Emanuele & another v Australian Securities Commission & others

Unreported 24/4/1996 HCA

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(Judgment by: Brennan CJ.)

ROCCO EMANUELE & LYNTON EMANUELE v AUSTRALIAN SECURITIES COMMISSION, ADDSTONE PTY LTD (in liq) (and others as listed in schedule hereto), COMMONWEALTH OF AUSTRALIA

Court:

Judge: BRENNAN CJ, McHUGH and KIRBY JJ

Judgment date: 24 APRIL 1996

ADELAIDE

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Judgment by:
Brennan CJ.

APPLICATION FOR SPECIAL LEAVE

MR N.W. MORCOMBE, QC: If it please the Court, I appear with MR A.L. DAL CIN for the applicants. (instructed by Cowell Clarke)

MR T.A. GRAY, QC: If it please the Court I appear with MR N.D. BAMPTON for the first respondent. (instructed by V. Malinaric, Australian Securities Commission, Adelaide)

MR M.F. BLUE: If it please the Court, I appear for the second respondent. (instructed by Fisher Jeffries)

MR D.M.J. BENNETT, QC: If it please the Court, I appear with MS S.J. MAHARAJ for the third respondent. (instructed by the Australian Government Solicitor)

BRENNAN CJ: Yes Mr Morcombe.

MR MORCOMBE: If it please, the question to be raised in this application is whether section 459P(2) of the Corporations Act imposes a condition precedent to the jurisdiction of the Court, or is merely procedural in nature and therefore subject to an order nunc pro tunc. The relevant section is set out at application book page 47 in their Honour's judgment.

MR MORCOMBE: At application book page 47 the relevant section is set out. If your Honours would look to that your Honours will see that in subsection (2) the relevant application, in going to the end of the second line:

may only be made with the leave of the Court:

The structure of section 459P is that it sets out those entities which may make application for the winding up of a company.

KIRBY J: What do you say is the purpose of the requirement of leave? Why have that provision, given that it is the sort of matter which can be overlooked and a mistake made?

MR MORCOMBE: The purpose is to give the court the role of a guard in respect of applications being made. That role was acknowledged in the case of Bingham v. Iona Corporation (13 ACLC 560 ) Pty Ltd and Others, which was a decision of his Honour Justice Lindgren sitting in the Federal Court in Sydney last year.

KIRBY J: If one accepts that, and one has here the case where the court, in effect, though not in form, provided the guardian role, but overlooked this requirement and then was required to come back to it, is not the substance of the matter the superior court has exercised the power, but it just has not taken the necessary step of turning its attention to the leave requirement?

MR MORCOMBE: With respect, no, because in my submission there is no indication that the court has, in fact, performed that guardian role. It is our submission that the role to be performed by the court is so important, as reflected in the structure of the legislation, that there simply is no power to remedy that fault.

KIRBY J: That has an awful consequence if what is done, as I think you contend, is void, then things may proceed for a very long time; large rights may be affected and nothing can be done to cure it, in your submission. That is an unlikely prospect that that is what Parliament intended.

MR MORCOMBE: If that is so, your Honour, then it is unusual to find the language that is actually used in section 459P wherein it uses words such as "may only be made" and in subsection (5) "a person cannot apply". The words used are very clear and one would then question why, if your Honour is correct, one needs subsection (2) at all. An absolute right is given in subsection (1). Why, then, give the court a guardian role in subsection (2)? The answer, as referred to in Bingham which referred to the general insolvency inquiry in August 1987 in respect of the category of members and directors which, of course, is paragraph (c) for the director, and, (b) for the contributory, and if I may quote, "Is to prevent mischievous and possibly harmful applications."

Now, the consequences of an application being made for winding up are immediate and those consequences are that it may invoke specific clauses in security documents. It has an immediate impact on the credit rating of the company and all of that before the court has any opportunity to review whether the application should be made at all.

BRENNAN CJ: I think we understand those points. Thank you, Mr Morcombe. The Court will be advantaged now if we call on Mr Gray.

MR GRAY: May it please the Court. The reasoning of the court below on this particular question commences at page 46 and their Honours drew on a long line of authority in the area of bankruptcy insolvency to construe the section as they did as one of procedure and not substance and the particular reasoning in that regard is at pages 51 and 52. At page 51, the court identified the decision of Justice Sholl in the Testro Case as conveniently summarising that long history of the law and, in particular, quoted from his Honour's judgment at the foot of page 51.

BRENNAN CJ: Now, that is in relation to the institution of proceedings against a company in liquidation?

MR GRAY: Yes, it is, but in the course of the cases being referred to - - -

BRENNAN CJ: The problem in this case, Mr Gray, is this. If a procedure is commenced by a party referred to in subsection (2) and an order is made purporting to wind the company up in insolvency and, thereafter, the omission to get leave is discovered and the Court refuses leave, what happens to the order?

MR GRAY: In that case, the order would lapse.

BRENNAN CJ: Would it? In that case, it must be that the leave is an essential requirement to the winding up. It may not be just the question of time. It may be a question of whether it is mandatory or not.

MR GRAY: Yes. If the Court pleases, our respectful submission is that, in substance, his Honour considered all relevant matters. The applicant, the ASC, was an applicant who qualified under subsection (2) and the question of insolvency, the threshold question, was established beyond doubt and, in those circumstances - - -

BRENNAN CJ: That is not the problem. The problem is, could the order be made in the absence of leave under subsection (2)?

MR GRAY: If the Court pleases, we say there is jurisdiction to make the order. The problem relates to the locus of the applicant. In our respectful submission, everything happened that should have happened, but the making of a formal application for leave on the uncontested evidence was overlooked as an oversight, it was simply an oversight.

KIRBY J: That might be right, but the statute, as Mr Morcombe has pointed out, is expressed in very strong, unusually strong language. These provisions are there for a purpose. One would imagine the commercial purpose is to ensure that the Court specifically turns its attention to the requirement of leave and that is not evidenced in what happened in this case, and you may be right or wrong, but this is, it seems, an arguable and important question for the administration of the law.

MR GRAY: Yes. If the Court pleases, we say there can be no doubt in this case that every relevant matter was addressed but for the question of leave and that undoubtedly the court, had it put its mind to it, would have granted leave.

BRENNAN CJ: That may well be right, but it does not really answer the question, Mr Gray.

MR GRAY: If the Court pleases, in the court below there was a notice of cross-appeal lodged by the ASC saying that if the appropriate procedure was not the nunc pro trunc procedure then the ASC sought the alternative route by way of appeal and that matter was not dealt with by the court below as it considered the nunc pro trunc route was appropriate on its construction of the section and we would put the submission that in any event an appeal would have to succeed in the circumstances of the case because the Full Court would be entitled to reconsider the matter in circumstances of an applicant who is undoubtedly qualified and in circumstances of a prima facie case of overwhelming insolvency.

BRENNAN CJ: That may well be right, but it does not really answer the question in respect to which special leave is sought.

MR GRAY: If the Court took the view that there was an interest in the administration of justice point to be debated on the construction of the section, then at the same time we would seek to agitate the cross-appeal that was not dealt with below. So that in the event that the Court took the view that the requirements of 459P were critical and a matter of substantive law rather than procedure, then in that circumstance we would wish to advance the appeal that was not heard below.

BRENNAN CJ: And we would send it back to the Full Court to deal with it.

MR GRAY: Yes. If the Court pleases, our respectful submission is that, properly characterised, this is a matter of procedure, but if the Court takes a view that the administration of justice point is open for debate then it is not a matter we can further advance. May it please the Court.

BRENNAN CJ: Thank you. Mr Blue.

MR BLUE: May it please the Court, we do not wish to address argument on the question which would fall for decision if special leave were granted but only on the question of whether special leave ought to be refused because the grant of leave would be futile. In that respect our submission is a short one. These group A companies were wound up over six months ago. The liquidation of those companies has proceeded and in the interim the group B companies and the group C companies were wound up without opposition in December and January. In our respectful submission, even were the order to be set aside for the winding up of the group A companies, it would be inevitable that a fresh order for winding up would be made and therefore the result would be the same, that this group of companies would remain.

KIRBY J: That would almost always be so in cases of this kind, would it not, just by the effluxion of time? So it is unlikely that this issue would ever be presented in a way that could be resolved because of this intervention of time. The time and the order winding up is going to present this difficulty in every case.

McHUGH J: It makes it even more important that this Court should deal with this important question so that there will be a decision on it.

MR BLUE: Your Honours, in this particular case the effluxion of time has been very substantial. No special efforts were made by the applicants to bring the matter on quickly. Secondly, because of the complexity of the administration of these companies, we would submit that this would not be an appropriate vehicle because in this particular case it would certainly be inevitable that ultimately the companies be wound up. There might be other vehicles in which it was arguable that the companies ought not on the merits be wound up, but no such argument has been addressed on behalf of the applicants here. They are our submissions, if the Court pleases.

BRENNAN CJ: Thank you, Mr Blue. Mr Bennett.

MR BENNETT: If the Court pleases. Dealing with the last point first, the question of utility, there is a further and even more significant reason why a grant of special leave and an allowance of the appeal would have no utility in the present case. This is sufficient, in our submission, to make this case an inconvenient vehicle. Your Honours, what occurred was that my client had presented as a creditor a petition to wind up these companies.

There was then a supervening deed and the deed was set aside on the same day as these orders were made. That appears in the judgment. My client's petitions were then before the court. It would have been open to the court to have wound the companies up on my client's petition and no reason why the court should not have done so except that it made the winding up orders on the petition of the Commission.

BRENNAN CJ: What happened about your client's petition?

MR BENNETT: It is in abeyance, it is still there, it is adjourned. So that, if the appeal were to be allowed, a winding-up order would be made with at least the same provenance as far as a relation back date is concerned, and there would simply be no reason why that would not be done. It is merely an accident, and an unfortunate accident which no one noticed, that, because of this provision, the making of the order on the petition of one, not the petition of the other, caused these problems.

BRENNAN CJ: Mr Bennett, one thought that crosses my mind is that, if it is right that your petitions are on foot and the relation back date is the same, one is unlikely to get a more convenient vehicle for considering the question.

MR BENNETT: In fact the relation back date, I think, is further back on my client's submissions.

BRENNAN CJ: It may be but, at all events, the respective rights of creditors will not be adversely affected if special leave is granted in this case.

MR BENNETT: That is so, your Honour, for that reason.

BRENNAN CJ: Now, it is difficult to conceive of a case, apart from this one, where 459P(2) could be advantageously considered, where there would not be some adverse effect upon creditors.

McHUGH J: This is the perfect vehicle.

BRENNAN CJ: The perfect vehicle.

KIRBY J: Thanks to your solicitor's efforts.

MR BENNETT: Yes. Your Honour, the difficulty with that is that it is not the normal practice for this Court to grant special leave in a case where the result is of no significance to the parties and, in a sense, that is a real problem in this type of case. The other situation is, of course, there may be questions about the validity of the liquidator's appointment and acts done by the liquidator and in that sense there may be very serious adverse consequences which have no particular benefit to anyone. But may I come to the merits and deal with that.

Your Honour the Chief Justice asked the question, "What if a winding-up order were made and there were no appeal, and then someone were to suggest that it was invalid"; leave perhaps being sought and refused? Your Honour, in my submission, in that case, the winding-up order, being an order of a superior court of record, would stand but there would be three remedies available, if thought appropriate: one would be to seek leave to appeal out of time, have an extension of time for leave to appeal; one would be to seek a permanent stay of the winding up, that being the traditional way of dealing with winding-up orders that ought not to have been made; and the third would be to act under the powers of the Federal Court to rescind orders made by it. So, under any of those three procedures it might be possible to seek to have the order, in effect, nullified, but the winding-up order itself would not, in my submission, be a nullity. Nor, in my submission, is the presentation of the petition a nullity.

McHUGH J: That means that, until some procedure was set in train, the effect of the order would be that rights have been changed, liabilities perhaps incurred.

MR BENNETT: Yes, your Honour, but can I put the other side of the proposition? The consequence of what my learned friend submits is that one cannot in the one application seek the winding up of the company and the granting of leave. One cannot do what to some extent has been a practice of filing a summons seeking two orders: (1) leave under section 459; (2) an order for winding up.

BRENNAN CJ: Why not?

MR BENNETT: Well, your Honour, because if the consequence is that the presentation of the petition or the moving of the court - making of the application, I should say - is a nullity without the order, then one could not even do that. Your Honour, the phrase is, "any one or more of the following may apply to the court for a company to be wound up in insolvency". Now, such an application is not like an application for special leave, which is regarded as being made when counsel rises to his or her feet. It is an application which is made when the document is filed in the registry. Now, if my learned friend is right and this has substantive effect and one gives full force to it, a person cannot present the application without having a prior proceeding in which leave is granted.

McHUGH J: That seems the evident policy of the section.

MR BENNETT: Well, your Honour, the inconvenience of that is enormous. How does one apply that, when asked rhetorically, to an ex parte situation? Suppose one wants to move ex parte for leave to serve short notice to wind up a company in a situation where one needs a provisional liquidator immediately; there are threats of money being sent - - -

McHUGH J: I know, but the theory of the section is that the people specified in subsection (2) are people who might ordinarily be regarded as not having a prima facie claim, or possibly may not have a prima facie claim.

MR BENNETT: No, your Honour, but the consequence is that if one of those people wants to bring an urgent application on, presumably one cannot get leave ex parte because that is a final matter and, therefore, one would need to notify the other party and have a hearing. So if, for example, one wanted a provisional liquidator because of a threat to send money overseas that afternoon, it would be totally impracticable to be able to obtain leave and then make the application in which one could seek the appointment of a provisional liquidator.

So it would have consequences which would in many situations have a very serious effect on the ability of a party to use the provision. In my submission, it is the type of provision which has appeared many times in companies legislation and other legislation. It is a procedural provision. It is a protective provision, but it is not one which has as dramatic a consequence as is contended for here.

KIRBY J: It is dramatic language. It is much stronger than "The court may grant leave". It is imperative on its face.

MR BENNETT: Is your Honour referring to subsection (5) or to the language of subsection (2)?

KIRBY J: Shall not - "may only" and "cannot apply". They are strong words in subsections (2) and (5).

MR BENNETT: Your Honour, the other way of reading it is reading it as if the "apply" relates to what is done in court, where one asks for the order, rather than what is done when one files a document. If one does that, it can be done, clearly, simultaneously with the making of the order because a judge is then entitled to say, "I have before me an application for leave and if successful, an application for an order. I grant leave. I deem the application that has been talked about to be made instantaneously, and I make the order". That, of course, is the effect, we say, of what occurred here.

BRENNAN CJ: Well, here it is not quite. I can understand that argument, but if the application for leave is made after the winding up then that is different from the proposition you are putting.

MR BENNETT: Your Honour, the application for leave is, in a sense, irrelevant. It is the grant of leave that is important. The leave itself can be granted, even without an application. It would be possible for a judge to say, when an applicant comes before him seeking a winding up, "That cannot be done without leave. I grant you leave". The judge would not need an application. If the judge can do that, the reason that is no different to what occurred in this case is that, on appeal, the Full Court can make any order which the trial judge could have made. If the trial judge could have said, "(1) I grant leave. (2) I wind the company up", then it is permissible for the Full Court to say exactly that, and the Full Court to say, "I grant leave. I wind the company up".

BRENNAN CJ: There must be somebody who seeks to have leave granted in some form or another. The judge will not grant leave under this section, one would think, unless there was somebody who was seeking the leave in order to present a a petition or to prosecute an application for the winding up of a company.

MR BENNETT: In my respectful submission, your Honour, it would be open to a judge to grant leave on the basis that leave, if applied for, would be granted without the formality of an application. The section does not require an application for leave. The section merely requires a grant of it and if, for example, one had a litigant in person who was unaware of the requirement, there is just no reason why the judge should not say, "I grant leave. I grant the application." If a judge can do that then that is the same effect as what occurred in the Full Court. So we would submit for that reason also the proposition of law should be answered adversely. It is a procedural section, the sort of provision in which courts traditionally have taken the other view. There is authority on similar sections which we have included in our submissions where courts have done that and, in our respectful submission, the application should be refused.

BRENNAN CJ: Mr Bennett, if the Court should be against you on that and proposes to grant special leave, are there any orders which, in your submission, ought to be made as a condition of the grant in order to preserve any vested rights under the existing order?

MR BENNETT: Yes, your Honour, particularly bearing in mind what your Honour has put to me about the convenience of the vehicle. It would be appropriate, in my respectful submission, for it to be a condition that no challenge will be made to the validity of any act done by the liquidator under the orders which have been made and that no opposition would be offered were the appeal to be allowed to a winding up on the application of my client on the existing petitions. That would make good what your Honour Justice McHugh and your Honour the Chief Justice put to me about this case being an even more convenient vehicle than the normal one. May it please the Court.

BRENNAN CJ: Yes. Mr Blue, if special leave were granted, are there any conditions which, in your submission, would have to be imposed other than those propounded by Mr Bennett?

MR BLUE: No, if the Court pleases.

BRENNAN CJ: Thank you. Mr Gray?

MR GRAY: No, if the Court pleases.

BRENNAN CJ: Mr Morecombe?

MR BENNETT: Might I just have leave to say one thing in answer to your Honour's last question before Mr Morecombe addresses you?

BRENNAN CJ: Yes.

MR BENNETT: It is one matter I have just been advised of and that is, your Honour, that there have been extensive public examinations and some millions of dollars have been spent, on my instructions, in the course of the liquidation in relation to those matters and there would be very serious possible consequences if there were ultimately a finding that the liquidator was invalidly appointed and his actions were invalidated. If your Honour pleases.

BRENNAN CJ: Yes. Mr Morecombe, if special leave were minded to be granted, what do you have to say about the conditions which were propounded by Mr Bennett?

MR MORCOMBE: With respect, we would strongly oppose those conditions because it presupposes that the facts would support that which Mr Bennett seeks and that is not the position. In my submission, if the Court was disposed to grant special leave, it would be appropriate to preserve the status quo as it exists at the moment and then the Full Court on hearing the appeal could make whatever consequential orders it deemed appropriate, but to make the orders sought or the conditions sought by Mr Bennett would presuppose a number of things which simply do not exist. He seeks to have no challenge to the validity of his petition. Now, that simply has not been argued previously.

BRENNAN CJ: No challenge to the validity of the appointment of the liquidator and the acts done by the liquidator pursuant to that purported appointment?

MR MORCOMBE: Well there are already, as I understand it, arguably some challenges that can be mounted to that. If my friend simply seeks those orders as an interim position, pending the hearing of the appeal, and if the appeal was listed reasonably quickly, then I would not oppose them as an interim measure. But, in my submission, they should not be - - -

BRENNAN CJ: But the interim measure does not really come to grips with the problem. The problem is this - that there has been an order made for the winding up of the group A companies and the liquidation has been under way for six months. This point has arisen which, if special leave were granted to entertain it, would result in a decision of this Court and, if in your favour, would result in the setting aside of the order for the winding up. What then would be the effect of such an order upon all that has happened in the last six months?

MR MORCOMBE: There would undoubtedly be significant consequences, your Honour. I have not been involved in that which has been happening as a result of the orders for liquidation being made. There have been other activities but I have not been briefed on those. I am simply not in a position to know, in sufficient detail, to be able to answer your question, I am sorry. But undoubtedly there would be significant consequences.

BRENNAN CJ: I shall put this further question to you - - -

MR MORCOMBE: Sorry, can I suggest, your Honour, it would certainly be appropriate, if leave were granted, for those matters to be addressed upon the hearing of the appeal.

BRENNAN CJ: If conditions were imposed on the grant of special leave, either as to the acceptance of what has happened under the purported order for the winding up, or in relation to the petitions by the Commonwealth for the winding up, are you in a position to say whether you would accept a grant of special leave, subject to either, or both, those conditions?

MR MORCOMBE: Your Honours, we do not have instructions to give any undertakings, but of course if the Court imposed the conditions, then those are the conditions with which we must comply.

BRENNAN CJ: If the condition is that the undertaking be given, then it is a question for you to say whether or not that the undertaking will be given.

MR MORCOMBE: Your Honour, I am not attempting to avoid, but professionally I am simply not in a position - I do not have instructions to give that undertaking.

BRENNAN CJ: Mr Morecombe, if we were to adjourn the further consideration of this matter for some short time, would that allow you to get any instructions?

MR MORCOMBE: By some short time, I take it your Honour has in mind something of the order of an hour?

BRENNAN CJ: Yes - at the maximum.

MR MORCOMBE: I would certainly endeavour to do so.

BRENNAN CJ: The matter will stand adjourned and will not come on before 4.15 pm Canberra time, 3.45 pm South Australia time, and perhaps you could let us know at that stage, when the matter is called on, what instructions you have.

MR MORCOMBE: Thank you, your Honour.

BRENNAN CJ: The Court will consider its decision in the meantime.

AT 3.19 PM THE MATTER WAS ADJOURNED UNTIL LATER THE SAME DAY

UPON RESUMING AT 4.35 PM:

BRENNAN CJ: Mr Morecombe, are you able to give us a response in relation to the Emanuele v. Australian Securities Commission matter?

MR MORECOMBE: Your Honour, I am in a position to offer undertakings, but not those sought, but I think the undertakings which I will offer will satisfy those concerned. The problem, your Honour, is that the Australian Tax Office, whom my friend, Mr Bennett, represents, does not have an application before the Court for winding up in respect of the group B and the group C companies. His application is restricted only to the group A companies. He simply has no interest in those others.

The other point, your Honour, is that the assessments on which those applications were based are challenged, and those proceedings are already on foot. Your Honour, what we offer is this, that the applicants - and perhaps if I can just read it quickly and go back, if your Honours wish:

The applicants and the directors of the group A companies undertake that in relation to the group A companies, if orders are made to set aside the winding-up orders, they will forthwith seek orders in the Federal Court to wind up the group A companies, with court approval in relation to those companies.

So that if the group A companies are successful in an appeal, then they will, forthwith, seek the winding up of those companies.

The second part of the undertaking is this:

In relation to all liquidations, the directors will not challenge any acts or powers of the liquidator on the grounds that the various orders appointing him were invalid.

That will leave those companies able to challenge on any other unassociated grounds from this appeal, that they would not seek to challenge his actions on the basis of any successful appeal in this Court on these grounds.

BRENNAN CJ: In relation to - - -?

MR MORECOMBE: That is in relation to all companies, your Honour, not just group A. The third and final part is that:

In relation to group B and group C companies, the directors would undertake to forthwith seek orders of the Federal Court for the appointment of a provisional liquidator to those companies.

We see that as having the effect that the status quo would then be preserved; the provisional liquidator could take control. There is in fact an argument as to whether all of those companies should be in liquidation or not, but with the appointment of a provisional liquidator, that would preserve the status quo and then enable those arguments to take place in an orderly sort of fashion.

BRENNAN CJ: Yes. Am I right in thinking that in relation to your first undertaking there would be a different date of relation back?

MR MORECOMBE: If the order was made on the group A companies' application, that would be right. However, the undertaking we have given in number 1 does not preclude the Australian Tax Office from pursuing its existing applications.

BRENNAN CJ: Yes.

MR MORECOMBE: And if successful, then of course the original relation back period would apply.

BRENNAN CJ: Yes, thank you, Mr Morecombe. Mr Gray, what do you have to say about the sufficiency of the undertakings that are offered?

MR GRAY: We do not wish to argue against their sufficiency, if the Court pleases. We did wish to raise something to the Court's attention about group B and group C companies, either now or at a convenient moment. If the Court pleases, order 2 of the Full Court at the foot of page 66:

The order of the primary judge made on 30 August 1995 be amended by adding thereto as paragraph numbered 7 an order that the Australian Securities Commission have leave nunc pro tunc pursuant to section 459P(2) of the Corporations Law to apply to wind up in insolvency the Group A Companies, and the Companies (as defined in paragraph 4 of the order)

The companies defined in paragraph 4 of the order are the group B and group C companies. In fact, what happened was that an application to wind up was proceeded with. It came on before Justice von Doussa in one instance and Justice Branson in another, in December. The question of the obtaining of leave was raised and both judges proceeded on the basis that the Full Court already granted leave in regard to those winding-up orders and proceeded to make the orders. So what has happened in regard to the group B and C companies is, in that regard, quite different to the group A companies.

BRENNAN CJ: Yes.

MR GRAY: The submission we wish to put is that if an appeal to this Court was successful, it would only strike down the nunc pro tunc part of that order and would leave a prospective order in regard to groups B and C or, alternatively, that the Full Court order was effective at the time it was acted on in the making of winding-up orders. For those reasons, special leave - - -

BRENNAN CJ: We can limit our grant of special leave to paragraph 2, up to and including the words "group A companies".

MR GRAY: Yes, and we would resist the special leave in regard to group B and C on that separate ground. The applicants were represented before Justices Branson and von Doussa when they dealt with that in December and neither consented - - -

BRENNAN CJ: We understand that. Thank you Mr Gray.

MR GRAY: If the Court pleases, the other point we wish to raise was that we would think there would be a great practical advantage in the Court having our cross-appeal from the order of Justice O'Loughlin before the Court at the same time, because if we were to succeed on that cross-appeal as an alternative route, it would effect the same result and that would save, in a practical term, the problem of time and a return to the Full Federal Court on a matter where the High Court would be fully seized of those matters.

BRENNAN CJ: Mr Gray, you would be at liberty to apply for special leave at the hearing of the appeal if special leave were granted in this case.

MR GRAY: We are obliged to the Court, thank you.

BRENNAN CJ: Mr Blue.

MR BLUE: May the Court please, we support the submissions by Mr Gray in relation to the group B and C companies. In relation to the group A companies, we remain concerned about the relation back date and we would still ask for the undertaking in the form that Mr Bennett formulated it, for the reasons given by Mr Bennett.

BRENNAN CJ: Yes, thank you. Mr Bennett.

MR BENNETT: If the Court pleases. Your Honour, we would also ask for the undertaking in that form. I would not seek to be heard further on it but I do wish to disclose to the Court, so it is not acting under any misapprehension, that my client is considering a course of action which would involve bringing on its petitions against the group A companies and seeking winding-up orders pending the appeal to this Court. Now there may be a question as to the power to make a winding-up order when one has been made and that is something we obviously have to look at. It can be done in bankruptcy. There may be a question in winding up, which we have not yet researched. But I simply disclose to the Court that that is a possible course of action being contemplated by my client.

BRENNAN CJ: As a condition of the grant of special leave, is there any reason why we should exact an undertaking more extensive than that which is offered in relation to the position that may arise in connection with the group A companies, in the event of the winding-up order being set aside?

MR BENNETT: I am only concerned that if the application is being granted on the basis that it is not going to have a substantive effect if the appeal is allowed, and for that reason the case is a convenient vehicle, we would submit, the undertaking should be wide enough to permit the relation back period to be maintained, which can only be done by the undertaking in the form I have referred to; or, I suppose, if my client chooses to take the course I referred to and is successful in that course.

BRENNAN CJ: Or even if your client persists with its petition, in the event that the winding order presently made is discharged.

MR BENNETT: Yes. My only concern with that, your Honour, is that my learned friend's application may, in fact, operate against my client. There may be a race to the court if the appeal is allowed, in relation to my petitions and his company's own petition. One would not wish my learned friend to be in a position to seek to win that race and thereby prevent the relation back period being as I have outlined.

Perhaps the first undertaking should be qualified by some words such as, "such application not to brought on within seven days of the court's order, and to be deferred in the event that the commissioner seeks in that time to have his petitions revived"; some phrase like that which would enable us to use the colloquial phrase "to win the race to the court", if that was what was then to occur. May it please the Court.

BRENNAN CJ: Mr Bennett, I would be concerned about a delay of seven days. One does not know what the commercial implications of that may be. But I can that there may be something to be said for an undertaking which extends this far, that the present applicant would not oppose an application on your part to have your application for a winding-up order heard in priority to any order that the present applicant might make.

MR BENNETT: That would be sufficient, your Honour.

BRENNAN CJ: Yes. Mr Morcombe, what do you have to say about that variation?

MR MORCOMBE: Yes, that variation would be agreeable to my clients, your Honour. Could I please raise one other matter that was addressed by Mr Gray in respect of the orders which appear at pages 66 and 67 of the application book and the suggestion that perhaps at the top of page 67 there should be a deletion of companies B and C?

The difficulty with that is that it would then preclude the real argument on section 459P. That would necessarily mean that the word "application" means, in section 459P, the oral application being made to the court. It is our very strong submission that application 459P means application in terms of the filing of the documents because - - -

BRENNAN CJ: You would still be at liberty to raise that in relation to the group A companies.

MR MORCOMBE: In respect of those, we would, your Honour, yes. What I am suggesting is that it would also be reasonable for that to be preserved for groups B and C.

BRENNAN CJ: I can see that you may wish to have it in relation to groups B and C but our concern is simply to get a vehicle in which the matter might be considered.

MR MORCOMBE: If it please the Court.

BRENNAN CJ: Mr Morcombe, upon the undertakings that you have given, amended in accordance with the intimation that I put to you after hearing Mr Bennett last this afternoon, the Court is willing to order that you have special leave to appeal in relation to that order of the Federal Court which is contained in paragraph 2 of its order of 15 December 1995, so far as that paragraph relates to the group A companies.

MR MORCOMBE: If the Court pleases.