Timms v Dellaplus Pty Ltd

[2008] SASC 17

SUPREME COURT OF SOUTH AUSTRALIA

(Applications Under Various Acts or Rules: Application)

TIMMS v DELLAPLUS PTY LTD

[2008] SASC 17

Judgment of The Honourable Justice Sulan

5 February 2008

CORPORATIONS - WINDING UP - CONDUCT AND INCIDENTS OF WINDING UP - PROCEEDINGS BY OR AGAINST THE COMPANY

Period within which the application for the respondent company to be wound up in insolvency was to be determined expired - application for extension of time - whether application for winding up automatically dismissed pursuant to s 459R(3) of the Corporations Act 2001 (Cth) ('the Act') - whether time may be extended pursuant to s 1322 of the Act - whether time may be extended by application of the slip rule - whether order extending time may be made nunc pro tunc - whether discretion should be exercised to grant extension.

Held: application granted - s 459R excludes the operation of s 1322 of the Act - the slip rule may be applied to ameliorate the effect of s 459R(3) of the Act - order made under the slip rule applies nunc pro tunc - discretion should be exercised to extend time - time extended by six months.

Corporations Act 2001 (Cth) s 459F, s 459G, s 459P, s 459Q, s 459R, s 459S, s 1322(4); Corporations Rules 2003 (Cth) r 1.3; Supreme Court Civil Rules (2006) (SA) r 4, r 242, referred to.
Australian Securities Commission v Marlborough Gold Mines (1993) 177 CLR 485; Davies v Chicago Boot Company Pty Ltd (No 2) (2007) 96 SASR 164; David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265; DDB Needham Sydney Pty Ltd v Elyard Corporation Pty Ltd (1995) 131 ALR 213; Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385; Merrill Lynch Equities (Australia) Ltd v Triangle Packing Case Pty Ltd (1999) 17 ACLC 1,522, applied.
Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia (1932) 47 CLR 1; Donne v Lewis (1805) 11 Ves Jun 601; Earls Croft University Ltd v Brown (2003) 226 LSJS 194; Emanuele v Australian Securities Commission (1996-1997) 188 CLR 114; L Shaddock & Associates Pty Ltd v Parramatta City Council (No 2) (1982) 151 CLR 590; Milson v Carter [1893] AC 638; Re Australnet Ltd (1995) 13 ACLC 96; Terry's Motors Ltd v Rinder (No 2) [1948] SASR 303, considered.

TIMMS v DELLAPLUS PTY LTD
[2008] SASC 17

Civil

1. SULAN J: This is an application by the plaintiff for an extension of time within which his application that the defendant company be wound up in insolvency, pursuant to s 459P of the Corporations Act 2001 (Cth) (‘the Act’), is to be determined. The plaintiff seeks the order extending time to be made nunc pro tunc.

   Background

2. On 11 January 2007, the plaintiff applied to this Court, pursuant to s 459P of the Act, to have the defendant company wound up. The application was made in reliance on s 459Q of the Act, following the defendant’s failure to meet a statutory demand issued to the defendant by the plaintiff as a creditor. The debt claimed in the statutory demand arose out of a loan from the plaintiff to the defendant company in the sum of approximately $35,000.

3. The statutory demand was received by the directors of the defendant company on 17 November 2006; it having been posted on 16 November.  The directors of the company were unfamiliar with the procedures following receipt by the company of a statutory demand.  The directors therefore sought legal advice from a firm of solicitors who do not now represent the company in this application.  The debt was disputed.  The directors relied upon the advice of their solicitors.

4. The defendant’s solicitors did not make an application to set aside the statutory demand, pursuant to s 459G of the Act. On the application before me, an affidavit sworn by the directors of the company indicates that the solicitors for the defendant advised the directors that the optimum course for them to adopt would be to enter into negotiations with the plaintiff in respect of the debt claimed in the statutory demand. The defendant’s solicitors gave this advice, having been instructed that the plaintiff was not in fact a creditor of the company. The defendant’s solicitors organised a meeting with the plaintiff on 11 December 2006. The plaintiff did not attend the meeting. Moreover, by the scheduled date of the meeting, the 21-day period within which to make an application to set aside the statutory demand under s 459G of the Act had expired.

5. The plaintiff filed the application for the defendant company to be wound up on 11 January 2007. On 26 June 2007, a Master of this Court refused an application by the defendant’s then solicitors, made pursuant to s 459S of the Act, to rely on grounds for setting aside the winding up application that could have been relied upon had an application been made previously pursuant to s 459G. The Master then adjourned the winding up proceedings to 17 July 2007.

6. On 17 July 2007, another Master of this Court, Judge Lunn, made an order varying the orders of 26 June 2007. He granted an application by the then solicitors for the plaintiff and not opposed by the then solicitors for the defendant to extend the time for the proceedings to be determined within four months from 26 June 2007. The application was made because s 459R of the Act requires an application for a company to be wound up in insolvency to be determined within six months after it is made, unless the court grants an extension of time for the application to be determined. If a winding up application is not determined within six months of it being filed and no extension of time is granted, s 459R(3) of the Act provides that the application is automatically dismissed. The parties had failed to recognise that, by operation of s 459R(3), the application stood dismissed, the proceedings having been instituted on 11 January 2007. Neither party applied for an extension of time pursuant to s 459R(2) and the court made no order extending time. The purpose of the orders made by Judge Lunn on 17 July 2007 was to rectify this position by granting an extension of time nunc pro tunc to operate from 26 June 2007.  The proceedings were then adjourned to 16 August 2007. 

7. On 16 August 2007, Judge Lunn, made orders in respect of the filing of affidavits and listed the matter for argument on 5 September 2007.  On 16 August, the plaintiff appeared in person and has not been legally represented since that hearing.

8. On 5 September 2007, the matter came before another Master of this Court, Judge Burley.  A preliminary point arose in the course of that hearing as to whether the plaintiff would continue to be a creditor for the purposes of the winding up application if the defendant was to the pay the monies claimed into court.  The preliminary point was adjourned for argument to 18 September 2007.  On that date, after hearing submissions, Judge Burley reserved judgment on the preliminary point.  No other orders were sought or made.

9. On 23 November 2007, the matter was called on by Judge Burley. In reviewing the file following the hearing of 18 September 2007, Judge Burley had, on 16 November 2007, checked whether the six-month time limit imposed by s 459R(1) of the Act had been extended. Having regard to the orders previously made on 26 June and 17 July 2007, he had concerns, which he reduced to writing in a note to the file, which stated:

   There was no order made […] on [26 June 2007] extending the time pursuant to s 459R(2) of the Act. It is therefore possible to argue that as at 11 July 2007 the action stood dismissed by virtue of subsection 459R(3) of the Act and that the order of 17 July 2007 was therefore of no effect.

   Even if it is assumed that that order was effective, the extended time has in any even expired on 26 October 2007. Thus, as at that date the action has been dismissed by force of the section because no order extending the time was made before 26 October 2007 (the same reasoning might apply to the possible dismissal date of 11 July 2007, namely that no order extending the time was made, as required by s 459R(2), before the expiry date).

   However, it might be argued that, the plaintiff may be able to invoke a provision of the Act which modifies the operation of s 459R, eg s 1322 of the Act.

10. On 23 November 2007, Judge Burley indicated to the parties that he did not consider it appropriate for him to deliver judgment on the preliminary point given the possibility that, even if the extension of time granted on 17 July 2007 was valid, that extension had expired whilst judgment on the preliminary point was reserved.  He referred the question of an extension of time to a Judge of this Court.  It is unfortunate that those who appeared at the time the preliminary point was argued did not, when Judge Burley indicated that he would reserve judgment, remind him of the time constraints involved in the case and the nature of the previous extension granted, nor make application for a further extension.

    Issues falling for determination

11. The following questions fall to be determined:

    ·Did Judge Lunn have jurisdiction to make the order of 17 July 2007 varying the orders of 26 June 2007?

    ·Assuming there was jurisdiction to make the orders of 17 July, does this Court now have jurisdiction to grant a further extension of time nunc pro tunc from, or before, 26 October 2007, the date on which the extension from 26 June granted by the order of 17 July, assuming it be valid, expired?

12. An order extending time for winding-up proceedings to be determined is to be made pursuant to s 459R of the Act. The answer to both questions falling for determination therefore depends upon whether there is power to retrospectively make an order in accordance with s 459R of the Act where such an order would have been made within the time prescribed by s 459R, but was not, either through error or oversight. The resolution of these questions in turn depends upon this Court’s power, pursuant to its inherent jurisdiction and certain legislative provisions, to effectively correct errors or oversights in its orders, in particular, whether such powers apply to s 459R and, if they do, whether they were exercised by Judge Lunn in making the orders of 17 July and whether they should now be exercised to grant a further extension nunc pro tunc.

13. It is convenient therefore to begin with an analysis of the relevant legislation.

    Relevant legislation

    Section 459R

14. Section 459R of the Act provides:

    (1)  An application for a company to be wound up in insolvency is to be determined within 6 months after it is made.

    (2)  The Court may by order extend the period within which an application must be determined, but only if:

    (a)     the Court is satisfied that special circumstances justify the extension; and

    (b)     the order is made within that period as prescribed by subsection (1), or as last extended under this subsection, as the case requires.

    (3)  An application is, because of this subsection, dismissed if it is not determined as required by this section.

    (4)     An order under subsection (2) may be made subject to conditions.

15. The effect of this section has been earlier discussed.  All applications for winding up in insolvency must be determined within six months and will stand dismissed at the end that period unless an extension of time is granted.

    Section 1322

16. Section 1322(4)(d) of the Act relevantly provides:

    (4)Subject to the following provisions of this section but without limiting the generality of any other provision of this Act, the Court may, on application by any interested person, make all or any of the following orders, either unconditionally or subject to such conditions as the Court imposes:

    (a)     […]

    (b)     […]

    (c)     […]

    (d)     an order extending the period for doing any act, matter or thing or instituting or taking any proceeding under this Act or in relation to a corporation (including an order extending a period where the period concerned ended before the application for the order was made) or abridging the period for doing such an act, matter or thing or instituting or taking such a proceeding; (my emphasis)

    and may make such consequential or ancillary orders as the Court thinks fit.

17. The effect of s 1322(4)(d) of the Act is to provide a general power to the court to extend the period for doing any act, matter or thing. For the reasons that follow s 1322 is however a general power provided by the Act which does not apply to the specific provisions of s 459R in respect of winding up proceedings.[1]

    [1]    See Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia (1932) 47 CLR 1, 7.

18. In David Grant & Co Pty Ltd v Westpac Banking Corporation,[2] the High Court considered the relationship between ss 459F, 459G and 1322(4)(d) of the Corporations Law (Vic). The sections are in the same terms as their counterparts under the Act. Section 459G of the Victorian Act specifically prescribes the time within which a company may apply to set aside a statutory demand. Section 459F of the Victorian Act provides that the court may extend the period for compliance. The period for compliance with a statutory demand is 21 days, unless the court extends that time. The effect of those provisions has the same effect as s 459R of the Act, which provides a specific statutory time limit of six months for winding up proceedings to be determined, unless the court extends that time.

    [2] (1995) 184 CLR 265.

19. Gummow J delivered the judgment of the Court.  After setting out the provisions to which I have referred, he concluded:

    The text of s 459F is set out earlier in these reasons. The effect of s 459F is that the company is taken to fail to comply if, at the end of the period for compliance, the demand is still in effect and the company has not complied with it. The term "period for compliance" is defined in pars (a) and (b) of s 459F(2). On the one hand, that period is twenty-one days after the demand is served (par (b)). On the other hand, if an order has been sought setting aside the demand, the period may be a longer one, as detailed in sub-pars (i) and (ii) of par (a). However, this will only be so if, in the terms of par (a), the company itself "applies in accordance with section 459G".

    These matters emphasise the importance of s 459G as an integral part of the particular scheme established by Pt 5.4. Paragraph (d) of s 1322(4) empowers the court to make an order where the period concerned ended before the application to extend it is made. An application to set aside the demand made not within the twenty-one days specified in s 459G but within another period allowed pursuant to an order under s 1322(4), could not modify what otherwise would be the operation of the definition of the "period for compliance" with the statutory demand set out in s 459F(2). That in turn would not change the answer to the question posed under s 459C(2) as to whether the court must presume the company to be insolvent because it had, within the period there specified, failed "as defined by s 459F" to comply with the statutory demand.

    For these reasons, the requirement in s 459G that the application to the court for which it provides be made only within twenty-one days after service of the demand should not be treated as supplemented or qualified by the operation of s 1322(4).[3]

    [3] Ibid, 278.

20. David Grant is authority for the proposition that s 1322 does not apply to the specific provisions of s 459G concerning the period for compliance with a statutory demand. Mr Dart, who appeared on behalf of the defendant, submitted that, in accordance with the reasoning in David Grant, s 1322 is similarly inapplicable to s 459R. That submission is supported by the decision of Sheppard J in DDB Needham Sydney Pty Ltd v Elyard Corporation Pty Ltd,[4] which was affirmed on appeal.[5]  Sheppard J said:

    The present case concerns s 459R, not s 459G. But I am unable to detect any reason of policy or anything in the language of the two provisions which would suggest that s 459R should be given a different construction from s 459G. McLelland CJ in Eq referred to this matter in Australnet (see at 396), but I think the safer view is that the two provisions should be given a similar construction. Australnet was a case dealing with s 459R, not s 459G. In those circumstances I have reached the conclusion that the words of s 495R are such as to exclude the operation of s 1322 of the Law. In my opinion, its provisions have no part to play in resolving the outcome of the notice of motion here to be dealt with.[6]

    [4] (1995) 131 ALR 213.

    [5]    Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385, 389.

    [6]    DDB Needham Sydney Pty Ltd v Elyard Corporation Pty Ltd (1995) 131 ALR 213, 217.

21. Mr Dart relied on the later Federal Court decision in Merrill Lynch Equities (Australia) Ltd v Triangle Packing Case Pty Ltd.[7] In Merrill Lynch, Spender J held that s 1322(4)(d) of the Act cannot be invoked to extend the six-month time limit for determining a winding up application imposed pursuant to s 459R. He said:

    In Re Australnet Ltd (1995) 13 ACLC 96, a creditor applied for an order that a company be wound up. The winding up application was not determined within six months, the period stipulated in s 459R(1) and no order was made extending that period. McClelland CJ in Equity held that, by force of s 459R(3), the application stood dismissed. The creditor then sought an order under s 1322(4)(d) of the Corporations Law extending the period for making an application under s 459R(2) and an order setting aside the dismissal of the winding up application.[8]

    [7] (1999) 17 ACLC 1,522.

    [8] Ibid, 1,524 [12].

22. Spender J then set out the relevant provisions of s 1332(4)(d) and continued:

    It was asserted by the creditor that the court had power in s 1322(4)(d) to extend the period for the determination of a winding up application, relying on Cavetina Pty Ltd v Synthetic Dyeworks Industries Pty Ltd (1994) 12 ACLC 768, where the court had held that there was power under [s] 1322(4)(d) to extend the period for applying to set aside a statutory demand under s 459G. McLelland CJ in Equity held that the structure of s 459R was significantly different from that of s 459G. Section 459R did not stipulate a period within which an application under s 459R(2) was to be made; rather it stipulated a period within which an order had to be made by the court as a condition of the power of the court to make that order. His Honour held that s 1322(4)(d) was directed to the extension or abridgment of a period which was stipulated in the Corporations Law, and for this reason could not apply to an application under s 459R(2). His Honour thought it arguable that s 1322(4)(d) could apply to the period within which the Court might make an order under s 459R(2). I must say I would need some convincing that the argument had merit, having regard to the provisions of s 459R(2)(b). The application by the creditor for an order extending the period for making an application under s 459R(2) and for an order setting aside the dismissal of the winding up application was dismissed.[9]

    [9] Ibid, 1,524-5 [14].

23. Spender J concluded that s 1322(4)(d) cannot apply to s 459R because s 1322(4)(d) is directed at extending or abridging periods stipulated by the Act. Section 459R does not however stipulate a period in which an application for winding up is to be made, rather the section provides the period within which an order must have been made by the court as a condition of the court’s power to make that order.

24. I agree that s 1322 of the Act cannot be used to extend time for the determination of an application for winding up in circumstances where there has been a failure to comply with s 459R in respect of any extension of time sought. I see no reason to depart from the position or reasoning of the authorities to which I have referred. [10]

    [10] See Australian Securities Commission v Marlborough Gold Mines (1993) 177 CLR 485, 492. See also Davies v Chicago Boot Company Pty Ltd (No 2) (2007) 96 SASR 164, 177 [45].

    Rule 242 – the ‘Slip Rule’ and Inherent Jurisdiction

1. Rule 242 of the Supreme Court Civil Rules (2006), (‘the Rules’), commonly referred to as the ‘slip rule’, provides:

   (1)     The Court may correct an error in a judgment at any time.

   (2)     If satisfied that the justice of a case so requires, the Court may—

   (a)     vary a judgment; or

   (b)     set aside a judgment and reopen an action.

   Example— The Court might set aside a judgment and reopen an action if satisfied that the judgment is vitiated by a mistake.

   (3)     The Court may act under this rule on its own initiative or on application by a party.

   (4) If the Court proposes to act under this rule on its own initiative, it must notify the parties and allow them an opportunity to make representations on the proposed course of action.

2. The Rules apply to proceedings under the Act by virtue of r 1.3(2) of the Corporations Rules 2003 (Cth).  There is no equivalent to the slip rule under the Corporations Rules.  ‘Judgment’ is defined for the purposes of r 242 to include orders and directions.[11]  Rule 242 empowers the court to correct an error in a judgment.  The rule also permits a judge to vary an order made by another judge.[12] 

   [11] See r 4 of the Rules.

   [12] Earlscroft University Ltd v Brown (2003) 226 LSJS 194.

3. The slip rule is common to the rules of all superior courts of record and its form and effect in each jurisdiction is substantially the same.  The rule reflects the inherent jurisdiction of such courts ‘at any time to correct an error in a decree or order arising from a slip or accidental omission’.[13]  Superior courts have an inherent jurisdiction to correct errors or mistakes in their judgments or orders.[14]  In Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd,[15] Lockhart J said:

   Courts have an inherent or implied jurisdiction to amend judgments which do not correctly state what was actually decided and intended. Indeed, after a decree or order has been passed and entered a court will not, unless by consent, permit it to be altered without a rehearing, except in cases of mistakes or errors arising from accidental slips or omissions.[16]

   [13] Milson v Carter [1893] AC 638, 640.

   [14] See Terry’s Motors Ltd v Rinder (No 2) [1948] SASR 303; L Shaddock & Associates Pty Ltd v Parramatta City Council (No 2) (1982) 151 CLR 590.

   [15] (1995) 61 FCR 385.

   [16] Ibid, 390.

4. In Elyard, the Full Court of the Federal Court considered the position in which the primary judge had made an order under the slip rule, to grant an extension of time for the determination of winding up proceedings under s 459R nunc pro tunc.

5. The application for the winding up in insolvency of Elyard was made on 18 November 1994. The effect of s 459R(1) of the Act was therefore to require the application to be determined by 18 May 1995. On 21 April 1995, orders were made by the Registrar substituting another creditor as the applicant in the proceedings and extending the period for the application to be determined to 26 May 1995, pursuant to s 459R(2), the date to which the proceedings were adjourned. On 26 May, by consent, the Registrar further adjourned the proceedings to 9 June 1995 and granted a further extension to that date in accordance with s 459R(2).

6. On 9 June, Elyard consented to DDB being substituted as the applicant in the proceedings and the Registrar again adjourned the proceedings to 16 June 1995.  Through inadvertence, those acting for DDB neglected to seek an order, and as a result no order was made by the Registrar further extending the time for the determination of the application.

7. On 16 June the application came before Sheppard J. DDB sought an extension of time pursuant to s 459R(2). In granting the application, Sheppard J applied the slip rule, correcting the orders of the Registrar made on 9 June by way of varying those orders to include an additional order that the time within which the application for winding up be determined be further extended to 30 November 1995.[17]  Elyard appealed to the Full Court.

   [17] See DDB Needham Sydney Pty Ltd v Elyard Corporation Pty Ltd (1995) 131 ALR 213.

8. The question before the Full Court was whether s 459R(2) of the Act precluded the order made on 9 August extending time. The resolution of that question depended upon whether s 459R has the effect of excluding the use of the slip rule in a case where the court does not in fact make an order for an extension within the time specified pursuant to s 459R.

9. Lockhart and Lindgren JJ, with whom Black CJ agreed, held s 459R does not exclude the operation of the slip rule. In so holding, Lockhart J referred to authorities relating to the application of the slip rule in the context of the Bankruptcy Act 1966 (Cth). He said:

   Provisions such as s 459R(2)(b) and (3) and s 459G of the Corporations Law, and s 52(3) and (5) of the Bankruptcy Act, reflect the intention of the Parliament that applications to wind up companies and petitions to sequestrate the estates of natural persons must be dealt with promptly. This evident purpose of the Parliament is not denied at all by the exercise by the court of its power under the slip rule to correct accidental slips when justice requires that this be done. The Court has a discretion which it would be loath to exercise except in clear cases. Prejudice to parties to the litigation, or to third parties, arising from uncertainty caused by delay in seeking to have the mistake corrected is one obvious matter which must be taken into account by the Court in the exercise of its discretion. But this says nothing about the power of the Court to make an order under the slip rule.[18]

   [18] Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 285, 392.

10. Lockhart J distinguished the application of the slip rule from that of s 1322. He said:

    The application of the slip rule does not involve making an order "setting aside the dismissal of the winding up application". Rather, once the earlier order has been corrected it speaks from the date of the earlier order, and it is deemed to have always operated from that date. The result is that the winding-up application was never dismissed, whether by force of the statute or otherwise.[19]

    [19] Ibid, 393.

11. Lindgren J emphasised that in cases where a further extension is sought under s 459R by application of the slip rule:

    there must have been an order made within the statutory period, and secondly, that an order under the slip rule in relation to such an order is appropriately seen not as varying it or setting it aside, but as merely correcting it by including an ancillary order which the Court and the parties intended to be included.[20]

    [20] Ibid, 405.

12. Lindgren J considered that if a court applied the slip rule to extend time under s 459R, the court should not be seen to be varying or setting aside a previous order but merely correcting the previous order by virtue of an ancillary order which the parties would have intended be made at that time and would have been made but for a ‘slip’. The Full Court held that in applying the slip rule to make an ancillary order under s 459R in a previous order and hence ‘correct’ that previous order, the ancillary (correcting) order operates from the date of the earlier (corrected) order such that the earlier order is deemed as always having been correct. The ancillary correcting order is made nunc pro tunc, as the court will make an order nunc pro tunc if satisfied that ‘it is only doing now what it would have done then’.[21]

    [21] Donne v Lewis (1805) 11 Ves Jun 601, 601 cited in the discussion of nunc pro tunc orders of Toohey J in Emanuele v Australian Securities Commission (1996-1997) 188 CLR 114, 131-2.

13. In holding that the slip rule was applicable.  Lockhart J said:

    It is well settled that the application of the slip rule is not confined to giving effect to the intention of the judge at the time when the court’s order was made, or judgment given. It extends to the intention which the court would have had, but for the failure that caused the accidental slip or omission. The rule also extends to permit the correction of an order or decree where the omission results from the inadvertence of a party's legal representative.[22]  (Citations omitted)

    [22] Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385, 391.

14. Lockhart J dismissed the arguments of the appellant as to why the slip rule had no application to s 459R as misconceived. He said:

    This is the case because the later order corrects the earlier order, and speaks from the date of the earlier order, which then operates with full force as corrected. Hence, the order made by the primary judge in this case, on 9 August 1995, corrected the order of the Registrar of 9 June 1995, which then operated with full force from 9 June 1995. The slip rule, with retrospective operation, corrected the earlier order. In the result, the Registrar's order of 9 June 1995 embodied the correction of Sheppard J's subsequent order, so that the order of 9 June 1995 was corrected to extend the relevant period under s 459R before the prescribed period had expired. The essential purpose of the slip rule is to give effect to the intention which the court would have had, if it were not for the failure which led to the accidental slip or omission.

    […]

    The purpose of the rule would be denied if s 459R operated to achieve the result for which the appellant contends. It is irrelevant that the later order of Sheppard J, which corrected the earlier order, was made after the expiration of the statutory time limit. The earlier order as corrected, and speaking by operation of the later order from the earlier date, operated with full force from a time which was within the statutory time frame.[23] (My emphasis).

    [23] Ibid, 391-2.

15. Lindgren J expressed similar views.  He said:

    In my view it is clear, as Sheppard J has observed, that where an order is properly made under the slip rule, its effect is that the "clerical mistake" or "error" in the original judgment or order is eradicated so that the original judgment or order is treated as having been always made as corrected.

    […]

    All the cases seem to have assumed that when an order under the slip rule is made, the correction speaks as from the date of the original judgment or order.[24]

    [24] Ibid, 400-1.

16. In holding orders made under the slip rule to apply nunc pro tunc, Sheppard J at first instance and both Lockhart and Lindgren JJ on appeal relied on and applied the decision of the High Court in L Shaddock & Associates Pty Ltd v Parramatta City Council (No 2).[25]  The effect of the decision in Shaddock was summarised by Lockhart J, who said:

    [In Shaddock] [t]he High Court said that it was within the power of the Court "to amend the Court’s previous order". The order which the Court made was that there be "included in the order of the Court" made on the previous occasion certain additional words. The approach of the High Court demonstrates the adoption by it of the view that, when the Court makes an order under the slip rule, that order has the effect of correcting the slip in the earlier order, and operates from the date of the earlier order. The legal operation of the later order is simply to correct a previous mistake. Once the later order speaks, the additional words are included in the earlier order; and the earlier order continues as the relevant and operative order.[26] (Citations omitted).

    [25] (1982) 151 CLR 590.

    [26] Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385, 392.

17. In my view, it is settled law that s 459R does not exclude the operation of the slip rule.

    Judge Lunn’s order of 17 July 2007

18. Mr Dart conceded that, although Judge Lunn did not expressly refer to the rule, in varying the orders of 26 June 2007 on 17 July 2007, he was applying the slip rule to extend time in accordance with s 459R(2) nunc pro tunc and he was correct to amend the earlier orders in the manner he did.  In my view, that concession is properly made, particularly in light of the fact that the parties agreed to the course Judge Lunn adopted.

19. I am satisfied that the effect of the order made on 17 July 2007 was to extend the time for determination of the winding up application by four months to 26 October 2007.

    Effect of time expiring on 26 October 2007 – whether a further extension should be granted

20. On 18 September 2007, the last hearing prior to the expiry date for the application of 26 October 2007, the only order made by Judge Burley was to reserve judgment on the preliminary point.  Time expired whilst judgment was reserved.  The question is whether I should now exercise the discretion to again apply the slip rule and correct the order of 18 September so as to extend time for the determination of this application from that date.

21. Mr Dart submitted that I should not exercise the discretion to apply the slip rule and consequently the application should stand dismissed as of 26 October by operation of s 459R(3). He submitted that as the delay in this case is likely to be in excess of two years, it is inappropriate to allow the application to remain on foot. He submitted that s 459R gives effect to the legislative intention that winding up proceedings be resolved expeditiously. The application can no longer be determined on the basis of information contemporaneous with the date on which the application was filed and the defendant has not yet had an opportunity to present its main argument in defence, which relies on s 467(2) of the Act. Mr Dart submitted that the protracted nature of these proceedings and the repeated omission to seek extensions of time where appropriate could be attributed to the faults of both parties and as such an order should not be made under the slip rule.

22. Mr Dart relied on the decision of Lindgren J in Elyard.  He drew attention to the relatively short extension of seven days that was granted by Sheppard J at first instance.  As to whether Sheppard J was correct to exercise the discretion in favour of applying the slip rule, Lindgren J concluded:

    I am not persuaded by Elyard's submission that as a matter of discretion an extension would not have been ordered on 9 June because, in terms of s 459R(2), the Court would not have been satisfied that "special circumstances" justified the extension. Apparently, Elyard would have consented to the extension; the period of the extension was only seven days; Needham was substituted as applicant in place of Bowater Tutt only on 9 June itself and the procedural steps referred to in pars 4-8 of the orders made on that date had to be taken in readiness for the hearing of the application. Against this background par 3 of the solicitor's affidavit sworn 8 June 1995 noted earlier would have established on 9 June the existence of "special circumstances" to support an order under s 459R(2) extending the period within which the application was to be determined to 16 June. The case was a particularly strong one for the making of an order under r 7(3), on the assumption that such an order would be effective and the power to make it was available.[27]

    [27] Ibid, 400.

23. Delay is a factor bearing upon the exercise of the discretion. However, it is but one factor to consider, as emphasised by Lindgren J’s observations:

    It is of the greatest importance to distinguish between the availability of the slip rule and the exercise of discretion whether to make any order or a particular order under it. The terms and policy of s 459R as well as the special and limited scope of the slip rule must be borne in mind in any case where the Court is asked outside the statutory period to exercise its discretion to remedy the omission of an order within that period under s 459R(2). It is not possible to identify all the factors which may be relevant to the exercise of the discretion. Consistently with the policy underlying s 459R referred to earlier one factor will be the length of the period beyond expiry of the period of six months that the application for winding up will remain alive. The appellant's case is that the power to make an order under the rule is excluded in all cases. In my view s 459R does not have that effect.[28]  (My emphasis).

    [28] Ibid, 405-6.

24. Lindgren J, in approving the exercise of the discretion by Sheppard J to extend time, had regard to the fact that both parties would have consented to the extension of time had it been ordered at the appropriate time.[29] In the present case, it is certain that had the court turned its mind to the requirements of s 459R at the hearing on 18 September 2007, an order would have been made by consent, pursuant to s 459R(2), further extending time.

    [29] Ibid, 400.

25. I consider that it would be unjust to require fresh proceedings to be instituted to resolve this matter given the reasons that it has not yet been resolved are not the fault of the parties.  No prejudice has been demonstrated to the defendant if time were extended.  To require the plaintiff to commence fresh proceedings is, in the circumstances, unreasonable.

26. In Elyard, Lockhart J said:

    It may be trite, but it is worth repeating that the slip rule exists to avoid injustice: see Monaco v Arnedo Pty Ltd (1994) 13 WAR 522 at 524 per Malcolm CJ.

    […]

    An exercise of the power of the court under the slip rule is ultimately to avoid injustice.[30]

    [30] Ibid, 392.

27. In my view justice in this matter will be best served by allowing the proceedings to continue to finality.  The decision on the preliminary point is presently reserved to Judge Burley.  Allowing judgment to be handed down on this issue will, in my opinion, lead to the conclusion of the dispute between the parties in the most timely manner possible.

    Conclusion

28. Pursuant to r 242 of the Rules, I would correct the order of 18 September 2007 so as to order that the period within which this application for winding up in insolvency is to be determined be extended by six months from 26 October 2007, this order to apply nunc pro tunc from 18 September 2007.