Saraceni v Jones & Ors [2012] HCATrans 215

[2012] HCATrans 215

[2012] HCATrans 215

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Perth   No P8 of 2012

B e t w e e n -

LUKE SARACENI

Applicant

and

Martin Bruce Jones as Receiver and Manager Of Newport Securities Pty Ltd and as agent of the mortgagee in possession of 3517 Caves Road,Wilyabrup and Darren Gordon Weaver as Receiver and Manager Of Newport Securities Pty Ltd and as agent of the mortgagee in possession of 3517 Caves Road, Wilyabrup and Andrew John Saker as Receiver and Manager Of Newport Securities Pty Ltd and as agent of the mortgagee in possession of 3517 Caves Road, Wilyabrup and Martin Bruce Jones as Receiver and Manager Of Mayport Nominees Pty Ltd and Darren Gordon Weaver as Receiver and Manager Of Mayport Nominees Pty Ltd and Andrew John Saker as Receiver and Manager Of Mayport Nominees Pty Ltd and Martin Bruce Jones as Receiver and Manager Of Seaport Pty Ltd and John Ross Lindholm as Receiver and Manager Of Seaport Pty Ltd

Respondent

Application for special leave to appeal

GUMMOW J
HAYNE J
BELL J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 7 SEPTEMBER 2012, AT 9.55 AM

Copyright in the High Court of Australia

____________________

MR B.W. WALKER, QC:   May it please the Court, I appear with my learned friend, MR J.C. VAUGHAN, for the applicant.  (instructed by Jackson McDonald Lawyers)

MR D.F. JACKSON, QC:   If the Court pleases, I appear with my learned friend, MR T.O. PRINCE, for the respondents.  (instructed by Ashurst Australia)

GUMMOW J:   Yes, Mr Walker.

MR WALKER:   Your Honours, the implications of the decision of the Court of Appeal can be set out in the following sequence.  It is accepted – it has been accepted for a long time and it is undisturbed by anything in this case – that a power to direct or to conduct questioning, which is not itself connected with a judicial function, is not itself a judicial power.  It is perhaps official questioning, or questioning given official imprimatur, but that rather indicates Executive rather than judicial.

GUMMOW J:   You may be right about that, but these provisions have a fairly long history, do they not?

MR WALKER:   It is a history with fractures and departures, your Honour, and yes, that is the point at which we failed below, and which we seek ‑ ‑ ‑

GUMMOW J:   Well, I am thinking about Davison’s Case.

MR WALKER:   Yes, your Honour.

GUMMOW J:   Justice Kitto in Davison’s Case, which I do not think is fully adverted to below.

MR WALKER:   No, it is not, your Honour.

GUMMOW J:   I do not know why it was not fully drawn to their attention, but anyhow.

MR WALKER:   Your Honour, the history I had in mind was rather a history that has two characters.  One, there was no historical analogue, to use the jargon, for a judicial power to direct questioning at the behest or at the request of a receiver ‑ ‑ ‑

GUMMOW J:   What is the difference between a receiver and a voluntary liquidator?

MR WALKER:   The voluntary liquidator had historically – and I stress, historically – the link which the respondents call a contrivance, or mechanism, whereby an anterior judicial determination was made that to enlist the compulsion of questioning was just and beneficial, because the voluntary liquidation in the circumstances justified being treated in that regard as if it were a winding‑up in the court.  It is correct, with respect, that the issue that we say is out for special leave focuses on the question whether that history is a history that supports what has been called the “historical analogue” characterisation of a power that might not otherwise without the history appear to be judicial.

HAYNE J:   Where does the analogy break?

MR WALKER:   The analogy breaks because there is no just and beneficial determination.  The analogy breaks because the so-called supervisory powers of the court over receivers, sections 423 and 424, are not of course powers to which this questioning, the questioning in issue in this case, has any relevant connection.  The questioning is not for the purpose of either exercising or considering the exercise of those supervisory powers.

HAYNE J:   True, but the court retains supervision of a person appointed by the will of the parties in connection with the affairs of a company.

MR WALKER:   Your Honour, some care, we submit, should be taken before pushing the notion too far of it being of decisive significance that the court has supervision over a privately appointed person, because after all, the court ultimately adjudicates all claims of breach of contract or infringement of authority by an agent.  So at that level of abstraction, it should not be decisive.

HAYNE J:   But what it points to is that since the 1862 Companies Act, at least, in the UK, the courts have, shall we say, had an active role including by permitting compulsory examination of those who have knowledge touching the affairs of the company about the administration of companies, either in financial difficulty or whose affairs are to be wound up.

MR WALKER:   Your Honour, again, in our submission, that history shows that there has always been a meaningful connection, not a mere form, with the court having either ordered the winding‑up or created the equivalence by means of the former, just and beneficial determination, necessary before a voluntary liquidator was enabled to call in aid the same judicial power.  It is not the case that the history shows that there has been, until these provisions, an equivalence – that is, an indifference to the qualities which see the appointment of a private receiver, a matter of contract, compared with the ‑ ‑ ‑

GUMMOW J:   Does not section 418 now require the receiver to be a registered liquidator?

MR WALKER:   Yes, your Honour.  Of course, being a registered liquidator is ‑ ‑ ‑

GUMMOW J:   It is not just a purely private person.  That is what I am putting to you.

MR WALKER:   No, quite, but once again, being registered does not mean that you are thereby the object of yourself a judicial power, or an emanation of judicial power, or that anything you do is a manifestation of judicial power.  After all, we lawyers are not the only profession that is registered – medical practitioners, et cetera, et cetera.  Registration will not be enough, and it has never been suggested ‑ ‑ ‑

GUMMOW J:   But continuance of registration is judicially controlled, is it not?

MR WALKER:   Yes, indeed.

GUMMOW J:   It is not purely a private affair.

MR WALKER:   There is no question about it being purely private, not least because there is any number of statutory provisions that govern the conduct of such people.  Statutory provisions governing the conduct of such people necessarily involve the potential of judicial power being engaged.  That has never been considered enough to bring, in its train, the character of judicial power for ‑ ‑ ‑

GUMMOW J:   No.  Tut the question is:  this phrase “of a kind” used by Justice Kitto.

MR WALKER:   Yes, “of a kind”.  It is identifying the genus, and in our submission, the genus is a power which is connected with a judicial function.  So ordering what the Americans would call depositions, a form of official questioning, for the purposes of litigation, oral interrogatories, is plainly the exercise of a judicial power.  Gould v Brown that we recite from Justice Gaudron equally plainly says – we say on the other side of a constitutional divide – that without that kind of connection, that relation to a judicial function, questioning in and of itself is not a judicial function.

What has happened by dint of these provisions which assimilate receivers – I will call them out‑of‑court receivers – and in‑court liquidators, what has happened, in our submission, particularly given the important incremental change of getting rid of what our friends call the contrivance of the just and beneficial determination, has been to bring about an abolition of that divide.  The divide is not contested, or at least has hitherto been thought to be fundamental in this area.

GUMMOW J:   What is the divide?

MR WALKER:   The divide is between questioning connected with the exercise of a judicial function and questioning without any such connection.  It is of obvious constitutional significance for there to be questioning without any connection to a judicial function.  That is a major exercise of power and, in our submission, its character or not as judicial is equally generally important.  It is our submission that that is a fundamental divide which hitherto undoubted by implication is abolished so soon as it is regarded as appropriate to treat an out‑of‑court receivership as exactly equivalent to an in‑court liquidation for the purposes of seeing an historical analogue, putting them all within the same kind.  They are not in the same kind, if one concentrates on the Gould v Brown division, but apparently by dint of this reasoning in the Court of Appeal they become the same kind, for no reason, it would appear, more convincing than that they each involve the exercise of a power to direct compulsory questioning.  That, in our submission, is a form of circular reasoning.  It produces a contradiction ‑ ‑ ‑

GUMMOW J:   That may be so, but you have got to face up to Davison’s Case.

MR WALKER:   Yes, your Honour.

GUMMOW J:   You might not have had to face up to it below, but you have got to face up to it now.

MR WALKER:   Your Honour, that gives rise to the question of what are the characterising features of the cases in question.  The characterising feature of an out‑of‑court receiver and official questioning is no connection with any other judicial function because, as the majority in the Court of Appeal, with respect, correctly held, this questioning is not incidental to the court’s undoubted judicial powers to supervise these out‑of‑court receivers.  It not being incidental to that, it surely lacks the connection necessary to place it in the same kind of case as one sees with the court’s unquestionably judicial power to direct compulsory questioning on the application of a court liquidator.

It is that divide which, with respect, has been abolished by the reasoning that has wrongly extended the historical analogue into a case which has produced the omission of the critical feature.  The critical feature is the connection with the judicial function.  As soon as one gets rid of that connection with the judicial function, the analogue becomes spurious.  That, in our submission, is the importance of the case.  It is an incremental change in what is put forward as an historical kind bearing comparison with the present case.  In our submission, that incremental change can be seen to have been critical to the outcome of this case.  If this decision is correct then it can no longer be said without either qualification or, as we would put it, in truth internal contradiction, it can no longer be said that the power to direct compulsory questioning unconnected with the exercise of a judicial function is not itself a judicial power.  That is a very large change in the jurisprudence.

HAYNE J:   That is a proposition that simply does not grapple with Davison.  It does not grapple with Davison because it states the proposition at a level of generality which discards the historical, you may describe it as “oddity”, presented by the 1862 Act and voluntary liquidators.

MR WALKER:   Your Honour, I do not intend to do so.  We have sought in our written submission to point out that the voluntary liquidation does not continue as an unbroken currently available analogue, regardless of what occurs to the voluntary liquidation provisions.  It is said against us well, we do not challenge the position about voluntary liquidators.  More accurately, of course, this case did not raise the question of the power in relation to voluntary liquidators.  Historically, it is clear – and it does not assist our case to call it odd or not – voluntary liquidators were able to call in aid this power, a judicial power, by reason of the historical existence of that power, notwithstanding they were not officers of court and it was not an in‑court liquidation.

In our submission, that case, which ought not to be treated as an anomaly and does have to be grappled with, we accept, is fully explained by the just and beneficial prior determination, the engagement of a plainly judicial power to bring to the case of a voluntary liquidation the powers of an involuntary court liquidation for reasons which seem to the court proper in light of the circumstances adjudicated by it – that is, the exercise of a judicial power.  That, in our submission, is absent from this case, and therefore it is not an inappropriate level of abstraction but an appropriate focusing on a specific aspect of this case to note that there is no equivalent to the just and beneficial prior judicial determination which stands in place of the court ordering, for example, a liquidation.  So whereas it could be said that historically a court‑ordered liquidation and a voluntary liquidation could both produce the exercise of a judicial power to order questioning, because in the latter case there was the just and beneficial determination to do so, there is no such similitude between the completely out‑of‑court receivership in this case.

HAYNE J:   Why is that not supplied by the considerations identified, according to the case, in 596A(b) or 596B(1)(b)?

MR WALKER:   Those are simply the provisions which give the court power to order questioning.  They are not in themselves, in our submission, the same as the prior determination of just and beneficial.  That is, one does not make a power judicial for the purposes of the Chapter III distinction by giving it to a court.  Sometimes, that will, given other characteristics, suffice, but it will never, in our submission, automatically be sufficient.  That is the whole point of these cases.  Any power given to a court lends itself, obviously, to statements, if it be discretionary, that it is to be exercised judicially but, again, that would be a bootstraps argument to answer the question, “But is this a judicial power?”, within the competence of the Parliament to bestow on a court.

HAYNE J:   The particular question you advance is that you say it is not an exercise of judicial power for a court to order, if satisfied of the circumstances identified in the relevant section, public examination.

MR WALKER:   Yes.  One needs to bear in mind what is actually being ordered.  What is being ordered is the facility of the court will provide the forum in which, or the auditorium in which, the question will be held, and most certainly and emphatically we submit that the fact that the statute purports to give this power to a court cannot naturally answer the question.

HAYNE J:   I understand that proposition.

MR WALKER:   Yes.  Your Honours, it is for those reasons, in our submission, there are very serious questions arising as to just how much one can move away from one of the established historical cases – in this case, voluntary liquidators – and one has moved away from it by no longer having the just and beneficial assimilation of that case to an involuntary winding‑up without fracturing the historical analogue for the purposes of this part of constitutional doctrine.  It is for those reasons, in our submission, that the case is an apt one for special leave.  May it please the Court.

GUMMOW J:   Thank you, Mr Walker.  Yes, Mr Jackson.

MR JACKSON:   Your Honours, may I say something first with respect to self-justification in relation to your Honours’ observation about references to Davison. The Court will see at paragraph 184, page 62 ‑ ‑ ‑

GUMMOW J:   There is a citation of it; I see that.

MR JACKSON:   Yes, quite.  There is a reference there in paragraph 184 going through to 189 of the reasons for judgment in Davison of other members of the Court.  Justice Kitto’s reasons are referred to in paragraph 190 and also 191, and then there is a reference in 192 to the plurality in White v Director of Military Prosecutions having relied upon Justice Kitto’s observations.

GUMMOW J:   But what do they make of it?  That is something of a mystery.

MR JACKSON:   What was made of it, your Honour, was in the context in which it appeared that there were decisions, of which Davison, of course, was a single decision, demonstrating that the judicial power of the Commonwealth is ‑ ‑ ‑

GUMMOW J:   But it seemed to end up with Gould v Brown.

MR JACKSON:   There is a discussion of it, your Honour, but Gould v Brown did not really deal with the aspect that was particularly dealt with in Davison.  Your Honours, could we just say that, in our submission, the high point, as it were, of this case is that the issue involved is one that is constitutional, of course, but we would submit – and I will develop this in a moment – that the issue was decided consistently with existing decisions on the relatively narrow issue of analogy, and there is not, with respect, sufficient reason to doubt the correctness of the Court of Appeal’s conclusion.  May I seek to develop that, your Honours?

The present case is one in which the basis upon which the case was decided against the applicant was that, for the reasons that are summarised at page 74, paragraphs 231 to 236, the examination power in question was held to be, if I can use the words of 237:

analogous to the examination power historically conferred on courts in relation to corporations in liquidation –

Your Honours, that is, in our submission, an appropriate test, a question of analogy.  Could I refer particularly in that regard, without taking the Court necessarily to the passages, in Thomas v Mowbray (2007) 233 CLR 307, Chief Justice Gleeson at page 328, paragraphs 16 and 17, and your Honours Justice Gummow and Justice Crennan at page 356, paragraphs 115 to 121, particularly 120 and 121. Justice Heydon agreed with both those judgments. Your Honours, I have put that briefly, because that test is not challenged by the applicant. You will see that at page 95 in paragraph 32 of the applicant’s submissions. Your Honours will see it is said:

The applicant accepts the finding of President McLure . . . that for historical usage to be determinative “the analogy has to be close but need not be exact” –

That test, your Honours, was not challenged below.  You can see that in the reasons of the Court of Appeal at page 38, paragraph 86.  So the proposed appeal, if it were not to depart from the way in which the case was conducted below, would turn on the application of the test to the particular statutory circumstances.  Your Honours, in dealing with that issue in the Court of Appeal, it was accepted that the examination power in relation to corporations in liquidation, whether the liquidation was as a result of a court order or not, was within judicial power.  You will see that, your Honours, at page 72, paragraphs 223 and 224.  Your Honours, it was said that it:

did not depend on the existence of a past or future (intended or potential) judicial determination –

Your Honours will see the acceptance in paragraph 224 that –

the current examination power in relation to the examinable affairs of a corporation in liquidation, whether as a result of a court order or otherwise, is within the judicial power of the Commonwealth.

So your Honours will see that the issue was a relatively narrow one in the Court of Appeal.  From that starting point, one then sees a discussion by the President of the analogies between examination in the various forms of external administration that are provided for by the Act.  Your Honours, if I could go to page 51, paragraph 141, the summary of the position in relation to legislation.  What your Honours will see – what is apparent, I should say, from the legislation, which is summarised at paragraph 141 – is that well before Federation, Australian and, of course, English courts exercised an examination power in relation to corporations in liquidation, whether as a result of court orders or not.  Then, your Honours, one sees following that the statement of the issues which is set out in paragraphs 142 and 143.  Your Honours will see, if I can go to the fourth line of paragraph 142:

The argument of the respondents and the Commonwealth is that receivership . . . falls within the same genus –

Your Honours, in our submission, one does not see in the matters to which I have so far adverted any apparent error in the approach taken by the Court of Appeal.  There is then, your Honours, a discussion of the issues at paragraphs 145 through to 183.  Your Honours, I will not go to the detail of it, but may I take your Honours to the conclusions arrived at.  A page 70 your Honours will see particularly the reference in paragraph 215 to “The question in issue”.  Then, your Honours, one goes to, if I could go over to paragraph 231, the six factors that are referred to in that paragraph and the succeeding paragraphs up to paragraph 236, leading to the conclusion in paragraph 237.

Your Honours, could I seek to make the following points.  The first is that what is apparent from the discussion by the Court of Appeal of the legislative history and of the provisions dealing with the purpose and the ambit of examinations of this kind is, in our submission, that the power to examine concerning the affairs, dealings, state or effects – whatever phrase one chooses – of a company in voluntary liquidation seems little different from the power of secured creditors by their receivers, or agents in possession, to examine officers of a company about examinable affairs as defined in section 9.  The analogy, your Honours, if I could go back to paragraph 231 at page 70 in the first four lines, was, we submit, with respect, correctly stated by the President to be “very close”.

Your Honours, the second point we would make about it is this:  as Chief Justice Barwick said in Rees v Kratzmann (1965) 114 CLR 63 at page 66 – your Honours, that is in the bundle of respondents’ authorities behind tab 7 ‑ ‑ ‑

HAYNE J:   Which page?

MR JACKSON:   Your Honour, it is the page numbered 66 in the report.  The particular passage to which I wanted to refer was the last paragraph on that page, where his Honour said in the second line:

the legislature has reposed in the judge presiding at the interrogation, the traditional judicial function of ensuring that the examination is not made an instrument of oppression, injustice, or of needless injury to the individual.

Your Honours, that is one of the reasons why courts have traditionally conducted examinations.  Your Honours, we would submit it would be a somewhat anomalous result if only some examinations of the present nature could be conducted by courts and the others conducted by whoever it might be.

Your Honours, as I submitted earlier, this is a case where we submit the issue was decided consistently with existing decisions and decided on a narrow but correct question of analogy, and there is not, with respect, sufficient reason to doubt the correctness of the Court of Appeal’s conclusion.

GUMMOW J:   Thank you, Mr Jackson.  Yes, Mr Walker.

MR WALKER:   Your Honours, the citation from Sir Garfield Barwick in Rees v Kratzmann really points up the importance of the issue warranting special leave.  Extended beyond what his Honour was specifically addressing in that case, that is a statement, after all, which would apply equally, and equally beneficially, to questioning of a kind that is currently undertaken by ASIC, by the Crime Commission, by ASIO.  In our submission, it need only thus be stated to be rejected as a hallmark or indication that this is a judicial power.  It is really only a way of saying judges, if I may respectfully put it this way, are experts in fairness.  That is not, with respect, a reason to depart from what appears still to be intended as a basic tenet, namely, the power of compulsory questioning is not of itself a judicial power unless it has a tolerable connection, an appropriate degree of connection, with a judicial function which is either adjudicatory or supervisory in the sense that liquidations are supervisory.  It is for those reasons, in our submission, that the issues in this case very much raise the

question of how one can, by degrees, inch away from what ought to be relatively bright‑line distinctions.  May it please the Court.

GUMMOW J:   We will take a short adjournment.

AT 10.27 AM SHORT ADJOURNMENT

UPON RESUMING AT 10.32 AM:

GUMMOW J:   This Court often has observed that it is not possible to frame a definition of “judicial power” which is at once exclusive and exhaustive.  However, to adopt and adapt what Justice Kitto said in R v Davison (1954) 90 CLR 353 at 382, the question which it is sought to agitate in this Court is whether the Constitution requires that the power to take the step necessary to bring about the application of a general law to the particular case is one which cannot be committed to the judiciary. More particularly, on the application of the receiver of a corporation can the Parliament confer upon a court exercising federal jurisdiction the power to make an order under section 596A or 596B of the Corporations Act 2001 (Cth) for the mandatory examination of a person about the examinable affairs of the corporation. As Justice Kitto said in Davison at page 382:

Where the action to be taken is of a kind which had come by 1900 to be so consistently regarded as peculiarly appropriate for judicial performance that it then occupied an acknowledged place in the structure of the judicial system, the conclusion, it seems to me, is inevitable that the power to take that action is within the concept of judicial power as the framers of the Constitution must be taken to have understood it.

The Companies Act 1862 (UK) (“the 1862 Act”), which was the model for the companies legislation of the Australian colonies, provided in section 138 that where a company was being wound up voluntarily the liquidator or any contributory or creditor might apply to the court having jurisdiction to wind up the company to exercise all or any of the powers which the court might exercise if the company were being wound up by the court. 

One of those powers conferred by section 115 of the 1862 Act was to order the compulsory examination of an officer or other person whom the court deemed capable of giving information about the affairs of the company.  The provisions of the Corporations Act, which it is sought to impugn, are not to any relevantly different effect. The identification in sections 596A and 596B of the circumstances in which an order may be made differs from the more generally expressed reference in section 138 of the 1862 Act to it being “just and beneficial” to make the order, but those differences are not presently significant. The making on application of a receiver of a mandatory examination order is an action of a kind which had come by 1900 to be so consistently regarded as peculiarly appropriate for judicial performance as it then occupied an acknowledged place in the structure of the judicial system.

The actual orders of the Court of Appeal are not attended by doubt.  President McLure set out the text of sections 135 and 138 of the 1862 Act and the passage in the reasons of Justice Kitto’s judgment in Davison to which we have just referred.  Her Honour concluded that the analogy between an examination in respect of companies in receivership and those in voluntary liquidation was “very close” and that the power of a court in this latter respect was of longstanding and predated Federation.  We need express no further view about the correctness of the reasons given by the Court of Appeal.  Special leave is refused with costs.

AT 10.36 AM THE MATTER WAS CONCLUDED