FEDERAL COURT OF AUSTRALIA

Ramsay Health Care Australia Pty Limited v Compton [2016] FCAFC 125

ORDERS

THE COURT ORDERS THAT:

1.    The applicant be granted an extension of time and leave to appeal.

2.    The appellant file and serve a notice of appeal in the form of the draft accompanying the application for an extension of time and leave to appeal within 7 days.

3.    The appeal be allowed.

4.    Orders 1 and 3 made on 9 June 2016 be set aside and in lieu thereof it be ordered that the orders made on 3 December 2015 be amended by adding:

“5A    Pursuant to s 52(5) of the Bankruptcy Act 1966 (Cth) the creditor’s petition will lapse at the expiration of the period of 24 months following its presentation on 5 June 2015, namely on 5 June 2017.”

5.    The appellant pay the respondent’s costs of the application for an extension of time and leave to appeal and of the appeal.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

(REVISED FROM THE TRANSCRIPT)

THE COURT:

1    The old proverb goes: “There’s many a slip ‘twixt the cup and lip.” This is a case about the slip rule. On 8 and 9 June 2016, the primary judge acted under the slip rule, to make an order under s 52(5) of the Bankruptcy Act 1966 (Cth) (the Act) that extended the time by three months, to 5 September 2016, before which the creditor’s petition, filed on 5 June 2015 by Ramsay Health Care Australia Pty Limited against Adrian Compton, would lapse. His Honour also granted liberty to restore on two days’ notice to enable the making of an application for a further extension of time under s 52(5).

2    The parties accepted that his Honour had power to act under the slip rule but that he did so under a misconception, through no fault of his own, that the Court had power to grant a further extension of time under s 52(5) subsequently, if need be. When making the orders, his Honour had to proceed in circumstances of considerable urgency. Both parties argued that the appeal should be allowed and that the extension of time should be varied to 12 months so that the petition will lapse on 5 June 2017. We are satisfied, for the following reasons, that the appeal should be allowed.

The legislative scheme

3    Relevantly, s 33(1)(c) of the Act gives the Court a discretion to extend any time limited by the Act after its expiration “if this Act does not expressly provide to the contrary” and s 52(4) and (5) provide:

(4)    A creditor’s petition lapses at the expiration of:

(a)    subject to paragraph (b), the period of 12 months commencing on the date of presentation of the petition; or

(b)    if the Court makes an order under subsection (5) in relation to the petition – the period fixed by the order;

unless, before the expiration of whichever of those periods is applicable, a sequestration order is made on the petition or the petition is dismissed or withdrawn.

(5)     The Court may, at any time before the expiration of the period of 12 months commencing on the date of presentation of a creditor’s petition, if it considers it just and equitable to do so, upon such terms and conditions as it thinks fit, order that the period at the expiration of which the petition will lapse be such period, being a period exceeding 12 months and not exceeding 24 months, commencing on the date of presentation of the petition as is specified in the order. (emphasis added)

4    Rule 39.05(h) of the Federal Court Rules 2011 provides:

The Court may vary or set aside a judgment or order after it has been entered if:

…

(h)    there is an error or omission arising in a judgment or order from an accidental slip or omission.

Background

5    The first slip arose because of the inadvertence of Ramsay’s solicitor by overlooking the operation of s 52(4) and (5) of the Act. That occurred, as the solicitor frankly explained in her affidavit of 8 June 2016, because she had thought that the time for determining the petition had been “adjourned” on 3 December 2015 when his Honour made order 5 that provided that:

There is to be an adjournment of the creditor’s petition proceedings pending the determination of the application for leave to appeal and (if leave is granted) the appeal.

6    That order was necessary because the primary judge had also ordered, as a separate question on 3 December 2015, that he would not go behind the judgment debt on which the petition had been founded. Mr Compton wanted to challenge that decision in the application he made for leave to appeal. Thus, the remaining issues on the petition would not be decided until the proposed appellate processes had been completed.

7    In the event, on 6 May 2016, a Full Court heard concurrently the application for leave to appeal with the appeal, and then their Honours reserved their decision.

8    It was only on 8 June 2016 that the solicitor realised that Ramsay needed to apply under s 52(5) to extend the life of the petition. She had thought that, although the petition had been electronically lodged on 5 June 2015, it had only been presented when the Court’s registry recorded, at 1.53 pm on 9 June 2015, that it had accepted that lodgment.

The primary judge’s decision

9    The primary judge followed what Bowen CJ, Fisher and Lockhart JJ had held in Purden Pty Ltd v Registrar in Bankruptcy (1982) 64 FLR 306, namely that the presentation of a petition occurred when and as soon as the document is delivered to, and accepted by, an officer of the Court. Accordingly, he found that the electronic lodgment of the petition, on 5 June 2015, that bore the electronic acknowledgment that the document “has been accepted for filing under the Court’s Rules”, amounted to the act of presentation under s 44(1) of the Act. That finding is not challenged on the appeal.

10    Next, the primary judge found that the solicitor’s misunderstanding of the effect of order 5, made on 3 December 2015, was an accidental slip for the purposes of r 39.05(h). He found that, had the necessity to apply under s 52(5) for an extension of the life of the petition occurred to Ramsay’s solicitor at the conclusion of the Full Court hearing on 6 May 2016, their Honours would have ordered an extension of time before the petition would otherwise have lapsed on 5 June 2016. As that had not happened, the primary judge concluded that he had jurisdiction, under r 39.05(h), to make an order extending the period under s 52(5).

11    His Honour followed a similar approach to the approach Black CJ, Lockhart and Lindgren JJ had adopted in Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385 in granting an extension of time for determination of an application to wind up a company in insolvency under s 459R of the Corporations Law. However, the primary judge did not vary, or set aside, any order in exercising the power under r 39.05(h).

12    Next, his Honour found that he should grant an extension of three months, to 5 September 2016, and the petition would then lapse unless otherwise extended. In addition, as we have noted, he made an order that a further application to extend time under s 52(5) could be made before then.

13    Both parties agreed that his Honour erred in his understanding that a further extension could be granted after the expiration of 12 months following the presentation of the petition specified for granting an extension under s 52(5), leaving aside the capacity to do so under the slip rule.

14    The primary judge did not have his attention drawn to Re Svir; Ex parte Commissioner of Taxation (1998) 83 FCR 314 where Burchett J had held that the power under s 52(5) to order any extension of the 12-month period could only be exercised during that period. That was by dint of the words “…at any time before the expiration of the period of 12 months” as they qualify the discretionary power in s 52(5). Burchett J applied what Bowen CJ, Sweeney and Lockhart JJ had said in Re Young; Ex parte Smith (1985) 5 FCR 204 at 208, namely:

… s 52(4) and (5) ensure, first, that petitions lapse upon the expiration of twelve months from the date of presentation of the petition unless, within that period, the court extends the duration of the petition to a maximum of a further twelve months; and second, that the court's power cannot be exercised outside the initial twelve months period. (emphasis added)

15    They held that s 52(4) and (5) displaced the general power to extend time conferred by s 33(1)(c) of the Act In our view, that reasoning is reinforced by the consideration that when the legislature explicitly gives a power in a particular provision that prescribes the mode for its exercise, the provision excludes more general powers in the same statute that would otherwise have operated as a source of power: David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 at 276 per Gummow J, with whom Brennan CJ, Dawson, Gaudron and McHugh JJ agreed; see too: Grant Samuel Corporate Finance Pty Limited v Fletcher (2015) 254 CLR 477 at 486-487 [22]-[23], per French CJ, Hayne, Kiefel, Bell, Gageler and Keane JJ.

Subsequent events

16    Subsequently, on 11 August 2016, Nicholas J rejected, correctly, an application by Ramsay to extend the petition’s life under s 52(5) beyond 5 September 2016 on the ground that he had no power to do so: Ramsay Health Care Australia Pty Ltd v Compton (No 3) [2016] FCA 954. Hence, this application for an extension of time and leave to appeal from the primary judge’s order of 9 June 2016.

17    On 17 August 2016, the Full Court allowed Mr Compton’s appeal and held that the primary judge should have permitted Mr Compton to go behind the judgment debt: Compton v Ramsay Health Care Australia Pty Ltd [2016] FCAFC 106. That will result in a more complicated hearing of the petition, that is unlikely to be heard and determined before the petition will lapse on 5 September 2016.

18    Ramsay indicated today that it is yet to decide whether to pursue an application for special leave to appeal to the High Court on the issues that the Full Court decided against it.

Mr Compton’s submissions

19    Mr Compton argued that the primary judge made an error, amenable to correction under the slip rule, when he considered that there was power to grant a further extension, and it would have been possible for Ramsay to apply under the slip rule to his Honour, or another judge, to obtain a variation of the order extending the time beyond 5 September 2016.

Consideration

20    We reject that submission because it misconceives the limited operation of the slip rule, both in the Court’s inherent power and its power under r 39.05(h), to correct accidental mistakes.

21    The primary judge correctly acted on the basis that the slip rule extends to authorising correction of an omission resulting from inadvertence by a party’s legal representative, as Mason A-CJ, Wilson and Deane JJ held in L. Shaddock and Associates Pty Ltd v Parramatta City Council [No 2] (1982) 151 CLR 590 at 594; and see too at 597.

22    Here, the solicitor accidentally omitted to apply on 3 December 2015 for an extension of time under s 52(5) when the primary judge made order 5. However, when the primary judge on 9 June 2016 ordered an extension of three months, his Honour intended to do so in the erroneous understanding that the Court retained power to grant a further extension of time after 5 September 2016 and he reflected that understanding in the order that he made to that effect. That was an error of law. Because the initial 12 month period had expired and his Honour had exercised the power to extend time, albeit under the slip rule, the order granting the extension could not be characterised as containing an accidental slip or omission. Rather, that order was the product of an intentional decision by his Honour to make it in the form in which it was entered and the order correctly reflected what he intended to do. As Gummow A-CJ, Hayne, Heydon, Crennan and Kiefel JJ said in Burrell v The Queen (2008) 238 CLR 218 at 224-225 [20]-[21]:

Identifying the formal recording of the order of a superior court of record as the point at which that court's power to reconsider the matter is at an end provides a readily ascertainable and easily applied criterion. But more than that, identifying the formal recording of the order as the watershed both marks the end of the litigation in that court, and provides conclusive certainty about what was the end result in that court.

The power to correct the record so that it truly does represent what the court pronounced or intended to pronounce as its order (L Shaddock & Associates Pty Ltd v Parramatta City Council [No 2] (1982) 151 CLR 590 at 594-595) provides no substantial qualification to that rule. The power to correct an error arising from accidental slip or omission, whether under a specific rule of court or otherwise, directs attention to what the court whose record is to be corrected did or intended to do. It does not permit reconsideration, let alone alteration, of the substance of the result that was reached and recorded. (emphasis added)

23    The Court’s record in the order that the primary judge made formalising his decision on 9 June 2016 reflected what he intended it to do and can only be corrected on appeal. In our opinion, in the circumstances before him on 8 and 9 June 2016, his Honour should have ordered and, had he been aware that a further extension was not possible, would have ordered, an extension under s 52(5) for the full 12 month period to 5 June 2017. That is because there was no certainty then as to when the Full Court would deliver its decision or, if it allowed the appeal, how long it would take to hear and determine the petition. His Honour should have varied the orders made on 3 December 2015 to incorporate the new order.

24    We should record that his Honour acted with commendable urgency and, in a complex and difficult matter, made an understandable error that, had he had more time and assistance, he would have avoided.

25    Ramsay has accepted that it should pay Mr Compton’s costs since its errors, accidental though they may have been, caused the necessity for these proceedings.

Associate:

Dated:    9 September 2016