FEDERAL COURT OF AUSTRALIA Mayfair Group Pty Ltd v Viculus Ltd [2006] FCA 614 MAYFAIR GROUP PTY LTD v VICULUS LTD ACD27 OF 2005 EMMETT J 4 MAY 2006 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIA CAPITAL TERRITORY DISTRICT REGISTRY ACD27 OF 2005 BETWEEN: MAYFAIR GROUP PTY LTD APPLICANT AND: VICULUS LTD RESPONDENT JUDGE: EMMETT J DATE OF ORDER: 4 MAY 2006 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The notices of motion of 16 February 2006 and 2 May 2006 be dismissed. 2. The plaintiff pay all costs reasonably incurred by the defendant in relation to the notices of motion. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIA CAPITAL TERRITORY DISTRICT REGISTRY ACD27 OF 2005 BETWEEN: MAYFAIR GROUP PTY LTD APPLICANT AND: VICULUS LTD RESPONDENT JUDGE: EMMETT J DATE: 4 MAY 2006 PLACE: SYDNEY REASONS FOR JUDGMENT 1 I have before me an application by notice of motion, filed on 2 May 2006, for an extension of time within which to make an application for review of the exercise of power by a Deputy Registrar. On 12 October 2005, Mayfair Group Pty Ltd ("Mayfair Group") applied under s 495E(2) of the Corporations Act 2001 (Cth) ('the Act') for the winding-up on the ground of insolvency of Viculus Limited ('the Company'). The matter came before Registrar Hedge on 27 October 2005, when it was stood over to 24 November 2005. On that day the application was adjourned to a date to be fixed before a judge. 2 On 29 December 2005, Mayfair Group filed a notice of discontinuance. However, that notice of discontinuance appears to have been rejected by the Registry and on 30 December 2005, Registrar Hedge, by consent, ordered that the application be dismissed. On 16 February 2005, Mayfair Group purported to apply by notice of motion for an order that Registrar Hedge's exercise of discretion in dismissing the winding-up application be reviewed and that the matter be reinstated. Even at that stage the proceeding might be regarded as somewhat extraordinary. 3 I shall deal with the circumstances surrounding the request for the winding-up proceeding to be dismissed by consent. On 23 December 2005, an agreement was entered into between Mayfair Group and the Company to resolve a dispute between them. The agreement was written and was entitled 'Terms of Settlement'. The Terms of Settlement recited that Mayfair Group had initiated proceedings in the Federal Court seeking to wind-up the Company on the ground of insolvency and non-payment of a debt alleged to be owed in the sum of $275,000. The Terms of Settlement recited that the Company denied the allegations made by Mayfair Group. 4 By the Terms of Settlement, the Company agreed to pay to Mayfair Group the sum of $60,000 by 29 December 2005, the further sum of $60,000 on or before 30 days from 29 December 2005, and the balance of $100,000 at some date, which is not entirely clear, but is probably the earlier of 30 March 2006 and the date on which the Company is re-listed on the Melbourne Stock Exchange. The Terms of Settlement also provided for the Company to give a fixed and floating charge over its assets in favour of Mayfair Group, which was to be discharged upon the making of the final payment. 5 A further clause of the Terms of Settlement provided that Mayfair Group would, upon receipt of the first payment of $60,000, prepare and lodge a notice of discontinuance in respect of the proceeding. It is pursuant to that commitment that the notice of discontinuance, to which I have referred, was tendered at the Registry. 6 It is asserted that the Registry staff indicated that the appropriate way to deal with the matter was by way of consent order for dismissal rather than notice of discontinuance, and, for that reason, the orders were made by Registrar Hedge on 30 December 2005. The reason for the belated change of heart by Mayfair Group is that there was apparently a default on the part of the Company in paying the second sum of $60,000. 7 Mayfair Group therefore applied on 16 February 2006 for review of the consent orders. Even then, Mayfair Group did not move with any particular expedition. It must have known before the end of January that there was default, but still waited for more than two weeks before purporting to apply for review of the exercise of power by the Registrar. The basis upon which it is said that the Court should extend the time is that there is a public interest in ensuring that an insolvent company does not continue to engage in trading. 8 Rule 16.1 of the Court (Corporations) Rules 2000 provides that, for the purposes of s 35A(1)(h) of the Federal Court of Australia Act 1976 (Cth), a Registrar may exercise a power of the Court to make a winding-up order or to dismiss a winding-up application. However, under r 16.1(2), a decision, direction or act of a Registrar made or given under those rules may be reviewed by the Court or a judge. Under r 16.1(3) an application for review must be made within 21 days after the decision, direction or act complained of or any further time allowed by the Court. Accordingly, the time within which any application should have been made expired no later than 21 January 2006. 9 The Terms of Settlement appear to be binding on the parties. Indeed, I have been informed that Mayfair Group has commenced a proceeding in the Country Court in Victoria to enforce the Terms of Settlement. I do not understand, therefore, how Mayfair Group can now come to the Court and say that it wants a review of an order made pursuant to the Terms of Settlement. It might have been possible for Mayfair Group to rescind the Terms of Settlement on the basis of their repudiation. However, I am at a loss to understand how it can, at the one time, seek to enforce and take the benefit of the Terms of Settlement, yet seek to resile from its own obligation. There has been no suggestion that Mayfair Group has refunded the sum of $60,000 that was paid prior to the order for dismissal being made. 10 For those reasons in the exercise of my discretion, I would have been disposed to refuse to extend the time within which to bring the application for review of the Registrar's order, assuming, without deciding, that an order made by consent is one to which rule 16.1 would apply. However, there is another reason why the extension of time would have no utility whatsoever. Section 459R of the Act provides that an application for a company to be wound-up in insolvency is to be determined within six months after it is made. Under s 459R(2), the Court may, by order, extend the period within which an application must be determined, but only if the Court is satisfied that special circumstances justify the extension and the order is made within that period as prescribed by s 459R(1), or as last extended under s 459R. 11 As I have said, the winding-up application was filed on 12 October 2005. The six month period would have expired by 13 April 2006. Under s 459R(3) of the Act, an application is dismissed by the operation of s 459R if it is not determined as required by s 459R. Even if I did extend time and had power to review the Registrar's order and concluded that the order should be reviewed, I would have no power to make any winding-up order because the application would be deemed to have been dismissed by the operation of s 459R. Accordingly, there is no utility at all in extending the time within which to bring the application that was made on 16 February 2006. It follows that both applications before me should be dismissed with costs. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate: Dated: 25 May 2006 Counsel for the Applicant: Dr B O'Hair Solicitor for the Applicant: United Legal Counsel for the Respondent: Mr P Bravender-Coyle Solicitor for the Respondent: Needham & Associates Date of Hearing: 4 May 2006 Date of Judgment: 4 May 2006