Pacanowski v Australian Securities Commission - [1995] FCA 336

CATCHWORDS

CORPORATIONS - application to reinstate deregistered company - whether applicant person aggrieved - whether reinstatement just.

Corporations Law, s 574(3)

Re L Carroll Ltd (1975) 1 NZLR 79
Re Proserpine Pty Ltd (1980) 5 ACLR 603
Re JJ Weeks Construction Pty Ltd (1982) 1 ACLC 425
Re Immunosearch Pty Ltd (1990) 8 ACLC 1031

No. NG 3441 of 1994

DAVID HENRY PACANOWSKI v AUSTRALIAN SECURITIES COMMISSION (in the matter of GALITE HOLDINGS PTY LTD)

MOORE J

SYDNEY

26 MAY 1995

IN THE FEDERAL COURT OF AUSTRALIA )
  )
NEW SOUTH WALES DISTRICT REGISTRY )      No. NG 3441 of 1994
  )
GENERAL DIVISION                 )

BETWEEN: DAVID HENRY PACANOWSKI

Applicant

AND:     AUSTRALIAN SECURITIES COMMISSION
  (IN THE MATTER OF GALITE HOLDINGS
  PTY LTD)

Respondent

JUDGE: Moore J

PLACE: Sydney

DATE: 26 May 1995

ORDER OF THE COURT

THE COURT ORDERS:

The registration of Galite Holdings Pty Ltd be reinstated.

No order as to costs.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA )
  )
NEW SOUTH WALES DISTRICT REGISTRY )      No. NG 3441 of 1994
  )
GENERAL DIVISION                 )

BETWEEN: DAVID HENRY PACANOWSKI

Applicant

AND: AUSTRALIAN SECURITIES COMMISSION
(IN THE MATTER OF GALITE HOLDINGS
PTY LTD)

Respondent

JUDGE: Moore J

PLACE: Sydney

DATE: 26 May 1995

REASONS FOR JUDGMENT

This is an application by Mr David Henry Pacanowski for the reinstatement of the registration of Galite Holdings Pty Ltd ("Galite") following the cancellation of its registration as a company. The application is made under s574(3) of the Corporations Law. The grounds upon which the application is made is that it is just that the registration of the company be reinstated.

At the commencement of the proceedings Mr Harry Wygoda sought to intervene in the proceedings under O71r10 of the Federal Court Rules. I granted leave to Wygoda to intervene though I indicated that the intervention might be made conditional. As events unfolded an underlying dispute between Pacanowski and Wygoda was settled during the hearing which is something I return to shortly.

Galite was incorporated in December 1986 as a shelf company and in January 1987 was acquired by Pacanowski and Wygoda for the purposes of property development which they proposed to undertake jointly. In January 1987 they became directors and shareholders in the company each holding one share valued at one dollar. The company traded for a number of years though without apparent success. By the financial year ending 30 June 1990 the company had accumulated losses in excess of $390,000. It failed to file annual returns in 1991 and 1992 and in September 1993 its registration was cancelled by the Australian Securities Commission ("ASC").

Over time the commercial relationship between Wygoda and Pacanowski has deteriorated and, as a result, there has been a plethora of litigation between them in the recent past. Some has concerned the bankruptcy of Wygoda and attempts by Pacanowski…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [1995] FCA 336
Decision Date: 26 MAY 1995

CaseChat Overview and Summary

In the matter of Pacanowski v Australian Securities Commission (in the matter of Galite Holdings Pty Ltd), the applicant, David Henry Pacanowski, sought the reinstatement of the registration of Galite Holdings Pty Ltd, which had been cancelled by the Australian Securities Commission (ASC). Pacanowski argued that it was just for the company's registration to be reinstated under s574(3) of the Corporations Law. The application was made in the Federal Court of Australia, before Moore J, and was heard in Sydney on several dates in 1995.

The central legal issues before the Court were whether Pacanowski had standing to apply for the reinstatement of the company's registration and whether it was just for the company to be reinstated. Pacanowski's standing to apply was based on his status as a creditor of the company and his interest in the potential use of accumulated losses for tax purposes. The Court found that Pacanowski had standing, as his interest was not narrowly construed and the precedent in Re L Carroll Ltd supported the acceptance of Pacanowski as aggrieved. The second issue involved determining whether the reinstatement of the company's registration was just, considering the lack of explanation for the non-filing of statutory returns that led to the deregistration and the ASC's lack of objection to the reinstatement.

Moore J held that it was just for the company's registration to be reinstated. The Court took into account Pacanowski's guarantee of loans to the company, which had resulted in his financial detriment. The Court also noted the ASC's lack of objection to the reinstatement, provided certain conditions were met, which appeared to be satisfied. The Court exercised its broad discretion under s574 and ordered the reinstatement of Galite's registration.

In summary, the Court found that Pacanowski had standing to apply for the reinstatement of the company's registration and granted the application on the basis that it was just to do so. The Court ordered the reinstatement of Galite Holdings Pty Ltd's registration, and no order was made as to costs.

Orders