Active Hearing Pty Ltd v Australian Securities and Investments Commission

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   ACTIVE HEARING PTY LTD -v- AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION [2025] WASC 191
CORAM:   WHITBY J
HEARD:   20 MAY 2025
DELIVERED          :   20 MAY 2025
PUBLISHED           :   27 MAY 2025
FILE NO/S:   COR 77 of 2025
BETWEEN:   ACTIVE HEARING PTY LTD
First Plaintiff
HUTCHINSON AUDIOLOGY CLINICS PTY LTD
Second Plaintiff
AND
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Defendant

Catchwords:

Corporations law - Application to reinstate deregistered companies - Application that company be wound up on just and equitable grounds - Application for leave to commence proceedings against company in liquidation - Turn on own facts

Legislation:

Corporations Act 2001 (Cth)
Supreme Court (Corporations) Rules 2004 (WA)

Result:

Application granted

Category: B

Representation:

Counsel:

First Plaintiff	:	B H Taylor
Second Plaintiff	:	B H Taylor
Defendant	:	No appearance

Solicitors:

First Plaintiff	:	Mills Oakley
Second Plaintiff	:	Mills Oakley
Defendant	:	No appearance

Case(s) referred to in decision(s):

ACCC v Link Solutions Pty Ltd [2008] FCA 1790
ACCC v Phoenix Institute of Australia Pty Ltd (subject to deed of company arrangement) [2016] FCA 1246
ACN 009 009 072 (in liquidation) v ASIC [2022] WASC 221
ASIC v Merlin Diamonds Limited (No 3) [2020] FCA 411
Clean Energy Regulator v E Connect Solar & Electrical Pty Ltd [2023] FCA 1081
Grogan Pty Ltd v ASIC, Re SIRA Pty Ltd (Deregistered) [2020] FCA 1832
Hipages Group Pty Ltd v Reach Aussie Pty Ltd [2017] FCA 112
Hugall v ASIC [2009] WASC 18
Jit Sun Investments [6]; Perrin v ASIC [2024] WASC 38
Kingjade Holdings Pty Ltd v Pineridge Nominees Pty Ltd (1997) 15 ACLC 910
Macquarie University v Macquarie University Union (No 2) [2007] FCA 844
Re Brockweir Pty Ltd [2012] VSC 225
Swaby v Lift Capital Partners Pty Ltd (ACN 011 015 500) (in liq) [2009] FCA 749

WHITBY J:

BACKGROUND

By originating process dated 19 May 2025, the plaintiffs apply under s 601AH(2), s 461(1)(k) and s 471B of the Corporations Act 2001 (Cth) (Act) for the following orders:
(1)the Australian Securities and Investment Commission (ASIC), the defendant, reinstates the registrations of Hutchison Audiology Clinics Pty Ltd (HAC), the second plaintiff, and FOOYII Pty Ltd (ACN 605 785 500) (Deregistered) (FOOYII), forthwith;
(2)upon the reinstatement of its registration, FOOYII be wound up by the court on just and equitable grounds;
(3)HAC have leave to commence proceedings against FOOYII, in liquidation.
The plaintiffs rely on the affidavit of Sergey Pustovoytov affirmed on 19 May 2025 (Sergey Affidavit).
The plaintiffs have also filed a certificate of urgency dated 19 May 2025, a minute of proposed orders dated 19 May 2025, consent of the liquidator dated 19 May 2025 and a written outline of submissions dated 19 May 2025.
The originating process was listed for an urgent hearing on 20 May 2025. ASIC had been notified of the hearing but did not attend. After hearing oral submissions from counsel for the plaintiffs, I gave short oral reasons for making the orders sought by the plaintiffs. I indicated I would provide more detailed written reasons. Those reasons follow.

Background

Mr Pustovoytov:
(1)is a director of Active Hearing Pty Ltd (AH), the first plaintiff, having been appointed on 29 September 2023;[1]
(2)was a director of HAC from 29 September 2023 until 13 February 2025, the date of HAC's deregistration;[2] and
(3)is the finance director of WS Audiology, the ultimate parent company of the plaintiffs.[3]
[1] Sergey Affidavit [1(a)].
[2] Sergey Affidavit [1(b)].
[3] Sergey Affidavit [2(a)].
HAC is a wholly owned subsidiary of AH and operated a business trading as 'Brad Hutchinson Hearing' (BHH) which provided audiology services, including adult and paediatric hearing testing, hearing aid fittings and hearing aid repairs.[4]
[4] Sergey Affidavit [11(b)].
BHH was originally owned by Brad Hutchison and his mother, Carole Hutchinson. On 20 May 2022, AH, Brad Hutchinson and Carole Hutchinson entered into a written share sale agreement pursuant to which AH purchased all of the issued capital in BHH.[5]
[5] Sergey Affidavit [12] - [14].
On 27 July 2022, AH and Ms Shze Yuen Claire Foo entered into a written employment agreement pursuant to which Ms Foo was employed as the 'Business Manager' of AH. From August 2022 to August 2023, Ms Foo was provided with the access details to the BHH Commonwealth Bank account to enable her to perform her duties for AH.[6]
[6] Sergey Affidavit [15] - [17].
On 1 October 2024, HAC and AH entered into a business sale agreement pursuant to which AH purchased from HAC the BHH business as a going concern and AH assumed all of the liabilities of HAC.[7]
[7] Sergey Affidavit [20] - [21].
On 11 December 2024, given the sale of the BHH business by HAC to AH, AH (as the sole shareholder of HAC) resolved to approve the deregistration of HAC pursuant to s 601AA of the Act and Mr Pustovoytov, as director of HAC, lodged the necessary forms with ASIC for that deregistration to occur.[8]
[8] Sergey Affidavit [22].
On 13 February 2025, HAC was voluntarily deregistered pursuant to s 601AA of the Act.[9]
[9] Sergey Affidavit [26].
Ms Foo was a director, secretary and shareholder of FOOYII, along with her husband Mr Hee Tung Stephen Yii, from 12 May 2015 until its deregistration on 4 April 2025.[10] FOOYII was the registered proprietor of the business names 'Elicious', 'Gosh Shoes' and 'Shake Sack'.[11]
[10] Sergey Affidavit [28(a),(b)].
[11] Sergey Affidavit [28(c)].
In around February 2025, Mr Pustovoytov requested the Commonwealth Bank to prepare a report of all transactions made into and out of the BHH account in an attempt to reconcile discrepancies he had identified in the account. Those reports revealed that, between 15 August 2022 and 24 August 2023, $365,015.01 was transferred from the BHH account to an account in the name of FOOYII trading as 'Elicious Café' and $78,954.70 was transferred to an account in the name of FOOYII trading as 'Gosh Shoes'.[12]
[12] Sergey Affidavit [50], Annexures 'SXP-17 - SXP-23'.
Other than payment of Ms Foo's wages, the plaintiffs did not have any other business arrangements with Ms Foo or FOOYII entitling her to any of those payments.[13]
[13] Sergey Affidavit [55].
Elicious Café is permanently closed, Gosh Shoes has ceased trading and there is no business operating under the name 'Shake Sack'.[14]
[14] Sergey Affidavit [29] - [36].
On 4 April 2025, FOOYII was deregistered on the initiative of ASIC pursuant to s 601AB of the Act.[15]
[15] Sergey Affidavit [40].
The plaintiffs allege that Ms Foo misappropriated AUD$443,969.71 (Misappropriated Funds), from the second plaintiff to FOOYII from August 2022 to August 2023.[16]
[16] Sergey Affidavit [6(a)(i)].
On 12 May 2025, Ms Foo was arrested by the WA Police Force on 29 charges in relation to the Misappropriated Funds. Since her arrest, Ms Foo has been released on bail and had her passport seized.[17]
[17] Sergey Affidavit [60].
The plaintiffs make these applications so that a court appointed liquidator can trace the Misappropriated Funds, seek to recover the Misappropriated Funds from FOOYII and Ms Foo (and any third party who received the funds knowing they were misappropriated) and to seek urgent asset preservation orders against Ms Foo.
I will deal with each application in turn.

The application to reinstate the registrations of HAC and FOOYII

Section 601AH(2) of the Act provides that the court may make an order that ASIC reinstate the registration of a company if:
(1)an application is made to the court by a person aggrieved; and
(2)the court is satisfied that it is just that the company's registration be reinstated.
The term 'person aggrieved' is not defined in the Act. A person will be a 'person aggrieved' if they can show that the deregistration of the company has deprived them of something or injured or damaged them in a legal sense.[18] The court is not required to embark upon a detailed and exhaustive analysis of the facts and law alleged to give rise to the plaintiffs' claims. In order to find that a person is a 'person aggrieved', the court does not need to undertake an exhaustive and detailed analysis of the person's claim. If the claim is not bound to fail, it should, subject to other relevant factors, be permitted to proceed.[19]
[18] Hugall v ASIC [2009] WASC 185 [13]; Jit Sun Investments [6]; Perrin v ASIC [2024] WASC 38 [22].
[19] Re Brockweir Pty Ltd [2012] VSC 225 [22]; Grogan Pty Ltd v ASIC, Re SIRA Pty Ltd (Deregistered) [2020] FCA 1832 [8].
The court must also be satisfied that it is just that the company's registration be reinstated. In its assessment of whether it is just, the court will consider:
(1)the circumstances in which the company was dissolved;
(2)whether good use could be made of the order for reinstatement;
(3)the future stewardship of the company if, and when, it comes back into existence;
(4)whether any person is likely to be prejudiced by the reinstatement; and
(5)the public interest.[20]

HAC

[20] Plaintiffs' outline of submissions [13] referring to ACCC v ASIC [2000] NSW 316 [27]; ACN 009 009 072 (in liquidation) v ASIC [2022] WASC 221 [47]; Jit Sun Investments [8]; Perrin [26].

HAC's registration should be reinstated for the following reasons.
Firstly, HAC was voluntarily deregistered in circumstances where:
(1)it has no charges, court actions, payment defaults or tax defaults recorded as being lodged against it;[21]
(2)at the time of applying to voluntarily deregister the company, Mr Pustovoytov was not aware of the Misappropriated Funds or the alleged misconduct giving rise to their transfer from HAC's bank account to FOOYII;[22] and
(3)if Mr Pustovoytov was aware of the Misappropriated Funds, he would not have caused HAC to apply to be voluntarily deregistered.[23]
[21] Sergey Affidavit [11(b)(ii)].
[22] Sergey Affidavit [23].
[23] Sergey Affidavit [24].
Secondly, AH is a 'person aggrieved' by the deregistration of HAC because:
(1)AH was the sole shareholder of HAC;
(2)HAC's deregistration prevents HAC from seeking to recover the Misappropriated Funds from FOOYII, Ms Foo and/or any third party to whom the funds have been transferred; and
(3)if HAC is able to recover some or all of the Misappropriated Funds from FOOYII, Ms Foo and/or any third party, AH will benefit as the sole shareholder of HAC.
Thirdly, HAC is also a 'person aggrieved' by its own deregistration because:
(1)HAC would not have been deregistered if it had known of the Misappropriated Funds;[24]
(2)HAC's deregistration prevents it from seeking to recover the Misappropriated Funds from FOOYII, Ms Foo and/or third party recipients; and
(3)unless HAC's registration is reinstated, FOOYII may not be required to account for the Misappropriated Funds.
[24] Sergey Affidavit [23] - [24].
Fourthly, the reinstatement of HAC is just because:
(1)its deregistration was a voluntary deregistration at a time when HAC had no knowledge of the Misappropriated Funds;
(2)HAC's reinstatement will enable it to seek to recover the Misappropriated Funds from FOOYII, Ms Foo and/or third parties with knowledge;
(3)the future stewardship of HAC will in the hands of its directors, who are currently the directors of AH;
(4)no material prejudice will arise from the reinstatement of HAC's registration; and
(5)it is in the public interest to enable HAC to seek to recover the Misappropriated Funds.

FOOYII

FOOYII's registration should be reinstated for the following reasons.
Firstly, HAC is a 'person aggrieved' by the deregistration of FOOYII because HAC is prevented from commencing proceedings against FOOYII to recover the Misappropriated Funds.
Secondly, AH is also a 'person aggrieved' by the deregistration of FOOYII as it is the sole shareholder of HAC and will benefit from any funds recovered by HAC from FOOYII.
Thirdly, the reinstatement of FOOYII's registration is just because:
(1)FOOYII has no charges, court actions, payment defaults or tax defaults recorded against it[25] and therefore, no material prejudice will arise from the reinstatement of FOOYII's registration; and
(2)it is in the public interest for HAC to seek to recover the Misappropriated Funds from FOOYII, Ms Foo or a third party‑recipient of those funds.

Winding up of FOOYII

[25] Sergey Affidavit [37].

Section 461(1)(k) of the Act permits the court to order the winding up of a company if it is of the opinion that it is 'just and equitable' to do so.
Section 462(2)(b) of the Act provides that a creditor of the company has standing to seek such an order.
It is just and equitable to wind up a company under s 461(1)(k) of the Act in circumstances where:
(1)there has been a serious fraud, misconduct or oppression regarding the affairs of the company;[26]
(2)the company is, or has been, used to commit fraud;[27] and
(3)the court has no confidence that the company's affairs would be properly conducted upon the reinstatement of its registration.[28]
[26] Plaintiffs' outline of submissions [16(a)] referring to Kingjade Holdings Pty Ltd v Pineridge Nominees Pty Ltd (1997) 15 ACLC 910, 6; Macquarie University v Macquarie University Union (No 2) [2007] FCA 844 [40].
[27] Plaintiffs' outline of submissions [16(b)] referring to Hipages Group Pty Ltd v Reach Aussie Pty Ltd [2017] FCA 112 [47].
[28] Plaintiffs' outline of submissions [16(c)] referring to ASIC v Merlin Diamonds Limited (No 3) [2020] FCA 411 [42].
In my view, it is just and equitable to wind up FOOYII, immediately upon the reinstatement of its registration, for the following reasons.
Firstly, ASIC deregistered FOOYII in accordance with s 601AB of the Act on ASIC's own initiative.
Secondly, it is appropriate that a liquidator, as an officer of the court, be appointed to FOOYII given the serious allegations raised against FOOYII and Ms Foo.
Thirdly, given Ms Foo is facing criminal charges in relation to her alleged conduct, the court can have no confidence that FOOYII's affairs would be properly conducted by Ms Foo and/or her husband as a director of FOOYII upon the reinstatement of its registration.
Fourthly, there is no apparent material prejudice that arises if FOOYII is wound up given that:
(1)FOOYII has no charges, court actions, payment defaults or tax defaults recorded as being lodged against the company;[29]
(2)all of FOOYII's business operations have ceased and it does not have any employees;[30]
(3)ASIC has been informed of the plaintiffs' application;[31] and
(4)registered liquidators have consented to the appointment.[32]

Leave to commence proceedings

[29] Sergey Affidavit [37].

[30] Sergey Affidavit [29] - [38].

[31] Sergey Affidavit [72].

[32] Liquidators Consent to Act dated 16 May 2025.

Section 471B of the Act provides that while a company is being wound up by a court, a person cannot proceed with a proceeding in a court against the company except with leave of the court and in accordance with such terms (if any) as the court imposes. The purpose of this section is to prevent a company from facing multiple proceedings that are potentially costly, time consuming and without merit.[33]
[33] Swaby v Lift Capital Partners Pty Ltd (ACN 011 015 500) (in liq) [2009] FCA 749 (Swaby) [22].
The usual practice is that a potential claimant lodges a proof of debt before seeking an order for leave to commence proceedings. However, that usual practice may be departed from if there is good reason to do so.[34]
[34] Swaby [26].
In considering whether to grant leave to commence proceedings against a company in winding up, the court should take into account:
(1)the amount of the claim, whether the claim has merit, the seriousness of the claim and the prospects of recovery;
(2)whether the liquidator would be unduly distracted by the proceedings;
(3)the nature and complexity of the proposed proceedings, including whether:
(a)the claim raises complex questions of fact that are more appropriate for determination by the court as opposed to a proof of debt procedure; and
(b)the relief sought is not otherwise available in the liquidation process;
(4)whether the company will face multiple legal proceedings;
(5)whether the cost of the litigation will be disproportionate to the company's resources; and
(6)any prejudice to the company and its creditors and delay.[35]
[35] Plaintiffs' outline of submissions [22] referring to Swaby [29]; ACCC v Link Solutions Pty Ltd [2008] FCA 1790 [11]; ACCC v Phoenix Institute of Australia Pty Ltd (subject to deed of company arrangement) [2016] FCA 1246 [87]; Clean Energy Regulator v E Connect Solar & Electrical Pty Ltd [2023] FCA 1081 [15] - [18].
Leave is granted to HAC to commence proceedings against FOOYII in winding up for the following reasons.
Firstly, it is unlikely that there are any creditors of FOOYII (other than HAC) and therefore, it is unlikely that other proceedings will be commenced against FOOYII.
Secondly, HAC's claims against FOOYII are serious and have merit. The evidence of the Commonweath Bank report setting out the transfer of funds from the BHH account to FOOYII accounts, together with the fact that Ms Foo has been arrested on 29 charges in relation to the Misappropriated Funds, support HAC's claim that FOOYII holds the Misappropriated Funds on constructive trust.
Thirdly, HAC's proposed proceedings against FOOYII will permit it to obtain discovery of how the Misappropriated Funds were applied.
Fourthly, there are serious questions of fact to be tried against FOOYII in the proposed proceedings which are more appropriate for determination by the court as opposed to a liquidator.
Fifthly, the commencement of proceedings allows HAC to apply for freezing orders against Ms Foo to prevent her from disposing of assets following her arrest.
Finally, it is in the public interest for HAC's claims in relation to the Misappropriation Funds to be prosecuted.

Conclusion and Final Orders

I make the following orders:
(1)The time for compliance with the requirements under rule 2.7(1)(a) and rule 2.8 of the Supreme Court (Corporations) Rules 2004 (WA) in reference to service of this application upon the Australian Securities and Investments Commission be abridged to 19 May 2025.
(2)Pursuant to section 601AH(2) of the Act, the defendant reinstates the registrations of:
(a)the second plaintiff; and
(b)FOOYII Pty Ltd (ACN 605 785 500) (Deregistered) (FOOYII),
forthwith.
(3)The first plaintiff shall pay all administrative fees applicable to the reinstatement of the second plaintiff's registration to the defendant.
(4)Upon the reinstatement of its registration, FOOYII be wound up by the court on just and equitable grounds pursuant to section 461(1)(k) of the Act.
(5)Upon the winding up of FOOYII, Jeremy Nipps and Thomas Birch, registered liquidators of Cor Cordis, be appointed as liquidator of FOOYII for the purposes of its winding up pursuant to section 601AH(3) of the Act or, alternatively, pursuant to section 472(1) of the Act.
(6)Pursuant to section 467(3)(b) of the Act, all applicable notification and/or advertising requirements in relation to the application to wind up FOOYII be dispensed with.
(7)The costs of the plaintiff's application, in respect of FOOYII, and those associated with the reinstatement of FOOYII's registration by the defendant, be costs in the winding up of FOOYII.
(8)The second plaintiff have leave to commence proceedings against FOOYII, in liquidation, pursuant to section 471B of the Act.
(9)Pursuant to section 601AH(3)(c) or, alternatively, s 601AH(3)(d) of the Act, to the extent that the reinstatement of the registrations of the second plaintiff and FOOYII cannot occur immediately upon the making of these orders and service of these orders upon the defendant, the second plaintiff (with leave) is validated in commencing proceedings against FOOYII, in liquidation, to the extent that such proceedings are commenced prior to the reinstatement of the registrations of the second plaintiff and FOOYII.
(10)There be no order as to costs.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CS
Associate to the Hon Justice Whitby
27 MAY 2025

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established