SGB Raffia v Gammacon [2007] NSWSC 1511

New South Wales Supreme Court

CITATION : SGB Raffia v Gammacon [2007] NSWSC 1511

HEARING DATE(S) : 21 November 2007 JUDGMENT OF : McDougall J at 1

EX TEMPORE JUDGMENT DATE : 21 November 2007

DECISION : See paragraph [32] of judgment.

CATCHWORDS : CORPORATIONS – winding up – whether registrar has power to adjourn hearing of proceedings for winding up pursuant to s440A(2), Corporations Act 2001. - PRACTICE AND PROCEDURE – review of registrar's decision – principles on which review undertaken – whether reviewable error shown.

Corporations Act 2001 LEGISLATION CITED : Civil Procedure Act 2005 Uniform Civil Procedure Rules

Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 Creevey v Deputy Commissioner of Taxation (1996) 19 ACSR 456 CASES CITED : House v The King (1936) 55 CLR 499 TCS Management Pty Ltd v CTTI Solutions Pty Ltd [2001] NSWSC 830 Waste Recycling and Processing Services of New South Wales v Local Government Recycling Co-Operative Limited (1999) 32 ACSR 194

PARTIES : SGB Raffia Pty Limited (ACN 106 939 262) Gammacon Pty Limited (ACN 104 275 523)

FILE NUMBER(S) : SC 5064/07

COUNSEL : C D Wood (Plaintiff) R M Foreman (Defendant)

SOLICITORS : Hugh & Associates Lawyers (Plaintiff) Minter Ellison Lawyers (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

McDOUGALL J

21 November 2007 (ex tempore – revised 28 November 2007)

5064/07 SGB RAFFIA PTY LIMITED (ACN 106 939 262) v GAMMACON PTY LIMITED (ACN 104 275 523) JUDGMENT 1 HIS HONOUR: On 16 November 2007, the plaintiff's application for the winding up of the defendant was listed before Senior Deputy Registrar Musgrave. The defendant sought an adjournment of the hearing, on the basis that it was under administration and that the interests of the defendant's creditors required the continuance of administration, rather than winding up. See s440A(2) of the Corporations Act 2001. 2 The Senior Deputy Registrar acceded to that request, although not, I think, to the extent of granting the full length of the adjournment sought by the defendant. The plaintiff seeks a review of the Senior Deputy Registrar's decision. See UCPR r49.19. 3 The plaintiff contends that the Senior Deputy Registrar lacked power to order the adjournment; and that even if he had that power, his exercise of the discretion to do so miscarried in any event. It is convenient to deal first with the question of power. 4 The power to wind up in insolvency is given to "the Court" by s459A of the Corporations Act. By s58AA, the reference to "Court" includes a reference to this Court. 5 Section 13 of the Civil Procedure Act 2005 authorises the Chief Justice of this Court by instrument in writing to direct that functions of the Court under the Civil Procedure Act, or the Uniform Civil Procedure Rules, may be exercised by registrars and other officers in circumstances and on conditions that may be specified in the instrument. 6 The instrument of delegation that is presently in force (and was in force last Friday) delegates to registrars a number of the Court's powers under the Corporations Act. The powers thus delegated include power to wind up a company in insolvency under s459A. The delegation does not in terms refer to s440A. 7 Section 66 of the Civil Procedure Act authorises the Court at any time and from time to time to adjourn any proceedings before it. That power is delegated to registrars without restriction by the delegation to which I have referred. 8 The delegation also empowers a registrar to "exercise the functions of the Court for the purposes of, and in respect of all matters incidental to, the exercise of the registrar's powers under any Act, under any other provision of the rules, or under this direction". See part 3, clause 9. 9 Mr C D Wood of counsel for the plaintiff submitted that s440A of the Corporations Act gave the Court a power, and that the power so given was not one of those delegated to registrars pursuant to the delegation. Thus, he submitted, although a registrar could hear an application for winding up in insolvency, he or she could not deal with an application for the adjournment of that winding up pursuant to s440A (2). Mr Wood submitted that this was not surprising, given that s440A sets out a test for the adjournment, requires findings of fact and involves the exercise of a discretion that has been much discussed in the authorities. 10 For the defendant, Mr R M Foreman of counsel submitted that, on its proper analysis, s440A does not grant a power or function. He submitted, instead, that it regulates the manner of exercise of a power or function. The power or function in question - to adjourn proceedings - is one delegated to registrars by s66 of the Civil Procedure Act. 11 Alternatively, Mr Foreman submitted, the power to make incidental orders necessarily included the power to adjourn the hearing of an application, where the hearing of that application was itself within another head of power delegated to a Registrar. 12 It appears that there is no authority on the point. I was informed from the Bar table that some registrars have taken the position that they do not have power to adjourn pursuant to s440A(2), or its predecessors, but other registrars have taken the view that they do have such power. It is certainly the case that, from time to time, applications for adjournment based on s440A(2) have been dealt with by a judge of the Court. 13 I have come to the conclusion that the Senior Deputy Registrar did have power to grant, or more accurately to order, the adjournment. In my view, that power arises in at least two ways. Firstly, the power to grant an adjournment is one explicitly given by s66 of the Civil Procedure Act, which is one of the powers delegated without restriction to registrars. Section 66 applies to the hearing of any proceedings in the Court. Hearings of applications to wind up under s459A are proceedings in the Court. It must follow that the power to adjourn applies as much to those proceedings as it does to any other proceedings under any other head of the Court's jurisdiction. 14 Alternatively, I think, the power to grant an adjournment of the hearing of proceedings is an incident of the power to hear and determine those proceedings. Any alternative view would be quite absurd. It would mean, in the facts of this case, that a registrar could hear an application for winding up, but would be required to refer to a judge of the Court an application pursuant to s440A(2) for the adjournment of that hearing, even where the application was one made by consent. That is scarcely consistent with the purpose of delegation. 15 It is, therefore, necessary to consider the question of exercise of discretion. 16 The statutory test is expressed in simple terms. It requires the Court to be satisfied of two things. The first is that the company is under administration. There is no doubt in this case that the defendant was and is under administration.