Westpac Banking Corporation ARBN 007 457 141 v E & W Jury Pty Ltd & Ors [1998] FCA 106 (12 February 1998)

Last Updated: 2 March 1998

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 3166 of 1997

BETWEEN:	WESTPAC BANKING CORPORATION ARBN 007 457 141 Applicant
AND:	E&W JURY PTY LIMITED First Respondent JUSTAL PTY LIMITED Second Respondent KEDGE PTY LIMITED Third Respondent LOGWON PTY LIMITED Fourth Respondent TRINITY PROPERTIES PTY LIMITED Fifth Respondent WOODCO PTY LIMITED Sixth Respondent

JUDGE:	EMMETT J
DATE:	12 FEBRUARY 1998
PLACE:	SYDNEY

THE COURT ORDERS:

1. That the order made by Justice Emmett on 18 December 1997, directing that these proceedings be listed for directions before His Honour on 6 February 1998, be corrected by adding an order that, subject to further order, the time within which the applicant's application pursuant to section 459P of the Corporations Law was to be determined be extended up to and including Friday 6 February 1998.

2. That the orders made by Justice Emmett on 6 February 1998, directing that these proceedings be listed on 12 February 1998 for hearing of any application made by the applicant pursuant to section 459R of the Corporations Law and the foreshadowed application by the respondents pursuant to section 459S of the Corporations Law, be corrected by adding an order that, subject to further order, the time within which the applicant's application pursuant to section 459P of the Corporations Law was to be determined be further extended up to and including Thursday 12 February 1998.

3. That the notice of motion of the respondents be dismissed with costs.

4. That each of E & W Jury Pty Ltd, Justal Pty Ltd, Kedge Pty Ltd, Logwon Pty Ltd and Trinity Properties Pty Ltd ("the Companies") be wound up by this Court under the provisions of the Corporations Law.

5. That John Frederick Lord of Level 8, 1 York Street, Sydney in the State of New South Wales, an official liquidator, be appointed the liquidator of each of the companies.

6. That the applicant's costs, including reserved costs, be taxed and reimbursed out of the property of the Companies in accordance with subsection 466(2) of the Corporations Law.

Note: settlement and entry of orders is dealt with in order 36 of the federal court rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 3166 of 1997

BETWEEN:	WESTPAC BANKING CORPORATION ARBN 007 457 141 Applicant
AND:	E&W JURY PTY LIMITED First Respondent JUSTAL PTY LIMITED Second Respondent KEDGE PTY LIMITED Third Respondent LOGWON PTY LIMITED Fourth Respondent TRINITY PROPERTIES PTY LIMITED Fifth Respondent WOODCO PTY LIMITED Sixth Respondent

JUDGE:	EMMETT J
DATE:	12 FEBRUARY 1998
PLACE:	SYDNEY

EX TEMPORE REASONS FOR JUDGMENT

HIS HONOUR:

MOTION OF THE APPLICANT FOR ORDERS UNDER SECTION 459R OF THE CORPORATIONS LAW

I have before me a motion seeking an order under section 459R of the Corporations Law seeking an extension until 5 pm today of the period within which a winding up application might be determined. When the motion was called on for hearing today, counsel for the Applicant indicated that he wished to seek further orders over and above the orders sought in the notice of motion, being orders under Order 35 Rule 7, often referred to as the "slip rule".

There is also fixed before me today an application for the winding up of six companies, although I was informed by counsel for the Applicant that the application would not be proceeded with against one of those companies. The application was filed on 21 July 1997. Under section 459R(1) an application for a company to be wound up in insolvency is to be determined within six months after it is made. Accordingly, the application should have been determined by 21 January 1998.

However, section 459R(2) provides that the Court may, by order, extend the period within which an application must be made but that the Court may only do so if:

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

(b) the order is made within the period so prescribed or as last extended as the case requires.

The notice of motion seeking the extension was not filed until 10 February 1998. It was filed pursuant to directions which I gave on 6 February, 1998, when the matter first came before me. Apparently it was not until very recently that it was perceived that, without something further, the power to extend time no longer existed. Accordingly, counsel for the Applicant seeks orders under Order 35 rule 7(3) on the basis that I should correct an error arising in a judgement or order from an accident or omission. It is necessary, therefore, to recount the history of the proceedings before today.

As I have said, the application was filed on 21 July, 1997. It came before Registrar Hedge on 28 August 1997. On that day notice of intention to appear at the hearing and grounds of opposition to the winding up were lodged. Accordingly, Registrar Hedge directed that the Respondents file and serve any affidavits in opposition and in support of any leave to oppose under section 459S, no later than 4 pm on 2 September, 1997. The Applicant was to file and serve any affidavits in reply no later than 4 pm on 3 September, 1997, and the proceedings were stood over to 9.30 am on 5 September, 1997 for possible referral to the Duty Judge.

On 5 September, 1997, the matter was stood over to 19 September 1997 for further directions at 9.30 am. At that stage there was apparently no appearance for the Respondents and the Applicant was directed to notify the Respondents of the date and place of the adjourned hearing. On 19 September, 1997, the proceedings came before Registrar Quinn, who directed that the Respondents file their notice of motion for leave under section 459S by 5 pm on 19 September 1997, returnable on the same day as the substantive hearing. Registrar Quinn also granted leave to the parties to file in the registry a range of dates for hearing on the basis that the hearing would be half a day and directed that the matter be allocated to a judge.

There then followed correspondence between the solicitors for the Applicant on the one hand and the Court and the solicitors for the Respondents on the other hand concerning the fixing of a date for the hearing of the application together with the question of whether leave should be given to the Respondents under section 459S to raise, in answer to the winding up application, matters which had been the subject of an earlier application to set aside statutory demands which had been unsuccessful.

On 23 October 1997 the solicitor for the Applicant spoke to an officer in the registry and inquired whether there was any way to find out when the matter might be listed for hearing. The officer indicated that she would look at that question and telephone the inquirer. On 27 September 1997 the associate to Davies J had a telephone conversation with the Applicant's solicitor indicating that his Honour had a matter fixed for some three weeks which might be settling and therefore may be able to make available some time for the hearing of the application. In the meantime the Applicant's solicitor was asked by the associate to find out what dates would be most convenient for counsel for both parties in the period between late October and early November.

On 28 October 1997 further discussions took place between the Applicant's solicitor and solicitors for the Respondents concerning a possible date for hearing. On that day a facsimile communication was sent by the Applicant's solicitor to the associate to Davies J referring to the discussions earlier in the day and saying:

We have discussed available dates with Mr Halley, Counsel representing Westpac and confirm that Mr Halley is available for a hearing of these proceedings on 12 December 1997.

We would be grateful if you would specially fix the proceedings for that date before His Honour.

We confirm that we have also conveyed Mr Halley's availability on that date to Central Law, apparently the solicitors who will be assuming carriage of these proceedings from Leary and Company.

We have requested that they advise you of their availability for that date.

.........................................................................................................................

We expect that the matter will take half to one full day.

On the same day the Applicant's solicitor sent a facsimile communication to the Respondents' solicitors informing them that she had written to the associate to Davies J asking that the matter be specially fixed for hearing on 12 December 1997 subject to the availability of Mr Hodgekiss, counsel for the Respondents.

On 31 October 1997 the Applicant's solicitor wrote to the Respondents' solicitors referring to the facsimile of 28 October 1997 and saying inter alia:

On 30 October 1997 we were advised by the Federal Court that Justice Davies feels compelled to disqualify himself from any hearing of the matter, by reason of earlier findings he has made in relation to Mr Jury's credit.

Justice Davies' Associate has advised that they are still hopeful of retaining 12 December 1997 as the hearing date.

Please let us know your clients' intentions in respect of that forthcoming hearing.

There is no evidence of any response to that facsimile. On 11 December 1997 the Applicant's solicitor again spoke to an officer in the registry when the Applicant's solicitor was informed that there was still no judge available to hear the proceedings. The officer said that it would be useful if she could be provided with available dates of the Applicant's counsel so that, if a hearing date does come up, a judge could be allocated.

On 18 December 1997 my associate spoke to the Applicant's solicitor saying that the winding up proceedings had been allocated to the docket system and were now to be returnable before me on 6 February 1998. My associate asked that counsel be present on that occasion. On 5 January 1998 the Applicant's solicitors wrote to the Respondents' solicitors confirming that they had been advised by the Federal Court registry that 6 February 1998 had been fixed for a directions hearing before me. The letter of 5 January 1998 pointed out that on 19 September 1997 directions had been made requiring the filing of a notice of motion for leave under section 459S but that at the date of the letter there had been no indication as to whether that motion was to be pressed.

The solicitor having the conduct of the proceedings on behalf of the Applicant swore an affidavit in which she says that on 19 September 1997, when directions were made by the Court, she overlooked the effect of section 459R. She says that, in hindsight, she now realises that at the time when the directions were made on 19 September 1997 she should have applied to the Court for a further order in relation to the relief that is available under section 459R, bearing in mind the period that had already elapsed between the filing of the section 459P application and 19 September 1997, the Respondents' foreshadowed application under section 459S and what she referred to as "the closure of the Court" over the summer vacation period.

The solicitor also says that she believes that an order should have been applied for extending the period either up to the close of business on the date fixed for hearing or to a date sufficiently distant to enable the application to be finally determined. She also says, with the benefit of hindsight, that she believes that as soon as she had had the conversation referred to above with my associate on 18 December 1997, she should immediately have lodged an application with the Court for relief under section 459R(2) and ensured that the relevant notice of motion was returnable before the Court prior to 20 January 1998. She says that it was not until after the commencement of the directions hearing before me on 6 February 1998 that she recognised that it would be necessary for an extension of time under section 459R.

On 6 February 1998 I granted leave to the Respondents to file any leave application in terms of section 459S no later than 4 pm on 10 February 1998, the application being returnable before me on 12 February 1998. I also abridged the time for service of such an application and fixed for hearing before me on 12 February 1998 the application for winding up the Respondents, noting that if leave under section 459S was not given then the hearing of the application for winding up would then proceed. At that stage I also gave leave to the Applicant to file an application for leave under section 459R. I abridged the time for service of that application and directed that it be returnable before me today.

The orders which the Applicant now seeks are in effect in the alternative. They are to the effect that whatever order was made by me on 18 December 1997 be corrected by reason of the omission of any reference to an order under section 459R. In effect, the application is for an order operating nunc pro tunc under Order 35, adding an order extending the time up to 6 February 1998 and a similar order adding to the directions I gave on that day extending the time for determination of the application up to and including today.

These applications are opposed by the Respondents although counsel for the Respondents accepts that had an application been made to the Court in December 1997 there would have been no basis for resisting an order under section 459R. On the material presently before me, I have no doubt that had an application been made to me in December I would have made an order extending the time for determining the application up to and including the date which I had fixed for directions and had an application been made on that day I would have extended the time for determination of the application up to the date which I then fixed for hearing of the application. The only question is whether I have power to make the order now sought by the Applicant.

I have been referred to the decision of the Full Court of this court in Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 133 ALR 206 in which a similar question arose. The Full Court there dismissed an appeal from an order of Sheppard J in which his Honour ordered an extension which operated nunc pro tunc. The circumstances of that case were not identical to those before me. Counsel for the Respondents submitted first, purely on a formal basis, that that decision was wrong and secondly that, because of the difference in the circumstances, was distinguishable. A formal submission was put on behalf of counsel for the applicant that the Full Court was wrong in concluding that section 1322 of the Corporations Law had no application to such a position, although it was accepted that I am bound by the Full Court's determination to the contrary.

The circumstances were different to the extent that in that case the creditor seeking a winding up order had made an application under section 459R which was successful but omitted to apply for a further extension on the adjourned hearing date. The evidence, however, was apparently to the effect that the solicitor for the applicant intended to make an application, but through oversight, forgot to do so. In the present circumstances, the Applicant's solicitor frankly acknowledged that she simply did not turn her mind to the question of an application under section 459R until the time had expired.

In Galler v DDS Investments (unreported, 4 March 1997) Moore J considered that such a question was of no relevance and that it did not matter whether there had been one extension and omission to request a further extension. In both cases, however, there were clearly orders on which the slip rule might be taken to operate. The primary submission for counsel for the Respondents before me was that there is simply no order on which the slip rule can operate, except perhaps the direction given on 19 September 1997. At that stage, of course, it was not in anybody's contemplation that there was a real risk that the Court would not be able to allocate a date for hearing prior to the expiration of the relevant period.

In Elyard, Lockhart J, with whom the Chief Justice agreed, observed at page 210 follows:

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 effect of an order made under the slip rule is that it operates as though the order had been made, in the corrected terms, at the time when the order was originally made. Lockhart J confirms that and also observes that, although it may be trite, it is worth repeating that the slip rule exists to avoid injustice. His Honour (at page 211) observed that the purpose of the rule would be denied if section 459R operated to achieve the result contended for in that case by the company respondent. His Honour said:

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.

It would certainly, in my view, be unjust if there is no means for remedying the circumstances which have arisen in this case, having regard to the concession made by counsel for the Respondents.

In Elyard, Lindgren J, at page 223 observed that rule 7(3):

addresses only "clerical mistakes" in a judgment or order and "errors arising in a judgment or order from an accidental slip or omission". These are situations in which, when the mistake, slip or omission comes to light, one might expect the response: "Of course, it must be attended to. It is obvious. It goes without saying".

His Honour went on to say that his analysis emphasised that 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.

In Elyard Lindgren J also referred (at page 222) to the judgment of Heerey J in Re Agushi; Ex parte: Farrow Mortgage Services Pty Ltd (in liq) [1994] FCA 1306; (1994) 126 ALR 704. Lindgren J observed that the facts of the case were somewhat different from those of other cases to which he had referred in that the parties were not involved in the making of the order which took the creditor's petition in that case outside the statutory period. Within the statutory period, a direction was made placing the case in the list of cases for hearing and the Registrar subsequently notified the parties that the case was fixed for hearing on a date some five months away.

That date was in fact outside the 12 month period but neither the Registrar nor the parties appreciated that until after the period had expired. Nevertheless, Lindgren J considered that, in those circumstances, the slip rule would be attracted, apparently on the basis that there must have been involved in the conduct of the Court's business in that case an order of the Court, either by the Registrar in removing the matter into the list for hearing, or what appears to be the case, in fixing the case for hearing on a date outside the 12 month period. In other words, the Court had fixed the matter for hearing during the relevant period on a date outside the period.

There would, of course, have been absolutely no utility at all for me, on 18 December 1997, to fix the proceedings for directions, if there was not to be an order under section 459R. Accordingly, I am satisfied that the circumstances which Lindgren J contemplated would have been attracted subject only to what, as I have said, is really the only matter of opposition that was advanced on behalf of the respondents, namely, that there was in fact no order.

It is certainly correct that there was no formal notation of any direction given by me in December 1997 that the matter be listed for directions on 6 February 1998. However, the business of the Court can only be conducted in accordance with directions given by appropriate officers, be they officers in the Registry or a judge of the Court. In so far as the matter was fixed for directions before me on 6 February 1998, there must have been an order made by me that that happen. Fixing a matter for directions could only be done with the authority of an officer of the Court be it a judge or registrar. It may be that the circumstances of the case suggest that greater formality than sometimes exists is required in order to record what is being done by the court in the administration of its business.

However, be that as it may, it appears to me that there can be no doubt that on 18 December 1997 there was a direction given by me listing the matter for directions on 6 February 1998, and that direction can properly be characterised as an order within the meaning of the slip rule. In my view, it goes without saying that I was not intending to waste my breath or waste the Court's time in such a directions hearing. As I have said, had I been asked I would have made an order under 459R(2). Similarly, if I had made such an order and then been asked to do the same thing on 6 February 1998, I would have said of course it is obvious that I intend that what I do on 12 February 1998 will have some utility. In the circumstances, I consider that I have power to make orders of the nature sought and I propose to do so.

Accordingly, on the motion of the Applicant I make orders in accordance with the short minutes of order which I have initialled, dated with today's date and which I will place with the papers.

MOTION OF THE RESPONDENTS FOR LEAVE UNDER SECTION 459S OF THE CORPORATIONS LAW

In the reasons which I gave earlier in the day for making orders extending the time within which the application for winding up orders should be determined, I indicated that the Respondents had intimated an intention to apply for leave under section 459S of the Corporations Law permitting them to oppose the application on grounds upon which they had sought to set aside the statutory demands. The statutory demands were served on 26 August 1996. Application was then made by the Respondents to the Supreme Court of New South Wales pursuant to section 459G which provides that a company may apply to that Court for an order setting aside a statutory demand. Under section 459H that section applies where, once an application has been made, the Court is satisfied either that there is a genuine dispute between the company and the creditor about the existence or amount of a debt or that the company has an offsetting claim. In those circumstances the Court must set aside the demand.

The applications were heard before Master McLaughlin in the Supreme Court who, on 16 July 1997, ordered that the applications to set aside the statutory demands be dismissed with costs. Master McLaughlin referred to the fact that the demands were based on a judgment of Rolfe J in the Commercial Division. Each of the companies had instituted an appeal from that judgment. I am now told that that appeal has been fixed for hearing in the Court of Appeal of New South Wales on 5 and 6 May 1998. There had been an application to the Court of Appeal for a stay of execution which was refused. Nevertheless, it was submitted to Master McLaughlin on behalf of the Respondents that there was a genuine dispute as to the existence of the debt. It was submitted that if there be such a genuine dispute then pursuant to section 459H the demands should be set aside.

Master McLaughlin said in his reasons that the ground upon which the companies submit that there is such a genuine dispute is that the judgment entered against them by Rolfe J is void in consequence of that judgment having been affected by what has been described as apprehended bias on the part of his Honour in the hearing of the proceedings. The contention appears to be, although at present there is no ground of appeal in the notice of appeal to that effect, that his Honour ought to have disqualified himself because of apprehended bias in the circumstances which I shall briefly describe.

When the matter was called on before Rolfe J on 26 September 1995, Mr Peter Graham QC, leading counsel for the Respondents, apparently drew his Honour's attention to the fact that his Honour might formerly have had some involvement with Cambridge Credit Corporation and in particular with an individual, Mr Whitbread, who was to be a witness in the proceedings. Mr Graham QC indicated that although he brought this to his Honour's attention it did not cause him any concern. His Honour said that at that time his recollection was that he was briefed to appear in some capacity with Mr Gormley QC in the prosecution of Mr Whitbread.

His Honour said that the prosecution got as far as an application being made before Mr Gilmour SM for a stay on the basis of the delay in bringing the prosecution. He said that that was argued by Mr Gormley QC before the Magistrate and the matter then came up and was heard by Maxwell J. Maxwell J granted a stay and the Court of Appeal upheld his Honour's decision. His Honour said that on that short narration he did not feel embarrassment.

Later in the morning, after a short adjournment, his Honour said to Mr Graham QC:

Mr Graham, I am just wondering about what I said earlier. I would like to make my position clear. I had been briefed by the Corporate Affairs Commission of the proposed prosecution, amongst others, of Mr Whitbread. Mr Gormley was senior counsel. There were some junior counsel. The matter came before Mr Gilmour when an application was made for a stay that was argued before a Magistrate and then the Corporate Affairs Commission appealed against that decision and I, on behalf of the Corporate Affairs Commission, appeared as leading counsel before Maxwell J who upheld the stay and then the Court of Appeal which upheld Maxwell J. That has been my involvement.

Mr Graham QC responded:

I think the matter that concerned us was if your Honour had held a brief to prosecute Mr Whitbread your Honour may have found some difficulty in dealing with Mr Whitbread in relation to evidence in this case. Our view was understanding that to be the case we were not in the least bit troubled by it and did not want your Honour to be embarrassed half way through the case.

His Honour said:

Thank you for drawing that to my attention. What I said earlier today remains. I am not in the least bit embarrassed. It is not any part of my function to form any view of what Mr Whitbread may or may not have done. I do not consider I should of my own motion and I certainly would not disqualify myself.

The contention appears to be that subsequently it came to the attention of those in control of the Respondents that Mr Rolfe QC, as he then was, in relation to the brief to which he referred, had received substantial papers and material which contained allegations of impropriety and misconduct on the part of Mr Whitbread. The detail of that material is not in evidence before me but that is what has been said from the bar table.

Master McLaughlin dealt with the involvement of Mr Rolfe QC in the proceedings involving Mr Whitbread. Master McLaughlin also referred to the fact that in an application for expedition of the appeal to the Court of Appeal, Sheller JA had refused to grant expedition. There was also an application for a stay before Sheller JA. His Honour dismissed the applications on 26 February 1996. On 16 December 1996 a full bench of the Court of Appeal declined to review the orders made by Sheller JA. Priestley JA, giving the decision of the Court, noted that the application before the full bench had been based primarily on a proposed ground of appeal which was not before Sheller JA, being the ground that Rolfe J should have disqualified himself because of his having been involved or concerned in the prosecution of Mr Whitbread.

There was no suggestion that the proceedings in which Rolfe J had been involved were connected in any way with the proceedings involving the Applicant and the Respondents before Rolfe J. Priestley JA said that the ground of appeal concerning Sheller JA was, in his opinion, doomed to failure. He said in fact that the prospects of the application to add that ground of appeal to the notice of appeal may themselves be very poor. He said that the reason why it is doomed to failure is that the very matter in respect of which the allegation of apprehended bias was then made was raised at the commencement before Rolfe J and counsel then appearing for the appellants, said that he had no problem with Rolfe J's prior involvement. That is the matter to which I have referred above.

No application was made to Rolfe J to disqualify himself and there is presently no material before me to indicate that anything which has come to the attention of the present Respondents since the judgment of Rolfe J discloses any further reason for him to have disqualified himself beyond the fact that he had been involved to the extent he had indicated on the first day of the hearing.

In addition to the proceedings before the Supreme Court, there have been related proceedings in this Court involving Eric Abraham Jury and Houda Jury who were apparently parties to the proceedings before Rolfe J. The acts of bankruptcy relied upon in bankruptcy petitions against Mr and Mrs Jury were based on debts said to be due for substantial sums of money arising out of the judgment of Rolfe J. Mr and Mrs Jury opposed the petition on the ground that the judgment was obtained as a result of a miscarriage of justice. The miscarriage of justice alleged was that there is a reasonable apprehension of bias against Rolfe J in the circumstances to which I have referred above.

In his reasons for making sequestration orders, delivered on 22 May 1997, Lockhart J recounted the circumstances referred to above. I am told by counsel for the present Respondents that there is no material sought to be put before me which was not before Lockhart J although I do not presently have before me all the material which was before Lockhart J. Lockhart J said, in his reasons for judgment, that Rolfe J was not involved in the decision to prosecute Mr Whitbread or the other defendants in the earlier proceedings which, of course, were not against Mr and Mrs Jury. The only relevant person involved was Mr Whitbread although Lockhart J accepted that he was an important witness in Mr and Mrs Jury's case in the proceeding before Rolfe J.

His Honour said that he had examined the material before the court and insofar as he could see, the involvement of Mr Rolfe QC, as he then was, in the earlier proceedings on which reliance was placed was the involvement one would expect to find of senior counsel for a party. Lockhart J was not persuaded that fair minded people might reasonably apprehend or suspect that Rolfe J had prejudged the case. He considered the evidence did not establish that Rolfe Js earlier involvement as counsel in the Whitbread proceedings would lead the fair minded observer to think that Rolfe J had not resolved the case before him in a fair way and with an unprejudiced mind. Lockhart J therefore concluded that that was not a case where the Federal Court, sitting as a court of bankruptcy, should go behind the judgment of the Supreme Court.

Having regard to the history which I have recounted above, the prohibition contained in section 459S upon a company opposing a winding up application on a ground relied upon for the purposes of an application to set aside a demand, I consider that the clear purpose would be offended if leave were granted to raise the matter which is now sought to be relied upon. Accordingly, I refuse the application for leave pursuant to section 459S for that ground to be relied upon, namely the ground that there is a proposed application for leave to amend the grounds of appeal or the notice of appeal to the court of appeal, to raise apprehended bias of Rolfe J as a ground of appeal. Accordingly I dismiss that notice of motion with costs.

WINDING UP APPLICATION

Having earlier dismissed the Respondents' application under section 459S for leave to oppose winding up on grounds which either were relied on or could have been relied on in the application before Master McLaughlin to set aside the statutory demands, counsel for the Respondents then indicated that winding up orders were opposed on the basis that, in the exercise of discretion, I should allow the Respondents the opportunity of pursuing and prosecuting their appeal to the Court of Appeal.

I am of the view that in this case there is no residual discretion having regard to the terms of section 459S. The ground upon which the statutory demands were sought to be set aside was that they were based upon a judgment which was flawed. From one point of view that was a misconception because there was never any dispute as to the amount of the indebtedness of the Respondents to the Applicant. The proper analysis is that the Respondents have a cross-claim against the Applicant which would be offset against the debt. I am not satisfied that there is present before me evidence which would lead me to conclude that, even on the hearing of the appeal and its success, the amount of any judgment would offset the amount of the debt.

Be that as it may, that is a matter which could have been relied upon before Master McLaughlin even if it was not. It is for that reason that I conclude that the Respondents are precluded from opposing the winding up applications on any ground related to the existence of the appeal from the judgment of Rolfe J.

However, even if there were a residual discretion, I have firmly formed the view that I would not exercise any discretion in favour of the Respondents on the material presently before me. I have had regard to the observations made by Priestley JA to which I have referred in my earlier reasons concerning the prospects of the Respondents obtaining leave to amend their grounds of appeal to raise the matter of apprehended bias on the part of Rolfe J. But even if that matter were argued there is simply no material before me at present which would indicate that there are any prospects at all of that ground succeeding. Rolfe J indicated in the clearest of terms that he was involved in the prosecution of Mr Whitbread and that he, as leading counsel, had conducted the proceedings before Maxwell J and in the Court of Appeal in relation to the stay. Knowing that, senior counsel for the Respondents indicated that he wished to make no application to Rolfe J to disqualify himself.

The only suggestion which has been put forward as to additional new material which has come to light is the extent of the material that was available to Rolfe J in his brief. It is clear that leading counsel appearing in such a matter as was described by Rolfe J must have had a very detailed brief. It beggars belief that Mr Graham QC would not have been fully aware that the material which Rolfe J would have had before him at the stage of the earlier proceedings would have been voluminous and detailed and would have contained whatever material was the subject of the prosecution of Mr Whitbread.

Thus, it is clear that Mr Graham QC was aware of those matters. In those circumstances I simply cannot see that there is any possible basis for that ground of appeal succeeding. That of course is the view which appears to have been reached by Lockhart J on more extensive material than is available before me. It is also the view which apparently was formed by the full bench of the Court of Appeal, although probably not on as voluminous material as is otherwise available.

In the circumstances I see no reason why I should adjourn the hearing of the winding up application. I have earlier indicated that I am satisfied as to the various matters which require to be established. In the circumstances I propose to make winding up orders against E & W Jury Pty Limited, Justal Pty Limited, Kedge Pty Limited, Logwon Pty Limited and Trinity Properties Pty Limited and I propose to order that John Frederick Lord be appointed as liquidator of those companies. I give leave to the Applicant to discontinue the proceedings against Woodco Pty Limited and I propose to order that the Applicant pay the costs thrown away by that discontinuance.

I make orders in accordance with the orders for winding up which I have initialled, dated with today's date and placed with the papers.

I certify that this and the preceding seventeen (15) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett

Associate:

Dated: 24 February 1998

Counsel for the Applicant:	J. Halley
Solicitor for the Applicant:	Clayton Utz
Counsel for the Respondent:	W.G. Hodgekiss
Solicitor for the Respondent:	Central Law Solicitors & Attorneys
Date of Hearing:	12 February 1998
Date of Judgment:	12 February 1998