Federal Court of Australia

Asia Property AU 1 Pty Ltd v Vertical 4 Pty Ltd, in the matter of Vertical 4 Pty Ltd [2025] FCA 188

ORDERS

THE COURT ORDERS THAT:

1.    The defendant’s interlocutory application dated 18 February 2025 be dismissed as incompetent.

2.    The defendant pay the plaintiff’s costs of the application.

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

REASONS FOR JUDGMENT

O’CALLAGHAN J

1    This is an application by the defendant (Vertical 4) purportedly made under s 35A of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act) to review the “exercise of power” of a registrar of this court.

2    By originating process filed 21 November 2024, the plaintiff (Asia Property) applied to wind up Vertical 4 in insolvency pursuant to ss 459A and 459P of the Corporations Act 2001 (Cth) (Corporations Act). The application was brought on the basis that Vertical 4 failed to comply with a creditor’s statutory demand dated 25 October 2024.

3    On 23 January 2025, Vertical 4 filed an interlocutory application seeking the separate determination by a registrar of the following question: “Was the Creditor’s Statutory Demand for payment of debt dated 25 October 2024, served on [Vertical 4]?”

4    The issue of service was critical because of the operation of s 459C of the Corporations Act, which relevantly provides that a company is presumed to be insolvent if, during or after the 3 months ending on the day when the winding up application was made, it fails to comply with a statutory demand.

5    On 31 January 2025, a registrar heard Vertical 4’s interlocutory application, and also heard and determined the separate question as proposed by Vertical 4.

6    On the same day, the registrar made the following “orders”:

1.    Pursuant to s 467(3)(d) of the Corporations Act 2001 (Cth) and/or r 30.01 of the Federal Court Rules 2011 (Cth), there be a separate hearing on the following question:

“Was the Creditor’s Statutory Demand for payment of debt dated 25 October 2024, served on the defendant?”

2.    The question on the separate hearing be answered “yes”.

3.    The further hearing of the winding up application be adjourned to 2.00pm on 14 March 2024.

4.    The defendant file and serve any affidavits in support of its grounds of opposition by 4.30pm on 28 February 2025.

5.    The plaintiff file and serve any affidavits in reply by 4.30pm on 8 March 2025.

6.    Costs be reserved.

7    By an interlocutory application filed on 18 February 2025, Vertical 4 applied for the following orders:

1.    Pursuant to section 35A(5) of the Federal Court of Australia Act 1976 (Cth), the Court review the orders of Judicial Registrar Buckingham made 31 January 2025 (the Orders).

2.    Orders 2 to 6 of the Orders be set aside.

3.    A final order that the separate question the subject of order 1 of the Orders be answered “no”.

4.    A final order dismissing the proceeding.

5.    An order that the Plaintiff pay the Defendant’s costs of the proceeding.

8    Vertical 4 relied on the affidavits of Mr David May, made 22 January 2025, and Mr Stephen Dunn, made 18 February 2025. They deposed to factual matters going to the issue of service.

9    Asia Property relied principally on three affidavits of Mr Finn Jackson (the relevant process server), made 20 November 2024 and 28 and 29 January 2025.

10    I caused the parties to be told that I would decide whether to determine the application on the papers, after the filing of written submissions. Vertical 4 filed its written submissions on 28 February 2025. Asia Property filed its written submissions on 7 March 2025.

11    Having read the submissions, I formed the view that it was appropriate to determine the application on the papers.

12    Vertical 4’s registered office is at premises located at 1 Balmain Street in Cremorne, Victoria.

13    The premises comprise a three-level building, which is set back from the street by an alcove and single step. Within the alcove is a glass door to the premises and a small, metal mailbox attached to a concrete wall on the right.

14    On 25 October 2024 at approximately 4:55pm, Mr Jackson attended the premises. He was unable to enter because the door was locked and he was unable to obtain the attention of anybody inside. He then placed the statutory demand that is the subject of this proceeding and an affidavit in support in black plastic wrapping. He then affixed a sticker to the wrapped documents which read “Vertical 4 Pty Ltd (ACN 603 413 604) of 1 Balmain Street Cremorne VIC 3121” and affixed the wrapped documents to the glass door.

15    It seems that the first occasion that Vertical 4 (specifically, Mr May) became aware of the existence of the statutory demand was after the winding up proceeding (which relies on the failure to comply with the statutory demand as giving rise to a presumption of insolvency) was commenced.

16    Subsections 35A(5) and (6) of the Federal Court Act provide as follows:

(5)    A party to proceedings in which a Registrar has exercised any of the powers of the Court under subsection (1) may, within the time prescribed by the Rules of Court, or within any further time allowed in accordance with the Rules of Court, apply to the Court to review that exercise of power.

(6)    The Court may, on application under subsection (5) or of its own motion, review an exercise of power by a Registrar pursuant to this section and may make such order or orders as it thinks fit with respect to the matter with respect to which the power was exercised.

17    As Lander J explained in Deputy Commissioner of Taxation v Commercial & General Law (SA) Pty Ltd (2011) 198 FCR 417 at 430 [98]–[99]:

Section 35A(5) does not contemplate that a party may, from time to time, seek to have the Court review individual findings of fact made by a Registrar before the Registrar exercises the power given to the Registrar in s 35A(1) or pursuant to the rules under s 35A(1)(h).

The power which is given to the Court in s 35A(5) and (6) is to review the exercise of the power, which means the order made by the Registrar under that power. If it were otherwise a party could, without asking the Registrar to cease hearing the application, ask the Court to review every individual finding of fact as and when the Registrar made those findings of fact.

18    When Registrar Buckingham ordered that there be a separate hearing on the question whether Asia Property’s statutory demand for payment of debt was served on Vertical 4 and “ordered” that the question be answered “yes”, he made a finding of fact, and no more than that. As Lander J explained in the passages set out above, the jurisdiction to review a decision of a registrar does not extend to reviewing such findings of fact. The power conferred by s 35A(6) is to review the exercise of the power, and it is not permissible to review individual findings of fact which may be made in advance of the exercise of power (here, to decide whether or not to make a winding up order).

19    It follows that the interlocutory application before me is incompetent, because the registrar has not yet exercised any power.

20    The application will be dismissed, and Vertical 4 will be ordered to pay Asia Property’s costs of the application.

21    The registrar should continue to hear the application for winding up listed before him on Friday, 14 March 2025.

Associate:

Dated:    12 March 2025