Case: Berowra Holdings Pty Ltd v Gordon [2006] HCA 32 ; (2006) 225 CLR 364
Outcome: applied
More recently, the High Court of Australia considered the effect of non-compliance with statutory requirements in the decisions of Emanuele v Australian Securities Commission [1997] HCA 20 ; (1997) 188 CLR 114 and Berowra Holdings Pty Ltd v Gordon [2006] HCA 32 ; (2006) 225 CLR 364. 46 In Berowra [2006] HCA 32 ; 225 CLR 364, the provision under consideration prohibited the commencement of proceedings within a specified time period. In breach of that provision, proceedings were commenced and an issue arose as to whether the proceedings so commenced were a nullity. The High Court (Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ) decided that the provision did not exclude the jurisdiction of the court (at [33] to [34]): Section 151C should not be read as if the entitlement of a plaintiff to commence court proceedings after the passage of six months from the giving to the employer of notice of the injury was a pre-condition to the jurisdiction conferred upon the court to determine claims for work injury damages... The better view is that the provision does not inevitably result in the invalidity of proceedings commenced in contravention of it, either for want of the court's jurisdiction or because the court has no jurisdiction except to accede to a defendant's application (whenever brought) to set aside the proceedings and to do so without regard to the procedural history and the relevant Rules of Court. 47 Justice Kirby noted in a separate judgment at [86] (footnotes omitted): Where parliament has enacted a provision in language which holds back from attaching consequences of nullity and voidness to the acts of a person in breach, it requires a very strong indication elsewhere in the Act that this is Parliament's purpose, if the Court is to derive an implication that this is so. This is because of the drastic consequences that can follow conclusions of nullity and voidness in the law. 50 In a similar way, the analysis undertaken in Berowra [2006] HCA 32 ; 225 CLR 364 is usefully applicable to my task of construing ss 236 and 237. Sections 236 and 237 are silent as to the consequences of commencing a proceeding without leave. There is no warrant to conclude that parliament intended that such proceedings be beyond the court's jurisdiction, as I can find no indication, strong or otherwise, to so conclude. It cannot be inferred that in the absence of parliament expressly stating that leave can be granted nunc pro tunc , the court does not have jurisdiction. This would be inconsistent with the wealth of authorities which provide for the grant of leave nunc pro tunc in respect of other provisions. More importantly however, by reference to the stated purposes of the legislation in the Explanatory Memorandum, it cannot be inferred that parliament contemplated that a company may be denied the benefit of the institution of proceedings where there is a proper basis to otherwise institute the proceedings, simply because proceedings were issued without leave. The express intention of parliament in introducing the statutory derivative action was to allow a simplified process for shareholders to appropriately bring valid causes of action on behalf of a company, which it would not do in its own right. 51 Further, I do not consider that, in expressly allowing for ex parte applications, it may be inferred that the legislation does not authorise the prior issue of the proceeding with leave to follow. True it is that the stated reasons for the requirement of leave are to allow the court to supervise the expenditure of company money, to prevent abuse of proceedings, and to guard against potentially "vexatious or unmeritorious" litigation. However, this purpose would not necessarily be defeated if leave were granted nunc pro tunc , as the criteria for the bringing of the proceedings still need to be considered to allow the matter to proceed. To permit an application to be made ex parte shows that parliament envisaged that in certain circumstances a party may need to approach the court urgently and without notice to interested persons, and permits the court to hear that application accordingly. By so permitting such an application to be made without notice and ex parte does not mean that it is a pre-condition to the jurisdiction of the court that leave be brought prior to the institution of proceedings in all circumstances. 52 In construing the provisions of legislation, it is always necessary to have cognisance of their context and the purpose the provisions are intended to serve. Sections 236 and 237 in themselves do not create the relevant causes of action that are sought to be maintained on behalf of the Company in the proceedings. Sections 236 and 237 identify the persons who may make or pursue a claim on behalf of a company and the requirements that must be met before the claims may be advanced. The court's jurisdiction is found in the substantive provisions of the Act or common law which empower it to adjudicate claims for breach of statutory and other duties. It may be inferred that parliament contemplated that the court having jurisdiction to hear the application, its general powers of correction would be available if faced with circumstances such as those arising in this application, or where there was inadvertence or oversight by a party in obtaining the necessary leave.