Perrin v Australian Securities and Investments Commission
[2024] WASC 38
•21 FEBRUARY 2024
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION: PERRIN -v- AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION [2024] WASC 38
CORAM: STRK J
HEARD: 15 FEBRUARY 2024
DELIVERED : 15 FEBRUARY 2024
PUBLISHED : 21 FEBRUARY 2024
FILE NO/S: COR 17 of 2024
BETWEEN: RICHARD SCOTT PERRIN
Plaintiff
AND
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Defendant
Catchwords:
Corporations law - Application to reinstate deregistered company - Whether the plaintiff is a 'person aggrieved' - Whether it was 'just' that the registration of the company be reinstated - Service of application on the Australian Securities and Investments Commission and on the Deputy Commissioner of Taxation - Turns on own facts
Legislation:
Corporations Act 2001 (Cth), s 601AH(2)
Supreme Court (Corporations) (WA) Rules 2004 (WA)
Taxation Administration Act 1953 (Cth), sch 1
Result:
Application granted
Category: B
Representation:
Counsel:
| Plaintiff | : | JP Cook |
| Defendant | : | No appearance |
| Interested party: | : | S Hotger |
Solicitors:
| Plaintiff | : | Mendelawitz Morton Commercial Lawyers |
| Defendant | : | No appearance |
| Interested party: | : | Deputy Commissioner of Taxation |
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
Callegher v Australian Securities and Investments Commission (ASIC) (2007) FCA 482; (2007) 239 ALR 749
Casali v Crisp [2001] NSWSC 860; (2001) 165 FLR 79
Hugall v Australian Securities and Investments Commission [2009] WASC 185
Jit Sun Investments Pte Ltd v Australian Securities and Investments Commission [2021] WASC 235
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 Andrews [2011] NSWSC 332
Re ERB International Pty Ltd (deregistered) [2014] NSWSC 200; (2014) 98 ACSR 124
Re Stojic (2006) 63 ATR 11
Teffaha v Australian Securities and Investments Commission [2010] NSWSC 511
The Bell Group Ltd v Australian Securities and Investments Commission [2018] FCA 884; (2018) ACSR 247
STRK J:
(This judgment was delivered extemporaneously and has been edited from the transcript to include complete references and so as to correct infelicities of language.)
Introduction
Richard Scott Perrin was the sole director, company secretary and shareholder of RSP Group Pty Ltd from its registration on 11 December 2014 until its deregistration on 2 May 2021. The deregistration occurred under s 601AB of the Corporations Act 2001 (Cth), which indicated that the Australian Securities and Investments Commission (ASIC) deregistered RSP Group Pty Ltd because of some payment or lodgement default by it.
The sole purpose of RSP Group Pty Ltd had been to act in the capacity of trustee for the Perrin Family Trust. RSP Group Pty Ltd had been the trading entity that had engaged in the business activities involving the assets of the Perrin Family Trust. The business of the Perrin Family Trust ultimately failed, and Mr Perrin said that on advice from his accountant he allowed the registration requirements of ASIC to lapse so as to allow RSP Group Pty Ltd to be deregistered on the basis that it no longer served an ongoing, useful purpose.
By an originating process presented for filing on 13 February 2024, Mr Perrin primarily sought an order under s 601AH(2) of the Corporations Act directing that ASIC reinstate the registration of RSP Group Pty Ltd. The application when filed was supported by an affidavit sworn by Mr Perrin on 13 February 2024, and was also accompanied by a certificate of urgency, a minute of proposed orders and an outline of submissions in support of the application. At the hearing, an affidavit deposed on 15 February 2024 by counsel for Mr Perrin concerning service of the application on ASIC and the Deputy Commissioner of Taxation was also read.
The application was prompted by Mr Perrin's receipt on 7 February 2024 of two director penalty notices (for superannuation guarantee charge amounts and PAYG withholding amounts, respectively), from the Deputy Commissioner of Taxation and delegate of the Commissioner of Taxation dated 5 February 2024 for amounts that RSP Group Pty Ltd had failed to pay.
By each penalty notice Mr Perrin was advised by the Deputy Commissioner that the penalty in respect of each unpaid amount of RSP Group Pty Ltd's liability as detailed in column four of each penalty notice would be remitted if, within 21 days after the date of the notice, one of the following were to occur:
(a)the company complies with its obligation to pay the unpaid amount to the Commissioner; or
(b)an administrator of the company is appointed under section 436A, 436B, or 436C of the Corporations Act 2001; or
(c)a small business restructuring practitioner for the company is appointed under section 453B of that Act;
(d)the company begins to be wound up (within the meaning of the Corporations Act 2001).
The total penalty amount detailed in column four of each penalty notice was $11,532.28 and $159,371.94, respectively.
Each penalty notice further recorded that the penalty in respect of each unpaid amount of RSP Group Pty Ltd's liability as detailed in column five of each penalty notice would be remitted if, within 21 days after the date of each notice, RSP Group Pty Ltd was to comply with its obligation to pay the unpaid amount to the Commissioner.
The 21 day period prescribed by the Deputy Commissioner in the issued penalty notices was the reason for the urgency of Mr Perrin's application. A liquidator cannot be appointed to wind up a deregistered company. If successful in securing an order that ASIC reinstate the registration of RSP Group Pty Ltd, Mr Perrin deposed that he intended to promptly take action to place RSP Group Pty Ltd in creditors' voluntary winding up so as to satisfy the condition of the director penalty notices at sub-par (d) (reproduced above).
Among other things, Mr Perrin deposed to his belief that RSP Group Pty Ltd was insolvent; that he had met with Mr Mervyn Kitay of Worrells, a registered liquidator; and that the necessary documents had been prepared for the purpose of placing RSP Group Pty Ltd into a creditors' voluntary liquidation with immediate effect should RSP Group Pty Ltd be reinstated. Annexed to Mr Perrin's affidavit and marked 'RSP 3' was a copy of the financial statements for the year ended 30 June 2019 for the Perrin Family Trust. Annexed to Mr Perrin's affidavit and marked Annexure 'RSP 7' was (among other things) a consent to act as liquidator signed by Mr Kitay dated 12 February 2024.
I accepted that if an order was made under s 601AH(2) of the Corporations Act directing that ASIC reinstate the registration of RSP Group Pty Ltd, it would likely take some time for it to be acted upon by ASIC.[1] Mr Perrin proposed to deal with that period by seeking a further order of the court pursuant to s 601AH(3) validating any special resolution or other action of and relating to RSP Group Pty Ltd to implement a creditors' voluntary winding up and the appointment of a liquidator.
[1] As acknowledged by ASIC, see the affidavit of JP Cook sworn on 15 February 2024, 'JPC1'.
The ancillary relief sought by Mr Perrin in the form of orders 2 to 5 of the originating process was as follows:
2.Pursuant to section 601AH(3)(c) of the Corporations Act 2001 (Cth), in the event that ASIC does not reinstate the company on or before 26 February 2024, any special resolution or other action of and relating to the Company to implement a creditor's voluntary winding up and the appointment of a liquidator be validated nunc pro tunc.
3.Liberty be reserved to ASIC and to the Australian Taxation Office, to apply on or before 7 days after the making of these Orders to set aside these Orders.
4.A copy of the originating process, supporting affidavit and these Orders be served forthwith upon the Australian Taxation Office.
5.There be no orders as to the costs of this application.
Service on ASIC and the Deputy Commissioner of Taxation
As to service of the application and supporting papers on ASIC and the Deputy Commissioner, at the hearing of the application, the affidavit of Mr Cook was read and relied upon.
Mr Cook deposed that on 14 February 2024 all documents then filed were served on the published address for service of ASIC (although at that time the originating process had not yet been sealed and so ASIC had been served with an unsealed copy of the originating process), together with notice of the date and time fixed for hearing.
Mr Cook also deposed to communications as between solicitors employed by Mendelawitz Morton Commercial Lawyers on behalf of Mr Perrin, and officers of the Australian Taxation Office. From Mr Cook's affidavit, I understood that Mr Perrin's application and supporting documents had come to the attention of an in‑house lawyer within the Litigation and Legal Services Team within the Office of the Chief Tax Counsel of the Australian Taxation Office.
While there was no appearance on behalf of ASIC at the hearing of Mr Perrin's application, Mr Stephen Hotger, a Principal Lawyer employed by the Australian Taxation Office, attended the hearing. The court granted Mr Hotger leave to be heard.[2] Mr Hotger informed the court that the materials served on behalf of Mr Perrin had been considered and the application for reinstatement was not opposed.[3] Among other things, Mr Hotger was also heard in relation to the form of orders, particularly the ancillary relief sought on behalf of Mr Perrin to the extent that they concerned the Deputy Commissioner.[4]
[2] Supreme Court (Corporations) (WA) Rules 2004 (WA), r 2.13(1)(c).
[3] ts 3 (15 February 2024).
[4] ts 3 (15 February 2024).
Finally, I noted that in Mr Perrin's supporting affidavit, Mr Perrin deposed that he undertook to pay any administrative fees outstanding or payable to ASIC in respect of the registration or reinstatement of RSP Group Pty Ltd.
Disposition
Service on ASIC
An unsealed copy of the originating process and the supporting affidavits were served on ASIC on 14 February 2024. ASIC was also informed that the application had been listed for hearing on 15 February 2024.
The Supreme Court (Corporations) (WA) Rules r 2.7(1)(a) provides that as soon as practicable after filing an originating process and, in any case, at least five days before the date fixed for hearing, the plaintiff must serve a copy of the originating process and any supporting affidavit on each defendant (if any) to the proceeding. Further, r 2.8 provides that a reasonable time before the hearing of an application under s 601AH(2) of the Corporations Act, the applicant must serve ASIC with a copy of the originating process and supporting affidavit in respect of the application.
In all of the circumstances, which included the urgency of the application; the promotion by Mr Perrin of the protective ancillary orders in the form of order 3 of the originating process (reproduced above); and the undertaking offered by Mr Perrin to pay any administrative fees outstanding or payable to ASIC in respect of the registration or reinstatement of RSP Group Pty Ltd, I was prepared to make an order abridging time for service on ASIC, on the basis that Mr Perrin would attend to serving a copy of the sealed originating process on ASIC by noon on 16 February 2024.
Power
I accepted that the court had the power to grant the relief sought by Mr Perrin. 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 Mr Perrin was a 'person aggrieved by the deregistration' of the company, and secondly, whether it was 'just' that the registration of the company be reinstated.
Standing
The term 'person aggrieved' is not expressly defined in the Corporations Act and should not be construed narrowly.[5]
[5] The Bell Group Ltd v Australian Securities and Investments Commission [2018] FCA 884; (2018) ACSR 247 [47], cited by Hill J in Jit Sun Investments Pte Ltd v Australian Securities and Investments Commission [2021] WASC 235 [6].
As was observed by Barrett J in Teffaha v Australian Securities and Investments Commission [2010] NSWSC 511 at [10],[6] the normal position would be that someone occupying the position of shareholder or director, or both those positions, would not be relevantly 'aggrieved' by the non‑existence of the company. Something more would be needed, at least where the company was insolvent. I proceeded on the basis that in determining whether a plaintiff is a person aggrieved by the deregistration of a company, the court must consider whether the plaintiff has shown that 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.[7]
[6] Citing Casali v Crisp [2001] NSWSC 860; (2001) 165 FLR 79.
[7] Jit Sun Investments Pte Ltd v Australian Securities and Investments Commission at [6] citing 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].
As was observed by Hill J in Jit Sun Investments Pte Ltd v Australian Securities and Investments Commission at [7], 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.[8] A person can become aggrieved as a result of events which occur after the time of the deregistration.[9]
[8] Citing The Bell Group Ltd v Australian Securities and Investments Commission [49].
[9] Jit Sun Investments Pte Ltd v Australian Securities and Investments Commission [7], citing Pilarinos v Australian Securities and Investments Commission [2006] VSC 301 [49].
It is well accepted that personal exposure to a penalty faced by a recipient of a director penalty notice, in circumstances where the recipient is unable to remit the penalty by causing the subject company to begin to be wound up by reason of its deregistration, is sufficient to ground standing to such a director under s 601AH(2) of the Corporations Act, as a 'person aggrieved by the deregistration'.[10] In the circumstances deposed to by Mr Perrin, I accepted that he was 'a person aggrieved by the deregistration' of RSP Group Pty Ltd for the purposes of s 601AH(2).
[10] Counsel for the applicant referred to Teffaha v Australian Securities and Investments Commission [11]; Re Stojic (2006) 63 ATR 11 [18]; and Re Andrews [2011] NSWSC 332 [3] and [4].
Adopting the reasoning of Barrett J in Teffaha v Australian Securities and Investments Commission at [11], the need, from the point of view of personal protection, to bring about satisfaction of one of the conditions for staying the Deputy Commissioner's hand was something that caused Mr Perrin to have a special interest, making him a 'person aggrieved by the deregistration'.
Was it 'just' that the registration be reinstated?
In considering whether it was 'just' to order the reinstatement of RSP Group Pty Ltd, I proceeded on the basis that the court's discretion under s 601AH(2) of the Corporations Act was wide, and the court was obliged to take into account all relevant circumstances. These included the circumstances in which the company came to be deregistered; whether, if an order was made, good use could be made of it; and whether any person was likely to be prejudiced by the reinstatement.[11] The court would also take into account the public interest generally.[12]
[11] 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 [18]; cited with approval by Hill J in ACN 009 009 072 (in liquidation) v Australian Securities & Investments Commission [2022] WASC 221 [47].
[12] Jit Sun Investments Pte Ltd v Australian Securities and Investments Commission [8], citing The Bell Group Ltd v Australian Securities and Investments Commission [72]; and Re ERB International Pty Ltd (deregistered) [2014] NSWSC 200; (2014) 98 ACSR 124 [5].
There was troubling evidence before the court that Mr Perrin was acting in accordance with professional accounting and taxation advice when he allowed RSP Group Pty Ltd to lapse on its registration requirements with ASIC, so as to allow for deregistration to occur in circumstances where he believed RSP Group Pty Ltd to be insolvent.
It was just in this case that RSP Group Pty Ltd be reinstated so that a liquidator could be appointed and it placed into a creditors' voluntary liquidation. There was evidence that the entity was insolvent when it was deregistered, and that it had not traded for a considerable period. As was observed by Mr Perrin at par 20 of his affidavit, the amounts particularised in the penalty notices related to the period 1 July 2016 to 31 May 2019. The public interest supported the liquidation of an insolvent entity.
Save for the trouble of having to attend to re‑registration, there was no apparent prejudice to ASIC by the making of the order. It appeared that any prejudice to ASIC could be met by the undertaking proffered by Mr Perrin, or by making reinstatement conditional upon payment being made to ASIC of all administrative fees outstanding or payable in respect of the registration or reinstatement of the company.
As to the position of the Deputy Commissioner, reinstatement was not opposed.
In circumstances similar to those before the court on this application, Barrett J in Teffaha v Australian Securities and Investments Commission made the following observations at [13] and [14]:
… penalty notices issued under the income tax legislation and served on the directors refer to a liability to pay, by way of penalty, an amount equal to the unpaid amount of each relevant tax liability of the company. The notices thus proceed on the basis that the company has a liability for tax. Of course, a nonexistent company owes nothing to anyone. It cannot be sued. The Deputy Commissioner of Taxation, if minded to pursue the company for the unpaid tax, would have to obtain reinstatement of its registration. And because of the derivative nature of the penalty imposed on the directors, it seems equally clear that the penalty will be capable of being collected only if liability of the company is recreated through reinstatement of the registration. The Deputy Commissioner's interests will thus apparently be served by the reinstatement; and that is, I think, another matter that points to the conclusion that the reinstatement is 'just'.
There have been three prior cases analogous to this case of which I am aware: Application of Stojic [2006] NSWSC 608; (2006) 24 ACLC 844; Beckton v Australian Securities and Investments Commission [2007] NSWSC 780; and Baldwin v Australian Securities Investments Commission [2009] NSWSC 936. In all of those cases there was an indication before the court that the Australian Taxation Office did not oppose the application. There is no such indication in this case but, for the reasons I have stated, it seems to me that the interests of the Deputy Commissioner of Taxation will not be prejudiced - indeed will be positively served - if the reinstatement order is made.
While counsel for Mr Perrin referred to the decision of Barrett J in Teffaha v Australian Securities and Investments Commission, counsel did not ask the court to adopt his Honour's reasoning that reinstatement was a precondition to collection of a penalty from a director of a deregistered company, and thus the Deputy Commissioner's interests would be positively served by reinstatement, being another matter that pointed to the conclusion that reinstatement would be 'just'. Further, Mr Hotger on behalf of the Deputy Commissioner respectfully noted that he had some difficulty with that part of his Honour's reasons for decision.
Given the very limited notice provided to the Deputy Commissioner of the application (a matter of hours), Mr Hotger was not in a position to substantively address the court as to the operation of the Taxation Administration Act 1953 (Cth), sch 1 (which schedule concerns the collection and recovery of income tax and other liabilities). Mr Hotger did however confirm that there was no opposition to the application on the part of the Deputy Commissioner, nor to Mr Perrin taking steps so as to bring about satisfaction of one of the conditions available to him for staying the Deputy Commissioner's hand.[13] Prejudice to the Deputy Commissioner by the orders sought was not agitated.
[13] ts 16 (15 February 2024).
In the end, I accepted that there was sufficient evidence to conclude that it was 'just' to order the reinstatement of RSP Group Pty Ltd without needing to consider and conclude whether the interests of the Deputy Commissioner would be positively served in the manner found by Barrett J. I proceeded on the basis that deregistration of RSP Group Pty Ltd had been the sanction for some payment or lodgement default by it. On balance, I did not consider that that procedural default should be allowed to have the substantive effect of precluding Mr Perrin from doing what the Taxation Administration Act, sch 1 contemplated that a director might do to avoid his personal liability for a penalty.[14]
[14] Following Re Stojic [15].
In all of the circumstances, including by reference to the public interest, I was satisfied that there was benefit in having RSP Group Pty Ltd reinstated so as to be wound up, and that in all of the circumstances it was 'just' to order its reinstatement.
Conclusion and orders
For these reasons, I was prepared to make orders in the following terms:
1.The time for compliance with requirements under the Supreme Court (Corporations) (WA) Rules 2004 r 2.7(1)(a) and r 2.8 in reference to service upon the Australian Securities and Investments Commission be abridged to 14 February 2024, save that the sealed originating process must be served upon the Australian Securities and Investments Commission by noon Friday, 16 February 2024.
2.Subject to order 3 of these orders, pursuant to s 601AH(2) of the Corporations Act 2001 (Cth), the Australian Securities and Investments Commission is to forthwith reinstate the registration of RSP Group Pty Ltd ACN 603 333 839.
3.Payment must be made to the Australian Securities and Investments Commission of all administrative fees outstanding and payable to the Australian Securities and Investments Commission in respect of the registration or reinstatement of RSP Group Pty Ltd ACN 603 333 839.
4.Pursuant to s 601AH(3)(c) of the Corporations Act 2001 (Cth), in the event that before the registration of RSP Group Pty Ltd ACN 603 333 839 is reinstated by the Australian Securities and Investments Commission, the plaintiff, being the person who was the sole member of RSP Group Pty Ltd ACN 603 333 839 at the time of deregistration and will again be the sole member upon reinstatement, takes action to pass a special resolution under s 491(1) of the Corporations Act 2001 (Cth), being action that would have been valid and effectual had RSP Group Pty Ltd ACN 603 333 839 existed when the action was taken, that action shall upon reinstatement be valid and effectual as and from the time at which it was taken.
5.Liberty be reserved to the Australian Securities and Investments Commission to apply on or before seven days after the making of these orders to set aside these orders.
6.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.
KO
Associate to the Judge
21 FEBRUARY 2024
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