In the matter of Dexterity Holdings Pty Ltd (managers appointed pursuant to the Property and Stock Agents Act 2002); In the matter of Cubed Realty Pty Ltd (managers appointed pursuant to the Property and Stock..

[2025] NSWSC 368

Supreme Court

New South Wales

Medium Neutral Citation:

In the matter of Dexterity Holdings Pty Ltd (managers appointed pursuant to the Property and Stock Agents Act 2002); In the matter of Cubed Realty Pty Ltd (managers appointed pursuant to the Property and Stock Agents Act 2002); In the matter of Equity Strata Pty Ltd (managers appointed pursuant to the Property and Stock Agents Act 2002) [2025] NSWSC 368

Hearing dates:

9 April 2025

Date of orders:

9 April 2025

Decision date:

09 April 2025

Jurisdiction:

Equity - Corporations List

Before:

Black J

Decision:

Leave granted to Third Plaintiff to discontinue the proceedings with no order as to costs; the Second Plaintiff be reinstated and wound up; and the Third Plaintiff be wound up.

Catchwords:

CORPORATIONS – Reinstatement – Winding up – Liquidators – Appointment.

COSTS – Costs incurred by non-parties – Where interested party heard under r 2.13 of the Supreme Court (Corporations) Rules 1999 (NSW) seeks costs - Declined

Legislation Cited:

- Corporations Act 2001 (NSW) s 601AH(2)

- Supreme Court (Corporations) Rules 1999 (NSW) r 2.13

Cases Cited:

- Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 180 CLR 622

- Re Jabiru Satellite Ltd (in liq) [2022] NSWSC 639

Category:

Principal judgment

Parties:

Dexterity Holdings Pty Ltd (managers appointed pursuant to the Property and Stock Agents Act 2002) (First Plaintiff)
Cubed Realty Pty Ltd (managers appointed pursuant to the Property and Stock Agents Act 2002) (Second Plaintiff)
Equity Strata Pty Ltd (managers appointed pursuant to the Property and Stock Agents Act 2002) (Third Plaintiff)

Representation:

Counsel:
D Robertson (Plaintiffs)
D S Weinberger (Interested Party)

Solicitors:
Addisons (Plaintiffs)
Bird & Bird (Interested Party)

File Number(s):

2024/472584

JUDGMENT – ex tempore (Revised 10 April 2025)

Leave to discontinue proceedings and costs

1. Each of Dexterity Holdings Pty Ltd (“Dexterity Holdings”), Cubed Realty Pty Ltd (“Cubed Realty”) and Equity Strata Pty Ltd (“Equity Strata”) initially sought orders for their own winding up on the ground of insolvency and also on the just and equitable ground, in an application brought by the managers appointed to those companies by the Department of Fair Trading (NSW) (“DFT”) pursuant to the Property and Stock Agents Act 2002 (NSW) (“PSA”). Equity Strata, on the instructions of those managers, have now sought leave to discontinue the application in respect of Equity Strata. There is no reason that that leave should not be granted.

2. A director and shareholder of Equity Strata, Mr McIntyre, had sought to oppose its winding up, and would likely have been heard as an interested person in that application under r 2.13 of the Supreme Court (Corporations) Rules 1999 (NSW) (“Corporations Rules”), although an order has not yet been made granting him leave to be heard under that rule.

3. Mr McIntyre seeks an order for his costs of the proceedings and, in the alternative, seeks directions to allow him to bring an application for a third party costs order, although the identity of the third party against which the costs order was sought was not entirely clear. There are, it seems to me, two fundamental difficulties with that application. The first is that Mr Macintyre did not seek to be joined as a party to the proceedings but sought leave to be heard as an interested person to be heard under r 2.13 of the Corporations Rules, putting aside the fact that that leave has not yet been granted and now will not be granted. The consequences of that approach are well established. I should add to my oral judgment that I reviewed those principles in Re Jabiru Satellite Ltd (in liq) [2022] NSWSC 639, and there declined to make an order for costs in favour of an interested person who had successfully opposed an application to appoint a special purpose liquidator. I adopt, without repeating, my review of the case law in that judgment.

4. In summary, a party who is heard under r 2.13 of the Corporations Rules ordinarily has no expectation that he or she will recover the costs of his or her appearance and equally has little risk that costs will be awarded against him or her. Those matters are correlatives, because the lesser exposure to an adverse order for costs carries with it a lesser likelihood of recovery of costs. It was, of course, open to Mr McIntyre to seek to be joined as a party, but he likely rightly did not do so, thereby minimising his costs exposure in respect of the proceedings.

5. While there are circumstances in which an order for costs may be made in respect of an interested person under that rule, it does not seem to me they are satisfied here. The winding up application in respect of Equity Strata has not been determined on its merits. I appreciate that Mr Weinberger, who appears for Mr McIntyre, seeks to contend that the managers of Equity Strata had no power to commence the proceedings in the name of the companies. I should not determine that issue on its merits in this application, where the application will be discontinued, adopting the approach recognised in the decision of McHugh J in Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 180 CLR 622. I put aside the fact that I in any event find below, in dealing with the same issue in respect of Dexterity Holdings, that the managers do have the necessary power..

6. I also bear in mind that, because this is an application for costs of an interested party heard under r 2.13 of the Corporations Rules, the normal rules as to costs do not apply, and the fact that Mr McIntyre might (again putting aside the finding that I reach below as to that question) have succeeded in a determination on the merits, had it occurred, does not advance his position as to costs. His success on that question would not, without more, have entitled him to an order for costs under r 2.13 of the Corporations Rules. For these reasons, I would not make an order for costs in Mr McIntyre's favour, where there has been no determination on the merits that would support that order, and he is not a party to the proceedings, but a person who would likely have been heard as an interested party under r 2.13 of the Corporations Rules had the proceedings in respect of Equity Strata not been discontinued.

7. I would also make orders to permit a third party costs application, because the premise of such an application can only be that Mr McIntyre is a party to the proceedings who is entitled to seek such an order, and that is not the case.

8. I therefore grant leave to Equity Strata, by its managers, to discontinue the proceedings brought by it with no order as to costs.

Reinstatement application in respect of Cubed Realty

9. By Amended Originating Process filed on 13 February 2025, Cubed Realty, also by its managers appointed pursuant to the PSA, sought an order for its reinstatement and then for its winding up. I put aside whether Cubed Realty can bring that application as a company that has been deregistered and has no continuing legal existence, where the application was, in substance, brought by its managers and it is also plain that they have standing to bring the application under s 601AH(2) of the Corporations Act 2001 (Cth) (“Corporations Act”) as persons aggrieved by the deregistration. In those circumstances, the just, quick and cheap resolution of the real issues in dispute supports my dispensing with any need to file a Further Amended Originating Process, joining the managers or possibly DFT as the applicant, to seek the reinstatement of Cubed Realty and any consequential winding up order.

10. The managers of Cubed Realty read the affidavit dated 19 December 2024 of Mr Hayes, one of the managers, in support of the application. He refers to his appointment by DFT as manager of Cubed Realty, to the nature of its business and to significant issues as to the conduct of Cubed Realty’s business, including improper payments to related parties, insufficient records of payments, trust account deficiencies and other matters. Mr Hayes also refers to the view which he and his co-manager have formed as to deficiencies in the handling of funds and improper payments made in respect of Cubed Realty, with the probable result that Cubed Realty was insolvent, and to the reasons that a winding up is sought in order to facilitate the investigation of Cubed Realty's affairs.

11. The managers also read the affidavit of Mr Marshall dated 13 February 2025, which refers to the circumstances in which Cubed Realty was deregistered by the Australian Securities and Investments Commission (“ASIC”), despite communications by the managers to ASIC, apparently because a striking off action was already in progress at the time of the managers’ appointments to Cubed Realty. Plainly, that matter involved no fault on the part of the managers, and ASIC did not there address the merits of a deregistration as against a liquidation in which the company's previous conduct could be investigated. The managers also tender a letter dated 8 April 2025 from ASIC which indicates its usual position in respect of a reinstatement application, and the consent of Mr Hayes and Mr Marshall to be appointed as liquidators of Cubed Realty.

12. I am satisfied, for the reasons noted above, that Mr Hayes and Mr Marshall, and likely also DFT, have standing to seek a reinstatement of Cubed Realty. They are persons aggrieved by its deregistration, where that deregistration will adversely impact the investigation of Cubed Realty’s affairs. I am satisfied that reinstatement is just and equitable in the relevant circumstances, where it will promote the investigation of Cubed Realty's affairs and leave open the possibility of, for example, recovery actions.

13. It is plain enough that Cubed Realty should not be reinstated without the appointment of a liquidator, where that would return it to the control of its former director. The latter course would be potentially adverse to the public interest, both because of the issues which are identified as to its former management and because of the issues that are raised as to its solvency. For these reasons, I am satisfied that the reinstatement order should be made on terms that the managers simultaneously be appointed as the liquidators of Cubed Realty. I will grant leave to them to be appointed to that position, to the extent that such leave may be required if they are creditors of Cubed Realty.

14. Accordingly, I make the following orders:

1. Order that Cubed Realty Pty Ltd be reinstated pursuant to s 601AH(2) of the Corporations Act 2001 (Cth) and the Australian Securities Investments Commission give effect to that reinstatement.

2. At the point of reinstatement Cubed Realty be wound up and Messrs Hayes and Marshall be appointed as its liquidators.

3. Grant leave, to the extent necessary, to Messrs Hayes and Marshall to be appointed as liquidators of Cubed Realty.

Winding up of Dexterity Holdings

15. By Amended Originating Process filed on 13 February 2025, Dexterity Holdings, also under the control of managers appointed to it under the PSA, applies for its winding up in insolvency or alternatively on the just and equitable ground. Dexterity Holdings has standing to seek a winding up order in insolvency under s 459P(1)(a) of the Corporations Act and also has standing under s 462(2) of the Corporations Act to seek a winding upon the just and equitable ground under s 461 of the Corporations Act.

16. I am satisfied that, here, the managers appointed to Dexterity Holdings can cause that application to be brought, since s 128 of the PSA confers on them the capacity to wind up the affairs of the company's business and an incidental power to do such things as are ancillary to the exercise of the power to wind up that business. Where a business is conducted in corporate form, it seems to me that the power to wind up the corporate entity is necessarily ancillary to the power to wind up the business. I am also satisfied that, where the managers have that power, they can bring the winding up application in the company's name, since s 130 of the PSA provides that an act done by the manager of a licensee's business is, for the purposes of any proceedings that rely on that act, taken to have been done by the licensee. Accordingly, the manager's act in commencing the winding up application is here taken to be undertaken by Dexterity Holdings, which has standing to apply for its own winding up as I noted above.

17. I have referred above, in dealing with the application brought by Cubed Realty, to Mr Hayes’ evidence, and the same issues exist in respect of Dexterity Holdings as exist in respect of Cubed Realty. Those matters seem to me to provide sufficient basis to make an order for the winding up of Dexterity Holdings both in insolvency and on the just and equitable ground. A notice of application for the winding up order has been published and is in evidence, and I have been informed that notice has also been given to the ASIC of the winding up application in the prescribed form, and I proceed on that basis. I am satisfied that it is appropriate that Messrs Hayes and Marshall also be appointed as liquidators of Dexterity Holdings, and I will grant leave for them to be appointed to that position, to the extent it is necessary to do so.

18. Accordingly, I make the following additional orders:

1. Dexterity Holdings Pty Ltd be wound up in insolvency and on the just and equitable ground, and Messrs Hayes and Marshall be appointed as its liquidators.

2. Grant leave to Messrs Hayes and Marshall to be appointed as liquidators of Dexterity Holdings Pty Ltd, to the extent necessary to do so. The exhibits be returned.

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Decision last updated: 23 April 2025