Amalgamated Commercial Holdings Pty Ltd T/As Alignity Consulting & Eurolink Consulting Australia Pty Ltd T/As Aristotle Corporation & Ors (Civil Disputes)

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

AMALGAMATED COMMERCIAL HOLDINGS PTY LTD T/AS ALIGNITY CONSULTING & EUROLINK CONSULTING AUSTRALIA PTY LTD T/AS ARISTOTLE CORPORATION & ORS (Civil Dispute) [2011] ACAT 56

XD 1418 of 2009
Catchwords: Civil Dispute - definition of company director - liability of director - company in liquidation - failure to properly notify ASIC of resignation of company officeholder – the correct date of resignation of the Director resident in Australia – was the Director resigned the Director at the time the contract.

Tribunal: Mr P.R Thompson, Member

Date of Orders:  29 August 2011
Date of Reasons for Decision:       29 August 2011
AUSTRALIAN CAPITAL TERRITORY          )
CIVIL & ADMINISTRATIVE TRIBUNAL     )          XD 1418 of 2009

BETWEEN:
AMALGAMATED COMMERCIAL HOLDINGS
PTY LTD T/AS ALIGNITY CONSULTING
Applicant

AND:
EUROLINK CONSULTING AUSTRALIA
PTY LTD T/AS ARISTOTLE CORPORATION
First Respondent
MARTIN KELLY
Second Respondent

TRIBUNAL: Mr P.R Thompson, Member

DATE: 29 August 2011

ORDER
1.Judgment is entered against the Second Respondent in the sum of $10,000 plus costs of $133.70 being a total of $10,133.70.
2. There will in the circumstances be no order for interest pre-judgment, but that interest will run on the judgment debt and costs on the total outstanding after one month from the date of service of this order.

3. The Second Respondent is to pay the total amount of the debt and costs by 30 September 2011. Payment is to be made directly to the Applicant.
………………………………..
Ms L. Crebbin, General President for
Mr P.R Thompson
Member

REASONS FOR DECISION

On 17 November 2009, a civil dispute application was lodged in the ACT Civil and Administrative Tribunal (ACAT) on behalf of the Applicant, Amalgamated Commercial Holdings Pty Ltd, trading as Alignity Consulting, whose address was given as PO Box 1660 Canberra, ACT.

The stated address for its registered officer/public officer was given as being in Sutherland in the State of New South Wales. Mr. Guy V.J.Forsyth, who was stated to be the Applicant’s registered officer/ public officer, signed the application.
Mr. Forsyth’s postal address was given as c/- GPO Kingston ACT.
Eurolink Consulting Australia Pty Ltd trading as Aristotle Corporation and whose registered office was given as Level 10, 210 George Street, Sydney. NSW was named as the Respondent to the action.
The grounds of the application were set out as follows:
1)On 16/7/09, the Respondent provided the Applicant with an opportunity to provide consulting services for an 8 month engagement with one of their clients (namely, the Department of Education, Employment and Workplace Relations, hereafter referred to as “the Client”)
2)On 17/7/09, the Applicant met with the Client to discuss the role
3)On 19/7/09, the Applicant advised the Respondent by email that they had another offer from a different client and would need to consider the Respondents offer as soon as possible.

4)On 20/7/09, the Respondent advised the Applicant that the Client was now considering a different role. A meeting was arranged to discuss this role with the Client for 21/7/09.
5)On 21/7/09, the Applicant met with the Client and discussed the role.
6)On 22/7/09, the Respondent telephoned the Applicant to advise that they could offer a 3-month contract with a “strong likelihood of a 3 month extension” and indicated that the engagement was also likely to go “for a very long time”. The Applicant informed the Respondent that they would make a decision shortly. That afternoon the Applicant advised the Respondent that the offer was acceptable.
7)On 22/7/09, the Respondent confirmed the acceptance of the position with the Client and indicated a start date of 27/7/09.
8)On 24/7/09, the Respondent advised that the commencement date had been deferred to 28/7/09.
9)On 27/7/09, the Applicant provided their Conditions of Service to the Respondent.
10)On 28/7/09, the Applicant commenced the engagement at 9 am. The Respondent provided their contract for engagement around 11am on that date to the Applicant.
11)On 29/7/09, the Applicant altered and returned the Respondents contract, unsigned, with the Applicants conditions of service.
12)On 30/7/09, the Applicant provided additional alterations to the Respondents contract.
13)On 11/8/09, the Applicant enquired on the alterations to the Respondents contract and provided a letter of intent for the engagement referring to the Applicants conditions of service.
14)On 20/8/09, the Applicant provided a further letter of intent to the Respondent following advice that the contract had not yet been finalised. The Applicant was simply advised that their contract was “with their lawyers”.
15)On 11/9/09, the Applicant enquired on the proposed extension to the contract and provided a further letter of intent to the Respondent as the previous term of the letter of intent had expired.
16)On 12/9/09 the Respondent advised that the contract for engagement of their services would be terminated effective 15/9/09, 6 weeks short of the agreed contract end date of 23/10/09.
(Note: Paragraphs have been re-numbered as the application itself contained duplicate numbers in several paragraphs.)

Under the heading “Remedy sought”, the Applicant states that its “Conditions of Service” were the operative terms for entering into the contract for services and that a condition of services under clause 25 provided that:
“ This contract is in force for the duration of the term specified between the commencement date and the contract end date of the schedule. Should the client wish to terminate for any ground other than that outlined in clause 25 then the client agrees to pay the balance of the contract term and release the Consultant from the performance of any duties. The payment of the balance will release both parties from any further contractual obligations.”
Further, the Applicant went on to state that:
On the basis of this clause the Applicant is claiming the balance of the term of the contract.
The Applicant also alleges that the letter of intent specified the basis for their continuing services and that the letter of intent sent and dated 11/9/09 was operative for 30 days.
In the alternative, the Applicant pleaded that:
The Applicant alleges that the Respondent was aware that the Applicant had an alternative offer and the Respondent induced the Applicant to accept their contract.
The Applicant has suffered loss of income for 29 days at $880 per day= $25,520 or in the alternative the difference between the other offer of $160,000 and the income received of approximately $30,000(ex GST) being a net loss of $130,000.
Finally, the Applicant waived its rights to the excess but claimed the costs for issuing the matter, together with interest on the amount of the claim.

The total amount of the claim was stated to be $10,000 and “Loss of income for the balance of the contract or loss of opportunity” was given as the reason for the claim, itself.

The application itself was accompanied by an ASIC eSearch document dated 17 November 2009, that listed the Respondent company’s officers as Anthony George ANTONIADES of Timber Spithurst Lane Barcombe, Lewes East Sussex, England, the sole Director of the company.
On 30 November 2009, an ACAT officer served the application together with other forms on the Respondent company by posting the documents to the stated registered address at Level 10, 210 George Street, Sydney, NSW 2000.
Subsequently, on a date not clear to me, a faxed Application for Default Judgment dated 29 December 2009 was received by the Tribunal. The original of that document was filed in the Tribunal on 4 January 2010.
On 6 January 2010, the Registrar of the Tribunal forwarded an email to the Applicant, marked to Mr. Forsyth’s attention, advising this matter should be listed for assessment of the damages incurred, rather than enter a default judgment for the amount claimed, even though at that stage, no response had been received from the Respondent company.
On 7 January 2010, a notice advising that a conference would be held at 2.25 pm on 10 February 2010 was forwarded to each party, with the copy to the Respondent’s company having attached to it, a copy of the application for default judgment.
On 10 February 2010, the matter came before Mr. B Stefaniak, a Presidential Member of the Tribunal, who noted that there was no appearance for the Respondent. The tribunal ordered that judgement be entered for the Applicant in the sum of $10,133.70, inclusive of costs, with the Respondent allowed 28 days to pay.
On 1 March 2010, Mr. Stefaniak made an In-Chambers order that the Applicant’s name be amended by adding after “Holdings” and before “T/AS”, the words “PTY LTD”.
On 19 April 2010, the Applicant, through Mr. Forsyth made application for a variation of the orders made by the Tribunal on 10 February 2010 requesting that the Tribunal include the Director of Eurolink Consulting, namely Mr. Martin Kelly, as a party to the default judgment.
The basis for making the application, and the grounds relied on, were set out in part as follows:
During the process of serving the claim on the Respondent it was discovered that the Respondent had entered voluntary administration on 16 December 2009.
It is a condition of service of the Applicant that the directors of Aristotle are jointly and severally liable for any debts owing per section 20 (vi) (attached Annex “A”). The conditions of service constituted the contract between the Applicant and the Respondent.
At the time that the Applicant entered into the contract with the Respondent the only director of the company was Mr. Martin Kelly c/- Level 4 35 Smith St Parramatta NSW. Mr. Kelly resigned as a director from Eurolink shortly before it entered voluntary administration (attached Annex “B”).
Section 20 (vi) provides that the client warrants that it is in a financial position to meet the Consultant’s claims under the contract, and shall remain in a position to do so for the term of the contract and, should it fail to do so, the directors and or principals will be jointly and severally liable for any fees. (Annex “A”).
Attached to the application and marked Annexure “B” was an Australian Securities and Investment Commission (ASIC) form headed ‘Change to company details.’
This form was stated to be certified, signed, and completed by one Anthony Antonaides, a Director of the Respondent company. The form was dated 14 October 2009.
The intended purpose of the form was to notify ASIC that Mr. Martin Kelly ceased to be a Director and Secretary of Eurolink Consulting Australia Pty Ltd from 13 October 2009.
The application was set down for determination by the Tribunal at

10.00 am on 10 May 2010.
On that date the Registrar made the following orders:
Upon there being no appearance of the Respondent:
1. Judgment of 10/02/10 is set aside in its current form.

2. Leave to the Applicant to join a Director or Directors as Respondents on the Original Claim and the Amended Claim to be lodged with the ACAT Civil & Administrative Tribunal to be forwarded to the joined party/parties.
3. Upon receipt of a response, matter to be listed for a Case Management Conference.

On 14 May 2010, pursuant to the above order, the Applicant filed an amended application, adding Mr. Martin Kelly of Parramatta NSW as the Second Respondent.
The Applicant also added an additional paragraph at the end of its grounds for application. The paragraph was numbed 12, which only perpetuated the initial miss numbering. In reality it should have been numbered Para. 17.
That paragraph was as follows:
The Applicant has become aware that the First Respondent entered voluntary administration during the initial proceedings to recover the loss and as such the Applicant has obtained leave of the Tribunal to join the Second Respondent as a relevant party to recover the loss.
After setting out in full clause 20 (vi) of its’ ‘Conditions of Service ‘ (See above), the Applicant’s amended application contained the following amended remedy:
The Applicant seeks to recover the loss from the Second Respondent who was a director of the First Respondent during the contract period.
Again, after stating that the Applicant’s total losses were either $25,520 or alternatively $130,000, the Applicant waived its rights to the excess and claimed an amount of $10,133.70, inclusive of costs.
An attempt was made to serve both Respondents by sending copies by pre-paid post on 17 May 2010. The copy sent to the First Respondent was subsequently returned by Australia Post.
On 24 May 2010 Mr. Kelly faxed his ‘Response’ to the Tribunal denying liability and disputing the Applicant’s claim on the following grounds:
“I have attached documentation confirming my resignation from the company Eurolink. I was never involved with the company during the mentioned time period.”
Accompanying the Response was a document headed ‘Deed of Release’ and naming the parties as Eurolink Consulting Australia Pty Limited and Martin Kelly. Page 3 of that document is headed ‘ Deed of Agreement’ and lists the above named as the ‘Parties’ to that agreement. The copy is however, undated.
Under the heading ‘Background’ it is stated that:
A. The employee has been employed by EUROLINK in the position of Managing Director (Employment) pursuant to a contract of employment. (contract of employment).
B. EUROLINK and the Employee have agreed that the employment end on 4 February 2009 (termination).

C. EUROLINK and the employee have agreed, on a without admission basis, to end the contract of employment and resolve all matters relating to that contract on the terms and conditions set out in this document.

Under the heading “Operative provisions” and the sub-heading “Settlement with the Employee” were the following clauses:
a)In consideration for entering into this document and without any admissions of liability EUROLINK and the Employee have agreed:
(A)On the execution of this Deed to provide the Employee with a payment of (insert) less Tax
to be known as the “Settlement”; and
b)the Employee will provide Eurolink with the following documents with the executed Deed of Release:
(A)his resignation from employment as at 4 February 2009; and
(B)his resignation as a director of EUROLINK effective immediately.
On 24 June 2010, Ms J David, a senior member of the Tribunal made the following Directions:
1.        That the First Respondent and/or the liquidator, Mr. John Kukulovski, produce to the Tribunal the original of the Deed of Release between the First Respondent and Mr. Kelly, the Second Respondent, which is undated and a copy of which was lodged by Mr. Kelly in these proceedings.
2.        Matter adjourned for hearing and for the Applicant to initiate joinder proceedings for a further Respondent.
3.        The Second Respondent is to lodge further evidence to establish the date of the signing of the original Deed of Release referred to in order (1) above.
On 5 July 2010, the Applicant wrote to the ACAT advising that:
·Enquiries had not identified a service address in Australia for the proposed additional Respondent as per Ms David’s directions.
·In any event the proposed additional Respondent was a UK citizen and would be unlikely to attend even if service could be effected.
·No further documentation had been provided by the current Second Respondent, Martin Kelly.
The Applicant requested that in view of the above, the matter be set down for a hearing.
On 3 September 2010, hearing notices were sent to Mr. Forsyth and Mr. Kelly advising them that the matter was set down for hearing at 2.00pm on 21 September 2010.
On that date, the matter came on for Hearing before me, with Mr. Guy Forsyth appearing for the Applicant company and Mr. Martin Kelly appearing in person, representing himself. There was no appearance for or on behalf of the First Respondent
Both gave evidence to the Tribunal, as did Ms Emma Obiakpani-Rose who was a witness for the Applicant and who gave evidence via a telephone link with the Tribunal.
The following documents were tendered as exhibits:
EXHIBIT A- ASIC “Change to company details” FORM DATED 14/10/09
EXHIBIT B-NOTICE OF MEETING TO CREDITORS (RE: EUROLINK) DATED 21/05/10
EXHIBIT C- NUMBER OF EMAILS (4 PAGES)
EXHIBIT 1-DEED OF RELEASE & DEED OF AGREEMENT (UNDATED)
EXHIBIT 2- 3 X STATUTORY DECLARATIONS
EXHIBIT 3- NUMBER OF EMAILS (4PAGES)
It became clear early in the proceedings, that Ms David’s direction that the First Respondent and/or the liquidator, Mr. John Kukulovski, produce the original of the Deed of Release between the First Respondent and Mr. Kelly, the Second Respondent, which presumably was both signed and dated, had not been complied with. The original was not available for the Tribunal’s inspection and the Tribunal was left with another undated copy of that document, which was subsequently tendered into evidence by Mr. Kelly (Exhibit “1”refers). The undated copy had little, if any, evidentiary value, on its own.
I could find no evidence that the liquidator had been served with a copy of Ms David’s order.
In any event, I was satisfied that both the Applicant and the Second Respondent had been served with the order, but neither had approached the liquidator with a request that he produce the original of the deed.
Mr Forsyth for his part contended that its production was more important to

Mr Kelly because it was his contention that the Deed of Release was invalid, and that “it could have been made up at any time.”
Further, that the “…request was being made to the liquidator to produce the original of the Deed, so further that there was some proof that it was in existence at the time it was allegedly entered into, and that the company that was responsible for notarizing had – did have a copy.”
Mr Kelly conceded that that his copy of the document wasn’t actually dated at the end of it and that it was only dated in the paragraph at the beginning.
When referred to Ms David’s direction that he, Mr Kelly, was required to lodge further evidence to establish the date of the signing of the original Deed of Release, he advised me that he had obtained three statutory declarations. (Exhibit “2” refers).
According to the evidence given by Mr Kelly, he resigned on 4 February 2009, as set out on page 1 of the Deed of Agreement (Exhibit “1”refers), and not on 26 October 2009 as alleged in documentation submitted by Mr Forsyth.
That is incorrect. The ASIC extract headed ‘Change to company details’, which is referred to above gives the date when Mr Kelly ceased to be a director of the First Respondent as 13 October2009. (Exhibit “A” refers).
Also, according to Mr Kelly, 4 February 2009 was the date indicated in the various statutory declarations as the date he resigned, “...but of course, the documents were, despite requests from the accountants to be lodged at the ASIC office were never done so. Because the story that was given was they had to go to the UK to be signed by Antonaides to be the other director of the business.”
Mr Kelly went on to state that rightly or wrongly, Mr Forsyth’s case was affecting him, because it was alleged that he was a Director of the company at the time, when in actual fact he wasn’t. In fact, according to him, he wasn’t even in the country at the time.
According to Mr Kelly, Anthony Antonaides was the director and remained so until October 2009.
Mr Forsyth did not, however, have any objection to the three statutory declarations being tendered, none of which was an original document. (Exhibit”2” refers). None of the deponents were available to be cross-examined on the statements made by them, a point made by Mr Forsyth.
He also made the comment that “ …I suppose my only concern is basis of best evidence, these documents could be prepared by anyone and say anything…”.

The first statutory declaration was made by Mr Paul Laugesen of Southampton, UK, on 4 August 2010. His declaration was as follows:
I confirm that I was present on the day of Martin Kelly’s resignation from Eurolink Consulting Australia Pty Limited and that the date indicated in the original document was in fact the correct date. Deed of Release. (sic)

The second statutory declaration was made by Ian John Smith of Hunters Hill, New South Wales on 20 September 2010. Mr Smith’s declaration was as follows:
“On or around 16th February 2009, Martin Kelly advised me verbally that he had resigned his position as Director of Eurolink Consulting Australia Pty Ltd (ACN 003 432 442), as at 4th February 2009.

In my capacity as tax agent & external accountant for Eurolink Consulting Australia Pty Ltd, I advised Emma Obiakpani Lowes, operations manager for Eurolink, that ASIC needed to be notified of Martin’s resignation & that a replacement director be appointed. I advised this verbally on a number of occasions and then further advised in an e-mail to Emma on 6^th March 2009.

Emma replied via email on that same day that “ASIC will be informed of a replacement shortly”.

The third and last statutory declaration was made by Mary Dowrick of Orange New South Wales on 12 August 2010. Her declaration was as follows:
On the 4^th February 2009, I was witness to a document confirming the resignation of Martin Kelly from Eurolink, also known as Aristotle. Also present was Martin Kelly, Paul Laugesen, a manager from the UK and Michael Pay from the same business.
Mr Forsyth’s first and only witness made herself available to give evidence before the Tribunal even though the summons for her to do so was never served. The witness gave her name as Emma Obiakpani –Rose and said she was unemployed at the date of giving evidence.
Mr Forsyth referred Ms Obiakpani-Rose to Exhibit “A”, which he referred to as ‘Form 484, Change to company details’ and which, according to him had been submitted to ASIC by the witness herself, as her name appeared in the lodgement details.
Ms Obiakpani-Rose stated that it was a long time ago, but that she did send some documentation on behalf of the shareholder. She did however, concede that “ If it’s got my details there that I was the contact person for it then yes probably”.
The witness then confirmed that the signature appearing on the document was that of Anthony Antonaides, the company’s director and that the document was dated 14 October 2009.
The witness could not however, confirm that the date specified therein of

13 October 2009 as the date that Mr Kelly resigned as an officer holder of the company, as “ I wasn’t privy to that type of detail. That would have been between Tony Antonaides and Martin Kelly.”
Pressed on the issue as to the date that she believed that Mr Kelly resigned as an office holder from Eurolink, Ms Obiakpani–Rose stated, “I have no idea.” Further, she said that she didn’t complete the form, but was asked to send the form on behalf of Mr Antonaides, who had actually completed the form.
Again pressed on this issue, the witness stated that she couldn’t “remember exactly how I lodged it. I don’t know if I posted it or faxed it or I can’t remember how I did it. But I would have been given the form by Tony Antonaides and asked to put it in to ASIC.”
The witness also stated in her evidence that she was the operations manager of Eurolink and reported to Martin Kelly who was her boss, but that she last saw him around March 2009. She also stated that she was not aware of the document that was tendered and marked Exhibit “1” (Deed of Release).
Mr Kelly tendered a series of emails, (Exhibit “3”), one of which was from Mr Ian Smith of Lincoln Partners dated 6 March 2009, addressed to the witness and which contained the following reference to Mr Kelly’s resignation:
Hi Emma
I understand your frustrations and hopefully you can realize that we are equally frustrated with the problems and errors we are encountering.
The question is do you want it done or do you want it done right? If the answer is not the latter, then we cannot help you.
Further to previous requests:
ASIC needs to be notified of Martin’s resignation and the new Director needs to be appointed within 28 days of Martin’s resignation so as to avoid late lodgment penalties.
We need the information to amend the GST overpayments from Mike Pay.
Regards, Ian Smith
Ms Obiakpani- Lowes’ email reply of the same date advised Mr Smith that “ASIC will be informed of a replacement shortly”.
Asked whether or not she remembered those emails, the witness replied, “I’m sorry, I don’t”. Referred to the contents of Mr Smith’s statutory declaration, which is set out above (Exhibit ”2” refers) and again asked whether or not she remembered, the witness stated, “I don’t, but it would be easy to say I did”.
Pressed by me on the contents of Mr Smith’s statutory declaration and whether or not she would believe him, Ms Obiakpani-Lowes stated, “ If it’s in black and white and I could see it with my own eyes, probably yes.”
Following on from the witness, Mr Forsyth tendered a further two documents. The first document was a notice of a meeting of creditors of Eurolink advising that the company was placed into voluntary liquidation on 4 December 2009 and that John Kukulovski of Jirsch was appointed as the liquidator. (Ex “B”)
The notice, which was dated 21 May 2010, contained a statement from

Mr Kukulovski that he had obtained a search extract of the company from records held by ASIC which he summarized as follows:

Registered office:
Level 10, 210 George Street Sydney NSW 2000
Company Officer(s):
Name  Office held            Date Start                   End Date
Anthony George Antoniades      Director                 23/09/1997            Current
Martin James Kelly                 Director/Secretary     18/05/2008            Current

There is no date given for the search extract itself.

The last document tendered (Exhibit “C”) was a four-page printout of a number of emails between the Applicant and the Second Respondent. They relate to attempts to settle the matter. There is no need to reproduce the contents in this decision.
At the conclusion of the hearing I made the following orders:
1.        Matter stood over generally pending submissions on legal liability of Mr. Kelly under relevant legislation governing directors.
2.        That submission to be filed and served by Mr. Forsyth within fourteen (14) days.
3.        Mr. Kelly has a further fourteen (14) days to reply to that submission if he wishes to.
4.        Decision reserved pending the receipt of submissions.
On 22 September 2010, Mr. Forsyth emailed the Applicant’s submission to the tribunal. That submission is set out in full hereunder:
Submission to ACAT in relation to matter XD09/1418
1. A company director is defined in the Corporations act as:

(a)a person who:
(i) is appointed to the position of a director ; or
(ii) Is appointed to the position of an alternative director and is acting in that capacity; regardless of the name that is given to their position;

2. A Company in Australia must have at least one director at all times per
s.201A:
Propriety companies

(1)A proprietary company must have at least 1 director. That director must ordinarily reside in Australia.

3.
Mr. Martin Kelly was appointed as a director to Eurolink Consulting (trading as Aristotle Corporation) on 18 May 2008 per the report by Jirsch Sutherland, liquidators of Eurolink. The only other director of Eurolink was Mr. Anthony Antoniades (sic), a citizen and resident of the United Kingdom. The date of

Mr. Kelly’s resignation as a director of Eurolink is indicated as 13 October 2009 in the ASIC register.
4. ASIC advise that a director is liable for certain duties under the Corporations Act:
Dear Mr. Forsyth
Thank you for your email.
I can refer you to sections 170 and onwards of the corporations Act, regarding the obligations of officeholders and their powers.
ASIC is not in a position to be able to give professional advice or interpretations of the Act, so you may wish to seek professional advise (sic) regarding your liabilities, and if the company has provided an incorrect cessation date.
Due to the unique nature of each enquiry ASIC is not able to provide interpretations or recommendations specific to some enquires or circumstances. If you require further information please seek independent advice through an ASIC registered agent, your accountant or solicitor.
Yours sincerely
Jessica McNeill
Customer service consultant, Enquires
Stakeholder Services

5. In relation to the resignation of a director, section 205A indicates the prescribed form in which a resignation from office of a director should be preformed:
1)If a director, secretary or alternative director retires or resigns, they may give ASIC written notice of the retirement or resignation. The notice must be in the prescribed form.
2)To be effective, a notice of resignation must be accompanied by a copy of the letter of resignation given to the company.

Note: if a director, secretary or alternative director of a company gives a written notice in accordance with this section, the company is not required to lodge a notice with ASIC under subsection 205B(5)(see subsection 205B(6)
6.Hence if the resigning director provides notice to ASIC then the Company is not required to do so. Mr. Kelly testified that he did not provide any advice to ASIC.
7.If the company is providing the notice of resignation to ASIC, then s.205B (5) and (6) state that:
“(5) If a person stops being a director or secretary of the company, the company must lodge with ASIC notice of the fact within 28 days. The notice must be in the prescribed form.

(6) Subsection (5) does not apply if:
(a)the person was an alternative director who stopped being a director in accordance with the terms of their appointment as an alternative director; or
(b)the person gives ASIC a written notice of the person’s retirement or resignation as a director, alternative director or secretary of the company in accordance with section 205A.

Note: A defendant bears an evidential burden in relation to the matter in subsection (6), see subsection 13.3(3) of the Criminal Code.
(7) An offence based on subsection (1), (2), (4) or (5) is an offence of strict liability.”
8.In summary, Mr. Kelly was appointed as a director of Eurolink. According to s.205A the resigning director may give notice of resignation to the ASIC as long as the notification includes the notice of resignation. The ASIC advise that it is prudent to do so in order to record your removal from office. If this is not done then under s.205B (5) the company MUST lodge the details of the director’s resignation within 28 days if the director does not do so.

9.Neither Mr. Kelly nor EUROLINK Consulting advised the ASIC of the resignation of Mr. Kelly at the time that Mr. Kelly claims to have resigned. The only information provided to ASIC is that provided by Eurolink Consulting via form 484 on 13 October 2009.
10.If Mr. Kelly did resign on 2 February, then the company would have effectively been operating without a director and in violation of s.201A as the only other director was not a resident or citizen of Australia. Eurolink would have been invalidly operating since a company must have at least one director at all times (and that director must be a resident of Australia). No other director was appointed to replace Mr. Kelly and it is submitted that Mr. Kelly was still a director according to ASIC records and in compliance with the requirement for the company to be legally constituted. The only way that a sole director company can resign (sic) is by a special provision which was not in place.
11.For the purposes of the claim Mr Kelly was a registered director and remained one until the date of notification to the ASIC. It was incumbent upon both |Mr. Kelly and Eurolink to notify the ASIC of the resignation and neither did around the time of the purported resignation date by Mr. Kelly. As such, Mr. Kelly was still a director at the time that Eurolink Consulting entered into a contract with Amalgamated Commercial Holdings and clause 20(iv) of the conditions of service contract states:
The client is in a financial position to meet the consultant’s claims under the contract and shall remain in a position to do so for the term of the contract and should it fail to do so the Directors and or principles will be jointly and severally liable for any fees.

12.As a result Mr. Kelly, as director of Eurolink, is liable to Amalgamated
Commercial Holdings for the fees and the resulting order of the ACAT dated 10 February 2010 in the amount of $10133.70 plus costs.
End note:

Eurolink consulting is currently under administration. The liquidator has reported to ASIC a range of breaches of the Corporations act (namely s.585G - insolvent trading, s.286 – requirement to maintain financial records, s.475 – RATA, s.180 – care and diligence, s.530A – requirement to provide all books and records of the company). If the ACAT deem that there may have been a breach of any section of the Corporations Act then it is requested that this information be provided so that the liquidator can be advised as it may have a bearing on the recovery of monies for creditors.

DECISION

Whether the written contract between the Applicant and the First Respondent was ever signed is irrelevant. There was a contract and the Applicant performed services for the First Respondent under that contract. This fact was not challenged.

I don’t believe that production of the original of the Deed would have changed my view.

Whilst I do not accept as evidence statements made by Mr Forsyth both during the hearing and in his submissions, that he had received certain advice from the ASIC indicating that Mr Kelly as a director was liable in this instance, I do accept the bulk of his submissions, and thank him accordingly.

I accept from the evidence given that the correct date of Mr Martin Kelly’s resignation as an office holder of Eurolink Consulting Australia Pty Limited trading as Aristotle Corporation was in fact 4 February 2009, as set out in the undated Deed of Agreement.

I have reached this decision after reviewing all the evidence, including that given by Mr Kelly himself, and the contents of the three statutory declarations that are backed up by emails forwarded at the time. Ms Obiakpani-Lowes evidence was unhelpful.

I am therefore satisfied from the evidence that at the time that the Applicant entered into the contract with the Respondent, Mr Martin Kelly had resigned from Eurolink as a director and not shortly before it entered voluntary administration as alleged by the Applicant.

However, Section 205A of the Corporations Act 2001 sets out how a director can resign by prescribing the form and the procedures as follows:

3)If a director, secretary or alternative director retires or resigns, they may give ASIC written notice of the retirement or resignation. The notice must be in the prescribed form.
4)To be effective, a notice of resignation must be accompanied by a copy of the letter of resignation given to the company.

Mr Kelly did not give written notice to ASIC at the time of his resignation, Eurolink failed to do so until 14 October 2009 for whatever reason. The obligation however, was clearly upon Mr Kelly, and the company’s obligation only arose following his failure to do so (ss205B (6))
Therefore, according to ASIC records, Mr Kelly was still an officer holder (Director/Secretary) of Eurolink at the time that the Applicant contracted with the First Respondent.
Section 20 (vi) of the Applicant’s ‘Conditions of Service” provided that the client warrants that it is in a financial position to meet the Consultant’s claims under the contract and shall remain in a position to do so for the term of the contract and should it fail to do so, the directors and or principals will be jointly and severally liable for any fees.
Evidence was produced and subsequently tendered that Eurolink went into voluntary liquidation in December 2009 and that John Kukulovski of Jirsch was appointed as the liquidator (Exhibit “B” refers).
Clearly the First Respondent was not then, and is not now, in a financial position to meet the Applicant’s claims under the contract, therefore making the director or directors jointly and severally liable for any outstanding fees.
Unfortunately, the only director involved in these proceedings is the Second Respondent, Mr Martin Kelly and I have no alternative but to find him liable. I do so fully aware that in reality he had no involvement with the company or the Applicant, at the time the contract was entered into.
It is also clear from the Tribunal’s records that the amended Application received and lodged on 14 May 2010 was not served on the First Respondent and was returned to the Tribunal’s registry on 22 June 2010, marked “Return to Sender-Left address-unknown”. The date of that advice was written on the envelope as 27/5.
Whilst I am satisfied that hearing notices for 21 September 2010 were subsequently forwarded by post to the Applicant and the Second Respondent and subsequently, at the Applicant’s request, to Eurolink by email, addressed to [email protected] on 20 September 2010, I am not satisfied as to service on the First Respondent, and do not regard them as a party to the proceedings that took place on 21 September 2010.
This was not raised as an issue by Mr Forsyth.
I therefore enter judgment for the Applicant against the Second Respondent only for the amount and costs claimed.
No interest prior to judgment will be allowed in view of the circumstances that have ultimately conspired to find Mr Kelly liable by default in this instance. He can hardly be found responsible for the non-payment of this legally binding debt within a reasonable period of time.
In view of the fact that Eurolink is not a party to this judgment debt, I will not make any findings against that company or forward any information to the liquidators as suggested by Mr Forsyth.
Finally, for the record I note that the ASIC has registered what appears to be an incorrect spelling of Mr Anthony Antonaides name. Whether the correct spelling is Antonaides or Antoniades, I am unable to say.

………………………………..
Mr P.R Thompson
Member

PUBLICATION DETAILS

TO BE PUBLISHED

To be completed by Tribunal Staff

PART A FILE NO:

APPLICANT:

RESPONDENT:

COUNSEL APPEARING: APPLICANT:

RESPONDENT:

SOLICITORS: APPLICANT:

RESPONDENT:

OTHER: APPLICANT:

RESPONDENT:
TRIBUNAL MEMBER/S:

DATE/S OF HEARING: PLACE: CANBERRA

DATE/S OF DECISION: PLACE: CANBERRA

PART B

RECOMMENDATION:

FULL REPORT ( ) CASE NOTE ( ) UNREPORTED DECISION ( )

COMMENTS:

[2011] ACAT 56

29 August 2011

Key Legal Topics

Areas of Law

Civil Litigation & Procedure

Legal Concepts

Judgment

Costs

Limitation Periods

Interest