Cory v Registrar of the Federal Court of Australia

GENERAL DIVISION NSD 1446 of 2010

AND: REGISTRAR OF THE FEDERAL COURT OF AUSTRALIA

REASONS FOR JUDGMENT 1 This is an application brought pursuant to s 39B(1A) of the Judiciary Act 1903 (Cth) in which the applicant, who is a shareholder of a company, Heron Developments (in liquidation) Pty Ltd (the second respondent), seeks prerogative writs against orders made by a Registrar of the Court on 8 October 2010. The applicant seeks specifically a writ of certiorari to quash the Registrar's decision to make a winding up order in respect of the second respondent and a writ of prohibition in respect of that order. Alternatively, the applicant seeks a declaration to the effect that the orders made by the Registrar on 8 October 2010 were made without jurisdiction or were otherwise materially affected by error, and should be set aside. 2 The relevant statutory provisions which form the foundation for this application are as follows. First, s 35A(1) of the Federal Court of Australia Act 1976 (Cth) provides that certain powers of the Court may be exercised by a Registrar, including "a power of the Court prescribed by Rules of Court". Under s 35A(5) a party to a proceeding in which a Registrar has exercised any of the powers under s 35A(1) may, within the prescribed time or such further time as allowed, apply to the court to review that exercise of power. Under s 35A(7), where an application for an exercise of a power referred to in ss (1) is being heard by a Registrar, and either the Registrar considers that it is not appropriate for the application to be determined by the Registrar or an application is made to the Registrar to arrange for the application to be determined by the court, the Registrar shall not hear or continue to hear the application and shall instead make appropriate arrangements for the application to be heard by the Court. 3 Rule 16.1(1) of the Federal Court (Corporations) Rules 2000 (Cth) states that: For the purposes of paragraph 35A(1)(h) of the Federal Court of Australia Act 1976, if the Court or a Judge so directs, a Registrar may exercise a power of the Court: (a) under a provision of the Corporations Act mentioned in column 2, or a provision of these Rules mentioned in column 3, of an item in Part 1 of Schedule 2… 4 Further, r 16.1(2) specifies that a "decision, direction or act of a Registrar made, given or done under these rules may be reviewed by the Court or a Judge". 5 Schedule 2 to the Federal Court (Corporations) Rules contains a table. That table in Part 1 identifies a series of 114 items. Column 2 specifies the provision of the Corporations Act 2001 (Cth). Column 3 specifies the relevant Rule, and column 4 provides a description (for information only). 6 Insofar as relevant, item 24 in that table refers to s 440D of the Corporations Act and item 48 refers to ss 459A, 459B and 467 of the Corporations Act. Section 440A of the Corporations Act is not enumerated in this table. 7 Section 440A(2) of the Corporations Act is as follows: The Court is to adjourn the hearing of an application for an order to wind up a company if the company is under administration and the Court is satisfied that it is in the interests of the company's creditors for the company to continue under administration rather than be wound up. 8 Section 440D(1) is as follows: During the administration of a company, a proceeding in a court against the company or in relation to any of its property cannot be begun or proceeded with, except: …. (b) with the leave of the Court and in accordance with such terms (if any) as the Court imposes. 9 Section 459A of the Corporations Act provides that on an application under s 459P, that is, an application for a company to be wound up in insolvency, "the Court may order that an insolvent company be wound up in insolvency". Section 467 of the Corporations Act is also relevant. It provides that, on hearing a winding up application, the court may, amongst other things "adjourn the hearing conditionally or unconditionally". 10 The application to wind up the second respondent first came before a Registrar of the Court on 17 September 2010. At that time, the application was adjourned to await the outcome of the administrator's report to creditors. The matter came before a Registrar of the Court again on 8 October 2010. At that time, Mr Hyde Page of counsel submitted that the application should be adjourned under s 440A of the Corporations Act. The Registrar declined to adjourn the winding up application and made orders winding up the second respondent. 11 I note that the applicant, Mr Corey, was not a party to the proceeding, and accordingly, would have no right of review in accordance with s 35A(5) of the Federal Court Act. The relevant parties to the proceedings before the Registrar on 8 October 2010 were the second respondent, Heron Developments (in liquidation) Pty Ltd, and the third respondent, the Deputy Commissioner of Taxation. Instead, Mr Corey makes this application for judicial review under s 39B(1A) of the Judiciary Act. 12 There are essentially four grounds upon which this application is brought. First, it is said that the Registrar is not able to validly determine an application under s 440A(2) of the Corporations Act. Second, it is said that as the Registrar did not give leave under s 440D of the Corporations Act for the matter to proceed, and therefore a necessary precondition to a valid exercise of power under s 459A of the Corporations Act was not satisfied. Third, it is said that these defaults in respect of ss 440A and 440D of the Corporations Act meant that there was a breach of natural justice so that the winding up order should be set aside. Fourth, it is said that the Registrar's determination of the application under s 440A(2) was legally erroneous, either because the Registrar took an irrelevant consideration into account or because on a proper application of the s 440A(2) criterion to the primary facts the adjournment was required to have been granted. 13 The application, however, faces a number of hurdles. Leaving aside the question whether Mr Cory, as a one-time director and current shareholder of the second respondent, has sufficient standing to bring this application, there is a fundamental difficulty insofar as the application seeks prerogative writs in the form of certiorari and prohibition against a Registrar of the Court. As Mr Vorreiter submitted on behalf of the Deputy Commission of Taxation, the order the Registrar made under the authority of s 35A of the Federal Court Act involved an exercise of the authority of a judge of the Court. There are a number of decisions which make clear that judicial review does not lie from one judge to another. In Bird v Free (1994) 126 ALR 475, Drummond J said (at 478): In my view a judge of the Federal Court has no jurisdiction to issue a writ of prohibition or an injunction against another judge of the court acting as such. 14 In Official Trustee in Bankruptcy v Nedlands Pty Ltd (in liq) (2000) 173 ALR 255; [2000] FCA 599, Finn J expressly dealt with the position of a Registrar of the Court (at [26]-[27]): [26] Distinctly, the applicant has submitted that if the order is merely voidable, it nonetheless can still be quashed by an order for certiorari. Though the applicant seeks to differentiate between a judge of the court acting as such (against whom the court does not have jurisdiction under s 39B of the Judiciary Act 1903 (Cth) to issue a writ of prohibition - hence certiorari - or an injunction: Bird v Free (1994) 126 ALR 475), and a Registrar for the purpose of identifying an individual against whom (as an "officer of the Commonwealth": see Judiciary Act 1903, s 39B(1)) a prerogative writ might be granted, the order sought to be quashed remains nonetheless an order of the court itself made in the exercise of the original jurisdiction of the court. [27] A Registrar, in so far as he or she is participating in the exercise of the authority of the court subject to the s 35A review process, is in my view so exercising the authority vested in the judges of the court as a group as to preclude (at least to that extent) the issue by the court itself of a prerogative writ against that Registrar. In such a case I do not consider that a relevant distinction can be drawn between a judge of the court as such: on which see Bird v Free; and a Registrar notwithstanding that, in terms of office held, the Registrar (no less than a Federal Court Judge: R v Watson; Ex parte Armstrong (1976) 136 CLR 248 at 263 ; 9 ALR 551) is otherwise to be characterised as an "officer of the Commonwealth" by virtue of the provenance of his or her office: cf R v Anderson; Ex parte Bateman (1978) 21 ALR 56; Northern Territory of Australia v Lane (1995) 138 ALR 544. It is immaterial for this purpose that the Registrar has, in fact, acted without jurisdiction in the matter. 15 The applicant submitted that Bird v Free is distinguishable and that Nedlands is inconsistent with High Court authority and, thus, wrongly decided. However, I can see nothing in the decisions of the High Court to which Mr Hyde Page made reference, (specifically Re McJannet; Ex parte Minister for Employment, Training and Inducstrial Relations for the State of Queensland (1995) 184 CLR 620; [1995] HCA 31 and Harris v Caladine (1991) 172 CLR 84) to support the proposition that Finn J's analysis in Nedlands was other than orthodox. Particularly relevant to the present application is what Mason CJ and Deane J said in Harris v Caladine (at 95): For present purposes it is sufficient for us to say that, if the exercise of delegated jurisdiction, powers and functions by a court officer is subject to review or appeal by a judge or judges of the court on questions of both fact and law, we consider that the delegation will be valid. 16 The validity of a delegation to the Registrar is not in question on this application. The High Court assessed the issue of validity by reference to the question whether there was a sufficient right of review or appeal. In this case s 35A(5) of the Federal Court Act provides a full right of review to a party to any proceeding against a decision of a Registrar. It follows that, in circumstances where the applicant could not avail himself of the review jurisdiction in s 35A(5) of the Federal Court Act, this must be treated as an application solely for judicial review seeking prerogative writs against the Registrar. By reference to the authorities cited, I am satisfied that no such prerogative writs can lie. Accordingly, the application fails at the outset and must be dismissed for this reason alone. 17 Although Mr Vorreiter invited me to determine the application on this narrow basis, it is appropriate to consider the additional arguments put forward by the applicant having regard to the detail with which those submissions were made and my obligation to resolve all of the issues in controversy. 18 The first submission that was made is that the Registrar did not have jurisdiction to determine the application under s 440A(2). The applicant relied upon Deputy Commissioner of Taxation v Scottsdale Homes No 3 Pty Ltd [2008] FCA 1958 at [3], where Logan J said: Upon the winding-up application coming on before a registrar of the Court that day, an application was made for the winding up application to be adjourned, pursuant to s 440A(2) of the Corporations Act 2001 (Cth). That particular application being beyond the jurisdictional remit of a registrar, the application was referred to a judge. It came before me for hearing today. 19 It is apparent that Logan J was doing nothing more than reciting the background by which the application came before him. It is also clear from the reasons for judgment that they were delivered ex tempore. It would appear from the recitation of the background that there was no issue before his Honour as to whether or not the Registrar had jurisdiction in relation to s 440A(2). That is to say, there seems to have been no argument about this issue, it having been simply assumed that there was no jurisdiction in the Registrar, that being the reason for referral of the application to a judge of the Court. 20 I am persuaded by Mr Vorreiter's submissions that the Registrar does have power in relation to s 440A on the proper construction of the provisions of the Corporations Act. Section 440A, properly construed, is a direction to the court about how a particular power, that is the power to adjourn a hearing of an application for a winding up order, is to be exercised. In short, if the Court is satisfied that it is in the interests of the company's creditors for the company to continue under administration rather than be wound up, then the Court is to exercise the power of adjournment. The power of adjournment itself, however, is vested in the Court by s 467(1)(b) of the Corporations Act which provides that, on hearing a winding up application, the Court may adjourn the hearing conditionally or unconditionally. 21 Schedule 2 to the Federal Court (Corporations) Rules specifically vests in the Registrar the power to deal with not only a winding up application in s 459A, but all of the powers in s 467, including the power to adjourn a winding up application. Mr Hyde Page submitted that because s 440A(2) is not listed in Schedule 2, the Registrar therefore has no power in circumstances arising under s 440A(2). However, it is inconceivable that a Registrar would be vested with the relevant powers under s s459A and 467 but be excluded from making the required order for an adjournment if the circumstances in s 440A(2) were found to exist (namely, satisfaction that it is in the interests of the company's creditors for the company to continue under administration rather than be wound up). 22 Construing all of the provisions together, I am satisfied that the power of adjournment is vested in the Registrar, and it necessarily follows that Registrar has power in circumstances arising under s 440A(2). Given the nature of s 440A(2), there was simply no need for it to appear in Schedule 2 to the Federal Court (Corporations) Rules. The fact that r 16.1 specifically refers to the provisions of the Corporations Act listed in Schedule 2 is insufficient to lead to any other construction. The improbability and inconvenience of the applicant's construction seems to be manifest. 23 The second issue was the fact that, apparently, the Registrar did not give leave under s 440D of the Corporations Act for the matter to proceed. In Hall v Mercury Information Technology (South Australia) Pty Limited [2002] FCA 272, Stone J at [14] expressed the view that the appointment of a provisional liquidator as a precursor to a winding up order was a proceeding against the company and, accordingly, triggered the obligation in s 440D to the grant of leave. However, there are other decisions which specifically relate to the winding up power. In Australian Prudential Regulation Authority v Rural & General Insurance Ltd (2004) 136 FCR 149; [2004] FCA 185, Gyles J analysed the provisions of ss 440D and 440A and concluded that a winding up proceeding is not within the purview of s 440D because s 440A alone operates in relation to such a proceeding. In Watts v Albany Marine Centre Pty Ltd [2006] WASC 22, EM Heenan J agreed with Gyles J. So too did Barrett J in Evans v Mullumbimby News Pty Ltd [2008] NSWSC 240. According to Barrett J (at [4]): A threshold question arising is whether, in the absence of leave under s 440D of the Corporations Act, the originating process may be filed so as to initiate the winding up proceedings. I am of the opinion that leave under that section is not needed so far as the winding up application is concerned. This is because of the existence of s 440A which makes specific provision with respect to winding up proceedings. 24 It follows that the weight of authority is against the applicant on this point, that is, s 440D did not operate in respect of this winding up application. 25 The third point on which the applicant relied was an alleged breach of natural justice. However, it is clear from the way in which this point was argued that that it can rise no higher than the alleged primary breaches of s 440A(2) and 440D. I have rejected the arguments that any such breach exists and, accordingly, there could be no breach of natural justice. That having been said, it is not apparent to me in any event how a separate claim for breach of natural justice arises merely by reason of alleged breaches of ss 440A and 440D. 26 The final argument is that the Registrar's determination of the application was legally erroneous, either because the Registrar took an irrelevant consideration into account or because, on a proper application of the s 440A(2) criterion, the Registrar was bound to reach the view that the adjournment should have been granted. 27 Mr Hyde Page made submissions about the extent of the record. However, it is not necessary that I resolve any issue about the nature of the record in this case. It would follow from the conclusions I have reached above about the nature of the power being exercised by the Registrar, that the record would not include the transcript or reasons for judgment (see Craig v State of South Australia (1995) 184 CLR 163) with the consequence that the line of authority on which the applicant relied (for example, GJ Coles & Co Ltd v Retail Trade Industrial Tribunal (1986) 7 NSWLR 503) is not enlivened. 28 It is also apparent, in any event, that there is no substance in the alleged errors of law. As the third respondent submitted: The registrar considered the circumstances set out in s 440A(2), but disagreed that the hearing should be adjourned… The applicant's submissions in respect of non-jurisdictional error amount to a complaint that the registrar did not accept that the proposed deed of company arrangement was in the interest of creditors. No error of law occurs merely because the registrar decided against the application to adjourn. The registrar was entitled to conclude that it was not in the interests of creditors sufficient to justify an adjournment of the winding up application. No attempt is made to identify any error on the part of the registrar in her process of reasoning which relevantly amounts to non-jurisdictional error of law. 29 Despite Mr Hyde Page's efforts to the contrary, this fourth ground of the application is nothing more than an attempt to argue with the merits of the Registrar's decision. 30 In these circumstances, it follows that the application filed on 15 October 2010 for prerogative writs to quash the decision of the Registrar, made on 8 October 2010, must be dismissed, and I so order. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot.