Gary Alan Robb v Roseneath Stud Pty Limited [1998] ACTSC 194 (24 April 1998)

  
  
  
  

  
   

  

   IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

   MILES CJ, GALLOP and CRISPIN JJ

  

 


   Corporations Law - application to wind up under s.459PCorporations Law -
subsequent appointment of administrator under deed
of company arrangement -
adjournment of application to wind up in order to deal specifically with
questions of expiry of six month
period in which to obtain winding up order -
application filed in meantime to terminate deed of company arrangement - no
date fixed
for hearing of latter application - notices of motion taken out in
both applications and made returnable on adjourned date for limited
hearing of
application to wind up - Master makes order terminating deed of company
arrangement - whether that application before
court - whether denial of
natural justice.

  

   Practice and Procedure - need for counsel to inform themselves and inform
court
which of several proceedings on court file are properly before court on
day of hearing.

  

   Corporations Law, s.435C, s.436A,
s.444H, s. 445C, s.445D, s.445E, s.445F,
s.445G, s.459E, s.459P, s.459R

   Supreme Court Act 1933 , sub-s.9(2), s.13

  

  

   CANBERRA, 3 February 1998 (hearing), 24 April 1998 (decision)

   #DATE 24:4:1998

  

   Counsel for the appellant:
M. Walton

   Solicitors for the appellant: Colquhoun Murphy

  

   Counsel for the respondent: T.M. Johnstone

   Solicitors for
the respondent: Abbott Tout Harper & Blain

  

  

   THE COURT ORDERS THAT:

  

   1. The appeals be upheld.

   2. The orders
made by the Master on 11 July 1997 be set aside.

   3. The applications to wind up (SC 103 of 1997) and the application to
terminate
the deed of company arrangement (SC 504 of 1997) subject to appeal
be remitted to the Master for further hearing in accordance with
these
reasons.

   4. There be no order in relation to the costs of either of the appeals.

  

  

   MILES CJ, GALLOP and CRISPIN
JJ

  

   1. These are appeals from decisions of the Master in two separate
proceedings, SC 103/97 and SC 504/97. The appeals were
heard together by
consent. They raise issues essentially procedural in nature. In order to
understand the issues raised on appeal
it is necessary to attempt to set out
the history of the proceedings with some accuracy.

  

   Events leading to the hearing before
the Master

  

   2 . On 30 July 1996 the appellant issued a statutory demand upon the
respondent (the company) for payment of $74,862.73
alleged to be owing
pursuant to a deed of guarantee dated 29 June 1990. The statutory demand was
made under s.459E of the Corporations
Law and was served upon the company on
13 August 1996.

  

   3. On 11 February 1997 the appellant caused to be filed an originating
application to wind up the company under s.459P of the Corporations Law (the
application to wind up). In support of the application
to wind up the
appellant filed an affidavit sworn by him in which he testified to a failure
of the company to comply with the requirements
of the statutory demand.

  

   4. The application to wind up was assigned number SC 103/97. The
application to wind up stated that
the court "may hear and determine the
application at the time and place specified below, or on a day subsequently
appointed for directions
in the proceedings". The date specified was 24 March
1997.

  

   5. On 21 March 1997 the company by instrument under seal appointed
Mr. John
Edwin Star administrator of the company pursuant to s. 436A of the
Corporations Law.

  

   6. We were told at the hearing
of the appeal that on 24 March 1997 the
application to wind up was adjourned to 24 April 1997.

  

   7. In the meantime, on 22
April 1997, pursuant to s.435C of the
Corporations Law, a deed of company arrangement was executed by the company.
In accordance
with the terms of the deed of arrangement and the provisions of
s.444H of the Corporations Law, the company was released from its
debts on the
date after which the administrator made a final distribution of the scheme
fund constituted under the deed of company
arrangement. Provision was made in
clause 7 of the deed of arrangement for the termination of the deed in the
circumstances provided
for in ss.445C, 445D, 445E and 445F of the Corporations
Law. None of those provisions apply in the circumstances of the present case.

  

   8. On 2 May 1997 the application to wind up came before the Master. Counsel
for the company submitted that the effect of
the deed of arrangement was such
that the application to wind up could not proceed. The application to wind up
was then adjourned
to 11 July 1997. The Master indicated that on the adjourned
date he would deal with the issue of the impending expiry on 11 August
1997 of
a six month period imposed by s.459R of the Corporations Law.

  

   9. On 17 June 1997 the appellant caused a notice of
motion to be taken out
(ancillary to the application to wind up) seeking leave to "file" (presumably
meaning issue) and serve subpoenas
for production of documents by various
companies and a firm of chartered accountants. The notice of motion was
returnable on 20 June
1997. We are not aware exactly of the reason for wanting
to issue the subpoenas nor are we aware of what happened on the return date
of
the notice of motion but we were told that various subpoenas to produce
documents were issued in accordance with leave granted.
The next development
appears to be that the legal representatives of the appellant were not
satisfied with such documents as were
produced in response to the subpoenas
and wanted further time to attend to that aspect of the matter before the
hearing of the application
to wind up on 11 July 1997.

  

   10. On 9 July 1997 the appellant caused to be filed an originating
application seeking orders
in the alternative that the deed of arrangement be
terminated pursuant to paras.445D(1)(f) and (g) or that the deed be avoided
pursuant
to sub-s.445G(2) of the Corporations Law. This application (the
application to terminate the deed) was a separate proceeding to the
application to wind up. It was allocated number SC 504/97. The application
filed stated that it was made on grounds appearing "in
the accompanying
affidavit". The affidavit so referred to was not otherwise identified in the
application filed and, as far as we
are aware, was not identified otherwise in
the proceedings or at the hearing of the appeal. This was one of the many
procedural defects
in the proceedings now before us. Another procedural defect
in the application to terminate the deed was that it bore a notice stating
that "a directions hearing in this application (and/or for the applicant's
claim for an interlocutory order) will be heard by the
Court at the time and
place specified below". The form of document in the appeal book was not clear
as to whether the hearing, the
time and place of which should have been
specified, was to be simply a directions hearing or a hearing of the claim for
interlocutory
relief. This is a matter of some importance, because until a
date for a directions hearing or a date for hearing of the application
itself
was fixed and notified to the opposing party, the application could proceed no
further.

  

   11. The application to terminate
the deed also claimed "by way of
interlocutory relief" an order for leave to file a "further affidavit" in
support of the application
to terminate the deed, following inspection of the
documents subject to subpoena in the application to wind up.

  

   12. Also
on 9 July 1997 the appellant caused to be filed in the respective
proceedings, SC 103 and SC 504, notices of motion each seeking
orders that
"these proceedings" be heard together with the other proceedings and that the
evidence in "these proceedings" be evidence
in the other. The notice of motion
in SC 504 sought a further order that "the application in these proceedings be
heard and determined
before the application in proceedings SC 103 is heard and
determined". The notice of motion in SC 103 sought further orders that
"the
period in which this application is to be determined be extended until 11
November 1997".

  

   13. Each notice of motion
was expressed to be returnable before the Court
on 11 July 1997 and each sought an appropriate order for abridgement of time
for
service.

  

   The hearing before the Master on 11 July 1997

  

   14. It is to be concluded from an analysis of the above summary
of events
that on 11 July 1997 the matters to be determined by the Court on that day
were those raised in the notices of motion filed
on 9 July 1997 and, further,
in the application to wind up the issue of the impending expiry of the six
month period, that issue
having been adjourned from 2 May 1997. A wise course
would have been for the parties mutually to acknowledge that the initial
issues
to be decided on 11 July 1997 were restricted to those raised in the
notices of motion. It would also have been wise to acknowledge
that it was not
necessary or appropriate for the parties or their legal representatives to
come to court prepared to present or resist
a case on the issues involving
final relief in either the application to wind up or the application to
terminate the deed of arrangement.
On the state of progress of proceedings in
both applications it was to be expected that the questions of final relief
were to be
left until after the Court had adjudicated on the issues raised by
the notices of motion filed on 9 July 1997, and the issue in the
application
to wind up relating to the expiry of the six month period.

  

   15. Furthermore, it may be noted that, according to
the administrative
arrangements within the Court, the motions were placed in the Friday motions
list customarily heard by the Master.
Normally matters in that list are of an
interlocutory nature and do not involve the adjudication on the merits of
issues which are
decisive on the question of final relief, unless those issues
are simple and the proceedings can be heard and determined on the day.

  

   16. When the motions were called on for hearing, it could not have been
expected that the Master, dealing with a busy motions
list, would readily
identify from the court files in front of him which particular proceedings
were to be decided that day. In accordance
with common procedure, the Master
made enquiries from counsel in this regard. The appellant was represented by a
solicitor, the company
by a member of the independent bar. It is convenient to
refer to both practitioners as counsel for their respective clients.

  

   17. It is unnecessary to set out the transcript of what occurred before the
Master. It is apparent from a reading of the transcript
that there was some
confusion and disagreement about what exactly was before the Master. At the
commencement, counsel for the company
indicated that he was ready to oppose "a
number of motions", all of which could be heard together. Counsel for the
appellant however
indicated that whilst he wanted the motions to proceed, he
was seeking an adjournment of the "actual applications in the proceedings".
In
this respect counsel for the appellant appears to have thought, wrongly, that
the application to terminate the deed was before
the Court for hearing as to
final relief. It was not. Counsel for the company put to the Master that
neither application was before
the Court except in terms of the notices of
motion and any question of an adjournment of either application was
inappropriate. In
this respect counsel for the company was also mistaken
because the application to wind up had been adjourned from 2 May 1997 on the
limited issue of the expiry of the six month period.

  

   18. The Master was not expressly reminded that the purpose of the
adjournment
of the application to wind up to 11 July 1997 was to deal with the
single issue of the expiry of the impending six month period on
11 August
1997. However it may be inferred that it was that period which counsel for the
appellant sought to have extended by the
notice of motion in the application
to wind up. In that limited sense the application to wind up was before the
Master, as well as
the two notices of motion. But as far as the application to
terminate the deed was concerned, that was before the Court only for
the
purposes of the notice of motion.

  

   19. In calling upon counsel for the company to respond to the submissions
put in support
of the motions and in support of a further adjournment of the
application to wind up, the Master appears to have taken the view that
all
issues in the application to wind up, the application to terminate the deed
and the notices of motion were before him for determination.

  

   20. Neither counsel took the opportunity to enlighten the Master on these
matters, which were matters particularly within
the knowledge and province of
counsel. On the contrary, counsel for the company took the opportunity to put
submissions to the Master
on a number of aspects relating to delay between the
filing of the application to wind up and the entering into the deed of
arrangement.
In so doing, counsel for the company implicitly abandoned the
attitude taken by him earlier when he protested that neither of the
substantive applications for final relief was listed for determination before
the Court that day.

  

   21. The Master gave a ruling
recorded in the transcript which we set out in
a slightly truncated version.

  

   Matter 504 of 1997 comes before me by way of
a notice of motion which,
inter alia, seeks to abridge the time for the service of that notice of motion
... which I am prepared
to grant, but substantively it involves the
application to terminate the deed of company arrangement... . Counsel for the
respondent
company refers me to...extensive authorities in relation to the
question of the discretion which a court ought exercise in entertaining
an
application to terminate a deed of company arrangement... . It is clear that
delay is a crucial issue and a month appears to be
about the maximum time for
entertaining such an application.

  

   In proceeding 103 of 1997... separate proceedings to independently
wind up
the Company have been confronted with the voluntary arrangement which had been
entered into before those proceedings got
on foot.

  

   That matter came before me on 2 May... where counsel for the Company
strongly urged that the presence of the voluntary
agreement meant that the
winding up application... could not proceed. That matter was adjourned to
today to, in effect, see what
had transpired [and] so that... the interests of
the applicant were preserved... within the six (6) month period in which a
winding
up application remains a foot.

  

   I have heard argument as to why the application to terminate the deed of
arrangement has not
been brought before this week... .

  

   I am compelled by the authorities... to rule that an application to
terminate a voluntary
arrangement must be brought promptly - on the
authorities, within a period of about a month, although obviously some
discretion is
available in the terms of the individual case. In this case
where the issue must have been... promptly in the mind of advisers of
the
applicant from the point at which I had ruled that the winding up application
could not proceed... because the deed of arrangement
had been entered into and
then adjourned the proceedings to preserve interests. An application to
terminate the deed of company arrangement,
if it were to be brought, ought to
have been brought swiftly. It has not been so brought and I rule that it
should for that reason
be dismissed. So I rule that matter 504 of 1997 ought
to be dismissed... and I order it be dismissed with costs.

  

   Having ruled
that it is inappropriate to entertain an application to
terminate the arrangement because of time, a winding up application for a
company where there is a valid deed of arrangement in place has nowhere to go
at this point of time. ... it is appropriate that this
application be
dismissed.

  

   22. Following the Master's rulings formal orders were taken out in the
following terms:

  

 
 In 103 of 1997

  

   1. The applicant's Application to have the above proceedings joined with
proceedings numbered 504 of 1997
be dismissed with costs.

  

   In 504 of 1997

  

   1. The applicant's Application dated 9 July 1997 be dismissed.

  

   2.
The applicant's Notice of Motion dated 9 July 1997 be dismissed.

  

   3. The applicant pay the respondent's costs of the Application
and of the
notice of motion."

  

   Proceedings before Higgins J

  

   23. The appellant caused two notices of appeal to be filed
seeking that the
Master's orders be set aside.

  

   24. These appeals came on before Higgins J. There was a question whether
the
orders appealed against, or some of them, were appeals against
interlocutory orders, or against final orders. His Honour had jurisdiction
to
entertain any appeal against an interlocutory judgment but in respect of any
appeal against a final order, jurisdiction lay with
the Full Court not his
Honour: sub-s.9(2) of the Supreme Court Act 1933 .

  

   25. His Honour took the view that the order refusing to set aside the deed
(or more precisely, the order dismissing the
application to set aside the deed
of company arrangement) was a final order and declined to entertain the appeal
against that order.
His Honour ruled that the appeal against that order should
be heard by a full court and extended the time in which to file a further
notice of appeal for that purpose. In relation to the appeals against
interlocutory orders, His Honour exercised his powers under
s.13 of the
Supreme Court Act 1933 and ordered that they proceed before a Full Court. His
Honour also ordered in SC 103 that the time under s.459R of the Corporations
Law be extended to 22 November 1997. His Honour further ordered in SC 103 that
should proceedings in SC 504 be heard earlier and
determined by a Full Court,
then the Full Court should exercise jurisdiction to determine the winding up
application.

  

   Issues
on appeal to the Full Court

  

   26 . The grounds set out in both notices of appeal to the Full Court are
identical. They are
based in the main on what might be called a denial of
natural justice, in that the Master dismissed "the proceedings" (that is, the
application to terminate the deed of arrangement) "without any hearing or
without a determination of them".

  

   27. There was
a separate issue raised on the appeal that the Master erred
in law in regarding himself bound to dismiss the application to terminate
the
deed of arrangement because it was not made within one month of the entry into
the deed of arrangement.

  

   28. The appeal
should succeed on the first ground. It was essential that
the parties through their representatives made clear to the Master what
proceedings were before the Court on 11 July 1997. It was necessary that they
also made clear what matters were to be determined
in and by those
proceedings. However, they did not make those matters clear and did not
sufficiently inform the Master as to the
issues to be decided. The proceedings
that were before the Master were the two applications, each made by way of
notice of motion
dated 9 July 1997 and taken out respectively in SC 103 and SC
504, and the adjourned hearing of the application to wind up, but insofar
as
the latter was concerned, only on issues relating to the expiry of the six
month period. Those were all truly interlocutory proceedings
seeking orders
ancillary and prior to the determination of the applications for final relief
by way of a winding up order in SC 103
and termination of the deed of
arrangement in SC 504. The orders sought in the notices of motion seeking to
have both applications
for final relief heard together should have alerted
counsel and the Master to the question whether the applications for final
relief
were before the Court for hearing on that day. In fact both counsel
appear to have expressed initial views that questions involving
final relief
were not before the court that day.

  

   29. However, when the Master indicated a view that there might be no point
in adjourning the application to wind up, as it might not succeed in any
event, counsel for the company used the occasion to put
submissions to the
effect that the application to terminate the deed was also bound not to
succeed. He addressed the Master on the
merits, to the effect that the
application to terminate the deed should fail for reasons of delay even at
that stage, and a fortiori
was bound to fail if there was any further delay
occasioned by an adjournment. By such submissions, counsel for the company
must
have been taken to have abandoned his earlier protest that the
application for final relief in SC 504 was not before the Court. Although
it
cannot be said that the Master did not give counsel for the appellant an
opportunity to be heard on the question of whether or
not a final order should
be made in SC 504, the fact is that, according to the normal procedures of the
court, the application to
terminate the deed in SC 504 was not listed before
the Court at the commencement of the hearing on 11 July 1997. Nothing was said
or done by counsel for the appellant to indicate consent to bring that
application to terminate the deed of arrangement before the
Court for
determination on that day. It is plain that counsel for the appellant did not
come that day ready to argue the merits of
the application to terminate the
deed and that counsel did not need to do so. Whilst it was appropriate for the
Master to indicate
a provisional view that delay was likely to defeat the
application to terminate the deed, he should not have proceeded to a final
determination of that issue until the application to terminate the deed was
properly brought before the Court for that purpose.

  

   30. The Master was in error when he said of the notice of motion in SC 504
that "substantively it involves the application
to terminate a deed of company
arrangement". It did not.

  

   Events pending appeal

  

   31. Since the Master's order, the
administrator appointed under the deed of
arrangement has made a distribution under the terms of the deed. Prior to that
distribution
the appellant lodged a proof of debt sent with a covering letter
from his solicitors dated 1 December 1997. The solicitors stated
that the
proof of debt was lodged without prejudice to their client's rights to press
for an order to wind up the company. On or
about 24 December 1997 the
administrator made a first and final distribution of the assets of the company
which he was authorised
to distribute. Counsel for the company submitted on
the appeal that having lodged a proof of debt and having received and accepted
the sum of $5,392.35, calculated at ten cents in the dollar in the
distribution (in respect of a proof of debt of $80,443.75), the
appellant is
no longer a creditor of the company and therefore not a creditor within
sub-s.445D(2) of the Corporations Law. It was
further submitted that having
ceased to be a creditor of the company the appellant is no longer a person
with standing for the purpose
of the appeal or for the purpose of the
application to terminate the deed.

  

   32. Section 445D provides as far as is relevant:

  

   (1) The Court may make an order terminating a deed of company arrangement
if satisfied .....

  

   (2) An order may be
made in the application of -

  

   (a) a creditor of the company; or

  

   (b) the company; or

  

   (c) any other interested
person.

  

   33. The Court was referred to a number of authorities relating to
approbation and reprobation, acquiescence, release
and similar doctrines.
Ultimately we are not convinced that it was within the province of the
administrator, acting in accordance
with the deed of arrangement, to deprive
the appellant of the status of creditor whilst there was pending the
application to wind
up. We were told that the application is still pending.
Nor are we convinced that any estoppel has arisen as a result of the
appellant's
acceptance of the sum distributed to him following the lodgement
of a proof of debt on the without prejudice basis to which his solicitors
referred. In any event, if the appellant is not a creditor of the company, we
are unable to see that he does not remain an interested
person within
para.445D(2)(c) and indeed no argument was put that he is not. If the deed is
terminated the appellant will presumably
claim that the application to wind up
should proceed. Insofar as that latter claim is arguable, the appellant has an
interest in
the termination of the deed of company arrangement.

  

   Outcome

  

   34. Whilst on the face of it delay on the part of the
appellant in applying
to set aside the deed of arrangement would seem to be a substantial impediment
to success in both that application
and the application to wind up, we are not
convinced that the appellant has been given the opportunity to present
evidence and to
make adequate submissions in that regard. Despite the
unfortunate and continuing delay, the matter can be properly resolved only
by
remitting back to the Master for further hearing both the application to set
aside the deed and the application to wind up. Those
applications should be
the subject of an early directions hearing followed by the fixing of a date
for final determination of both
applications.

  

   35. The orders made by the Master on 11 July 1997 are set aside.

  

   36. The application to wind up and
the application to terminate the deed of
company arrangement subject to the appeal are remitted to the Master for
further hearing
in accordance with these reasons.

  

   36. In the circumstances we make no order in relation to the costs of
either of the appeals.