FEDERAL COURT OF AUSTRALIA CORPORATIONS LAW - WINDING UP - Extension of period for determination of winding up application - Power of court to make order extending time where application for extension made after date by which winding up application required to be determined - Where conference adjourned to date after limited date - whether adjournment was order within slip rule Federal Court of Australia Rules O35 r7. Corporations Law s.459R(1)(2)(3). Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 133 ALR 206. Re Agushi; Ex parte Farrow Mortgage Services Pty Ltd (in liq) (1994) 126 ALR 704. Westpac Banking Corporation v Jury (1998) 16 ACLC 547. Polygram Pty Ltd v CEL Entertainment Pty Limited (unreported, FCA No. 779 of 1998, Emmett J, 10 June 1998). Gould v Vagellas (1985) 157 CLR 215. ABORIGINAL ENTERPRISES COMPANY PTY LTD (ACN 009 124 396) -v- NGANGGANAWILI COMMUNITY INCORPORATED WAG 3021 OF 1997 RD FARRELL JR 22 JULY 1998 PERTH IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY WaG 3021 of 1997 BETWEEN: ABORIGINAL ENTERPRISES COMPANY PTY LTD (ACN 009 124 396) Applicant AND: NGANGGANAWILI COMMUNITY INCORPORATED Respondent COURT: RD FARRELL DATE OF ORDER: 22 JULY 1998 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. Pursuant to Order 35, rule 7(3), the order of Deputy District Registrar Rayney on 20 January 1998 adjourning the settlement conference to 27 February 1998 be corrected by adding a further order that, subject to further order, the time for the determination of the winding-up application be extended up to and including 27 February 1998. 2. Pursuant to Order 35, rule 7(3), the order of Deputy District Registrar Rayney adjourning the settlement conference to 20 March 1998 be corrected by adding a further order that, subject to further order, the time for the determination of the winding-up application be extended up to and including 20 March 1998. 3. Pursuant to Order 35, rule 7(3), the order of Deputy District Registrar Rayney adjourning the settlement conference to 5 May 1998 be corrected by adding a further order that, subject to further order, the time for the determination of the winding-up application be extended up to and including 5 May 1998. 4. Pursuant to Order 35, rule 7(3), the order of District Registrar Jan on 21 April 1998 adjourning the respondent's notice of motion to 16 June 1998 be corrected by adding a further order that, subject to further order, the time for the determination of the winding-up application be extended up to and including 16 June 1998. 5. Pursuant to Order 35, rule 7(3), the order of District Registrar Jan on 16 June 1998 adjourning the parties' notices of motion to 20 July 1998 be corrected by adding a further order that, subject to further order, the time for the determination of the winding-up application be extended up to and including 20 July 1998. 6. Pursuant to Order 35, rule 7(3), the order of Judicial Registrar Farrell on 20 July 1998 reserving his decision and adjourning the parties' notices of motion be corrected by adding a further order that, subject to further order, the time for the determination of the winding-up application be extended up to and including 23 July 1998. 7. Subject to further order, the time for the determination of the winding-up application be extended up to and including 24 August 1998. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY WaG 3021 of 1997 BETWEEN: ABORIGINAL ENTERPRISES COMPANY PTY LTD (ACN 009 124 396) Applicant AND: NGANGGANAWILI COMMUNITY INCORPORATED Respondent COURT: RD FARRELL DATE: 22 JULY 1998 PLACE: PERTH REASONS FOR DECISION This is a notice of motion for orders under the slip rule, Order 35 rule 7 of the Federal Court Rules, which would have the effect of extending the time for the determination of a winding up application. Background Subsection 459R(1) of the Corporations Law ("the Act") provides that an application for a company to be wound up in insolvency is to be determined within 6 months after it is made. The applicant applied to wind up the respondent on 20 August 1997. At a directions hearing held on 7 October 1997, the District Registrar ordered that the parties file further affidavits and that: "A conference under Order 10, rule 1(2)(h) be held before a registrar on a date to be fixed after 5 November 1997." The conference was not held until 27 February 1998. The parties had initially been advised by a letter from a Deputy District Registrar of the Court that the conference was listed for 25 November 1997. However, the conference was adjourned by consent at the written request of the respondent, because the respondent's representative was unable to attend, and was due to have medical treatment on two days in December. The new date, 20 January 1998 was confirmed by another letter from the Deputy District Registrar. Then, on 19 January 1998, the applicant wrote to request a further adjournment to a date after 10 February 1998, advising that the respondent had agreed to the adjournment. The reason given was to allow negotiations between the parties and other related entities which might result in discontinuance of the application. These negotiations were to occur without solicitors involved. The Deputy District Registrar wrote on 23 January 1998 to confirm that the conference had been adjourned to Friday 27 February 1998 ("the original adjournment"). It came to the attention of the parties on that date that more than six months had passed since the making of the winding up application. Subsection 459R(3) of the Act provides that: "an application is, because of this subsection, dismissed if it is not determined as required by this section [ie, in this case, within 6 months]". Subsection 459R(2) provides that: "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) [ie. 6 months], or as last extended under this subsection, as the case requires." Notwithstanding the awareness by then of the parties that more than six months had passed since the making of the winding up application and that no order had been made within that time to extend the period, the conference was adjourned first to 20 March 1998, then to 5 May 1998 and finally to a date to be fixed by the Registrar. The respondent's consent to these adjournments was without prejudice to its submission that the winding-up application had been dismissed pursuant to Section 459R of the Act. No further conference has been held since 27 February 1998. On 15 April 1998, the respondent applied by Notice of Motion for the costs of the winding up application, on the basis that the winding-up application had been dismissed pursuant to Subsection 459R(3) of the Act. On 30 April 1998, more than two months after the effect of Subsection 459R(3) was brought to its attention, the applicant applied by Notice of Motion under the slip rule for orders nunc pro tunc[1]that the Deputy District Registrar's orders be amended to include a further order that the time for the determination of the winding-up application be extended. The District Registrar made orders on 16 June 1998 that the two motions be adjourned to 20 July 1998. They were referred to me to be heard on that date. Slip Rule Not Excluded by Section 459R of the Corporations Law The slip rule found in Order 35 sub-rule 7(3) provides that: "A clerical mistake in a judgment or order, or an error arising in a judgment or order from an accidental slip or omission, may at any time be corrected by the Court." The Full Court of the Federal Court held in Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd[2] that the operation of Order 35 sub-rule 7(3) is not excluded by Section 459R of the Act, because the effect of an order under the slip rule is to eradicate the error in the original order so that the original order is treated as having been always made in its corrected form. The correction speaks from the date of the order. Thus where the corrected order includes an extension of time, the Subsection 459R(3) has no application, because the time for determination of the winding up application had not elapsed when the original order, now corrected to extend the time for determination, was made. Whether Adjournment by Deputy District Registrar of Conference was an Order to which the Slip Rule can Apply. The respondent submits that there is no order to which the slip rule can apply, because the Deputy District Registrar's action in adjourning the conference from 20 January 1998 to 27 February 1998 was merely administrative in nature. However, the authorities include similar circumstances where decisions as to scheduling have been held to be correctable under the slip rule. In Elyard, Lindgren J considered Re Agushi; Ex parte Farrow Mortgage Services Pty Ltd (in liq)[3], a bankruptcy case. In that case, the parties were not involved in the making of the order which took the creditor's petition outside the statutory period. A direction had been made placing the case in the list of cases for hearing and the registrar later notified the parties that the case was fixed for hearing on a date outside the statutory period. Neither the Registrar nor the parties appreciated this until the period had elapsed. While Heerey J held he had no power to extend the order, his decision was based upon his analysis of the interrelationship of the slip rule with the bankruptcy provisions prescribing the statutory period. The Full Court in Elyard did not follow Agushi, and Lindgren J indicates that it should have been decided differently.[4] Westpac Banking Corporation v Jury[5], a case which has been decided since Elyard, arose in similar circumstances. It was submitted in that case that there was simply no order on which the slip rule could operate. The facts of the case follow. The winding up application was filed on 21 July 1997. At a directions hearing on 19 September 1997, the Registrar set the matter down for hearing before a judge on a date to be fixed. There were then numerous contacts between the parties and the court's registry concerning the parties' available dates. The setting of a date was delayed because the judge initially allocated the case decided to disqualify himself. On 18 December 1997, the associate to Emmett J spoke with the applicant's solicitor advising that: · the proceedings had been allocated to Emmett J; and · the proceedings were returnable at a directions hearing before Emmett J on 6 February 1998. The statutory period had elapsed by 21 January 1998. The applicant did not become aware for the need for an extension of time until the directions hearing on 6 February 1998. At that hearing, Emmett J granted leave to file an application for extension of time to be heard on 12 February 1998. In his reasons for decision, Emmett J referred to Elyard, noting that Lindgren J emphasised that there must be an order made within the statutory period. Emmett J then referred to Lindgren J's analysis of the Agushi decision, noting that: "Nevertheless, Lindgren 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..." Turning to the circumstances in the case before him, Emmett J continued: "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 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 this case, there must have been involved in the adjournment of the conference to a later date an order of the Court by the Deputy District Registrar, given that the business of the Court can only be conducted in accordance with directions given by appropriate officers. It was not disputed that the Deputy District Registrar was an appropriate officer for these purposes, having been delegated powers of the Court in relation to winding up applications by the Chief Justice. There is a notation of the order in the correspondence from the Deputy District Registrar to the parties, confirming that the conference had been adjourned to 27 February 1998. I am satisfied, therefore, that there was an order to which the slip rule can apply, and that the Deputy District Registrar's action in adjourning the conference was not merely administrative in nature. Whether the Deputy District Registrar had Power to Make Orders Under Subsection 459R(2) to Extend Time Similarly, it was not disputed that the Deputy District Registrar, having been delegated powers of the Court in relation to winding up applications, would have had power under Subsection 459(2) to make an order to extend the period within which an application must be determined, had such an order been sought within the period. Any corrected order extending time would thus be within power. Whether there was an Error arising in the Order from an Accidental Slip or Omission Given that no such order was made, can it be concluded that it was due to an error of the sort the slip rule can remedy? In Elyard, Lindgren J noted that the nature of the slip rule is strictly confined, addressing 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." Lockhart J agreed that the slip rule applies where no real difference of opinion can exist and does not apply where the amendment is a matter of controversy. Had the issue of the need to extend time been properly raised at the time the Deputy District Registrar adjourned the conference to 27 February 1998, I am satisfied that it could not reasonably have been opposed by the respondent, given that an eight week adjournment had been granted earlier at its request for reasons relating to its convenience, and that it was consenting to the latest adjournment which was in the interests of both parties. It was not controversial that special circumstances justified the extension. The issue of extending the statutory period was not, however, properly raised before the Court by the applicant at the time the adjournment was sought. The slip rule may still apply. For the purposes of the rule, the slip or omission may be a slip or omission of the Court, or an omission resulting from the inadvertence of a party's legal representative.[6] The source of the slip or omission is a moot point in this case. The affidavit evidence of the solicitor assisting in the conduct of the matter for the Applicant, Mr Archer, was to the effect that he had not turned his mind to the requirement of an application for an extension of time until he attended the conference on 27 February 1998 and became aware that the statutory period had elapsed a week earlier. His evidence is that had he turned his mind to it, he would have applied for an extension of time on 19 January 1998 when he wrote requesting an adjournment. It would have been prudent to do so, given that the applicant's request for adjournment sought a date after 10 February 1998 and the period elapsed after 20 February 1998. Lockhart J noted that the slip rule does not extend to mistakes that are the consequence of a deliberate decision[7]. It was submitted by the respondent that it had not been established that the Deputy District Registrar had not deliberately decided to omit orders extending the period to the date of the adjourned conference. The respondent notes that Order 71 rule 39A requires that an application to extend time under Section 459R must be made by notice of motion, and supported by an affidavit setting out the material facts upon which the applicant relies. He submits that the Deputy District Registrar may well have decided to adjourn the conference to a date outside the period on the basis of the applicant's request by correspondence, leaving it to the applicant to apply under Order 71 rule 39A in the proper way in the four weeks following advice of the new date. He submits that the Deputy District Registrar could not properly have extended the time on the basis of a mere letter, and without hearing from the respondent. I do not accept this submission. Given the terms of the Deputy District Registrar's letter, I find that there was no deliberate decision to omit orders extending the period. Given that orders under the slip rule could have been made and were made in Agushi and the Westpac case respectively, I see no basis on which I can find that there was no slip or omission in this case. It could be said that the omission was the applicant's failure to apply for an extension under Order 71 rule 39A at the time the adjournment was sought. I note that it was suggested in Polygram Pty Ltd v CEL Entertainment Pty Limited[8] that Order 71 rule 39A would not preclude an order being made by the Court on its own motion, subject to ensuring procedural fairness in relation to any proposed order. The parties are, of course, given the opportunity to be heard before an order is corrected under the slip rule. Orders made in the Intervening Period Applications to invoke the slip rule for orders nunc pro tunc extending time are usually made on the first occasion the matter is before the court after the statutory period has elapsed. A further issue arose in this case, however, because the application was further adjourned on a number of occasions in a manner which would not have been in the contemplation of the Deputy District Registrar at the time the original order to adjourn the conference was made. Guidance can be derived from Westpac Banking Corporation v Jury, the history of which I have set out in some detail above. In that case there was also an intervening directions hearing between the expiry of the statutory period and the consideration of the slip rule. Emmett J observed: "I have no doubt that had an application been made to me in December [when he made the original order fixing a date for directions] 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 [at the directions hearing, which took place after the statutory period had expired,] I would have extended the time for determination of the application up to the date which I then fixed for hearing of the application." and again, later: "...on 18 December 1997 there was a direction given by me listing the matter for directions on 6 February 1998... 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." Emmett J went on to make orders correcting his orders made on 18 December 1997 and on 6 February 1998 to provide in each case an additional order extending the time for determination of the winding up application to the date of the next hearing. The applicant has adopted this form of orders for the purpose of this motion seeking orders nunc pro tunc that each of the Deputy District Registrar's orders adjourning the conference made on and after 20 January 1998 be amended to include a further order that the time for determination of the winding-up application be extended until the date to which the conference had been adjourned, the latest date being 5 May 1998. Given events since the filing of the notice of motion, the applicant also applied at the beginning of the hearing of his notice of motion for leave to amend its terms to seek additional orders nunc pro tunc in relation to orders made at the subsequent hearings by the District Registrar and orders extending the statutory period for a further month after this hearing. The application to amend was opposed. I am satisfied, however, that the need for the amendments could have been, and indeed was anticipated by the respondent, and that the arguments prepared by the respondent in relation to the intervening orders made by the Deputy District Registrar are equally applicable to the additional orders which were the subject of the amendments. I will therefore permit the amendment to the Notice of Motion. The respondent contends that, even if the slip rule can be applied to the original adjournment of the conference to 27 February 1998, it cannot be applied to the subsequent orders. At the time the subsequent adjournments were granted, the parties were aware that the statutory period had expired. It is not contended that the applicant or the Court accidentally omitted on each of these occasions to make the orders sought. There is some force in this submission. However, I am bound by the result in the Westpac case, and see no basis for distinguishing that case from this case. While, the issues raised by the respondent's submission were not addressed in Emmett J's reasons, it may be that the orders made in that case are based on the proposition that the original omission affected all the subsequent orders. In Elyard, it was noted that the slip rule is not confined to giving effect to the intention of the Court at the time when the order was made. It extends to the intention which the court would have had, but for the failure caused by the accidental slip or omission. The Court, at the time it made its intervening orders, would have intended to extend the statutory period but was unable to, because until the original adjournment order was corrected under the slip rule, the order to extend the statutory period could not be made within the period, as Subsection 459R(2) requires. Given the decision in the Westpac case, I will proceed on the basis that there is no impediment to orders nunc pro tunc being made under the slip rule to correct the numerous intervening orders in this case. Whether The Discretion should be Exercised Lockhart J observed in Elyard that the exercise of the power of the court under the slip rule is ultimately to avoid injustice.[9] Thus the circumstances of the slip or omission, and any injustice resulting from a failure to correct the error will be an important and often conclusive factor in the exercise if the discretion under the slip rule. There are, however, other factors, as the High Court recognised in Gould v Vagellas[10], when it considered its slip rule. The Court, in a joint judgment, stated that: "the jurisdiction is one to be exercised sparingly, lest it encourage carelessness by a party's legal representatives and expose to risk the public interest in finality of litigation." Other relevant factors were: · whether the matter was an afterthought; · whether the order sought was fair and just; · whether there has been undue delay on the part of the appellants in seeking rectification, and whether any delay has been explained. An additional factor relevant in this case is the legislative policy reflected in Section 459R. The explanatory memorandum accompanying the insertion of Section 459R indicates that the purpose of the provision is to ensure that decisions on a company's solvency are based on contemporaneous information. In Elyard, Lindgren J observed that one factor in exercising the discretion will be the length of time beyond expiry of the original six month period that the application for winding up will remain alive.[11] The exercise of the discretion in this case would have been relatively simple had the applicant applied for orders under the slip rule immediately it became aware on 27 February 1998 that the statutory period had elapsed. Instead, the notice of motion was not filed until 30 April 1998. This nine week delay was not explained. If orders are made today which have the effect of extending the statutory period so that the winding-up application is not dismissed, the applicant seeks order that the period be extended for a further month, so that the winding-up application may remain alive until 22 August, more than a year after it commenced. Even so, I find on balance that the injustice to the applicant resulting from the slip outweighs these factors. In so finding I note that, while some of the delay in determining the matter was caused by the applicant, much of the delay was caused by the adjournment for the benefit of the respondent and by the court processes after this notice of motion was filed. I note however that the parties should not assume that further extensions would be given as a matter of course. Conclusion I will make orders nunc pro tunc consistent with the applicant's notice of motion as amended. I will hear further from the parties as to the costs of the applicants motion and as to the respondent's motion for the costs of the winding up application. I certify that this and the preceding thirteen (13) pages are a true copy of the Reasons for Judgment herein of Judicial Registrar RD Farrell Associate: Dated: 22 July 1998 Counsel for the Applicant: Mr G J Archer Solicitors for the Applicant: Mallesons Stephen Jaques Counsel for the Respondent: Mr A Atkinson Solicitors for the Respondent: Solomon Brothers Date of Hearing: 20 July 1998 Date of Decision: 22 July 1998 [1] meaning, literally, "now instead of then", with the same force and effect as if it had been made at the time of the Deputy District Registrar's orders. [2] (1995) 133 ALR 206 [3] (1994) 126 ALR 704 [4] (1995) 133 ALR 206 at 212 and 223 [5] (1998) 16 ACLC 547. [6] (1995) 133 ALR 206 at 210. [7] (1995) 133 ALR 206 at 210. [8] (unreported, Federal Court of Australia Judgment No. 779 of 1998, Emmett J, 10 June 1998). [9] Lockhart J at 212 [10] (1985) 157 CLR 215 at 275 [11] (1995) 133 ALR 206 at 224