Marina Blue Pty Limited v Gear (No 2)

[2018] NSWSC 1442

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Marina Blue Pty Limited v Gear (No 2) [2018] NSWSC 1442

Hearing dates:

27 August 2018

Date of orders:

26 September 2018

Decision date:

26 September 2018

Jurisdiction:

Common Law

Before:

Harrison AsJ

Decision:

The Court orders that:

 

(1) The defence filed 12 March 2018 is struck out pursuant to rule 13.1 or rule 14.15(3) of the Uniform Civil Procedure Rules 2005 (NSW).

 

Judgment

 

(2) Judgment is entered in favour of the plaintiff for possession of the land comprised in Certificate of Title Folio Identifier 3/XXXXX , being the land situated at and known as XX Wartlers Street, Port Macquarie.

 

The Court further orders that:

 

(3) The plaintiff is to file and serve written submissions on the defendant and my associate by email as to when the writ of possession should issue by 5.00 pm on 27 September 2018.

 

(4) The defendant is to file and serve on the plaintiff and my associate by email as to when the writ of possession should issue by 5.00 pm on 4 October 2018

 (5) The defendant is to pay the plaintiff’s costs on an ordinary basis.

Catchwords:

CIVIL PROCEDURE – Summary disposal – Judgment for the plaintiff – No defence

 

LAND LAW – Adverse Possession – Possessory application over Torrens title land – Real Property Act 1900 (NSW), ss 45D and 45E – whether the defendant was in possession of the property

CORPORATIONS – Reinstatement – Corporations Act 2001 (Cth), ss 601AH and 1322 – whether Court can order an incorrect reinstatement by ASIC is void – whether the defendant has standing to make the application

Legislation Cited:

Corporations Act 2001 (Cth), ss 201A, 601AB, 601AH and 1322
Federal Court of Australia Act 1976 (Cth), s 31A
Limitation Act 1969 (NSW), s 27
Real Property Act 1900 (NSW), ss 45D and 45E
Residential Tenancies Act 2010 (NSW)
Uniform Civil Procedure Rules 2005 (NSW), 13.1 and 14.15

Cases Cited:

Marina Blue Pty Limited v Gear [2018] NSWSC 824
O’Brien v Bank of Western Australia Ltd [2013] NSWCA 71
Re Peter Conyers Holdings Pty Ltd (in liq) (1996) 14 ACLC 1835
Spencer v Commonwealth [2010] HCA 28; (2010) 241 CLR 118
Westbury Holdings Kiama Pty Ltd v ASIC (2007) 25 ACLC 710; [2007] NSWSC 466

Texts Cited:

Robert Austin and Ashley Black’s Austin & Black’s Annotations to the Corporations Act (2018, LexisNexis Australia)
F Burns, ‘Adverse Possession and Title-by-registration Systems in Australia and England’ (2011) 35 Melbourne University Law Review 773

Category:

Procedural and other rulings

Parties:

Marina Blue Pty Limited (Plaintiff)
Trevor Gear (Defendant)

Representation:

Counsel:
G Rundle (Plaintiff)

  Solicitors:
Jenson Partners (Plaintiff)
T Gear (Defendant in person)

File Number(s):

2017/306734

Publication restriction:

Nil

Judgment

1. HER HONOUR: By notice of motion filed 21 March 2018, the plaintiff seeks an order firstly, that the defence filed 12 March 2018 be struck out pursuant to 13.1 or 14.15(3) of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”); secondly, judgment for the plaintiff for possession of the land comprised in Certificate of Title Folio Identifier 3/XXXXX , being the land situated at and known as XX Wartlers Street, Port Macquarie (“the property”); and thirdly, leave to issue a writ of possession.

2. The plaintiff is Marina Blue Pty Limited (“Marina Blue”). The defendant is Trevor Gear. Marina Blue relied upon the affidavit of Graeme Robert Jensen dated 21 March 2018. The defendant relied upon his affidavit dated 31 July 2018, and the affidavit of James Laurence Jones dated 20 March 2018. Counsel appeared for the plaintiff. The defendant appears and represented himself.

3. In my extempore judgment Marina Blue Pty Limited v Gear [2018] NSWSC 824, I stated at [15] that I intended to proceed on the next occasion unless the defendant demonstrated to me that he was well advanced in gaining adverse possession. I granted the defendant’s adjournment application and stood the hearing over part heard before me today. I directed that all evidence admitted on the adjournment application is to be evidence on the substantive hearing. The defendant was directed to serve any further affidavit evidence by 27 July 2018. On 31 July 2018, albeit a bit late, the defendant served an affidavit. The defendant was ordered to pay the plaintiff’s costs, with such costs not to be payable until the proceedings are finalised.

The pleadings

4. By statement of claim filed 11 October 2017, Marina Blue alleges that it is the registered proprietor of the property and the defendant is, and has been at all times, in possession and occupation of the property without the authority of Marina Blue. Marina Blue has requested the defendant to vacate the property and the defendant has refused to do so. The defendant has not paid rent to Marina Blue in respect of his occupation, nor is his occupation subject to the Residential Tenancies Act 2010 (NSW).

5. The defence is a bit of a mixed document. The defendant admits that he has been in possession of the property, and that he has been requested to vacate it and has refused to do so. While he admits that Marina Blue is currently a registered company, it was reregistered after being deregistered in 2011 by ASIC. The defendant intends to show that this should not have occurred. He also disputes the fact that he is not subject to the Residential Tenancies Act. He alleges that no one has more right to occupy the property than he does.

6. The defendant also indicated that he wished to file a proposed cross claim seeking the following relief:

(1)   A declaration that the purposed reinstatement of Marina Blue Pty Limited (ACN 099 311 743) to the register of companies on 17 July 2017 is void;

(2) An order pursuant to s 1322(4)(b) of the Corporations Act 2001 (Cth) directing ASIC to rectify the register of companies by removing Marina Blue from it; and

(3)   An order directing to transfer to the defendant the property free from any encumbrance.

Summary judgment

7. UCPR 13.4(1) provides that the Court may dismiss proceedings generally, or in relation to any claim for relief, in three circumstances. These are, if the proceedings are frivolous or vexatious, if no reasonable cause of action is disclosed, or if the proceedings are an abuse of the process of the court.

8. UCPR 14.28(1) provides that the Court may at any stage of the proceedings order that the whole or any part of a pleading be struck out if the pleading firstly, discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading; secondly, has a tendency to cause prejudice, embarrassment or delay in the proceedings; or thirdly, is otherwise an abuse of the process of the court.

9. UCPR 14.28(2) provides that the court may receive evidence on the hearing of an application for an order under subrule (1).

10. In O’Brien v Bank of Western Australia Ltd [2013] NSWCA 71, the Court of Appeal applied the High Court decision of Spencer v Commonwealth [2010] HCA 28; (2010) 241 CLR 118 (“Spencer”). In Spencer, the High Court was concerned with s 31A(2) of the Federal Court of Australia Act1976 (Cth), but the following principles are of general application:

(a)   On a summary judgment application, the real issue is whether there is an underlying cause of action or defence, not simply whether one is pleaded (at [23]).

(b)   The critical question can be expressed as whether there is more than a “fanciful” prospect of success (French CJ and Gummow J at [25]) or whether the outcome is so certain that it would be an abuse of the process of the court to allow the action to go forward (at [54]). Demonstration of the outcome of the litigation is required, not an assessment of the prospect of its success.

11. Powers to summarily terminate proceedings must be exercised with exceptional caution (at [55]; see also French CJ and Gummow J at [24]).

12. For the purposes of this summary judgment, I have taken the defendant’s case at its highest.

Background

13. Marina Blue is the registered proprietor of the property. The defendant, in his defence filed 12 March 2018, agreed that he is in possession of the property without the authority or consent of Marina Blue. (Defence, [1] and [5]). The records of the NSW Transport Road & Maritime Services indicate that the defendant has resided at the property only since 12 November 2013. (Aff, Jensen 21 March 2018, Annexure G).

14. As at 1 July 2016, the valuer general valued the land of the property at $550,000. (Ex 1).

15. The defendant conducted a search approximately two nights before this hearing of the Port Macquarie Hastings Council’s (the Council) records. They show that the amount of rates owing by Marina Blue on the property as being $39,985.19. (Ex 6). On 24 August 2018, the defendant paid the sum of $2 to the Council as a contribution to the outstanding rates. (Ex 8).

16. There are two adjoining properties to the property, namely DP 1/XXXXX and 2/XXXXX . They were both owned by Gernot Melcior and Zareen Waterhouse, each property was subject to a mortgage held by Perpetual Trustee Mortgage Ltd (the mortgagee). The mortgagee exercised its power of sale in relation to each property. On 20 October 2011, both properties were sold. The ownership of 1/XXXXX was transferred to Thomas Robert Todd and 2/XXXXX was transferred to Timothy John Charlies Hilier and Melonie Elizabeth Todd as joint tenants. (Ex 7).

17. It is noted here that on 18 December 2013, a company also named Marina Blue Pty Limited, but with a different ACN number (ACN 167 292 186), was registered. On 18 December 2017, it was voluntarily deregistered. Between 13 July 2015 and 10 April 2017, its registered address was XX William Street, Port Macquarie, and then Lake Cathie Shopping Village, Shop XXXX Ocean Drive, Lake Cathie. Its principal place of business was Unit x, XX The Anchorage, Port Macquarie. The directors of this company were Andrew Johnston Robertson and Jeffrey Rogers, both located in New South Wales. Each director beneficially held 100 fully paid shares of the allotted 200 shares. (Ex 3). It does not appear that this Marina Blue had any dealing with the property. (My emphasis).

The defendant’s application for adverse possession

18. On 9 June 2017, the defendant made a possessory title application with the Registrar General. On 31 July 2017, the application was relodged. (Defence, [8]). On 2 March 2018, this application was rejected by the Registrar General and a notice of rejection was sent to the defendant. (Aff, Jensen 21 March 2018, Annexures A, B and F).

19. On 5 October 2017, the defendant lodged a statutory declaration with the Land Registry Services NSW making a claim for an adverse possession/factual possession of the property. The defendant deposes that:

“So I am therefore officially making and stating a claim of Adverse Possession/Factual possession of the property/house and my home of lot 3/dpxxxx, that I have permanently occupied and maintained for many years.

I Trevor James Gear request the property of lot 3/dpxxxx be transferred into my name so I can pay and extinguish any outstanding debts or dues to council.

I have tried to pay these bills in the past but have been advised not to from council if the property was not in my name.”

20. He continues:

“(c) I myself Trevor Gear have been living at the property on and of for the last 15 years. With the only vacancies due to my voluntary work taking care and saving Australia’s oldest sailing vessel the three masted tall ship Alma Doepel. During this time other people who I can no longer contact were living in the property paying no rent, with Myself Trevor Gear the only one for the last seven years being uninterrupted, constant and permanently living in the property XX Wartlers Street Port Macquarie (3/XXXXX ) this is adverse to the true owner but is still current and goes on unmolested, uninterrupted and I continue to pay no rent to the owner.

(d) The land is used Privately and occupied and possessed by only myself Trevor James Gear.

(E) The time of my Occupation/possession as well as the previous occupation of other people, the fact there is no one else other than myself Trevor James Gear with a better claim to the property. The fact the property is now owned by ASIC and no one else with a better claim can be established. And to the fact that common law has always regarded the possession or occupation of a parcel of land as sufficient evidence of ownership. And to the fact that I continue to live, occupy and possess the property paying no rent unmolested or interrupted and in the full view and knowledge to anyone that looks or asks, with signs also erected saying No Entry private property and owned by Trevor Gear as well as a large sign with a picture of a camera saying CCTV in use.

(F) The property is fenced on three sides , North, west and south with a fence I erected on the eastern side removed for fear of trouble or harassment from troublesome neighbours as there is no middle fence between the other two properties, and the goats I have don’t need fences as they where on runners and the dog has always lived inside for over 8 years of life.

(G) Myself Trevor Gear as well as other tradesmen mates have done constant work on the property including but not limited to repairs on the roof, plumbing, electrical and garden maintenance as well as installing the

CCTV.

(H) All maintenance and erection and removal of fences with the exception of some help from a couple of mates has been done by myself Trevor James Gear.

(I) Not to my Knowledge other than the caveat (AEXXXX) and form 08LX (916117) that I have submitted with LPL.

(j) With the exception to section I above to my knowledge there is no litigation involving the subject property other than the dealings through ASIC for which you have been made aware of and the current possessory application applied for by Trevor James Gear.

(K) To my knowledge I Trevor James Gear or any predecessors have not paid any rent to any owner of the property or acknowledged the title of property to anyone.”

21. On 19 October 2017, the defendant was advised by Land & Property Information that in relation to the property that (Ex 2):

“The Applicant claims title by possession adverse to Marina Blue Pty Limited, the registered proprietor, and its assigns.

The Registrar-General intends to grant this application on the expiration of one month from the date of publication of this notice, unless before expiration of that time period an objection is lodged in the form of a caveat pursuant to section 74F(3) of the Act.

…

The date for completion of all outstanding matters has been extended to 18.12.2017. If all matters are not placed in order and any uplifted documents returned by that date lodgment fees will be forfeited and all documents mentioned will be rejected.”

22. The defendant was obliged to place an advertisement in a daily newspaper circulating generally in the State; and a local newspaper circulating generally in the area in which the land was located. The defendant also had to provide the LPI with a statutory declaration confirming that the advertisements were made, and annexing copies of the advertisements to the statutory declaration. (Ex 2). However, by 19 October 2017, Marina Blue had already been reinstated to the ASIC register.

23. On 28 June 2018, the Council wrote to the solicitor for Marina Blue (Ex G) stating:

“A recent inspection of the subject property by a Council Officer indicated that the actions necessary to comply with the Notice have not been carried out and the mail sent to you has been returned unclaimed.

Due to the ongoing legal issues relating to this property and our conversation on the 28 June, 2018 Council has engaged Port Macquarie Work Teams to clear the land of all overgrown vegetation. The costs of this work will be attached to the property.”

24. During the hearing, the defendant provided evidence of rates he has paid on the property. Specifically, on 24 August 2018, the defendant paid $2. (Ex 8).

25. The defendant also explained in his statutory declaration that he undertook periods of voluntary work taking care and saving Australia’s oldest sailing vessel, the three masted tall ship Alma Doepel. Counsel for the plaintiff tendered an internet search about the Alma Doepel (Ex H). The defendant agreed with the information contained in the article.

The Alma Doepel

26. Briefly, the Alma Doepel was built in 1903 in Bellingen, New South Wales, by Frederik Doepel. It was named after his youngest daughter, Alma. She sailed mainly around the coast of Australia, carrying goods such as timber, wheat and jam. She was also used in World War II as a supply vessel in Papua New Guinea. In 1946, she returned to commercial service around Tasmania. From 1961 to 1975, she was stripped of her rigging and used to carry limestone. In 1976, she was sold for the scrap value of her engines to the Melbourne company Sail & Adventure.

27. From 1976 to 1987, Alma Doepel was comprehensively restored and returned to full sail in magnificent style to lead the Parade of Sail in Sydney Harbour in January 1988.

28. In April 2001, Alma Doepel was taken to Port Macquarie where she was berthed at Lady Nelson Wharf and open to the public as a static exhibit. In January 2009 the Alma Doepel returned to Melbourne. She is berthed at No 2 Victoria Dock (Melbourne) undergoing an extensive refit to return her to survey so she can recommence sail training. The main point there is that from 2001 to January 2009 she was berthed in Port Macquarie. Since 2009 she had been berthed in Melbourne.

Evidence of James Laurence Jones

29. The defendant also relied upon the affidavit of James Laurence Jones dated 20 March 2019. He is a director of Marina Blue. Mr Jones has only held office as a director of the company since 17 July 2018, being the date it was reinstated with ASIC. However, he has been closely involved with the company and his Austrian resident co-director Gemot Melchior for over twenty years. (Aff, Jones 20 March 2018, [2]).

30. Mr Jones is aware that the properties owned by Marina Blue, as well as those adjoining them, were mortgaged to Challenger Finance Pty Limited. In 2009, the company was in default in respect of that mortgage. (Aff, Jones 20 March 2018, [3]).

31. On 25 February 2009, Mr Jones procured a loan to Marina Blue in the sum of $25,000 from Sylvania Investment & Finance Co Pty Limited. He was and remains a director of this company. The purpose of this loan was to rectify Marina Blue’s default under its mortgage to Challenger Finance Pty Limited. (Aff, Jones 20 March 2018, [4]).

32. In October 2010, in order to secure the repayment of the above loan, he made enquiries as to the tenants of the property. He ascertained the tenants as being Jon Kearney and Christine Brown. (Aff, Jones 20 March 2018, [5]).

33. On 30 November 2010, Marina Blue authorised Mr Jones to direct the payment of all future rent due by Jon Kearney and Christine Brown in respect of the property to Sylvania Investment & Finance Co Pty Limited. (Aff, Jones 20 March 2018, [6]).

34. From 30 November 2010 until 30 June 2013, Mr Jones was in constant contact with Jon Kearney and Christine Brown in relation to their payment of rent and maintenance of the property. During this period, he visited the property on numerous occasions. (Aff, Jones 20 March 2018, [7]). John Kearney and Christine Brown maintained the property in acceptable condition and made improvements to it. (Aff, Jones 20 March 2018, [8]).

35. While Mr Jones was made aware that a person named Paul Kerrigan was living with Jon Kearney and Christine Brown at the property, he never met nor was introduced to him. Nor was he told that anyone by the name of Trevor Gear occupied the property. (Aff, Jones 20 March 2018, [9]).

36. The defendant disputes paragraph [9] of Mr Jones’ affidavit. The defendant says that he was living at the property from time to time when Paul Kerrigan and his dog, Rastus, John Kearney and Christine Brown were also living there. The defendant says he and Paul Kerrigan resided in different parts of the house to John Kearney and Christine Brown. However, a Transport Roads & Maritime Services Display Customer Address History shows that from 12 November 2013 to 31 December 2999 (2999 must be wrong but that is what it says) the defendant lived at the property. For a period of time namely, 10 July 2009 to 27 November 2009 the defendant has his mail forwarded to a post box in Port Macquarie.

29. Fair Trading has responded to a subpoena issued by the solicitors for Marina Blue. It shows that the defendant and Nozomi Yaginuma lodged a rental bond on 20 September 2012 in relation to a different property in Port Macquarie. The rental bond was paid in full to the defendant on 30 September 2013. (Ex D). Rental bond forms were lodged for a property in Belrose for the period 17 November 1997 to 10 July 2009. The defendant says that his mother, Elaine Gear, resided at the Belrose property. (Ex E).

Marina Blue’s submissions

38. During the hearing, Counsel for Marina Blue submitted that the central issue concerns possession. (T17.15). The substance of the Defence filed 13 March 2018 was that the defendant has made a possessory title application before the Registrar-General (Defence, [8]). However, as previously stated, this application was rejected by the Registrar-General on 2 March 2018.

39. Counsel for Marina Blue submitted that, in any event, the defendant was not in possession of the property for the requisite period. In the defendant’s affidavit sworn on 5 October 2017, he states that for the last seven years (being from 2010) he was the only one that was permanently living at the property, and that this was uninterrupted and constant. The records produced by Fair Trading record that on 20 September 2012, the rental bond for the property at XX Gall Street was lodged. (Ex D). The tenants were Trevor Gear and Nozomi Yaginuma. This is at a time when the defendant asserted that he was living at the property. In addition, the records of NSW Transport Road & Maritime Services indicate that the defendant had only resided at the premises since 12 November 2013. (Aff, Jensen 21 March 2018, Annexure G).

The defendant’s submissions

40. The defendant submitted that Marina Blue has shown no interest in the property until they received notice of his application from the Land & Property Information. He also says that they have made no attempt to pay the rates on the property. (T33.46-50; T34.1). The defendant also recently paid $2 towards rates on the property.

The law

41. The starting point is s 27 of the Limitation Act 1969 (NSW). It reads:

“27 General

(2) Subject to subsection (3) an action on a cause of action to recover land is not maintainable by a person other than the Crown if brought after the expiration of a limitation period of twelve years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims.”

42. Section 27(3) is not applicable here as the cause of action does not accrue to the Crown.

43. Sections 45D(1) and 45E(1) and (2) of the Real Property Act 1900 (NSW) read:

“45D Application for title by possession

(1) Where, at any time after the commencement of this Part, a person is in possession of land under the provisions of this Act and:

(a) the land is a whole parcel of land,

(b) the title of the registered proprietor of an estate or interest in the land would, at or before that time, have been extinguished as against the person so in possession had the statutes of limitation in force at that time and any earlier time applied, while in force, in respect of that land, and

(c) the land is comprised in an ordinary folio of the Register or is comprised in a qualified or limited folio of the Register and the possession by virtue of which the title to that estate or interest would have been extinguished as provided in paragraph (b) commenced after the land was brought under the provisions of this Act by the creation of the qualified or limited folio of the Register,

that person in possession may, subject to this section, apply to the Registrar-General to be recorded in the Register as the proprietor of that estate or interest in the land.

45E Grant of possessory application

(1) Subject to section 45F, the Registrar-General may grant a possessory application if the Registrar-General is satisfied that the application:

(a) was authorised by section 45D (1), (2) or (2A),

(b) was not made in breach of section 45D (3) or (4), and

(c) complies with section 45D (5).

(2) Where the Registrar-General intends to grant a possessory application and, pursuant to section 12 (1) (h) or 12 (1A), gives notice of that intention the Registrar-General shall, in the notice, specify a period (being not less than 1 month after the date of the notice) before the expiration of which the application will not be granted.”

Conclusion

44. For convenience, this Court has the power to dismiss proceedings under UCPR, 13.4(1) where the proceedings are frivolous or vexatious, if no reasonable cause of action is disclosed, or if the proceedings are an abuse of the process of the court. This Court may also strike out the pleading as a whole or in part under UCPR, 14.28(1) if the pleading discloses no reasonable cause of action or defence, has a tendency to cause prejudice, embarrassment or delay in the proceedings, or is otherwise an abuse of the process of the court. As I have previously set out, the relevant inquiry is whether there is more than a “fanciful” prospect of success: see Spencer, per French CJ and Gummow J at [25]. I also accept that the power of this Court to summarily terminate proceedings must be exercised with exceptional caution: Spencer per French CJ and Gummow J at [24].

45. Section 45D of the Real Property Act requires the defendant to have been in possession of the whole parcel of land for the duration of the relevant statutory limitation period. Section 27(2) of the Limitation Act provides that this period is twelve years. Accordingly, at trial, the defendant has to establish on the balance of probabilities that he has been in possession of the property for at least twelve years.

46. The evidence shows the defendant was only in possession of the property from 12 November 2013. (Aff, Jensen 21 March 2018, Annexure G). This is consistent with the evidence of Mr Jones, who from November 2010 to 30 June 2013 was in constant contact with the property’s tenants, Jon Kearney and Christine Brown. Despite visiting the property on numerous occasions, he never met nor was introduced to the defendant. (Aff, Jones 20 March 2018, [7] and [9]).

47. However, as this in an application for summary judgment, I will take the defendant’s claim at its highest and for the purposes of this application, I accept his evidence in relation to his period of possession of the property. However, if the defendant’s version of events was accepted, he has only established he was in possession since 2010 (being the last seven years). (Aff, Jensen 21 March 2018, Annexure D). This falls far short of the required twelve year period.

48. Putting to one side the difficulty facing the defendant in establishing he has more than a fanciful prospect of success, his application remains one of adverse possession. There remains some uncertainty over the exact nature of the interest that an applicant for adverse possession has in the land.

49. In F Burns, ‘Adverse Possession and Title-by-registration Systems in Australia and England’ (2011) 35 Melbourne University Law Review 773, Associate Professor Fiona Burns states at 797:

“…the NSW statute clarifies that until registration, the applicant does not acquire title to the land and the adverse possession does not extinguish the interest of the registered proprietor. Indeed, it remains unsettled whether prior to registration the adverse possessor acquires any title in the land. Some authority suggests that the adverse possessor acquires an inchoate possessory title which has a status similar to that of other unregistered interest holders, while other authority relying on pt 6A has held that the legislation precludes the adverse possessor having any inchoate right. A possible way of resolving this issue is to ask whether the adverse possession is (like in Victoria, Western Australia and Tasmania) an exception to indefeasibility. It is not expressly stated to be so, and the provisions in pt 6A lean against any inchoate or possessory claim operating as an exception to indefeasibility (because upon a new registration, time runs afresh and a possessory claim does not extinguish the proprietor’s title). Therefore, it is unlikely that the adverse possessor acquires any interest in the land, and it is more likely that the possessor holds only a statutorily regulated possessory claim against the current registered proprietor after the expiration of the limitation period.” (Foot note omitted)

50. Neither party provided this Court with a historical title search of the property or a title search before 17 July 2017, being the date when Marina Blue was reregistered. There is no evidence to suggest that Marina Blue’s title to the property has been invalidated. Notwithstanding the difficulty in classifying the nature of the defendant’s interest, Marina Blue remains the registered proprietor of the property.

51. Accordingly, it is my view that the defendant has not established he has more than a fanciful prospect of success. It is now unnecessary to deal with the defendant’s adjournment application.

The proposed cross claim

52. While it is not necessary for me to decide the defendant’s proposed cross claim, it is convenient that I make a few pertinent observations.

53. On 24 August 2018, the defendant made an attempt to file a cross claim. This was returned as it was not signed. However, the substance of the proposed cross claim is as follows.

54. On 18 January 2002, Marina Blue was registered as a company with Australian Securities Investment Commission (ASIC) under the Corporations Act. (Ex 4).

55. Since 2006, the directors of Marina Blue, Mr Melchior and Ms Waterhouse, have resided in Innsbruck, Austria. They were shareholders, as were Faridan Binte Jaffar and Hashim Bin Hussein, both residents of Malaysia. They each beneficially held one fully paid ordinary share in Marina Blue.

56. From 2006 to 12 June 2011, it appears that Marina Blue did not have any directors located in Australia. Under s 201A of the Corporations Act, a proprietary company must have at least one director residing in Australia. It relevantly reads:

“Minimum number of directors

Proprietor companies

(1) A proprietary company must have at least 1 director. That director must ordinary reside in Australia.

…”

57. On 12 June 2011, Marina Blue was deregistered by ASIC. It was deregistered under s 601AB(1A) of the Corporations Act for non payment of the review fee. (Aff, Gear 31 July 2018, Ex TJG-1, 11).

Reinstatement of Marina Blue

58. On 21 June 2017, Marina Blue applied to be reinstated on the ASIC register. The application, together with a statutory declaration dated 21 June 2017, was completed by Gernot Melchior, who was residing in Innsbruck, Austria. The statutory declaration was witnessed by Maree Fay, Consul at the Australian Embassy in Vienna. Gernot Melchior stated that he would hold the office of a director of Marina Blue, and that if Marina Blue was reinstated, the company would be able to meet its debts if and when they fell due. He also stated that the company was carrying on business or was in operation at, and subsequent to, the time that the registration of the company was cancelled. (Aff, Gear 31 July 2018, Ex TJG-1, 26-28).

59. On 17 July 2017, some six years after deregistration, Marina Blue’s registration was reinstated by ASIC. (Aff, Gear 31 July 2018, Ex TJG-1, 6-12; Ex B).

60. On 28 July 2017, James Laurence Jones signed a written consent to his appointment as a director of Marina Blue.

61. On 31 July 2017, Jeffrey Laurence Jones signed a written consent to his appointment as director, secretary and public officer of Marina Blue. His home address at Annandale is the registered office of the company.

Minutes of meeting held by Marina Blue on 15 August 2017

62. On 15 August 2017, Marina Blue held a meeting of shareholders and directors at a venue in Innsbruck, Austria. Present at this meeting were Gernot Melchior and Zareen Waterhouse. Faridan Binte Jaffar and Hashim Bin Hussein did not attend. Gernot Melchior was elected chairperson of the meeting.

63. The minutes of the meeting read as follows (Aff, Gear 31 July 2018, Ex TJG-1, 29-30):

“1. Advice from (Graeme Jensen, Solicitor and confirmation from Australian, Securities & Investment Commission (ASIC) that registration of the Company has been reinstated.

2. Consent of Jeffrey Laurence Jones to act as Director, Secretary and Public Officer of the Company and for his home address of XXX Nelson Street Annandale New South Wales to be the Registered Office of the Company.

3. Consent by James Laurence Jones to act as Director of the Company.

4. Advice from Graeme Jensen, solicitor that the Company’s property XX Walters Street Port Macquarie Is occupied by a squatter and that the squatter has failed to comply with an eviction notice served on him on behalf of the Company.

5. Advice from Mr. Jensen that there was a Caveat recorded on the title the above property lodged by Faridah Jaffer and Hashim Hussein.

Resolved:

The meeting noted

That shareholders Faridah Jaffer and Hashim Hussein cannot be located; and that the Certificate of Title relating to the above property cannot be located.

1. That any requirement for formal notice of the meeting be waived.

2. That Jeffrey Laurence Jones be appointed as a Director, Secretary and Public Officer of the Company.

3. That James Laurence Jones be appointed as a Director of the Company.

4. That the Registered Office of the Company be changed to XXX Nelson Street Annandale New South Wales 2038.

5. That Jensen Partners Solicitors be instructed to take all necessary action to

(a) remove the squatter from the Port Macquarie property;

(b) have the Caveat removed from the Title to the Port Macquarie property; and

(c) obtain a replacement Certificate of Title for the Port Macquarie property.

There being no further business the meeting closed at 9.30am.”

64. The chairman signed the minutes as a correct record. The meeting was of 30 minutes duration.

Marina Blue’s submissions

65. As the cross claim had not been filed, counsel for Marina Blue made no submissions on it. (T32.18).

The defendant’s submissions

66. The defendant made a number of submissions. Firstly, he seeks an adjournment on the basis that he needs more information because he believes the information that he has been able to collate since the last directions hearing on 17 May 2018, that Marina Blue should not have been reinstated to the register of companies pursuant to s 601AH of the Corporations Act.

67. The defendant disputes that Marina Blue was carrying on business subsequent to 2001, and that it has not paid its debts as they fell due post reinstatement. There is evidence to show Marina Blue has failed to pay Council rate for some years and owes $39,983.19. (Ex 6).

68. The defendant submitted that the evidence shows:

(a)   the directors of Marina Blue, Gemot Melchior and Zaireen Waterhouse have not resided in Australia since 2006, and Marina Blue has therefore been in contravention of the Corporations Act at all relevant times by reason of having an insufficient number of directors (s 201A of the Corporations Act);

(b)   50% of the shareholders of Marina Blue cannot be located and have not been notified about the reinstatement application (and the consequences of such reinstatement) lodged with ASIC in July 2017;

(c)   inaccurate supporting documentation was provided by the applicant(s) submitting the relevant form, being ‘Form 581: Application for ASIC Reinstatement’, which purported to effect the reinstatement of Marina Blue;

(d)   the purported appointment of Jeffrey Laurence Jones and James Laurence Jones as directors of Marina Blue on 16 August 2017 is invalid under the Corporations Act; and

(e)   there is reasonable cause to believe that Marina Blue was not carrying on business at the time of deregistration or at the time of its reinstatement.

69. The defendant submitted that the conduct of Marina Blue leading up to, and since, its deregistration shows that ASIC should not have administratively reinstated Marina Blue because:

(a)   there have been dealings with the alleged property of Marina Blue that give rise to third party rights that are adversely affected by the reinstatement;

(b)   the evidence sought to be adduced by the plaintiff via the affidavit made by James Laurence Jones dated 20 March 2018 contends that Marina Blue was receiving rental income in respect of the subject property despite the fact that Marina Blue was deregistered and unable to act as it had ceased to exist as a legal entity and enjoyed no proprietary rights over the property;

(c)   Marina Blue and/or its officers were not contactable for many years despite various attempts by ASIC and the Port Macquarie Hastings Council; and

(d)   Marina Blue has not conducted itself as having any interest in the property for many years.

70. Overall, the defendant says that the purported reinstatement of Marina Blue should be required to proceed through the courts rather than administrative reinstatement overseen by ASIC.

The law

71. Section 601AH of the Corporations Act concerns reinstatement. It reads:

“601AH Reinstatement

Reinstatement by ASIC

(1) ASIC may reinstate the registration of a company if ASIC is satisfied that the company should not have been deregistered.

(1A) ASIC may reinstate the registration of a company deregistered under subsection 601AB(1B) if:

(a) ASIC receives an application in relation to the reinstatement of the company’s registration; and

(b) the levy imposed on the company by the ASIC Supervisory Cost Recovery Levy Act 2017 is paid in full; and

(c) the amount of any late payment penalty payable in relation to the levy is paid in full; and

(d) the amount of any shortfall penalty payable in relation to the levy is paid in full.

Reinstatement by Court

(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;

…

(b) the Court is satisfied that it is just that the company’s registration be reinstated.

(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.

Note: For example, the Court may direct ASIC to transfer to another person property vested in ASIC under subsection 601AD(2).

ASIC to give notice of reinstatement

(4) ASIC must give notice of a reinstatement in the Gazette.

(4A) If an application was made to ASIC for the reinstatement of a company’s registration, ASIC must give notice of the reinstatement to the applicant.

Effect of reinstatement

(5) If a company is reinstated, the company is taken to have continued in existence as if it had not been deregistered. A person who was a director of the company immediately before deregistration becomes a director again as from the time when ASIC or the Court reinstates the company. Any property of the company that is still vested in the Commonwealth or ASIC revests in the company. If the company held particular property subject to a security or other interest or claim, the company takes the property subject to that interest or claim.”

72. As from 17 July 2017, the effect of Marina Blue being reinstated to the ASIC register is as follows. Mr Melchior (who was a director of the company immediately before deregistration) becomes a director again. The property of Marina Blue that is still vested in ASIC revests in Marina Blue. If Marina Blue held property subject to a security or other interest or claim, Marina Blue takes the property subject to that interest or claim: see Ex B, letter dated 17 July 2017 to plaintiff’s solicitor from Denise Kelly, an Analyst in Property Law Group at ASIC.

Conclusion

73. As best as I can understand it, the defendant’s cross claim is premised upon his seeking an order of this Court to deregister Marina Blue under ss 601AH and 1322(4) of the Corporations Act.

73. In Robert Austin and Ashley Black’s Austin & Black’s Annotations to the Corporations Act (2018, LexisNexis Australia), the key principles concerning s 601AH of the Corporations Act are discussed at [5A.601AH]. It relevantly reads:

“[5A.601AH] Reinstatement of deregistered company - Annotations to section 601AH

[Current to April 2018]

Key principles

ASIC may reinstate registration

ASIC may reinstate registration of a company under s 601AH(1) if it is satisfied that the company should not have been deregistered. If a company does not have the requisite number of directors at the point of reinstatement, ASIC can reinstate it conditionally upon it holding a shareholders meeting to appoint directors: Re Amtrao Pty Ltd (1994) 13 ACSR 654; 12 ACLC 486; BC9502588; Re Porter (1994) 15 ACSR 424; BC9502051 . A company’s restoration by ASIC under s 601AH(1)does not validate any action taken by it or on its behalf while it was deregistered: White v Baycorp Advantage Business Information Services Ltd (2006) 200 FLR 125; 24 ACLC 969; [2006] NSWSC 441;BC200603521 . The case law differs as to whether, if a company has been wrongly reinstated under this section, the court may make an order under s 1322(4) directing that ASIC rectify the register of companies by removing its registration: Re Peter Conyers Holdings Pty Ltd (in liq) (1996) 14 ACLC 1835 (holding that such an order can be made); Westbury Holdings Kiama Pty Ltd v ASIC (2007) 25 ACLC 710; [2007] NSWSC 466; BC200703491 (to the contrary).

Court may reinstate registration

The court can order that a company company’s registration be restored if it is satisfied that it is just that it do so, on application by a person aggrieved by the deregistration of a company or a former liquidator of the company: s 601AH(2); Re Proserpine Pty Ltd & the Companies Act [1980] 1 NSWLR 745; 5 ACLR 603; (1980) CLC 40-645 ; Dennis v McMahon (1989) 7 ACLC 283 ; Re KP Wee Investments Pty Ltd (1993) 32 NSWLR 745; 12 ACSR 620; 12 ACLC 157 … The concept of “person aggrieved” includes a person who has been damaged or injured in a legal sense including where he or she has a genuine grievance as a result of a decision which prejudices his or her interest or where the company's dissolution extinguished a right of some value or potential value: Australian Competition & Consumer Commission v ASIC, above; Callegher v ASIC (2007) 239 ALR 749; 25 ACLC 438; [2007] FCA 482; BC200702334 ; Re Newfront Pty Ltd (deregistered) [2008] SASC 127; BC200803248 ; Arnold World Trading Pty Ltd v ACN 133 427 335 Pty Ltd (2010) 80 ACSR 670; [2010] NSWSC 1639; BC201008928 at [43].

...”

75. Standing under s 601AH of the Corporations Act requires the applicant to be a “person aggrieved”. Consistent with the above authorities, a “person aggrieved” includes a person who has been damaged or injured in a legal sense, including where he or she has a genuine grievance as a result of a decision which prejudices his or her interest or where the company’s dissolution extinguished a right of some value or potential value. The relevant decision in the present case is ASIC’s decision on 12 June 2011 to deregister Marina Blue. The difficulty in the defendant’s argument lies in his attempt to argue that he is aggrieved by a different decision, being ASIC’s later reinstatement of Marina Blue on 21 June 2017 under s 601AH(1). There is a clear distinction between an initial decision to deregister a company, which enlivens standing for an aggrieved person to make an application to a court under s 601AH(2), and a later decision to incorrectly reinstate a deregistered company that does not.

76. For completeness, I have also briefly reviewed the authorities cited in the above extract. In particular, I have considered Re Peter Conyers Holdings Pty Ltd (in liq) (1996) 14 ACLC 1835 (“Re Peter Conyers”) and Westbury Holdings Kiama Pty Ltd v ASIC (2007) 25 ACLC 710; [2007] NSWSC 466 (“Westbury”). Both decisions concerned whether or not a court can make an order under s 1322(4) of the Corporations Act (or its predecessor) to deregister an incorrectly reregistered company. In Re Peter Conyers, a decision of the Supreme Court of Victoria, Senior Master Mahony considered an application to set aside a reinstatement where the aggrieved party did not have standing to apply for the company’s reinstatement. He stated at [1849] to [1850] that such an order could be made. In Westbury, Barrett J considered an application to set aside an earlier decision of the Court under s 601AH(2) to reinstate a company. His Honour at [40], [42] and [44] held that no such order could be made.

77. These authorities reflect that there remains some uncertainty over whether a court does have the power to set aside a decision by ASIC to reinstate a company. Putting to one side the issue of whether this Court has such a power, any resulting order would prove futile for the defendant. If Marina Blue were to be deregistered, it could simply reapply under s 601AH to be reinstated in order to challenge the defendant’s adverse possession claim. The defendant would be in no way assisted by such an order. Even if it were accepted that this court does have this power, neither Re Peter Conyers nor Westbury concerned someone in the present defendant’s position making the application.

78. Without expressing any final view (and without the benefit of full evidence on this issue), it is most unlikely that the defendant can rely upon s 601AH of the Corporations Act to seek the reregistration of Marina Blue be declared void.

Conclusion

79. The defence filed 12 March 2018 is struck out. In the exercise of my discretion, I can give the defendant an opportunity to replead his defence. However, it is my view that he cannot succeed in his application for adverse possession, nor on his proposed cross claim seeking to deregister the plaintiff pursuant to s 601AH of the Corporation Act. Therefore, there is no utility in permitting the defendant to replead his defence nor file the proposed cross claim. The plaintiff is entitled to summary possession.

80. I make orders in accordance with paragraph (1) and (2) of the plaintiff’s notice of motion filed 21 March 2018. The plaintiff is to file and serve written submissions on the defendant and my associate by email as to when the writ of possession should issue by 5.00 pm on 27 September 2018. The defendant is to file and serve on the plaintiff and my associate by email as to when the writ of possession should issue by 5.00 pm on 4 October 2018

81. Costs are discretionary. Costs usually follow the event. The defendant is to pay the plaintiff’s costs on an ordinary basis.

The Court orders that:

(1) The defence filed 12 March 2018 is struck out pursuant to rule 13.1 or rule 14.15(3) of the Uniform Civil Procedure Rules 2005 (NSW).

Judgment

(2)   Judgment is entered in favour of the plaintiff for possession of the land comprised in Certificate of Title Folio Identifier 3/XXXXX , being the land situated at and known as XX Wartlers Street, Port Macquarie.

The Court further orders that:

(3)   The plaintiff is to file and serve written submissions on the defendant and my associate by email as to when the writ of possession should issue by 5.00 pm on 27 September 2018.

(4)   The defendant is to file and serve on the plaintiff and my associate by email as to when the writ of possession should issue by 5.00 pm on 4 October 2018

(5)   The defendant is to pay the plaintiff’s costs on an ordinary basis.

**********

Amendments

28 September 2018 - Coversheet & para [10] - "Federal Court Act" to "Federal Court of Australia Act"

Coversheet & para [74] "Ashley & Black's" to "Austin & Black's"

Decision last updated: 28 September 2018