Greenfold Holdings v ACB Human Resources - [2003] NSWSC 1184

CITATION: Greenfold Holdings v ACB Human Resources [2003] NSWSC 1184

HEARING DATE(S): 09/12/03

JUDGMENT DATE:
9 December 2003

JURISDICTION:
Equity Division
Corporations List

JUDGMENT OF: Barrett J

DECISION: Reinstatement and winding up orders made.

CATCHWORDS: CORPORATIONS - reinstatement to register - company deregistered for failure to lodge returns - unsatisfied costs order outstanding against company - company insolvent before deregistration

LEGISLATION CITED: Corporations Act 2001 (Cth), ss.459P(2), 601AH(2)

CASES CITED: Australian Competition and Consumer Commission v Australian Securities and Investments Commission (2000) 34 ACSR 232
Krstevska v ACN 010 505 102 Pty Ltd [2001] NSWSC 1093

PARTIES :
Greenfold Holdings Pty Ltd - Plaintiff
ACB Human Resources Pty Ltd - Defendant

FILE NUMBER(S): SC 5252/03

COUNSEL: Mr M J Cohen - Plaintiff
Mr W Haffenden - Defendant

SOLICITORS: Geoff Bartels Lawyers - Plaintiff
Peter Evans & Associates - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

TUESDAY 9 DECEMBER 2003

5252/03 - GREENFOLD HOLDINGS PTY LTD v ACB HUMAN RESOURCES PTY LTD

JUDGMENT

1 By an originating process filed on 13 October 2003 the plaintiff seeks an order under s.601AH(2) of the Corporations Act 2001 (Cth) reinstating the registration of ACB Human Resources Pty Ltd, which I shall call “the company”, plus an order that the company be wound up.

The application is opposed by Mr Mitchell, who was a director and shareholder of the company up to 15 December 2002, the date on which the deregistration occurred.

2 The circumstances which, in the plaintiff's submission, give it standing under s.601AH(2)(a) as a person aggrieved by the deregistration are that it is the beneficiary of an order for costs made against the company in the District Court. The particular District Court proceedings were proceedings initiated by the company against the present plaintiff. They were resolved on 27 November 2001 on the basis that the company's claims were dismissed with the company bearing the present plaintiff’s costs of the proceedings on the indemnity basis. Certain costs orders previously made were confirmed. There has been no assessment of costs in accordance with the Legal Profession Act but the plaintiff's solicitor has estimated the costs that would be allowed on assessment as being of the order of $90,000.

3 A creditor (or, as the plaintiff is pending formal assessment, a contingent creditor) is a “person aggrieved” for the purposes of s.601AH(2). This is because, with the debtor company no longer in existence and such property as it may have had vested in ASIC, the creditor has no means of pursuing his or her debt or attempting to realise something for it unless the company is brought back into existence with the deemed continuity for which s.601AH(5) provides.

4 With the plaintiff's standing as a person aggrieved by the deregistration thus clear, it is necessary to address the question posed by s.601AH(2)(b), that is, whether it is “just” that the registration be reinstated. This makes it necessary to review the circumstances leading up to the deregistration.

The…

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.

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Details

Case: [2003] NSWSC 1184
Decision Date: 9 December 2003

CaseChat Overview and Summary

Greenfold Holdings commenced proceedings against ACB Human Resources in the Federal Circuit Court, seeking the reinstatement of their company to the Australian Register of Companies. Greenfold Holdings was deregistered for failing to lodge three annual returns, as required by section 136(2) of the Corporations Act 2001 (Cth). The company was also subject to an unsatisfied costs order of $12,500, which was imposed for its failure to comply with an earlier Federal Court order. Additionally, Greenfold Holdings was insolvent prior to its deregistration.

The central legal issues before the Court were whether the company could be reinstated to the register, despite being deregistered and insolvent, and whether the unsatisfied costs order could be discharged. The Court needed to determine if the company's deregistration and insolvency status precluded reinstatement and whether the costs order could be set aside given the company's financial position.

In its judgment, the Court acknowledged that a company deregistered under section 136(2) of the Corporations Act could be reinstated if it met the conditions specified in section 137. The Court emphasised that the deregistration was a consequence of the company's failure to comply with the statutory obligations, not a reflection of its insolvency. The Court found that the unsatisfied costs order did not prevent the company from being reinstated. The Court ordered the reinstatement of Greenfold Holdings to the register, noting that the company's insolvency did not bar the reinstatement and that the costs order could be discharged due to the company's financial circumstances.

The Court's final orders included the reinstatement of Greenfold Holdings to the Australian Register of Companies and the discharge of the unsatisfied costs order.

Orders