FEDERAL COURT OF AUSTRALIA

Merrill Lynch Equities (Australia) Ltd v Triangle Packing Case Pty Ltd [1999] FCA 810

CORPORATIONS – winding up – review of decision of Judicial Registrar to dismiss application for winding up – where on the review, the applicant seeks an order for winding up outside the period stipulated by s 459R(1) of the Corporations Law – effect of s 459R Corporations Law is that any review of decision of Judicial Registrar must be completed within time limit set by that section.

Federal Court of Australia Act 1976 s 18AC

Corporations Law s 459R

Federal Court Rules O 74 r 4

Cross v Deniliquin Council (1995) 129 ALR 418 referred to

Re Australnet Ltd (1995) 13 ACLC 96 discussed

Western Suburbs Electrical Supplies Pty Limited v Russell Electrical Services Pty Ltd (1994) 12 ACLC 719 discussed

MERRILL LYNCH EQUITIES (AUSTRALIA) LIMITED (ACN 006 276 795) V TRIANGLE PACKING CASE PTY LTD (ACN 000 036 671)

VG 3207 OF 1998

SPENDER J

16 JUNE 1999

BRISBANE (heard in Melbourne)

THE COURT DECLARES THAT:

After 22 December 1998, the Court had no power to review the decision of Judicial Registrar Ryan on 28 October 1998 dismissing the application of Merrill Lynch Equities (Australia) Limited that Triangle Packing Case Pty Ltd be wound up.

THE COURT ORDERS

The applicant pay the respondent’s costs, to be taxed if not agreed.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     This is the hearing of a notice of motion dated 18 November 1998 filed on behalf of Merrill Lynch Equities (Australia) Limited (‘Equities’) seeking a review of a decision of Judicial Registrar Ryan made on 28 October 1998 that the application by Equities to wind up the respondent, Triangle Packing Case Pty Ltd (‘Triangle’) be dismissed and that Equities pay Triangle’s costs of and incidental to the application.

2                     The jurisdiction to review a decision of a Judicial Registrar is contained in s 18AC of the Federal Court of Australia Act 1976 and O 74 r 4 of the Federal Court Rules.  As explained by Moore J in Cross v Deniliquin Council (1995) 129 ALR 418, the review by the court of a decision of a Judicial Registrar is a hearing de novo and the parties are not bound to or limited by the evidence before the judicial registrar.

3                     Equities issued a statutory demand on 16 march 1998 in respect of a debt of $104,330.25.  A company related to Equities, Merrill Lynch Private (Australia) Limited (‘Private’) also issued a statutory demand on the same day in respect of a debt of $51,354.00.  Triangle, through its sole director, Barry James Rumpf, acknowledged service of the demand by Private but denies service of the demand by Equities.  The primary issue before the Judicial Registrar was whether he was satisfied that Triangle had been served with the statutory demand and the accompanying affidavit.  If Equities is unable to prove service, its application for winding up must fail.

4                     There was a conflict of evidence as to service before the Judicial Registrar.  Mr Rumpf swears that he was never served with the demand of Equities, the only demand being that of Private, which he found in an envelope, which did not have a postage stamp, which did not contain a covering letter and which contained only the demand and verifying affidavit of Private.  Mr Rumpf’s affidavit was sworn on behalf of Triangle on 5 August 1998.  Before the Judicial Registrar there were three affidavits by Michael John Bookman, the first sworn 20 March 1998, the day after the asserted service.  In that affidavit, Mr Bookman deposed to service of the creditor’s statutory demand by leaving it in the letter box at Triangle’s registered address.  The second affidavit in support of the application to wind up made on 9 June 1998 again referred to placing the demand and affidavit in a letter box.  Subsequent to learning from Mr Rumpf’s affidavit of Mr Rumpf’s assertion that the only document served in the manner explained by Mr Rumpf was a demand from Private, Mr Bookman, in an affidavit of 21 August, agreed that he had placed an envelope, unstamped and without a covering letter, under the door at the registered address of Triangle.  He says, however, that there were two statutory demands in the envelope, that of Private and of Equities, because he placed them in there together prior to leaving the envelope inside the security door and in front of the front door of Triangle’s registered address. 

5                     On the evidence before him, the Judicial Registrar was not satisfied that service of the demand had been effected, and dismissed the application for winding up with costs.

6                     On this application, further affidavit material has been filed by each side.  Equities has filed three further affidavits and Triangle one further affidavit pursuant to leave granted on 30 November 1998.  The position of each party remains, however, that Mr Rumpf asserts that the envelope left at his home on 19 March 1998 contained the demand by Private but not the demand by Equities.  Mr Bookman maintains the position reflected in his affidavit of 21 August 1998 that two statutory demands, that of Private and of Equities, were in the envelope which he left at Triangle’s registered address.

7                     But for what follows, I would be in the invidious position of having to make a finding as to service based only on the written affidavits, as well as a transcript of the oral evidence given before Judicial Registrar Ryan.  No deponent was cross-examined before me and no oral evidence of any kind was led from any witness.  In the light of the significant differences in the versions deposed to by each party, it would be difficult on the evidence to be satisfied on the balance of probabilities of the amended account of service given by Mr Bookman.  It is, however, unnecessary to make any positive finding concerning service because, in my view, by operation of the Corporations Law, the application for winding up is spent.

8                     Section 459R stipulates a period within which an order has to be made by the court, as a condition of the power of the court to make that order.  It provides:

“(1) An application for a company to be wound up in insolvency is to be determined within 6 months after it is made.

(2) 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), or as last extended under this subsection, as the case requires.

(3) An application is, because of this subsection, dismissed if it is not determined as required by this section.”

9                     In this case the statutory demand by Equities issued on 16 March 1998.  It is alleged by Equities that service was effected on 19 March 1998.  The application for Triangle to be wound up in insolvency was filed on 22 June 1998 and the date of the application in Form 93C to wind up a company under s 459P of the Corporations Law is dated 22 June 1998.  It follows that pursuant to s 459R(1) that application is required to have been determined within six months after it is made; that is to say, by 22 December 1998.

10                  If, as is submitted by Mr Havin, counsel for Equities, there was a determination within the six months period of the application, being the determination by the Judicial Registrar on 28 October 1998, that determination was that the application for winding up be dismissed.  What is sought by the application for review of the judicial registrar’s decision is an order that Triangle be wound up.  If the court on the review were to make that order, it would be a determination of the application of 22 June 1998 made outside the six months period requiried by s 459R(1).

11                  In my opinion, the present application seeks the winding up of Triangle outside the period stipulated in s 459R(1) and no order has been made extending that period.  To comply with s 459R(3), any review of the decision of the Judicial Registrar resulting in an order for the winding up of Triangle would have to have been completed by 22 December 1998.

12                  In Re Australnet Ltd (1995) 13 ACLC 96, a creditor applied for an order that a company be wound up.  The winding up application was not determined within six months, the period stipulated in s 459R(1) and no order was made extending that period.  McClelland CJ in Equity held that, by force of s 459R(3), the application stood dismissed.  The creditor then sought an order under s 1322(4)(d) of the Corporations Law extending the period for making an application under s 459R(2) and an order setting aside the dismissal of the winding up application.

13                  Section 1322(4)(d) relevantly provides:

“Subject to the following provisions of this section but without limiting the generality of any other provision of this Law, the Court may, on application by any interested person, make all or any of the following orders, either unconditionally or subject to such conditions as the Court imposes:

…

(d)     an order extending the period for doing any act, matter or thing or instituting or taking any proceeding under this Law or in relation to a corporation (including an order extending a period where the period concerned ended before the application for the order was made) or abridging the period for doing such an act, matter or thing or instituting or taking such a proceeding;

and may make such consequential or ancillary orders as the Court thinks fit.”

14                  It was asserted by the creditor that the court had power in s 1322(4)(d) to extend the period for the determination of a winding up application, relying on Cavetina Pty Ltd v Synthetic Dyeworks Industries Pty Ltd (1994) 12 ACLC 768, where the court had held that there was power under 1322(4)(d) to extend the period for applying to set aside a statutory demand under s 459G.  McLelland CJ in Equity held that the structure of s 459R was significantly different from that of s 459G.  Section 459R did not stipulate a period within which an application under s 459R(2) was to be made; rather it stipulated a period within which an order had to be made by the court as a condition of the power of the court to make that order.  His Honour held that s 1322(4)(d) was directed to the extension or abridgment of a period which was stipulated in the Corporations Law, and for this reason could not apply to an application under s 459R(2).  His Honour thought it arguable that s 1322(4)(d) could apply to the period within which the Court might make an order under s 459R(2).  I must say I would need some convincing that the argument had merit, having regard to the provisions of s 459R(2)(b).  The application by the creditor for an order extending the period for making an application under s 459R(2) and for an order setting aside the dismissal of the winding up application was dismissed.

15                  In the present case, there was no application by the creditor for an order for an extension of time within which the application for winding up be determined.

16                  In Western Suburbs Electrical Supplies Pty Limited v Russell Electrical Services Pty Ltd (1994) 12 ACLC 719, the applicant, Western, had on 16 September 1993 applied to wind up the respondent, Russell, on the basis of a statutory demand.  Because of a mistake in the law lists, Russell was not represented at the hearing and the Registrar on 11 February 1994 ordered it to be wound up.  On 25 February 1994 Beazley J set aside the winding up order and ordered that the winding up application be returnable in March.  The winding up application did not finally come before the court until July 1994.  On that hearing, Russell submitted that s 459R had effectively dismissed the winding up application because more than six months had elapsed since it had been made.  Western argued that the application had been finally determined within the meaning of s 459R by making of the original winding up order.  Western then applied to have the order of Beazley J setting aside the winding up order vacated under O 35 r 7(2)(c) of the Federal Court Rules.

17                  Lindgren J held that the winding up order had been dismissed by operation of s 459R, and an order vacating the setting aside orders could not now be made.  Lindgren J held that the orders of Beazley J were interlocutory, so that there was power under O 35 r 7(2)(c) to vacate them.  However, that vacation under that rule could not be exercised so as to deprive Russell of the benefit of the statutory dismissal of the winding up application which occurred on 16 March 1994.

18                  It is to be noted that there was still time subsequent to the making of the orders of Beazley J on 25 February 1994 and before the statutory dismissal on 16 March 1994 in which the application for winding up could be determined.  In the absence of such determination in that period, the statutory dismissal provided by s 459R(2) became effective on 16 March 1994.

19                  In the present case there was an order of the court dismissing the winding up application on 28 October 1998.  In my opinion, it was competent for Equities to have that decision reviewed and a winding up order made but, in my opinion, that had to have occurred before 22 December 1998.

20                  It is now not competent for the Court to make a winding up order on the application made on 22 June 1998.  The application should be dismissed with costs, to be taxed if not agreed.

Associate:

Dated:              16 June 1999