Reliance Financial Services Pty Ltd v Martha's T Market Pty Ltd

[2003] NSWSC 422

Reported Decision: (2003) 45 ACSR 287

Supreme Court

CITATION:	Reliance Financial Services Pty Ltd v Martha's T Market Pty Ltd [2003] NSWSC 422
HEARING DATE(S):	19/05/03
JUDGMENT DATE:	19 May 2003
JURISDICTION:	Equity Division Corporations List
JUDGMENT OF:	Young CJ in Eq
DECISION:	Interlocutory process dismissed with costs. Extension of time denied.
CATCHWORDS:	CORPORATIONS [228]- Winding up- Application not heard within six months- Power to excuse default in not applying for extension- Operation of s 459R of the Corporations Act 2001. PROCEDURE [487]- Slip rule- Inherent power akin to slip rule to deal with matters overlooked by solicitors- Whole history of case to be considered when exercising power to excuse.
LEGISLATION CITED:	Corporations Act 2001, s 459R Supreme Court Rules, Part 20 r10
CASES CITED:	Edwards v Waterproofing Manufacturers (Chendu) Pty Ltd [2000] NSWSC 1227 Elyard Corp Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385 Westpac Banking Corporation v E & W Jury Pty Ltd (1986) 16 ACLC 547
PARTIES :	Reliance Financial Services Pty Limited (P) Martha's T Market Pty Limited (D)
FILE NUMBER(S):	SC 5422/02
COUNSEL:	P A Fury (P) G Colman (D)
SOLICITORS:	Stoikovich Macri (P) Dibbs Barker Gosling (D)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

YOUNG CJ in EQ

Monday 19 May 2003

5422/02 – RELIANCE FINANCIAL SERVICES PTY LTD v MARTHA'S T MARKET PTY LTD

JUDGMENT

1 HIS HONOUR: The present application is made under the inherent power of the court to correct a problem caused by counsel and solicitors for the plaintiff failing to direct their minds to the effect of s 459R of the Corporations Act 2001 when the then Corporations Judge fixed the hearing of the plaintiff's winding up application for final hearing in June of this year. The Act had the effect that the last day for dealing with the application was 7 May 2003.

2 What happened was that Gzell J fixed the matter for hearing before Bryson J on 23, 24 and 25 June 2003. The court appointed a directions hearing before Bryson J on 8 May 2003. Due notice was given of that and a solicitor for the plaintiff made a note in what he calls his computer diary. He looked at that diary a couple of times, nonetheless did not attend before Bryson J on 8 May. It was then drawn to his Honour's attention that the winding up proceedings had come to an end because of s 459R. His Honour notified the defaulting solicitor, who made this present application by interlocutory process filed on 12 May 2003.

3 Despite the rigors of the regime set out in the Corporations Act, judges, particularly in the Federal Court, have been fairly merciful in extending the time under s 459R, even after it has expired, if the failure to ask for the extension when the matter is set down for hearing has been inadvertent; see for instance, Elyard Corp Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385 and Westpac Banking Corporation v E & W Jury Pty Ltd (1998) 16 ACLC 547.

4 Part 20 r10 of the Supreme Court Rules sets out what is commonly called the Slip Rule. That Rule only covers errors in a judgment or order. However, it is not contested that the Court has an analogous inherent power to correct other errors including errors where solicitors do not direct their minds to serious problems. It is clear that when the inherent power is being invoked, the matter is in the discretion of the court and the prime issue is one of justice between the parties; Edwards v Waterproofing Manufacturers (Chendu) Pty Ltd [2000] NSWSC 1227.

5 The principal defence of the company whose winding up is sought to the present motion is that the defaults on behalf of the solicitors and counsel for the plaintiff continued for a considerable period of time and that there was also no appearance before Bryson J on 8 May. They also say that they were the victims of negligence by their former solicitors in these proceedings and that when they sought mercy from the court last year this was opposed, mainly on technical reasons, and denied them.

6 It would seem, reading from the affidavit of the plaintiff's solicitors, that on 10 September 2002 there was no appearance for the defendant, when its application to set aside the statutory demand was before the court, when the list was called at 9am. The Acting Master dismissed the application. There was an appearance later in the morning, but at that stage the plaintiff had gone and the Acting Master declined to reverse the dismissal.

7 On 11 September the defendant filed a notice of motion seeking to set aside the orders of 10 September, which motion was returnable on 23 September. That motion was contested and the matter seems to have been resolved on the basis that because of the failure to make an application to extend the time under s 459F, the time for compliance had expired. There was an appeal to a judge, which appeal was dismissed on 9 October.

8 It seems to me that when there are negligent lawyers on both sides, that if one party is seeking relief one does take into account the whole history of the matter. If it were possible for me to work out some condition, whereby the parties could be restored to the position which they were in prior to the first act of negligence by the lawyers, I would probably do so, as essentially I believe that, if it is possible, parties should not suffer for the carelessness of their lawyers, and it is to everybody's interest that the matters in dispute come before a court and be dealt with earlier rather than later.

9 I floated these matters with Mr Colman of counsel for the defendant. I could not think of any condition which might be able to allow the problem to be solved, nor could Mr Colman, and counsel for the plaintiff did not attempt to do so in his reply. It seems to me than no such condition can be worked out.

10 Thus I have to consider whether in light of the technical attitude taken last year, when there was a failure to ask the Acting Master to extend the time to deal with the statutory demand, I should excuse the negligence on the plaintiff's side.

11 I do not consider that the case made out by the plaintiff is sufficient for me to take that step. It is not completely prejudiced, as it is open to it, if it so wishes, to make a new statutory demand, or to sue.

12 Accordingly, in my view, the interlocutory process should be dismissed with costs. The exhibits may be returned.

13 Mr Fury has raised the point that the reason why Barrett J dismissed the application to extend the time was that he had no discretion because there having been no obligation to extend the time on 10 September there was nothing any court could do about the matter. However, comity between members of the legal profession usually means that where a lawyer has been late in arriving at court such technical arguments are not put to judges because it is true that if they are put the judge can do nothing about it. When a person does not accord comity to the other lawyer who makes a mistake, that lawyer cannot expect any mercy when he or she in turn carelessly lets a vital date pass.

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Last Modified: 05/21/2003