FEDERAL COURT OF AUSTRALIA Conlan v Pratt (No 2) [2013] FCA 105 Citation: Conlan v Pratt (No 2) [2013] FCA 105 Parties: MARK ANTHONY CONLAN v MICHAEL ROBERT ANTHONY PRATT and SOUTHLAND AGRIBUSINESS HOLDINGS PTY LTD ACN 109 068 242 File number: WAD 52 of 2012 Judge: MCKERRACHER J Date of judgment: 8 February 2013 Catchwords: CORPORATIONS – validity of order made by Registrar appointing an official liquidator under s 472 of the Corporations Act 2001 (Cth) – whether power validly delegated to a Registrar pursuant to a Direction under s 35A(1) of the Federal Court of Australia Act 1976 (Cth) Legislation: Federal Court of Australia Act 1976 (Cth) s 35A(1) Cases cited: Amos v Monsour Pty Ltd (formerly Monsour Legal Costs Pty Ltd) [2010] FCA 741 Chisholm v Official Trustee in Bankruptcy [2000] FCA 1234 Commonwealth of Australia v Hospital Contribution Fund of Australia (1982) 150 CLR 49 Conlan v Pratt [2013] FCA 19 Harris v Caladine (1991) 172 CLR 84 Lane v Morrison (2009) 239 CLR 230 Official Trustee in Bankruptcy v Nedlands Pty Ltd (in liq) (2000) 99 FCR 554 The Queen v Davison (1954) 90 CLR 353 Re Socket Screw & Fastener Distributors (NSW) Pty Ltd (in prov liq) (1994) 51 FCR 599 Taylor v Deputy Commissioner of Taxation (Cth) (1999) 42 ATR 220 Totev v Sfar (2008) 167 FCR 193 Date of hearing: 8 February 2013 Place: Perth Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 15 Counsel for the Applicant: The Applicant did not appear Counsel for the Respondents: MRA Pratt appeared in person for the respondents IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 52 of 2012 BETWEEN: MARK ANTHONY CONLAN Applicant AND: MICHAEL ROBERT ANTHONY PRATT First Respondent SOUTHLAND AGRIBUSINESS HOLDINGS PTY LTD ACN 109 068 242 Second Respondent JUDGE: MCKERRACHER J DATE OF ORDER: 8 FEBRUARY 2013 WHERE MADE: PERTH THE COURT DECLARES THAT: 1. The disposition of the truck with registration number KBC 686A (formerly, 1CBA 538) (Truck) from PB Enterprises (WA) Pty Ltd to the second respondent is void. THE COURT ORDERS THAT: 2. The second respondent deliver the Truck into the custody of Ross's Auctioneers & Valuers at Lot 5 Great Eastern Highway, Kalgoorlie within 7 days of this order. 3. The second respondent deliver an executed Department of Transport form 'Notification of Change of Ownership' in respect of the Truck to the applicant's legal representative, HopgoodGanim within 7 days of this order. 4. The respondents pay the costs of the application to be taxed if not agreed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011 IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 52 of 2012 BETWEEN: MARK ANTHONY CONLAN Applicant AND: MICHAEL ROBERT ANTHONY PRATT First Respondent SOUTHLAND AGRIBUSINESS HOLDINGS PTY LTD ACN 109 068 242 Second Respondent JUDGE: MCKERRACHER J DATE: 8 february 2013 PLACE: PERTH REASONS FOR JUDGMENT (Revised from the transcript) 1 Before fixing the time for delivery of judgment this morning I had published reasons on 17 January 2013 in relation to the application brought by the applicant (Mr Conlan) in his capacity as liquidator of PB Enterprises (WA) Pty Ltd as described in Conlan v Pratt [2013] FCA 19. The matter was listed for judgment this morning at 10.00 am so that the relief which would follow from those reasons could be considered and orders made. Mr Conlan filed a minute of proposed final orders. 2 The first respondent (Mr Pratt) has travelled a considerable distance to attend Court for the judgment and to make a further submission which he had foreshadowed by affidavit recently filed and served. The solicitors for Mr Conlan did not attend Court to make any submissions concerning that matter or make any submissions in writing. 3 By Mr Pratt's affidavit filed on 5 February 2013 (which is more in the nature of a written submission) he raises the question as to whether or not there was power on the part of a Registrar of this Court to place PB Enterprises (WA) Pty Ltd into liquidation in the first place. He contends today, as he did by that affidavit, that there was no such power because of the High Court decision in The Queen v Davison (1954) 90 CLR 353. Mr Pratt submits the High Court there held that Registrars have 'absolutely no authority to carry out or perform any judicial function'. He also relies on the High Court decision of Lane v Morrison (2009) 239 CLR 230 in support of that contention. 4 There are difficulties with the submission. The first is that Davison was a case concerning what was then the first validly created federal court after the High Court was constitutionally created, namely, the Federal Court of Bankruptcy. It was established in 1930 after the passing of the Bankruptcy Act in 1924. 5 Davison was dealing not with the question of appointment of a liquidator but rather with bankruptcy and the making of a sequestration order upon a debtor's petition. The Federal Court of Bankruptcy no longer exists. The powers of that court were legislatively transferred to this Court, the Federal Court of Australia, in 1977 on the passing of the Federal Court of Australia Act 1976 (Cth) (FCA). This Court is unquestionably a court created under Ch III of the Constitution. 6 In Davison, the High Court, as Mr Pratt submits, held that a Deputy Registrar of the Court could not exercise judicial power in the manner then conferred by s 24(1) of the Bankruptcy Act. Dixon CJ and McTiernan J said (at 370-371) (footnotes omitted): In the present case the thing done is the making of an order characteristic of courts. The primary power to make the very order is entrusted to the court established under ss. 71 and 72. The power of the registrar is secondary and in a sense derivative. Further by the definition of the expression "the Court" the legislature has made it clear that for certain purposes he is to enjoy the very powers conferred upon the court and is to act exactly as the court. This he is to do, although under the peculiar arrangements adopted to meet the decision in Le Mesurier v. Connor, the registrar is no part of the court and is not an officer of the court. It is clear that s. 24 (1) (a) of the Bankruptcy Act confers upon the registrar a power which is also exercisable by the court and a power to be exercised by him in the same way and by the same form of instrument as would be used by the judge. He is, in other words, the substitute for the judge. Within the meaning of s. 54 he is by definition "the Court". By definition also he is the court within the meaning of s. 57. It is therefore his function to decide whether good and sufficient cause exists for refusing to make a sequestration order. Although no doubt it is exceptional for difficulties to arise under this heading, they are by no means unknown; see Re Bachelor; Re Betts; Ex parte Official Receiver; Re Hancock. When s. 24 (1) is construed with the definition of "the Court" and applied to ss. 54 and 57, it becomes clear that the function of making an order of sequestration is treated as judicial and is confided to the registrar in the same character as it is confided to the court. In other words it is the intention of the legislature that the registrar should make an order operating as an order of the court. That is exactly what in fact he did in the present case. For upon its face the order is one which could not be made except by a court constituted as it is in conformity with s. 71 and s. 72 of the Constitution. It follows that what has been done is an attempt to authorize a person not constituting a court under ss. 71 and 72 of the Constitution to exercise part of the judicial power of the Commonwealth and is not authorized by the Constitution. The order of sequestration so made is void. ... 7 But the High Court did nevertheless accept that judicial functions could be executed by an officer of the court such as a Master or a Registrar subject to judicial confirmation or review. 8 This point of law has been re-visited on a number of occasions in a series of cases dealing with the question of delegation of judicial power. The High Court has repeatedly held under Ch III of the Constitution judicial power may be delegated providing that the delegation is subject to the supervision and control by Ch III judges: see Harris v Caladine (1991) 172 CLR 84 and Commonwealth of Australia v Hospital Contribution Fund of Australia (1982) 150 CLR 49. In addition in other courts, mainly this Court, see also Amos v Monsour Pty Ltd (formerly Monsour Legal Costs Pty Ltd) [2010] FCA 741; Totev v Sfar (2008) 167 FCR 193; Re Socket Screw & Fastener Distributors (NSW) Pty Ltd (in prov liq) (1994) 51 FCR 599; Taylor v Deputy Commissioner of Taxation (Cth) (1999) 42 ATR 220; Official Trustee in Bankruptcy v Nedlands Pty Ltd (in liq) (2000) 99 FCR 554 and on appeal in Chisholm v Official Trustee in Bankruptcy [2000] FCA 1234. Was there delegation and supervision and control? 9 Section 35A FCA relevantly provides: 35A Powers of Registrars (1) Subject to subsection (2), the following powers of the Court may, if the Court or a Judge so directs, be exercised by a Registrar: (a) the power to dispense with the service of any process of the Court; (b) the power to make orders in relation to substituted service; (c) the power to make orders in relation to discovery, inspection and production of documents in the possession, power or custody of a party to proceedings in the Court or of any other person; (d) the power to make orders in relation to interrogatories; (e) the power, in proceedings in the Court, to make an order adjourning the hearing of the proceedings; (f) the power to make an order as to costs; (g) the power to make an order exempting a party to proceedings in the Court from compliance with a provision of the Rules of Court; (h) a power of the Court prescribed by Rules of Court. … (3) The provisions of this Act and the Rules of Court that relate to the exercise by the Court of a power that is, by virtue of subsection (1), exercisable by a Registrar apply in relation to an exercise of the power by a Registrar under this section as if references in those provisions to the Court were references to the Registrar. (4) Notwithstanding any other provision of this Act and any provision of the Public Service Act 1999 or of any other law, a Registrar is not subject to the direction or control of any person or body in relation to the manner in which he or she exercises powers pursuant to subsection (1). (5) A party to proceedings in which a Registrar has exercised any of the powers of the Court under subsection (1) may, within the time prescribed by the Rules of Court, or within any further time allowed in accordance with the Rules of Court, apply to the Court to review that exercise of power. (6) The Court may, on application under subsection (5) or of its own motion, review an exercise of power by a Registrar pursuant to this section and may make such order or orders as it thinks fit with respect to the matter with respect to which the power was exercised. (7) Where an application for the exercise of a power referred to in subsection (1) is being heard by a Registrar and: (a) the Registrar considers that it is not appropriate for the application to be determined by a Registrar acting under this section; or (b) an application is made to the Registrar to arrange for the first mentioned application to be determined by the Court; he or she shall not hear, or continue to hear, the application and shall make appropriate arrangements for the application to be heard by the Court. (8) In this section, Registrar means the Registrar, a Deputy Registrar, a District Registrar or a Deputy District Registrar of the Court. 10 The position in relation to the power exercised by 'the Registrar' in the present instance is that it was a power delegated by a direction of French J (as his Honour then was), a former judge of the Federal Court of Australia, a Ch III judge. Pursuant s 35A(1) FCA by an instrument of delegation made and signed by his Honour on 8 January 2008 (the Delegation) he expressly delegated, pursuant to the powers listed in s 35A(1) FCA, certain powers of the Court to all the (named) 'Registrars' of this District Registry including Deputy District Registrar Stanley. The Delegation specifically includes, by item 51, a power under s 472 of the Corporations Act 2001 (Cth) for the Deputy District Registrar to appoint an official liquidator. On 25 January 2011 Mr Conlan was appointed Official Liquidator of PB Enterprises (WA) Pty Ltd by Deputy District Registrar Stanley. 11 The power to appoint the liquidator was therefore validly delegated to the Registrar and, in accordance with the authorities, remained subject to supervision and control by Ch III judges. 12 The decision of Lane v Morrison on which Mr Pratt relies is a decision dealing with what was then the Australian Military Court. In that decision the High Court of Australia ruled that the Military Court of Australia was constitutionally invalid. There were a variety of reasons for that, but the legislated structure of the Australian Military Court did not accord with the requirements of Ch III of the Constitution. This is in contrast to the Federal Court of Australia, a Court which does conform with Ch III of the Constitution. 13 Lane v Morrison, dealing with an entirely different concept, namely, rejecting the validity of a court itself, does not therefore assist Mr Pratt in his argument. To the extent the Davison case might have assisted at all, it has been displaced by the creation of this Court and the express delegation of powers pursuant to s 35A(1) FCA. Conclusion 14 On the strength of the authorities and on the basis of the Delegation, the argument raised by Mr Pratt cannot succeed. So, while I am sympathetic to Mr Pratt's position, I must make orders in accordance with the applicant's minute of proposed orders (which I have modified). 15 The following declaration is made: 1. The disposition of the truck with registration number KBC 686A (formerly, 1CBA 538) (Truck) from PB Enterprises (WA) Pty Ltd to the second respondent is void. The Court orders that: 2. The second respondent deliver the Truck into the custody of Ross's Auctioneers & Valuers at Lot 5 Great Eastern Highway, Kalgoorlie within 7 days of this order. 3. The second respondent deliver an executed Department of Transport form 'Notification of Change of Ownership' in respect of the Truck to the applicant's legal representative, HopgoodGanim within 7 days of this order. 4. The respondents pay the costs of the application to be taxed if not agreed. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. Associate: Dated: 20 February 2013