In the matter of Richmate Pty Ltd (in liq) (deregistered)

[2015] NSWSC 2009

Supreme Court

New South Wales

Medium Neutral Citation:	In the matter of Richmate Pty Ltd (in liq) (deregistered) [2015] NSWSC 2009
Hearing dates:	10 September 2015
Decision date:	10 September 2015
Jurisdiction:	Equity - Corporations List
Before:	Black J
Decision:	Orders in accordance with the short minutes of order initialled by His Honour and placed in the file.
Catchwords:	CORPORATIONS – application for reinstatement of company under s 601AH of the Corporations Act 2001 (Cth) – where Plaintiff sought to reinstate a deregistered company so that the company could receive funds from sale of investment.
Legislation Cited:	- Corporations Act 2001 (Cth) s 601AH
Cases Cited:	- Australian Competition and Consumer Commission v Australian Securities and Investments Commission [2000] NSWSC 316; 34 ACSR 232 - ERB International Pty Ltd (deregistered): Re Fiorentino v Australian Securities and Investments Commission [2014] NSWSC 200; (2014) 98 ACSR 124 - JP Morgan Portfolio Services Ltd v Deloitte Touche Tohmatsu [2008] FCA 433; (2008) 65 ACSR 636 - Reid v Action Insulation Engineers Pty Ltd [2009] NSWSC 1182
Category:	Principal judgment
Parties:	Maxwell William Prentice (Plaintiff) Australian Securities and Investments Commission (Defendant)
Representation:	Counsel: R Clark (Plaintiff)   Solicitors: Clamenz Lawyers (Plaintiff)
File Number(s):	2015/264295

Judgment – ex tempore

1. By Originating Process filed on 9 September 2015 the Plaintiff, Mr Maxwell Prentice, applied for an order under section 601AH of the Corporations Act 2001 (Cth) to reinstate Richmate Pty Limited ("Company"). On that date, I made orders abridging the time for service of the application upon the Australian Securities and Investments Commission (“ASIC”) and made the application returnable today, by reason of the urgency of the application. There is evidence that the application has been served upon the ASIC in accordance with my orders. Perhaps not surprisingly, in the circumstances of the short notice of the application, ASIC has not yet indicated its attitude to the application. I will return to that matter below.

2. The application is supported by an affidavit of Mr Prentice, which sets out the circumstances in which it is brought. Mr Prentice indicates that he is the former liquidator of the Company, and that he was appointed as the Company's liquidator by order of the Court in September 2012, and the Company was deregistered in June 2014. The deregistration reflected Mr Prentice's then assessment that the Company's then affairs had been fully wound up under Part 5.4 of the Corporations Act and that there was no property that was likely to be available in the liquidation. Mr Prentice's affidavit exhibits a report as to the liquidation dated 21 September 2012, which set out his then assessment of the position. In particular, that report noted that the company had an investment in ten almond lots held with Macquarie Assets Management Limited (“Macquarie”), that the life cycle of the almond plants was 22 years and the investment could not, he then believed, be realised prior to that time unless an interested purchaser could be found, and it then appeared that there was not likely to be a potential purchaser of the investment.

3. Happily for the Company, the position has since changed, in that it appears that Macquarie has called a meeting, which has now occurred, to approve a proposal for a third party purchaser to acquire the relevant asset, which will in turn enable a cash distribution to be made to the Company. There is evidence the cash distribution estimated as $61,425 would be made on 15 September 2015, which indicates the urgency of the application, and that further quarterly payments totalling approximately $64,000 would be made in the following 12 months. Plainly, that is potentially a significant receipt for the Company, which may be available either to fund costs of the liquidation which have not previously been paid, or to fund a distribution for the creditors.

4. The present position is that, while the Company is deregistered, the amount would be required to be paid to ASIC, because the Company is not a legal entity capable of receiving the payment. It appears that payment would be made to ASIC unless the Company is re-registered prior to 15 September 2015. Mr Clark, who appears for Mr Prentice, submits, and I accept, that the payment of that amount to ASIC is likely to give rise to additional costs and inconvenience, since if the Company then sought to access those funds to meet the costs of the liquidator and for the benefit of its creditors, it would still be necessary to bring a reinstatement application, but it would also then be necessary to take steps to recover the relevant funds from ASIC, which would have received them in the first instance, which is likely to involve additional time and additional expenditures.

5. Mr Prentice's evidence is that he does not intend to conduct any trade or other activities through the Company when it is reinstated, and he expresses the view that there is no detriment to any party in the reinstatement. He has indicated his consent to act as liquidator, and expresses the view that he is best placed to continue to do so given his previous duties as former liquidator of the Company.

6. Section 601AH of the Corporations Act permits the Court to reinstate a company, inter alia, on application by a former liquidator of the company. Mr Prentice satisfies that requirement, and accordingly he has standing to make the application. The other requirement for reinstatement, under s 601AH(2)(b) of the Corporations Act, is that the Court is satisfied that it is just that the company's registration be reinstated. Mr Clark helpfully draws attention to the decision in Australian Competition and Consumer Commission v Australian Securities and Investments Commission [2000] NSWSC 316; 34 ACSR 232 as setting out the relevant criteria, which include the circumstances of the deregistration of the company, the fact it would be put to good use upon reinstatement, any likely prejudice to third parties, and whether there is any public interest reason not to order reinstatement. In the present case, the application of those factors seem to me to be straightforward.

7. The circumstances of deregistration give rise to no reason not to reinstate the company, since the deregistration appears to have been a reasonable step to take, in circumstances that the Company was, on reasonable grounds, then not expected to realise further assets, although that position has now changed. There is plainly a benefit in reinstatement of the Company, which will allow it to recover funds that were its property, in circumstances that no useful purpose is served in payment of those funds to ASIC, merely because the person previously entitled to them no longer has legal existence. Mr Clark submits, and I accept, that there is no reason to see any prejudice arising from reinstatement, where the consequence of reinstatement is that the Company, which was in liquidation, and under the control of a person appointed by the Court, will be returned to that position. There is no public interest reason not to order reinstatement. This is not a case, for example, where a director who had been responsible for a company's failure seeks its reinstatement, since Mr Prentice's role was, of course, to administer the Company's affairs in its liquidation, having been appointed by the Court to perform that role.

8. Mr Clark rightly draws attention to the fact that, upon reinstatement of a company that was in liquidation, it will be returned to liquidation by reason of s 601AH(5) of the Corporations Act. Mr Clark also rightly points out that the balance of authority indicates, although there have been some different views expressed over time, that an order for reinstatement does not automatically result in the reappointment of the liquidator who was in office at the times of the company's deregulation, although the court will typically appoint the liquidator who was in office, by a specific order, if he is prepared to accept that position: JP Morgan Portfolio Services Ltd v Deloitte Touche Tohmatsu (2008) FCA 433; (2008) 65 ACSR 636; ERB International Pty Ltd (deregistered): Re Fiorentino v Australian Securities and Investments Commission [2014] NSWSC 200; (2014) 98 ACSR 124. In this case, Mr Prentice consents to his reappointment as liquidator and there is obvious advantage in his reappointment, in circumstances that he will have familiarity with the relevant matters, and has already been a contact person in respect of the proposed payment to the Company.

9. For these reasons, I am satisfied that an order for reinstatement should be made. The orders that I will make include provision reserving the opportunity to ASIC to apply to set aside the orders, if so advised, within 14 days. In the circumstances, it is perhaps unlikely, or highly unlikely, that such an application will be made. However, such an order can properly be made, where an application needs to be brought in circumstances of some urgency, and ASIC has not had the opportunity to determine its position, so as to preserve that position, in case it ultimately forms a view that it wishes to oppose the reinstatement order that has been made: Reid v Action Insulation Engineers Pty Ltd [2009] NSWSC 1182. I make orders in accordance with the short minutes of order initialled by me and placed in the file.

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Decision last updated: 12 February 2016