Murray Halstead v CTS Quality Building Products Pty Ltd (in liq)

[2006] NSWSC 1022

CITATION:	Murray Halstead v CTS Quality Building Products Pty Ltd (in liq) [2006] NSWSC 1022
HEARING DATE(S):	27/09/06
JUDGMENT DATE :	27 September 2006
JURISDICTION:	Equity Division Corporations
JUDGMENT OF:	White J
EX TEMPORE JUDGMENT DATE:	09/27/2006
DECISION:	Summons dismissed.
CATCHWORDS:	CORPORATIONS – Application for leave to proceed against company in liquidation – Company deregistered – Proceedings pending in Industrial Court of New South Wales – Leave refused.
LEGISLATION CITED:	Corporations Act 2001 (Cth) Industrial Relations Act 1996 (NSW)
CASES CITED:	Domanko v Cloeh Pty Limited (in liq) [2005] IRCComm 384 Ramantanis v G & M Excavations (2004) 22 ACLC 22
PARTIES:	Murray Halstead v CTS Quality Building Products Pty Ltd (in liq)
FILE NUMBER(S):	SC 5036/06
COUNSEL:	Plaintiff: R Mitchell Defendant: ex parte
SOLICITORS:	Plaintiff: Employment Lawyers Defendant: N/A

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

WHITE J

Wednesday, 27 September 2006

5036/06 Murray Halstead v CTS Quality Building Products Pty Ltd (in liq) & Ors

JUDGMENT

1 HIS HONOUR: This is an application pursuant to subs 500(2) of the Corporations Act 2001 (Cth) for an order granting leave to the plaintiff to proceed against CTS Quality Building Products Pty Limited (in liq) ("the company") in proceedings in the Industrial Court of New South Wales No IRC 1477/03. Those proceedings were commenced on 17 March 2003. The company was named as the first respondent in those proceedings.

2 The plaintiff claims a declaration that a contract between him and the company was unfair, harsh, or unconscionable, or against the public interest. In those proceedings, the plaintiff claims an order varying the contract (apparently pursuant to subs 106(1) of the Industrial Relations Act 1996 (NSW)), and an order pursuant to subs 106(5) of that Act that the respondents to those proceedings pay a sum of money to the plaintiff in connection with the contract. Other consequential relief is also sought.

3 On 2 May 2003, a liquidator was appointed to the company pursuant to a resolution of creditors.

4 On 21 April 2005, the company was deregistered pursuant to s 601AC(2) of the Corporations Act. That subsection provides that ASIC must deregister a company if three months have passed after a company’s liquidator has lodged a return under s 509, and no order under s 509(6) has been made during that period. The company's liquidator had filed a return under s 509(1) as the affairs of the company had been fully wound up.

5 The ground for the present application is that the plaintiff apprehends that unless the leave sought is given, the respondents in the Industrial Court will contend that no relief can be obtained pursuant to s 106 of the Industrial Relations Act, because the company, which is the first respondent to those proceedings, is being wound up. I was referred to a decision of the Industrial Relations Commission in Court Session, Domanko v Cloeh Pty Limited (in liq) [2005] IRCComm 384 which dealt with a case in which a company to an allegedly unfair contract, which was a party to proceedings brought under the Industrial Relations Act, was in the course of being wound up pursuant to creditor's voluntary winding up.

6 Subsection 500(2) of the Corporations Act provides:

“After the passing of the resolution for voluntary winding up no action or other civil proceeding is to be proceeded with or commenced against the company except by leave of the Court and subject to such terms as the Court imposes."

7 In Domanko v Cloeh Pty Limited (in liq), it was held that a claim for relief under s 106 of the Industrial Relations Act in respect of a contract to which a company being wound up was a party, was an action or other civil proceeding against the company which could not be proceeded with without leave of the Supreme Court. It was held (at [35]) that unless such leave were given, no order could be made in connection with the impugned contract, as any order or declaration made under s 106(1) of the Act would be a step in the action cause or matter that advanced the action.

8 However, in the present case the company has been deregistered. The effect of deregistration is that the company has ceased to exist (Corporations Act 601AD(1)). No step taken in the Industrial Relations Court can be a proceeding against the company unless the company is reinstated. Subsection 500(2) does not preclude the plaintiff as applicant in the Industrial Relations Court from continuing with its action in that Court.

9 The question whether relief under s 106 can be obtained when the party to the impugned contract has ceased to exist is a different question. That question is not addressed by the decision in Domanko v Cloeh Pty Limited. If the question is raised in the Industrial Court, it will be a matter for that Court to determine it. Nothing in s 106 expressly precludes the Industrial Court from granting relief in respect of a contract which is found to be an unfair contract, on the ground that the party to the contract when it was made has ceased to exist.

10 It follows from the fact that the company is deregistered, that no order could be made under subs 500(2) for leave to proceed against the company, unless the company were first reinstated. The power to reinstate the company would arise under subs 601AH(2) of the Corporations Act.

11 I accept that the plaintiff is a person who would be aggrieved by the deregistration, if the effect of the deregistration were that the plaintiff could not continue with its claims against the second and third respondents in the Industrial Court. I would also be satisfied that it was just that the company's registration be reinstated, if that were the effect of deregistration. However, as matters presently stand, I am not satisfied that that would be the effect of deregistration.

12 Moreover, if the company were reinstated, it would resume its status as a company in liquidation. It would not necessarily follow that the liquidator, whose functions had been wholly discharged, would automatically resume office as liquidator upon reinstatement (Ramantanis v G & M Excavations (2004) 22 ACLC 22). It would be necessary to appoint a liquidator and, accordingly, the consent of a qualified person to assuming the office of liquidator would be needed. Adequate arrangements would also need to be made in respect of the liquidator's remuneration and expenses.

13 As matters presently stand, there is no application before me for an order under s 601AH(2). For the reasons I have given, I propose to dismiss the summons. That will not preclude the plaintiff, if it finds it necessary to do so, from making urgent application for an order for reinstatement of the company, coupled with an order for leave to proceed against the company pursuant to subs 500(2) if the company is reinstated. If time permits, it would be appropriate, if any such application is made, for notice to be given to the Australian Securities and Investments Commission in accordance with rule 2.8 of the Supreme Court (Corporations) Rules. There has been no appearance by the defendant, which does not exist, to these proceedings. Accordingly, the only order I make is that the summons be dismissed. The exhibits are to remain with the file.

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