Jit Sun Investments Pte Ltd (Singaporean Unique Entity Number: 200308432W) v Australian Securities and Investments Commission
[2021] WASC 235
•15 JULY 2021
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: JIT SUN INVESTMENTS PTE LTD (SINGAPOREAN UNIQUE ENTITY NUMBER: 200308432W) -v- AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION [2021] WASC 235
CORAM: HILL J
HEARD: 18 MAY 2021
DELIVERED : 18 MAY 2021
PUBLISHED : 15 JULY 2021
FILE NO/S: COR 76 of 2021
BETWEEN: JIT SUN INVESTMENTS PTE LTD (SINGAPOREAN UNIQUE ENTITY NUMBER: 200308432W)
Plaintiff
AND
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Defendant
Catchwords:
Corporations law – Application to reinstate deregistered company – Whether plaintiff is a 'person aggrieved' - Whether 'just' to reinstate deregistered company - Application granted - Turns on own facts
Corporations law - Application for relief from civil liability - Turns on own facts
Legislation:
Corporations Act 2001 (Cth), s 601AH, s 1322(4)(c)
Result:
Application granted
Category: B
Representation:
Counsel:
| Plaintiff | : | SM Murphy |
| Defendant | : | No appearance |
Solicitors:
| Plaintiff | : | DLA Piper Australia - Perth |
| Defendant | : | In Person |
Case(s) referred to in decision(s):
Brereton v Australian Securities and Investments Commission [2007] FCA 651
Callegher v Australian Securities and Investments Commission (ASIC) (2007) FCA 482; (2007) 239 ALR 749
Hugall v Australian Securities and Investments Commission [2009] WASC 185
Pilarinos v Australian Securities and Investments Commission [2006] VSC 301
Re Deputy Commissioner of Taxation; in the matter of James Hardie Australian Finance Pty Ltd [2008] FCA 1181; (2008) 248 ALR 557
Re ERB International Pty Ltd (deregistered) [2014] NSWSC 200; (2014) 98 ASCR 124
Re Murray River Organics [2019] FCA 931; (2019) 138 ACSR 365
The Bell Group Ltd v Australian Securities and Investments Commission [2018] FCA 884; (2018) ACSR 247
HILL J:
On 13 May 2021, the plaintiff, Jit Sun Investments Pte Ltd (Jit Sun Investments), filed an originating process seeking orders under s 601AH and s 1322(4)(c) of the Corporations Act 2001 (Cth) (Act) for the reinstatement of the registration of a deregistered company, namely Advanced Resources Australia Pty Ltd (ACN 103 395 062) (deregistered) (Advanced Resources), and for relief from any civil liability relating to the failure by Advanced Resources to have at least one director residing ordinarily in Australia.
Jit Sun Investments was the sole shareholder of Advanced Resources and seeks the reinstatement of Advanced Resources to enable it to recover an outstanding debt and pay the net proceeds to the plaintiff. Jit Sun Investments also seeks relief from civil liability relating to Advanced Resources' historic failure to have at least one director ordinarily resident in Australia. This failure will be addressed immediately after reinstatement by the appointment of an Australian resident director.
In light of the urgency with which the application was brought, I made orders at the conclusion of the hearing on 18 May 2021 granting the relief sought and said that I would subsequently publish reasons for my decision. These are the reasons for my decision.
Section 601AH of the Act
Pursuant to s 601AH(2) of the Act, where a company has been deregistered, the court may make an order that the Australian Investments and Securities Commission (ASIC) reinstate the company if the conditions required by the Act are met. Relevantly, s 601AH(2) states:
(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
(ii)a former liquidator of the company; and
(b)the Court is satisfied that it is just that the company's registration be reinstated.
An application to this court for a company to be reinstated may be made by a person who is aggrieved by the deregistration or a former liquidator of the company. The court has a residual discretion whether to make an order.[1]
[1] Re Deputy Commissioner of Taxation; in the matter of James Hardie Australian Finance Pty Ltd [2008] FCA 1181; (2008) 248 ALR 557 [13].
The term 'person aggrieved' is not expressly defined in the Act and should not be construed narrowly.[2] In determining whether the plaintiff is a person aggrieved by the deregistration of the company, the court must consider whether the plaintiff has shown that deregistration has deprived them of something, or injured or damaged them in a legal sense, or that they became entitled in a legal sense to regard the deregistration as the cause of dissatisfaction.[3]
[2] The Bell Group Ltd v Australian Securities and Investments Commission [2018] FCA 884; (2018) ACSR 247 [47].
[3] Hugall v Australian Securities and Investments Commission [2009] WASC 185 [13]; Callegher v Australian Securities and Investments Commission (ASIC) (2007) FCA 482; (2007) 239 ALR 749 [50].
There is no temporal limitation in the term 'person aggrieved' and there need only be a causal link between the grievance and the deregistration of the company.[4] A person can become aggrieved as a result of events which occur after the time of the deregistration.[5]
[4] The Bell Group Ltd v Australian Securities and Investments Commission [49].
[5] Pilarinos v Australian Securities and Investments Commission [2006] VSC 301 [49].
Before the court can make an order for reinstatement, the court must be 'satisfied that it is just that the company's registration be reinstated'. This confers a broad discretion on the court. In exercising its discretion, relevant factors that the court will take into account include:[6]
(a)the circumstances in which the company came to be deregistered;
(b)the future activities of the company, if an order for reinstatement is made;
(c)whether any particular person is likely to be prejudiced by the reinstatement; and
(d)the public interest generally.
[6] The Bell Group Ltd v Australian Securities and Investments Commission [72]; Re ERB International Pty Ltd (deregistered) [2014] NSWSC 200; (2014) 98 ASCR 124 [5].
Factual Background
In support of its application, the plaintiff relied on three affidavits: an affidavit of Yvette Chia Fu‑Yuen, the Australian resident proposed to be appointed as a director of Advanced Resources, filed 13 May 2021; an affidavit of Kirsty Jayne Hall, a solicitor at DLA Piper Australia, the plaintiff's solicitors, filed 13 May 2021; and an affidavit of Shane Michael Murphy, a partner at DLA Piper Australia, filed 18 May 2021, which annexed an affidavit of Chye Cheng Adrian Lee which had not been affirmed. At the hearing, the plaintiff called Mr Lee, who appeared by audio link and confirmed that the contents of his affidavit dated 17 May 2021 were true and correct.
Prior to its deregistration, Jit Sun Investments owned all of the issued shares in Advanced Resources. Mr Lee is a director of the plaintiff and was a director of Advanced Resources.
Immediately prior to the deregistration of Advanced Resources, the only directors were Mr Lee and his father, Mr Kian Soo Lee, who both ordinarily reside in Singapore.[7] Mr Mark Schiller was the last director of Advanced Resources to ordinarily reside in Australia and resigned on about 12 April 2018.[8]
[7] Affidavit of Chye Cheng Adrian Lee dated 17 May 2021 [20].
[8] Affidavit of Chye Cheng Adrian Lee dated 17 May 2021 [21].
On 5 March 2020, Mr Lee applied to ASIC to deregister Advanced Resources.[9] In making the application, Mr Lee incorrectly stated that the assets of Advanced Resources were less than $1,000. In respect of this statement, Mr Lee's evidence is that:[10]
(a)in 2008, the company loaned $2,500,000 to a purchaser of land in North Coogee, Western Australia (Property);
(b)the loan was secured by a mortgage registered against the Property (Mortgage);
(c)as at 5 March 2020, the loan had not been repaid; and
(d)at the time he applied to deregister Advanced Resources, he had forgotten about the loan.
[9] Affidavit of Chye Cheng Adrian Lee dated 17 May 2021 [9], 'CCAL-3'.
[10] Affidavit of Chye Cheng Adrian Lee dated 17 May 2021 [11].
At the date of the hearing before me, the loan was still outstanding and the Mortgage had not been discharged.[11]
[11] Affidavit of Chye Cheng Adrian Lee dated 17 May 2021 [12].
Mr Lee deposes that he discovered the error in late 2020 or early 2021 when he was informed that a contract of sale had been entered into in relation to the Property.[12] On discovering the error, Mr Lee instructed the plaintiff's solicitors to apply to ASIC for the administrative reinstatement of Advanced Resources pursuant to s 601AH(1) of the Act.[13] On 12 February 2021, the plaintiff, by its solicitors, lodged the application.[14]
[12] Affidavit of Chye Cheng Adrian Lee dated 17 May 2021 [13].
[13] Affidavit of Chye Cheng Adrian Lee dated 17 May 2021 [14].
[14] Affidavit of Chye Cheng Adrian Lee dated 17 May 2021 [17], 'CCAL-10'.
On 19 April 2021, ASIC informed the plaintiff that it would not reinstate the registration of Advanced Resources because on any reinstatement of the company, it would not meet the requirements under s 201A and s 204A of the Act for the minimum number of directors and secretaries.[15] ASIC noted that if the plaintiff wished to pursue the application, an application could be made to the court for an order that ASIC reinstate the company.[16]
[15] Affidavit of Chye Cheng Adrian Lee dated 17 May 2021 [18], 'CCAL-11'.
[16] Affidavit of Chye Cheng Adrian Lee dated 17 May 2021 [18], 'CCAL-11'.
On being informed of the issue (of the failure by Advanced Resources to have an Australian resident director) by ASIC, Mr Lee requested that Ms Yvette Chia Fu‑Yuen, an Australian resident, consent to her appointment as a director and instructed the plaintiff's solicitors to prepare a circular resolution to appoint Ms Fu-Yuen as a director of Advanced Resources.[17] However, until Advanced Resources is reinstated, the circular resolution cannot be signed or have any effect.
[17] Affidavit of Chye Cheng Adrian Lee dated 17 May 2021 [23], 'CCAL-12', 'CCAL-13'.
On 4 May 2021, Ms Fu-Yuen provided her consent to act as a director.[18]
[18] Affidavit of Chye Cheng Adrian Lee dated 17 May 2021 [25], 'CCAL-13'; Affidavit of Yvette Chia Fu-Yuen filed 13 May 2021 [7], 'YCF-2'.
Position of ASIC
ASIC was named as the defendant in the originating process. ASIC indicated that it does not oppose the application and did not intend to appear at the hearing.[19]
[19] Affidavit of Kristy Jayne Hall filed 13 May 2021 [16], 'KJH-6'.
Disposition
Counsel for the plaintiff submitted that in circumstances where a company would be solvent if reinstated to registration, a shareholder with a right to dividends has standing as a 'person aggrieved' because the shareholder stands to lose their capital.[20]
[20] Submissions [7]; Brereton v Australian Securities and Investments Commission [2007] FCA 651 [4].
Prior to the deregistration of Advanced Resources, the plaintiff was the sole shareholder of the company. If the registration of Advanced Resources is reinstated, Jit Sun Investments will again become the sole shareholder and anticipates that it will receive a substantial dividend from repayment of the loan.[21] If Advanced Resources is not reinstated, Jit Sun Investments will lose this entitlement.
[21] Submissions [7].
On this basis, I accept that the plaintiff is a 'person aggrieved' by the deregistration of Advanced Resources and has standing to bring this application.
I turn then to the question as to whether it is just to make the orders sought. I accept Mr Lee's evidence that on about 5 March 2020, when he applied to ASIC to deregister the company, he forgot that there was an outstanding loan to the company and that there was a Mortgage registered against the Property.[22] Given that the loan had been made 12 years earlier, I accept and find that this error occurred honestly and inadvertently.
[22] Affidavit of Chye Cheng Adrian Lee dated 17 May 2021 [9] – [12].
The plaintiff seeks an order for the reinstatement of Advanced Resources to enable the following to occur:
(a)to allow Advanced Resources to seek repayment of the loan and pay any proceeds (net of costs) as a dividend to the plaintiff;[23]
(b)to discharge the Mortgage to enable completion of the sale and purchase of the Property to occur;[24] and
(c)once these matters have been addressed, the plaintiff intends to seek the voluntarily deregistration of Advanced Resources.[25]
[23] Affidavit of Chye Cheng Adrian Lee dated 17 May 2021 [6] – [7], [27(b)] – [27(d)], [28(c)(ii)] ‑ [28(c)(iv)], 'CCAL-1'.
[24] Affidavit of Chye Cheng Adrian Lee dated 17 May 2021 [27(c)], [28(c)(iii)].
[25] Affidavit of Chye Cheng Adrian Lee dated 17 May 2021 [27(e)] – [27(f)], [28(c)(v)] – [28(c)(vi)].
At present, completion of the sale of the Property has been delayed because the Mortgage cannot be discharged. This has caused an ongoing liability on the part of the vendor to pay penalty interest and is reducing the net proceeds of the sale of the Property.[26]
[26] Affidavit of Chye Cheng Adrian Lee dated 17 May 2021 [16], [27(c)], [28(c)(iii)], 'CCAL-6', 'CCAL-7', CCAL-8', 'CCAL-9'.
Counsel for the plaintiff submitted that no one, except potentially for ASIC as the statutory inheritor of the company's property, will be prejudiced by the reinstatement of Advanced Resources.[27] In contrast, if Advanced Resources is not reinstated, the plaintiff will suffer prejudice in not receiving the net proceeds of the recovery of the Debt as a dividend, and the vendor and purchaser of the Property may suffer prejudice because the sale of the Property will continue to be delayed or the contract terminated.[28]
[27] Affidavit of Chye Cheng Adrian Lee dated 17 May 2021 [30].
[28] Affidavit of Chye Cheng Adrian Lee dated 17 May 2021 [31].
I do not consider that the public interest or public policy will be undermined by granting the relief sought by the plaintiff.
For these reasons, I accept that is it 'just' to make an order that Advanced Resources be reinstated to registration.
Relief from civil liability
The plaintiff also seeks a declaration under s 601AH(3)(d) or s 1322(4)(c) of the Act that Advanced Resources and its directors be relieved from any civil liability arising out of a contravention of s 201A(1) of the Act. This arises from the failure of the company to have at least one director that is ordinarily resident in Australia from 12 April 2018.
Section 601AH(3) of the Act states:
(3)If:
(a)ASIC reinstates the registration of a company under subsection (1) or (1A); or
(b)the Court makes an order under subsection (2); the Court may:
(c)validate anything done during the period:
(i)beginning when the company was deregistered; and
(ii)ending when the company's registration was reinstated; and
(d)make any other order it considers appropriate.
Section 1322(4)(c) permits the Court to make an order relieving a person from civil liability for a broad range of contraventions or failures, subject to the conditions in s 1322(6) that the person concerned acted honestly and that no substantial injustice has been or is likely to be caused to any person.[29]
[29] Re Murray River Organics [2019] FCA 931; (2019) 138 ACSR 365 [28].
Mr Lee's evidence is that after the resignation of Mr Schiller on about 12 April 2018, Advanced Resources made an honest mistake in failing to replace him with a director that was ordinarily resident in Australia.[30] I accept and find that on being informed of the issue, Mr Lee acted promptly to remedy the error.
[30] Affidavit of Chye Cheng Adrian Lee dated 17 May 2021 [21] – [22].
Counsel for the plaintiff submitted that Advanced Resources and its directors acted honestly and that the breach of s 201(A)(1) of the Act was caused by an honest mistake.
Pursuant to s 601AH(5) of the Act, when a company is reinstated, it is taken to have continued in existence as if it had not been deregistered, and any person who was a director immediately before the deregistration of the company becomes a director again as from the time the company is reinstated by ASIC or by the court. This means that upon reinstatement of Advanced Resources, Advanced Resources will be in breach of s 201A(1) of the Act in failing to have at least one director that resides ordinarily in Australia. However, the company intends to remedy this promptly by the appointment of Ms Fu‑Yuen as a director.
On the basis of the evidence before the court, for the following reasons, I consider it is appropriate to make an order relieving Advanced Resources and its current and former directors and officers from any civil liability. First, I accept that the failure to have an Australian resident director of Advanced Resources was inadvertent and due to an honest mistake. I accept that this was not done in blatant disregard of its obligations under the Act. Second, Advanced Resources intends to remedy the contravention as soon as it can but requires the company to be reinstated before this can occur. Third, for the reasons set out above at [25], I consider that no substantial injustice is likely to be caused to any person by granting the relief sought. Finally, I do not consider that public policy will be undermined by granting the plaintiff the relief sought.
Conclusion
For these reasons, I was satisfied that, in the circumstances of this case, relief should be granted in the terms sought by the plaintiff and that orders should be made to require ASIC to reinstate the registration of Advanced Resources.
Accordingly, at the conclusion of the hearing, I made orders in the form annexed to these reasons as 'Annexure A'.
'Annexure A'
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
HW
Research Associate to the Honourable Justice Hill
15 JULY 2021
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