New South Wales Supreme Court CITATION : Expile Pty Ltd v Jabb's Excavations Pty Ltd [2002] NSWSC 851 CURRENT JURISDICTION: Equity FILE NUMBER(S) : SC 1887/02 HEARING DATE(S) : 12 September 2002 JUDGMENT DATE : 12 September 2002 PARTIES : Expile Pty Ltd (P) Jabb's Excavations Pty Limited (D) JUDGMENT OF : Hamilton J COUNSEL : S D Epstein SC (P) R W Tregenza (D) SOLICITORS : Baron & Associates (P) Cadmus Lawyers (D) CATCHWORDS : CORPORATIONS [340] - Supervision, regulation and correction - Irregularities in proceedings - Extension of time - For winding up application - Meaning of special circumstances - Public interest. LEGISLATION CITED : Corporations Act 2001 (Cth) ss 459R(1) & (2), 459S Clarks of Hove Ltd v Bankers' Union [1978] 1 WLR 1207 Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385 Lyon v Wilcox [1994] 3 NZLR 422 CASES CITED : Peninsula Watchdog Group (Inc) v Minister of Energy [1996] 2 NZLR 529 Re Hunter (A Bankrupt), Ex Parte Exclusive English Imports Limited (In Liquidation) [1954] NZLR 747 Re Norman (1886) 16 QBD 673 Springfield Nominees Pty Limited v Bridgelands Securities Limited (1992) 38 FCR 217 Westpac Banking Corporation v E & W Jury Pty Ltd (1998) 16 ACLC 547 DECISION : Extension of time granted; vacation of fixture for hearing refused. IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION HAMILTON J THURSDAY, 12 SEPTEMBER 2002 1887/02 EXPILE PTY LIMITED v JABB'S EXCAVATIONS PTY LIMITED JUDGMENT 1 HIS HONOUR: There are three applications before the Court in these proceedings, which are fixed for hearing on Friday next, 20 September 2002, before Barrett J. The proceedings were commenced by the filing of an originating process attaching a notice of demand of 14 March 2002. The six month period stipulated in s 459R(1) of the Corporations Act 2001 (Cth) ("the CA") as the period within which an application for a company to be wound up in insolvency is to be determined therefore expires on 14 September 2002 and therefore falls between today and next Friday, when the matter is fixed for hearing. A chronology of various events in the history of the case has been prepared and has been allowed into evidence on the basis that, although in bulk it was prepared by the plaintiff, it is not suggested on the defendant's part that the matters stated in it are not factual. 2 The first of the applications with which I have to deal is an application by the plaintiff that the period within which the application to wind up must be determined should be extended under s 459R(2) of the CA for a short period, which would permit the matter to be heard and determined by Barrett J. That application is made on an interlocutory process filed on 10 September 2002. The second application is made on the defendant's notice of motion filed on 3 September 2002 and is for an order that, if I grant an extension of time, without which the winding up application will not continue to be current, then I should vacate the hearing date before Barrett J and send the matter to the Registrar to be given a fresh hearing date. 3 For the application under s 459R(2) to be granted the Court must be satisfied that special circumstances justify the extension. There has been a deal of litigation concerning the incidence of s 459R, but that litigation has largely concerned whether or not, where the order is not made within the prescribed period, an order can be made rectifying the situation under the slip rule, if the circumstances of the case justify the use of the slip rule: see Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385 (Full Court); Westpac Banking Corporation v E & W Jury Pty Ltd (1998) 16 ACLC 547 (Federal Court, Emmett J). 4 These applications have been argued before me today and obviously require immediate determination. I have not had a great deal of time in which to look for relevant authority under the section. Mr Tregenza, of counsel for the defendant, has usefully given me some of the authorities relating to the slip rule, to which I have referred above. However, the efforts of counsel during the day and what endeavours I have been able to make have not found consideration by the Courts as to what falls or does not fall within the concept of special circumstances as used in this section. There are oblique reflections on that subject matter in the Full Court decision in Elyard supra in the judgment of Lindgren J at 400. There is certainly indication that the shortness of the extension applied for may be taken into account in assessing whether there are special circumstances, as the willingness of the other party to have the time extended. But there is no consideration of what definition, if any, should be placed upon the expression "special circumstances" in this section. 5 The word "special" is an ordinary English word. The relevant definition of it as used in the present context appears to me to be that given in the Macquarie Dictionary (3rd ed, 1997) as follows: "6 Distinguished or different from what is ordinary or usual: a special occasion " The thrust of that definition is that "special" is used in contradistinction to "ordinary" or "common". "Special circumstances" is an expression that has been used in other statutes. One must always bear in mind in an exercise of statutory interpretation that one is interpreting the particular words in the context of the particular statute. However, cases decided on other statutes, whilst they cannot govern the situation, indicate that, where "special circumstances" is used in contexts like the present, it is used in the sense of the definition which I have quoted from the Macquarie Dictionary. Its essential meaning is that it denotes a particular situation which can be regarded as distinguished from the ordinary or common runs of situations. It has been found to bear this meaning in a number of other statutory contexts of a widely varying nature: eg Re Norman (1886) 16 QBD 673 per Lopes LJ at 677; Re Hunter (A Bankrupt), Ex Parte Exclusive English Imports Limited (In Liquidation) [1954] NZLR 747 per F B Adams J at 754; Clarks of Hove Ltd v Bankers' Union [1978] 1 WLR 1207 per Geoffrey Lane LJ at 1215; Springfield Nominees Pty Limited v Bridgelands Securities Limited (1992) 38 FCR 217 per Wilcox J at 225; Lyon v Wilcox [1994] 3 NZLR 422 CA per Casey J at 431; Peninsula Watchdog Group (Inc) v Minister of Energy [1996] 2 NZLR 529 CA per Richardson P at 536. 6 The other thing that may be said about the meaning of the words "special circumstances" in this context is that there should be no exhaustive attempt to define or list the matters which may come within the rubric "special circumstances" as used here: Re Norman ibid; Springfield Nominees ibid. The discretion is a discretion to be exercised by the Judge on the view that he or she takes of all the circumstances of each case. Having said that, I should emphasise that one feature of s 459R(2) is that an order may only be made under the subsection if the Court is satisfied that special circumstances exist and justify the extension. If no special circumstances exist, then that is an end of the matter. If there is nothing that can be characterised as special circumstances, the discretion cannot be exercised. If, however, special circumstances are found to exist, that does not compel or even necessarily authorise the exercise of the discretion. Those special circumstances must be found to justify the extension and whether or not an extension is granted is still within the general discretion of the Court, as emphasised by the word "may", which is the third word in s 459R(2). 7 It is on the basis of the matters stated above that I turn to examine the material in this case relevant to the exercise of the s 459R(2) discretion. Three things are put forward by Mr Epstein, of Senior Counsel for the plaintiff, as constituting special circumstances. One is said to be conduct of the defendant which has caused delay in the determination of the matter. One is the fact that the matter is already fixed for hearing before a Judge of this Court only six days after the expiration of the period. That fact carries two consequences: it means both that there may be expected to be finality in a very short period outside the six months and, consequently, the extension asked for need be only a short one. The third matter which Mr Epstein said constitutes special circumstances is tardy action inside the Court in causing the matter to be brought on for hearing. Whatever may be said of what has occurred in the Court, I do not think it can be fairly described as tardiness. However, unfortunately, something did occur within the Court that could be said to cause or contribute to the matter not being dealt with within the six month period. 8 The factual background against which those submissions must be viewed is as follows. On 17 May 2002 the defendant filed a notice of motion for leave under s 459S of the CA to rely on the hearing of the winding up proceedings on a matter that the company could have relied on for the purpose of an application to set aside the notice of demand. The company did not in fact make an application to set aside the notice of demand. That notice of motion was stood into the short notice list to be listed in the Registry before a Judge, but not to be listed before 19 June 2002. However, two days before that day, the defendant wrote to the Registrar informing the Registrar that the notice of motion would not be pursued. Mr Epstein points out that no reason was given in the letter as to why, the application having been made, it was simply withdrawn at that point of time. Mr Epstein has submitted that those actions by the defendant caused a delay of one month in the matter, which is a period longer than the period by which the trial lies outside the six month period. I am not to be taken as saying that delays occasioned by a defendant in winding up proceedings may not in some circumstances fall within the category of special circumstances. But, whatever happened about that motion does not seem to have delayed the progress of the matter. Before the time at which the winding up application could have been listed and before the motion was withdrawn the Registry on 13 June 2002 assigned 20 September 2002 as the hearing date of the proceedings. The motion cannot therefore constitute a special circumstance. It was the action of the Court in fixing a hearing date outside the six month period that in my view enables it to be said that actions within the Court have led to the matter being heard outside the six month period, or contributed to that result. I am unable to accept that on 13 June 2002 a date could not have been found for the matter to be fixed within the six month period. If the Registry was having difficulty in finding a date within that time, an approach should certainly have been made to the Corporations List Judge, the Duty Judge or the Chief Judge in this Division for guidance or assistance as to what ought to be done. I am pleased to say I am quite certain that the fixing, one would think inadvertently, of the hearing of a winding up application outside the six month period is not an ordinary occurrence in the Court and it may, therefore, in my view, constitute a special circumstance, and should be regarded as doing so in these proceedings. 9 Even when the results of that criticism are taken into account, the date fixed is only six days outside the relevant period. What the Court must bear in mind in exercising its discretion is not simply the interests of the parties, but the public interest in what is established as the policy of this portion of the Act of ensuring that winding up proceedings are speedily disposed of. There are various good reasons for this policy and I do not purport to be exhaustive. They include winding up applications not being dealt with on material which is stale. They include situations where a company may be trading or engaging in transactions whilst it is insolvent, which should not be protracted. And they include companies, which are not insolvent, not having the commercial cloud caused by the existence of winding up proceedings hanging over their heads for a long time. This is particularly so when, under the policy of the Act, the circumstances in which applications may be made to set aside notices of demand are stringently controlled. I am entirely conscious of that policy as I consider this matter. Nonetheless, Mr Epstein presses on me that it may be regarded as a special circumstance, as being outside the ordinary run of cases of this sort, that when the Court comes to consider the matter of an extension, the matter has been fixed for a hearing which is to take place only six days outside the six month period, and only eight days from the time when the Court is considering this application. Again, in my view, that is something out of the ordinary and something that may be regarded, and that I do regard, as a special circumstance in this case. I bear also in mind the shortness of the adjournment sought. 10 Although I have mentioned various circumstances individually, those various circumstances should not be considered, and I do not consider them, singly. Taking all the above matters together, I am of the view that there are in this case special circumstances potentially justifying an extension of the time. 11 The question remains whether I ought in all the circumstances exercise the discretion in favour of an extension. The weightiest matter put against it by Mr Tregenza, and it is indeed a matter of some considerable weight, is as follows. The plaintiff was aware from shortly after 13 June onwards that the Court had fixed a date for hearing outside the six month period. It has been remarkably ineffectual in remedying a situation which could have been remedied much earlier than this. It did file an application which was listed before the Registrar on 18 July 2002. Mr Epstein was to appear on that occasion to pursue that application, among, I gather, others. However, an application to the Registrar for the matter to be delayed for Mr Epstein's arrival was not acceded to. The plaintiff was represented by its solicitor and the order for extension was simply not made. Indeed, as I understand it, the problem created by the Court in fixing a date outside the six month period was not drawn to the Registrar's attention on that day. The intended correction or agitation of the matter on that day simply did not occur. But today, as I have already observed, is 12 September 2002, and the plaintiff is now moving on a process filed on 3 September 2002; in other words, after the hearing on 18 July 2002, the plaintiff remained inactive for some six weeks. There is a strong case for saying that, because of its inaction through that period, it should now be left to bear the consequences. That inaction, it is said, should, weighed with the other circumstances, lead me to refuse the application, even if I find, as I have found, that there are special circumstances which potentially justify the extension. 12 I have considered the entire matter as laid before me, including all the circumstances referred to in these reasons for judgment. The conclusion that I have come to is that I should grant a short extension of the time under s 459R(2) to allow the matter to be dealt with, if it can be dealt with, before Barrett J on the day fixed, provided that I maintain that fixture. The precise length of the extension can be dealt with, if it remains relevant, when I return to short minutes in the matter, but the sort of time I have in mind is until 20 September and for, say, 14 days thereafter, to give his Honour time to deliver a decision, if not necessarily reasons for judgment, upon the winding up application. 13 That conclusion on my part means that I must now turn to the defendant's application for vacation of the fixture. The decision that I have provisionally announced in relation to the s 459R application is dependent, in the end, upon the fixture for next Friday being maintained, and I shall have to revisit that situation if I accede to the defendant's application to vacate the fixture. Application to vacate the fixture is made upon a notice of motion filed on 3 September 2002 and made returnable on 17 September 2002. However, I have been asked to deal with it today in conjunction with the other applications that are before me. It is not a satisfactory course to take where what is sought is the vacation of a fixture before a Judge that is 17 days off, to go to the Registry, which I infer is what occurred in this case, and take a return day for the motion 14 days away, and only three days before the fixture sought to be vacated. That is a course not only inconvenient to the parties, but extremely inconvenient to the Court. If a fixture must be vacated, in a Court in which time is precious it is much easier to redeploy usefully the time of a Judge upon a fortnight's notice than upon two days' notice. The profession should take note that, as soon as it is known a fixture is to be vacated, application should be made either with his or her assent to the trial Judge for a vacation of the fixture, or if that cannot be arranged, then to the Duty Judge. However, the time at which the motion was originally made returnable will play no part in my determination of this motion. 14 The motion for vacation is upon the basis that the defendant proposed to prove the company's solvency upon the evidence of Mr Billingham, a partner in Grant Thornton, accountants, who is also a registered liquidator. Mr Billingham made an affidavit on this subject matter on 7 May 2002 and a supplementary affidavit on 4 June 2002. I am told by affidavit that Mr Billingham, as a registered liquidator, was engaged some months ago as the person to do the work necessary to come to the conclusion that the company is solvent, and worked upon the case for some time. I am told from the bar table that he has conferred with the defendant's counsel concerning it. Bearing in mind the nature of the material from the bar table as to counsel's own involvement with the witness, I accept that from the bar table However, what occurred is that, shortly after 13 June 2002, the defendant's solicitor knew that 20 September 2002 was the trial date. Contact was not made with Mr Billingham until the first week of August 2002, and Mr Billingham on that occasion indicated that he would be overseas on business and unavailable on 20 September 2002. He was asked for a letter defining his unavailability, did not send it at once, was asked perhaps ten days later where the letter was and finally wrote a letter defining his unavailability on 30 August 2002. I entirely accept the solicitor's evidence concerning these matters but, apart from the fact that on 3 September a motion to vacate the hearing was filed, nothing was done to replace Mr Billingham's evidence if an adjournment could not be obtained. There were three courses that were open. If the witness were irreplaceable he could be subpoenaed. He would not like that. It might be rude, as the solicitor thought it was, but he could be subpoenaed. Alternatively, if his evidence was not irreplaceable, bearing in mind that the search for a replacement could have commenced in the first week of August for a trial on 20 September, then his evidence could have been replaced. Grant Thornton is a firm of a number of partners, it appears on the material before me. One of the witness' partners, whether a registered liquidator or not, could, not have started the exercise anew, but been taken by Mr Billingham through the material and by affidavit confirmed that he had examined all the material and adopted Mr Billingham's views. Or, by swearing an affidavit of his own, based upon his own examination, shortened by the use of the work Mr Billingham had done, he could have been ready to give the necessary evidence. Yet a third course that may have been possible would have been to ask the trial Judge to make an hour or two available to hear the cross examination of Mr Billingham on an earlier day which, if requested, may or may not have been possible. This was a backs to the wall situation. This company faces potential liquidation, yet none of those courses was followed. It is unfortunate for the defendant they were not because, if the matter now must go ahead next week and Mr Billingham leaves the country tomorrow, his participation in the preparation of replacement evidence will be prevented or diminished. But, even if he is totally lost to the process, there is nothing in the evidence before me that suggests that a competent accountant cannot in the week that remains be put in a position to give evidence concerning the solvency or insolvency of this company. I, at the moment, know nothing of this company's affairs, but I imagine they are not of the size of the affairs of BHP Billiton, and there is certainly nothing laid before me by way of evidence that shows that mastery to the necessary degree of the affairs of this company is impossible within a week. 15 In view of the fact that the defendant did not pursue any of the courses open to it, and does not show that replacement of the evidence is impossible, I refuse to vacate the fixture upon the application that has been made to me. In those circumstances, to the degree to which my earlier views on the extension of time remain provisional, they may now be confirmed. I see no reason why the matter should not proceed to hearing before Barrett J next Friday. In those circumstances it seems to me an extension of time until next Friday and for 14 days thereafter will not improperly trench upon the public interest that exists in the time limit being observed. I propose to make an order to that effect. Short minutes can be brought in in due course to give effect to the decisions that I have enunciated. 16 The third application may be disposed of easily. The plaintiff by its interlocutory process dated 10 September 2002 sought an order for production of certain documents. The defendant indicates that it is prepared to undergo that order provided that access to the documents is kept confidential to the plaintiff's legal advisers in the first instance. The order will therefore be order 2 in the interlocutory process filed 10 September 2002 on the basis that access to the documents is exercised by and their contents kept confidential to the plaintiff's legal advisers in the first instance. 17 Liberty to apply is reserved, and may be exercised before the trial Judge or the Duty Judge. ********** Last Modified: 09/23/2002 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.