Andrews re Pink Foods Pty Limited
[2011] NSWSC 332
•18 April 2011
Supreme Court
New South Wales
Medium Neutral Citation: Andrews re Pink Foods Pty Limited [2011] NSWSC 332 Hearing dates: 18 April 2011 Decision date: 18 April 2011 Jurisdiction: Equity Division - Corporations List Before: Justice Barrett Decision: 1. Order pursuant to s 601AH(2) that Australian Securities and Investments Commission reinstate the registration of Pink Foods Pty Limited ACN 126 662 459.
2. Order pursuant to s 601AH(3) of the Corporations Act that if before the registration is reinstated by Australian Securities and Investments Commission the person who was the sole member of Pink Foods Pty Ltd at the time of deregistration and will again be the sole member upon reinstatement takes action to pass a special resolution under s 491(1) of the Corporations Act , being action that would have been valid and effectual had Pink Foods Pty Ltd existed when the action was taken, that action shall upon reinstatement be valid and effectual as and from the time at which it was taken.
3. Order that the plaintiff pay such costs as Australian Securities and Investments Commission may levy in connection with this application.
Catchwords: CORPORATIONS - deregistered company - application for order directing reinstatement of registration - director in receipt of penalty notice issued by Commissioner of Taxation - director wishes to see company reinstated and wound up to avoid personal liability - conditions for ordering reinstatement met - sole member may purport to pass resolution for winding up before reinstatement effected - whether court may prospectively validate that action Legislation Cited: Corporations Act 2001 (Cth), ss 491(1), 601AH(2), 601AH(3)
Taxation Administration Act 1953 (Cth), Division 269-15Cases Cited: Application of Stojic [2006] NSWSC 608
Teffaha v Australian Securities and Investments Commission [2010] NSWSC 511Category: Principal judgment Parties: Stephen Paul Andrews - Plaintiff Representation: Counsel:
Mr N W Hogan - Plaintiff
Solicitors:
Eakin McCaffery Cox
File Number(s): 2011/127066
Judgment
This is an application under s 601AH(2) of the Corporations Act 2001 (Cth) for an order that Australian Securities and Investments Commission reinstate the registration of Pink Foods Pty Ltd. That company has at material times operated a Hungry Jacks franchise at Kotara. Its registration was terminated on 12 December 2010 because of failure to attend to annual fee payment obligations owed to Australian Securities and Investments Commission.
The deregistration did not come to the notice of the sole director, who is the present plaintiff, Mr Andrews, until he was served with a director penalty notice under Division 269-15 of the Taxation Administration Act 1953 (Cth) by which the Commissioner of Taxation sought to make him personally liable for tax amounts payable by the company. Upon discovering the deregistration, Mr Andrews took urgent steps to make the application now before me.
In normal circumstances, a director of a deregistered company is not, in terms of s 601AH(2)(a)(i), a "person aggrieved" by the deregistration. There needs to be something more and the additional element is often found in the status of member. Mr Andrews is not a member of Pink Foods but, as I have said, he is the recipient of a penalty notice issued by the Commissioner of Taxation which gives him a very clear and distinct interest in the matter of the company's existence. This is because, under the taxation legislation, he can avoid personal liability only if the company is subjected to winding up; and that cannot happen if it does not exist.
It is with a view to causing winding up to be imposed that Mr Andrews brings the present application. He is in that respect a person aggrieved by the deregistration.
I am satisfied also that it is just that the company's registration be reinstated so that it may take action directed towards regularising its affairs with the Commissioner of Taxation.
The deadline imposed by the penalty notice will expire on 21 April 2011. Mr Andrews is concerned that administrative procedures may mean that the reinstatement of the registration is not actually effected before that time even if, as I propose, the order is made now. In those circumstances he seeks an order under s 601AH(3) which, as it were, validates in advance steps he intends to set in train to produce a voluntary winding up s 491 of the Corporations Act .
Mr Andrews is not himself a member of Pink Foods. The sole member is a company in which I am told Mr Andrews has an interest or of which he is an officer.
I am doubtful that it is possible under s 601AH(3)(a) to validate by order made now something that has not already occurred. But I am of the view that under s 601AH(3)(b) a suitable order may be fashioned.
I have said that I intend to make the order for reinstatement. In that respect I note that Australian Securities and Investments Commission and the Commissioner of Taxation have both been served but only recently and the attitude of neither is before the court. That to my mind is not a matter for particular concern, although I acknowledge the interest of each of those in the application.
On the face of things, there is nothing that would excite the interest of Australian Securities and Investments Commission and one would expect that its normal stance would be taken, that is that it neither consents nor opposes provided that its fees are paid.
As to the Commissioner of Taxation the position is, I think, as I saw it in Teffaha v Australian Securities and Investments Commission [2010] NSWSC 511, namely that the interests of the Commissioner are not prejudiced by an application of this kind which will facilitate the normal working of the tax collection system.
This matter is very similar to Application of Stojic [2006] NSWSC 608 and the reasoning in that case applies here as well.
The orders of the court are as follows:
1. Order pursuant to s 601AH(2) that Australian Securities and Investments Commission reinstate the registration of Pink Foods Pty Limited ACN 126 662 459.
2. Order pursuant to s 601AH(3) of the Corporations Act that if before the registration is reinstated by Australian Securities and Investments Commission the person who was the sole member of Pink Foods Pty Ltd at the time of deregistration and will again be the sole member upon reinstatement takes action to pass a special resolution under s 491(1) of the Corporations Act , being action that would have been valid and effectual had Pink Foods Pty Ltd existed when the action was taken, that action shall upon reinstatement be valid and effectual as and from the time at which it was taken.
3. Order that the plaintiff pay such costs as Australian Securities and Investments Commission may levy in connection with this application.
4. I direct that the orders be entered forthwith.
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Decision last updated: 20 April 2011
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