Environmental Forest Farms Management Limited (ACN 087 201 670) v Charnley Hall Pty Ltd (ACN 056 976 240)
[2010] FCA 661
•24 June 2010
FEDERAL COURT OF AUSTRALIA
Environmental Forest Farms Management Limited (ACN 087 201 670) v Charnley Hall Pty Ltd (ACN 056 976 240) [2010] FCA 661
Citation: Environmental Forest Farms Management Limited (ACN 087 201 670) v Charnley Hall Pty Ltd (ACN 056 976 240) [2010] FCA 661 Parties: ENVIRONMENTAL FOREST FARMS MANAGEMENT LIMITED (ACN 087 201 670) and FORESTRY FINANCE LIMITED (ACN 108 513 239) v CHARNLEY HALL PTY LTD (ACN 056 976 240) File number: WAD 138 of 2010 Judge: MCKERRACHER J Date of judgment: 24 June 2010 Catchwords: CORPORATIONS – reinstatement of deregistered company - s 601AH(2) of the Corporations Act 2001 (Cth) Legislation: Corporations Act 2001 (Cth) s 601AH(2) Cases cited: Australian Competition and Consumer Commission v Australian Securities and Investments Commission (2000) 174 ALR 688
Callegher v Australian Securities and Investments Commission (2007) 98 ALD 1
Krstevska v ACN 010 505 012 Pty Ltd (2002) 20 ACLC 292Date of hearing: 22 June 2010 Place: Perth Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 16 Counsel for the Plaintiffs: T Galic Solicitor for the Plaintiffs: AustAsia Legal Pty Ltd
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
WAD 138 of 2010
IN THE MATTER OF CHARNLEY HALL PTY LTD (ACN 056 976 240) (DEREGISTERED)
BETWEEN: ENVIRONMENTAL FOREST FARMS MANAGEMENT LIMITED (ACN 087 201 670)
First PlaintiffFORESTRY FINANCE LIMITED (ACN 108 513 239)
Second PlaintiffAND: CHARNLEY HALL PTY LTD (ACN 056 976 240)
Defendant
JUDGE:
MCKERRACHER J
DATE OF ORDER:
22 JUNE 2010
WHERE MADE:
PERTH
THE COURT ORDERS THAT:
1.Pursuant to Order 6 Rule 9 of the Federal Court Rules Charnley Hall Pty Ltd (ACN 056 976 240) (Deregistered) is to cease to be a party to these proceedings.
2.Pursuant to Order 6 Rule 8 of the Federal Court Rules the Australian Securities and Investments Commission (ASIC) be added as a Defendant to these proceedings.
3.ASIC do reinstate the registration of Charnley Hall Pty Ltd (ACN 056 976 240) (Deregistered).
4.The plaintiffs do personally serve a copy of these orders on either Mr Michael Frederick Winter or Mr Matthew Allen Winter within 28 days of these orders being made.
5.The Plaintiffs do lodge the original of these orders and a duly completed Form 105 of the Corporations Regulations 2001 with ASIC.
6.There be no order as to costs.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
WAD 138 of 2010
IN THE MATTER OF CHARNLEY HALL PTY LTD (ACN 056 976 240) (DEREGISTERED)
BETWEEN: ENVIRONMENTAL FOREST FARMS MANAGEMENT LIMITED (ACN 087 201 670)
First PlaintiffFORESTRY FINANCE LIMITED (ACN 108 513 239)
Second PlaintiffAND: CHARNLEY HALL PTY LTD (ACN 056 976 240)
Defendant
JUDGE:
MCKERRACHER J
DATE:
24 JUNE 2010
PLACE:
PERTH
REASONS FOR JUDGMENT
The plaintiffs apply pursuant to s 601AH(2) of the Corporations Act 2001 (Cth) (CA) for the reinstatement of the defendant, Charnley Hall Pty Ltd (ACN 056 976 240) (the Company).
On the first return date of the originating process in this matter, I made the orders appearing below (in [16]) and indicated that short reasons would follow. These are the reasons.
Relevantly, s 601AH(CA) provides as follows:
601AHReinstatement
Reinstatement by ASIC
(1)…
Reinstatement by Court
(2)The Court may make an order that ASIC reinstate the registration of a company if:
(a)an application for reinstatement is made to the Court by:
(i)a person aggrieved by the deregistration; or
…
(b)the Court is satisfied that it is just that the company’s registration be reinstated.
(3)If the Court makes an order under subsection (2), it may:
(a)validate anything done between the deregistration of the company and its reinstatement; and
(b)make any other order it considers appropriate.
ASIC to give notice of reinstatement
(4)ASIC must give notice of a reinstatement in the Gazette. If ASIC exercises its power under subsection (1) in response to an application by a person, ASIC must also give notice of the reinstatement to the applicant.
Effect of reinstatement
(5)If a company is reinstated, the company is taken to have continued in existence as if it had not been deregistered. A person who was a director of the company immediately before deregistration becomes a director again as from the time when ASIC or the Court reinstates the company. Any property of the company that is still vested in the Commonwealth or ASIC revests in the company. If the company held particular property subject to a security or other interest or claim, the company takes the property subject to that interest or claim.
The plaintiffs’ purpose in seeking reinstatement of the Company is so that they may join the Company in proceedings issued against the Company in the District Court of Western Australia. By those proceedings, the plaintiffs assert that the Company purchased ‘16 woodlots’ in the Kiri Park Projects: 2007 Growers ARSN 107 747 383 (the Project) which were allotted by the first plaintiff, as responsible entity for the Project, to the Company.
The claim is that the Company entered a finance agreement with the second plaintiff. The plaintiffs each commenced proceedings in the District Court in October 2009 against the Company and its two Directors, Mr Michael Frederick Winter and Mr Matthew Allen Winter in which the first plaintiff claimed outstanding lease and management fees for the Project for the year of 2008 in the sum of $11,888.00; and outstanding lease and management fees for the Project in 2009 in the same amount plus interest and administration fees on outstanding lease and management fees in accordance with the Product Disclosure Statement for the Project. In the District Court proceedings, the second plaintiff also claimed the total outstanding Principal Loan in accordance with the Finance Agreement ($87,323.89) and interest incurred on the outstanding Principal Loan at the rate of 12.5% per annum in accordance with the First Finance Agreement.
On 20 January 2010, the plaintiffs received correspondence from the Company’s former solicitors enclosing a notice of solicitor ceasing to act for the Company in the District Court proceedings. By an Australian Securities and Investments Commission (ASIC) search conducted in May 2010, it was revealed that the Company was deregistered on 18 January 2009.
Pursuant to s 601AD CA, the Company ceased to exist on deregistration and all of its property vested in ASIC. By s 601AH(5) CA, if a company is reinstated, it is taken to have continued in existence as if it had not been deregistered. Any director of the company in office immediately before the deregistration again becomes a director from the time reinstatement is ordered and any property of the company vested in ASIC re-vests in the company.
CONSIDERATION
I am satisfied that the plaintiffs have made out a case that they are aggrieved by the deregistration. The plaintiffs are prejudiced and aggrieved by the deregistration of the Company as their legal rights as creditors of the Company have been affected by the deregistration. Prime facie, they have a genuine grievance that the dissolution of the Company affected their interests and their right to sue the Company has now gone out of existence: Australian Competition and Consumer Commission v Australian Securities and Investments Commission (2000) 174 ALR 688 (at [24]-[26]). The plaintiffs also, prima facie, have a pecuniary interest in the reinstatement of the Company as the Company is to be a party in the District Court proceeding for outstanding debts owed in the manner outlined above.
Rule 2.8 of the Federal Court (Corporations ) Rules 2000 requires a copy of the originating process and supporting affidavit to be served on ASIC a reasonable time before the hearing of the application. Service was effected by hand delivery to ASIC on or about 8 June 2010 which I am satisfied is reasonable time before the hearing of the application. Copies of all further materials filed in the Court will also be served on ASIC including orders made with these reasons. Additionally, there is proof that the originating process and supporting affidavit of 27 May 2010 was served by a process server on Mr Michael Winter on 10 June 2010 at 1.35 pm. Mr Michael Winter will be recorded as a director of the Company immediately before it was deregistered and is a party in the District Court proceedings by reason of representations said to have been made by Mr Winter guaranteeing the performance of the Company in relevant respects.
Similarly a copy of the originating process and supporting affidavit was served on the former solicitors for the Company, Solomon Brothers on or about 9 June 2010. Solomon Brothers have also acted for Mr Michael Winter in the District Court action. No party has indicated any wish to be heard in relation to the relief sought on the first return date. Due notice was given that the relief may be granted on that date.
ASIC has advised the plaintiffs’ solicitors in writing that it does not intend to seek to appear or to oppose the application subject to certain conditions. In the minute produced for the plaintiffs at the hearing, the conditions were reproduced.
In addition to being satisfied that an applicant is aggrieved by a deregistration, it is necessary for the Court to be satisfied that it is just that the Company’s registration be reinstated (s 601AH(2)(b) CA). Discretion on an application for registration is broad: Krstevska v ACN 010 505 012 Pty Ltd (2002) 20 ACLC 292.
There is no evidence that any process of winding up or the appointment of a liquidator has occurred. There is no indication on the formal record as to the reasons for deregistration. There is no prospect of the plaintiffs ventilating their grievances in any sense while the Company remains deregistered.
It cannot be guaranteed that the Company will be in a financial capacity to satisfy the claims that the plaintiffs say should be honoured. Were there evidence of no prospect that the Company could meet any alleged indebtedness or financial obligations, it may be inappropriate to make an order for reinstatement due to the futility in doing so. There is no such evidence in this case. The Company will be restored to the position at which it stood immediately before the deregistration. The reinstatement also puts the Company back into the hands of the directors (s 601AH(5) CA). That is appropriate in the circumstances where the plaintiffs wish to pursue a cause of action in the District Court proceeding against both the Company and the directors in respect of related transactions and events.
As with any discretion, it is necessary to have regard to prejudice that might be suffered by any person as a result of orders for reinstatement and ancillary relief. It is not apparent that any prejudice would be suffered by any third party nor by the Company by these orders for reinstatement being made. While there may be some cost in being required to defend a District Court proceeding, it is not prejudice of the kind which would make it unjust to order the reinstatement of a company (see Callegher v Australian Securities and Investments Commission (2007) 98 ALD 1 per Lander J (at [62]). If there is any prejudice it would be substantially outweighed by the prejudice to the plaintiffs in being unable to pursue the Company in respect of the alleged claims.
In all the circumstances I consider that it is appropriate to make orders in the terms sought. The following orders will be made:
1.Pursuant to Order 6 Rule 9 of the Federal Court Rules Charnley Hall Pty Ltd (ACN 056 976 240) (Deregistered) is to cease to be a party to these proceedings.
2.Pursuant to Order 6 Rule 8 of the Federal Court Rules the Australian Securities and Investments Commission (ASIC) be added as a Defendant to these proceedings.
3.ASIC do reinstate the registration of Charnley Hall Pty Ltd (ACN 056 976 240) (Deregistered).
4.The plaintiffs do personally serve a copy of these orders on either Mr Michael Frederick Winter or Mr Matthew Allen Winter within 28 days of these orders being made.
5.The Plaintiffs do lodge the original of these orders and a duly completed Form 105 of the Corporations Regulations 2001 with ASIC.
6.There be no order as to costs.
I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. Associate:
Dated: 24 June 2010
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