court of the Federal Court

but had applied for a variation of the directions given in the action, the effect of which would be to "vary the programming orders", and I am now quoting from page 10 of his decision:

"It would be open to the court in the exercise

of its original jurisdiction to vary the

programming orders ... (reads) ... any interference

with the orders·of the full court."

His Honour held:

"But in my opinion, and notwithstanding the

concerns of the liquidator, no such variation

should be ordered ... (reads) ... require that the

programming directions made by his Honour

should stand."

TOOHEY J:	So you really have an expression of opinion on the
merits?
MR MARTINO:	Yes.

TOOHEY J: Yes.

MR MARTINO: With respect to that, your Honour, we say first	of all we maintain that it was not appropriate for us to
effectively seek a stay of the decision of the full court of the Federal Court. by varying programming orders in the action
that was on foot. The substance of what we were seeking was a
stay and what we are still seeking is a stay, and it is
appropriate for the application to be for a stay.
The principles upon which an application for a stay are to be considered are well known. The principles upon which an application for a variation of programming orders in these
circumstances should be considered are unknown, and it can only be considered, in my respectful submission, on the basis
of an application for a stay and the principles that are
applying to such an application.
TOOHEY J:  You do not seek, at least in formal terms, any stay
of the directions - or do you?
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MR MARTINO:	We do.
TOOHEY J:	You do?
MR MARTINO:	We do seek a stay of - - -

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207B,MP6B,2,25

MR MARTINO (Continuing): - - - stay of directions, having

given the matter some further thought. There are some directions that were made by his Honour after his decision was

delivered, as to filing of defence and discovery, and it

seems, having given the matter further thought, that if the

action is stayed as Mr Justice Lee originally ordered then it would be prudent to seek also a stay of the directions of Mr Justice French so that the applicant is not in a position of

not complying with orders against it which are on foot.

TOOHEY J: My question to you was whether you seek in formal terms the stay of the directions, and you answered "Yes", but

doesn't the summons seek in paragraph' 2 an order that the

directions made by the Federal Court be varied to give effect

to the stay?

MR MARTINO: Yes.

TOOHEY J: I don't know whether anything turns on it or not. It may be one thing in terms of the power of this court to grant a stay of an order in proceedings below; it may be

another as to whether this court can vary directions.

MR MARTINO: Yes; I don't think it can. It may be that this

court can but would not wish to vary directions given in

another court. On the other hand it is not uncommon, and this

court clearly does have power, to stay an action including

staying the effect of directions that have been given in that

action - so it is my respectful submission that seeking a

variation of orders of the Federal Court is not appropriate.

What we should seek is a stay of orders, including a stay of

the order of Mr Justice French, and I have re-drafted draft orders which give effect to that - if I could simply tender

those at this stage?

TOOHEY J: Yes.

MR MARTINO:  The net effect is the same, but what we are

seeking to do is get a stay of those directions.

TOOHEY J: So can I take it that paragraphs 1 and 2 of the

draft orders correspond, in effect if not in express terms,

with sub-paragraphs (a) and (b) of paragraph 1 of the motion?

MR MARTINO:  Yes, your Honour - and I've added to it, in line

three, " ... and the directions made by Mr Justice French on 18

December 1990 be stayed".

TOOHEY J: I see. Now, would that still leave on foot the directions given by Mr Justice Lee except to the extent that they were varied, or do you argue that Justice French's directions really are comprehensive?

MR MARTINO:	Yes, that is the effect of it, in my submission.
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Mr Justice French's directions are the directions with which

the applicant at this stage must comply.

TOOHEY J: Yes, thank you.

MR MARTINO: The exercise of the discretion to order a stay in

these circumstances clearly requires that the applicant show

that there are extraordinary circumstances which justify the

stay prior to the hearing of the application for special

-leave, and the often-quoted judgment of his Honour Mr Justice

Brennan in Jennings Construction Ltd v Burgundy Royale appears

in paragraph 3.1 of my outline, where he said:

"In exercising the extraordinary jurisdiction

to stay the following factors are·material to

the exercise ... (reads) ... and, fourthly, where

the balance of convenience lies."

It is my submission in the context of this appeal, which

concerns an interlocutory order to stay the action against Manfal under section 371(2), the subject matter of the litigation that is required to be preserved is the stay

itself, so that unnecessary legal and liquidation costs are

not incurred and whilst, generally speaking, this court will

only exercise its discretion to order a stay where it is

necessary to preserve the subject matter or the integrity of

litigation that is not the only circumstance in which this

court will exercise that jurisdiction; it will also do so, as

was done in Grasby v The Queen," ... where it is necessary to

do so to enable the applicant to present his application for

special leave as the proceedings stand".

The nub of the extraordinary ciicumstances which the

applicant puts forward is that the application is made by the

liquidator of the company which is alleged to have engaged in the unconscionable conduct. The company is insolvent, its

debts are estimated by the liquidator to be approximately $15

million; its assets are estimated by the liquidator to be

approximately $2 million, leaving a shortfall of $13,721,831.

That appears in paragraph 11 of the affidavit of David John

Coates, sworn 11 December 1990.

The effect of that is that as at 25 November 1990,

subject to the costs of the administration of the winding up

and the claim by the Trade Practices Commission in this

action, the liquidator estimates a dividend of only 11 cents

in the dollar may be made to the unsecured creditors of

Manfal.

Now, in those circumstances it is' submitted to you that that small dividend to the creditors of the company, who are not in any sense a party to the action - the complaint of the

Trade Practices Commission - should be preserved until the

application for special leave can be determined. If it is not

then the applicant is going to have to spend substantial

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amounts of money in preparing a defence to a lengthy and

detailed statement of claim and in preparing discovery of

documents where the discovery of documents is substantial,

involving some 12,000 boxes of papers, and which is going to

incur not only legal costs but substantial administrative

costs from the of~ice of the accountant liquidator.

TOOHEY J: I take it that it is not suggested those costs are

going to exhaust the moneys available for distribution but

rather that they will make a substantial impact upon that

amount?

MR MARTINO:  Yes, your Honour. That is the nub of the

extraordinary circumstances that are presented to you.

Now, as to the other four factors that are referred to in

that extract

TOOHEY J: Just before you leave that - that is putting it

rather differently to the impression I gained, rightly or

wrongly, from the papers that were filed in support of the

application. I rather took the applicant to be saying that if there is no stay then if the applicant gets special leave to appeal (jumps that hurdle), that if the appeal is successful

(jumps that hurdle) and gets to the Supreme Court and leave

is refused - - -

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LA3A.O22.2.35

TOOHEY J (Continuing): - - - and leave is refused to the

commission to proceed with its action ( and again I

interpolate, jumps that hurdle), then in effect the refusal of
leave has been to a large extent negated by the proceedings

that have gone on in the meantime.

MR MARTINO:	Yes.
TOOHEY J:	Which isn't quite the way you are putting it at the
moment.	·
MR MARTINO:	Yes, your Honour - I respectfully adopt what you
are saying - -

TOOHEY J: It's not what I am saying, it's what I took from

what the papers said.

MR MARTINO: Thank you; I respectfully adopt that that is what the papers do disclose, and what my submission is that that on

its own is not extraordinary. That is the effect of giving effect to the order of the full court of the Federal Court of

Australia. What is extraordinary is loss to unsecured

creditors who are not in any sense the subject of the

complaint of the Trade Practices Commission in its substantive

action against the applicant under section 52A of the Trade

Practices Act.

TOOHEY J:  And this, I take it, is because it's a liquidator's

application, in practical terms?

MR MARTINO:	Yes, your Honour.
TOOHEY J:	Could I just ask you this, Mr Martino, by way of

information: What is the position with the action so far as

it affects the other defendants, those who are also

respondents to this application?

MR MARTINO: As I understand it, your Honour, the other

defendants applied for an order staying the action against

them after the original order of Mr Justice Lee staying the

action against Manfal. That application was not successful and the action against the other defendants or the other

respondents ~s proceeding and, as I understand it, is

substantially ready to be entered for trial.

TOOHEY J: Yes, thank you.

MR MARTINO: Your Honour, the other factors to which I will

now refer are, firstly, whether there is a substantial

prospect that special leave to appeal will be granted. The reasons for the application for special leave to appeal - the prospects of success are set out in paragraphs 4 and 5 of the

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affidavit of Bruce Stevenson Dodd sworn the third day of

December 1990. The issues in short are

TOOHEY J: I understand the issues, Mr Martino, I think and I

don't know that you need to spend much time on that aspect

because the respondents' summary, while you could hardly say

it goes so far ·as to accept that special leave will be granted, at least concedes that there is an arguable

proposition to be put. I think you might just leave that to

see what Mr Bhojani says about that aspect of it and I will

give you the chance to reply if necessary.

MR MARTINO: · Thank you, your Honour.

The next point that is relevant is· whether the applicant

should have taken any other steps in the court below, and

again it seems that the respondent does not take any point

there so I won't deal with that.

The next point is whether the TPC will suffer any loss if

a stay is granted. Now, the TPC does have a public duty to

enforce the law and that is a matter that it has raised in its

summary. It is my submission that in the circumstances of this case, where the application is made by the liquidator of

a company which is in the process of being wound up by an

order of the Supreme Court of Western Australia, and so is not

engaging in the activities that are alleged against the

company by the Trade Practices Commission in the substantive

proceedings, it cannot in any sense suffer a loss because all

of the conduct complained of is not continuing - so it cannot

in any sense be suffering from a loss.

TOOHEY- J: Tell me, when the matter goes before the Supreme

Court for leave to proceed - I certainly don't intend becoming

involved in that aspect of it, that being a matter for the

Supreme Court - just in a general way what· are the sort of considerations that the court looks at in deciding whether

leave will be granted to proceed?

MR MARTINO: The factors taken into account in- those

applications are, broadly, whether there is on the merits a good cause of action, whether the assets of the company in

liquidation will be administered in accordance with the

Companies Code, whether there will be any prejudice to the creditors or to the orderly winding up of the company if the

action is allowed to proceed, and whether the claim could be

dealt with by way of proof of debt.

TOOHEY J: Mustn't there always be some detriment to the

creditors if the action proceeds - at least if it proceeds and

is successful?

MR MARTINI: Yes; there is

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TOOHEY J:  Unless some sort of relief was being sought that

wasn't money relief, I suppose - -?

MR MARTINO:  Yes.

TOOHEY J: Yes, thank you.

MR MARTINO: The final factor is the balance of convenience,

and all I can say on that is as long as the application for

special leave is dealt with expeditiously and progressed expeditiously by the applicant, which it undertakes to do,

then bearing in mind the factors that I have already mentioned

the balance of convenience, in my respectful submission, must

clearly lie with letting things stand as they are pending the

hearing of the application.

TOOHEY J: There must be an inconvenience to the commission, I

take it; perhaps that's implicit in the very idea of

"balancing". However, it would be some months if there were

no stay before the commission could enter the action for trial

because no doubt it wouldn't wish to do so against the other defendants until it knew the position as against the company -

or perhaps that may not be the case, but certainly if its

intention was to have a trial of issues against all

defendants, if that were possible, then there could be no

trial effectively for some months.

MR MARTINO:	Yes, your Honour.
TOOHEY J:	I don't know - possibly six months, given the time

of the year that we're at now.

MR MARTINO: Yes, your Honour - but that argument, it seems to

me is no longer available to it because the Trade Practices

Commission says in these papers, in paragraph 3(b), the

summary of its argument - - -

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ZE6.V20.2.45

MR MARTINO (Continuing): - - - of its argument, that it does

not intend to proceed to trial against Manfal or the other

respondents prior to determination of its application for

special leave to appeal to the High Court. If that's the case

- and I think that is a proper position to take - really there

is no inconvenience to any substantial extent as a result of a

stay being ordered.

TOOHEY J: If I was to grant a stay (and I am not expressing a

view one way or the other at the moment, but just to see that I am apprised of all the issues) is it appropriate there be a

stay limited to the disposal of the application for special

leave or, as y~u seek, a stay that· carries beyond that

application if special leave is granted until disposition of the appeal? In other words, should I really make an order

which perhaps is more appropriately made by the bench that

deals with the application for special leave?

MR MARTINO: Your Honour, the orders that we are seeking are

orders until a special leave application is heard and

determined and orders until the appeal is determined. The reason why we are seeking the second order is that if your

Honour determines that it is appropriate that a stay be

granted until the special leave application is determined

then, having satisfied that extraordinary circumstances test, it seems inevitable that the matter should be stayed and the

position preserved until the substantial appeal is dealt with

as well, because there can be no additional factors, it seems

to us, that would mitigate against the application of the stay

being extended until the appeal is dealt with.

TOOHEY J: I suppose there is another answer, too, namely that

an order in the terms sought would necessarily be - and I'm

not sure that this is included in your draft order - - it is not, but I would not make an order in the terms of the draft order without some such language as "or until further order".

MR MARTINO:  Yes.

TOOHEY J: So the bench before whom the application for special leave comes, whose hands in any event wouldn't be tied

by an order that I made, could make its own decision in

respect of any continuance of the stay.

MR MARTINO: Yes, your Honour; with respect, that would be an

appropriate addition - then, if the application were to be

successful, the court's time or the Trade Practices Commission time need not be wasted with a further application for a stay; unless the Trade Practices Commission sought to set aside the

stay the matter wouldn't need to be before the court

unnecessarily.

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,·

Your Honour, those- are the submissions in support of the application.

TOOHEY J:  Yes, Mr Martino. Thank you. Mr Bhojani?

MR BHOJANI: Thank you, your Honour. I believe your Honour

has already received the outline of submissions on behalf of

the commissioner?°

TOOHEY J: Yes, I have, and I have read it although fairly

quickly, Mr Bhojani.

MR BHOJANI: Thank you, your Honour. Your Honour is well

aware of the ordinary position that the successful litigant is

entitled to the fruits of his litigation pending the

determination of any appeal.

Your Honour, I don't intend to focus on the jurisdiction aspect of this court in any shape or form other than to

perhaps highlight-one aspect of Justice Brennan's decision in

the Burgundy Royale case, which seemed to throw some doubt as
to the manner in which his Honour was approaching the matter.

That may just pea doubt on my interpretation of his Honour's judgment, but his Honour seemed to be saying that the High

Court's jurisdiction to grant a stay in a case such as this depends on whether a stay is necessary to preserve the subject

matter of the litigation - and I am referring to his Honour's

decision there at page 683, sir, at point five of the judgment

on that page, where it is said:

"The jurisdiction to grant a stay in the present

case depends on whether a stay is necessary to preserve ... (reads) ... the jurisdiction arises."

It seems to almost be suggesting that although here his Honour

had earlier, in fact in the paragraph above, identified the

source of the jurisdiction as the inherent jurisdiction of the

court his Honour then seems to have gone on to make the

comment that the jurisdiction does not arise unless the appeal	or the application for special leave would be futile unless	the stay were granted, and it's only in those circumstances
that his Honour was considering that the jurisdiction actually
arose.
TOOHEY J: Yes; I'm not sure whether his Honour is there
using "jurisdiction" in that second context to mean exercise of power.
MR BHOJANI: Yes; well, his Honour certainly does continue
with the issue on the following page, and in the last sentence
of that page, his Honour having considered the situation,
concluded:

"Jurisdiction to grant the stay is thus

established.	The question is how it should
be exercised."

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And I must admit I have interpreted that as the issue of the

power - that his Honour was there turning to the issue of
power, but perhaps that may be an improper interpretation on

my part, your Honour. However, be that as it may, certainly

there is no question about this court's jurisdiction to deal

with the matter; it is just as to whether his Honour has put

up a threshold test, that the jurisdiction will not arise
unless the applicant establishes that the special leave

application will be rendered nugatory or the circumstances for

the exercise of that jurisdiction will not arise unless the

applicant establishes that the application for special leave

will be rendered nugatory.

In the commission's submissions, your Honour, the

applicants' application for special leave will not be rendered nugatory without a say and merely because it is required to comply with some interlocutory procedures.

The authorities on the applications for leave to proceed
under the section of the Companies Code, section 371(2) and

its equivalent sections seem to show that leave can be granted nunc pro tune at a subsequent stage and in the commission's

view, provided the matter has not proceeded to trial and that

there are no substantive findings made against Manfal, then it

is not being prejudiced. If it is successful in its

application for special leave and if it is successful in its

appeal to the High court, in those circumstances the

commission would still be obliged to obtain the leave of the

Supreme Court prior to proceeding to trial - so in that sense

the section still has a function, a very useful function, to

serve, and I will certainly turn to the purpose of the actual

leave requirement provision and the principles that your

Honour requested earlier in a moment, if I may.

However, the commission's position is that by forcing the

applicant to undertake some interlocutory steps it is not

being prejudiced other than in terms of financial aspects, and

I will certainly turn to those issues in a moment.

TOOHEY J: You say "some interlocutory steps"; as I read the

directions and the likelihood that the application for special

leave would not be heard until March or April, if the

directions were complied with I think all interlocutory steps

would have been taken by the time the application for special

leave comes on for hearing.

MR BHOJANI:	I apologise for that, your Honour;	it is a poor
choice of words on my part.	What the applicant	seeks to do is

to have the company complete the interlocutory	steps and have
the matter ready to be entered for trial - - -

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D163.RJAL.2.55

MR BHOJANI (Continuing): - - - entered for trial, and to pause

at that level, so it is to in fact complete the interlocutory

steps.

However, as I have outlined in paragraph 3(b), the

commission itself does not intend to proceed to trial against

Manfal or the other respondents prior to the determination of

Manfal's application for special leave to appeal.

TOOHEY J: Now, how do I read that? I take it I don't read it

to mean that the commission is not proceeding with all steps

short of going to trial against the other defendants - or - -?

MR BHOJANI: Well, it does seek to proceed with all steps

short of going to trial against all the defendants. The only

purpose for that concession, if it be such, is to ensure that

from the commission's point of view the applicant's

application to the High Court is not rendered nugatory; it is

to assist it to that extent. From the commission's point of

view that is the compromise that would be appropriate in these

circumstances.	·
TOOHEY J: What do you mean by that, Mr Bhojani, "compromise"?
MR BHOJANI: Well, your Honour, "the compromise" in the sense
that the commission has a full court judgment which has indicated that the commission is entitled to proceed with its
action without obtaining leave of the Supreme court of Western
Australia. It is entitled to the fruits of that order unless
and until it is set aside on appeal. There are exceptional circumstances that need to be shown, as your Honour is well
aware under the authorities, for the grant of a stay. The position the commission seeks to adopt is that an effective
compromise in those circumstances of balancing the company's
interests with the commission's interests would be to allow
the Federal Court action to proceed to the stage where it is
re-assess the situation as to where the High Court application	ready to be entered for trial and to pause at that level to
is at that stage and, if it has been dealt with, to allow the
matter to be proceeded with for trial or, as the commission itself has indicated, the.matter will automatically stop there
because the commission does not seek to have the matter
entered for trial pending the determination by the High Court.
TOOHEY J: Well, when you speak of a "compromise", do you mean a compromise reflected in some order of this court or are you
simply saying that in any event, whatever may or may not be
done by this court or in particular if there were refusal of a
stay, the matter would not proceed against the applicant
beyond the stage of entry for trial?
MR BHOJANI: Well, your Honour, it's the latter - the matter
would not proceed against the applicant or for that matter

P42/90 18 20.12.90

against the other respondents, unless the commission were

minded to consider the proposition of splitting the matter up and having two trials, and that is something the commission is

not keen to do.

TOOHEY J:  No, I can imagine that.

MR BHOJANI: so, it is the latter·-· that in· any event the

matter will not proceed to trial until the High Court has

dealt with the special leave application.

TOOHEY J: I am not again sure whether you are saying that

that should be reflected simply in a dismissal of the

applicant's motion or that there should_be some order - -

MR BHOJANI:  Yes, I apologise, your Honour.

TOOHEY J: - - which, as it were, gives effect to this

compromise.

MR BHOJANI: In the first instance, your Honour, the commission's position is that it would seek to be not reflected in any order of the court, that it would be a matter

that will just happen by effluxion of time.

TOOHEY J:  Well, when you say your "first position", there is

obviously a second position; what is that?_

MR BHOJANI: Yes. Alternatively, if there were some doubt or

the court had some fear that that may not be the position that

is adopted by the commission then the appropriate order would

be to allow the proceedings, or to perhaps adjourn this

application to a subsequent date to allow the matter to have

pioceeded to the stage of completion of the interlocutory
procedures in the Federal Court application and then to consider whether or not a stay is still warranted at that

stage, and it may well be that even an undertaking by counsel

on behalf of the commission could be given that the matter

would not proceed further.

TOOHEY J: Mr Bhojani, is it the position in the commission's

submission that if a stay were refused and the matter went

forward - that is the proceedings against the various

defendants including the company went forward - and in the

end an appeal was successful and leave to proceed refused, that time and expense would not have been incurred unnecessarily? Now, I'm not .suggesting that that is the

touchstone, necessarily, but just so that I can understand the

implic_ations involved in this application.

MR BHOJANI: Yes, your Honour. No, I think, your Honour, the

commission's position is that it doesn't have a definite view
on that issue. What it.would seek to have happen at that

stage (and it is perhaps reflected a little bit later in my

outline) is that there may have been some expense.that has

been incurred unnecessarily, but the commission's view on that

P42/90 19 20.12.90

is that that expense ought to be dealt with by the liquidator

by making a formal application to the Federal Court for an

appropriate award of costs in respect of those unnecessary, or

what the liquidator termed to be unnecessary, or unwarranted

steps in which it had been forced to engage.

TOOHEY J: Well, ·they would have been thrown away in the sense that if leave to proceed were refused then whatever had been

done in respect of the action against the company would simply

have been wasted, except to the extent that it might spill over into the proceedings against the other defendants, but isolating the company as a defendant those costs would have

been simply thrown away.

MR BHOJANI: Yes, your Honour. Well, they may have been

thrown away or perhaps they could be converted in a sense that

if the company's application is successful and on the

hypothetical assumption that leave is not granted by the

Supreme Court, it would be the commission's position that nevertheless a subpoena or, alternatively, requirements in the nature of discovery from a non-party - an application of that nature - would be served on the company in order for it to be

able to proceed with its proceedings against the other

respondents.

Now, in complying with that subpoena or third party

discovery or non-party discovery, as the case may be, the

company would undoubtedly incur expense in that event and presumably it would be entitled to an order for costs in

respect of that, so costs that have been incurred by the

company in respect of discovering of documents (as the

classical example, your Honour) would not necessarily be

thrown away in toto from the commission's point of view.

From the company's point of view, your Honour, I accept

that it would be entitled to an application or some order for costs in respect of carrying out that work, but certainly it

is the commission's position that the incurring of some legal

Honour) or other expense does not mean that the application	expense (and that is the paragraph 3(c) of the outline, your	for special leave is rendered nugat.ory.
Your Honour, my learned friend has read out the passage from his Honour Mr Justice French's decision just a matter of
days ago in which his Honour - and I can refer you to that passage - -
TOOHEY J:  Can you just take me to the exhibit number?
MR BHOJANI: Yes, your Honour, it is exhibit BDll, your Honour,
and I should add as your Honour is seeking to locate that decision that before his Honour - -
TOOHEY J:  I seem to run out before I get to 11?
P42/90  20 20.12.90
MR BHOJANI: It is with the summons and the affidavit in support of the present summons before the High Court, your
Honour; it is the first exhibit to that; the exhibit numbers seem to continue on - - sorry, the second exhibit to that.
TOOHEY J:  I see, yes. The numbering has been continued in
respect of the second affidavit.
MR BHOJANI: Yes, your Honour. I should point out, as I was
-about to indicate to your Honour, that in argument before his Honour Mr Justice French the matter was argued fully on both
the issue of jurisdiction, which his Honour decided upon
ultimately, but more importantly it was certainly argued on the merits and whilst his Honour has only dealt with the merit
situation in view of his Honour's ultimate finding, it is
still relevant to bear in mind that his Honour did hear full
argument on the merits prior to making the comments that he
has made.

At about point seven, your Honour, his Honour says:

"While it is true that expenditure may

be increased in complying with the various

inerlocutory ... (reads) ... is not for that

reason rendered nugatory."

TOOHEY J: I am not sure that I follow that sentence. The concern that has been expressed by Mr Martino isn't an
increase in expenditure but rather the incurring of

expenditure which may in the end prove to have been quite

unnecessary.

MR BHOJANI: I think his Honour had in mind there the increase

in expenditure because it was submitted to his Honour, and in

fact his Honour raised it - - -

P42/90	21	20.12.90
ZT2.33A

MR BHOJANI (Continuing}: - - - Honour raised it himself, the

issue of whether or not, if leave were not granted to the

commission to proceed against the company, it would still have

to face the costs of complying with the subpoena, and it was certainly indicated to his Honour that the commission would be seeking to make that sort of application, which would incur some sort of costs on the company.

TOOHEY J: Yes, but there is a big difference between a

subpoena addressed to someone, party or non-party, to produce

records and the work done by a party in the filing of pleadings, the provision of particulars, the seeking of particulars if necessary and the ~iving of discovery,

particularly in these large commercial transactions.

MR BHOJANI:  Yes.

TOOHEY J: But in any event are you saying, Mr Bhojani, that you understand that sentence to be, as it were, a comparison

between cost~ involved if the applicant were subpoenaed as

against the costs involved in remaining as a party?

MR BHOJANI: Well, that there are some aspects of the costs

involved in remaining as a party that would nevertheless have

to be incurred even if it were ultimately not a party to the

actions, so the issue of expense is not without some aspect of

mitigation.

The other aspect I seek to draw to your Honour's

attention is that to suggest that the actual incurring of

these costs and having to proceed down the path of undertaking

some interlocutory steps - it is the commission's position

that in saying that the company is not obliged to undertake those tasks and incur that expense it is effectively pleading the section, section 371(2), as a bar to an action, and the

authorities tend to suggest that that is not the manner in

which this particular provision ought to be interpreted.

In that respect, your Honour - and I note your Honour did

indicate that you had no intentions of going down the path

that the Supreme Court would have to go down - -

TOOHEY J: Well, in the sense that I don't think it would be

proper for me to express a view on that matter since it is not directly befqre me; it is not a matter in respect of which

this court has jurisdiction.

MR BHOJANI:	No, your Honour.
TOOHEY J:	And it is a matter that the Supreme Court may or

may not have to deal with at a later stage.

MR BHOJANI:  Thank you, your Honour. I am heartened to hear

you say that, because all I sought to do in going down this

P4 2/90 22 BHOJANI 20.12.90

path was , as your Honour had indicated earlier, just to draw

to your Honour's attention briefly the principles that the

courts seem to apply in determining applications of this

nature and the interpretation that has been put on provisions

such as section 371(2) of the Code.

In respect of the provision not being able to be used as

a bar to an action, if I may refer your Honour to the first

decision I have there; it is re Sydney Formworks Pty Ltd (In

Liquidation), 1965 New South Wales Reports 646. I do have a copy of that decision, your Honour.

TOOHEY J:  Thank you.

MR BHOJANI: Rather than trouble your Honour with the details

of the case in toto, his Honour Chief Justice McClelland deals

with the matter on the basis of whether or not the section could be pleaded in bar to a common law proceedings for

damages, and at page 649, at about line 54, summarises his

consideration of all the cases and says:

"The result of the cases on the Companies Act

which I've mentioned is that the section" (and

that is the equivalent of section 371(2)) "cannot

be pleaded in bar to the action ... (reads) ... to

continue an action which has been commenced without

leave."

It seems to be reflected in that paragraph, your Honour, that

it is clearly envisaged that there will be occasions when

actions will be continued, notwithstanding that leave has not been obtained. Now, generally in those circumstances I accept

that it is because parties have not appreciated that leave was

required or for some other reason. The commission's position is that in this case it also has a legitimate reason for not

seeking the leave, that is it has a full Federal Court

decision that tells it that it doesn't need the leave to

proceed.

TOOHEY J: Does that passage that you have just read mean that

the section cannot be pleaded as a defence to an action or

merely that if it is pleaded it is still open to the court

before whom the action comes to grant leave?

MR BHOJANI: My interpretation of it has been the former -

that it cannot be pleaded as a defence to the action.

Unfortunately I am unable to elaborate further on that

interpretation, your Honour, but - -

TOOHEY J: It would be curious if an action were brought against a company in liquidation without the leave of the court and the defendant were not able to raise that as an

answer. It is one thing to raise it as an answer and run the

risk that the court could then and there grant leave to

proceed; it is another thing altogether to say that it is not

available as a defence to a defendant.

P4 2/90 23 20.12.90

MR BHOJANI: Well I am just perhaps somewhat confused in terms

of the manner in which the company would seek to raise it.

Certainly if the matter was drawn to the commission's attention, as was the. case for example in this particular

instance, whilst it may not in any sense have been pleaded as a defence to the action nevertheless the issue has formally come to the appl.icant' s notice and in that sense it is being acted upon, rather than a formal defence that the proceedings cannot continue, which it is the commission's submission the

applicant is seeking to endeavour to do here and say that the

commission cannot proceed with this action unless and until it

obtains leave and that it is seeking now, notwithstanding it

hasn't got a defence, use it as a bar to the action

proceeding.

TOOHEY J:  Yes, I understand.

MR BHOJANI: Your Honour, the other decision to which I sought

to refer your Honour was a decision of Master Lee in re Gordon

Grant v Grant Pty Ltd, 1982, 1 Australian Company Law Cases at

page 196. Again there the learned Master reviewed a number of

the authorities, and at page 199 the learned Master sets out eight propositions which he says arise from the authorities.

In the left-hand column at about point three the learned

Master says:

"The various authorities were referred to and

from them and from the foregoing two authorities

the following principles relevant to this

application appear to emerge" (and that was an application for· leave to proceed) "1. That an

application for leave nunc pro tune ... (reads) ...

all claims brought against the company."

I would emphasise that, your Honour - that is really a

supervisory role that the court is taking on board there:

"3. That there must be no prejudice to the

creditors or to the orderly winding up of the

company ... (reads) ... is unlikely to prejudice

the credi_tors or the company. "

I would pause there for a moment and recognise that the

comment I am about to make is coming to your Honour from the

bar table, but certainly I think your Honour is entitled to accept that if the company is successful in any challenge or

in any appeal to the High Court, the commission would be

seeking leave to proceed against the company and the issue of insurance is one of the factors that would be raised in that

application.

Now, I think your Honour perhaps can take it no further

than that the commission would certainly apply to the Supreme

Court for leave to proceed against the company.

Continuing on to the factors that are relevant, your

P42/90	24	20.12.90
Honour:

"6. A condition is often imposed that the

plaintiff will not enforce any judgment against

the company ... (reads) ... that the court retains

ultimate control."

Again, your Honour, I would emphasise that it is the

supervisory or control aspect that the Supreme Courts of the states are seeking to achieve by the leave requirement and

that in a proper situation a plaintiff will be entitled to

proceed against a company notwithstanding it is in

liquidation. Then 7 and 8:

"That mere delay itself in applyin~ for

leave will not prevent leave being granted. It is not to be withheld simply and solely

as a punishment ... "

And factor 8 that Master Lee considered on that page 199 was:

"Leave may be granted after the expiry of
the relevant period of limitation to continue
an action within the limitation period without

the leave of the court."

That does have some significance, your Honour, to this

particular case and perhaps the best thing for me to do is to

come back to that - - -

P42/90	25	20.12.90
J30,224B,3,15

MR BHOJANI (Continuing): - - - to come back to that because it

affects the position of various people who are not parties to

or who are not covered by the commission's application which

is a representative action but with may nevertheless be
affected by the ·outcome of the commission's application.

TOOHEY J: But at the time the proceedings were commenced I

take it there was no requirement of leave - that is no

requirement of leave that the proceedings be commenced?

MR BHOJANI: My recollection of the wording of section 371(2),

I think, your Honour, is that strictly speaking there possibly

was a requirement that leave to proceed or commence an action
was required as a provisional liquidator had already been

appointed.

TOOHEY J:	It is wide enough, is it, to include that
situation?

MR BHOJANI: That's certainly my recollection - -

TOOHEY J: It might be worthwhile just checking on that, Mr

Bhojani?

MR BHOJANI: Yes, your Honour; a copy of the full court

judgment, I think, does set out - - the Companies Code itself

seems to provide, your Honour, that:

"When an order has been made for the winding up

of a company or a provisional liquidator has
been appointed in respect of a company, no action

or other civil proceeding may be commenced or

proceeded with against the company except (a) by

leave of the court and (b) in accordance with

such terms as the court imposes."

My recollection is that the provisional liquidator had in fact

been appointed at the time.

TOOHEY J: Well, according to the chronology that Mr Martino

gave me, the provisional liquidator was appointed some 15 days

before commencement of the action.

MR BHOJANI:  Yes, your Honour; that is my recollection of the

circumstances. ·

TOOHEY J:  Yes. So the point is - what - that there may be

· some interference with the right of the commission to proceed

against other defendants?

MR BHOJANI:  Oh, sorry, your Honour - you mean in respect of

the limitation period?

P4 2/90 26 20.12.90

TOOHEY J: Yes.

MR BHOJANI: Yes. I apologise for having been so vague on

that, but it is an argument I have set out in the "balance of

convenience" section of the outline, your Honour, and it is at

page 8, I think, _6(d) (ii) of the outline.

The relevant third parties that I seek to draw to your

Honour's attention and identify - if I could ask your Honour

.to turn to exhibit BD3, the affidavit in support of the

application for special leave, your Honour; that is the

previous affidavit of Mr David John Coates.

TOOHEY J: Yes, I have that.

MR BHOJANI: Paragraphs 3 and 7 were merely formalities again,

that on the 6th of September 1989 he was appointed the

liquidator. In paragraph 7 the liquidator deposes to the fact

that on his appointment as a provisional liquidator he

discovered that the first respondent operated principally in

Western Australia and had contracted to complete some 1140

homes, all of which were at varying stages of completion:

"The major asset of the first respondent at

that stage was the work in progress and in

order ... (reads) ... and work has commenced on

completing the homes."

Your Honour, if I can then refer you to paragraph

13(1) (iii) of the affidavit, which is at page 8, I believe - it is the last paragraph on that page. The liquidator deposes

to the fact that in the case of the relief claimed in

paragraph 1 (b) (iii), that is relief seeking to have a

declaration that the variation clause in the relevant

contracts is an unconscionable clause - so in the case of that

relief:

"The first respondent will of necessity oppose

the claim as the repercussions flowing from

an injunction ... (reads) ... unrealistic expectations

of monetary compensation."

Your Honour, in the commission's view that tends to

suggest that there may be (and the liquidator has deposed to the fact that there is) a real risk of people in the community

who may have a right of action against the company but who may

not be seeking to initiate that right of action until the

commission's application has been dealt with and succeeded and

who may not wish to institute any proceedings against the

company in liquidation until they are quite certain that that

clause is held to be unconscionable - that their right does

exist, and seek advice on that issue.

The difficulty that ar1ses and where this limitation

period becomes relevant, your Honour, is if I may refer you to

section 87(1CA) of the Trade Practices Act, which states:

P42/90 27 20.12.90

"An application under sub-section (lA)"

(that is section 87(1A) of the Trade Practices

Act) "may be commenced in the case of conduct

in contravention of section 52A" (which is the

unconscionable conduct provision at the basis
of this claim) "at any time within two years
after the ·day on which the cause of · action

accrued."

It would appear, your Honour - the possibility arises, your

Honour; perhaps I can put it no higher than that - that from

what the liquidator has indicated or deposed to, there may be

other home owners on whose behalf the commission has not

commenced actions as at present who may have claims against the company but who may be barred by· the limitation period

because they don't institute their proceedings prior to the

two-year limitation period expiry.

TOOHEY J:  Well, I assume the two year period is well and

truly past, is it?

MR BHOJANI: Well, in respect of some of them. Unfortunately

we have no indication of when the last contracts and

completions were carried out, but the liquidator was appointed

in 1989; obviously no further contracts were entered into

upon his appointment but there may be some home owners who had

entered into a cont.ract with the company in early 1989 who may

still have some claim, or possibilities of some claim, against

the company until about mid-1991, so there is in that sense a

relevant factor which I have there put in the issue of

"balance of convenience" - that it's a third party; they are

not parties to this action, clearly, but it is a relevant

consideration from the commission's point of view.

TOOHEY J: I am just having a bit of trouble with that

argument. Mr Bhojani, let us assume there is no stay but the

application for special leave proceeds.	What is the position
of the third parties?
MR BHOJANI: Well, immediately it is not made any better.
TOOHEY J:	No.

MR BHOJANI: But the expectation is that if the matter is

dealt with by the High Court on the special leave application and the application is dismissed, there would be some sort of

an application for an expedited hearing or to have the matter

entered for trial, provided that the company has of course

completed all the interlocutory steps and the matter can be

listed for trial. However, if that is not possible then there

is no possibility of - - I don't hold it out as a major

factor, your Honour; it is just a relevant consideration.

TOOHEY J:  Yes, thank you. However, can I just come back to

this question of limitations? As between the immediate

parties to the action now before the court, can I take it that

P42/90 28 20.12.90

limitation plays no part?

MR BHOJANI: No, your Honour; that fact was only relevant

insofar as that those third parties would not be able to

obtain the leave to commence an action because the limitation

period would hav~ expired.

TOOHEY J: And I suppose in the ordinary way what should have

happened is that once the provisional liquidator was appointed

P4Z/90	29	20.12.90
SGA.P57,3,25

TOOHEY J (Continuing): - - - was appointed then the leave of

the court should have been sought by originating summons or

some such process in order to commence the action?

MR BHOJANI:  Yes.

TOOHEY J: That is not to say, of course, that leave cannot be granted subsequently, but that would have cleared the decks?

MR BHOJANI: In the general run of things, yes, your Honour.

If the provision applies then that is the means by which

generally speaking - -

TOOHEY J:	Yes.	I understand the argument that it doesn't
apply.

MR BHOJANI: Yes, but if it did apply, yes, an originating summons to seek the leave of the court prior to commencement of the action would have been the appropriate course, your

Honour.

If I can return to page 4 of the outline, your Honour,

the second reason that the commission puts forward as to why the appeal would not be rendered nugatory is that the company

could apply for an appropriate order for costs if it has had to undertake interlocutory steps, and in that sense be

compensated for any loss that it has incurred, so clearly the

issue of incurring of expense and the rendering of the

application for special leave to appeal to the High Court

ought not, in the commission's view, equate it. They are

distinct and separate m~tters and can be dea~t with

separately.

TOOHEY J: I suppose the difficulty with that is that costs

would probably not be a complete indemnity to the liquidator

for the work that had been done.

MR BHOJANI:. No. No, I take your Honour's point. Although I	am unable to refer your Honour to the precise authority my
understanding is that under section 43 of the Federal Court
Act the discretion is wide enough to allow solicitor-client
costs, but I take the point that it may not be a 100 per cent indemnity, although it may be able to convince the Federal Court that costs ought to be awarded on a solicitor-client
basis. ·
TOOHEY J: Yes.
MR BHOJANI: Point 3, your Honour, I have already dealt with
in terms of the subpoena and possibility of discovery application.

Paragraphs 4 and 5 just perhaps highlight the difficulty

P42/90 20.12.90

I had with his Honour Mr Justice Brennan's approach on the

issue of jurisdiction, and it is put there that if his

Honour's comments are correct that the jurisdiction only

arises if the appeal will be rendered nugatory, then it is

submitted that paragraphs 2 and 3 show that the appeal will

not be rendered ~ugatory therefore your Honour's jurisdiction

does not arise.

Alternatively, if your Honour does not consider that to

be a relevant basis for distinction - that it is not a

question of jurisdiction but power, as your Honour has indicated - the factors that I have just outlined to your Honour are indeed relevant to the consideration of the

discretion.

Turning then, your Honour, very briefly to the relevant

factors in the exercise of the court's jurisdiction, the

prospects of success of the special leave application, clearly there is no doubt from the commission's point of view that the

company has a reasonably arguable case for special leave and

on that issue, your Honour, perhaps I can refer - - well,

perhaps I need not take your Honour to it; it is your Honour's own decision in the Paringa Mining case, where I think your Honour seemed to accept that all one needed to do was to conclude that the application for special leave was

reasonably arguable - -

TOOHEY J:	Well, it is very difficult to do any more, isn't
it?

MR BHOJANI: Yes; yes, your Honour.

TOOHEY J: Because the matter is going to come before a full

bench, anyhow, and it is a bit bold to be saying in advance

what the full court is likely to do, especially if you are not

going to be a member of it.

MR BHOJANI:	Yes, your Honour.
TOOHEY J: So, it is certainly a relevant consideration, and

there may be cases - and there are cases - where a single

judge feels that he or she can say with confidence: "Well, this appeal has no prospect of success", but if you are not

able to say that it is very difficult to go much beyond

s~ying: "Well, there's an arguable case here".

MR BHOJANI: Readily, with respect your Honour, I accept that

proposition and in fact the second aspect is, as your Honour went on to say, that in accepting that proposition all that is

done is to save the company from being in that position -

being involved in a case that is just totally hopeless, or· one that should be thrown out because it is unarguable - but in

the commission's view the fact that there is a reasonably

arguable application for special leave doesn't take them

P4 2/90	31	20.12.90
anywhere beyond that.

Again in the circumstances of this case the commission

submits that Manfal's failure to seek leave from the full

court ought not to be a relevant consideration in your

Honour's exercise of- the discretion as to whether or not this application shoul·d be allowed or not allowed.

In terms of loss, your Honour, certainly the commission

does not submit that it will suffer any financial loss;

however, it does submit that the nature of the commission and

its application before the Federal Court are relevant to this

issue. The commission is a public body with a role to protect

the public interest. Although it would not be suffering a

loss in a direct financial sense, your Honour, what the

commission seeks your Honour to do is to, for use of the word

"loss~ substitute the words "prejudice" or "detriment to a

party". That is, in the commission's view, a relevant

consideration, and the delay in prosecution of a

representative action by the commission, especially by virtue

of appeals on interlocutory matters - and that is indeed what

this application for special leave is, an application for

special leave to appeal from an interlocutory decision,

although that is not being sought to raise as an argument against the granting of special leave - is a relevant factor

in considering the effect of the delays that are being caused

in the prosecution of the commission's action.

Finally, your Honour (or the second-last point, your

Honour) is the balance of convenience. Again the issue of

delay - the trial and its resolution is being delayed for the

convenience of one respondent, whereas it is in the interests

of the applicant and the other five respondents, as well as in the commission's view the public interest, for the substantive dispute to be resolved quickly.

I should perhaps pause there for a moment to point out

that whilst the commi,ssion has itself conceded that it will

will not take the matter to trial - pending the outcome of the

not take the matter to trial - conceded or accepted that it

special leave. application, it does not suggest that it is not incurring any prejudice or any loss as a consequence of that.

It does accept that, but it is making the assumption or the

concession for the purposes of ensuring that the application

for special leave is not rendered nugatory, which in the

commission's view it would be if the trial proceeded.

Finally, your Honour, in terms of the orders, if the court is minded to make any orders, it is the commission's

view that the only order that your Honour ought to make is one

suspending the directions made by the Federal Court, that is

his Honour Justice French, on the 18th of December and add:

" ... pending the outcome of the applicant's application for

special leave and/or any subsequent appeal". Perhaps I don't

need to add in those paragraphs - -

P42/90 32 20.12.90

TOOHEY J: Now, what would be the effect of that, Mr Bhojani?

The order of the Federal Court would still be on foot, of

course, and there would be no stay attached to that order?

MR BHOJANI: No, your Honour. Well, there would be no stay

attached to that· order, but this court would have suspended

the operation of that order pending the application for

special leave.

TOOHEY J: Well, it wouldn't have suspended the operation of the order, would it? In practical terms that might be the result of suspending the operation of the directions given by

Mr Justice French - -

MR BHOJANI:	Oh yes - sorry, your Honour; I misunderstood
your Honour.	Yes, the order of the full Federal Court would

in fact be on foot; there would be no stay. However, if the

court is minded to make an order in favour of the applicants,

an order suspending the operation of the directions would

achieve all the things that the applicants are seeking to

achieve without any necessity for a stay. The difficulty with

a stay would tend to be - or the only difficulty I can foresee

with a stay of the full court order - almost re-imposition of a requirement to obtain leave because it is taking away the

full court's order, thereby by default bringing back Justice Lee's order, which was that the commission is obliged to

obtain leave.

TOOHEY J: Yes. There is a sentence which I perhaps should

put to Mr Martino rather than to you, Mr Bhojani, because it

arises from Mr Dodd's affidavit, but it is the affidavit in

support of the application for a stay - - -

P4 2/90	33	BHOJANI	20.12.90
FJ55.520B.CM37B.3.35

TOOHEY J (Continuing): - - - application for a stay, paragraph

15 on page 6.

MR BHOJANI:  Yes, your Honour.

TOOHEY J: It reads:

"The decision of the full court of the Federal

Court of Australia was that the Federal Court

proceedings should not be stayed pending the

application by the Trade Practices Commission

for leave to proceed."

I was wondering whether that is strictly accurate in the sense

that, as I understand it, the full court simply said that

leave was not necessary

MR BHOJANI:  Yes, your Honour.

TOOHEY J: - - rather than that there should be no stay of the Federal Court proceedings. Is that how you would understand the position to be?

MR BHOJANI: Indeed your Honour, yes, insofar as that sentence

seems to imply that a leave requirement was still held to be

necessary

TOOHEY J: - - or that in some way the full court directed its

attention, firstly, to the question of stay or not a stay - -?

MR BHOJANI: Yes.

TOOHEY J: But as I understand it, it didn't do so; it merely

said that leave was ~nnecessary in the circumstances of this

case.

MR BHOJANI: Indeed, your Honour, it did.

TOOHEY J: Yes. '

MR BHOJANI: Unless I can assist your Honour further those are

the submissions on behalf of the commission.

TOOHEY J:  Thank you, Mr Bhojani. Mr Martino?

MR MARTINO: Thank you, your Honour. Just dealing with that

last point first, perhaps that paragraph of the affidavit is

not as clear as it should be.

TOOHEY J: Yes, it is slightly ambiguous, but I think we are

all on common ground, are we, as- to·what it really means?

MR MARTINO:	Yes.	The full court simply said that in these
P4?/90	34  20.12.90

circumstances the Trade Practices Commission did not need to

apply for leave at all.

I just have some points to touch on briefly: Firstly,

the question of jurisdiction, meaning power, to grant a stay

where a special leave application is on foot. In Grasby v The

Queen, Chief Justice Mason said:

"Generally-speaking this court exercises its

jurisdiction to grant a stay of proceedings

pending ... (reads) ... However, in the light

of the history of the case - -"

and other factors that he set out, his Honour granted a stay.

It is therefore clear, certainly as far·as Chief Justice Mason was concerned in that case that you need extraordinary

circumstances. It is not a formal matter of inherent

jurisdiction only arising if the subject matter is going to be

destroyed if the stay is not granted, because in that case his Honour granted a stay although he was not satisfied that it was necessary to preserve the subject matter for integrity of the litigation.

Your Honour, on the question of costs and whether the

position would be lost or the costs would be lost if

interlocutory steps are taken and the applicant is ultimately successful, we lawyers are often concerned with solicitor-

client and party-party costs, but that is not the only factor in this case; there is liquidator's staff. What we will need

to do is to set out in the affidavit a great deal of work to

do all things necessary to properly plead to the statement of

claim and to determine what documents amongst this huge bundle

of documents are or may be relevant and to sort those out.

Those costs are properly costs of the liquidation if this

action proceeds, but they're unlikely to be costs that would

be recoverable in any sense against the Trade Practice

Commission in the action.

On the other hand, if a subpoena were to be issued to a

third party or to this party then the court does have power to

make allowance for the costs of presenting the documents of the party to whom the subpoena is addressed - presenting the

documents to the court.

As to the statement that is made in paragraph 3(b) on page 3 of this outline of the first respondent's submissions,

that: "The commission does not intend to proceed to trial against Manfal or the other respondents prior to determination of Manfal's application for special leave to appeal by the High Court", in the context of this application it is my respectful submission that the matter shouldn't simply be left

like that, as a statement of intention at this stage, it being

a basis for not granting any order on the application of the

applicant. If that is a relevant factor then either the

commission should so undertake or the order should be made.

We should not be in a position where the commission's present

P42/90 35 20.12.90

intention can change. I am not suggesting it is intended to, but the matter should not be left simply as a statement of

intention as it there is. So, either an undertaking or an

order at least in those terms is required.

As to the question of insurance, I don't have any

instructions on whether or not there is insurance. There is

no evidence in the papers as to whether there is insurance. I

don't believe this affidavit setting out or going to the costs that are going to be incurred could be drafted in that manner

if there was insurance cover in place. I can't take the

matter any further than that.

TOOHEY J: Yes.

MR MARTINO: As to the public interest, in this particular

case there is very little public interest to be served by enabling this action to proceed while this application for special leave to appeal is awaiting to be determined. The

reason for that is that not only is the alleged conduct not continuing but the whole of the business of the company about

whom the complaint is made is being wound up. There is

nothing going on about which the Trade Practices Commission or the public could complain. Effectively the business is all over - so there is no substantial public interest factor on

this particular case.

As to the speculation about third parties who might be locked out by a statute of limitations if the other action is not listed for trial, well, that is entirely speculation. If ~t were relevant as a fact no doubt the Trade Practices Commission would have the resources to present the facts. As

a matter of practice there is no substance to it anyway,

because the provisional liquidator was appointed in June 1989, so the very last contract would have been entered into in June

1989 and the two year period is going to expire in June 1991

in any event. It is most unlikely that this matter is going

to be resolved by then.

TOOHEY J: Mr Martino, how did the relevance of the section of

the Companies Code first surface in this litigation -

obviously not through a defence, because there has been no defence filed, but was it through the application brought by the company defendant?

MR MARTINO:  Yes, your Honour. That application was brought

on the 16th of October 1989;	that is in page 1 of the
chronology.
TOOHEY J: Yes, thank you.

MR MARTINO: Finally, the reference to the decision of Mr

Justice French on the 18th of December, exhibit BDll - his

Honour's statements on page 10, which I have quoted, that

whilst it is true that expenditure may be increased in

P42/90 36 20.12.90

complying with the various interlocutory steps, including the

filing of a defence and provision of discovery " ... the

application for special leave is not for that reason rendered

nugatory" - well, with the greatest respect to his Honour he

doesn't explain why that is the case. Costs will be thrown

away and those statements made by his Honour are statements

made obiter, because that wasn't the application before him in any event; there was no application varying the directions

orders that were on foot.

Those ~re my submissions.

TOOHEY J:  Thank you, Mr Martino.

I propose to consider this matter overnight and I will

give you my decision tomorrow. I think, because of the time

of the year that we're at it would be better if I could give
counsel a written judgment rather than an oral judgment which

would then have to be extracted from transcript. To allow that to be done, and allowing for other commitments, I propose

to make my decision available at 4 o'clock tomorrow afternoon.·

I don't want to bring counsel back unnecessarily, but it

may be that there are matters arising out of the decision that

need to be dealt with, and again, given the time of the year,

it is probably better that the parties know exactly where they stand by the end of play tomorrow - so I will fix 4 o'clock

for the delivery of judgment in this matter, and the court

will now adjourn.

DECISION RESERVED

(

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