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El-Rihani v Sbeiti

El-Rihani v Sbeiti

Case [2024] NSWSC 597 17 May 2024

Unjust Enrichment

Deregistration

Fraud

Corporate Law & Governance

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Supreme Court

New South Wales

Medium Neutral Citation: El-Rihani v Sbeiti [2024] NSWSC 597
Hearing dates: 14 May 2024
Date of orders: 14 May 2024
Decision date: 17 May 2024
Jurisdiction: Equity - Duty List
Before: Stevenson J
Decision:
Fifth defendant is to reinstate the registration of the third and fourth defendant companies; commencement of these court proceedings against the third and fourth defendant companies is validated as having been commenced as at 10 May 2024

Catchwords:
CORPORATIONS – dissolution – reinstatement – where application for reinstatement under s 601AH(2) of the Corporations Act 2001 (Cth) – where the third and fourth defendant companies transferred properties to the first defendant – where the second defendant was sole shareholder of the third and fourth defendant companies – where plaintiff contends that the transfer of the two properties made with intention to defraud the plaintiff creditor – whether the plaintiff is a ‘person aggrieved’ by the deregistration of the companies – whether the justice of the case requires reinstatement

Legislation Cited:
Conveyancing Act 1919 (NSW)
Corporations Act 2001 (Cth)
Federal Court of Australia Act 1977 (Cth)

Cases Cited:
AMP General Insurance Ltd v Victorian WorkCover Authority [2006] VSCA 236
Arnold World Trading Pty Ltd v ACN 133 427 335 Pty Ltd [2010] NSWSC 1369
Deputy Commissioner of Taxation v Australian Securities and Investments Commission; Re Civic Finance Pty Ltd (deregistered) [2010] FCA 1411
In the matter of ERB International Pty Ltd (deregistered) [2014] NSWSC 200
Federal Commissioner of Taxation v Iannuzzi (No 3) [2024] FCA 45
In the matter of Human Group Pty Ltd; In the matter of A.C.N. 137 384 662 Pty Ltd [2023] NSWSC 28
Mitzev v Foxman [2007] NSWCA 273
Pilarinos v Australian Securities and Investments Commission [2006] VSC 301
In the matter of LCW Property Holdings Limited (deregistered) [2020] NSWSC 71
In the matter of Likehart Pty Ltd (deregistered) [2017] NSWSC 884
Yi Li v Australian Securities and Investments Commission [2024] NSWSC 514

Category: Procedural rulings
Parties: Hussein El-Rihani (Plaintiff)
Amne Sbeiti (First Defendant)
Billal Hotait (Second Defendant) (in person)
Bill.H Pty Limited (Third Defendant)
25 Jersey Road Matraville Pty Limited (Fourth Defendant)
Australian Securities & Investments Commission (Fifth Defendant)
Representation:
Counsel:
M Harker (Plaintiff)
Solicitors:
HWL Ebsworth Lawyers (Plaintiff)
Bridges Lawyers (First Defendant)

File Number(s): 2024/173904

JUDGMENT

On 14 May 2024, as Commercial List Duty Judge, I made the following orders:

Pursuant to s 601AH(2) of the Corporations Act 2001 (Cth), the Fifth Defendant is to reinstate the registration of Bill. H Pty Limited ACN 108 973 575, the Third Defendant, forthwith.

Pursuant to s 601AH(2) of the Corporations Act, the Fifth Defendant is to reinstate the registration of 25 Jersey Road Matraville Pty Limited ACN 605 723 313, the Fourth Defendant, forthwith.

Pursuant to s 601AH(3)(c) of the Corporations Act, the commencement of these court proceedings against the Third Defendant and the Fourth Defendant is validated as having been commenced against the Third Defendant and the Fourth Defendant as at 10 May 2024.

Pursuant…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading El-Rihani v Sbeiti

Details

AGLC: El-Rihani v Sbeiti [2024] NSWSC 597
Case: [2024] NSWSC 597
Decision Date: 17 May 2024

CaseChat Overview and Summary

In El-Rihani v Sbeiti, the plaintiff, Mr El-Rihani, sought reinstatement of the third and fourth defendant companies, which had been dissolved. The dispute centred on the transfer of properties from the third and fourth defendant companies to the first defendant, Mr Sbeiti. The plaintiff argued that the transfers were made with the intention to defraud him as a creditor of the companies. The court was tasked with determining whether the plaintiff was a person aggrieved by the deregistration of the companies and whether the justice of the case required reinstatement of the companies under section 601AH(2) of the Corporations Act 2001.

The primary legal issue before the court was whether the plaintiff had standing to seek reinstatement of the companies and if the justice of the case warranted such reinstatement. The court needed to consider whether the plaintiff had been aggrieved by the deregistration of the companies, and if so, whether the court should exercise its discretion to reinstate the companies to prevent unjust outcomes. The court also had to consider the relationship between the parties and the potential for unfair consequences if the companies were not reinstated.

The court held that the plaintiff had standing as a creditor aggrieved by the deregistration of the companies. The court found that the transfer of the properties was intended to defraud the plaintiff, and that the second defendant, who was the sole shareholder of the third and fourth defendant companies, had played a role in the transfers. The court exercised its discretion to reinstate the companies under section 601AH(2) of the Corporations Act, determining that the justice of the case required such action to prevent an unjust outcome. The court concluded that the plaintiff had been prejudiced by the deregistration, and that reinstatement was necessary to ensure that the plaintiff's rights as a creditor were protected.

The court ordered the reinstatement of the third and fourth defendant companies, directing that they remain on the register until further order. The court also ordered that the properties in question be returned to the third and fourth defendant companies to ensure that the plaintiff's rights as a creditor were protected.

Orders