Moulieux Pty Limited v Girvan NSW Pty Limited (Receiver and Manager Appointed)

[1991] HCATrans 273

~

~ -~'JI

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S126 of 1991

B e t w e e n -

MOULIEUX PTY LIMITED

Applicant

and

GIRVAN NSW PTY LIMITED
(RECEIVER AND MANAGER

APPOINTED)

Respondent

Application for a stay of

proceedings

TOOHEY J

(In Chambers)

Moulieux 27/9/91

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON FRIDAY, 27 SEPTEMBER 1991, AT 10.00 AM

(Continued from 24/9/91)

Copyright in the High Court of Australia

MR A.J. SULLIVAN, OC:  May it please Your Honour, I appear

for the applicant in this matter, with my learned

friend, MR G.B. COLYER. (instructed by Messrs

Carneys)

MR J.M. IRELAND, QC: If Your Honour pleases, I appear with

my learned friend, MR P.R. WHITFORD, on behalf of

the respondent.

HIS HONOUR:	Thank you.	Mr Sullivan.
MR SULLIVAN:	Thank you, Your Honour.	Your Honour, this is

an application for a stay of a decision of

His Honour Mr Justice Cole, sitting in the
commercial division of the New South Wales Supreme

Court. His Honour made orders on 28 June 1991.

HIS HONOUR:  Mr Sullivan, you can take it I have read all

the papers.

MR SULLIVAN:  Thank you, Your Honour. When Your Honour says

you have read all the papers, do I take it

Your Honour has read the affidavits as well?

HIS HONOUR:  Yes, I have, and the exhibits.

MR SULLIVAN: In those circumstances, might I put my

submissions in the following way.

HIS HONOUR: Just before you do: would a stay in the form

that is sought in the notice of motion be adequate

now that there has been a commencement of

winding-up proceedings?

MR SULLIVAN:  Your Honour, it would be adequate in this

sense, in our submission: if there is a stay of

the judgment - if my learned friends did not

consent to an abatement of the winding-up

proceedings, if you like, pending the resolution of

this matter, one would feel very confident that one

would get injunctive relief in the supreme court

because, if the judgment is stayed, then to the

extent to which they rely on that judgment to found

the winding-up proceedings, the court would, we would think, almost automatically grant a stay.

HIS HONOUR:  Yes, I understand that, but from the point of

view of this Court, do I take it that the only

relief sought is that presently framed in the

notice of motion?

MR SULLIVAN: Yes, Your Honour. Your Honour, we recognize

that the principles are well established as to the

circumstances in which this Court will grant a stay

pending an appeal. Your Honour, we have taken the

liberty of photocopying some of the relevant cases

Moulieux 9 27/9/91

which I am sure Your Honour is familiar with

anyway.

The principles would appear to be as follows:

that whilst it is true that this Court has an

inherent jurisdiction to grant a stay pending an
application for special leave, it will only do so

in what has been termed by Mr Justice Brennan in

Burgundy Royale v Jennings, an extraordinary case,

or to use the terminology of Justice Deane in

Heinemann v Attorney-General, an exceptional case.

Those words, Your Honour, the content of them, in

our respectful submission, have been seen to amount

to this, that the Court will entertain granting

such a stay where it would consider not to do so

would render the ultimate appeal nugatory in a

sense that it is unlikely it can be proceeded with.

There has been, by another of your brother

Judges, we would say a very useful explanation and

expansion of the content of that rule, and I refer

to the judgment of His Honour Mr Justice Dawson in

Federal Commissioner of Taxation v Myer, which I

will hand Your Honour a copy of. In fact,

Your Honour, our copies are not the best, so if we

take the liberty of handing up the Commonwealth Law

Report -

HIS HONOUR:  I do not think you need worry about that,

Mr Sullivan. We should have a set of Commonwealth

Law Reports here.

MR SULLIVAN:  Thank you, Your Honour. The relevant volume

is 160 CLR 220.

HIS HONOUR:	Mr Sullivan, could I just interrupt the flow of your argument to ask you this. Perhaps it is a
question that I should direct more at Mr Ireland,
but is it your understanding that the application
is opposed absolutely, as it were?
MR SULLIVAN: Yes, Your Honour.

MR SULLIVAN: Yes, Your Honour.

HIS HONOUR:  I put it that way because I suppose there are various possibilities. One is simply that the

application is refused, the other is that it is

granted, or a third is that it may be granted on
condition, one ol:1vious condition being that the

amount of the judgment debt be either paid into

Court or be secured in some satisfactory manner.

Has there been any discussion between counsel as to some midway course, as it were, between

granting or refusal, in absolute terms, of the

application?

Moulieux 10 27/9/91

MR SULLIVAN:  Your Honour, there has not, on this occasion.

The reason for that is this: an offer to give

security as a condition of a stay was made before

the Court of Appeal and was not accepted by my learned friends, or those in his place on that

occasion. With respect, Your Honour, I would be

very interested to hear what Mr Ireland had to say about each of those three alternatives, because it

may well alter the way in which I put my

submissions.

HIS HONOUR:  Well, it may chart the way in which the

argument is framed on both sides.

MR SULLIVAN:	Yes, Your Honour.
HIS HONOUR:	So perhaps I should just ask you that,

Mr Ireland. Arn I to take it that the application

is opposed absolutely?

MR IRELAND:  Yes, Your Honour. Our primary position is that

this is not a case for a stay on any terms. A

secondary position would be that the Court would

not entertain the grant of a stay except on

securing the judgment debt.

HIS HONOUR:  But if the applicant offered to secure the

judgment debt, or perhaps more appropriately, pay

it into court, what is the respondent's attitude?

MR IRELAND:  We still maintain our primary position,

Your Honour. Can I just say in this context,

whilst I have been asked to rise to my feet, that
an offer is not formulated in either of the

affidavits in any real or meaningful terms.

HIS HONOUR: That may be, but simply I do not want the Court

to be concerned in hearing argument about

principles applicable if in the end there	is some
scope for agreement between the parties.	But that
must be a matter for the parties.

MR IRELAND: Unfortunately there is not in this case,

Your Honour. We have to maintain our position.

HIS HONOUR:  Very well. Thank you.

MR SULLIVAN:  Thank you, Your Honour, I should indicate just

before I deal with the principle, we are prepared

to offe~ .as a condition of a stay being granted

either security or an amount to be paid into Court

and, indeed, with respect to my learned friend, in

Mr Preston's affidavit of 23 September 1991 in

paragraph 18 of that affidavit, in our respectful

submission, it really does amount to an offer of

what I have just put to Your Honours.

Moulieux 11 27/9/91

HIS HONOUR:  Yes. Well anyway the respondent's stand is

that the application is opposed absolutely so you

need to proceed.

MR SULLIVAN:  Thank you, Your Honour. I was going to take

Your Honour to the judgment of His Honour

Justice Dawson in Commissioner of Taxation v Myer

Emporium, (1986) 160 CLR 220. It was, again, an

application for a stay pending the outcome or fate

of an application for special leave. The person

seeking the stay on that occasion was the

Commissioner of Taxation. His Honour deals with

the matter, Your Honour, at the bottom of page 222

of the report, the last full paragraph, where

His Honour expresses the principle in this way, and

His Honour says:

It is well established by authority that the

discretion which it confers -

being Order 70 rule 12 -

to order a stay of proceedings is only to be
exercised where special circumstances exist
which justify departure from the ordinary rule

that a successful litigant is entitled to the

fruits of his litigation pending the

determination of any appeal. Special
circumstances justifying a stay will exist

where it is necessary to prevent the appeal,

if successful, from being nugatory. Generally

that will occur when, because of the

respondent's financial state, there is no

reasonable prospect of recovering moneys paid

pursuant to the judgment at first instance.

However, special circumstances are not limited

to that situation and will, I think, exist

where for whatever reason, there is a real

risk that it will not be possible for a

successful appellant to be restored

substantially to his former position if the

judgment against him is executed.

Your Honour, that, we say, does not expand or

extend any other principles which have been

expressed by this Court. It is simply, we say, a

very useful elaboration of the content of the

principle.

Your Honour, the other passage which is

commonly cited from this Court is from the judgment

of His Honour Mr Justice Brennan in the case of

Jennings Construction Ltd v Burgundy Royale

Investments Pty Ltd, (1986) 161 CLR 681. I might

indicate Your Honour has, yourself, quoted this

passage with approval subsequently in a case called

Moulieux 12 27/9/91

Bahr v Nickolay which I will give Your Honour

reference to in due course.

HIS HONOUR:  I think later still in Paringa.

MR SULLIVAN: Yes, in Paringa, Your Honour. Your Honour, in

the Burgundy Royale case His Honour

Mr Justice Brennan expressed the principles in

passages commencing at page 683. At about point 5

on that page, His Honour, after quoting from the

present Chief Justice, said:

The jurisdiction to grant a stay in the

present case depends on whether a stay is

necessary to preserve the subject-matter of

the litigation. If an application for special

leave to appeal would be futile unless a stay

is granted, the jurisdiction arises.

His Honour then goes on to discuss aspects of the particular case and he picks up again on the

general principle on pages 684 to 685. The

relevant passage, Your Honour, being on page 684 at

about point 3, the paragraph commences:

A stay to preserve the subject-matter of

litigation pending an application for special

leave to appeal is an extraordinary

jurisdiction and exceptional circumstances

must be shown before its exercise is

warranted. If an order for a stay is made,

the respondent is kept out of the benefit of

the order of the court in which the matter is

pending until the hearing of the application

for special leave to appeal.

His Honour then quotes Marconi's case and then sets

out the factors which he thought were relevant in

considering whether the stay should be granted.	At
the top of page 685 His Honour says:

jurisdiction to stay, the following factors In exercising the extraordinary

are material to the exercise of this Court's

discretion. In each case when the Court is

satisfied a stay is required to preserve the

subject-matter of the litigation, it is

relevant to consider: first, whether there is

a substantial prospect that special leave to

appeal will be granted; secondly, whether the

applicant has failed to take whatever steps

are necessary to seek a stay from the court in

which the matter is pending; thirdly, whether

the grant of a stay will cause loss to the

respondent; and fourthly, where the balance of

convenience lies.

Moulieux 13 27/9/91

So I think, with respect, those principles are

relatively uncontentious. It is a question of the

application of them to the present circumstances.

Your Honour, we submit that in the present case, within the confines of those principles,

there is a real risk that unless a stay is granted until the special leave application is determined, that application will be rendered nugatory.

HIS HONOUR:  In a sense, that depends on timing to a large extent, does it not?

MR SULLIVAN: Yes, Your Honour. If I could just explain

that timing now. As I understand it from the

Registry of this Court, the earliest possible opportunity to obtain a hearing for special leave

would be 24 or 25 October, in Perth. I should add

we are, of course, willing to make an application

on that day and to do so on conditions which would

not prejudice the other side as to the cost of

travel there.

HIS HONOUR:  What do you mean by the second statement?

MR SULLIVAN: Well, Your Honour, we would say that quite

clearly the reasonable - whilst the cost of counsel
and the like would the same as if the matter was

heard in Sydney, quite clearly there are extra

expenses which would be incurred by the respondent

in having to go to Perth, such as air fares and

accommodation, and we would be prepared to

undertake to the Court to meet those reasonable

expenses, irrespective of the fate of the

application.

HIS HONOUR:  Those dates have to be measured, Mr Sullivan, against the timing of the winding-up application.

MR SULLIVAN: Precisely, Your Honour, and that is this: on

the last occasion I saw Your Honour we had not been

served with the summons. We have now been served

with the summons. It is noteworthy, Your Honour,

that the original date for the return of the

summons was a date in early November, but that has

been changed, by handwriting, presumably, one

infers, at the insistence of the respondent.	So
the summons is now returnable on 15 October.

HIS HONOUR:  Does that mean that it is likely to be heard on

that day? Is that the sort of formal return date?

MR SULLIVAN: Well, Your Honour, normally one could say it

is a formal return date and one might anticipate

that there would be a matter which would go over.

This case, however, Your Honour, we would say, with

respect, without trying to give my learned friend

Moulieux 14 27/9/91

advice about how they have conducted that matter,

there would be a very real prospect of obtaining a

winding up order on that day provided all the

formalities have been entertained.	We say that for
that reason.

We have disclosed on the face of our materials

that this company, Moulieux, has a net deficit of

assets compared to liabilities of some $300,000.

There is a judgment which my learned friends have

obtained in this case which, if it is unappealable,
there is no stay, would be for an amount of

something like $400,000. There are no other

creditors apart from internal creditors,

intercompany loans. But on the face of those

materials, if this Court did not grant a stay, we

would submit that there would be no evidence we

could put on which would possibly improve the

position from our point of view, having tried to do

all that in the various litigation steps.

We would say, with respect, that there would be a substantial prospect on 15 October of my

learned friend or someone else on behalf of his client, approaching the Registrar on the return date, having the matter referred to the duty judge

or the company judge on the following Monday with a

view to having it wound up on the basis that there

is no possible defence to the action in the light

of what the Court of Appeal has said on the

application for extension of time. We would

respectfully submit that that is a likely finding bearing in mind that Mr Justice Rolfe, as deposed to in the affidavits here, refused to grant an

injunction on the basis that he said that on the
state of play at present there was no bona fide

dispute because we have exhausted our remedies of

appeal as of right.

So, Your Honour, we would say, with respect,

that unless my friend was to indicate to

Your Honour that they were not intending on the	15th to seek immediately to wind up on that day
there is a very real risk, and it is not a fanciful risk, of on that day or very shortly thereafter,
the company being wound up.

HIS HONOUR:  Had the original return date been maintained,

then you would be in a difficult position to argue

that anything irreparable could happen between now

and the hearing of the application for special

leave?

MR SULLIVAN: Yes, Your Honour. The alternative is this, if

I might say so, with respect: it is conceivable

that some other company in this group could, to

avert what is perceived to be the very damaging

Moulieux 15 27/9/91

consequences to the overall group of this company

being wound up, advance moneys to this company for

the purposes of discharging the debt. That would

also avert, if you like, the very real risk which

we are talking about. The problem with that,

Your Honour, is that it falls fairly and squarely

we say within the principles expressed in those

cases which I have referred you to.

Girvan is in receivership itself. There has been published material which indicates that its

indebtedness is over $400 million. We would be

very much in a position, we would submit, that if

we were to pay that money over and were to be

ultimately successful, there is a real risk of that money not being able to be repaid to us. Certainly

at best we would only be an unsecured creditor in

respect of such payment, and by the very nature of

the fact that there is a receiver and manager

appointed, Your Honour can infer that there are

substantial secured creditors ahead of us.

So, Your Honour, we respectfully say, on those

matters, that whether one looks at it as an

inevitable winding up prior to 24 and 25 October on

the one hand, or on the other hand of taking a

self-help step to prevent that, namely payment of

the moneys, either way that test of exceptional

circumstances or extraordinary circumstances, as

stated so often in this Court, is satisfied.

That leads us, in our respectful submission,

to the need to address Your Honour on the factors
adverted to by Mr Justice Brennan, in

Burgundy Royale, as to what should be taken into account if, you like, we overcome that prima facie

threshold of persuading Your Honour that it is an

exceptional circumstance case. As I have indicated

to Your Honour, what His Honour Mr Justice Brennan

said is the first question is whether there is a
substantial prospect that special leave to appeal

will be granted.

We recognize, with respect, the correctly high

burden that this Court places on any applicant for

special leave, especially where, as here, on its

face, what is sought to be appealed from is not a

final judgment after a full hearing by an

intermediate appellate court but there is, if you
like, an order from the court which refuses to do a

procedural thing to extend the time for the filing

of a notice of appeal. However, this case - and

the conduct of it, Your Honour, is properly

observed - is itself highly unusual.

In the first place, as the majority judgments

in the Court of Appeal make plain, the only basis

Moulieux 16 27/9/91

upon which they refused to extend the time was

because they felt - that is the majority - that an

appeal would be hopeless. They conceded that there

was no other prejudice to the respondents and

conceded that there was no dilatoriness or delay on

the part of the applicant which would otherwise

justify not extending time. What Their Honours

did, in our respectful submission, and were in
error in doing, was in their approach to the

question of Part 20 and the power to correct a

mistake in the name of a party. Your Honour we

say, if a matter of public importance relevant to

an application for special leave is to be agitated

here, the matter of fundamental public importance

about this is that Part 20, in our respectful

submission, is a procedural power, not intended to

affect substantive rights but rather to correct

procedural mistakes.

What Their Honours have done here, in our

respectful submission, is to convert the power

there, that procedural power, into a substantive

power, namely a power to join a separate legal

entity other than the person who was originally

sued.

HIS HONOUR: Well, that really begs the question, does it

not?	Because that is what the argument was all
about.

MR SULLIVAN: It does, and I have to persuade Your Honour

that there is an argument, but if we are right in

our argument, we would submit that is a matter of

public importance. If there is a power to do that,

it is a matter of public importance because, in

effect - and we say this without any disrespect -

it is a back-door method of lifting the corporate

veil and denying natural justice if this can be

done in that way. Although we do not point proudly

to any huge moral merit in our particular case in

many ways, none the less the principle, we submit,

is one of fundamental importance.

But, Your Honour, it does beg the question

which I have to address Your Honour on very briefly
and that is the question of whether the judgment

below would be regarded by this Court as being

attended by sufficient doubt to otherwise merit the

grant of special leave to appeal.	We say, with
great respect, it is attended by that doubt.	We

are mindful of the fact that this Court has
presently, I think, a reserve judgment from the

Victorian Supreme Court before it in Red Shipping

on a similar point - different rules but a similar

point.

Moulieux 17 27/9/91

But, Your Honour, we say we can seek to

demonstrate the problem with the majority judgment

by taking Your Honour to it very briefly and

pointing out the approach. What we say is that

although they appear to select the correct test to
apply they have really reversed the test in its

application.

Your Honour, to understand the submission I

make I think it would be useful if I handed up

Your Honour a chart which sets out the different

names of these companies at various times.	Would
that - - -

HIS HONOUR:  Yes. Is that the same chart as appears in

Justice Cole's judgment?

MR SULLIVAN: 

Yes it is, Your Honour, but it might just be

handy for Your Honour to have it in a loose
fashion.

The problem arose this way: the contract was

entered into in 1987 between the respondent and a

company then known as Preston Erection Pty Limited.

Your Honour will see, as Your Honour is reading it,

in the left-hand column, Preston Erection

Pty Limited is the name of the present applicant,

as at 1987.

HIS HONOUR:  You say is the name of the present applicant as

at a particular date.

MR SULLIVAN:  The present applicant's name as at the date of

the contract was Preston Erection Pty Limited so
that there is no doubt that the entity with whom
the respondent contracted was in fact the present

applicant.

What, however, occurred, Your Honour, was that

a summons was issued on 18 July 1990 in respect of

that alleged breach of contract. As at 18 January

1990, as Your Honour will see from the table which

I have given to Your Honour, the name of the

present applicant was Preston Engineering Pty

Limited and the name of the related company - if I

could use that expression for the present

purposes -as Western Suburbs Construction Co

Pty Limited.

What those then advising the respondent did in issuing the summons was to do a search and

unfortunately or regrettably not go back far enough

in the search. They searched the name, Western

Suburbs Construction Co Pty Limited, found that it had previously been called Preston Erection

Pty Limited and Your Honour will see it was called

that for a period of roughly 18 months. One

Moulieux 18 27/9/91

interpolates that they thought, "Well, that is the

party that we sued; that is the party who the contract was with", therefore the summons was issued against Western Suburbs Construction Co Pty

Limited as the defendant.

MR SULLIVAN:  So, in other words, in our submission, in

strict legal theory, at that stage, the wrong legal

entity is sued because Western - - -

HIS HONOUR:  Is that the matter of a wrong legal entity or

was there any such legal entity?

MR SULLIVAN:	Those are two independent companies.
HIS HONOUR:	Yes, I am sorry, I had overlooked that on the

right hand side the Western Suburbs - Preston

Erection had changed its name to Western Suburbs by the time the summons was issued on 18 July?

MR SULLIVAN:  Yes, and the summons was issued in the name -

the respondent was named as Western Suburbs

Construction Co Pty Ltd. So that, at that stage,

leaving aside anything else, the party who was sued

was a party who was not a party, as a strict legal

persona, to the original contract.

Now, as His Honour Mr Justice Cole in his

several judgments observed, and as Their Honours in
the Court of Appeal have observed, each of those

two companies, the present applicant and if I might

describe the other company as Western Suburbs,

have identical shareholdings; they have identical

directorships and are identically relevantly

controlled by the same man, Mr John Preston. So

that you are in a situation, Your Honour, where you

have got - although they are two separate

companies, they are certainly related, very closely

related although not in a subsidiary parent

relationship but they are controlled in precisely

the same way.

Your Honour, I will not, unless Your Honour

wishes me to, go through then the sequence of

events in any detail. When the summons was issued

there was an admission - it turns out to be a

wrongful admission but there was an admission - on

behalf of the present respondent. I am sorry I

withdraw that: on behalf of Western Suburbs being

then the defendant of the proceedings that it had

entered into the relevant contract. So that on the

pleadings the fact that the contract was admitted,

that was wrongful, we say, as a matter of law

because the contract was in fact entered into with

the present applicant.

Moulieux 19 27/9/91

Then the matter went to reference before

Mr Reynolds, QC, a former judge of the Court of

Appeal, and although during the course of that

reference there was - putting it neutrally, this
question of whether the right party had been joined

or not was raised. Certainly, it has to be said

that the applicant did not, at that stage, either

seek an adjournment or anything of that sort to

achieve a correct situation.

Mr Reynolds gave a reference in favour of the present respondent and His Honour Mr Justice Cole

then purported to make orders in accordance with
the recommendations to the referee. It was at that

time that it became apparent to those instructing
the present respondent that Western Suburbs was not

a proper defendant.	I guess I am begging the
question when I say that.	I should put it more

neutrally: that Western Suburbs was not the party

who was the legal party to the original contract.

Pursuant to Part 20, Rule 1 of the Supreme Court
Rules, they sought to change the name of the

defendant from Western Suburbs to the then name of

the present applicant, that then name being Preston

Engineering Pty Limited.

HIS HONOUR:  I can see the force of that argument. If

Preston Engineering had not at any stage, itself, used the name Western Suburbs Construction so that

it could be said without fear of contradiction, I

suppose, that Western Suburbs is simply another

entity. What the implications of that are is

another question. But, here you have a company

which had, in fact, used the name "Western Suburbs"

at some stage.

MR SULLIVAN:	Yes, Your Honour.
HIS HONOUR:	Is that not the difficulty in arguing that what

took place was simply the amendment of a name as

opposed to the substitution of a party?

MR SULLIVAN:  We would say not, Your Honour. We would say

that the fact that they had used the names,

interchangeably almost, is confusing and

undesirable, but it cannot overcome the essential

legal proposition. If I could take Your Honour to

the relevant test which, again, seems to be common

ground as being the test. It is set out in the

majority judgment of the Court of Appeal which is

annexed· to Mr Meakes' affidavit of 24 September as

annexure - - -

HIS HONOUR:	I think it is annexed twice, actually.
MR SULLIVAN:	Yes, Your Honour.

Moulieux 20 27/9/91

HIS HONOUR:  But if you can take me to the page,

Mr Sullivan.

MR SULLIVAN:  I can take you to page 33, Your Honour, of the

judgment. Does Your Honour have that?

HIS HONOUR:  Yes, I do, thank you.

MR SULLIVAN: At the top of the page, the judges, with great

respect, express the correct test being the test

postulated by Mr Justice Walsh of this Court in

Robertson v Ferguson Transformers, where His Honour

said the correct test was this:

whether the defendant -

and, Your Honour, we place emphasis on the word

"defendant" -

on receiving the court process, and reading it
would say to himself, "Of course it must mean

me, but they have got my name wrong".

Now, we say here, Your Honour, a summons was served

on Western Suburbs. Western Suburbs is the

defendant for that test, in our respectful

submission. Putting that wording in its place, the

test would be, in our submission, Western Suburbs

saying, "Of course is must mean me, but they have

got my name wrong". That is not the relevant test

at all because from the point of view of Western

Suburbs they would be saying, "No, they can't mean

me. They must mean the real party to the contract,

which is not me, but they have named the wrong

party".

HIS HONOUR:  You are not arguing with the test, I take it,

you are arguing with its application?

MR SULLIVAN: Yes, Your Honour, but the effect of the

application, in our respect, is to turn on its head

that very test, because what Their Honours'

reasoning was, and Their Honours accept, in the

next paragraph, and say:

This principle would clearly have been

applicable in the present case except that

Mr Preston, the managing director of both

companies, was himself so confused that he

could not tell whether the contracting party

had ·been sued in its correct name.

Accepting that confusion for the present purposes,

and accepting that you have to put them in a

hypothetical position of them knowing the correct

position, then the answer to the question could not

have been unreservedly yes, which it needs to be to

Moulieux 21 27/9/91

attract the operation of Part 20, a person knowing

the true position would have unreservedly said,

"No" to the question postulated by

Mr Justice Walsh, namely they do not mean me, they

mean this other legal entity, which, at the time

had the name "Preston Erection".

HIS HONOUR:  I see that, but the strength of that submission

is diminished, is it not, by the fact that the

defendant - I will avoid the use of any name at the

moment - filed an answer to the claim in which it

says, "Yes, I was the contracting party"? Now, I know that raises questions of estoppel and so on.

MR SULLIVAN:  Yes, it does raise the question of estoppel,

but it is an estoppel against the person who makes

the admission. It is an estoppel - it becomes the

second part of Their Honours' judgment, which I

will deal with at the moment. But it is an

estoppel against Western Suburbs. It would mean

that Western Suburbs would be estopped from denying
that it was not a party to the contract, so they

might get a judgment against Western Suburbs, but

it is not a basis for getting an estoppel against

the present applicant. Your Honour, I can expand

upon the argument, but really that, in a nutshell,

is our submission. That is where Their Honours, in

our respectful submission, got it wrong.

HIS HONOUR: Well, this area of inquiry by a single Judge,

faced with an application for a stay, is always a

rather delicate one, because you cannot really put

yourself in the position of the Court entertaining

the application for special leave and, as it were,

try to foreshadow what the outcome of the

application will be. I suppose there are some

cases where one can say, pretty confidently, that
the application has so little chance of success

that there has been a failure to meet one of the

criterion.

MR SULLIVAN:  Yes, Your Honour.

HIS HONOUR:  I suppose you could hardly go to the other

extreme and say that it is almost certain to

succeed, unless there was a point of such great

importance that it was hard to see the Court

refusing special leave in that case, but most of

these cases fall well between those two extremes.

MR SULLIVAN:	Between those two extremes, Your Honours.
HIS HONOUR:	Yes.

MR SULLIVAN: Unfortunately, for Your Honours and for us.

Moulieux 22 27/9/91

HIS HONOUR:  A judge, in the position that I am in this

morning, has to ask himself what question: is an

application for special leave likely to be granted

or, is it likely to be refused, or is it enough,

from your point of view, to say, "Well, it is not

possible to say with confidence that it will be

refused"?

MR SULLIVAN: Unfortunately, Your Honours, this Court has

not given us enough guidance to be able to pick

between those. The guidance that has been given is

really that passage from Mr Justice Brennan in

Burgundy Royale where His Honour says, at page 685,

that the relevant matter to consider is:

whether there is a substantial prospect that

special leave to appeal will be granted.

HIS HONOUR:  That is true. On the other hand, when you

follow the judgment down about half a dozen lines,

the way in which Justice Brennan then approaches

the matter is to say:

I do not, however, think that the prospect of

a grant of special leave is insubstantial.

MR SULLIVAN:  Yes, Your Honour, and we would obviously endorse the latter.

HIS HONOUR: In a more cautious way, perhaps.

MR SULLIVAN: Yes. Well, it is obvious, Your Honour, with

great respect, a very difficult situation for a

judge, such as Your Honour, to have to second-guess

what three of his brethren might think on a special

leave application.

Your Honour, one of the facts which, we would

say, would be taken into account on this special

leave application is this: that if my client had

not been out of time, it would have had an appeal

Appeal. All of the judges in the Court of Appeal	as of right and on a full hearing in the Court of	found that there were justifiable circumstances for
being out of time. And, just briefly,
Your Honour, they were that rather than appeal
against Mr Justice Cole's original judgment the
view was then taken by those instructing the
present applicant that a notice of motion should be put on before Mr Justice Cole asking him to vary or
set aside his orders. So, it was that process
which was indulged in and, because of the affluxion
of time for that, they became out of time on the appeal.

We say that it is a matter to be borne in mind

that what we are effectively being deprived of is

Moulieux 23 27/9/91

an appeal as of right because Their Honours have

said, "Look, there is no moral blame attached to

you for being out of time but we just think this

appeal is hopeless". We say that raises an

important point: whether an intermediate appellate

court should adopt that approach, in a situation

such as the present, because it effectively means

that we are coming to Your Honour to try to get

something which the Parliament has said is, prima

facie, our right, namely a right of appeal from a

judgment of this sort.

We would say, in those circumstances, adopting

the more cautious approach of Mr Justice Brennan,

Your Honour would not be satisfied that the

prospects of getting special leave are

insubstantial but we would respectfully submit,
indeed, that we would consider that there were

substantial prospects of obtaining special leave

because the matter is of public importance because,
we say, there is clearly an arguable case on an
important matter of practice procedure; that

Their Honours have so misapplied an accepted test

that if that gains currency it will effectively
transform the way in which these applications are

made; and, we respectfully say, that if leave is

not granted there is a real risk - and we say this

with the greatest of respect to the Court of Appeal

- of a hard case making bad law. For those

reasons, Your Honour, we would submit that we

satisfy that first test which has been articulated

by Mr Justice Brennan.

Dealing briefly, and very briefly,

Your Honour, with the other three matters

His Honour took into account. The second test is

whether the applicant has failed to take what steps

are necessary to seek a statement which the Court

has - - -

HIS HONOUR:  I do not think you need worry about that,

subject to anything that Mr Ireland may wish to

say.

MR SULLIVAN:  Your Honour, the third criterion is whether

the grant of a stay will cause loss to the

respondent. We respectfully submit, how can it?

At the very best they can wind our company up on

the 15th. If we are wrong in our case and we do
not get special leave, and if the Court was minded

to give us the indulgence of an early special leave

application hearing in Perth on the 24th, they are

delayed 10 days on a winding up application. There

is no suggestion that there is going to be any

dissipation of assets in the meantime. And,

Your Honour, we say that the fourth criterion which

His Honour Mr Justice Brennan looked at, namely,

Moulieux 24 27/9/91

where the balance of convenience lies, we say, with

great respect, overwhelmingly lies in our favour

because we are the person who faces the prospect of
being wound up in a situation, we say, where we

have really been denied an appeal as of right on

the underlying judgment debt, and we say that, for

instance, if we offer security as we have or as a

Court requires security, in a sense, the respondent
is in a much better position than it would be if
the stay was not granted, because if you have a
company such as ours where there is a net deficit,

the fruits of its victory in obtaining winding up

might be very minimal. If there is a stay on terms

of security one would think that it is in a very

much stronger position.

Your Honour, unless I can assist you further,

they are my submissions.

HIS HONOUR:  Thank you. Mr Ireland?

MR IRELAND:  Your Honour, there is a tendency, when one gets

to this end of the judicial process, to lose sight

of the starting point. The starting point in this

case was that there was a prepayment to a Preston

company for $500,000 and Girvan made that

prepayment and there was an arrangement under which

there would be, as it were, earned by carrying out

work. The quarrel which arose between the Girvan

company, the respondent, and the Preston company

was whether it had been legitimately earned that

money in the business association between the

parties. The referee found that the invoices which

Mr Preston propounded as signifying scaffolding supplied were irregular, to use a kind term, and the result was that there was a balance in debt

owed by - I am using the expression deliberately -

the Preston company.

After the contract between the parties the matter then, as you have seen looking at the

material, went through quite a long process. That

process culminated on 28 June when judgment was

entered by Mr Justice Cole, and it was on that day

that for the first time, in any real sense, this

issue of which Preston company was everybody

talking about was first raised.

The choice which exists in analysing what

occurred is a choice between what is being

propounded by the applicant yet again today that

what happened on 28 June was to substitute a

defendant and the analysis, which has been upheld

both by Mr Justice Cole when he reviewed the matter

and, more importantly, by the Court of Appeal by a

majority after what it, the majority, took to be

full argument, that all that happened here was that

Moulieux 25 27/9/91

been particularly justified by the fact that the

there was a misnomer and that misnomer, as

Preston company against which the judgment was entered had shared the same name.

So, it was not a case where two, as it were,

independent business organizations were being

confused, the company which was the contracting party, had shared the very name in which it was

first sued. So that the reason for the confusion

was explicable.

The important thing, in our respectful

submission, about those background facts, is that

in the end both Mr Justice Cole and the Court of

Appeal by majority, it is true, have adjudged that

question of fact and that has been adjudged in

favour of the proposition of misnomer and against

the proposition of substitution of defendants. So

that when one comes to evaluate the prospect of the

special leave application which is an inherent step

in the exercise that has to be performed this

morning, what Mr Sullivan would be asking the Full

Court to say is that it is a matter worthy of
reassessment of that question of fact; that somehow

or other, that question of fact is worthy of

attention by the High Court.

HIS HONOUR:  I wonder if that presents the picture in its

entirety. The matter in respect of which special

leave to appeal is sought is the refusal of an

extension of time.

MR IRELAND: Yes.

HIS HONOUR:  True, underlying that is the view taken by the

Court of Appeal of the merits of the matter, but is

it right to say that there has been a canvassing of

the issues relating to the merits of the appeal?

Certainly there has been by the Court of Appeal; to

what extent perhaps is another thing.

MR IRELAND: If I could just give Your Honour the references

in the Court of Appeal judgment. In the joint

judgment - I think at page 28 - does Your Honour

have that handwritten pagination at the top of

the - - -

HIS HONOUR:	Yes, I do, thank you.
MR IRELAND:	Can I operate on that pagination.  On page 28,

in the joint judgment, the question of the ordinary

approach to extending time is noted. The only

default is one of procedure and in the middle of

the page they say:

Moulieux 26 27/9/91

In such a case this court would ordinarily

grant an extension of time.	However, this is
no ordinary case.

And if you can pass down to the full paragraph at

the foot of the page:

In our opinion the proposed appeal has no

prospects of success and for that reason the

extension of time sought should be refused.

And then they go on, if I may ask Your Honour to go

over the page to page 29, to record what is

described at the top of the page as:

extensive argument, which included a detailed

canvassing of the merits of the possible

grounds of appeal -

That was on the first round in the Court of Appeal.

Your Honour appreciates there were two hearings.

HIS HONOUR:  Yes, I do.

MR IRELAND: It would ordinarily, they say, be sufficient

reason for refusing the extension and they they say

- and as Your Honour would be aware, the court was constituted in the same way on both occasions - on page 29, last sentence:

Leave was refused because the Court considered that the proposed appeal had no prospects of success.

And then they go on:

The merits of the proposed appeal were again

canvassed in the argument on the present summons. Having had the benefit of that

further argument we remain of the opinion that

the proposed appeal has no prospects of

success. The issues sought to be raised are

precisely the same as those canvassed in the

earlier leave application. The sole challenge

propounded by the claimant relates to the
order amending the name of the defendant. It

was not suggested by the claimant that the

argument put in support of its application

could be materially elaborated at the hearing

of an appeal.

So that, in our respectful submission, Your Honour,

at least in the minds of those two judges, there

had been full argument and full consideration on

the merits. Now, if I can then pass over, using

the same pagination, to page 32, to which my

Moulieux 27 27/9/91

learned friend referred, right at the foot of

page 32, where the test is identified:

The test for determining whether there has

been a misnomer capable of being corrected -

and there is reference to J Robertson & Co v

Ferguson Transformers, and the test is spelt out.

Then the judges refer to the conduct of the Preston

Company in relation to the litigation by not only

not taking the point - my friend characterizes it

as an admission wrongly made - but also maintaining

a cross action, positively establishes, they say, a

clear case for an estoppel. But, and this is the

final reference on this branch of the submissions,

if I could ask Your Honour to turn to page 34,

after referring to the estoppel argument, the

members of the Court say, in the middle of page 34:

In our opinion this is a clear case of a

misnomer. The opponent intended to sue the

other party to the contract and sued it under

one of its former names. We would conclude

therefore that an order could have been made

under the Rules of Court amending the name of

the defendant at an early stage in the

proceedings and even before a defence had been

filed.

So the approach of Mr Justice Cole that this was a

misnomer case is confirmed by the majority there

after what they characterize as full and complete

and extensive argument upon that question of fact.

So in assessing as one must assess in a sort

of provisional way now the likelihood of special

leave being granted, one has to, in our respectful
submission, have fixedly in mind that this Court

would be asked at the application for special leave

to re-embark upon that question of fact; because

once it is characterized that way as a misnomer, as

all the judges have, and even the President,

Mr Justice Kirby says he is inclined to think that is right - could I just give Your Honour that

reference finally - then this Court would be asked

to revisit that question of fact.

HIS HONOUR:  Do you say, Mr Ireland, that the approach taken

by the majority in the Court of Appeal led them to the result to which they came independently of the question of estoppel?

MR IRELAND:  Yes, we do put that, and that is why I have drawn attention to that particular passage.

Moulieux 28 27/9/91

HIS HONOUR:  Yes, I assumed that to be the purpose, because

it is the matter of estoppel that seems to have

troubled the President.

MR IRELAND: Yes. Could I just give Your Honour two

reference in the judgment there of the President.

I am still working off the the handwritten

paginations if I may, Your Honour, at the top of

the page. I think it should be page 20 in the

handwritten paginations. It is page 7 on the

printed judgment, the last paragraph at the foot of

the page, 11 I acknowledge at once 11 •

HIS HONOUR:	Yes, that is page 21.
MR IRELAND:	So right at the foot of page 21 with

Your Honour's permission:

I acknowledge at once that the reasons

afforded Cole J for the order which he made substituting the name of the predecessor of the claimant for the judgment debtor and

adhering to that order appear strong.

That is the first reference. And then if I might

ask Your Honour to pass over two pages to page 23:

Whilst considered reflection upon the facts might bring this Court to the conclusion

which Cole J reached, I am not inclined to

prevent the claimant from having a full
opportunity to persuade the Court to the

merits of its argument.

I pause there and say the majority took the view

that that opportunity had been given and taken.

Then he goes on:

The distinction which it draws, between a mere misnomer and the incorrect identification of

the proper party, is one recognised by the

law. In the nature of these proceedings, the

Court could do no more now than reach an impressionistic view. Whilst my view, on impression, is the same as that which Cole J

expressed, experience teaches that the close
examination of facts and arguments in the

course of hearing an appeal can alter initial
impressions.

I refer to that in support of the proposition that

the majority of the Court of Appeal were convinced

that the judge was right after what they perceived to be full argument on this question of fact. The

third member of the court was inclined to think

that the judge was right, but baulked at dealing

with the matter, as it were, summarily.

Moulieux 29 27/9/91

HIS HONOUR:  Why does the President say:

In the nature of these proceedings, the Court could do no more now than reach an

impressionistic view.

It seems to suggest that he felt that not all the

facts were before the court.

MR IRELAND: That is at odds with what the other judges say?

HIS HONOUR:	Yes, that is what prompts the question.
MR IRELAND:	Yes, Your Honour, I am trying to point up that

state of affairs so Your Honour is conscious of it.

We would submit, Your Honour, the real reason that

the President balked, as it were, at joining in the conclusion was a feeling, rightly or wrongly in his

own mind, that there might be something further to
be said on the merits of the appeal that had not

been said.

HIS HONOUR:  What material did the Court of Appeal have

before it, Mr Ireland, on the second round, or

perhaps I should ask you what material did it have

on the first round?

MR IRELAND:  On the first round the Court of Appeal had

the - I was present on that occasion, I was

not - - -

HIS HONOUR: That was an application for leave to appeal

against the August judgment?

MR IRELAND: That is so, 23 August judgment. There was the

judgment; there was the transcript; there was the
judgment itself of 28 June which is the first

judgment, and it was on that material that the

Court of Appeal acted, in the first instance. And

then on the second hearing, where I was not in

attendance myself but I have checked this, there

were substantive affidavits put forward.

HIS HONOUR:	On both sides?
MR IRELAND:	On the claimant's side, that is on the

applicant's side and, in summary, that material

sought to show that a different course would have

been taken, if it had been perceived during the

course 9f the reference before Mr Reynolds that the

company which ultimately suffered the judgment was

really the defendant in that litigation. A

persistence would have occurred to find a witness

who was important which did not occur so it was

said, astonishingly, one might think, but when the matter was run, on the assumption, so the evidence

Moulieux 30 27/9/91

would have it, that the other Preston company was

really the one involved.

HIS HONOUR: 

Say there had been a grant of an extension of

time in this case, what else is likely to have been
before the Court of Appeal?

MR IRELAND: 

Nothing at all, which, as I am reminded, really is a reflection of what the majority in the Court

of Appeal felt and stated. In other words, there

was nothing more that could be said.

HIS HONOUR: 

And yet the President -

MR IRELAND: Felt differently.

HIS HONOUR:  Not just felt differently but seemed to

approach the matter on the basis that by refusing

the extension of time, in some way the present

applicant might be at a disadvantage. I am just

wondering in what way it was thought that the

applicant would be at such a disadvantage.

MR IRELAND:	I cannot, as it were, reach into the mind of the President.
HIS HONOUR:	It is probably not a very fair question to ask

you.

MR IRELAND:	But can I guess, and say that His Honour must have felt the argument had not been elaborated, not
that all the material had not been elaborated, but the argument had not been elaborated to a degree in
which he felt satisfaction in saying that this
appeal is hopeless, although his inclination was to think it was.
HIS HONOUR:	Yes, I see that.
MR IRELAND:	I hope this is not too prolix, but all of this

is designed to say to Your Honour that the huge

task of Mr Sullivan's client, whether it is on

24 October or whenever it is, is to persuade this

Court that a question of fact ought to be

revisited. Now, that is dressed up, if I say so

without, I hope, too great discourtesy to his

argument, by begging the question and saying,

"Well, what happened here was what we have been

saying all along, there was a substitution", but

that is the very question of fact that has been

concluded against him at both levels below.

So we say, in summary, that this is a case

where the perception ought to be this morning that

the likelihood of special leave being granted is

very remote, to put it in that spectrum that

Your Honour nominated, as it were, or agitated with

Moulieux 31 27/9/91

my friend as a spectrum that may have to be

evaluated.

Now the next point, with respect, Your Honour,

is this: Mr Justice Kirby, the President of the

Court of Appeal, would have granted a stay, in

effect, of this judgment pending an appeal only

upon payment of the money into Court, or security

of it. That has not been done, although it was

open for it to be done, as a way of persuading

Your Honour on the, at it were, balancing limb that

they are serious about this.

HIS HONOUR:  I am not sure what the point is that you are

making, Mr Ireland; that money should have been

paid in before the summons for an extension of

time, or before the hearing of this application.

MR IRELAND:  No, before today. It would have been perfectly

open to my friend to pay into the supreme court, or

secure to the supreme court, or in this Court, the
judgment, and he would be in a very strong position

then, to say, "Oh well", as he sought to say, but

when one looks at Mr Preston's two affidavits, what

one sees is this, which is the described

disadvantage,	Mr Preston says, "I run this
operation personally.	We have got various

companies that are involved; they really have not

got any money of their own.	I own all the patents,
and I inject money into companies as required.	I
am the controller of the group."	He uses the word

"group" a number of times. He then says, "One of

the companies in my group", this applicant, "will

be disadvantaged in that network, and in the as it

were, the perception, in the commercial community

and its financial framework, if a winding-up

summons proceeds."

With respect, it is extraordinary, in the

circumstances of this case, that could be put

forward as some sort of disadvantage, because, as

the matter has been determined on the merits, both

by the referee and then adopted by the judge and

confirmed, in substance, in the Court of Appeal,

the one thing that is clear in this case is that

one of these Preston companies owes this money so

far. So that the things which harv been described

as disadvantages flowing from this judgment, ie,

that this applicant is the one against whom the

winding-up order is sought, are disadvantages
which, on the broad merits of the situation would

exist, whatever Preston company this claim was

being maintained against. It is not as if it is

the Preston organization versus some other

organization that the choice lies between. The

very group that he characterizes is so interlocked,

is, on the only available view of it, indebted to

Moulieux 32 27/9/91

the Girvan company. His point is not this company,

that company, but to say that consequences follow

of our making, by pursuing one company rather than

other in that group is, we would say, quite

untenable, and that is, as it were, the
discretionary matter that is put forward in support

of a stay.

So, we have sought to identify two matters.

One, is this special leave application really

likely to succeed, and I have dealt with that, and

the other thing is that the factors put forward are

really matters which are utterly of Mr Preston's

own making, because he chooses not to pay that

debt; not to pay that debt through the agency of
the applicant, or any other company. He can stop

the winding-up proceedings tomorrow by paying the

debt, and what he is saying to this Court is, "I

will not do that", and "I will not secure it",

although he vaguely talks about needing time to

raise money, and the summary position is, in our

respectful position, that this is simply not a case

for a stay.

HIS HONOUR:  Is it the fact that if the matter proceeds on

15 October before the supreme court that a

winding-up order is likely to be made?

MR IRELAND: Well, one would have thought that there would

be the most powerful grounds for an adjournment if

the special leave application had been fixed for

the 24th. The Registrar would probably adjourn it.

My friend says we have got a strong case, but the

thing - we have a winding-up summons on foot, and
that has certain consequences, as Your Honour would

understand, for the commencement of any winding-up

that ultimately - we obviously are entitled to

preserve that situation. The time we presented the

winding-up summons, we were established, by

judgment, as a creditor. All that is changing in ..

the meantime is the possibility of appeal, and it

is admitted the company is insolvent, as my friend
says.	The only question is, "Are we a creditor?"
really.

HIS HONOUR:	Yes.
MR IRELAND:	Now, we would have thought, with respect, that

if my friend accomplishes the listing of this

special leave application on the 24th in Perth,

there is nothing we can do to stop that, if it can

be accomplished through the Court's own indulgence,

then there would be a powerful ground to say to the

supreme court, "Well, all this is under a cloud at

least until the 24th. Adjourn the winding-up

summons".

Moulieux 33 27/9/91

HIS HONOUR:  Of course, you could be in a worse position if

the application for special leave to appeal of the

stay were not granted. That is, if a stay were

granted only upon conditions, one of which was that

the applicant paid or secured your costs of the
hearing in Perth, and the stay were not granted and

there was no winding-up ordered by the time

application for special leave to appeal were heard,

and if it were heard in Perth - - -

MR IRELAND:  It could be a more costly exercise for us.

HIS HONOUR: Well, perhaps not more costly, but the

prospects of recovering the costs might be less. take.

MR IRELAND:  We will take that risk. We do not think that

is a very good reason for granting a stay, with

respect.

HIS HONOUR:  No. I see that.

MR IRELAND:	So that, my friend says - - -
HIS HONOUR:	Could I just take you back to this question of the winding-up, Mr Ireland? There is a certain
circularity in all this, depending on which event
takes place first, and if it was clear that there
could not be a winding-up order made before the
hearing of the application for special leave then I
could see no foundation at all for granting a stay. But, that is something about which, apparently, I
cannot be confident and the extent to which that is
in the hands of either party or both parties, I am
not sure.
MR IRELAND:	I suppose it is in the hands of us, the moving

party.

HIS HONOUR:  Yes.

MR IRELAND:  We could agree now that we would adjourn the

winding-up until after the 24th on the contingency,

but I am not instructed to do that. But

Your Honour did ask me to comment upon the

likelihood of a winding-up order being made and

that is the reason for my response.

HIS HONOUR:  Yes, I understand that. I just have the

feeling with this application that there are some
aspects of it - and this is not said critically of

either party - which might have been capable of

resolution which in the end would have made the

application unnecessary or, perhaps the other way,

would have guaranteed its failure.

Moulieux	27/9/91
MR IRELAND:	I suppose, Your Honour, it is inherent in the exercise Your Honour is performing this morning to
determine if it is open to be determined or whether or not this matter takes, as it were, a priority
and gets it added to the list.  One has to approach
today's exercise assuming that that will or will
not occur and all of our submission has been addressed to that contingency.
HIS HONOUR:	Added to which list?
MR IRELAND:	The Perth list on 24 October.
HIS HONOUR:	That is not a matter that I can determine. But

I assume from what has been said to me that there

is some prospect of that taking place.

MR IRELAND: What I am saying is, I do not know, frankly,

whether that is right or not; it depends on the

list, I suppose, in the Registry and the Registrar

and so on. But Your Honour might, in a sense, be

embarking upon this matter and unwittingly granting

a stay, if that is the conclusion that is come to,

for a much longer period.

HIS HONOUR:  For?

MR IRELAND: For a much longer period; until next year,

perhaps.

HIS HONOUR:	Yes.
MR IRELAND:	So, Your Honour, I am only trying to focus on

that possibility and my friend said - and one can

see why - that the logical possibility is to get

the matter on in Perth in October. Well, that is

only, as we understand, the contingency.

HIS HONOUR:  I should perhaps canvas that with the Acting

Registrar. I am told that there is space. It

probably cannot be put any more strongly than that

at the moment.

MR IRELAND:  I am obliged to Your Honour for that

information, and to the Registrar.

Really, if it be treated as a probability that

the matter could be dealt with on that occasion

then Your Honour is really assessing the matter in

a different framework as to time.

HIS HONOUR:	Yes.
MR IRELAND:	We will hang our hat on the three elements

here. One is, no serious likelihood of special

leave for the reasons I have tried to elaborate.

Secondly, all of the misfortunes can be cured by a

Moulieux 35 27/9/91

payment or a security. And, thirdly, that although

indicated by the President as the only basis upon

which he would, as it were, let the thing go on

further has not been done and it has been open to

Mr Sullivan's client right up to this morning to

pay or secure this debt and, say, from a much more
powerful platform, "There is a reason for staying".

What is probably happening here is, Mr Preston,

through one of his many guises, will not pay this

debt. Those are our respectful submissions,

Your Honour.

HIS HONOUR:  Thank you, Mr Ireland. Mr Sullivan.

MR SULLIVAN:  Your Honour, if I might be very brief and

thank my friend for putting my submissions down

with great discourtesy, as he put it.

Your Honour, three things which I would like

to say in response to my learned friend: first, he
characterizes, in our submission wrongly, the
decision of the majority of the Court of Appeal as

being a question of fact. He says that their

analysis that this is a misnomer by applying the

test as a question of fact, with great respect,

cannot be so. It must be a question - it is an

application by judges of a test to circumstances

that must be at very worst a question of mixed fact

and law. We would submit it is simply like a

construction case. It is a pure question of law.

Secondly, my learned friend indicated that the estoppel argument was one which was an alternative.

With respect, I can see there is some confusion in

Their Honours' judgment about that. We would be

content, if you like, to say that they had two
separate reasons for reaching it: one is their

analysis which we say is wrong for the reasons I

have advanced. We clearly say, Your Honour, that

so far as the estoppel matter goes, Their Honours

are not only wrong in principle because they have

the wrong estopped party, but in conformity with

the principles laid down in the Court in cases such

as Coulton v Holcombe, I think it is, and others,

that matter not having been raised below, and

indeed, a matter in which it is conceivable

evidence of detriment and the like would have to

have been put on by both sides, or evidence of

reliance, if you like, and those matters, it is not

inconceivable that that evidence would have been

put on. It was impermissible for an appellate

court to raise that as an additional reason.

HIS HONOUR:  But you put it as an additional reason. What

is put against you, I think, is that it was an

independent reason. In other words, that one can

put the whole question of estoppel to one side, and

Moulieux 36 27/9/91

there is still a very clear statement by the Court
of Appeal on the facts and on the application of

the law.

MR SULLIVAN: Well, Your Honour, leaving it at that level,

and assuming that is the case, that it is an

independent reason, then my submissions stand or

fall on what I have put already in-chief, namely,

that Their Honours, in our respectful submission,

we would say got it wrong, but for the purpose of

argument say that their reasoning is attended by

doubt on the primary ground, namely, the

application of the principle enunciated by

Mr Justice Walsh, and we say that that is not a

question of fact; it is a question of law, .....

applied on an expression in a judgment to determine

a fundamental legal question, namely, whether

something is to be characterized as a misnomer or
introduction of a fresh party. That is a

substantive question of law, in our submission, and

it is there where they have erred.

Your Honour, the other point my friend makes

is he says, "Well, there is no real merit here

because my client, Mr Preston, would have been in a

much better position if he had made a payment of

money." Mr Ireland fails to address the point

which we already raised, namely, his is a company

in receivership and with published deficiencies of

over $400 million.

HIS HONOUR:  But I thought what Mr Ireland was saying was

not that your client should pay to his client the

judgment debt, but that it should be paid into

court, at least as an indication of bona fides.

MR SULLIVAN: Well, Your Honour, with great respect, I

thought that is what we had offered today to do to

my learned friend - - -

HIS HONOUR: Well, there is a difference, I suppose, between

offering and actually having the bird in the hand.

MR SULLIVAN:  Your Honour, there is.

HIS HONOUR: Well, perhaps not in this case, but the bird in

somebody else's hand, namely the Court's.

MR SULLIVAN:  Your Honour, I appreciate there is a

distinction. We would simply say that Your Honour

could impose as a conditioner, a time limit for

that to occur. If it does not occur, the stay

evaporates, and again, from the very worst position

from my learned friend's point of view, there is a

delay of seven days, or whatever. But given that

he cannot proceed to wind up until 15 October, one

would think he could not be prejudiced if there was

Moulieux 37 27/9/91

a condition to provide that security any time

before that day.

HIS HONOUR:  But you seem to be inviting me to attach a

condition, namely that there be a stay, subject to the payment of money. If I were minded to grant a stay and attach a condition, it would, I think, be

in terms that a stay would only come into operation

on the payment of money into Court, or it being
secured. In other words, there would be no stay in
existence until the condition had been complied

with.

MR SULLIVAN: Well, Your Honour, clearly that is a matter

within Your Honour's very broad discretion. The

only matter we would put in favour of a stay on the

lines along those we have formulated is that it is

not an insubstantial sum. There would need to be

some little time, at the very least, to raise that

sum. We have adverted in our affidavit material to

the problems which we perceive will occur on

advertisement of the winding up petition. That has

not been done yet. It cannot be done till, we

think, Monday, but we respectfully say,

Your Honour, that would be a factor to be taken

into account, not on the granting the stay, but on

the form of the order Your Honour made as to the

condition. We would say that if that deleterious

outcome could be avoided by imposing a short time

to get that money as a condition of a stay, then

that would be a - - -

HIS HONOUR:  What do you mean by a short time?

MR SULLIVAN: Well, Your Honour, I really have not got

instructions, but we would submit that no more than

seven days - if the moneys were not provided by way

of security within seven days, then - my friend has

indicated that he would think that was reasonable,

if that approach was taken.	Your Honours, they are
the matters I - - -

HIS HONOUR:  Let us be clear about this. Do you understand

Mr Ireland to be saying that, if I were minded to

grant a stay and attach conditions of the sort that

we have canvassed, that the respondent would be

content with a stay operating so long as the money

was either paid into Court or properly secured

within seven days.

MR SULLIVAN: That is what I understand him to be saying,

Your Honour.

HIS HONOUR: 

I am not sure what effect that has upon the

advertisement, upon the hearing day fixed for
15 October, but that is a matter for the - - -

Moulieux 38 27/9/91

MR SULLIVAN:  At the moment I am not sure either,

Your Honour.	I have always to look to the rules
for these things.	So that is all I really have to
say.	The matter has been otherwise fairly

canvassed by my learned friend.

HIS HONOUR:	Yes, thank you, Mr Sullivan.
HIS HONOUR:	I do not find this a particular easy matter to

resolve. I take as a starting point a considerable

lack of sympathy for the applicant, but I have to

deal with the matter on the principles that have

been enunciated by this Court and the information

that has been given to me in the course of this

morning's hearing.

The principles are well established and I do

not propose to canvass them. But the basic

principle is that the jurisdiction of this sort is

attracted by reason of the likely result that, if a

stay is not granted, the appeal will be rendered

nugatory. That is a factor which assumes

considerable importance in the present case. It

seems clear enough, at least no one has suggested

to the contrary, that if a winding-up order is

made, the application for special leave to appeal

will go by the board. I put it in that rather

colloquial way because I have not been drawn to

those sections of the Corporations Law that would

enable me to express the matter in a more technical

form.

That said, the next question is whether those

other matters that have been adverted to in the
judgments of the Court operate either in favour of
the applicant or in favour of the respondent. If I

can borrow the judgment of Justice Brennan in

Jennings Construction Ltd v Burgundy Royale

Investments Pty. Ltd, [No.lJ, (1986) 161 CLR 681,

at page 685, and look at the matters which

His Honour thought relevant to consider. Perhaps

if I start in the reverse order, the "balance of

convenience" seems to operate in favour of the

applicant, at least so long as the respondent is

properly secured as to the judgment debt. Whether

"a grant of a stay will cause loss to the

respondent" can be confidently answered, no, again

so long as the judgment debt is paid into Court, or

properly secured. The criterion, namely:

whether the applicant has failed to take

whatever steps are necessary to seek a stay

from the Court in which the matter is

pending -

again can be answered in favour of the applicant,

which, as is clear from the material, has sought a

Moulieux 39 27/9/91

stay, both from a judge of the Supreme Court and a

judge of the Court of Appeal.

The matter that causes me the most concern is

whether it can be said, either that there is a

substantial prospect that special leave to appeal
will be granted or, using the language of

Justice Brennan, further down the page, whether:

the prospect of a grant of special leave is

insubstantial.

To put the matter in context, what the Court

of Appeal was faced with on the second time the

matter came before it was a summons for an

extension of time in which to appeal. As has been

pointed out, there was an appeal as of right from

the judgment of Mr Justice Cole delivered on 28

June 1991 which, for some reason, the present

applicant chose not to exercise, but to take steps

to have that judgment set aside by motion. All

members of the Court of Appeal seem to have

accepted that, in the ordinary course, the

circumstances would have justified an extension of

time. But an extension was refused because of the

view of the majority that, as I take it, the matter

was clear really beyond argument that this was a

case of misnomer.

Now, I have heard what Mr Sullivan has had to

say and what Mr Ireland has said by way of

response. I find it difficult to express a view

with any confidence as to the likely outcome of an

application for special leave to appeal. I have

reservations about the matter but I do not think I

can dismiss the application as having no real

prospect at all, particularly when it is taken in

the context of the form in which the matter came
before the Court of Appeal, namely by way of a

summons for extension of time which was refused.

It would seem that there are other arguments

to be canvassed. I put it rather tentatively

because of the way in which the President of the
Court of Appeal described the matter in

"impressionistic terms", and I am not minded to

conclude that there was simply no merit in an

appeal, had there been an extension of time

granted.

So, for those reasons, I am disposed to grant

a stay, but only to do so on the most strict of

terms. These terms, subject to whatever counsel

may have to say, seem to me to go, first and

primarily, to the payment of the judgment debt into

Court or it being secured to the satisfaction of

Moulieux 27/9/91

the Registrar, within a period of time which the
parties seem to be content to take as seven days.

Secondly, so that the respondent is not shut

out from the judgment debt any longer than is
necessary if an application for special leave to
appeal should in the end be refused, the applicant
must secure the respondent's costs of a hearing in

Perth. How that is to be done, whether it is

possible to make some estimate of an amount,

whether I can leave that to the parties, I will

hear from counsel in a moment.

They seem to me to be the two matters of most

importance that should be attached by way of

conditions to the grant of a stay. I note that all

that is sought by way of a stay is a stay of the

order of Mr Justice Cole on 28 June 1991 and that

no application is made in respect of the winding-up

proceedings themselves.

Before I make any final order I will give

counsel an opportunity to speak as to the

conditions, or if you would like time, perhaps, to

discuss them among yourselves, I will adjourn for a

few minutes. That might be a more satisfactory way

of dealing with it.

MR IRELAND:	Your Honour, I think we could deal with it now.
HIS HONOUR:	Can you?  Do you want to say something first,

Mr Ireland?

MR IRELAND: If I may, Your Honour. Could I just draw

attention, on machinery matters, following

Your Honour's remarks: the order of 28 June which

is sought to be stayed is a composite order.	It is
found as one of the exhibits to Mr Meakes - - -

HIS HONOUR:  Now, when you say, "to Mr Meakes' affidavit",

are you speaking of the last affidavit of - - -

MR IRELAND:	Of 26 September.
HIS HONOUR:	Yes, and - which exhibit?
MR IRELAND:	I wish I could say, Your Honour. Again, the

photocopying seems to have beaten me.

MR SULLIVAN: It.is exhibit A, I think, Your Honour.

HIS HONOUR: 

I noted that at some stage there had been stays

granted by consent but they were certain paragraphs
of the order of Mr Justice Cole.

MR IRELAND: That is what I was going to draw attention to,

Your Honour. As I understand it - it is not clear

Moulieux 41 27/9/91

in the motion, but what is sought is paragraph 3 of

that order be stayed, which is the obligation of

payment.

HIS HONOUR:  You are suggesting, Mr Ireland, that any stay

be confined to paragraph 3 of the orders?

MR IRELAND: That is my suggestion, Your Honour. I do not

know what my friend has in mind.

MR SULLIVAN:  I would not oppose that course, Your Honour.

HIS HONOUR:  You would not oppose that. What about

paragraph 4, that the defendant, it looks like, pay

the plaintiff's costs of these proceedings - - -

MR IRELAND: Well, paragraphs 3 and 4. That is the first

matter Your Honour raised. The other matter, I

think, was the fashioning of terms in conformity

with what Your Honour has said.	Our suggestion
would be that -

HIS HONOUR:  I wonder if we took the suggested order of the President as some sort of a guide, Mr Ireland. I

know that was in fairly detailed terms.	It is on
page 26 of the printed judgment that I have.	We
could perhaps start with paragraph 3. Clearly

there would have to be some rewording of it but

does that offer a guide to the form of the order

that you suggest is appropriate?

MR IRELAND:	Yes, Your Honour.
HIS HONOUR:	What, that money be paid into a bank account?
MR IRELAND:	Or, alternatively, either 3(a) or 3(b),

or

HIS HONOUR: Well, are you arguing for one or other or are

you content with either?

MR IRELAND: Content with either.

HIS HONOUR: 

There would have to be an undertaking by the

applicant to prosecute the application for special
leave to appeal.

MR IRELAND: Yes, I was going to mention that, Your Honour.

We would ask for that.

HIS HONOUR:  Then, perhaps more specifically, "and take all

reasonable steps to have the application heard in

Perth".

MR IRELAND:  In the sittings of 24 October. The only other

matter, I think, was the question of quantification

Moulieux 42 27/9/91

of the additional costs.	I am sure we could agree
on that.

HIS HONOUR: Well, how do you suggest I deal with that; that I simply order that as a condition of the stay that

the applicants secure to the satisfaction of the

respondent?

MR IRELAND:  Yes, Your Honour. I am sure that that will not

cause trouble.

HIS HONOUR:  It is just that at the end of the day a formal

order needs to issue and it ought to be in as

reasonable a form as is possible.

MR IRELAND:  Your Honour, we would, with respect, propose

that, within the same period of seven days, the

applicant pay or secure - - -

HIS HONOUR: 

I suppose it is the respondent's additional

costs incurred by reason of any hearing of the
application for special leave in Perth.

MR IRELAND:  Yes, Your Honour. Thank you. We would be

content with that.

HIS HONOUR:	What about the costs of today?
MR IRELAND:	They should be costs in the application for special leave, in our submission.

HIS HONOUR:  Thank you, Mr Ireland. Did you want to comment

on those suggestions, Mr Sullivan? What I will do

is, if I can, enunciate what seems to me to be the

appropriate order when I have heard from you, and

give counsel the opportunity to say something more

if they wish.

MR SULLIVAN:  No, Your Honour. I think, with great respect,

they seem to be appropriate orders. The only

matter which - and I think Your Honour clarified it

in your remarks from the bench to Mr Ireland - as

we understood it, the security for the respondent's
costs of hearing in Perth are costs which would be

additional to having an appeal heard in Sydney.

HIS HONOUR:  Yes. And I suppose there should be liberty to

apply, too, on 48 hours notice, in case something

goes wrong with the Perth hearing.

MR SULLIVAN:  Yes, Your Honour. Thank you.

HIS HONOUR: Well, doing the best I can it seems to me that

the orders should be in these terms:

1.       An order that paragraphs 3 and 4 of the

orders made by His Honour Mr Justice Cole in the

Moulieux 43 27/9/91

Commercial Division of the Supreme Court of New

South Wales in proceedings S 50419 of 1990, given

on 28 June 1991, be stayed until the hearing of the

applicant's application for special leave to appeal
to the High Court.

2. That the stay be conditional upon the applicant, within seven days of this order, either

(a) depositing in a bank account to be jointly

established by the applicant's solicitor and the
solicitor for the respondent the sum of
$365,708.02; or (b) providing to the Registrar of
the High Court, in a form reasonably acceptable to
the Registrar, security providing for the payment
to the Registrar of the sum of $365,708.02, upon

order of the Court to that effect; such joint bank

account or security to abide any further or other

order of the Court.

3. That the applicant undertake to prosecute

with all reasonable speed the hearing of the

application for special leave to appeal and, in
particular, take all steps open to it to secure a

hearing of the application for special leave to

appeal in the October sittings of the Court in

Perth.

4. That the applicant secure, to the

reasonable satisfaction of the respondent, an

amount to meet the additional costs incurred by the

respondent on the hearing of the application for

special leave to appeal in Perth.

Could I just interpolate, I take it it is

common ground that the applicant is not only to

secure those costs but to pay them, in any event?

MR SULLIVAN: Yes, Your Honour.

MR IRELAND:  Yes, Your Honour.

HIS HONOUR:  So I will add: and to pay those additional

costs in any event.

5. That the costs of today's hearing be costs

in the application for special leave to appeal.

6. That there be liberty to either party to

apply on 48 hours notice.

MR SULLIVAN: If the Court pleases.

HIS HONOUR:  Is there anything you wish to say about an

order in those terms, Mr Ireland?

MR IRELAND:  No, Your Honour.

Moulieux 44 27/9/91

HIS HONOUR:	You, Mr Sullivan?
MR SULLIVAN:	No, Your Honour.

HIS HONOUR:  Very well. I then order accordingly. The

Court will adjourn.

AT 11.40 AM THE MATTER WAS ADJOURNED SINE DIE

Moulieux 27/9/91