In the matter of Miramax Projects Pty Ltd (in liquidation)
[2024] NSWSC 184
•29 February 2024
Supreme Court
New South Wales
Medium Neutral Citation: In the matter of Miramax Projects Pty Ltd (in liquidation) [2024] NSWSC 184 Hearing dates: 29 February 2024 Date of orders: 29 February 2024 Decision date: 29 February 2024 Jurisdiction: Equity - Corporations List Before: McGrath J Decision: See [19]–[22]
Catchwords: CORPORATIONS — Winding up — Application to defer deregistration of company — HELD — deferral order made
Legislation Cited: Corporations Act 2001 (Cth)
Cases Cited: AJ Azzopardi Industries Pty Ltd v ACN 104 635 369 Pty Ltd (in liq) [2014] FCA 710
Campbell-Wilson v Australian Securities and Investments Commission [2017] FCA 391
Commonwealth v Castel Electronics Pty Ltd [2022] FCA 432
Falaren Pty Ltd (deregistered) v Australian Securities and Investments Commission [2012] FCA 368
Re Emergen-X Pty Ltd (in liq) [2010] FCA 487
Re Petroleum Operations Pty Ltd (in liq) [2016] SASC 201
Re Rosaub Pty Ltd (2005) 54 ACSR 371; [2005] NSWSC 689
Category: Principal judgment Parties: Insurance Australia Group Limited (Plaintiff)
Miramax Projects Pty Ltd (in liquidation) (First Defendant)
Australian Securities and Investments Commission (Second Defendant)Representation: Counsel:
Solicitors:
McCrostie D (Solicitor - Plaintiff)
Turks Legal (Plaintiff)
No appearance (First Defendant)
Submitting appearance (Second Defendant)
File Number(s): 2024/00070576
JUDGMENT
INTRODUCTION
-
This is an application made under s 509(2) of the Corporations Act 2001 (Cth) (Corporations Act) by the plaintiff, Insurance Australia Group Limited (IAG), by amended originating process filed 29 February 2024 seeking an order that the second defendant, the Australian Securities and Investments Commission (ASIC), defer the deregistration of the first defendant, Miramax Projects Pty Ltd (in liquidation) (Miramax Projects), until 28 February 2025. The amended originating process contained a minimal change to the originating process filed 23 February 2024.
-
The basis for the application is to enable IAG to continue to prosecute proceedings in the District Court of New South Wales brought in the name of Miramax Projects against Premium Fire Services Pty Ltd (PFS), pursuant to the right of subrogation under an insurance policy held by Miramax Projects with IAG.
EVIDENCE
-
In support of its application, IAG relies on the affidavit of Jacqueline Kelly sworn 22 February 2024 and the exhibit to that affidavit, as well as a further affidavit of Jacqueline Kelly sworn 28 February 2024.
-
I am satisfied that Miramax Projects has been served with the relevant documents and advised of the hearing before me. There was no appearance by Miramax Projects at the hearing before me after it was called outside court. ASIC has filed a submitting appearance.
RELEVANT FACTS
-
Miramax Projects held an Annual Contract Works and Legal Liability Policy of Insurance with IAG for the period of insurance from 1 April 2017 to 1 April 2018 for all contract works commencing during that period (Policy). Miramax Projects and IAG extended the period of insurance under the Policy a number of times, and that extension was ongoing at the time of the loss described below.
-
By way of a contract with Luxeland Pty Ltd (Luxeland Contract), Miramax Projects was the head contractor for development works at 6 Railway Parade, Burwood (Property).
-
On 7 June 2018, Miramax Projects entered into a Major Works Subcontract Agreement with PFS, under which PFS was engaged to provide fire service works, which included the installation of sprinkler heads throughout the Property.
-
On 11 February 2020, a sprinkler bulb that had been installed by PFS failed, causing damage to the Property. The cost of rectifying the damage to the Property amounted to $319.226.00.
-
Pursuant to the Luxeland Contract, Miramax Projects was liable to Luxeland Pty Ltd to rectify the damage. Miramax Projects made a claim on the Policy and was indemnified by IAG for the cost of rectifying the damage. IAG has paid $251,7771.15 towards the cost of assessing and rectifying the damage.
-
Between 2021 and 2023, investigations were carried out by IAG into the cause of the failed sprinkler bulb. Those investigations concluded that the installation of the sprinkler head by PFS was defective, ultimately causing it to fail and resulting in the subsequent damage to the Property. Pursuant to clause 9 of the Product and Disclosure Statement of the Policy, IAG is subrogated to all of Miramax Projects’ rights of recovery against PFS for all the payments made by IAG under the Policy.
-
On or about 11 October 2023, IAG gave notice to PFS and its insurer of IAG’s intention to commence proceedings against PFS for recovery of its loss by operation of its right of subrogation to the rights of Miramax Projects.
-
On 30 November 2023, proceedings were commenced in the District Court of New South Wales by IAG in the name of Miramax Projects against PFS (District Court proceedings). On 29 January 2024, the following orders were made by consent in the District Court proceedings:
PFS is to file and serve its defence by 9 February 2024.
IAG/Miramax Projects is to serve its lay and expert evidence in chief by 29 March 2024.
PFS is to serve its lay and expert evidence in response by 28 June 2024.
Matter listed for Status Conference on 10 July 2024.
-
On 13 February 2024, IAG became aware that Miramax Projects had been the subject of a members voluntary winding up. As it turned out, a Form 5603 had been lodged with ASIC by the liquidator of Miramax Projects on 12 December 2023. As such, by the operation of s 509(1) of the Corporations Act, ASIC must deregister Miramax Projects on 13 March 2024 unless the court makes an order under s 509(2) of the Corporations Act that ASIC deregister Miramax Projects on a different specified day.
LEGAL PRINCIPLES
-
Section 509(2) of the Corporations Act provides that:
On application by the liquidator or any other interested party, the Court may make an order that ASIC deregister the company on a specified day. The Court must make the order before the end of the deregistration period.
-
In relation to the exercise of the discretion conferred by s 509(2), in Re Rosaub Pty Ltd (2005) 54 ACSR 371; [2005] NSWSC 689, Barrett J at [10] made the following observations with respect to the operation of former s 509(6) (being the predecessor to s 509(2), which is in substantially similar terms):
In relation to the substantive question, the legislation does not seek to define or qualify the court’s discretion except in a timing sense … Case law provides little guidance as to considerations relevant to the exercise of the discretion. Judge Burley, a Master of the Supreme Court of South Australia, dealing with an earlier version of s 509(6) in Kerol Pty Ltd v Vergeld Engineering Pty Ltd (unreported, SASC, 30 April 1998) expressed the opinion that the discretion is properly exercised where “the continued existence of the company is necessary in order to effect some proper purpose”. To like effect is the decision of Austin J in Application of Walker (as liquidator of SC Australia Pty Ltd) [1999] NSWSC 176 where an order was made because, if deregistration was not deferred, certain persons “would suffer a loss to which there is no particular reason to subject them”.
-
In Re Rosaub, Barrett J also stated at [12]–[13]:
12 I am satisfied that, if some apparently beneficial purpose will, according to the evidence, be served by a deferral, the deferral should be granted, particularly where it is the liquidator who puts forward the need for deferral …
13 There is an obvious statutory intention that the court should have regard to some particular proposal not only in deciding that an extension of time should be granted but also in fixing the further time. Its power is to order that deregistration be effected by ASIC “on a specified day” and that that day should thereby be substituted for the day fixed by s 509(5). The court must therefore form a view as to the amount of time appropriately required. That is something that can be judged only by reference to particular circumstances …
-
The principles expressed in Re Rosaub have been followed and applied in Re Emergen-X Pty Ltd (in liq) [2010] FCA 487 by Jacobson J at [14]; Falaren Pty Ltd (deregistered) v Australian Securities and Investments Commission [2012] FCA 368 by Siopis J at [17]; AJ Azzopardi Industries Pty Ltd v ACN 104 635 369 Pty Ltd (in liq) [2014] FCA 710 by Farrell J at [17]; Re Petroleum Operations Pty Ltd (in liq) [2016] SASC 201 by Dart J at [8]; Campbell-Wilson v Australian Securities and Investments Commission [2017] FCA 391 by Markovic J at [12]; and Commonwealth v Castel Electronics Pty Ltd [2022] FCA 432 by Lee J at [10].
-
It is clear that the discretion in s 509(2) is wide and the purpose to be identified is not limited to one in which the company to be deregistered will benefit.
CONSIDERATION
-
I am satisfied that IAG is an ‘interested party’ in the deregistration of Miramax Projects for the purposes of section 509(2) of the Corporations Act. IAG has a financial interest in Miramax Projects remaining registered so that IAG is able to continue to prosecute the District Court proceedings against PFS in the name of Miramax Projects, pursuant to its right of subrogation under the Policy.
-
I am also satisfied that the ability of IAG to continue the District Court proceedings against PFS in the name of Miramax Projects represents a ‘proper’ or ‘beneficial’ purpose for which the continued existence of Miramax Projects is necessary. Furthermore, if the deregistration is not deferred, IAG will also suffer a significant loss, as Miramax Projects will cease to exist and IAG's ability to recover its subrogated loss from PFS will in all likelihood be extinguished.
-
For these reasons, I am satisfied that orders should be made deferring the deregistration of Miramax Projects.
-
As to the date of the deferral, I am satisfied that a period of one year is sufficient to enable to District Court proceedings to be determined. Should there be a need for the extension of that time, there will be liberty to apply to do so.
ORDERS
-
Accordingly, I make the following orders:
Pursuant to section 509(2) of the Corporations Act 2001 (Cth), the second defendant is to defer the deregistration of the first defendant until 28 February 2025.
Leave is granted to the plaintiff to re-list this matter on 48 hours’ notice to the parties for the purpose of applying to vary the deregistration date provided for in order 1.
Each party is to pay its own costs of these proceedings.
**********
Decision last updated: 29 February 2024
8
1