Lime Gourmet Pizza Bar (Darby Street) Pty Ltd (In Liq) v Workers Compensation Nominal Insurer; In the Matter of Lime Gourmet Pizza Bar

Federal Court of Australia|2014-05-30|Before: Foster J

The Application for an Extension of Time and Leave to Appeal filed by Lime Gourmet Pizza Bar (Darby Street) Pty Ltd (In Liq) at the instigation of Haralabos Moshos, its sole director, be dismissed.
Pursuant to s 43(1) and s 43(2) of the Federal Court of Australia Act 1976 (Cth), the said Haralabos Moshos pay the respondent's costs of and incidental to the said Application. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 364 of 2014

IN THE MATTER OF LIME GOURMET PIZZA BAR (DARBY STREET) PTY LTD (IN LIQUIDATION) (ACN 147 958 861) BETWEEN: LIME GOURMET PIZZA BAR (DARBY STREET) PTY LTD (IN LIQUIDATION) (ACN 147 958 861)

JUDGE: FOSTER J DATE: 30 MAY 2014 PLACE: SYDNEY

REASONS FOR JUDGMENT 1 By an Application filed on 8 April 2014, the applicant, Lime Gourmet Pizza Bar (Darby Street) Pty Ltd (In Liq) (the corporation) applied for an extension of the time by which it might seek leave to appeal from orders made by a Judge of this Court on 28 February 2014. By those orders, the learned primary Judge dismissed an application by the corporation in liquidation for an order setting aside a winding up order made by a Registrar of this Court on 13 December 2013 in the absence of the corporation and for consequential relief. The primary Judge also ordered the corporation to pay the plaintiff's costs of the application before him. 2 The orders made by the primary Judge on 28 February 2014 were supported by two judgments delivered by his Honour: the first on 10 February 2014 (Workers Compensation Nominal Insurer v Lime Gourmet Pizza Bar (Darby Street) Pty Ltd [2014] FCA 43) (the first judgment); and the second on 28 February 2014 (Workers Compensation Nominal Insurer v Lime Gourmet Pizza Bar (Darby Street) Pty Ltd (No 2) [2014] FCA 151) (the second judgment). 3 In order to give effect to the first judgment, on 10 February 2014, the primary Judge made a declaration 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. 4 By the first judgment, the primary Judge had determined as a separate question a preliminary point raised by the corporation, namely, whether the winding up order made on 13 December 2013 in the absence of the corporation was valid according to its terms. The corporation had argued before his Honour that the Registrar who made the winding up order did not have power to do so. 5 By the second judgment, his Honour determined all remaining issues raised by the corporation's application to set aside the winding up order. 6 The orders made by the primary Judge on 28 February 2014 were supported by the declaration made on 10 February 2014, the reasons given in the first judgment and the reasons given in the second judgment. The corporation now seeks leave to appeal out of time from both the first and second judgments. 7 Upon the assumption that leave to appeal is required in respect of both judgments, the corporation was required to apply for leave to appeal from the first judgment by no later than 24 February 2014 and was required to apply for leave to appeal from the second judgment by no later than 14 March 2014 (see r 35.13(a) of the Federal Court Rules 2011 (FCR)). The delay on the part of the corporation in seeking leave to appeal is, therefore, in the case of the first judgment, 42 days and, in the case of the second judgment, 24 days. 8 By these Reasons for Judgment, I determine the corporation's application for an extension of time.

The Relevant Facts 9 In the proceeding below, the respondent to the present application, Workers Compensation Nominal Insurer (the insurer), sought an order under s 459A of the Corporations Act 2001 (Cth) (the Act) winding up the corporation in insolvency. The proceeding below was commenced on 16 May 2013 by the filing of an Originating Process in the usual format. 10 In its Originating Process, the insurer relied upon alleged non-compliance by the corporation with a Creditor's Statutory Demand for payment of debt dated 22 April 2013 (Demand) which was issued under s 459E of the Act which the insurer alleged in its Originating Process had been served upon the corporation on 22 April 2013. The amount claimed by the insurer in the Demand was $7,405.99, being the total of two Local Court judgment debts which the insurer had obtained against the corporation for amounts due to the insurer by reason of the fact that the corporation had failed to effect appropriate workers compensation cover and thus failed to pay the appropriate amounts by way of premium for such cover. 11 The insurer's winding up application was first returned before a Registrar of the Court on 14 June 2013. On that occasion, the application was adjourned to 28 June 2013. 12 On 28 June 2013, the District Registrar made the following orders: THE COURT ORDERS THAT: 1. Plaintiff be granted leave to file an amended Originating Process in the form filed in Court on 28 June 2013, such amendment to take effect from today. 2. The amended originating process be given a return date of 17 July 2013. 3. The Plaintiff is to: (a) Serve upon the Defendant the amended originating process within 7 days of filing the amended originating process. (b) Notify the parties not appearing today, by ordinary post within 7 days, of the details of the time, date and place of the adjourned hearing and of any other orders made. 4. On the application of the Plaintiff, the application be adjourned until 10:15am on 17 July 2013. 13 There was no appearance either by or on behalf of the corporation on either 14 June 2013 or 28 June 2013. 14 At the hearing on 28 June 2013, the insurer filed in Court an Amended Originating Process. The only amendment of any substance made by the filing of that document was that the date of service of the Demand specified in the Originating Process was altered from "22 April 2013" to "30 April 2013". 15 The next listing after 28 June 2013 was on 17 July 2013. On that occasion, the proceeding came before the District Registrar. The insurer was represented by its solicitor. Supporting creditors, being the administrators who had previously been appointed to the corporation and to other related corporations, also appeared on this occasion. They were represented by their solicitor. The administrators claimed that the corporation was indebted to them in the amount of $29,092.80 as fees payable to them for work done as administrators of the corporation. On this occasion, Mr Haralabos Moshos, who was, at that time, the sole director of the corporation, sought leave to appear for the corporation. The Registrar gave Mr Moshos leave to represent the corporation on 17 July 2013. 16 In Reasons for Decision given that day, the Registrar noted that the corporation had opposed the making of a winding up order on a number of grounds, each of which was set out in a Notice of Grounds of Opposition filed by the corporation. On 17 July 2013, Mr Moshos, on behalf of the corporation, applied for an adjournment of the hearing of the insurer's winding up application. The Registrar refused to adjourn that application. However, he did accede to a request made by Mr Moshos, on behalf of the corporation, that the whole of the proceeding be referred to a Judge for determination pursuant to s 35A(7) of the Federal Court of Australia Act 1976 (Cth) (FCA) and r 3.05 FCR. 17 The formal orders made by the Registrar on 17 July 2013 were in the following terms: THE COURT ORDERS THAT: 1. On the Application of the Defendant, the Proceedings be referred to a judge for determination under section 35A(7) of the Federal Court of Australia Act 1976 and rule 3.05 of the Federal Court Rules 2011. 2. Defendant to file and serve any evidence in support of the Notice of Opposition by 4.30pm on 31 July 2013. 3. Plaintiff to file and serve any evidence in reply by 4.30pm on 6 August 2013. 4. Parties to exchange and file with the Registry a list of authorities and/or an outline of submissions (no more than 3 pages), including an estimate of hearing time, by no later than 4.30pm on 12 August 2013. 5. The Proceedings be stood over to be heard before a Judge on the Corporations Panel in the week of 12 August 2013 or as advised by the Registry. 6. The Proceedings be nominally listed before a Registrar at 10:15am on 14 August 2013 with liberty to vacate. Date that the entry is stamped: District Registrar Subsection 35A (5) of the Federal Court of Australia Act 1976 (the Act) provides that a party to proceedings in which a Registrar has exercised any of the powers of the Court under subsection 35A (1) of the Act 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. Rule 3.11 provides that a party may apply to the Court under subsection 35A(5) of the Act for review of the exercise of a power of the Court by a Registrar and that any application must be made within 21 days after the day on which the power was exercised. A party seeking a review can apply to the Court to dispense with any requirement of the Rules (Rule 1.34). 18 The Notice of Grounds of Opposition to Winding Up filed in Court on 17 July 2013 specified the following grounds of opposition: 1. The Originating process was not served upon the Defendant as required by the rules and/or the Corporations Act. 2 The Creditor's statutory demand for payment of debt was not served upon the defendant at all. 3. There are no monies owing by the defendant to the plaintiff. Particulars The policies of insurance obtained by the defendant were with QBE Limited. The affidavit verifying the amount owing dated 15 May 2013 is by Mr Andrew Sharpe, employee of QBE Limited. The defendant entered into no policies of insurance with the plaintiff. 3.[sic] Further, and in the alternative, the period required for compliance with the statutory demand, being twenty one (21) days, had not expired as at the date of the execution of the Affidavit of Andrew Sharpe dated 15 May 2013 allegedly verifying the debt in the statutory demand. Particulars The plaintiff alleges the statutory demand was forwarded by pre-paid post on Monday 22 April 2013. Pursuant to s 160 of the Evidence Act, the statutory demand was deemed to have been served four (4) business days following 22 April 2013, being Friday 26 April 2013. There is a period of nineteen (19) days between 26 April 2013 and 15 May 2013. 4. Further, and in the alternative, the period required for compliance with the statutory demand, being twenty one (21) days, had not expired as at the date of commencement of proceedings being 16 May 2013. Particulars The plaintiff alleges the statutory demand was forwarded by pre-paid post on Monday 22 April 2013. Pursuant to s 160 of the Evidence Act, the statutory demand was deemed to have been served four (4) business days following 22 April 2013, being Friday 26 April 2013. There is a period of twenty (20) days between 26 April 2013 and 16 May 2013. 19 By 17 July 2013, Mr Moshos was aware that the insurer had amended its Originating Process on 28 June 2013 in the manner which I have described at [14] above. He did not take issue with this at the time. 20 The matter was first listed before Jacobson J on 15 August 2013. On that occasion, the insurer was represented by its solicitor and Mr Moshos represented the corporation. 21 A few days before that listing, on 12 August 2013, the insurer filed a list of authorities and an Outline of Submissions as directed by the Registrar. The corporation did not file any list of authorities or submissions prior to 15 August 2013. 22 On 15 August 2013, Jacobson J was informed that the proceedings were likely to be resolved in the near future. On that day, he made the following orders: THE COURT ORDERS THAT: 1. The Defendant is to lodge all outstanding wage declarations by 5 September 2013 with the Plaintiff and the Plaintiff's solicitor. 2. The proceedings be adjourned for further directions on 19 September 2013. 3. Costs reserved. 23 The matter was next listed on 19 September 2013. Once again, the matter came before Jacobson J. The insurer was again represented by its solicitor. There was no appearance either by or on behalf of the corporation. Upon the application of the insurer, the matter was adjourned to 9.30 am on 3 October 2013. 24 The matter was next listed before the Court on 3 October 2013. On this occasion, the matter was listed before Farrell J. The insurer was legally represented but there was no appearance either by or on behalf of the corporation. 25 The legal representative who appeared for the insurer on this occasion informed her Honour that the corporation had recently lodged wage declarations with the insurer and had thereby reduced its debt to the insurer quite substantially. He also said that the corporation had indicated that it would now pay the balance of the debt in full which would then dispose of the proceeding. In the event that the debt was paid in full, as promised, the only issue that would remain concerned the costs of the proceeding. On the assumption that the balance of the debt due to the insurer would be paid, the insurer's legal representative suggested that the proceeding be adjourned to the Registrar's list on 18 October 2013 for the purpose of dealing with the issue of costs. 26 In light of what her Honour was told by the legal representative of the insurer, her Honour adjourned the proceeding to the Registrar's list on 18 October 2013. While her Honour said that the referral to the Registrar was for the purpose of dealing with costs, her Honour nonetheless ordered that the whole proceeding be referred to and listed before a Registrar rather than a Judge. 27 On 18 October 2013, the matter was again listed before the Court, on this occasion before a Registrar. The insurer was represented by its solicitor and Mr Moshos again sought leave to represent the corporation. By consent, the proceeding was adjourned to 22 November 2013. Costs were reserved. 28 On 15 November 2013, the solicitor for the insurer approached a Registrar in Chambers on an ex parte basis and sought an order pursuant to s 459R(2) of the Act that the time for determination of the winding up application made in the proceeding below be extended until 22 February 2014. The Registrar made that order. She made no order as to costs and directed the insurer to notify the corporation and the supporting creditor of the details of the order which she had made. 29 The insurer's ex parte application to which I have referred at [28] above was supported by an affidavit sworn by an employed solicitor in the firm of solicitors acting for the insurer. 30 The insurer did not give notice to Mr Moshos or to the corporation that it intended to seek an order under s 459R(2) of the Act on 15 November 2013 nor did it serve its Interlocutory Application dated that day or the affidavit in support on Mr Moshos or the corporation. However, on the same day (15 November 2013), the solicitors for the insurer did inform Mr Moshos of the outcome of that application. Mr Moshos did not take any steps then to complain about the fact that the Registrar had made the s 459R(2) order on 15 November 2013. Nor did he complain then about the lack of prior notice or the fact that the relevant Interlocutory Process had not been served. 31 The matter was again before the Court on 22 November 2013. On that occasion, the insurer was represented by its solicitor. There was no appearance either by or on behalf of the corporation. The proceeding was adjourned to 13 December 2013 before a Registrar. 32 On Monday, 25 November 2013, the solicitors for the insurer sent a letter to the corporation by email. Omitting formal parts, that letter was in the following terms: We refer to the above matter which was heard before Registrar Tesoriero in the Federal Court on Friday 22 November 2013. The Court ordered that the application be adjourned until 9.30 am on 13 December 2013 at the Law Courts Building, Queens Square, Sydney, NSW 2000. If you have any questions, please do not hesitate to contact us. 33 On 13 December 2013, the matter again came before the Court. On this occasion, the insurer was represented by its solicitor. Notwithstanding that Mr Moshos had been informed that the proceeding was listed on 13 December 2013, there was no appearance either by or on behalf of the corporation on that occasion. 34 In the absence of the corporation and in light of the evidence then before her, the Registrar ordered that: 1. LIME GOURMET PIZZA BAR (DARBY STREET) PTY LTD (ACN 147 958 861) be wound up. 2. Andrew Barnden of Rodgers Reidy Chartered Accountants is appointed as liquidator of the defendant corporation. 3. The plaintiff's costs of these proceedings be agreed or taxed and reimbursed in accordance with section 466(2) of the Corporations Act. 35 On 31 December 2013, the corporation filed an Interlocutory Process in which it sought an order that the orders made in its absence on 13 December 2013 be set aside and costs. 36 The corporation's application to set aside the winding up order was supported by three affidavits sworn by Mr Moshos. Those affidavits were sworn on 17 December 2013, 16 January 2014 and 3 February 2014. 37 The corporation's Interlocutory Process was first listed before Jacobson J on 6 February 2014. On that occasion, the insurer was represented by its solicitor, Mr Moshos represented the corporation and Mr JT Johnson, of Counsel, represented the supporting creditors, the former administrators of the corporation. 38 On 6 February 2014, the primary Judge heard argument in support of the relief claimed by the corporation in its Interlocutory Process. His Honour also permitted the corporation to add a further claim for relief, namely, for an order that the s 459R(2) order made in the absence of the corporation on 15 November 2013 be set aside. 39 On 10 February 2014, his Honour delivered the first judgment and made the declaration which I have extracted at [3] above. 40 On 21 February 2014, his Honour heard further argument in relation to the corporation's claims to have the orders made by the Court on 15 November 2013 and 13 December 2013 set aside. On that occasion, his Honour reserved his judgment. 41 On 28 February 2014, his Honour delivered the second judgment and made the following orders: THE COURT ORDERS THAT: 1. The interlocutory process filed by the defendant on 30 December 2013 is dismissed. 2. The defendant pay the costs of the application. 42 Given the terms of his Honour's Reasons for Judgment delivered on 28 February 2014, his Honour's orders must be taken to have effected a dismissal of the corporation's Amended Interlocutory Process filed in Court on 6 February 2014. His Honour clearly declined to set aside the orders made by the Registrar on 15 November 2013 and also clearly declined to set aside the orders made by the Registrar on 13 December 2013. 43 On 10 March 2014, Mr Moshos, on behalf of the corporation, endeavoured to file an Interlocutory Process whereby he sought to challenge the first and second judgments delivered by the primary Judge. This attempt to challenge those judgments was within time insofar as the second judgment was concerned and only a little more than a week out of time insofar as the first judgment was concerned. 44 Registry staff rejected (correctly) these attempts to challenge the orders made by the primary Judge and informed Mr Moshos that, if he wished to overturn his Honour's orders, he needed to bring an appropriate application in the appellate jurisdiction of the Court.

The First Judgment 45 At [1]-[9] of his Reasons for Judgment, the primary Judge outlined the issue which he had chosen to decide as a preliminary point. He said: 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. 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. 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. 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. 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. 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. 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). 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. 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. 46 His Honour then reviewed the relevant facts which, in large part, I have set out at [9]-[41] above. 47 At [24], his Honour noted that the essential issue which he had to decide turned upon the status of the Registrar's order made on 15 November 2013 by which she extended the statutory period within which the winding up application was required to be determined. That order was made prior to the expiration of the initial six month period. 48 His Honour noted (at [25]) that the Interlocutory Application made by the insurer which was dated 15 November 2013 and filed on the same day had not been served on the corporation. He also noted that, on the face of things, r 17.04 FCR had not been complied with. 49 However, his Honour held that the order made by the Registrar on 15 November 2013 was nonetheless valid according to its terms. 50 His Honour gave two reasons for the conclusion to which I have referred at [49] above: First, his Honour inferred that the Registrar had dispensed with service and that it was well within her power to do so. Second, his Honour held that the Court may dispense with compliance with the FCR and, under r 1.35 FCR, may even make an order that is inconsistent with the FCR and, in that event, the order will prevail. His Honour went on to hold that, under the FCR, orders may be made otherwise than in open Court (as to which, see r 1.36 FCR) and the corporation's criticism of the order upon the basis that it was made in Chambers was without merit. 51 Finally, his Honour held that, at best, the order made by the Registrar on 15 November 2013 was voidable and not void. It remained valid until set aside. At [35]-[38], his Honour said: 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. 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). 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). 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). 52 At [39], his Honour concluded that the preliminary issue raised by the corporation must be determined adversely to it. In those circumstances, his Honour made the declaration which I have set out at [3] above.

The Second Judgment 53 At [4] of his Reasons for Judgment, the learned primary Judge described the substance of the issues which remained for determination after delivery of the first judgment in the following terms: The essential argument raised by the company is that the winding up order made on 13 December 2013 was not validly made because the 21 day period for compliance with the statutory demand prescribed by s 459F of the Act had not expired when the plaintiff's Originating Process was filed. Thus, it was submitted on behalf of the company that the statutory presumption of insolvency created by s 459C(2) of the Act was not enlivened and the winding up order was improperly made. 54 At [6]-[11], his Honour noted a number of important matters of history which occurred prior to 28 June 2013, when the District Registrar gave leave to the insurer to amend its Originating Process with effect from that day. At [12], his Honour noted that the corporation had not made any application under s 459G of the Act to set aside the Demand. He concluded that, in light of that circumstance, the 21 day period which gave rise to a presumption of insolvency under s 459C(2)(a) and s 459F(2) ran from 30 April 2013, being the date of service of the Demand. By the time the proceeding came to be heard by his Honour in February 2014, it was common ground that the Demand had been served on 30 April 2013, and not on 22 April 2013, as had been asserted by the insurer in its Originating Process filed on 16 May 2013. 55 At [19]-[29], his Honour succinctly summarised the evidence led by the corporation and by the insurer in the proceeding before him. He said: The company's evidence Mr Moshos, to whom I gave leave to appear, relied on affidavits sworn by him and filed on 31 December 2013, 20 January 2014 and 4 February 2014. Those affidavits addressed a number of matters but they contained no evidence of the company's solvency. The affidavits addressed four issues which were the subject of submissions by Mr Moshos in this application. The first was the order made by Registrar Hannigan under s 459R(2) on 15 November 2013. Mr Moshos said that the company had not been given notice of the plaintiff's application which resulted in the making of the order. The second was the default judgments which founded the statutory demand. He gave evidence that one of those judgments was set aside by the Local Court on 10 December 2013. The third was referred to in a letter attached to an affidavit. The letter dealt with a number of Mr Moshos' contentions. One of his contentions was that the statutory demand was invalid for the purposes of s 459E and 459A because, "for instance", there was no judgment debt supporting it and it was for less than the statutory minimum amount. The fourth was addressed in a letter to the liquidator. It was that the company's books and records had not been provided to the liquidator pending the determination of the present application. This was apparently relied upon in the present application to negate the force of the affidavit filed by the liquidator which deals with the question of solvency. The plaintiff's evidence The plaintiff relied on a "Final Affidavit of Debt" in which evidence was given of credit adjustments of $3,268.62 and $1,608.97 to the amount specified in the Originating Process leaving an amount due and payable of $2,528.40. The affidavit was sworn on 12 December 2013 and was filed on 13 December 2013, that is to say, the date on which the winding up order was made. Although it does not refer to the order of the Local Court made on 10 December 2013, it is apparent that the adjustments in the affidavit were referable to the setting aside of one of the Local Court judgments. The plaintiff also relied upon an affidavit filed by the liquidator on 30 January 2014. The affidavit annexed a report by the liquidator of the same date. The liquidator's report stated that Mr Moshos had not provided a Report as to Affairs and had not delivered up the company's books and records pending the outcome of this application. The liquidator was unable to identify the company's assets or to place a value on them. However, he identified taxation liabilities of $34,597 and unsecured creditors of $44,232. The liquidator concluded in his report that "the company appears insolvent": He said that unless the costs of the winding up and sufficient funds were received to permit all creditors to be paid in full, he would oppose the application. 56 At [30]-[36], his Honour also described the evidence which had been led on behalf of the supporting creditors, who were the former administrators of the corporation. 57 At [41]-[49], the primary Judge addressed the main argument put to him by Mr Moshos on behalf of the corporation in the following terms: Mr Moshos' other principal submission was that the statutory presumption of insolvency created by s 459C(2)(a) was not enlivened because the Originating Process was filed on 16 May 2013, less than 21 days after the service of the statutory demand. However, there are two answers to this submission. The first is that Registrar Wall made an order on 28 June 2013 granting leave to file the Amended Originating Process with effect from that date. In doing so, the Registrar followed the course which I took in Lozito-Strada at [8]. Although I have not had the benefit of full argument on this question, it does not seem to me that to permit the plaintiff to proceed on the Amended Originating Process in accordance with this course is contrary to the decision of Barrett J and the New South Wales Court of Appeal in the TQM case. That case was concerned with the question of whether an application to set aside a statutory demand had been made in accordance with s 459G(3) of the Act for the purpose of determining the period for compliance with the statutory demand under s 459F(2)(a). That question does not arise in the present case. Here, the company made no application under s 459G and accordingly the period for compliance fell to be determined under s 459F(2)(b). That is to say, the expiry date for compliance was 21 days after the demand was served. The statutory demand was served on 30 April 2013. The time for compliance under s 459F(2)(b) was 21 May 2013. The Amended Originating Process took effect on 28 June 2013. Thus, during the three months ending on the day the winding up application was made, the company failed to comply with the statutory demand: see s 459C(2)(a). This approach is not inconsistent with the decision of the High Court in David Grant v Westpac. That case was concerned with the definition of the jurisdiction of the Court under s 459G, and in particular the conditions imposed by that section upon the right to apply to have a statutory demand set aside. In the appeal decision in TQM, Spigelman CJ referred to David Grant v Westpac and to a decision of the New South Wales Court of Appeal in Switz Pty Ltd v Glowbind Pty Ltd (2000) 48 NSWLR 661 ("Switz"). The Chief Justice's own observations in the Switz case are apt in the present circumstances. His Honour pointed out in Switz at [50] that there are public interests which underlie the legislative scheme contained in Part 5.4 of the Act. He observed that if a company is not solvent, because the disputed debt is indeed owing, there is a public interest in commencing the process of the winding up sooner rather than later. His Honour went on to say that the fact that commercial injustices may sometimes be caused to a debtor company by the operation of the legislative scheme: … may be offset by the commercial injustices that the continued operation of an insolvent company may cause to existing and, if permitted, increased or future creditors of such a company. 58 At [50]-[51], the primary Judge adverted to the question of solvency. He noted that Mr Moshos had not adduced any evidence which could satisfactorily found a conclusion that the corporation was solvent. To the contrary, the somewhat limited evidence adduced by the supporting creditors suggested that the corporation was in fact insolvent. 59 Ultimately, his Honour concluded that the corporation had failed to satisfy him that the conditions stated by Hodgson J in George Ward Steel Pty Ltd v Kizkot Pty Ltd (1989) 15 ACLR 464 had been satisfied. Given that the winding up order had been regularly made, the primary Judge took the view that Mr Moshos, on behalf of the corporation, was required to address those conditions. 60 At [53]-[59], his Honour said: Mr Moshos has approached this application as if the only question which arises is whether the winding up order ought to have been made. He has failed to address the matters necessary to enliven the discretion to set it aside. Here, three of the conditions referred to by Hodgson J in George Ward Steel have not been satisfied. Most importantly, the company has not addressed evidence indicating that it is solvent. Indeed, as I have said, the evidence supports a finding that the company is insolvent. Moreover, the plaintiff and the supporting creditors do not consent to the application and the liquidator's position is that he would not consent unless the creditors are paid and his fees are satisfied. No offer has been made to satisfy the debts of creditors or the liquidator's costs. The only other point made by the company addressed the amount of the judgment debt which supported the statutory demand. The statutory demand was for more than the statutory minimum required under s 459E(1). It is true that the amount of the judgment debt outstanding as at 13 December 2013 was reduced to approximately $2,500. However, that amount is more than the statutory minimum for a demand under s 459E and, in any event, that question was not relevant to the power of the Court to exercise the discretion to make a winding up order: FAI Insurances Ltd v Goldleaf Interior Decorators Pty Ltd (1988) 14 NSWLR 643. ORDERS It follows from the above that the interlocutory process filed by the company seeking an order under rule 39.05 must be dismissed. I will order the company to pay the costs of the application. It is not appropriate to order Mr Moshos to pay the costs of the application as a condition of the leave granted to him to appear on behalf of the company.

Consideration 61 In the corporation's Application for an Extension of Time and Leave to Appeal filed on 8 April 2014, the corporation set out the grounds upon which it contended that it was entitled to an extension of time and leave to appeal. At the time of filing that Application, it also filed a draft Notice of Appeal which essentially repeated the grounds set out in its Application for an Extension of Time. The grounds relied upon by the corporation in support of the present Application may be summarised as follows: (1) Because the District Registrar made an order on 17 July 2013 pursuant to s 35A(7) of the FCA referring the proceeding to a Judge to be heard by a Judge, Registrars of the Court thereafter had no power to make any orders in the proceeding with the consequence that the orders made by a Registrar of the Court on 15 November 2013 extending the time for the determination of the winding up application and the winding up order and other orders made on 13 December 2013 by the same Registrar were all invalid as having been made without power. For those reasons, both sets of orders should be set aside (ground 1). (2) The learned primary Judge erred in finding that the winding up application was made on 28 June 2013, the date when the Amended Originating Process was filed pursuant to leave to amend granted by the District Registrar on that day, rather than 16 May 2013 when the Originating Process was initially filed. For that reason, no presumption of insolvency had arisen at the time the Originating Process was filed on 16 May 2013 because the 21 day period had not expired by that date, it ultimately being common ground that the Demand was served on 30 April 2013 (ground 2). (3) The primary Judge erred by concluding that the Interlocutory Application and affidavit in support dated 15 November 2013 were not required to be served upon the corporation in accordance with the rules of Court (ground 3). 62 Other points of argument directed to the above grounds were mentioned in the corporation's Application for an Extension of Time but they are more in the nature of submissions than grounds of challenge to the primary Judge's judgments. 63 The first and second judgments are probably interlocutory. For that reason, leave to appeal is required from each of them (see s 24(1A) of the FCA). 64 Rule 35.14 FCR provides: 35.14 Extension of time to seek leave to appeal (1) A person who wants to apply for an extension of time to seek leave to appeal must file an application, in accordance with Form 118. (2) The application may be made during or after the period mentioned in rule 35.13. (3) The application must be accompanied by the following: (a) the judgment or order from which leave to appeal is sought; (b) the reasons for the judgment or order, if published; (c) an affidavit stating: (i) briefly but specifically, the facts on which the application relies; and (ii) why the application for leave to appeal was not filed within time; and (d) a draft notice of appeal that complies with rules 36.01(1) and (2); (e) a statement by the applicant of whether the applicant wants to have the application considered without oral argument. Note 1: The Court may grant an extension of time, and hear and determine the application for leave to appeal, at the same time. Note 2: An application under rule 35.12 or 35.14 will be heard and determined by a single Judge unless the application is made in a proceeding that has already been assigned to a Full Court and the Full Court considers it appropriate to hear and determine the application. Note 3: File is defined in the Dictionary as meaning file and serve. 65 The rule itself requires the Court to consider the question of delay and the reasons why the application for leave to appeal was not filed within time. 66 In the present case, the delay is not significant. In addition, on 10 March 2014, Mr Moshos, on behalf of the corporation, endeavoured to instigate an appropriate challenge to the second judgment within time but failed to do so in the appropriate manner and by means of the appropriate forms. Nonetheless, he indicated quite clearly both to the Court and to the insurer that he intended to challenge both the first and second judgments. 67 In all the circumstances, I am satisfied that, on its own, the delay in making an application for leave to appeal does not constitute a reason for declining the extension of time sought. 68 The authorities in this Court establish that the likelihood of leave to appeal being granted is a relevant consideration when the Court comes to consider an application for an extension of time for leave to appeal (Deighton v Telstra Corp Ltd [1997] FCA 1568). 69 In considering the prospects of success of the corporation's potential application for leave to appeal, I propose to apply the principles explained by the Full Court in Samsung Electronics Co Ltd v Apple Inc (2011) 217 FCR 238 at 248-251 [25]-[37]. In particular, I propose to apply the principles summarised by the Full Court at 248-249 at [26]-[29], where the Court said: In this Court, it is well established that the relevant test (or "litmus test") for whether leave to appeal from an interlocutory judgment will be granted, comprises the following two integers: (1) Whether, in all the circumstances of the case, the decision is attended by sufficient doubt to warrant its being reconsidered by the Full Court; and (2) Whether substantial injustice would result if leave were refused supposing the decision to be wrong. (DÉcor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398-400). In Bienstein v Bienstein (2003) 195 ALR 225 at [29] (p 231), McHugh, Kirby and Callinan JJ said that: The principles that govern the grant of leave to appeal are well established. An applicant for leave must establish that the decision in question is attended with sufficient doubt to warrant the grant of leave. The applicant must also show that substantial injustice will result from a refusal of leave to appeal. The test for leave to appeal explained by the High Court in Bienstein v Bienstein is the same test as the Full Court had earlier articulated in DÉcor. As the Full Court itself said in DÉcor, the test which it described is appropriate for the general run of cases. The test should not, however, be applied as if it were some hard and fast rule. Each case must be considered on its merits. 70 In considering the corporation's prospects of success in obtaining leave to appeal, it must be remembered that the application before the primary Judge was an application to set aside the orders made on 15 November 2013 and on 13 December 2013. The applicant for that relief was the corporation itself, not Mr Moshos, although Mr Moshos was given leave by his Honour to represent the corporation in connection with that application. The corporation did not seek review of the Registrar's decision pursuant to s 35A(5) of the FCA nor did he, in his personal capacity, apply to stay the winding up or terminate the winding up pursuant to s 482 of the Act. No doubt Mr Moshos had very good reasons for not taking either of these courses. Had Mr Moshos been entitled to proceed under s 482 of the Act, he would have been obliged to address the matters required to be addressed pursuant to s 482(2A) of the Act as well as other relevant matters. One matter of considerable significance to an application under s 482 of the Act would have been the question of whether the corporation is solvent. 71 Prior to the introduction of s 471A(1A) of the Act, the so called "Diamond Fuel" rule was applied from time to time in New South Wales. That rule was first articulated in the English Court of Appeal decision Re Diamond Fuel Co (1879) 13 Ch D 400. The principle is that the directors of a company in liquidation retain a residual power to commence proceedings in the corporation's name to set aside the winding up order. They may also have other residual powers but I do not need to consider that proposition in the present case. 72 Section 471A(1A) refines the position somewhat. There is a line of authority starting with Rock Bottom Fashion Market Pty Ltd v HR & CE Griffiths Pty Ltd (1997) 142 FLR 20 at 21 which stands for the proposition that the Diamond Fuel rule is now unnecessary and has been overtaken and replaced by s 471A(1A) of the Act. 73 It has been said that an application for the Court's approval under s 471A(1A) raises a range of discretionary considerations (Termination and Setting Aside of Winding-Up Orders, K van Zwieten and RP Austin, (2007) 81 ALJ 932 at 945). 74 Although I gave Mr Moshos leave to appear for the corporation and thus approved his participation in the hearing before me, I did so only for the purpose of allowing the corporation to advance its arguments in support of the relief which it now seeks. I did so upon terms that Mr Moshos would pay the costs of the present exercise should the corporation's application be unsuccessful. 75 As the learned authors in the article to which I have referred at [73] above said, applications to set aside a winding up order fall into two categories. The first is where there has been some serious unfairness to the corporation going to the very heart of the Court's power to make the order and the second is where the order was obtained irregularly or in the absence of the corporation in circumstances where the corporation did not have fair notice that the creditor would seek the winding up order. 76 At the hearing before me, Mr Moshos informed me that the primary Judge had, in effect, approved his acting for the corporation in connection with the application which the corporation made to the primary Judge to set aside the orders made by the Registrar on 15 November 2013 and on 13 December 2013. I take it that his Honour was satisfied that Mr Moshos had the requisite standing to bring that application. No point was taken by the insurer in the proceeding before his Honour to the effect that Mr Moshos had no standing to represent the corporation in that proceeding. Similarly, no such point has been taken before me.

Grounds 1 and 3 77 The primary Judge gave careful consideration to the arguments advanced by Mr Moshos on behalf of the corporation in support of his challenge to the efficacy of the order made by the Registrar on 15 November 2013. 78 Section 35A(7) of the FCA provides that, once a Registrar has referred a proceeding to a Judge, he or she shall not hear, or continue to hear, the proceeding and shall make appropriate arrangements for the proceeding to be heard by the Court (a Judge). In the present case, the proceeding was referred to a Judge (Jacobson J). His Honour first became seized of the matter on 15 August 2013. The proceeding continued to be dealt with by a Judge of the Court up to and including 3 October 2013. On that occasion, Farrell J made an order referring the whole of the proceeding back to a Registrar. 79 In my judgment, it was within power for Farrell J to make the order which she made on 3 October 2013. That order was effective to reinvest a Registrar of the Court with the power to deal with the proceeding. Neither Mr Moshos nor any other person on behalf of the corporation took issue at the time with her Honour's power to do that which she did nor did any person on behalf of the corporation seek to have the proceeding referred back to a Judge. 80 The learned primary Judge dealt with the s 35A(7) arguments advanced on behalf of the corporation by Mr Moshos (at [38] of the first judgment) by applying the principle that orders remain valid until set aside. Mr Moshos did not make any submission that persuasively overcame his Honour's reasoning in this regard. In addition, as I have said, I see no reason why, once a Judge is properly seized of a matter (even pursuant to s 35A(7)), that Judge or another Judge may not refer the matter to a Registrar for determination by that Registrar. 81 Mr Moshos repeated before me the same arguments which he had advanced to the primary Judge to the effect that the failure on the part of the insurer to give notice of its application on 15 November 2013 and the failure on the part of the insurer to serve its Interlocutory Process dated that day together with the affidavit in support was fatal to the efficacy of the orders made by the Registrar on that day. 82 I have set out and referred to the primary Judge's reasons for rejecting these arguments at [45]-[51] above. The essence of his Honour's reasoning was that there is ample power within the Court to dispense with compliance with the FCR. Indeed, r 1.34 and r 1.35 FCR make perfectly clear that the requirements of the FCR may be dispensed with. 83 It is true that the order made on 15 November 2013 was made ex parte and without notice to the corporation. In my judgment, there is no prohibition on the Court making such an order ex parte. However, it is liable to be set aside if the interests of justice and fairness require that it be set aside in all the circumstances (Deputy Commissioner of Taxation v Annesley Plant Hire Pty Ltd [2010] FCA 755). 84 During the course of argument before me, I enquired of Mr Moshos what he would have done had he been given fair notice of the application made by the insurer on 15 November 2013. His answer was that he would have opposed the application on the ground that the corporation would have been entitled to take advantage of the deemed dismissal that might have come into effect on 16 November 2013 notwithstanding that the principal cause for the delay in having the application determined lay squarely at the feet of the corporation. The likelihood that the extension would have been refused in the face of opposition on that ground was small. 85 In any event, the primary Judge declined to set aside the order made by the Registrar on 15 November 2013. He did so for the reasons which I have explained at [51] above and in the exercise of his undoubted discretion.

Ground 2 86 As far as ground 2 is concerned, both the Registrar and his Honour followed a line of authority exemplified by Workers Compensation Nominal Insurer v Lozito-Strada Pty Ltd [2013] FCA 625. In argument before me, Mr Moshos did not address the principle articulated by Jacobson J in Lozito-Strada. Rather, he repeated his submission which he had made to the primary Judge to the effect that, as at 16 May 2013 when the proceeding below was commenced, the time for compliance with the Demand had not yet expired with the consequence that the statutory presumption of insolvency under s 459C of the Act had not arisen. In my view, Mr Moshos has failed to demonstrate that the line of authority relied upon by the primary Judge is based upon a wrong principle or is otherwise incorrect.

Conclusions 87 Because the orders made by the Registrar on 13 December 2013 have serious consequences for the corporation, I have carefully considered the prospects of success on the part of the corporation in obtaining leave to appeal from the primary Judge's judgments. I consider those prospects to be extremely poor. They are not sufficient to warrant an extension of time for leave to appeal. 88 Accordingly, given that his Honour inferred that the corporation was probably insolvent and given that Mr Moshos has expressly disavowed any need to prove solvency and thus not adduced any evidence of solvency, I propose to refuse the Application for an Extension of Time. 89 On 19 May 2014, Mr Moshos gave an undertaking to the Court that he would pay any adverse costs order made in respect of the present Application. For that reason, I propose to order him to pay the costs of and incidental to the Application. 90 There will be orders accordingly. I certify that the preceding ninety (90) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster.

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