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Partners v Sampson

Partners v Sampson

Case [2002] NSWSC 383 29 April 2002

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CITATION: Partners v Sampson [2002] NSWSC 383

CURRENT JURISDICTION: Equity Division

FILE NUMBER(S): SC 2034/02

HEARING DATE(S): 29/04/02

JUDGMENT DATE: 29 April 2002

PARTIES :

Partners in Enterprise Pty Ltd - Plaintiff
Adapt Technologies Pty Ltd - First Defendant
Ronald Spencer Sampson - Second Defendant
John William Lloyd - Third Defendant

JUDGMENT OF: Barrett J

COUNSEL : Mr R. Glasson - Plaintiff
Mr K.R. Eassie - Defendants

SOLICITORS: Nash O'Neill Tomko - Plaintiff
Yandell Wright Stell - Defendants

CATCHWORDS: CORPORATIONS - application by creditor for reinstatement of deregistered company - questions of standing considered - reinstatement just where purpose is to permit winding up in insolvency - no grounds for staying winding up

LEGISLATION CITED: Corporations Law 2001 (Cth)
Corporate Law Review Act 1998

CASES CITED: Australian Competition and Consumer Commission v Australian Securities and Investments Commission (2000) 34 ACSR 232
Re Botar-Tatham Pty Ltd (2001) 52 NSWLR 680
Re Cambridge Coffee Room Association Ltd [1952] 1 All ER 112
Casali v Crisp [2001] NSWSC 860
Re Dormo Constructions Pty Ltd (1979) ACLC 32,229
Re Great Eastern Cleaning Services Pty Ltd (1978) 3 ACLR 886
Hunter Valley Community Investments Pty Ltd v Bell (2001) 37 ACSR 326
Re Morton; Ex parte Mitchell Products Pty Ltd (1996) 21 ACSR 497
Payne v Wizard Industries Pty Ltd (1997) 24 ACSR 277
Re Proserpine Pty Ltd [1980] 1 NSWLR 745
Scott v Janniki Pty Ltd (1994) 14 ACSR 334
Re Williams United Mines Pty Ltd (1992) 8 ACSR 627

DECISION: Registration reinstated; winding up ordered; stay of winding up refused.

- 5 -

IN THE SUPREME COURT REVISED
OF NEW SOUTH WALES
EQUITY DIVISION

BARRETT J

MONDAY 29 APRIL 2002

2034/02 - PARTNERS IN ENTERPRISE PTY LTD v SAMPSON & ANOR

JUDGMENT

1 The plaintiff seeks, in the first instance, an order under s.601AH(2) of the Corporations Act 2001 (Cth) reinstating the registration of Adapt Technologies Pty Limited (“the company”). Dependent upon the outcome of that application, the plaintiff seeks an order that the company be wound up in insolvency. Both these applications are opposed by, effectively, the persons who were the directors and shareholders of the company when it was deregistered, Mr Sampson and Mr Lloyd. They also foreshadow that, if a winding up order is made, they will seek a stay of the winding up under s.482.

2 The originating process filed by the plaintiff names the company as sole defendant. That is not a satisfactory position, given the stark words of s.601AD(1):

“A company ceases to exist on deregistration.”

3 The effect of an equivalent predecessor provision upon the entity’s capacity to be party to legal proceedings was stated by Sackville J in Re Morton; Ex parte Mitchell Products Pty Ltd (1996) 21 ACSR 497:

“A company registered under the Corporations Law is, inter alia, capable of suing and being sued and of holding property: s.123(2)(c), (e). But upon dissolution the company ceases to be a legal person: it becomes a ‘non existent person’: United Service Insurance Co Ltd…

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.

Continue reading Partners v Sampson

Details

AGLC: Partners v Sampson [2002] NSWSC 383
Case: [2002] NSWSC 383
Decision Date: 29 April 2002

CaseChat Overview and Summary

Partners sought reinstatement of Sampson, a company that had been deregistered. The purpose of reinstatement was to allow the company to be wound up in insolvency. The Federal Court heard the application, considering questions of standing and the appropriateness of reinstatement for the purpose of winding up. The court had to determine if reinstatement was justified and whether it was appropriate to stay the winding up proceedings.

The central issue was whether the creditor had standing to apply for the reinstatement of Sampson. The court examined the circumstances under which a deregistered company could be reinstated and if it was appropriate to do so to facilitate winding up in insolvency. The court considered the purpose behind reinstatement and whether the objective was legitimate under the Corporations Act. Furthermore, the court assessed whether there were grounds to stay the winding up proceedings, particularly if reinstatement would serve a just outcome.

The court concluded that the creditor did have standing to apply for reinstatement. It found that reinstatement was appropriate in this instance, as the primary purpose was to enable the winding up of Sampson in insolvency. The court determined that the objective of facilitating an insolvent winding up was legitimate and in the interests of justice. Consequently, the court held that there were no grounds to stay the winding up proceedings. The court found that reinstatement was justified to permit the orderly administration of the company's assets and the resolution of creditors' claims.

The court ordered that Sampson be reinstated for the purpose of winding up. The winding up proceedings were not stayed, allowing for the orderly administration and distribution of the company's assets among its creditors. The decision underscores the importance of considering the underlying purpose of reinstatement and the potential for achieving a just outcome through the winding up process.

Orders