Federal Court of Australia

Terra Mining Pty Ltd v Paulsens East Iron Ore Pty Ltd [2026] FCA 1092

ORDERS

THE COURT ORDERS THAT:

1.    The defendant's interlocutory process dated 12 May 2025 is dismissed.

2.    The defendant is to pay the plaintiff's costs of the interlocutory process, to be taxed if not agreed.

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

REASONS FOR JUDGMENT

VANDONGEN J:

1    By an originating process the plaintiff, Terra Mining Pty Ltd (Terra Mining) applied under s 459P of the Corporations Act 2001 (Cth) for an order for the winding up of the defendant, Paulsens East Iron Ore Pty Ltd (Paulsens), on the ground of insolvency (Winding Up Application). The Winding Up Application was dismissed by a Registrar of this Court in the exercise of a delegated power to make orders in relation to winding up applications: s 35A(1)(h) of the Federal Court of Australia Act 1976 (Cth) (FCA Act) and r 16.1(1)(a), read with item 62 in Pt 1 of Sch 2 of the Federal Court (Corporations) Rules 2000 (Cth) (Corporations Rules).

2    Terra Mining applied under s 35A(5) of the FCA Act and r 3.11 of the Federal Court Rules 2011 (Cth) (Rules) for a review of the Registrar's decision (Review Application). By the Review Application, Terra Mining relevantly seeks an order that the Registrar's order dismissing the Winding Up Application be set aside and that it be substituted with an order that Paulsens be wound up in insolvency under s 459P of the Corporations Act. Notwithstanding the reference to s 459P, I take it that this order is in fact sought under s 459A, on an application under s 459P of the Corporations Act.

3    However, before the Review Application could be heard, Paulsens filed an interlocutory process in which it sought an order under s 31A of the FCA Act and r 26.01 of the Rules that the application be summarily dismissed. However, given that Terra Mining had a statutory right conferred by s 35A(5) of the FCA Act to review the Registrar's decision to dismiss the Winding Up Application that was based on a 'constitutional imperative' (see, Tran v Pu [2015] FCA 97; (2015) 228 FCR 562 at [19]; and Zdrilic v Hickie [2016] FCAFC 101; (2016) 246 FCR 532 at [16]), it is difficult to see how the Review Application could be summarily dismissed.

4    Nevertheless, Paulsens ultimately contended that the Review Application should be dismissed on the sole basis that it has no utility. According to Paulsens, the Review Application has no utility because it is hopeless or foredoomed to fail because the Court does not have the power to determine the Winding Up Application in circumstances where, as here, the period allowed for by s 459R of the Corporations Act to determine such applications has now passed. I have determined Paulsens' interlocutory process on that basis.

5    On 4 August 2026, I dismissed Paulsens' interlocutory process and ordered that Paulsens pay Terra Mining's costs, to be taxed if not agreed. These are my reasons for making those orders.

Why Paulsens' interlocutory process was dismissed

6    Section 459R of the Corporations Act is in the following terms:

(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.

(4)    An order under subsection (2) may be made subject to conditions.

7    There is no dispute that when the Registrar dismissed the Winding Up Application, she did so within the time allowed for by s 459R(1), as extended by an order that was made under s 459R(2). However, the Review Application was filed out of time. It is on that basis that Paulsens argued that, by operation of s 459R, this Court does not have the power to 'determine' the Winding Up Application on a review conducted under s 35A(5) of the FCA Act of the Registrar's decision to dismiss that application.

8    In support of its argument, Paulsens relies on the decision of Spender J in Merrill Lynch Equities (Australia) Ltd v Triangle Packing Case Pty Ltd [1999] FCA 810. In that case, his Honour dismissed a notice of motion seeking a review under the now repealed s 18AC of the FCA Act of a decision of a registrar that a winding up application be dismissed. By operation of s 459R of the Corporations Law (which was in relevantly identical terms to s 459R of the Corporations Act) the winding up application was required to have been determined by 22 December 1998. However, his Honour found that if after that date the Court on a review of the registrar's decision were to make an order that the respondent be wound up then 'it would be a determination of the application … made outside the six months period required by s 459R(1)': Merrill Lynch Equities at [10]. Accordingly, his Honour concluded that it was not competent for the Court to make the winding up order on review of the registrar's decision and dismissed the notice of motion.

9    Terra Mining submits that Merrill Lynch Equities was wrongly decided and that it is inconsistent with more recent decisions of this Court and with decisions of intermediate courts of appeal of other courts. In that regard, Terra Mining refers to Cottrell v Nicholls (Trustee) in the matter of Cottrell (Bankrupt) [2004] FCA 102; Totev v Sfar [2008] FCAFC 35; (2008) 167 FCR 193; Deputy Commissioner of Taxation v Revolve Limited [2012] FCA 555; Owen-Pearse v Lander Land Company Pty Ltd [2018] FCA 2077; Barboutis v The Kart Centre Pty Ltd [2019] WASCA 184; Bechara v Bates [2021] FCAFC 34; (2021) 286 FCR 166; and Low v Joondalup Golf Management (Aust) Pty Ltd [2023] WASCA 33.

10    It is unnecessary to traverse most of those authorities in any detail. However, it is convenient to commence by saying something about Owen-Pearse.

11    In Owen-Pearse the plaintiff sought a review of a decision made by a registrar to refuse a winding up application made under s 459P of the Corporations Act. The application for a review raised issues about:

(1)    whether an extension of time should be granted to bring the application;

(2)    whether it was an abuse of process;

(3)    whether the defendant was able to prove solvency; and

(4)    whether the six month time limit in s 459R(1) of the Corporations Act operated so as to render any review futile.

12    At [80] of her Honour's reasons in Owen-Pearse, Banks-Smith J found that the winding up application on a review had no or no sufficient prospect of success to justify an extension of time because the application would be dismissed as an abuse of process as it had been pursued for an improper purpose. Her Honour also concluded that the company's submission that it was solvent would be accepted on a review.

13    Her Honour also considered whether the application for review was futile in the sense that the only possible outcome was that it would be dismissed because it had been commenced outside the time allowed in s 459R(1). After discussing various authorities, including many of those relied upon by Terra Mining, and noting that Merrill Lynch Equities was relevantly indistinguishable on the facts, her Honour made the following three points about Merrill Lynch Equities at [125] to [128]:

First, where a winding up application has been granted (as against dismissed) during the six month period and the Court on a review comes to the view that the application ought to be dismissed, it dismisses the application for review or affirms the initial decision of the registrar (see Cottrell v Nicholls (Trustee) in the matter of Cottrell (Bankrupt) [2004] FCA 102 at [16] (Allsop J)). The Court does not make an additional winding up order. The Court has held that in such a case, no issue arises despite a review being conducted outside the six month period. No issue arises as to possible non‑compliance with s 459R(1): Deputy Commissioner of Taxation v Revolve Limited at [23]‑[24].

Second, it follows that an application of Merrill Lynch Equities may lead to a different result in circumstances where the registrar, exercising delegated power, declines to make a winding up order but such order is then sought on a review outside the six month period. It would be odd if the right to review is circumscribed by the result, such that an order affirming the registrar's decision or dismissing the application would not give rise to non-compliance with s 459R, but an order allowing the review and making a winding up order may be barred.

Third, whilst acknowledging there are differences in the wording of the respective provisions, in the bankruptcy context an argument similar to that relied upon by Spender J in Merrill Lynch Equities was rejected by the majority in Totev v Sfar [2008] FCAFC 35; (2008) 167 FCR 193.

(original emphasis)

14    In Totev v Sfar, to which Banks-Smith J referred, the Full Court was required to consider the effect of subss (4) and (5) of s 52 of the Bankruptcy Act 1966 (Cth), which provided that:

(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.

15    At [54] to [62] in Totev v Sfar, Bennett J (with whom Cowdroy J agreed) said:

Justice Emmett [who was in the minority], at [48], identified a problem arising from the fact that no order extending the currency of the petition under s 52(5) of the Bankruptcy Act had been made prior to the period of 12 months from the presentation of the petition. On his Honour's view, by reason of s 52(4), the petition had lapsed.

There are two opposite approaches which might be taken to the resulting problem.

The first is to start with s 52(4) of the Bankruptcy Act which provides:

'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.'

(Emphasis added.)

On this approach, a sequestration order was made before the expiration of the relevant period. The subsection is therefore no bar to the application of the law at the hearing de novo which may proceed to the making of a fresh sequestration order.

The second approach is to start, as did Emmett J, with r 20.03 of the Federal Magistrates Court Rules 2001 (Cth) ('the Federal Magistrates Court Rules') which provides that the review of an exercise of power by a registrar must proceed by way of a hearing de novo. As the hearing is de novo, it must proceed on the basis that no sequestration order has been made. As Emmett J pointed out at [48], the result is that the petition is 'stale'. It lapsed as more than 12 months had expired since the presentation of the petition.

The question is which of these approaches is correct.

It is apparent that the second approach gives rise to an anomaly. It is unlikely that the Legislature or the rule-making authority intended the result that an appeal from the correct making of a valid sequestration order within time would necessarily have to result in a decision to make no sequestration order, merely because the time between hearing and appeal was such as to render the appellate hearing more than 12 months after the date of the petition. The anomaly is well illustrated by the facts of this case.

One way of reading the provisions to avoid the anomaly is to read r 20.03 of the Federal Magistrates Court Rules as meaning that one proceeds as if no sequestration order had been made for all purposes except the application of s 52(4) of the Bankruptcy Act. The distinction between a de novo hearing and other forms of appeal concerns evidence and the relevance of the correctness of the order below. It is not concerned with time limits. Bearing in mind the possibility of reading the two provisions together in this manner and bearing in mind the anomalous result produced by the other construction, it appears to me that the first approach is to be preferred.

It follows that a sequestration order can be made on the de novo hearing of an appeal from a sequestration order notwithstanding that more than 24 months have elapsed since the filing of the petition.

(original emphasis)

16    In Owen-Pearse Banks-Smith J said that an argument about the construction of s 459R(1) by analogy with the majority view in Totev v Sfar would have substance. In that regard, her Honour said at [133] that it would protect the right of review under r 16.1 of the Corporations Rules and the 'constitutional imperative' that the exercise of delegated powers by a registrar be subject to review by a judge of the Court by way of hearing de novo, citing HVAC Constructions (Qld) Pty Ltd v Energy Equipment Engineering Pty Ltd [2002] FCA 1638 at [40] to [41]; and Van Gorp v Davy [2016] FCA 1385. However, her Honour ultimately concluded that the question of whether Merrill Lynch Equities should be followed in the context of a review from a registrar's decision did not need to be determined in the circumstances of the particular case with which she was concerned.

17    The observations made by Banks-Smith J in Owen-Pearse about the correctness of Merrill Lynch Equities were later noted by the Court of Appeal of the Supreme Court of Western Australian in Barboutis at [26]. However, the Court of Appeal also concluded that it was not necessary to determine the correctness of Merrill Lynch Equities because it was found to be distinguishable.

18    I note, for completeness, that in Bechara v Bates at [153] the Full Court approved the reasoning of Bennett J in Totev v Sfar, with which Cowdroy J relevantly agreed, to which I have referred at [15] of these reasons.

19    With the greatest of respect, I would not follow Merrill Lynch Equities. To explain why I have reached that conclusion it is necessary to refer only to what was said in Bechara v Bates about the general principles concerning the delegation of judicial power.

20    The background facts in Bechara v Bates are set out in Bechara v Bates (No 2) [2020] FCA 659. For present purposes it is only necessary to appreciate that the case concerned the effect some fundamental principles, identified by the Full Court, had on a sequestration order made by a registrar of the then Federal Circuit Court, in circumstances in which there had been a very lengthy delay while a review of the order by a judge of that court was sought. The decision of Bechara v Bates was concerned with the nature of a review under the now repealed Federal Circuit Court Act 1999 (Cth) by a judge of the Federal Circuit Court of orders made by registrars of that Court. However, the Full Court made it clear that its observations about the nature of such a review applied with equal force to reviews conducted under s 35A of the FCA Act.

21    Before dealing with the particular facts of the case that was before it in Bechara v Bates, at [1] to [7] of its reasons the Full Court made the following important observations concerning the operation of judicial power:

When it comes to federal judicial power in Australia, certain matters are fundamental. The judicial power of the Commonwealth may only be exercised by judges of federal courts or other courts exercising federal jurisdiction and membership of a federal court is confined to judges appointed in accordance with s 72 of the Constitution. However, federal judicial power may be delegated to registrars if the power exercised by them is subject to review or appeal by a judge or judges of the court: Harris v Caladine [1991] HCA 9; 172 CLR 84 at 94-95 (Mason CJ and Deane J), 123, 126 (Dawson J), 150-151 (Gaudron J) and 164 (McHugh J) (noting the dissenting views to the effect that federal judicial power invested in a federal court cannot be exercised by a registrar, at 109 (Brennan J) and 141 (Toohey J)). The opportunity for a review by way of hearing de novo is sufficient to satisfy this requirement: Harris v Caladine 172 CLR at 95, 123 and 164.

It is now an accepted incident of judicial power that it may be exercised in this way, namely by an order being made pursuant to a delegation, but only if the order may be reversed or otherwise corrected by a judge on review. In such cases, however, it is important to recognise that the review (or by de novo 'appeal') is not concerned with correcting error and in that respect is to be differentiated from the statutory rights of appeal that have gradually become an established part of the judicial system. Nor is it a review de novo as a further stage in a tiered process. Rather, the review is an attribute of a recognised mechanism by which the exercise of judicial power may be delegated to an officer of the Court who is not a judge, such as a registrar. The right to seek review attaches to the delegation and is an attribute of the nature of the delegated authority.

So, if a registrar exercises delegated judicial power within a formal structure that enables review by the Court, the order of the registrar takes effect as an exercise of judicial power by the judges of the Court, but the exercise of that delegated power depends for its validity upon the availability of review by the judges of the Court. The exercise of the delegated power is not deferred until there has been a review or confirmation of the order by a judge. Nor does the exercise of delegated judicial power operate in some provisional manner pending a review. Rather, the registrar's order takes effect as an order of the judges of the Court but on the basis that a judge may be asked to make an order in place of the exercise of delegated authority.

Then, if the review process is validly invoked in respect of an order made by a registrar, there is the possibility that by subsequent decision of a judge of the Court a different order will be made in place of the existing order. In effect, the delegated exercise of power is undone or revoked and a decision by a judge is made in its place.

In consequence, where an application is brought to review the exercise of a delegated judicial power it is often emphasised that the review by the judge should be undertaken promptly. The nature of the delegation produces the potential that parties may act on the basis of the delegated exercise of judicial power only to have the decision reversed when the process of judicial oversight that is reserved as part of the delegation is invoked successfully.

If there is a concern about steps being taken by parties based upon the order that has been made in the exercise of delegated power then interim relief could be sought pending the outcome of the review. However, the nature of the review means that matters can be addressed when the decision is made on review because inherent in the nature of the delegation is a reservation by the Court of an ability to revisit the order by way of review and make whatever order may have been made by the officer in the exercise of the power of delegation. There are limits upon the extent to which such delegations (themselves being an exercise of judicial power) can be the subject of control by Parliament. Nevertheless, it is well established that laws can be made by which a power to delegate of the kind just described may be recognised.

If an order is made by a registrar in the exercise of delegated judicial power and there is a review that results in a different conclusion by a judge to that reached by the registrar then an order is required to bring the operation of the existing order to an end. The Court, on review, does not determine that the earlier order was made without authority. Rather, by way of oversight, it makes a new order to replace the registrar's order and does so in the exercise of the power of review which is a condition of the delegation. The fact that the nature of the review conducted by the Court is a de novo review does not mean that the review proceeds as if no order had been made by the registrar or that the Court, if persuaded to make a different decision, makes orders as if there had been no order by the registrar.

(emphasis added)

22    Drawing on that authoritative statement it appears to me that the principles that are most relevant in the circumstances of this case may be summarised as follows:

(1)    The judicial power of this Court may only be exercised by its judges. However, that power may be delegated to the Court's registrars if the power exercised by those registrars is subject to de novo review or appeal by a judge or judges of the Court.

(2)    If a registrar makes an order in the exercise of delegated judicial power, in circumstances in which it is subject to review by the Court, that order takes effect as an exercise of judicial power by the judges of the Court. Accordingly, the order is not deferred until there has been a review by a judge and the exercise of delegated judicial power does not operate in some provisional manner pending a review.

(3)    A de novo review by a judge is not concerned with correcting error and is not to be regarded as a further stage in a tiered process. Instead, the right to seek a review attaches to the delegation of federal power to the registrars and is an attribute of the nature of the delegated authority. This means that if a registrar of this Court makes an order in the exercise of delegated judicial power the order takes effect as an exercise of judicial power by the judges of the Court, but the exercise of that delegated power depends for its validity upon the availability of review by the judges and on the basis that a judge may be asked to make an order in its place.

(4)    If the review process is validly invoked in respect of an order made by a registrar, there is the possibility that a judge of this Court may make a different order in place of the order that was made by the registrar. Where that occurs the delegated exercise of power is 'revisited', 'reversed', 'undone' or 'revoked', and a decision by a judge is 'made in its place', an order is made that 'may have been made by the [registrar] in the exercise of the power of delegation', or a 'new order [is made] to replace the registrar's order'.

23    With those principles in mind, it is necessary to observe that the Review Application was made under s 35A(5) of the FCA Act, which is in the following terms:

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.

24    The Court's power to review the exercise by a registrar of the power to dismiss the Winding Up Application is conferred by s 35A(6), which provides as follows:

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.

25    Subsections (5) and (6) of s 35A are concerned with a review by the Court of the exercise by a registrar of a power delegated under s 35A(1) of the FCA Act. In this case, there is no issue that the power to make orders in relation to winding up applications under s 459P(1) of the Corporations Act was delegated to the Registrar under s 35A(1)(h) of the FCA Act, read with r 16.1 and item 62 in Pt 1 of Sch 2 of the Corporations Rules. However, the availability of the power in s 459A to make an order that a company be wound up in insolvency on an application made under s 459P may depend on the operation of s 459R. That is because an application for a company to be wound up in insolvency must, by force of subss (1) and (2) of s 459R, be 'determined' within six months, or within such other extended period as may be the subject of an order of a court, after the application is made. If an application is not 'determined' within the time allowed for in s 459R(1), or within any extended period ordered under s 459R(2), it will be taken to be dismissed: s 459R(3).

26    In this case the Registrar 'determined' the Winding Up Application when she ordered that it be dismissed. There is no question that this determination occurred within the period allowed for in an order the Registrar made on an earlier occasion under s 459R(2), extending the time prescribed by s 459R(1). That is because, as the above principles establish, the Registrar's order took immediate effect when it was made as an order of the judges of the Court.

27    However, the validity of that order depended upon the availability under s 35A(6) of the FCA Act of a review by a judge of the exercise of the Registrar's delegated power. Further, the Registrar's order was made on the basis that a judge conducting a review under s 35A(6) of the FCA Act might make a 'determination' in place of the Registrar's exercise of delegated authority. In that sense, because a review by a judge of an exercise of delegated judicial power is an attribute of the nature of such delegated power, a judge dealing with the Review Application may, by way of oversight, undo or revoke the Registrar's delegated exercise of power and make a different order in its place. As the Full Court said in Bechara v Bates at [7], in the passage to which I have already referred to above:

If an order is made by a registrar in the exercise of delegated judicial power and there is a review that results in a different conclusion by a judge to that reached by the registrar then an order is required to bring the operation of the existing order to an end. The Court, on review, does not determine that the earlier order was made without authority. Rather, by way of oversight, it makes a new order to replace the registrar's order and does so in the exercise of the power of review which is a condition of the delegation.

(emphasis added)

28    When the nature of a review is understood in this way then, contrary to what was said in Merrill Lynch Equities at [10], if the Court on the Review Application were to make the order sought by Terra Mining, namely an order under s 459A that Paulsens be wound up in insolvency, that would not amount to a further or different 'determination' of the Winding Up Application made outside the period allowed for by s 459R(1), as extended under s 459R(2). If, after hearing the Review Application on a de novo basis, the Court were to make a different decision to the one reached by the Registrar then, by way of oversight, the Court may make a new order in the exercise of its powers of review under s 35A(6) of the FCA Act which will then replace the Registrar's determination of the Winding Up Application that was made within the time allowed for by s 459R.

29    For these reasons I ordered that Paulsens' interlocutory process in which it sought summary dismissal of the Review Application be dismissed, with costs.

Associate:

Dated:    7 August 2026