CATCHWORDS PRACTICE AND PROCEDURE - application to further adjourn the examination of the respondent on matters relating to the examinable affairs of a Corporation pending application for special leave to the High Court from orders of the Full Federal Court - application not strictly a stay of the orders of the Full Federal Court - application in the nature of an interlocutory injunction pending the determination of the special leave application or alternatively an interlocutory order dealing with a matter of practice and procedure concerning the exercise of the Court's jurisdiction pursuant to part 5.9 of the Corporations Law - jurisdiction to grant injunctive relief to preserve the subject matter of litigation pending the determination of an application for special leave is an extraordinary one and will only be granted in exceptional circumstances - jurisdiction to further adjourn the examination pending an application for special leave is to be exercised on a similar basis - factors to be taken into consideration - case not one in which exceptional circumstances justify a grant of relief sought. COURTS AND JUDGES - jurisdiction - application to further adjourn the examination of the respondent on matters relating to the examinable affairs of a Corporation pending application for special leave to the High Court from orders of the Full Federal Court - whether application might more appropriately be made to the Full Federal Court which heard and determined the appeal or alternatively to the learned President of that Court - single judge of the Federal Court has jurisdiction to make an interlocutory injunction pending the determination of a special leave application and if special leave were granted, pending the determination of the appeal - such jurisdiction is part of the original jurisdiction of the Federal Court rather than its appellate jurisdiction - source of jurisdiction for a single judge of the Federal Court to hear and determine the application comes from s 20 rather s 25 of the Federal Court of Australia Act 1976 (Cth). Federal Court of Australia Act 1976 (Cth) s 20 and s 25 Smith Kline & French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health [1991] 65 ALJR 360 Jennings Construction Limited v Burgundy Royale Investments Proprietary Limited [No 1] (1986) 161 CLR 681 John Fairfax & Sons Ltd v Kelly (No 2) (1987) 8 NSWLR 510 Sibuse Pty Ltd v Shaw [No 2] (1988) 13 NSWLR 125 Gerah Imports v The Duke Group Ltd (in liq) (1994) 12 ACSR 672 No SG 3137 of 1994 IN THE MATTER of CORTAUS LIMITED (IN LIQUIDATION) (ACN 008 965 124) JOHN SHEAHAN v IAN EDWARD JOYE Branson J Adelaide 23 April 1996 IN THE FEDERAL COURT OF AUSTRALIA) ) SOUTH AUSTRALIA DISTRICT REGISTRY) No SG 3137 of 1994 ) GENERAL DIVISION ) IN THE MATTER of CORTAUS LIMITED (IN LIQUIDATION) (ACN 008 965 124) BETWEEN: JOHN SHEAHAN Applicant - and - IAN EDWARD JOYE Respondent REASONS FOR DECISION CORAM: Branson J PLACE: Adelaide DATE: 23 April 1996 This application was initiated by notice of motion dated 12 April 1996. By such notice of motion the respondent, Ian Edward Joye ("Mr Joye"), moved for the following orders:- "1. That the adjournment of the examination of the respondent which is now adjourned until further order be extended until 7 days after the respondent's application for leave to appeal to the High Court of Australia from the orders of the Full Federal Court of Australia made on 28 March 1996 is heard and determined. 2. In the alternative, that any order fixing a date for the respondent to attend for examination be a date after 1 September 1996. 3. Such further or other orders as the Court thinks fit. 4. An order as to costs." BACKGROUND The background to the present application is as follows. On 1 November 1994 an application was made by John Sheahan, the liquidator of Cortaus Limited (In Liquidation) ("the liquidator") pursuant to s596B of the Corporations Law for an order that a summons issue to Mr Joye requiring him to appear before the Court for examination about the examinable affairs of Cortaus Limited (In Liquidation). On 25 November 1994 an order was made on the application of 1 November 1994 and on 6 December 1994 a summons to Mr Joye requiring him to attend before the Court for examination was issued. Personal service upon Mr Joye of the summons has not been effected. Mr Joye left Australia on 13 December 1994 and has not returned. On 7 February 1995 a Registrar of the Court authorised substituted service of the order and summons on Mr Joye and such substituted service was effected on 14 February 1995. By notice of motion dated 17 March 1995 application was made on behalf of Mr Joye for the order of the Registrar authorising substituted service on Mr Joye to be set aside and for a declaration that the order and summons had not been duly served on him. An extension of time within which to make the above application was granted. On 21 March 1995 I ordered by consent that the examination of Mr Joye pursuant to the order of the Registrar dated 25 November 1994 and the summons dated 6 December 1994 be adjourned until further order. The application to set aside the order of the Registrar and for the related declaration came on for hearing before me on 23 May 1995. On 1 June 1995 I refused the relief sought and granted Mr Joye leave to appeal to the Full Court of this Court. On that day I directed that no application be made on behalf of the liquidator to the Registrar or otherwise to set a date for the examination of Mr Joye until the foreshadowed appeal to the Full Court was heard and determined, but that should such foreshadowed appeal not be promptly instituted or promptly prosecuted the liquidator was to be at liberty on short notice to approach the Court for the purpose of having the direction revoked. I interpolate that an issue has arisen as to whether the above direction superseded the consent order of 21 March 1995. It is not, in my view, an issue of practical significance. I was content for the purposes of the present application to accept the position adopted by those who represent Mr Joye that the consent order of 21 March 1995 remained operative as at the time of the hearing of the present application. On 28 March 1996 Mr Joye's appeal to the Full Court of this Court was dismissed. On 11 April 1996 the matter was again listed before me. The liquidator sought that a date be fixed for the examination of Mr Joye. Counsel for Mr Joye foreshadowed the application now before me. On that day I directed the liquidator to take no steps to set a date for the examination of Mr Joye before 16 April 1996 or as otherwise ordered by the Court. This application came on for hearing on 15 April 1996. I raised with the parties the question of whether the application might not be more appropriately made to the Full Court which heard and determined Mr Joye's appeal, or alternatively to the learned President of that Court. Each party submitted that I had jurisdiction pursuant to s25 of the Federal Court of Australia Act 1976 (Cth) ("the Federal Court Act") to hear and determine the application and each party urged me to exercise such jurisdiction. At the conclusion of argument I indicated that I was not prepared to make either of the orders sought by Mr Joye in paragraphs 1 and 2 of the notice of motion dated 12 April 1996. I advised the parties, however, that I was prepared to restrain the liquidator, if it were necessary to do so, from fixing a date for the examination of Mr Joye for a period of time sufficient to allow counsel for Mr Joye to seek an order of the kind sought from me from the High Court, or alternatively the Full Court of this Court, if they were so instructed. I was advised that they were so instructed. Following a brief adjournment senior counsel for the liquidator advised the Court that the liquidator gave an undertaking not to seek to fix a date for the examination of Mr Joye for a period of 21 days. Counsel for Mr Joye indicated that they were willing to accept this undertaking. It was agreed that the appropriate orders in the circumstances were as follows:- "1. Insofar as it is necessary the order of this Court made 21 March 1995 adjourning the Examination Summons and the direction of this Court to the applicant made 1 June 1995 are revoked. 2. The respondent's Notice of Motion dated 12 April 1996 is dismissed. 3. The respondent pay to the applicant his costs of and incidental to the respondent's Notice of Motion dated 12 April 1996. 4. The Court notes the undertaking given by the applicant by his counsel that the applicant will not approach this Court for a new date to be set for the examination of the respondent pursuant to the Examination Summons within 21 days of the date of this order or such earlier date upon which the respondent shall have made and been refused an application restraining or otherwise preventing the applicant from so obtaining a date for the examination of the respondent pursuant to the Examination Summons. 5. Liberty to the respondent to apply on short notice." Orders were made by me accordingly. THE APPLICATION The order sought by Mr Joye by his notice of motion of 12 April 1996 is not strictly speaking a stay of the orders of the Full Court. It is perhaps, as has been contended by senior counsel for the liquidator, more in the nature of an interlocutory injunction pending the determination of the foreshadowed special leave application. Alternatively, it might be seen simply as an interlocutory order dealing with a matter of practice and procedure concerning the exercise of the Court's jurisdiction pursuant to Part 5.9 of the Corporations Law. There must be some doubt as to whether s25 of the Federal Court Act is the source of jurisdiction for a single judge of this Court to make an order of the kind which is here sought. I note, however, that in Smith Kline & French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health [1991] 65 ALJR 360 at 362 Mason CJ accepted that a single judge of this Court had jurisdiction to make an interlocutory injunction pending the determination of a special leave application, and if special leave were granted, pending the determination of the appeal. It seems likely that such jurisdiction is part of the original jurisdiction of this Court rather than part of its appellate jurisdiction. In my view, it is more likely that my jurisdiction to hear and determine this application comes from s20 of the Federal Court Act than from s25 of that Act. I accept, however, that I do have such jurisdiction. As both parties requested me to do so, I was willing to exercise such jurisdiction. The following are my reasons for refusing the orders sought by Mr Joye in his notice of motion dated 12 April 1996. REASONS FOR REFUSAL OF ORDERS SOUGHT Counsel for Mr Joye rightly pointed out that if a time and date is set for the examination of Mr Joye, and such examination takes place before the application for special leave is heard, any appeal which might follow the application, if it is successful, will be rendered nugatory: the liquidator will have achieved the examination of Mr Joye before the High Court has been able to rule upon the jurisdiction of this Court over Mr Joye. Although not a matter raised by counsel for Mr Joye, it is also the case that any attendance by Mr Joye for examination is likely to give rise to an opportunity in the liquidator to perfect service of the order and summons on Mr Joye should such service be found by the High Court to have been ineffective. I accept that these are weighty considerations. On the other hand, as Mason CJ pointed out in Smith Kline & French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health, the jurisdiction to grant injunctive relief to preserve the subject matter of litigation pending the determination of an application for special leave is an extraordinary one and will be granted only in exceptional circumstances. See also Jennings Construction Limited v Burgundy Royale Investments Proprietary Limited [No 1] (1986) 161 CLR 681 at 684. In the circumstances of this case, the jurisdiction to further adjourn the examination of Mr Joye pending an application for special leave, ought, in my view, to be exercised on a similar basis. I accept the submission made on behalf of the liquidator that the following factors are to be considered on an application of this kind. First, whether there is a substantial prospect that special leave to appeal to the High Court will be granted; secondly, whether the grant of the application will cause loss to the liquidator; and thirdly, where the balance of convenience lies. Counsel for Mr Joye urged me to adopt the practice of the New South Wales Court of Appeal as set out in John Fairfax & Sons Ltd v Kelly (No 2) (1987) 8 NSWLR 510 at 511 and confirmed in Sibuse Pty Ltd v Shaw [No 2] (1988) 13 NSWLR 125. It is not clear to me that adoption of the practice of the Court of Appeal of New South Wales would require me to approach this application on any different basis from that which I have outlined. If I am wrong in this, I do not consider it appropriate to adopt such practice in preference to following the principles to be derived from the decisions of the High Court to which I have referred. Before the Full Court of this Court, although not before me at first instance, it was conceded by senior counsel for Mr Joye that, if Mr Joye knew before he departed from Australia that a summons for his examination had been issued and that an attempt was being made to serve it upon him, then there was jurisdiction to make an order for substituted service. At first instance I concluded on the balance of probabilities that Mr Joye had learnt from Sydney solicitors earlier than his departure from Australia on 13 December 1994 of the institution of these proceedings by the liquidator and of the desire of the liquidator's solicitors to effect service of process upon him. The basis of Mr Joye's argument to the Full Court of this Court was that my above conclusion was wrongly reached. It was submitted to the Full Court that my conclusion that there was communication between Mr Joye and the Sydney solicitors as to the issuing of the examination summons before Mr Joye left Australia was merely a choice between two guesses, the evidence being silent on the point (see the Reasons for Judgment of the Full Court at p11). A factor which I had taken into account was that at a time shortly after Mr Joye had left Australia the Sydney solicitors in question wrote to the solicitors for the liquidator advising that they had "no instructions to accept service". I noted that they did not advise of any inability to contact Mr Joye and that no affidavit evidence had been obtained from such solicitors deposing to any difficulty in contacting Mr Joye before he left Australia. I concluded that the evidence of the Sydney solicitors, if obtained, would not have assisted Mr Joye in this regard. The Full Court of this Court, as I read its reasons for judgment, did not find error in this approach. The affidavit sworn by Jonathan Charles Clarke ("Mr Clarke") in support of this application by Mr Joye makes it plain that Mr Joye's complaint about the decision of the Full Court of this Court is that it "should have found that the learned trial Judge could not as a matter of law find on the evidence before her that the respondent [i.e. Mr Joye] knew of the issue [of the summons] and the desire of the applicant to serve that summons whilst he was in Australia." It is somewhat embarrassing for a single judge of this Court to be required to assess the likelihood of an applicant for special leave to appeal to the High Court obtaining such special leave. It seems necessary, however, for me to do so. I do not regard Mr Joye's prospects of obtaining special leave to appeal to the High Court as substantial. Indeed, I consider such prospects to be slim. I regard this assessment as a factor of considerable significance on the application before me (Smith Kline & French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health at p362; Gerah Imports v The Duke Group Ltd (in liq) (1994) 12 ACSR 672). On the material before me it is difficult to conclude that the grant of the application will cause loss to the liquidator. The purposes of the liquidator in seeking to examine Mr Joye have been expressed by him in his affidavit evidence in the following way:- "9.1In relation to the subject matter of the Cortaus v Larken proceedings in order to determine whether Cortaus should continue with those proceedings and enable me to obtain updated advice from Counsel as to the prospects of success for Cortaus in those proceedings; 9.2To determine whether it is in the interests of the creditors of Cortaus to continue the Cortaus v Larken proceedings against Mr Joye and other respondents; 9.3To conduct enquiries into Mr Joye's ability to satisfy any judgment which may be awarded in favour of Cortaus in the Cortaus v Larken proceedings." His affidavit also makes it clear that he wishes to examine Mr Joye with respect to moneys that may be traceable in the liquidation of Cortaus Limited (In Liquidation) into property and assets. It seems appropriate, in the circumstances, to conclude that further delay in the examination of Mr Joye, may result in loss to the liquidator in his official capacity. However, I am unable to conclude that it will cause such loss. On the issue of the balance of convenience, I take into account the fact that if an examination of Mr Joye takes place before an application for special leave to appeal to the High Court in this matter can be heard and determined any resulting appeal will be rendered nugatory. I further take into account the fact that should Mr Joye return to this country for such examination personal service of legal process upon him may then be able to be achieved. Against the above factors, I take into account the length of time which has now passed since the issue of the order for examination and the summons to Mr Joye and the public interest sought to be advanced by the examination of Mr Joye. Counsel for Mr Joye have informed the Court that their client's application for special leave to appeal will not come before the High Court until August of this year. Having regard to all of the above matters, I do not regard this case as one in which exceptional circumstances justify a grant of the relief sought. I certify that this and the preceding pages are a true copy of the Reasons for Decision of the Honourable Justice Branson. Associate: Dated: Counsel for the Applicant : Mr A J Besanko QC with him Mr G S Davis Solicitors for the Applicant : Piper Alderman Counsel for the Respondent : Mr J M Wilkinson with him Mr J C Clarke Solicitors for the Respondent : Cowell Clarke Hearing Date : 15 April 1996