Lindholm v Australian Securities and Investments Commission

[2005] VSC 453

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

CORPORATIONS LIST

No. 7313 of 2005

IN THE MATTER of GLOBAL COMMUNICATIONS TECHNOLOGIES PTY LTD
(ACN 050 166 526) (Deregistered)

JOHN ROSS LINDHOLM and GEORGE GEORGES	Plaintiffs
v
AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION	Defendant

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JUDGE:	WHELAN J
WHERE HELD:	Melbourne
DATE OF HEARING:	3 and 7 November 2005
DATE OF JUDGMENT:	7 November 2005
CASE MAY BE CITED AS:	Lindholm v ASIC
MEDIUM NEUTRAL CITATION:	[2005] VSC 453

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CORPORATIONS – Receivers, managers and controllers – Reinstatement and winding up  – Corporations Act 2001 (Cth) s 461(1)(k) – Dispensation from certain requirements of the Corporations Act 2001 (Cth) and the Supreme Court (Corporations) Rules 2003.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr D J Williams	Gadens Lawyers
For the Defendant	Mr M Adkins (solicitor)	Australian Securities & Investments Commission
For Circuit Finance Pty Ltd	Ms A H Kaitinis	Leonard Legal

HIS HONOUR:

1. This proceeding commenced with an application under s 601AH(2) of the Corporations Act 2001 (Cth) (“the Act”) by Mr John Ross Lindholm and Mr George Georges, who are receivers and managers of a company named Advanced Communications Technologies (Australia) Pty Ltd (“ACTA”). They applied to reinstate a company related to ACTA, being Global Communications Technologies Pty Ltd (“GCT”). GCT was deregistered on 22 May 2005 by the Australian Securities & Investments Commission (“ASIC”) under s 601AB(1A) of the Act, as the company’s review fee had not been paid in full for at least 12 months after the due date for payment.

1. The purposes for which Mr Lindholm and Mr Georges sought GCT’s reinstatement were various, but one of them concerned a deed of 16 June 2005 to which GCT was a named party, and which was the subject of directions and orders I made today in proceeding 6935 of 2005.  It was not one of their purposes to reinstate GCT so as to seek an order that it be wound up. 

1. The sole director of GCT at the time of its deregistration was Mr Roger May.  Mr Roger May is an undischarged bankrupt.  The trustee of Mr Roger May’s estate was notified of the application by Mr Lindholm and Mr Georges and he advised them that he had no objection to the reinstatement.  The trustee did not appear, or seek to appear, on any of the hearings in this proceeding.

1. As matters transpired, Mr Lindholm and Mr Georges did not pursue their application to reinstate GCT, but a creditor of GCT named Circuit Finance Pty Ltd (“Circuit Finance”) appeared in one of the earlier interlocutory hearings and advised that it wished to pursue reinstatement for the purpose of having an order made that GCT be wound up.  On that occasion I indicated that they ought to issue an application, and Circuit Finance did so by an interlocutory process dated 4 November 2005.  The interlocutory process only seeks an order that the company be reinstated, and, as originally filed, did not seek an order that the company be wound up.

1. [Discussion as to the amended interlocutory process ensued].

1. The interlocutory process of Circuit Finance is supported by affidavits of Mr Dimitri Nuwon Peries sworn 2 November and 4 November 2005.  Those affidavits indicate that Circuit Finance issued proceedings against GCT in April 2004 and obtained an order against GCT for $178,958.90, together with interest of $1706 and costs on 3 August 2004.  A statutory demand was served on 11 March 2005.  There was a failure to comply with the statutory demand, and a winding up proceeding, being 6194 of 2005, was issued on 24 May 2005, two days after the company had been deregistered.

1. As a result of the deregistration, the winding up application was dismissed on 22 June 2005. 

1. The judgment obtained by Circuit Finance remains outstanding. 

1. Circuit Finance has obtained the consent of Mr Paul Pattison to act as liquidator should a winding up order be made.  Mr Pattison is also the liquidator of Global SDR Technologies Pty Ltd.  I have been advised by counsel for Circuit Finance that Mr Pattison has agreed that in the event there is any conflict in his role as liquidator of Global SDR Technologies Pty Ltd and GCT, he will apply to the Court and seek directions.

1. [Discussion as to the minutes of order ensued].

1. Ms Kaitinis, who appeared on behalf of Circuit Finance, sought to amend the interlocutory process so as to add to the relief claimed orders for the winding up of GCT and the appointment of Mr Pattison as liquidator, and for dispensation from certain of the requirements of the Act and the Supreme Court (Corporations) Rules 2003 (“the Rules”) concerning notices and advertisement. The solicitor who appeared on behalf of ASIC, Mr Adkins, neither consented to nor opposed this course. He agreed, in response to an enquiry from me, that winding up appeared to be an appropriate course, notwithstanding the need for amendment to the interlocutory process and the need for dispensation.

1. In an appropriate case a creditor may apply for orders reinstating a company and immediately winding it up, with such dispensations from the requirements of the Act and the Rules as are appropriate and necessary.[1]

   [1]See Scott v Janniki Pty Ltd (1994) 14 ACSR 334; Deputy Commissioner of Taxation v Lanstel Pty Ltd (1996) 22 ACSR 314; Payne v Wizard Industries Pty Ltd (1997) 24 ACSR 277; Shaw v Goodsmith Industries Pty Ltd (2002) 41 ACSR 556; Euphron Pty Ltd v Hunter Valley Piggery Pty Ltd [2003] NSWSC 543.

1. Ms Kaitinis does not rely upon presumed insolvency as a consequence of the failure to comply with the statutory demand, quite properly given s 459C of the Act. She relies instead upon s 461(1)(k) of the Act, and, in that connection, has in particular relied upon the decisions in Shaw v Goodsmith Industries Pty Ltd[2]  and Euphron Pty Ltd v Hunter Valley Piggery Pty Ltd.[3]

   [2](2002) 41 ACSR 556.

   [3][2003] NSWSC 543.

1. In my view, this company should be reinstated and immediately wound up. If it is not immediately wound up, upon reinstatement it will have no officers and there is no basis for a belief that that situation could be remedied. It would, accordingly, immediately become a company in contravention of ss 201A and 204A of the Act,[4] and a company unable to operate under a normal administration.[5]

   [4]See Euphron Pty Ltd v Hunter Valley Piggery Pty Ltd [2003] NSWSC 543, [14].

   [5]See Shaw v Goodsmith Industries Pty Ltd (2002) 41 ACSR 556, [14].

1. Circuit Finance’s desire to have a liquidation, with all of the consequent steps required of a liquidator, is, in my view, appropriate.  It is necessary to reinstate the company in order to achieve that outcome. 

1. As the proposed liquidator, Mr Pattison, is also liquidator of Global SDR Technologies Pty Ltd, I sought, and was given, an assurance that if a potential conflict arose he would seek a direction.

1. In all the circumstances, subject to finalisation of the form of the orders, to clarification of the matter I raised in relation to Mr Pattison, and to filing of the amended interlocutory process, I will otherwise make orders in accordance, or substantially in accordance, with the minutes on the file contained in a facsimile transmission handed to me by Ms Kaitinis.