PACT Construction Pty Ltd v Australian Securities and Investments Commission
[2024] WASC 369
•9 OCTOBER 2024
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: PACT CONSTRUCTION PTY LTD -v- AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION [2024] WASC 369
CORAM: STRK J
HEARD: 19 SEPTEMBER 2024
DELIVERED : 19 SEPTEMBER 2024
PUBLISHED : 9 OCTOBER 2024
FILE NO/S: COR 138 of 2024
BETWEEN: PACT CONSTRUCTION PTY LTD
Plaintiff
AND
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Defendant
Catchwords:
Corporations law - Application to reinstate deregistered company - Deregistered company a party to a construction contract - Whether the plaintiff is a 'person aggrieved' by the deregistration of Iris Mabel Park Pty Ltd - Whether it was 'just' that the registration of the company be reinstated - Turns on own facts
Legislation:
Corporations Act 2001 (Cth), s 601AH(2)
Result:
Application granted
Category: B
Representation:
Counsel:
| Plaintiff | : | DJ Pratt |
| Defendant | : | No appearance |
Solicitors:
| Plaintiff | : | Thomson Geer |
| Defendant | : | No appearance |
Cases referred to in decision:
ACN 009 009 072 (in liquidation) v Australian Securities & Investments Commission [2022] WASC 221
Australian Competition and Consumer Commission v Australian Securities and Investments Commission [2000] NSWSC 316; (2000) 174 ALR 688
Bell Group Ltd (ACN 008 666 893) (in liq) v Australian Securities and Investments Commission [2018] FCA 884; (2018) ACSR 247
Callegher v Australian Securities and Investments Commission (ASIC) [2007] FCA 482; (2007) 239 ALR 749
Deputy Commissioner of Taxation; Re James Hardie Australian Finance Pty Ltd (deregistered) [2008] FCA 1181; (2008) 248 ALR 557
Di Camillo v Australian Securities and Investments Commission [2024] WASC 288
Hugall v Australian Securities and Investments Commission [2009] WASC 185
Jit Sun Investments Pte Ltd (Singaporean Unique Entity Number: 200308432W) v Australian Securities and Investments Commission [2021] WASC 235
Low as Liquidator of Safa Auto Parts Pty Ltd v Australian Securities and Investments Commission [2024] WASC 116
Perrin v Australian Securities and Investments Commission [2024] WASC 38
Pilarinos v Australian Securities and Investments Commission [2006] VSC 301
Price, in the matter of Advanced Polymer Recycling Pty Ltd v Australian Securities and Investments Commission [2022] FCA 20
Re Dreampoint Pty Ltd (Deregistered); Ex Parte Brett Phillip Jones [2024] WASC 125
Re ERB International Pty Ltd (deregistered) [2014] NSWSC 200; (2014) 98 ACSR 124
Romaro And Pikachu Pty Ltd v Australian Securities And Investments Commission [2024] WASC 276
STRK J:
(This judgment was delivered extemporaneously on 19 September 2024 and has been edited from the transcript to include complete references and to correct infelicities of language.)
By an originating process filed on 2 September 2024, PACT Construction Pty Ltd sought an order pursuant to s 601AH of the Corporations Act 2001 (Cth) to compel the Australian Securities and Investments Commission (ASIC) to reinstate the registration of Iris Mabel Park Pty Ltd ACN 625 944 265. The application was supported by an affidavit sworn by Jason Thomson on 2 September 2024 (the general manager of PACT), an affidavit sworn by Ms Dimitra Maria Andritsos Murphy on 17 September 2024 (a solicitor employed by Thomson Geer, PACT's representatives in this application), an outline of submissions and a minute of proposed orders. Although it had been served, ASIC did not file a notice of appearance and did not seek to be heard in opposition to the application.
After hearing counsel and on the evidence read, I was satisfied that ASIC should be ordered to reinstate the registration of Iris Mabel pursuant to s 601AH of the Corporations Act.
Background
The outline of submissions filed on behalf of PACT contained a summary of the background facts which conveniently summarised evidence before the court, from which the following overview is substantively drawn.
PACT is a company that performs commercial building works.
Iris Mabel was a wholly owned subsidiary of Iris Residential Pty Ltd. Iris Mabel and Iris Residential had common directors.
On 14 October 2020 PACT (as builder) entered into a construction contract with Iris Mabel (as principal) for the construction of a large mixed use apartment development in Jolimont known as 'One Mabel Park' (the Mabel Contract). The Mabel Contract price was about $18 million.
I understand that the date of practical completion under the Mabel Contract was 9 February 2022.
On 12 September 2023 a Form 6010 (Application for Voluntary Deregistration of a Company) was lodged by Iris Mabel with ASIC. As part of that application, Iris Mabel's company secretary (Zin Mar Lin Wan) declared that:
(a)all members of the company agreed to the deregistration;
(b)the company is not carrying on business;
(c)the company's assets were worth less than $1,000;
(d)the company had paid all fees and penalties payable under the Corporations Act;
(e)the company had no outstanding liabilities; and
(f)the company was not a party to any legal proceedings.
On 29 September 2023 Cameron Chisolm Nichol (CCN) (the superintendent under the Mabel Contract) issued a site instruction to PACT to the effect that the defects liability period under the Mabel Contract had expired on that day.
Upon the expiry of the defects liability period under the Mabel Contract:
(a) pursuant to GC 42.7, PACT was required to issue a final payment claim within 28 days;
(b) pursuant to GC 42.8, CCN was required to issue a final certificate within 14 days after receipt of PACT's final payment claim certifying the amount payable from the Iris Mabel to PACT, or vice versa; and
(c) within 14 days of the issue of a final certificate which certified a balance owing from Iris Mabel to PACT, pursuant to GC 42.8, Iris Mabel was to release any security or retention.
On 26 October 2023 PACT issued its final payment claim under the Mabel Contract claiming the sum of $927,095.02 (plus GST and interest).
On 7 November 2023 CCN issued a final certificate certifying that the sum of $4,451 was due and payable by Iris Mabel to PACT.
A dispute arose between PACT and Iris Mabel in November 2023 concerning variations and liquidated damages under the Mabel Contract.
On 14 November 2023:
(a) Iris Mabel was deregistered; and
(b) Iris Residential paid PACT the amount that had been certified as being due and payable by Iris Mabel to PACT by the final certificate.
On 21 November 2023 PACT issued a notice of dispute under the Mabel Contract and requested that Iris Mabel attend a conference with PACT in the presence of CCN (as superintendent) to try to resolve the dispute.
In response to the notice of dispute, on 1 December 2023 Iris Residential wrote to PACT noting that Iris Mabel had been deregistered on 14 November 2023, and therefore, as a result of the deregistration, Iris Mabel no longer existed as a legal entity and could not attend the proposed meeting.
On 22 January 2024 the former directors of Iris Mabel applied to ASIC for the reinstatement of Iris Mabel.
On 15 February 2024 ASIC wrote to the former directors of Iris Mabel through their solicitors (Hotchkin Hanly), and requested the provision of information demonstrating that Iris Mabel had been carrying on business at the time of its deregistration, for example through a bank statement or a copy of a contract entered into at the time of deregistration, such as a lease or contract for business.
The former directors of Iris Mabel did not provide the requested further information to ASIC and their application for reinstatement lapsed on 15 March 2024.
On 27 February 2024 PACT was informed through Hotchkin Hanly that there were no documents indicating that Iris Mabel was carrying on business at the time of its deregistration, and therefore the former directors could not provide the same to ASIC.
On 20 March 2024 PACT applied to ASIC for reinstatement of the registration of Iris Mabel.
On 13 May 2024 PACT was informed that its application was refused by ASIC as ASIC was not satisfied that Iris Mabel should be reinstated.
In circumstances where Iris Mabel's registration had not been reinstated, PACT made this application to the court seeking the reinstatement of Iris Mabel so that PACT could continue to press the claims the subject of the notice of dispute issued under the Mabel Contract on 21 November 2023.
Legal principles
Pursuant to s 601AH(2) of the Corporations Act, the court may make an order that ASIC reinstate a company if the conditions prescribed by s 601AH(2) are satisfied.
In Jit Sun Investments Pte Ltd (Singaporean Unique Entity Number: 200308432W) v Australian Securities and Investments Commission, Hill J summarised the principles to be applied in determining an application made pursuant to s 601AH(2), and I adopt the same:[1]
[1] Jit Sun Investments Pte Ltd (Singaporean Unique Entity Number: 200308432W) v Australian Securities and Investments Commission [2021] WASC 235 [5] ‑ [8], cited with approval in Di Camillo v Australian Securities and Investments Commission [2024] WASC 288 [25]; Low as Liquidator of Safa Auto Parts Pty Ltd v Australian Securities and Investments Commission [2024] WASC 116 [17]; Re Dreampoint Pty Ltd (Deregistered); Ex Parte Brett Phillip Jones [2024] WASC 125 [23]; Romaro And Pikachu Pty Ltd v Australian Securities And Investments Commission [2024] WASC 276 [11] ‑ [15].
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.[2]
The term 'person aggrieved' is not expressly defined in the Act and should not be construed narrowly.[3] 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 the 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.[4]
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.[5] A person can become aggrieved as a result of events which occur after the time of the deregistration.[6]
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:[7]
(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.
[2] Deputy Commissioner of Taxation; Re James Hardie Australian Finance Pty Ltd (deregistered) [2008] FCA 1181; (2008) 248 ALR 557 [13].
[3] Bell Group Ltd (ACN 008 666 893) (in liq) v Australian Securities and Investments Commission [2018] FCA 884; (2018) ACSR 247, 262 [47].
[4] 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].
[5] Bell Group Ltd (ACN 008 666 893) (in liq)v Australian Securities and Investments Commission [49].
[6] Pilarinos v Australian Securities and Investments Commission [2006] VSC 301 [49].
[7] Bell Group Ltd (ACN 008 666 893) (in liq) v Australian Securities and Investments Commission [72]; Re ERB International Pty Ltd (deregistered) [2014] NSWSC 200; (2014) 98 ACSR 124 [5].
Service on ASIC and former directors of Iris Mabel
As to service of the application and supporting papers on ASIC and the former directors of Iris Mabel, the affidavit of Ms Murphy sworn on 17 September 2024 was read and relied upon. Ms Murphy attached 17 documents to her affidavit which were marked DM-1 to DM-17.
I was satisfied that there had been service of the originating process and supporting affidavit on ASIC. By a communication received on 17 September 2024 ASIC advised PACT (through PACT's solicitors) that ASIC did not oppose the application and would not appear at the hearing of the application.
I was also satisfied that there had been service of the originating process and supporting affidavit on the former directors of Iris Mabel through their solicitors (Hotchkin Hanly). On 9 September 2024 Hotchkin Hanly was asked to confirm that the former directors of Iris Mabel had no objection to the application and would abide by the court's decision. At the hearing of the application the court was informed that no response had been received to that request. No former director of Iris Mabel sought to be heard at the hearing of the application.
Disposition
I accept that the court has the power to grant the relief sought by PACT.
As to whether the court ought exercise that power, I was cognisant that the questions posed by s 601AH(2) of the Corporations Act were, first, whether PACT is a 'person aggrieved by the deregistration' of the company, and secondly, whether it was 'just' that the registration of Iris Mabel be reinstated.
Standing - 'person aggrieved'
As was submitted on behalf of PACT, the term 'person aggrieved' is not expressly defined in the Corporations Act and should not be construed narrowly.[8]
[8] Outline of submissions filed 17 September 2024 par 21; citing Bell Group Ltd (ACN 008 666 893) (in liq) v Australian Securities and Investments Commission [47], cited by Hill J in Jit Sun Investments Pte Ltd v Australian Securities and Investments Commission [6].
In determining whether PACT was a person aggrieved by the deregistration of Iris Mabel, the court must consider whether PACT has shown that deregistration has deprived PACT of something, or injured or damaged PACT in a legal sense, or that PACT became entitled in a legal sense to regard the deregistration as the cause of dissatisfaction.[9]
[9] Jit Sun Investments Pte Ltd v Australian Securities and Investments Commission [6], citing Hugall v Australian Securities and Investments Commission [13]; Callegher v Australian Securities and Investments Commission (ASIC) [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.[10] Importantly, a person can become aggrieved as a result of events which occur after the time of the deregistration.[11]
[10] Jit Sun Investments Pte Ltd v Australian Securities and Investments Commission [7], citing Bell Group Ltd (ACN 008 666 893) (in liq) v Australian Securities and Investments Commission [49].
[11] Jit Sun Investments Pte Ltd v Australian Securities and Investments Commission [7], citing Pilarinos v Australian Securities and Investments Commission [49].
In the circumstances deposed to, and for the purposes of s 601AH(2) of the Corporations Act, I accepted that the deregistration of Iris Mabel deprived PACT of its right to pursue outstanding claims against Iris Mabel under the Mabel Contract dispute resolution mechanism. PACT satisfied the court that it is a 'person aggrieved' by the deregistration of Iris Mabel for the purposes of this application.
Was it 'just' that the registration be reinstated?
In considering whether it would be 'just' to order the reinstatement of Iris Mabel, I was cognisant that the court's discretion under s 601AH(2) of the Corporations Act is wide and that all relevant circumstances must be taken into account, including the circumstances in which Iris Mabel came to be deregistered; the future activities of Iris Mabel if an order for reinstatement is made; whether any particular person is likely to be prejudiced by the reinstatement; and the public interest generally.[12]
[12] Australian Competition and Consumer Commission v Australian Securities and Investments Commission [2000] NSWSC 316; (2000) 174 ALR 688 [27]; Price, in the matter of Advanced Polymer Recycling Pty Ltd v Australian Securities and Investments Commission [2022] FCA 20 [56], cited with approval by Hill J in ACN 009 009 072 (in liquidation) v Australian Securities & Investments Commission [2022] WASC 221 [47]; Jit Sun Investments Pte Ltd v Australian Securities and Investments Commission [8]; Perrin v Australian Securities and Investments Commission [2024] WASC 38 [26].
As to the circumstances in which Iris Mabel came to be deregistered, I noted that the completed Form 6010 (Application for Voluntary Deregistration of a Company) was lodged by Iris Mabel with ASIC before the expiry of the defects liability period under the Mabel Contract; and before CCN had under the Mabel Contract issued a final certificate certifying the amount payable from Iris Mabel to PACT, or vice versa.
Further, I noted that in the application made by the former directors of Iris Mabel for reregistration on 17 January 2024 by the Form 581 (Application for ASIC reinstatement), the reason for reinstatement was recorded as follows:[13]
The company was carrying on business or was in operation at, and subsequent to, the time that the registration of the company was deregistered.
[13] Affidavit of J Thomson sworn on 2 September 2024, JT‑10 (page 344).
In support of the application made by the former directors of Iris Mabel to ASIC for reinstatement, Hotchkin Hanly lodged a letter in which it was recorded that:[14]
The basis for that application for reinstatement is that that (sic) Iris Mabel was carrying on business at, and subsequent to, the time Iris Mabel was deregistered.
In support of this our instructors refer to paragraphs 7 to 10 above and the obligations under the Construction Contract that were subsisting at the time of deregistration of lris Mabel.
[14] Affidavit of J Thomson sworn on 2 September 2024, JT-10 (page 349 - 350).
The reason given in support of reinstatement was not consistent with the declarations that had been made on 12 September 2023 in the Form 6010 (Application for Voluntary Deregistration of a Company) (reproduced at [8] above).[15]
[15] Affidavit of J Thomson sworn on 2 September 2024 par 10, JT‑4 (pages 238 - 239).
I also accepted that the reinstatement of Iris Mabel would allow the pursuit of the extant claims of PACT. I did not consider the fact that legal proceedings had not been commenced at the time of deregistration to be determinative of the matter.
These were all matters which weighed heavily in favour of the grant of the application.
As to the future activities of Iris Mabel, counsel for PACT noted that if an order for reinstatement was made, the future activities of Iris Mabel would be a matter for its directors and shareholders.[16] In particular, it would be a matter for them to determine whether to put Iris Mabel in a position to meet any outstanding liabilities to PACT or seek to wind up Iris Mabel in insolvency.
[16] Outline of submissions filed 17 September 2024 par 22(b).
Counsel also noted that in the former directors' application for reinstatement by Form 581 (Application for ASIC reinstatement) dated 17 January 2024, a declaration was made by a former director of Iris Mabel that upon reinstatement Iris Mabel would be able to pay its debts as and when they fall due.[17] I weighed these matters in the balance.
[17] Affidavit of J Thomson sworn on 2 September 2024, JT‑10 (page 344).
As to whether any particular person is likely to be prejudiced by the reinstatement of Iris Mabel, I accepted that there was nothing to suggest that anyone was likely to be prejudiced.[18] In this regard, I took some comfort in the fact ASIC and the former directors of Iris Mabel had been served with the originating process and supporting affidavit, and neither opposed the application or sought to be heard.
[18] Outline of submissions filed 17 September 2024 par 22(c).
Finally, I had regard to the public interest, which I considered favoured reinstatement in circumstances where there were extant claims against the deregistered entity. It would not be in the public interest if the voluntary deregistration of the company was to defeat creditors, potential creditors, and the proper dealing of the extant claims.
In all of the circumstances, I was satisfied that it was 'just' to order the reinstatement of Iris Mabel.
Conclusion and orders
For these reasons, orders will be made in the following terms:
1.Pursuant to s 601AH(2) of the Corporations Act 2001 (Cth), the defendant, the Australian Securities and Investments Commission, forthwith reinstate the registration of Iris Mabel Park Pty Ltd (ACN 625 944 265) (the Company).
2.The plaintiff shall give notice of these orders to the defendant and the former directors of the Company.
3.There be no order as to costs.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
SE
Associate to the Honourable Justice Strk
9 OCTOBER 2024
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