FEDERAL COURT OF AUSTRALIA

Workers Compensation Nominal Insurer v Lime Gourmet Pizza Bar (Darby Street) Pty Ltd [2014] FCA 43

THE COURT DECLARES THAT:

1.    Without prejudice to the entitlement of the defendant to seek to set aside the winding up order made on 13 December 2013 on the remaining grounds set out in the application filed on 31 December 2013 (as amended), the order of the Court made on 13 December 2013 was valid in accordance with its terms.

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

REASONS FOR JUDGMENT

Introduction

1    A preliminary issue has been raised in an application by Lime Gourmet Pizza Bar (Darby Street) Pty Ltd (the company) to set aside a winding up order made by a Registrar of the Court on 13 December 2013.

2    The issue raised by the company addresses the circumstances in which the Registrar made an earlier order under s 459R(2) of the Corporations Act 2001 (Cth) (the Act) extending the six month period within which the application brought by the creditor to wind up the company could be determined.

3    The winding up application was filed on 16 May 2013. The effect of s 459R(2) and (3) of the Act is that the application lapsed, and was required to be dismissed, unless it was determined by 16 November 2013, or, prior to that date, the Court exercise its power to extend the period within which the application may be determined.

4    On 15 November 2013, the day before the winding up application would have lapsed, the Registrar made an order under s 459R(2) of the Act extending the time for determination of the application until 22 February 2014.

5    That order was made by the Registrar in the absence of the company, on an interlocutory process filed on 15 November 2013, that is to say, on the same date as the order was made. It is common ground that the interlocutory process was not served on the company. Nor did the Registrar make an order dispensing with service of the interlocutory process or the affidavit filed in support of it.

6    The company relies on Part 17 of the Federal Court Rules 2011 (the Rules), and in particular r 17.04, in support of its submission that, in the circumstances described above, the Registrar did not have power to make the order on 15 November 2013 extending the time for determination of the winding up application. It follows, according to the company’s submission, that the winding up application lapsed on 16 November 2013 and the Registrar had no power to make the winding up order on 13 December 2013.

7    The company also relies upon an earlier order, made on 17 July 2013 by a different Registrar, referring the proceeding to a Judge of the Court for determination in accordance with s 35A(7) of the Federal Court of Australia Act 1976 (Cth).

8    The effect of the company’s submission on this issue is that, the referral to the Court having been made, the Registrar did not have power to make the winding up order.

9    Both of the submissions made by the company turn on the same question, namely the effect of an order made without power. That is to say, if the orders were made, whether in the absence of power or without jurisdiction, did they render the winding up order null and void.

Background facts

10    As I have said, the Originating Process was filed on 16 May 2013. It sought an order that the company be wound up on the ground of insolvency under s 459P of the Act.

11    The Originating Process was listed before a Registrar on 14 June 2013 when it was adjourned until 28 June 2013. On 28 June 2013 District Registrar Wall granted leave to amend the Originating Process and the matter was stood over to 17 July 2013. On that date Registrar Wall made the order to which I have referred above under s 35A(7) of the Federal Court of Australia Act.

12    The matter came before me on 15 August 2013. On that occasion I pointed out to the parties that the amount of the debt on which the winding up application was based was very low. The debt arose from an apparent failure on the part of the company to pay premiums due for workers’ compensation insurance. The amount of the unpaid premiums was said to be $7,405.99.

13    As a result of discussions that took place between the parties outside Court on 15 August 2013, it was anticipated that the company would provide wage declarations to the creditor. I was told that when that was done it was likely that the application would not proceed. I stood the matter over to 19 September 2013 to enable the necessary steps to take place.

14    On 19 September 2013 I was informed by the parties that further time was needed and I stood the matter over to 3 October 2013.

15    The matter was before Farrell J on 3 October 2013. The plaintiff was represented by its solicitor but there was no appearance for the company. The report of listing for that date records that her Honour directed that the matter be stood over to the Registrar’s list on 18 October 2013 “for resolution of costs issue”.

16    Both parties attended before Registrar Hannigan on 18 October 2013. The Registrar made an order by consent adjourning the matter to 22 November 2013.

17    The date to which the matter was adjourned was six days after the winding up application would have lapsed under s 459R(3) of the Act. However, it seems clear to me that neither party realised that the effect of the adjournment was that, in the absence of an application to extend the six month period under s 459R(2) on or prior to 16 November 2013, the winding up application would have lapsed when the matter was due to come before the Court on 22 November 2013.

18    However, in the meantime, as I have said, the plaintiff filed the interlocutory process and a supporting affidavit on 15 November 2013 and the order extending the relevant period was made on that date. Order 3 of the orders of 15 November 2013 provided that “Plaintiff to notify the parties not appearing today of the details of these orders”.

19    The matter was listed before Registrar Tesoriero on 22 November 2013. The company did not appear on that date but the matter was adjourned by the Registrar until 13 December 2013.

20    As I have said, on 13 December 2013 Registrar Hannigan ordered that the company be wound up, and that Mr Andrew Barnden be appointed as liquidator.

21    On 31 December 2013 the company filed an interlocutory application seeking an order that the winding up order made in its absence be set aside under r 39.05 of the Federal Court Rules. I gave leave to the company to file an amended application in Court on 6 February 2013. The amended application does not alter the substance of the relief sought.

Consideration

22    It is well-established that the power to extend the period within which an application for a company to be wound up in insolvency cannot be exercised after the expiration of the six month period prescribed by s 459R(1) (or the date of the last extension). Thus, if the power is not exercised within that period, a defendant is entitled to the benefit of a statutory dismissal under s 459R(3): Western Suburbs Electrical Supplies Pty Ltd v Russell Electrical Services Pty Ltd (1994) 14 ACSR 337 at 342 (Lindgren J).

23    The authorities which address the power of the Court to invoke the slip rule after the expiration of the statutory period are not in issue in the present case: DDB Needham Sydney Pty Ltd v Elyard Corporation Pty Ltd (1995) 131 ALR 213; affirmed on appeal in Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385; see also Flint v Richard Busuttil & Co Pty Limited [2013] FCAFC 131.

24    Here, the essential issue turns, as I have said above, on the status of the Registrar’s order of 15 November 2013 extending the statutory period prior to its expiration.

25    I accept that the interlocutory application and the affidavit on which the application was based were required to be served on the company. That is clear from r 17.01(2) which provides that the party filing an interlocutory application must serve it, and any accompanying affidavit, on any other party at least three days before the date fixed for the hearing.

26    I also accept that, on its face r 17.04 was not complied with. That rule provides that an interlocutory application may be heard and determined in the absence of a party if service is not required, or if service has been effected but the party does not appear, or the Court has dispensed with service.

27    However, I do not accept that the order made by the Registrar on 15 November 2013 was not effective in accordance with the Rules. There are two principal reasons for this.

28    The first is that it seems to me that it is to be inferred that in the circumstances which arose before the Registrar on 15 November 2013, she proceeded upon the basis that service was to be dispensed with.

29    It is true that there is no record of what actually took place when the Registrar made the order. But the Registrar is well experienced in dealing with matters under the Act and I would assume that she had access to the Court file when the order was made. The file records the date when the Originating Process was filed and it must have been apparent to the Registrar that the winding up application would have lapsed on the following day (or on one view, on 15 November).

30    It must therefore have been plain to the Registrar that unless the order was made immediately, an automatic dismissal of the application would come about by reason of the provisions of s 459R(3). Plainly, there was no time to permit service of the interlocutory application on the company and the Registrar must be taken to have dispensed with service.

31    Order 3 of the orders of 15 November supports the view that the Registrar had effectively dispensed with service. It is difficult to see otherwise why she would have ordered the plaintiff to notify the company of the details of the order.

32    The second reason is that under r 1.34 the Court may dispense with compliance with the Rules. Moreover, under rule 1.35, the Court may make an order that is inconsistent with the Rules and in that event the order will prevail. This seems to me to be a complete answer to the company’s submissions.

33    The company’s submission that the order was made in chambers is answered by r 1.36 which provides that the Court may make orders other than in open court.

34    It seems to me to be clear that the Registrar was satisfied by reason of para 11 of the affidavit in support of the interlocutory process that she ought to make the order under s 459R(2). That paragraph stated that the company had filed motions in the District Court seeking to set aside the default judgments on which the plaintiff relied to support the statutory demand and the winding up order. The affidavit stated that the motions were currently adjourned until 22 November 2013.

35    But even if the Registrar did not have power to make the order under s 459R(2) because of non-compliance with the Rules, it does not follow that the order was not effective to permit the Registrar to exercise the delegated jurisdiction of the Court to make the winding up order on 13 December 2013.

36    The reason for this is that even if orders of the Court are made without jurisdiction they are voidable, not void. The orders therefore remain valid until set aside: Robins v Incentive Dynamics Pty Ltd (1999) 91 FCR 423 at [25] (Branson, Sackville and Kiefel JJ).

37    The same principle applies where a Registrar purports to exercise the Court’s original jurisdiction, subject to review by the Court, and the order purports to be one of the Court: Official Trustee in Bankruptcy v Nedlands Pty Ltd (2000) 99 FCR 554 at [24] (Finn J); affirmed on appeal, see Chisholm v Official Trustee in Bankruptcy [2000] FCA 1234 (Moore, Kiefel and Mansfield JJ).

38    In addition, this principle applies to the submission made on behalf of the company that the winding up order was made by the Registrar without power on 13 December 2013, the matter having been previously referred to a Judge of the Court under s 35A(7).

Conclusion

39    It follows that the preliminary issue raised by the company must be determined adversely to it. The order I will make is that, without prejudice to the entitlement of the defendant to seek to set aside the winding up order made on 13 December 2013 on the remaining grounds set out in the application filed on 31 December 2013 (as amended), the order of the Court made on 13 December 2013 was valid in accordance with its terms.

40    I will determine at the next directions hearing the course which is to be followed in relation to the balance of the present application.

Associate:

Dated:    10 February 2014